BLU JEAN by Himanshi Shah

blu jean

playful denim with a purpose

Shannon Hessen Sarah Nickle Himanshi Shah Molly Buice

CONTENTS

Luxury & Fashion Management Supply Chain Management Professor Grace Canepa LXFM 720

INTRODUCTION

EXECUTIVE SUMMARY

COMPANY INFORMATION

VISION & MISSION STATEMENT

CORE VALUES

TARGET MARKET

PRODUCTS

SOURCING GUIDELINES

COUNTRY REPORTS

SOURCING STRATEGY - country ranking - supplier ranking - line plan - placement ranking

113

WAREHOUSE & DISTRIBUTION

124

FINAL STRATEGY - final strategy - conclusion

131

APPENDIX - size chart - cost sheets - tech packs - email correspondence - work cited

INTRODUCTION Supply chain strategy development is an aspect of the apparel industry that often gets overlooked as an integral piece to the overall puzzle. Not only through the development of the product and the manufacturing process, but the success of the product from conception through the distribution to the market. The strategies demonstrated have been developed by four students â&#x20AC;&#x201C; Molly Buice, Sarah Nickle, Shannon Hessen, and Himanshi Shah- for Luxury and Fashion Management (LXFM) 720 Supply- Chain Management at Savannah College of Art and Design. The process book will take you through the development of a childrenâ&#x20AC;&#x2122;s denim company, focusing on four core products: the skinny jean, the bootcut jean, the flare jean, and the short. The following components were considered in the development of the overall supply chain strategies. 1. Profile the country selected 2. Analyze the country selected 3. Research the business etiquette for the country of export 4. Examine import/export trade agreements 5. Classify the product HTS code to be imported 6. Complete the cost sheets for the imported product 7. Determine the shipping route from the country of export to the U.S. 8. Finalize the entry process of the imported product

blu jean 4

EXECUTIVE SUMMARY Blu Jean is a premium childrenâ&#x20AC;&#x2122;s denim company that sells four styles of 100% cotton denim bottoms. Available exclusively through our e-commerce platform and specializing in Little Girls sizing. Blu Jean strives to create a brand that gives little girls all over the U.S. the confidence to be creative and instill the idea that anything is possible. Blu Jean focuses on sustainability and making sure the entire supply chain meets the sourcing guidelines embodying our overall vision. Our process began by determining what product to create. With few players in the premium little girls denim sector, we decided to focus our company product mix on four different styles. The process began with developing full technical packages (tech pack) for each style, working through each step from design, into material sourcing, definition of components, packaging, and the costing per unit. This was calculated from research and the development of personal relationships with suppliers in each of the four different countries: Mexico, Egypt, Jordan, and Vietnam. While defining the product mix, four countries were researched indepth to understand their global standing from an import/export perspective, as well as their current social, political, and economic standing internally and in terms of a global marketplace. Once the countries were analyzed, each country was given an overall ranking based on the different factors relative to doing business within the country. Supplier and manufacturers were then chosen within each country and compared/ranked in order to determine the top manufacturers to do business with. From this, a line plan and placement strategy were developed, showing cost margins, profitability, and distribution across the four countries. Finally, a distribution strategy was developed to solidify transportation, inventory management methods, warehousing, and finally distribution to the customers. Between costing, the country/supplier rankings, placement strategy, and distribution rankings, a full supply chain strategy was completed.

C O M PA N Y I N F O PRODUCT SELECTION Childrenâ&#x20AC;&#x2122;s denim (skinny, bootcut, flare, short) SELLING CHANNEL Selling straight to consumers through our e-commerce platform. COMPANY LOCATION Headquartered in Savannah, Georgia PRICE Skinny: $49.99 Bootcut: $49.99 Flare: $49.99 Short: $34.99

V I S I O N S TAT E M E N T Playful denim with a purpose

M I S S I O N S TAT E M E N T Socially responsible girlâ&#x20AC;&#x2122;s jeans made with integrity that unleashes creativity.

VA L U E S Honesty, Creativity, Family, Respect, Integrity

blu jean

TA R G E T M A R K E T • Children’s Clothing market • $10 Billion annual revenue (2017) • Included children under the age 17 • -1.3% annual growth in 2017 • Competitors • Joe’s, Levi’s, Hudson’s, Calvin Klein

TA R G E T C U S T O M E R DEMOGRAPHICS Mothers, ages 30-45, household income $90,000+ PSYCHGRAPHICS Appreciate luxury goods, encourages extra-circulars, positive, outgoing, prioritizes quality GEOGRAPHIC US Market through e-commerce SOCIO-BEHAVIORAL Shops at whole foods, invests in sustainable products, drives a Tesla, kids attend private schools

blu jean

SKINNY Sizes: 4, 5, 6, 6x Fabric: 100% cotton Details: Snap button, fake front pockets, 5 belt loopes, 8 rivets (4 front, 4 back) Price: $49.99 Washes: light, medium, dark

BOOTCUT

PRODUCTS Blu Jean provides little girlâ&#x20AC;&#x2122;s denims in four styles with 3 different wash options per style. Our denim will be made with a 100% cotton denim to ensure durability and easy care. Our jeans will range between $34.99-$49.99. For more product details, see our tech packs in the appendix.

Sizes: 4, 5, 6, 6x Fabric: 100% cotton Details: Snap button, fake front pockets, 5 belt loopes, 8 rivets (4 front, 4 back), front right coin pocket Price: $49.99 Washes: light, medium, dark

FLARE Sizes: 4, 5, 6, 6x Fabric: 100% cotton Details: Snap button, fake front pockets, 5 belt loopes, 4 rivets (4 front) Price: $49.99 Washes: light, medium, dark

SHORT Sizes: 4, 5, 6, 6x Fabric: 100% cotton Details: Snap button, fake front pockets, 5 belt loops, 8 rivets (4 front, 4 back) Price: $34.99 Washes: light, medium, dark 12

SOURCING GUIDELINES

letâ&#x20AC;&#x2122;s talk about our standards... Corporate responsibility is the core of our business. We understand that business is about the people. At Blu Jean our goal is to create positive associations throughout every level of the supply chain. We understand the importance and impact a business can have on health, safety, the environment and labor standards within and outside the organization. Our beliefs and commitments align with the United Nations Sustainable Development Goals. Blu Jeanâ&#x20AC;&#x2122;s high standards in corporate responsibility add value to our overall operations. Through creating positive associations, environmentally and socially, our company is able to maximize efficiency, hedge against risk, and remain agile and responsive. Our company highlights integrity and establishes an honest intent to remain socially and ethically responsible. At Blu Jean, we are truly inspired to create playful denim with a purpose. We set high standards for responsible production and consumption in order to promote an efficient use of resources and energy. In order to create transparency and maintain our high standard for corporate responsibility, thorough auditing and quality control is necessary. We understand the strict practices we must implement when conducting business in certain countries. Manufacturers that our organization works with must meet our minimum requirements for health and safety conditions, human rights, political, economic and social environment standards.

LABOR SAFTEY

WORKING HOURS

NON-DISCRIMINATION

HARASSMENT

WAGES

CHILD LABOR

SUSTAINABILITY WATER

WASTE

COMMUNITY INVOLMENT VOLUNTERRING

DONATING

EMPLOYEE BENEFITS LEADERSHIP

HEALTH

Our employment standards must maintain continuous transparency. These standards include, but are not limited to, fair living wages, no child labor, equal pay for all employees, zero tolerance for harassment, non-discriminatory maternity leave, and provided child care. Our environmental standards will include everyday sustainable practices throughout our supply chain. Blu Jean aims to keep waste and water usage at a minimum, use recycled and recyclable packaging materials, waste and water treatment resources will be utilized at all manufacturing plants as well as phasing out all hazardous chemicals out of the denim process. Blu Jean conducts regular audits at each manufacturer under contract. Continuous improvement is key to our success. Quality control is conducted through every internal and external aspect in our Supply Chain. Our corporationâ&#x20AC;&#x2122;s auditing process aligns with our code of ethics. Developing transparent relationships with our highly selected manufacturers enables us to operate at a highly efficient and sustainable level. To ensure that all these sourcing guidelines are met we have broken down our strategy into 4 main categories, labor, sustainability, community involvement, and employee benefits. Within the labor category this includes ensuring fair and reasonable wages, no room for harassment, discrimination or child labor, ensuring the safety of the workers, reasonable working hours. With the sustainability pillar, we have broken it down into water and waste, as the denim industry typically uses a large amount of water. This category ensures that our manufacturers all have water treatment facilities on site and are also phasing out their use of chemical to minimize toxic waste. The third category, community involvement includes ensuring that our manufacturers are giving back to their community through either donations or volunteering to make their country a better place in some way. Our last category, employee benefits, ensures that our manufacturers are providing their workers with health care and leadership opportunities.

COUNTRY REPORTS 1. 2. 3. 4.

Mexico Egypt Jordan Vietnam

INTRODUCTION

MEXICO

Mexico’s growing economy along with their large manufacturing industry provides business expansive opportunity. With a large number of rising start-ups, half the population below 30, and the number of technology graduates rising, Mexico has the potential to compete with the largest exporters globally (Mexico: In-Depth PESTLE). Known for their apparel industry, specifically the denim sector, Mexico’s jean industry has become the seventh largest denim exporter in the world as a result of their innovative technology and cheap labor ( Jeans in Mexico). Political instability has triggered a rise in crime and violence, however with an upcoming presidential election in July of 2018 and new employment and education reforms, the country is moving towards positive progress. This country report will analyze many different aspects of Mexico today and its future outlook. Some of the topics addressed throughout the report include Mexico’s general characteristics, the country’s stability in regards to their social, economic, and political status, the predicted lead time for future production, the cultural aspect of the country, the current state of the apparel and textile industry, potential denim suppliers within the country, essential trade agreements, the product classification, the transportation, and the overall risks and benefits associated with doing business within Mexico. See cost sheets on page 134.

C O U N T R Y S TA B I L I T Y Political Overview Mexico’s government is set up as a Federal Presidential Republic, a democracy that elects a new president every six years through universal suffrage with an impeding election in July of 2018. (Mexico: Country Profile). The Institutional Revolutionary Party (PRI) held control of Mexico’s politics roughly from the 1930s to 2000 until they won the seat of president again in 2012 with Enrique Peña Nieto (Woody). With the shift in parties, the political instability was accompanied with a large increase in violence. Many of the Mexican states have seen a correlation between the high-level political change and the increase in violence (Woody). However, despite the crime and violence related to politics, Mexico has a strong democracy set up with different branches of government. This crime, violence, and corruption have had a major effect on the overall stability of the country. Individual businesses have recently been forced to switch from railcar to road just to ensure their goods reach their market intact without tampering (Mexico: Country Profile). This crime could affect the transportation of Blu Jean’s products so consideration must be given to this form of transportation and the risk involved.

Social Overview Mexico’s population is currently growing at a steady pace. In 2017, the population was recorded at 124 million, up from 103 million in 2000 (Mexico: Country Profile). While the population is growing, the growth rate has been slowing decreasing. This population decline can partially be contributed to the introduction of family planning in the 1980s (Mexico: Country Profile).

(“Mexico Political Stability - Data, Chart.”) Many are fearful that the upcoming election in July of 2018 will contain fraud and lead to more violence. However, with a new president coming into power, it is predicted that Mexico will attempt to improve ties with Canada to remedy the former PM action of instituting a visa requirement for Mexican visitors (Mexico: Country Profile). By improving this relationship many believe Mexico, The United States, And Canada will be able to work out an energy and climate deal and possibly renegotiate parts of NAFTA (Mexico: Country Profile). These talks could affect Blu Jean’s manufacturing in Mexico if new limitations are placed on factories in Mexico. The topic of NAFTA is a huge concern for all candidates, as any changes to NAFTA will heavily impact the economy and small businesses. With the risk of the U.S. cutting ties with Mexico, the manufacturing business would see a huge decline in business from American companies.

Currently Mexico struggles with an absence of adequate housing. While the government has invested in government subsidized housing projects, the urban areas have increased faster than new units can be built and other government economic difficulties have reduced the funds available for new housing projects (Bernstein). The Northern regions of the country tend to have a higher quality of life due to the large industrial and manufacturing business (Mexico: In-Depth PESTLE). While the southern half of Mexico relies mainly on agriculture. With Blu Jean’s Mexican supplier Monty located in the southern coast of Mexico it means there most likely won’t be a large manufacturing presence in the area possibly making it more difficult to find skilled workers or other resources since there is a much larger manufacturing presence in the Northern part of the country. Currently, Mexico’s unemployment rate is about 3.7% (2018) and the poverty rate has remained somewhat stable at 46.2% in 2014 (Mexico: Country Profile). The socio-economic gap is unfortunately very wide with the richest 10% of the population earning 20 times more than the poorest 10% (Mexico: Country Profile). The uneven distribution of wealth and the growing inequality adds to the socioeconomic problems of the country. Mexico is actively trying to discourage gender discrimination in the workplace. Programs are starting to be put in place to secure a more flexible maternity leave, and implementing more care for sexual harassment victims (Mexico January 2017 11). Recently Mexico made the requirement of providing your marital status and pregnancy tests for hiring illegal (Mexico January 2017 37). The government is putting a large emphasis on educational reform and a new model will be implemented nationwide during the 2018-2019 school year (Mexico: In-Depth PESTLE).

Economic Overview While Mexico’s economy grew slower than other Latin American countries recently, it has continued to grow, benefitting from open borders and direct foreign investment. Mexico currently has around 44 FTAs in place with different countries around the globe. This results in more than 90% of their trade falling under one of these agreements.

(Mexico: In-Depth PESTLE)

(Mexico: Country Profile) The tourism industry serves as another large employer, employing 13% of the workforce and continuing to grow (Mexico: Country Profile). Mexican manufacturing accounts for 20.8% of GDP and employs 16.3% of the workforce, making manufacturing a crucial part of Mexico’s growing economy (Mexico: Country Profile). Meanwhile, inflation unfortunately continues to be a problem as in 2017 prices grew by 6.0% and inflation of 4.6% is expected in 2018 (Mexico: Country Profile). In order to combat the problem and control the high inflation rates, Mexico’s central bank raised interest rates to a 9-year high (Mexico: Country Profile).

The Mexican government plans to grow the tourism industry with a goal to become one of the world’s top five tourist destinations before the end of the decade. Mexico’s oil production industry is also expected to grow by 45% by 2030 while oil prices are expected to gradually rise from the extremely low prices of 2014 (Mexico: Country Profile). Another sector Mexico plans to grow is their IT services, which has a growth of about 15% a year (Mexico: Country Profile). With lots of growth in Mexico’s future there is quite a bit of uncertainty as well. Possible NAFTA renegotiations could have a major effect on Mexico’s manufacturing business. If the US were to withdraw it is predicted that it would shrink their economy by 2% (Mexico: Country Profile). With the uncertainty of the US policy changes, Mexico is starting to look to renegotiating a trade agreement with the EU in order to decrease Mexican’s reliance on US business (Mexico: In-Depth PESTLE). Despite some uncertainties, economic predictions for Mexico are positive as their GDP is expected to continue to grow steadily at 2% for both 2018 and 2019 making Mexico one of the strongest performers in the region (Hinecke).

L E A D T I M E A N T I C I PAT I O N According to the World Bank and Turku School of Economics based on logistic performance index surveys, the lead-time in Mexico has decreased from 4.40 days in 2007 to 3.00 in 2016 (“Lead Time to Import…”). Mexico has a similar holiday calendar to the US making it easy for US manufacturers to work with Mexico’s production schedule. Mexican time zones also make communication during the business day much easier. However, with rampant crime and violence throughout the country, this could negatively affect the transportation of goods from Mexico to the US. While the shipping process is usually weeks faster than transporting goods from overseas, Mexican goods come with a risk (“Mexico vs. China Manufacturing Comparison”). There are instances when trucks carrying newly manufactured goods get robbed which results in a complete loss of goods. With much of Mexico’s land bordering the Pacific Ocean and the Gulf of Mexico, Mexico is highly exposed to natural disasters such as hurricanes and flooding. Other natural disaster that could affect Mexico is volcanic eruptions and earthquakes (“Natural Disasters: Mexico”). All of these hazards could have the power to affect transportation or the manufacturing facility.

C U LT U R A L I N S I G H T S The key to conducting successful business in Mexico is to understand their business culture and business etiquette. The most important part of doing business in Mexico is establishing a relationship with the people you will be working with. Mexicans will typically only do business with you if they trust you, so taking interest in their personal life and making small talk is crucial (“Doing Business in Mexico:..”). Relationships are valued and business transactions primarily are done in person and not over email or phone. Once you have secured an in person business meeting, many will consider the meeting tentative until you have confirmed that you are in the country. Cancellations are also not uncommon (“Doing Business in Mexico:..”). As a pretty conservative country, appropriate business attire is expected and could have a long-term effect on your long-term success. Although punctuality is important, it is not uncommon for the Latino culture to be late as there is a much larger emphasis on personal life (“Doing Business in Mexico:..”). Using and respecting all titles (unless invited to call them by their first name) is important and learning and using basic Spanish greetings is appreciated (Acrecent). It is important to understand the Mexican culture is not as fast paced as American society. During meetings, negotiations typically move very slowly and small talk is common at the beginning of meetings (“Doing Business in Mexico:..”). With a more relaxed nature, it is vital that you make your dates very specific and clear. Often in the Mexican culture, they will say Manana (directly translated to tomorrow), but really mean “in the next few days” (“Doing Business in Mexico:..”). At the end of the meal it is appreciated that you, as the guest, offer to pay for the meal but most likely they will insist on paying since you are the guest (“Doing Business in Mexico:..”).

DENIM IN MEXICO

2,000 1/2 8

of the jeans sold in the US are made in Mexico

denim manufacturers throughout Mexico

Important Trade Agreements: NAFTA, MEXICO-EU FTA, MAQUILA PROGRAM Future of denim in Mexico: Mexican Jean industry is expected to grow 4% and is expected to reach MXN bn in 2022

40.4

billion dollars of annual denim trade in Mexico (MNCAI) Denim industry in Mexico provides:

125,000 jobs in Mexico

64,000 jobs in the US

Top companies sourcing denim in Mexico:

Manufacturers Monty

www.montyindustries.com

Located: Mérida, Yucatan, Mexico Expertise: Monty is a full service manufacturer that is able to aid in garment design, sampling, trendy wash development, worldwide fabric and trims sourcing, cut, sew, and make, and packaging and labeling. Monty also has experience manufacturing a range of denim products including denim for children. Values: Monty Prides themself on being a sustainable and eco-friendly company directly relating back to our sourcing guidelines of using sustainable practices and minimizing water usage and waste. Monty has their own waste water treatment plant where all the water returns to the plant after being treated to a required environmental standard. Monty is also employing researchers and innovators to keep their products up to date while using cutting edge technology. Clients: Polo Ralph Lauren, American Eagle, Eddie Bauer, L.L. Bean, Macy’s, Liz Claiborne Capacity: 3.6 million units yearly

Global Denim

www.globaldenim.mx/en

Located: Puebla City, Mexico Expertise: Global denim has focused on a variety of high quality denim products since it was founded in 1994. Values: Aligning with Blu Jean’s values, Global denim is largely committed to multiple sustainability practices. Global Denim currently has many programs in place such as using recycled water, gradual replacement of chemical and dyes, reduction programs in waste generation, using their own hydroelectric plant, and water treatment plant. The mill also reuses thermal energy to ensure that there are no emissions back into the air. To continue to evolve, Global Denim’s Mill uses state of the art technology to encourage creativity, similar to our values. As a family run company, employees are valued and treated like family. The company also sources 80% of their cotton from the US which is important for Blu Jean, as an american company. Clients: Levi Strauss Certifications: “Clean Industry” certification issued by PROFEPA

Kaltex

www.kaltex.com.mx/

Located: San Juan del Río, Mexico Expertise: Kaltex is a large, Mexican owned vertically integrated conglomerate that is a full service textile Mexico has company producing acrylic fibers, yarn, fabrics, clothing (with a large emphasis on denim), and home textile Levi Strauss product. Values: Kaltex is extremely environmentally friendly complying with our sourcing guidelines and values of using Gruopo Axo of jeans sustainable practices and integrating recycled product into our manufacturing process. By using high quality the number of produced in ecologic yarn made of recycled cotton and PET fibers they are reducing their waste, saving water, energy, and engineering Zara chemical products. Kaltex has a water treatment plant that processes 240 liters of water per second resulting in Mexico go to grads than the water meeting aquatic life quality standards. Using top of the line technology, Kaltex is able to save up to 10 liters the US, which US, giving their of water per garment while reducing effluents and biological charge. Kaltex also uses a gas turbine reducing VF Outdoor could hurt industries future their energy consumption by 25% in 2014. manufacturers if technology Clients: Levi Strauss & Co., Levis Strauss Istanbul, Grupo M C&A NAFTA changes 30 31 Certifications: ISO-9001-2209 and ISO 14000 certified potential

50% 3x

1. 2. 3. 4. 5.

