Global Sourcing Strategy
Abstract
T
he basis of this project was to plan a global sourcing strategy to reflect the framework and goals of the up and coming apparel company, Foxx & Mann. The strategy incorporates an analysis of five countries and their textile industries including: El Salvador, India, Indonesia, Malaysia, and the Philippines. The strategy is further developed through supplier analysis, preliminary costing, country ranking, product placement, and comparison pricing. Overall, our approach was to find countries and off-shore suppliers that offer our ideal quality at an effective cost, and who will adhere to the sourcing guidelines while measuring the risks, benefits, values and future potential with regard to Foxx & Mann.
Table of Contents Introduction............................................................................. Pg. 02 Strategy Development Process.............................................. Pg. 06 Country Analysis..................................................................... Pg. 15 Supplier Analysis..................................................................... Pg. 30 Costing Analysis...................................................................... Pg. 42 Strategy Development............................................................ Pg. 47 Final Strategy........................................................................... Pg. 56 Final Costing Comparison..................................................... Pg. 61 Conclusion............................................................................... Pg. 66 Bibliography............................................................................. Pg. 69 Appendix.................................................................................. Pg. 76
Introduction
Introduction
Mission Statement
W
e aim to redeďŹ ne men’s casual wear, by developing comfortable, functional, and effortlessly professional products while helping you to form your own unique style.
Vision Foxx & Mann is a company that appeals to young professional men . Our goal at Foxx & Mann is to develop life long consumers. We do this through our image of responsibility and community. We are inspired by our clients and seek to inspire them by constantly providing products that help them create their own unique style. We seek to practice ethical and safe global standards, from our sourcing to our sales floor we carry our company beliefs through every facet of our company. We desire to lead the menswear industry in our woven shirts and remain ahead of the competition. At Foxx & Mann we create products that embody the Casual. Effortless. Style of the
ethically handsome man.
3
Walker Age: 28 Live in New England Creative Director Annual income: $65,000
Our Guy Foxx & Mann appeals to the young professional male who we affectionately call, “Walker�. Walker, has a way of rolling out of bed and simply dressing well. He is a guys guy and a ladies man. He wants a wardrobe to fit his basic needs and yet is still in trend. He believes in taking any and every opportunity to move up in his career and open his horizons. We help Walker with this. We provide him with a line of woven shirts that fit every aspect of his lifestyle. Whether he is bar hopping with the guys or spending his leisure time, relaxing in the park, we have Walker covered. Our shirts fit his mood, style, and his ethics.
2
Introduction
Our Location Our location is pretty wicked awesome. Our distribution center, as well as our flagship store is located in the heart of Boston, MA. Our offices are right above our flagship store on Newbury street, surround by a myriad of shops and restaurants.
The Bigger Picture Foxx & Mann believes that every aspect of our Walkers life is important. Therefore, we work with charities local to the Boston area that would impact his life and build his community.
Our Best Friend
Our Woman
Our Little Brother 5
Product
Product
Our Assortment Walker will have plenty to choose from with our Foxx & Mann product line. We will carry five different styles of men’s woven shirts. The shirts will come in various assortments of three colors per shirt that will be carried throughout each season. Chambray
Flannel
Slim Fit
Oxford
Short Sleeve
7
Our Prices Foxx & Mann provides high quality products at a moderate price point. Our prices are favorable with our competition. Those competitors being J. Crew and Brooks Brothers. Our shirts are cost-plus pricing, and are based upon our initial costs from suppliers. Our shirts have a price range from $65.00 -$80.00 per shirt.
Graph of Prices
8
Product
Executive Summary The purpose of this document is to provide information as to why Foxx & Mann globally sources, produces, and operates. Foxx & Mann believes in taking every opportunity alloted to it. Like Walker, we are constantly seeking every opportunity to expand and create. We have sources our products in three various countries that show exceptional growth in the textiles and garment market. These counties and the manufactures that we use, fall in line with the sourcing guidelines we have established. These manufacturers provide the high quality fibers that we want and that our ethically handsome man desires.
9
Strategy Development Process
Strategy Development Process
Why Develop A Strategy A
t Foxx & Mann, developing a global sourcing strategy is crucial in clearly identifying our goals and guidelines as we expound upon our process of creating a new competitive mens-
wear company. Not only will this strategy be used to inform our teams both domestically and globally, but also be referenced for future company growth. To develop this complex strategy, many different steps must be taken to complete the process of choosing countries of manufacture. Formulating a detailed country profile for each prospective country combines knowledge regarding social, geographical, political, cultural, and economic traits to further support our decisions. Not only must we study these traits, but also need to analyze and consider any unstable tendencies within the country. Political instability, social unrest, natural disasters, war and duties will also affect the conditions of sourcing with certain countries, including any trade agreements that may be beneficial to our business relationship. Since Foxx & Mann is a new company, quotas may not be of great concern, however, we must be aware of any duties placed on textiles and apparel as it may raise an unbeknown cost. Understanding the expectations of manufacturer sourcing guidelines will also clarify our placement of products in each country, or perhaps, a choice to not source with that country at all. Child labor, forced labor, and worker’s health in some areas of the world is less to be desired, therefore, Foxx & Mann will decide carefully based on these concerns. We want to uphold the highest of standards when it comes to our employees and those involved in the making of our products, both domestically and globally. Over 70% of business deals fail due to lack of cultural sensitivity: keeping this startling fact in mind, Foxx & Mann vows to operate with utmost respect for cultural elements unlike ours in the United States. We will not only just adhere to these differences, but also embrace them into our company culture.
11
Foxx & Mann will also work to effectively tackle the topic of costing, providing fair and researched costs to our manufacturers and the team here in Boston. Providing our freight, customs, and insurance brokers with accurate quotes, documents, and export requirements, while referencing the HTS, will ensure a smooth importing process.
12
Strategy Development Process
Product Breakdown Foxx & Mann’s assortment team has decided to produce 560,000 units annually. Since our product line is primarily fashion-oriented, Foxx & Mann will be receiving seasonal shipments throughout the year. The flannel, style #FM001, is projected to be shipped seasonally (between 13,000-15,000 units respectively) primarily in the fall and winter months of September, October, November, and December due to its content. Smaller shipments will be made throughout the year due to the in-store markdowns of the previous flannel inventory Like the flannel, the short Sleeve, style #FM005, will be shipped seasonally as well with higher volumes carried in the Spring and Summer months of April, May, June, and July. Low shipments will be made throughout the Fall and Winter to function as layering pieces under winter sweaters and jackets. The calculated annual units for both seasonal styles will total 112,000 units, accounting for nearly two-thirds of our total inventory. The chambray (#FM002), the oxford (#FM003), and the slim (#FM004) will be distributed relatively evenly throughout the year as they function as staple items in our All Natural collection. The months of September, October, November, and December will be our highest selling months due to holidays and special business casual occasions such as holiday work parties, family events, and winter weddings. Customers purchasing gifts for the men in their lives will also be a driving factor for sale.
13
Shirt Illustrations Flannel Seasonal Seasonal Item High volumes through holiday season and winter months.
Slim Fit Staple Staple Item Consistent volumes throughout the year.
Chambray Staple Staple Item Consistent volumes throughout the year. Short Sleeve Staple Seasonal Item High Volume through holiday season and winter months. Oxford Staple Staple Item Consistent volumes throughout the year.
14
Country Analysis
15
The Five Countries
F
oxx & Mann selected five initial countries in search of potential offshore providers to produce a line of men woven shirts. The five countries were selected based on their ability to produce high quality men shirts in a
sustainable fashion with competitive labor costs. The countries included: El Salvador, India, Indonesia, Malaysia, and the Philippines. All five countries have growing textile and apparel industries as well as individual benefits to our start up company. El Salvador is a large scale apparel assembler in the clothing supply chain; most fabrics exported to El Salvador for cut and assembly are then re-imported to the United States as finished goods, for sale within the retail market. The textile industry in India is the second largest within the country, with the main textile sectors being cotton and wool, two of the primary raw materials found within Foxx & Mann garments. Indonesia is a country with a well-established textile industry, strong ports, and a central location between the Pacific and Indian Ocean, making it an easy country to both access and source from geographically. Malaysia is well known for its reliability and manufacturing of high quality garments, with its latest venture of utilizing recyclable materials. The Philippines has a young and highly literate workforce, over 90% of the population can read and write.
16
Country Analysis
India Location: Southern Asia, bordering the Arabian Sea and the Bay of Bengal Population: 1,205,073,612 GDP: $4.421 trillion Government: Federal Republic Language: Hindi 41% + English
Business Climate: • An open-market economy • Grant Thornton Global Dynamism Index rated as “fifth best country in the world for growing businesses and political stability”. Socio-Political Stability: • Highly noticeable differences in wealth, power, and socio-economic status. 17
• Over 70 percent of India’s population lives in villages characterized by kinship, status, and occupation. • Agriculture remains the primary source of income. • Neighboring enlarging cities bring extreme pollution, unsanitary water supplies, overcrowded streets, concrete commercial factories, noise pollution, and crime. • The 1990s economical and technological breakthroughs in India led to renewed relations between the country with the United States. Economic Stability: • Currently, the Indian economy is one of the largest emerging economies in the world. • Transition from a closed economy to an open market economy marked a new era of processing and sending information, reforming the traditional fiscal system into something of a modern competitive outlook • Commonly grouped with Brazil, Russia and China as part of the BRIC countries that are having an increasingly important impact on the global economy. • According to the study by Goldman Sachs, Indian economy is expected to continue growing at the rate of 5% or more till 2050. Indian economy is slated to become the fourth largest economy by 2050. Location in Regards to the U.S • India to New York City, New York, USA is about 7790 miles. Transportation: • Public transport • India’s rail network is the 4th longest and the most heavily used system in the world, transporting over 6 billion passengers and over 350 million tons of freight annually. Foreign Exchange: • Indian rupees (INR) per US dollar - 46.67 (2011) Cultural Difference: • Its polychronic nature Raw Materials Available: • Coal (4TH largest reserves in the world), iron ore, manganese, mica, bauxite, titanium ore, chromite, natural gas, diamonds, petroleum, limestone, arable land
Textile Industry State of Apparel Industry: • One of the largest in world currently, with potential to become more of a major global competitor. • Most establishments focus on spinning, weaving, and apparel manufacturing, the Indian textile industry has developed into a competitive market with growing capabilities. • According to the Ministry of Textiles of India, the textile industry accounts for 14% of industrial production (4% of GDP), and employs 45 million people. • The textile industry also contributed about 12% of the country’s foreign exchange earnings from foreign investment. • Readymade garments account for 39% of total exports while apparel and cotton textiles make 73%. • Exports range from items such as hand-loom handicrafts to man-made fiber textiles to readymade garments. • The European Union and the United States are the major importers of India’s textile products. 18
Country Analysis Textile and Apparel Associations: • Apparel Export Promotion Council (AEPC), The Cotton Textiles Export Promotion Council (Texprocil), The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC), Wool & Woolen Export Promotion Council (S&WEPC), Wool Industry Export Promotion Organization (WOOLTEXPRO), Indian Silk Export Promotion Council (ISEPC, ASEAN. Trained Work Force: • The Rajasthan government proposes to train 35,000 workers in the textile industry during the span of the 12th Five Year Plan (2012-17). Quality of Manufactures: • Many manufactures produce high-quality garments for brands such as Ralph Lauren and Levis. • Manufacturers comply with global organic textile standards • Remain updated in the newest technological innovations in the textile industry.
Risks & Benefits Risks • Weak infrastructure • Hierarchal nature of the workplace • Late or missed deadlines that may occur within factories due to Benefits • India’s highly skilled workforce specializing in wool and cotton textiles • Highly skilled textile labor force • Logistics and shipping because of numerous ports • Low wages
19
Malaysia Location: Southeast Asia Population: 29,179,952 GDP: $492 Billion Government: Constitutional Monarchy Language: Bahasa Malaysia Business Climate: • dynamic with its fast growing economy and market policies that promote entrepreneurship, trade, indus • business-friendly and investor-centric country to encourage market development. Political Stability: • transitioning into a new political state of parliamentary democracy; from constitutional monarchy. • Some protests and reforms due to recent general election 20
Country Analysis Economic Stability: • middle-income country that has been steadily growing since the 1970s • The current Prime Minister of Malaysia, Najib Tun Razak, has announced his attempt to make Malaysia a high-income/developed country statue by 2020. Social Stability: • Malaysia is a multi-cultural society with the main ethnic groups being native Malays, Chinese, and Indians. • Religions, customs, and ways of life are still retained by the different ethnicities within Malaysia. Location in Regards to the U.S: • The distant between the United States and Malaysia is great with over 8,500 miles between Malaysia’s capital, Kuala Lumpar and Los Angeles, CA. Transportation: • Malaysia is considered a central location for trans-ship being at the crossroad of South-East Asia. • there are six international airports • major shipping ports are located in Bintulu, Johor Bahru, George Town, Port Kelang, and Tanjung Pelepas. Foreign Exchange: • Malaysia’s Ringgit (RM) is 3.09 RM for every 1 USD, with the United States benefiting in exchange. • minimum wage is at least 900 RM or $290.89 a month. Cultural Difference: • multi-ethnic and multicultural country where people value family life, heritage, and religion, while strongly believing in respecting other’s faiths and ways of life for a peaceful society. • Polychronic
Textile Industry Raw Materials Available: • Imports many raw materials from neightboring countires and China State of Apparel Industry: • Upstream involves fibers, yarn, fabrics and wet processing activities, • Downstream involves made up garments, textile products, and accessories. • Growth of the Malaysian textile and apparel industry can be explained by the shift from an import substitution policy to export oriented industrialization. • Malaysia is ranked 9th in trade performance and totaled RM 10.81 billion in exports of textiles and apparel in 2011. Trade Organization: • Malaysian Textile Manufacturers Association (MTMA) • MTMA is Malaysia’s national spokesman in its relationship with the government and private sectors and institutions, while assisting to increase productivity and efficiency in the industry. • Malaysian Knitting Manufacturers Association (MKM); a national textile trade association with a mission to increase the global competitiveness of the apparel and textile industry. 21
• Trade Agreements: ASEAN: Association of Southeast Asian Nations and TPP: Trans-Pacific Partnership. Trained Work Force: • Malaysia has a multi-skilled work force with experienced professionals in a variety of fields with • an estimated 12.84 million-labor force as of 2012. Quality of Manufactures: • Malaysia’s apparel sector has been a producer of a number of high-end and international brands such as Burberry, and Gap. • there are over 300 apparel making companies supplying domestic and international markets. • The garment manufacturers in Malaysia focus on producing apparel that emphasizes design, high quality finishes, and production.
Risks & Benefits Risks • protests and police raids that have been occurring • no Free Trade Agreement at the moment between the United States and Malaysia, and there is little preferential treatment when it comes to the apparel and textile industry. • cost of labor elevating with the new a minimum wage Benefits • timely deliveries • accessible ports Malaysia • variety of suppliers who produce men’s woven button-down shirts with the quality, the use of sustainable methods, and codes of conduct with which the company is looking to work.
22
Section Header
Philippines Location: Pacific Ocean, Southeast Asia Population: 94.852,030 GDP: $240.7 billion (2012) Government: Republic Language: Filipino and English Business Climate: • The overall very friendly and hospitable. The country and its people focus on relationships as a basis for conducting any and all business. Some important attributes of conducting proper business in the country are: dress, titles, introductions, presentation of business cards, and gestures. These traits are adversely different in comparison to business conduct by Americans. Following these traits will lead to better negotiations and longterm partnerships. Political Stability: The AQUINO administration is the current political party in the Philippines. Politics in the country as also highly based on relationships. The current administration’s President Benigon “Noynoy” Aquino III, is the son of the prior president of the country, Mrs. Aquino. Typically in the Philippines, families tend to rule when it 23
comes to politics. An ongoing battle between two families, the Aquinos and Marcoses has dominated the administration in the country over the past two decades. There is continued political strife between the Philippines and America, the country that at one point and time colonized the country. Economic Stability: The economy in the Philippines is very strong. The economy is based on a calendar fiscal year. The country is essential booming and has become the 44th largest economy in the world (HSBC). It is projected to jump to the 16th spot by the year 2050(New York Times). The gross domestics product of the country has also seen an increase. As of 2012, it grew 6.4% in the first quarter. The economy is driven by young and skilled labor force. The high population also contributes to this as well, with about 61percent being of working age. The country’s economy is dependent on it outsource of labor to other countries as well as exports. In 2011, the Philippines exported $47.23 billion dollars’ worth of goods and services. These goods ranged from agriculture products such as coconuts to electronic equipment like semiconductors. The Philippines has a bilateral trade agreement with the U.S., meaning, some products, excluding textiles and apparel is duty free. Government: As mentioned in political stability, the country is pretty steady in terms of its government. However, a change of hands in administration, and possible government scandals will shift the political standing of the country in years to come. Social Stability: The social stability of the country is fairly steady as well. There are various cultural groups that make up the Philippines, however, the people are very proud of their heritage and culture. The religious practices of the country reflect heavily into daily life, ethics, and values. Recent acts such as the Peace Acts between Muslim Rebel Groups Internet laws, has contributed to the steady social stability of the country. The Peace Act reduces violence on the southern island of Minadanao, a predominantly Muslim region in the Philippines. The Internet law, Cybercrime Prevention Act, sets penalties in place for computer related crimes, including child pornography, identity theft, and online fraud. However, this law in particular imprisons citizens for libelous activates, meaning comments on social networking sites, such as Facebook and Twitter. Location in Regards to the U.S: The Philippines is located is about 8,000 miles away from Los Angeles. By air, it would take 13 hours to fly direct, by sea; it could take up to 6 to 8 weeks maritime. Transportation: Since the Philippines are made up of islands, travel can be a little complicated. Unless it is taking place between two different areas of the country, traveling can be done by motorized vehicle. International cargo from the Philippines is transported by ocean or air freight. In cases of transportation from island to island where airfreight is not needed, cargo is transported by truck. There are 247 airports located in the Philippines as well as 213,151 km of roadways; mostly are unpaved. (CIA). 24
Section Header Foreign Exchange: The Filipino Peso is equivalent to 42.56 PHP (PESO) = $1 USD Cultural Difference: The major cultural difference between Americans and Filipinos is relationships. Filipino’s value family and religion, and are typically more affectionate when it comes to in their relationships with their friends and family. Filipino’s are hospitable but not as introverted as Americans. They do not typically greet complete strangers, as Americans typically do.
Textile Industry Raw Materials Available: The following, are raw materials that are indigenous to the Philippines: Abaca, Bakbak, Bamboo, Buntal, Buri, Coir, Nito, Pandan, Raffia, Rattan, Tikiw, Tikog, Uqpay. The Filipions have also developed their own material: Philippine Tropical Fabrics. The tropical fabric is made of raw materials indigenous to the area. These in combination with synthetic fabrics will be used to create new business opportunities for thriving entrepreneurs. Currently, that Republic Act No. 9242 prescribes the use of this material for uniforms of public official and employees. The month of January, in the Philippines is strictly dedicated to the use of this fabric; a material the country is hoping will revolutionize their garment industry. State of Apparel Industry: The garment industry is increasingly growing and developing in the Philippines. The Philippine Textile Research Institute is constant developing new technologies as well as fibers that help to improve the garment industry as a whole. These technologies are available to manufactures upon proper job training/ skill buildings workshops and seminars. The institute has developed the following for the Filipino apparel industry: Natural Fibers, Natural Dyes, Sericulture and Silk waste Utilization, Weaving, Pinukpok Processing, Colormatching and Dyeing. The biggest downfall for the Philippines in terms of its garment industry is the high labor wages. Trade Organization: The Garments and Textile Industry Development Office govern the garment industry in the Philippines. This division of the Department of Trade & Industry of the Philippines is responsible for: Market Access and Development Programs, Regulatory Issues, Export and Investment Promotions, Trade Facilitation and Regulation. Insuring that companies are accredited. Trade Agreements: There are no trade agreements between the U.S and the Philippines. There is however, preferential treatment with certain product imports from the Philippines. The two governments are still working on the SAVE act, which would push for garments to be included in duty-free treatment with the United States. It currently has GSP with Europe.
25
Trained Work Force: The Philippines has a highly trained workforce; nine out of ten people are able to read and write. Quality of Manufactures: The manufacturing companies in the Philippines are growing. Most factories as associated with companies, whose headquarters are located in countries such as China, Korea, and even Japan. There is constant funding generated into the country by these manufactures to insure that quality standards and kept and met. The manufactures are also governed by GTIDO and the Department of Trade and Industry. Companies including, J. Crew, Liz Claiborne Company, and Brooks Brothers source from manufacturers located in the Philippines.
Risks & Benefits Risks: There are a various amount of risks to sourcing from the Philippines. One, is the high cost to operate power. The Philippines is one the most expensive countries in the world to operate electrical power. The next reason is lack of government spending on the infrastructure of the country. Which, is caused by weak tax collection from the current administration. There is also the high demand for Filipino workers to work in other countries, weakening the overall local workforce. High wages in the country also make it a risky place for sourcing, and of course, the possible act of government corruption, and possible economic woes make the country risky as well. Benefits: Despite all the risks, the Philippines is an excellent country for garment and textile sourcing. The country has a rich and welcoming culture which is great for conducting business. English, is the business language and the second most spoken language next to the national language of Filipino(Tagalog). The country has a very skilled, young, and educated workforce. The country has a high GDP, which is predicted to grow. The trade agreements between the established with the ASEAN as well as preferential treatment with the U.S and Europe, is excellent as well, lessing the coverall cost because of the exemption of duty on most products.
26
Section Header
Countries Not Selected The five countries initially researched each presented their individual pros and cons. Foxx and Mann weighed these options and decided to best conduct business with India, Malaysia, and the Philippines. Indonesia and El Salvador have much potential in the near future to be considered places of operation for our business. Especially, with Fair Trade Agreements in El Salvador and the growing textile industry in Indonesia.
Indonesia Location: Between mainland Asia and Australia. Population: 249,000,000 GDP: $846.843 billion Government: Republic Language: Indonesian
El Salvador Location: Central America, bordering the North Pacific Ocean Population: 6,090,646 (2012) GDP: 23.05 Billion United States Dollars (2011) Government: Republic Language: Spanish (Official), Nahua (Among Some Amerindians) 27
Country Ranking COUNTRY RANKING
Scale of 1 to 10 with 1 being the worst and 10 the best EL Salvador
Explanation
India
Explanation
Indonesia
8
Stable economy, educated workers, English is major business language, great textile industry
6
Business Climate
6
Very Hopsitable and speak both Spanish and English
Costs
4
Very expensive
6
Low cost for the quality received
3
Government
6
Stable Republic Government no major issues
6
Stable gov't, Established democracy
6
Location
9
8
Far distance, but ports are very accesible
5
Risks
5
Very Close High-jacking , drug trafficing, occasional earthquakes
Social Stability
5
Stable
7
Sourcing Guidelines
6
In place, but needs to be watched for child labor
7
Textile Industry Trade Agreements
6 10
Trained Work-force Socio-eco-political
6
CAFTA-DR
9 0
6
Plenty
7
Stable e. No major anticipated issues.
Developed, but not main focus
Infrastructure is still developing Easy to work with, Tensions with Pakistan
Clear initiative to remain socially responsible, factory check! Textile industry established, major part of culture
6 7
8
None with U.S.
7 0
8
Textile trained & educated, but major part of country is poor
6
7
Stable, major economic growth
6
Total
70
72
60
Average
6.4
6.5
5.5
Country Analysis
Explanation
Stable economy, loyal workers, can be difficult to communicate with Minimum wage is paid, is rather high in most of the textile based areas. Jakarta is $2.44 per hour Stable, muslim rebels are present though and could potentially present issues
Malaysia
Explanation
The Philippines
Explanation
6
Good for textile and industrial goods
8
Hospitable and easy to get along with
6
Lower Cost, but rising with new minimum wage.
5
High wages by Eastern standards of manufacturing
4
In a transition into a democracy and coming up on a new election.
