Simo final

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SUPPLY CHAIN STRATEGY LXFM 720 Supply Chain Management Strategy Professor Grace Canepa Chuhao Zhou, Elsa Min Kao, Fan Zhang, Jialin Wang, Joy Jie Yuan


EXECUTIVE SUMMARY We aim to introduce simple, comfortable and aesthetic apparel products for our consumers and to influence them with our core concept of sustainability and environmental protection. To accomplish our goal, we established “simo,� our company, which sells organic cotton women basic t-shirts. Before everything getting start, we built our company mission, vision, sourcing guideline and code of conduct to be our company standards. After we had our guidelines for everything, we started our research and strategy. For this project, we sourced our suppliers out of five countries, Honduras, Peru, Egypt, Pakistan and Turkey. First we created tech packs for each style of our product lines, which are basic t-shirt, v neck basic t-shirt, long sleeve t-shirt, tank top and crop top, and measure the quantity of fabrics and threads that we need for each product. Then we filled out the one-year line plan for our product line. Secondly we conduct secondary research for country profiles for each country to have in-depth information of the general, political, social, economic, lead time of production, culture insights, state of the textile industry, possible suppliers, transportation and the analysis of the risks and benefits for each country. During our country research, we also searched for potential apparel manufacturers and raw material suppliers for each country. With the information of fabric suppliers, other components of our garments, packaging, packing and labor cost of each style, we started to fill out our cost sheet and searched for freight company to get the cost of shipping. After accomplishing the cost sheet for each item in single country, we created the cost sheet for each item in multiple countries. Then we ranked the five countries and potential suppliers for each country and analyzed which are the best choice for us. With the cost of each five styles in each country, we made our placement in different combinations to maximize opportunities and minimize risks. At the same time, we search for 3 possible supply chain solutions for warehousing and distribution to arrange our inventory and delivery to our end consumers for e-commerce. In the end we made decisions through all the research and ranking based on our company and product requirement.


INTRODUCTION

Within the environment of the rapid change among different industries, the change of the apparel industry is extremely rapid, generating high volume of landfill and huge quantity of waste. We want to establish a brand to provide high quality, comfort and aesthetic via basic and non-seasonal t-shirt for consumers while being the model of sustainable and environmentally friendly company within the apparel industry. In order to achieve the goal of being sustainable, the innovation of technology and other techniques to minimize the waste and pollution within our supply chain; while the innovation is also important for us to improve the efficiency of our supply chain management. Therefore, all of our strategy and decision are mainly based on the quality and sustainability. With all these concepts in mind, we build “simo.�


COMPANY STRATEGY Established in 2015, simo is a Savannah-based fashion company that sells women’s basic t-shirts in the US market. With online retailing only, the company aims to offer high-quality, comfortable, durable and aesthetic products in competitive price to our customers by sourcing globally highquality, yet affordable organic cotton.

MISSION STATEMENT From the simplest human need for clothing, we provide high quality, 100% organic cotton t-shirts with simple but tailored silhouettes and aesthetics with the goal of helping our environment and helping our consumers stay safe and healthy. As clothing, water, food, shelter and travel are the five basic elements for life, we cannot live without any of them. Based on that, we chose clothing to inspire people to return to the basics. We believe that the simplest thing can change the whole world, and we value the concept of home as the basic unit. When people respect and help their family and expand this concept and relationship to their community, the society, the environment and the whole earth, sustainability becomes a vivid idea that they live with everyday. Without respect and help toward mankind and the environment, it’s impossible to be sustainable.


CORE VALUE Love H.O.M.E. --- Helping, Origin, Mankind, Environment For the basic human need of clothing, we provide simple products with high quality, comfort and aesthetics. On the simplest thing, we take good care of every detail. Through our products, we connect the love between individual, family, society and environment, building the thought of helping each other in our staffs’ and consumers’ mind. By helping our suppliers, community, environment, and others, we hope our planet can return to its original purity. Such changes start from our own home and then expand to the whole world. Eventually we establish a better HOME.

VISION To be the most sustainable apparel company among the industry.


TARGET MARKET Gender: Female Location: the US Age: 25-44 Income: $5,000-8,000 per month Education: Bachelor or higher Our consumers are high-educated female who are within the age range of 25-44 with income of $5,000- 8,000 per month. They live in either big cities or suburbs in the US. Most of them are sympathetic and highly environmentally conscious. They are tech-savvy and live in fashionable neighborhoods with favor of simple but qualified household. Health is one of the main concerns of both of themselves and their family for them. They pursue organic lifestyle and prefer organic food and apparel. Whole Foods Market is their primary shopping place for grocery.


SOURCING GUIDELINES We chose our suppliers based on our core values, which are helping, organic, mankind and environment. All our suppliers should at least share the value of sustainability with us.

Only suppliers who achieve the minimum requirements of our Code of Conduct can be our new partners. All our suppliers must have full compliance of our

Code of Conduct. Auditors must visit potential partners at least 3 times without announcement before contract. Auditors should make unannounced visits during the first 3 months of a new contract with new partners. If the new partners fail to achieve the minimum requirements of Code of Conduct, our corporation has the right to dismiss the contract. If the already existing suppliers cannot meet the full compliance, our company should help them to improve the situation; after 1 year, if there is still no improvement for the condition, our corporation has the right to dismiss the contract with the suppliers. The audits and inspections of our sourcing guidelines need to comply with the standard of ISO 9001, Global Organic Textile Standard and WARP. Other preferential standards are ISO 14001, OEKO-TEX 100, Global Security Verification (GSV), BLUESIGN®, SA8000, Textile Exchange, Sustainable Apparel Coalition, 1% for the Planet, B-Lab, Fair Factories Clearinghouse, and Fair Labor Association.

Code of Conduct • Prohibitions on child labor. Regardless of the legal age for employment of the local laws, the limitation of working age for our company, either within the corporate or suppliers, should be 18. • Prohibitions on forced labor. Using forced labor is forbidden, including prison labor, indentured labor, bonded labor or other forms of forced labor. We provide reasonable job opportunities to vulnerable groups and provide reasonable accommodation for them, including facilitating access to bathrooms and other factory facilities. • Prohibitions on discrimination based on race, religion, or ethnic origin. No employees are subject to discrimination based on gender, race, religion, age, disability, sexual orientation, pregnancy, marital status, nationality, political opinion, trade union affiliation, social or ethnic origin or any other status protected by country law. Also, employees should be treated with respect and dignity. Employees are not subject to physical, sexual, psychological or verbal harassment or abuse.


• Women’s rights. Women should receive equal pay for work of equal value as men, as well as equal evaluation of the quality of their work and equal opportunities to fill open positions. Women employees should not be forced or pressured by the contractor to use contraception. Pregnancy tests should not be a condition of employment. In addition, women employees who are pregnant, nearing childbirth, or nursing should be provided safe work, including restricted work hours as recommended by a licensed physician. • Requirements to ensure the health and safety of the workplace environment. There should be fire drills, eye guards, first aid kits, emergency exits, fire extinguishers. All aisles should be clean and available all the time. Chemical storage should be kept safely with clear labels and locked properly. • Basic rights including payroll accuracies, sufficient social insurance coverage, and payment of resigned employees. All workers must have at least one day off a week. Reasonable request for leave should be permitted, such as sick leave. • Provisions on wages. Overtime working hours should be paid with 20% more than regular wage per hour. The wage should be 50% more than the minimum legal wage of the local laws. • Provisions regarding limits on working hours, including forced overtime, in accordance with local laws. Working hours at maximum should not exceed 48 hours a week, including overtime. • Support for freedom of association and the right to organize and bargain collectively. • Housing conditions: Suppliers should provide employees’ dormitory for each worker without exception, but employees can choose to stay at their own house. The basic requirements for housing should be the same as working environment in terms of safety. Dormitories should be separated by gender, but we also provide dormitories for couples who both work for us. • Monitoring and enforcement: All facilities should be monitored regularly, at least once a month with unannounced visits at any time. Suppliers should be monitored and audits with different monitoring partners every few years to ensure the integrity of audits. • Management system evaluation: System approach should be based on the policy of the corporation, business for social responsibility guidelines of organizations such as Ethical Trading Initiative, Fair Factories Clearninghouse, Responsible Sourcing Network, American Sustainable Business Council, and Business for Innovative Climate & Energy Policy. Factories should achieve the threshold of the sustainability performance score. • No late changes. • Regular mutual feedback, open communications and clear expectations between the corporate and suppliers. • Reasonable market prices and suppliers’ costs. Pay all invoices on time. • Pre-order planning, clarity on volumes, enough lead times


The Environment: • Energy: We use 100% renewable energy and reduce every aspect of our carbon footprint in the supply chain. • Waste: Create zero waste through smarter packaging, recycling and reducing plastic bag use. Both pre-production and post-production waste should be recycled or treated properly and utilized to the maximum. • Water: No pollution. All wastewater should be treated properly with no toxins and any chemicals should be used last. Every facility should have rain harvest equipment. Suppliers are encouraged to use water-efficient design facilities to control water quality, water security and access to water and sanitation. Utilize the treated wastewater from factories to irrigate local agriculture. Community Involvement: • There should be facilities such as a fitness center for employees to keep in health. Both our corporate and suppliers should provide occupational training for employees, including operation of machines and safety. • Encourage our employees to volunteer to help community, such as at nursing homes, orphanages and human societies. We will collaborate with various organizations such as Trees for the Future and require our employees to plant trees as volunteers. • Employee benefits should include:

• Health insurance

• Life & Accident insurance

• Disability insurance

• Transportation allowance/discount

• Education

• Family benefits: Hold family events such as picnic day once each month for staff to build relationships with their family as well as to communicate with other families. Provide day care or nursery for children and health insurance for spouses and children of employees. Hold family day carnivals once a year.

Philanthropic Interests: • Providing recycled clothes for organizations such as orphanages or animal associations and UNHCR (United Nations High Commissioner for Refugees). • Using the 5% income per transaction to establish a foundation to support philanthropic business.


LINE PLAN

LINE PLAN

Basic T-shirt

STYLE #

V-neck T-shirt

NAME

SEASON

Crop Top

Tank Top

Long Sleeve T-shirt

SPRING/SUMMER

SUMMER

JAN

FEB

MAR

APR

MAY

JUN

Quantities

Quantities

Quantities

Quantities

Quantities

Qua

Style #5214 Tank top

150000/15%

200

800

9000

15000

20000

Style #1311 Crop top

70000/7%

400

1000

3000

5000

8000

Style #3112 Long sleeve

130000/13%

25000

20000

2800

400

200

Style #1121 V-neck

300000/30%

8000

12000

22000

25000

29000

Style #1111 Basic

350000/35%

15000

20000

22000

24000

28000

48600

53800

58800

69400

85200

TOTAL


PRODUCT LINE Basic 100% organic women t-shirt

PRICE POINTS We provide high quality with moderate prices. Our humble price gives more people the chances to enjoy high-quality and sustainable products.

PRODUCT REQUIREMENTS Must follow simo’s code of conduct, and fulfill the requirement of high quality organic cotton.

FALL/WINT ER

HOLIDAY

Y

JUN

JUL

AUG

SEP

OCT

NOV

DEC

ntities

Quantities

Quantities

Quantities Quantities Quantities Quantities

TOTAL

Quantities Quantities

20000

24000

30000

23000

16000

5000

2000

5000

150000

8000

12000

17000

12000

7000

1000

600

3000

70000

200

0

0

600

5000

20000

25000

31000

130000

29000

31000

33000

31000

28000

25000

20000

36000

300000

28000

35000

40000

36000

27000

23000

35000

45000

350000

85200

102000

120000

102600

83000

74000

82600

120000

1000000


TURKEY

HONDURAS EGYPT

PERU

COUNTRY REPORT

PAKISTAN


TURKEY


Introduction

The Republic of Turkey is a country that straddles two continents of Europe and Asia that its location and geo-political strategic significance is extremely important. Turkey is an Asian country but implements the European model in its political, economic, and other fields. Constitution of Turkey is democracy, secularism and the rule States. Turkey’s diplomatic center is in the European countries, and maintaining the traditional strategic partnership with the United States. Turkey has a strong industrial base and development of emerging economies. Turkey is also one of the fastest growing countries in the world.

Country Traits

• Turkey is a country that straddles two continents, Europe and Asia, and is bound by the Black Sea and the South Eastern Mediterranean. The total land area is 780,576 square kilometers. • The area of Turkey is 783,562 km2. Land: 770,760 km2; water: 9,820 km2. • Turkey is a Republic within the framework of a parliamentary representative democracy; it pursues a multi-party system. Its current Prime Minister is Recep Tayyip Erdoğan, Turkey's new leader of the government. • Turkey's president is elected by popular vote for five years by parliament. • Turkey's language is Turkish, Kurdish, and other minority languages. • Turks represent 70-75% of the population, with 18% Kurdish and 7-12% minorities. • The population of Turkey is estimated at 75million in 2014.


Country Stability Social • Turkey ranks number 18 in the list of countries by population. In Turkey, 32% of adults aged 25-64 have earned the equivalent of a high-school degree. 36% of men have successfully completed highschool degree compared with 27% of women. • Turkey has one of the youngest populations in the world. About 20 million people are between the ages of 15 and 30. This youthful population can help Turkey society keep an energetic and efficient labor and improve job opportunities. • Turkey’s female employment is the lowest in Western Europe with just 28.9% of the female population working at the ages between 15 and 64 in 2013, while the average of Western European is 59.6%. Female’s low education level affects job opportunities, which is the other factor to hinder Turkey’s labor force. Turkey’s poor female employment rate hampers competitiveness and productivity. • Unemployment rate was 10.0% in 2014 and will remain the same in 2015. Half a million new jobs need to be created every year to prevent the number of jobless rising (“Country Report Turkey”). • Some highly skilled professionals from Turkey immigrated to Germany. The phenomenon resulted in a “brain drain” effect on the country’s development. The apparel manufacture industry was also hindered by the skills shortage. • Turkey adult literacy rose 95.5% in 2013 and 96.1% in 2014 (“Country Report Turkey”).


Economic • 1USD = 2.571TRY • The Gross Domestic Product (GDP) in Turkey was 820.21 billion US dollars in 2013. The GDP value of Turkey represents 1.32% of the world economy. The average GDP between 1960 and 2013 was 197.27 USD billion. In the future, Turkey’s GDP will continue to grow. • Turkey’s low domestic savings make it heavily dependent on capital inflows to meet the investment needs. In 2014, savings were 3.9% of disposable income and the ratio will stay at this level in 2015. • Turkey has a stable bank system to protect from the unstable economic environment. Also, Turkey’s local banks can provide loan transactions to local enterprises, which can benefit apparel factory development. • Inflationary pressures: In 2013, the annual average rate of inflation stood at 7.5%, and shot up to 9.3% in July 2014 - way above the central bank’s target of 5%. Despite of this, interest rates have been cut and the central bank has indicated that this path will continue. Price pressures have not been helped by the weak currency, which makes imports more expensive (“Euromonitor International from”). • Higher wages will result in the increasing production costs, so prices will rise. In the labor market, employers were pressured after a rise in wages; the increase of wage added costs, which raised precession in products. It will affect our business spending more cost.


Political • In September 2010, a referendum on constitutional reforms backed amendments to increase the control of parliament over the army and the judiciary, while strengthening democratic processes in the country, including guaranteeing the rights of women and children and strengthening collective bargaining agreements (“Country Report Turkey”). • Turkey faces foreign policy challenges, mainly due to turmoil in the Middle East, which has severely affected Turkey’s international standing and strained its ties with countries such as Syria, Egypt, Israel, Iraq and Iran (“Country Report Turkey”). The environmental diplomacy makes the people’s life unstable, affects the local people’s work environment, and limits the country’s ability to attract ongoing account deficit in Turkey. Turkey is affected by external sources of finance, which prevent foreign companies from choosing Turkey as a supplier. It will hinder the country’s industry development. • Political instability both inside and outside:Political instability is the other challenge in the domestic and international side. Turkey's major political corruption scandal and riots have increased in recent years. Also, Turkey faces problems internationally with its borders in Syria and Iraq. Tensions in these two countries have economic, political and security impacts on Turkey (“Euromonitor International from”). • Turkey has attached particular importance to transatlantic relations being strengthened with the United States and European countries.

Outlook The country aims to improve its political stability in the long run, and expects to be among the world's 10 largest economies by 2023. Turkey’s political outlook has turned murky since the eruption of corruption allegations against members of the Erdogan administration because political uncertainty could exacerbate the effects associated with high gross external funding requirements of the country. A major part of an economy’s dependence on short-term portfolio stems from funding needs associated with a very high current account deficit; consequently, the government is expected to take efforts to increase the domestic savings rate in order to reduce the economy’s dependence on hot money for investment inflows. In the social side, the Turkish telecommunications sector aims to increase its R&D allocation to 3% of GDP by 2023.


Lead-time of production • Turkey is prone to earthquakes and is occasionally impacted by floods. Frequent earthquakes increase the need for reconstruction activity, whilst disrupting the country’s economic rhythm, also including the apparel manufactory industry, which will affect its development. • Turkey's Aegean and Mediterranean regions, government departments and many other agencies in the summer afternoons are closed. Every year, the Governor determines summer rules. • In the first day of Eid al-Fitr and ID al-Adha religious holidays, all the shops and markets are closed.

Culture insights • Turkey’s government office and banks work from Monday to Friday, and are closed Saturday and Sunday; banking office hours are shorter. Aegean and Mediterranean governments and a number of other institutions take break in the afternoon during the summer. The governing body in the province decides fixed daylight savings time. On the other hand, some governmental and commercial institutions have interim arrangements for 15 or 30 minutes before Office hours to make good use of the sun and save energy. • Turkey holidays include Republic Day and Victory Day holidays, but there are two important religious holidays, Seker Bayrami (3 days) and Kurban Bayrami (4 days). The majority of citizens and businessmen will comply with the holidays. Unlike in the West, the Islamic lunar calendar festival follows 10-11 days per calendar year in advance. During the Festival, most Turkish citizens have their religious ceremonies and celebrations, so businessmen should pay attention to when they’re doing business with Turkish during these days. • Turkey is an Islamic country, but most people choose to do business based on the Western way. At business meetings, business people generally shake hands when meeting and exchange business cards. • Relationships are very important in Turkey. It is impossible to do business in Turkey through a mobile phone; they prefer face-to-face interactions.


• Business dress styles are similar to Western Europe. For example, men usually wear a suit, a white shirt, and tie. However, women should pay attention to a conservative skirt length, avoid using strong perfumes, brightly vivid lipstick and lavish jewelry. • Foreign investors should avoid July and August schedules for the meetings, as well as before and after national holidays and religious festivals for business meetings because many of the staff and administrators will recess in these days, especially before and after the Seker Bayrami and Kurban Bayrami holiday. • Universal business language is English, especially among young people. Not all business people speak English, even though some of them know English, so scheduling a translator is appropriate to ensure that foreigners can more effectively and accurately communicate with Turkey partners. • Turkey businesses are willing to accept corporate gifts and business gifts, such as high quality pens and other office supplies, but alcohol is not the right choice.


State of the Apparel and Textile Industry • Turkey's clothing industry is well developed; it is one of Turkey’s pillar industries. Turkey produces one-third of the total garment exports. • Manufacturing makes up 17.7% of GDP and employs 19.6% of the workforce. Clothing and textiles make up nearly 40% of total exports (most of it to the EU) and one-third of manufacturing employment. According to the international textile industry labor cost report, Turkey labor cost is $ 5.48 per hour (“Werner International Hourly”). • As a bridge between East and West, Turkey has a great position geographically, and it can bring benefits to Turkey’s booming apparel industry (“Time of Change”). • Western European apparel brands choose Turkey for the reason of local costs of raw materials and labors. • Modern production equipments improve turkey's apparel and textile industry to be more efficient. It can reduce production time and save cost. • A further advantage for Turkey's manufacturers is that their production complies with internationally accepted ecological standards. • Child labor phenomenon appears in Turkey. • Tariffs intended to safeguard local industry: In September 2011, the Turkish government implemented tariffs on the import of textiles and apparel. The move was designed to protect local textile and apparel manufacturing. The additional tax rate is as high as 20% in several textile products and 30% for apparel. The rule will affect all origins, except countries with duty-free agreements with Turkey and the European Union (“Time of Change”). It brings more benefits to European countries. Also, manufactures, which have moved overseas, may move back to Turkey. Another option for Turkish manufacturers would be to concentrate their efforts on supplying more premium high street branded apparel (“Time of Change”). • According to the Istanbul Textile and Apparel Association (ITKIB), in 2013, Turkey exported $ 17.3 billion worth of apparel to 203 countries and regions; it rose 8.3% in 2013. • Domestic supplier companies fear that the increased production costs will hinder demand for international brands and will impact the garment and textile export market for the global brands who will seek better deals in Asia.


• Turkey manufacturers possess the expertise to meet customer needs; their national fabric and garment industry is the ideal place, with better prices and exceptional quality. • Weak labor laws, which hinder the formation of unions, have considerably restricted workers’ rights in Turkey. According to the European Commission, around two-fifths of the workforce does not enjoy full protection under the labor laws, with long working hours without payment for overtime, unjustified terminations and limitations on the usage of annual leave being some of the common problems faced by employees. (“Country Report Turkey”). • Many Turkey textile and apparel manufacturers have moved to a new design, fashionable style and quality label of high-end customers. • Turkey Governments have launched a "Turquality," designed to provide marketing and quality upgrade programs of assistance to the textile industry and strategic positioning of the company.


Suppliers within the Country Yesim Satis Magazalari Ve Tekstil Fabrikalari A.S. Yesim Tekstil is based in Bursa in northwest Turkey, one of the most industrialized and culturally charged metropolitan centers in the country. In addition to being one of the four largest, fully integrated yarn-to-finished-product facilities under one roof in the garment sector anywhere in the world, Yesim Tekstil is also one of Turkey’s largest firms in terms of creating employment. Meanwhile, their major exports include cotton, Polo, tank tops, and so on. Yesim Tekstil’ top 5 buyers are all from United States companies, including Burberry, Gap, BD Vineland, Edpa USA, and Banana Republic. They have maintained a good relationship of supplier and buyer. Also, Yesim Tekstil provides high quality products to the buyer while focusing on social responsibility and workers ' rights. Finteks Tekstil Ve Hali Sanayi Ltd. Sti. Finteks is one of the leading knitwear manufacturers in Turkey and is exporting to USA and European countries. They offer readymade garments, such as t-shirts and trousers. 
They not only provides good quality products, but also and listens and responds to the needs of consumers and partners. Meanwhile, Finteks protects the environment and maintains environmental consciousness among staff, suppliers and the public. In addition, the supplier has quality policy to guarantee the products. It can help the business remain efficient and valuated. The top partners are all America companies, such as Nas Apparel and Urban Outfitters. Taha Pazarlama Ve Magazacilik A.S. Taha Group is a vertically integrated, full-service apparel manufacturing company, which is proud of its international reputation as a manufacturer of top quality fabrics and garments. Taha provides services ranging from product development through logistics arrangements. The Group is a major supplier for some of the most famous brands, and this success has been achieved by implementing key principles, including maintaining good quality, achieving reliable delivery, continuous innovation in research, design and development. They pay attention to their customers to provide them developments of various fabric qualities, garment designs, embellishment or garment washing techniques. Their top partners are Levi Strauss and The Timberland. In addition, the supplier focuses on social responsibility to help give its workers better places to live and work.


Trade Agreements Turkey and the U.S.A. do not have a Free Trade Agreement. However, Turkey is a member of the Customs Union Agreement. Customs Union Agreement EC-Turkey Association Council, established by the Ankara Agreement to implement a customs union between Turkey and the European Union, came into effect on 31 December 1995. The main characteristics of a Customs Union Agreement are not only to cancel each other’s trade barriers between member states, and the implementation of free trade, but also the establishment of a common external tariff. In other words, Turkey and members of the customs union countries mutually agreed to eliminate trade barriers with each other, but also to adopt a common external tariff and trade policy. Goods can travel between the two entities without any customs restrictions. The CUA covered the textile industry to improve Turkey’s textile industrial development. NAFTA & FTA In addition, Turkey has Free Trade Agreement (FTA) with Canada and Mexico which both countries have NAFTA (North American Free Trade Agreement), Egypt. NAFTA greatly simplifies matters rising between the three countries on the import and exports formalities in trade and investment and promotes regional trade and economic development.

Turkey


Product Classification HTS Code: 6109.10.0040 Women’s t-shirts Except Underwear of cotton, knitted; style 1001 is a t-shirt constructed from 100% cotton knit fabric. The t-shirt features a round neckline, short-hemmed sleeves and a hemmed bottom without pockets, trim or embroidery. Duty rates: 16.5% in general, except QIZ certificated product.

Transportation

Major seaports: Istanbul, Canakkale, Aliaga, Izmir, Diliskelesi, Eregli, Izmit (Kocaeli), Mersin (Icel), Limani. (Figure 5.)


Shipping Company

CMA-CGM

Alianca

Route

Cost (including the insurance)

Time

Istanbul, Turkey --- Tanger Med (MAPTM)

$ 4,337.00

17 Days

10 Days

$ 4,533.00

21 Days

Per week

$ 4,793.52

23 Days

Per week

Schedule time

Morocco --- Savannah (USSAV) US

Aliaga (TRALI) Turkey --- Bremerhaven (DEBRY) Germany --- Savannah (USSAV) US

Turkon American

Izmit Turkey --- Istanbul --- Savannah (USSAV) US


Risks and Benefits Risks • Inflationary pressure

Benefits

• Turkish foreign policy challenges and political instability both

• Turkey has many river resources for cotton growing.

inside and outside. • Frequent earthquakes and expected floods • Exchange rate vulnerability to domestic and external shocks • The current account deficit remains high and the country is vulnerable to the volatility of external capital, on which the financing of the economy country heavily depends.

• Turkey is one of the countries in the world with young population. • Turkish apparel and textile industry continues growing and providing better quality. • Turkey's geographic position makes it an important energy and logistics corridor. • Its textile manufacture has great development on production process, equipment and design.

Conclusion

Turkey has plenty of labor and skilled textile workers and Turkey government supports the development of the textile industry. Turkey's natural resources promote the growth of cotton. Meanwhile, Turkey is one of the fastest growing countries in the world and its advantageous terrain has contributed to Turkey's development. Turkey has attracted large amounts of foreign investment, which is beneficial to Turkey's economic development. However, since Turkey has inside and outside the political, which hampers foreign investment in Turkey. Also, massive amounts of foreign capital has influenced the economies. Meanwhile, women's education levels also affect the employment rate of women in Turkey. In addition, Turkey frequent natural disasters, such as earthquakes and floods, are also one of the negative factors. These facts will affect doing business in Turkey.


HONDURAS


Introduction Honduras is located in Central America, bordered with Nicaragua, El Salvador and Guatemala. Its capital is Tegucigalpa. It’s a small-scale developing country known for its agriculture exports, especially bananas, coffee and sugar. Besides the exports, it is also known for its notorious crime rate and drug trafficking between South America and the US. As with most developing countries, the living standard of Honduras is poor, and many Hondurans have little access to electricity and clean drinking water, as well as health care. While the textile industry has been developing for years due to Caribbean Basin Initiative (CBI), it has gone through a downhill since 2005 with the migration of the business investment to Asian countries.

Country Traits Location: Central America Government Type: Democratic Constitutional Republic Head of State: President Juan Orlando Hermandez Alvarado Country Size: 112,090 sq km total land size; 8,598,561 total population Language: Spanish (official), Amerindian dialects Literacy ( age 15 and above can read and write): 85.1% of total population Labor Force: 39.2% agriculture, 20.9% industry, 39.8% services Export Commodities: Apparel, coffee, shrimp, automobile wire harnesses, cigars, bananas, gold, palm oil, fruit, lobster Export Partners: 34.5% US, 11.6% Germany, 6.8% Belgium, 6.6% El Salvador, 4.9% Guatemala, 4.6% Nicaragua (Central Intelligence Agency)


Country Stability Social The main advantage of Honduras is its high ratio of workforce at age 15-64 (about 60% of the population) as well as the cheap labor cost (GlobalEDGE). But the low wages for labor traps the society in the cycle of national poverty and low education, which results in unskilled labor, causing low development of the country. Honduras is one of the poorest countries of Latin America (GlobalEDGE). The high rate of national poverty as well accounts for the lack of access to the health care, electricity, and clean drinking water (GlobalEDGE). The unstable society and the fact that over 50% of Hondurans live in poverty also affect the social condition and result in the high murder rate and gang violence (GlobalEDGE). Without better education, it is hard for the government to improve the national literacy and culture to decrease crime rates. For investment in Honduras, one of the biggest disadvantages is the lack of a skilled workforce. If we choose the suppliers in Honduras for textile industry, we might need to consider the quality of the production and products as well as the safety of the laborers at factories. The lack of skills may also influence the lead time. Besides, we may need to invest more in the corporate social responsibility to help the local people with knowledge and skills to equip them with working ability for better operation efficiency and for their future opportunities. Another thing that needs to be considered is the lack of access to clean drinking water and electricity, which might not only influence the operation of the factories but also the condition of the workers; these may be another part that we need to invest and assist for the improvement of the local society. The good thing is that it may be an opportunity for us to convey our mission of helping others and the environment.


Economic The currency of Honduras is lempiras (HNL). The exchange rate is 21.35 HNL per US dollar as of 2015, which has increased from 18.9 HNL in 2009 (CIA). This increase may be the result of both the growth of US dollar and the account deficit of Honduras. The current inflation rate is 3.66%, compared to 5.82% at the end of 2014. The economy of Honduras is more stable now (“Honduras Inflation Rate”); it is mostly due to the decrease of oil prices and the growth of the US economy as the result of its dependency on the US economy. The ratio of the distribution of workforce in Honduras may be a concern for us because most of them are farmers, who may have limited knowledge and skills for working at a factory. Although recently the textile industry and electronic component industry have been growing in Honduras, the main proportion of the workforce is still for agriculture and aquaculture. Most of their GDP is from the export of goods and services (“Honduras 2014 Country Review”). The biggest export and import partner of Honduras is the US, which builds a good foundation for us to work with the country for exports. Moreover, as a member of CAFTA-DR, Honduras is a great export partner for us to work with, since there will be tariffs exemption (“Honduras Country Report”). Furthermore, Honduras has access to world’s main markets and has the trade agreement with many countries, which is an advantage for us if we want to ship or sell our products in those markets and countries (“Business Climate”). But still the account deficit and off-budget debt of Honduras may be a concern for us to work with (“Honduras Country Report). If our suppliers there fail to pay for taxes and other fees and become bankrupt, it may also hugely influence our operation.



Political Although Honduras has been a democratic republic country for years, the strong control of military over the mass, the power of the president and the National Congress, and the fight between the two main political parties, the Liberal and the National, all affect the stability of the country, causing the uncertainty of the political situation (“Honduras Country Report”). With the unstable politics, it is hard for the country to reduce the crime rate in order to improve the insecurity problem and the living standard of the country. While the power of the government are divided into 3 main branches, the two parties try to get more seats and to pass the legislation that would do them good, which may also influence the instability of the legal code for foreign investments. The main advantage of the political sector may be the relation between Honduras and the US, which makes it easier for us to import our supplies from Honduras. Nevertheless, the risk of it is that the uncertainty of the politics may cause the strike or other labor and operation difficulties. Besides, the high violence crime rate is risky for our business with the possible threats from gangs (“Honduras Country Report”).


Lead Time of Production The factors that may influence the lead time in terms of geography are the natural disasters such as hurricanes, earthquakes and floods. In October 1998, Hurricane Mitch hugely destroyed Honduras; thousands of people were killed and hundreds of thousands were homeless. Hurricane Mitch was the worst natural disaster of the century in the western world. The disaster not only took the lives of people but also destroyed the road network and other public infrastructure, highly devastating the economy of Honduras (“Honduras 2014 Country Review”). Although the earthquakes in Honduras are generally mild, the frequency of earthquakes and the possibility of a tsunami caused by earthquake may still be a big concern that might influence the lead time, especially the shipment lead time may be affected. Floods are another possible factor on lead time since most of the industry parks are near the ground area and around the north and east coastline. Besides the geography and natural disasters, another possible influence is the threats of being extorted by the gangs (“Honduras 2014 Country Review”).

Cultural Insights For doing business in Honduras, the biggest problem might be punctuality since the Hondurans seem to be more flexible with the view of time use (Cultural Crossing Guide). And the indirect style of communication may be a challenge for us to communicate and transfer the information correctly with them (Cultural Crossing Guide). The informal way of meeting may also influence the operation efficiency (Cultural Crossing Guide). In addition, the gender issue of women being not appropriate for walking alone at night and at an unpopulated area may affect our employment so that we might only be able to employ male workers (Cultural Crossing Guide). As for the social and political sectors, the violent crime and murder rates are some of the biggest risks for the foreign investments as well as the local workers.


Culture and taboos when communicating with Hondurans: • Custom form of greeting is firm handshake with direct eye contact. When greeting a woman, men should wait for the woman to extend her hand first. When becoming familiar with the person, a pat on the shoulder can be a sign of friendship between men. Besides, greetings among Latin Americans are usually lengthy, involving caring about health, travels, relatives, etc. If the greeting is too short and quick, it would be seen as disrespectful and thoughtless. • In Latin America, formality is regarded as a custom and that people should always address others by title and last name unless they prefer to be called the other way. • People should always cover the mouth if yawning and coughing cannot be avoided for the reason that yawning and coughing are seen as rude, especially during conversation. • People should not stand with hands on their own hips for it is seen as a sign of anger. • Latin Americans usually stay a closer proximity when communicating; people should try to be calm and not feel too uncomfortable. • The punctuality view is different there. It is a custom to be late at a party, especially for foreigners and in business circles. The time period depends on the occasion; for dinner parties, it could be about 30 minutes late, while at large ones it could be up to an hour. • Hondurans, as other Latin Americans, like to show their hospitality and sometimes may invite people to visit their homes for dinner. If it’s a dinner party, it usually begins and ends later than the usual dinnertime. Even if they are hospitible, one should never drop in someone’s home without invitation or scheduled visit. • Although there often are business lunches or dinners, business conversation usually does not appear on the table of social dinners. There are some differences between business and social dinners that one should be sure when attending. • One should bring an appropriate gift such as flowers, high quality sweets like chocolates and pastries, whiskey or other high-end liquor. Some gifts such as knives and some specific kinds of flowers which are symbol of funerals should be avoided. • For the dress, they usually wear casuals but they are also highly conscious of fashion and self-presentation. During business occasion, suits are the norm for both men and women. Even if the weather is hot due to the tropical climate, shorts are perceived as private wear at home and should not be worn at work (“Honduras 2014 Country Review”).


State of the Apparel and Textile Industry Due to the preferential trade agreements with Caribbean Basin countries, the Caribbean Basin Initiative (CBI), the exports from Caribbean countries, including Honduras, has become typical for its short lead times and regional trade agreements for the US market. During the last 15 years, under the influence of Multi-fiber Arrangement (MFA), regional trade agreements with the US such as CAFTA-DR, the government’s attractive foreign direct investment (FDI), export processing zone (EPZ) policies, and relatively low labor costs ($1.69 per piece in 2009), the apparel manufacture had developed to be the largest apparel exporter among the region before 2004 (“Sewing Success?”). During 2004, the apparel export from Honduras to the US hit $2,743 million with 157 apparel producers, 9 textile mills, and 90,000 workers at that time (“Sewing Success?”). In the early stage, there were only apparel assembly plants in Honduras while now there are more than 9 textile manufacturers, including one yarn manufacturer; some of the manufacturers provide the full-package services. Most of the apparel manufacturers are US-based brand-owned manufacturers, with only some owned by Honduras domestic firms. The preferential access to the US market and the relatively low labor cost made Honduras a preferable location for the US apparel firms moving their manufacture down to Honduras, making the apparel sector export-oriented. The legislation and the passing of CAFTA-DR provide duty-free access for apparel made in Honduras with fabric or yarn from the US or other countries in the region. The models of apparel sector in Honduras are mostly original equipment manufacturing (OEM) and full-package production. The main product of apparel exports in Honduras are basic knitwear made of cotton, and mostly for men’s market, such as t-shirts, socks and underwear. However, after the MFA phased out, not only Honduras but also other countries of CAFTA-DR have lost its competitive advantages that lots of US firms moved their manufacture to Asian countries. Besides, the instability of the politics of Honduras as well has influenced the manufacture for the US firms with the increased financing costs caused by the low confidence in the region. Among 2009, the textile and apparel exports from Honduras to the US fell more than 30% (“Sewing Success”).

Suppliers within the Country Elcatex S.A. De C.V. It is a 500,000 square feet textile facility, which is capable of producing up to 2 million pounds of textile per week. The company is dedicated to knit fabric, cut parts and full package programs. It started in 1984 with the objective to be an integrated textile center in Honduras, providing high quality products for national and international markets. It develops its operation by embracing the new opportunities and innovation on sustainable production process. It also welcomes the strategic partnerships with vendors and customers. Its products are mostly made of 100% cotton or a cotton-poly blend with different fabric finishing. Its product development department is able to provide fabric, garment and packaging specifications based on customers’ needs (Elcatex Official Website).


Competitive Advantages: • Vertically integrated with first process of knitting • Certified by WRAP and Hohenstein for product class II of Oeko-Tex Standard 100. • Pioneer within the region on energy generation of renewable process such as biomass and water recycling process with ‘Dyeclean” reducing up to 80% water consumption and 50% chemicals (Elcatex). Pinehurst Manufacture Pinehurst was founded in 1989 and has grown its partnerships with many well-known apparel brands. Its vision is “to build a network of partnerships with the most exciting brands from all around the world” (Pinehurst Manufacturing Official Webstie). It keeps expanding its portfolio to be the leading lifestyle retailer in the US and Central American regions. The portfolio also helps the company to grow its capability for versatility and diversity to be more creative to face the challenges and opportunities in the apparel industry. Pinehurst has grown its ability to include sweat shirts, performance shirts, sportswear shorts and jersey, ladies’ line, underwear and a wide array of other lifestyle apparel. It provides services of cutting, sewing, screen printing, embroidery, sublimation and washing. Besides, Pinehurst also focuses on innovation and technology with modern facilities. (Pinehurst Official Website). Competitive Advantages: • Big customer base of well-know brands including Nike, adidas, CK, Polo Ralph Lauren, Ralph Lauren, A|X, Nautica, VF, DKNY, Puma, Under Armour, Kenneth Cold, Reebox • Capacity of product availability • Innovation Pride Manufacturing S. De R.L. Pride is located in Choloma, Honduras. It has 450 employees and a capacity of 10,000 dozens per week. It provides versatile apparel manufacturing facility with the service of sewing a variety of clothes in various fabrics and styles. It also provides products in forms of full package, cut & sew and 807 (Grupo Karim’s Official Website). Competitive Advantages: • Certified by WRAP (Panjiva)


Trade Agreement CAFTA-DR Dominican Republic-Central America FTA is the first free trade agreement between the US and the smaller developing countries in Central American region, including Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Dominican Republic. It creates trade and investment ties with the US, creating prosperity and stability for those countries as well for the Southern border of the US. It is listed the third largest after Mexico and Brazil of the US export market in Latin America. The multilateral trade of goods between the US and these countries has made more than 71% growth with a $25 billion increase from 2005 to 2013. The imports from CAFTA-DR to the US totaled $30 billion in 2013. This relationship helps to strengthen the human rights and working conditions among the region by labor protections under the local country laws. Under this trade agreement, we have the big benefit of the exemption of tariffs (Office of the United States Trade Representative).


Product Classification The product is women’s basic knitted tank top with 4 trendy colors of the current season, for example, Fusion Coral, Golden Haze, Orchid Tint, and Pool Blue for Spring 2016. The silhouette is regular fit with round neck. The material will be 100% organic cotton only. The HTS code is 6109.10.0060 with the product description as “women’s tank tops except underwear of cotton, knit” (“U.S. TEXTILE AND APPAREL CATEGORY SYSTEM 2015”).

Transportation Depart Port: Puerto Cortes, Honduras Arrival port: Savannah, GA, USA Costs: $790,70-873.93 (Word Freight Rates)


Risks and Benefits Risks The main risk may be the uncertainty and instability of the politics, which may highly influence the implementation of the legislation of foreign investments. The high rates of crime and murder as well will be a threat to our investment there. Drug trafficking is also a potential risk when passing the US custom. Another big risk is the natural disasters of hurricanes, earthquakes and floods, which may devastate the whole business suddenly without warning.

Benefits

The biggest benefit is the partnership of CAFTA-DR, with which we can not only export the products made in Honduras but also can import the raw materials from other partners of CAFTA-DR without tariff. The second main benefit will be the large quantity of cheap labor. In addition, the short distance between Honduras and the US is also beneficial to us.

Conclusion The inefficiency of the compliance of laws and foreign trade legal codes, the lack of skilled workforce as well as the low rate of literacy of the population all account for the difficulties for foreign investments. With the account deficit and high dependency on the economy of the US, Honduras is one of the poorest countries in Central America. Its uncertainty of economy and politics as well as the drug markets are the biggest reasons for the violence of the country, which even exceeds the level of most war-zones. The natural environment of Honduras also influences the sector of its economy; the majority of the country is on mountains, with only a small portion of plains, which are mostly the coastline of the country. With this kind of topography, Honduras is also a country of banana and coffee production, which are mainly exported to the US. Overall, the uncertainty of the politics and the macroeconomics, the gang violence, insecurity of the environment, the risks of natural disasters such as hurricanes and floods, the unskilled and underskilled workforce, and the topography of Honduras make it a negative location for foreign investments and partnerships.


PAKISTAN


Introduction Pakistan is one of the most chaotic countries in the world. The country is facing significant security issues from both inside and outside. Terrorism, religious conflicts and energy crisis are the three major problems blocking the country from moving forward. Also, there are land issues between Pakistan and its neighbors that have existed for over decades. On the other hand, with the sixth largest population in the world, Pakistan has a rich labor source, and it is one of the lowest labor cost countries in the world. These advantages attract a lot of companies to set up their factories in this country. In addition, Pakistan has a long history on cotton production, and the textile industry of the country contributes over half of the country’s export.


Country Traits • Location: South Asia. • Country size: 796,095 square km, ranked 36th in the world (CIA). • Capital city: Islamabad. • Type of government: Federal republic. • Head of the state: Mamnoon HUSSAIN, since Sept 2013. • Language spoken: there are more than 60 languages spoken in Pakistan. The official languages are English and Urdu. • Population: 187,841,333 till July 2014. Ranked as 6th in the world (worldometers.info). • Median age: 22.8 years (worldometers.info). • Literacy (age 15 and over can read and write): total 54.9%, male: 68.6%, female: 40.3% (CIA).

Country Stability Social

With the large population and young median age, Pakistan has a huge advantage on the labor market. It has one of the lowest labor costs in the region, which can attract a lot of investors who are looking to reduce the cost. However, the situation of child labor in Pakistan is very serious, and it made Pakistan rank as one of the worse country in the world, with more than 3.3 million children between the ages of 5 and 14 currently engaged in fulltime employment. Also, the unemployment within the young generation and low effective production are the main problems within the business sector (country Reports – Pakistan).


Economic Pakistan is classified as lower middle income country by the World Bank. However, with the political tensions subsided, the country’s economy is getting better since the last five years. The GDP of Pakistan was $232.2 billion in 2013, and the GDP growth rate was 4.4%. In 2014, the GDP growth rate increased to 5.5%; however, according to the World Bank forecast, the number will be back to 4.6% in 2015, and slowly growing to 4.8% and 4.9% in 2016 and 2017 respectively. • Currency: Pakistani rupee (PKR) • 1 Dollar = 101. 88 Pakistani Rupee (date: 4th April 2015)

On the other hand, The high inflation rate and the gap between the rich and poor are the main issues within Pakistan. As a typical Third World country, the undeveloped economic condition will also cause a lot of problems for a company investing in this area, such as pervasive tax evasion and corruption. The fiscal mismanagement of the whole country, political instability and sectarian violence also hurt the economy, including the business sector.


Political The political situation in Pakistan is unsteady. There are over 200 of political parties within the country; the political alliances in Pakistan can shift frequently. Thus, the political unrest and the changing policies will hugely affect the country’s industries. According to Multi Fiber Agreement (MFA), the challenges for its textile industry result from the lack of political will by the successive governments. In addition, terrorism has been a serious issue in this country for a long time. Although United States killed Bin Laden within Pakistan in 2011, and the government announced plans to execute an estimated 500 Islamist terrorists in the coming days as part of a ‘decisive war’ against the Taliban in 2014. Taliban is still the biggest threat, as well as other local terrorism forces (country Reports – Pakistan). The US is the most important partner of Pakistan against terrorism.


Furthermore, corruption in Pakistan (both political corruption and bureaucratic corruption) is still a big issue that limits its development even if the government has noticed the problem. In the country, police and law enforcement appointments are often politicized, full of nepotism and conflicts of interest (Cheema). According to Corruption Perceptions Index 2014, which was published by Transparency International, Pakistan is ranked 126th among 175 countries in the world in 2014 (ransparency.org).

Meanwhile, the relationship between Pakistan and other countries is also influencing the political situation of the country. Within its neighbors, Pakistan has a long-standing and harmonious relationship with China on many aspects such as military, nuclear power, transpiration, etc. In recent years, China’s treatment of its Muslim citizens had become a problem for Pakistan, but China is still one of the best friends of Pakistan (China And Pakistan Are Geopolitical Friends). On the other hands, although Pakistan and India share a similar culture, their relationship is very complicated, and mostly, they are against each other. There are three big wars between them in the history. Now, Kashmir is the biggest issue between these two countries, even though they signed a cease-fire agreement in 2004, the clash has never stopped (pakindiafriendship.com). Afghanistan is also a complicated neighbor to Pakistan with border issues as the main problem, but they share the same attitude towards terrorism and the development of economy (Rubin).


Lead Time of Production Energy crisis is the biggest sector causing the late lead time of production in Pakistan. According to Customs Today, a newspaper in Pakistan, textile industry in Pakistan has been struggling with this problem in the last six years. However, the government didn’t provide an effective solution to this issue. Also, the natural condition in Pakistan is very poor, although subtropical climate is good for cotton farming, it will bring flood and heavy rains to destroy the farms and factory facilities in the rainy season. Furthermore, earthquake is a serious issue in the northwestern part of the country. In addition, in Pakistan, public holidays are celebrated according to Islamic calendars for religious and civil purposes respectively. As an Islamic country, Pakistan has the second largest Muslim population in the world. For Muslims, they are required to pray five times per day. Friday is the holy day of Muslims and everything is closed. Another important holiday of Muslims is the holy month of Ramadan. All Muslims are only permitted to work six hours per day. These elements will all have influences on lead time of production in the country.

Cultural Insights • Pakistan is one of the oldest countries in the world with Indus Valley civilization, which can be traced back at least 5,000 years. • In Pakistan, the social structure is based on family, and it’s more private than other cultures. Thus, asking questions about family is considered as discourteousness, especially to female relatives. • Pakistan is a hierarchical society; older people are viewed as wise and are granted respect.


