Sourcing Strategies of U.S. Fashion Brands and Apparel Retailers: Discussion Questions from FASH455

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#1 Assume you are a sourcing manager for a major US fashion brand, how would you rank the followings regarding importance when determining a sourcing destination: 1) Speed to Market; 2) Sourcing Cost; 3) Risk of Compliance; 4) other factors (please specify). Why would you rank them as such?

#2 According to the 2018 US Fashion Industry Benchmarking Study, some apparel retailers report sourcing from more than 10 or even 20 different countries or regions. What are the benefits of adopting such a diversified sourcing base? Is it necessary?

#3 How has President Trump’s trade policy agendas affected U.S. fashion brands and apparel retailers’ sourcing strategy? What could be the long-term effect and why?

#4 U.S. fashion brands and retailers plan to source less from China and move towards other apparel suppliers like Vietnam or Bangladesh. Is this a short-term response or a reflection of companies’ adjustment of its long-term sourcing strategy? Why?

#5 Most U.S. apparel companies have already shifted their businesses to non-manufacturing activities such as design, branding, sourcing and retailing. Why or why not do you think it is still meaningful to give attention to apparel manufacturing in the U.S.?

#6 Based on the 2018 US Fashion Industry Benchmarking study, why or why not do you think U.S. fashion brands and apparel retailers have given enough attention to sustainability and social responsibility issues in their sourcing practices? What could be done further?

#7 Any other topics/questions do you think next year’s US Fashion Industry Benchmarking Study could include and why?

[For FASH455: 1) Please mention the question number in your comments; 2) Please address at least two questions in your comments]

Author: Sheng Lu

Professor @ University of Delaware

12 thoughts on “Sourcing Strategies of U.S. Fashion Brands and Apparel Retailers: Discussion Questions from FASH455”

  1. 1.-speed to market
    2. Not necessary, but certain study needs to be taken for which market segment you are catering to.
    3. there will be volatility and end customer will be affected with lesser choice . This will also help to surge online sales.
    4. Long term strategy
    5. not meaningful. the cost of production is high and also finding labor to meet the requirements will be more difficult.
    6. Not done enough. only a lip service
    7.too volatile to comment.

  2. 4. I believe that U.S. fashion companies are planning to move towards sourcing more from Vietnam and Bangladesh as a long term solution. Sourcing from China has become more expensive so sourcing from there doesn’t make sense for fashion companies who can source from Vietnam or Bangladesh cheaper. China is losing it’s competitiveness. I believe that China can regain its competitiveness but it won’t happen overnight.
    5. It is still important to pay attention to apparel manufacturing in the U.S because it is still a source of jobs and income for many U.S. workers. We cannot disregard it until it has completely moved from the country, which many companies don’t want to happen.

  3. 1. If I was a sourcing manager for a major US fashion brand I would rank 1) sourcing cost, 2) speed to market, 3) risk of compliance and 4) other factors like location when determining a sourcing destination. I think most apparel brands and retailers look at the cost as the first major way to pick a sourcing destination. Companies are focused on the bottom line and want to spend the least amount of money as possible. In relation to sourcing cost, the next most important characteristic in my mind would be speed to market. This is very important so that apparel brands and retailers can quickly change merchandise and have new products in store. Especially if a popular item sells through very quickly it is important to have a fast speed to market to replenish that garment. I think risk compliance would be third because more companies are starting to see the negative aspects of factories as described with the Rana Plaza factory collapse. Some factories do not follow regulations, like proper minimum wage requirements, child labor laws, etc and it is important for sourcing managers to make sure that the factories they are using are up to their standards. Lastly location is important. A US based company might want to source from NAFTA or CAFTA regions because the location is better, and it is easier to regulate.

    4. As US fashion brands and retailers plan to source less from China and move towards other apparel suppliers like Vietnam or Bangladesh I think it is a long term sourcing strategy. As stated previously, companies care about the bottom line and want to source from the cheapest countries possible. Vietnam and Bangladesh offer cheaper apparel products than China and more companies are starting to see the appeal to these countries. I also think China is becoming more advanced and moving on the stages of development cycle. As a country progresses throughout this cycle, it switches from an apparel based industry to a textile based industry. China is starting to produce more textiles and less apparel. It is starting to supply other Asian countries with its textiles and that will reflect in the fact that companies are sourcing from other countries as a long term strategy.

