Globalstrategyfinalbook

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Knitfit Co.


Abstract For this project we researched China, Peru and Egypt and everything about business and culture within their countries. With that imformation we developed a strategy for where we will source our product and who our suppliers will be. We chose our suppliers based on their sourcing guidelines, flexibility, llead-times, and most importantly cost. It is important for our business to manage a realationship with the suppliers to make sure our products will be what we pay for.


Table of Contents Introduction (4) Strategy Development (11) Country Analysis (16) Supplier Analysis (36) Costing (51) Strategy Development Evaluation (54) Final Sourcing Strategy(67) Cost Comparison (71) Conclusion (73) Appendix (75)


Introduction

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Knitfit Co. We started our brand Knitfit Co. because we felt like there was a lack of basic ,high quality, long lasting knits in the world. We have researched and developed a strategy to get our business going, along with strategic outlook of our future. From establishing our brand, to our product, to our sourcing, this is our strategy.

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Knitfit Co. Location: Portland Oregan Mission Statement: Knitfit is a collective knitwear brand that produces timeless easy-to-wear pieces for the young trendy woman. Name Origin: Unlike a misfit, a person whose behavior or attitude sets them apart from others in an uncomfortably conspicuious way, our knits are beautiful, unique and fit just right. Values: Embrace.Commit. Evolve We embrace the ideas of our consumers We commit to high quality We evolve with the trends Vision: High Quality comfort to the touch We plan to have about 15 stores on the Northwest coast and would like to seel in stores such as Neiman marcus. We also have our online store www.knitfit..com We aim to be a well known brand for basic and fashion knitwear. We strive to be the best quality, price, and customer service around. We are commited to creating and maintaing relationships with our customers and encourage feedback. We use only organic cotton to create our knitwear and are always looking for new sustainable opportunities to keep our environment safe. 6


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Market Segmentation: -Women Knitwear -Concentrated- efficiency, attracting a large portion of one section while controlling costs. -High Quality -Comfort and versatile -Broad selection with narrow sizes -Price Range $30-$70 -100% Natural Organic Cotton Target Market: Demographics: Females, Age range 18-26, Students or graduates, low-income Geographic’s: Northwest, Metropolitan areas, college towns Psychographics: Creative, Confident, comfortable in all aspects of her being, adventurous, loves to travel Behavioral: Purchases frequently, purchases 2-3 items at a time, parents income, shops with friends, wears knits all year long VALS: Striver- trendy and fun loving, concerned about the opinions of others, favor stylish products 8


Target consumer Sarah Camden is a 23 year old, recent graduate from Washington State University. After receiving her degree in psychology, she now works in an autism research center. In her spare time she loves to travel, read books at the park, shop and socialize with friends. She usually shops in store and looks for great quality clothing.

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Product Products: Knit Sweaters made from 100% organic cotton Product Styles: V-Neck, Boyfriend, Cable Knit, and Cardigan. Color Styles: Soft pallate, pastels, neutrals, basics Category: Basic Knitwear, worn all year round Price Range: $30-$70 Why? We chose to do basic knit sweaters because there seems to be a lack of this product in the world. Commonly, basic knits are lower in price which usually means lower in quality. We want their to be availability to purchase a high quality sweater made from an organic light material so customers will return when they are ready for a new one. We want to create a product line that is comfortable and fashionable as we keep up with the changing trends. We chose to sell our products between $30-$70 so that our consumer knows that they are paying for good quality. This is a reasonable price for a well

Knitfit Co. Block Knit Sweater $50.00

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Strategy Development Process

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Strategy Strategic Sourcing will be defined as the process of evaluating, selecting and aligning with suppliers or consortiums of suppliers to achieve operational improvements in support of an organization’s strategic objectives. The phrase Strategic Sourcing was coined and is used when the activities of sourcing are directly tied to a sourcing strategy. Why develop a strategy? First, a sourcing strategy aligns an organization’s overall business strategy with the sourcing objectives. For example, it does not benefit an organization to select a supplier for a multiple year agreement based on superior manufacturing capabilities and local presence if the organization is evaluating global outsourcing operations in support of business growth and cost competitive objectives. Second, when properly defined, this sourcing strategy assists our organization by gaining a true understanding of our requirements, knowing how we must map to the existing supply market, and then develop a plan for both short and long term.

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Block Knit Price: $50.00 Wholesale Price: $37.50 # of Product all year: 305,000 We chose this product because it is a basic with a touch of fashion. With a multicolored knit it is more versatile. This lightweight knit can be worn all year and we offer it in 4 colors.

Crop Knit Price: $50.00 Wholesale Price: $37.50 # of Product all year: 295,000 We chose this product because it is not only a basic top, but it is also fashionable. During the summer months this is a popular style because even though it is a knit sweater, the crop silhoutte offers less material so it can be worn all year.

Cardigan Price: $50.00 Wholesale Price: $37.50 # of Product all year: 400,000 We chose this product because it is a basic cardigan that is a necessity in all women’s wardrobes. What is unique about our product is that it is high quality and you can keep it forever. We offer neatral and bright colors so that it is stylish all year. We have the highest amount of this product all year because they are very popular. 14

*For Volumes & Seasons see page #


Products: Block Knit Sweater, Cardigan, and Crop Knit For whole year: 1,000,000 3 Styles Based On What: We are selling our products all year round because they are basics. The cotton fabric that we use is a lightweight fabric making it wearable even in the summer. We offer cropped knits, light block knit and a cardigan. Our busier season for the Block knit is in the fall/winter so we will have about 200,000 of this product available during those months. We have more cropped knits available during the summer into fall because this is the time of year when it is most appropriate. We have the Cardigan distributed almost evenly throughout the year since it is a versatile and more basic piece. There is a spike of production during September and October. We based our line plan on the weather throughout the United States compared to the style. Because we are a basic knit company we have the option to produce our products all year round without them going out of style. We chose 3 styles that can be worn all year round. We value high quality products and sustainable manufcaturers. We value our consumers opinions and want to give them the

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Values:

Organic/eco friendly High Quality Basic and Fashion Trends Sustainability

Sourcing Guidelines I. Compliance with Laws II. Environment III. Employment Standards 2. Child Labor 3. Wages and benefits 4. Working Hours 5. Forced Labor 6. labor by governments. 7. Health and Safety 8. Nondiscrimination 9. Human Treatment 10. Collective Bargaining 11. Environmental Standards 12. Subcontracting 13. Monitoring and Compliance 14. Certification 15. Verification 16. Audits 17. Internal Accountability Standards *See Detailed Guidelines in Appendix 16


Country Analysis

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China

Economy: China operates as a market economy. They have emerged to the lead exporter in the world with the second largest economy. China’s economy has grown 7.8 percent in 2012 from a year earlier. This is rather slow in comparison to previous years. China’s luxury consumer base is expected to expand from 80 million to 180 million people. China is also expected to overtake Japan as the world’s larges consumer of luxury goods. China’s luxury goods consumption reached us $6.5 billion maintain the world’s fastest growth rate for three consecutive years. China is also seeing growth in the e-commerce consumers. By 2015, China is forecasted to reach 520 million online shoppers. Government: They have a more then 80 million-member communist party who controls the tightest central government offices and in urban economic, industrial and cultural settings. I think China will be changing shortly. China’s government is in trouble with an annual growth rate of below eight percent. The Chinese Communist Party said they would supply growth in return for political quiescence. The end of high growth would imply that this social contract is in trouble. Textile Industry: China’s garment industry is one of the industries in China that has the most international competition and the fastest growing. There are more then 100,000 garment manufacturers that employ over 10 million people. In 2012, China made altogether 43.6 billion pieces of garments with export value 1.5 billion. Since China’s reform, the garment industry has achieved significant development because of the fast growth in the national economy and domestic demands. They are making progress within their structure, technology, brand development, quality control and exploration in the international markets. The garment industry is mainly located in Pearl River Delta and southeast coastal areas. With years of experience in production management, this industry secures its front ranking in the world market. The garment industry in China is undergoing a new wave of upgrading changing their growth patterns and deep¬ening collaboration and innovation within the industrial network. China must find its new position in the global economy, create a new competitive edge in international cooperation and competition and continue to innovate. Costs: Their work wages are cheap compared to countries like the U.S, Egypt and Peru. This is because they have more people to work and who are willing to work for less. China does not have any trade agreements with the U.S, which adds costs for tariffs but it is still cheaper then the cost to have something produced in Peru. Why? China is the leading manufacturer for apparel and textiles. They have the most international competition and employ over 10 million people. China also has the fastest growing national economy and domestic demand. They are also undergoing a new wave of innovation and are becoming more sustainable. They used to be known for knock-offs and trinkets, but they are becoming more known for luxury items with cheap prices. 18


Fig 1. This image shows the forecast for China’s luxury consumers. China is expected to expand their luxury goods which means better quality overal.

Fig 2. This Table shows the top US imports from China in 2011. Apparel, knitted is 16.7% of the imports.

Fig 3. This map shoes the shipping routes from China to the United States. As you can see there are many options.

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Peru

ECONOMY The Peruvian economy is classified as upper middle income by the World Bank. The country has rich deposits of natural resources, huge agricultural potential, good fishing grounds, a traditional textile industry and also brings in a lot of tourism. Peru has one of the most vivacious economies in the world. The country’s economic performance has been very strong with a 20% fall in poverty rates and decade long expansion resulting in the tripling of the per capita income. Peru’s economy is mainly driven by exports making the country susceptible to fluctuations in world market prices and to the overall performance of the worldwide economy, but Peru’s economic future is thought to be bright with a growing economy, increasing investments and low inflation. Peru has proven to have some of the fastest economic growth in Latin America in the last seven years because it one of the leading mineral exporters, and showed a GDP growth rate of 8% in 2007. The country experienced an economic boom in the 2000s, and in 2011 Peru was said to have one of the world’s fastest-growing economies. Between 2002 and 2006, after several years of inconsistent economic performance, the economy boomed and grew by 4%, with low inflation and a stable exchange rate. In 2007 the Peruvian economy could register a growth rate of 9%, the largest in Latin America, and in 2008 a 9.8% growth rate topped the previous year result. Even though Peru was not necessarily affected by the global crisis their growth for 2009 was only 0.9%, but rebounded to 8.8% the following year. Although more and more Peruvians benefit from the continuous growth of the countries economy, inequality does still exist and the distribution of the country’s wealth to all Peruvians seems to be difficult. Peru has one of the lowest inflation rates out of the Latin American countries because of its good economic management, along with their free-floating exchange rate, which is one of the most stable. Although more and more Peruvians benefit from the continuous growth of their economy, inequality persists and the distribution of the country’s growing wealth to all Peruvians seems difficult. Since 2004 poverty in Peru dropped by astonishing 28%, but still a third of the country’s population lives in adversity. There is an extravagant difference among the urban and rural areas in regard to poverty. In the urban areas such as Lima only 16% of the population live in poverty whereas in the Andes 67% of the population live in poverty. Peru’s stability and economic growth brought about significant reduction in unemployment, but mainly in urban areas.

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Government: Peru is a presidential representative democratic republic. The government is divided into three branches: the executive, the legislative and the judicial. The President is popularly elected for a five-year term and the Peruvian constitution of 1993 permits one consecutive re-election. The president takes on the role of head of state and head of government, and the first vice president and the second vice president are also popularly elected but have no constitutional functions unless the president is unable to perform his duties. The executive branch of their government is the principal executive body or Council of Ministers, comprised of 15 members and headed by a prime minister. The president appoints its members, who must be ratified by the Congress. All executive laws sent to Congress must be approved by the Council of Ministers. The legislative branch consists of a unicameral congress of 120 members popularly elected for a five-year term. Peru has a multi-party system, which prevents that one party has the main influence in a decision making process. The Peruvian Congress ratifies treaties, approves the government budget, authorizes government loans and passes laws. The judicial branch of government is headed by a 16-member Supreme Court seated in Lima. The Constitutional Tribunal interprets the constitution on matters of individual rights. Superior courts in departmental capitals review appeals from decisions by lower courts. Courts of first instance are located in provincial capitals and are divided into civil, penal and special chambers. All Peruvians over the age of 18 living in Peru have the duty to vote. The vote is universal, secret and direct. During the elections public gatherings of any sort are prohibited during voting hours, political gatherings are forbidden, religious liturgies and entertainment shows are prohibited, and the selling of alcohol is not permitted and all clubs and bars are also closed. Ollanta Humala was elected as President of Peru in 2011. Promising the Peruvians a fair share of the wealth from Peru’s key natural resources. Humala spread joy amongst his followers and fear amongst national and foreign investors. During his campaign he promised to terminate injustice in Peru for the impoverished population and to revive social democracy. Humala’s top priorities were to increase the minimum wage and the salaries of the public sector, guarantee a pension for people over 65 years who have no social protection, expansion of health care including building of hospitals especially in rural areas and implementation of an emergency ambulance network, improvement of the public education system and fight malnutrition as well as expansion of basic infrastructure to all areas in Peru. He also promised to maintain foreign investment and economic growth, which kept the economic growth of Peru on the rise.

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STATE OF THE TEXTILE AND APPAREL INDUSTRY The textile and clothing sector in Peru has great potential, but the difficult economic environment in major markets, fall in the exchange rate and growing labor costs are hindering their exports.The cotton grown in Peru is bought by the textile industry at prices prevailing in the international market, but owing to lack of productivity and other factors Peruvian farmers have to depend on Government subsidies to make their prices competitive. The availability of cotton at competitive prices is essential for growth of the country’s textile and apparel sector, and urged the Government to change its strategy, as the present strategy has not worked. The Peruvian textile and apparel sector has a deserved international positioning as a flexible supplier of large well known global brands. This is the result of the quality of inputs, high development of the Peruvian textile capacity and the excellent level of local apparel workshops, which can produce with great efficiency even the most complex garments.

Fig 5 Peru Round Knit Machine.

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The Peruvian textile and apparel exports peaked in 2008. The many international brands served by the Peruvian industry include Armani Exchange, Calvin Klein, Donna Karan Inc., Guess and Lacoste among others. The North American market in 2009 had more than 50% of the sector exports, but clients from various European, Latin American and Asian countries are also important. There is a specialization in knitted cotton garments, where the quality of long and extra long fibers that are grown in Peru can be appreciated. Exports based on fine alpaca and vicuna hair are highlighted in the case of thermal clothing. The efficient production process of the Peruvian textile and apparel sector, ranging from cotton farming activities or vicuña and alpaca raising and shearing, to spinning, weaving, dyeing, tailoring and garment finishing. A strategic differentiator in the highest quality Peruvian clothing is the use of pima cotton, a variety grown only in Peru, characterized by its extra long strand, and it is soft and considered one of the world’s finest threads. Peru is the first world’s largest producer of the finest South American camelid fibers, where alpaca and vicuña fibers are found, being the latter higher than the cashmere fiber. For efficient and flexible care of international clients, most Peruvian exporters have integrated their production processes. There are also specialized service providers in each of the production stages. The geographical proximity and time zone makes it easy to provide service to the U.S. market. The long Peruvian textile tradition has fostered the professionalization and training of manpower, both for industrial processes and agriculture and clothing. There are educational classes at universities dedicated to these practices. The textile business is a sector with value-added opportunities, and has shown a strong upward trend, reaching its peak in 2008. Due to the international financial crisis during 2009 there was a slowdown in exports, but there was a rapid recovery with a 15% increase by 2010.

