The Need for Open Labor Costing in Apparel Sourcing Business

SHARE:

Why open costing is important in sourcing apparel? Who will be benefitted on open garment costing?

This is a guest submission from Charm Rammandala.
We all understand the need for a universally accepted system to cost apparel to ensure buyers as well as manufactures feel comfortable. Even though, it is being in discussion for over two decades, still we find both buyers as well as manufacturers complaining about the challenges they face when it comes to negotiating prices.
Just recently I had a discussion with a friend who runs a buying office. He explained to me how some leading buyers/retailers such as NEXT and M&S use online auctions to decide prices and to find manufactures. I am sure if you ask them they will tell it’s a totally acceptable method to find most competitive manufacturer. However, I would argue this is not the right thing to do.
Lets discuss why I said that. My friend was explained how much pressure and a tense situation it was to be in front of the computer and bid. Every time he put a lower price, somebody else from another company would outbid him. So if you want the order, naturally you have to quote a lower price. This goes on until buyer feel she got the price she wanted. Now what guarantee is there that the final price agreed is the right price? How we ensure manufacturer earns sufficient amount to pay its employees without cutting corners?

It is hugely important to build a trusting relationship between a buyer and a manufacture. Open costing should be the way to do business where both parties feel they are in control. It is very important buyers fully converse in standard minute value and how it is calculated.

Unfortunately, we find still most of the buyers who are negotiating prices rely on few costings received from several different manufacturers around the world and giving unrealistic target prices to manufacturers. Obviously, manufacturers and buying officers who are desperate for orders quote unrealistic prices and end up cutting corners once order is placed. This leads to all sorts of problems which includes low wages, below rate overtime pay and in some cases trying to employee underage kids.

On the other side of the story, we find often manufacturers quoting above average prices and trying to overcharge the buyer. Most of manufacturers are very reluctant to give open costing and just submit CMT or FOB price.

Buyer has no idea what was the SMV or even fabric consumption of the costing. These practices do not help to build a trust. So no wonder why buyers like NEXT rely on on-line auctions to find buyers. However, we need to start putting pressure on both buyers as well as manufacturers to be fully transparent to ensure correct price paid for the items. This will actually help both parties to work closely and build a long-term business relationship.

About the Author: Charm Rammandala is the founder & CEO of IStrategy USA. He counts over two decades in fashion supply chain in diverse roles as Lean Manager and Model himself. He is an expert in rolling out programs in Lean apparel manufacturing and Sustainable labour costing. His former positions included being the first Lean Technologist at George Sourcing Services UK Ltd.

COMMENTS

You may also like

Name

5S,3,Apparel ERP,1,apparel industry,56,apparel news,33,Apparel Production,30,Apparel Software,17,Bamboo Fabric,1,Bangladesh,1,Blogs,1,Books,30,Business Guides,9,Buyer,1,Buying House,4,CAD/CAM,1,Calculation & Formula,1,career,33,Change Management,1,Clothing,1,Clothing Brand,3,Compliance,3,Consumption,4,Costing,7,Cutting,17,Denim,3,Directory,3,Dyeing,1,eCommerce,2,Education,5,Event & Fair,14,Fabric,71,Fashion,5,Fashion Business,37,Fashion Design,3,Fashion Show,1,Fiber,1,Finishing,10,Garment Exporters,1,Garmenting,1,Gartex,1,GSM,1,Guest Post,8,Human Resource,2,Industrial Engineering,211,Infographic,5,Knitting,3,Kurti,1,Lean,27,Line layout,3,Machines,28,Manufacturing,51,Merchandising,101,MIS,23,MISC,20,Operation bulletin,14,Operator,1,Operator Training,1,Performance rating,1,PLM,3,Printing & Embroidery,11,Problem Solving,1,Production Planning,26,Project Report,1,QNA,121,Quality,61,Quality manual,2,Quality system,14,Resources,42,Retailing,4,Salary & Wages,7,Sampling,22,Scheduling,3,Sourcing,8,Spec Sheet,9,Sportswear,1,Stitching,3,Store,2,Stretch fabric,1,sustainable clothing,7,T-shirt,3,Tailor,1,Tailoring Shop,2,Technology,58,Texprocess,1,Textile processing,11,Textile testing,22,Textiles,41,Threads,1,Towel,1,Trims & Accessories,15,videos,11,Waste,1,Work Study,38,Yoga wear,1,
ltr
item
Online Clothing Study: The Need for Open Labor Costing in Apparel Sourcing Business
The Need for Open Labor Costing in Apparel Sourcing Business
Why open costing is important in sourcing apparel? Who will be benefitted on open garment costing?
https://2.bp.blogspot.com/-7fpOlQtnVv4/WEGO2Tuh-QI/AAAAAAAADrk/7d61Q6eHmIIANdVJb9X4AZ0IeRFWQHzigCK4B/s400/costing.jpg
https://2.bp.blogspot.com/-7fpOlQtnVv4/WEGO2Tuh-QI/AAAAAAAADrk/7d61Q6eHmIIANdVJb9X4AZ0IeRFWQHzigCK4B/s72-c/costing.jpg
Online Clothing Study
http://www.onlineclothingstudy.com/2016/12/open-labor-costing-in-apparel-business.html
http://www.onlineclothingstudy.com/
http://www.onlineclothingstudy.com/
http://www.onlineclothingstudy.com/2016/12/open-labor-costing-in-apparel-business.html
true
6551124471002606808
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy