U.S. Textile and Apparel Industry and Companies’ Sourcing Strategy—Discussion Questions from FASH455

 

#1 How do you think it would be possible for the United States to successfully re-shore apparel manufacturing when so many other countries have the advantage in speed, efficiency, and cost?

#2 The Berry Amendment is highly favored by NCTO and is seen as being good for the U.S textile industry and American pride. Why or why not do you think Berry Amendment should be applied to other segments of the fashion industry? Will such an initiative gain broad support?

#3 Why do you think NCTO suggests the trump administration impose tariffs on finished apparel items from China, whereas U.S. fashion brands and retailers oppose the tariff action strongly?

#4 Assume you are a sourcing manager for a major US fashion brand, how would you rank the following regarding importance when determining a sourcing destination: Speed to Market, Sourcing Cost, Flexibility and Agility, and Risk of Compliance?  Why would you rank them as such?

#6 Why do you think U.S. fashion brands and apparel retailers are sticking with sourcing from China, when there are less expensive products in other countries, such as Bangladesh and Vietnam?

#7 According to the 2019 US fashion industry benchmarking study, some apparel retailers source 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?

(Welcome to our online discussion. For students in FASH455, please address at least two questions and mention the question # in your reply)

Related: Global Apparel Sourcing Practices and Trends

Author: Sheng Lu

Professor @ University of Delaware

21 thoughts on “U.S. Textile and Apparel Industry and Companies’ Sourcing Strategy—Discussion Questions from FASH455”

  1. #1: Does the US has the entrepreneurs willing to invest there ? Does the US has the workers with the necessary skills and the willingness to work for relatively low salaries ?
    #3: It is the traditional conflict between textiles industry (less labour intensive, more invest intensive -> US based) and apparel industry (extremely labour intensive, less invest intensive -> moved abroad).
    #6: Because China is simply good (Quality, Service, reliability) and fast (especially because of complete textile chain within the Country countrary to VN or BD).
    #7: limited production capacities of the factories; diversity of products and necessary skills of factories; spreading risks; trade Agreements.

    1. thank you so much for your always great insights from the industry, Bernd!! The outlook of apparel sourcing from China is particularly interesting. While much attention has been given to the impact of the US-China tariff war, China’s market share is dropping even more significantly in the EU and Japan… it seems some structural changes are underway.

      1. Even without the US-duties China has become more expansive and companies in Europe are looking for alternatives for quite someone time. But that is not as easy as It was in the past. In the 90s everyone went to eastern Europe and Turkey, 15 years ago everyone went to China. But now there is no obvious new hot spot to be. Africa is not ready yet. Each Company has to make its own decision and Experiences. Exciting times.

  2. #6: I believe that US fashion brands are sticking with sourcing from China despite the tariffs on imports due to the fact that China has no near competitors in terms of the variety of products that it can produce. Although other destinations like Vietnam and Bangladesh offer cheaper labor costs, China has many valuable raw materials like silk, which other nations lack. Raw materials like these are crucial to many fashion brands and are forcing them to continue to source from China.
    #7: Sourcing from so many different destinations is a key strategy used by many US fashion brands in order to achieve different benefits. No one sourcing destination is perfect and has all four characteristics of a perfect sourcing destination including sourcing cost, speed to market, flexibility and agility, and risk of compliance. Therefore, I believe that it is very beneficial and necessary to source from several destinations because it allows a company to achieve a balance of those four characteristics.

  3. #3
    I believe that US fashion brands and retailers oppose the tariff action because their bottom line will be negatively effected by this. If it costs them more to import their goods, they will have to either change their customers more for their merchandise or take the hit to their bottom line. Both options leave retailers in a tough situation that they would rather not face.

    #4
    1) sourcing cost
    2) Risk of compliance
    3) Flexibility and agility
    4) Speed to market

  4. 2: The Berry Amendment is beneficial for other segments of the fashion industry if the industries are able to source local materials as quickly and as efficiently as they do so with imported materials. That is, there is no point in favoring domestically products when there are no suppliers for such materials, or if the materials are not enough. Hence, before the implementation of this, processes have to be set in place in order for it to gain broad support.
    3: The National Council of Textile Organizations suggests the imposition of tariffs on items from China because it sees this as a step towards limiting the flow of goods from other countries, hence increasing the profit of U.S. fashion brands. However, such initiatives will lead to negative outcomes for U.S. brands, particularly because it will affect the supply chain for these brands. The prices of materials will increase, and the result would be higher costs of manufacturing, higher prices for consumers, and loss of jobs for workers in the clothing industry. The clothing industry is not yet as efficient in order to rely on locally made materials and products.