5
Rather far
6
Very Far, but with international shipping and airports
6
Enviornmental risks Very polite people, unclear communication
5
Clear laws and regulations in the cities, somewhat unfollowed in rural areas. Child labor is an issue. Well established, cotton is imported though
5
7 7 0
Protests, Riots, and Flooding Needs to be watched will high tension with up-coming election
In place, but needs to be watched for violations Well developed with globally recognized suppliers
6 8
8
None with the US
7 0
Textile trained, but not the most educated otherwise
7
Plenty
8
Unified
5
Needs to be watched due to protests and government changes
5
58
66
5.3
6.0
Pretty stable, with the current AQUINO Far but by air, it would take 13 hours to fly direct, by sea, it could take up to 8 weeks Typhoons, volcanoes, rebel groups, and drugs No major occurrences have taken place Larger companies that have locations within the country have guidelines, that are in accordance to some of the competitors of our brand Growing constantly None for apparel or garments Very young population as well as educated and willing to learn The government is looking to improve the overall output of the country.
29
Supplier Analysis
Supplier Analysis
Introduction to Suppliers T
he first component taken into consideration when looking into suppliers for Foxx & Mann were traits such as the suppliers capacity, meaning how many shipments the manufacturer is able to produce. Other important characteristics for potential suppliers included flexibility when it came to producing similar products and introducing new styles, the present day customers of the supplier, and whether the customers were of similar quality to Foxx & Mann standards. Identifying the manufacturers lead-time, the amount of time it takes to produce a product, from the production to delivery as well as understanding the manufacturers management operations were taken into consideration when developing the sourcing strategy for Foxx & Mann. After narrowing down the initial top ten manufacturers to three from each country, Foxx & Mann looked specifically into the manufactures abilities, how many types of products they were able to manufacturer and the capacity of how much the suppliers could produce on a weekly to monthly basis to detect whether or not the manufacturers could fulfill Foxx & Mann annual unit requirement. The cost and customer service of the manufactures were other aspects researched to evaluate expensive and compare to predicted margins and how well the manufacturers responded to requests and “stayed ahead of the game.” The flexibility of the manufactures became a crucial component in seeing how well a supplier could switch from one product to another, since Foxx & Mann’s product line had a variety of styles, sizes, and fabrication. Narrowing down the manufactures based issued lead-time, the time from purchase orders issuance to delivery dictated how fast Foxx & Mann could be expecting new merchandise on the shelves. The quality of the potential suppliers was very much emphasized upon; Foxx & Mann were only in search of supplier with excellent quality. Sourcing guidelines and management were also highlighted on. Being that our customer is the ethically handsome man all manufactures have published sourcing guidelines that correlate with Foxx & Mann’s sourcing guidelines, which focus on health and safety, forced and child labor, and sustainable efforts. The strategic outlook of the manufactures validated, which companies were growing to developing new technologies and incorporating artisans and schooling. Lastly, the manufactures value-added services were bonus services including pattern making, design, inventory management, and shipping, which is desired by most growing businesses. Further explored are the top manufacturers for our chosen countries of production.
31
India The top three manufacturers chosen from India were all highly qualified for the requirements proposed in terms of quality and price: Bombay Rayon Fashion Limited, Srinivasa Fashions Private Limited, and Indus Intex Private Limited. Each, have their various strengths and capabilities. However, choosing one manufacturer to sources was a very tough decision.
32
Supplier Analysis
Bombay Rayons Abilities: Bombay Rayons specializes in woven, dyed, and printed fabrics in the ready-made apparel industry. Bombay Rayons manufactures comfortable, durable, and stylish products while also providing the yarn and trim for a retail environment. They have successfully evolved into a multi-fiber manufacturing company producing fabrics such as Cotton, Polyester, Tencel, Modal, Lycra, Wool, and various blends. Capacity: • Fabric Manufacturing Facilities: 100 million meters annually • Garment Manufacturing Facilities: 60- 90 million pieces annually Costs: N/A Customers: The Gap, J.Crew, Levi Strauss, Guess Inc. Customer Service: Throughout their company statement, flexibility and adhere-ability. Customers are their priority and are passionate about new businesses. Flexibility: Bombay Rayons employs over 32,000 employees, allowing a more streamlined production process, and flexibility. Lead Time: 45 days. Management: The most qualified individuals oversee the production process and all aspects involved. Quality: Excellent-Due to the quality level of Bombay Rayons’ customers, Bombay Rayons is Ocko- Tex certified, which provides evidence of quality through using previously certified materials such as dyes and auxiliaries. Processing techniques are also closely watched for quality. Services Offered: Fabric, retail, yarn, and trim. Sourcing Guidelines: Bombay Rayons is certified in the following environmental state that they strive to provide a sound working environment for everyone involved. They also focus heavily on orgainc cotton, fair trade, and SA 8000( global accountability). Strategic Outlook: Bombay Rayons rigorously strives to keep up to date with the latest technologies. They have partnered with Datex, a specialist in the Textile and Garment industry. This group uses over 11,500 workstations in 14 different languages in 38 nations, including some of the world’s largest and most important textile manufacturers. Bombay Rayons has also expanded their facilities to elsewhere in the European region, such as the Netherlands and the UK. Value Added Services: Bombay Rayons has received many national and international awards based on production and social responsibilities which will add to our overall reputation as a transparent company.
33
Malaysia The three top manufacturers in Malaysia contained clients who not only distribute similar products as Foxx & Mann in terms of style, quality, and price, but who also had comparable sourcing guidelines and expected codes of conduct of their manufacturers. The products Foxx and Mann are looking to outsource is a line of men woven button down shirts in a variety of styles that are of high quality and promote sustain-able products.
34
Supplier Analysis
Pen Apparel Pen Apparel Sdn Bhd along with Imperial Garments Sdn Bhd are apart of the Tal Group a international manufacturer based out of Hong Kong who is recognize for producing one out of six dress shirts sold in the United States. Pen Apparel Sdn Bhd has Brooks Brothers Group Inc. as one of their main clients, who adheres to many of the same values as Foxx and Mann. Both Foxx and Mann and Brooks Brothers Group place a focus on workplace code of conduct and having high standards of humane working conditions for all manufacturers and suppliers with whom they work. Abilities: Pen Apparel is able to produce shirts, polo shirts, pants, blouses, outerwear, and suits. Capacity: The maximum shipment size Pen Apparel is able to fulfill is 31,498 Kg per shipment. Costs: N/A Customers: Pen Apparel top three customers include Brooks Brothers Group Inc., The Apparel Group Ltd., and Retail Brand Alliance Inc. Flexibility: Pen Apparel is very flexible when adjusting products or incorporating a new style and are able to shorten customers cycle of new product introduction with their speed to market motto. Lead-time: N/A Shipping-time: 4 to 6 weeks Management: Pen Apparel is overseen and apart of the Tal Group an international manufacturer. Quality: Pen Apparel produces excellent quality products, especially men woven shirts. Services Offered: Besides offering quality products in a timely manner, Pen Apparel also is able to provide floor ready merchandise to be places on the shelves right away. Sourcing Guidelines: Tal Group sourcing guidelines are published and reflect similar values as Foxx & Mann including sustainability and transparency. Strategic/Forward Thinking: Tal Group and Pen Apparel are looking into new technologies when designing and producing garments including; De-odorant technology, expandable waistband technology, washable wool, and pucker free seam technology. Value Added Services: Tal Group add extra value services including made to measure personalized services, speed to market services, and collaborative planning, forecasting and replenishment strategy’s based on sales data and market trends to help customers keep their shelves replenish with relevant inventory.
35
36
Philippines The suppliers in the Philippines are constantly growing to accommodate to the increasing demand of exports for the textile and garment industry. There were only few companies, however, that were greatly transparent with their business as w hole. The three companies that provided information that would follow in line with the ethics and values of Foxx & Mann were: H. B Garments, Smart-Shirts, and R K Garments. H.B Garments was the most beneficial manufacture because it aligned most closely to the principles that are in sync with those of Foxx & Mann.
Supplier Analysis
Smart Shirts Smart Shirts is a subset of Youngor Group a business sector that focuses on branded garments, property development, and financial investing. Smart Shirts limited is a leading garment manufacturer whose headquarters is located in Hong Kong. The production facilities are spread throughout Asia, with a factory located in the Philippines. The company is continuously exploring customer potential demands and promptly reaching the market trend in the lifestyle, product features, and customer services areas. Abilities: There are over 25,000 employees that are able to perform various functions, processes, and tasks. Capacity: Smart Shirts annual outputs exceeds 3 million dozen a year. Costs: N/A Customers: The Joseph A. Bank Mfg. Co. Inc., Smart Apparel (U.S) Inc., Customer Service: There are various offices across the globe, including the United States. This helps to establish close proximity to American markets and customers as well as provide pre and post sales services for product design, document handling, transportation arrangement, and warehouse services. Flexibility: Smart-Shirts focuses on woven tops for men, women and children’s shirts, in various lengths and materials. Lead Time: Proactive production services are constantly being developed. The RFID and IT technology provides real time data to identify potential operation problem, and other obstacles that can cause waste and increased production time. Management: Customer accredited laboratory facilities are set up to further enhanced factory locations and ensures quality fabric and products that are held at exceptional customer standards. Quality: Various qualities, very high quality based on the current company clientele. Services Offered: Services offered include: up-stream services (fabric development), through the middle-stream services (garment manufacturing) and extends to the down-stream services (distribution logistics and customer service). Sourcing Guidelines: Youngor group focuses on public welfare, employee care, environmental protection, and consumer care. Strategic/ Forward Thinking: The recent acquisition of Smart Shirts by Youngor Group provides fabric development and handling as well as total “supply chain” solutions for the clientele. Value Added Services: Youngor group, maintains an intimate business partnership with customers and continuously invests in R & D resources, production technology has empowered the factories to produce high end product such as wrinkle free and dipping garments.
37
R. K. Garments R.K. Manufacturing Corporation started operations in 1981 and has at present become one of the Philippines’ leading garment manufacturers and exporters. Abilities: Can manufacture a variety of woven and knit products. Capacity: Over 112,000 units Costs: The costs were pretty high, for the quality that they specialize in. Customers: Coppel Cooperation, Rama Imp. & Exp. Inc., Customer Service: The Company has great customer service and is prompt in supply costs inquiries. Flexibility: The company can manufacturer a variety of products including: women’s, men’s, and children’s, tops, in knitted and in wovens. Lead Time: The production time from order details finalized is 120 days. Lead-time is 18-20 days to the Los Angeles. Management: The management is very prompt and friendly. Quality: The quality is lower to medium quality garments. Services Offered: N/A Sourcing Guidelines: N/A Strategic/ Forward Thinking: RK Manufacturing Corporation is the largest quota holder for the Canadian market and has holdings of several quotas for the USA and Europe. Value Added Services: The company participates in Messe Frankfurt Trade Shows, MAGIC, and the international Apparel Sourcing Show in New York.