TRADE AGREEMENTS NAFTA, the North American Free Trade Agreement was implemented on January 1, 1994 and allowed Mexico, the United States, and Canada to trade freely without tariffs (Floyd). Since NAFTA was signed into law, its purpose has been to boost the economies and increase cross-country commerce in North America. While the law had many benefits, it also had some downfalls. Soon after NAFTA became effective, many U.S. manufacturers had to close down, as they couldn’t match the low Mexican wages. (Amadeo). As a result, the Mexican manufacturing business grew significantly and continues to provide the U.S. and Canada with many products.

PRODUCT CLASSIFICATION The HTS code is 6204.62.1511. This includes girls blue denim and specifies that that are no tariffs if imported from Mexico.

Specifically for Blu Jean, this allows our company to manufacture our product at a lower cost and import them into the United States with no tariff costs. Since Mexico is conveniently located, this also means that the cost of transporting the goods would also be significantly less. When it comes the apparel industry, NAFTA has outlined strict regulations in order to receive the free tariff. The rule of origin states that the manufacturer must get a certificate of origin to waive the tariffs in order to prove that the product originated in one of the three countries (“Textile and Apparel Products”). Although there are some specific exceptions when it comes to apparel. The basic rule for garments is that the yarn that was made to form the fabric must have been spun in one of the 3 NAFTA countries (“Textile and Apparel Products”). If the wool to make the yarn was grown in a non NAFTA country but was taken and spun into yarn in a NAFTA country it is considered to have originated in the country (“Textile and Apparel Products”). Textile and apparel articles made out of fibers must follow a “fiber forward” rule similar to yarn, that the fibers must have originated in a NAFTA country (“Textile and Apparel Products”). Today many worry about the future of NAFTA as President Trump announced last year that he wants to renegotiate parts of the NAFTA bill. If the agreement was cut all together it is estimated that the tariff rate would increase to 11.6% on apparel from Mexico and Canada (Lu). Many disagree what the end of NAFTA could mean for the future of manufacturing as some believe that it would bring more manufacturing back the U.S. while others argue that Asian countries would just pick up the loss in Mexican manufacturing (Lu). 32

SHIPPING

RISKS & BENEFITS

routes

When it comes to manufacturing apparel in Mexico it’s critical to analyze both the risks and benefits. As a U.S. apparel company one of the largest benefits is the close proximity to the United States, meaning shorter lead and transportation times. This saves money and makes it easier to manage last minute changes. With Mexico a part of the NAFTA agreement, this means that Blu Jean never has to worry about a tariff charge at the border, making it easier and cheaper to import our goods. Another benefit of doing business in Mexico is the cultural similarities between the Latin culture and American. Most of Mexico celebrates similar holidays meaning their calendar is extremely close to ours, making it easier to do business. Many of the apparel manufacturers have high end, innovative technology that allows Blu Jean to create jeans that are cost efficient while implementing sustainable practices.

transportation

1. LOCATION: Puebla City, MX

Price: $4,560 Time: 3 days

2. LOCATION: Mérida, MX (using nearby port of Progreso)

LOCATION: San Juan del Río, MX

Price: $3,554 Time: 4-5 days

Price: $4,520 Time: 3 days

However, while Blu Jean believes Mexico’s benefits outweigh the risks, like with any foreign manufacturing there is a risk. With Mexico’s government being somewhat unstable and the current high crime rates this poses a risk to us as we transport our goods in and out of the country. Blu Jean must understand the risk that our goods could be stolen and never arrive to their destination. With the upcoming election in July of 2018 it is uncertain how the political turnover will affect the violence or the social activity of the country, which as a result could have an effect on the Mexican manufacturers.

CONCLUSION Mexico is a country that holds rich potential for business opportunities, however, there is some inherent risk that must be considered before long term arrangements are made. Mexico, as discussed, is a country with a significant number of denim manufacturers and the proximity to the United States, alone with the NAFTA agreement, make Mexico a substantial manufacturing prospect for our business. With a growing economy, and advanced technical manufacturers Mexico has the capability to continue to be one of the largest players in the global denim industry.

INTRODUCTION

EGYPT

One of the essential processes of global sourcing starts with an indepth research of the potential countries in which the company would like to develop a supply chain. The research will display the current status of the countries health in terms of political, social, economic, and trade, as well as anticipated lead-times, cultural insights, the current status of the apparel industry, trade agreements, product classifications, harmonized tariff schedule (HTS) code information, and transportation information. The information will allow a company to gain insight into any potential opportunities or threats that a country may offer during a global business operation. The objective of this research is to determine whether Egypt will serve as a viable country to source little girls denim jeans that cooperate with the company’s vision, sourcing guidelines, and overall standards instilled throughout the entire supply chain. See cost sheets on page 134.

OVERVIEW Egypt, also officially known as the Arab Republic of Egypt, is a transcontinental country located at the northeastern corner of Africa and the southwestern corner of Asia. It borders the Mediterranean Sea, as well as the Red Sea with its neighboring countries being Israel, Jordan, Libya, Sudan, and Saudi Arabia. Egypt dates back to the Pharaohs as one of the world’s first nation states, with some of the earliest developments in writing, agriculture, urbanization, organized religion and government. In recent years, Egypt became Africa’s second largest economy after Nigeria, and adopted a new constitution in 2014 after a 98.1% vote in favor of the change. Egypt’s tourism, manufacturing, and agriculture industries are some of the most important influences within the country’s economy, but the social and political uncertainties have impacted the country’s ability to grow in terms of foreign investment. 36

C O U N T R Y S TA B I L I T Y Political Overview

Religion: 90%

Islam, 9% Orthodox Chrisitan, 1%

Currency: Egyptian pound (E£)

EGYPT

Location

In January 2011, the country was experiencing political turmoil which caused former president Mubarak to resign after a coup and hand his position to the Supreme Council of Armed Forces. (SCAF) Following Mubarak stepping down, Mohammad Morsi was declared president, which caused more dismay within the country after disguising a dictatorship as a democracy. Morsi was removed by the Egyptian military which pushed the country into more political instability and violence. The citizens of the country were looking for change after years of political unrest throughout the country, causing Abdel Fattah El-Sisi to win the election in a landslide. Egypt adopted a new constitution in 2014 following the election of current president El-Sisi, the former Head of Egyptian Armed Forces.

Population:

94,798,827 Language: Arabic, Modern Standard Arabic

Prime Minister: Sherif Ismail

President:

Capital:

Abdel Fattah Al-Size

Cairo

; 30°2′N 31°13′E / 30.033°N 31.217°E

GDP:

1.173 trillion usd

Government: Unitary Semi-Presidential Republic

Current strengths relating to the political state of Egypt include the support from the World Bank and the India- Egypt relations. The support of the World Bank focuses on alleviating poverty and fostering prosperity to keep the economy of the country stable during political unrest. The strength of India-Egyptian relations is beneficial in bilateral trade as well as stabilize the economy amongst political turmoil, also keeping foreign relations intact to boost the state of the trade industry. Some of the current challenges include the war against ISIS, issues with the new constitution, and an elusive democracy. In 2016, Egypt ranked in the 9.05 percentile on political stability and the absence of violence. This indicator measures perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including domestic violence and terrorism. This ranking is extremely low in comparison to other established countries. The political unrest has paralyzed the government’s efforts to help resolve issues within the country in terms of rapid population growth and the straining of the country’s resources and economy. Although the government has seen increased stability since the election of President El-Sisi, there is still a lot of uncertainty. Despite successive authoritarian governments, Egypt boasts a long tradition of party politics, with left-wing, liberal, and Islamist groups challenging the power of Egypt’s establishment.

Another challenge in terms of political unrest is the disconnect between the military and government authorities, in terms of laws and relationships. The political instability and regional security concerns have caused a significant negative impact on the economy as well as the international trade. The issues revolving around safety issues within the country caused Cairo to launch one of its harshest security bans in recent history after the government has failed in recent years to provide a secure environment. These political issues have caused international unrest but are beginning to see a positive turn in after El-Sisi’s reelection in March of 2018. Although, Egypt’s political stability has a lot of improvement to be made, it seems the country is moving in the right direction and the effects of the new constitution are beginning to prove successful. Together with the support of the Wafd Party, headed by Bahaa el-Din Abu Shoka, President al-Sisi is calling to unify Egypt’s various political parties into two or three strong parties to promote political life. The development of stronger parties will allow a system in place to properly provide for its countries people. Social Overview Egypt is the most populated Middle Eastern country and the second most populated country in Africa, second to Nigeria. The population is expected to increase by nearly 25 million by 2030. Egypt has been under scrutiny in the past due to issues relating to human rights abuses, poor food quality safety, and poor education regulations. These in turn have affected the overall well-being of the citizens in Egypt and pose as a threat to the manufacturing industry. The country is currently working with the US and the World Bank Group on creating a sustainable healthcare system, reducing unemployment, and developing livable housing. The issues within the society were neglected during the turmoil of the political unrest, which in turn lead to human rights abuse and rise of poverty throughout the country. In recent years, the government and foreign groups have worked together to help tackle many of these issues. The Egyptian socio-status will continue to rise due to the increased support of the government. The main issue is making sure the right government organizations and proper safety regulations are in place to provide a proper quality of life to the citizens of Egypt.

The education system also poses as a potential risk in the country due to the disparity within the different levels. In the 2017-18 Global Competitiveness Report, Egypt was ranked 100th out of 137 countries in terms of the quality of health and primary education; this highlights the desperate need for improvement. The future of the social stability of the country seems to be moving in the right direction with the proper focus being put on tackling many of these issues, but the threat of political uncertainty can strongly influence whether or not the well-being of the Egyptians continues to improve. Economic Overview Egypt’s economy has struggled for much of the 21st century, largely in part to the political transitions and country unrest which contributed to a decrease in growth rates and increased unemployment ultimately leading to a decrease in foreign investment. As of late, the economy has strengthened in support of public investment, such as Cairo widening the Suez Canal allowing increased traffic on the shipping route. Egypt’s foreign trade makes up 12.9% of overall GDP in 2017 and is expected to grow by 25% in 2018 due to a weaker Egyptian pound. According to the World Bank, the influx of foreign direct investment increased from $2.8 billion in 2012 to $8.1 billion in 2016, which is almost 189% growth, showcasing Egyptians stability of foreign trade. Some of the current challenges relating to Egypt’s economy include a high fiscal deficit, which is decreasing in 2018 but still remains uncomfortably high causing increased borrowing and higher interest payments on current debt. This can negatively affect the country’s economic development and inhibit a stable economy. Another influence is a decrease in tourism, which effects many of the industries in Egypt. The political and safety concerns have caused tourist to divert their vacations elsewhere in search for a safer option. The threat of terrorism and unsecure security measures create an issue within the country as well as decrease business relations due to unsafe territories.

L E A D T I M E A N T I C I PAT I O N The rise of inflation within the country has eroded the purchasing power, and policy makers are increasingly trying to attract foreign investment by providing a portfolio funded largely by other Arab nations, such as the Saudi Public Investment Fund, which will be used for housing, energy, and tourism sectors. These issues have caused high unemployment rates, that are beginning to decrease as of the recent years. Economic prospects are moderately moving towards a brighter future. Egyptâ&#x20AC;&#x2122;s potential stability comes from its young and growing population, its low-cost labor force and a large domestic market. As long as foreign investment continues to increase at the current rate, the GDP will continue to increase and the deficit decrease, allowing a more stable market that creates Egypt as an established country, rather than a developing country. The government is trying to restore financial stability and improve the business environment after years of political turmoil by consolidating public finances through fiscal reforms and allowing market forces to determine the exchange rate. Reform of the fuel and electricity subsidies has been a notable achievement. The next step is likely to include a new investment law and revised bankruptcy law. Although, weak institutional capacity and stiff opposition from interest groups has stymied some necessary economic reforms.

According to the World Bank, Egyptâ&#x20AC;&#x2122;s Logistics Performance Indicator (LPI) was ranked 3.18/5, with a 3.63/5 (1=low, 5=high) on timeliness. Some key indicators for lead-time include the average export lead time of 12 days with a 2 days export rate in terms of border compliance. The sail time from the Port Said East terminal to Savannah, Ga is averaged at 25 days. Egypt is also a predominately hot, dry country with very few inclement weather threats to inhibit lead-time. One of the biggest lead-time factors would include the festivals and holidays relating to many of the holidays celebrated in Egypt, such as Ramadan and El Hijra. In Egypt, the weekend is considered on Friday and Saturday and the national holidays are celebrated throughout the entire country including government and ministries. The workday varies from 8 am to 2 pm in the summer and 9 am to 1 pm, and 5 pm to 7 pm in the winter. Egypt shows a overall strong lead-time in production, but the unrest in the political state can serve as a threat with the uncertainty of workers participating in political coups and protests.

(Euromonitor)

C U LT U R A L I N S I G H T S Business Mentality For almost 13 centuries, Arabic has been the written and spoken language of Egypt and is the language of business, which means it is important to have an Egyptian agent in business meetings to conduct the proper language presentation. Another business mentality of the Egyptians is that business will not progress until the counterpart is comfortable and has formed a suitable relationship. The social side of the business is just as important as the work-related side. Also, Egyptians are tough negotiators and do not respond to high-pressure tactics. The Egyptians typically work at a slower pace in terms of working culture and take their time in responding to foreign trade partners. It is expected to take a few days to come to a business conclusion. Business Meeting Etiquette Egyptians are firm believers in direct eye-contact, as they feel it is a sign of honesty and sincerity. It is also important to follow the lead of the Egyptian business man and address them with their title and surname. Titles are viewed with pride and are important to demonstrate increased interest in the personal status of whom you are doing business. Egyptians are keen on first impression which carries into their traditional clothing when it comes to business meetings, a woman should be dressed modestly despite the hot temperatures. In a business dinner setting it is important to never salt food, as it is seen as offensive, and leave a small portion of food on the plate to symbolize that you have had enough.

Body Language Gifts are welcome but must be given or accepted with the right handnever the left as it is seen to be unclean in Egyptian culture. Pointing, a â&#x20AC;&#x153;thumbs upâ&#x20AC;? sign, and showing the bottom of your foot are all extremely rude and offensive to the Egyptian. Men in Egypt will hold hands as a symbol of friendship, and it is important to follow the lead of the Egyptian when it comes to handshakes. Although less common, when dealing with women in business in Egypt keep a respectful, professional distance and do not try to ask personal questions. Once an established relationship has been formed it is common to kiss on the cheek as well as shake hands, men to men and women to women. Society Islam is practiced by majority of Egyptians and is important to their personal, political, economic, and legal lives. Muslims pray five times a day and celebrate Friday as the Muslim Holy day, where everything is closed. It is important to set up business meetings around the Muslim holidays and working hours and to respect the fasting standards in public during the month of Ramadan.

Apparel Industry

47 46

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fabrics ranked third in the countrys exports accounting for 25% of the total exports. â&#x20AC;˘ Egypt is equipped with

Middel Delta region where new players are establishing their business.

facilitating its exports.

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Molly Buice LXFM 720- Supply Chain Management

The Alexandria region facilitates exports through its ports.

15 commercial ports

GDP and 27% of the industrial output.

The Canal region is dedicated to denim production and imports of thick cotton yarns. The Suez Canal facilitates its exports to Europe and Asia.

accounts for 3%

Arabian countries, EU and US. Cotton and textile are the

I ndus try O ver view

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Manufacturers

Egyptâ&#x20AC;&#x2122;s textile sector

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The textile sector employees over 1

Country brea k down

Market GD P

Regions Economic Minimum wage for labor is 1200 EGP/mon

Apparel sector

Main markets for Egypt

MILLION Egyptians

Top Export Countries

Employment Apparel Expor ts

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consists of 3,243 companies with a

total investment of 3.2 billion USD. Public sector dominates the production industry with 50% in spinning, 60% in hemming, and 60% in weaving. Private sector owns 90% of the garmenting side of the industry.

T ex t i l e E m p l oy m en t

Â&#x2122;Â&#x2020;Â&#x2020; Â&#x2020;Â&#x2020;Â&#x2020; Â? Â&#x2020; Â&#x192;Â&#x2022; Molly Buice LXFM 720- Supply Chain Management

EGYPT

TRADE AGREEMENTS Egypt and The U.S. do not have a free trade agreement in place currently, although there has been talk in recent years about the development of one. Egypt works in relation with Israel to create Qualifying Industrial Zones (QIZ’s) which are public zones utilized for free trade within certain regions of the country. Positive results from the Jordanian agreement for QIZ’s led to the Government of Egypt negotiating a QIZ protocol in Cairo on 24 December 2004 that came into effect in February 2005. There are currently 15 QIZ’s in Egypt that work in coordination with the Israeli and U.S. government to create free trade zones. In order for an Egyptian QIZ article of clothing to be eligible for duty-free entry into the United States, QIZ factories must add at least 35% to the value of the article. The 35% minimum content can include costs incurred in Israel, Egypt, or the United States, also Israeli manufacturers have to supply at least 10.5% of the product. The benefits of the QIZ agreement are ease of access into the US market, low factor cost and large supply of labor force, and foreign investors and Egyptian companies alike are continually seeking to locate and qualify their businesses within these zones. This is beneficial for sourcing within the country, because it allows the companies to manufacturer product without worrying about additional tariff costs. Many of the manufacturers in Egypt are located within one of the fifteen QIZ regions.

PRODUCT CLASSIFICATION The development of Little Girls denim pants is classified under the HTS Code 6204.62.1511: “Women’s or girls’ suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) Other: Blue Denim” This classification requires a 16.6% tariff when imported from Egypt unless manufactured within one of the 15 QIZ regions and following the correct qualifications to obtain a tariff free trade.

Another benefit of manufacturing in Egypt include the low costs of skilled labor as well as the strong domestic market. The increase in manufacturing in Egypt also helps decrease unemployment rate, create new economic growth and create a better quality of life to those impacted. A great risk includes the uncertainty of the governmentâ&#x20AC;&#x2122;s ability to stabilize the country economically, politically, and decrease threats of safety unrest. These issues influence the business strategy of deciding whether manufacturing in Egypt is beneficial or too risky to depend on as a serious foreign relation. The government seems to be moving in the right direction, but the effects of these changes wonâ&#x20AC;&#x2122;t be quantified for years to come.

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RISKS & BENEFITS Egypt poses many pros and cons, with a lot of potential risks and benefits. The country has experienced a lot of uncertainty in years past, but in recent years has seen a fairly bright turnaround. The GDP is expected to increase, and the government is investing in policies to create a positive influence in foreign relations. The uncertainties in the socio, economic, and political stability of the country pose as serious threat to the overall well-being of the country but hasnâ&#x20AC;&#x2122;t shown a severe Impact on the export industry. The US is still the largest customer of Egyptian exports and the relations created through the QIZâ&#x20AC;&#x2122;s have helped influence the positive impact of US relations to trade. This is extremely beneficial for the apparel manufacturing industry in which our company is interested in.

CONCLUSION In conclusion to researching Egypt as a country as well as from an apparel perspective, I believe that Egypt is still a contender for consideration of global manufacturing. Although the country has seen its fair share of uncertainty, instability, and turmoil in the past, the future seems bright for the Egyptian manufacturing industry. The country has depended upon the trade industry for over 2000 years and continues to maintain business relations with companies all around the world. The potential benefits of manufacturing in Egypt outweigh the potential risks that focus on the country rather than the industry itself. The benefits of sourcing in Egypt could influence not only the buyer, but also the Egyptian manufacturer and the community in which it is located. The key to sourcing in Egypt is finding reliable, responsible and honest business partners to create a transparent and trustworthy supply chain.