• In business, Pakistanis prefer to work with people they like or trust, they will spend a long time building a relationship and get to know their partners. They often ask personal question as a way to know a person, and they like to talk business in person rather than over the telephone. • Unlike most western cultures, Pakistanis do not require much personal space. Thus, as foreign business partners, do not feel violated or back away when they stand close to you. • It is very important to make a clear statement with Pakistanis and get certain feedback because they hardly admit that they cannot or will not be able to do something. • It is very important to made appointments three or four weeks in advance when doing business with Pakistanis, and the best time is in the late morning or early afternoon, but making an appointment during the holy month is not appropriate. • Pakistanis are not always punctual; waiting is necessary when setting up meetings. • It is common to have a meeting cancelled at the last minute or even when you have arrived. • Business may not be discussed at all at the first several meetings because the relationship is still developing. • Meetings always start after prolonged inquiries about health, family, etc.. However, one should never inquire about a colleague’s wife or daughter during this time, and maintain indirect eye contact while speaking. In addition, Pakistanis have an open-door policy in general, thus, it is easy to be interrupted. • Although most of Pakistanis pursue win-win outcomes, they may become very emotional during negotiations, and then may use Urdu (the local language), thus, it is important to keep a calm atmosphere and do not use high-pressure tactics. • It is always hard to make decisions when doing business with Pakistanis, and the decision always has to be made by the highest-ranking person.


Apparel and Textile Industry Textile is the largest industry in Pakistan and the main sector of the country’s economy, including garments, towels, household linens, and soft toys. Cotton is the main industrial crop in the country, which grows 15% of the country’s arable land, and Pakistan is the fourth-largest cotton producer in the world (country Reports – Pakistan). In the mid-2000s, there was a rapid increase of investment in this industry, both nationally and internationally. There were a lot of global brands attracted by cheap labor, especially sportswear, such as Nike and adidas. Thus, compared to other industries, the government has a complete system in textile and cotton, such as Pakistan Cotton Ginners Associations, Karachi Cotton Association, etc. Pakistan also has specialized laws about cotton.

However, there are some important problems within this industry that limit its development. The first one is the energy crisis, as mentioned before, which

has been existed in the industry for several years, and caused a lot of extra problems to the factories such as layoffs and the increased cost of products. In addition, the production of cotton heavily relies on weather; thus, extreme weather in Pakistan will bring a lot of risk to the industry. In 2014, the floods damaged an estimated 80,000 hectares of cotton area, a small fraction of Pakistan’s 3.1 million hectares of cotton. This damage caused the Pakistani cotton to be currently among the lowest-priced cotton in the world (USDA GAIN: Pakistan Cotton Update - October 2014 - Market Reports). International competition is another problem of the industry from countries such as India, Bangladesh and Vietnam. These countries also have low-cost labors, and their country conditions are better than Pakistan’s, with the changing of exchange rate, cost of energy, markets, product mix, as well as perceptions regarding trade opportunities. They may take over Pakistan’s position in the global level. Because the textile industry in Pakistan is mostly export, this problem will become the biggest threats to the industry in Pakistan (How Competitive Is Pakistan’s Textile Sector | Business Recorder).


Suppliers within the Country Loop Tex Pvt. Loop Tex is located in Lahore, which is in north east of Pakistan. The company offers fully vertical service to its clients, including manufacturing, sourcing, making and design. The products of the company are also very diversified; it provides all types of knitted, woven, nonwoven apparel, bags, accessories, aprons and etc. Loop Tex’s customers are mostly from the US, such as Levi’s (Pajiva.com).

More importantly, The company provides high quality organic cotton which is

certified by Global Organic Textile standard (G.O.T.S), E 100 standard, and OE blended standard (replaced by OCS in 2014). Although Loop Tex is a small company, which only has 340 employees, the company has the thought of social and labor compliance. According to its website, Loop Tex provides a very decent and honest work environment for works, as well as regular outdoor activities. Meanwhile, the company always keeps working on upgrading its workforce and technology to do a better job (looptex.com). Style Textile Pvt Ltd. Style Textile is also located in Lahore, it has 4,400 employees and has its own vertical manufacturing facilities, such as fabric production plants and garment factories. All of these facilities are approved by some the world’s leading brands like Nike, adidas, Reebok and Levi’s. For fabric, Style Textile specializes in 100% cotton, CVC with polyester blended fabrics like Fleece, Jersey, Pique, Ribs and Interlock amongst others (styletextilepvtltd.enic.pk). On the garment side, they have a substantial experience and skill for handling diverse styling with multiple embellishments. The company’s customers are mainly international companies, such as Nike, adidas, Levi’s, Macy’s etc (Pajiva.com).


Combined Fabric Limited. Combined Fabric was established in 1990, as a WRAP Certified vertically integrated knit apparel manufacturing facility. It offers apparel for both males and females. The company has the vertical production process, including knitting, dyeing, finishing, embroidery, and stitching. Thus, the company can guarantee quality control in every step of the production, and meet customers’ high standards. Combined Fabric have earned a reputation for handling various fashion styling and color combination at one time without compromising quality, and its strength lies in short lead time, usually 45 days, minimum 30 days, and high quality (combinedfabrics.com). The company’s customers include Levi’s, Guess, etc (Pajiva.com).

Trade Agreements Pakistan is a member of GATT (General Agreement on Tariffs and Trade), WTO (World Trade Organization), ECOTA (Economic Cooperation Organization Trade Agreement) and SAFTA (South Asian Free Trade Agreement). Unfortunately, although the United States is the biggest exporter for Pakistan, there is no trade agreement between these two countries. Thus, products from Pakistan should be paid with full tax when they enter the US. However, in 2012, the Bilateral Investment Treaty was approved, and this may be a sign that US-Pakistan Free Trade Agreement will be negotiated in the future (ustr.gov). Now, Pakistan already signed over 50 BITs with other countries, and it has FTA with India, China, Sri Lanka; PTA with Iran and Mauritius, Early Harvest Schemes with China and Malaysia (commerce.gov.pk).

More importantly, in the future, Pakistan has been preparing FTA talks with Brunei, Indonesia, Jordan, Thailand, Malaysia, Morocco, Singapore, and may

have a chance to talk FTAs with Afghanistan, Algeria, the EU, Japan, Laos, Mexico, New Zealand, South Africa and Tunisia (bilaterals.org).


Product Classification • HTS code: 6109. 10. 00. 40 • Description: The product line is women’s basic v-neck t-shirt, and made by 100% organic cotton. There are four different colors within this product line, including cornsilk, black, light gray, and fairway. According to HTS, the product is defined as women’s or girl’s t-shirt.

Transportation

• Duty rate: 16.5%

For water transportation, the country is beside the Arabian Sea, and it has four ports. Port Karachi is the busiest port of the country, located in Karachi city, which in south east of Pakistan. In 1970s, Pakistan built a new port – Qasim, near to Port Karachi, 95% of the water transportation in Pakistan are from these two ports (pqa.gov.pk). Both of these ports have ability to serve international freight. According to Global Container Services Port of Savannah, the table below shows the detailed¬ information of three fright companies that have shipments from Port Qasim, Pakistan to Port Savannah, United States.

Company

Route

Time

Price

Frequency

APL

Qasim -

29 days

$4,320

Weekly

28 days

$4,433

Weekly

40 days

$4,155

Weekly

Savannah NYK

Qasim Savannah

Cosco

Qasim Savannah

* Other Data based on worldfreight.com


Risks and Benefits Risks:

Benefits:

• Unsteady social, economic, and political environment

• Rich raw material resources and low prices

• Terrorism

• Governmental policy attraction

• Long leading time

• Low labor cost

• Energy crisis • Extreme weather

Conclusion In conclusion, Pakistan is transferring to a better world step by step. The GDP is growing, and the resources of labors and raw materials will definitely adding attractions of the country. More importantly, most suppliers within Pakistan can provide complete services to their costumers with appropriate prices, and they have consciousness of upgrading themselves in order to be more competitive at the global level. However, due to the unstable country environment, especially terrorism, doing business in Pakistan is risky. Unfortunately, these issues, such as terrorism, energy crisis and boundary problems cannot be solved in a short time. Thus, although Pakistan has a good perspective in the future, it still has a long way to go.


EGYPT


Introduction Long known for its pyramids and ancient civilization, Egypt is the largest Arab country and has played a central role in Middle Eastern politics in modern times. The long history of its textile industry and the reputable high-end cotton attracts supply chain managers’ attention from all over the world. However, the country’s growth slowed down after the January 2011 Arab Spring, so did the industry. Thanks to the 2014 new government who temporarily stabilized the current political unrest, Egypt now has the opportunity to sow the seeds of future growth. The Egypt report will explore various factors that influence our supply chain strategy including the overall stability of the country, the apparel manufacturing industry’s condition, culture, business environment as well as transportation, and obtain the thoughtful insights of benefits and risks for doing business in Egypt.

Country Traits Location: Northern Africa, bordering the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, including the Asian Sinai Peninsula Area: 1,001,450 sq km Population: 86,895,099 (July 2014 est.), ranked as 16th Government type: republic Head of state: the President (now Abdul Fattah al-Sisi) Language: Arabic (official), English and French widely understood by educated classes Literacy (age over 15 can read and write): 73.8% (2015 est.) GDP: $272.0 billion (2013) GDP per capita adjusted by purchasing power parity: $6,483 (2013) (CIA)


Country Stability Political Turbulence and uncertainty have characterized Egypt’s political scene for three and a half years since the ouster of former President Hosni Mubarak in February 2011 (“Egypt Country Profile”). Egypt witnessed a power struggle between the military and Muslim Brotherhood whose candidate Mohammed Morsi became the first freely elected president in the nation’s history but was removed by the military a year later amid mass protests. This resulted in fresh violence, leading to the death of several supporters of Morsi. The former military officer, Abdel Fattah al-Sisi, won a landslide victory in May 2014 presidential elections. However, the low voter presence in the polling booths failed to offer the much-needed stamp of legitimacy for Sisi. The new president has promised to deliver both domestic security and economic prosperity to the country, yet it remains uncertain for Egypt’s future in terms of political instability (The PRS Group U5). The outcome of the complicated deliberations on the new government’s makeup, quality, and policy orientation can be expected to consume the next several years, posing high risks, challenges, and opportunities for both Egyptians and foreign investors. The lack of political stability in the country would affect our business as the riots, looting and general disorder in the environment could disrupt business operations.

Egypt has a great influence among the Gulf Arab states, and its strong relations with various gulf countries have secured the economic benefit for Egypt.

For example, Saudi Arabia, Kuwait and the UAE have together promised a combined $13.9 billion aid to Egypt (Marketline 38). Besides, relations between Egypt and the US are likely to revive. The US just ended freezes on deliveries of military equipment to Egypt this year, which happened after the removal of Morsi nearly two years ago (Rampton and Mohammed). In addition, the country is now focusing on expanding its alliances by forging ties with allies such as Russia, China and India. When political and social turmoil in the country have taken their toll on the economy, the healthy relationships with above countries will enable the influx of aid and relieve the tension on economy situation, thus reducing the risk of our business operation in Egypt.

Hosni Mubarak 1981-2011

Mohammed Moris 2012-2013

Abdul Fattah al-Sisi Since 2014

TERM OF OFFICE


Social Egypt’s current strengths in the social sphere rest upon its extensive social security and welfare system that offers coverage to most of its citizens such as retraining and unemployment insurance, as well as pensions and sickness benefits (Marketline 21). Besides, the country is collaborating with the US to improve the healthcare system. These strengths build up a great base for companies to formulate and execute internal codes of conduct in terms of health, safety and welfare, which will potentially meet our company’s requirement in sourcing guidelines. However, social stability will remain elusive amid political uncertainty and higher unemployment rate in the country. The tensions between Salafists (radical Islamists) and Coptic Christians resulted in many casualties in the country since the 2011 uprising. The business operation would be hit adversely due to frequent strikes, social unrest, and chaos in the country. And poverty and food insecurity in Egypt has risen significantly in recent years as around 26% of the population lives in poverty and 17% of the population suffers from food insecurity in 2011 (Marketline 22). According to CAPMAS, 15% of the population slid into poverty between 2009 and 2011, twice the number who moved out of poverty. In addition, Egypt is ranked 148th out of 148 countries in the 2013-14 Global Competitiveness Report, the last one in terms of the quality of primary education (Schwab 456-457). The state of education in Egypt and lack of competitiveness could affect the social and economic development of the country with such a young population. This is a bad news for our company because the scarcity of well-trained and educated workers may affect the quality of our products. And operating a supply chain with long distance requires an integrated and synchronized system with highly developed IT platform and other technology, and it will take more time for an employee with a poor education to master it.


Economic The continuous political uproar and violence had a profound impact on Egypt’s economy when continued protests have turned tourism, foreign investment and remittances from Egyptian expats off. The GDP growth declined dramatically during 2011 to 2013 due to ongoing political turmoil. Due to the economic depression, a decline in demand for garments in the domestic market, the rising inflation rate, and the ongoing decline in the value of Egyptian currency, many small and midscale Egyptian production units have either closed down or suffered from reduced capacities (“Economic Crisis Affects Egyptian Textile Industry”). Nevertheless, with the succeeding improvement of political conditions and the inflow of Gulf aid, the economic situation is expected to move ahead slowly and the GDP growth is projected to increase at about 4 percent in next few years, which still remains well below the

GDP and GDP growth rate in Egypt, 2007-17

5-7 percent annual growth of the decade before the Arab Spring. Besides, Egypt is planning to attract foreign investment and there is no legal difference between domestic and foreign investors in most sectors including the apparel and textile industry. Thus, it is a benefit for our company to cooperate with suppliers in Egypt. In addition, the cheaper pound should make Egyptian products more attractive to us. However, since the textile and garment industry in Egypt relies heavily on imports such as yarn, fabrics and accessories, our company also needs to consider the impact on costs based on the performance of the Egyptian Pound to other currencies in countries that offer raw materials or components.

The currency of Egypt is the Egyptian Pound (symbol: £). Currently 1 US dollar equals 7.58 Egyptian Pound (April 4, 2015).


Cultural Insights Religion of Islam has a huge impact not only to Egyptian’s culture but also the society and economy. Due to Muslims’ obligation to pray five times a day – at dawn, noon, afternoon, sunset and evening, in addition that Friday is the holy day for them, which makes Thursday and Friday as their weekend, it is hard to cooperate with the working hours of Egypt (Kwintessential).

The fact that Arabic is the official language of Egypt and only some speaks English makes it

hard to communicate with them (Katz 186). Gestures and body language can be extensive in Egypt, and people tend to make frequent physical contact. For example, men may greet each other by hugging and kissing as a sign of friendship. However, one should never touch someone’s head or point at people. Eye contact should be direct and frequent, as Egyptians believe that it’s a sign of honesty and sincerity except dealing with a superior. Egyptians smile frequently even if they are distressed or angry since they enjoy showing positive emotions. Women need to dress themselves carefully: collarbones and knees should be covered appropriately (Katz 191); men should wear dark colored, lightweight, conservative business suits, at least to the first meeting (Kwintessential).

Generally, Egyptians employ a poly-chronic working style (Katz 188). Building relationships

is crucial to most Egyptians that they only do business with those they know and like (Katz 185). Most companies tend to emphasize hierarchy that people usually work within clearly lines of authority. Decision makers rarely delegate their authority, so it is better to deal with senior executives. Titles in a team are important because Egyptians respect age and experience. Besides, appointments are necessary and should be made in advance (Kwintessential). The meeting should be confirmed one week in advance and reconfirmed again a day or two earlier. Schedules are usually loose and flexible (Katz 186) but some Egyptians still focus on punctuality; it’s better not to be late more than 10 to 15 minutes. Although


businesspeople in Egypt will have a formality in signing the contracts, they may view them as general guides for conducting business and expect that both parties agree to modify contract terms if there is a change of (Katz 189). In Egypt, contracts are often dependable and Egyptian partners will strive to keep their commitments while expecting the collaboration to remain flexible. Moreover, Egyptians are tough negotiators and expect to do a fair amount of bargaining and haggling, thus leaving a lot of room for concessions at many different stages.

Lead Time of Production The natural hazards that have hit Egypt over the years include frequent earthquakes, periodic droughts, insect infestations, epidemic breakouts, flash floods, landslides, hot, driving windstorms called khamsin which occur in spring, dust storms and sandstorms ("Egypt"). In many cases, natural disasters have affected the poorest and most vulnerable population, which is the majority of the labor in Egyptian textile and apparel industry, and consequently have impacted the lead time of production.

Besides, all Muslims must fast from dawn to dusk during the holy month of Ramadan, and

are only permitted to work six hours per day. Thus, many businesses operate on a reduced schedule during Ramadan, which leads to the reduction of capacity and increasing lead time of production. Muslims neither eat nor drink while fasting, resulting in a lack of concentration and thus lower production efficiency (Katz 191).


State of the Apparel and Textile Industry Egypt’s apparel and textile industry has been known for its long history and highend cotton such as Egyptian Giza. The industry has been one of the most important industries in Egypt; it’s the main source of employment and the third main source of foreign currency (Matar 129). It represents almost one third of the manufacturing value added and around 3% of GDP, making it the third largest contributor to GDP after tourism and the Suez Canal. During the period from 2005-2010, the industry on average contributed by 18% to industrial value added, and by 28% of total nonoil exports (CAPMAS). In February 2010, the textiles industry consisted of 3243 companies, with 3029 companies operating inland and 214 companies operating in free zones with a total investment of $3.2 billion (Alexbank 5).

Currently, the increased transaction costs associated with securing

consignments, delays in shipments, and delayed government decisions have negatively affected the industry on the exports market (Ghoneim 5). The total value of textile and apparel exports from Egypt to the US slipped 2.8% from$1.08 billion to $1.04 billion during 2011 to 2012 (CBI). The Egyptian government provides support for the apparel and textile industry, such as facilities. Egypt’s Ministry of Trade and Industry established a special unit to support Egyptian companies to comply with the QIZ agreement eligibility (USAID 22). The 2020 textile and apparel sector strategy is to sustain exports and to increase its value from the current level $2.6 billion to $10 billion in 2020 (Gherzi).


Egypt’s textile industry is vertically integrated,

from raw materials to finished goods (USAID 18). Despite the excellent skills and low labor costs, less than $1 in 2007 according to Werner International Institution (see Appendix), there are several obstacles such as low productivity, low levels of quality, poor maintenance of machines and unutilized capacity, as well as lack of technical education accounts for its disadvantages (Ghoneim 5).

The trade organization includes Egypt’s Textile

Export Council (TEC), Ready-Made Garment Export Council (RMGEC). Besides, textile and finished goods corporations generally affiliate with the Egyptian Exporters

Association

(ExpoLink)

Other

trade

associations include Industrial Modernization Center (IMC) that serves 3,764 of the 6,000 registered textile companies in Egypt and Egyptian Textile Development Association (EDTA).


Suppliers within the Country All of the selected manufacturers are working under the QIZ initiative, which provides the feasibility for them to enjoy a duty-free benefit for their exports. Cairo Cotton Center Cairo Cotton Center is a private shareholder company created in 1990 with the objective of manufacturing high-level, quality knitted garments under license. The company is vertically operated and committed to applying and integrating in its internal code of conduct all health, safety and environmental regulations. Its primary business contains knitted tops, bottoms & woven shirts (denim – non denim) for men, women and children and it has a well-known customer portfolio including Macy’s, Levi’s, Calvin Klein, Gap, Banana Republic, Liz Claiborne, American Eagle, Victoria’s Secret and Columbia. Dyetex Dyetex group has a long history (since 1967) in manufacturing and exporting high quality garments to the US, and it owns integrated, diversified factories covering all stages of garment production. The company executes CSR activities guided by its code of conduct and quality policies and extends them to the community and the environment. Dyetex manufactures knitted fabric, dyeing, knitted & woven ready made garments such as t-shirts, polo shirts, sweatshirts, shorts, pants, sleepwear and denim for men, women and children and serves great customers include Dolce & Gabbana, Nautica, Calvin Klein and Zara. Alex Apparels Owned by Alpine Creations Group, the manufacturer is structured to ensure quality through its expansive, integrated production capacity. The company has deep relationships with renowned textile factories across Asia and tends to use ecofriendly and sustainable fabrics. Besides, it adheres to a strict code of conduct with health and safety concerns. The primary business of the company includes active wear, knitted or woven wear, intimates and uniforms for men, women and children. Alex Apparels’ major customers include Wal-Mart, Sears, Under Armour, Carter’s, Kmart.


Trade Agreements Designated geographic areas within Egypt can enjoy a duty free status with the US under the Qualifying Industrial Zone (QIZ) agreement, as long as the products contain inputs from Israel (“What Is QIZ”). In order to be qualified as a QIZ article, manufacturers must ensure that at least 35% of the appraised value of the product was created in an Egyptian QIZ area at the time it enters the US, of which a minimum of 10.5% origin must come from Israel (“Qualifying Industrial Zone”). The tariff and quota exemption applies to all products, regardless of the industry. According to the Egyptian Government, the textile and apparel industry is the main beneficiary from the QIZ initiative, representing the largest volume of exports to the US under the QIZ Protocol. And fabrics become the primary imports from Israel among Egyptian companies working under the QIZ Protocol, followed by chemicals, zippers, threads, packaging material and other readymade garment accessories. Thus, if our company chooses QIZ certificated suppliers in Egypt to produce our garments under the QIZ framework, we can enjoy tariff-free goods from Egypt, which can further lower the cost, increase the profit margin and enhance our competitiveness in price.

Egypt also offers competitive duty free access to several other substantial markets

such as the European Union (EU), other Greater Arab Free Trade Area (GAFTA) countries, the Common Market for Eastern and Southern Africa (COMESA) countries, the Agadir Agreement countries (Jordan, Morocco, and Tunisia), and Turkey. Our company could leverage Egypt’s regional power in sourcing raw materials or fabrics, extending the trade routes across the Middle East, Europe, and Africa.

Qualifying Industrial Zone


Product Classification HTS code: 6109.10.0040 Description: Women’s t-shirts Except Underwear of Cotton, Knitted; Style 01001 is a t-shirt constructed from 100% cotton knit fabric. The t-shirt features a round neckline, shorthemmed sleeves and a hemmed bottom without pockets, trim or embroidery. Duty rates: 16.5% in general, except QIZ certificated products

Transportation Major ports in Egypt: Alexandria, Dekheila, Damietta, Port Said, Suez Port, Sokhna Port

Egypt enjoys higher-quality transportation infrastructure than

most textile-producing nations, as well as a satisfactory port infrastructure (World Economic Forum). Alexandria is the main port in Egypt, while

Shipping Service Company

Port of Departure

Port of Arrival

Transit Times

Dekheila is a natural extension to Alexandria Port. Damietta Port has

APL

AZX: Suez Express

Damietta

Savannah

17

IAX: India America Express

Damietta

Savannah

16

IEX: India East Coast Damietta Express

Savannah

16

AZX: (G6 Service)

Damietta

Savannah

22

MINA

Port Said

Savannah

26

the largest container terminal and most sophisticated equipment in the Middle East. Port Said, located at the end of the Suez canal, is the biggest

NYK

transit port in the world (“Egyptian Ports”). According to freight company CGB’s representative, the rate from Egypt to the US would be about $3650 per 40’ full container. And the frequency of service is fixed-day weekly.

UASC

*Route map see Appendex


Risks and Benefits Risks The prospect of lingering political uncertainty and social instability in Egypt is likely to negatively affect the industry on the exports market. The possibility of labor or port strikes will cause late delivery or even production disruption. And the widespread fuel and electricity shortages are another reason that leads to production interruption (CBI). What’s more, the week economic environment may lead to the closure of some Egyptian manufacturers or the reduction of capacity due to high cost of imported raw materials, rising inflation, and a decline in demand for garments in domestic market. The long distance to the US also raises the uncertainty within the supply chain since it lower the response speed to the changing market trends.