38
Supplier Analysis
H.B Garments H.B Garments is one of the major garment manufacturers in the Philippines. Since 1979, H. B. Garments, Inc. has expanded through the years to become a competitive exporter boosting of its design and quality founded on well-trained personnel and hi-tech machineries. The company was very nontransparent with their information . Abilities: The company can produce a variety of garments, from knits to polyesters. Capacity: The manufacturer works with a fair amount of companies, according to Panjiva, the company has shipped as much to their clientele as the year prior. Costs: The cost were expensive, but did include FOB. All costs were quoted as supplier quality. The supplier does not make wool but all other fabrics were able to be accommodated. With further negotiation, the cost could raise or lessen in terms of the proper quality that our company would desire. Customers: Ahead Inc.( golf and active wear) as well as Kellwood Company, which designs and manufactures for premier fashion brands such as Vince and Rebecca Taylor. Customer Service: The customer service was very professional and responsive. The representative was helpful and asked a lot of question s to insure the validation of Foxx & Mann as an up and coming business. Flexibility: The manufacturer works on woven to knits, suggesting that they have various machines available to them within the factory. Lead time: The lead time from the Philippines to our port in Los Angles would be about 18 to 20 days. Management: N/A Quality: The quality is excellent from the manufacturer. Services Offered: N/A Sourcing Guidelines: The sourcing guidelines for H.B Garments were hard to find, however, the company is WRAP certified, meaning they socially and environmentally responsible. Strategic/Forward Thinking (Strategic Outlook): N/A Value Added Services: N/A
39
Supplier Ranking
SUPPLIER RANKING
Scale of 1 to 10 with 1 being the worst and 10 the best
El Salvador
Supplier A
Abilities Capacity Costs Customer Service Customers Flexibility Lead-time
Management
Quality Services Offered Strategic Outlook
Sourcing Guidelines
Total
Average
40
Picacho
Supplier B
7 8 n/a
L.D. El Salvador
India
Supplier C
6 7 n/a
Lenor Industries
Supplier D
5 6 n/a
Bombay Rayon
Supplier E
9 9 n/a
Srinivasa Fashion
Indonesia
Supplier F
8 5 n/a
Indus Intex
Supplier G
7 7 n/a
Sunrise Bumi
S
7 8 n/a
6 8 6 6 5 8
5 7 5 5 4 7
5 7 4 4 4 7
7 8 5 5 7 8
7 8 7 5 6 8
6 8 6 5 6 8
8 8 6 8 7 8
7
6
5
6
6
6
6
5
4
4
7
7
6
4
5
4
4
6
7
7
8
71
6.5
60
5.5
55
5.0
77
7.0
74
6.7
72
6.5
78
7.1
B
Supplier Analysis
Supplier H
Bandung Sakura
Malaysia
Supplier I
7 7 n/a
Indo Liberty
Supplier J
7 7 n/a
Pen Apparel
Supplier K
9 8 n/a
Imperial Garments
Philippines
Supplier L
6 7 n/a
Esquel
Supplier G
8 9 n/a
RK Manufacturing
Supplier H
8 8 9
Smart Shirts
Supplier I
9 7 n/a
H.B. Garments
8 7 8
6 6 6 8 7 6
7 6 6 7 7 7
7 8 6 5 7 8
5 6 5 5 4 6
6 6 4 5 6 7
9 6 7 8 6 7
7 7 8 7 7 7
8 8 7 8 8 8
6
6
7
4
6
9
8
7
5
4
7
7
6
6
8
8
8
8
8
7
8
7
7
8
72
6.5
72
6.5
80
7.3
62
5.6
71
6.5
81
7.4
82
7.5
93
8.5
41
Costing Analysis
Supplier Analysis
Costing Analysis B
ased on continued research of suppliers and their prices for services, Foxx and Mann was able to allow for greater flexibility in planning costs to correspond with our mark up per-
centages. Initially, the estimated costs were very cautious, accounting for much higher prices in the beginning. With further research and comparison quotes, the actual cost came to a significantly lower estimate. This gave allowance for a greater mark up percentage than initially planned.
43
Preliminary Cost Preliminary Cost Indonesia
Preliminary Cost India
*total including freight, broker, insurance, and duty.
*total including freight, broker, insurance, and duty
Preliminary Cost FM0001
$26.64
FM0002
Preliminary Cost FM0001
$26.45
$25.53
FM0002
$23.45
FM0003
$25.73
FM0003
$24.45
FM0004
$25.03
FM0004
$23.45
FM0005
$23.83
FM0005
$22.45
Preliminary Cost Malaysia
Preliminary Cost Philippines
*total including freight, broker, insurance, and duty.
*total including freight, broker, insurance, and duty.
Preliminary Cost FM0001
$10.41
FM0002
$22.08
FM0003
$24.32
FM0004
$10.80
FM0005
$25.39
Preliminary Cost FM0001
$27.64
FM0002
$25.53
FM0003
$24.73
FM0004
$24.03
FM0005
$22.83
Preliminary Cost El Salvador *total including freight, broker, insurance, and duty. Preliminary Cost
44
FM0001
$26.64
FM0002
$25.53
FM0003
$25.73
FM0004
$25.03
FM0005
$23.83
Supplier Analysis
Preliminary Cost vs. Initial Cost Preliminary Cost verses Initial Cost India
Preliminary Cost verses Initial Cost Philippines
*total including freight, broker, insurance, and duty
FM0001
Preliminary Cost $26.64
*total including freight, broker, insurance, and duty
Initial Cost $12.72
FM0001
Preliminary Cost $27.64
Initial Cost $13.46
FM0002
$25.53
$8.83
FM0002
$25.53
$9.97
FM0003
$25.73
$9.91
FM0003
$24.73
$10.91
FM0004
$25.03
$11.37
FM0004
$24.03
$12.25
FM0005
$23.83
$12.55
FM0005
$22.83
$13.14
Preliminary Cost verses Initial Cost Indonesia
Preliminary Cost verses Initial Cost Malaysia
*total including freight, broker, insurance, and duty
FM0001
Preliminary Cost $26.45
*total including freight, broker, insurance, and duty
Initial Cost $8.58
FM0001
Preliminary Cost $10.41
Initial Cost $13.14
FM0002
$23.45
$8.16
FM0002
$22.08
$9.26
FM0003
$24.45
$9.09
FM0003
$24.32
$10.37
FM0004
$23.45
$12.15
FM0004
$10.80
$11.83
FM0005
$22.45
$12.92
FM0005
$25.39
$12.71
Preliminary Cost verses Initial Cost El Salvador
*total including freight, broker, insurance, and duty
FM0001
Preliminary Cost $26.64
Initial Cost $11.88
FM0002
$25.53
$8.49
FM0003
$25.73
$9.48
FM0004
$25.03
$10.80
FM0005
$23.83
$12.80
45
Preliminary Margins & Placement PRELIM PLACEMENT & MARGIN CALCULATION India
Total Units
560,000
FM001
Wholesale Cost per Unit Margin % 40,208,000 13,694,240 53,902,240
$ $ $
71.80 24.45 47.35
Avg Cost/Unit $
47.35
Total Purchase total Margins Avg Wholesale Avg Purchase
Avg Margins
Avg Margins %
46
FM002
$80.00 $26.64 $53.36 66.70% $ $ $
Total Wholesale
Indonesia
112,000
66%
$ $
$
8,960,000.00 2,983,680.00
11,943,680
Malaysia
112,000
FM003
$70.00 $23.45 $46.55 66.50% $ $
$
7,840,000.00 2,626,400.00
10,466,400
Philippines
112,000
FM004
$68.00 $24.32 $43.68 64.24% $ $
$
7,616,000.00 2,723,840.00
10,339,840
El Salvador
112,000
FM005
$65.00 $24.03 $40.97 63.03% $ $
$
7,280,000.00 2,691,360.00
9,971,360
Pen Apparel 112,000 $76.00 $23.83 $52.17 68.64%
$ $
$
8,512,000.00 2,668,960.00
11,180,960
Strategy Development
47
Strategy Development I
n the process of developing the sourcing strategy for Foxx & Mann, an evaluation was made based on the product line, estimated volumes, and specific company requirements. Certain criteria were then set by Foxx &
Man when looking at the selected countries and the sources within the countries in reference to our woven tops. From there, Foxx & Mann assessed preliminary costs and initial quotes, as well as product qualities. More evaluations were made that furthered the strategizing process of Foxx & Mann based on risks, benefits, distance, lead time, quality, flexibility, capacities, and value-added services, as well as raw material availability in each country that was selected. The next step was to classify and calculate any future requirements that would need to be utilized as the business continued to grow from working with the countries and suppliers. Lastly, Foxx & Mann analyzed all value-added services, in addition to maximized margins.
Products, Volumes, & Requirements Foxx & Mann has developed a product line for the 2013/2014 calendar year starting in the Fall 2013 season. The line is made up of five different styles of men’s woven shirts. Three of the shirts are staple pieces that will be carried in stores year round with relatively consistent units per season. The three styles include the chambray, oxford, and slim cut. The fabrications of these three styles include a cotton-synthetic blend, 100 percent cotton, and pima cotton. The other two products, the flannel made from cotton/wool blend and the short sleeve shirt made from Egyptian cotton, are categorized as seasonal items. The flannel shirt will be carried predominantly during the fall and winter seasons, whereas the short sleeve shirt will be produced for mainly the spring and summer seasons; though, both styles will be available year round. Foxx & Mann is looking at a total of 560,000 units for annual volume. The 560,000 will then be divided up by shirt style, each style containing 112,000 units. Each staple style will have 9000 units in stock per month. The seasonal styles will vary in units depending on the month, with a range from 4,000 to 12,000 units. Foxx & Mann’s requirements are that all products produced for Foxx & Mann need to be made ethically by following the specified sourcing guidelines, the designs and details need to stay true to the technical packets, and volumes must be met in terms of units, shipping schedules, and negotiated costs.
48
Strategy Development
Selected Countries The five countries were evaluated on specific criteria and ranked each country’s overall performance. The countries’ performance levels became a major factor for whether or not Foxx and Mann found them both appropriate and beneficial to source from. The criteria included each country’s business climate and the stability of its economy. For instance, El Salvador has a very hospitable business climate, and both Spanish and English are spoken in the business environment. The cost to source the prodcuts in the country, and if Foxx and Mann would benefit from the exchange rate, was another key criteria. Malaysia and the Philippines were the most cost effective countries to do business in, while Indonesia and El Salvador have greater labor costs and were noted for such when finalizing the sourcing strategy. Each country’s government stability was another component taken into consideration by Foxx and Mann. India has a very established and stable democracy, while Malaysia is in the middle of an election year and is transitioning into democracy, causing political and social tension. Location is another key factor with El Salvador being the closest to the United States and having the best lead-time capabilities. The other four countries are in the Southeast Asia region and have a much greater travel distance. Each country has risks that could affect Foxx and Mann when it comes to the production and transportation of products. For instance, El Salvador has problems with high jacking and drug trafficking. In the Philippines, the risks are more environmental with typhoons and volcanoes. Besides social tension, most of the countries reasearched are socially stabe. Sourcing guidelines were another important aspect when evaluating the five countries, with many having sourcing guidelines in place but needing to be watched for violations. For example, child labor in Indonesia is frequently cited as a problem in rural factories. The textile industries were gaged on how developed they were in each country. India’s textile industry is very well established and a large part of the culture. When it came to trade agreements, unfortunately only El Salvador had a trade agreement with the United States, meaning products are duty free to import from El Salvador. A trained work force was present in most of the countries, with India and the Philippines ranking higher in terms of education of workers. Indonesia, on the other hand, has a smaller percentage of educated workers. Lastly, Foxx and Mann evaluated the social-eco-political climate of each country to assess the overall country climate. India is the most stable and is experiencing major economic growth. As well, the Philippines and Malaysia are expanding and growing as countries, especially in the textile industry, which is potentially very beneficial to Foxx and Mann.