INTRODUCTION

JORDAN

This document consists of a comprehensive understanding of Jordanâ&#x20AC;&#x2122;s overall conditions and its apparel manufacturing status. The country traits illustrate the specifications of the country. The country stability discusses the social, economic, and political status of Jordan. The lead-time and production is explored in order to understand issues that may disrupt the supply chain. Cultural insights indicate social ques and norms to follow when engaging in business in Jordan. The state of the apparel industry further breaks down the overall factors that have an effect on production and sustainability of the industry. Three suppliers are listed as manufacturers of denim in Jordan. Trade agreements are discussed, along with product classification. Transportation is highlighted through two shipping companies. Risks and benefits are analyzed in order to assess the practicality of sourcing from Jordan. This comprehensive understanding of Jordan will allow for a decision to be made on whether or not our company, Blu Jean, will source from this countries industry. See cost sheets on page 134.

C O U N T R Y S TA B I L I T Y Jordan’s government framework consists of a parliamentary monarchy. The head of the government is the prime minister. The Prime Minister is Hani Al-Mulki. The King is Abdullah II. The Jordanian government has been decentralized throughout the past decades. The country is divided into three regions: North, Central, and South. Each region has a council that is elected. Each council handles the economic, legal, political and social issues related to the region. Jordan is divided into twelve different administrative “governorates” (heritage.org). Each “governorate” is headed by a governor that was appointed by the King (heritage.org). The country’s current main powers are divided amongst the executive, judicial and Legislative branches. The monarch holds strong authority over executive and legislative powers. The monarch can suspend or dissolve parliament. The prime minister advises the kind on a daily basis. The legislative branch has the power to override the king’s veto by a vote of two-thirds. The supreme court of Jordan is much like the United States and enforces proper constitutional interpretation. Jordan is continuously improving as a country, however, corruption still remains an issue. “Regional instability and continued pressures mean that the country has serious weaknesses and vulnerabilities” (bbc.com). Jordan has recently been surrounded by political instability in Palestine and Israel. The Palestinian-Israeli conflict, refugees and ISIS activity raise red flags throughout the region. Jordan is also bordered with Syria. There have been many incidents linked to conflict in Syria. The border of Iraq and its related conflicts must be recognized as well. Refugee camps are common in Jordan. Israel and Jordan have signed a peace treaty and practice nonaggression. It is important to keep in mind Jordan’s vulnerable location in the Middle-East. Instability throughout the region has the potential to cause major disruption in the supply chain.

Jordan is classified as an emerging market. Its market is considered “one of the most developed Arab markets outside the Persian Gulf states” (cnn. com). As the market expands, so does the apparel industry. The country’s Economic Policy Council has implemented a plan that will boost the country’s infrastructure growth. Large amounts of funding and resources have been provided by the government to grow the apparel industry. Overall growth and an increase in employment is the end goal. The plan includes further economic reforms to be incorporated in the near future. These plans and projects are to be funded by the government and the private sector. Jordan has free trade agreements with the United States, Singapore, Malaysia, Canada, Tunisia, Algeria, the European Union, Syria, Turkey and Libya. Throughout the country there are six special economic zones that “attract large-scale investment” (cnn.com). These zones consist of Aqaba, Ajloun, Ma’an, Mafraq, the Dead Sea and Irbid. Throughout these zones are many apparel manufacturers. Jordan was listed as 18th on the 2012 Global Retail Development Index. This index lists the top 30 retail markets in the world. As of April 23rd, 2018, 1 United States Dollar equals 0.71 of a Jordanian Dinar. The inflation rate is expected to rise by 1% in 2019. However, it is expected to remain steady throughout the following year, until 2022. An increase in inflation will directly affect business operations. This predicted jump in inflation could force businesses to raise prices. Technology is a huge sector for economic development in Jordan. New technologies are continuously tested and developed to better industry practices. The overall goal is to reduce production costs and to increase efficiency throughout the production process. The most popular social media platform in Jordan is Facebook. It is used by over 50% of the country’s population. Queen Rania leverages on YouTube and Twitter social media platforms for public diplomacy. As of mid-2016, around 3.5 million Jordanians had internet access. However, officials hold power to block and censor websites. Jordan is greatly inhabited by younger generations. More than 7 out of 10 people in Jordan are under the age of 29. There is an extremely high unemployment rate throughout the country. Most employees who work in the apparel industry are nonJordanians. The above political, economic and social elements make up the environment of Jordan’s rich country.

L E A D T I M E A N T I C I PAT I O N Jordan is known for having earthquakes, droughts, flash floods and landslides. The countries vulnerability for natural disasters is high. The high risk location is due to “rapid urbanization and under-regulated land use” (jtifoundation.org). Over 75% of Jordan’s population lives within 30 kilometers of the country’s main fault line. The three most populated areas in Jordan are Amman, Aqaba and Petra. These cities are at the highest risk for natural disasters. Flash floods and landslides are known to occur after an earthquake. With the increase in climate change, there will be an increase in droughts and flash floods in the future. The two months with the highest risk of flash floods are January and February. Jordan is located seven hours ahead of eastern standard time. The country operates on a work week from Sunday to Thursday. It is nearly impossible to schedule business appointments on Fridays. Business hours typically range from 830am to 130pm and 330pm to 630pm. During the month of Ramadan, business hours are typically 6 hours per day. It is not unusual for the government to change the day of a holiday in order to create a three-day-weekend (export.gov). It is also necessary to avoid making business appointments on any public holiday. These holidays include New Year’s Day, Palm Sunday, Easter, Jordanian Labor Day, Jordanian Independence Day, Fid Al-Fitr, Fid Al-Adha, Islamic New Year and Christmas Day (export.gov).

C U LT U R A L I N S I G H T S When conducting business in Jordan, it is necessary to choose a quiet location that has no distractions. The first meeting is considered a “light meeting” (fas.org). The first meeting will establish whether or not further negotiating will take place. Being late to a meeting is a normal occurrence. It does not signify a lack of respect. However, if one is more than 90 minutes late, an apology is expected. It is important to shake all male hands in the room first. One should not shake hands with an Arab woman unless she offers to shake first. Handshakes last longer and are less firm than in the United States. It is also important to grasp one’s elbow with your left hand. Before engaging in business, it is important to establish respect and trust. In order to establish this, it is necessary that there is enough time for refreshments at the beginning of a meeting. Coffee and tea should always be available at a meeting. It is important to offer refreshments at least three times. The respondent should accept at least twice. Refreshments will be accompanied with small talk. If a meeting is going to be long, food is expected. However, alcohol should never be served. Shaking hands when leaving a meeting is also expected. Throughout the course of a meeting, one should never look at a clock or watch. This signifies that the person you are meeting with is not worth your time. The American concept of personal space will not be practiced in Jordan. Most Arabs do not recognize personal space. It can be interpreted as offensive or rude to step or lean away while engaging in conversation. It is important to always maintain eye contact when speaking with a business partner. Even if a translator is in use, eye contact must remain. However, one must be careful with a translator; it is not uncommon for translators to have an agenda. When around woman, it is important not to stand close to, touch or stare at them. “Body language is especially significant in Arab culture” (fas.org). A strong sign of respect can be represented by placing your right hand on your heart with a slight bow. This is usually done when greeting one another. When looking for an ally, one is to look for the eldest member of the group. If you can cultivate a connection with the elder, your chances of a successful business partnership are greater. Be careful not to give constructive criticism. This type of criticism is taken as an insult. “Admitting that you do not know something is distasteful to an Arab” (fas. org). Strong bartering is also to be expected when working with a Jordanian. 58

TRADE AGREEMENTS The United States and Jordan hold a free trade agreement called JOFTA. The agreement was signed in 2001. It is the first trade agreement the United States signed with an Arab country and the fourth overall agreement the US has signed. The FTA states that virtually all Jordanian goods enter the United States duty free. The request for a trade agreement with Jordan was initiated by the United States Trade Representative (cbp.gov). The purpose of the investigation was to evaluate the economic impact in the United States due to the potential trade agreement. JOFTA benefits both countries by establishing a strong trade relationship, protecting intellectual property, enforcing regulatory transparency and reducing/eliminating duties through customs (ustr.gov). However, Jordan has greatly benefitted from manufacturing plants opening up. Jordan’s economy has been significantly boosted while creating many job opportunities. General country eligibility provisions state that the product has to be manufactured or grown in Jordan. It must contain at least 35% of Jordanian content in order to be eligible for trade benefits (usitc.gov). Fibers must be spun in Jordan. Apparel garments must qualify as fabric consisting of fibers that were spun in Jordan (export.gov). The trade agreement effects Blu Jean’s business by eliminating tariffs on imports from Jordan.

PRODUCT CLASSIFICATION The Harmonized Tariff Schedule (HTS) code for articles of apparel and clothing accessories, not knitted or crocheted, falls under Chapter 62. The HTS code is 6204.62.1541. The heading/subheading states: “Women’s or girl’s suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and short” (hts.usitc.gov). The article description is considered “other blue denim” (hts.usitc.gov). These items are duty free when entering the United States from Jordan.

RISKS & BENEFITS

SHIPPING

There are many risks and benefits when discussing the possibility of sourcing from Jordan. The overall apparel industry is supported by the government. Growth is continuously being fostered. New technologies are explored in order to maximize production and efficiency. Labor is cheap and manufacturers are notable. The United States FTA with Jordan is extremely beneficial. However, with all of these benefits taken into account, the risks must also be analyzed. Jordan is a country that is surrounded by political instability. This creates a huge red flag in terms of unpredictability and the overall vulnerable state of the country. Corruption is a relevant issue. Natural disasters are a huge risk as well. Frequent flash floods and landslides resulting from earthquakes raise concerns. Shipping from Jordan is costlier than shipping from countries in closer proximity to the US. However, the overall product may be cheaper. It is important to analyze the risks and benefits throughout the supply chain. The benefits may outweigh the risks in the long run. However, an unexpected political upset or natural disaster could severely upset our sourcing strategy.

CONCLUSION This country report of Jordan is a vital source when deciding where to source for production. By analyzing country traits, country stability, lead time of production, cultural insights, state of the apparel and textile industry, suppliers within the country, trade agreements, product classification and transportation, Blu Jean is well equipped to decide where to source our product from. In comparison to other countries, we will decide which country best meets our needs. Our goal is to source from manufacturers that meet our sourcing guidelines requirements. It is necessary that we work with well-established and affluent manufacturers. We believe that by making the right decision our company will maximize efficiency and successfully hedge against risk while remaining as ethical as possible.

INTRODUCTION

VIETNAM

The Socialist Republic of Vietnam is a country located in Southeastern Asia bordering the Gulf of Thailand, the Gulf of Tonkin, and the South China Sea. The neighboring countries include Cambodia, China, and Laos. With an area of 329, 560 sq. km, the country is about three times the size of Tennessee and slightly larger than the state of New Mexico (CIA). As a single ruling party, the Communist Party of Vietnam has remained stable since its 2016 re-selection and will continue to rule for the next five years. Nguyen Xuan Phuc is the Prime Minister and Tran Dai Quang is the President of the country at present. Both the parties aim to achieve economic growth with an attempt to satisfy the social and material needs of the people, thereby quelling discontent and demands for political and social freedoms. As of 2016, the population was 92,701,100 with Vietnamese being the official language, but English favored as a second language. In terms of religion, 7.9% of people identify as Buddhist while 6.6% as Catholic. The geography consists of hills and densely forested mountains in the northwest. The government system is a communist state; the chief of state is the president, and the head of government is the prime minister. Vietnam has a mixed economy in which there is limited private freedom, but the economy remains highly controlled by the government. Vietnam is a member of the Asia-Pacific Economic Co-operation (APEC), the Association of Southeast Asian Nations (ASEAN), and the Trans-Pacific Partnership (TPP). Vietnam has struggled for centuries with power as larger countries continuously ruled over it, including France and China. It first gained independence in 1945, the Social Republic of Vietnam has placed a huge emphasis on its economic, liberalization, and modernization in order to produce more competitive, export-driven industries (CIA). The country continues to experience small-scale protests, the vast majority connected to either land-use issues, calls for increased political space, or the lack of equitable mechanisms for resolving disputes. Through tradition is still valued in their culture, the Vietnamese have grown to become an attractive, stable and progressive nation, due to their single-ruling CPV party cultivating export industry and ongoing regard of the development of its people. See cost sheets on page 134.

C O U N T R Y S TA B I L I T Y Political Overview Since 1976, the Communist Party of Vietnam has been very stable. In December 1980, Vietnamese Socialist Republic was the proletarian dictatorship and the Vietnamese Party was the only one that led the nation. In 1973, Vietnam and the United States signed the Paris agreement on ending the war and restoring peace to Vietnam. In 1992, the National Congress of Vietnam passed the current constitution and stipulated the current political system in Vietnam. The National Assembly is the highest state authority in Vietnam and the only legislative facility in the country. Congress representatives are elected directly by the Vietnamese citizens. The main powers of the council are formulating the constitution and deciding economic plans. The central government is the executive authority and the supreme administrative authority of Vietnam. With elections just being held in 2016, this single-ruling party will remain in power for the next five years. The re-election of Nguyen Phu Trong as general secretary and the election of Nguyen Xuan Phuc as the prime minister during the 12th CPV congress in January 2016 indicates the maintenance of the status quo rather than any major change in direction. This indicates that the government will likely maintain a positive attitude to trade and foreign investment while focusing on building existing good relations with China, the United States, and the European Union. Opposition to political leaders in Vietnam is illegal, causing very little power but leading to many arrests of political activists. The party aims to achieve economic growth in an attempt to satisfy the social and material needs of the people, thereby quelling discontent and demands for political and social freedom. The growing middle class, which is expected to rise to 33 million in 2020, is developing and maturing and will likely demand more of a voice in future politics.

Social Overview Vietnam has a young population which helps add to its labor force and reduces social expenditure. Through funding from the World Bank and Global Partnership on output-based aid, the country has been able to carry out The Vietnam Second Higher Education Project, which has helped 8,000 poor students to attend non-public upper secondary schools and professional secondary schools providing tuition subsidies to them during 2010-2013(The World Bank). Vietnamese society is a traditional agricultural country, and the agricultural population accounts for over 70% of the total population. Agriculture output accounts for 20% of the gross domestic product. Farmers have important social status in Vietnamese society. The characteristic of Vietnamese society is based on the agricultural social culture. The population of Vietnam is 92 million now and it is ranked 14th in the world, 8th in Asia and 3rd in Southeast Asia. Since 2007, Vietnam has entered the golden age of population structure. In other words, Vietnam’s labor force is a large proportion of its total population. As a result, this advantage has provided adequate human resources for the development of Vietnam economy. Since entering the socialist era, Vietnamese has been widely affected by government-controlled media and communist culture. Since the 1990s, Vietnam’s government started to operate the policy of reformation and opening, and Vietnam started to accept Western or other Asian culture. Economic Overview Vietnam’s economy is ranked 6th among the 10th ASEAN countries, behind the Philippines and ahead of Myanmar. Vietnam has made it the most attractive foreign investment destination in South-east Asia. However, the value of the Vietnam Dong to the US dollar has recently decreased after the State bank of Vietnam was forced to increase the central rate by 0.7% a few years ago. Vietnam’s service, manufacturing, and agriculture industry account for 44%, 39% and 17% of its GDP. Vietnam’s major industries and services include manufacturing, mining, construction, real estate and finance. In the first half of 2017, Vietnam’s economy grew 5.7% GDP due to industrial growth (manufacturing and processing industries grew by 10.2%.) In August 2017, the average consumer price increased by 3.8%. From 2010 to 2015, Vietnam’s government increased the minimum wages every year, with an average growth rate of 18%. Therefore, the minimum wage in Hanoi and Ho Chi Minh is $166-170 monthly.

L E A D T I M E A N T I C I PAT I O N The lead time to export apparel in Vietnam is 17-21 days. For 5,000 pieces, you would need approximately 6,000 meters of fabric, which would take 17 days to produce (Vietnam Insider). The time is calculated from the product’s initial stage until it is finished. The processes include fabric cutting, sewing, ironing, folding, and packaging. Working days in Vietnam are from Monday to Saturday. The country’s public holidays are Hung Kings Temple Festival, Reunification Day and May Day. If a public holiday falls on a weekend, workers are entitled to have the following day off as compensation. Under the Article 115 of the Labor Code issued in 2012, workers are entitled to ten paid holidays each year. Employees who are foreign citizens working in Vietnam receive an additional day off for their own country’s National Day. The longest holiday is the Lunar New Year which is a five-day holiday. Vietnam is a country that places the balance between enjoying life to the fullest and working hard at the same time. Compared with other countries, these festivals do not affect the production very much. According to World Bank, Vietnam will face losses of more than 6.7 billion dollars over the next 50 years due to natural disasters such as typhoons, and earthquakes. Heavy rains have continued to affect Vietnam, especially the northern areas, causing floods and landslides. About 71% of Vietnam’s population and 60% of the land areas have the risk of hurricanes and floods. The average loss caused by hurricanes and floods is estimated at 0.8% of Vietnam’s GDP in total.

C U LT U R A L I N S I G H T S The Vietnamese pay lots of attention to etiquette. The most appropriate manner of greeting is a gentle handshake and a smile to show respect. Though occasionally rigid, Vietnamese officials such as the police appreciate being treated in a firm, yet diplomatic manner. In Vietnam, personal relationships are the foundation of business and also the factor that can decide if your business is successful or not. If you know how to develop and maintain your relationships, you could have opportunities as big entrepreneurs. The Vietnamese are happy to meet new people, but they don’t prefer doing business with strangers. Vietnam’s government has the power to decide most of the commercial changes in the country and Vietnam’s law and policies change a lot. Vietnam is a nation of resilience and determination. There are an inner strength and resoluteness that’s often overlooked by foreigners. The nation itself has many times been dubbed as ‘Phoenix rising from its ashes’. Through thousands of years of atrocities and obliteration. Vietnam follows the traditional Asian decisionmaking model. Vietnam businessmen emphasize the harmony of groups. Foreigners usually know nothing about the disputes between various partners. Compared with other Asians, the Vietnamese are more likely to use a frank manner of speaking and they don’t like disputes when they talk about business. When discussing business with Vietnam clients, it is forbidden to talk about the political issues in Vietnam. When dealing with Vietnamese, it is impolite to touch the shoulder and avoid touching the heads of the children.

MANUFACTURERS IN VIETNAM DENIM IN VIETNAM Vietnam as a country of 92 million, is home to textiles manufacturers and suppliers. The ecosystem runs deep and also covers more advanced fabrics, and components. The industry produces T-shirts, Knitwear, Children’s Clothing, Baby Clothing, Home textiles and Technical Fabrics. In South East Asia, Vietnam’s textile and apparel is growing faster than other regional competitors. The textile and apparel company are more than 3,800 and also the main power of the export sector. United States, Japan, and Europe are the main exported countries of Vietnam’s textile and apparel industry. The basic wage of labor is $175-180 per month and it is expected to grow in the next few years. In addition to cheap labor, Vietnamese manufacturers also focus on increasing production capacity, and the delivery time. Vietnam’s textile and apparel industry plays a very important role in economic growth. Despite the overall imports of Vietnam being sluggish and the failure of TPP, the country’s apparel and textile industry remain strong and a top destination for sourcing. Vietnam’s textile and apparel industry represent over 15% of the country’s GDP and 18% of its total exports in 2017. Textile and apparel companies provide over two million jobs and one million related job opportunities. The trade agreements give the advantages to enter different markets. Vietnam-EU FTA will be officially effective in 2018 and Vietnam’s textiles and products can compete with other GSP countries such as Cambodia and Europe’s market. The textile and garment manufacturing industry continue to benefit from the increasingly young skilled population, as more people join the labor force.