  5. #1 Absolutely not. America has developed itself to mostly be capital intensive. We are not trained or willing to have such low waged/labor intensive jobs. Our advantage is in textiles and capital. If America re-shored manufacturing we would lose the benefit of cost and efficiency because there are so many other countries that are labor intensive and could just do it for us.

    #4
    1.Risk Compliance
    Humanity and ethics always comes first in any industry.
    2.Flexibility and Agility
    As a designer this is a high ranking for me because designs (trims, buttons, colors, zippers, etc) will change everyday with so many opinions around! There’s also a lot of miscommunication between the designers and manufacturers in technical packs.
    3.Sourcing Cost
    This is obviously important because this affects the price of the finished product. The lower the price, the more appeal it has to the market.
    4.Speed to Market
    This is the lowest rank in my opinion because if your products are unique and your name brand is valued your speed doesn’t matter so much.

  6. #4
    Risk of Compliance – the safety of the workers is of the utmost importance to me
    Sourcing cost – the price needs to be competitive so that the overall product can give us a profit
    Flexibility and Agility – since we’re working with different countries, languages, and time zones communication and flexibility is very important
    Speed to market – this is last for me because the products I am creating the consumer doesn’t even know they want it yet so I am not concerned if their wants changes

    #7
    Sourcing from multiple countries allows the US to receive countless benefits. They are able to forge connections with more than just one supplier and are able to efficiently source from each supplier. The US is also able to allow these countries to grow within the textile and apparel market.

  7. #4 First I priority for me would be “Risk of Compliance” my reasoning for that would be due to sustainability purposes. The most important thing would be that my sourcing companies follow the rules my company gives them for quality purposes, ethical purposes, environmental purposes, and even legal purposes. This can make or break the company and can have the biggest impact on everyone involved. Therefore I think it is most important. Second, I would say “Speed to Market” would be the next most important thing because in order to keep the company or brand alive, I would need to keep my consumers happy with well stocked stores of the things they want that season and time. Third, I would say “Flexibility and Agility” is next most important due to changing styles and seasons constantly asking for different items and garments, if my sourcing company cannot achieve those things, then it is not worth it for me to work with them. Lastly, I believe “Sourcing Cost” is still important but the least important of the list. If the sourcing company can achieve all of the above priorities then they are worth the price. Also, if they do achieve these priorities, then my company should make enough to cover the cost of the sourcing since it is what is making most the companies profit.

    #6 I believe the U.S. fashion brands and apparel retailers are remaining with sourcing in China even though it is cheaper in other countries such as Vietnam because of the relationships they have gained with them already, the realization that the tariff may not last too long, the quality that they produce and know they produce, and the prediction that those other cheaper countries will probably soon also receive the tariff. Therefore, there is little reason to move besides cost and the risk of moving and the tariff following them to that country or the tariff being lifted is too high and too inconvenient for companies as of now.

  8. #2. I do not think the Berry Amendment should be applied to other segments of the fashion industry. The Berry Amendment is a national security measure that has a bonus of providing economic benefits to the U.S. textile industry. However, the increased cost of sourcing from the U.S. is still being paid, by taxpayers. Consumers don’t need to pay extra money to support a single sector of the U.S. economy. Outsourcing creates more economic growth for the country than domestic production.

    #6. U.S. fashion brands and apparel retailers are sticking with sourcing from China even though there are less expensive alternatives because they have the best balance of needs. The slightly higher cost is worth the increased speed to market, flexibility and agility and the reduced risk of compliance. Sourcing partnerships in China are also well established which leads to better communication and transparency. When sourcing the cost of a product is but one factor to consider.

