What is Your Sourcing Strategy?

How many of you have a sourcing strategy?  How many of you have taken a long, hard look at your suppliers, your vendors, your manufacturers and asked yourself these questions:  “What will my supply chain look like in a year?”  “Can I expect to get the same margins I’m getting now with the same sourcing strategy?”  “How can I improve my delivery times and keep my costs low?” “How do I mitigate my risks?”  More questions spring to mind, but you get the idea. 

Think about your current supply chain.  Where are you getting most of your goods?  Is it all from one country?  Is it from one or two vendors at most?  Would your business survive if those vendors increased their prices by 1/3? 

Pick up any newspaper and take a good look at the business and news sections.  This week’s Wall Street Journal article titled “U. S. Retailers Turning Their Gaze Beyond China” sums up what many other articles are saying:  with rising labor costs in China, and with Chinese factory workers striking for higher wages, the days of inexpensive, quality products from China may be coming to an end.  So what are these retailers planning for their sourcing strategy?  Well, finding other, more affordable labor markets is key.  India, Cambodia, Vietnam and other Asian sources for one thing.  Africa is starting to develop a talented labor pool as well.  There is always Mexico, the Caribbean and Central America.  And, hey…what about the U. S.? 

I know, you don’t want to spread the work around too much.  You need to concentrate your products and keep your manufacturers working.  I agree.  However, if I were getting all of my product from China, I would start TODAY to find quality, reliable resources in other markets and build on those relationships.  Yes, I know…how do you find those quality, reliable resources?  Start with the Sourcing at MAGIC event.  Not planning on attending in August?  It might be too late if you think you can wait until February’s Sourcing at MAGIC event.  

Just like fashion, the world of sourcing is constantly changing and evolving.  Everyone is trying to play the same game.  Get the best quality goods for the lowest prices with the fastest turn times.  Being a leader in the apparel industry means finding those trends and responding quickly.  The same goes for your sourcing strategy.  Responding quickly is the key. 

Come see us at the Sourcing at MAGIC event.  FBI will be presenting seminars on a number of topics.  Can’t wait to see you there!

Jill Mazur is an independent apparel business and technology consultant working with Fashion Business, Incorporated.  Email:  jill@fashionbizinc.org

With friends and family in from out of town this past week, it’s been a bit challenging to keep up on the weekly blog.  My apologies for being a few days late.  Along with the friends and family have been many opportunities for dinner table conversations on a wide range of topics - in my family, baseball is chief among them.  However, this is a fashion blog, not a sports blog, so I’ll steer clear of the Dodgers and their chances for World Series greatness this year.  (Go Dodgers!) 

An interesting discussion came up last night.  One which never fails to irk me, as a fashion industry professional - counterfeit products.   I’m not talking about “knockoffs” or products “inspired by” a designer original.  I’m talking about actual trademark-infringing, counterfeit products.  Check out these blogs: Fashion Law by Staci Riordan and Fashionista’s Adventures in Copyright on the “knockoff” debate for further discussion. 

I generally like to enjoy my holiday meals without delving into controversial topics - you know, politics, religion, health care reform, etc.  I had even decided to politely hold my tongue when the topic of buying a “knockoff purse” came up.  All I did was make a correction to the statement - “That’s not a knockoff purse, it’s a counterfeit purse.”  And the floodgates opened!  If you have to ask me what the difference is, I’m going to give you an earful.  Or, a pageful, as evidenced by this blog.  If the product you purchased has the same brand name label as the original from which is was copied, that’s a counterfeit product.  Even if the product you purchased has a slightly altered name -”Prado” versus “Prada”- but the exact same design details, it can be considered counterfeit. 

This quote from Tim Trainer, president of the International Anti-Counterfeiting Coalition in Washington, D.C.  says it all “Counterfeiters trade off the backs of legitimate brands. They let the real brands pay for the marketing, advertising, develop the designs, and then they profit off of it.” Think about all of the time, money, effort and energy it takes to develop a new style for your brand-name label.  Think about how excited you are when your style takes off and is seen in magazines and on the arms or legs of a celebrity.  Now think about how upset you’d be to realize your style has been copied by one or more counterfeiters and is being sold through back door retailers and illegal channels.  What happens to your sales?  Your profits? What money do you use to develop your next great design?  Many people don’t realize when they’re buying a fake product they’re putting legitimate designers out of business.  They’re looking for a bargain; they want the latest and greatest styles but don’t want to have to pay retail prices. 