49
Selected Suppliers After narrowing down our suppliers from each of our countries, into our top three, we looked into specific qualities of the suppliers that are mostly relevant to our company. These qualities include: what their abilities are, as far as woven fabrics go; the capacity they are able to produce; how much they cost; what kinds of customers they currently have; whether they have quality customer service; how their flexibility is; how long their lead time is; what the management is like; what kind of quality they are able to offer; what their sourcing guidelines are, and if theirs are published; what their strategic outlook is for future business; and specifically what kinds of services they offer. Stepping back and looking at it as a whole, and taking each of these components into consideration, we at Foxx & Mann feel that it is a good match for our products, and feel confident in the decision on our selection. India: Bombay Rayons Through extensive research, each of the of the top three suppliers from India, proved their specialty in woven textiles with a concentration in men’s business attire. It was imperative that each company displayed a stable influx of the raw materials required to produce our garments to keep the production process as streamlined as possible. Ultimately, we chose Bombay Rayons due to their extensive capacities (looking to future requirements) and emphasis on fair trade and using organic cotton. Along with an impressive customer base (J.Crew, the Gap, Levi’s, etc.), Bombay Rayons impressedour company with their level of expertise and professionalism. With the facility located in the major port of Mumbai, the complications that arise with shipping and freight are reduced. Very few risks are involved which allows our company to focus on the creating a long-lasting relationship with this supplier. Indonesia: Sunrise Bumi Textiles The top three suppliers in Indonesia were as follows: Sunrise Bumi Textiles, Panji Mas Textile, and in first place, Lameirinho Industria Textile. Each of these suppliers ranked high in location, abilities, and potential costs, however, Lameirinho Industria was significantly more superior in many other important areas of consideration. Lameirinho Industria has an excellent list of customers including companies like Ralph Lauren, Anthropologie, J. Crew, Macy’s, and Land’s End. They adhere to our sourcing guidelines, which we take very seriously in selecting a potential supplier. . They are experienced with men’s wear products, and they have educated and skilled workers that are treated well and correctly compensated. They display good levels of customer service and have expressed an open door policy for factory visits to check in from time to time. Their prices, while not the lowest, are still competitive, and their excellent list of customers and easy communication out weighs this fact. All in 50
Strategy Development all, we have evaluated Lameirinho Industria as an excellent choice for a potential supplier in the future with very little risk and a large opportunity for growth and benefits to our growing company. Malaysia: Pen Apparel Out of the top three suppliers from Malaysia, Pen Apparel was the manufacture that came the closes to matching all the criteria’s set by Foxx and Mann. Pen Apparel offers not only a variety of products and flexibility to introduction new styles, but is specifically known for their men dress shirts. The quality and clients such as Brooks Brother Group Inc., Pen Apparel image and quality level correlates with what Foxx and Mann aspires to provide to our customer. Pen Apparel’s capacity meets the required volume set by Foxx and Mann on monthly bases and is able to provide floor ready merchandise in their shipments. One of the most important factors about Pen Apparel is its sourcing guidelines not only are published and are comparable to Foxx and Mann’s guidelines, but because Pen Apparel takes a great stance being sustainable to reduce the company’s environmental footprint and being a transparent business. Other beneficial factors of Pen Apparel is that the company is managed by the Tal Group, one of the worlds leading manufactures based in Hong Kong and is able to provide the latest in technologies including nano, deodorant and moisture treatments for their products. Philippines: H.B. Garments The suppliers in the Philippines are constantly growing to accommodate to the increasing demand of exports for the textile and garment industry. There were only few companies, however, that were greatly transparent with their business as a whole. The three companies that provided information that would follow in line with the ethics and values of Foxx & Mann were H.B. Garments, Smart-Shirts, and R.K. Garments. H.B. Garments was the most beneficial manufacture because it aligned closely with those of Foxx & Mann. Risks were evaluated to be low and capacities were extensive. El Salvador: Picacho The suppliers in El Salvador are mostly knit-focused, however, there were some qualified suppliers with a woven specialty. The most well rounded supplier turned out to be Picacho S.A. DE C.V. located 25 KM northeast of the capital city of San Salvador. Picacho specializes in the manufacturing of the specific type of products we at Foxx & Mann are looking to carry. Picacho’s main goal is to be flexible and to respond quickly and efficiently, making sure orders are processed promptly and according to our exact specifications. Taking these attributes into consideration, this makes Picacho the most beneficial manufacturer to place our products in El Salvador efficiently.
51
Preliminary, Initial, and Quality Foxx & Mann evaluated the preliminary costs based on the markup percentage goals set for the young company. The initial markup percentage goal was made at 65% minimum per product. Based on this information, Foxx & Mann chose the ideal retail prices for our customer, and then planned costs higher to ensure the set margin goal. As research continued to be conducted on the selected countries and potential suppliers, the average costs came to be significantly lower than expected when setting the preliminary costs in the high-price scenario. Once Foxx & Mann received our first quotes after contacting the top suppliers, initial cost could be established. Due to lower costs than anticipated in the preliminary cost assessment, Foxx & Mann was able to account for higher quality products to provide to our customer, the esthetically motivated man. The initial costs markup percentages averaged around 85%. This higher markup allows for flexibility in production, retail price, and quality of the garments.
Suppliers Risks vs. Benefits Foxx & Mann’s five perspective sourcing countries all displayed different strengths as we conducted in-depth research surveys for qualities required by our company. These essential factors included topics such as lead-time, distance, flexibility, quality, capacities, and raw material availability. The chosen Indian manufacturers consistently expressed knowledge and expertise in the textile industry and the agricultural capacity for the raw materials required for our products. The cotton and wool industries in India are among the most extensive in the world. Many of the manufacturers disclosed certifications for sustainability and organic fiber, which was an added bonus. Most of the other countries researched, such as Indonesia, Malaysia, and the Philippines, required import of the materials from outside sources such as China. El Salvador is located at an attractive distance, which would undoubtedly cut down on lead-time and shipping costs, whereas the other countries were located in the Asian region. Malaysian companies advertise short leadtime periods with emphasis on their ability to shorten the customer cycle of new product introduction and impressive speed to market efforts. The Tal Group established an X- Docking system to eliminate costly warehousing and lead-time by having all products packed to store with a barcode at their factories. India’s lead-time usually ranged from 40-60 days. Nearly all of the manufacturers in each country emphasized their quick lead-times, which was desirable; however, the reality of these claims might be proven different.
52
Strategy Development India’s top manufacturers boasted their capability to produce millions of units annually, which would prove beneficial to our company both now and in the future. Srinivasa Fashions, a supplier researched from India, houses over 1100 different machines capable of handling a variety of different challenges that arise when producing these garments. Their facility spans over 1500 square meters powered by its own personal power plant. The company has a total production capacity of about 60,000 shirts per month. In researching the other countries, Malaysia also claims to produce nearly 30,000 units per month. Although many of Indonesia’s suppliers are at full capacity at this time, they are open to new customers in the near future and willing to work with us on all of our designs. Updating technologically and staying in tune with market trends and innovations is crucial when deciding where to effectively produce our garments. Tal Group and Pen Apparel of Malaysia are looking into new technologies when designing and producing garments, including deodorant technology, expandable waistband technology, washable wool, and pucker free seam technology. Another Malaysian manufacturer also mentioned stain resistant and moisture wicking treatments, all very desirable in the menswear industry. Bombay Rayons, an Indian manufacturer, partnered with Datatex implementing a company wide Enterprise Resource Planning tool (ERP) to cover all textile and garmenting processes under one roof. Another Indian manufacturer tackled the negative connotation around India’s lack of infrastructure by supplying their facilities with self-sufficient energy resources. The Philippines are also working towards self-sufficiency, technologically-speaking, through the use of their natural resources and strengths. Social responsibility was also a topic addressed by all manufacturers researched; however, Indian and Malaysian companies shined. A statement by Indus Intex, an Indian manufacturer, declares: “We strive to attract, enhance and retain the best talent and to build a culture that drives the symbiotic growth of the company and individuals through talented & committed employees. We have ample space to provide exciting opportunities for employees at all levels to realize their ambitions in a supportive environment.” Srinivasa Fashions is extremely concerned about worker welfare and offers benefits such as a free lunch, free transportation, bonuses, and medical care. Nearly all of the companies researched showcased social initiatives where they are involved in their community. The top three countries that excelled when delving into these crucial topics were consistently companies located in Malaysia, India, and the Philippines. Each of our requirements were met above and beyond by these countries, and they would benefit the overall reputation of Foxx & Mann’s internal and external image. By analyzing these 53
specific strengths, we can effectively place products in the appropriate countries researched. THE PHILIPPINES: TRAINED WORKFORCE / TECHNOLOGY / SUSTAINABILITY INDONESIA: DISTANCE / LEAD-TIME EL SALVADOR: DISTANCE / LEAD-TIME / SOURCING GUIDELINES MALAYSIA: QUALITY / LEAD-TIME / PRODUCTION / SUSTAINABILITY INDIA: RAW MATERIALS / LEAD-TIME / QUALITY / CAPACITIES / TRAINED WORKFORCE / TECHNOLOGY
Future Requirements What Foxx & Mann is looking for in order to grow as a company in the future includes keeping up with the market, utilizing a planning system, and grasping concepts of cash flow and financial management. The goal of Foxx & Mann is to develop into a completely “green” company, requiring us to utilize more organic materials and sustainable equipment from our chosen suppliers. The suppliers will need to grow with our company by being able to produce and ship a greater volume of units to meet our needs as Foxx & Mann expands into more flagship stores, E-commerce, and wholesales for department stores.
Value Added Services When evaluating the value added services of suppliers from our selected countries, Foxx & Mann examined certain factors of services that were above normal standards by suppliers. Such services include providing pattern-making, innovative design services, established inventory management systems, and other benefits such as shipping options. El Salvador’s manufacturer, Picacho, offers inspection and automated inventory control of fabric that is received, fabric and trim sourcing, product development, pattern-making and grading (Gerber System Version 7.6.1), marker-making (Gerber Plotter AP-320), computerized production tracking control with Internet access to customers, and pre-packs and UPC bar coding capabilities on individual garments and shipping cartons. India’s Indus Intex has been involved in community and social initiatives, such as Friends of Tribal’s Society and School Projects Awareness, which heightens its value related to Foxx & Mann’s global reputation. Indus Intex also solves the worry of infrastructure by having personal resources of energy.
54
Strategy Development In Indonesia, Sunrise Bumi aims to provide a vertically integrated service which helps in product development and shipping from port to port. Also in Indonesia, Lameirinho Industria supplier aims to provide the most comprehensive experience possible and is willing to assist and counsel on all levels of the production cycle. In Malaysia, Pen Apparel and Imperial Garments are a branch of the Tal Group, which add extra value services, including made-to-measure personalized services, speed-to-market services, and collaborative planning, forecasting, and replenishment strategies based on sales data and market trends, helping customers keep their shelves replenished with relevant inventory. In the Philippines, Smart Shirts emphasizes quality and offers up-stream services (fabric development) through middle-stream services (garment manufacturing), and extends to down-stream services (distribution logistics and customer service). Also in the Philippines, the Youngor Group maintains an intimate business partnership with customers and continuously invests in research and development resources; production technology has empowered the factories to produce high end products, such as wrinkle-free and dipping garments.
Maximizing Margins After receiving initial quotes from potential suppliers of the selected countries, Foxx & Mann was able to maximize our margins. The preliminary goal for Foxx & Mann was to have a markup percentage of 65%, but instead we ended up with an average of 85% markup, giving our company the opportunity to maintain and even improve the quality of the products. For instance, initially Foxx & Mann planned to have simple plastic, solid color buttons on each of the different shirt styles, but with the greater margin our company was able to laser-cut the Foxx & Mann logo on each of the shirt buttons. Based on the average markups per country, Foxx & Mann was able to maximize the margins better in certain countries with specific shirt styles. Overall, the order of least expensive to most expensive begins with Malaysia, followed by India, the Philippines, El Salvador, and lastly, Indonesia.
55
fINAL sTRARTEGY
Final Strategy
Foxx & Mann Strategy F
oxx & Mann has developed a final strategy that is promising for the launch of its product line for the 2013/ 2014 fiscal year. We have determined that three countries, India, Malaysia, and the Philippines are the best
countries to source our menswear woven products. We will source two styles from India and the Philippine and one style in Malaysia. India has been selected to produce the flannel shirt style number FM001 and the oxford shirt, style number FM0003. India and the selected supplier Bombay Rayons are able to provide the wool and cotton blend fabrication and the number units required of style number FM001. India also has the most cost effective costs and margins compared to the initial countries for style number FM0003. The Philippines and the selected supplier, HB garments will be producing the Chambray shirt, style number FM002 and the Slim cut, style number FM0004. The synthetic fibers used in style FM0002 are obtainable in the Philippines at a desirable cost. Style FM0004 will also be produced in the Philippines because of the quality and educated labor needed to effectively manufacture the slim cut of this style. Our last and most expensive shirt, style number FM0005 will be sourced from the Malaysia because it is the most cost effective country with the highest markup percentage. The chosen supplier in Malaysia Pen Apparel is able to easily source the fabrication, Egyptian cotton, of the garment because they are apart of the Tal Group and have great relationships with cotton suppliers around the world.
