Rating and selection of suppliers (potential suppliers)

A very important part for all decisions regarding your supply- partners is the rating of your existing or potential suppliers

Important informations for us have been

grade of verticality (spinning – weaving – garment production – laundry)
capacity of the supplier
our share of his capacity (how important are our orders)
ability to produce smaller volumes
his other clients (from your continent?)
his suppliers
communication skills
r&d ?
creativity
compliance
past experiences
strenght – weakness – options – threats (SWOT analysis)
% of sales at regular price
% of sales at reduced price
aso…..

Visit all countries and visit your suppliers – what you see is what you get. If you just read the profiles, there are just very good factories and all of them are somewhere leaders and experts.

With the results of your „desktop- investigations“ you visit the factory and the offices of your suppliers and potential suppliers. You should collect all informations which are important for You and the company, you are working for. Most important are always communication skills – if you and your supplier don’t understand each other any business will be difficult.

Ask for all the information on the company – which you have found – to make sure your informations are updated.

Would you like to work in this company? Is there a certain level of confidence? Do you feel fine?
What could happen if there would be fire? Is child care on the 5th floor safe for mums and kids?
Or is everything too perfect? Did somebody „warn“ the departments before you visited them? Is the presentation of the factory more a show or real?

Please understand: our orders have been 30K+ per item and the annual volume was superior to 12 Mio jeans. This makes all discussions relatively easy and we had to select suppliers which have been able to produce these volumes easily. But there are as well „normal“ retailers or brands who order smaller volumes.

I will describe the three types of suppliers

– completely vertical setups – weaving (eventually including spinning) – garment production (including laundry)
– vertical setups – garment production with laundry
– simple garment producer – medium and smaller sized units

general characteristics: the more vertical – the more big players will be working with this supplier. That means this supplier will be better informed, will run his own R&D department, there will be permanent production of well selling fabrics. In a completely vertical setup it will be easy to discuss prices. But: more vertical means as well that the supplier will need bigger order volumes.
Vertical setups can be huge or tiny this is the most interesting type of supplier which can match to every type of retailer or brand. The big ones will have their own fabric sourcing, a R&D dept. and most possibly there will be big players with their customers. You might get similar advantages like with a completely vertical setup but don’t forget the fabric supplier must earn money too, which is not the case in a completely vertical setup. If your orders are small, try to find a small vertical supplier. With a small one, you risk, that the guys in the laundry don’t really understand european or american needs, that they don’t understand the differences between our markets, that they use chemicals which soon will be prohibited to use … all this might happen, but must not be necessarily the case. Be careful with owners who are just talking too loud, guys who know everything – just remember: „… when you talk, you can’t listen – if you listen, you might understand.“ With a smaller setup you have as well the chance to get very good ambitious collaborators who will do everything for you and your orders. It will be a question of understanding. If the potential supplier is open to learn and you respect, that you have to learn as well – there will be a healthy basis for your future. Simple garment producers ? … try to avoid if possible. There will be discussions in case of problems. Who was responsible for what? Did the mill create the issue or the laundry? Who tested what? How? ….

Big setups don’t work with agents, buying houses, vendors – they don’t need this kind of service. Thats why buying houses, agents asa are working in general with factories (with or without laundry) who don’t have a R&D dept. and who are not traveling.

If you need to – or can – give just smaller orders, you need to compromise. There are all around the world smaller setups who do a very professional job. Talk to people who know the country, who know some factories, talk to colleagues, … to be informed is the best vault you can get.

Now you have to decide. What will be the best solution for you and for the company who is paying your salary?

Country analysis

Check for all countries where you plan to work:

human rights
custom duty GSP status
political situation
relevant ressources (fabric, accessories, work force,….)
…..

Where can you get what ?

Pakistan: is one of the leading producers of cotton with a perfect staple length for the production of denims. Cotton is picked by hand! Denim and jeans production since the 50s. A big number of mills and garment producers, a lot of high class completely vertical setups. Very high standard of fabrics and production quality.

Bangladesh: together with China the biggest producer of jeans, globally. No cotton available but an increasing number of mills. As Bangladesh is still considered to be a low cost country for jeans production, the quality of their denims is reasonable and matching to the needs of the local producers. A few huge factories (vertical setups) who are doing a big and important part of the production in a very good quality and a lot of little garment producers who are doing these low cost jeans. Fabrics are imported from (Pakistan, India, China, Turkey – just to name the most important). Difficult for high quality in smaller order volumes.

China: best source for man made fibers and blended fabrics. A big part of the chinese mills are exporting the biggest part of their production. Sophisticated fabrics, knitted denims, aso are best from China. In certain regions, the workers switch to other industries because the wages are higher.

Turkey: important country for denims and the production of jeans. High level of experience and the possibility to produce as well smaller volumes in a very good quality.

Tunisia: is you can’t get your fabric from SWIFT, you have to import it. High standard of production and washing.