1. Tuong Long Expertise: Tuong Long is a Vietnam based textile & garment company specializing in manufacturing and trading all types of cotton fabrics (especially denim), as well as garment production. They offer full range of manufacturing services from warping, dyeing, weaving, sewing, washing and treatment, to finished and ready garment. While they can handle complete garment manufacturing, they can also accommodate any phase of the process. Located: Binh Duong Province, Vietnam Values: Quality, Competitive Pricing, High capacity, Vertical manufacturing Clients: JC Penny, Express, American Eagle Outfitters, Uniqlo Capacity: 12,000,000 meters/year Contact: www.tuonglong.com

2. Nien Hsing Expertise: Nien Hsing Garment Co., Ltd. manufactures jeans wear. The company was founded in 2007 and is based in Thai Binh, Vietnam. Nien Hsing Garment Co.Ltd. operates as a subsidiary of Nien Hsing Textile Co. Ltd. Located: Ho Chi Minh, Vietnam Values: To to develop sustainable business practices in our products & manufacturing processes that will benefit future generations through sustainable growth, both profitably and responsibly, while leaving a smaller footprint on the world, and encouraging practices that will result in a net positive towards living environments. Clients: V F Jeanswear Ltd., Kohl's Department Stores, Inc., American Eagle Outfitters Certifications: SA 8000 Certified Contact: www.nhjeans.com

3. Phong Phu International Jsc Expertise: Phong Phu International is the leading garment textile manufacturers and exporters in Vietnam. The company was built in 2007 by consolidation within the Phong Phu Corperation to serve the purpose of promoting denim & bottom and knitted fabrics & convertingfabric into high quality apparels as Jeans wear, Work Wear,Casual Wear and knit wear made in Vietnam to the international markets. Located: Ho Chi Minh City, Viet Nam Values: PPJ complies with Vietnamese environmental rules, regulations and standards applicable to its processes and practices. They are trying to reduce our water footprint. By joining the Higg Index program in order to measure our environmental and social labour impact. Clients: V F Jeanswear Ltd., Chico’s, Levi Strauss and Co, JC Penney, Quicksilver Americas Inc. Certifications: SA 8000 Certified Contact: www.ppj-international.com

TRADE AGREEMENTS The US-Vietnam Bilateral Trade Agreement was signed in 2001. Under the BTA, both sides extended normal trade relations (NTR) to one another, thereby lowering tariff levels on the other country’s imports. Total merchandise trade flows in 2006 was $9.4 billion, more than six times the level before the BTA came into effect. Over 80% of the increase in trade since 2001 has come from the growth in imports from Vietnam. The United States is now Vietnam’s largest export market, U.S. firms constitute the single largest source of foreign direct investment (FDI) in Vietnam. After this trade agreement, the trade between the two countries had dramatically increased in the next decade. In 2007, Vietnam became a member of WTO. As for the textile and apparel industry, Vietnam is the third largest supply country of textile, accounting for 7% of the total imports. Furthermore, Vietnam has already been the second supply country of apparel to the United States, accounting for 12.5% of the total imports. Vietnam is a member of ASEAN and the goal of ASEAN is to accelerate economic growth, social progress, and cultural development. In 2018, tariffs have been reduced 96% of the total tariffs and investment restrictions have also been gradually opened. Furthermore, ASEAN has also signed the FTA with China, Japan, South Korea, New Zealand and Australia. ASEAN has successfully built the fully integrated region in the global economy. In order to increase Vietnam’s economic competitiveness, Vietnam’s government has signed 12 FTA, including Vietnam- Korea FTA, Vietnam-Eurasian Economic Union and EU-Vietnam FTA. These FTA could dive foreign enterprises to increase investment and introduce new technologies to Vietnam’s industry.

PRODUCT CLASSIFICATION The harmonized tariff schedule code for girl’s denim shorts is 6204.62.61. This code is placed under girl’s shorts made of cotton fibers. Under this classification, the general rate of duty is 14.9%. Our products are little girl’s shorts and denim including 1 style of shorts and 3 styles of denim. Products were under girl’s shorts imported as parts of playsuits.

TRANSPORTATION IN VIETNAM

MAJOR PORTS IN VIETNAM Saigon port-South, Hai Phong port-North, Da Nang port-Central TRANSIT TIME 30-35 Days COSTS $ 4,787 from Port Hai Phong to East Savannah, GA INSURANCE Costing $ 1,128 DUTY 14.95%

T R A N S P O R TAT I O N

CONCLUSION

Along with her 3,200km-long coastline, Vietnam has a total of 114 seaports, 14 of which are relatively large and named as the keys to economic development. The limited size of Vietnamese ports entails transportation of goods from Vietnam to major international markets such as the USA and the European Union to be transshipped at larger ports, including Hong Kong and Singapore. Being such a coastal based country, Vietnam operates many ports. However, the largest of these ports are on the international level are Saigon, Port of Ho Chi Minh City, Hai Phong and Da Nang. Saigon Port, more than 130 years old, has had the highest throughput and productivity per annum of the country for years. Situated on what was the outskirts but is now the outskirts or suburbs of Ho Chi Minh City. Zim Integrated Shipping services offer routes from Ho Chi Minh City of Savannah in 30-32 days, only shipping full containers. The current moving rate for a 40 container is roughly $2,700 all-in, with containers sizes being 7”8 wide and 8”6 tall.

Vietnam’s impressive and consistent growth over the last several years (second in Asia to China) has made Vietnam more and more visible on the global map, especially for those multinational corporations looking for an outsourcing and factory-relocating destination. Vietnam has achieved this success through hard work and the willingness of the government to respond to investor concerns. Despite the uncertainty caused by the failure of TPP Vietnam has shown their plan to remain on top of their foreign apparel strengths. Their interest in science, technology, and development of young population confirms their eagerness to modernize and progress in all markets worldwide. Around 57% of the enterprises are located in Ho Chi Minh city, where about 2,500 garment export-oriented factories are operating20. 70% of the companies in the industry are garment companies; only 17% are textile and 6% are yarn producers. Among the garment companies, 70% are producing on Cut-Make-Trim (CMT) process while those with FOB (Freight on Board) production account for only 20%. The garment industry of Vietnam is heavily reliant on the import of materials including cotton, yarn, and cloth. Every year, Vietnam imports around 6.8 billion meters of cloth or 80% of its total need, mostly from China, Taiwan, and South Korea. In order to remain in their heightened position and achieve their goals of transparency and integration, they must show more focus on the needs of its people in order to fully progress as a county. In near future, Vietnam’s textile and apparel exports will be expected to have bigger growth as one of the major beneficiaries after joining the Trans-Pacific Partnership. TPP will bring more investment opportunities, including foreign direct investment for developing materials and supporting industries. When joining the TPP, textile tax rate reduces to 0% which also indicates a huge profit for Vietnam’s textile sector.

RISKS & BENEFITS Vietnam has a lot of potentials to develop textile and apparel industry in the world. The abundant and cheap labor are two main drivers of the industry along with its near proximity to countries like China for raw material sourcing. The benefits are rapid economic growth and support from the Vietnamese government. Moreover, Vietnamese government made quite strict environmental regulations, which matches our sourcing guideline. However, there are still some unavoidable risks. For instance, Vietnam is vulnerable to hurricanes and the infrastructure is very fragile, which can increase the lead time.

SOURCING S T R AT E G Y country ranking supplier ranking line plan placement ranking

COUNTRY RANKING When analyzing the four countries, we looked at them holistically and kept our sourcing guidelines as a top priority. The main factor that differentiated the countries was their experience and sophistication within the textile industry. Some of the countries ranked higher in terms of business climate and labor force, but lower for political and economic stability. When deciding what was most valuable for our company to consider, we decided that the countries that had higher rankings relating to foreign relations, trade, and business freedom were the most vital to consider doing business in. All of the countries had their own pros and cons, benefits and weaknesses, and added value, but the biggest indicator were the countries that would meet our expectations as a business, as a brand, and as a partner. Below is each countries rankings and the explanation for their scores.

Mexico

Jordan

Egypt

Vietnam

Business Climate Costs Government Location Risks Social Stability Sourcing Guidelines Textile Industry Trade Agreements Trained Work-force Socio-eco-political

8 5 7 10 9 7 8 9 10 9 8

6 6 8 6 5 5 6 8 10 5 6

7 8 5 7 5.5 4 5.5 8.5 8 8 5.5

6 7 6 5 7 7 7 8 3 8.5 7

Total Average

90 8.2

71 6.5

72 6.5

71.5 6.5

B U S I N E S S C L I M AT E

GOVERNMENT:

Mexico: Mexico’s $2 trillion economy has quadrupled in size since 1994. The financial sector has become more competitive with a open and relatively stable banking industry and their foreign participation growing rapidly. With new workplace regulations and programs in place for maternity leave there are large signs for forward growth. Inflation rate is at 2.8%.

Mexico: Government is a democracy with a president and elects a new president every 6 years through universal suffrage and established branches of gov.. Crime and violence associated with politics and the governing party have recently seen an increase.

Egypt: Egypt eased requirements for starting a business. Has a high inflation of 10.2%, the business freedom ranking is 71.5 and their trade freedom ranking is 70.9. Government openness to international trade is above average Jordan: Beureacratic obstacles and delays effect business operations. Little momentum for reform. Trade is significant for Jordan’s economy. Negative inflation (-0.8%) - supply of goods are overall slightly higher than current demand. Vietnam: Inflation rate is 2.7%, Gdp growth is 6.7%, labor market remains relatively rigid, government regulates a wide variety of prices and subsidizes many stateowned enterprises, Trade is extremely important to Vietnam’s economy, Foreign investors may lease but not own land, and the lack of a well-developed legal system deters foreign investment, financial sectors continues to expand, lack of transparency

COST Mexico: Most expensive per unit in comparison to the other countries, however still cheapter than US manufacturing. No added tarrif costs Egypt: Low labor costs, also no duty in the QIZ regions. The cheapest cost of production of the 4 countries Jordan: Second to Mexico in terms of production costs per unit. Vietnam: Third to Mexico in terms of production per unit, duties and transportation costs are high compared to ther countries

Egypt: The judiciary has gained some autonomy but remains highly politicized. The government is a unitary semi-presidential republic that has a high level of corruption. The government integrity ranking is 32.2 which is slightly higher than Vietnam. Jordan: Government integrity and judicial effectiveness is trending in a positive direction. Run by a Monarchy. 62nd freest economy in the world. Vietnam: Government Integrity and judicial effectiveness is growing in a positive direction, Government is one-party system led by the Communist Party of Vietnam, Corruption and nepotism are rife within the party and state-owned companies

L O C AT I O N Mexico: Boarders the U.S. making it extremely easy to carry goods back and forth. Mexico also sits on two large bodies of water making it easy to transport by boat as well. Egypt: With multiple ports located along the Mediteraean sea it makes transporting to America’s east coast by boat fairly quick and direct. Jordan: Located in close proximity to Egypt. However, in order to access the Mediterranean - must go through Suez Canal which is a large added cost. Vietnam: Containers have to travel all the way through Pacific Ocean through the Panama Canal or through if the boat docks in California it must be transported by land to the east coast

RISKS

SOURCING GUIDELINES

Mexico: Somewhat unstable governement leading to occasionally leading to crime, violence, and hijacking. With the uncertainty of the future of NAFTA that could possible affect the future of the economy. Hurricanes could very occasionally effect coastal manufacturers.

Mexico: Many apparel manufacturers are focused on environmentally friendly practices as well as incorporating the most up to date technology. However, not all manufacturers accross different industries are all committed to incorporating environmental programs and advancing their technology.

Egypt: High terrorism risks, no natural disaster risks, and low education system in place but also an unstable government

Egypt: Previous issues with child labor laws, the textile industry has a trade association in place to regulate the factories within the country to make sure they maintain certain qualifications.

Jordan: Earthquake fault through the textile industry capital. High risk of flash floods and land slides. Flash floods occur annually. Most employees in textile industry are refugees. Vietnam: Natural disasters like earthquakes, occasional typhoons, and the rainy season occur annually, reacurring tensions with China, Government is unstable

S O C I A L S TA B I L I T Y Mexico: The country is lacking adequate housing and has a unemployment rate of 3.7% Huge educational improvements over the recent years, however there still room to grow. Actively promoting prorgams that discourage work place discrimination.

Jordan: Overall cultural and manufacturing values allign with our companies sourcing guidelines. In 2016, the United States removed Jordan from a list of countried who use child labor. Vietnam: Apparel manufacturers are focusing on sustainability and eco-friendly products as the government has implemented strict environmental protection laws, and levied fines up to US$88,000. Vietnam passed its new labor code in 2012 aiming to improve the labor market and industrial relations in the country. The government supports the industrial estates offering appealing tax incentives to foreign investors and international garment manufacturers.

Egypt: High unemployement rate at 12% and a high tax rate. The country is lacking adequate housing and education system and has a high poverty rate Jordan: 13.2% unemployment. Over 700,000 refugees. Tax rate is 13% of overall domestic income. Vietnam: Low unemployment rate is 2.2% and the income tax rate is 35% . The country is building a better education system by “Comprehensive Reform of Higher Education in Vietnam, 2006–2020”. Currently one of the most dynamic outbound student markets worldwide (UNESCO)

TEXTILE INUDSTRY

TRAINED WORK FORCE

Mexico: Extremely well developed, with a large emphasis on denim and over 2,000 denim manufactuers throughout Mexico. Currently 1/2 the jeans today sold in the US are made in Mexico. The denim industry provides more than 125,000 jobs in Mexico and is expected to grow continuously at 4% reaching 40.4 billion in 2022.

Mexico: Citizens must attend school through high school and Mexico is currently graduating 3x the number of engineering students than the U.S.

Egypt: Apparel sector accounts for 3% of GDP and 27% of the industrial output. Egypt has many favorable factors that have made it attractive in the global textile industry. Core areas for investment in Egypt are cotton cultivation, yarn making, spinning, weaving, dyeing, knitting, and RMG sectors. Jordan: Most apparel manufacturers main focus is activewear. Denim is specialized with specific manufacturers. Not very diverse. The textile industry makes up 95% of manufacturing industry in Jordan. Textile industry is 20% of the country’s GDP. Vietnam: Textile and Apparel industry represents 15% of the country’s GDP and 18% of its total exports in 2017. Provide over 2 million job opportunities overall. The industry benefits from the increasingly young skilled population as more people join the labor force. The basic wage of labor is $ 160-180 per month.

TRADE AGREEMENTS Mexico: NAFTA Egypt: 15 QIZ regions allowing free trade with the US. Also still depends on the relationship with Israel to allow the trade agreements to be effective Jordan: JOFTA - Free trade agreement with the USA Vietnam: No trade agreements with the USA but trade agreements with the ASEAN countries helps them source cheaper raw materials which would help US in the longer run.

Egypt: Egypt has adequate labor resource. Wages are competitive and stable. Government runs various training programmes, continuously upgrading the skill sets of the labors. Jordan: Minimum age for labor is 16. However, 70% of workers are nonJordinians. Training is something that is hard to keep up with when there is high unpredictablilty with refugees. Vietnam: Minimum age for labor is 16, 5% english proficiency, 10.40% skilled workforce,Compulsory education in Vietnam ended with the completion of elementary education at the age of eleven.

SOC-ECO-POLITICAL Mexico: The country is improving socially with new programs however there has recently been some violence related to the politics of the country. Economically the country is growing due to all their 44 trade agreements around the world. Egypt: Egypt is still considered a developing country. The country has seen improvements in terms of politcal and social stability after many years of unrest. The country is still experiencing high unemployment and high inflation rates that effect the overall score Jordan: Surrounded by political and social instability. Iraq, Syria and Irael/ Palestine are continuously dealing with social unrest and instability. Jordan stands against ISIS, but has refugees flleeing into the country on a daily basis. Jordanian governemnt is in the process of funding economic reforms. Vietnam: Economic growth is set to grow by +6.7% in 2018. Robust competitive advantages like cheap labour costs, support an expansion of manufacturing and exports. Vietnam is ranked 35th among 43 countries in the Asia–Pacific region.

1. MEXICO Based on research and comparison between Mexico and the other three countries ranked, Mexico was given an overall total score of 90/100 making Mexico the leading country between all four of our countries. The country today is continuously making advancements in all sectors of the country. The business climate is has quadrupled in size since 1994 helping the country to become a larger global player. NAFTA has helped significantly increase their economy and as a result, Mexico today has strong, and growing business industry. While the countries cost are low in comparison to the US, Mexico is becoming more and more modernized making their prices higher than some of the less advanced countries such as Jordan, Egypt or Vietnam. While the government has had some problems with crime and violence related to politics, the government is overall stable. Mexico is also an established democracy, allowing every citizen the chance to vote, which aligns Blu Jean’s values and beliefs. Mexico’s extremely close proximity to the US allows for easy transport, minimizes risk, and allows us to keep a closer eye on our products and the manufacturers. This close proximity also helps to cut down on our shipping time which is a huge benefit in comparison to the other three countries. While there are some minute risks that a potential American client must keep in mind, overall doing business in Mexico is relatively low risk. With the extremely close proximity, it’s easy to keep a close eye and monitor any possible risks. Currently the textile industry in Mexico is continuing to expand with much of Mexico’s textiles relating to denim. Mexico has great relationships with many of the biggest denim companies globally and has truly mastered the denim manufacturing process. The industry continues to make advancements to better the system. Many manufacturers are implementing more and more sustainable options to cut down on waste while using the latest technology to continue their efficiency and maintain quality. This technology is a huge pillar of their success and much of this is attributed to Mexico’s high number of engineers graduating and their skill workforce. Overall, Mexico is creating new programs to assist their citizens and are making new investments into their country to continue to become a larger global player.

2. EGYPT Based on research and analysis, Egypt was given an overall total ranking of 73/110 which was the second highest ranking of the four countries. After analyzing all the factors of doing business within the Middle Eastern country, it was proven to be a good choice when considering business relations. Egypt was given a 7/10 in terms of business climate, this is based on their overall country rankings regarding business freedom, foreign investment, import/export freedom, and the government openness to foreign relations. Egypt prides their industries on their foreign investment and incentives companies to maintain an open relationship with the U.S. specifically. Other factors for consideration were costs, trained labor force and the textile industry as a whole, which Egypt ranked higher in all of those specifically. The factors that Egypt ranked the least in were the government, socio-eco-political stability, and sourcing guidelines. In the past, Egypt has had high government corruption and political turmoil, but as of late has seen a slight increase in stability with the election of the newest president. Although Egypt has risks associated with it in terms of the stability of the government and terroristic threat, the apparel, textile, and cotton industry bring many opportunities. The textile industry is one of the largest and most sophisticated industries within the country and the workforce is highly trained in this sector. Another factor taken into consideration was the impact our company could have on the country and how we could benefit from doing business in Egypt. There is a large opportunity to make a local impact on the communities in which the business is embedded and the benefits outweigh the risks.

3. JORDAN Jordan’s business climate is ranked a six due to it bureaucratic obstacles and delays that affect business operations. There is slow momentum for governmental reform. However, trade is significant. The country currently has an overall supply of goods that are slightly higher than current demand. This is leading to a negative inflation rate of -0.8%. Costs are ranked a six due to its comparative cost of production per unit being relatively higher. The countries government integrity and judicial effectiveness is trending in a positive direction. Jordan is run by a Monarchy and has the 62nd freest economy in the world. The countries government is ranked an eight. Jordan is located in close proximity to Egypt. However, in order to access the Mediterranean, ships must go through the Suez Canal which is a large added cost. Due to the added costs and transportation, the countries location is ranked a six. Risks rank a five due to an earthquake fault which runs directly through the textile industry capital. This leads to a High risk of flash floods and landslides. Flash floods occur annually. Risk factors also include the fact that most employees in the textile industry are refugees. Social stability ranks a five due to a high rate (13.2%) of unemployment. The country houses over 700,000 refugees. The overall domestic tax rate is 13% of income. Sourcing guidelines rank a six due to the overall cultural and manufacturing values alignment with Blu Jean’s sourcing guidelines. In 2016, the United States removed Jordan from a list of countries who use child labor. The textile industry ranks an eight. Most apparel manufacturers main focus is activewear, however, denim is specialized with specific manufacturers. The textile industry makes up 95% of manufacturing industry in Jordan. The textile industry is 20% of the country’s GDP. Jordan’s trade agreements rank at a ten due to the countries free trade agreement with the United States ( JOFTA). Trained work force ranks at a five due to the following reasons. The minimum age for labor is 16. However, 70% of workers are nonJordanians. Training is something that is hard to keep up with when there is high unpredictability with refugees. The “socio-eco-political” of the country is shaped as follows. Jordan is surrounded by political and social instability. Iraq, Syria and Israel/Palestine are continuously dealing with social unrest and instability. Jordan stands against ISIS, but has refugees entering Jordan on a daily basis. Jordanian government is in the process of funding economic reforms in order to further support industry and manufacturing growth. Jordan’s overall country ranking is a 71.

