Cost, quality or lead time has always been a puzzle for the apparel retailers outsourcing from parts across the globe. It is difficult to label any one factor as the prime factor for sourcing. Sourcing is a complicated process and cost, quality and lead time are all important aspects; unquestionably reliant on the product and demand. The importance is based on the nature of product, the requirement of the company, and the target customer. Says Mr. Howard Lucas (CEO- Kahn&Lucas Lancaster Inc.) the first preferred factor is quality, followed by cost and lead time. Quality of product sets the image for a company. While it is not always necessary to be the least expensive or fastest to market, apparel companies must always ship high quality product. Many of the retailers have extensive testing programs in place and any substandard components will most likely result in the cancellation of a style. If a company is manufacturing under a national brand, it can "make or break" its brands image with the consumer based on quality. Whereas, for Gary Simmons (President & CEO, Gerber Childrens Wear) cost is a primary factor for outsourcing; but he also mentions that just three factors are not sufficient to determine the terms for sourcing. Other factors like political stability of the country, infrastructure, compliance etc are equally important. Bridget McDaniel (Assistant Buyer, Designer Sportswear- QVC) says its difficult to rate any particular factor as all are important. Based on their companys products, which are sold online, they have to be very meticulous about quality, and being competitive cost is equally important; so is lead- time as they have to assure faster delivery to the buyer.
Globalization has become a phenomenon in the apparel industry. Outsourcing has taken an edge over local and in house manufacturing
Apparel industry is highly labor intensive and so low labor cost is always a prime factor for developed countries when sourcing from under developed countries with assurance of consistent quality and on-time delivery of products. Thus global sourcing involves procurement of finished goods from other countries to make the merchandise more economical. The main factors of concern for global sourcing includes: cost, quality, quantity requirements, long lead times, shipping costs, political instability, language barriers etc.
The demand for high-quality low-cost products coupled with the need to reduce costs to increase operating profits is driving more companies to outsource manufacturing overseas. Due to this demand, the market is getting very competitive and motivating every competitor to globally source their products and create a niche for itself in the retail sector. After all, cost minimization leads to revenue maximization. As believed in the supply chain; its wise to pass the job to a third party that is core competent in the same for getting better results, this applies to every other industry. If you can get a better quality trade at lower cost then it seems advisable to outsource the job to that provider. Global strategies are used to source these suppliers throughout the world on the basis of price, quality, technology and lead time or delivery reliability.
In general, all the three parameters of an apparel product cost, quality and lead-time are correlated. Quality defines the life and durability of the product. If the quality is poor and the cost of the product is high, selling the product becomes a biggest challenge. Meanwhile, paying high cost to get the product that cannot meet the sell period can convert huge loss to the retailer. Time sensitive products like fast fashion apparel follow very tight timeline and meeting the deadline is important than ever. Quality and lead-time go hand in hand. High quality products with simple silhouettes need shorter turnaround time compared to the embellished or fashion cuts. One should not forget the time needed for the raw-material like fabric, trims or other accessories that would define the timing of the finished goods. Longer lead times generally tend to stock higher inventory levels for the retailers. To avoid these retailers have started practicing Lean Retailing; which means they only own products that are there in stores. And they do not store the merchandise in warehouse for replenishment. If lead time were the only consideration in a supplier's decision on where to produce its goods, then producers close to the retail market such as Mexico and the Caribbean for the US, or Turkey, Eastern Europe, and the Mediterranean for the EU would have a clear advantage over Asia (Arnold, Dennis).
The entire practice is basically to get the right product at the right place on right time and ensure business revenue to everyone.