What is apparel sourcing?

Typically, sourcing is finding the most suitable supplier that provides the quality of goods or services at a price point that gives the business owner the profit margins they need. In most organizations, the process of sourcing products or services is the first step in the supply chain process. Sourcing involves finding a balance between the quality of products and raw materials required and affordability.

The apparel sector manufactures finished apparel and leathers such as men’s, women’s, children’s, and intimate apparel. Apparel production is one of today’s most in-demand industries.

The method of determining how and where to source manufactured items or components is known as sourcing.

Apparel sourcing involves crossing borders to discover the best markets for their products all around the world. Apparel brands and retailers are prioritizing sourcing in order to increase product awareness and maximize revenues.

In terms of income generation and job creation, the apparel industry is critical to a country’s economic development.

The basic goal of apparel sourcing is to have control over where and how its products are made. It also reports to the merchandising department and is responsible for the timely and reasonably priced delivery of the essential commodities.

Types of apparel sourcing

Local manufacturer: Apparel is produced locally, using local infrastructure.
Conventional manufacturing: Local fabric is exported to the countries that manufacture apparels.
International sourcing: Fabric is produced locally, but basic raw materials, such as yarn or fiber, are imported from another country.
Global sourcing: As part of a global sourcing strategy, fabrics are manufactured with parts sourced from abroad.
Off-shoring: To meet demand, raw material is exported first, such as yarn or fiber, and then fabric is reimported.
Global manufacturing: Fabric is manufactured in another country.

Importance of Sourcing

The apparel merchandiser will source components of the product domestically or globally.
A supplier is assessed on

Price and quality standards,
Delivery times,
Managing risk,
Reputation of the supplier,
Capability to complete the volume of the order, laws, transport, and various costs involved.

Apparel sourcing process

There are several ways to start the sourcing process. Some companies will look first to companies that have good reputations in their apparel industry and see how they use as suppliers. They also solicit referrals from others in the business. Check industry publications, industry trade organizations, and trade shows for sources.

Selecting a Supplier: It is important to remember that when you are choosing a vendor, you are choosing a business partner. This needs to be someone you can trust and someone you can rely on now and in the future.
Securing a Supplier: Managing your inventory effectively helps reduce your holding costs and tying up capital that could be used elsewhere in your business. Whether you choose continuous replenishment, just in time inventory, or on-demand delivery, all require the cooperation of reliable businesses and suppliers.
Supplier Delivery Models: In the continuous replenishment model, suppliers make deliveries off a predetermined schedule, often in short periods, based on a company’s inventory data and/or real-time demand. Under a just-in-time delivery model, companies receive supplies on an as-needed basis. In doing so, they reduce inventory levels and costs because just in time delivers only what is needed to increase efficiency and decrease excess waste.
Create a Contract: Once you have negotiated the terms, it is time to draw up a contract. Don’t skimp on an attorney. If you make a mistake or leave it up to the supplier, you may limit your recourse should anything go wrong.

Check points for apparel sourcing

The materials to be sourced are checked for the following criteria:

Samples: The materials intended for purchase are assessed by the samples received from the vendors. The samples should be accompanied with their specifications.
Certifications: Some vendors provide certification of product quality. It is intended to provide the buyer with assurance of the quality of goods shipped while eliminating the need for receiving inspection. The certification may include the following,

Documentation of flaws and their locations
Test reports
Date of testing and the laboratory details

3. Order Minimum: The decision to source a material from a particular vendor is based on the “order minimum,” which is nothing but the minimum or smallest quantity a vendor shall supply on a single purchase order. Import goods may require a longer lead time but often have low minimums when compared to domestic suppliers. Minimums also relate to availability, order processing, packaging, and shipping costs.

4. Mode of Packing: The mode of packing is also important when a material is sourced from the vendor. If, for example, a firm wishes to purchase woven fabrics, they will be supplied in full width on a cardboard tube. The buyer should source goods based on the mode of packing so that the goods are not damaged in transit.

5. Delivery and Payment Terms: The buyer should clearly define the mode of payment and the delivery conditions so that there is no misunderstanding between the vendor and the buyer.

6. Professional Credibility of the Vendors: A vendor’s reputation in the trade is often a strong factor in determining whether the materials can be sourced from him. The buyer may check with the vendor’s client list and inquire about the quality of service and timing of delivery.

Factors affecting apparel sourcing

Lead time: The merchandiser needs to decide the supplier of the fabric on the basis of the type of fabric, and time remains to complete the export order.
Logistics: When placing an order, the merchandiser must take into account the following factors: cost of logistics, infrastructure needed for logistics, and time needed for transportation.
Quality parameters: The ability of the workforce and the workers’ flexibility to work on various apparel are the main determining factors.
Trade policies and politics: Policies are one of the major contributors to the product’s cost. Trade politics, and thus the resulting trade policies, are one of the key determinants of the decisions relating to the choice of suppliers.
Sourcing costs: The sourcing cost depends upon the following factors: labor wages, manufacturing costs, logistics (transportation), and Incoterms negotiated (for international sourcing). The freight charges are increased when there is a delay in manufacturing.
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. The dynamics of strategic sourcing functions like supply chain optimization also factor into sourcing decisions.
Minimum Order Quantity (MOQ): Every supplier requires a certain MOQ to produce the apparel economically. If the apparel exporter places the order of raw material below the MOQ, then the cost will generally be higher.
Ordering specifications: An apparel exporter must give specifications to the supplier to get accurate raw materials.

Apparel sourcing in Ethiopia

Ethiopia is fast becoming a rising star for sourcing apparels. The country’s efforts to build its textile and apparel industry and offer competitive prices in the international market have attracted a growing number of new buyers in recent years. (Source: Just Style)

The transformation of a small, obsolete and uncompetitive apparel industry into a strong export industry may seem a madman’s dream to most people, but not to sector observers who in the past witnessed the steep rise of the apparel industry in countries like Bangladesh and Cambodia. Until recently, the Ethiopian Government and a couple of pioneering Turkish textile companies stood nearly alone, predicting that Ethiopia would become the next big apparel sourcing hub. However, 2015 was the year of Ethiopia’s take-off Ethiopia’s main export market for apparels is Europe (with around 60 percent of the total export).

Half of Ethiopian textile and apparel companies are SMEs of 500–1,000 workers who are able to handle small-run orders for European mid-segment fashion retailers. Sweden’s H&M was a sourcing pioneer in Ethiopia. (Source: Apparel Resources)

Conclusion

The growing usage of sourcing strategies has had a significant impact on how goods are created, produced, and delivered. By implementing these improvements, the industry becomes more effective at meeting consumer expectations within a specific cycle time and for a reasonable price. Lead time, pricing, and quality are factors that affect how to source raw materials for the apparel industry. These techniques are significantly impacted by international trade and tariff legislation. In addition to these criteria, sourcing decisions are based on the state of the domestic market, cost-benefit analysis, state of the global market, ties between the relevant nations, and political stability of the nation.

To remain competitive, apparel manufacturers aim to expand their operations in a variety of ways. Furthermore, producers must prioritize variables such as changeable styles, short product life cycles, uncertain market trends, and client impulse buying behaviors in order to remain competitive in the apparel sector segment.

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