What is the future of Apparel Sourcing?

Introduction

• Apparel sourcing decisions can make or break an apparel business. Balancing cost, capacity, and compliance, while maintaining navigation volatility, is not an easy task. Apparel businesses run in a fast-changing and highly demanding environment. Apparel sourcing in such a scenario can become the key to survival.

• Right apparel sourcing decisions offer greater process efficiencies and flexibility along the complete supply chain.

• Today, apparel buyers are shifting their focus towards lower-cost offering countries, where alongside, some traditional low-cost countries are also losing their sheen. But the cost is not the only factor. Agility, proximity sourcing, and re-shoring are also the factors that have come into play.

Factors Affecting Apparel Sourcing

• Trade policies and politics: Trade policies are one of the major contributors to the product cost. Trade politics, and thus the resulting trade policies are one of the key determinants of the decisions relating to the choice of suppliers. This is especially valid in the global sourcing scenario of the apparel industry.

• Changing market environment: Price fluctuations, changing requirements with different market segments, market-specific security and customs compliance, customer value and consolidation, and the ethical values pertaining to the markets all define the choice of supplier countries.

• Supply chain management: Lean retailing, advances in IT and multi-channel sales are forcing buyers to look for ways to optimize sourcing aligned to their supply chain management strategies. Dynamics of strategic sourcing function, like supply chain optimization, reduction of lead time to market, total cost focus, the cost to vendors, push functions and reduction in the vendor base and span of control, also factor into the sourcing decisions.

How Sourcing Decisions Affect Businesses

• Costs are increasing steadily, compliance is gaining more importance and awareness, compliance laws are tightening due to multiple unfortunate incidents apparel industry has seen recently, and buyers are continuously looking for new markets.

• These factors have made apparel sourcing much more complex. With an increasing demand for transparency in the supply chain and growth of multi-channel markets, the impact of apparel sourcing decisions has much wider span now.

• There are multiple layers in choosing the right suppliers. Sourcing decisions not only affect the cost and profits a business gets, but also the product’s quality, order lead times, supply chain responsiveness, sales volume and the value system of the company. Good sourcing decisions also lead to long-term supplier relationships which further add many advantages to the list.

Sourcing Destinations in Apparel Manufacturing

• To engage more with their suppliers, apparel companies are not only working on improving productivity but also on compliance. For instance, more than 150 companies from 20 different countries have signed the Bangladesh Accord on Fire and Building Safety.

• Hence, gradually apparel buyers are working towards developing industry standards that ensure transparency and compliance. This is making compliance a top criterion, along with costs, capacity and supplier’s proximity to US and European markets in the evaluation of sourcing markets.

The Future of Apparel Sourcing

• Balancing cost and compliance with the other factors, and managing the rise in globalization in apparel market are making sourcing much more complex than it already is. To add to this, multiple retail channels and greater visibility demand more from sourcing managers than ever before.

• Digitization is a factor that can take sourcing into the desired directions, but along with that the way business is done has to be changed. Sourcing professionals and merchandisers need to develop new skills aligned to the changing requirements of the industry.

• The future of apparel sourcing lies in instilling new skill set amongst sourcing professionals, who possess product knowledge, business acumen, consumer-centric focus, Omni-channel perspective and design and engineering capabilities. Empowerment of sourcing staff in companies, meaningful professional development opportunities, opportunities of cross-pollination among functional departments and better talent management can help in the development of a talent pool like that.

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