Benefits Port of Alexandria

Egypt’s mature apparel and textile industry and reputable high-quality cotton can fulfill our company’s product requirement in terms of quality. And the strong environmental policy framework in Egypt also meets simo’s requirement in sustainability. The Egyptian government has compelled textile companies to adopt the policy of eco-friendly textile products as well as to control their waste (Matar). Besides, the government’s openness to foreign investment and strong support for the apparel and textile industry facilitate our company’s cooperation with suppliers in Egypt. The country is also a great choice considering the cost due to the abundant labor with low costs and the QIZ agreement that allows Egypt to enjoy the free duty status while exporting to the US. In addition, Egypt’s

Port of Damietta

developed transportation infrastructure and satisfactory port infrastructure enables the suppliers to shorten the delivery time to us.


Conclusion Egypt has long been known for its cotton. Together with its low labor cost, multi-variety production and openness to foreign investment, it attracted many international brands to produce their products here under license. Besides, the QIZ agreement waives the duty of particular Egyptian companies, which further reduces our company’s cost. And Egypt’s developed transportation and port infrastructure enables the suppliers to shorten the delivery time to us. More importantly, the strong environmental policy framework in Egypt also meets simo’s requirement in sustainability. However, the political uncertainty, social instability and weak economic environment that followed the Arab Spring badly affected investor confidence at the same time that the global economy began to falter. In addition, existing weaknesses in the industry such as the scarcity of well-trained workforce, low productivity, and poor maintenance of machines also expose the risks to our company. The long distance to the US also raises the uncertainty within the supply chain since it extends the lead time of production and lowers the response speed to the changing market trends.



PERU


Introduction The textile industry in Peru has its roots in ancient pre-Columbian cultures. They knew how to cultivate cotton and take advantage of Andean Camelidae fibers, developing extraordinary textile dyeing and weaving techniques. In the 21st century, textiles are still recognized as a strategic business for the country. Peru's geography creates ideal growing conditions for cotton. Peruvian pima cotton is one of the finest cottons in the world, famous for its strength, luster and softness. Along with the promising textile industry, Peru’s macro environment, including its politics, economy, culture and society, is under benign development. In the following content, a comprehensive analysis about Peru and its textile industry, as well as the trade information and possible suppliers will be introduced. Readers will find useful information on the possibility of sourcing from Peru.


Country Traits • Peru is located in South America with a coastline on the Pacific Ocean. • It is bordered by Chile, Bolivia, Brazil, Colombia and Ecuador. • The Andes Mountains divide the nation into a western coastal plain, high and rugged mountain terrain in the center, and an eastern lowland jungle in the Amazon Basin. • The capital city is Lima, which is located on the coast (-5 GMT). • The country has 1,285,216 sq.km with a population of 30,375,603. • 84.1% of Peruvians speak Spanish. • Peru is a presidential representative democratic republic, led by president Ollanta Humala. • The education expenditure of Peru accounts for 2.8% of GDP, ranking 145th in the world. • Education: Years compulsory: 11; Attendance ages: 6-11 (92%); ages 12-16 (66%). Literacy: 96% in urban areas, 80% in rural areas (CIA).


Country Stability Political Although Peru’s boundary issue with Chile is still up in the air,

and there is little internal unrest. According to the report, Peru’s

and 2014, and it has increased from 5.6% in November to 6.4% in December

political environment is stable and can be ensured in the long run.

of 2014. The growing amount of unemployed people should make it easy

Also, the unrest often happens in particular areas and lasts only

for factories to build a workforce, but many of them are unskilled due to

a short period of time. The Country Report cites Peru’s Political

Peru’s poor education system. There is an opportunity to provide them with

Stability Index at a 7.5 out of 10 (with 10 being the highest level of

training programs that allow them to acquire the professional skills our

political stability). In addition, president Ollanta Humala insists

company needs (CIA).

on business-friendly policies, the flexibility of the labor market, and the efficiency of the judiciary. This undoubtedly supports the development of domestic industry and allows Peru to have free market practices(Country Risk Report).

Social Serious social problems still exist in Peru. Poor children have to drop out of school to support their families, and they are often working at hazardous mining sites for long hours. The Child Labor index has reached 34% of the market. Besides that, Peru still has refugees and internally displaced persons. The illegal drug trade has accounted to the social instablity as well.

The average unemployment rate in Peru was 8.20% between 2001


Economic 1 USD = 3.09450 PEN (Peruvian Sol) Peru has a mixed economic system in which the economy combines private freedom with centralized economic planning and government regulation.

Peru has achieved significant progress in its macroeconomic performance

in recent years, with very dynamic GDP growth rates, stable currency exchange rates and low inflation. Over the past decade, the Peruvian economy has had the lowest annual average inflation rate in Latin America, at 2.9%. For our company, low inflation means low expenditures in Peru, which will reduce our operation costs.

The exchange rate of the Peruvian Sol is relatively stable, as the Peruvian

Central Bank intervenes in the foreign exchange market occasionally to prevent significant exchange rate variations.

According to World Bank’s report in 2015, the GDP of Peru is as follows:


Peru’s outlook remains positive on sound macroeconomic policies and substantial commodity wealth. Peruvian GDP growth is expected to rebound sharply in the medium term, supported by government stimulus, implementation of large new infrastructure projects, and two mining megaprojects coming online in the next two years (World Bank).

Furthermore, Peru's economic outlook will remain positive under

the assumption of a gradual global economic recovery, lower commodity prices in the domestic market, and stable growth in Peru's main trading partners. Meanwhile, president Ollanta Humala is expected to continue implementing a market-friendly strategy. The Central Bank will continue to keep the inflation rate at 2% plus or minus one percentage point, adjusting the monetary policy rate as needed in 2015 to support economic growth expansion (Country Report).


Lead time of Production

Peru is located on the Pacific coast of South America which experiences no less than 80 percent of the world’s disasters, such as earthquakes, tsunamis, flooding, landslides and mild volcanic activity. Peru is very prone to earthquakes, and it experiences as many as 200 small earthquakes each year, with one major earthquake occurring every five to six years on average. The Pisco earthquake in 2007 was a major earthquake that caused damages in excess of $2 billion. Therefore, for us, emergency preplan scenarios need to be prepared for unpredictable natural disasters and potential factory damage. Fortunately, the Peruvian government has $400 million in savings, as of March 2015, to help Peru respond quickly and efficiently to future possible natural disasters. This is a positive signal for us that Peru’s ability to deal with emergencies will hopefully improve (Dunnell).


Cultural Insights

Peru is best known as the heart of the Incan Empire, and the culture of Peru includes people of different religions and customs. Peru’s ethnic groups include Amerindian, mestizo, white, black, Japanese, Chinese, and others. Its religions include Roman Catholic (81.3%), Evangelical (12.5%), other (3.3%), and none (2.9%). The majority people there are Roman Catholic. Hence, before starting to work with people in Peru, our company should have basic knowledge about their taboos and respect for their customs and habits. Also, Peru is a Spanish language dominated country, so the possible language barrier demands more clear-cut regulations to cut down misunderstandings.

Negotiations in Peru require a direct, no-frills approach, due to the patriarchal nature of society in the country. Peru’s history of nepotism is also often a

factor when negotiating. Many businesses are comprised of entire families, with one family member in charge who will be particularly protective over the family business. So, any offers must be realistic and reasonable. Peruvian business-owners respond to an honest and frank negotiation style.

Peruvians are proud businesspeople who have not lost the endearing personal touch when it comes to professional etiquette. A long-standing business

relationship with a Peruvian is an extremely rewarding and unique experience. While doing business with Peruvians, the above cultural characteristics should be taken into consideration.


due to textile production being recognized as a strategic business for the country. In the garment sector alone, sales to foreign markets exceed $2 billion dollars per year (Thimble Sourcing). The high quality of raw materials makes Peruvian textile products attractive for the most exclusive markets. Over the past 10 years, factories have invested in state-of-theart technology. Automatic sewing machines, centralized dyestuff dispensing units, modern dyeing machines, hydroextractors, compacting machines, foulards and other finishing equipments ensure the highest quality textiles. Textiles and garment manufacturers account for more than 30% of the non-traditional exports in Peru. Textile and clothing exports from Peru amounted to US$ 272 million during the months of January and February 2014, recording an increase of 7% compared to the same months in 2013 (Country Reports).

State of the Apparel and Textile Industry

The textile industry in Peru has its roots in ancient pre-Columbian cultures who knew how to cultivate cotton and take advantage of Andean camelidae fibers, developing extraordinary textile dyeing and weaving techniques. Furthermore, Peru's geography creates ideal growing conditions for cotton. Peruvian pima cotton is one of the finest cottons in the world, and is famous for its strength, luster and softness. Manufacturing is one of the four key sectors (mining, agriculture, fishing and manufacturing) in Peru’s overall development. The growth of the textile industry in Peru is primarily


Peru is one of the lowest cost countries in Latin America.

The labor market is very flexible and has much qualified labor. Based on the New Twist report, Peru’s hourly labor cost was $2.78 in 2014 (New Twist). However, the Exporters Association of Peru announced in 2013 that Peru’s apparel production costs may grow by 4-5%, which will raise our production cost (Fibre2Fashion).

The organizations that support Peru’s textile industry

include: The World Trade Organization (WTO), which Peru joined in 1995, and the Asia-Pacific Economic Cooperation forum (APEC), which it has participated in since 1998. These

two trade organizations give us tangible benefits, such as minimizing our trade risks with standardized regulations, smoothing trades by reducing the trade barriers, which will trigger more trade activities and economic growth between Peru and other member countries. Furthermore, regulations require the local manufacturers to focus on human security and environmental protection, which ensures the local manufacturers develop in a sustainable way. That is also what our company looking for, a manufacturers who has social responsibility, and who shares the same values with us.


Suppliers within the Country (organic apparel manufacturers) Suppliers

Year

Revenue

Employees

Capacity

Product Range

Customers

Hilanderia De Algodon Peruano S.A. (HIALPESA) www.hialpesa.com

1979

$66,918,512

2,852

27,500/day

T-shirt, polo, shirts, hooded sweatshirts, pants G Star; VF Outdoor; Guess; Vans; and shorts for men, ladies and children. The North Face; Garnet Hill; Eastern Mountain Sports

Bergman Rivera S.A.C www.bergmanrivera.com

1986

/

/

/

Infants, children, women and men, underwear, home textiles, shirts, socks, tote bags.

Confecciones Textomax SA 1988 www.textimax.com.pe

/

2,057

100,000/day

Women and men’s tops and Children’s dresses, World Textile Sourcing; Textile tops and jumpsuits. Manufacturing; Hugo Boss; Winners Merchants International; Guess; Hanna Andersson; Ameritrade

Sleeptek Mfg; Sanyo Trading; Natura World; Envirosax; Andrew Morgan Collection; Bergman Textile

P.S. Shipment, certification and customer information are included in the Appendix.

Hilanderia De Algodon Peruano S. A.’s (HIALPESA) competitive strengths Hilanderia De Algodon Peruano S.A. is the largest fully vertical integrated mill in Peru, which offers competitive prices, high quality products with short lead time and transparency in the supply chain. The company primarily works with cotton fiber, and it was the first supplier to offer organic cotton, as well as one of the only companies in the country to offer both long staple Organic Tanguis and extra long staple Organic Pima. Hialpesa is the only manufacturer in Peru to have an onsite day care; also, the company established a scholarship fund for employees and their children in 2004. The actions of this company aligns with our core value and mission. Bergman Rivera S.A.C’s competitive strengths Bergman Rivera S.A.C is one of the world’s pioneers of the organic cotton movement. The company provides high quality organic cotton products by developing organic agriculture, pest control and textile processing. It is the first company in Latin America that is fully certified under the Global Organic Textile Standard (G.O.T.S) from field to garment, which also proves their fair labor standards, sustainability of all their products and respect for the environment . Confecciones Textimax SA’s competitive strengths Confecciones Textimax SA is one of the most important vertically integrated companies in Latin America. High quality standards, production volume, variety, advanced technology, as well as rapid response, competitive prices, continuous personnel training, and social and environmental development, have enabled this company to successfully meet the international market’s demands and the ever-changing requirements of the fashion industry.


Trade Agreements

U.S.-Peru Trade Promotion Agreement (PTPA): In 2009, the Peru – United States Free Trade Act entered into force. Just two years after entering into force, 418 new products were exported, of which 96% were non-traditional products, most notably in the areas of Metal-Mechanical (32%), Chemicals (20%), and Textiles (11%). Under PTPA, textiles and apparel will be dutyfree and quota-free immediately if the products meet the agreement’s rule of origin. The PTPA eliminates tariffs and removes trade barriers, as well as promotes new opportunities for the US and Peruvian fiber, yarn, fabric and apparel manufacturing. It also provides us a secure, predictable legal

Product Classification

framework for trade, and strengthens protection for our intellectual property,

HTS code: 6109.10.0040

workers, and the environment. More specifically, duty-free and quota-free

Description: Women’s t-shirts except

trade increase our profit margins, and allows our products to move more

underwear of cotton, knitted; style 1311 is

freely across borders.

a t-shirt constructed from 100% organic

In the process of negotiation: Trans-Pacific Partnership (TPP) .

cotton knit fabric. The t-shirt features a

It aims to promote economic growth and job creation, and to establish

round neckline, short-hemmed sleeves

a platform for potential economic integration among Australia, Brunei,

and a hemmed bottom without pockets,

Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the

trim or embroidery.

United States, and Vietnam. TPP represents a trading platform where one

Duty rates: free.

can diversify export destinations among its 11 member countries. Once TPP is passed, Peru will benefit from free trade between these countries (USTR).


Transportation

Considering Peru’s diverse geography, ocean rate is the best way of transportation for our company. Callao is the largest port in Peru and is adjacent to capital city Lima, and the majority of goods from Peru are shipping through this port. So, Callao is the perfect choice. In the United States, Savannah is chosen to be the landed port. Shipping Company

Port

Landed

Shipping Time

Shipping Frequency

Benefits

Mediterranean Shipping Callao Company (MSC)

Savannah

14days

Weekly shipping

MSC is a world leader in global container shipping and a company offering global service with local knowledge. MSC provides integrated network of road, rail and sea transport resources, which stretches across the globe.

CMA CGM

Callao

Savannah

15 days, 8days, 21days

Weekly shipping

CMA CGM was founded in Marseille in 1978. CMA CGM Group is the thirdlargest container shipping company worldwide and number 1 in France.

Hapag-Lloyd

Callao

Savannah

10 days, 15 days, 16 days Weekly shipping

Hapag-Lloyd is a leading global liner shipping company. For over 165 years. Hapag-Lloyd has set industry-wide benchmarks for reliability, service, productivity and environmental protection. Other important topics for Hapag-Lloyd are compliance and sustainability


Risks and Benefits Risks

Natural hazards in Peru would heavily influence the local production, which would increase the lead time. Water supply, sewage and road infrastructures are still inadequate, particularly outside the towns, which may affect our production as well as transportation. Therefore, slow or unpredictable delivery may happen due to transportation systems and infrastructure failures. In addition, the future of national cotton production seems to be uncertain, as the area under cotton cultivation diminished by 30% in 2013 (Fibre2fashion). This may affect our production because our products heavily rely on cotton material. But, overall Peru continues to be a moderate-risk destination for foreign investment and relatively better in terms of economic, political, tax, legal, operational, and security risks by global and regional standards.

Benefits The growing economy and stable politics in Peru provide our company with a sound macro-environment to develop our business. We can take advantage of the geography of Peru since it is located close to the US, which stands for a short lead time. In addition, the abundant local workforce ensures the stability of the labor-intensive apparel industry. Moreover, Peru has excellent cotton material and expertise in the textile industry, and this will ensure the quality and competitive strength of our products. Furthermore, we can benefit from the favorable trade agreements between Peru and United States, which eliminate the trade barriers and cut down our costs. Meanwhile, Peru and the US have already established a strong and cooperative relationship. This stable and long-term relationship will definitely ensure our trade between Peru.


Conclusion

Peru ranks as the 35th most suitable country for doing business (World Bank, 2014). The growing economy and stable politics in Peru provide our company with a sound macro-environment to develop our business. The geography of Peru allows us to take advantage of a short lead time, which reduces our cost. Moreover, Peru has excellent cotton material and expertise in the textile industry. More importantly, there are some manufacturers offering organic cotton and aiming at developing their business in a sustainable way. They take responsibility for their employees and the environment, so they share the same values as our company. In addition, we can also benefit from the abundant local workforce and favorable trade agreements between Peru and United States. The US is already one of the most important importers for Peru and has developed a strong and cooperative relationship with this country. This stable and long-term relationship will definitely ensure our trade between Peru. Although Peru suffers from various natural disasters, Peru’s government has already taken action to improve its ability to respond. Overall, Peru is a good choice for our company to conduct our business.


SOURCING STRATEGY


Country Selection We choose Peru, Honduras and Egypt out of the five. Both Peru and Egypt have the high quality of cotton fabric and have mature textile and apparel industry for thousands of years. Since our company’s core value mainly focuses on high quality, these two countries are the best to fulfill our needs compared to the other three. For Honduras, although it doesn’t produce cotton fabric itself, it imports Pima cotton from the US, which can also meet the quality requirements for us. Moreover, the distance between Honduras and the US is the shortest among the five, which is highly beneficial for us to shorten our product lead time. When it comes to the cost, Egypt is the most cost efficient among the five while Honduras is the second cheapest. Furthermore, after the calculation of the placement with various combinations, Peru-Honduras-Egypt gives us the highest margin relatively, so it is the most beneficial combination. Although Turkey is also a good choice for our company since it also has high quality and is ranked much higher than Honduras for doing business according to the data of the World Bank Group, the distance makes it a risky choice for us in terms of lead time. Since we already choose Egypt, which has the similar distance to the US with Turkey, 16 days and 17 days as the shortest period respectively, choosing two far-away countries is too risky for product availability, even though the government and society of Turkey is relatively more stable than Honduras and the country has higher quality, better skilled labor and all the other benefits. Furthermore, among the five countries, Peru and Honduras have free trade agreement with the US and Egypt has the special trade agreement with the US, compared to Pakistan and Turkey, which both have no trade agreement with the US, it is more beneficial for us to do business with these three countries. Besides, though Pakistan also has mature and well developed textile industry with low labor cost and its own cotton farming, due to the instability of government and society, the energy crisis, the long distance to the US and terrorism, which has been a big issue among the country and the globe, we put it at the last for our consideration.


Country Ranking HONDURAS

PERU

EGYPT

Benefits

5

CAFTA-DR. 9 Distance to the US. Textile industry. Abundant work force. Cheap labor.

FTA and TPP. Distance to the US. Pima cotton. Organic cotton. Mature textile industry. Abundant work force. Frequent trade activities with the US.

6

Business Climate

4

Ranked 104 The laws of Honduras is less friendly and protective for the foreign investors. The country is mainly agriculture oriented.

9

Ranked 35 Steady business partnership with the US Biggest export and import partner: US Rise of middle class infrastructure investment.

5

Costs

9

$5.11

8

$5.34

The government surpasses the country with military. The two main parties are competing for more stands in the congress. Central America; 4 days Natural disasters: earthquake, flood, hurricane. High crime rate and violence rate. Drug trafficking.

9

Stable with its presidential government.

South America; 8 days 8.5 Earthquake. Lack of the production of cotton within Peru. Overall, Peru is the least risky than the other four.

4

4

Government 3

PAKISTAN

TURKEY

Egyptian cotton. 4 Mature textile industry. Cheap labor. Abundant work force. Free tariff in some condition. Strong environmental policy frame work. Open to foreign investment. Developed logistics. Ranked 112 3 Government devotes in business investment. Instability of the governments and societies discourages investors to do business. Delays in economic policies and reforms.

Cheap labor. Cotton farming. Encourage foreign. Investment. Textile industry. Development.

7

Innovation. Development and technology. Infrastructure development. Partner with EU. Textile industry. Stable bank system.

Ranked 128 The government of Pakistan encourages foreign investments with rewards and legal protection.

7

10

$5.05

7

$5.77

4

Ranked 55 Government devotes in business investment. Stable bank system to support its textile industry. Many European business has been worked with Turkey for years. Instability of the governments and societies discourages investors to do business. $6.74

5

It has been through political turmoil but its new government has terminated the turmoil currently and is trying new approach to attract foreign investment. North Africa; 16 days Instability of the society and politics, which might influence the lead time of the delivery.

2

Multi parties competing between each other and the corruption within the country.

6

It has been through frequent political parties change, but it is relatively stable than the other three low score countries.

3

South Asia; 5 27 days Terrorism within the 8 country. Possibility of products from Pakistan being hold at the US custom. Tense relationship with the US. Manufacturers are facing the risk of being bombed. Energy crisis. Terrorism. 7 Religion problem between different parties of Muslim within the country.

Europe and Asia; 17 days Earthquake. Instability of the politics within and outside Turkey, but relatively stable than Pakistan and Honduras.

Child labor. Has organic cotton.

5

Low employment rate of female worker. Child labor problem. Has organic cotton.

Cotton farming industry is the 4th largest among the world. Government supports its textile industry. Been through downturn; recently recovering. Energy crisis. Competence with its neighbors i.e. Bangladesh.

8

Textile accounts around 40% of Turkey’s total export. Its government is protective for its local industry, including textile industry. The location of it makes it advantages for export its textile industry, especially to Asia and Europe.

Non

0

Non

Location

10

Risks

2

Social Stability

3

High crime rate and severe violence. Drug trafficking. High rate of poverty. Low education of the population.

9

Boundary conflict between Peru and Chile (only short period at some specific areas). Relatively stable.

Sourcing Guideline

3

Child labor. No organic cotton. Transparency due to CAFTA-DR

7

Textile Industry

6

Textile industry in 9 Honduras has been developed since the period of CBI and reached its peak around 2004. It slowed down since the phaseout of quotas, which resulted in the migration of textile industry from Central America to Asian countries.

Some manufacturers 8 emphasize on sustainability and employees welfare. Some manufacturers focus on organic cotton products. But there is also child labor problem in Peru. High quality pima 9 cotton and organic cotton. Long history of textile industry. The growth of the textile industry in Peru is primarily with factories continuing updating their technology and techniques.

Trade Agreement Trained Workforce

10

CAFTA-DR

10

FAT, TPP

8

High quality Egyptian 7 cotton. Spinning and knitting techniques of Egyptian textile industry has been developed for thousands of years Developed port and transportation infrastructure. Technology and infrastructure of Egypt lacks of maintenance. Vertical integration. QIZ 0

5

7.1

7

8.4

4

6.4

3

6.2

6

8.2

Socio-ecopolitic

3

Huge country debt. 8 Instable politics, society and economy. High crime rate, violence and drug trafficking.

Peru is the most stable in terms of society and politics. Its economy is also continuous growing.

5

Instable politics and society.

2

Huge country debt. Instable politics, society and economy. Terrorism, religion conflicts.

6

Instable politics but the society is relatively stable than Egypt. The GDP growth rate is better than Egypt recently and for the near future.

TOTAL AVERAGE

63

101.5

75

38

69

5.25

8.46

6.25

3.17

5.75

8

7

1

High unemployment 2 rate, high rate of poverty. Religion conflict between Christian and Muslim, but currently Muslim has overwhelmed Christian within the region. The government 4 highly emphasizes the approach of ecofriendly production and the control of the waste of the textile industry.

NOTE

Based on the ranking of 2014 Doing Business from World Bank Group

Based on the average costs of 5 styles in each country

Based on the transportation time.

Society within the country is steady. Lose of human resources due to the emigration. Politics are instable.

Based on the score of Higher Education and Training plus the score of Labor Market Efficiency on the report of World Economic Forum. Overall all 5 countries are unskilled or underskilled.