Fig 5: Middle Incom is the majority of Pe

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The Peruvian textile and apparel sector could develop diverse marketing strategies according to each target market. One target market in particular being local and Latin American Markets introducing products with competitive price in the market through the creation of local brands which positioning based on opening stores in boutique format. The other target market would be the European Market positioning the country as having a recognized quality in the textile and apparel sector through the supply of products “premium� for which consumers re willing to pay an additional price or serve a niche market. Peru Moda is the biggest event of the Peruvian fashion industry and is considered one of the most important in Latin America. Representatives from leading global brands such as GAP, Armani, Custo Barcelona, Maison Simons, La Martina and Palacio de Hierro, among others are expected to attend. It promotes the participation of Peruvian businessmen in trade fairs and world eventssuch as Pret a Porter, Play Time, Ethical Fashion (France), Magic Las Vegas (USA) and Colombiamoda. Fair Trade promotes the development of a differentiated product in the context of an alternative strategy to enter new markets. COSTS The cost of getting our knit sweaters produced in Peru is $9.71, which is less than the price of producing the sweaters in Egypt, but more expensive than what it would cost in China. The trade agreement in place between Peru and the US eliminates duty and extra fees, which is appealing when considering producing our product in Peru. WHY PERU? Peru has many appealing characteristics that make it a great choice for the production of our knit sweaters. The government in Peru is stable and well organized and there is no current political turmoil. The economy struggles slightly, but is showing rapidly increasing growth. The abundance of natural resources in Peru make it a great place for producing many products, but in particular they are known for their high quality pima cotton which is very beneficial for KnitFit Co. The trade agreement between Peru and US makes trade easier and also eliminates duty, and the shipping time would be relatively short at about one week. The textile industry in Peru is fairly new and up coming, which makes a start up company like KnitFit Co. very appealing. All of the reasons given provide a great example for why Peru would be a great choice for manufacturing our product. Fig 6: Peru’s GDP is increasing every year.

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EGYPT Country Overview: Egypt is a small, but most populous country in Africa located at the top northeast tip of the continent. With a population totaling over 80 million people, Egypt is also currently the largest Arab country. Egypt’s clothing and textiles industry has always been a major contributor to their economy. Egypt is the fourth largest exporting market for the United States in the Middle East and 33rd globally for the United States. The U.S. is Egypt’s largest trading partner and second largest investor. The United States imports apparel, natural gas and oil, fertilizers, textile coverings, and agricultural products from Egypt. One of the most beneficial agreements that the United States and Egypt share is the US Qualifying Industrial Zones (QIZ) Agreement. QIZ allows Egypt to export to the United States duty free as long as a minimum of10.5% of their products contain inputs from Israel. Factories must add 35% value between Egypt, Israel, and the United States and the product must be grown, produced, and/or manufactured in the specified zones. The Qualifying Industrial Zones in Egypt include the Greater Cairo, the Alexandria, the Suez Canal, the Central Delta, the Beni Suef, & the Al Minya zones. U.S. Tariffs are usually high on apparel goods; this is very attractive to the Egyptian market. Another agreement established between the United States and Egypt is the Common Market For Eastern & Southern Africa (COMESA) Agreement. COMESA includes 19 countries that receive 100% reduction of import tariffs as long as a minimum of 45% local added-value is added to the goods traded. Within this agreement the United States charges no duties on products imported from Egypt. The purpose of these agreements is to ensure and promote strength and peace between the United States and Egypt. The two countries are both interested in gaining freer trade and increased investment flow in a manner that is fair, equitable, and nondiscriminatory and these agreements are the first steps to ensure these factors.

25 Fig 7: Egypts Economy, Wholesale and retail traid is 13%.


Egypt’s location at the gateway of trade and commerce for Southern Europe and Africa as well as the Middle East, is positioned at a prime location for the transit of goods. This has been considered a key destination for American companies seeking to do business in Egypt and the region. After Egypt’s independence from the United Kingdom, the United States established diplomatic relations with Egypt in 1922. Many foreign and Egyptian companies have lost some trust in the Egyptian market and are waiting for their economy to transition into their new democratic form and reestablish some security. This has not completely scared off investors like the United States. The United States and Egypt established their relationship based on their interests in peace and stability in the Middle East, re-stabilizing Egypt’s economy by strengthening their trade relations, and promoting regional security. Egypt has proven to be a reliable ally to the United States in helping protect regional stability and security, including countering terrorism. Egypt’s initial transition to democracy in 2011 has shown promise for their future political stability, not only for their country but also for the entire Middle East and North Africa (MENA). The United States will continue to support Egypt’s transition to democracy and economic stability to help strengthen a long and reliable ally. The change to democracy will protect the basic rights of Egyptian citizens. This is important to the United States because a prosperous economy means prosperous companies, citizens, and business that they can be a part of. A prosperous and democratic Egypt will also mean stability for the Middle East and North Africa (MENA) region as a whole.

26Egyptian Flag Fig 8:


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China Justifications

1. I gave China a 10 for Business Climate because China operates as a market economy. They have emerged to the lead exporter in the world with the second largest economy. China’s economy has grown 7.8 percent in 2012 from a year earlier. This is rather slow in comparison to previous years. China’s luxury consumer base is expected to expand from 80 million to 180 million people. China is also expected to overtake Japan as the world’s largest consumer of luxury goods. China’s luxury goods consumption reached us $6.5 billion maintain the world’s fastest growth rate for three consecutive years. China is also seeing growth in the e-commerce consumers. By 2015, China is forecasted to reach 520 million online shoppers. 2. I gave China a 9 for costs because they are one of the cheapest countries for production. Their work wages are cheap compared to countries like the U.S, Egypt and Peru. This is because they have more people to work and who are willing to work for less. China does not have any trade agreements with the U.S, which adds costs for tariffs but it is still cheaper then the cost to have something produced in Peru. 3. I gave China a 7 for government because they are still run as a communist government. They have a more then 80 million-member communist party who controls the tightest central government offices and in urban economic, industrial and cultural settings. Although Peru and Egypt have more freedom with their government, I think China will be changing shortly. China’s government is in trouble with an annual growth rate of below eight percent. The Chinese Communist Party said they would supply growth in return for political quiescence. The end of high growth would imply that this social contract is in trouble. 4. I gave China’s location a 7 because it is somewhat convenient for the United States, but not as good as Peru. Peru can be delivered by boat and truck in just a matter of hours. China would take at least a week to boat from China to and American Export. This would cost more then Peru and take more time. reform, the garment industry has achieved significant development because of the fast growth in the national economy and domestic demands. They are making progress within their structure, technology, brand development, quality control and exploration in the international markets. The garment industry is mainly located in Pearl River Delta and southeast coastal areas. With years of experience in production management, this industry secures its front ranking in the world market. The garment industry in China is undergoing a new wave of upgrading changing their growth patterns and deep¬ening collaboration and innovation within the industrial network. China must find its new position in the global economy, create a new competitive edge in international cooperation and competition and continue to innovate.

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5. I gave China a 5 for risks. I did this because China is surrounded by 12 other countries, which enables it to have a lot of political issues. They are also still communist run therefore they do not have the freedom other countries have. Every country has risks, Peru has some risks being in South America, and Egypt is under a lot of risk being in Africa with the war breaking out. Although China has a lot of risks, I don’t think they will effect our business greatly. I gave social stability a 7 because they are improving but are not there yet. China wants to be a rich, strong and prosperous nation, however the majority of citizens must enter the middle class. For this to happen the annual general income must be three times the average GDP and higher. The annual income must be of U.S$ 18,000. Once they achieve this income they will be at the living standard similar to a lower class in the U.S. Majority of this group will be urban residents with a stable and high-income job, and those who have at least a high school education. They will have money to spend on food, clothing and housing while having some disposable income, which will be used for consumption. China has about 250 million people that can be classified as middle class, which is only about 18.5% of the total population. The middle class is the cornerstone of social stability. They own property and have some social status and their social development will build political democracy. 6. For Sourcing Guidelines, I gave China a 7 because they have great sourcing guidelines, it is just whether or not they follow the rules. They have a lot of Child labor issues because there are so many people working in factories, they can sometimes hide it. Their established rules are overtime pays are time and a half for over 44 hours per week, paid leave for at least 3 months for maternity, at least 16 days paid vacation, minimum wages that are increasing , but they have no right to strike. 7. I gave China’s textile industry a 10. China’s garment industry is one of the industries in China that has the most international competition and the fastest growing. There are more then 100,000 garment manufacturers that employ over 10 million people. In 2012, China made altogether 43.6 billion pieces of garments with export value 1.5 billion. Since China’s reform, the garment industry has achieved significant development because of the fast growth in the national economy and domestic demands. They are making progress within their structure, technology, brand development, quality control and exploration in the international markets. The garment industry is mainly located in Pearl River Delta and southeast coastal areas. With years of experience in production management, this industry secures its front ranking in the world market. The garment industry in China is undergoing a new wave of upgrading changing

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their growth patterns and deepÂŹening collaboration and innovation within the industrial network. China must find its new position in the global economy, create a new competitive edge in international cooperation and competition and continue to innovate. 8. I gave China a 0 for trade agreements because they do not have a trade agreement with the United States. 9.Trained work-force is a 9 because they have so many employees and they train their employees to work in all aspects of these factories. 10. Socio-eco-political climate is an 8 because overall China is improving their country standards. Their economy is growing with so much international business and most companies are either working with China or opening businesses over there. They are in the process of growing their middle class to be more like the United States and they are on their way to eliminating communism.

Fig 9: China’s Labor Laws 30


Peru Justifications

Business Climate (8): Peru got an 8 for business climate because China is the lead exporter in the world, but Peru is a close second in relation followed by Egypt. Business negotiations and meetings are relatively informal and relaxed in Peru. Relationship building is very important, as is informal communication. More recently the business setting in Peru has picked up as its economy has been on a steady incline. There are not too many formalities involved in business negotiations making business transactions very easy. Costs (6): The costing in Peru and Egypt was slightly high compared to that of China because the cost of goods in China is generally lower even over. The cost for our product in Peru was relatively expensive. Mostly because of the price of their high quality pima cotton that they pride themselves on. For basic garments our knit sweaters are relatively expensive to produce in Peru mostly because of the price of cotton. Every other aspect of costing seemed to be relatively average. The cost of the freight container was relatively inexpensive, and no duty based on the trade agreement is also another plus. Government (8): Peru is a presidential representative democratic republic. Egypt has a fairly stable government, but China is still communist which is why Peru has been ranked higher. The government is divided into three branches: the executive, the legislative and the judicial. The President is popularly elected for a five-year term and the Peruvian constitution of 1993 permits one consecutive re-election. The president takes on the role of head of state and head of government, and the first vice president and the second vice president are also popularly elected but have no constitutional functions unless the president is unable to perform his duties. Ollanta Humala was elected as President of Peru in 2011. Promising the Peruvians a fair share of the wealth from Peru’s key natural resources. Humala spread joy amongst his followers and fear amongst national and foreign investors. During his campaign he promised to terminate injustice in Peru for the impoverished population and to revive social democracy. Location (9): Peru is located in the central part of South America and borders on the north with Ecuador and Colombia, on the east with Brazil and Bolivia, on the south with Chile and on the west with the Pacific Ocean. Peru is located relatively close to southern Florida at about 3,000 miles providing a fast shipping time of about a week. Egypt and China are significantly further away from the US than Peru giving Peru the advantage in terms of location. Risks (7): Some risks that are present is the uneven distribution of wealth, problems with rebel groups and the price of cotton. These three aspects are the main risks involved with manufacturing in Peru. Peru is relatively stable though in most aspects. Peru has more recently evolved and grown in comparison to other countries so its slower maturity could also pose a threat. China is surrounded by twelve different countries that present the threat of turmoil, and Egypt is currently at war creating 31 even higher risks for both of these countries.


Social Stability (5): The country has to deal with some big challenges, especially regarding social issues. Despite some recent improvements, its income distribution remains unequal. Widespread rural poverty might affect growth and cause more social and political conflicts. Peru still also has problems to conquer with its informal sector and the problems arising with drug production and narco-trafficking. Daily life differs in pattern for Peruvians depending on their social class and whether they live in rural or urban settings. In comparison to China and Egypt Peru’s social stability is lower mostly based on the instability of the class system. Sourcing Guidelines (8): For most of the manufacturers in Peru they were very transparent with their sourcing guidelines. Not all of the elements were always present though especially in terms of factory condition specifics. Some manufactures did not offer much information, but the ones that did I was relatively impressed with. KnitFit Co. is very concerned with being environmentally friendly and labor conscious, which I found to be true of most Peruvian manufactures, but not all. China and Egypt have problems with unfair and child labor which is why they fall behind Peru in ranking for sourcing guidelines. Textile Industry (8): The textile and clothing sector in Peru has great potential, but the difficult economic environment in major markets, fall in the exchange rate and growing labor costs are hindering their exports. The Peruvian textile and apparel sector has a deserved international positioning as a flexible supplier of large well known global brands. This is the result of the quality of inputs, high development of the Peruvian textile capacity and the excellent level of local apparel workshops, which can produce with great efficiency even the most complex garments. The Peruvian textile and apparel sector could develop diverse marketing strategies according to each target market. China is much more popular for clothing manufacturing than Peru and Egypt. Trade Agreements (10): There is a trade agreement that exits between Peru and the US. As a result of the U.S.-Peru Trade Promotion Agreement (TPA), 80 percent of U.S. consumer and industrial goods exports to Peru are no longer subject to tariffs. Tariffs on the rest of those products will be phased out by 2019. For agricultural products, tariffs have been eliminated on almost 90% of U.S. exports – remaining tariffs will be phased out by 2026. To be eligible for tariff-free treatment under the TPA, products must meet the relevant rules of origin. Egypt and China both do not have trade agreements with the US.

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Trained Work Force (7): The minimum age for employment in non-industrial agricultural work is 15 years,16 years for work in the industrial, commercial, and mining sectors and 17 years for work in the industrial fishing sector. Children ages 12 to 14 may perform certain jobs, subject to restrictions, only if they obtain legal permission and can certify that they are attending school. Children ages 12 to 14 years are prohibited from working more than four hours a day, or over 24 hours a week, and adolescents between 15 and 17 years may not work more than six hours a day, or over 36 hours a week. Night work or work that might serve as an obstacle to continued school attendance is prohibited for children under 18 years of age. Underground work or work that involves heavy lifting, toxic substances, or responsibility for one’s own safety or the safety of other workers is prohibited for children under 18 years. The workers are average men and women that are skilled at their job, but not necessarily trained in their field. They do have fairly good laws in place for child labor and work hours, but they seem to take whoever they can get especially those directly in factories. The work force in China is bigger and more skilled in apparel making than that of Peru and Egypt mostly based on the fact that China is more popular for garment manufacturing. Social/Eco/Political Climate (7): Peru has proven to have some of the fastest economic growth in Latin America in the last seven years because it one of the leading mineral exporters, and showed a GDP growth rate of 8% in 2007. The country’s economic performance has been very strong with a 20% fall in poverty rates and decade long expansion resulting in the tripling of the per capita income. Inequality persists and the distribution of the country’s growing wealth to all Peruvians seems difficult. Peru is a presidential representative democratic republic. The government is divided into three branches: the executive, the legislative and the judicial. The President is popularly elected for a five-year term. There are two main rebel groups operating in Peru, both leftist: The “Sendero Luminoso” (Shining Path) and the “Movimiento Revolucionario Tupac Amaru” (Tupac Amaru Revolutionary Movement). Both groups arose in response to Peru’s entrenched system of race and class based discrimination. Politically Peru is in good standing, but they falter slightly based on their distribution of wealth and problems that exist with the rebel groups. Chinas ranking is slightly higher and Egypt’s is slightly lower mostly having to do with the overall growth and development of each country. Total: 83

33


Egypt Justifications: Business Climate: We gave Egypt a 7 in Business Climate because after Egypt’s switch to democracy, they are actively seeking to improve in domestic, regional, and international investments. These actions are aimed to strengthen their business climate. Egypt’s reputable potential for high-growth in their economy is strongly supported by their long and profitable textile industry with Europe and the United States. China is currently revitalizing their economy as well. The concerns with slower economic growth and rising labor costs are rising with outside invested countries. Peru’s business climate is very strong and organized with multiple different laws associated with trade and trade agreements with over 32 different countries. It was ranked at a 7/10 along with Paraguay for being the highest favorable climate for business and has plans for new investments with Europe and Asia along with a new metro system in Lima for 2013. Costs: We gave Egypt a 6 for costs because costs in Egypt have risen since last year and the cost of income per capita is at 10.2%. While most costs in China are rising, the costs for starting a new business and enforcing contracts have gone down since last year. Their cost of income per capita is at 2.1%. Peru’s costs of business have for the most part risen since last year, especially in dealing with construction permits. Unfortunately costs have risen slightly for starting a business and trading across borders. Their current cost of income per capita is 10.6%. Government: We gave egypt’s government a 6 because it has recently made a switch to try and stabilize their economy with democracy. China’s president Xi Jinping has plans to revitalize their economy even though on-lookers believe this may worsen the local government debt and inflate property costs. China’s economic growth is at its lowest in 13 years, yet are still considered a potential threat in the market. Peru’s government has taken on a decentralized setting and is set to attract both foreign and domestic investments for all sectors of their economy. The Base Law for Decentralization, the Organic Law on Regional Governments, and the Organic Law of Municipalities strive for private investment for regional and local governments. Location: WE gave Egypts Location a 6 because Egypt is known for it’s prime location in the Middle East for trading between it’s surrounding countries in Southern Europe and Western Asia. This location may not be so ideal, however, for trading with the United States, especially to Portland, Oregon. China’s location holds a much more comfortable position geographically for shipments to the west coast of the United States. Peru’s location in reference to the west coast of the United States is the most ideal in concern of costs and lead-times of shipments.

