Material Sourcing ADM4307 Apparel Manufacturing

Dr. Su-Jeong Hwang Shin, Ph.D. Associate Professor

Materials Sourcing

• Sourcing:• Is the determination of the most cost-efficient vendor of materials

and/or production at a specified quality and service level.

• The global textile complex

• Producer goods and consumer goods• Producer goods are products or materials that are used in the

production of other goods. (e.g. fiber, yarn, grey goods, etc.)

• Consumer goods are end products

• Integration in both producers and consumer goods market. Mergers means fewer firms in fabric production.

Sourcing of apparel

• Fiber production: Natural fiber and manufacture fiber (75%). • Example: Cotton Inc. FiberLink Trading, Inc.

• Yarn and Fabric production: • Fancies: Short run vs. Staples: No change

• Primary sources of Fabrics: • Mills: produce grey (=greige) goods

• Converters: finishers providing the dyeing or printing, and finishing.

• Secondary sources of Fabrics:• Jobbers ( buy mill overruns or tailings and sell)

• Brokers

• Wholesalers (Sell broad assortments of fabrics)

Sourcing of apparel

• Findings production and marketing• Findings: all the materials other than fabrics, fibers, and

yarns. Interlinings, trim, zippers, buttons, thread.

• Findings firms: not only make but develop and sell equipment for attaching products.

• Snap and zipper firms may sell or lease equipment.

• Worth street textile market • Since 1926 textile trade in NY.

The role of sourcing decisions

• Sourcing decisions are related to business plan

• Make or buy decisions may arise as:• The result of the development of new products,

• Desire to reduce costs,

• Need for specialized equipment, skills

• Unsatisfactory supplier performance,

• Increase or decrease in demand.

The role of sourcing decisions

• Factors in make or buy alternative (sourcing decisions):• Costs (Price quote, bid)

• Production capacity

• Required capacity is the total need for output of materials, finished goods.

• Demonstrated capacity is the volume of out put that a plant, work center, or machine is capable of producing.

• Quality

• Timing (hot items, quick response)

The role of sourcing decisions

• Sourcing plans for Make to Stock or Make to Order• Both inventory strategies depending on its product lines and

target market.

• Make to Stock (for basic goods)• Sourcing plan= Forecast+ (Desired ending finished goods

inventory – Starting finished good inventory)

• Make to Order (for fashion goods)• Sourcing plan= Forecast + (Starting order backlog- Desired

ending order backlog)

• * Backlog refers to all orders received and not yet shipped.

Materials sourcing processes

• Materials sourcing seeks and negotiates the acquisition of materials.• Materials supply determines the availability of fabrics and findings

for production of finished goods.• Sourcing specialists (=Buyers)

• Retail buyers • Select finished goods from product lines in apparel markets and manufacturer’s

showrooms

• Work with manufacturers and contractors to develop merchandise for their firms, and they attend fashion shows to review product offerings and fashion trends.

• Material buyers• Make higher volume purchase from fewer suppliers.

• Attend semiannual fabric shows held in the U.S, France, Germany, Italy, Japan and etc.

Selecting fabrics

• Product identification• Appropriate fabrics are identified based on product information and

testing.• Sources of information include:• Fabric samples (about 5 yards)• Fabric specifications- Product name, Fiber content, width, finishes,

dyes, style number, quality standards. Fabric certification of product quality.

• Lead times• Lead time varies with point of origin, shipping methods, open-stock or

custom designed.• Imported fabric (6~9 months)/ domestic (a few days~3 month)• Open-stock materials have shorter lead times.

Selecting fabrics

• Order minimums• The smallest quantity a vendor will sell on a single purchase order.• Open-stock fabric: smaller minimums (about 500 yards)• Custom or special order: larger minimums (about 3000~6000 yards),

exclusivity, and higher priced fabric.• Converters: Quicker delivery, smaller minimums than fabric mills.

• Fabric put-up• The manner in which the fabric is folded and/or rolled by the vendor.• Roll length: A full roll (60 ~100 yards)• Shorts, tailings, (40yards) and remnants (10 yards or sell by pounds).

Over-the-counter fabric (less than 30 yards)

Selecting fabrics

• Material testing by the apparel manufacturer

• Prices-price adjustments and costs

• Professional Credibility of suppliers

Predicting Aesthetics & Performance

• Criteria for determining acceptable quality of fabric are based on aesthetics and performance.