While these three seems to be the good choice for our company, there are also some potential risks in each country.

For Peru, one of the possible risks is the reduction of cotton production.

To deal with the problem of cotton, our alternative is to import the fabric from the US. Since there is FTA, the cost for the fabric will still be under control. Another potential risk is the boundary conflicts between Peru and Chile, which we have no control of it, usually only happen within a specific region for a short period and has relatively little influences to us.

For Honduras, the risks includes high crime rate and violence rate, which

influence the will of foreign investors to do business in Honduras, and the notorious drug trafficking between south America and the US. While we cannot control the crime rate of the country, drug trafficking might be the most influential risk to our shipment, which may cause delay at the US custom if the gangs utilize our cargo to transfer their drugs. To face this problem, we will choose the freight companies that are members of CTPAT (Customs-Trade Partnership Against Terrorism) to minimize the risk.

For Egypt, the main risks are the instability of the government and the

society, and the long distance to the US. For the former one, we may have no way to control but transfer our production to other countries when the instability causes the interruption to our production. For the later one, we will utilize IT platform and other technology to integrate and synchronize our supply chain management from the beginning to the shipment to investigate our order at the real-time base and to shorten the lead time.


All these three countries have the risk of natural disasters, although we have no control of it, if it happens in one of the three countries, we will immediately transfer our production and transportation to our suppliers in the other two to minimize the loss of unfulfilled orders. In addition, we will buy apparel manufacturer insurance to cover our financial loss. In the mean time, we will cooperate with the third party natural disasters evaluation company such as Air Worldwide, and send our team to the country to evaluate the situation and discuss the possible solutions.

The most important thing is that we will have investigation at

each country to keep update with the condition of the business climate and the overall environment of the countries. If there’s any variation and emergency, we will have Turkey as our backup plan to fulfill product orders.


Supplier Ranking HONDURAS Abilities

Capacity Lead-Time

Quality

Customer Sourcing Guidelines

Services Offered Strategic Outlook

TOTAL AVERAGE

Elcatex 8.5 T-shirts, sweatshirts, polo shirts, pants, underwear

PERU Pinehurst 8.5 T-shirts, pants, activewear

Pride Manufacturing 7.5 Dress pants, dress shirts, cargo pants, uniform shirts, skirts, labcoats, denim shirts 6.5 17,140 units/day

Bergman Rivera 10 T-shirts for infants, children, women and men, underwear, home textiles, shirts, socks, tote bags 6.5 18,300 units/day 7 25,000 units/day 6 Only 41 shipments from Panjiva 7 10 weeks for 1st order; 8 More effcient than 6.5 Less efficient than 6 Less efficient than 8 weeks for reorder the other two due the other two due to the other two due to to innovation and the smaller customer the company size and customer base base and capacity shipment number 8 According to its current 9 According to its 7.5 Relatively less 10 Frist company in customers: JCPenny current customers: quality emphasized: Latin America fully and Nordstrom Nike and Ralph American Apparel as certified under Lauren customer GOTS* 8 JCPenny, Nordstrom, 9 Nike, Ralph Lauren, 7 American Apparel, 8 Sanyo, Natura, Dickies CK, DKNY VF Bergman 10 Corporate social 9 Pinehurst can meet 7 Ranked the lowest 9.5 Certificated by GOTS; responsibility; the high requirement among the three fair labor standards, environmental friendly; for corporate social due to the smaller sustainability and employee care; responsibility of customer base environmental community concern Nike concern 10 Full package service 9.5 Full package service 6 Mainly focus on 10 Cotton farming; from sourcing to sewing private label shipping; product development development 9.5 Innovation; 9 Innovation; 7 Opportunity to 8 The focus of organic competitive prices expansion of brand grow in the future cotton products is the via quality control; portfolio according to its current and future environment concern customer VF brand trend; large number of followers on Facebook

Textimax 9 Tops for children, women and men, dress and jumpsuit

HIALPESA 9.5 T-shirts, polo shirts, sweatshirts, pants and shorts for children, women and men 7.5 27,500 units/day

67.5

69

55

67.5

74.5

73.5

8.4375

8.625

6.875

8.4375

9.3125

9.1875

10

100,000 units/day

9

Rapid response to order

9

9

In-house quality control

10

8

Potential growth opportunity as it has established for a long time with large customer base

10

Short lead-time

In-house quality control; organic standards for raw materials 10 Hugo Boss, Guess, 9.5 The North Face, World Textile Vans, Guess, VF 9.5 Certificated by WRAP 9 Employees care amd BASC for its social such as onsite responsibility and day care and intergrated security scholarship funds management system 10 Vertically integrated 9 Fully vertical factories; sales and integrated mills product development A long-established company with sustaianble focus


EGYPT Cario Cotton Center 8.5 Tops, bottoms and shirts for childern, men and women

PAKISTAN Dyetex 8.5 Knitted fabric, tops, bottoms, sleepwear and denim for children, men and women

Loop Tex Pvt. 10 Tops, bottoms, bags, caps/hats, aprons, scarfs, stationary, home furnishing, accessories 9 60,000 units/day 9 57,000 units/day (4000 7.5 30,000 units/day 6 Small scale with 350 employees) employees 8 8 weeks (less for 8 Similar scale with Cario 10 Less than 4 weeks in 7 Medium efficiency replenishment order) Cotton Center average ranking due to smaller capacity but large customers like Levi’s 10 Under license for 10 Well known consumer 8 Major customers such as 10 High quality organic PVH and Calvin base such as Dolce & Wal-mart and Kmart are cotton certified by Klein; ISO 9001 Gabbana and VF; ISO less quality emphasized; GOTS and OCS certified. 9001 certified. ISO 9001 9.5 Macy’s, PVH, Calvin 9.5 JCPenney, Under 8 Wal-Mart, Kmart, Under 8 Levi’s, Big Accessories Klein, Levi’s Armour, Dolce&Gabbana Armour Inc., GMPC 9.5 Health safety and 9 Fairtrade; health and 9 Tend to use eco-friendly 9 100% unconditional environmental safety regulations; and sustainable fabrics; compliance with labor regulations; certified certified by quality and health and safety and workplace laws; by Oeko-Tex 100 and social compliances such concerns; certified by decent and honest WRAP as WRAP, OHSAS 19001 C-TPAT, WRAP work environment 9.5 Full package service 8 Mainly focus on 10 Product development; 10 Design, sourcing, manufacturing full package serive marketing and manufacturing

Style Textile 9 T-shiers, polo shirts, sweatshirts, tank tops, jogging pants

Combined Fabric 6 Cotton t-shirt for male and female

9

Similar scale to Dyetex with 4401 employees 8.5 More effcient than the other two due to large scale and customer base 9 According to its current customers: Nike, adidas, Reebok and Levi’s 9 Nike, adidas, Levi’s. Macy’s 9 Style Textile can meet the high requirement for corporate social responsibility of Nike

8

9

Fabric and garment manufacturing

8

9

7

Aim to improve the competitiveness internationally in terms of price and quality

8

Apply the latest 8 technologies in production management; human resource development

Aim to make and maintain the Dyetex as the global customer first choice in Egypt

Alex Apparel 9.5 Tops, activewear, intimates and uniforms

TURKEY

8.5 Aim to build a preferred, 8 one-stop solution “from factory to store” for customers

Aim to enhance the knowledge of renewable energies and protect the environment

9

9

9 9

TAHA 9 Tops, bottoms, dresses for childern, men and women

Finteks Yesim 9.5 T-shirts, shirts, 9.5 T-shirts, denim, dresses, sweatshirts, trousers, home textiles party wear, sportswear for childern, men and women 36,000 units/day 7 20,000 units/day 8.5 15,000 units/day 8 8,000 samples in 1000 different models 6 weeks 10 Less than 4 weeks 6.5 Less efficient than the 9 4-6 weeks other two due to the small capacity and customer base The company needs 9 TQM (Total Quality 8.5 Quality control with 10 Environmentally friendly to meet the high Management); customer teams fabrics; long-term customer quality requirement worker training base including Burberry of Levi’s and PVH and Hugo Boss Levi’s, Guess, PVH, 8.5 Levi’s, Timberland 8 Nas Apparel, Urban 10 Burberry, Banana Republic, Hurley Outfitters Hugo Boss Social responsibility; 8.5 Preserv employee 9 Environment 10 Employee benefit clubs discourage and society’s cultural protection; maintains covering environment and forced and child and life value; the relationship social responsibility, sport, labor; labor and environmental between employees travel, and arts; social environment management system facilities Mainly focus on 10 Full package service; 10 Full package service; 10 Full package service; design manufacturing design design and marketing

Aim to work on 9 shortening lead time and high quality

Taha will focus on fashion product and product innovation in the future

8

Finteks will keep on developing its knitting, cutting, sewing and ironing

10

Close attention to industry trends and the need of combining their production and management flexibility; innovation

73

70

70.5

68

69.5

66

71

66

76.5

9.125

8.75

8.8125

8.5

8.675

8.25

8.875

8.25

9.5625


Peru: Textimax

Egypt: Cairo Cotton Center

While all three suppliers for Peru, Bergman Rivera, Textimax and HIALPESA have

Among the three, Cairo Cotton Center, Dyetex and Alex Apparel,

high scores, and all of them provide integrated and comprehensive services, Textimax

Cairo has the highest score with the highest capacity and full-

has the best capacity with 100,000 units/day. Besides, its customers, including Hugo

package service. While Alex has the shortest lead time with less

Boss and Guess, have similar quality requirements to our product lines than the

than 4 weeks and Cairo is about 8 weeks, Alex’s capacity is much

other two suppliers’ customer base. Furthermore, Textimax has been established for

smaller than Cario’s, 30,000 units/day for the former and 60,000

a long time with large customer base, which shows its stability and its capability to

units/day for the later. In terms of the customer base, Dyetex

fulfill our orders for our core products steadily. Therefore, we choose Textimax as our

seems to have the best, including Dolce&Gabbana, VF and

supplier in Peru.

JCPenny; Cairo has PVH and Calvin Klein, Macy’s and Levi’s;

The benefits of Textimax are that it is one of the most important vertically

while Alex is more about mass retailers such as Walmart and

integrated companies in Latin America with high quality standards, high production

Kmart, which makes Alex less appealing to us. Although Dyetex

volume, variety, advanced technology, rapid response, competitive prices, continuous

has such a good customer base, and its capacity is also high, with

personnel training and social and environmental development. The company has

57,000 units/day, it mainly focuses on manufacturing; compared

successfully met the international market demands and ever changing requirements

with Cairo and Alex, which both provide full-package services,

for the fashion industry. The risk of Textimax is that its future outlook is uncertain

Dyetex becomes less attractive. Besides the highest score, because

since there is not a clear development plan presented by the company. To face this

of the emphasis on sustainability and the application of the latest

risk, we choose HIALPESA, which has the second-high score, to be our backup

technologies in production management, Cairo is the best choice

supplier in Peru.

in Egypt for our company.


Honduras: Pinehurst

The benefits of Cairo are that it has high-level

Among the three suppliers in Honduras, Elcatex, Pinehurst and Pride Manufacturing,

quality knitted garment manufacturing with high capacity

Elcatex and Pinehurst have higher scores than Pride. Elcatex and Pinehurst both provide

of 60,000 units/day. The company is vertically operated

full-package services and they both serve big name customers, while Pinehurst has better

and committed to applying and integrating its internal

capacity with a larger amount available per day. Both of them are innovative. Although Elcatex

code of conduct to health, safety and environmental

places more emphasizing on corporate social responsibility and quality control, Pinehurst

regulations. In addition, Cairo focuses on organic fabric,

has the customer base that is more similar to our company; Elcatex’s main customers are

which is certified by Global Organic Textile Standard,

department stores such as JCPenny and Nordstrom while Pinehurst’s customers are Nike,

and sustainability. Moreover, the company aims to

Ralph Lauren, adidas and other apparel and fashion companies. Besides, Nike has high

apply the latest technologies in managing its production

requirements for its suppliers and product quality, therefore, we assume that Pinehurst’s

with advanced machinery with well-developed human

quality and sourcing guideline would fit for our company and product requirements.

resources. Although overall Cairo looks great for our

production in Egypt, its 60-day lead time is our main

as well as innovation and its growth with its expansion of brand portfolio. Since it can

concern as a risk. To face this risk, we will cooperate

fulfill the requirement of those big names among the fashion industry, it has the ability to

with them closely on the IT platform to synchronize our

provide our company with the same quality and efficiency. The risk of it is that the products

supply chain to have the real-time data of our production

produced for its portfolio brands are mainly activewear, which is quite different from our

and shipment; we will also keep the information of Alex

product lines. To face this risk, we will work with Pinehurst closely to make sure it is capable

Apparel as our backup supplier in Egypt.

for our product lines.

The benefits of Pinehurst are the 25,000 units/day capacity, its full package service


Placement Strategy Based on the cost, quality of the products, distance and the risk of the five countries, we created three possible placements: Peru-Egypt-Turkey as the highest quality and lowest risk; Peru-Egypt-Honduras as the shortest distance to the US; Egypt-Pakistan-Honduras as the lowest costs separately among the five countries. Average cost of each product: Basic $5.47, V Neck $5.70, Tank Top $4.99, Crop Top $5.54, Long Sleeve $6.32 (see Cost Sheet in Appendix) Retail price of each product: Basic $20, V Neck $20, Tank Top $15, Crop Top $30, Long Sleeve $34 Peru-Egypt-Turkey For this combination, we put 60% of our core products, the basic t-shirt and v neck tee, which are non-seasonal and predictable basic products, in Peru, which is the nearest to the US with the most stable socio-eco-political status. And we put 50% of our long sleeve, which is seasonal and high cost, in Egypt for the reason that the cost of Egypt is the lowest among the three. For the fashion item, crop top, which can be marketed with higher price, we put 70% of it in Turkey to balance the retail price and the high costs of production in Egypt. Since Turkey is the farthest and is risky for on-time delivery, it is less suitable for our basic items. Peru-Egypt-Honduras Since Honduras is the nearest to the US and the cost is in the middle among the three with free trade agreement and low labor cost, we put 50% of our basic and v neck in Honduras. While Egypt is relatively the farthest among the three, and the cost is the lowest, we put 50% of our long sleeve in Egypt to balance the higher cost of long sleeve. Although Peru has the highest quality among the three and has shorter lead time than Egypt, we put 50% of our crop top in Peru in this placement for the reason that the cost of Peru is relatively the highest among the three; the high price of crop top can balance the costs of Peru. Since tank top is also seasonable with the lowest costs among the five styles, we place 50% of tank top in Egypt for it is unnecessarily to be replenished all the time. Egypt-Pakistan-Honduras In this placement, all three countries are the lowest cost among the five countries, while Honduras is the closest to the US, we place 50% of our basic and v neck in Honduras. For the long sleeve, we place 50% of it in Pakistan, which is the farthest among the three for it is unnecessary to be replenished all the time. Because that Egypt has the lowest cost, we put 40% crop top in Egypt, and separate the rest as 35% in Pakistan, which has lower cost than Honduras but is the farthest, and 25% in Honduras which costs the most but is the nearest. While Pakistan is the farthest and tank top is seasonal item that it is less urgent, we put 40% of it in Pakistan.


Then we also added the combination of Peru-Honduras-Egypt with the same percentage and placement with the combination of Peru-Turkey-Egypt while

replacing Honduras for Turkey to have an apple-to-apple comparison to see whether the best quality combination would be beneficial enough in terms of margin. In these placement, the average cost/unit is lower than Peru-Turkey-Egypt, $5.16 and $5.40 respectively, and the average margin for the former is 1.14% higher than the later, which seems to be no big difference.

In the end, we arrange our final placement with our 3 selected countries, Peru, Honduras and Egypt according to our product essence of each style. To

maintain the quality of our core products, we put both 40% of our basic tee and v neck tee in Peru and Egypt, with 20% of both styles in Honduras as our backup replenishment since Honduras has the shortest distance to the US but its quality is not as high as Peru and Egypt. For our fashion item, crop top, we put 60% of it in Peru, for the reason that it should have shorter lead time to meet the needs of the rapid change of fashion trends, and it has higher retail price to balance the costs. For long sleeve, since it costs the most, we put 40% of it in Egypt to balance the costs for the reason that Egypt is the cheapest, and 30% in Peru since long sleeve has higher retail price and can balance the high costs in Peru while it also has the shorter distance than Egypt. Another 30% in Honduras is because of the short lead time and lower cost than Peru. For tank, since it’s also seasonal, the distance and lead time is crucial; however, unlike crop top, tank has lower retail price, we put 40% of it in Honduras to fulfill the fast orders and 40% in Egypt for the low costs and better quality.

The benefit of this final placement is the low costs and high margin of Honduras and Egypt. It also provides us the high quality of Peru and Egypt to fulfill

our core essence of our products. In addition, both Peru and Honduras can be shipped within 10 days to the US, providing us short lead time. On the other hand, the risks of these placement are as mentioned in the country selection. Besides the risk management mentioned in the country selection, we will also have regular audit seasonally to check the capability of our suppliers and have close inspection in these three countries; once there’s any problem that would affect our product order fulfillment and lead time, we will swift our placement to the other two countries immediately to solve emergency problems and have a complete evaluation and change for long term plan.


Final Placement: Peru-Honduras-Egypt FINAL PLACEMENT & MARGINS

Peru

Honduras

Basic 1,000,000

V-neck 140,000

Crop tops

120,000

Long sleeves

42,000

Tank

39,000

Basic 30,000

V-neck 70,000

Retail

$

20.00 $

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

Cost per Unit

$

5.21 $

5.47 $

5.25 $

6.04 $

4.73 $

4.97 $

Margin

$

14.79 $

14.53 $

24.75 $

27.97 $

10.27 $

15.03 $

%

73.95%

72.64%

82.51%

82.25%

68.46%

75.13%

Total Retail

$ 21,770,000 $ 2,800,000.00 $ 2,400,000.00 $ 1,260,000.00 $ 1,326,000.00 $ 450,000.00 $ 1,400,000.00 $ 1,20

Total Purchase

$ 5,167,431 $

235,365.00 $ 141,930.00 $ 348,180.00 $

31

Total Margins

$ 16,602,569 $ 2,070,460.00 $ 1,743,360.00 $ 1,039,626.00 $ 1,090,635.00 $ 308,070.00 $ 1,051,820.00 $

88

Avg Retail

$

21.77

Avg Purchase Avg Margins Avg Margins %

$ $

5.17 16.60 76.26%

Avg Cost/Unit

$

5.17

729,540.00 $ 656,640.00 $

220,374.00 $


as

Egypt V-neck

70,000

Crop tops 60,000

Long sleeves

14,000

Tank

39,000

Basic 60,000

V-neck 140,000

Crop tops 120,000

Long sleeves

14,000

Tank

52,000

60,000

20.00 $

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

20.00 $

30.00 $

34.00 $

15.00

4.97 $

5.17 $

5.05 $

5.75 $

4.54 $

4.97 $

5.17 $

5.05 $

5.75 $

4.53

15.03 $

14.83 $

24.95 $

28.25 $

10.46 $

15.03 $

14.83 $

24.95 $

28.25 $

10.47

75.13%

74.16%

83.15%

83.08%

69.75%

75.15%

74.15%

83.17%

83.09%

69.78%

000.00 $ 1,200,000.00 $ 420,000.00 $ 1,326,000.00 $ 900,000.00 $ 2,800,000.00 $ 2,400,000.00 $420,000.00 $ 1,768,000.00 $900,000.00

180.00 $

310,080.00 $ 70,756.00 $ 224,406.00 $ 272,280.00 $ 695,800.00 $

620,400.00 $ 70,700.00 $

299,000.00 $271,980.00

820.00 $

889,920.00 $ 349,244.00 $ 1,101,594.00 $ 627,720.00 $ 2,104,200.00 $ 1,779,600.00 $349,300.00 $ 1,469,000.00 $628,020.00

Cost Sheet Summary Cost Sheet Summary

Basic T-Shirt

Long Sleeve

Tank Top

V Neck

Crop Top

Egypt

$4.95

$5.70

$4.53

$5.11

$5.05

Honduras

$4.97

$5.75

$4.58

$5.17

$5.05

Peru

$5.21

$6.04

$4.73

$5.47

$5.25

Pakistan

$5.63

$6.48

$5.18

$5.77

$5.78

Turkey

$6.58

$7.64

$5.94

$7.00

$6.55


WAREHOUSING, LOGISTICS AND DISTRIBUTION STRATEGY

Since all the three countries are not directly next to the US, it is more cost efficient for us to use ocean freight to ship our products to the US. From the port to the warehouse, the transportation will be mostly by truck and is based on the organization of the contract supply chain solution company; from the warehouse to the end consumers, the transportation will be either by truck or by air, depending on the supply chain solution company. In order to cut the cost of operation, we decided to contract with warehousing companies instead of owning our warehouse and let the experts streamline our order and distribution. Except for reducing the cost, the essence of our product is basic and simple which is unnecessary to be sold at the fancy retail stores.

To reduce the costs of operation of brick-and-mortar stores as well as save energy, tangible resources and human resources,

we only do online retailing. While there’s no cost for brick-and-mortar stores, we can have more budget for the quality and investment on the development of our technology system and other innovation to enhance our supply chain efficiency as well as help our suppliers grow. The budget can also go into the development of customer service and new product lines. For supply chain solution, we contact several companies, including UPS, FedEx, DHL, Bergen Logistics, UTi, Barrett, Li&Fung, Simperal, Waitex, bsi, Logility, Demand Solution, Dematic, Supply Chain Solution, TAL, LynnCo Supply Chain Solutions, Fashion logistics, Hellmann Worldwide Logistics and the Apparel Logistics Group, and we come up with three suppliers, UPS, Bergen Logistics, and Barrett.


UPS is one of the largest supply chain solution companies in the world, with integral and abundant services, including inventory control, reporting, pick and pack, pre-distribution services, design and planning of supply chain management and labeling. The lead time for order turn around is only 24 hours, and the size of UPS is huge, with services across the US, which can meet the requirement of online retailing efficiently. Although FedEx is also a big player among supply chain solutions and distribution business, it only does the health and hightech industries, so FedEx is not valid for us. DHL has a similar situation as FedEx, though it serves the apparel industry, it focuses on the international logistics instead of domestic, so DHL is not suitable for us as well.

Bergen Logistics also has comprehensive services, including garment-on-hanger shipping, flat-box shipping, price-tag application, inventory warehousing and control, order pick and pack and shipping, returns processing, quality control, online warehouse management system, scanning and receiving goods by unit, EDI solutions and e-commerce order fulfillment, which are highly suitable for our company since this company provides services mainly for the apparel industry, and it also deals with e-tailing. The order turn around time for Bergen is also only 24 hours, which is beneficial for our online business. Another advantage of Bergen is that it has three facilities in New Jersey and one facility in California, which can serve across the country; the most attractive thing is that 95% of the volume out of the facilities is for fashion logistics and 30% of this 95% is direct to consumers of e-commerce, highly beneficial for our business.


Barrett has sophisticated warehouse management systems, provides tier-one warehouse management system software, and it also provides services for ERP and e-commerce integrations and quality control, which are valid for our requirement. The order turn around time of Barrett is also 24 hours; it provides consumers direct fulfillment and retail channel delivery with facilities and operations across the East Coast, West Coast and Mid-Atlantic and Southeast, which is suitable for our e-tailing business. For the rest of the companies some do not fit our business, such as Waitex, which does not do e-commerce. Although UPS has the most comprehensive services with its own logistics while Bergen and Barrett both have third party to handle logistics, the cost of UPS is too high for our start-up company. Comparing between Bergen and Barrett, the advantages of Bergen are its emphasis on fashion order fulfillment and e-commerce, while Barrett has lower cost and more facilities across the country, which should be beneficial for e-commerce as well. Though Bergen seems to be more attractive to us, Barrett is more cost efficient to us.