  4. 1. I would rank them as follows: Sourcing Cost, Speed to Market, Risk of Compliance and then channels of distribution. Sourcing cost is ranked first because I feel as though other countries look deeply into how much money they will be putting at risk when trading. Therefore, sourcing cost is vital when determining what and who you want to trade with. Speed to market is how well and/or fast you can get what you want out to the world and it also shows differentiation of what you’re trying to enter into the market. You want to add a value added and innovative product to the designated target you wish to market to. It’s important to get that brand/product/service or anything out in the open before someone else takes the initiative. Risk of compliance is exposure to legal penalties so you want to ensure you’re covered by law and aren’t effected. I think most of the time a lot of fashion companies don’t follow strict guidelines or compliance rules. I do think it is important but fashion brands need to make sure they are putting their workers in safe working conditions as well as making sure the space in which they work is suitable for everyone. Channels of distribution are important as well because it’s where a country decides to source their products from. The location is key and making sure that you do your research on what countries are best suitable for exports or imports based off of what you what to trade or source.

    4. Bangladesh and Vietnam offer the most competitive prices. China is one of the biggest export countries but I think it’s a long term strategy. China’s prices are much higher than Bangladesh or Vietnam, therefore China is in competition. U.S. fashion brands and retailers are going to source from Bangladesh and Vietnam and it will take a while for China to come back into the mix again if they continue to keep their prices high.

  5. 4. U.S. fashion brands and retailers plan to source less from China and move towards other apparel suppliers like Vietnam or Bangladesh. I believe this is a strategy could be viewed as short term in order to receive cheaper apparel products now for the U.S. and put the pressure on China to reduce their prices. In the end if China becomes cheaper than Vietnam or Bangladesh the U.S. could potentially go back to sourcing from China.

    1. If I was a sourcing manager for a major US fashion brand, I would rank the followings regarding importance when determining a sourcing destination as : 1)Sourcing Cost 2) Speed to Market 3) Risk of Compliance; 4) other factors such as location and government regulations. I would rank the following as this because I think it would be able to provide the most profit at the end of the day for the company. Having sourcing costs as number one is essential in order to be able to receive the most for the company. The speed to the market is important in order to be able to have products and resources as fast as possible with consumers demands rising. Risk of Compliance and other factors such as location and government regulations I listed as last because although they are important for the company the first things I would be interested in is for what price I can receive the goods and for how long I would have to wait in order to receive them.

  6. 4. I feel as thought Vietnam and Bangladesh both offer prices that can be viewed as competitive which has led the U.S. fashion brands and retailers to want to source from these countries. I believe the U.S. strategy to source less from China and source more from countries like Vietnam and Bangladesh is quite logical. With this said, I see this strategy as being more short term rather than long term because the U.S. will now have the ability to import products for a cheaper price and this will in turn lead China to rethink their high prices and possibly lower them in the long run. I believe that if China ends up lowering their prices, there could be a good chance of the U.S. going back to importing from China.

    5. I think it is still meaningful to give attention to apparel manufacturing in the U.S. for an abundance of reasons. By acquiring apparel manufacturing in the U.S., it allows for more people to have job opportunities and decrease the rate of unemployment. It will also decrease the rate of poverty as well due to more people obtaining a better source of income for themselves and their family. Most companies in the U.S. do not wish for apparel manufacturing to be completely removed for the main reasons of job opportunities and apparel value in the U.S. Although we are now in an era where technology is overcoming labor, it is important to keep in mind that there are various people in need of jobs and apparel manufacturing fulfills the need for this.

  7. #1 Assume you are a sourcing manager for a major US fashion brand, how would you rank the followings regarding importance when determining a sourcing destination: 1) Speed to Market; 2) Sourcing Cost; 3) Risk of Compliance; 4) other factors (please specify). Why would you rank them as such?

    1. Risk of compliance- as a U.S. fashion brand, ethics and risk of compliance should always be the most important factor when choosing a sourcing destination. With sustainability becoming a major trend in the industry, making sure your company maintains ethical values is more important than speed or cost.

