Sourcing & Logistics: Top 5 Sourcing Strategies

Global competition is a killer. Here are five sourcing strategies to help keep you on top of your game.

1. Streamline your product development processes.

You’re scratching your head. I thought these were sourcing strategies, you say. If you’ve been in this business for any length of time, you know that sourcing doesn’t take place in a vacuum, and improving your product development processes is one of the best ways to improve the efficiency of your sourcing and your entire supply chain.

These days, apparel companies are singing the praises of product lifecycle management (PLM) software, which enables them to develop products in real time, maintaining a single repository for all products and their progression through the development cycle one version of the truth for everyone involved in the process, including designers, merchandisers, technical designers and sourcing directors.

These systems are speeding cycle time by eliminating redundancies, awkward e-mails, spreadsheets and miscommunications and allowing for improved collaboration, which enables the entire supply chain to move closer to market.

For those companies that have extended access to their PLM systems to their vendors, the benefits are manifold. Vendors with PLM access are privy to last-minute changes in design or materials, and may even be involved in design collaboration. Ultimately, PLM can take retailer-vendor integration to a whole new level, creating a tight-knit partnership in which design and sourcing ideas originate on both sides and the two units work together as a single organism.

2. Keep a close eye on free trade agreements, regional shifts.

Twelve years ago, NAFTA was the drumbeat to which most apparel companies marched. Today, Mexico is seeing its share of the apparel market erode, and has become the poster child for how not to allow a free trade agreement to be your exclusive selling point when it comes to attracting apparel investment. It wont come as news to you that China and India are apparel hot spots, and show no sign of letting up. Safeguards may have somewhat slowed Chinas exports to the United States, but ultimately, nothing will stop the growth. Still, the giant sucking sound that everyone expected from China in 2004 was more like a big slurp, and its clear now that maintaining a sourcing balance remains as important as ever. Chinas rapid rise comes with growing pains, including shortages of power and raw materials, and rising wages, which has created opportunity for many other regional players.

Sure, youre in China. Yes, India is going to flood the world with its incredible textiles. But check out Vietnam, too. At press time, it was on the verge of possibly joining the WTO and also is benefiting from a bilateral free trade agreement with the United States. Keep an eye on Cambodia. Its proximity to China, port access and competitive labor rates make it a potentially serious contender, along with Pakistan, which recently opened a 1,250-acre Textile City adjacent to the countrys Port Qasim. Other countries to watch include Bangladesh, which is witnessing increasing apparel and textile investment from China; and Sri Lanka, which is on the short list of countries whose apparel industries will likely grow considerably in the coming years.

On the other side of the world, Central America is getting closer to reaping the full benefits of the U.S./DR-CAFTA. As of July 1, the agreement was in force for four of the six signatory countries, and all but Costa Rica had ratified the agreement. In addition to its proximity to the U.S. market, leaders in the region are increasingly marketing DR-CAFTA as not only an agreement but as a brand, offering speed, collaboration, full-package capability and its Western Hemisphere status as part of its cachet.

3. Find the companies, not the countries, that best meet your needs.

If this seems like a complete contradiction to Strategy No. 2, well, uh Look! Over there! Theres a man-sized apparel-eating moth in your shipping container!

Free trade agreements, proximity and regional strengths can be crucial components of your sourcing strategy, but theyre only as good as the companies under which theyre being used. Increasingly, as quotas slip away and consolidation increases among retailers as well as vendors strong, knowledgeable vendors are rising to the top and weaker ones, especially those that were staying afloat on quota alone, are slipping by the wayside. Make sure to align your company with the strong players.

Find sourcing partners that can manage more responsibility from sourcing raw materials and collaborating on design to consolidating shipments and managing replenishment programs with efficiency, hustle and finesse, while paying particular attention to the unique needs of your business. When youre Levi Strauss, and youre designing the RedWire DLX jeans, which are iPod compatible, featuring a joystick in the watch pocket, a built-in docking cradle and retractable headphones well, lets just say, you cant shop that around to anyone.

Dig deep to ensure that a potential vendor has the capability, equipment and willingness to manage your product. Yes, we can do that sometimes translates to: No, we cant do that, but we want your business, and leads to disastrous results when your order is sewn improperly or is late or incomplete.

If you have trustworthy partners that you value, but your growth is outpacing their capabilities, approach them with suggestions for expansion before entering uncharted territory. Dedicated partners already know your business needs and requirements, and may be looking for just such an opportunity to expand their own operations. When you do find a good vendor, learn to let go, and focus on what you do best.

If this strategy came with an addendum, it would be: Dont chase the lowest-cost needle. Not only will you likely wind up with shoddy workmanship, it probably wont come at the lowest cost. True cost must take into account the whole kit and caboodle. If youre saving 30 cents per hour per sewer, but youre faxing design specs instead of sending them electronically, losing 16 hours to bumpy, unpaved roads and hiring extra guards to protect your apparel on its unsafe journey, youre probably losing money, as well as the chance to establish meaningful and progressive partnerships.

4. Get your product on those shelves, pronto!

Consumers are fickle, and they want the latest fashions now, and again next week. Unless youve just returned from a long hibernation, you know that this is the part where the Zara success story is trotted out as a model example of quick turn times. Legend has it that Zara can move from design to retail shelf at just under the speed of sound, or about two weeks, depending on which reports you believe.

Truly, Zara has an amazing business model whose operations allow it to move rapidly from concept to consumer. Unlike most apparel companies, however, Zara owns its entire supply chain, most of which is clustered in Spain. The company whips out designs based on retail store sales data, sends them into production with already-designed fabrics, and moves the product out to its retail stores while most companies are still taping butterfly wings to their color story boards.

Zara has a business model that can be replicated by few, if any, apparel companies. Still, it offers many lessons that can improve the speed of a more typical supply chain. The company, for example, sacrifices absolute perfection for speed, giving its designers creative license within limited parameters, such as the requirement that they use available fabrics.

While this exact model may not work for you, there may be room to squeeze some extra time out of your cycle by letting go in some areas. If your color lab dip is almost perfect, maybe its time to move on instead of demanding another round, for example. Another benefit: The more turns you have, the less any one design failure will significantly impact your bottom line.

Zara also offers a lesson in proximity. Even if you dont own your supply chain, you can strive for its components to be near one another, whether that means sourcing in China to be close to a large regional fabric base, or sourcing in Central America to be close to the end consumer. Find the mix of vendors that works best for your individual products and your overall company needs. Then, get on the ground in those countries. Its crucial to maintain a presence to keep on top of training needs, quality standards and social compliance.

5. Use technology to your best advantage.

Sourcing is so much more complicated than it was when the mill was down the street from the factory and your brother ran it. Now youve got 1,000 retail stores supplied by more than 200 vendors in 20 countries. You cant possibly keep track of it all manually, and you dont have to.

Sourcing software packages and some PLM programs can give you visibility into all of your sourcing activities, from RFQs to sample management to production. Many are designed to be flexible enough to react to challenges, such as sudden design changes, or to alert users when a task is not completed on schedule, and they are also scalable, able to deal with multiple vendors and offices around the globe.

Investigate your options thoroughly, and consider bringing in an outside consulting firm to help you. Selecting the right software package for your firm may take a long time, and a good software provider will be willing to invest the time to perform real-time simulations with your data to ensure that the solution is right for you.

Implementing enterprise-wide solutions is a huge undertaking, and youll need buy in from the executive office as well as the users. Make training a priority, and understand that change is difficult.

Jordan K. Speer is senior editor of Apparel. She can be reached at [email protected].