57
Line Plan
Foxx & Mann
LINE PLAN
SEASON
STYLE # NAME FM001 FM002 FM003 FM004 FM005
58
Flannel Chambray Oxford Slim Short Sleeve
TOTAL
Fall/ Winter
SP/SU JAN
FEB
SUMMER MAR
APR
MAY
JUN
JUL
AUG
Quantities
Quantities
Quantities
Quantities
Quantities
Quantities
Quantities
Quantities
10,000 11,000 10,000 9,000 6,000
46,000
8,000 10,000 9,000 7,000 8,000
42,000
6,000 8,000 9,000 8,000 10,000
41,000
5,000 7,000 7,000 8,000 14,000
41,000
4,000 9,000 8,000 9,000 15,000
45,000
4,000 9,000 8,000 7,000 15,000
43,000
8,000 9,000 8,000 7,000 13,000
45,000
10,000 8,000 9,000 10,000 10,000
47,000
Final Strategy
SEP
OCT
HOLIDAY NOV
DEC
Quantities
Quantities
Quantities
Quantities
13,000 9,000 10,000 9,000 8,000
49,000
14,000 10,000 11,000 12,000 5,000
52,000
15,000 10,000 11,000 13,000 4,000
53,000
TOTAL 15,000 12,000 12,000 13,000 4,000
56,000
112,000 112,000 112,000 112,000 112,000
560,000
Wholesale
Wholesale
Cost
Cost
Per Unit
Total
Per Unit
Total
$ 71.80
$ 8,232,000.00
$ $ $ $ $
80.00 68.00 70.00 76.00 65.00
$ $ $ $ $
8,960,000.00 7,616,000.00 7,840,000.00 8,512,000.00 7,280,000.00
$ $ $ $ $
$
12.50 9.64 9.74 11.89 12.72
11.30
$ $ $ $ $
1,400,000.00 1,079,680.00 1,090,880.00 1,331,680.00 1,424,640.00
$ 1,225,560.00
Margin $ $ $ $ $
$
67.50 58.36 60.26 64.11 52.28
60.50
59
Our Reasoning The countries Foxx & Mann is sourcing from are significantly closer to our desired L.A port. Each country has an overall lead-time of 4 to 6 weeks from the South East Asia region. The labor costs for these countries varied. India and Malaysia have low labor costs in comparison to the Philippines has the highest labor cost. However, the Philippines accounts for a larger degree of well trained and educated labor force. The Philippines are also predicted to have major growth in their textile industry. This information is very important to Foxx & Mann, as an emerging country, we believe in sourcing from the best countries with the most honest, fair, and ethical treatments, the Philippines, and it’s up rise as a country is an excellent example of this. The maturity of the textile industry was also a major determine factor for our final strategy. Overall, India had the most developed textile industry. The country is able to agriculturally provide many of the fabrics that make up our products. Malaysia also has a very advanced textile industry while the Philippines continue to grow. Overall, these three countries ranked the most favorable to each other for sourcing. The suppliers have been determined based upon their ability to produce and source the fabrics and eco-friendly components that make up our garments; Bombay Rayon’s (India), H.B. Garments (Philippines) and Pen Apparel (Malaysia). These three are in step with the sourcing guidelines, volumes, and product quality that we desire for our menswear shirt line. They were able to meet our desire lead-time and pricing requirements as well as value added services that showed their dedication to go above and beyond customer expectations. We have chosen three manufacturers to source our products. Our units are based upon the needs for our ethically handsome man throughout the year. We will source a total of 560,000 units annually. We will have higher volumes throughout the holiday season as well as in the summer months to accommodate the events in our consumer’s life. Our costs have been leveraged to generate higher than predicted margins for our company, while still allowing us to keep a moderate retail/wholesale price for Walker.
60
Final cost COMPARISON
61
Final Costing Analysis
T
hough there was a lack of exact quotes from potential suppliers from the respective countries, Foxx and Mann was able to assess a range of costing to be expected in each location.
The cost sheets created from the research provided further reasoning country placement and ranking. The Philippines was the only country that provided initial costing quotes for almost all the products. The initial quotes ranged from $10.50 to $13.50. With the Philippines quote, Foxx and Mann was able to achieve an average mark up percentage of about 83%, as opposed to the initial mark up percentage goal of 65%. The higher mark up percentage will allow for higher profits and further growth and expansion.
62
Final Cost Comparison
Preliminary Cost vs. Negotiated Preliminary Cost verses Negotiated Cost Indonesia
Preliminary Cost verses Negotiated Cost India
*total including freight, broker, insurance, and duty
*total including freight, broker, insurance, and duty Preliminary Cost
Preliminary Cost
Negotiated Cost
Negotiated Cost
FM0001
$26.64
$12.84
FM0001
$26.45
$12.78
FM0002
$25.53
$9.10
FM0002
$23.45
$12.16
FM0003
$25.73
$10.14
FM0003
$24.45
$13.00
FM0004
$25.03
$11.43
FM0004
$23.45
$16.06
FM0005
$23.83
$12.62
FM0005
$22.45
$15.99
Preliminary Cost verses Negotiated Cost Malaysia
Primary Cost verses Negotiated Cost Philippines
*total including freight, broker, insurance, and duty Preliminary Cost
*total including freight, broker, insurance, and duty Negotiated Cost
FM0001
$10.41
$13.20
FM0002
$22.08
$9.33
FM0003
$24.32
$10.44
FM0004
$10.80
$11.89
FM0005
$25.39
$12.78
Preliminary Cost
Negotiated Cost
FM0001
$27.64
$13.50
FM0002
$25.53
$10.01
FM0003
$24.73
$10.95
FM0004
$24.03
$12.30
FM0005
$22.83
$13.36
Preliminary Cost verses Negotiated Cost El Salvador
*total including freight, broker, insurance, and duty Preliminary Cost
Negotiated Cost
FM0001
$26.64
$10.64
FM0002
$25.53
$6.92
FM0003
$25.73
$6.92
FM0004
$25.03
$8.26
FM0005
$23.83
$10.18
63
Preliminary Cost vs. Initial Cost vs. Negotiated Cost Preliminary Cost vs Initial Cost vs Negotiated Cost
*total including freight, broker, insurance, and duty
Preliminary Cost FM0001 India Indonesia Malaysia Philippines El Salvador
$ $ $ $ $
FM0002 India Indonesia Malaysia Philippines El Salvador
$ $ $ $ $
FM0003 India Indonesia Malaysia Philippines El Salvador
$ $ $ $ $
FM0004 India Indonesia Malaysia Philippines El Salvador
$ $ $ $ $
FM0005 India Indonesia Malaysia Philippines El Salvador
64
$ $ $ $ $
Initial | Margin %
Negotiated Cost
26.64 26.45 10.41 27.64 26.64
$ $ $ $ $
12.72 8.58 13.14 13.46 11.88
84% 89% 83% 83% 85%
$ $ $ $ $
12.84 12.78 13.20 13.56 13.53
83% 84% 83% 83% 83%
25.53 23.45 22.08 25.53 25.53
$ $ $ $ $
8.83 8.16 9.26 9.97 8.49
68% 88% 86% 85% 88%
$ $ $ $ $
9.10 12.16 9.33 10.07 9.81
87% 82% 86% 85% 85%
25.73 24.45 24.32 24.73 25.73
$ $ $ $ $
9.91 9.09 10.37 10.91 9.48
86% 87% 84% 85% 86%
$ $ $ $ $
10.14 13.00 10.44 11.01 10.80
86% 81% 84% 84% 85%
25.03 23.45 10.80 24.03 25.03
$ $ $ $ $
11.37 12.15 11.83 12.25 10.80
85% 84% 84% 84% 86%
$ $ $ $ $
11.43 16.06 11.89 12.35 12.12
85% 79% 84% 84% 84%
23.83 22.45 25.39 22.83 23.83
$ $ $ $ $
12.55 12.92 12.71 13.14 12.80
80% 80% 82% 80% 80%
$ $ $ $ $
12.62 15.99 12.78 13.24 13.90
81% 75% 82% 80% 78%
Final Cost Comparison
Initial & Final Margins
MARGINS
INITIAL
India
Total Units
FM001
560,000
Wholesale Purchase Margin Total Wholesale
$ $
40,208,000.00 6,396,320.00
Avg Wholesale Avg Purchase
$ $ $
71.80 11.42 6.29
Avg Cost/Unit $
11.42
Total Purchase
Avg Margins
Bombay Rayons
112,000
FM003
112,000
Philippines
FM002
H.B. Garments Inc.
112,000
FM004
Malaysia
Pen Apparel
FM005
112,000
112,000
$ $ $
80.00 12.72 67.28
$ $ $
70.00 9.91 60.09
$ $ $
68.00 9.97 58.03
$ $ $
76.00 11.37 64.63
$ $ $
65.00 13.14 51.86
$ $
8,960,000.00 1,424,640.00
$ $
7,840,000.00 1,109,920.00
$ $
7,616,000.00 1,116,640.00
$ $
8,512,000.00 1,273,440.00
$ $
7,280,000.00 1,471,680.00
MARGINS
Final
India
Total Units
560,000
Wholesale Cost per Unit Margin %
$ $ $
Total Wholesale
$ $ $
40,208,000 6,490,400 73,925,600
Avg Wholesale Avg Purchase
$ $ $
71.80 11.59 60.21
Total Purchase total Margins
Avg Margins
Avg Margins %
FM001
Avg Cost/Unit $
$ $ $
Bombay Rayons
112,000
FM003
80.00 $ 12.84 $ 67.16 $ 83.95% 8,960,000.00 1,438,080.00 7,521,920.00
$ $ $
112,000 70.00 9.91 60.09 85.84%
7,840,000.00 1,109,920.00 6,730,080.00
Philippines
FM002
$ $ $ $ $ $
H.B. Garments Inc.
112,000
FM004
68.00 $ 10.07 $ 57.93 $ 85.19% 7,616,000.00 1,127,840.00 6,488,160.00
$ $ $
112,000 76.00 12.35 63.65 83.75%
8,512,000.00 1,383,200.00 7,128,800.00
Malaysia
FM005
$ $ $ $ $ $
Pen Apparel 112,000 65.00 12.78 52.22 80.34%
7,280,000.00 1,431,360.00 5,848,640.00
83.86%
60.21
65
Conclusion
F
Conclusion
oxx & Mann came to conclusions with each process of the global sourc-
ing strategy. The evaluation of the country analysis helped narrow down the initial five selected countries to a final three including India, Malaysia, and the Philippines. The supplier analysis gave insight as to which manufacturers best match the values and requirements of Foxx & Mann. As a result, the selected suppliers in the final strategy were Bombay Rayons, HB Garments, and Pen Apparel. The process of costing concluded which countries where the least expensive to source from and could give Foxx & Mann the ability to maximize margins. The final negotiated prices determined that India was the least expensive country to source from followed by Malaysia, then the Philippines, with El Salvador and Indonesia being the most expensive. The final decisions made in Foxx & Mann’s sourcing strategy included sourcing styles FM0001 and FM0003 from India’s Bombay Rayons, styles FM0002 and FM0004 from the Philippines’ H.B Garments, and lastly, style FM0005 from Malaysia’s Pen Apparel. Bombay Rayons is one of the largest manufacturers in the well-established textile industry of India with the most effective costs overall. Bombay was selected to produce style number FM0001 because it is made of a cotton wool blend, and India was the only country out of the initial countries that can produce wool. Bombay Rayons is also able to meet the required volumes for the Flannel FM001 style which is a seasonal style with more units carried in the fall and winter season, the season that carries the greatest amount of units. Bombay Rayon will also be producing style number FM0004 because they are able to easily provide 100% cotton and are the most cost effective compared to every country with the high markup percentages of 86%. HB Garments will be producing two styles of Foxx & Mann shirts since they are in a growing textile industry in the Philippines. Though, the Philippines’ costs are overall higher than Malaysias, for styles FM0002 and FM0004 the Philippines have roughly the same markup percentages around 84% and 85%. The Philippines and HB Gar-
ments were selected because of the ability to source manmade fibers required in style FM0002 as well as have the educated labor to produce the quality and correct sizing for the Slim Cut style FM0004. Pen Apparel was only given one style due to the risk of riots and protests in Malaysia which is in an election year. Pen Apparel will be producing style number FM0005 because they can easily import Egyptian cotton, being part of the Tal Group and having great relations with cotton suppliers around the world. Sourcing style number FM0005 from Pen 67
Apparel in Malaysia will also let Foxx & Mann utilize the highest markup percent with the shirt style that is the most costly to produce compared to all four of the initial countries. Though Foxx & Mann is taking some risks in terms of selected countries with tensions between India and Pakistan, a transitional government in Malaysia, and drugs and rebel groups in the Philippines, overall the risks are less severe compared to alternative strategies. The risks of the selected countries are overcome by the benefits provided by the suppliers in terms of quality, costs, and services. Risks that were avoided in the end strategy included: El Salvador’s hijackings, high costs, and suppliers with a greater focus on knitwear and Indonesia’s poor communication, environmental risks, less educated trained work-force, and high costs.
