Prophesies
- Increased Regionalisation- Manufacturing and sourcing shift will take place
- Will enter Free Trade- Traditional Categories will get killed
- Retail industry will consolidate and speed sourcing will happen- faster fashion
- Cost cutting will take place. Emerging Partnerships in sourcing will happen
- Mass customisation will happen- cost cutting/ cost productivity considerations
- Faster and more effective supply chains will result
- Regionalisation: Formation of trade blocks between the large consuming markets and contiguous manufacturing nations.
- Hegemony of Uncle Sam/ Statue of Liberty: Out of E 360 b neeed of European Nations- exports and supply- 61% of it comes from within trade blocks i.e. MFN.It means entering EU now is getting more difficult than earlier.
- Economic and Commercial: Though it is not cheaper manufacturing wise, but it is cheaper export wise- least lead time and fashion risk is minimised.
It leads to regions like the EU becoming virtual fortresses- Approximately 49% of the clothing needs of the EU are being met by sources within the enlarged EU or preferential treatment areas.
Implications: India can be a secondary buying hub and manufacturing can be done in either of the countries ( e.g. Pearl has moved to China, TCNS to Japan).
Impact of Trade Blocks:
- Trading within a trade block can impact a far off nation which is not part of trade block.
- A trade block can sign a pact with a far off nation ( EU with SL)
How to Counter
- Open an office in Dubai
- Acquire a trade brand in Germany- can be a PAN European Company (Hindaloco- Novalis)
- Route it through a partner/ become a partner/ become a transnational corporation
- Go fro least resistant path- provide all the products.
Retail Consolidation Happening
Imapact:
- Exporters have to go for large scale manufacturing as companies wont go for smaller exporters
- Product development costs will reduce
- price pressures
- social clause- ethical trading supply chain
- restructuring of the product lines
- brand identity can be lost for a small exporter
- merger will impact supplies
Shift of Customers towards discounters- Cost Cutting
How to cut cost
- compress supply chain
- increase productivity
- bring efficiency in operations
- Inventory management
- improve scale of operations
Vendor Selection Criteria
Sourcing requires a regionwise, country specific, company specific and product specific( i.e. whether basic, value added or fast fashion) , vendor selection criteria vary with each of the approaches.
The selection criteria can be one or more of:
- Product quality advantage
- efficiency of CMT/ Cutting operationss
- Financial Flexibility
- Capacity Utilisation
- Capacity Availability
- ERP system usage/ automation
- Supply chain/ merchandising system management
- Delivery Schedule Adherence
- Post Production Logistics
Why there is a need to develop vendor
- You want them to pick up a new category
- Standard vendors may have financial problems, you go to a vendor who is flush with funds.
Buying Offices
1. Store Owned Offices
GAP, Nike- also called liasion office. People on rolls of the office are in the rolls of the company.
Why your own office: I have classified information, to have a good control on quality and compliance, to increase in offtake, to help them develop more vendors, can use it to enter into the market, improves pricing.
2. Associated offices
Profits can be distributed. eg. AMC., eg. ATKINS in New York
3. Syndicate Offices
They are independent offices, are not associated with a retailer. Why: A companies core competency is branding not sourcing, they dont want to lock up money, they only focus on the product category to keep. e.g. Li and Fung.
4. independent Offices
Within a syndicated office. Here I can keep two or my people on the rolls within syndicated offices,
Merchandising Services
- Market Information
- Buyer Clinics- training to buyers
- Sales Promotion, services
- Cataloguing
- Operations and Research.
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