Supply Chain Solutions Rank

Supply Chain Solutions CATEGORY

UPS

10 Inventory Management

Inventory control

BERGEN

BARRETT

10

10

Garment-on-hanger shipping.

Warehouse management systems

Inventory visibility

Flat-box shipping.

Tier-one WMS software

Unique Inventory storage environments

Price-tag application.

Real-time visibility of inventories, order status,

Data and physical security

Inventory warehousing and control.

shipment tracking, history, and customized

Reporting, measurement, and compliance

Order picking, packing and shipping.

reports for clients and customers.

FTZ (Foreign Trade Zone) and bonded

Returns processing. Quality control. Receiving of new shipments. Order fulfillment. Invoicing. Factoring services.

Order Turn 10 Around Pick and Pack 10

24hr

10

Credit approvals. 24 hr

10

24hrs

Consolidation, pick & pack and pre-

10

Pick & pack 24/7, anywhere.

10

Received, sorted, and repackaged efficiently.

9

WMS & EDI Services

distribution service

Scanning and receiving goods by unit. 3 points of scanning in the warehouse Track the location in the inventory. Track the status of the order. Real-time movement of the inventory.

Value Added 10 Services

Design and planning

9

Reverse logistics. Price ticket affixation.

Consulting

Label changes.

ERP & e-commerce integrations

Custom Brokerage

Minor alterations.

Product returns center

Trade management

Style changes.

Quality control

Configuration/customization

Quality control.

Shipping rates negotiation with major providers

Product labeling

Hang tags/ price tickets application.

such as UPS and FedEx

Price ticketing

EDI solutions.

ProShip Multi-Carrier Parcel Shipping Software

Repackaging Quarantine QA

Back office solutions.

to ship domestic & international parcels via UPS

inspection Testing

Ecommerce order fulfillment.

and FedEx centralized freight management and control Barrett Blueprint® supply chain methodology Sustainability

Costs

4

$10 per unit (retail price); shipping over 25- 8

$3.5 per order (Based on the phone call with

35 times/week can get discount (Based on

Bergen)

10

item + shipping) (Based on the quote of SP

the phone call with UPS)

Size

9

$2.75 (Order processing and Pick & Pack + each Express)

Over 1.5 million square feet distribution and 8

NJ – 3 facilities (180,000 sq ft, 222,000 sq ft,

10

MA- 3 facilities (50,000 sq ft, 205,000 sq ft,

warehousing facilities in the US

600,000 sq ft)

260,000 sq ft)

CA – 1 facility (154,000 sq ft)

NJ- 1 facility (115,000 sq ft)

Belgium – Gent (200,000 sq ft)

TN- 1 facility (650,000 sq ft)

Total: 1.2 million square feet in the US

MD- 1 facility (275,000 sq ft) VA- 1 facility (50,000 sq ft) CA- 1 facility (220,000 sq ft) 2.1 million square feet warehousing capacity.

Customers

9

For goods/retial: adidas, Crown Premiums,

10

High-end fashion clients in RTW, outerwear, 8

Best Buy, Vibram, Five Figers, Belgium's

Deer Stags, Fabricut, G3 Genuine Guide

sportswear, dresses, footwear, handbags and

Chocolate Source, Pacific Coast Producers, Ken's

Gear, Kingsdown, LUSH, Nikon, Skirts Plus,

accessories.

Foods, The Lagoon Group, Tivoli Audio

TeddyCrafters…

Multiple Locations Location

10

Over 1000 sites, located in over 120

10

countries 10

Office: Alpharetta, GA.

3 facilites in New Jersey, 1 facility in

10

California, 1 facility in Belgium. 10

Warehouse: MA, Mo, CA. Includes East

Both the East Coast and West Coast. NJ and

8 warehouse. Massachusetts, New Jersey, Tennessee, Maryland, Virginia, California

9

CA.

Covering the East Coast, West Coast, MidAtlantic and Southeast.

Coast, Middle, and West Coast with nationwide services.

Total

82

85

86

Average

9.1

9.4444

9.5556


SUPPLY CHAIN STRATEGY Based on our product requirement and company requirement, we considered our product out of five countries which have mature textile industry, which are Peru, Honduras, Egypt, Turkey and Pakistan. Through the country research, we came out with the benefits and risks as well as the past-current-future situation of the textile industry, and made the comparison and rankings between the five countries. Based on the risks and benefits of each country, Peru, Turkey and Egypt seem to be more attractive to us with relatively stable socio-eco-political environment, better business climate and high quality and advanced technology for textile industry. After comparing the costs of each country, the highest to the lowest are Turkey, Pakistan, Peru, Honduras and Egypt. Finally, we compared the shipping distances required for each country, and choosing between Honduras and Turkey became a hard decision. Turkey has the high quality, innovation, technology, facility, better business environment and better skilled labor, but the cost is too high and the lead time from the port of Turkey to the US is about four times that of Honduras. Besides, Turkey has no trade agreement with the US while Honduras is part of CAFTA-DR and is the closest to the US among the five. In addition, Honduras is the second cheapest among the five. Although the textile industry has been down-hill in Honduras since the phase-out of quota of textile industry, it is still mature enough to fulfill our product orders. While facing the decision between Honduras and Turkey, we also think about Pakistan, which also have mature textile industry and low labor cost. However, for the reason of the issue of terrorism and the total high costs of Pakistan, we decided not to consider Pakistan. With the consideration of all the factors, we decided to select Peru, Honduras and Egypt. But since the core value of our company mainly focuses on the quality, we decided to make our placement mainly in Peru and Egypt to get the quality and Honduras as our quick replenishment location.


Before we finalized our country selection, we had 3 suppliers in each country and compared between the three and between the whole 15 suppliers in five countries. Among the 15 suppliers, most of them have good performance with well-known customer bases and good capacity. Out of the three countries we chose, we compared mainly the capacity, customer base, sourcing guidelines and the future outlook between the three suppliers, we choose Textimax for Peru, Cairo for Egypt and Pinehurst for Honduras, because they have the best capacity and customer base as well as sourcing guidelines, which are the most influential to our company. To ensure the quality, capacity, working environment and lead time of our suppliers, we will also have regular audits and inspections and always have a plan B at hand to solve emergency situations. With the mission of being sustainable in mind, we decided to do online business only in order to minimize the environmental harm and the waste of energy and resources from the brick-and-mortar store, and to maximize our budget on the investment of other parts of our operation such as customer services, technology and IT platforms for synchronizing our supply chain. And since we are doing e-commerce to focus our effort on product development and supply chain management, we decided to have contract supply chain solution companies to do warehousing, logistics, distribution and inventory management for us. After doing the primary research for the potential supply chain solutions, we came out with three possible companies, which are UPS, Bergen and Barrett. While all of them have comprehensive services and strategic location across the US, UPS is mainly focused on health care and high-tech products and its cost is the highest. Bergen mainly focuses on the business of the fashion industry and provides many value added services for fashion order fulfillment as well as e-commerce and ships directly to consumers services, which make Bergen more attractive than Barrett. While Barrett also has good performance on e-commerce fulfillment and provides EDI and a warehouse management system, Barrett has more warehouse facilities and the fact that Barrett costs less than Bergen, we select Barrett as our supply chain solution company.


Since the original concept of our company is to provide products with high quality, simple yet aesthetic design, and sustainable manufacturing, the main concern for us when we did our sourcing strategy were to decrease the amount of resources used and energy wasted as well as to help with human resources, quality and sourcing guidelines. As Peru and Egypt are valid for the high level requirements for quality and innovation, these two are the best fits for our product requirement. Because of the concern for the cost and lead time, although Honduras is not the best choice in terms of product quality and infrastructure innovation, it still works for us as our replenishment location since it has the low cost and shortest distance as well as the good quality of fabric imported from the US. Our placement strategy is also based on the product quality requirement and the minimizing of costs. Our distribution decision of doing online business only was tailored to meet our company’s requirement for sustainability with the reduction of carbon dioxide, energy and other resource waste. Overall, our supply chain decision should accomplish the quality for our company, product requirement, and the efficiency for our supply chain.


CONCLUSION Overall, the prior essence that influenced our decision making was quality and sustainability while cost was the second crucial factor in our decision during the whole project. For our product development, we put quality, comfort and sustainability at the forefront. Besides, because we wanted our product to be sustainable, we developed it as non-seasonal with basic and simple design and good quality. However, we also made some compromises when facing the cost and margin issue. Although Turkey has the better quality and technology, we gave up Turkey due to the high cost and low margin as well as the long lead time. Honduras won the third position because of the low cost and short distance. Pakistan has good performance in textile industry with low labor cost but the factors of worldly notorious terrorism issue as well as the lack of energy and the long distance to the US made it less attractive. In order to maintain our quality, we put our focus on Peru and Egypt to fulfill our product quality requirement.

Also, because of our emphasis on product quality and sustainability, we selected

e-commerce as our only distribution channel to reduce the costs and to minimize the waste. When choosing the supply chain solution companies, we made our decision based on the value-added services and their performance for e-commerce fulfillment. To achieve our mission and vision to be the most sustainable apparel company via simple but aesthetic and comfortable apparel with our core value, which is to love helping, love our origin, love mankind and love the environment, we keep looking back to our product and company requirement for quality and sustainability through all of our research and decision making. Though cost and margin are important to our business, when it comes to the decision between quality and cost, we choose quality and sustainability to follow the core value of our company.


Work cited Country research

Pakistan "China And Pakistan Are Geopolitical Friends." Business Insider. Business Insider, Inc, 24 Jan. 2015. Web. 6 Apr. 2015. "Country Reports - Pakistan." IHS Economics and Country Risk. IHS Global Inc., 2 Mar. 2015. Web. 4 Apr. 2015. "How Competitive Is Pakistan's Textile Sector | Business Recorder." Business Recorder. 22 Jan. 2015. Web. 6 Apr. 2015. "Ploumen: Pakistani Textile Industry Not Yet Fair for All." Ploumen: Pakistani Textile Industry Not Yet Fair for All. 27 May 2014. Web. 6 Apr. 2015. "USDA GAIN: Pakistan Cotton Update - October 2014 - Market Reports." The Crop Site. 10 Oct. 2014. Web. 6 Apr. 2015. Cheema, Iqtidar Karamat. "Shall Pakistan Celebrate Its Best Ever Corruption Ranking." 6 Dec. 2014. Web. 6 Apr. 2015. Rubin, Barnett. "Ghani’s Gambit." The New York Times. The New York Times, 19 Mar. 2015. Web. 6 Apr. 2015. www.cia.gov Peru Bergman Rivera S.A.C. "BERGMAN / RIVERA: OUR COMPANY." BERGMAN / RIVERA: OUR COMPANY. Bergman Rivera S.A.C, n.d. Web. 04 Apr. 2015. "Country Reports - Peru." Peru Country Monitor (2015): 1-19. Business Source Premier. Web. 3 Apr. 2015. Doing Business. "Doing Business in Peru - World Bank Group." Doing Business in Peru - World Bank Group. World Bank Group, n.d. Web. 11 Apr. 2015. Dunnell, Tony. "Natural Hazards in Peru." About Travel. About Travel, n.d. Web. 15 Apr. 2015. Fiber to Fashion. "Peru’s Apparel Production Costs May Increase by 4-5%: ADEX." Fiber to Fashion. Fiber to Fashion, 24 Sept. 2013. Web. 12 Apr. 2015. Fibre2fashion. "Peru's Cotton Output Will Dip This Season: SNI." Fibre2fashion. Fibre2fashion, 12 Feb. 2013. Web. 04 Apr. 2015. Fibre2fashion. "Peru's Textile & Apparel Exports Rise 7% in First 2 Months." Fibre2fashion. Fibre2fashion, 14 Apr. 2014. Web. 04 Apr. 2015. Mennis, Fdmund A. "Diffusion Analysis as an Investment Guide." The Analysts Journal 13.2 (1957): 47-56. Web. 12 Apr. 2015. New Twist. "New Twist - Werner International - Newsletter 11." New Twist - Werner International - Newsletter 11. New Twist, n.d. Web. 07 May 2015. Ojeda, Hillary. "Peru: Gov't Approves Large Loan for Possible Natural Disasters." Peru This Week. Peru This Week, 23 Mar. 2015. Web. 15 Apr. 2015. "Peru: Country Risk Report." Peru Business Forecast Report 2 (2015): 1-51. Business Source Premier. Web. 3 Apr. 2015. "Peru Unemployment Rate 2001-2015." Trading Economics. Trading Ecnomics, n.d. Web. 04 Apr. 2015. Peru - History & Culture. "Peru - History & Culture." Peru - History & Culture. InterKnowledge Corp, 2007. Web. 04 Apr. 2015. Thimble Sourcing. "Textile Infrastructureand Developmentin Peru." Thimble Sourcing. Thimble Sourcing, n.d. Web. 04 Apr. 2015. United States Trade Representative. "Peru Trade Promotion Agreement | United States Trade Representative." Peru Trade Promotion Agreement | United States Trade Representative. Office of the United States Trade Representative, n.d. Web. 04 Apr. 2015. Worker Rights Consortium. "Global Wage Trends for Apparel Workers, 2001-2011." Global Wage Trends for Apparel Workers, 2001–2011 (2013): n. pag. American Progress. American Progress, June 2013. Web. 18 Apr. 2015. Turkey “Country Report Turkey.” Marketline.com. N.d. N.p. Web. April 3, 2015. “Euromonitor International from International Labor Organization.” Euromonitor.com. N.d. “Euromonitor International from national statistics.” Euromonitor.com. N.d. N.p. Web. “Overseas Business Risk.” Gov.uk. August 22, 2014. Web. April 15, 2015. “Time of Change in Turkish Apparel.” Euromonitor.com. N.d. N.p. Web. April 3, 2015. “Turkey Apparel.” Istanbulfashion.com. N.d. N.p. Web. April 4, 2015. “Turkey County Report.” CIA. Gov. N.d. N.p. Web. April 3, 2015. “Turkey GDP.” Tradingeconomics.com. N.d. N.p. Web. April 3, 2015. “Turkish Apparel Industry.” Istanbulfashion.com. 2014. N.p. Web. April 3, 2015. “Werner International Hourly Labor Cost Textile Industry.” Werner-newtwist.com. 2014. Panjiva


Honduras “Apparel Manufacturer – Honduras.” Panjiva. N.d. Web. 4 April 2015. “Business Climate.” Investment and Exports. N.d. Web. 3 April 2015. “CAFTA-DA (Dominican Republic-Central America FTA).” Office of the United States Trade “Honduras 2014 Country Review.” CountryWatch. N.d. Web. 3 April 2015. “Honduras Country Report.” The PRS Group, Inc. August 2014. Web. 3 April 2015. “Honduras Inflation Rate – 1990-2015.” Trading Economics. 13 April 2015. Web. 13 April 2015. “Honduras.” Central Intelligence Agency. 22 June 2014. Web. 13 April 2015. “Honduras.” Culture Crossing Guide. N.d. Web. 3 April 2015. “Honduras.” GlobalEDGE. N.d. Web. 3 Arpil 2015. “Textile and Apparel Industry.” Investment and Exports. N.d. Web. 3 April 2015. “U.S. TEXTILE AND APPAREL CATEGORY SYSTEM 2015.” Office of Textiles and Apparel. N.d. Web. 3 April 2015. Bank Publications, 2012. ProQuest ebrary. Web. 19 April 2015. Elcatex Official Website. Grupo Karim’s Official Website Lopez-Acevedo, Gladys, and Robertson, Raymond, eds. Directions in Development : Sewing Panjiva Pinehurst Manufacturing Official Website Representative. N.d. Web. 13 April 2015. Success: Fostering Job Creation in the Apparel Sector. Washington, DC, USA: World World Freight Rates. N.d. Web. 3 April 2015. Egypt Alexbank. "Textile in Egypt: Ex-pioneer Industry." Bank of Intesa. Alexbank Economic Research Division, Jan. 2011. Web. 28 Apr. 2015. Barrie, Leonie. "Egyptian Turmoil “no impact” on textiles." Just-style. Just-style, 8 July 2013. Web. 5 Apr. 2015. CAPMAS. Statistical Year Book. Central Agency for Public Mobilization and Statistics, 2013. Web. 1 May 2015. CBI. "Egypt Africa: CBI Key Performance Indicators – Practical Outsourcing Insights." CBI Market Information Database. CBI Ministry of Foreign Affairs, 2014. Web. 25 Apr. 2015. "Economic Crisis Affects Egyptian Textile Industry." Textile News Egypt. Fiber2Fashion, 24 Jan. 2013. Web. 6 May 2015. "Egypt." CIA World Factbook. Central Intelligence Agency, 22 June 2014. Web. 3 Apr. 2015. "Egyptian Ports." RAFIMAR, Egyptian Ports. Rafimar Inc., n.d. Web. 17 Apr. 2015. Gherzi. "Textile Development Strategy Vision 2020." Ghoneim, Ahmed Farouk. "Ready Made Garments (RMG) Industry: Is There a Way to Save It?" Policy Brief. Egypt Network for Integrated Development, 2014. Web. 5 Apr. 2015. Katz, Lothar. Negotiating International Business: The Negotiator's Reference Guide to 50 Countries around the World. Charleston, SC: urge, 2007. Print. Kwintessential. "Egypt - Language, Culture, Customs and Etiquette." Egypt. Kwintessential Ltd., n.d. Web. 09 May 2015. Marketline. "Egypt Country Profile." Business Source Premier. June 2014. Web. 5 Apr. 2015. Matar, Sameh Fikry. "An Exploratoration into Job Satisfaction and Motivation among Senior and Middle Managers in Egyptian Textile Industry." Thesis. University of Bradford, 2010. Bradford Scholars. Department of Development and Economic Studies, 6 July 2011. Web. 4 May 2015. "Qualifying Industrial Zone (QIZ)." Qualifying Industrial Zone (QIZ). Office of Textiles and Apparel (OTEXA), International Trade Administration, U.S. Department of Commerce, n.d. Web. 11 Apr. 2015. Rampton, Roberta, and Arshad Mohammed. "Obama Ends Freeze on U.S. Military Aid to Egypt." Reuters. Thomson Reuters, 31 Mar. 2015. Web. 5 Apr. 2015. Schwab, Kalus. "The Global Competitiveness Report 2013-2014." World Economic Forum. The World Economic Forum, 2013. Web. 5 Apr. 2015. The PRS Group. "Egypt Country Report." The PRS Group, Inc. Political Risk Services, 24 Jun. 2014. Web. 1 May 2015. USAID. "Apparel Exports to the United States: A Comparison of Morocco, Jordan, and Egypt." Nathan Associates Inc. The United States Agency for International Development, Oct. 2008. Web.19 Apr. 2015. "What Is QIZ?" QIZ EGYPT - Qualifying Industrial Zones - Ministry of Trade and Industry. Egyptian Ministry of Foreign Trade, n.d. Web. 11 Apr. 2015. World Economic Forum. "Global Competitiveness Report, 2010-2011." Geneva: WEF, 2011. Web. 1 May 2015.


Tech Pack

BASIC SHORT SLEEVE WOMEN T-SHIRT TECHNICAL-SHEET

DESIGN SHEET

“Essence T” by simo

PAGE #01

COMPANY NAME: simo Co.

STYLE #: 1111 SKETCH

ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

COLORS

PHONE: 912-666-7777

White

E-MAIL: simotshirt2015@gmail.com

GARMENT INFORMATION

Black

GROUP NAME: Element

Grey

CLASSIFICATION: Women’s wear SEASON: Spring 2016

Cameo Green

FRONT

GARMENT LABEL: simo

PLEASE NOTE: Colors shown are for reference only. For closest match, see PMS colors; for exact match, samples are available.

BACK

*6-ounce, 100% organic cotton knitted

FABRIC CONTENT: 100% organic cotton COLORWAY: White, Black, Grey, Cameo Green DESCRIPTION: Basic short sleeve women t-shirt

SIZE XS S M L XL CARE INSTRUCTIONS Machine wash cold with similar colors. Width 15 17 19 21 23 Do not bleach. Do not tumble dry. Iron Length 19 20 21 22 23 with low temperature. Sleeves 5 6 7 8 9 Chest width measured from bottom of armhole across the chest. Body length measured from highest point from seam to bottom hem. Sleeves length measured from center neck to hem. FABRIC INFORMATION

White

Black

Grey

Cameo Green

Textile PMS

11-4201 TCX

19-0303 TCX

13-4303 TCX

14-6312 TCX

General PMS

White

Black

3C

5585 C

ILLUSTRATION SHEET

Designer Initials

DATE CREATED: 04/05/2015

PAGE #02

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 1111 GROUP NAME: Element CLASSIFICATION: Women’s wear GARMENT LABEL: simo COLORWAY: White, Black, Grey, Cameo Green

PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com SKETCH

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

100% Organic Cotton single jersey fabric, GOTS dyed, Herbal Fab, India

# GOTS81389 53” wide 6 ounce (more details see fabric sheets)

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

DATE RELEASED:

STYLE #: 1111 GROUP NAME: Element CLASSIFICATION: Women’s wear

Designer Initials

DATE MODIFIED:

PAGE #03

SEASON: Spring 2016

E-MAIL: simotshirt2015@gmail.com SKETCH

DATE RELEASED:

FABRIC SHEET COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

PHONE: 912-666-7777

DATE CREATED: 04/05/2015

DATE MODIFIED:

SEASON: Spring 2016

GARMENT LABEL: simo COLORWAY: Cameo Green, White, Black, Grey SWATCH

Designer Initials

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

100% Organic Cotton single jersey fabric, GOTS dyed, Herbal Fab, India

# GOTS81389 53” Wide 6 ounce

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:


COMPONENT & LABEL/PACKING SHEET

PAGE #04

COMPANY NAME: simo Co.

STYLE #: 1111

ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

GROUP NAME: Element

FABRIC CONTENT: 100% Organic Cotton

E-MAIL: simotshirt2015@gmail.com

COLORWAY: White, Black, Grey, Cameo Green

CLASSIFICATION: Women’s wear

CONTENT

SIZE-QUANTITYUNIT OF MEASURE

LOCATION

COLOR

COMMENTS

Flexographic ink

T-21 Perma Spun

All seams and hems

4 colors

Dye to match

100% Cotton

1 per garment

Center back

3 colors

See tech-sheet, SULQW WR ÂżOO RUGHU size tab included

Recycled paper

1 per garment

Center wrap

1 color

Bar-code tag attached by Dennison gun

Paper sleeves Vendor: S.P.I. Code: PCD-00025 Origin: USA

DATE CREATED: 04/05/2015

DATE MODIFIED:

STYLE #: 1111 GROUP NAME: Element

SEASON: Spring 2016

PHONE: 912-666-7777

Thread Vendor: The Quality Thready & Notions Co. Code: THR4800 Origin: Ohio, USA Designer label and care label, Print-Avery Dennison Machine Vendor: Uline Code: S-5037 Origin: USA

PAGE #05

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

CLASSIFICATION: Women’s wear

ITEM-VENDOR -CODE-ORIGIN

LABEL CONSTRUCTION SHEET

FABRIC CONTENT: 100% Organic Cotton COLORWAY: White, Black, Grey, Cameo Green

DATE CREATED: 04/05/2015

DATE RELEASED:

LONG SLEEVE V NECK WOMEN T-SHIRT TECHNICAL-SHEET

PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com DETAIL:

“Long Sleeve T- Shirt� by simo COLORS

SEASON: Spring 2016

DATE MODIFIED:

DATE RELEASED:

DESIGN SHEET

PAGE #01

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 3112 SKETCH

PHONE: 912-666-7777

Canyon Rose

E-MAIL: simotshirt2015@gmail.com

GARMENT INFORMATION

Fungi

GROUP NAME: Element

Provincial

CLASSIFICATION: Women’s wear SEASON: Spring 2016

Dress Blue

BACK

FRONT *6.8-ounce, 100% organci cotton knitted

GARMENT LABEL: simo

PLEASE NOTE: Colors shown are for reference only. For closest match, see PMS colors; for exact match, samples are available.

