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)?

Additional reading: Hugo Boss moves production closer to home to shorten supply chain (Dec 2021, Financial Times)

[Everyone is welcome to join our online discussion]

Author: Sheng Lu

Professor @ University of Delaware

30 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.

    1. I am glad you mentioned about free trade agreement (FTA). As you said, the relatively low utilization of FTAs by US companies is a concern (for example, only about 15% of US apparel imports were under FTAs in 2020). EU is better for two reasons: 1) one is EU has established more FTAs with countries that are key sourcing destinations, such as Vietnam (https://shenglufashion.com/2020/06/12/eu-vietnam-free-trade-agreement-and-outlook-of-vietnams-apparel-export/). Countries like Bangladesh and Cambodia can also export garments to the EU duty-free under EU’s everything but arms (EBA) program (https://shenglufashion.com/2020/06/18/how-will-eu-trade-curb-affect-cambodias-apparel-industry/)

      2) most trade agreements enacted in the EU adopt the double transformation rules of origin (i.e., fabric forward rule), which are more liberal than the “yarn forward rule” in most US Free trade agreements. The liberal rules of origin allow fashion companies to more easily meet the requirements and enjoy the benefits.

  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!

  7. This article was interesting to learn more about Hugo Boss as a company and their particular sourcing strategies. It was interesting to learn that 17% of their sourcing volume came from their own facilities as we really don’t see that happening often with other companies. U.S. companies usually source from other places, as the article states, making Hugo Boss’s sourcing strategy unique to them. The U.S. is starting to slowly move in a similar direction as more and more facilities are becoming digitalized to help increase speed, but it is not something we have entirely dominated yet. The U.S. would like to be considered a country where they push products out in a timely and efficient manner, which is why they see it is best to source from underdeveloped countries when in reality they need to adopt a similar technology-advanced model like Hugo Boss has done.

  8. This post was interesting to consider major fashion brands like Hugo Boss sourcing and producing more internally. The part of their sourcing I found most interesting was their supplier code of conduct that focuses on nurturing long terms relationships with suppliers with a more ethical and sustainable perspective rather that solely business focused.

  9. I really enjoyed reading this blog post and feel Hugo Boss is shaping the future of how major fashion brands will run. With Hugo Boss optimizing their supply chain and owning four of their own production facilities, they are able to make garments faster but also increase innovation in their operations. They are ahead of the game with their digital technology usage and can be a great company US brands can look to when it comes to modernizing in the 21st century. It can be hard for US companies to adopt these strategies due to the supply chains in place and the complexity it takes to create a production facility. COVID-19 has affected many companies and Hugo Boss being able to firsthand create garments in their own facilities, gives them a major advantage.

  10. It’s really interesting to see how Hugo Boss’ sourcing strategy compares to US companies. I find Hugo Boss’ strategy to be more efficient and economically sound. Hugo Boss aims to source and produce high-quality products for its customers. To meet these standards, Hugo Boss strives for efficiency and flexibility of its supply chain. In order to respond quickly and flexibly to customer needs Hugo Boss uses its own facilities/production, unlike US companies. Majority of US companies are extremely dependent on Asia for sourcing , as its the cheapest and fastest strategy. However, for Hugo Boss, they prioritize creating long-term relationships with their suppliers, as well as respect for human rights working standards and occupational health and safety first. While this may be a hard strategy for US companies to adopt, I think it would be beneficial for US companies to follow in their footsteps, as there has been much controversy over where US companies source due to sustainability and ethical issues. Hopefully we can see an improvement in US sourcing strategies in the near future.

  11. I think that Hugo Boss’s sourcing strategy is much more advanced than some of the US fashion companies. One key thing to note is that Hugo Boss has invested heavily into the strategic focus on increasing the efficiency and flexibility of the supply chain while maintaining quality. Something, in particular, I don’t think many US companies do is source in house. For Hugo Boss, 17% of the total sourcing volume was produced at the companies own facilities in 2020. Doing in-house production allows for the brand to stay on top of consumer demand and changes. It makes them flexible and adaptable. If more US companies were to take advantage of this long-term investment they could see a significant payoff. Hugo Boss has also separate production centers based on lines and products which helps the products stay of high quality and of the factories specialization.

  12. I found learning about the Hugo Boss sourcing strategies very interesting. I have learned a lot during this time about technology in manufacturing to speed up production and it is interesting to learn more about a company which is utilizing this technology. Although this technology is proving efficient, sourcing from other areas can be beneficial to Boss. Boss puts an emphasis on forming long lasting relationships with their manufacturers, although in order to keep up with the ever-changing industry it is important to broaden horizons. It was also very interesting to see how Hugo Boss repositions themselves based on their consumers, as shown through their special lines centered around different Chinese holidays. I think as Hugo Boss continues to navigate their way throughout the pandemic and capitalize on the technology they already have they will have continued success.