34


Risks: We gave Egypts risks a 4 because the major risk for Egypt right now would be its economic state. Future investments may be put on hold while the economy stabilizes, but the overall economic potential is very attractive, especially for the relationship the U.S already has established with Egypt. China’s plans for revitalizing their economy is a risk for new and current investors to their trading market. Their biggest business risk, however, would fall under their increase in labor costs. Shortages in employees and managers have never been so low. Peru’s major risk in reference to apparel and textile trading lies in counterfeit goods. Intellectual Property Law has recently complied with the United State Free Trade Agreement requirements, along with the newer countries including Europe and Colombia. This is clearly not a subject that is taken lightly in the apparel industry and will continue to be monitored by all parties involved. Social Stability: We gave Egypt’s social stability an 8 because Egypt’s struggle between political groups who encounter their own militias. China’s massive population numbers gives them a strong sense of stability especially in such a controlled and cultured (family oriented) environment. Peru’s economic freedom score is 68.2 and holds 44th place in freest economy for 2013. There is a minor mining conflict that rises some social conflict, but Peru’s score on freedom from corruption remains significantly below the world average. Sourcing Guidelines: We gave Egypt’s sourcing guideline’s a 6 because its faults lie in there overtime hours in the factories. China’s sourcing guideline’s faults lie in their poor costs of labor and use of young workers. Peru’s sourcing guideline’s faults lie in their risks for counterfeiting their goods. Textile Industry: We gave Egypts textile industry a 8 because Egypt’s textile industry has been the oldest and most profitable industry for its country. The industry provides a quarter of all industrial jobs and accounts for 27% of non-oil exports. Egypt is known for its high quality cotton. Most long staple, local crops are exported because the fibers are too fine/expensive to manufacture denim and t-shirts. The China Textile Association showed that their export volume on had a 1% increase I the first 3 quarters of the fiscal year. The Association sees that an update in technology to appeal to influential will be needed as soon as possible. Peru’s textile industry contributes to 1.6 of the country’s Gross Domestic Product and employs 350,000 citizens. Their availability of cotton and cotton farming is suffering in the competitive pricing market. Modernization of irrigation projects, technical assistance, strength in partnerships, access to finance and increase in productive areas are a few places the chairman of the Association of Exporters thinks Peru needs to start. Trade Agreements: Egypt and the U.S have no trade agreements that eliminate tarrifs however they are in the process of creating relationships and considering the need for duty free trade. 35


Trained Work Force: Egypt’s workforce makes up 27.24 million citizens. Agriculture makes up 32%, industry jobs make up 17%, and service jobs make up 51%. Egypt’s unemployment rate is 12.5% with 24.8% being unemployed between the ages of 15-24. Almost 800 million citizens are employed in China with 39.6% in the primary industry workforce, 27.2% in the usable products industry, ans 33.2% in the service industry. Peru contains a 28% home workforce with 35% sourced in their offshore industry in Lima. Socio-Eco-Political: In Egypt economic justice, poverty, and inequality are growing. Freedom of speech, press, and elections seem to be impossible things to achieve with the current government system. China’s 8% growth annually over the past two decades has improved the standards of living for its citizens. There has also been a dramatic increase in demand for environmentally friendly resources in production growth. There have been cut backs in forest cropping which has decreased flooding and species loss. Water facilities had gotten really poor and are finally starting to improve. Peru has been struggling with some racial indifference. 82% of the population is indigenous and 15% making up a Caucasian percentage. There are many poverty related resentments and television ratings have shown Caucasians have a more appealed dominate presents.

Fig 10: Air Freight Trading routes with Cairo, Egypt and the U.S

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Supplier Analysis We initially chose our suppliers in each of our country based on their sustainability, cost and quality. Quality is what we focused on mostly because that is what our brand is about. We narrowed our selctions down to our top 3 by looking at them overall and comparing the quality (based on their customers) to their sustainability. The most eco-friendly high quality companies were what we ended up with.

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China Supplier Ranking SUPPLIER RANKING Scale of 1 to 10 with 1 being the worst and 10 the best

China

Peru

Turbo Knit

AbiliFes Capacity Costs Customer Service Customers Flexibility Lead-­‐Fme

Shenzhou

Kata Mfgr

Sup

9 10 8

9 10 7

10 8 7

9 10

7 9 9 8 9 9

10 10 9 8 9 10

10 10 10 7 9 10

10 8 8 9 10 10

9

10

9

10

9

9

9

9

9

10

10

9

Total

105

111

109

102

Average

8.8

9.3

9.1

8.5

Management

Quality Services Offered Strategic Outlook Sourcing Guidelines

38

South Asia


China Supplier Ranking 4. South Asia Knitting Fty, LTD Customers: Sears, The Gap Inc. Banana Republic www.southasiagroup.com Leoyeung@southasiagroup.com South Asia Textile has successfully established a world-renowned brand in knitwear-manufacturing. When the company was founded in 1963 its primary focus was on the production of high quality knitwear. They have seen steady growth over the years. Since 1980 Chairman Lu Sin has contributed to build over 150 school-buildings. He has also donated more than HK$6 million, supporting education business in China. The company has contributed 100,000 pieces of knitwear to people living in remote countryside. Lu Sin donated the first Chang Ding High School. South Asia Knitting Company: 1. South has an average ranking of 9.3. For their abilities I gave them a 9 because they are a knitting textile, garment manufacturing, bleaching and dyeing, machinery production, car repair, property development and logistics company. They do a lot of different things. For their capacity I gave them a 10 because they can produce 40 million knitwear and 10 million garments a year. For Costs, I gave them an 7 because their costs are reasonable but don’t include freight. For their customer service I gave them a 10 because they do offer contact information for the heads of each department/factory. Their motto is “serving out customers with excellance.” They are fully committed to keeping consistant and quality of raw materials. For customers I gave them a 10 because their customers include Abercrombie and Fitch, Gap, Banana Republic, Ann Taylor, Ralph Lauren and Land’s End. For flexibility I gave them a 9 because they work around your time. I have them a 9 for management because they have won multiple awards including the Ralph Lauren outstanding Children’s wear award and Land’s end number 1 supplier award. The fact that their company is overall great, means they have a great management team that will help you. I also gave them a 10 for quality because of these awards as well as that their customers are known for great quality. I gave them a 10 for services offered because they offer so many different services. As for strategic outlook I gave them a 9 because they are ranked 3rd among 3,800 textile enterprises in Hong Kong and they are dedicated to developing overseas markets and increasing investments in recent years. They are working towards making South Asia a world-class knitwear enterprise for the country. For sourcing guidelines I gave them a 10 because they work really hard to be sustainable and offer new safe and high technological equipment to make it easier for their workers to work. They also follow all of the China labor standards.

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*Turbo Knit Factory Ltd. www.blgroupintl.com Customers: Dillards, LLBean, Victoria Secret, Abercrombie and Fitch, Nordstrom, White/Black House KBL is the premier Global supplier of Sweaters in the World. They have facilities in Hong, Mexico, and China. Their technology offers 1500 of the most advanced machinery. Some of their customers include Abercrombie & Fitch, Victorias Secret, L.L Bean, Dillards, Bebe, and Nordstrom. They produce Ladies 100% cotton knits. Turbo Knit Factory: 2. Turbo Knit has an average ranking of 8.8. KBL group inernational’s global headquarters are in New York. For their abilities I gave them a 9 because they have 5 facilities. They have one in Mexico that has 381 stoll machines and 2000 workers. They have one in Hong Kong that has 462 knittng machines and another in Guandong with 590 knitting machines. For Capacity I gave them a 10 because they can produce over 200,000 a month between their three facilities. For their cost I gave them an 8 because they seem relatively cheap. For their customer service I gave them a 7 because they offer contact information but are not quick to respond. I gave them a 9 for customers because their customers are Abercrombie, bebe, Nordstrom, Dillards and LL Bean. For flexibility I gave them a 9 because they can make any kind of knitwear from sweaters to t-shirts. From these customers I’ve learned that their quality is good. KBL offers 1500 of the most advanced Stoll machinery, more then any company in the world. I gave them a 9 for services offered because they can knit cables, pointelles, intarsias and jacquards. They use cotton, cotton blends, wool, wool blends and acrylic. For their strategic outlook I gave them a 9 because they have so much machinery and capacity that they will be able to produce more and more each year. For their sourcing guidelines I gave them a 9 because they follow their guidelines really close because and allow audits whenever you want. 1. Suzhou Hengrun Import & Export Corp., Ltd admin@hengrunchina.com www.hengrunchina.com Suzhou was founded in 2000. The former company specialized in textiles and was established in 1978. It was ranked 25th in the import and export turnover of the year 2005. They mainly handle import and export of piece goods, garments, wool/cotton knitwear and home textiles. It has obtained comprehensive sales outlet in the world and now owns it’s own brand A-CCO. The Corp branches in Hong Kong, Japan, Shanghai, and Nanjining. They currently possess four factories that produce knitwear, woven wear, silk wear and a garment designing and sample-making center. The Corp has received awards in quality Management Authentication and holds an excellent reputation. 40


l Group Holdings average rank of 9.1. The Group aims to develop long-term partnerships with each of its key customers. The Group’s customer-centered culture focuses on flexibility and sensitivity to the increasing demands made by its customers. I gave them an 8 for capacity because although they meet our capacity right now they may not have a lot of room to grow for the future. I have them a 7 for cost, because although I never recieved a quote, they are a wholesale supplier from China and are bound to be fairly cheap. To assist customers in responding to the changes in the marketplace, the sales and marketing strategy of the Group focuses on offering customers the following services across the knitwear supply chain: (i) customized fabrics, (ii) dyeing and finishing services, (iii) printing and embroidery services, (iv) cutting and sewing, and (v) packaging and logistics. Although not all of the Group’s customers require all of the above services, the Directors believe that having these vertical service capabilities is important in distinguishing the Group from its competitors and meeting the changing needs of its customers.The Group has a sales office in HongKong and Shanghai and a representative office in Japan for handling export sales. The Directors believe that by locating sales representatives near to the Group’s customers, the Group is able to respond to market changes and customers’ requirements promptly. One of the focuses of the sales team is to gain an early understanding of the proposed new designs and ideas of the Group’s customers at the start of each new season. Business meetings with major customers are held prior to the commencement of each season in order to formulate the production and sales plan for the coming season. With this information, the sales team can then suggest certain fabrics, trim, wash or printing techniques or designs to the customer that may fit well with that customer’s specific design and fabric requirements as well as production budget. The Directors believe that these services are important factors in winning orders as the Group’s aim is to meet its customers’ requirements as well as being able to produce apparel in an efficient and timely fashion.The Group regularly invites customers to visit its production facilities so that they can better understand the production methods, quality control mechanisms, research and development capabilities and employee care standards of the Group. In addition, the Group also participates in trade shows, particularly in China, to further promote its new products and especially targeting the U.S. and European markets. They work wit UNIQLO, Nike, Adidas, Puma and Champion. They focus more on t-shirt Knitwear but have experience and the flexibility to do sweater knits. Their strategic outlook is market expansion in the U.S and strengthening product development capability. They continuously take “human paramount, client imperatorial,” value point and devote themselves to become the global knitwear manufacturer with strongest competition.

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Peru Supplier Rankings

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Peru Suppliers: Algolimsa: Manufacturer in Peru with an office in California, USA. Manufacturer of casual and sports wear. Fabrics utilized: 100% pima cotton / 100% cotton / poly cotton / cotton spandex. Complete vertical operation with processes which go from manufacturing, to quality control, through finishing, packing and FOB shipping scheduling. ALGOLIMSA is divided into three separate and distinctive operations: knitting, dyeing, and sewing house process. Pre-Production From first pattern to approved production based on customer’s specs, and subject to prototype approvals and quotes from raw materials to finished production, fit sampling and grading and fabric and color testing. They have quality control systems in place as well as packaging and shipping operations. ALGOLIMSA is a top quality operation very much aligned with modern production techniques and modern equipment. Textiles of Peru: They manufacture clothing for private label companies in the U.S.A and Europe. They manufacture for several well-known brands in the market such as Adidas Licensee USA. With offices in Woodland Hills, California and an office in front of the US Embassy in Peru. They offer their clients the trust of their very experienced team. Minimums can go as low as 200 units to whatever amounts. Specializing in Pima cotton, Pima cotton gassed, mercerized, baby alpaca, bamboo, merino wool, etc. For polo shirts, t-shirts, shirts, underwear with normal cotton to the finest Pima Cotton, it can be mercerized or a normal combed cotton. Also, they work with different kinds of laundry processes, embroidery, prints, etc. They also work with lycra, polyester, French terry, fleece. They offer quotes door-todoor insured via airline cargo. GSEA Peru: Is a privately owned facility operating in Callao, Lima. They provide apparel merchandise at factory direct pricing. Their services include fabric research and development, cut/sew knitproduction, graphic design, pattern development, screen-printing, embroidery, labeling and packaging and exporting and delivery.

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ALGOLIMSA Abilities (10): This is a fully vertical integrated manufacturing organization functioning under three distinct operations: yarn, knitting and dyeing, sewing, grading, marking, cutting, spinning, knitting, marking and grading. Fabric testing, color testing, all trims, production planning. Algolimsa is divided into three separate and distinctive operations: Knitting, Dyeing, and Sewing House process. Complete vertical operation with processes which go from Manufacturing, to Quality Control, through Finishing, Packing and FOB shipping scheduling. Capacity (9): They said that they produce a high capacity at a time but did not specify beyond that. Costs: Customer Service (10): They have customer service teams and management available for help when needed and is easy to reach and work with. They provide the up most care for their clients. Customers (10): Their customers consist of GAP, Adidas, Theory, Beology, Life is Good and Everlast. These are all companies that carry basics in similar fabric, style and cost as KnitFit Co. Flexibility (10): They have a diverse selection of cotton made products in different fabrics and colors. They also work in product development, and like creating new products to set them apart from their competition Lead-time (9): They were not very specific with lead-time, but did mention that they ensure timely delivery in many ways. You can track shipments and they guarantee fast production tomes of what you need. Management (10): They have separate knowledgeable management teams for each different service that they offer for specialized attention. Quality (10): They have Quality Control systems in place as well as packaging and shipping operations. Algolimsa is a top quality operation very much aligned with modern production techniques and modern equipment. Services Offered (9): Complete vertical operation with processes which go from Manufacturing, to Quality Control, through Finishing, Packing and FOB Shipping scheduling. Strategic Outlook (9): They have no plans to expand their business as of now, but they pride themselves on always being up to date with technology. They also like building long lasting relationships with their clients. Sourcing Guidelines (10): They allow factory visits at any time, and they feel strongly about not implementing forced and child labor. They also have guidelines in place for safety and health for the employees.