Even worse, in my opinion, is the fact that many counterfeit products can actually cause damage or injury to the person buying them.  Maybe your new “Prado” purse isn’t going to be the source of many injuries, but has it been tested for lead content?  Was formaldehyde used in the manufacturing process?  What about those “Channel” sunglasses you just bought?  Do you think the manufacturer thoughtfully used UV filtering or polarized lenses?  I sincerely doubt it.  What about those new “Reebook” trainers you took for a run?  Do you really think they’re using the same technology and support as a real pair of Reeboks?  There’s no way to hold anyone accountable for counterfeit products. 

How about this for a bit of advice?  If you don’t buy counterfeit products, the market for these goods will start to dry up.  Legitimate designers will be able to sell their products to consumers willing to pay legitimate prices and maybe we’ll all start making a profit? If you have questions regarding copyrights or trademarks, contact one our legal experts at Fashion Business, Inc. for legal advice.

Jill Mazur is an independent apparel business and technology expert working with Fashion Business, Incorporated.  Email:  jill@fashionbizinc.org

Let’s hope that what happens at MAGIC doesn’t just stay in Las Vegas. Let’s hope that the excitement, energy and dare I say it, enthusiasm I felt at last week’s MAGIC show is carried forward throughout the year. It was nice to see a lot of foot traffic, new faces, new brands and even orders being written. I know this isn’t a barometer for the economy, but it was encouraging none-the-less.

It’s a lot to see and do with all of the shows happening at the same time: POOLTradeshow, PROJECT, MAGIC, S. L. A. T. E., WWDMAGIC, STREET and more, it’s hard to keep track of everything and impossible to see everything unless you have a pair of rollerblades with you. I was excited to be a part of the SOURCING at MAGIC marketplace and seminars. FBI presented a number of seminars and panels on a variety of topics. Frances Harder and the FBI team presented seminars on “No Risk = No Sales: How to Plan, Merchandise and Brand your Product in a Global Market,” “Turning a Bad Economy Into a Profitable Business Opportunity” and “Retailing for Profit in a New Economy.” I’m not sure how Frances had any vocal chords left after four seminars, but she was still raring to go at the FBI cocktail event Wednesday night at the Hard Rock.

It’s exciting to be a part of these seminars. We met a lot of interesting people with great stories to tell and great products to bring to market. We even signed up a number of new members, excited to take advantage of a discounted FBI membership rate for the MAGIC seminars. I know how excited and eager people are when they have a great idea or design to develop and sell. The challenge becomes how to bring that product to market. MAGIC and all of the related tradeshows are a shining example of people and companies who were able to successfully launch their ideas and sell them to targeted consumers. FBI seminars, classes, consulting and training are all designed to support fashion businesses from inception to profitable multi-million dollar brands. I speak from personal experience when I say that it’s thrilling to see our members “fly the nest” and become the next great brand. It’s not without a lot of hard work and long hours, but by taking advantage of the FBI membership, our members benefit from our expertise, knowledge and know-how to help them navigate the pitfalls of this industry.

I’m looking forward to MAGIC in August, 2010. I hope to see more FBI members showing their lines and doing great business. I know if they take advantage of their memberships, they’ll be well on their way.

Jill Mazur is an independent apparel business and technology consultant working with Fashion Business, Incorporated. Email: jill@fashionbizinc.org

I had lunch with a friend recently. I mentioned FBI was presenting a number of seminars on Sourcing at MAGIC, February 16 – 18, 2010. When she asked me what sourcing was, I had to think long and hard about how to describe sourcing in general. It seems easy enough to describe: the supply of resources as required by a business process. I’m sure that’s not what she wanted to hear, so I thought about it for a while. She is a screenwriter with no experience in any sort of manufacturing or service industry. I realized, however, that sourcing can be applied to almost any business process. In her case I related it to her wedding, I asked her to think of her wedding planning as sourcing. Think of the logistics, planning, purchasing, deliveries, setup, payments and tastings as sourcing.

Unless you’re doing everything yourself, including sewing your own dress, baking your own cake, growing your own flowers and playing all of the instruments in the band, you’re sourcing. Many brides hire a wedding planner – let’s call that the agent. The agent’s job is to facilitate the sourcing process. They smooth out the bumps, they help ensure shipments are on time, they deal with customs and suppliers and manufacturers to make sure everyone has what they need to get the merchandise manufactured and delivered on time. In the case of a bride, however, late shipments, extensions, customs holdups and shortages aren’t acceptable at all, so the wedding planner has his or her hands full just as much as an agent. Throughout the wedding planning or sourcing process there are a number of vendors supplying goods and services. A bride might have a caterer supplying food, a photographer, a DJ or band, florist, clergyperson, venue and more. A manufacturer might have fabric or trim suppliers, cutting and sewing services, shippers or freight forwarders and more. Retailers can be as demanding as a bride, so keep in mind your retailers requirements throughout the sourcing process.