FABRIC CONTENT: 100% organic cotton COLORWAY: Dress Blue, Canyon Rose, Fungi, Provincial DESCRIPTION: Basic V-neck long sleeve women t-shirt

SIZE XS S M L XL CARE INSTRUCTIONS Machine wash cold with similar colors. Widh 16 18 20 22 24 Do not bleach. Do not tumble dry. Iron Length 22 23 24 25 26 with low temperature. Sleeves 23 24 25 26 27 Chest width measured from bottom of armhole across the chest. Body length measured from highest point from seam to bottom hem. Sleeves length measured from center neck to hem. FABRIC INFORMATION

Dress Blue

Canyon Rose

Fungi

Provincial

Textile PMS

19-4024 TCX

17-1520 TCX

17-1212 TCX

18-4220 TCX

General PMS

7546 C

8421 C

8003 C

8201 C

Designer Initials

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:


ILLUTRATION SHEET

PAGE #02

COMPANY NAME: simo Co.

STYLE #: 3112

ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

GROUP NAME: Element CLASSIFICATION: Women’s wear

CLASSIFICATION: Women’s wear

GARMENT LABEL: simo COLORWAY: Dress Blue, Canyon Rose, Fungi, Provincial

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

100% organic cotton twill fabric for pants/dress/t-shirt, Termin Tekstil, Turkey.

# FK-392-0403746 53’’ wide, 6.8-ounce (more details See fabric sheets)

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

PAGE #04 STYLE #: 3112 GROUP NAME: Element CLASSIFICATION: Women’s wear

FABRIC CONTENT: 100% Organic Cotton

E-MAIL: simotshirt2015@gmail.com

COLORWAY: Dress Blue, Canyon Rose, Fungi, Provincial

Thread Vendor: The Quality Thready & Notions Co. Code: THR4800 Orgin: Ohio, USA Designer label and care label, Print-Avery Dennison Machine Vendor: Uline Code: S-5037 Orgin: USA

CONTENT

SIZE-QUANTITYUNIT OF MEASURE

LOCATION

COLOR

COMMENTS

Flexographic ink

T-21 Perma Spun

All seams and hems

4 colors

Dye to match

100% Cotton

1 per garment

Center back

3 colors

See tech-sheet, print to fill order, size tab included

Recycled paper

1 per garment

Center wrap

1 colors

Bar-code tag attached by Dennison gun

Paper sleeves, Vendor: S. P. I. Code: PCD-00025 Orign: USA

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

100% organic cotton twill fabric for pants/dress/t-shirt, Termin Tekstil, Turkey.

# FK-392-0403746 53’’ wide, 6.8-ounce

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

DATE MODIFIED:

DATE RELEASED:

LABEL CONSTRUCTION SHEET

PAGE #05 STYLE #: 3112 GROUP NAME: Element CLASSIFICATION: Women’s wear

PHONE: 912-666-7777

ITEM-VENDOR -CODE-ORIGIN

Designer Initials

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

SEASON: Spring 2016

SEASON: Spring 2016

GARMENT LABEL: simo COLORWAY: Dress Blue, Canyon Rose, Fungi, Provincial SWATCH

DATE CREATED: 04/05/2015

DATE RELEASED:

COMPONENT & LABEL/PACKING SHEET COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com SKETCH

Designer Initials

BACK

DATE MODIFIED:

STYLE #: 3112 GROUP NAME: Element

SEASON: Spring 2016

E-MAIL: simotshirt2015@gmail.com SKETCH

DATE CREATED: 04/05/2015

PAGE #03

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

PHONE: 912-666-7777

FRONT

FABRIC SHEET

SEASON: Spring 2016

PHONE: 912-666-7777

FABRIC CONTENT: 100% Organic Cotton

E-MAIL: simotshirt2015@gmail.com DETAIL:

COLORWAY: Dress Blue, Canyon Rose, Fungi, Provincial

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:


DEEP SCOOP WOMEN TANK TECHNICAL-SHEET

DESIGN SHEET

“Essence Tank” by simo

PAGE #01

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

COLORS Orchid Tint

STYLE #: 5213 SKETCH

PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com

Golden Haze

GARMENT INFORMATION

Fusion Coral

GROUP NAME: Element CLASSIFICATION: Women’s wear

Pool Blue

SEASON: Spring 2016 GARMENT LABEL: simo

Front

PLEASE NOTE: Colors shown are for reference only. For closest match, see PMS colors; for exact match, samples are available.

Back

*5.28-ounce, 100% organic cotton knitted

FABRIC CONTENT: 100% organic cotton COLORWAY: Orchid Tint, Golden Haze, Fusion Coral, Pool Blue DESCRIPTION: Deep Scoop Women Tank

SIZE XS S M L XL CARE INSTRUCTIONS Width 17 19 21 23 25 Machine wash cold with similar colors. Do Length 19 20 21 22 23 not bleach. Do not tumble dry. Iron with low temperature. Sleeve width 10 11 12 13 14 Chest width measured from bottom of armhole across the chest. Body length measured from highest point from seam to bottom hem. Sleeves length measured from center neck to hem. FABRIC INFORMATION

ORCHID TINT

GOLDEN HAZE

FUSION CORAL

POOL BLUE

Textile PMS

13-3802 TCX

12-0826 TCX

16-1543 TCX

15-5218 TCX

General PMS

5245 C

7507 C

170 C

563 C

Designer Initials

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:

PAGE #02 FABRIC SHEET

ILLUTRATION SHEET COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 5213 GROUP NAME: Element CLASSIFICATION: Women’s wear

PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com SKETCH

PAGE #03

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 5213 GROUP NAME: Element

SEASON: Spring 2016

CLASSIFICATION: Women’s wear

GARMENT LABEL: simo COLORWAY: Orchid Tint, Golden Haze, Fusion Coral, Pool Blue

PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com SKETCH

SEASON: Spring 2016

GARMENT LABEL: simo COLORWAY: Orchid Tint, Golden Haze, Fusion Coral, Pool Blue SWATCH

Designer Initials

Designer Initials

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

100% Organic Pima Cotton Alamac American Knits, LLC

SKU# 15638-21 6001 44” Wide 5.28 ounce (more details See fabric sheets)

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

100% Organic Pima Cotton Alamac American Knits, LLC

SKU# 15638-21 6001 44” Wide 5.28 ounce

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:


COMPONENT & LABEL/PACKING SHEET

PAGE #04 LABEL CONSTRUCTION SHEET

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 5213 GROUP NAME: Element

PAGE #05

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

CLASSIFICATION: Women’s wear

STYLE #: 5213 GROUP NAME: Element

SEASON: Spring 2016

CLASSIFICATION: Women’s wear

SEASON: Spring 2016

PHONE: 912-666-7777

FABRIC CONTENT: 100% Organic Cotton

PHONE: 912-666-7777

FABRIC CONTENT: 100% Organic Cotton

E-MAIL: simotshirt2015@gmail.com

COLORWAY: Orchid Tint, Golden Haze, Fusion Coral, Pool Blue

E-MAIL: simotshirt2015@gmail.com

COLORWAY: Orchid Tint, Golden Haze, Fusion Coral, Pool Blue

ITEM-VENDOR -CODE-ORIGIN

CONTENT

SIZE-QUANTITYUNIT OF MEASURE

LOCATION

COLOR

COMMENTS

Thread Vendor: The Quality Thready & Notions Co. Code: THR4800 Origin: Ohio, USA Designer label and care label, Print-Avery Dennison Machine The Quality Thready & Notions Co.

Flexographic ink

T-21 Perma Spun

All seams and hems

4 color

Dye to match

100% Cotton

1 per garment

Center back

3 color

See tech-sheet, print to fill order, size tab included

Paper sleeves The Quality Thready & Notions Co.

Recycled paper

1 per garment

Center wrap

1 color

Bar-code tag attached by Dennison gun

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:

BASIC CROP TOP WOMEN T-SHIRT TECHNICAL-SHEET

DETAIL:

DATE CREATED: 04/05/2015

“Essence Crop Top” by simo COLORS

DATE MODIFIED:

DATE RELEASED:

DESIGN SHEET

PAGE #01

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 1311 SKETCH

PHONE: 912-666-7777

Vanilla Ice

E-MAIL: simotshirt2015@gmail.com

GARMENT INFORMATION

Linen

GROUP NAME:

Grey

CLASSIFICATION: Women’s wear SEASON: Spring 2016

Limoges

FRONT

BACK

*6-ounce, 100% organic cotton knitted

GARMENT LABEL: simo

PLEASE NOTE: Colors shown are for reference only. For closest match, see PMS colors; for exact match, samples are available.

FABRIC CONTENT: 100% organic cotton COLORWAY: Vanilla Ice, Linen, Grey, Limoges DESCRIPTION: Short sleeves women crop top

SIZE XS S M L XL CARE INSTRUCTIONS Width 16 18 20 22 24 Machine wash cold with similar colors. Do Length 16.5 17.5 18.5 19.5 20.5 not bleach. Do not tumble dry. Iron with low temperature. Sleeves 7 8 9 10 11 Chest width measured from bottom of armhole across the chest. Body length measured from highest point from seam to bottom hem. Sleeves length measured from center neck to hem. FABRIC INFORMATION

Vanilla Ice

Linen

Grey

Limoges

Textile PMS

11-0104 TCX

12-1008 TCX

13-4303 TCX

19-4044 TCX

General PMS

7527 C

475 C

420 C

7694 C

Designer Initials

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:


ILLUSTRATION SHEET

PAGE #02 FABRIC SHEET

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 1311 GROUP NAME: Element CLASSIFICATION: Women’s wear

PAGE #03

COMPANY NAME: simo Co.

STYLE #: 1311

ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

GROUP NAME: Element

SEASON: Spring 2016

PHONE: 912-666-7777

GARMENT LABEL: simo

E-MAIL: simotshirt2015@gmail.com SKETCH

COLORWAY: Vanilla Ice, Linen, Grey, Limoges

CLASSIFICATION: Women’s wear PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com SKETCH

Designer Initials

SEASON: Spring 2016

GARMENT LABEL: simo COLORWAY: Vanilla Ice, Linen, Grey, Limoges SWATCH

Designer Initials

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

100% Organic Cotton fabric, Organic Cotton combed Jersey Fabric and Rib 1x1, Ne 24 / 1-155 grxsqm, Natural / unbleached Factory:Peru Pima S.A.

#BW-304-0295023 39” wide 6 ounce

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

100% Organic Cotton fabric, Organic Cotton combed Jersey Fabric and Rib 1x1, Ne 24 / 1-155 grxsqm, Natural / unbleached Factory:Peru Pima S.A.

#BW-304-0295023 9” wide 6 ounce

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

DATE CREATED: 04/05/2015

DATE MODIFIED:

COMPONENT & LABEL/PACKING SHEET STYLE #: 1311 GROUP NAME: Element CLASSIFICATION: Women’s wear PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com

Thread Vendor: The Quality Thready & Notions Co. Code:THR4800 Origin:Ohio,USA Designer label and care label, Print-Avery Dennison Machine Vendor:Uline Code:S-5037

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401 SEASON: Spring 2016

FABRIC CONTENT: 100% Organic Cotton COLORWAY: Vanilla Ice, Linen, Grey, Limoges

SIZE-QUANTITYUNIT OF MEASURE

LOCATION

COLOR

COMMENTS

Flexographic ink

T-21 Perma Spun

All seams and hems

4 colors

Dye to match

100% Cotton

1 per garment

Center back

3 colors

See tech-sheet, print to fill order, size tab included

Recycled paper

1 per garment

Center wrap

1 color

Bar-code tag attached by Dennison gun

DATE CREATED: 04/05/2015

DATE RELEASED:

DATE MODIFIED:

DATE RELEASED:

PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com DETAIL:

DATE CREATED: 04/05/2015

PAGE #05

STYLE #: 1311 GROUP NAME: Element CLASSIFICATION: Women’s wear

CONTENT

Paper sleeves, Vendor:S.P.I. Code: PCD-00025 Origin:USA

DATE MODIFIED:

PAGE #04 LABEL CONSTRUCTION SHEET

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

ITEM-VENDOR -CODE-ORIGIN

DATE CREATED: 04/05/2015

DATE RELEASED:

SEASON: Spring 2016

FABRIC CONTENT: 100% Organic Cotton COLORWAY: Vanilla Ice, Linen, Grey, Limoges

DATE MODIFIED:

DATE RELEASED:


V NECK SHORT SLEEVE WOMEN T-SHIRT TECHNICAL-SHEET

“V Neck Tshirt” by simo

DESIGN SHEET

PAGE #01

COMPANY NAME: simo Co.

STYLE #: 1112 SKETCH

ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

COLORS

PHONE: 912-666-7777

Cornsilk

E-MAIL: simotshirt2015@gmail.com

GARMENT INFORMATION

Black

GROUP NAME: Element

Light gray

CLASSIFICATION: Women’s wear SEASON: Spring 2016

Fairway PLEASE NOTE: Colors shown are for reference only. For closest match, see PMS colors; for exact match, samples are available.

q

FRONT

BACK

* 6 -ounce, 100% organic cotton knitted

GARMENT LABEL: simo FABRIC CONTENT: 100% organic cotton COLORWAY: Cornsilk, Black, Light gray, Fairway DESCRIPTION:V-Neck Short Sleeve Basic T-Shirt

SIZE XS S M L XL CARE INSTRUCTIONS Machine wash cold with similar colors. Width 17 19 21 23 25 Do not bleach. Do not tumble dry. Iron Length 19 20 21 22 23 with low temperature. Sleeves 6 7 8 9 10 Chest width measured from bottom of armhole across the chest. Body length measured from highest point from seam to bottom hem. Sleeves length measured from center neck to hem. FABRIC INFORMATION

Cornsilk

Black

Light gray

Fairway

Textile PMS

13-0932 TCX

19-0303 TCX

12-0404 TCX

18-6320 TCX

General PMS

7-2-2C

P Black

154-1-1C

111-3-5C

Designer Initials

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:

PAGE #02 FABRIC SHEET

ILLUTRATION SHEET COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

CLASSIFICATION: Women’s wear

PAGE #03

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 1121 GROUP NAME: Element

STYLE #: 1112 GROUP NAME: CLASSIFICATION: Women’s wear

SEASON: Spring 2016

SEASON: Spring 2016

PHONE: 912-666-7777

GARMENT LABEL: simo

PHONE: 912-666-7777

GARMENT LABEL: simo

E-MAIL: simotshirt2015@gmail.com SKETCH

COLORWAY: Cornsilk, Black, Light gray, Fairway

E-MAIL: simotshirt2015@gmail.com SKETCH

COLORWAY: Cornsilk, Black, Light gray, Fairway SWATCH

Designer Initials

Designer Initials

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

FABRIC INFORMATION

STYLE # WIDTH

SIZE RANGES

DELIVERY DATE

COMMENTS

100% Organic Cotton single jersey fabric, GOTS dyed, Herbal Fab, India

#HFB127520619 53” wide 6 ounce (more details ee fabirc sheets)

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

100% Organic Cotton single jersey fabric, GOTS dyed, Herbal Fab, India

#HFB127520619 53” wide 6 ounce (more details ee fabirc sheets)

XS, S, M, L, XL Sample size: M

TBD

Delivery not set yet with jobber

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:


COMPONENT & LABEL/PACKING SHEET

PAGE #04

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401

STYLE #: 1121 GROUP NAME: Element CLASSIFICATION: Women’s wear

COMPANY NAME: simo Co. ADDRESS: 2 and 4 E. Jones St., Savannah, GA 31401 SEASON: Spring 2016

PHONE: 912-666-7777

FABRIC CONTENT: 100% Organic Cotton

E-MAIL: simotshirt2015@gmail.com

COLORWAY: White, Black, Grey, Cameo Green

ITEM-VENDOR -CODE-ORIGIN

Thread Vendor: The Quality Thready & Notions Co. Code: THR4800 Orgin: Ohio, USA Designer label and care label, Print-Avery Dennison Machine Vendor: Uline Code: S-5037 Orgin: USA

SIZE-QUANTITYUNIT OF MEASURE

LOCATION

COLOR

COMMENTS

Flexographic ink

T-21 Perma Spun

All seams and hems

4 colors

Dye to match

100% Cotton

1 per garment

Center back

3 colors

See tech-sheet, print to fill order, size tab included

Recycled paper

1 per garment

Center wrap

1 color

Bar-code tag attached by Dennison gun

DATE CREATED: 04/05/2015

DATE MODIFIED:

DATE RELEASED:

PHONE: 912-666-7777 E-MAIL: simotshirt2015@gmail.com DETAIL:

DATE CREATED: 04/05/2015

DATE MODIFIED:

SEASON: Spring 2016

FABRIC CONTENT: 100% Organic Cotton COLORWAY: Cornsilk, Black, Light gray, Fairway

mail.com

5

STYLE #: 1121 GROUP NAME: Element CLASSIFICATION: Women’s wear

http://www.rapidtags.com/ printed-fabric-labels-tagless-heat-transfers/

PACKAGE SAMPLE DATE MODIFIED:

DATE RELEASED:

SEASON: Spring 2016

FABRIC CONTENT: 100% Organic Cotton COLORWAY: Cornsilk, Black, Light gray, Fairway

ON SHEET

. St., Savannah, GA 31401

STYLE #: 1121 GROUP NAME: Element CLASSIFICATION: Women’s wear

CONTENT

Paper sleeves, Vendor: S.P.I Code:PCD-0025 Orign: USA

LABEL CONSTRUCTION SHEET

DATE RELEASED:


Vendor

S-4505 S-444 S-5037

ULINE ULINE ULINE

Tape Labels

per container

per container

Broker*

GRAND TOTAL

TOTAL OTHER

percentage Duty*@

+ insurance + freight

Insurance per container Total cost of product

Freight

250

0%

250

0%

250

17%

147.35

4206.1 4735.3 80.84 100

1484

250

17%

143.46

250

0%

80

4389.58 882.67

40000

40000

40000

Pakistan Honduras# units

5.211

0.010

0.000

5.201

0.002

0.037

$Total

5.1618

*Includes pressing & packing unless otherwise noted.

Turkey

2.7670

TOTAL LABOR

Egypt

0.5000

Admin

Peru

0.0600

Prepacks

COST

1.0000

Washing*

OTHER

0.4000

Finishing*

5.0000

0.7000

0.1

Sewing

0.055

0.0700

Cutting 0.2

0.0070

Marking

$Total

0.0905

192000 0.0800

19200 0.0001

192 0.0104

$Total

0.1010

0.0150

0.08

$Total

0.2868

0.2250

0.0618

$Total

5.4948

3.1000

0.5000

0.0600

1.0000

0.4000

1.0000

0.1000

0.0100

0.0150

0.0150

0.0905

0.1010

0.2868

1.9165

1.9165

4.6900

2.2953

0.5000

0.0600

1.0000

0.4000

0.2750

0.0275

0.0028

0.0150

0.0150

0.0905

0.1010

0.2868

1.9165

1.9165

4.9398

2.5450

0.5000

0.0600

1.0000

0.4000

0.5000

0.0500

0.0050

0.0150

0.0150

0.0905

0.1010

0.2868

1.9165

1.9165

4.946

0.010

0.000

4.936

0.0025

6.582

0.010

0.955

5.617

5.630

0.010

0.817

4.803

4.974

0.010

0.000

4.964

0.00368 0.00359 0.002

0.10515 0.11838 0.10974 0.022067

4.8288

2.4340

0.5000

0.0600

1.0000

0.4000

0.4000

0.0400

0.0040

0.0150

0.0150

0.0905

0.1010

0.2868

1.9165

0.0150

0.14

Quantity

Honduras# of mins

0.004

2.55

2

$/unit

Quantity

1

38

Quantity**

1.9165

1.9165

Egypt

1.9165

1 0.1010

0.7500

Grading

Cost/min Peru

2.5300

Patternmaking

LABOR

TOTAL PACKING COSTS

Poly Film

Egypt Turkey Pakistan

Style #

Vendor

Straps

$/unit

0.225

0.0013

$/unit

Peru

Turkey Pakistan Honduras

Spring2016

Wash Description

Wash

Season

$/yard* Yield** Total

Date

**must include waste

PCD-00025 0.1

Style #

Cartons

PACKING

TOTAL PACKAGING COSTS

Recycled paper sleeve S&Y

PACKAGING

TOTAL COMPONENT COSTS

Rapid Take&Paper

PL#5

The Quality Thread & Notions Co. 32 SPC

Style #

Laser print label

Vendor Thread

COMPONENT

*to include freight

Organic Cotton 170-175cm 180-190

20/1 Organic Cotton Jersey 100%

Description

Isil Tekstil 991651 gr/m2 30 Kg/col. 500 Kg/ord.

TOTAL FABRIC COST

Fabric 1

Style #

Basic Short Sleeve Women T-Shirt

Description

Mill

Essence Basic T

Style Name

FABRICS

1111

Style #

Multi-Countries Basic T-Shirt Cost Sheet

Cost Sheet


Vendor

S-5037

ULINE

Labels

0.2

S-444

ULINE

Tape

Turkey

Pakistan

Honduras# units

0.002

0.037

GRAND TOTAL

TOTAL OTHER

250

250

250

250

250

5.472

0.010

per container

40000

40000

$Total

Broker*

0%

80

40000

5.462 17%

143.46

882.67

0.000

17%

147.35

4389.58

percentage

0%

100

4735.3

+ insurance + freight 0%

80.8

4206.09

Duty*@

Total cost of product

per container

Insurance

1484

COST Peru Egypt per container

Freight

OTHER

5.4225

*Includes pressing & packing unless otherwise noted.

1.9165

5.8554

3.4330

0.5000

0.0600

1.0000

0.4000

1.3000

0.1300

0.0130

0.0150

0.0150

0.0905

0.1010

0.3144

1.9165

4.8092

2.3868

0.5000

0.0600

1.0000

0.4000

0.3575

0.0358

0.0036

0.0150

0.0150

0.0905

0.1010

0.3144

1.9165

1.9165

Pakistan

5.1339

2.7115

0.5000

0.0600

1.0000

0.4000

0.6500

0.0650

0.0065

0.0150

0.0150

0.0905

0.1010

0.3144

1.9165

1.9165

Honduras

5.107

0.010

0.000

5.097

7.004

0.010

1.016

5.977

5.769

0.010

0.837

4.923

0.0025 0.003684 0.0035865

5.168

0.010

0.000

5.158

0.002

0.105152 0.118383 0.1097395 0.0220668

4.9896

0.5000 2.5672

0.5000 3.0001

Admin TOTAL LABOR

1.0000 0.0600

0.5200 0.4000 1.0000

0.9100

0.0600

6.5000

Washing*

0.1

Prepacks

0.055

0.4000

0.14 0.08

0.0520

0.0052

0.0150

0.0150

0.0905

0.1010

0.3144

1.9165

1.9165

Egypt

Finishing*

Sewing

0.0091 0.0910

Marking Cutting

$Total

0.0905

0.0800

0.0001

0.0104

$Total

0.1010

0.1010

$Total

0.3144

0.2250

0.0894

$Total

0.0150

192000

19200

192

1

1

55

1.9165

1.9165

Total

Peru

Turkey

Spring2016

Wash Description

0.0150

Honduras # of mins

Quantity

Quantity

Quantity**

0.7500

Yield**

Season Wash

Grading

Cost/min Peru

2.55

2

0.1

0.004

$/unit

$/unit

0.225

0.0013

$/unit

**must include waste

2.5300

$/yard*

Date

Patternmaking

LABOR

TOTAL PACKING COSTS

Poly Film

Pakistan

S-4505

ULINE

Straps

Style #

Vendor

PCD-00025

Style #

PL#5

32 SPC

Style #

Cartons

PACKING

TOTAL PACKAGING COSTS

Recycled paper sleeve S&Y

PACKAGING

Egypt Turkey

Rapid Take&Paper

Laser print label TOTAL COMPONENT COSTS

The Quality Thread & Notions Co.