Benefits of the Strategy Foxx & Mann’s overall strategy did not only make sense for our company but was beneficial. The countries and suppliers selected for the final strategy including Bombay Rayons (India), H.B. Garments (Philippines), and Pen Apparel (Malaysia) reflect the values of Foxx & Mann by doing business in an ethical manner. All three suppliers had published sourcing guidelines that correlated with Foxx & Mann’s sourcing guidelines and focused on key components including education, health & safety, sustainability, and transparency. Foxx & Mann was able to maximize our margins with total average margins coming to 84% and $60.21, which is an increase of 19% from the preliminary set by Foxx & Mann. The excellent quality Foxx & Mann is looking for in our product will be accessible through the chosen suppliers who have active customers including: The Gap, J. Crew, Levi Strauss, Guess Inc., Brooks Brother Group Inc., and Kellwood Company (a producer of apparel for Vince and Rebecca Taylor). Though Foxx & Mann did not end up utilizing El Salvador for sourcing which would have ultimately minimized lead-time, we did select suppliers who are recognized for reliability and who keep lead time between four to six weeks. Flexibility is another benefit Foxx & Mann is able to utilize from the selected suppliers because Bombay Rayon, HB Garments, and Pen Apparel are able to easily adjust current styles while incorporating new ones into product lines. The value added services these suppliers are able to provide include speed to market services, personalized services, new textile technologies, and educational courses for employees. The suppliers Bombay Rayon’s, H.B Garments, and Pen Apparel not only meet the volume Foxx & Mann requires, but they allow room for additional units when Foxx & Mann begins to expand the company. The suppliers are also able to produce a variety of different products from suits to knitwear should Foxx & Mann wish to expand into different product categories. Foxx & Mann is confident in the countries and suppliers who have been selected to be sourced from. The selected countries and suppliers are all internationally recognized within the textile industry and are a part of a growing economy. 68
Bibliography
69
PHILIPPINES “About DOTC.” Welcome to DOTC. N.p., n.d. Web. 11 Feb. 2013. “Country at a Glance Philippines.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, n.d. Web. 11 Feb. 2013. “Doing Business in the Philippines.” Home. N.p., n.d. Web. 11 Feb. 2013. “Economy: Philippines.” CIA. N.p., n.d. Web. 11 Feb. 2013. “GlobalEDGE Blog: Is the Philippines Asia’s Next Hotspot?” GlobalEDGE: Your Source for Global Business Knowledge. N.p., n.d. Web. 11 Feb. 2013. “The Philippines.” Pinterest. N.p., n.d. Web. 11 Feb. 2013. “Philippines.” Forbes. Forbes Magazine, n.d. Web. 11 Feb. 2013. “Snapshot for USD-PHP Exchange Rate.” Bloomberg. N.p., n.d. Web. 11 Feb. 2013. “Stylesight Sourcing.” India Textile Suppliers. Panjiva, n.d. Web. 1 Feb. 2013. “U.S. Relations With the Philippines.” U.S. Department of State. U.S. Department of State, 10 Sept. 2012. Web. 11 Feb. 2013. “WORLD TRADE ORGANIZATION.” WTO. N.p., n.d. Web. 11 Feb. 2013.
70
Bibliography
IMAGES https://www.cia.gov/library/publications/the-world-factbook/ http://www.bostonscenicphotos.com/ http://www.google.com/imghp?hl=en&tbm=isch&source=og&sa=N&tab=li http://www.imgspark.com/ http://www.nationalgeographic.com/ http://pinterest.com/ http://www.travelblogs.com/ http://www.tumblr.com/ http://www.wix.com/ http://www.worldatlas.com/
71
Appendix
Appendix
Sourcing Guidelines A
t Foxx & Mann we believe in providing quality for the men who wear and aspire to wear our specialty woven tops. We see our company as a partnership; this partnership means upholding standards of high quality products, social responsibility, and philanthropic efforts. We will only conduct business with suppliers that work within the principles and guidelines of our company. To do this, Foxx & Mann will conduct long - term partnerships with the right suppliers who strive to comply with guidelines and principles set forth in this document. Legal Guidelines for Vendors: Foxx & Man expects our vendors to adhere to all legal requirements and laws of the country in which they are doing business. We expect our vendors to respect both legal and moral rights of every employee. Factories Visit: Our vendors must be prepared and welcoming to any corporate factory visitations whether it is announced or unannounced. Healthy and Safety: Employers must follow both national and local laws to provide clean and safe work environments for employees to prevents any injuries or accidents from occurring. Employers must be proactive in designing both policies and systems to protect their employees from both a hazardous and unsanitary working conditions. These policies and systems will range from equipment inspections to lavatory sterilization. Forced and Child Labor: Foxx & Mann prohibits any form of forced labor including prison, indentured, bonded, or otherwise. Every employee must be of legal age allowed by the law to work. Harassment and Abuse: Every employee must be treated with respect and dignity and will not be subjective to any type of physical, sexual, verbal, or psychological harassment or abuse. Discrimination: Foxx & Man does not tolerate any form of discrimination in terms of gender, race, age, religion, disability, pregnancy, sexual orientation, nationality, political stance, or social or ethnic origin in the subject matter employment including hiring, benefits, salary, promotions, termination, or retirement. Wages and Benefits: Employers shall provide at least minimum wage required by local laws to employees including overtime hours wages if applicable well as accommodate legally mandated benefits. Sustainability: We expect employers to value natural resources by being conscience of how our products are being manufactured and adhere to environmental regulations. Specifically, Foxx & Mann plans for sustainability will begin with requiring all manufacturers to use recycled buttons on all woven shirts, before our company ventures into further methods of sustainability. 73
Branding Website
Taylor Justin STYLE
Planning Manager
FX0005
301 Newbury St. Boston, MA 02116 foxxandmann@gmail.com 804.536.3895
Remy Godwin
Chelsea Leigh
Buyer
Director of Merchandising
301 Newbury St. Boston, MA 02116 foxxandmann@gmail.com 804.536.3895
301 Newbury St. Boston, MA 02116 foxxandmann@gmail.com 804.536.3895
SIZE
M $79.50
Hangtag
74
Catherine Graham
Anna Hill
Allocation Manager
Buyer 301 Newbury St. Boston, MA 02116 foxxandmann@gmail.com 804.536.3895
301 Newbury St. Boston, MA 02116 foxxandmann@gmail.com 804.536.3895
Appendix
Technical Packet
Slim Fit - FM0004
75
FOXX AND MAN 30 NEWBURY STREET BOSTON, MA 02116 804.815.6936 FOXXANDMAN@GMAIL.COM ALL NATURAL MENSWEAR FALL 2013/2014 FOXXANDMAN PIMA COTTON PROVINCIAL BLUE (P -18-4220), STORMY GREY (P-16-3915), FEUD FUCHSIA PINK (P-19-2431)
THE GARMENT IS NON-IRON MADE FROM PIMA COTTON. THE GARMENT A SIM FIT BUTTON DOWN WITH SPREAD COLLAR, CENTER BACK PLEAT, AND FRENCH CUFF.
1.16.3
76
FM0004
Appendix
FOXX AND MAN
FM0004
30 NEWBURY STREET BOSTON, MA 02116
ALL NATURAL MENSWEAR FOXXANDMAN
804.815.6936 FOXXANDMAN@GMAIL.COM 100% AMERICAN PIMA COTTON
SEE FABRIC SHEET
FALL 2013/2014
PROVINCIAL BLUE (P -18-4220), STORMY GREY (P-16-3915), FEUD FUCHSIA PINK (P-19-2431)
S-M-L-XL
1.16.3
77
FOXX AND MAN
FM0004
30 NEWBURY STREET FALL 2013/2014 BOSTON, MA 02116 804.815.6936
1.16.3
78
FALL 2013/2014
MENSWEAR
FOXXANDMAN
FOXXANDMAN@GMAIL.COM
100% AMERICAN PIMA COTTON
ALL NATURAL
WIDTH: 42” WEIGHT: 4oz
PROVINCIAL BLUE (P -18-4220), STORMY GREY (P-16-3915), FEUD FUCHSIA PINK (P-19-2431)
S-M-L- XL
TBD
THREAD SIZE: T 24
Appendix
FOXX AND MAN
FM0004
30 NEWBURY STREET BOSTON, MA 02116
ALL NATURAL MENSWEAR
804.815.6936
FALL 2013/2014
100% PIMA COTTON
FOXXANDMAN@GMAIL.COM BUTTON, EMSIG
WOOD
BUTTON, EMSIG
WOOD
THREAD, A&E INC.
100% POLY
PROVINCIAL BLUE (P -18-4220), STORMY GREY (P-16-3915), FEUD FUCHSIA PINK (P-19-2431)
18/ LIGNE/ GROSS 7 PER GARMENT/IN LEFT SIDE
DARK OF PLACKET BROWN 15 LIGNE/ GROSS 4 PER GARMENT/IN ON SLEEVE DARK BROWN SPOOL 812, AS NEEDED PER ALL HEMS PROVINAND SEEMS CIAL BLUE GARMENT
RECYCLED WOOD RECYCLED WOOD THREAD SIZE: T 24
1.16.3
79
FM0004
FOXX AND MAN
ALL NATURAL
30 NEWBURY STREET BOSTON, MA 02116
MENSWEAR
804.815.6936
PIMA COTTON PROVINCIAL BLUE (P -18-4220), STORMY GREY (P-16-3915), FEUD FUCHSIA PINK (P-19-2431)
FOXXANDMAN@GMAIL.COM BRAND LABEL
100% POLY 100% POLY 100% POLY
SIZE TAB CARE LABEL BAR-CODE TAG HANG TAG
80
TRANSPARENT
PAPER 80 LB CARD STOCK
1.16.3
FALL 2013/2014
1.5” X .5”, 1 PER GARMENT 1 CM X 1 CM, 1 PER GARMENT
CENTER 2 COLOR WOVEN BACK NECK BELOW BRAND LABEL
2 COLOR WOVEN
3 CM X 1 CM, 1 PER GARMENT BELOW SIZE 2 COLOR WOVEN TAB
1 PER GARMENT
ATTACH TO 2 COLOR SLEEVE CUFF
1 PER GARMENT
LEFT SIDE SEAM
WOVEN
3 COLOR PRINTED
Appendix
FOXX AND MAN 301 NEWBURY STREET BOSTON, MA 02116 804.815.6936 FOXXANDMAN@GMAIL.COM
FM0004 ALL NATURAL MENSWEAR
FALL 2013/2014
PIMA COTTON PROVINCIAL BLUE (P -18-4220), STORMY GREY (P-16-3915), FEUD FUCHSIA PINK (P-19-2431)
BRAND LABEL
EDGESTITCH SIDES OF BRAND LABEL ONLY SEW TO BRAND LABEL AT CENTER BACK
SIZE TAB/CARE LABEL
81
FOXX AND MAN 30 NEWBURY STREET BOSTON, MA 02116 804.815.6936 FOXXANDMAN@GMAIL.COM
*BUTTON FOR SLEEVE PLACKET WITH LASER CUT BRAND LOGO ON RECYCLED WOOD.