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TEXTILES OF PERU Abilities (10): Woven and knitted apparel for infants, men and women. They are also fabric cutters, garment sewers, pattern makers, graders, screen-printers, embroiderers, customs brokers and textile sourcing. They offer a very wide range of basics and garment making abilities. Capacity (8): They work with high capacities, but did not specify. Costs: Customer Service (10): They offer many different forms of customer service in sales assistance, advice and consults, assistance in logistics and product development. There are customer service representatives in each field for specialized help. Customers (9): They mentioned a few of their customers as Adidas, GAP and Everlast. These customers are similar to that of KnitFit Co. in regard to basics and quality. Flexibility (8): Textiles of Peru offers a wide range of basic garments, but they are all fairly similar and simple. They are though flexible and willing to work with the customer by sending samples and having consultations to ensure satisfaction. Lead-time (7): They were not very specific with lead-time, but did mention that they ensure timely delivery in many ways. They also make sure that all proper documentation is accounted for when shipping. They also track their shipments in transit and they also thrive to keep their clients up to date on all things regarding laws and regulations for shipping and transit. Management (9): Managed by professionals with over 25 years of experience. They all have extensive knowledge in the apparel production process and garment manufacturing. All employees have wide range of knowledge. I feel as if they have management, but more detailed information and examples would have made it more convincing. Quality (9): A standard quality level is maintained to ensure effective quality control at T.O.P Partners. They oversee every single phase of internal quality control provided. The Quality Assurance is in manufacturer’s responsibility but the company monitors the quality during the sampling or production processes. They prefer to work with the manufacturers in which they are sure of their quality and service. Services Offered (10): Their services consist of Review of all factory’s capacities and expertise, Review cost-effective structures, Product Development assistance, Logistics, Sales Assistance and Ongoing advice and consultation. They offer a lot of different services that are very involved with very experienced teams of people. Strategic Outlook (7): They did not mention anything about expanding anytime in the near future, but they are interested in building long lasting relationships with their clients. Sourcing Guidelines (8): They do have a set of sourcing guidelines, but they were relatively vague. They state that they do not work that have forced labor, and they also only work with factories that have health and safety precautions and provide workers with reasonable pay. They do quality inspections in their factories

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GSEA PERU Abilities (7): They make women’s basics in a variety of styles from t-shirts to dresses. While they do offer a lot of different kinds of product it is focused on only one market (women) and they are fairly basic pieces, which is why I am ranking them at a 7 for ability. Capacity (8): They work with high capacity and are known for their fast turn around and fast shipping time, but they did not specify with any figures. Costs: Customer Service (8): Their customer service is based on quality of the product and on time delivery. They spend very little time selling people when it comes to customer service. Customers (6): They do have a significant amount of customers, but they are not as commonly know as are some of the customers of the other suppliers. Their customers consist of Euphoria, V&X creations ltd., Paper Denim and Cloth and Glossy. These are not necessary as high quality as KnitFit Co., which is why I gave them a lower ranking. Flexibility (8): They offer a very basic product line, but they do offer a number of services for their products such as dyeing and screen-printing. Overall though they have a very low assortment of products that they offer. Lead-time (9): Lead-time is about one to two weeks, and their port is only 10 miles from their factory. They pride themselves on their lead-time and ability to produce and ship much faster than countries like China. Management (10): They have a management team for each service that they offer, as well as senior management, accountants, a legal team and people that specialize in US sales. Their management teams have at least eight years experience. Quality (8): They are a performance-based business and quality for them is measured on timeliness and fast production. They did not seem too concerned with talking about their quality other than that their customers are always satisfied and that they like relationship building with other companies. Services Offered (9): They offer services in cut and sew knit development, screen printing, exporting and delivery, labeling and packaging, graphic design and fabric research and development. They do offer a lot of services but in comparison to the other suppliers that I found they rank slightly slower. Strategic Outlook (10): They are in the works of developing a new manufacturing facility in Callao, Lima. It is a privately owned facility that was founded in 2008. They like to build long-term relationships with their clients and like to grow with them as business increases. Sourcing Guidelines (10): They adhere to all national and international production guidelines opening our factory doors to any 2nd or 3rd party inspectors/auditors. Their factories are open to visitors at any time.

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Egypt Supplier Rankings SUPPLIER RANKING Scale of 1 to 10 with 1 being the worst and 10 the best

China

Peru

Turbo Knit

AbiliFes Capacity Costs Customer Service Customers Flexibility Lead-­‐Fme

South Asia

Shenzhou

Kata M

9 10 8

9 10 7

10 8 7

7 9 9 8 9 9

10 10 9 8 9 10

10 10 10 7 9 10

9

10

9

9

9

9

9

10

10

Total

105

111

109

Average

8.8

9.3

9.1

Management

Quality Services Offered Strategic Outlook Sourcing Guidelines

47


Suppliers: Bishara: For Fashion Amir Wissa, Assistant Managing Director 10th of Ramadan City, Industrial Zone B2, 10th of Ramadan City Phone: +20(15) 362-750; Fax: +20(15) 362-753 Email: bishara@bishara.com.eg Web: http://www.bishara.com.eg About: The founder and chairman of Bishara: For Fashion, Louis Bishara, is also currently a senator in the Egyptian Congress, a former member of the Presidential Egyptian American Business council, as well as many other reputable political and industrial venues. Bishara: For Fashion is included in the Qualified Industrial Zones, which allow their products to enter the United States duty-free. Bishara’s capacities for tops are their largest section producing 120,000 tops a month. Bishara’s current client list includes Van Heusen, Next, Calvin Klein, and Marks & Spencer. One of the major attractions Bishara has that best fits with Knitfit Co. is their attempt to help protect the environment. Their water treatment plant is located onsite to insure no hazardous chemicals are brought into their manufacturing plants and as well as a incorporating a drainage system to recycle their dyeing water during their processes. Cairo Cotton Center Cairo Cotton Center, Qualioub City 67, Cairo Alexandria Agriculture Road, Kalioub Station Cairo, Egypt Phone: +202-42157079 Fax: +202-42152080 Email: chairmanoffice@cairocotton.com Website: www.cairocotton.com About: Cairo Cotton Center started in 1990 as a private shareholder company. Still a private shareholder company today, CCC flourishes with a goal to manufacture high quality knitwear. CCC stongly believes in the importance of technology when managing their production, purchasing machinery, and developing its human resources. They are a great benefit to Egypt’s textile and apparel industry because of the popular American and European brands they manufacturer including Macy’s, Gap, Liz Claiborne, American Eagle, Victoria’s Secret, Calvin Klein, Columbia, and Cabela’s for America and V.F Group, Levi’s, Nike, Adidas, Body Talk, Marks & Spencer, Next, Kappa, Decathlon, and Otto Versand for Europe. Their facilities has 6000 square meters dedicated to their knitting processes. This area includes the latest technology in auto 48


mated fabric-processing operations including circular and flat knitting machines involving detailed inspections throughout and following the knitting process. The cutting area is 1800 square meters, contains 240 employees, and averages 60,000 pieces cut a day. The sewing area is 4000 square meters, contains 1540 employees, and averages 75,000 pieces a day. CCC employs 60 workers to make sure machines are in effective conditions, 450 employees assigned to quality during production cycle, 450 employees assigned to packing and packaging (6 halls, total of 2900 square meters), and 110 workers assigned to their warehouse which is 4900 square meters. CCC’s minimum quantities are 3000 units per style, 500 units per color, with a lead-time of 60 days. 55 pcs/day Lindo Style Maadi, Egypt 38 Police Officers Buildings, Maadi, 11729 Contact Person: Ms. Badia Ali Phone: 20-2-27002189 Fax: 20-2-27002189 Website: www.lindostyle.com About: Badia A. Ali is the owner and fashion designer of Lindo Style located in Cairo, Egypt. Lindo Style is a fashion knits manufacturing and design company that provides unique styles and ideas particularly for women’s fashion knit products. Lindo Style’s product offerings include machine or handmade knitting, crochet, beading and embroideries. They create their own designs as well as accept your provided specifications for your own designs / product offerings. Lindo Styles provides machine and hand knitted / crochet fabrics of unique styles and textures for their clients. Their prices are competitive; sweaters can range between $9-14 considering the level of detail incorporated into the design of the product. There is no minimum limit for ordering, but their lead times can be between 8-10 weeks dependent on if the products ordered are machine made or handmade.

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Egypt Supplier Rankings 1. Abilities: For Egypt, Bishara has a 6 for abilities because their factories mainly specialize in tailored suiting. Cairo Cotton Center has a 10 because their factories have the proper machinery to supply the knitted products that Knitfit Co. will need. Lindo Styles has a 10 because they specialize in knitwear and will be able to supply the knitted products Knitfit Co. will need. 2. Capacity: For Egypt, Bishara has a 10 for capacity because they are able to product 120,000 tops a month. Cairo Cotton Center has a 7 because their capacity is 55 garments a day. Lindo Styles has an 8 because their capacity is 112 sweaters in a day, not as large are we would like but for the quality of their garments it could be negotiable. 3. Costs: For Egypt, Bishara has an 8 for cost because their prices are a little high for the quality of their knitted garments. Cairo Cotton Center has a 9 because their prices seem pretty fair for the quality of their knitted garments. Lindo Styles has a 6 because their prices are very high for out product margins. 4. Customer Service: For Egypt, Bishara has a 10 for customer service because they are open to adjusting their product offerings. Cairo Cotton Center has a 10 because they are open to working with new clients and their special needs. Lindo Styles has a 10 because they are a smaller design company eager to engage with new clients and work one on one with them to customize their clients designs. They offer a selection of the owner’s own designs and hand-knitted fabrics. 5. Customers: For Egypt, Bishara has a 9 for customers because Cairo Cotton Center has a 10 because Lindo Styles has an eight because their customers are unknown, but the uniqueness and quality of their work could be negotiable. 6. Flexibility: For Egypt, Bishara has an 8 for flexibility because they specialize in tailored suiting, but are open to adjusting their product offerings. Cairo Cotton Center has an 8 because they are open to working with new clients and their special needs. Lindo Styles because they are a smaller design company eager to engage with new clients and customize their clients designs. 7. Lead-Time: For Egypt, Bishara has a 9 for lead-time because they have a standard 8 week lead-time but offer 7 weeks for smaller orders. Cairo Cotton Center has a 9 because they have the standard 8-week lead-time. Lindo Styles has a 7 because their lead-times can take up to 10 weeks dependent of the detail of the products being produced. 8. Management: For Egypt, Bishara has a 9 for management because Louis Bishara is a well-established congressman with many different leadership and business credentials. He strives for quality in a routine and orderly way with no unacceptable blemishes during the production process. Cairo Cotton Center has

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a 10 because they have full staffed factory, well equipped, organized, and certified to accommodate their clients. Routine checks and verifications are of high priority and vital for CCC’s production process. Lindo Styles has 10 because their small knit company is itself tightly knitted and organized. After a meeting consultation with the owner Badia A. Ali is she delegates the orders through her 14 different locations in Cairo. 9. Quality: For Egypt, Bishara has an 8 for quality because their product offerings are a little too stiff for Knitfit Co.’s vision. Cairo Cotton Center has a 9 because their credentials for their product offerings are nearly perfect but still don’t match that of Knitfit Co.’s vision. Lindo Styles has a 10 because their product offerings are nearly perfect and exactly what Knitfit Co. is looking for to display in our product line. 10. Services Offered: For Egypt, Bishara has a 4 for services offered because they like to specialize in tailored suits. Cairo Cotton Center has an 8 because they specialize in producing knitwear with the latest knitting machinery. Their knitwear offerings, however, are a tighter, different style knit than Knitfit Co. is ideally looking for. Lindo Styles has a 10 because their product offerings are exactly what Knitfit Co. is looking for in their sweaters. Their unique handmade element is the exact touch Knitfit Co. wants to sell. 11. Strategic Outlook: For Egypt, Bishara has a 9 for strategic outlook because they are striving for a profit with commendable price to quality ratios. Cairo Cotton Center has a 10 because they their prices to quality ratio are competitive and reflect well on their company. Lindo Styles has an 8 because their strategic strategy is simply is to make quality knits at a profitable but fair price. 12. Sourcing Guidelines: For Egypt, Bishara has an 10 for sourcing guidelines because they are credible for having solid by-the-book guidelines that are appealing to America. Cairo Cotton Center has a 10 because they are credited for having credible by-the-book guidelines that are please to American investors. Lindo Styles has an 8 because their equipment is not routinely checked and updated and sometimes employees are worked overtime.

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Costing

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Initial Costs Kni$it CO.

Crop Knit

COST Peru China Egypt

Block Knit

TOTAL

$ 9.49 $ 0.22 $ 9.71 $ 7.10 $ 1.61 $ 8.71 $ 8.62 $ 2.06 $ 10.68

COST China Peru Egypt

Freight, Duty, Broker & Insurance

Freight, Duty, Broker & Insurance

TOTAL

$ 7.10 $ 1.61 $ 8.71 $ 9.49 $ 0.22 $ 9.71 $ 8.62 $ 2.06 $ 10.68

COST

Freight, Duty, Broker & Insurance

TOTAL

Cardigan Egypt China Peru

$ 2.06 $ 11.21 $ 9.15 $ 7.23 $ 1.61 $ 8.84 $ 9.60 $ 0.22 $ 9.82

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Initial Costs INITIAL COST COMPARISONS BY COUNTRY Kni$it Co Style Name

Style #

Block Crop Cardigan

Retail Price

ChinaCost Margin%

6673 $ 50.00 $ 8.71 6674 $ 50.00 $ 8.71 6675 $ 50.00 $ 8.84

Average Price Average Cost Average Margin

Peru Cost Margin%

82.58% $ 9.71 82.58% $ 9.71 82.32% $ 9.82

EgyptCost Margin%

81% $ 10.68 81% $ 10.68 80% $ 11.21

79% 79% 78%

$ 50.00 $ 8.75

$ 9.75 82.49%

$ 10.86 100%

78%

FF0000INITIAL VS PRELIMINARY CO

Prelim Costs

EXAMPLE

INITIAL Style Name

Style #

Retail Price

China Cost

PRELIM Margin%

Block 6673 $ 50.00 $ 8.71 82.58% Crop 6674 $ 50.00 $ 8.71 82.58% Cardigan 6675 $ 50.00 $ 8.84 82.32% 000INITIAL COSTS Average PVS rice PRELIMINARY $ 50.00 Average Cost $ 8.75 Average Margin EXAMPLE

Style Name PeruCost Style # Margin%

Block 89% $ 9.71 6673 Crop 89% $ 9.71 6674 Cardigan 87% $ 9.82 6675 Average Price $ C ost 9.75 Average

88.05% Average Margin

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China Cost Margin%

INITIAL PRELIM Retail Price Margin%

China Cost PeruCost

$ 50.00 9.50 81% $ $ 8.71 $ 50.00 9.75 81% $ $ 8.71 $ 50.00 8.84 80% $ $ 11.00 $ 50.00 $ 10.08 $ 8.75 81%

Margin%

PeruCos

89% $ 9.71 89% $ 9.71 87% $ 9.82

81% $ 9. 81% $ 9. 80% $ 11.

$ 5.98

$ 9.75

$ 10.

FF0000INITIAL VS PRELIMINARY CO 88.05%

PRELIM INITIAL Margin%

PeruCost

PRELIM

$ 5.61 $ 5.61 $ 6.71

82.49%

INITIAL

INITIAL

81%

INITIAL PRELIM

Egypt CCost hina Cost Margin% Margin%

PRELIM

eruCost Margin% Margin% E PgyptCost

PeruCos

82.58% 5.61 81% $ $ 10.68 82.58% 5.61 81% $ $ 10.68 82.32% 6.71 78% $ $ 11.21

89% $ $ 10.50 9.71 78.64% 89% $ $ 10.50 9.71 78.64% 87% $ $ 11.49 9.82 77.58%

81% $ 9. 79% 81% $ 9. 79% 80% $ 11. 77%

$ $ 10.86 5.98

$ $ 10.83 9.75

$ 10.