  9. #3 Why do you think NCTO suggests the trump administration impose tariffs on finished apparel items from China, whereas U.S. fashion brands and retailers oppose the tariff action strongly?
    I believe that the NCTO suggests imposition of tariffs on finished apparel items since American textile manufacturers believe that US fashion brands and retailers should be sourcing their textiles and materials for manufacturing from within their own region, North America. When US fashion brands and retailers receive their finished goods from places like China, US textile manufacturers lose business. Although this may be true, US fashion brands and retailers struggle with high cost of textiles and materials produced within the US and source materials from countries that offer less expensive goods and services. Therefore, the US apparel industry does not wish to see tariffs placed on finished goods from China as it would raise their cost of goods significantly, ultimately lowering net profit.
    #6 Why do you think U.S. fashion brands and apparel retailers are sticking with sourcing from China, when there are less expensive products in other countries, such as Bangladesh and Vietnam?
    I believe that US fashion brands and retailers are sticking with sourcing from China due to an effort to keep good relationships that have already been established. Although sourcing materials from countries that offer less expensive products, such as Bangladesh and Vietnam, may be more cost effective, creating new relationships with manufacturers can be time consuming and risky. Therefore, US fashion brands and apparel retailers often accept a slightly higher cost of goods in exchange for familiarity and comfort.

  10. #6 Why do you think U.S. fashion brands and apparel retailers are sticking with sourcing from China, when there are less expensive products in other countries, such as Bangladesh and Vietnam?
    The U.S. fashion brands are accustomed to the way China factories produce. Yes, other countries could produce products at a cheaper price but are they made to the same quality? The same quantity? Are they able to make products as quickly? In the end, will a company need to send a product to two different countries when China could do the same process locally?

    #7 According to the 2019 US fashion industry benchmarking study, some apparel retailers source 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? The advantage of going to different countries or regions is exposure. Companies may now be able to market to other countries or have access to the countries innovations. Switching to more countries could create more time needed for a product to be completed. Some of the diversified sourcing is necessary because different countries specialize in different things but other sourcing may just be extravagant.

  11. #6 Why do you think U.S. fashion brands and apparel retailers are sticking with sourcing from China, when there are less expensive products in other countries, such as Bangladesh and Vietnam?

    I think that U.S. fashion brands and apparel retailers are sticking with sourcing from China because of preexisting relationships. Many brands and retailers have switched their sourcing countries to less expensive alternative like Bangladesh and Vietnam. I think because many brands have either worked out their costs, relationships, issues everything with certain factories it is then difficult to change to a whole different country. Many companies that source from China may also be apart of the third way sourcing strategy which focus on an enduring brand and supplier relationship. This would give a reason to why many brands in America stick to the status quo and stay with a factory that they have been working with in the past.

  12. #4 Sourcing Cost > Speed to Market > Risk of Compliance > Flexibility and Agility
    I ranked them this ways because as a retailers, cost is the first and probably the most important thing when it comes to sourcing and buying. Therefore I has cost as the most important. Following cost is the speed to market, as today’s trends are changing so quickly, it is important to have the right style at the right time for customers. Next is risk of compliance because uncertainty is not good for retailers. Lastly is the flexibility and agility because it is important to have suppliers that knows how to handle unexpected situations.

    #6 U.S fashion brands and apparel retailers are sticking with sourcing from China because China has the fabrication and technology they need for the garments. Also, Bangladesh and Vietnam do not have competence in overall manufacturing capacity against China. Therefore U.S. retailers will continue sourcing from China as it is the largest and leading player in the industry.

  13. #4
    -Risk of compliance: safety and risks are the most important factors to me
    -Flexibility and Agility: I think it is important for a sourcing destination to be flexible especially due to the fact that we will be compromising on numerous factors
    -Sourcing Cost: I think this is important because we need to be making some sort of money back
    -speed to market: This is last because I do not think this is the most important when determining sourcing destination. The reason for this is because things are changing constantly, and it will never be possible to continuously keep up with the speed this industry entails

    #6 I think US fashion brands and apparel retailers are sticking with sourcing from China, when there are less expensive products in other countries, such as Bangladesh and Vietnam because China is the most convenient. Not only does China offer decent quality products, but they are also extremely fast in providing them. Another reason I think they are sticking to China is because it is better to stick with what you are familiar with, rather than take a risk and possibly have it come crashing down. China is not perfect, but they are known to give good service so this is why they are sticking to sourcing from China rather than trying something new.