Vietnam: is producing the biggest part of its production for the american market

Etiopia: will need some time – they just started – just basics

Risk sharing … countries/areas

…..   Last week was just horrible.  I planned to write on tuesday based on an article on Bangladesh.

There are tectonic plates at a subduction zone under Bangladesh which have been building up strain for over 400 years. Assuming the movement has been steady over the last 400 years, enough strain should have built up for the zone to jump 5.5m all at once. No one knows exactly when something will happen but Dhaka might be devasted. Bangladesh is for the european community the biggest supplier of jeans. In the case of a catastrophe like this earthquake there will be as well a serious issue regarding apparel in european and american stores.

Then on last week’s thursday we had to experience again that terror can’t be avoided. In France more than 80 people have been killed. One week before about 20 people have been killed in Dhaka and  there have been attacks in Istanbul and in Baghdad. Terror is influencing everything – even production and shipment of our garments.

On friday some guys tried a coup in Turkey. Sure the laws will be changed, the relationship between Turkey and the EU might be influenced.

There are influences in each country (or in each area) where we produce which are risky for the production. They are even different in different cities. Merchandise which is produced in Dhaka (BD) or Lahore (PK) must be transported to Karachi or Chittagong for the shipment.

There will be Ramadan and there will be Chinese New Year.

But there are as well changes. New streets are built, new factories are set up, …

Permanent changes make our business less boring.

To avoid issues regarding your production you should share the risk – probably you concentrate on two or three areas (or countries) and you source or produce for all genders in al areas (if possible).

Set up shares for the countries where you buy and leave some volume for countries where you want to do a test.

Ranking the countries for purchasing and suppliers

As I wrote before, purchasers, the sourcing guys, product developers and as well product managers are just in for the money. Lets put it this way – if we don’t do our job properly, the company will not earn enough money. OK, the product must be good and should be what our consumer wants to buy.

Whatever I write here, is not rocket technology but just the stuff what common sense asks us to do and what we heard already hundred times.

Last post was about the start, the basics – the famous fact finding mission. After we collected the informations, we rated countries and suppliers.

 

Rating of suppliers (potential suppliers)

Important informations for us have been

grade of verticality (spinning – weaving – garment production – laundry)

capacity of the supplier

our share of his capacity (how important are our orders)

ability to produce smaller volumes

his other clients (from your continent?)

his suppliers

communication skills

r&d ?

creativity

compliance

our past experiences with this factory

strenght – weakness – options – threats (SWOT analysis)

% of sales at regular price

% of sales at reduced price

aso…..

collect as well all available informations regarding the countries where you are buying or where you could probably purchase your products

 

country analysis

human rights

custom duty

political situation

…..

You should collect all informations which are important for You and the company, you are working for. Most important are always communication skills – if you and your supplier don’t understand each other any business will be difficult.

Visit all countries and visit your suppliers – what you see is what you get. If you just read the profiles, there are just very good factories and all of them are somewhere leaders and experts.

Set up a table with informations which you want to collect and ask each supplier (or potential one) in future the same questions.

Even if you see you have been bullshitted and you will never collaborate with this company, stay polite. The guy might know someone whom you need. If a collaboration has to stop or is not possible, please inform the people why – they might want to change something.

How it started – the fact finding mission

I have been working for a very big company and have been in charge with „sourcing for denim“. Sourcing means in this case:

  • finding the fabrics and production units,
  • setting up a fabric library,
  • development of all denim styles,
  • assuring a buying price which allows the company to create a certain profit,
  • making sure that the producer will be able to deliver in time.

With the exception of some kids garments, everything was produced in China, which appeared to be very risky as the prices went up, the margins tended to become ridiculous and the quality of the products and the fit consistency showed room for improvements.

Another big part was bought at vendors which produced wherever it suited them.

This was the situation when I was asked to develop some ideas to increase the quality of our pro ducts and brush up our denim business.

First I checked with how many factories we are working and how many fabrics we are using. The same was done for all our vendors.  The result was awful – too many suppliers, much too much fabrics and an average order per supplier which was ridiculous.

Together with my boss, we visited all our suppliers and as well the countries where we thought, we must find production facilities. We visited as well factories and laundries of vendors. The result was as expected. We produced in horrible places or in factories which don’t match our needs. But we found as well factories which could solve all our problems. All factories which we visited have been rated.

Like this we created a pool of informations which helped us to decide, what we want to do in future and how we can increase our performance.

Hello world!

My baby is denim, this wonderful blue fabric, which acts like a women, unpredictable but beautiful, more beautiful the longer you know it – please feminists don’t fight me now.

I found out, that a big part of my way of working is completely old school, nothing special but people need to be reminded. I was consulting a big company who wanted to brush up their sales in jeans. They signed me and so I was allowed to modify their way of working. Their buying volume increased 12 mio jeans per year and it was a very good experience which I want to share with you.