4. VIETNAM Based on research and analysis, Vietnam was given an overall ranking of 71.5. Business climate is ranked a six due to its lack of well-developed legal system and lack of transparency within the government. The government is more stable than Egypt and Jordan. Trade is extremely important to Vietnam’s economy. The financial sector continues to expand. The inflation rate is 2.7% and the country GDP growth is 6.7%. Costs are ranked a seven due to its comparative cost of production per unit being higher. Duties and transportation to the US are higher than other countries. Vietnam is a communist party country and ranked 141st economy worldwide. The country’s government ranked a five. Vietnam is further away from all the other countries which further increases the lead times. The countries government integrity and judicial effectiveness is trending in a positive direction. Vietnam’s government is a communist party and ranked a five. Vietnam is located in far proximity to Egypt and Jordan. Containers have to travel all the way through Pacific Ocean through the Panama Canal or through if the boat docks in California it must be transported by land to the east coast which is a large added cost. Due to the added costs and transportation, the countries location is ranked a five. Risks rank a seven as there are many natural disasters like earthquakes, occasional typhoons, and the rainy season occur annually. Recurring tensions with China is also a risk for our business as it highly relies on China for sourcing raw materials. Social stability ranks a seven as the unemployment rate is only 2.2% and the income tax rate is 35% . The country is building a better education system by “Comprehensive Reform of Higher Education in Vietnam, 2006–2020”. Vietnam is one of the most dynamic outbound student markets worldwide (UNESCO). Trade agreements ranks a three as they don’t have any free trade agreements with the USA but with the ASEAN countries helps them source cheaper raw materials which would help Blu Jean in the long run. Trained workforce ranks at an eight due to the minimum age for labor is sixteen. The country has 5% English proficiency and 10.40% skilled workforce. Compulsory education in Vietnam ended with the completion of elementary education at the age of eleven. Socio-eco-political ranks a seven. Vietnam’s economic growth is set to grow by +6.7% in 2018. Robust competitive advantages like cheap labour costs, support an expansion of manufacturing and exports.Vietnam is ranked 35th among 43 countries in the Asia–Pacific region. Vietnam’s overall ranking is 71.5.

SUPPLIER RANKING Blu Jean has analyzed suppliers from each country and located each country’s top supplier. Mexico’s top supplier is Monty, Egypt’s is Lotus, Jordan’s is Classic Fashion and Vietnam’s is Phong Phu. Supplier rankings are based off of abilities, capacity, lead-time, quality, customers, sourcing guidelines and strategic outlook. The top suppliers align with our sourcing guidelines and navigate risk efficiently.

Abilities Capacity Lead-time Quality Customers Sourcing Guidelines Services Offered Strategic Outlook Total Average

Mexico Monty 9 7.6 9.5 9 9 8 9 10 71.1 8.89

Jordan Classic Fashion 9 7.5 7 7 8 6 6 5 55.5 6.94

Egypt Lotus 10 8.6 9 10 10 10 8 10

Vietnam Phong Phu 10 8.8 8

75.6 9.45

66.8 8.35

8 9 7 9 7

1. LOTUS Lotus Garments is one of the top suppliers in Egypt, serving as a fully vertically integrated manufacturer. Lotus specializes in denim garments and works with some of the top denim retailers in the world, such as Levi Strauss, Lee, and Wrangler. A key differentiator for Lotus Garments is their exceptional values in terms of sustainability, corporate social responsibility, and accreditations. They strive to achieve the best in the business and prove to be a reliable supplier in terms of high capacity, flexibility, and experience in denim. They’re also located in one of the fifteen QIZ regions and comply with all of the free trade requirements in order to make trade to the U.S. a cheaper experience. Lotus Garments meets our entire vision as a company and states, “At Lotus Garments Group, we respect and appreciate our people and customers, the communities in which we work, and the natural environment. We actively seek to make a positive contribution to the world around us by focusing on the way we work and live.”

2. MONTY Monty Industries, located on the east coast of Mexico is a large, vertically integrated, denim manufacturer with well known clients such as Polo Ralph Lauren, American Eagle, Eddie Bauer, L.L. Bean, Macy’s, Liz Claiborne, GAP, Tommy Hilfiger, Lucky Brand, and Levis. Using cutting edge technology and integrating sustainable practices into their manufacturing process makes this company a good fit for Blu Jean as it aligns with all of our sourcing guidelines. Their onstaff research and development team working to make constant improvements to the washing system and Monty’s on site certified lab ensuring quality really sets Monty apart from the other manufacturers and secures it a perfect 10 in the strategic outlook category. While Monty is either first or second in most categories, it is smaller in comparison to some of the other manufacturers who have a much larger capacity. However, the good highly outweigh the bad in terms of Monty and one large benefit of using them is their experience with children’s denim. Having their factory in Mexico makes it Blu Jean’s closet manufacturer will will allow us to keep an close eye on our products and will allow for a shorter transportation time.

3. PHONG PHU Phong Phu International is a denim manufacturer headquartered in Ho Chi Minh City. The manufacturer ranked third in comparison to the the other top manufacturers in the other three countries. The entire manufacturing facility is vertically integrated with specializing in producing all types of denim. Capacity ranked a eight as they can produce 38,000 garments per day. Lead time on average is between five to six weeks and is ranked a seven. Overall quality of Phong Phu ranks an eight as it is SA8000 Certified, WRAP Certified. They also invest in chemical laser and ozone technology to reduce water and energy to process garments. The company is also a member of the Better Work Vietnam, Higg Index program and Business Social Compliance Initiative. Customers consist of V F Jeanswear Ltd., Chicoâ&#x20AC;&#x2122;s, Levi Strauss, JC Penney and Quicksilver. Vietnamâ&#x20AC;&#x2122;s customers ranking is a nine. Sourcing guidelines outlined by the manufacturer rank a seven as they support measure environmental and social labour issues and uses laser tech and waterless practices for sustainability. The manufacturer offers many services including Knitting, Product Development, Sourcing, Sampling, Laundry and Pattern Making therefore services rank a nine. Strategic outlook ranks a seven due to their future plans for investing in environment impact measuring software from jeanologia and reduce water and energy to process garments. Overall, Phong Phu International ranks a sixty-seven.

4 . C L A S S I C FA S H I O N Based off our analysis, Classic Fashion Apparel Industry ranked 4th out of the top manufacturers . The manufacturing company ranked a nine in abilities due to its extensive line of capabilities. Denim shorts and pants are their top expertise. The entire manufacturing facility is vertically integrated. Capacity ranked a seven and a half due to their comparatively lower level of output, which is 25,000 garments per day. Lead time is on average six weeks and is ranked at a seven. Overall quality of Classic Fashion Apparel ranks at a seven. The manufacturer is a Gold Listed Company, and is a member of the Better Work Program, WRAP, and the Sustainable Apparel Coalition. The manufacturer lacks competitors certifications. Customers consist of One JeansWear Group, Nine West, Costo, Sears, JCPenney, Bandolino, Haggar and Greg Norman. Jordanâ&#x20AC;&#x2122;s customer ranking is an eight. Sourcing guidelines outlined by the manufacturer are limited and rank a six. The guidelines states the importance of equal opportunities, professionalism, leadership, and environmental consciousness. The manufacturer lacks detailed outlined sourcing guidelines. Basic vertically integrated services are offered. These services include cutting and sewing. finishing, washing and packaging. Services rank a six. Value added services, such as pattern making, is not provided at Classic Fashion. Strategic outlook ranks at a five due to their limited future plans. Their outlook consists of furthering management and operations development. The manufacturer lacks a strong strategic future outlook. Overall, Classic Fashion and Apparel Industry ranks fifty-five and a half.

MEXICO

EGYPT

Mexico Monty

Abilities Capacity Lead-time

Quality

7.6 9.5

Explanation Vertically integrated, does everything from sourcing, cut, sewing, making, and specialized washing. Also has experience with children's garments. Focuses on denim (pants, dresses, jackets, shorts, shirts)

26,250 a/day (between two factories)

3-4 weeks

Excellent, on site certificed labratory to ensure quality is met

Polo Raph Lauren, American Eagle, Eddie Bauer, L.L. Bean, Macy's, Liz Claiborne, GAP, Tommy Hilfiger, Lucky Brand, Levis

Customers

Global Denim Explanation

Have their own waste water treatment plant that complies with standards required by environmental norms.

Services Offered

Strategic Outlook

They have an onstaff research and development team constantly making improvements to washing systems as well as a certified lab to ensure products meet quality standard requirements

Egypt

Explanation Vertically integrated congolomerate that produces acrylic fiber, yarn, fabrics, clothing, and home textile products. Also has the ability to make products outside of just denim

9.5 8

20,000 a/day

7 10

3 weeks

Perminent, 4 point quality control system

Good, ISO-9001-2209 certified quality control

Explanation

T&C

Explanation

Dice

Explanation

vertically integrated in denim, also capable of producing other garments as well

Capacity

8.6

36,000/day

7.5

500,000/month (25,000 /day)

50,000 per day

4 weeks

7-8 weeks

ISO 9001, ISO 14001, ISO 18001, WRAP, OHSAS 18801, GSV, Sustainable Apparel Coalition certified

ISO 9001 Certified, BSCI, WRAP, OHSAS 18001

Wrangler, Lee. Levis, Chaps, Polo Ralph Lauren

Levi, Calvin Klein, Nike, American Eagle

Target, Macy's, Calvin Klein, Levi's

Many certifications and complete sustainability in all aspects. Utilize environmentally friendly practices, when it comes to chemicals, waste, energy, water, and recycling. Also have a in-depth code of conduct, practice fair trade, workers well-being. Also, Use laser tech and waterless practices for sustainability. Overall exceed our company expectations and sourcing guidelines

many certifications, not as transparent with additional sustainability practices. Meets the Levi Strauss certification standards

Many certifications, offer child care, free transportation, ethical work environment. Commitment to Human Rights Standards, and Ethical Trade Initiative(ETI) Offer a medical clinic, life insurance, health insurance

Offers germent design, sampling, trendy wash development, fabric & trim sourcing, cut, sew, make, packaging and labeling. Also offer printing, embroiddory, lace detailing and additional services

Offers germent design, sampling, trendy wash development, fabric & trim sourcing, cut, sew, make, packaging and labeling

Innovative outlook, invested in R&D but not transparent with the future outlook of the company

Constantly looking for expansion through aquisitions. Invested heavily in R&D as well as efficient supply chain tactics

20,000 a/day

3-4 weeks

Levis

Lotus

Abilities

Lead-time

Sourcing Guidelines

Offers germent design, sampling, trendy wash development, fabric & trim sourcing, cut, sew, make, packaging and labeling, EDI/ASN capable. In the garment process Monty offers dry process, laser, ozone, and washing

Vertically Integrated, takes the cotton raw and turns it into denim, focuses only on denim products

Kaltex

Levi Strauss & Co, Groupo M

Quality Customers

Have their own on site hydroelectic power plant, thermo electrical power plant, and recycled water treatment plant. As well as ongoing programs for sosa recovery, gradual replacement of chemicals and dyes, and reduction programs in waste generation

Offer garment design, sampling, and development, comprehensive prorcess including spinning, dyeing, weaving, and finishing.

ISO 14000 certifed, Have an onsite water treatment plant, a gas turbine, reduction of chemicals, developed a high quality ecologic yarn made of recylced cotton and PET fibers

Sourcing Guidelines

Offer service design and manufacturing but don't mention any other services offered. Not as sophisticated as other manufacturers

Offers germent design, sampling, trendy wash development, fabric & trim sourcing, cut, sew, make, packaging and labeling

Extremely invested in R&D to better the company in terms of sustainability and effeciency. Constantly innovating and looking for ways to better the company in the future. Use the top technology to produce a more cohesive supply chain

Services Offered

Extremely commited to sustainablity practices with an onsite water treatement and other recycling programs

Extremely environmentally friendly and focuses on three main aspect, water management, energy management, and waste management. Have programs in place to make improvements in all of these categories

Strategic Outlook

iSO 9001, ISO 14001, WRAP, OHSAS 18801, GSV, GOTS, Oeko-Tex Standard 100

Total

Average

9.5

8.5

6.5

Average

JORDAN

VIETNAM

Jordan Jerash Garments & Fashions

Galaxy

Vietnam

Classic Fashion

Nien Shing

Abilities

Not as an extensive line of abilites. Capable and do manufacture denim, but it is not their top specialty. Vertically integrated.

Capacity

6.9

19,000 garments a day

6.5

15,000-16,000 a day

7.5

25,000

7 weeks

8 weeks

6 weeks

Quality

WRAP, C-TPAT, GSC, SQP, Gold Listed.

Better Work Program, Social & Ethical Standards, WRAP, GSV, ISO, FCCA, C-TPAT

Gold Listed Company, Better Work Program, WRAP, Sustainable Apparel Coalition

Walmart, Columbia, Land's End, VF Corporation, PVH, Costco, Seasrs, Hanes

One Jeans Wear Group, Nine West, Costo, Sears, JCPenny, Bandolino, Haggar and Greg Norman

Lead-time Quality

Customers

Sourcing Guidelines

Services Offered

Strategic Outlook Total

5 53.9

No child labor, inclusion & diversity, safe workplace, high quality standards

Somewhat an extensive line of abilites. Capable and do manufacture denim, but it is not their top specialty. Vertically integrated.

Extensive line of capabilites and denim shorts and pants is their top expertise. Vertically integrated.

cutting and embriodery. finshing, washing, packaging. basic vertical integration.

Management and operations development

5 54.5

Walmart, Sears, Jordache, Columbia, Umbro, Perry Ellis Preservation of the environment, health & safety standards, quality, responsibility, efficiency, respect

cutting and sewing. finshing, washing, packaging. basic vertical integration.

Management and operations development

Equal Opportunities, professionalism, leadership, environmentally concious cutting and sewing. finshing, washing, packaging. basic vertical integration.

Explanation

Phong Phu

Explanation

Vertical Integrated in denim & bottom and knitted fabrics. Converting fabric into high quality apparels as Jeans wear, Work Wear, Casual Wear and Knit wear

Viet Hong

Explanation

Specializes in denim. Types like Classic denim, Comfort stretch, Super stretch, Flat denim, Green denim

Abilities

Vertical Integrated, Also produces Denim, Knit Garments, Jeans, Yarn

Capacity

7.5

25,000 per day

8.8

38,000 units per day

30,000 units per day

Lead-time

7.5

5-6 weeks

5 weeks

7.5

5-6 weeks

Minimum certification, but good clients

Excellent High quality, SA 8000 Certified

Decent high quality, ISO 9001:2008

Abercrombie & Fitch, American Eagle outfitters, BJ's, Levi's strauss & co. , Old navy, Kohl's, Gap, Tommy Hilfiger

V F Jeanswear Ltd., Chicoâ&#x20AC;&#x2122;s Retail Services, Levi Strauss and co., JC Penney Purchasing Corp., Quicksilver Americas Inc.

Express, KOHLâ&#x20AC;&#x2122;S, New York & Company, Mixxo, Perry Ellis, John henry

Complete Sustainability in all aspects but not very transparent with additional information

Reduce water footprint, joining the Higg Index program in order to measure environmental and social labour impact

Adaptation, Flexibility, and Consistency Yarn Forward, High commitment, Passion for denim

Offers many services like Knitting, Sewing, Washing, Cutting, Weaving, Trendy denim washes

Offers many services like Product development, Sourcing, Sampling, Denim, Sewing, Knitting, Cutting, Laundry, Pattern making

7.5

Offers services like washing, Cutting, Sewing, Weaving, Mercerizing, Sanforizing and Designing

Latest in ecological & technological advancement, water less management, Employee benefits, Constant improvement

Investing in environment impact measuring software from jeanologia, Reduce water and energy to process garments

Investing in better machinery and high commitment to maintain the consistency of products

Customers

Sourcing Guidelines

Services Offered

Strategic Outlook

Total

66.8

Average

7.88

8.35

7.38

Management and operations development

55.5

100

101

Blu Jean

LINEPLAN

LINE PLAN

SEASON

STYLE # NAME

SP/SU JAN Quantities

Total

Skinny 11002 Boot 11003 Flare 11004 Short 11001

35% 27% 23% 15% 100%

14000 10000 8000 8000

Fall/Winter 2020

FEB

SUMMER MAR

APR

MAY

Quantities

Product Line: Little Girls Denim Bottoms (Skinny, Boot, Flare, Shorts) 40000 Price Point: Skinny, Boot, Flare- $49.99 USD | Shorts- $34.99 USD Product Requirements: Compliance with sourcing guidelines and Blu Jean product quality LINE PLAN SEASON Fall/Winter 2020 Seasonality: Skinny/Boot/FlarePeak season is during July/AugustFall/ during “Back to School” shopping season with higher quantities beingWinter SP/SU SUMMER HOLIDAY STYLE # NAME Total JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL ordered, the average quantities Quantities will beQuantities ordered in Fall/Spring, and theQuantities Quantities Quantities Quantities Quantities Quantities Quantities Quantities Quantities Quantities smallest quantity in Winter/Summer. 11001will Skinnybe ordered 35% 14000 17000 25000 27000 15000 22000 39000 44000 26000 31000 43000 47000 350000 11002 Boot 10000 14000 20000 20000 11500smaller 17000 30500 33000 20000 24000 33000 37000 270000 Shorts- Peak throughout the27% Spring/Summer months and see 11003 Flare 23% 8000 11000 17000 18000 9000 14000 28000 30000 18000 21000 27000 29000 230000 order numbers 11004 in Fall/Winter. Short 15% 8000 9000 13000 15000 17000 17000 15000 14000 10000 9000 11000 12000 150000 100%

40000

51000

75000

80000

52500

70000

112500

121000

74000

85000

114000

125000

17000 14000 11000 9000 51000

25000 20000 17000 13000 75000

JUN

Fall/ Winter JUL

AUG

SEP

OCT

HOLI NOV

Quantities

Quanti

27000 20000 18000

15000 11500 9000

22000 17000 14000

15000 80000

17000 52500

17000 70000

39000 30500 28000 15000 112500

44000 33000 30000 14000 121000

Retail

Retail Total

Cost

Per Unit

Total

Per Unit

Total

$ 17,496,500.00 $ 13,497,300.00 $ 11,497,700.00 $ 5,248,500.00 $ 11,935,000.00

$ 3.89 $ 4.91 $ 4.72 $ 3.71 $ 4.31

$ 1,361,500.00 $ 1,325,700.00 $ 1,085,600.00 $ 556,500.00 $ 1,082,325.00

$ 46.10 $ 45.08 $ 45.27 $ 31.28 $ 41.93

Average

$ 49.99 $ 49.99 $ 49.99 $ 34.99 1000000 $ 46.24

Average

102

Margin

26000 20000 18000 10000

74000

31000 24000 21000 9000

85000

Margin % 0.078 0.10 0.09 0.11 0.094 Average

103

PLACEMENT S T R AT E G Y Our placement strategies analyze three different placement scenarios. An analysis was run on the amount of product that would be produced in Egypt, Mexico, Vietnam and Jordan. Proximity, costs, lead time, risk and capacity are a few of the categories that were assessed and compared. Each placement strategy will further be discussed in this section. â&#x20AC;&#x153;Strategy oneâ&#x20AC;? is the final placement strategy that Blu Jean will be executing. In this strategy, Jordan has been eliminated in order to minimize risk and maximize efficiency.

blu jean

104

105

Strategy 2

Total Units

(

1,000,000 ) (

Retail Cost per Unit Margin %

( ($ ($ ($

($ ($ ($

Egypt Lotus Garment Skinny Boot 200,000) ( - ) ( 49.99) ($ 3.89) ($ 46.10) ($ 92.22%

Total Retail Total Purchase Total Margins

($ 47,740,000 ) ($9,998,000.00 ) ($ ($ 4,245,696 ) ($ 778,000.00 ) ($ ($ 43,494,304 ) ($ 9,220,000.00 ) ($

Avg Retail Avg Purchase Avg Margins Avg Margins %

($ ($ ($

47.74) 4.25) 43.49) 91.11%

Avg Cost/Unit ($

3.94)

Mexico Skinny 50,000) ( 49.99) ($ 4.83) ($ 45.16) ($ 90.34%

Monty Boot 170,000) ( 49.99) ($ 4.91) ($ 45.08) ($ 90.17%

Flare 110,000) ( 49.99) ($ 5.01) ($ 44.98) ($ 89.98%

49.99) ($ 3.93) ($ 46.06) ($ 92.13%

Flare 40,000) ( 49.99) ($ 4.21) ($ 45.78) ($ 91.58%

34.99) ($ 4.32) ($ 30.67) ($ 87.65%

34.99) ($ 3.45) ($ 31.54) ($ 90.14%

Mexico Skinny 50,000) ( 49.99) ($ 4.83) ($ 45.16) ($ 90.34%

Monty Boot 170,000) ( 49.99) ($ 4.91) ($ 45.08) ($ 90.17%

Flare 110,000) ( 49.99) ($ 5.01) ($ 44.98) ($ 89.98%

Short 30,000) ( 34.99) ($ 4.32) ($ 30.67) ($ 87.65%

Vietnam Skinny 100,000)

S T R AT E G Y 1

49.99) 4.20) 45.79) 91.60%

For our first placement strategy we will place production in Egypt, Mexico and Vietnam. Egypt’s manufacturer, Lotus Garments, will produce 200,000 skinny jeans, 40,000 flare, and 60,000 shorts. In total, 300,000 units will be produced in Egypt. Mexico’s manufacturer, Monty, will produce 50,000 skinny, 170,000 boot-cut, 110,000 flare and 30,000 shorts. In total, Mexico will produce 360,000 units. Vietnam’s manufacturer, 4.2 Phong Phu, will produce 100,000 skinny, 100,000 boot4.91 cut, 80,000 flare and 60,000 shorts. In total, 340,000 units will be produced in Vietnam. In total, 1,000,000 units will be produced. Mexico ranked the highest in our country ranking analysis. Due to this, they will have the highest production rate. Mexico is closest in proximity and our supplier heavily mets our guidelines. With most of our product Reasoning: being in Mexico, we will be able to navigate risk more efficiently. Due to - Mexico got the highest country ranking the countries close proximity there will be lower holding and inventory - mexico is close costs due to a quicker lead time and inventory turnover rate. Vietnam - suppliers heavily meet our guidelines - Vietnam has cheap labor and has a slightly country ranking over Jordan (that's why we cut Jordan) hashigher the cheapest labor in comparison to the three countries. Vietnam - Highest margin for bootcut (out of everything), gave them a significant amount of bootcut has from theChinahighest margin - Vietnam has access to cost effective materials through their trade agreement for bootcut. Due to this, we gave Vietnam a - less risk significant amount of bootcut jeans. The countries close proximity to - meets our sourcing guidelines - based on risk ranking (Mexico, Egypt, Vietnam) China allows for quick access to cheap manufacturing materials. Egypt - putting it in Mexico you can manage risk better has faster lead time than Vietnam and a better supplier ranking. - better manage mexico's political situation betterabecuase they're close - balance cost between best margins and least risk Egypt’s manufacturers can produce more in a shorter amount of time - how does it meet our company values, sourcing guidelines - want to keep good partnerships close due to home to a high capacity.