That’s not the half of it, however. You don’t just start sourcing, just like you don’t just start planning a wedding. First, you need to think of your budget. How much do you have to spend to bring your products to market or to get yourself and your spouse-to-be to “I do?” Second, what should the end result look like? Third, what is the timeframe to get to the deliverable? How long do you have to plan this? In the wedding world, it may be months or years, in the retail world weeks are better than months and rarely can anyone get away with years. Fourth, how do you find a reliable, high quality agent or wedding planner that fits your requirements - budget, personality, location, contacts, etc.? Do you work off of recommendations, advertising, Angie’s List? How do you know that the person you entrust with your business will provide the services you need? Fifth, how do you begin to execute your plan? Where do you find your suppliers? How do you know the designs and fabric swatches you sent months ago will be delivered to your specifications and quantities? Can you get TOP samples? A bride can’t. But she can have her gown custom altered and chances are good, you can’t do that with your production run. Sixth, what about logistics? What are you doing to track your purchase orders, customs clearing, quota numbers and containers? Let’s hope you have a good system in place to provide visibility to all of that information. If the bride is savvy, she’s tracking her information in an organizer or spreadsheet. Last, but not least, how are you tracking your finances? Letters of credit? Payments to your agent or vendors? Due dates and payment terms? Hopefully the bride is tracking her deposits and payments by check or credit card.

By the time I finished explaining the sourcing process with my bridal analogy, my friend actually understood sourcing better than many of my clients. Then I hit her with “Hopefully, this is the only wedding you’ll ever have to plan. Apparel manufacturers source year round for millions of products to be delivered to thousands of retailers. It’s like planning hundreds of wedding a year, without the cake tasting or big parties at the end.” And, if you do it right, make your deliveries and even make your margins, you’ll keep on doing it year after year.

Jill Mazur is an independent apparel business and technology consultant working with Fashion Business, Incorporated. Email: jill@fashionbizinc.org

F. B. I. members Erin Wieczorek, Susan Brandt, Korena Ellis and I had the opportunity to attend Hong Kong’s Fashion Week and World Boutique this past January.  It was a huge and well-attended event.  Taking over most of the five floors of display space in the Hong Kong Convention and Exhibition Center, there was truly something for everyone.  Susan Brandt was hoping to find one or more fabric suppliers for a new product she’s developing.  Korena Ellis and Erin Wieczorek were also looking to develop new products and find potential manufacturing and sales resources.  I was intent on enjoying this unique opportunity and hoping to gain a better understanding of the global markets for supply and demand.  

The World Boutique, Fashion Week and all of the activities, seminars and fashion shows related to these events were exceptionally well-executed.  A big round of applause goes to the Hong Kong Trade Development Council (HKTDC) for putting on such a well organized show.  An entire floor was dedicated to Mainland China sourcing with other floors and areas dedicated to a variety of merchandise and sourcing opportunities.  It truly was a global market place with attendees from all over the world.  Asia, to be expected as well as Australia, New Zealand and India were all well represented, as were buyers from the Americas and Europe.  

As has come to be expected, the fashion shows were the major highlights of Fashion Week, with the spotlight shining on Vivienne Westwood’s Thursday night show.  Other shows included Taipei In Style, William Tang/MARCCAIN by William Tang, La Mer by Ali Charisma (see photos above), Global Sphere by Ika, Hong Kong Young Fashion Designers, Moiselle, International Designers Show and an incredible Knitwear show.  

The Vivienne Westwood show was an invitation only event and the invitations were hard to come by.  Luck was not on our side, but from all of the press and photos, it looked to be a fantastic event.  Ms. Westwood’s husband, Andreas Kronthaler, Creative Director and Christopher di Pietro, Marketing & Merchandising Director  - both of Vivienne Westwood - presented a seminar on “Vivienne Westwood Kingdom Decoded” concentrating on how they’ve built their Asia business and are now expanding their retail sales in North America.  A special mention was made about the latest store opening in Los Angeles, the first retail shop for the iconic brand to open in 9 years.  

