Global Sourcing Options in Textile and Apparel Industry

Explore the crucial decisions between making and buying products in the textile and apparel industry, along with key criteria for decision-making. Learn about various sourcing options and their advantages and disadvantages, such as direct sourcing, CMT contracting, full-package sourcing, and joint venture sourcing. Delve into the complexities of cost minimization, profit maximization, capabilities evaluation, risk reduction, and sustainability goals in the global sourcing landscape. Discover strategies employed by industry giants like Zara and the concept of joint ventures. Prepare for the next class by reading Chapter 5 on sourcing options.

• Global sourcing
• Textile industry
• Apparel industry
• Make or buy decision
• Sourcing options

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1. LESSON 4 CHAPTER 4 GLOBAL SOURCING OPTIONS PROF. C. IOELE

2. Learning objectives Make or buy? The five major criteria for make-or-buy decisions Sourcing options: advantages and disadvantages of: Direct sourcing CMT contracting Full-package sourcing Joint venture sourcing Global Sourcing in the Textile and Apparel Industry 2

3. Make Produce parts or products on its own Global Sourcing in the Textile and Apparel Industry 3

4. Buy Source parts or products from others Global Sourcing in the Textile and Apparel Industry 4

5. Make or buy? The five key decision criteria: Cost minimization criterion (cost analysis) 1. Profit maximization criterion (opportunity cost) 2. Capabilities criterion (skills evaluation) 3. Risk reduction criterion (safety hazard issues) 4. Sustainability criterion (sustainable goals) 5. ATTENTION!! All five criteria are considered simultaneously and affect business short-term and long- term goals and performance! Global Sourcing in the Textile and Apparel Industry 5

6. Watch.. https://www.youtube.com/watch?v=S1qw_FRJ43Y Zara's strategy Global Sourcing in the Textile and Apparel Industry 6

7. Learning objectives Sourcing options: Direct sourcing - own manufacturing facilities overseas CMT contracting sourcer owns design/ materials and produces in third party facilities Full-package sourcing suppliers fully responsible for the entire process, from design to logistics Joint venture sourcing new business generated by two companies who join Global Sourcing in the Textile and Apparel Industry 7

8. Watch.. https://www.youtube.com/watch?v=j8weokZzRDA What is a Joint Venture? Global Sourcing in the Textile and Apparel Industry 8

9. For the next class Read Ch. 5 (see pages on syllabus) Homework on sourcing options (see instructions in MySRISA) Global Sourcing in the Textile and Apparel Industry 9

10. Learning objectives Make or buy? The five major criteria for make-or-buy decisions Sourcing options: advantages and disadvantages of: Direct sourcing CMT contracting Full-package sourcing Joint venture sourcing Global Sourcing in the Textile and Apparel Industry 10