- ) ($ 1,999,600.00 ) ($ 2,099,400.00 ) ($ 2,499,500.00 ) ($ 8,498,300.00 ) ($ 5,498,900.00 ) ($ 1,049,700.00 ) ($ 4,999,000.00 ) - ) ($ 168,400.00 ) ($ 207,000.00 ) ($ 241,500.00 ) ($ 835,346.00 ) ($ 551,100.00 ) ($ 129,600.00 ) ($ 420,000.00 ) - ) ($ 1,831,200.00 ) ($ 1,892,400.00 ) ($ 2,258,000.00 ) ($ 7,662,954.00 ) ($ 4,947,800.00 ) ($ 920,100.00 ) ($ 4,579,000.00 )

3.89

Short 30,000) (

Short 60,000) (

3.45

Vietnam Skinny 100,000) ( 49.99) ($ 4.20) ($ 45.79) ($ 91.60%

Phong Phu Boot 100,000) ( 49.99) ($ 3.47) ($ 46.52) ($ 93.07%

Flare 80,000) (

Short 60,000)

49.99) ($ 4.32) ($ 45.67) ($ 91.36%

34.99) 3.71) 31.28) 89.40%

($ 2,499,500.00 ) ($ 8,498,300.00 ) ($ 5,498,900.00 ) ($ 1,049,700.00 ) ($ 4,999,000.00 ) ($ 4,999,000.00 ) ($ 3,999,200.00 ) ($ ($ 241,500.00 ) ($ 835,346.00 ) ($ 551,100.00 ) ($ 129,600.00 ) ($ 420,000.00 ) ($ 346,550.00 ) ($ 345,600.00 ) ($ ($ 2,258,000.00 ) ($ 7,662,954.00 ) ($ 4,947,800.00 ) ($ 920,100.00 ) ($ 4,579,000.00 ) ($ 4,652,450.00 ) ($ 3,653,600.00 ) ($

2,099,400.00 ) 222,600.00 ) 1,876,800.00 )

- MANAGE RISK - how is it going to accomidate you to the future

4.91

4.2

3.47

3.71

- Gave mexico some of each style to manage risk so we can ensure that we have some of each sytle - Mexico close proximity - lower holding and inventory costs due to quicker invenotry turnover - less liability - quicker turnover - less shipping time - gave Eygpt more than Vietnam becuase they have a faster lead time, better supplier ranking, higher capacity - Egypt can make more in a short amount of time - Egypt has a higher capcaity than Vietnam

106

107

Strategy 1

Total Units

(

1,000,000 ) (

Retail Cost per Unit Margin %

49.99) ($ 3.89) ($ 46.10) ($ 92.22%

($ 47,740,000 ) ($ 15,996,800.00 )($ ($ 4,098,202 ) ($1,244,800.00 ) ($ ($ 43,641,798 ) ($ 14,752,000.00 )($

Avg Retail Avg Purchase Avg Margins Avg Margins %

($ ($ ($

Avg Cost/Unit

4.15) 3.89

Monty Boot 150,000)

Flare

(

($ ($ ($

Total Retail Total Purchase Total Margins

Mexico Skinny

($ ($ ($

Egypt Lotus Garment Skinny Boot 320,000)

Flare (

- ) (

Mexico Skinny (

Monty Boot 150,000)

- ) ($ - ) ($ - ) ($

- ) ($2,099,400.00 ) ($ - ) ($ 207,000.00 ) ($ - ) ($ 1,892,400.00 ) ($

- ) ($ 7,498,500.00 ) ($ - ) ($ 737,070.00 ) ($ - ) ($ 6,761,430.00 )($

3.45

Short 90,000) (

4.91

Jordan Classic Fashion Skinny Boot 30,000) ( 240,000) ( 49.99) ($ 3.93) ($ 46.06) ($ 92.14%

Flare 110,000) (

4.53

3.93

Short - )

49.99) ($ 34.99) 4.02) ($ 4.02) 45.97) ($ 30.97) 91.96% 88.51%

- ) ($ 3,149,100.00 ) ($ 1,499,700.00 ) ($ 11,997,600.00 )($ 5,498,900.00 ) ($ - ) ($ 388,800.00 ) ($ 135,900.00 ) ($ 942,432.00 ) ($ 442,200.00 ) ($ - ) ($ 2,760,300.00 ) ($ 1,363,800.00 ) ($ 11,055,168.00 )($ 5,056,700.00 ) ($

4.32

(

Short 90,000) (

Jordan Classic Fashion Skinny Boot 30,000) ( 240,000)

- ) - ) - )

S T R AT E G Y 2

49.99) 3.93) 46.06) 92.14%

The following placement strategy highlights Egypt, Mexico, and Jordan, as the three countries in consideration for sourcing the four key products. The initial reason for cutting Vietnam was considering their lack of Free Trade Agreements with the United States, causing high amounts of tariffs and quotas on imports. When breaking down the number of garments produced through each country, we focused on maintaining 4.32 4.53 3.93 the highest profit margin and the focusing on suppliers with the highest capacity. Egypt received the highest amount of product produced, due to a high capacity, cheap production cost, higher margins in certain garments, and factoring in the Lotus Garment supplier ranking being the number 1 overall. Jordan was given the second highest number of garments, specializing in the three pants due to profit margins, supplier ranking, and also considering the high shipping cost, making Reasoning: - cutting vietnam becuse it's furthestit away and tarriffs more valuable to ship a larger number of garments in a container to - Vietnam ranks the lowest make per item cheaper. Lastly, Mexico was given the lowest - Reason we didn't give Mexico as much becuase the Margins cost were higher in Egypt and Mexico - Egypt had high capacity number of products to produce, due to having the highest cost and the - Giving Jordan more becuase their shipping is so much might as well give them a lot to ship if we're paying for a container lowest profit margins. Mexico will focus a majority of its production on the shorts, as they are highly seasonal, and the demand can fluctuate greatly. Mexico has the smallest lead time and a closer proximity to the U.S. making it easier to meet the changing demands of the company. This overall strategy focused heavily on price, profitability, country/ supplier rankings, and achieving the highest profit margin while producing in these three countries.

- ) ($ 7,498,500.00 ) ($ - ) ($ 737,070.00 ) ($ - ) ($ 6,761,430.00 )($

47.74) 4.10) 43.64) 91.42%

(

Flare

49.99) ($ 49.99) ($ 34.99) ($ 49.99) ($ 49.99) ($ 49.99) ($ 34.99) ($ 49.99) ($ 3.93) ($ 4.21) ($ 3.45) ($ 4.83) ($ 4.91) ($ 5.01) ($ 4.32) ($ 4.53) ($ 46.06) ($ 45.78) ($ 31.54) ($ 45.16) ($ 45.08) ($ 44.98) ($ 30.67) ($ 45.46) ($ 92.13% 91.58% 90.14% 90.34% 90.17% 89.98% 87.65% 90.94%

49.99) ($ 49.99) ($ 49.99) ($ 34.99) ($ 49.99) ($ 4.83) ($ 4.91) ($ 5.01) ($ 4.32) ($ 4.53) ($ 45.16) ($ 45.08) ($ 44.98) ($ 30.67) ($ 45.46) ($ 90.34% 90.17% 89.98% 87.65% 90.94%

4.91

Short 60,000)

- ) ($ 3,149,100.00 ) ($ 1,499,700.00 ) ($ 11,997,600.00 ) - ) ($ 388,800.00 ) ($ 135,900.00 ) ($ 942,432.00 ) - ) ($ 2,760,300.00 ) ($ 1,363,800.00 ) ($ 11,055,168.00 )

4.02

108

109

Strategy Three

Total Units

(

1,000,000 ) (

Retail Cost per Unit Margin %

($ ($ ($

49.99) ($ 3.93) ($ 46.06) ($ 92.13% - ) ($ - ) ($ - ) ($

($ ($ ($

47,740,000 ) ($ 9,998,000.00 ) ($ 4,009,185 ) ($ 778,000.00 ) ($ 43,730,815 ) ($ 9,220,000.00 ) ($

Avg Retail Avg Purchase Avg Margins Avg Margins %

($ ($ ($

47.74) 4.01) 43.73) 91.60%

Avg Cost/Unit

4.17)

Monty Boot

49.99) ($ 4.83) ($ 45.16) ($ 90.34%

49.99) ($ 4.91) ($ 45.08) ($ 90.17%

498,500.00 ) ($ 724,500.00 ) ($ 774,000.00 ) ($

(

Flare 90,000)

Flare 20,000) (

Short 150,000) (

49.99) ($ 4.21) ($ 45.78) ($ 91.58%

34.99) ($ 3.45) ($ 31.54) ($ 90.14%

4.21

Vietnam Skinny

Short

(

34.99) ($ 4.32) ($ 30.67) ($ 87.65%

- ) ($ 4,499,100.00 ) ($ - ) ($ 450,900.00 ) ($ - ) ($ 4,048,200.00 ) ($

- ) ($ - ) ($ - ) ($

Mexico Skinny 150,000)

Monty Boot

49.99) ($ 4.83) ($ 45.16) ($ 90.34%

49.99) ($ 4.91) ($ 45.08) ($ 90.17%

999,800.00 ) ($ 5,248,500.00 ) ($ 7,498,500.00 ) ($ 84,200.00 ) ($ 517,500.00 ) ($ 724,500.00 ) ($ 915,600.00 ) ($ 4,731,000.00 ) ($ 6,774,000.00 ) ($

3.89

49.99) ($ 5.01) ($ 44.98) ($ 89.98%

5.01

(

49.99) ($ 3.89) ($ 46.10) ($ 92.22%

Total Retail Total Purchase Total Margins

Mexico Skinny 150,000)

4.83

Egypt Lotus Garment Skinny Boot 200,000)

49.99) ($ 4.20) ($ 45.79) ($ 91.60%

Phong Phu Boot 270,000) (

3.45

Flare 120,000)

4.83

Short

49.99) ($ 3.47) ($ 46.52) ($ 93.07%

49.99) ($ 4.32) ($ 45.67) ($ 91.36%

34.99) 3.71) 31.28) 89.40%

- ) ($ 13,497,300.00 ) ($ - ) ($ 935,685.00 ) ($ - ) ($ 12,561,615.00 ) ($

5,998,800.00 ) ($ 518,400.00 ) ($ 5,480,400.00 ) ($

- ) - ) - )

3.47

(

Flare 90,000) 49.99) ($ 5.01) ($ 44.98) ($ 89.98%

Short

34.99) 4.32) 30.67) 87.65%

S T R AT E G Y 3

For our third placement strategy we will place production in Egypt, Mexico and Vietnam. Egypt’s manufacturer, Lotus Garments will - ) ($ 4,499,100.00 ) ($ - )200,000 skinny jeans, 20,000 flare and 150,000 shorts. In produce - ) ($ 450,900.00 ) ($ - ) total, 370,000 units will be produced in Egypt. Mexico’s manufacturer - ) ($ 4,048,200.00 ) ($ - ) Monty will produce 150,000 skinny jeans and 90,000 flare jeans. In total, 240,000 units will be produced in Mexico. Vietnam;s manufacturer, Phong Phu will produce 270,000 boot-cut jeans and 120,000 flare jeans. In total, 390,000 unit will be produced in vietnam. In total, 5.01 1,000,000 units will be produced. Vietnam and Egypt ranked similar in our country ranking analysis. Due to this, they will have the highest production rate and cheaper labour compared to mexico. With most of our product being in Vietnam and Egypt, we will be able to distribute risks and manage cheaper labour. Due to the countries close proximity Reasoning: - Egypt got the second highest becuasewill their supplier got the best holding ranking there be lower and inventory costs due to a quicker lead - Focused on highest margin time and inventory turnover rate. Vietnam has the cheapest labor - gives us the best margin comparison toamount theto Egypt three countries. also - Skinny jeans are the mostin important so we're giving a large becuase they have the best Vietnam supplier and has the largest has capacitythe highest - why we cut out Jordan? margin for bootcut. Due to this, we gave Vietnam a huge amount of - What's the risk beteween Egypt and Vietnam bootcut The - giving Vietnam the most becuase they arejeans. less risk than Egypt countries close proximity to China allows for quick - how are you going to manage your risk access to cheap manufacturing materials. Egypt has a faster lead time - give mexico more (less risk) than Vietnam and a better supplier ranking. Egypt’s manufacturers can produce more in a shorter amount of time due to a high capacity. We gave mexico a lesser units to produce due to expensive labor.

4.32

110

111

WA R E H O U S E & DISTRIBUTION distribution ranking

112

113

DISTRIBUTION S T R AT E G Y The warehousing and distribution strategies allowed us to compare and contrast different distribution companies that Blu Jean could use to distribute our product across the countries to our end consumer. A distribution company that had a fast turnaround time and experience with ecommerce and apparel was prioritized when deciding on a final strategy. After ranking each company and analyzing their services, we decided eFulfillment Service, despite receiving the lowest score, would be the best distributor to partner with. Although eFulfillment Service is the smallest distributor we looked at, they offered personalized service and had extensive experience in start-ups and small to medium size ecommerce companies. They demonstrated a willingness to work with us and expressed their interest in growing with us as a customer. Another large plus is that they offered competitive prices and with no minimum order requirement, no start-up costs, and no long term contracts. Although the other distributors also have extensive experience, we believe eFulfillment Service will be the best option for where Blu Jean is today.

eFulfillment Service XPO Logistics

NFI

GEODIS

Inventory Management

Order Turn Around

Pick and Pack

Value Added Services

Costs

Size

Customers

Multiple Locations

Location

Total

Average

7.6

9.2

9.3

114

115

INVENTORY MANAGEMENT eFulliment Service: Inventory Monitoring, monitoring of orders and shipments, 24/7 access to inventory reports + forecasted inventory needs, warehouse Management, return, processing, price tagging, inventory alerts, view backorders/ invoices, manage shopping Cart integrations, using FCP, web based fulfillment software (proprietary software) XPO Logistics: Omni-channel fulfillment, warehousing and distribution, returns management and processing, vendor managed inventory, demand planning and procurement, ecommerce fulfillment information, automated and rfid tracking, just in time inventory management, real-time transaction processing, mobile and web based tracking, integrated staatus resporting, in house proprietory software. NFI: In house IT management software, Warehousing, Cross-Docking Services, Warehouse Optimization, Fulfillment, Flexible Space Managment, E-commerce support, Proactive factory/vendor monitoring, Supplier negotiation, Order Management, Product Managment, Document Management GEODIS: Inventory Monitoring, Warehouse Management, Inventory Alerts, Supply Chain Optimization, Freight Forwarding, Contract Logistics, Distribution & Express and Road Transport, Customs management, Return logistics, Return Processing, E-commerce fulfillment information

ORDER TURN AROUND eFulliment Service: 24 hours XPO Logistics: 24 hours NFI: 24 hours GEODIS: 24 hours

P I C K A N D PAC K eFulliment Service: Scan & Receive, Organizing, Packaging, Distribution XPO Logistics: Chose the box, picking the cushion for inside the box, sealing and labeling the package, palletize or crate depending on size and shape NFI: Recieve, Sorting and Organization, Repackaging (with fees), Distribution E-Commerce packing GEODIS: Automated apparel picking and shipping product in appropriately sized cartons, Packing, Distribution, Organizing

VA L U E A D D E D S E R V I C E eFulliment Service: Order Returns Processing, Custom Technology Projects, Kitting/ Light Assemble, 24 hour security, IT disaster recovery plan, One on One Support XPO Logistics: Factory support - kitting and sub assembly, design and development for packing solutions, aftermarket support with cost saving solutions, transportation management with 4PL solutions, rfid NFI: Freight Consolidation, Kitting, Labeling, Point-of-purchase display, Reverse Logistics, Ticketing/Tagging, Quality Control, Foreign Trade Zone, Bonded Warehousing, Transloading, SmartWay Program (with EPA), RFP tender management, Consulting and Analytics, Full Visibility including tracking, reporting, and milestone management, sustainable distributing GEODIS: Transportation services, Personalized packing, Carbon Footprint Reduction, Labeling to customer specified conditions and formats, Price labelling, Unpacking and ready for shelf product handover, Ironing for clothes on hanger, reliable aftersales service, consistent with your image, quality control, price labeling and relabeling, Product repackaging, Product seam adjustments, Checks on product reception at port or airport, Checks on platform prior to delivery to store and delivery with drivers trained on customer specifications, Sustainable distribution

116

117

COST

CUSTOMERS

eFulliment Service: No Setup costs, no minimum order requirements, no longterm contracts, Account Management & FCP Access: $22.50, Inventory Storage & Management: $0.09 per cubic foot/ week, Receiving: $8.95 per half hours Returns Processing: $2.65/ package + $0.55 per item Pick and Pack: 0-500 orders a month: $2.00 501-1,000 orders a month: $2.10 1,001- 3,000 orders a month: $1.90 3,001-5,000 orders a month: $1.70 5,001-10,000 orders a month: $1.50 10,000+ orders a month: $1.25

eFulliment Service: Walmart, Ebay, and many apparel brands, experience with startups and small and midsize online sellers

XPO Logistics: Based on dimension and weight and miles driven for transportation costs NFI: Warehouse setup fee: $2500 , Warehousing cost: $0.55, Outgoing Distribution Per Order: $3.15 GEODIS: Develops individual solutions for each customer as per dimensions, weight and miles driven for transportation costs

SIZE eFulliment Service: 200,000 sq ft XPO Logistics: 173 million sq feet of facility space NFI: 41.5 million square feet of public and contract warehouse space GEODIS: Presence over 140 locations in North America

XPO Logistics: 50,000 customers Industries serviced: aerospace, technology, omni-channel retail, food and beverage, government, consumer packaged, healthcare - Customers include: Home Depot, whirlpool, Lowes NFI: Oceanspray, Crest, Walmart, Amazon, CPG, Retail, E-commerce, Tech, Industrial, Beverages, Specialty Chemicals, Food Manufacturing, Auto, Healthcare, Apparel, Drug Store, Aerospace & Defense GEODIS: Duluth Trading, Kohlâ&#x20AC;&#x2122;s, Coldwater Creek, Stitch Fix, Burlington, Vineyard Vines, 150,000 customers

M U LT I P L E L O C AT I O N S eFulliment Service: One Location XPO Logistics: 845 in North America NFI: 250 Locations throughout the U.S. & Canada. Located alongside the coast near many port cities and major hubs, Nashville, Greensboro, Jacksonville, Chicago, Newark, etc. GEODIS: Operate over 140 locations in North America, 90 of which are shareduse, multi-client facilities, All across US.