1.16.3
82
FM0004 ALL NATURAL MENSWEAR
FALL 2013/2014
PIMA COTTON PROVINCIAL BLUE (P -18-4220), STORMY GREY (P-16-3915), FEUD FUCHSIA PINK (P-19-2431)
Appendix
FM0004
FOXX AND MAN 30 NEWBURY STREET BOSTON, MA 02116 804.815.6936
2 3 4
CHEST ARM LENGTH WAIST NECK
MENSWEAR
FALL 2013/2014
FOXXANDMAN
FOXXANDMAN@GMAIL.COM
1
ALL NATURAL
PROVINCIAL BLUE (P -18-4220), STORMY GREY (P-16-3915), FEUD FUCHSIA PINK (P-19-2431)
26.75 27.75 41 -42.5 36 - 38
1414.5
28.5
28. 87��� -
27.25 44.5 -46.5
44.5 -46.5 40 - 42
44 - 46
1515.5
16 -16.5
26.75 -
27.75 52.5 -54.5 48.62 30
17 -17.5
All measurements are in inches ( 1 IN = 2.54 m) 1.16.3
83
Cost Sheets
Philippines
84
Appendix
Philippines FOXX & MANN
COST SHEET
Date: 1.31.13
Style # FM0001 Style Name: All Natural Description: Flannel
Season: Fall 2013/2014
FABRICS Flannel
85% wool, 15% cotton
TOTAL FABRIC COST *to include freight
$/yard*
$5.15
Yield**
1.6
Total
$8.24
$8.24
**must include waste
Components
$/unit
$Total
Quantity**
Buttons
Recycled Plastic
$0.05
12
$0.60
Thread
T24
$1.35
0.15
$0.15
Care label
3 x 1 cm
$0.05
1
$0.05
Woven label
1.5 x .5 cm
$0.05
1
$0.05
Size Tab
1 x 1 cm
$0.04
1
$0.04
TOTAL COMPONENT COSTS
$0.89
PACKAGING Hangtags Straight Pins Polybags Tissue Paper Cardstock
size/price/barcode 100pcs, size 16 2,400 sheets
$/unit $ $ $ $ $
0.08 0.00 0.04 0.02 0.03
Quantity
1 5 1 2 1
$Total $ $ $ $ $
TOTAL PACKAGING COSTS
$0.20
PACKING Cartons Tape Labels
24"x18"x12"
$/unit
$0.06 $0.002 $0.06
Quantity
1 1 1
$Total
TOTAL PACKING COSTS
LABOR Patternmaking Grading Marking Cutting Sewing Finishing* Admin
GRAND TOTAL
$0.06 $0.002 $0.06 $0.12
Time
$Total $ $ $ $ $ $ $
2% 2% 1% 100% 12% 3% 10%
TOTAL LABOR *Includes pressing & packing unless otherwise noted. OTHER Freight Duty Broker Insurance TOTAL OTHER
0.08 0.01 0.04 0.04 0.03
0.06 0.06 0.03 2.94 0.35 0.09 0.29 $3.82
$/unit $ $ $ $
1.80 0.81 0.05 0.04
Quantity
MU % RETAIL
20 20 1 20
$Total $ $ $ $
0.09 0.04 0.05 0.00 $0.18
$13.46
83% $80.00
85
FOXX & MANN
COST SHEET
Date: 1.31.13
Style # FM0002 Style Name: All Natural Description: Chambray
Season: Fall 2013/2014
FABRICS Chambray
97% cotton, 3% elastane
TOTAL FABRIC COST *to include freight
$/yard*
$3.00
Yield**
1.6
Total
$4.80
$4.80
**must include waste
Components
$/unit
$Total
Quantity**
Buttons
Recycled Plastic
$0.05
12
$0.60
Thread
T24
$1.35
0.15
$0.15
Care label
3 x 1 cm
$0.05
1
$0.05
Woven label
1.5 x .5 cm
$0.05
1
$0.05
Size Tab
1 x 1 cm
$0.04
1
$0.04
TOTAL COMPONENT COSTS
$0.89
PACKAGING Hangtags Straight Pins Polybags Tissue Paper Cardstock
size/price/barcode 100pcs, size 16 2,400 sheets
$/unit $ $ $ $ $
Quantity 0.08 0.003 0.04 0.02 0.03
1 5 1 2 1
$Total $ $ $ $ $
$0.20
TOTAL PACKAGING COSTS
PACKING Cartons Tape Labels
24"x18"x12"
$/unit
$0.06 $0.04 $0.06
Quantity
1 1 1
$Total
TOTAL PACKING COSTS
LABOR Patternmaking Grading Marking Cutting Sewing Finishing* Admin
Broker Insurance
Time
$Total $ $ $ $ $ $ $
2% 2% 1% 100% 10% 2% 10%
86
0.06 0.06 0.03 2.94 0.29 0.06 0.29 $3.73
$/unit $ $ $ $
1.80 0.81
Quantity
$Total 20 $ 20 $
0.05 0.04
1 $ 20 $
TOTAL OTHER
GRAND TOTAL
$0.06 $0.04 $0.06 $0.16
TOTAL LABOR *Includes pressing & packing unless otherwise noted. OTHER Freight Duty
0.08 0.01 0.04 0.04 0.03
0.09 0.04 0.05 0.002 $0.18
MU% Retail
$9.97 $
85% 68.00
Appendix
FOXX & MANN
COST SHEET
Date: 1.31.13
Style # FM0003 Style Name: All Natural Description: Oxford
Season: Fall 2013/2014
FABRICS Fabric 1 Interfacing Collar
$/yard*
100% Cotton
TOTAL FABRIC COST *to include freight
Yield**
1.6 0.6
Total
$/unit
Recycled Plastic T24 3 x 1 cm 1.5 x .5 cm 1 x 1 cm
Quantity**
$0.05 $1.35 $0.05 $0.05 $0.04
12 0.15 1 1 1
$Total
TOTAL COMPONENT COSTS
$/unit $ $ $ $ $
size/price/barcode 100pcs, size 16 2,400 sheets
Quantity 0.08 0.003 0.04 0.02 0.03
1 5 1 2 1
TOTAL PACKAGING COSTS
$Total $ $ $ $ $ $
PACKING Cartons Tape Labels
$/unit
24"x18"x12"
$0.06 $0.002 $0.06
Quantity
1 1 1
$Total
TOTAL PACKING COSTS
Time
$Total $ $ $ $ $ $ $
2% 2% 1% 100% 10% 2% 10%
TOTAL LABOR *Includes pressing & packing unless otherwise noted.
GRAND TOTAL
0.08 0.01 0.04 0.04 0.03 0.20
$0.06 $0.002 $0.06 $0.12
LABOR Patternmaking Grading Marking Cutting Sewing Finishing* Admin
OTHER Freight Duty Broker Insurance TOTAL OTHER
$0.60 $0.15 $0.05 $0.05 $0.04 $0.89
PACKAGING Hangtags Straight Pins Polybags Tissue Paper Cardstock
$4.88 $0.90 $5.78
**must include waste
Components Buttons Thread Care label Woven label Size Tab
$3.05 $1.50
0.06 0.06 0.03 2.94 0.29 0.06 0.29 $3.73
$/unit $ $ $ $
1.80 0.81 0.05 0.04
Quantity 20 20 1 20
MU % RETAIL
$Total $ $ $ $
0.09 0.04 0.05 0.00 $0.18
$10.91
84% $70.00
87
FOXX & MANN
COST SHEET
Date: 1.31.13
Style # FM0004 Style Name: All Natural Description: Slim Fit
Season: Fall 2013/2014
FABRICS
$/yard* $ $
PIMA COTTON Interfacing Collar TOTAL FABRIC COST
Yield** 4.35 1.00
Total 1.5 0.6
$7.13
**must include waste
Components
$/unit
$Total
Quantity**
Buttons
Recycled Plastic
$0.05
12
$0.60
Thread
T24
$1.35
0.15
$0.15
Care label
3 x 1 cm
$0.05
1
$0.05
Woven label
1.5 x .5 cm
$0.05
1
$0.05
Size Tab
1 x 1 cm
$0.04
1
$0.04
TOTAL COMPONENT COSTS
$0.89
PACKAGING Hangtags Straight Pins Polybags Tissue Paper Cardstock
size/price/barcode 100pcs, size 16 2,400 sheets
$/unit $ $ $ $ $
Quantity 0.08 0.00 0.04 0.02 0.03
1 5 1 2 1
TOTAL PACKAGING COSTS
PACKING Cartons Tape Labels
10/bundles 2/yards 150/label in pack
$/unit $ $ $
Quantity 0.06 0.04 0.06
LABOR Patternmaking Grading Marking Cutting Sewing Finishing* Admin
$Total $ $ $ $ $
0.20
$Total 1 $ 20 $ 1 $
0.06 0.002 0.06
$
0.12
Time
$Total $ $ $ $ $ $ $
2% 2% 1% 100% 10% 2% 10%
TOTAL LABOR *Includes pressing & packing unless otherwise noted. OTHER Freight Duty Broker Insurance TOTAL OTHER
GRAND TOTAL
0.08 0.01 0.04 0.04 0.03
$
TOTAL PACKING COSTS
88
$6.53 $0.60
0.06 0.06 0.03 2.94 0.29 0.06 0.29 $3.73
$/unit $ $ $ $
Quantity 1.80 0.81 0.05 0.04
20 20 1 20
$Total $ $ $ $
0.09 0.04 0.05 0.00 $0.18
$12.25 MU% RETAIL
$
84% 76
Appendix
FOXX & MANN
COST SHEET
Date: 1.31.13
Style # FM0005 Style Name: All Natural Description: Short Sleeve
Season: Fall 2013/2014
FABRICS Quanity
Fabric 1 Interfacing Collar
Eygiptian
TOTAL FABRIC COST *to include freight
$/yard*
1/yd 8/ in
Yield** $6.11 $1.50
Total 1.2 0.6
$8.23
**must include waste
Components
$7.33 $0.90
$/unit
$Total
Quantity**
Buttons
Recycled Plastic
$0.05
12
$0.60
Thread
T24
$1.35
0.15
$0.15
Care label
3 x 1 cm
$0.05
1
$0.05
Woven label
1.5 x .5 cm
$0.05
1
$0.05
Size Tab
1 x 1 cm
$0.04
1
$0.04
TOTAL COMPONENT COSTS
PACKAGING Hangtags Straight Pins Polybags Tissue Paper Cardstock
size/price/barcode 100pcs, size 16 2,400 sheets
$0.89
$/unit $ $ $ $ $
Quantity 0.08 0.003 0.04 0.02 0.03
1 3 1 2 1
$Total $ $ $ $ $
$0.20
TOTAL PACKAGING COSTS
PACKING Cartons Tape Labels
24"x18"x12"
$/unit
$0.06 $0.04 $0.06
Quantity
1 20 1
$Total
TOTAL PACKING COSTS
LABOR Patternmaking Grading Marking Cutting Sewing Finishing* Admin
$0.06 $0.002 $0.060 $0.12
Time
$Total $ $ $ $ $ $ $
1% 1% 1% 100% 7% 1% 10%
TOTAL LABOR *Includes pressing & packing unless otherwise noted. OTHER Freight Broker Insurance TOTAL OTHER
0.08 0.01 0.04 0.04 0.03
0.03 0.03 0.03 2.94 0.21 0.03 0.29 $3.56
$/unit $ $ $
Quantity 1.80 0.05 0.04
$Total 20 $ 1 $ 20 $
GRAND TOTAL
0.09 0.05 0.002 $0.14
$13.14 $
80% 65.00
89
Negotiated Costs
India Malaysia Philippines
90
Appendix
India FOXX & MANN COST: INDIA PRICE RANGE TOTAL : $8.99-‐$12.89
PRODUCT LINE ILLUSTRATION
COST
Freight, Broker & Insurance
DUTY
TOTAL
FM0001
$11.42
$0.15
$1.27
$12.84
FM0002
$8.04
$0.15
$0.91
$9.10
FM003
$8.98
$0.15
$1.01
$10.14
FM004
$10.14
$0.15
$1.14
$11.43
FM005
$11.21
$0.15
$1.26
$12.62
91
Malaysia
FOXX & MANN COST: MALAYSIA
PRICE RANGE TOTAL : $9.25-$13.12 PRODUCT LINE
92
ILLUSTRATION
COST
Freight, Broker & Insurance
DUTY
TOTAL
FM0001
$11.82
$0.12
$1.18
$13.12
FM0002
$8.30
$0.12
$0.83
$9.25
FM003
$9.31
$0.12
$0.93
$10.36
FM004
$10.63
$0.12
$1.06
$11.81
FM005
$11.44
$0.10
$1.14
$12.68
92
Appendix
Philippines FOXX & MANN COST: PHILIPPINES PRICE RANGE TOTAL: $10.07 - $13.56 PRODUCT LINE FM0001
FM0002
ILLUSTRATION
COST
Freight, Broker & Insurance $13.38 $ 0.14
DUTY
$0.04
TOTAL
$13.56
$9.89 $
0.14
$0.04
$10.07
FM003
$10.83 $
0.14
$0.04
$11.01
FM004
$12.17 $
0.14
$0.04
$12.35
FM005
$13.06 $
0.14
$0.04
$13.24
93
Casual. Effortless. Style.
94
94
Global Sourcing Fashion Marketing & Management 420 Winter 2013
The Foxxy Ladies Chelsea Leigh Remy Godwin Catherine Graham Anna Hill Taylor Justin