Facs 131 spring 2014 Chapter 1 Flashcards
(28 cards)
two types of manufacturers?
ch 1
Manufacturers
1.Inside shops: operates their own production
factories
2. Outside shops: does not own production
facilities. Hire out part or all of the work to
independent contractors
Advantages of Inside Shops
ch1
- fewer communication problems
- tighter control over quality processes and
procedures - more control over timing, making it easier to
meet delivery dates - savings of time and transportation costs if
garments are made domestically - easier to ensure work is done in compliance
with human rights and environmental
regulations
-ultimately you have more control.
Advantages of Outside Shops
ch1
- no investment in plants and equipment
- fewer employee training needs and fewer
personnel problems and demands - no need to buy and maintain factories and
equipment as business grows - no need to employ workers between seasons
or if business slows - the ability to perform specialty work as
needed(fashion changes all the time, makes it more flexible)
T/F Manufacturers have to have a manufacturers facility to be a manufacturer.
ch 1
False; still responsible for producing, having a facility isnt a requirement because you can pay some one else to do it.
Contractors
ch 1
- Contractors primarily provide labor and
equipment, do not own merchandise - Contractors have no risk for the success or
failure of particular styles, unlike
manufacturers and retailers. - Various ranges of contractors
Ex) Cut, make, and trim contractor (CMT) - Subcontractors(when contractors hire outside)
-middle people, provide labor (sewing) or equipment. they do not own merchandise
Wholesale Representatives
ch 1
1 Sales reps: Agents of the apparel
manufacturing companies
2 Sell the finished garments to retailers
2 types of sales reps
ch 1
- for on brand - one company , like the gap
2. presents multiple brands - independent, dont get paid up front, get paid when the shipment happens .
Retailers
ch 1
Sell to the ultimate consumer
- Traditional retailers
- Manufacturing retailers
- manufacture all or part of the goods they sell
- The GAP, Macy’s
- the gap=manufacturing
- macys= manufacturing
Branded vs. Private Label
ch 1
-Private-label: developed by or for a specific
retailer
- Branded apparel: developed by a
manufacturer and sold to many retailers under
the trademarked brand name
Advantages & Disadvantages of Private
Labels
ch 1
Advantages -Attractive profits -Customer loyalty Disadvantages -Need to promote the private label - Risk to fail - Require a knowledge of and investment for garment production
Vertical integration and Consolidation
ch 1
- Vertical integration: same company
responsible for multiple steps in the production
or marketing of a product (ex. Ralph Lauren) - Consolidation: mergers and acquisitions, large
companies have become larger.
Global Trade in the Apparel Industry
ch 1
Three main areas to achieve success in the global competition
- Quality
- Service
- Price
- Global business
- Export: sell to other countries
- Export trading companies (ETCs)
- Import: buy from other countries- Customs broker
Advantages of Exports
ch 1
Advantages
- Expands customer base -Greater sales
- Extend the length of the demand for seasonal products (warm here, cold there, more swimsuits or less jackets)
- Extend the life of a product
- Diversify risk, open prospective business growth
Disadvantages of Exports
ch 1
Disadvantages
-Difficulty in understanding foreign business practices
- Differences in product standards and consumer
standards
- Problems in receiving payment
- Difficulty in obtaining adequate representation
- Expensive foreign travel
Advantages of Imports
ch. 1
Advantages
- Low price
- Higher profit
- Unique assortments
Disadvantages of Imports
ch 1
Disadvantages - Expensive foreign travel - Fluctuations in currency exchange rates - Higher shipping and insurance cost, broker fees, hidden costs - Longer lead times - Difficulty to control - Complicated process to take recourse on defective production - Some customers’ negative reaction to imports
Offshore Production
ch 1
U.S. apparel manufacturers
- Contracting with foreign producers to make goods
- Establishing their own sew-only plant in a foreign country
U.S. apparel imports
- 1/3 international sourcing by US manufactures
- 1/3 international sourcing by US retailers acquiring private label merchandise
- 1/3 marketed in the US directly by foreign companies
Chapter 98 Production
ch 1
Some US apparel manufactures…
- Cut fabrics in the U.S.
- Send the cut pieces to a low-wage country to be sewn
- The assembled garments are shipped back to the U.S. for finishing, pressing, and any other processing; Importing the assembled garments
- Manufacturer pays off a tariff only on the value added; the labor cost of the production that look place outside of us.
- We dont pay tax on top of the fabric we purchase, only pay tax on the labor.
International Trade Policy
ch 1
Tariffs ;
- Also known as duties
- Taxes placed on imported apparel
Quotas ;
- Limit the quantity of items that are imported.
Quick Response Strategy
ch1
- shortens the business cycle throughout the chain from raw material to consumer by implementing advanced technology and industry partnership (e.g. suppliers, manufacturers, retailers)
- make more informed merchandising decisions based on up-to-the-minute (real time) information by sharing sales and inventory information.
- a comprehensive business strategy incorporating time-based competition, agility, and partnering to facilitate speed to market.
Fundamentals of Quick Response
ch 1
- Customer-driven business system
- Time-based competition
- Agility
- Partnering
Benefits of QR (quick response)
ch 1
-Prompt delivery of goods (short lead time)
- The accuracy of information
- Benefits to Retailers:
* better buying decision
* Increased sales at first price
* Prompt reorders (reduce inventory levels and carrying costs, and stockouts)
* Retailers’ sharing point-of-sale data with manufactures,
suppliers —>manufacturers’ replenishing retail stock in a timely and accurate way, (e.g., automatic replenishment or vendor-management retail inventory)
-Manufactures:
*Retailers’ sharing point-of-sale data —>better merchandising plan
- Can begin mass production after receiving orders from buyers —> lower inventory levels and reduced carrying costs
QR: Customer-Driven Business System
ch 1
A customer makes a purchase at retail store.
- The UPC code (Universal product code = barcode) is scanned at the time of the customer transaction.
- Purchase information is recorded in the POS (point of sale ) system in real-time.
- The information is sent to retailer’s, manufacture’s and material
supplier’s data systems via EDI( electronic date, interchange ) and/or Internet.
- A re-order is created and sent to the vendor by predetermined agreements and/or automatic replenishment models.
- In less than a week, the product is manufactured using a flexible production system.
- Merchandise is delivered to the retailer shelf or hanger ready.
- Forecasts can be modified and adjustments can be made in merchandise plans according to the styles, sizes, and colors that are selling
EDI & UPC
ch 1
-EDI
* Provides a vital link within companies and between companies by
allowing the tracking of raw materials and finished garments at all
phases of production, distribution, and sale.
* Reduce order lead times, better accuracy, increased information availability, and timely information receipt
- UPC
- 12 digit code representing a product