79.83% 82.49%

78.29% 88.05%

78.34% 81%


Strategy Development Evaluation

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Evaluated products, volumes & requirements COMPANY LINE PLAN

SEASON

STYLE # NAME

SP/SU JAN Quan%%es

Style #1 Style #2 Style #3

Block Knit Cropped Knit Cardigan

FEB

SUMMER MAR

APR

MAY

JUN

Quan%%es

Quan%%es

Quan%%es

Quan%%es

Quan%%es

15,000 15,000 35000

15000 15000 35000

10,000 10000 25000

20,000 20,000 20,000

20,000 20,000 20,000

25,00 25,00 25,00

65000

65000

45000

60000

60000

7500

Style #4

TOTAL

APR

MAY

JUN

Fall/ Winter JUL

Quan%%es

Quan%%es

Quan%%es

Quan%%es

AUG

SEP

Quan%%es

Quan%%es

OCT

HOLIDAY NOV

DEC

Quan%%es

Quan%%es

Quan%%es

TOTAL

00 00 00

20,000 20,000 20,000

20,000 20,000 20,000

25,000 25,000 25,000

15,000 15,000 15,000

45,000 50,000 40,000

55,000 60,000 50,000

30,000 30,000 60,000

35000 20,000 35000

20,000 15,000 40,000

30500 29500 40000

00

60000

60000

75000

45000

135000

165000

120000

90000

75000

100000

Wholesale

Wholesale

Cost

Cost

Per Unit

Total

Per Unit

Total

$ 37.50 $ 37.50 $ 37.50

$ 11,437,500.00 $ 11,062,500.00 $ 15,000,000.00 $ -­‐ $ 9,375,000.00

$ 8.81 $ 9.56 $ 10.00

$ 2,687,050.00 $ 2,820,200.00 $ 4,000,000.00 $ -­‐ $ 2,376,812.50

DEC

TOTAL

Quan%%es

00 00 00

20,000 15,000 40,000

00

75000

305000 295000 400000 0 1000000

$ 37.50

Average

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$ 7.09

Average

Margin $ 28.69 $ 27.94 $ 27.50 $ -­‐ $ 30.41 Average


Evaluated Products and volumes We have evaluated each of our products and chosen our volumes based on the popularity of the product throughout the year. We are selling our products all year because they can be worn all year and are basics. Our volumes are highest during August, September, October and December because this is when they would be worn most. Our voumes are the lowest during the summer months, because although they are light weight knits, they are not quite as popular and necessary. Each month we looked at which one would most likely sell the most and decided the volumes based on that. The crop knit is more popular in the summer months then the cardigan and block however all three will still be sold.

Fig 11: Spring Knit wear example 57


Evaluated Selected Countries China

For the past years (and still counting), China has become the biggest trading country in Asia. China offers a lot of opportunities for getting wholesale goods at cheaper prices and having it sold at the best prices in Western countries. We chose China because of their cheap prices, decent transportation times and working relationship with the United States. China’s rapid economic growth and emergence as a major economic power have given China’s leadership increased confidence in its economic model. The key challenges for the United States are to convince China that (1) it has a stake in maintaining the international trading system, which is largely responsible for its economic rise, and to take a more active leadership role in maintaining that system; and (2) further economic and trade reforms are the surest way for China to expand and modernize its economy. For example, by boosting domestic spending and allowing its currency to appreciate, China would likely import more, which would help speed economic recovery in other countries, promote more stable and balanced economic growth in China, and lessen trade protectionist pressures around the world. China’s one of the leading manufacturers with the lowest prices. We want to produce some of our products in China to maintain a business relationship between the U.S and China as wella s take advantage of the costs.

Peru

We chose Peru because Peru and the U.S have a trade agreement. Also Peru is pretty close to the U.S and the transportation is quick by water or truck. Peru is known for cotton exports and we are sure to get a good quality garment made. Because Peru is so close, we will be able to make trips to the factories to ensure our sourcing guidelines are being followed as well as our products are being made correctly and in a timely manner. The cotton grown in Peru is bought by the textile industry at prices prevailing in the international market, but owing to lack of productivity and other factors Peruvian farmers have to depend on Government subsidies to make their prices competitive. The availability of cotton at competitive prices is essential for growth of the country’s textile and apparel sector, and urged the Government to change its strategy, as the present strategy has not worked.

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Egypt The economic relationship between Egypt and the United States has been developing and expanding quickly over the last twenty years. Egypt and the US have a mutually beneficial trading relationship, with each country making substantial exports to the other. The governments of Egypt and the United States have worked together to develop and sustain a good business relationship. The United States is the most important trading partner for the Egyptian economy. One fifth of the imports that come into Egypt originate in the United States, so the relationship with the US is very important for Egypt. Egypt also plays an important role in the US economy, as an important destination for exports. The US receives about one eighth of all Egyptian exports, but this accounts for less than one tenth of a percent of the total imports that come into the United States. Egypt also plays an important role in the US economy because of the strong political links between the two countries and the importance of Egypt in the Arab world. Egypt’s strategic location and its political position in the Middle East make it an important partner for the United States. The relationship between the US and Egypt is not only important for the direct trade which the US benefits from with Egypt, but because it helps to maintain stability in the region, which enables the US to trade with other Arab countries. Egypt has great cotton production and we feel that we can benifit from the quality of their products. Although Egypt is not the closest country, making it a longer delivery, we feel that we can count on quality since we are paying more. There prices may be more expensive, however, it should show through our products and the lead times.

Fig 12: Trading in th Atlantic Ocean 59


Evaluated Selected Sources

China Supplier: We chose South Asia Textile as our Source from China because of their well established reputation. Their main focus is on the production of high quality knitwear and they have seen steady growth over the years. Not only do they produce the garments we need, they also are flexible in their production. They are a sustainable manufacturer has the Chairman has built 150 schools in China and also donated 100,000 pieces of knitwear to people living in remote countrysides. This is a company that we know will benefit our business. They also quoted their costs in a qucikly efficeint manner which is a plus. They have contacts available for each of their managers and allow visits whenever possible. This company ranked high above the others researched. Peru Supplier: We chose ALGOLIMSA as our manufacturer/supplier from peru because they utilize 100% cotton. Complete vertical operation with processes which go from Manufacturing, to Quality Control, through Finishing, Packing and FOB Shipping scheduling. Algolimsa is divided into three separate and distinctive operations: Knitting, Dyeing, and Sewing House process. They have Quality Control systems in place as well as packaging and shipping operations. Grading, marking, cutting, spinning, knitting, marking and grading. Fabric testing, color testing, all trims, production planning. Transportation FOB Ocean FOB Air FOB Courier Comments: Algolimsa is a top quality operation very much aligned with modern production techniques and modern equipment. We chose this manufacturer because we can depend on them for flexibility and they are versatile. They can make 100,000 basic garments per month. Egypt Supplier: We chose Cairo Cotton Center as our Egypt Supplier because of their sourcing guidelines as well as their quality. They have worked with Macy’s, Calvin klein, Levi’s and many more which proves they have nice quality. They are very flexible on what they can produce and can dye, as well. Cairo Cotton is proud of its integrated quality control system implemented at each step for all activity starting by its yarn warehouse up to inspection of products prior to packing and shipping. Last stop for products is at the mini control room in which the American 2.5 AQL and European 1.5 AQL quality standards are applied on each order respectively.

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Evaluated Prelim Costs vs. Initial Cost and Quality

Our preliminary costs vs our initial costs are very different. Our initial costs in China are significantly higher then the quotes we recieved from suppliers. Our initial costs were around $8 dollars and are now around $5. This makes us consider the quality of our products as well as the lead time. The Intial margin % was 82.49% and the Prelim % is 88.05%. Our Initial costs in peru for each product were lower then our Preliminary costs. This is because the supplier we chose will be of better quality as well as have a faster lead time. Although the costs will be higher then what we originally planned, the quality should also exceed our expectations. The intial margin percent was 81% and the prelim % is 79.83% For Egypt our Initial costs were fairly high. Production in Egypt is more expensive because of the quality of the cotton. The manufacturers may be willing to negotiate prices for how basic our products are. The Initial margin percent is 78.29% and the prelim is 78.34%.

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Evaluated risk vs benefits, distance & lead-time, quality & flexibility, capacities, value added services & raw material availability. Between the three countries that we have chosen, China, Peru and Egypt, there are multiple risks and benefits of each country to be considered that has guided us in determining our final strategy. Many different elements must be considered when analyzing the risk and benefits such as distance and lead-time, quality and flexibility, capacities, value added services and raw material availability. There are some risks to be considered within each of the three countries. When it comes to China and Egypt the biggest risk is the lack of a trade agreement between them and the US. Trade agreements remove tariffs and other barriers and assists with the free movement of goods and services across borders. They affect unemployment and wages, as well as investment in and structure of a country’s industry, and they have significant political importance as well. Peru does have a trade agreement with the US, which is very beneficial to them. In terms of location Peru is the closest to the US followed by Egypt and then China. Peru’s location is very beneficial as it offers about a five to eight day shipping time. The shipping and delivery time for China is about twelve to thirteen days and Egypt is just slightly lower than that. A slower delivery and shipping time is not an extremely serious risk, but the fast delivery time offered by Peru is very beneficial for business with them. In terms of lead-time the suppliers in Peru and Egypt can offer more than that of China. Overall in terms of lead-time Peru and Egypt had the best to offer at about seven to eight weeks. A lead-time of seven to eight weeks is fairly reasonable which is a benefit for Peru and Egypt over China. In terms of flexibility and quality China ranks higher than Peru and Egypt. China ranks high in both aspects mostly because of the awards the China suppliers have received to prove that they offer top quality. China also offers the widest range of product in knitwear, which is extremely beneficial to our company. The Peru suppliers do not offer the wide range of knitwear that the suppliers in China do. This is a high risk for Peru and Egypt because as companies grow and expand they usually expand with their product offering as well, and these suppliers in Peru and Egypt may not be able to keep up with their demands and change. With growing demands and change within a company comes the desire for more flexibility in a supplier. Flexibility also means working around the customer’s needs which China suppliers are very good at. Quality and flexibility are risks for Peru and Egypt but beneficial qualities for China suppliers.

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finishing’s and even product development. Even though our company is looking to produce some very basic knitwear there is the possibility of expanding and experimenting with our product in the future. Being able to continue using the same suppliers as our company grows is very appealing to us as a company. Peru and China benefit from the wide range of services that they offer. Egypt however does not offer as much as Peru and China do. They focus mainly on only basics with little to no dyeing or finishing services. In terms of raw material we are obviously most concerned with cotton. The raw material availability is definitely beneficial for Peru because they have a lot to offer more importantly they are a great source for high quality pima and organic cotton. Peru by far exceeds China and Egypt with the fact that they offer such high quality cotton. Our company produced basic knits made out of high quality organic cotton, and Peru has the best to offer us. China and Egypt cannot as easily provide us with the high quality fabric that we are looking for. Overall there are many benefits and risks to be considered associated with each country. Overall we have a lot to look forward to and gain from these countries as their benefits mostly outweigh their risks. These benefits and risks will help us decided where and how much of each product we choose to place in each country.

Evaluated future requirements Weighing the benefits and risks of each country helps to decide where we can see our company in the future. As a startup company we hope to build long lasting relationships with our suppliers that will have the ability to help us expand and grow. In the future we hope to expand in terms of product offering. As of right now we offer basic knit sweaters, but as we grow as a company we hope to expand to other products such as other styles of tops and even bottoms. We would also consider adding more in terms of color and even adding print. We also hope to eventually produced and sell higher quantities of our products. We need to consider the future when choosing our future suppliers. We believe in building relationships with our suppliers, which means that they must have the ability to produce according to our growing demands and desires. Weighing the previous risks and benefits of our three countries it is easy to determine the more appealing countries based on our future goals. China and Peru definitely have the most benefits associated with their suppliers in terms of what we see for our company in the future. China and Peru both offer a number of dyeing and finishing services that is something we can look into in the future. Knowing that the company has those services to offer now helps us better prepare in the future and assures us of a steady long lasting relationship with the supplier. Their flexibility and capacity also tell us that they would be able to accommodate our growth. Egypt is a good choice for our production right now, but in the future they do not require all of the necessary abilities for expansion. All three countries ranked fairly high in terms of strategic outlook though which does give hope 63 that they could offer us more in the future than they do now.


Evaluated value added services In terms of services offered some of our countries offer more than others. From overall ranking China and Peru seem to be able to offer the most, and Egypt has very little variety of services to offer. While not all of their services offered are of importance to us now they could be in the future, which is why it is important to know that they have plenty to offer us. Chinas suppliers can produce knit cables, pointelles, intarsias and jacquards, and they also use cotton, cotton blends, wool, wool blends and acrylic. They also offer custom¬ized fabrics, dyeing and finishing services, printing and embroidery services, cutting and sewing, and packaging and logistics. This is a wide range of different services that can fulfill our needs now and in the future. Peru also offers a wide range of services. Peru suppliers can offer us complete vertical operation with processes, which go from Manu¬facturing, to quality control, through finishing, packing and FOB shipping scheduling. Their services consist of review of all factory’s capacities and expertise, review cost-effective structures, product development assistance, logistics, sales assistance and ongoing advice and consultation. They offer a lot of different ser¬vices that are very involved with very experienced teams of people. They offer services in cut and sew knit development, screen-printing, exporting and delivery, labeling and packaging, graphic design and fabric re¬search and development. These services are all beneficial to our company now and possibly in the future. Egypt offers some services, but not as much as what Peru and China have to offer us. Egypt’s suppliers can specialize in producing knitwear with the latest knitting machinery. They do offer a lot of fine hand and machine knitwear, but they do not deal much in dyeing or finishes or styles. Egypt has the capability to produce our basics now, but in the future they may not be able to. The more services a supplier has to offer us the more likely it is that we would be able to create a long lasting relationship with them. The ability to provide multiple services means that they are usually capable of producing higher capacities and are usually more flexible.

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Evaluated Maximized margins How it’s Placed

Peru We are placing half of out crop knit and block knit sweaters in Peru. By doing this, we are minimizing our risk for this product. Because it will cost $9.49 for our Crop Knit, and 9.90 for our Block knit, we can balance out the price for them to not be too expensive. We will have a lead time of 7 weeks with room to shorten that. Because our products will be cheaper to produce here, we are maximizing our margins. Because peru is so close, we are able to make visits often to make sure our product quality is up to speed. Egypt We are placing the other half of our Product with Cairo Cotton in Egypt. By placing our products in 2 countries we can gaurentee product despite the risk. This is the most expensive manufacturer however they gaurentee quality and a quick lead time. We need to void price increases in this country to maximize our margins. China We are placing all of our Cardigans in China. We are doing this because this is the cheapest place of production. Since or Cardigan is the most expensive to produce and our largest volume, we think it it smart to pay cheaper for the same quality and keep our margins high. We will be buying this product for $7.85 a piece and our margins will be over 80% Our Margin goal was 68% and we have exceeded our standards.

65


Final Countries We have selected China because although they have high risk with their relationship with foreign enterprises, and can effect everything from jobs to tax revenues, it can also be positively rewarding. They have Low cost manufacturing which results in a competitve advantage if the competitors are in a higher labor cost company. It is also a Lower capital Investment. With low capital investment, comes lower risk. Lower capital also translates to faster return on investment where you can invest increments as your confidence grows. Also, with the number of firms already in China, and greater interdependency, there is a less likelihood of adverse conditions. Since China’s reform, the garment industry has achieved significant development because of the fast growth in the national economy and domestic demands. They are making progress within their structure, technology, brand development, quality control and exploration in the international markets. We will mitigate risks in importation by researching the reputation, resources, export experience, communication, ability, standards and certification. We will also evaluate our suppliers production capabilities, workforce, quality control and certifications. It is really important to maintain and manage a relationship with your supplier. In order to mitigate risk with importation we will pick a freight forwarder with a good record of delivering on time and product liability insurance. We have selected Egypt as a country to source from. As long as the government continues to support its banking sector and not let it weaken to a point of extinction then we can avoid getting into a financial crisis. We need to make sure that our suppliers have good reputations so that the government doesn’t attempt o exploit their assests. Egypt is the best known source for cotton, and though it may be more expensive, the quality is worth it. In order to avoid risks we will keep only half of our product here and we will research and get to know our manufacturer. Although there has been some political uprisings, things are headed in a better direction now and companies are les involved. With delivery taking about 10 days, we can ensure our product will be here when we ask. The textile Industry in Egypt. KnitFit Co. produces basic lightweight organic cotton knit sweaters. There are many abilities and qualities that Peru’s suppliers posses that make them a viable candidate for production. Three of the best candidates for suppliers in Peru are Algolimsa, Textiles of Peru and GSEA Peru.