  13. I very much enjoyed reading about Hugo Boss and their soucing strategies and how they operate. They definitely have a more advanced system of how they do their processing compared to places like The United States. With the technology that Hugo Boss has adopted they capitalize on the fact that they can create products at a faster pace compared to others. Its an interesting thought to think about how Hugo Boss has a higher percentage of in facility production which is not seen in places like the US and differenciates them among their competitors. Hugo Boss does a signifcant job of repositioning themselves to target their customer base and we see this through the different branches of their lines they curate. I think that places like the US should take notes and learn from Hugo Boss to better their production processes.

  14. Hugo Boss has a very unique sourcing strategy, and some of its strategies would be difficult for US companies to adopt. Many US fashion brands utilize trade agreements such as USMCA and CAFTA-DR for their sourcing, as it provides duty free benefits for products coming from countries like Mexico and Canada. With these trade agreements, US brands use yarn-forward rules of origin, where any materials in the supply chain after yarn must come from within the free trade agreement region. Hugo Boss on the other hand uses their own production facilities in Europe, where each facility focuses on a certain aspect of apparel. Not only would this strategy be difficult for US fashion brands because they tend to source from Asia and very few have their own facilities, but it would not be cost effective for US brands to source in Europe or have their own production facilities located there. It makes the most sense for them to be located in Asian countries for economic reasons. US brands tend to look for the cheapest and fastest way to source their products, whereas Hugo Boss prioritizes working standards and occupational health and safety. Because of the COVID-19 pandemic, Hugo Boss will have to adjust their sourcing strategy accordingly. They will continue to use dual technologies, however they need to adjust their sourcing strategy with the strict regulations of travel in Europe due to the pandemic. Overall, US brands and retailers can learn a lot from Hugo Boss’s strategy, as it has proven to be very effective and could be useful for brands in the US.

  15. When it comes to Hugo Boss’ sourcing approach, I believe it is a highly effectual sourcing technique. Hugo Boss places a strong focus on speed and the rising use of digital technology. The ability to provide high-quality goods and max supply of these products while lowering costs throughout the production process allows both consumers and merchants the chance to benefit from this. I believe that in the upcoming years, we will see more companies operating similarly to Hugo Boss’s sourcing method. That being said, there are reasons why during this time, we will not see the U.S. operating using this method. There are four manufacturing sites owned by Hugo Boss in the European Union. As a result of the high labor costs and long distances, most American corporations would not choose to build their factories in the European Union, making this a factor that would make it hard for U.S companies to adopt. Operating out of Asia is financially cheaper for U.S companies which would make it hard for them to see the advantage of operating at home.

  16. I enjoyed learning about the differences between Hugo Boss’s sourcing strategies and those of U.S. fashion brand companies from the perspective of other FASH455 students. I agree with the stated point that Boss’s strategies seem to focus more on speed and technology than strategies possessed by fashion brand companies within the United States. Boss has strategized is online presence by completing digitalizing his strategies, which is more accessible and connected to the fashion industry’s digital future. Moreover, Hugo Boss seems to be extremely focused on the wants and needs of consumers. Specifically, he has limited his suppliers in order to be able to focus more on other products and ensure the best quality to consumers. Boss is effectively reaching and working with his target market. Ultimately, It seems as though Hugo Boss is focused more on the quality of his strategies than U.S. fashion brand companies who are driven by profit.

  17. I like to learn about Hugo Boss’s sourcing strategy from this article. It focuses on increasing the efficiency and flexibility of the supply chain. Speed is the key element to meet the fast change in market requirements. Making full use of digital technologies in product development by launching digital platforms enables closer cooperation with suppliers. The company is focusing on streamlining the product range, reducing the component and material complexity and partially extending product life cycles. It is important to select suppliers carefully, choosing sustainable suppliers who respect human rights is necessary. For most US fashion brands and retailers, they focus more on cheaper prices on sourcing cost. That is why most of their sourcing is done in Vietnam or other developing countries. Sustainability is one of the problems for the US companies while they are doing sourcing during recent years.

  18. I found Hugo Boss’s sourcing strategies to be very unique and interesting. Something that is not always seen in other companies, is a significant amount of Hugo Boss’s sourcing volumes come from their own facilities. Something Hugo Boss was able to take advantage of was advanced digital platforms to fulfill closer relationships between production development and suppliers. This is a tactic the United States would also greatly benefit from. Dominating a hybrid approach of digital advancements within their production system would allow for a quicker and more efficient distribution process to bring products to their consumers. Right now, the US typically sources from underdeveloped countries for cheaper prices. If they were to adopt similar technology models as Hugo Boss, they would greatly benefit within their supply chains.

  19. According to the article, I can tell that Hugo Boss’ sourcing strategy is different from US companies’ sourcing strategy. First off, they have made significant progress in their sourcing organization last year in order to diversify their portfolio and optimize the digitization of processes. This was also done in order to reduce costs over the next few years. The company uses a combination of sourcing from independent contractors, producing in their own facilities, amongst other methods. This is different from US companies because they don’t typically have as many proposed methods.