  14. #1. I honestly do not believe it would be possible for the United States to successfully re-shore apparel manufacturing, as we are capital intensive. The U.S. could not compete to where there would be an advantage due to speed, efficiency, and cost already being present in countries such as Bangladesh, China, and Vietnam. These countries are mostly labor intensive, and I do not believe U.S. workers are cut out to produce products at the speed and cost at which these other countries are able to. If this were to be possible, I believe Americans would have to be willing to pay more for their apparel. With this being said, I don’t believe this will be the case especially since fast fashion is so prevalent at this point in time.
    #3. I believe the NCTO welcomes the Trump administration to impose tariffs on finished apparel items from China for several reasons. First, NCTO has reported that the U.S. textile industry has supported this decision as it would crack down on China’s abuse of intellectual property rights. Secondly, I believe this is in an attempt to regain previous U.S. manufacturing jobs that were lost once U.S. fashion brands decided to start sourcing in cheaper and faster countries such as China, Bangladesh, and Vietnam. Chinese imports have had a significant impact on domestic textile and apparel production in the U.S., so I believe NCTO hopes that this tariff will push U.S. brands to start sourcing domestically.

  15. #4
    Risk Compliance- As a brand, the safety of the workers and ethics are the most important.
    Flexibility and Agility- Communication and flexibility is important due to possible language barriers and time zones with various manufacturers and designers. It is important to be able to become adaptable and fix various issues efficiently. The flexibility goes along with the speed to the market, due to the constant changes in trends and demands.
    Speed to market- Many trends go in and out of the market, so it is important for brands to get their products out while the style is in demand. However, it is important for brands to achieve this by working with manufacturers who are reliable and have quick production times while following all ethical and safety procedures.
    Sourcing cost- the price of the product affects the outcome of consumers. Consumers are looking for quality but lower priced. However, with sustainability becoming a popular demand, many are willing to pay more for quality products. The sourcing prices need to be competitive, to overall gain a profit.
    #6 Despite the high tariffs rates, many US retailers are brands are sticking with China in sourcing because of the trust that has been developed. China will remain a top manufacturer due to the relationships created with many brands. However, many brands will start to only source specific more quality products from China, and begin sourcing more of their mass products from countries such as Vietnam and Bangladesh. Overall, the production time and quality of China’s manufacturing will cause the US retailers and brands to continue despite the tariffs. China additionally has many raw materials such as Silk, that many other countries lack.

  16. #7 According to the 2019 US fashion industry benchmarking study, some apparel retailers source 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?
    I think it is very necessary for two reasons. First of all, it is a type of risk management skills of fashion companies. As there is a saying’ do not put all the eggs in one basket’. The companies are doing this because they want to avoid any economic, political or weather factors. If the production goes wrong in one country because of such things as tariff or natural disaster, they could always find another factory in other companies in order to catch up the production.
    Secondly, companies are doing it to gain various types of advantages for the nature of production in different countries. For example, China has better quality than Columbia but production time is shorter in Columbia than in China. In that way, companies could decide and choose their ideal production destination for goods that have different requirement in quality or time.

  17. 4)
    -risk compliance – in my opinion, safety and risk are always the top priority
    -flexibility and agility – considering multiple countries are involved, flexibility and communication are very important. In working with different countries with varying languages, times zones, and culture, effective and efficient communication and flexibility are crucial. In addition, flexibility is necessary in sourcing destinations, for flexibility goes along with both adaptability as well in keeping up with the fast pace of the market.
    -sourcing cost – The sourcing cost is obviously important due to the fact that lower sourcing costs result in lower price points of the finished products. Lower prices attract more customers in the market. Sourcing costs are also important in generating profit
    -speed of the market – While the speed of the market is still important, I put this last because while consumer demand is extremely important to keep up with, it is not one of the top priorities in my opinion. I think one of the biggest problems in the industry right now is brands’ desire to keep up with the speed of the market, causing many brands (mostly fast fashion brands) to practice unsustainable manufacturing practices in order to keep producing and generating profit.

    7)I think there are many benefits associated with having a broad sourcing base. Countries are able to foster relations and agreements with multiple countries/suppliers. With this being said, this opens up options for manufacturing in which the brand can determine/experiment to find out which destination is the best in satisfying sourcing costs, speed of the market, flexibility and agility, and risk of compliance, in the most effective/efficient manner. Another benefit I see in sourcing with multiple countries is that if the primary sourcing destination fails or becomes less efficient (example: china U.S. tariff war – the U.S. is now looking to source elsewhere when we’ve been so dependent on China for so long. Having strong relations with multiple countries would help us in this sense)

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