Hugo Boss’s Sourcing Strategy vs. US Fashion Companies: Comments from Students in FASH455

“Hugo Boss’s sourcing strategy differs from US companies because they have four of their own production facilities and 17% of the total sourcing volume was produced at the Group’s own facilities in 2020 (self-owned production). US companies usually source/import apparel from other places, and US fashion brands and retailers have become more interested in near-sourcing (Mexico, Central America, etc). Also, Hugo Boss’s largest own production site transformed into a “smart factory” and has the highest levels of digitized processes and operations which allow them to innovate and become more flexible, which US companies have not quite succeeded at yet.”

Hugo Boss places an emphasis on speed and the increased use of digital technologies in their product development process. Additionally, the brand is placing a focus on optimizing its sourcing and production processes and placing great importance on its careful selection of long-term suppliers. US fashion brands utilize trade agreements such as USMCA and CAFTA-DR for their sourcing as it provides benefits such as lower costs for goods from countries within the trade agreement as well as no import tariffs. US brands also use “yarn-forward” rules of origin to maintain domestic sourcing rules, while Hugo Boss uses their own facilities rather than sourcing throughout multiple countries.”

“I found that Hugo Boss’s sourcing strategy differs from US companies because of their emphasis on speed and technology. Hugo Boss’s goal is to continuously meet consumer demand and strategizes to do so by having material parts placed ahead of time so that production can happen quicker than typical rates. Along with this, Hugo Boss sees the importance of smooth and easy communication with suppliers and strengthened this by their implementation of a platform that makes product communications much easier. Hugo Boss is also focused on developing a simpler product range, which will allow for fewer stressors in previous specific product ranges. I believe that Hugo Boss’s adaption of increased technology within their production has helped the brand obtain more flexibility in manufacturing, but when focusing on sourcing, the brand cares about relationships greatly with suppliers.

“Hugo Boss’ sourcing strategy differs from the US because first of all, they use their four own production facilities which are located in Izmir Turkey, Metzingen Germany, Radom Poland, and Morrovalle Italy. Each of these facilities specializes in a certain area of apparel. Formalwear and womenswear are manufactured in Izmir, tailored suits, prototypes, and samples are manufactured in Metzingen, and the Radom and Morrovalle facilities mainly produce business shoes and sneakers. They also are declining the number of suppliers to ensure quality and optimum availability of its products while the US is looking to diversify its suppliers.

“Hugo Boss owns four production facilities within the EU. Most US companies would not choose to set up factories in the EU, due to the high labor cost and distance. US fashion brands tend to source from Asia, and very few own their own facilities. Those that do likely do not locate their own facilities in the EU. However, much of their sourcing strategy is similar to the US; the brand is optimizing technology, streamlining their products, and strengthening relations with their key suppliers.”

“Based on this article, Hugo Boss’s sourcing strategy provides consumers with casualwear styles at a much more efficient pace. Through the use of digital technologies, product development is made faster than ever. This strategy seeks to manufacture products that are not only produced more efficiently but relatively lower in cost. Supplier relationships are maintained through long-term strategic partnerships and are of great importance. This sourcing strategy ultimately gives both consumers and retailers the opportunity to ensure high-quality products and optimum availability of these products.”

“I think one major thing that Hugo Boss does differently than the US in their sourcing strategy is having the Hugo Boss supplier code of conduct. Hugo Boss makes it a priority to create long-term relationships with their suppliers. they put respect for human rights working standards and occupational health and safety first. The US looks for the cheapest, fastest way to source and tends to put the safety of the workers they are sourcing from behind the price.”

Discussin questions: Why or why not do you agree with the assessment above regarding Hugo Boss’s sourcing strategy? What aspects of Hugo Boss’s strategy could be hard for US companies to adopt and why? Given COVID-19, how do you think Hugo Boss’s sourcing strategy will continue to involve (based on the video)?

[Everyone is welcome to join our online discussion]

Author: Sheng Lu

Professor @ University of Delaware

6 thoughts on “Hugo Boss’s Sourcing Strategy vs. US Fashion Companies: Comments from Students in FASH455”

  1. I really enjoyed learning a bit more about Hugo Boss and what their sourcing strategy entails. I found it very interesting to see that Hugo differentiates itself from the US in the sense that they focus heavily on creating lasting relationships with suppliers. This, along with various other concepts and policies, allows Hugo to truly stand out from other sourcing strategies.

  2. Hugo Boss is being very strategic with their sourcing strategy, which I found intriguing to read about. Implementing new technologies in the supply chain is incredibly important to the future of textiles and apparel, and I am interested to see how this develops both within the Hugo Boss brand and across the industry!

  3. The assessment above regarding Hugo Boss’s sourcing strategy is very interesting in regards to their unique and innovative approaches. Their use of digitization and self-owned production is what differentiates them. They are also creating long term relationships with the suppliers they do have, which can ensure higher quality products and faster lead time, which ultimately is a win-win situation. US companies may struggle to adopt the strategy of using their own sourcing facilities. I’ve learned that the US utilizes trade agreements and outsources, so I think leaving those agreements and creating their own production facilities would be challenging, and if it were to happen, it would take a long time to implement. With COVID-19, I think Hugo Boss’s strategies will continue to see success. I believe this because with their own production facilities, they are avoiding issues in regards to the current supply chain crisis. Also, since they already have long term, positive relationships and are technology focused, I also believe this gives them an advantage.

  4. Each assessment regarding Hugo Boss’s sourcing strategy has its unique approach, which is interesting to read about. I especially agree with the points that Hugo Boss sets itself apart from the US fashion companies by utilizing its production facilities, incorporating technologies in their product development process, and implementing strict codes of conduct with their suppliers to create long-term relationships. By implementing these strategies, Hugo Boss can better control its products’ qualities, better monitor the working environment and improve efficiency, stability, as well as flexibility within its supply chains. However, I think it would be difficult for US apparel companies to build their facilities anytime soon given the fact that nearly 90% of US apparel is imported. With trade agreements that the US involves within the Western Hemisphere, It would be difficult to stop importing garments from other members without hurting the amount of US textiles exported to the trade members each year. Given COVID-19, I think Hugo Boss’s strategy would continue to evolve regarding digitalization and producing in its facilities. Hugo Boss’s sourcing strategy can not only prevent shipping disruption issues but can also ensure that the high standards in production are met.

  5. I agree with the assessment above regarding Hugo Boss’s sourcing strategy because I think it is a very efficient sourcing strategy. It allows for more flexibility in manufacturing. Hugo Boss puts an emphasis on speed and the increased use of digital technologies which I think further makes the sourcing strategy efficient. Also provides a lower cost during the manufacturing process, and gives both consumers and retailers the opportunity to ensure high-quality products and optimum availability of these products. I think that the Hugo Boss sourcing strategy is the future of the industry and think that it would be beneficial for other countries to adopt. I am curious to see if the US could adopt some practices of this sourcing strategy to better improve their sector of sourcing.

  6. I found this article regarding Hugo Boss and its sourcing operations very interesting! Hugo Boss is a fascinating company that strives to ensure its supply chain is flexible, efficient, and fast to adhere to customers’ wants and needs. It’s wonderful that to ensure quality standards and sustainable measures are being met the company uses four of its own production facilities. US companies don’t typically have the control that Hugo Boss has over the production process due to outsourcing and importing garments from foreign countries and factories and hopefully, this will pave a path for the US to improve their sourcing strategies in the near future!

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