Home / Knowledge / News / Information Technology / Need of multi-sourcing strategy in sportswear industry - Lawson
Need of multi-sourcing strategy in sportswear industry - Lawson
22
Apr '09
A new report commissioned by Lawson Software exposes potential hidden costs and risks of outsourcing production of sportswear garments to manufacturers in low-cost countries. According to the findings, many companies fail to identify hidden costs when developing their outsourcing strategies.

Quality control, inefficiency, credit, the cost of establishing a supply source, and travel to resolve issues can add unexpected costs. Lengthy transportation and unplanned delays at ports of entry can also add significant costs, because companies may need to establish extra inventories as a precaution.

For example, shipping garments from Asia to Northern Europe can often take six to eight weeks. But shipping from Eastern Europe or North Africa to Northern Europe often takes six to 10 days. Added lead time, last-minute rush delivery charges and lost sales can add more costs.

“With the total cost of sourcing in China increasing compared to Eastern Europe or Central America and the Caribbean, multi-sourcing is taking over from outsourcing,” said Andrew Dalziel, Lawson marketing director for fashion. “Multi-sourcing recognizes the need to create different sourcing strategies based on product characteristics. So companies may look for shorter lead times for those fashion items that have uncertain demand – rather than using lower cost options that require much longer lead times. They need greater agility to deal with unexpected demand shifts – higher or lower – and information technology plays an important role in these global sourcing strategies.”

The traditional belief that low costs means lower service quality is shifting to the notion that low cost and high quality service can be attained through efficient and effective use of IT. Peter Bambridge, Research Director at Gartner Inc. comments, “The real synergies of outsourcing production can be found in IT systems and long-term partnership relationships within the supply chain that can lead to sustainable performance improvements. Harnessing the benefits of IT can help overcome difficulties of distant locations in the global apparel supply chain to ensure retailers' demands for speed and flexibility as well as total quality are met.”

The Lawson-commissioned report contains research data on key performance metrics for sportswear, providing a benchmark for companies in the industry. This analysis follows an Operational Excellence report that Lawson published in 2008. The latest report identifies some average key metrics for business performance among sportswear companies today:

• 6.7 percent net profit margin
• 34.8 percent gross profit margin
• 10.3 percent return on capital expenditure (ROCE)
• $1.23 earnings per share (EPS)
• 5.9 inventory turns per annum

The report recommends that those that are not achieving or exceeding the above metrics should review their business processes and identify potential improvement opportunities and potential hidden costs.

Lawson Software

Must ReadView All

Textiles | On 17th Jan 2017

GST rollout from July 1; states to control small taxpayers

The Centre and states have reached a consensus on the issue of dual...

Courtesy: Carnegie Fabrics

Textiles | On 17th Jan 2017

Calera Capital acquires majority stake in Carnegie Fabrics

Private equity firm Calera Capital has bought a majority stake in...

President Tsai Ing-wen delivering remarks before boarding her plane bound for Central America. Courtesy: Presdient's office

Textiles | On 16th Jan 2017

‘Textiles at centre of Taiwan’s new trade arrangements’

Textiles should be at the heart of Taiwan’s thinking while developing ...

Interviews View All

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Binoy Ravjani
Hero's Fashion

‘One of the recent trends in hand block printing is the indigo process,...

Jim Desai
Blaiva Fabricaa

Fashion industry likely to remain labour-intensive in coming years

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Paolo Ocleppo
Sandvik Hyperion

Paolo Ocleppo, Rotary Cutting Segment manager, Sandvik Hyperion discusses...

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer Prathyusha Garimella is known for blending...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search