• Fiber content • Synthetic fibers/natural fibers• Market grades are used as a basis of determining a product’s suitability

for end use. • Yarn quality and size

• Denier or Tex (larger number, bigger yarn diameter)• Cotton count (larger number, finer)

• Fabric weight • A primary consideration in suitability to end use.• Top weight vs. Bottom weight (heavier)

Predicting Aesthetics & Performance

• Hand and drape-ability• Application of color: Dyes/ pigments.• Structural or applied fabric design

• Structural fabric design are crated through manipulation of yarns, fabrication, color, or texture.

• Applied fabric design is created by printing, embroidery, quilting, other forms of fabric decoration.

• Fabrication : Woven or Knits• Finishes: Calendaring, polishing, embossing, and napping.

Evaluating fabric quality

• Receiving and inspecting materials• Ensure correct shipments, on time, width and length, quality

standards, damage.• Use a fabric inspection system

• Fabric problems• Patent defects: Visible variation, such as Shading (color

variation), Fabric flaws (knots, holes, streaks, stains, and slubs), bow and skew, inconsistent width, etc.

• Latent defects: Cannot be detected by viewing the fabric. Examples: Shrinkage or stretching, Snap back, Colorfastness.

Fabric grading

• Fabric grading systems: To assess or grade the quality of fabric.

• 3 systems for grading woven. 10 point grading system. 4 point grading system, Graniteville grading system.

• Textile performance standards• ASTM performance standards.

ProductionSourcing

Sourcing issues

• Sourcing issues ( 2 things)• Social responsibility

• Financial options

Social responsibility

• Related to human rights • child labor, working condition

• The Sourcer (=a firm) has a written code of conduct.• The contractor (=a vendor) compliance (international

trade regulation) with the code of conduct.• A buying agent (=rep. of sourcing company in country)

or subcontractor is involved.• Example of outside auditing system : WRAP

(=Worldwide Responsible Apparel Production)

Financial options1. Own the manufacturing capacity (direct or joint investment).

• Example: Retailer and manufacturers are vertically integrated.2. Purchase the materials and have production done by contractors (Cut-make-

trim = CMT)• Contractors cut and sew garments.

3. Have the contractor source materials and produce finished goods (Full package program =FPP)

• Contractors develop patterns, sources materials, produces. (Hong Kong)4. Purchase or provide materials and have product development and production

done by contractors (half package program = HPP).• Sourcing firm provides the fabric. (Mexico)

5. Generate part of production and contract the rest (Item 807): Called shared production.

• Parts are assembled in the Caribbean Basin by the contractor. U.S. labor rate tariff paid is very low, therefore the total cost of garment is reduced.

6. Purchase the finished goods from a manufacturer (wholesale): Called Outsourcing.

7. License the production.

Global sourcing

• Domestic production sourcing• QR (Quick Response) or Speed sourcing

• International sourcing• Developing countries: Less labor wage rate.

• Economic development trade legislation

Sourcing processes

• [1] Selecting a production contractor

• FPP or CMT

• Review of potential contractor through international sourcing fair “Source International ”.

• Resume of an apparel contractor

• Plant visits.

Sourcing processes

• [2] Product development for production sourcing• Technical style specifications and detailed costing

• Specific measurements are important for quality audit.

• Potential contractors use the bid package

Example: Bid Package from a Contractor

Sourcing processes

• Sourcer (a firm) has to know SAM (Standard Allowed Minutes) in each style to determine potential labor costs.

• FPP contractor send style sample

• Approve contractor

• Preproduction style samples (counter samples)

• Production samples to be made in the actual factory.

Sourcing processes

• Managing materials sourcing

• Quality management of sourced goods

• Managing production of sourced goods

• Managing logistics and customs issues• Packing and shipping.

• Quick Response.

Costing imported goods•CMT arrangement: Fabric cost will not be included in FOB•FPP: Yes. Fabric cost must be included in FOB

Total import costs = TLC + overland freight + other budgeted expense

+ quota premium+ agent’s commission+ freight+ insurance+ customs duty+ customs clearance

FOB (Free on Board)= (Fabric)

+ trim+ direct labor+ overhead+ profit+ freight+ loading

TLC (Total Landed Cost)+ =

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