L O C AT I O N eFulliment Service: Traverse City, MI XPO Logistics: Headquartered in Greenwhich, CT NFI: Headquarters in Cherry Hill, NJ Has a location in Savannah, GA GEODIS: Headquartered in Europe, has a location in Savannah, GA

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119

EFULFILLMENT SERVICE

XPO LOGISTICS

Although eFulfillment Service is the smallest distributor out of the 4 compared, received the lowest score, this distributor still offers Blu Jean significant opportunity to work one on one and receive individualized attention. eFulfillment Service is a distribution center located in Traverse City, Michigan that specializes in small start up companies and does purley ecommerce fulfilment. While their company may not have multiple locations around the globe or their own transportation, they show that they are committed to helping our company grow with their customized service. eFulfillment Service as proven themself as a trusted business by being named a â&#x20AC;&#x153;Top 3PL Providerâ&#x20AC;? within the order fulfillment industry by Multichannel Merchant. They have also have made the Inc. 5000 list for the most entrepreneurial and fastest growing companies in America and given an A+ rating with the Better Business Bureau. eFulfillment Service has created their own proprietary software, FCP, for their inventory management that gives their customers access to all their information 24/7. While eFulfillment Service may lack the large name brand, they make up for it in their customized service and commitment to startups making it a great fit for an ecommerce startup such as Blu Jean.

XPO Logistics is the second largest provider of logistics services in the nation. Their facilities makeup 173 million square feet of facility space. XPO Logistics has 1,466 locations worldwide and 845 in North America alone. Their headquarters are in Greenwich, CT. Order turnaround time is 24 hours. Their inventory management services consist of, but are not limited to: omni-channel fulfillment, warehousing and distribution, returns management and processing, vendor managed inventory, demand planning and procurement, ecommerce fulfillment, automated and rfid tracking, etc. The list continues with their value added services. The pick and pack process consists of choosing the box, picking the cushion for inside the box, sealing and labelling the package, and palletizing or crating depending on the size and shape. The pick and pack process will be very important to Blu Jean due to the nature of our e-commerce company. XPO Logistics services over 50,000 customers globally. These customers span multiple industries. Since we are only producing 1,000,000 units, Blu Jean would be a small fish in a big pond when working with XPO Logistics.

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121

NFI NFI is ranked as one of the Top 50 Global & U.S. 3PL companies. They pride themselves on their business expertise, sustainability practices, community and workplace culture, and customers. NFI has over 250 locations in North America, focusing on many port cities, distribution hubs, and major metropolitan cities. NFI uses state of the art equipment in terms of inventory management, warehousing, distribution, crossdocking and more. With over 8000 tractor trailers available and a private transportation brand in place, they are able to distribute product in less than 24 hours after an order is received. Another key component to NFI is their expertise in E-commerce and apparel distribution, as well as their added value services. Blu Jean is solely based through an online platform and needs a distributor who can provide the customers with the quickest, most reliable turn-around. Lastly, maintaining a transparent supply chain, which embodies our core values and sourcing guidelines, is extremely important and NFI speaks to and exceeds all of our expectations and needs.

GEODIS GEODIS is headquartered in Europe and has over 160 facilities across North America. GEODIS is a supply chain operator ranking among top companies all around the world. They offer many value-added services, warehousing locations, and distribution efficiency throughout the US and also a distribution center in Savannah, GA. Blu Jean being an exclusive ecommerce platform and a start-up based out of Savannah, Georgia. Geodis operates through 140 distribution centers all across US which makes the best strategy to utilize multiple warehouse spaces. Geodis also offers custom tailored warehousing solutions including the design of custom warehouse facilities, transportation methods, and digital inventory system management. With its five Lines of Business (Supply Chain Optimization, Freight Forwarding, Contract Logistics, Distribution & Express and Road Transport), Geodis manages its customers Supply Chain by providing end-to-end solutions enabled by people, infrastructure, processes and systems. Since our inventories rely on shipping to different locations biweekly under as requested/ order based needs, keeping our inventory under one roofs allows us to maintain easier inventory management and tracking of products. Their sourcing guidelines fit with ours as their four pillars are transparency, value, intimacy, and agility. For fashion and lifestyle, GEODIS offers an array of value-added services that would meet the needs of Blu Jean, including processing of garment-on-hanger flows, personalized orders and packaging, store opening logistics, management of customs operations, e-business and multi-channel logistics, returns logistics, quality control and carbon footprint reduction.

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123

FINAL S T R AT E G Y final strategy conclusion

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125

F I N A L S T R AT E G Y After careful research, analysis, and strategic outlook, Blu Jean is able to create a comprehensive supply chain strategy based on our product mix, company guidelines, and the minimization of risks. Four countries were assigned to complete a thorough analysis and risk assessment, giving the background and necessary information to ultimately eliminate one. The primary goal throughout the process of developing a strategy was making sure the entire supply chain was transparent and met the sourcing guidelines established from the beginning. The overall goal of Blu Jean was to follow an ethical and sustainable business model, which spoke to our customer base as parents often prioritize authentic brands when it comes to children’s wear. Each step of our strategy took many things into consideration, but transparency was required as the number one priority. When considering minimizing risks, our country and supplier rankings became a key asset to choosing three countries to perform our business relationships. Mexico, Egypt, and Vietnam ranked the highest when comparing the four, and allowed Jordan to be eliminated from consideration. When analyzing an efficient placement strategy, Mexico is given the most units to produce. This correlates directly to minimizing risks, maintaining a high profit margin, and having the most leverage due to lead time, proximity, and supplier relations. Although Mexico has higher production costs, we offset the prices by using manufacturers in other countries to help increase our margins. Another benefit of using a range of manufacturers to produce our garments, is the help of minimizing risk as we’re not putting all of our products in one factory. This allows us to build up inventory for busier times, such as back to school and holiday season. Each manufacturer chosen in these countries ranked as the top suppliers in terms of sourcing guidelines, capabilities, and matching our company’s vision and mission, which directly relates back to the idea of transparency. When considering distribution methods, we analyzed companies both big and small. A key factor when researching distributors was making sure each one was capable of e-commerce, as our company’s product is only sold online. This helps minimize risks in terms of error rates, and because the product is sent directly to the consumer rather than a retailer. We decided a smaller distributor, eFulfillment Services, would benefit our small e-commerce company the most, as they specialize in startups and small businesses, allowing us to grow with the company. Another reduction of risk is partial to the company having less customers and a higher attention to detail. Our distributor is also centrally located in Michigan, allowing a short turnaround time for each customer order. Overall, Blu Jean’s priority in creating our supply chain is to maximize efficiency, remain responsive, while hedging and managing against risk.

blu jean

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127

CONCLUSION Blu Jean has managed to efficiently maximize our supply chain in order to benefit our company. The overall process of managing the supply chain can be extremely complicated. Every single aspect of globalization in business must be analyzed in order to successfully navigate the intricacies of global commerce. Not a single detail can be overlooked. Each business has to meet their specific needs when designing their own strategy. No one strategy is alike, however the importance of hedging against risk is forever present. As globalization continues to expand, it is necessary for our supply chain to adapt to our future growth and opportunities. The future growth of Blu Jean depends on our ability to respond to these ever present changes in the apparel industry.

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129

APPENDIX size chart cost sheets tech packs email correspondence works cited

130

131

SIZE CHART

132

133

SKINNY Blu Jean COST SHEET

Date

Style # Style Name Description

11001 Skinny Jean 100% Cotton, Skinny jean cut

FABRICS

Mill

100% Cotton Denim

Foshan Nenginx Cunde Textile LTD. NX-4412

20-Apr-18 Season FALL/WINTER 2020 Wash MEDIUM Wash Description STONEWASH

Style #

TOTAL FABRIC COST *to include freight

Description

$/yard*

Yield**

100% Vivid blue cotton 2.25/yd

Egypt

Mexico

Total

0.5 ($ ($

1.125) ($

Vendor

Style #

Snap Button Zippers Burrs & Rivets Thread Faux Leather Patch Label Woven Care label Matchbook Label

Ningbo MH YKK Universal Ningbo MH Empire General Agency

O-style 45YGR 0301-0AM TEX 60- A&E

The Graphic Label The Graphic Label The Graphic Label

BLL001 BWL001 BML001

$/unit 0.04/unit

Quantity** 1 0.0375 1 0.05 8 0.00125 152 0.03 0.03 0.02

EGYPT $Total

MEXICO

Vendor

Style #

Cartons Tape Labels

Uline Uline Uline

S-13325

$/unit

TOTAL PACKING COSTS

1 1 1

Quantity 54 $2.18) 0.01 1 0.06 1

EGYPT $Total

cost/min

$0.085)

Medium Stonewash

$4,374.00 $0.00 $0.01 $1,472.00

JORDAN

$0.7475

VIETNAM

$0.7475

JORDAN

$0.04 $0.01 $0.06

EGYPT $Total

45144

VIETNAM

$0.11 JORDAN

$0.0105 $0.0105 $0.0105 $0.1050 $1.0500 $1.0500 $0.5000

$0.0049 $0.0049 $0.0049 $0.0490 $0.4900 $0.4935 $0.5000

$0.0084 $0.0084 $0.0084 $0.0840 $0.8400 $0.8400 $0.5000

$1.7674

$2.7365

$1.5472

$2.2892

MEXICO

45144

$0.11

$0.0060 $0.0060 $0.0060 $0.0595 $0.5950 $0.5950 $0.5000

EGYPT $Total

$0.11 MEXICO

Quantity

Price

$0.7475

$0.11

# of min.

VIETNAM

MEXICO

TOTAL OTHER

GRAND TOTAL

1.125)

$0.0300 $0.0300 $0.0200

$2.25)

TOTAL LABOR *Includes pressing & packing unless otherwise noted.

Freight Duty Broker Insurance

1.125) ($

$0.0400 $0.0375 $0.4000 $0.1900

$0.7475

PACKING

OTHER

1.125) ($

**must include waste

Components

LABOR Patternmaking Grading Marking Cutting Sewing Washing* Admin

Jordan

1.125)

TOTAL COMPONENT COSTS

COST SHEETS

Vietnam

VIETNAM

JORDAN

$0.0969 $0.0000 $0.0100 $0.0326

$0.1010 $0.0000 $0.0100 $0.0000

$0.1060 $0.5277 $0.0100 $0.0250

$0.2255 $0.0000 $0.0100 $0.0234

$0.1395

$0.1110

$0.6687

$0.2588

EGYPT

MEXICO

VIETNAM

3.8893) ($ 4.8300) ($ 4.1984) ($

134

JORDAN

4.5305)

135

FLARE

BOOT CUT Blu Jean

Blu Jean

COST SHEET Style # Style Name Description

Date

COST SHEET

4/15/2018

Style # Style Name Description

Season Fall/ Winter 2020 Wash Medium Wash Description Stone Wash Mexico Egypt

11002 Boot Cut 100% Cotton Boot Jean Cut

FABRICS

$/yard* Yield** Total $Total Mill Style # Description $2.25 0.5 $1.13 100% Cotton Demin Foshan Nengxin Cunde., LTD NX-4412 100% Vivid Blue Cotton TOTAL FABRIC COST *to include freight

Components

Snap Buttons Zippers Burrs & Rivets

$1.13 **must include waste

Vendor Ningbo MH YKK Universal Ningbo MG

Style # $/unit O-Style 45YGR 0301-0am

Mexico Quantity**

0.05 0.00125

152

0.1900

0.015

Thread Faux Leather Patch Label

Empire General Agency

Tex-60

The Graphic Label

BLL001

0.03

0.0300

Woven Care label Matchbook Label

The Graphic Label The Graphic Label

BWL001 BML001

0.03

1 1

0.0300 0.0200

0.02

TOTAL COMPONENT COSTS

PACKING Cartons Tape Labels

0.7475

Mexico Vendor Uline Uline Uline

Style # $/unit S-13325

Quantity 54 1 0.01 1 0.06 2.18

TOTAL PACKING COSTS

LABOR Patternmaking Grading Marking Cutting Sewing Washing* Prepacks Admin

# of mins

0.15

Medium Stone Wash

TOTAL LABOR *Includes pressing & packing unless otherwise noted. OTHER Freight Duty Broker Insurance TOTAL OTHER

GRAND TOTAL

7.5

100% Cotton Denim

$Total

TOTAL FABRIC COST

$1.13 Egypt

$1.13

Jordan

Vietnam

$Total

Egypt

$Total $Total 0.0400 0.0100 0.0600

0.07475

Jordan

Vietnam

$Total

0.11

Mexico Egypt Jordan Vietnam $Total $Total $Total $Total 0.01125 0.006375 0.0090 0.00525 0.01125 0.006375 0.0090 0.00525 0.01125 0.006375 0.0090 0.00525 0.1125 0.06375 0.0900 0.0525 1.1250 0.6375 0.9000 0.5250 1.0500 0.5950 0.8400 0.4900 0.0000 0.0000 0.0000 0.000 0.5000 0.5000 0.5000 0.5000 2.8213

1.8154

2.3570

per container per container

included in freight

percentage

0.0000

Empire General Agency The Graphic Label

TEX-60-A&E BLL001

Woven Care Label Matchbook Label TOTAL COMPONENT COSTS

The Graphic Label The Graphic Label

BWL001 BML001

Vendor ULINE ULINE ULINE

Style # S-13325 S-423 S-21933

0.0300

0.0200

LABOR Patternmaking Grading Marking Cutting Sewing Washing* Admin TOTAL LABOR *Includes pressing & packing unless otherwise noted.

GRAND TOTAL

Vietnam

$/unit

0.04 0.0375 0.2

152 1

0.19 0.03

1 1

0.03 0.02 0.5475

0.05 0.00125 0.03 0.03 0.02

Jordan

Quantity 45 2.18 1 0.01 1 0.06

0.12

0.048444 0.01 0.06 0.1184

Jordan 0.0093 0.0093 0.0093 0.093 0.93 0.84 0.5 2.3909

Jordan

cost #units $Total 10178 37620 FREE

0.01

37620

0.2805

Jordan

4.68734

Mexico

Egypt

0.1184

Egypt

0.1184

Mexico 0.066 0.066 0.066 0.066 0.66 0.6 0.5 2.024

Egypt

0.03 0.7072

0.04 0.1663

Egypt

0.0116 0.0116 0.0116 0.116 1.16 1.05 0.5 2.8608

Mexico 0.1163

4.32330

0.5475

Mexico

0.1272 0.54 FREE 0.01

Vietnam

1.35

0.5475

0.0054 0.0054 0.0054 0.054 0.54 0.49 0.5 1.6002

Vietnam 0.2705

Egypt

0.1184

Vietnam

$Total

7.75

1056

Mexico

1.35

0.5475

Vietnam

$Total

# of min

cost/minute

1.35

Vietnam

$Total

1 1 4

0.0375

$/unit

Jordan

Quantity** 0.04

Egypt

1.35 1.35

Thread Faux Leather Patch Label

Insurance TOTAL OTHER

Jordan

$/yard* Yield** Total 2.25 0.6 100% Vivid Blue Cotton Description

0.01

4.20620

FREE

0.1212 0.01 0 0.1312

Mexico

5.00790

1.5833

Mexico Egypt Jordan Vietnam COST # units $Total $Total $Total $Total $4,560 45144 0.1000 0.0970 0.2300 0.1100 0.0000 0.0000 0.0000 0.4325 0.0100 0.0100 0.0100 0.0100

per container

Mill Style # Foshan Nenjinx Cund Textile., Ltd. NX-4412

Style # O-style 45YGR 0301-0am

OTHER Freight Duty Customs Broker

4/15/2018

Season Fall/Winter 2020 Wash Dark Wash Description Dark Indigo, No Fading

Vendor Ninjbo NH YKK Universal Ninjbo NH

Cartons Tape Labels TOTAL PACKING COSTS

0.7475

11003 Flare 100% Cotton Flare Jean Cut

Snap Button Zippers Burrs & Rivets

PACKING

0.1100

Cost/min

Vietnam

Components

$Total $Total 0.0400 0.0375 0.4000

1 1 8

0.04

Jordan

Date

0.0200

0.1100 0.1370 0.2600 0.5725 Mexico Egypt Jordan Vietnam

-$ 4.9138--$ 3.9349--$ 3.9268--$ 3.4655per unit

per unit

136

137

SHORT BLU JEAN COST SHEET

Date

4/15/2018

Style #

#11004

Season

Fall/Winter 2020

Style Name

Jean Short

Wash

Dark

Description

100% cotton

Wash Description

Dark Indigo Vietnam

Egypt

Jordan

Mexico

FABRICS Mill Fabric 1

Foshan Nengxin Cund Textile, Ltd

# Style

Description

$/yard*

Yield**

Total

NX-4412

100% Vivid Blue Cotton

$2.25

0.4

$0.9000

Vietnam

Egypt

Jordan

Mexico

TOTAL FABRIC COST *to include freight

**must include waste

COMPONENTS Snap Buttons

Vendor Ningbo MH

Zippers

YKK Universal

Burrs & Rivets

Ningbo MH

Thread Faux Leather Patch Label

Style #

$/unit

Quantity**

$Total

O-Style

$0.04

$0.0400

45YGR

$0.0375

#0301-0 am

$0.050

$0.4000

Empire General Agency

TEX-60

$0.00125

$0.1063

$0.1100

The Graphic Label

BLL001

$0.030

$0.0300

Woven Care Label

The Graphic Label

BLWL001

$0.03

$0.0300

Matchbook Label

The Graphic Label

BML001

$0.02

$0.0200

$0.6638

$0.6675

Vietnam

Egypt

Jordan

Mexico

TOTAL COMPONENT COSTS PACKING Vendor Cartons

ULINE

Style #

$/unit

Quantity

$Total

S-13325

$2.18

$0.0303

$0.0300

$0.0300 $0.0600

Tape

ULINE

S-423

$0.06

$0.0600

Labels

ULINE

S-21933

$0.01

$0.0100

$0.1003

$0.1000

Mexico

TOTAL PACKING COSTS LABOR Patternmaking

Cost/min

#of mins

1% of Sew Cost

Vietnam

Egypt

Jordan

Quantity

$Total

$0.0042

$0.0051

$0.0072

$0.0090

Grading

1% of Sew Cost

$0.0042

$0.0051

$0.0072

$0.0090

Marking

1% of Sew Cost

$0.0042

$0.0051

$0.0072

$0.0090

Cutting

10% of Sew Cost

Sewing Washing*

0.07 Medium Stonewash

$0.0420

$0.0510

$0.0720

$0.0900

$0.4200

$0.5100

$0.7200

$0.9000

$0.4900

$0.5950

$0.8400

$1.0500

$0.5000

$1.4646

$1.6713

$2.1536

$2.5670

Mexico

Admin TOTAL LABOR

T E C H PAC K S 1. 2. 3. 4.

Skinny Boot Cut Flare Short

*Includes pressing & packing unless otherwise noted.

Vietnam

Egypt

Jordan

OTHER

Company

Cost

# units

$Total

Freight

ZIM

$4,787

60,192

$0.0795

$0.0730

$0.1690

$0.0760

$0.4700

$0.0000

$0.0100

$0.0187

$0.0245

$0.0175

$0.0000

$0.5783

$0.1075

$0.1965

$0.0860

Vietnam

Egypt

Jordan

Mexico

Duty

14.95%

Broker Insurance TOTAL OTHER

GRAND TOTAL

$1,128

$3.7069

$3.4463

$4.0176 $4.3205

138

139

SKINNY

140

BOOTCUT

151

COMPANY NAME: Blu Jean PHONE #: +1 912-423-5991 ADDRESS:

DESIGN SHEET

403 Button St. Suite 23 Savannah, GA 31401

SHEET #1

STYLE #: 11003 EMAIL: production@blujean.com CONTACT: Jennie Walters

GROUP NAME: Flare Jean

CLASSIFICATION: Little Girlâ&#x20AC;&#x2122;s Jeans

SEASON:

Fall/Winter 2020

FLARE

COLORWAY: Light wash, medium wash, dark wash.