Vendor Thread

COMPONENT

*to include freight

Cotton 170-175cm 180-190 gr/m2 30 Isil Tekstil 991651 Kg/col. 500 Kg/ord.

TOTAL FABRIC COST

Fabric 1

20/1 Organic Cotton Jersey 100% Organic

Style # Description

V Neck Short Sleeve Basic T-Shrit

Description

Mill

Essence V Neck

Style Name

FABRICS

1121

Style #

Multi-Countries V Neck Cost Sheet


Vendor

0.14

0.1

0.5600

GRAND TOTAL

TOTAL OTHER

250

250

250

250

0% 40000

40000

0.002

0.037

$Total

4.731

0.010

250

per container

17%

80

40000

Broker*

17%

143.46

882.67

0.000

0%

147.35

4389.58

0%

100

4735.3

+ insurance + freight percentage Duty*@

80.84

4206

Egypt Turkey Pakistan

4.721

per container

Insurance

1484.3 Total cost of product

per container

Freight

Peru

*Includes pressing & packing unless otherwise noted.

COST

4.6816

TOTAL LABOR

OTHER

0.5000 2.6116

Admin

1.0000 0.0600

Washing* Prepacks

Honduras# units

4.0000

0.4000

0.055

Finishing*

0.2

0.0056 0.0560

Marking Cutting Sewing

0.0150

$Total

0.0905

0.0800

0.0001

0.0104

$Total

0.1010

0.1010

$Total

0.3095

0.2250

0.0845

$Total

0.0150

TurkeyPakistanHonduras # of mins

192000

19200

192

1

1

52

1.5690

1.5690

Grading

Cost/min Peru

2.55

Quantity

Quantity

Quantity**

0.6140

Patternmaking

LABOR

TOTAL PACKING COSTS

Poly Film

0.08

ULINE

Labels

Egypt

S-5037

ULINE

Tape

2

0.1

0.004

S-444

ULINE

Straps

Style # $/unit S-4505

Vendor

PCD-00025

Style # $/unit

0.225

Cartons

PACKING

TOTAL PACKAGING COSTS

Recycled paper sleeve S&Y

PACKAGING

TOTAL COMPONENT COSTS

PL#5

Rapid Take&Paper

Laser print label

0.0013

Style # $/unit

The Quality Thread & Notions Co. 32 SPC

Vendor

2.5300

$/yard* Yield** Total

**must include waste

190 gr/m2 30 Kg/col. 500 Kg/ord.

Organic Cotton 170-175cm 180-

20/1 Organic Cotton Jersey 100%

Description

Thread

COMPONENT

*to include freight

Style #

Isil Tekstil991651

Mill

TOTAL FABRIC COST

Fabric 1

FABRICS

Description

4.9480

2.8780

0.5000

0.0600

1.0000

0.4000

0.8000

0.0800

0.0080

0.0150

0.0150

0.0905

0.1010

0.3095

1.5690

1.5690

4.3042

2.2342

0.5000

0.0600

1.0000

0.4000

0.2200

0.0220

0.0022

0.0150

0.0150

0.0905

0.1010

0.3095

1.5690

1.5690

4.5040

2.4340

0.5000

0.0600

1.0000

0.4000

0.4000

0.0400

0.0040

0.0150

0.0150

0.0905

0.1010

0.3095

1.5690

1.5690

Pakistan Honduras

4.533

0.010

0.000

4.523

5.942

0.010

0.862

5.070

5.179

0.010

0.751

4.418

0.0025 0.003684 0.00359

4.538

0.010

0.000

4.528

0.002

0.10515 0.118383 0.10974 0.0220668

4.4152

2.3452

0.5000

0.0600

1.0000

0.4000

0.3200

0.0320

0.0032

0.0150

0.0150

0.0905

0.1010

0.3095

1.5690

1.5690

Turkey

Wash Description

Deep Scoop Tank Top

Style Name

Egypt

Wash

Essence Tank Top

Peru

Season Spring2016

5214

Date

Style #

Multi-Countries Tank Top Cost Sheet


PCD-00025

S-5037

ULINE ULINE

Tape Labels Poly Film

# units per container

Insurance

per container

Broker*

GRAND TOTAL

TOTAL OTHER

percentage Duty*@

insurance + freight

Total cost of product +

per container

Freight

250

0%

80.8

1484

250

0%

100

4206

250

17%

147.35

4735.3

250

17%

143.46

4389.6

250

0%

80

882.67

40000

40000

4.9316

2.3452

0.5000

0.0600

1.0000

0.4000

0.3200

0.0320

0.0032

0.0150

0.0150

0.0905

0.1010

0.2868

2.1081

2.1081

Egypt

2.1081

5.4644

2.8780

0.5000

0.0600

1.0000

0.4000

0.8000

0.0800

0.0080

0.0150

0.0150

0.0905

0.1010

0.2868

2.1081

5.247

0.010

0.000

5.237

0.002

5.049

0.010

0.000

5.039

6.546

0.010

0.950

5.586

2.1081

5.0204

2.4340

0.5000

0.0600

1.0000

0.4000

0.4000

0.0400

0.0040

0.0150

0.0150

0.0905

0.1010

0.2868

2.1081

5.783

0.010

0.839

4.934

5.054

0.010

0.000

5.044

0.002

0.10974 0.0220668

4.8206

2.2342

0.5000

0.0600

1.0000

0.4000

0.2200

0.0220

0.0022

0.0150

0.0150

0.0905

0.1010

0.2868

2.1081

2.1081

Pakistan Honduras

0.0025 0.00368 0.003587

0.037 0.105152 0.11838

$Total

5.1980

*Includes pressing & packing unless otherwise noted.

40000

2.6116

TOTAL LABOR

Peru Egypt Turkey Pakistan Honduras

0.5000

Admin

COST

0.0600

Prepacks

OTHER

0.4000 1.0000

Finishing* Washing*

0.5600

4.0000

Sewing

0.1

0.0560

Cutting 0.055

0.0056

Marking 0.2

0.0150

0.14 0.08

0.0150

$Total

0.0905

0.0800

0.0001

0.0104

$Total

0.1010

0.1010

$Total

0.2868

0.2250

0.0618

$Total

2.1081

2.1081

Total

Grading

Cost/min Peru

192000

19200

192

Quantity

1

0.8250

Yield**

Peru

Turkey

Spring2016

Wash Description

Wash

Season

Patternmaking

LABOR

TOTAL PACKING COSTS

0.004

2.55

2

Quantity

1

38

Quantity**

Egypt TurkeyPakistan Honduras # of mins

S-444

ULINE

Straps

Style # S-4505

Vendor Cartons

PACKING

0.1

$/unit

Style #

S&Y

$/unit

0.225

0.0013

$/unit

Vendor TOTAL PACKAGING COSTS

Recycled paper sleeve

PACKAGING

TOTAL COMPONENT COSTS

PL#5

Rapid Take&Paper

Laser print label

Style #

The Quality Thread & Notions Co. 32 SPC

Vendor

2.5300

$/yard*

Date

**must include waste

175cm 180-190 gr/m2 30

100% Organic Cotton 170-

Style # Description 20/1 Organic Cotton Jersey

Isil Tekstil 991651 Kg/col. 500 Kg/ord.

Mill

Thread

COMPONENT

*to include freight

TOTAL FABRIC COST

Fabric 1

FABRICS

Short Sleeve Women Crop Top

Description

1311 Essence Crop Top

Style Name

Style #

Multi-Countries Crop Top Cost Sheet


Vendor

ULINE ULINE

Tape Labels

per container

Insurance

per container

Broker*

GRAND TOTAL

TOTAL OTHER

percentage Duty*@

+ insurance + freight

Total cost of product

per container

Freight

1484

250

0%

80.84

250

0%

100

4206.09

Egypt

250

17%

147.35

4735.3

250

17%

143.46

4389.58

250

0%

80

882.67

40000

40000

40000

5.5864

2.5228

0.5000

0.0600

1.0000

0.4000

0.4800

0.0480

0.0048

0.0150

0.0150

0.1011

0.1010

0.3063

6.3856

3.3220

0.5000

0.0600

1.0000

0.4000

1.2000

0.1200

0.0120

0.0150

0.0150

0.1011

0.1010

0.3063

2.5553

2.5553

6.035

0.010

0.000

6.025

0.002

5.704

0.010

0.000

7.624

0.010

1.106

6.508

6.484

0.010

0.941

5.533

0.0025 0.00368 0.003587 5.694

5.7196

2.6560

0.5000

0.0600

1.0000

0.4000

0.6000

0.0600

0.0060

0.0150

0.0150

0.1011

0.1010

0.3063

2.5553

2.5553

5.754

0.010

0.000

5.744

0.002

0.10974 0.022067

5.4199

2.3563

0.5000

0.0600

1.0000

0.4000

0.3300

0.0330

0.0033

0.0150

0.0150

0.1011

0.1010

0.3063

2.5553

2.5553

Turkey Pakistan Honduras

0.037 0.10515 0.11838

$Total

*Includes pressing & packing unless otherwise noted.

Peru

2.9224 5.9860

TOTAL LABOR

COST

0.5000

Admin

OTHER

1.0000 0.0600

Prepacks

Pakistan Honduras # units

6.0000

Washing*

Turkey

0.1

0.4000

0.055

0.8400

0.2

Sewing

0.08

0.0840

Cutting Finishing*

0.0084

$Total

0.1011

0.0800

0.0003

0.0208

$Total

0.1010

0.1010

$Total

0.3063

0.2250

0.0813

$Total

Marking

1

1

50

0.0150

0.14

96000

Honduras# of mins

0.004

9600

96

Quantity

Quantity

Quantity**

0.0150

Pakistan

2

0.1

2.55

$/unit

$/unit

0.225

0.0013

$/unit

2.5553

Egypt

2.5553 2.5553

2.5553

Grading

Cost/min Peru

S-5037

S-444

S-4505

Style #

PCD-00025

Style #

PL#5

32 SPC

Style #

1.0000

Yield** Total

Patternmaking

LABOR

TOTAL PACKING COSTS

Poly Film

Straps

ULINE

Vendor Cartons

PACKING

TOTAL PACKAGING COSTS

Recycled paper sleeveS&Y

PACKAGING

Egypt Turkey

Rapid Take&Paper

Laser print label TOTAL COMPONENT COSTS

The Quality Thread & Notions Co.

Vendor

2.5300

$/yard*

* include waste

Organic Cotton 170-175cm 180-190

Description 20/1 Organic Cotton Jersey 100%

Thread

COMPONENT

*to include freight

Style #

Isil Tekstil 991651

Mill

TOTAL FABRIC COST

Fabric 1

FABRICS

Peru

Wash Description

V Neck Long Sleeve T-Shirt

Description

Spring2016

Wash

Essence Long Sleeve T Shirt

Season

3112

Style Name

Date

Style #

Multi-Countries Long Sleeve Cost Sheet


Fabric Price Source

5/24/2015

Email Contact with Vendors

Gmail - Product Quote

simo simo <simotshirt2015@gmail.com>

Product Quote Tanil / Isil Tekstil <tanil@isiltekstil.com.tr> To: simo simo <simotshirt2015@gmail.com>

Sat, May 16, 2015 at 3:54 AM

Dear Jenny, Thank you for your e‐mail. Please find below the NET FOB prices for 2 items from our collection of organic cotton. 991651 20/1 Organic Cotton Jersey %100 Organic Cotton 170­175 cm 180­190 gr/m2 30 Kg/col. 500 Kg/ord. 7,30 €/Kg 2,43 €/m 24.03.2015

991898 24/1 Organic Cotton Jersey %100 Organic Cotton 185­195 cm 165­175 gr/m2 60 Kg/col. 500 Kg/ord. 7,40 €/Kg 2,53 €/m 24.03.2015

Best regards, TANIL CIFTER Export Manager ISIL TEKSTIL P: +90 212 456 00 00 F: +90 212 456 00 99

https://mail.google.com/mail/u/3/?ui=2&ik=d09e0c17f9&view=pt&search=inbox&msg=14d5bb2e3e783a19&siml=14d5bb2e3e783a19

1/2


Preliminary Placement

FINAL PLACEMENT & MARGINS Peru

Turkey

Basic

V-neck 210,000

1,000,000

Crop tops 180,000

Long sleeves

14,000

Tank

52,000

Basic 45,000

V-neck 35,000

Crop tops 30,000

4

Retail

$

Cost per Unit

$

5.21 $

5.47 $

5.25 $

6.04 $

4.73 $

6.58 $

7.00 $

Margin

$

14.79 $

14.53 $

24.75 $

27.97 $

10.27 $

13.42 $

13.00 $

20.00 $

73.95%

%

20.00 $

72.64%

30.00 $

82.51%

34.00 $

82.25%

15.00 $

68.46%

20.00 $

67.09%

20.00 $

64.98%

7

Total Retail

$ 21,620,000 $ 4,200,000.00 $ 3,600,000.00 $ 420,000.00 $ 1,768,000.00 $ 675,000.00 $ 700,000.00 $ 600,000.00 $ 1,470,0

Total Purchase

$

Total Margins

$ 16,215,188 $ 3,105,690.00 $ 2,615,040.00 $ 346,542.00 $ 1,454,180.00 $ 462,105.00 $ 469,630.00 $ 389,880.00 $ 1,149,2

Avg Retail

$

21.62

Avg Purchase

$

5.40

Avg Margins

$

16.22

Avg Margins %

5,404,812 $ 1,094,310.00 $

984,960.00 $

73,458.00 $ 313,820.00 $ 212,895.00 $ 230,370.00 $ 210,120.00 $

320,7

75.00%

Avg Cost/Unit $ 5.40 FINAL PLACEMENT & MARGINS

Honduras *While I've included formulas to Peru facilitate calculation, it's your resonsibility to ensure the integrity of them and the calculation. Basic V-neck Crop tops Long sleeves Tank Basic 1,000,000

210,000

180,000

14,000

52,000

45,000

V-neck

35,000

Crop tops 30,000

Retail

$

20.00 $

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

20.00 $

Cost per Unit

$

5.21 $

5.47 $

5.25 $

6.04 $

4.73 $

4.97 $

5.17 $

Margin

$

% Total Retail

14.79 $ 73.95%

14.53 $ 72.64%

24.75 $ 82.51%

27.97 $ 82.25%

10.27 $ 68.46%

15.03 $ 75.13%

14.83 $ 74.16%

49

3

2

8

$ 21,620,000 $ 4,200,000.00 $ 3,600,000.00 $ 420,000.00 $ 1,768,000.00 $ 675,000.00 $ 700,000.00 $ 600,000.00 $ 1,470,00

Total Purchase $ 5,158,081 $ 1,094,310.00 $

984,960.00 $

73,458.00 $

313,820.00 $ 212,895.00 $ 174,090.00 $ 155,040.00 $ 247,64

Total Margins

$ 16,461,919 $ 3,105,690.00 $ 2,615,040.00 $ 346,542.00 $ 1,454,180.00 $ 462,105.00 $ 525,910.00 $ 444,960.00 $ 1,222,35

Avg Retail

$

21.62

Avg Purchase

$

5.16

Avg Margins

$

16.46

Avg Margins % Avg Cost/Unit

76.14% $

5.16


Egypt

ck

Crop tops 30,000

Long sleeves Tank

49,000

13,000

Basic 35,000

V-neck 105,000

Crop tops 90,000

Long sleeves

7,000

Tank

65,000

60,000

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

20.00 $

30.00 $

34.00 $

15.00

7.00 $

6.55 $

7.62 $

5.94 $

4.95 $

5.11 $

5.05 $

5.70 $

4.53

13.00 $

23.45 $

26.38 $

9.06 $

15.05 $

14.89 $

24.95 $

28.30 $

10.47

64.98%

78.18%

77.58%

60.39%

75.27%

74.47%

83.17%

83.22%

69.78%

00,000.00 $ 1,470,000.00 $ 442,000.00 $ 525,000.00 $ 2,100,000.00 $ 1,800,000.00 $ 210,000.00 $ 2,210,000.00 $ 900,000.00

10,120.00 $

320,754.00 $ 99,112.00 $ 207,970.00 $ 519,330.00 $

459,630.00 $ 35,343.00 $

370,760.00 $ 271,980.00

89,880.00 $ 1,149,246.00 $ 342,888.00 $ 317,030.00 $ 1,580,670.00 $ 1,340,370.00 $ 174,657.00 $ 1,839,240.00 $ 628,020.00

Egypt

ck

Crop tops 30,000

Long sleeves

49,000

Tank

13,000

Basic 35,000

V-neck 105,000

Crop tops 90,000

Long sleeves

7,000

Tank

65,000

60,000

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

20.00 $

30.00 $

34.00 $

15.00

5.17 $

5.05 $

5.75 $

4.54 $

4.97 $

5.17 $

5.05 $

5.75 $

4.53

14.83 $

24.95 $

28.25 $

10.46 $

15.03 $

14.83 $

24.95 $

28.25 $

10.47

74.16%

83.15%

83.08%

69.75%

75.15%

74.15%

83.17%

83.09%

69.78%

00,000.00 $ 1,470,000.00 $ 442,000.00 $ 525,000.00 $ 2,100,000.00 $ 1,800,000.00 $ 210,000.00 $ 2,210,000.00 $ 900,000.00

55,040.00 $ 247,646.00 $

74,802.00 $ 158,830.00 $ 521,850.00 $ 465,300.00 $ 35,350.00 $ 373,750.00 $ 271,980.00

44,960.00 $ 1,222,354.00 $ 367,198.00 $ 366,170.00 $ 1,578,150.00 $ 1,334,700.00 $ 174,650.00 $ 1,836,250.00 $ 628,020.00


FINAL PLACEMENT & MARGINS Peru

Egypt

Basic Total Units

V-neck

Crop tops

105,000

1,000,000

90,000

Long sleeves

25,000

Tank

45,000

Basic 45,000

V-neck 70,000

Crop tops 60,000

15,0

Retail

$

20.00 $

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

20.00 $

30.

Cost per Unit

$

5.21 $

5.47 $

5.25 $

6.04 $

4.73 $

5.21 $

5.47 $

5.

Margin

$

14.79 $

14.53 $

24.75 $

27.97 $

10.27 $

14.79 $

14.53 $

24.

73.95%

% Total Retail

72.64%

82.51%

82.25%

68.46%

73.95%

72.64%

82.5

$ 22,350,000 $ 2,100,000.00 $ 1,800,000.00 $ 750,000.00 $ 1,530,000.00 $ 675,000.00 $ 1,400,000.00 $ 1,200,000.00 $ 450,000.

Total Purchase $ 5,353,825 $

547,155.00 $

492,480.00 $ 131,175.00 $ 271,575.00 $ 212,895.00 $

364,770.00 $ 328,320.00 $ 78,705.

Total Margins $ 16,996,175 $ 1,552,845.00 $ 1,307,520.00 $ 618,825.00 $ 1,258,425.00 $ 462,105.00 $ 1,035,230.00 $ 871,680.00 $ 371,295. Avg Retail $ Avg Purchase $ Avg Margins $

22.35 5.35 17.00

% Avg Cost/Unit $

76.05% 5.35

FINAL PLACEMENT & MARGINS Pakistan

Egypt Basic Total Units

1,000,000

V-neck 140,000

Crop tops

105,000

Long sleeves

20,000

Tank

45,000

Basic 52,500

V-neck 35,000

Crop tops 45,000

10,

Retail

$

20.00 $

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

20.00 $

30

Cost per Unit

$

5.21 $

5.47 $

5.25 $

6.04 $

4.53 $

5.63 $

5.77 $

5

Margin

$

% Total Retail

$

Total Purchase

$ $

Avg Retail

$

21.85

Avg Purchase

$

5.32

Avg Margins

$

16.53 75.65%

$

5.32

Avg Margins %

14.53 $ 72.64%

24.75 $ 82.51%

27.97 $ 82.25%

10.47 $ 69.78%

14.37 $ 71.85%

14.23 $ 71.16%

24

80

21,850,000 $ 2,800,000.00 $ 2,100,000.00 $ 600,000.00 $ 1,530,000.00 $ 787,500.00 $ 700,000.00 $ 900,000.00 $ 300,000

total Margins

Ave Unit / Cost

14.79 $ 73.95%

5,319,648 $ 729,540.00 $ 574,560.00 $ 104,940.00 $

271,575.00 $ 237,982.50 $ 197,050.00 $ 259,605.00 $ 57,830

16,530,353 $ 2,070,460.00 $ 1,525,440.00 $ 495,060.00 $ 1,258,425.00 $ 549,517.50 $ 502,950.00 $ 640,395.00 $ 242,170


Honduras

ck

Crop tops 60,000

Long sleeves

15,000

Tank

75,000

Basic 75,000

V-neck 175,000

Crop tops 175,000

Long sleeves

10,000

Tank

30,000

30,000

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

20.00 $

30.00 $

34.00 $

15.00

5.47 $

5.25 $

6.04 $

4.53 $

4.97 $

5.17 $

5.05 $

5.75 $

4.54

14.53 $

24.75 $

27.97 $

10.47 $

15.03 $

14.83 $

24.95 $

28.25 $

10.46

72.64%

82.51%

82.25%

69.78%

75.13%

74.16%

83.15%

83.08%

69.75%

200,000.00 $ 450,000.00 $ 2,550,000.00 $ 1,125,000.00 $ 3,500,000.00 $ 3,500,000.00 $ 300,000.00 $ 1,020,000.00 $ 450,000.00

328,320.00 $ 78,705.00 $

452,625.00 $ 339,975.00 $ 870,450.00 $

904,400.00 $

50,540.00 $

172,620.00 $ 136,140.00

871,680.00 $ 371,295.00 $ 2,097,375.00 $ 785,025.00 $ 2,629,550.00 $ 2,595,600.00 $ 249,460.00 $

847,380.00 $ 313,860.00

Honduras

ck

Crop tops 45,000

Long sleeves

10,000

Tank

75,000

Basic 60,000

V-neck 175,000

Crop tops

150,000

Long sleeves

20,000

Tank

30,000

37,500

20.00 $

30.00 $

34.00 $

15.00 $

20.00 $

20.00 $

30.00 $

34.00 $

15.00

5.77 $

5.78 $

6.48 $

5.18 $

4.97 $

5.17 $

5.05 $

5.75 $

4.54

14.23 $ 71.16%

24.22 $ 80.72%

27.52 $ 80.93%

9.82 $ 65.47%

15.03 $ 75.13%

14.83 $ 74.16%

24.95 $ 83.15%

28.25 $ 83.08%

900,000.00 $ 300,000.00 $ 2,550,000.00 $ 900,000.00 $ 3,500,000.00 $ 3,000,000.00 $ 600,000.00 $ 1,020,000.00 $

259,605.00 $ 57,830.00 $

10.46 69.75% 562,500.00

486,300.00 $ 310,740.00 $ 870,450.00 $ 775,200.00 $ 101,080.00 $

172,620.00 $

170,175.00

640,395.00 $ 242,170.00 $ 2,063,700.00 $ 589,260.00 $ 2,629,550.00 $ 2,224,800.00 $ 498,920.00 $

847,380.00 $

392,325.00


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