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Fig 12: Knitwear workers from Peru


The general criteria for Peru as a candidate has to do with their availability of high quality pima and organic cotton and their close proximity to the US. These two qualities initially sold us on Peru. From there research on knit apparel suppliers led us to Algolimsa, Textiles of Peru and GSEA Peru. From further evaluation based on many different criteria from service and ability to management and customers Algolimsa posses the highest ranking in all aspects as a Peru supplier for knit tops. Peru is located in the central part of South America and borders on the north with Ecuador and Colombia, on the east with Brazil and Bolivia, on the south with Chile and on the west with the Pacific Ocean. Peru is located relatively close to south¬ern Florida at about 3,000 miles providing a fast shipping time of about a week. The closer to the US that the country is the shorter the shipping and delivery time. For Peru it would take approximately five to eight days, which is extremely appealing and beneficial for any company in the US looking to get their apparel produced internationally. Labor costs in Peru are one of the lowest costing countries in Latin America. The minimum salary in Peru is US $183 and the cost per hour is approximately US $0.88. The labor market is very flexible and has a lot of qualified labor. Labor costs for our products in Peru came out to $1.72, which is relatively reasonable. The textile industry in Peru is not as developed as some of its competitors, but it has shown a steady incline along with Peru’s over all economic growth. The difficult economic environment in major markets, fall in the exchange rate and growing labor costs are hindering their exports. The Peruvian textile and apparel sector has a deserved international positioning as a flexible supplier of large well known global brands. This is the result of the quality of inputs, high development of the Peruvian textile capacity and the excellent level of local apparel workshops, which can produce with great efficiency even the most complex garments. The Peruvian textile and apparel sector could develop diverse marketing strat¬egies according to each target market. One target market in particular being local and Latin American Markets introducing products with competitive price in the mar¬ket through the creation of local brands which positioning based on opening stores in boutique format. The other target market would be the European Market positioning the country as having a recognized quality in the textile and apparel sector through the supply of products “premium” for which consumers re willing to pay an additional price or serve a niche market. Overall the apparel industry is in great shape and growing with the economy. These factors all support the fact that Peru is a great country to place our product. The distance, labor costs and apparel industry as a whole do not represent and risks or concerns for our company.

67


Final Sourcing Cairo Cotton Center will produce 50% of our Crop and Block Knits. By placing half of these basic tops in Egypt, we will have high quality products. We only want to place half of our product here because of the political risks in Egypt. It also takes a little longer for them to get to the United States. We want to ensure that our product is made properly and we are willing to pay more the quality. They add many services including the dying, cutting, sewing, drying, embrodiery and printing. These all help our future. They do great wuality inspection to make sure that our product is exactly how we want it before it is sent out. They ensure sustainable equipment is used and that they treat their workers very well. Ironing and packaging are done according to our specifications. Packaging follows our recommendations and export regulations. Despite risk we can rely on 50 percent of our Crop and Block knit to be produced here. They will be making 300,000 knit tips for us per year. South Asia Knitting company will produce our cardigan sweaters. We want them to be produced in China because we can count on this company to create high quality goods at a low cost. Our Cardigan requires more work then our other tops. This company has pledged to provide fully commited services and dedication. They promise prompt samples which helps speed up our process. Besides meeting our demand, they are also capable of meeting international demand with all of their differenct factories. They have a Dyeing factory as well. They are able to accommodate making 400,000 cardigans in a year for us. They will meet our lead time of 8 weeks and accept our forecasted products to speed up time. Depending on how our volumes do, we may try producing a portion of our Cardigans in peru to see if the organic pima cotton makes a difference, but that is in the future. Other factors that are important in selecting Peru as one of our countries of production is sourcing guidelines, volume accommodation, quality, lead times, pricing and value added services. The suppliers that we chose in Peru, Algolimsa, Textiles of Peru and GSEA Peru, all rank very high in these areas which is why we are so interested in Peru for production for KnitFit Co. Our sourcing guidelines focus mainly on compliance with laws with the up most importance on the environment and employment standards. Peru supplier Algolimsa, allows factory visits at any time, and they feel strongly about not implementing forced and child labor. They also have guidelines in place for safety and health for the employees. Textiles of Peru has a set of sourcing guidelines that state that they do not practice forced labor, and they also only work with factories that have health and safety precautions and provide workers with reasonable pay. They do quality inspections in their factories as well. GSEA Peru adheres to all national and international production guidelines opening their factory doors to any 2nd or 3rd party inspectors/auditors. Their factories are open to visitors at any time. These suppliers are very transparent and take into consideration the condition for their workers. Their sourcing guidelines fit relatively well with what we expect and hope for in a supplier. 68


Peru suppliers can accommodate high volumes and capacity. Most of them were also very flexible and willing to work with their customers when it comes to how much they want and when they want it by. While Peru’s factories and facilities are not as large as what China has to offer, they can produce relatively high volumes. When it comes to lead-time all of the suppliers have fast lead times and turn over’s including shipping and delivery times. When it comes to quality Peru suppliers have a lot to offer especially because their availability of high quality cotton. They have Quality Control systems in place as well as packaging and shipping operations. Algolimsa is a top quality operation very much aligned with mod¬ern production techniques and modern equipment. A standard quality level is maintained to ensure effective quality. They oversee every single phase of internal quality control provided. The Quality Assurance is in manufacturer’s responsibility but the company monitors the quality during the sampling or production processes. They prefer to work with the man¬ufacturers in which they are sure of their quality and service. They are a performance-based business and quality for them is measured on timeliness and fast production. They did not seem too concerned with talking about their quality other than that their customers are always satisfied and that they like rela¬tionship building with other companies. Quality is taken into consideration from all angles providing definite reassurance in their ability to produce high quality goods. Peru also offers a wide range of services. Peru suppliers can offer us complete vertical operation with processes, which go from Manu¬facturing, to quality control, through finishing, packing and FOB shipping scheduling. Their services consist of review of all factory’s capacities and expertise, review cost-effective structures, product development assistance, logistics, sales assistance and ongoing advice and consultation. They offer a lot of different ser¬vices that are very involved with very experienced teams of people. They offer services in cut and sew knit development, screen-printing, exporting and delivery, labeling and packaging, graphic design and fabric re¬search and development. These services are all beneficial to our company now and possibly in the future. The more value added services that they offer the more likely we are able and willing to work with them in the future.

69


Units and Costs Our Units and costs have been leveraged so that we will recieve maximum margins. We are paying more for high quality but will get the return when our products sell for $50.

Placement:

70


71


Final Cost Comparison

72


Prelim vs. Negotiated Prices:

Our China prelim costs were relatively low compared to our final costs. Our quoted prices for our preliminary costs was not as acurate as our final cost because the manufacturer did not understand the quality we were looking for. Our final costs for China including the shipping, freight and broker) still keep our margins high. Our Prelim costs for peru were relatively average and after negotiating we actually got out final cost down. We negotiated the shipping to get 4 cents off each product which results in lower costs and higher margins for us. Out prelim costs for Egypt were all around the same amount and after our final negotiatation we were able to raise the cost without making a difference in our margin. Thought we are paying more for each product, we will still be making very high margins. Our Prelim margins varied. Our Prelim marginf or China was 91.04% and actually ended up dropping to 81.71% which I think is fair. We are still above our targeted 68%. Our prelim for Peru was 84.88% and our final margin percent was 84.95% so we were able to keep it about the same with a slight increase. Our preliminary margin eprcent for Egypt was 83.76% and after negotiating and actually paying more for each of our products, we were still able to maintain 83.28%. 73


Conclusion Throughout this process we have learned the ins and outs of 3 countries and the average costs for manufacturing. We have made decisions ranging from what country to what supplier, to what cost. We have decided to place products in all 3 countries in order to ensure that we have products and limit our risks. We will mitigate risks in importation by researching the reputation, resources, export experience, communication, ability, standards and certification. We will also evaluate our suppliers production capabilities, workforce, quality control and certifications. It is really important to maintain and manage a relationship with your supplier. In order to mitigate risk with importation we will pick a freight forwarder with a good record of delivering on time and product liability insurance. By placing our products in all 3 countries and spliting two of them up, we are benefiting higher margins, lower costs, and lower risks. After researching each country and supplier thourghly, we now understand how to create a business relationship and recieve benefits. Each supplier aligns with our values of maintaining high quality and sustainability since those are the most important values to us. We strive to create a relationship with our customers just the same as with our manufacturers. We will only use organic materials and have picked the best countries to source organic cotton from. Each manufacturer is able to meet our social guidelines especially our environmental standards, subcontracting and monitoring and complaince. They have agreed to get approval for any sub contracting as well as give us the right to conduct announced and unannounced inspections of all manufacturing facilities. We want to make sure that they are constantly following our guideliens so we can ensure the best product for our money. Although each country has different quality, we have picked the top knit manufacturer in each country to make sure we get the best quality product we can. This means paying more for each product but our margins are relatively high with lots of room for higher costs. Our average margin was set at 68% and we exceeded this by more then 10% in each country. Because our company is basic knits, we are able to keep costs low and prices high because of our long lasting high quality.

74


Keeping inventory cost under control is important to the financial well being of any type of business operation. This is especially true when we are located in a nation that imposes local and national taxes on different types of inventories such as goods in process, supply or raw materials inventories. By keeping inventories as lean as possible without causing problems for production or order fulfillment, we can manage inventory costs in a manner that avoids tying up financial resources in large inventories that will not move for some time, while also keeping taxes to a minimum. We are going to watch the aging of our products because it has to do with how long our products remain in inventory before being issued to a department within the company operation or is sold to a buyer. Usage provides details on how often a given unit is issued and how many units must be kept on hand in order to meet demand. Planning purchases around these 2 factors will help us prevent accumulating too many items in an inventory and help keep the total value of that inventory within reason. We are going to get an idea of how long it takes vendors to fill and deliver an average order to make it easier to set up ordering protocols that ensure we can place an order and still have enough units on hand to keep production going until that order arrives. Along with standard lag time between the submission and delivery of orders, we will also get some type of commitment on what would be required to expedite an order in the event of an emergency, such as the breakdown of several machines at once. While some companies may require 4 units of a given item during certain seasons of the year, we will reduce to 3 units per month in slower seasons. We are going to minimize our lead times by sending our manufacturers are forecasted timeline and products so they are ready when we are. All three of our manufacturers offer us flexibility and are able to tend to changes in our products as well as add future products. They all offer dyeing, sewing, pattern making and washing services which is a huge benefit. Two of them also offer printing and floor ready services. This strategy offers us room to grow in the future and makes it easy for us to expand our product line and change colors. We will have an advantage in the future when we want to expand out products because we will already have a relationship with our suppliers and they can help design our products. We are proud to tell people that we source from Peru, China and Egypt because we have found 3 manufacturers who will produce the quality organic products that we have created. We want to share with the rest of the world and be confident in our product, and with this strategy it is possible. 75


Appendix

76


CHINA COST SHEETS BLOCK KNIT CROP KNIT CARDIGAN

77


Knitfit Co. COST SHEET Company name: Knitfit Co Address: Portland, Oregan 97034

Style # 6673

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: ivory, blush, grey, Carolina Blue

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Material

- BLOCK-CHINA

$/Yard

Quantity $4.09

$/Unit

Thread 3 Labels Hangtag

Quantity

0.00126 0.05 0.03

Packing

Quantity 0.045

$/Unit

Cartons Tape Labels

$Total

Quantity

0.04545 $Total

30 3.03

Total Packing Cost:

Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin

$0.108 $0.152 $0.030

1.01 0.04545

1.22 0.01

Labor

$Total

$0.260

$/Unit

Re-Usable Bag Total Packaging Cost:

$5.494

86 3.03 1.01

Total Component Cost:

Packaging

$Total

1.3433 $5.494

Total Material Cost:

Components

Size range: XS, S, M, L, XL

0.040666667 0.0303 0.06

0.131

.059 per minute

Cost

$Total

1% 1% 1% 10% 10 minutes

$0.006 $0.006 $0.006 $0.059 $0.590

$0.059

$0.50 Total Labor Cost: $1.167

Other

size/quantity

Box (23"X10"X6") Freight Container 17580 Duty 19.70% Insurance Broker Total Shipping: Grand Total per Garment:

78

Cost $2,625.00 $7.27 $325.00 $250 per entry $1.61 $8.71

$Total $0.149 $1.43 $0.02 $0.01


Knitfit Co. COST SHEET Company name: Knitfit Co Address: Portland, Oregan 97034

Style # 6674

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: ivory, blush, grey, Carolina Blue

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Material

-CROP-CHINA

$/Yard

Quantity $4.09

$/Unit

Thread 3 Labels Hangtag

Quantity

0.00126 0.05 0.03

Packing

Quantity 0.045

$/Unit

Cartons Tape Labels

$Total

Quantity

0.04545 $Total

30 3.03

Total Packing Cost:

Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin

$0.108 $0.152 $0.030

1.01 0.04545

1.22 0.01

Labor

$Total

$0.260

$/Unit

Re-Usable Bag Total Packaging Cost:

$5.494

86 3.03 1.01

Total Component Cost:

Packaging

$Total

1.3433 $5.494

Total Material Cost:

Components

Size range: XS, S, M, L, XL

0.040666667 0.0303 0.06

0.131

.059 per minute

Cost

$Total

1% 1% 1% 10% 10 minutes

$0.006 $0.006 $0.006 $0.059 $0.590

$0.059

$0.50 Total Labor Cost: $1.167

Other

size/quantity

Box (23"X10"X6") Freight Container 17580 Duty 19.70% Insurance Broker Total Shipping: Grand Total per Garment:

Cost $2,625.00 $7.27 $325.00 $250 per entry $1.61 $8.71

$Total $0.149 $1.43 $0.02 $0.01

79


Knitfit Co. COST SHEET Company name: Knitfit Co Address: Portland, Oregan 97034

$/Yard

Quantity $4.09

Total Material Cost: $/Unit Components Thread 0.00126 3 Labels 0.05 Hangtag 0.03 Buttons 0.02 Total Component Cost:

Packaging

$/Unit

Re-Usable Bag Total Packaging Cost:

Packing

Style # 6675

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: ivory, blush, grey, Carolina Blue

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Material

-Cardigan-CHINA

Quantity

$/Unit

Cartons Tape Labels

$Total $0.108 $0.152 $0.030 0.1 $Total

Quantity

0.04545 $Total

30 3.03

Total Packing Cost: Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin

$5.494

1.01 0.04545

1.22 0.01

Labor

$Total

1.3433 $5.494 Quantity 86 3.03 1.01 5 $0.390

0.045

Size range: XS, S, M, L, XL

0.040666667 0.0303 0.06

0.131

.059 per minute

Cost

$Total

1% 1% 1% 10% 10 minutes

$0.006 $0.006 $0.006 $0.059 $0.590

$0.059

$0.50 Total Labor Cost: $1.167

Other

size/quantity

Box (23"X10"X6") Freight Container 17580 Duty 19.70% Insurance Broker Total Shipping: Grand Total per Garment:

80

Cost $2,625.00 $7.27 $325.00 $250 per entry $1.61 $8.84

$Total $0.149 $1.43 $0.02 $0.01


PERU COST SHEETS CROP KNIT BLOCK KNIT CARDIGAN

81


Knitfit Co. COST SHEET Phone: 616-822-8407 Email: Knitfitco@gmail.com

$/Yard

$ Total Material Cost:

Components

Style # 6674

Size range: Group Name: Comfort Knit XS, S, M, L, Classification:Women's knitwear XL Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Peach Blush, Aqua Foam, Bit of Blue

Company name: Knitfit Co Address: Portland, Oregan 97034

Material

CROP-PERU

Quantity

5.4500

$/Unit

Thread 3 Labels hand tags/components

1.3433 $ $7.321 Quantity

0.00126 0.037 0.05

Packing Cartons Tape Labels

Quantity

0.0500

$/Unit $ $

Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin

0.10836 0.11211 0.05050

$Total 1.01 $ $0.05

Quantity 1.220 0.010

$0.12 per minute

0.05050 $Total

30 $ 3.03 $ $ $0.13

Total Packing Cost:

Labor

$Total

$0.271

$/Unit

Re-Usable Bag $ Total Packaging Cost:

7.32099

86 $ 3.03 $ 1.01 $

Total Component Cost:

Packaging

$Total

Cost

1% 1% 1% 10% 10 minutes $

0.04067 0.03030 0.06000 $Total

0.12

$ $ $ $ $

0.0012 0.0012 0.0012 0.0120 1.2000

$

0.5000

Total Labor Cost: = $1.72

Other

size/quantity

Cost

Box (23"x10"x6") Freight Container 17580 $ 895.00 Shipping Insurance+Broker $ 0.0190 Total Shipping: Grand Total per Garment: = $9.71

82

$Total

$

0.05091 $0.2199


Knitfit Co. COST SHEET Phone: 616-822-8407 Email: Knitfitco@gmail.com

$/Yard

$ Total Material Cost:

Components

Style # 6673

Size range: Group Name: Comfort Knit XS, S, M, L, Classification:Women's knitwear XL Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Peach Blush, Aqua Foam, Bit of Blue

Company name: Knitfit Co Address: Portland, Oregan 97034

Material

BLOCK-PERU

Quantity

5.4500

$/Unit

Thread 3 Labels hand tags/components

1.3433 $ $7.321 Quantity

0.00126 0.037 0.05

Packing Cartons Tape Labels

Quantity

0.0500

$/Unit $ $

Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin

0.10836 0.11211 0.05050

$Total 1.01 $ $0.05

Quantity 1.220 0.010

$0.12 per minute

0.05050 $Total

30 $ 3.03 $ $ $0.13

Total Packing Cost:

Labor

$Total

$0.271

$/Unit

Re-Usable Bag $ Total Packaging Cost:

7.32099

86 $ 3.03 $ 1.01 $

Total Component Cost:

Packaging

$Total

Cost

1% 1% 1% 10% 10 minutes $

0.04067 0.03030 0.06000 $Total

0.12

$ $ $ $ $

0.0012 0.0012 0.0012 0.0120 1.2000

$

0.5000

Total Labor Cost: = $1.72

Other

size/quantity

Cost

Box (23"x10"x6") Freight Container 17580 $ 895.00 Shipping Insurance+Broker $ 0.0190 Total Shipping: Grand Total per Garment: = $9.71

$Total

$

0.05091 $0.2199

83


Knitfit Co. COST SHEET Phone: 616-822-8407 Email: Knitfitco@gmail.com

$/Yard

$ Total Material Cost:

Components

Style # 6675

Size range: Group Name: Comfort Knit XS, S, M, L, Classification:Women's knitwear XL Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Peach Blush, Aqua Foam, Bit of Blue

Company name: Knitfit Co Address: Portland, Oregan 97034

Material

CARDIGAN-PERU

Quantity

5.4500

$/Unit

1.3433 $ $7.321 Quantity

Thread 0.00126 3 Labels 0.037 hand tags 0.05 Buttons 0.03 Total Component Cost:

Packaging

$/Unit

Re-Usable Bag $ Total Packaging Cost:

Packing Cartons Tape Labels

86 $ 3.03 $ 1.01 $ 5 $0.421

0.0500

Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin

$Total

Quantity 1.220 0.010

$0.12 per minute

0.10836 0.11211 0.05050 0.15

1.01 $ $0.05

0.05050 $Total

30 $ 3.03 $ $ $0.13

Total Packing Cost:

Labor

7.32099 $Total

Quantity

$/Unit $ $

$Total

Cost

1% 1% 1% 10% 10 minutes $

0.04067 0.03030 0.06000 $Total

0.12

$ $ $ $ $

0.0012 0.0012 0.0012 0.0120 1.2000

$

0.5000

Total Labor Cost: = $1.72

Other

size/quantity

Cost

Box (23"x10"x6") Freight Container 17580 $ 895.00 Shipping Insurance+Broker $ 0.0190 Total Shipping: Grand Total per Garment: = $9.82

84

$Total

$

0.05091 $0.2199


EGYPT COST SHEETS CARDIGAN CROP KNIT BLOCK KNIT

85


Knitfit Co. COST SHEET-C

ARDIGAN-EGYPT

Company name: Knitfit Co Address: Portland, Oregan 97034

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Orange, Aqua Foam, Bit of Blue

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Material

$/Yard

$ Total Material Cost:

Components

6.9780

Thread 3 Labels hand tags/components Buttons Total Component Cost:

Packing $ $

1 $ $6.978

0.08 0.05 0.05 0.08

1 $ 3 $ 1 $ 5 $0.680

0.0500

0.100 0.010 0.018

Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin Total Labor Cost:

Other

size/quantity

0.05000 $Total

1 $ 1 $ 1 $ $0.13 Cost

1% 1% 1% 10% 8 minutes $

Box (23"x10"x6") / 1 Freight Container 17,580 $ Duty 19.7% $ Shipping 1 Insurance+Broker $ Total Shipping: Grand Total per Garment:

86

$Total

Quantity

$0.08 per minute

0.08000 0.15000 0.05000 0.4

1 $ $0.05

Total Packing Cost:

Labor

6.97800 $Total

Quantity

$/Unit

Size range: XS, S, M, L, XL

$Total

Quantity

$/Unit

Re-Usable Bag $ Total Packaging Cost: Cartons Tape Labels

Quantity

$/Unit

Packaging

Style #6675

0.10000 0.01000 0.01800 $Total

$ $ $ $ $

0.0008 0.0008 0.0008 0.0080 0.8000

$ $1.31

0.5000

0.08

Cost

$Total

2,000.00 9.15

$ $

575 $2.06 $11.21

0.11377 1.80184 0.113765643 0.03


Knitfit Co. COST SHEET-CROP

-EGYPT

Company name: Knitfit Co Address: Portland, Oregan 97034

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Orange, Aqua Foam, Bit of Blue

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Material

$/Yard

$ Total Material Cost:

Components

6.9780

Thread 3 Labels hand tags Buttons Total Component Cost:

Packing $ $

1 $ $6.978

0.08 0.05 0.005 0

1 $ 3 $ 1 $ 0 $ $0.235

0.0500

0.100 0.010 0.018

Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin Total Labor Cost:

Other

$Total

Quantity

$0.08 per minute

Box (23"x10"x6") / 1 Freight Container 17,580 $ Duty 19.7% $ Shipping 1 Insurance+Broker $ Total Shipping: Grand Total per Garment:

0.05000 $Total

1 $ 1 $ 1 $ $0.13 Cost

1% 1% 1% 10% 8 minutes $

size/quantity

0.08000 0.15000 0.00500 -

1 $ $0.05

Total Packing Cost:

Labor

6.97800 $Total

Quantity

$/Unit

Size range: XS, S, M, L, XL

$Total

Quantity

$/Unit

Re-Usable Bag $ Total Packaging Cost: Cartons Tape Labels

Quantity

$/Unit

Packaging

Style #6674

0.10000 0.01000 0.01800 $Total

$ $ $ $ $

0.0008 0.0008 0.0008 0.0080 0.8000

$ $1.31

0.5000

0.08

Cost

$Total

2,000.00 8.70

$ $

575 $1.97 $10.68

0.11377 1.71418 0.113765643 0.03

87


Knitfit Co. COST SHEET-BLOCK

-EGYPT

Company name: Knitfit Co Address: Portland, Oregan 97034

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Orange, Aqua Foam, Bit of Blue

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Material

$/Yard

$ Total Material Cost:

Components

6.9780

Thread 3 Labels hand tags Buttons Total Component Cost:

Packing $ $

1 $ $6.978

0.08 0.05 0.005 0

1 $ 3 $ 1 $ 0 $ $0.235

0.0500

0.100 0.010 0.018

Patternmaking Grading Marking Cutting Sewing Washing Prepacks* Admin Total Labor Cost:

Other

size/quantity

0.05000 $Total

1 $ 1 $ 1 $ $0.13 Cost

1% 1% 1% 10% 8 minutes $

Box (23"x10"x6") / 1 Freight Container 17,580 $ Duty 19.7% $ Shipping 1 Insurance+Broker $ Total Shipping: Grand Total per Garment:

88

$Total

Quantity

$0.08 per minute

0.08000 0.15000 0.00500 -

1 $ $0.05

Total Packing Cost:

Labor

6.97800 $Total

Quantity

$/Unit

Size range: XS, S, M, L, XL

$Total

Quantity

$/Unit

Re-Usable Bag $ Total Packaging Cost: Cartons Tape Labels

Quantity

$/Unit

Packaging

Style #6673

0.10000 0.01000 0.01800 $Total

$ $ $ $ $

0.0008 0.0008 0.0008 0.0080 0.8000

$ $1.31

0.5000

0.08

Cost

$Total

2,000.00 8.70

$ $

575 $1.97 $10.68

0.11377 1.71418 0.113765643 0.03


BLOCK KNIT TECH PACK

89


Knitfit Co.

Block Knit Design Sheet

Company name: Knitfit Co Address: Portland, Oregan 97034

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Date Created: 4/2/2013

90

Date Modified:

Style # 6673

Garment Information: Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Colorway: ivory, blush, Stone, Carolina Blue Description: Block Knit

Date Released:


Knitfit Co.

Block Knit Illustration Sheet

Company name: Knitfit Co Address: Portland, Oregan 97034

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Style # 6673

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: ivory, blush, grey, Carolina Blue

Fabric Information 100% Organic Cotton, Shishi Haobao Textile Co., Ltd. Model #DB76

Style # Width Size Ranges See fabric XS, S, M, L, Sheets XL, Sample size: M

Delivery Date Comments TBD

Date Created: 4/2/2013

Date Modified:

Date Released:

91


Knitfit Co.

Block Knite Size Sheet

Style #: 6673

Care Instructions Machine wash cold with like colors. Do not bleach. Tumble dry on low or hang dry.

Tol +/0.25 0.375 0.375

0.375

SIZES A Length B Sleeve length C Shoulder length D Neck Circumference

E Torso 1 Circumference 0.25 F sleeve detail G Armhole 0.5 circumference

92

XS S M L XL 19.5 19.8 20.0 20.3 25.7 26.0 26.4 26.8 3.1 3.5 3.9 4.2

20.5 27.2 4.6

21.6

22.0

22.4 22.8

23.1

31.0 3.5

32.0 3.8

33.0 34.0 4.0 4.3

35.0 4.5

6.5

7.0

7.5

8.0

8.5


Knitfit Co

.Block Knit Fabric Sheet

Company name: Knitfit Co Address: Portland, Oregan 97034

Style # 6673

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: ivory, blush, stone, Carolina Blue

Sketch:

Swatch:

Fabric Information 100% Organic Cotton, Shishi Haobao Textile Co., Ltd. Model #DB76

Style # WidthSize RangesDelivery Date Comments #DB76 XS, S, M, L, TBD XL, Sample 67" 140gsm size: M

Date Created: 4/2/2013

Date Modified:

Date Released:

93


Knitfit Co.

Date Created: 4/2/2013

94

Block knit Label Placement Sheet

Date Modified:

Style # 6673

Date Released:


Knitfit Co

. Block Knit Label/Packakging Sheet

Style #:6673

Company name: Knitfit Co Address: Portland, Oregan 97034

Phone: 616-822-8407 Email: knitfitco@gmail.com Item-VendorCode-Origin Designer label, XHFJ Econimic & Trade co, China Size tab, XHFJ Econimic & Trade co, China Care Label XHFJ Econimic & Trade co, China, A81

Content

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: ivory, blush, stone, Carolina Blue Size-QuantityLocation Color Unit of Comments Measure

100% cotton

1X1-square-1 per garment

Center Backbetween seems

White

Print/Make to fill order

100% cotton

1X1-square-1 per garment

Center Back Neck, under designer label

White

Print/Make to fill order

100% cotton

In between Rectangle, front and back .75X3- 1 per seams-5 garment inches from bottom hem

White

See techsheet print to fill order

Bar Code tag Transparent Vy Pphuong paper Co. Ltd, China Hangtag,XHFJ Econimic & Paper Trade co, China, W103

1 per garment

Attach to hangtag by dennison gun

2 Color

Order by size range, color, and style #

1.5X3-1 per garment

hang by denison gun

Gray with white writing

print to fill order

grey

Fill order

Re-usable 1 per non-woven bags, Xiamen garment fabric,laminat Probtain 30(W)x42(H) ed-20121101 Nonewoven x12(G)cm CO, A0087 Date Created: 4/2/2013

Date Modified:Date Released:

95


Knitfit Co.

Block Knit Component Sheet

Company name: Knitfit Co Address: Portland, Oregan 97034

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Item-VendorCode-Origin

Content

Anecot Organic-A&E China

100% Orangic Cotton

Date Created: 4/2/2013

96

Style # 6673

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: ivory, blush, stone, Carolina Blue

Size-Quantity-Unit of Measure

Location

Color

Ivory #0112 tex size 35-5000-Spool- All seams and Pink #3727 Blue #7812 hems as needed per garment Grey #8629

Date Modified:

Date Released:

Comments


CROP KNIT TECH PACK

97


Knitfit Co.

Cropped Knit Design Sheet

Company name: Knitfit Co Address: Portland, Oregan 97034

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Date Created: 4/2/2013

Date Modified:

Style # 6674

Garment Information: Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Peach Blush, Aqua Foam, Bit of Blue Description: Cropped Knit

Date Released:

64

98


Knitfit Co.

Crop Knit Illustration Sheet

Company name: Knitfit Co Address: Portland, Oregan 97034 Phone: 616-822-8407 Email: Knitfitco@gmail.com

Style # 6674

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Peach Blush, Aqua Foam, Bit of Blue

Fabric Information 100% Organic Cotton, Peruvian Organic, #C-001

Style # Width Size Ranges See fabric XS, S, M, L, Sheets XL, Sample size: M

Delivery Date Comments TBD

Date Created: 4/2/2013

Date Modified:

Date Released:

65

99


Knitfit Co.

Crop Knit Size Sheet

Style #: 6674

Care Instructions

Machine

was cold with like colors. Do not bleach. Tumble dry on low or hang dry.

Tol +/0.25 0.375 0.375

0.375 1

SIZES A Length B Sleeve length C Shoulder length D Neck Circumference

E

Torso Circumference

XS S M 9.5 9.75 25.7 26.025 3.12 3.5

10 26.4 3.87

L XL 10.3 10.5 26.8 27.15 4.25 4.62

26.3

26.6

27

27.4

27.75

36

37

38

39

40

Fabric Information

Peach Blush

Aqua Foam

Bit of Blue

Textile PMS

13 1504 Pantone

14 5707 Pantone

11 4601 Pantone

68

100


Knitfit Co

.Block Knit Fabric Sheet

Company name: Knitfit Co Address: Portland, Oregan 97034

Style # 6674

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Peach Blush, Aqua Foam, Bit of Blue

Sketch:

Swatch:

Fabric Information 100% Organic Cotton, Peruvian Organic, #C-001

Style # WidthSize RangesDelivery Date Comments #C-001, 30", XS, S, M, L, TBD 185gsm XL, Sample size: M

Date Created: 4/2/2013

Date Modified:

Date Released: 66

101


Knitfit Co.

