Changing Apparel Sourcing Strategies
Over the past 18 months, companies have been focusing more intensively on the contribution of overseas sourcing offices and the relationships they have with their suppliers as they look for further ways to reduce costs and operate more efficiently.
Many retailers have responded to the need to deliver “more for less” to consumers by shifting massively across different types of products (not just clothing), by sourcing heavily from China, and by establishing direct sourcing operations. However, this approach has under-optimised the value which changes in the sourcing model can provide. Consequently, leading retailers and brands have been developing their sourcing strategies in order to not only look at a balanced portfolio of markets but also change the ways in which they work with suppliers to develop and deliver products to market.
As a result they are more aware of the total cost of bringing a product to market, as well as considerations relating to the market, supplier and product which dictate the product’s final price.
Regardless of the location from which retailers source, it will remain an imperative that more responsibility is placed upon the supporting overseas sourcing office and that strong relationships are developed with a few key strategic suppliers to provide opportunities for driving efficiencies throughout the process. In a post-recession period, businesses need to stay focused upon continuous improvement and operational excellence. As retailers’ sales begin to improve, the tendency will be to fall back on old habits, but retailers must make sure this trap is avoided.
By putting into place a well defined strategic sourcing plan which addresses the entire cost of sourcing, retailers will redefine relationships with suppliers and revise their internal organisations, processes and behaviours in order to ensure that cost reduction remains a top priority for years to come.
Many retailers have responded to the need to deliver “more for less” to consumers by shifting massively across different types of products (not just clothing), by sourcing heavily from China, and by establishing direct sourcing operations. However, this approach has under-optimised the value which changes in the sourcing model can provide. Consequently, leading retailers and brands have been developing their sourcing strategies in order to not only look at a balanced portfolio of markets but also change the ways in which they work with suppliers to develop and deliver products to market.
As a result they are more aware of the total cost of bringing a product to market, as well as considerations relating to the market, supplier and product which dictate the product’s final price.
Regardless of the location from which retailers source, it will remain an imperative that more responsibility is placed upon the supporting overseas sourcing office and that strong relationships are developed with a few key strategic suppliers to provide opportunities for driving efficiencies throughout the process. In a post-recession period, businesses need to stay focused upon continuous improvement and operational excellence. As retailers’ sales begin to improve, the tendency will be to fall back on old habits, but retailers must make sure this trap is avoided.
By putting into place a well defined strategic sourcing plan which addresses the entire cost of sourcing, retailers will redefine relationships with suppliers and revise their internal organisations, processes and behaviours in order to ensure that cost reduction remains a top priority for years to come.
SUMMARY
CHANGING SOURCING MODELS: FROM AGENTS TO OVERSEAS
SOURCING OFFICES
EVALUATING THE PERFORMANCE AND STRUCTURE OF THE
OVERSEAS SOURCING OFFICE
Sourcing sanity check
THE GROWING ROLE OF THE OVERSEAS SOURCING OFFICE
Three levels of service
Level 1 model
Level 2 model
Level 3 model
EMBRACING THE EXPERTISE OF OVERSEAS SOURCING OFFICES
AND SUPPLIERS
Collaborative relationships
FINDING OPPORTUNITIES TO CREATE EXTRA VALUE
CHANGING SOURCING MODELS: FROM AGENTS TO OVERSEAS
SOURCING OFFICES
EVALUATING THE PERFORMANCE AND STRUCTURE OF THE
OVERSEAS SOURCING OFFICE
Sourcing sanity check
THE GROWING ROLE OF THE OVERSEAS SOURCING OFFICE
Three levels of service
Level 1 model
Level 2 model
Level 3 model
EMBRACING THE EXPERTISE OF OVERSEAS SOURCING OFFICES
AND SUPPLIERS
Collaborative relationships
FINDING OPPORTUNITIES TO CREATE EXTRA VALUE
LIST OF TABLES
Table 1: Market drivers and sourcing trends
Table 1: Market drivers and sourcing trends
LIST OF FIGURES
Figure 1: Sourcing channels—shift of responsibilities
Figure 2: Product development workloads under the supplier collaboration model
Figure 1: Sourcing channels—shift of responsibilities
Figure 2: Product development workloads under the supplier collaboration model