  20. I really enjoyed learning about Hugo Boss through this article and through our case study in class. I found their sourcing strategies to be very interesting, as their focus is on speed and new technology. It is important for companies to stay on top of the latest technology in order to keep up with the competition and stay ahead. The Hugo Boss supplier code of conduct is also an interesting aspect of the strategies, as I had never heard of that idea before this article. I think it is important for Hugo Boss to make it a priority to create long-term relationships with their supplies, as this can only benefit them as time goes on. Also respecting human rights and working standards is definitely something that should be prioritized as well.

  21. I find Hugo Boss sourcing interesting. I think the US should copy some of their strategies. Hugo Boss’ strategies are to use the few countries that they have to make most of their products. Since the products are made in a few countries, the product is meant to last the test of time. The US makes cheap clothes because they are sourced from many different countries. Another thing that the US should try to replicate is building long-term relationships with their supplies and respecting human rights. The US should make sure their workers have excellent health coverage. Hugo Boss is using technology to help build their relationship with their supplies.

  22. I think Hugo Boss is far ahead of the game when it comes to its sourcing strategy and its haste action. When a business owns its own supply chain, they have a clear competitive advantage. Other competitors have to rely on sourcing from factories in other countries that may not follow safety measures or may be involved unfair treatment of garment workers like forced labor. Hugo Boss’s control over its own supply chain is a clear example of what every company should be striving to do. Not only is it more reliable and efficient, full control also makes the supply chain more transparent and this will ultimately benefit the company’s growth in the future as supply chain issues continue to occur.

  23. I think Hugo sourcing strategy gives the a competitive advantage against other companies. The reason I say this is because after reading this article I found out that this company and brand has their own sourcing factories and their own strategy. Brands and companies who have their own facilities are better able to maintain them. Communication is better, lead time is better, and everything is able to move a lot smoothly and nothing can be done without a companies authorization. Companies that don’t have their own facilities have worse communication with their manufacturers, don’t have the best lead time especially now since their is so much supply chain disruption and everything is delayed days even weeks. Also with the push to make sure workers are being treated properly is a lot harder to do overseas when you can’t actually keep track of what they are doing all day and all night. Although having your own facilities is really convenient it is also extremely pricey so I would not recommend it to a start up company I would say you need more of a following before you even want to think of investing in something like that.

  24. Hugo Boss says that 2020 will extremely affect businesses. In the second half of the year, they are back in action since they are growing in the online sector. They have exceeded the 200 million mark and will continue to make online business a priority. As a company, they emphasize that they are a lifestyle brand while producing their casual wear through digital technologies for maximum efficiency and lower costs. What makes Hugo Boss different from other brands is the fact that they have four production facilities within the EU. This differs from most US companies because we see US fashion brands usually sourcing from places in Asia since it has lower labor costs. US fashion brands often look for the cheapest, fastest way to source and tend to look past safety of the workers since it is a better price. Hugo boss prevents this by having a Hugo Boss supplier code of conduct in order to put safety as a top priority.

  25. Compared with most US Company’s choice of Asian countries with lower labor costs, Turkey is the only Asian country for Hugo Boss’s four production bases, while the other three production bases are all European countries. And its factories use digital smart factories, rather than mass production with cheap labor. While purchases in Asian countries have increased over the past year, eastern Europe and Turkey remain the main sourcing bases.

  26. I found Hugo Boss’s sourcing strategies very interesting. Learning how these strategies differ from the U.S. really emphasized how specific and thought out Hugo’s sourcing strategies are. Hugo has four of their own different production facilities with 17% of the sourcing coming from their own facilities. The U.S. does not usually source this way, as they are more interested in sourcing from other places and look into near-sourcing options. Another reason the two differ is due to Hugo’s emphasis on speed and technology. The increase in technology has helped the brand gain more flexibility in manufacturing. Hugo also cares about the relationships with their suppliers, shrinking their number of suppliers to ensure quality and availability. Overall after reading this article, it seems Hugo Boss is ahead of the game when it comes to sourcing.

  27. I think that for them to own their own production facilities it gives them control and a better relationship with their suppliers for creating apparel. Even though it is a hefty investment, the company will ultimately have control over production. Especially with Covid-19 new variant and a potential shut down in other countries makes it unpredictable what will happen. Those countries that have an increase of covid could halt production all together. US companies look for the cheapest way to make products to sell them at a high product cost. With spending more money of employees of higher capital countries it makes it more difficult to make a profit. Especially in these times it is unpredictable due to Covid, Us companies would rather keep their supply chain relations in Asia because they can have a lower production cost.

  28. I agree with the assessment above regarding Hugo Boss’s sourcing strategy. The assessment describes their sourcing strategy as sufficient and flexible through the use of new production technologies. The brand is also focused on creating high-end products with a focus on quality. I feel as though US companies would struggle to adopt the prioritization of quality. I think this is because U.S. companies are less focused on high-quality products but rather on producing more goods as fast as possible. With COVID-19, I believe that Hugo Boss’s strategy would continue to be successful because of their own production facilities allowing them to already limit their use of other factories.

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