Crop Knit Component Sheet

Company name: Knitfit Co Address: Portland, Oregan 97034

Phone: 616-822-8407 Email: Knitfitco@gmail.com

Item-VendorCode-Origin

Content

Anecot Organic-A&E China

100% Orangic Cotton

Date Created: 4/2/2013

Style # 6674

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: Peach Blush, Aqua Foam, Bit of Blue

Size-Quantity-Unit of Measure

Location

Color

Comments

tex size 35-5000-Spool- All seams and Ivory #0112 hems as needed per garment

Date Modified:

Date Released:

67

102


Knitfit Co

. Crop Knit Label/Packakging Sheet

Style #:6674

Company name: Knitfit Co Address: Portland, Oregan 97034

Phone: 616-822-8407 Email: knitfitco@gmail.com Item-VendorCode-Origin Designer label, XHFJ Econimic & Trade co, China Size tab, XHFJ Econimic & Trade co, China Care Label XHFJ Econimic & Trade co, China, A81

Content

Group Name: Comfort Knit Classification:Women's knitwear Season: F/W 2014 Garment Label: White Fabric Content: 100% Organic Cotton Colorway: ivory, blush, stone, Carolina Blue Size-QuantityLocation Color Unit of Comments Measure

100% cotton

1X1-square-1 per garment

Center Backbetween seems

White

Print/Make to fill order

100% cotton

1X1-square-1 per garment

Center Back Neck, under designer label

White

Print/Make to fill order

100% cotton

In between Rectangle, front and back .75X3- 1 per seams-5 garment inches from bottom hem

White

See techsheet print to fill order

Bar Code tag Transparent Vy Pphuong paper Co. Ltd, China Hangtag,XHFJ Econimic & Paper Trade co, China, W103

1 per garment

Attach to hangtag by dennison gun

2 Color

Order by size range, color, and style #

1.5X3-1 per garment

hang by denison gun

Gray with white writing

print to fill order

grey

Fill order

Re-usable 1 per non-woven bags, Xiamen garment fabric,laminat Probtain 30(W)x42(H) ed-20121101 Nonewoven x12(G)cm CO, A0087 Date Created: 4/2/2013

Date Modified:Date Released:

70

103


Knitfit Co.

Date Created: 4/2/2013

Crop Knit Label Placement Sheet

Date Modified:

Style # 6674

Date Released:

69

104


CARDIGAN TECH PACK

105


Knitfit Co.

Design Sheet

Company Name: Knitfit Co. Address: 339 Copper Rd. Portland Oregan 56034 Phone: 616-822-8407 Fax: 616-822-8407

Date Created: 4/3/2013

106

Style # 6675

Garment Information: Cardigan Group Name: Comfort Knit Classification: Women's Knitwear Season: F/W 2014 Garment Label: Boyfriend Fabric Content: 100% Organic Cotton Colorway: Pink, Celadon, Earth Description: Tunisian Block Knit

Date Modified:4/6/2013 Date Released: 4/8/2013


Knitfit Co.

Illustration Sheet

Style # 6675

Company Name: Knitfit Co. Group Name: Comfort Knit Address: 339 Copper Rd. Portland Oregan Classification: Women's Knitwear Season: F/W 2014 56034 Garment Label: Boyfriend Phone: 616-822-8407 Fabric Content: 100% Organic Cotton Fax: 616-822-8407 Colorway: Pink, Celadon, Earth

Fabric Information

100% Organic Cotton, HEE-HF019, Egypt

Date Created: 4/3/2013

Style # Width Size Ranges Delivery Date

Comments

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

Delivery not set with jobber

Earth #88923 58" Wide

Date Modified: 4/6/2013

TBD

Date Released: 4/8/2013

107


Knitfit Co.

Fabric Sheet

Style # 6675

Company Name: Knitfit Co. Group Name: Comfort Knit Address: 339 Copper Rd. Portland Oregan Classification: Women's Knitwear 56034 Season: F/W 2014 Garment Label: Boyfriend Phone: 616-822-8407 Fabric Content: 100% Organic Cotton Fax: 616-822-8407 Colorway: Pink, Celadon, Earth

Sketch:

Fabric Information 100% Organic Cotton, HEE-HF019, Egypt

Date Created: 4/3/2013

108

Swatch:

Style # Width Size Ranges Delivery Date

Comments

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

Delivery not set with jobber

Earth #88923 58" Wide

Date Modified: 4/6/2013

TBD

Date Released: 4/8/2013


Knitfit Co.

Detail/Construction Sheet

Company Name: Knitfit Co. Address: 339 Copper Rd. Portland Oregan 56034 Phone: 616-822-8407 Fax: 616-822-8407 Detail

Date Created: 4/3/2013

Style # 6773

Group Name: Comfort Knit Classification: Women's Knitwear Season: F/W 2014 Garment Label: Boyfriend Fabric Content: 100% Organic Cotton Colorway: Pink, Celadon, Earth

Date Modified: 4/6/2013

Date Released: 4/8/2013

109


Knitfit Co.

Fabric Sheet

Style # 6675

Company Name: Knitfit Co. Group Name: Comfort Knit Address: 339 Copper Rd. Portland Oregan Classification: Women's Knitwear 56034 Season: F/W 2014 Garment Label: Boyfriend Phone: 616-822-8407 Fabric Content: 100% Organic Cotton Fax: 616-822-8407 Colorway: Pink, Celadon, Earth

Sketch:

Fabric Information 100% Organic Cotton, HEE-HF019, Egypt

Date Created: 4/3/2013

110

Swatch:

Style # Width Size Ranges Delivery Date

Comments

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

Delivery not set with jobber

Earth #88923 58" Wide

Date Modified: 4/6/2013

TBD

Date Released: 4/8/2013


Knitfit Co.

Component Sheet

Company Name: Knitfit Co. Address: 339 Copper Rd. Portland Oregan 56034 Phone: 616-822-8407 Fax: 616-822-8407

Item-VendorCode-Origin

Content

Thread 1500Y (factory stock), Egypt

100% Organic Cotton

Date Created: 4/3/2013

Style # 6675

Group Name: Comfort Knit Classification: Women's Knitwear Season: F/W 2014 Garment Label: Boyfriend Fabric Content: 100% Organic Cotton Colorway: Pink, Celadon, Earth

Size-Quantity-Unit of Measure 5000-Spool-as needed per garment

Location

Color

Buttons

Zoheng All seams and Earth #0128 hems 14001 25mm

Date Modified: 4/6/2013 Date Released: 4/8/2013

111


Knitfit Co.

Label/Packakging Sheet

Company Name: Knitfit Co. Address: 339 Copper Rd. Portland Oregan 56034 Phone: 616-822-8407 Fax: 616-822-8407

ItemVendorCode-Origin

Style # 6675

Group Name: Comfort Knit Classification: Women's Knitwear Season: F/W 2014 Garment Label: Boyfriend Fabric Content: 100% Organic Cotton Colorway: Pink, Celadon, Earth

Size-Quantity-Unit of Measure

Location

Color

Comments

Designer 100% cotton label, Egypt

1 per garment

Center Back

1 Color

Print/Make to fill order

Size tab Print Avery 100% cotton Denison Machine

1 per garment

Center Back Neck, under designer label

1 Color

Print/Make to fill order

1 per garment

In between front and back seams towards bottom left

1 Color

See techsheet print to fill order

Content

Care Label Print Avery 100% cotton Dennison Machine Bar Code Tag Cairo, Egypt

Transparent paper

1 per garment

Attach to hangtag by denison gun

2 Color

Order by size range, color, and style #

Hangtag, Egypt

100% cotton

1 per garment

hang by denison gun

5 Color

print to fill order

Hangers

Recycled wood

1 per garment

(separate)

Natural

Fill order

Date Created: 4/3/2013

112

Date Modified: 4/6/2013 Date Released: 4/8/2013


SOURCING GUIDELINES

113


Knitfit Co. Sourcing Guideline

I. Compliance with Laws Manufacturers and suppliers who produce goods for Knitfit Co. shall operate in full compliance with the laws of their respective countries and with all other appropriate rules and regulations. A. The factory operates in full compliance with all applicable laws, rules and regulations including those related to labor, worker health and safety and then environment. B. The factory allows Knitfit Co. to access its facilities and all relevant records, whether or not notice is provided in advance. II. Environment Factories shall comply with all applicable environmental laws and regulations. Factories are strongly encouraged to meet the standards outlined in Knitfit Co.’s statement of environmental principles attached as a law. A. The factory has an environmental management system. B. The factory has an environmental emergency plan that includes notifying the local community authorities incase of an emergency. C. The factory stores hazardous and combustible materials in secure ventilated areas. III. Employment Standards The company’s employment standards set forth the company’s guiding principles that factories must conduct business in a lawful, ethical and responsible manner. Child Labor A. Factories shall employ only workers who meet the applicable minimum legal age requirement or are at least 15 years of age. 1. Every worker employed by the factory is at least 15 years of age and meets the applicable minimum age 2. The factory complies with all applicable child labor laws, including those related to hiring, wages, hours worked, overtime and working conditions. 3. The factory encourages and allows eligible workers to also attend classes and participate in work study programs 4. The factory maintains official documentation for every worker Wages and benefits A. Factories shall pay wages and overtime premiums in compliance with all applicable laws. Workers shall be paid at least the legal minimum wage. 1. Workers are paid at least the minimum legal wage or the local industry standard. 2. The factory pays overtime and any incentive rates that meet all legal requirements 3. The factory provides paid annual leave and holidays required by law that meet the local industry standards 4. For each pay period, the factory provides workers an understandable wage statement which in114 days worked, hours of overtime, and bonuses cludes


Working Hours A. Factories shall set working hours in compliance with all applicable laws. While it is understood that overtime is required in garment production. 1. 2. 3.

The factory complies with all applicable laws, regulations and industry standards on working hours. Workers may refuse overtime without any threat of penalty, or punishment Workers shall have at least one day off in seven.

Forced Labor A. Factories shall not use any prison, indentured or forced labor. 1. The factory does not use involuntary labor of any kind, including prison labor, debt bondage or forced labor by governments. Health and Safety A. Factories shall comply with all applicable laws and regulations regarding working conditions and shall provide workers with a safe and healthy environment. 1. The factory complies with all applicable laws regarding working conditions 2. Work surface lighting in production areas, such as sewing, knitting, pressing and cutting 3. Factory is ventilated 4. There are sufficient clearly marked exits 5. Aisles, exits and stairwells are kept clear at all times of work in process 6. Doors and other exits are kept accessible and unlocked during all working hours for orderly evacuations 7. Fire extinguishers are appropriate to the types of possible fires in certain areas 8. Fire alarms are on each floor with emergency lights 9. Evacuation frills are conducted annually 10. 11. 12. 13.

Machinery is equipped with operational safety devices and serviced on a regular basis The factory provides potable water for all workers The factory places at least one well-stocked first aid kit on every factory floor The factory maintains cleanliness throughout working hours

Nondiscrimination A. Factories shall employ workers on the basis of their ability to do the job, not the basis of their personal characteristics or beliefs. 1. The factory hires, employs, promotes, terminates and provides access to training workers without regard to race, color, gender, nationality, religion, age, maternity, marital status, social origin, sexual orientation, disability, membership in workers’ organizations including unions. 2. The factory pays workers wages and provides benefits without regard to race, color, gender, nationality, religion, age, maternity, marital status, social origin, sexual orientation, disability, membership in workers’ organizations including unions. Human Treatment A. Factories shall treat workers with respect and dignity. Factories shall not use corporal punishment or any other form of physical harm. 1. The factory does not engage in or permit physical acts to punish workers 2. The factory does not engage in or permit psychological or any other form of violence, harassment, 115or verbal abuse.


Collective Bargaining A. Workers are free to join associations of their own choosing. Factories shall not interfere with workers who wish to lawfully and peacefully associate, organize or bargain collectively. 1. 2.

Workers are free to choose whether or not to lawfully organize and join associations The factory does not threaten, penalize or restrict with workers lawful efforts to join associations

Environmental Standards A. Must adhere to applicable local, national and international laws and regulations regarding the protection and preservation of the environment Subcontracting A. Must not subcontract any portion of the manufacturing process without prior written approval from Knitgit Co. Monitoring and Compliance A. The right to conduct announced and unannounced inspections of all manufacturing facilities 1. requirements in this code are understood and implemented at every level and must maintain all documentation necessary to demonstrate compliance with Knitfit Code of Vendor Conduct. Certification Under the code of Conduct, Knitfit Co.’s Suppliers certify that they will conduct business sin compliance with the law, including, among other things, without child labor, without forced labor, without corporal punishment, without discrimination, and in compliance with wage, safety, environment and hour regulations. Verification Knitfit Co maintains long- standing business relationships with suppliers who have been vetted through an internal screening process. It shall be the responsibility of licensees to ensure their compliance with the code. Audits The company uses qualified, accredited, third party, social compliance auditing firm to conduct risk assessments and to audit manufacturing vendors which meet certain risk-related criteria. Audits inspections can be announced or unannounced. Internal Accountability Standards When non-conformance with the Code of Conduct is identified, Knitifit Co. works with the supplier to identify the cause and develop an action plan to assure future compliance. .

116


Work Cited South Asia Textiles Holding (Ltd). N.p., 2005. Web. 20 May 2013. <http://www.southasiagroup.com/eng/garment04.html>. “Trade and Investment Facilitation.” CEPA. N.p., 2008. Web. 26 Apr. 2013. < http://www.cepa. gov.mo/cepaweb/front/eng/itemI_1_4.htm >. “The Mainland and Macau Closer Economic Partnership Arrangement (CEPA) and its impact in the banking and financial sector.” IFLR 1000. N.p., n.d. Web. 26 Apr. 2013. <http:// www.iflr1000.com/LegislationGuide/776/The-Mainland-and-Macau-Closer-Economic- Partnership-Arrangement-CEPA-and-its-impact-in-the-banking-and-financial-sec tor.html>. mporting into the United States. N.p., n.d. Web. 25 Apr. 2013. <http://www.cbp.gov/linkhan dler/cgov/newsroom/publications/trade/iius.ctt/iius.pdf>. “An Overview of China’s Garment Industry.” CNGA. N.p., n.d. Web. 25 Apr. 2013. <http://www. cnga.org.cn/engl/about/Overview.asp>. Fangqing, Wang. “China pushes textile companies to go green.” Just-Style. N.p., 12 Mar. 2013. Web. 25 Apr. 2013. <http://www.just-style.com/analysis/china-pushes-textile-companies- to-go-green_id117243.aspx>. Qihui, Gao. “Call for design innovation to pull textile sector out of slump.” China Daily. N.p., Mar. Web. 25 Apr. 2013. <http://usa.chinadaily.com.cn/business/2013-03/15/con tent_16310691.htm>.

Lindo Style. N.p., 2013. Web. 20 May 2013. <http://www.lindostyle.com/index.php?option=com_content&task=view&id=19&Itemid=30>. World Business Culture. N.p., 2012. Web. 20 May 2013. <http://www.worldbusinessculture.com/Business-Facts-and-Figures-on-Egypt.html>. U.S Department of State. N.p., 22 Aug. 2012. Web. 20 May 2013. <http://www.state. gov/r/pa/ei/bgn/5309.htm>. United States Census Bureau. U.S Department of Commerce, 2 May 2013. Web. 20 May 2013. <http://www.census.gov/foreign-trade/balance/c7290.html>. Doing Business in Egypt. U.S Commercial Service, 2012. Web. 20 May 2013. <http:// www.buyusainfo.net/docs/x_8534139.pdf>. Bishara For Fashion. N.p., 2011. Web. 20 May 2013. <http://www.bishara.com.eg/company-profile>. Cairo Cotton Center. N.p., 2008. Web. 20 May 2013. <http://www.cairocotton.com/ ccc.htm>.

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“Export.gov Page Not Found.” Home. N.p., n.d. Web. 16 Apr. 2013. “Free Trade Agreements | U.S.-Peru Trade Promotion Agreement Rules of Origin | Export.gov.” Free Trade Agreements | U.S.-Peru Trade Promotion Agreement Rules of Origin | Export.gov. “General Information about Peru.” Peru General Information Guide. N.p., n.d. Web. 19 Apr. 2013. “(OTEXA) Market Reports/Tariffs.” (OTEXA) Market Reports/Tariffs. N.p., n.d. Web. 16 Apr. 2013. “Peru : Daily Life and Social Customs.” Encyclopedia Britannica Online. Encyclopedia Britannica, n.d. Web. 19 Apr. 2013. “Peru Country Profile.” BBC News. BBC, 31 July 2012. Web. 18 Apr. 2013. “Peru Is Open for Your Business.” Services for U.S. Companies Home. N.p., n.d. Web. 18 Apr. 2013. “Peruvian Economy Economic History & Economy in Peru Today.” Peruvian Economy. N.p., n.d. Web. 18 Apr. 2013. “The Peruvian Food Guide.” Peruvian Food Guide by LimaEasy. N.p., n.d. Web. 15 Apr. 2013. “Search.” Peru. N.p., n.d. Web. 17 Apr. 2013. “Textiles and Clothing.” Textiles and Clothing. N.p., n.d. Web. 14 Apr. 2013.

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