Key findings:
The apparel sourcing formula is getting ever more sophisticated today. US fashion brands and retailers consider a wide range of factors when deciding where to source their products. The long list of sourcing factors includes #1 Capacity, #2 Price & tariff, #3 Stability, #4 Sustainability, and #5 Quality (see the table below).
When evaluating the world’s top 27 largest apparel supplying countries’ performance, no souring destination appears to be perfect. In general, fashion brands and retailers have many choices for sourcing destinations that can meet their demand for production capacity, price point, and quality. However, fashion companies face much more limited options when seeking an apparel sourcing destination with a stable financial and political environment and a strong sustainability record.
When we compare the trade volume and the performance against the five primary sourcing factors:
- Apparel sourcing today is no longer a “winner takes all” game. Notably, the factor “Capacity” is suggested to have limited impacts on the value of apparel imports from a particular sourcing destination.
- Apparel sourcing is not merely about “competing on price” either--the impact of the factor “Price & tariff” on the pattern of apparel imports statistically is not significant.
- Improving financial and political stability as well as product quality can help a country enhance its attractiveness as an apparel sourcing base. In particular, American and Asia-based fashion companies seem to give substantial weight to the factors of “Stability” and “Product quality” in their sourcing decisions.
- Fashion companies’ current sourcing model does not always provide strong financial rewards for sustainability. Interestingly, the result indicates that a higher score for the factor “sustainability” does NOT result in more sourcing orders at the country level. Behind the result, fashion companies today likely consider sustainability and compliance at the vendor level rather than at the country level in their sourcing decisions. It is also likely that sustainability and compliance are treated more as pre-requisite or “bottom-line” criteria instead of a factor to determine the volume of the sourcing orders.
In conclusion, fashion companies’ sourcing decisions seem to be more complicated and subtle than what is often described in public.
By Emma Davis and Sheng Lu
Further reading: Emma Davis & Sheng Lu (2021). Which apparel sourcing factors matter the most?. Just-Style.
FASH455 Global Apparel & Textile Trade and Sourcing 
I read the article (“Which apparel sourcing factors matter the most?”) at Just Style and I was very suprised seeing that Turkey is classified as “poor” according to sustainability parameter. When I compare the “acceptable/good” classified countries (such as Cambodia, Ethiopia, Haiti, Jordan) with Turkey, this rating seems very unfair and very superficial. Could you please explain for which reasons do you rate Turkey poor? Because Turkey is the 6th biggest clothing exporter in the world and I am sure that the factories in Turkey are more compatible with sustainability/compliance standarts when compared to all other countries in the table.
Thank you for the comments. It is not our personal assessment—the calculation is based on the inputs from the database. These inputs are collected from experts anonymously. Personally, I find the evaluation for “Sustainability” the most challenging one as there is a lack of unified standards and scope.
Also, the purpose of our study is not to evaluate the sourcing performance of each individual country. Rather, we want to see in the aggregate which sourcing factor is most influential to the trade flow changes.
In addition to the procurement factors mentioned in the article, I think the transparency of the supply chain and the transparency of the source of clothing production are also very important. For consumers, they also want to know where and by whom the clothing they buy is produced. Therefore, I think the transparency of procurement channels and sources is also one of the important factors that should be considered for apparel companies.
I’m somewhat surprised by the ratings of key sourcing factors and performance indicators, as I believe that stability should be higher up on the list. I would think that stability would be the most important because if there’s rebels attacking factories or a corrupt government, then why would a company want to put their employees at risk in a country like that and risk losing product? Based on the list, I’m also not that surprised that capacity comes first because there’s a focus on efficiency and profits- whatever gets a brand the most amount of money in a small time frame in preferred, even when there is corruption in a country apparently.
I agree with the comments you made. I also believe that stability is more important than how it is rated on the list. The stability of a country plays a huge role in how the industry may do in the situation of working with them in the industry. I do not believe it is worth the risk to work with a country that could have negative impacts on your own employees and products if there are other countries available that do not have these risk factors together with them. I also agree with your second point that it is not surprising that capacity is also high on this list and rated that importantly. It is sad that a lot of times sustainability is pushed aside and the hunt for money and such comes ahead in the scheme of things, but it is how our society has been working and this has been proven in many different industries. The focus on efficiency seen is dominantly based on income and making the most profits and setting aside what this really does to the industry in the long run and the environment around it. In the long run, I think this industry focuses a lot on profits and income and disregards a lot of sustainability and environmental factors.
I strongly agree that the “stability “and product quality in the article are the standard factors considered in the purchase of American and Asian fashion companies. In addition, I think that supply chain transparency and transportation speed are also the procurement standards of fashion companies because of the development of e-commerce. Consumers have more stringent requirements on the speed of product arrival and the source of the supply chain. Fashion companies that meet these needs of consumers can build deeper brand dependence with consumers.
I found this article interesting because of how complex deciding where to source production is. Before taking FASH455 and reading this article, I would’ve assumed that companies source from whichever countries have the cheapest prices, but there is a lot more that goes into the decision process. I personally think sustainability is a very important factor to consider, which became even more apparent after the collapse of the Rana Plaza. Many sourcing countries are implementing rules and regulations to manage factories’ safety codes, and US fashion brands are beginning to care about this more and more, which also looks good to consumers. However, I didn’t realize that many companies focus more on the vendor’s sustainability rather than the country as a whole. I feel as if this is a good practice because some specific factories could have very good or bad practices ethically, so it is important to look at each individual vendor. I also found it interesting how companies consider the countries political and financial stability when deciding where to source from. If a country has greater stability in these areas, it is more attractive to source from because it is more reliable than some other countries. I think it made sense that America and Asia care most about the stability of a country because they are developed countries and care about more than just cheap labor.
Paige, I also agree with what you said. Prior to taking this course, it would have been hard for me to see why companies source where they do and the reasoning that goes behind it. Sustainability is definitely something to take into consideration not only because of the Rana Plaza collapse but because consumers have begun to take this into consideration and really look into where and how where they shop goes on to source and manufacturer products. With this being said, that is why apparel sourcing matters. It is so important to be as transparent as possible with how sourcing is done for the consumer’s sake but also for the ultimate way your brand is seen.
I am shocked to see sustainability already so high up on the list of sourcing factors and also pleasantly surprised. As this article states, sustainability, although severely important, doesn’t appear to be the most critical factor in sourcing decisions. When placing orders, it is certainly more important to know that both the facilities and countries one is working with have the space, stability, and low prices to allow appropriate sales. However, I wonder what can be done to incentivize brands to further push for sustainability and to work with places who already have the capacity/stability/prices so that the industry as a whole can be more environmentally-conscious. Sustainability in many ways feels like something brands have to take issue with out of the kindness of their heart since it requires time and money. The industry needs to get to a point where all if not the majority of companies are sustainable so that clothing waste is no longer astronomical and factory operations can more ethical. I believe that America needs to work closely with Asian countries to streamline this problem and prioritize sustainability in deals.
Before this class, I had never known about the apparel sourcing formula, but it is an interesting concept. The most thought-provoking information given in this article to me was how “fashion companies face much more limited options when seeking an apparel sourcing destination with a stable financial and political environment and a strong sustainability record”. The most surprising factors that are used to calculate this would be sustainability factors. This is an idea that I believed to be more of a recent issue, so it is great to see initiatives already taken and put into place regarding sustainability efforts. If more companies use this list I believe that the fashion industry will be making a more positive impact.