By definition, sourcing is a process through which something is sourced from another place. The sourcing decision is normally made on the basis of several factors. Although sourcing of anything is not a simple task. That’s why, the concern people always first try to make/develop the product by their own.
If the production of particular product is not cost effective, non-availability of skills, unsatisfactory suppliers or vendors then they have to go for sourcing. There are four factors on the basis of which one can decide whether to make or source the product. And it includes cost, production capability, quality and lead time of the required product.
Cost: In some products, the product cost is not as cheaper as compare to the outsource supplier. It could be due to several factors like cheaper labor availability or cheaper raw material cost due to several suppliers. So, in this particular case, you better decide for sourcing the product instead of in-house production.
Production Capability: Every territory and geographic location has its own characteristics and benefits. For apparel industry examples, some areas have skilled labor of top items (jackets, upper, shirts etc). Whereas, some are good in washing capability due to its good water PH value and labor proficiency. So, in this particular case, you will have to make a decision for product outsourcing.
Quality: Quality is no doubt the foremost requirement of everyone. If you are compromising on product quality due to unskilled labor or usage of sub-standard raw material. And even you could have option to procure the better quality with same cost or paying some pennies extra to them. Then your first choice would be outsource the particular product.
Lead Time: The lead time of is really crucial in every product making process. Some companies have expertise and running regular orders in particular products. Such companies can offer you not only competitive prices of the same product but also give you a short lead time. So, in that particular case, you will definitely choose outsourcing option. In short, if the narrated factors are not met then sourcing decision has to make.
The fashion industry was use to follow the traditional ways of sourcing. In which the main motive is to reduce product cost through selection of cheapest manufacturers. And in order to get cheap manufacturing vendors, you have to look for in less developed countries. This is why, the fashion industry gradually moved from west to Eastern Europe to Asia and Africa.
With the passage of time, the ways of production and processing is changing and improving. The research and development teams are continuously focusing on time high quality product with low cost. In order to reduce the cost, instead of human being, the robots are working in many industries. So, by adding these automation options, one can control his/her day to day increasing labor cost. If this addition is practically implemented then it can affect 231 million manufacturing jobs at risk in almost 50 countries of the world.
Sourcing Automation & Digitization:
Not only this, through technology the sourcing can also be cost effective as well as fast. The R&D people also suggested some new ways through which sourcing operation can handle efficiently and even effectively. And as per them, there are two ways which can revolutionize the sourcing world and it include as follows:
Digitization in Sourcing:
It’s the requirement of every client for more transparency in production and material sourcing. Along with that everyone is demanding for shorter lead-time and increased production. All of this can happen by the help of digitization in sourcing. As per the current market scenario where speedy but customize production trend is getting hot. So, you can’t meet the market trends without digital support. The digital sourcing has positive impact on China which is a big player in textile sector. Since the wages are increasing in China so it’s time to move brand manufacturing outside China. In this particular matter, digitization will help the Chinese manufacturers to streamline its product cost.
In-fact, sourcing digitization will empower the client to speak more effectively. As per the experts, there will be a time when people place customize apparel orders through their mobiles. These order will digitally sent to the manufacturers for completing the desired job. So, the elimination in barriers through digitization will definitely help the manufacturers to speed-up their productions. And this can shorten the lead time and allow end users to communicate their requirement directly. When we look this concept in a broader way then a storekeeper can place the order directly to manufacturer. So, he will place the order as per the current requirements of the local market.
Li&Fung is currently investing heavily in digitization concept. And their main motive is to streamline their operations, transparency in production and focusing on digital-design to avoid prototype cost. The famous brands Zara, H&M and Macy’s are also focusing on same line. What they are doing, they are trying to change the whole shopping experience of the customer who visit them. They will try something to the customer and then it will be customized by the help of AI and made nearby.
Automation in Sourcing:
Automation in sourcing means you replace human labor with robots. This approach is vice versa to the traditional sourcing where everyone prefer remote manufacturers due to low cost. But in this approach, your manufacturing is handling by robots so you try to build manufacturing set up closer to end user markets. Moreover, you have a close interaction with the end user so the product innovation or customization is possible. Along with that you can easily enhance your production speed which will shorten the lead time of high fashion apparels. Furthermore, changing in geographical location can also eliminate the huge cost and hassle of long-distance transportation/duties. In-future, if this concept runs well then there will be no inventory at all as all products are made on-request.
There is no doubt that most of the people believed that in future automation would be the major driver in sourcing decision. And this thing will happen in next few years when sourcing people prefer automation instead of labor cost. Its fact, by implementing automation, there is chance the number of people will lose their jobs. But on the other hand, the new jobs are also created with better remunerations. And these new jobs would be a bit tech oriented like data analyst, engineers, technician etc. By adopting automation, factories have even a better chance to grow. So, they could also adjust the surplus staff to other vacant posts (after some training).
There are some people who don’t believe on automation and digitization approach. As per them, the apparel industry is not like other industries where production steps are fixed. As every product production steps are different from past products due to change in fashion trends (which are already a more volatile thing of current phase). So, you can’t replace skilled workers with robots. On the other hand, some believe that digitization accompanied with automation can be practical and beneficial. But it’s not homogeneous size which fits for all. As it would be more practical for some brands and may be impractical for few of them.
Digitization and automation in sourcing is no doubt a revolutionary concept for fashion players. And there are so many brands which are transforming their processes to take maximum benefits from this concept. Through automation, we can’t say this thing that mass production will be shifted in West in next decade. But you will see many players who will return and collect the benefits of this approach.