    2. Speed to market- if I were to rate these a few years ago, I would have put cost as #2 instead of speed to market. However, speed is becoming the most important trend in not only the apparel industry, but every industry in the world. Consumers want goods fast, and cutting the length of you supply chain is one of the most important factors to an apparel company who is looking to stay competitive. With so much competition, you need to be able to react to trends and changes in the industry as fast as possible, and you always want to be the first to do so.

    3. Cost/trade policies- I was going to put trade as a separate point, but I think that cost and trade policies are equally as important since they go hand in hand. Trade barriers, tariffs, and duties can drastically affect your sourcing price.

    #3 How has President Trump’s trade policy agendas affected U.S. fashion brands and apparel retailers’ sourcing strategy? What could be the long-term effect and why?

    President Trump’s trade agenda is more protectionist than past trade agendas. This is in attempt to protect American industries and compete with the growing markets overseas, such as China’s. I think that it is important to have a trade agenda that protects your country’s industries to some extent, but also keeps free trade with countries that we depend on for goods, since it is impossible for every country to be completely self reliant. No matter how protectionist Trump may be, I don’t think it is logical to ever have a trade agenda that disregards the benefits free trade can bring our economy.

  8. 1. Cost, risk of compliance, speed to market, channel of distribution.
    I would rank them in this order because, when you’re considering cost not only are you considering the cost of the construction of the garment but you need to be aware of the true cost; The lives of the workers making these garments, how safe the factories are, and if these employees are being treated fairly. Risk of compliance ranks next for me because ethics are a huge part of a company and sourcing from factories that are unethical can destroy a successful companies reputation. Speed to market is something that is always trying to be improved and it’s a competitive advantage. And finally coming in fourth I would say location of factories or channel of distribution. Location is key and cut down on lead and production times.

    4. I believe that U.S. fashion brands and retailers are planning to move toward other apparel suppliers like Vietnam and Bangladesh as opposed to China for a long term sourcing strategy. I believe this because sourcing from China has become more expensive ( a rise in minimum wage) and companies will do whatever it takes to find a cheap way of making their apparel. Countries like Bangladesh and Vietnam make apparel for much cheaper than China and companies are beginning to make the switch to be more competitive.

  9. 3. Since Trump’s presidency began, he has been making major tariff and trade decisions that dramatically affect the apparel industry. It has lead to increased sourcing costs and has stated that new trade policies are creating challenges in the industry. Bills such as the TTP pushed free trade with Asian and South American nations was pushed by the Obama administration, but now Trump calls for a repeal. Many brands have been very vocal about their thoughts about new trade agreements and feel as though costing for every stage of the product line will increase, causing customers prices to go up. Long term, higher tariffs on China could cause them to place tariffs on imports and exports creating a loss for both the US and themselves.
    4. Fashion companies that plan to move toward courting from countries like Vietnam and Bangladesh is more of a short term solution rather than long term. We have already seen some discrepancies in sourcing from Bangladesh such as, child labor, inhumane work conditions, and unlawful incidents such as Rana Plaza. Although for China, these developing countries are becoming cheaper and more efficient in apparel production making China’s competitiveness decrease. If China wants to complete, it will have to keep pricing in mind.

  10. #3 How has President Trump’s trade policy agendas affected U.S. fashion brands and apparel retailers’ sourcing strategy? What could be the long-term effect and why?
    Currently President Trump has created a tariff on certain goods entering the United States. This tariff currently does not affect the fashion industry because it is on goods such as steel and metals that are unrelated to this industry. But, it has been discussed the possibility of Trump extending this tariff onto textile and apparel goods which would affect the fashion industry tremendously. U.S. fashion brands and apparel retailers’ have thought about this possibility and the thoughts of moving into more in house manufacturing and sourcing have risen. If this happens a long term effect may be weakened relationships with other countries that U.S. fashion brands and apparel retailers’ used to source from creating a global tension.

    #5 Most U.S. apparel companies have already shifted their businesses to non-manufacturing activities such as design, branding, sourcing and retailing. Why or why not do you think it is still meaningful to give attention to apparel manufacturing in the U.S.?
    I think that it is still meaningful to give attention to apparel manufacturing in the U.S. because it will create jobs and could possibly in the long-term save apparel companies money. If a tariff arises on apparel goods this may be the way for apparel companies to save themselves a lot of money instead of paying the tariff. I think that manufacturing will always be important and I think that it should be given more attention than it is currently receiving.

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