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

15 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.

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