Of special note was the permanent HKTDC Design Gallery located next to the Hong Kong Convention and Exhibition Center.  This retail store is devoted to Hong Kong designers and products manufactured within Hong Kong and the New Territories.  The store sells jewelry, accessories, toys, books, games and more, highlighting some of best and brightest of Hong Kong’s up and coming designers.  What a great thought!  Maybe we can do the same for California designers?

This show is definitely worth attending for anyone looking to find manufacturing resources in Asia as well as anyone looking to sell to global markets.  The HKTDC office in Los Angeles made it easy for our members to attend with special airfare, hotel and exhibitor rates.  Hopefully, this offer will be available again.  If you have the chance, don’t miss out.  

  Jill Mazur is an independent apparel business and technology consultant working with Fashion Business, Incorporated. Email: jill@fashionbizinc.org

Recently, Fashion Business, Inc. conducted a seminar on selling goods to foreign markets. We were fortunate to have Julia Son from Hong Kong Trade Development Council (HKTDC) and Bobby Hines, International Trade Specialist, from U. S. Department of Customs as our guest speakers. It was a fascinating discussion, not easily summarized in a few paragraphs, but I’ll do my best.

As I’ve talked about in previous blogs, if you’re looking to expand your customer base, perhaps you should look outside the U. S. borders. The U. S. government has a number of programs in place to help your business sell to foreign markets if, and it’s a big IF, the products you’re looking to sell are made primarily in the U. S. I won’t try to explain the details of this – go to the Office of Textile and Apparel website for more information on what types of products qualify. All products will need a certificate of origin in order to be considered for export. For mixed origin materials or manufacturing, you’ll want to check with the Office of Textile and Apparel to see if your products will qualify. NAFTA or CAFTA goods have a different set of rules and regulations, so be sure to check with the Office of Textile and Apparel regarding these qualifications.

Enough of that, The U. S. government is very happy to encourage businesses to sell internationally. Exporting goods to foreign consumers helps strengthen our economy and who doesn’t want that? The Department of Commerce has offices in over 170 countries. Some of the many purposes of these offices are to help to identify markets for your company’s products, determine the best methods to handle financial transactions, orders, shipments and more. Plus, help you make connections in the countries your looking to develop your business contacts. Looking to find out the basics of exporting? Go to http://www.export.gov/ for essential information. Want to know more? Consider purchasing A Basic Guide to Exporting available at the U. S. Government bookstore.

When I talk about exporting with some of my clients, I usually hear about all of the barriers they’ve encountered trying to create an international business. Well, that may be true. Not all countries have the same type of trade relationship with the U. S. Some of those barriers may be with a specific country, or perhaps with the type of product a company is trying to export. Your best bet is to look for countries with Free Trade agreements with the U. S. Currently, we don’t have a Free Trade agreement with India, which makes trying to export products there very difficult. You’ll have a better chance trying to sell to Australia, Bahrain, Chile, Israel, Jordan, Morocco, Peru, Oman, or Singapore each of which has a Free Trade agreement with the U. S. Free trade isn’t limited to these countries – remember NAFTA or CAFTA? There are plenty of trade agreements with more than 150 countries, so do some homework to find countries and markets that are right for your products.

Looking to sell your product to China? Your first stop should be Hong Kong. Why? Prospects are bright, despite the global economic downturn. The U. S. government expects Hong Kong and China to bounce back faster than the rest of the world and Asian markets are hungry for U. S. products. Hong Kong is an easy entre to Mainland Chinese markets. It has a separate legal system, currency and customs system from that of Mainland China. And, did you know, English is the official language in Hong Kong? Hong Kong has an open financial banking system. There are no foreign exchange controls. It may be easier for you to get paid through a Hong Kong company rather than a Mainland Chinese company. If that’s not enough to entice you, Hong Kong is a free port with virtually no duties or tariffs; perfect for small to medium sized firms looking to do business in Hong Kong or Mainland China. Hong Kong is the perfect stepping stone into Mainland China and the rest of Asia. Want to find out more, go to Hong Kong Trade Development Council (HKTDC) for information.

One more thing, the U. S. is one of the last countries in the world still using the Imperial measurement system. Almost every other country uses the Metric system. If you plan to sell products to foreign markets, make sure you sell them in the correct unit of measure for each country. A 32″ waistband won’t get you very far in many countries.

Some important websites to visit for anyone looking to export U. S. goods:

http://www.export.gov

http://www.buyusa.gov

Jill Mazur is an independent apparel business and technology consultant working with Fashion Business, Incorporated.  Email:  jill@fashionbizinc.org