FABRIC CONTENT: 100% Cotton

Front

Back

DESCRIPTION: 100% Cotton, Flare Cut Jean, Zip Fly with Snap button, 2 Faux Front Pockets, 2 Functional Back Pockets, 5 Belt Loops DATE CREATED:

DESIGNERS INITIALS: SYN

DATE MODIFIED:

162 04/08/2019

DATE RELEASED:

139

bj ILLUSTRATION SHEET

COMPANY NAME: Blu Jean

SHEET #2

PHONE #: +1 912-423-5991

STYLE #: 11030

ADDRESS:

EMAIL: production@blujean.com

403 Button St. Suite 23 Savannah, GA 31401

CONTACT: Jennie Walters GROUP NAME: Flare Jean

CLASSIFICATION: Little Girl’s Jeans

COLORWAY:

COMPANY NAME: Blu Jean

SHEET #3

PHONE #: +1 912-423-5991

STYLE #: 11003

ADDRESS:

EMAIL: production@blujean.com

403 Button St. Suite 23 Savannah, GA 31401

CONTACT: Jennie Walters GROUP NAME: Flare Jean

CLASSIFICATION: Little Girl’s Jeans

COLORWAY:

FABRIC SHEET SEASON: Fall/Winter 2020

SEASON: Fall/Winter 2020

FABRIC:

SKETCH:

100% denim Cotton, vivid blue NX-4412 Yarn Count: 20SOA*21SOE Width: 64/65 inches wide Weight: 6.24 oz - Sturdy cotton warp-faced textile -Twill weaving -Diagonal ribbing

Front

Back DESIGNERS INITIALS: SYN

FABRIC INFO: 100% Cotton, NX-4412 Foshan Nenjxin Cund Textile., Ltd. DATE CREATED:

04/08/2019

STYLE WIDTH: 64/65 inches wide

SIZE RANGES: 4, 5, 6, & 6x (childrens)

DATE MODIFIED:

DELIVERY DATE: TBD COMMENTS:

DATE RELEASED:

DESIGNERS INITIALS:

FABRIC INFO:

100% Cotton, NX-4412 Foshan Nenjxin Cund Textile., Ltd.

STYLE WIDTH: 66 inches

DATE CREATED:

04/08/2019

SIZE RANGES: 4, 5, 6, 6x (Childrens) Smaple Size: 6

DATE MODIFIED:

DELIVERY DATE: TBD

COMMENTS:

DATE RELEASED:

COMPANY NAME: Blu Jean

SHEET #4

PHONE #: +1 912-423-5991

STYLE #: 11003

ADDRESS:

EMAIL: production@blujean.com

403 Button St. Suite 23 Savannah, GA 31401

CLASSIFICATION: Little Girl’s Jeans

CONTACT: Jennie Walters GROUP NAME: Flare Jean COLORWAY:

COMPANY NAME: Blu Jean

SHEET #5

PHONE #: +1 912-423-5991

STYLE #: 11003

ADDRESS:

EMAIL: production@blujean.com

403 Button St. Suite 23 Savannah, GA 31401

CONTACT: Jennie Walters GROUP NAME: Flare Jean

CLASSIFICATION: Little Girl’s Jeans

COLORWAY:

FABRIC SHEET SEASON: Fall/Winter 2020

COMPONENT SHEET

Fabric Washes:

ITEM-VENDOR-CODEORGIN

CONTENT

SIZE-QUANTITYUNIT OF MEASURE

LOCATION

COLOR

Front Button Snap Ningbo MH O-Style

Copper

15 mm 1 per jean

Front-top-middle

Copper

Rivets & Burrs Ningbo MH #0301-0am

Copper

9.5 mm 4 per jean

Front pocket Corner Intersections

Copper

Thread Empire General Agency Style: TEX-60-A&E

100% Polyester

T-60, 152 yards per garment

All seams, stitches and hems

Multicolor

Zipper YKK Universal 45YGR

Metal

1 per jean

Fly

Brass

Light

Medium

Dark

SEASON: Fall/Winter 2020 COMMENTS

DESIGNERS INITIALS:

FABRIC INFO:

100% Cotton, NX-4412 Foshan Nenjxin Cund Textile., Ltd.

STYLE WIDTH: 66 inches

DATE CREATED:

04/08/2019

SIZE RANGES: 4, 5, 6, 6x (Childrens) Smaple Size: 6

DATE MODIFIED:

DELIVERY DATE: TBD

COMMENTS:

DATE RELEASED:

DATE CREATED:

04/08/2019

DATE MODIFIED:

DATE RELEASED:

COMPANY NAME: Blu Jean

SHEET #6

PHONE #: +1 912-423-5991

STYLE #: 11003

ADDRESS:

EMAIL: production@blujean.com

403 Button St. Suite 23 Savannah, GA 31401

CLASSIFICATION: Little Girl’s Jeans

CONTACT: Jennie Walters GROUP NAME: Flare Jean

COLORWAY:

LABEL/PACKAGING SEASON: Fall/Winter 2020 SHEET

COMPANY NAME: Blu Jean PHONE #: +1 912-423-5991

STYLE #: 11003

ADDRESS:

EMAIL: production@blujean.com

04/08/2019

DATE MODIFIED:

403 Button St. Suite 23 Savannah, GA 31401

CONTACT: Jennie Walters GROUP NAME: Flare Jean

CLASSIFICATION: Little Girl’s Jeans

COLORWAY:

LABEL/PACKAGING SEASON: Fall/Winter 2020 SHEET ITEM-VENDOR-CODEORGIN

CONTENT

SIZE-QUANTITYUNIT OF MEASURE

LOCATION

COLOR

Faux leather patch lable, The Graphic Lable

Faux leather

2 x .75 in 1 per jean

back right waist band, 1 in right of side seam

cognac

Care lable The Graphic Lable

Print/Woven

2.25 x 1.25 in 1 per jean

Recycled paper

2 x 2.5 in

Matchbook Lable The Graphic Lable

DATE CREATED:

SHEET #7

DATE RELEASED:

DATE CREATED:

04/08/2019

inside waist band lower seam, 1.5 inches from top of jean, .5 in from side seam

front right, over waist band, .5 in from side seam

DATE MODIFIED:

COMMENTS

cream

white

DATE RELEASED:

COMPANY NAME: Blu Jean

SHEET #8

PHONE #: +1 912-423-5991

STYLE #: 11003

ADDRESS:

EMAIL: production@blujean.com

403 Button St. Suite 23 Savannah, GA 31401

CONTACT: Jennie Walters GROUP NAME: Flare Jean

CLASSIFICATION: Little Girl’s Jeans

COLORWAY:

DETAIL CONSTUCTION SHEET

LABEL PLACEMENT SEASON: Fall/Winter 2020 SHEET

DETAIL:

COMPANY NAME: Blu Jean

SHEET #9

PHONE #: +1 912-423-5991

STYLE #: 11003

ADDRESS:

EMAIL: production@blujean.com

403 Button St. Suite 23 Savannah, GA 31401

CONTACT: Jennie Walters GROUP NAME: Flare Jean

CLASSIFICATION: Little Girl’s Jeans

COLORWAY:

SEASON: Fall/Winter 2020

DETAIL:

No rivets and burrs on back pockets

DATE CREATED:

04/08/2019

DATE MODIFIED:

DATE RELEASED:

DATE CREATED:

04/08/2019

DATE MODIFIED:

DATE RELEASED:

bj SPEC SHEET

COMPANY NAME: Blu Jean

SHEET #10

PHONE #: +1 912-423-5991

STYLE #: 11003

ADDRESS:

EMAIL: production@blujean.com

403 Button St. Suite 23 Savannah, GA 31401

CONTACT: Jennie Walters GROUP NAME: Flare Jean

CLASSIFICATION: Little Girlâ&#x20AC;&#x2122;s Jeans

COLORWAY:

SEASON: Fall/Winter 2020

TECHNICAL SKETCH:

SKETCH/ PHOTO:

SHORT CODE

POINT OF MEANSURE

TOL

Waist

+/- .25 in

22-23 in

22.5-23.5 in

23-24 in

23.5-24.5 in

Inseam

+/- . 25 in

16 in

18 in

19.5 in

21 in

Rise

+/- .25 in

5 in

5.5 in

6 in

7 in

COMMENTS:

DATE CREATED:

DATE MODIFIED:

DATE RELEASED:

04/08/2019

173

EMAIL CORRESPONDENCE

184

185

186

187

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C I TAT I O N S

“Doing Business in Mexico: Understanding Mexican Business Culture & Eti quette.” Acrecent, 6 Feb. 2018, www.acrecent.com/doing-busi ness-in-mexico-understanding-mexican-business-culture-etiquette/. Floyd, David. “NAFTA’s Winners And Losers.” Investopedia, Investopedia, 30 J an. 2018, www.investopedia.com/articles/economics/08/north-american- free-trade-agreement.asp.Global Denim, globaldenim.com.mx/. Heiecke, Kenneth. “How Will the 2018 Mexican Presidential Election Affect Busi ness?”Biz Latin Hub, Biz Latin Hub, 6 Apr. 2018, www.bizlatinhub.com/ mexican-election-2018-business-effect/. Jeans in Mexico. Euromonitor, 2018, Jeans in Mexico, 0-www.portal.euromoni tor.com.library.scad.edu/portal/analysis/tab. Kaltex, www.kaltex.com/kaltex-environment.html+. “Lead Time to Import, Median Case (Days).” The World Bank, data.worldbank. org/indicator/LP.IMP.DURS.MD?locations=MX&view=chart. Lu, Sheng. “How Would End of NAFTA Affect US Apparel Industry?” Just-Style, 23 Nov. 2016, www.just-style.com/comment/how-would-end-of-nafta-affect- us-apparel-industry_id129361.aspx. “Mexican Flag.” World Atlas , 7 Apr. 2017, www.worldatlas.com/webimage/coun trys/namerica/mexico/mxflags.htm.

188

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Mexico: Country Profile. Euromonitor International, 2018, Mexico: Country Pro file. Mexico: In-Depth PESTLE Insights. Business Source Premier , 2018, Mexico: In- Depth PESTLE Insights, 0-web.a.ebscohost.com.library.scad.edu/bsi/pd fviewer/pdfviewer?vid=8&sid=755608fb-da40-4cb9-bebf-080ddc75e371% 40sessionmgr4008. “Mexico: Introduction.” GlobalEDGE: Your Source for Global Business Knowl edge, globaledge.msu.edu/countries/mexico. Mexico January 2017. OECD Economic Surveys, 2017, Mexico January 2017, www. oecd.org/eco/surveys/Mexico-2017-OECD-economic-survey-overview.pdf. “Mexico.” Macro Market, macro.market/country/namex?source=oec. “Mexico.” OEC , atlas.media.mit.edu/en/profile/country/mex/. “Mexico Political Stability - Data, Chart.” TheGlobalEconomy.com, www.the globaleconomy.com/Mexico/wb_political_stability/. “Mexico vs. China Manufacturing Comparison.” NAPS, napsintl.com/manufac turing-in-mexico/mexico-vs-china-manufacturing-comparison/. “Monty – Global Leader in Garment Manufacturing.” Monty – Global Leader in Garment Manufacturing, montyindustries.com/. “NAFTA Renegotiation Puts Mexico-US Jeans Trade at Risk.” Fashion Network, 23 Feb. 2017, in.fashionnetwork.com/news/NAFTA-renegotiation-puts- Mexico-US-jeans-trade-at-risk,796842.html#.Wsyq JtPwbUo. “Natural Disasters: Mexico.” Natural Disasters - Country Profile Series - Mexico, www.imua.org/Files/reports/Natural%20Disasters%20-%20Country%20 Profile%20Series%20-%20Mexico.html. Sjol. “US Denim Imports: Mexico Unseats China as Top Country of Origin.” Sourcing Journal, 9 Mar. 2015, rivetandjeans.com/us-denim-imports-slide -in-2014-mexico-unseats-china-as-top-country-of-origin/.

“Textile and Apparel Products.” Textile and Apparel Products | U.S. Customs and Border Protection, www.cbp.gov/trade/nafta/guide-customs-procedures/ provisions-specific-sectors/textiles. Woody, Christopher. “Mexico’s Criminal and Political Worlds Are Shifting, and 2017 Is off to the Most Violent Start on Record.” Business Insider, Busi ness Insider, 7 Mar. 2017, www.businessinsider.com/mexico-political-gov ernment-cartel-changes-with-increasing-violence-2017-3?r=UK&IR=T. “The World Factbook: MEXICO.” Central Intelligence Agency, Central Intelli gence Agency, www.cia.gov/library/publications/resources/the-world-f actbook/geos/mx.html.

EGYPT CITATIONS “Egypt 2018 Country Review.” Egypt Country Review, Jan. 2018, pp. 1-496. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&d b=buh&AN=129151337&site=bsi-live. Manfreda, Primoz. “What’s Currently Happening in Egypt in the After math of the 2013 Coup?” ThoughtCo, www.thoughtco.com/current-situa tion-in-egypt-2352941. “Egypt Ranks Among the World’s Best Countries.” U.S. News & World Report, U.S. News & World Report, www.usnews.com/news/best-countries/egypt. “Egypt Guide.” Egypt - Language, Culture, Customs and Etiquette, Commisceo Global, 2017, www.commisceo-global.com/resources/country-guides/ egypt-guide. “World Report 2018: Rights Trends in Egypt.” Human Rights Watch, 18 Jan. 2018, www.hrw.org/world-report/2018/country-chapters/egypt. “Country Score Card: Egypt, Arab Rep. 2016.” Country Score Card: Egypt, Arab Rep. 2016 | Logistics Performance Index, The World Bank, 2018, lpi.world bank.org/international/scorecard/line/8/C/EGY/2016?sort=asc&order= Timeliness#datatable.

190

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Cooke, Steve. “Doing Business in Egypt.” TodayTranslations.com, 2018, www. todaytranslations.com/doing-business-in-egypt. “QIZ Egypt.” QIZ EGYPT - Qualifying Industrial Zones , Ministry of Trade and Industry, www.qizegypt.gov.eg/About_QIZ.aspx. Cooke, Steve. “Doing Business in Egypt.” TodayTranslations.com, 2018, www. todaytranslations.com/doing-business-in-egypt.

Awadallah, Bassem I. “Jordan’s Five Biggest Challenges.” CNN, Cable News Net work, 23 June 2015, www.cnn.com/2015/06/23/opinions/jordan-five-chal lenges/index.html. Branch, Foreign Trade Data Dissemination. “Foreign Trade: Data.” U.S. Trade with Jordan, 21 Apr. 2009, www.census.gov/foreign-trade/balance/c5110. html.

“QIZ Egypt.” QIZ EGYPT - Qualifying Industrial Zones , Ministry of Trade and Industry, www.qizegypt.gov.eg/About_QIZ.aspx.

“Disaster Risk Reduction in Jordan | Enhanced Local Capacities.” JTI Founda tion - Supporting Disaster Management Programs Worldwide, jtifounda tion.org/projects/disaster-risk-reduction-jordan/.

“Qualifying Industrial Zone.” Wikipedia, Wikimedia Foundation, 2018, en.wiki pedia.org/wiki/Qualifying_Industrial_Zone#Regulations.

“Economy of Jordan.” Wikipedia, Wikimedia Foundation, 10 Apr. 2018, en.wiki pedia.org/wiki/Economy_of_Jordan.

“US-Egypt Trade Facts.” Egypt , United States Trade Representative, ustr.gov/ countries-regions/europe-middle-east/middle-east/north-africa/egypt.

“F.2-Jordan Rules of OriginJordan Rules OfOrigin.” F.2-Jordan Rules of Origin, www.export.gov/article?id=Jordan-Rules-of-Origin.

Euromonitor. “Egypt:Country Profile.” Passport, Euromonitor International, 0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab.

“Generalized System of Preferences (GSP).” Generalized System of Preferences (GSP) | U.S. Customs and Border Protection, www.cbp.gov/trade/ priority-issues/trade-agreements/special-trade-legislation/general ized-system-preferences.

Maersk. “Rate Quotes.” Maersk Line - The World’s Largest Container Shipping Company, Maersk Line, www.maerskline.com/. EMCO. “Egypts Main Ports.” Emco | Egypt Main Port, Egyptian Maritime Con sultant Office, www.emco-shipping.com/egypt_main_port.aspx.

JORDAN CITATIONS

“Jordan.” Jordan Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption, www.heritage.org/index/country/jordan. “Jordan.” OEC - Jordan ( JOR) Exports, Imports, and Trade Partners, atlas.media. mit.edu/en/profile/country/jor/.

Jordan Free Trade Agreement | United States Trade Representative, ustr.gov/ trade-agreements/free-trade-agreements/jordan-fta.

“Jordan - Local Time, Business Hours, & HolidaysJordan - Local Time.” Jordan - Local Time, Business Hours, & Holidays, www.export.gov/article?id=Jor dan-local-time.

National Archives and Records Administration, National Archives and Re cords Administration, georgewbush-whitehouse.archives.gov/news/re leases/2001/09/20010928-12.html.

“Jordan Country Profile.” BBC News, BBC, 4 Sept. 2017, www.bbc.com/news/ world-middle-east-14631981.

Publications, www.usitc.gov/publications/docs/pubs/332/pub3340.pdf.

“Jordan- Inflation Rate 2022 | Statistic.” Statista, www.statista.com/statis tics/385594/inflation-rate-in-jordan/.

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“Politics of Jordan.” Wikipedia, Wikimedia Foundation, 10 Apr. 2018, en.wikipe dia.org/wiki/Politics_of_Jordan. Stratfor. “Who Benefits from Free Trade in Jordan?” Stratfor, Stratfor, 13 Nov. 2000, worldview.stratfor.com/article/who-benefits-free-trade-jordan. U.S. International Trade Commission. Harmonized Tariff Schedule PDFs, hts. usitc.gov/current. Ita. “U.S.-Jordan Free Trade Agreement.” Export.gov - Home, 2016.export.gov/fta/jordan/index.asp.

VIETNAM CITATIONS

“The World Factbook: VIETNAM.” Central Intelligence Agency, Central Intelli gence Agency, 10 Apr. 2018, www.cia.gov/library/publications/the-world- factbook/geos/vm.html. “Travel Blog: Insights to Vietnamese People & Culture.” Explorient, 27 June 2017, www.explorient.com/blog-insights-to-vietnamese-people-and-culture/. “Vietnam People & Culture - Vietnam Information.” Vietnam-Guide.com, www. vietnam-guide.com/people.htm. U.S. International Trade Commission. Harmonized Tariff Schedule PDFs, hts. usitc.gov/current.

“Viet Nam: Floods and Landslides - Aug 2016.” ReliefWeb, reliefweb.int/disaster/ tc-2016-000111-vnm. Hays, Jeffrey. “NATURAL DISASTERS IN VIETNAM: TYPHOONS, STORMS, TOR NADOES AND AN EARTHQUAKE.” Facts and Details, factsanddetails.com/ southeast-asia/Vietnam/sub5_9h/entry-3489.html. Walker, Chris. “What Is the Manufacturing Lead-Time?” Working with Vietnam ese Clothing Manufacturers, Vietnam Garment Insider, 5 Feb. 2015, www. vietnaminsider.net/en/garment-manufacturing-lead-time.html. Runckel. Seaports in Vietnam, www.business-in-asia.com/ports_in_vietnam. html. “The World Factbook.” Central Intelligence Agency, Central Intelligence Agency, www.cia.gov/library/publications/the-world-factbook/geos/print_vm.html. “Vietnam: Helping 8,000 Poor Students Pursue Their Academic Dreams.” World Bank, www.worldbank.org/en/results/2014/04/10/vietnam-helping-8000- poor-students-pursue-their-academic-dreams. “XE Currency Charts.” XE.com - Free Currency Charts, www.xe.com/currency charts/?from=USD.

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195