An interesting BBC article describes the global journey of a Marks and Spencer (M&S) wool suit:
- The suit was designed by M&S in-house team in UK
- Wool that makes up the suit came from Australia
- Raw wool was shipped from Australia to China for topping.
- Wool top was shipped from China to Italy for dying
- Dyed wool was shipped from Italy to Romania to be spun into yarn
- Yarn was shipped to Yorkshire, UK to be woven into cloth
- Cloth was shipped from Yorkshire, UK to Cambodia to be made into finished suit
- Finished suit was shipped back to UK to be sold at M&S retail stores
As noted by the article, such a global-based production model for M&S’s suit is increasingly typical in UK. What makes the issue controversial, however is that, the suit is labeled as “100% British cloth”. As “defined” by M&S, “British cloth means it is woven, dyed and finished in the UK”.
Similar debates also exist in the United States. In the past, even if a garment was cut and sewn in California but made of imported items, the tag still had to say, “Made in USA of imported fabric, zippers, buttons and thread.” But a new law which takes into effect on January 1, 2016 allows California manufacturers to attach the “Made in USA” label as long as no more than 5 percent of the wholesale value of the garment is made of imported materials.
- What are the driving forces behind apparel companies’ global-based production model?
- Is the clothing label “Made in ___” outdated in the 21st century?
- Do you support the new law which allows apparel labeled “Made in USA” to contain certain value of imported material? Why? Do we need such a regulation at all? Why or why not?
In the class, we discussed how global U.S.-based apparel companies have become. The typical business model in the U.S. apparel industry today is “producing anywhere in the world and selling anywhere in the world”. Here is one more example: JCPenney.
JCPenney has been importing products from across the world since 1959. The company’s sourcing organization has eight offices globally aside from its office in Dallas. The offices are in Shanghai, Hong Kong, Korea, Bangladesh, Guatemala, Pakistan, India, and Taiwan.
In terms of its future growth opportunities, JCPenney identifies the following three:
- Omnichannel: Implementing the necessary tools, processes and technologies that enable us to serve the customer no matter how they’re shopping with us. By creating a seamless shopping experience in stores and online, customers are likely to shop and spend more at JCPenney.
- Center Core: Strengthening and revitalizing the highest traffic area in the store to become a leading destination for women’s shoes, handbags, fashion jewelry, intimate apparel and accessories, which are anchored by two very strong businesses: Sephora inside JCPenney and the Fine Jewelry store.
- Home: Restoring our Home store to its previous sales productivity with a compelling assortment of value-driven products backed by a promotional strategy that builds customer loyalty and increases traffic.
(Source: JCPenney’s 2014 Annual Report)
What role do you see global sourcing could play in helping JCPenney achieve these strategic development goals? How do you understand the statement that sourcing is part of a company’s overall business strategy? Do you think JCPenney will likely to source more “Made in USA” products in the future? Please feel free to share your views.