Various factors that a buyer considers before selecting a sourcing partner are flexibility, technological capabilities, lead time, cost, quality and working condition, explains Mahesh Shaw.
Sourcing is one of the most important activities in fashion business. It can be defined as “knowing who to go to” and maintaining healthy relations with those contacts in order to find “the right product for the right quality, at the right price, in the right time frame”. Apparel brands and retailers have to select right partners for the supplies of fabrics, trims and apparels.
In this article, an attempt is made to identify various important factors which a buyer considers before selecting a sourcing partner. These are flexibility, technological capabilities, lead time, cost, quality, and working condition.
While selecting a production base, flexibility is the topmost priority. The apparel products have short life cycle, the success of brands lies in offering varieties in the product range. By flexibility it is meant the production facility should be capable enough to manufacture varieties of products in a given category. This will help the supplier to meet various requirements of the buyer. The buyer in turn will have a reliable supplier.
Technological capability of a supplier puts the enterprise on competitive edge. Right ERP system for production, supply chain, product lifecycle management helps to stream line operations. Use of effective information technology helps in terms of sharing information, status of flow of materials and information. Visibility of information across the supply chain leads to speedy communication, better coordination, planning, scheduling, and it results in reduction of lead time.
Lead time for short lifecycle product is very important. Fashion changes very quickly. Apparel sourcing requires a very long lead time as the production of finished fabric takes a lot of time. So, the supplier needs to work with reliable demand forecast to have adequate amount of ready fabrics, which would help to reduce lead time. The lead time has reduced significantly from earlier days. It has reduced to 30-40 days from 120 days A shorter lead time is inevitable to provide mid-season replenishment if items are sold well. Buyer requires the supplier to deliver finished goods on time. Timely delivery is linked with other factors such as capacity, quality system, and capability of the supplier. Buyers expect suppliers to be responsive in terms of quick deliveries.
Buyers generally select the supplier based on first cost. Selection of lower cost sometimes is accompanied by large hidden cost such as lost sales, inventory cost, marked-downs, etc. Keeping the long term business strategy, cost could be secondary factor. Quality can be given priority over cost. Costing is a very complex exercise as it takes various factors into account. In case of apparel, costing includes costs of supplier search, sampling, production cost, cost of raw materials, logistics, customs duties, quality control, disposal and re-work, loss of sales (due to quality or delivery problems), and markdowns.
Customer is very quality conscious. Maintaining quality has very lasting effect on business performance. It is an established fact that implementation of right quality system helps in reduction of rejections, visibility of flow of material and information, traceability of lots, timely delivery (reduction in lead time), reliability on manufacturing capability, retaining customers and making profit. The supplier must understand the buyer’s requirement and establish quality systems to be followed. He must identify the performance indicators to assess the performance level. Buyers always do quality audit as part of quality compliance. If a supplier is doing business with multiple buyers, it has to fulfill the quality compliance of all the buyers. Many times it<