Factories are Preferred

By: amit ghosh
Submitted: 2007-07-19 13:14:15
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At the outset, it should be pointed out that choice of set of factories is severely limited by constraints of quota availability fabric accessibility and compliance. For example, if one wants to buy washed twill shorts for ShopKo Stores, one is limited to factories that have quota for category 347/8 available in a big quantity and there are only few who have much quota. And as twill fabric in India is exorbitantly priced and not reliable in terms of delivery. One’s choice is further limited to factories, which are in an EPZ or EOU and can import cheap twill from China. Therefore at the end you have probably only a couple of factories left to choose from. And of these, if only one is compliant to ShopKo Stores requirements, it leaves you finally with only one factory you could work with.

The above example is to illustrate that there is not exactly a choice set of factories to short list and choose from. A factory may be disorganized. Poor in follow up and expensive, and you would not place an order with them normally. But in a case like above you would have no choice but to do the same.

Price is another such constraining factor when we bid for programs of a few thousand dozen garments from stores like JC Penney, Wal-mart, Sams Club. Price Costco or shopko (vide importers) it is just a price game. If the programme relates to say a poly/nylon/spandex fabric which entails, around 28% import duty or a rayon crayon printed one which entails the same: we would look for sourcing in Kenya or Madagascar which is duty-free for export to US. If it is a T/C Plaid shirt program, we would look for Bangladesh using Chinese or Kenyan fabric: but Bangladesh with duty may still be cheaper. If the program is of cotton shorts for Marmaxx we would again not even think of India or Bangladesh with their prohibitive quota prices: we would look straight to Kenya or Vietnam. Hence the current scenario calls for keen eye on landed pricing, not just f.o.b. We have to mentally add f.o.b. and duty and freight and then offers received from different sources are compared. The Competition cannot beat Kenya or Madagascar for the US and Bangladesh or Nepal for Canada because of duty-free status.

Product ability is of course what determines the choice matrix. If we are looking for dresses. Pants or blazers or polyamide briefs, there would only be 2-3 factories in India having this capacity. Let us take a product category like ladies woven blouses or men’s knit golf shirts where you can indeed exercise choice from a set of factories. I don’t mention quality because nowadays it is a given factor, not a determining one. We would visit factories when they approach us and evaluate their pattern making, sewing, finishing abilities and control systems and check their other customers merchandise, Only when they pass basic quality norms, would they be a part of the matrix of factories we would work with. Of course there are factories, which offer an excellent product versus a good one: which would affect our decision depending on customer and product profile. But by and large, the finished products of factories would be almost the same: and hence quality is not a determining factor.

The reality today is that customers want compliant + quality factories at lowest landed prices with fastest turnaround and least headaches. They are not interested in status reports (which can lead to pointing out by them that we did highlight, say a fabric delay) or in hearing about problems or in solving them. They have little idea nowadays of what they should buy; hence they look to us for color style and fabric trends. Moreover they increasingly lack technical skills and look to us to generate graded specs or even to do basic fits. They want least financial exposure and wish to move away from the least correspondence business.

Article source: Expert Articles