Starting Business in the Apparel Supply Chain - 11 Questions Answered

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Today, I have posted answers to some questions asked by a business aspirant. She wants to start a business in the apparel supply chain but she is not sure what kind of business she should start. These questions are important not only to her but to anyone who thinks of setting up a business in the apparel supply chain. Also, many of the newcomers come with similar questions. That’s why I thought of sharing my answers on OCS.

Q-1. The idea of setting something up seems great, but I find that it would be easier (without too much capital investment) to start out as an agent, to begin with. How would you suggest I go about this making it a meaningful role, how do I approach clients and manufacturers?

Yes, this is true that if your start something as a middle person or open an agency, there is no much capital investment required, as you don’t need to purchase machinery, and no large working space is required for such kind of business.

In the apparel supply chain, there are some stages where you can fit yourself as an agent. It might be apparel buying agent – placing yourself in between apparel buyers (brands) and manufacturers, or a fabric trader as you have mentioned in your other question, or agent for selling machines and equipment to garment manufacturers. Or you can work as a shipping and logistic agents.

Let assume you want to be a fabric trader. For this, you have to build your portfolio in this area. Develop fabric library with new developments in fabrics and latest trends. Learn the role of fabric traders. If possible, find some fabric traders and talk to them how they work. Prepare a list of your prospects (here small size garment manufacturers, designers, and local labels). On the other hand find some good sources/suppliers for fabrics where you can get the best quality of fabric, with a wide range of fabrics, and at a competitive price. At the start, you must have contacts of fabric suppliers, fabric mills, or fabric whole sellers.

Once you have the database of fabric suppliers and fabric library, you can meet the garment manufacturers with your offers. Let them know about your services, cost of the services, and order delivery model. Do marketing of your services as much as possible.

Q-2. Any ideas on bridging the knowledge gap here?

You can learn about the products, services, and processing of the order by doing it or by reading good and reliable material (books, journals,  and articles). For the fabric trading, learn about fabrics, fabric processing and cost of various processes. Visit fabric suppliers and their processes to learn in and out of the fabrics. If required take a short course on fabrics and apparel.

Q-3. How to approach either one and ask the right questions and commissions to expect?

First, you have to decide your business role, where you like to stand in the apparel supply chain. A lot of ideas might be coming in your mind. Once you fix the one, you can play multiple roles by partnering with others.

Check the current commission rate for different types of services. You will learn these once you are into this business.

Q-4. I have seen the role of fabric and materials, trims traders in India? Can you help me understand what bases to cover when working as a middle person, in fabrics and materials and if such a role is viable?

The fabric is the primary raw material for making an apparel product. If you are thinking to work as a middle person in material sourcing, there is also a good scope for starting a business. Many small size design houses, garment manufacturers, and small businesses don't source fabrics directly from the mills due to their minimum order volume and unavailability of qualified sourcing person among the staff.

As a fabric trader one needs to know about fabrics, yarns, fibre contents, fabric finishing, fabric processing and different types of fabric and their quality parameters. Similarly, you need to know about the various raw materials (trims, accessories and other materials) for trading in this area.

Also read: Frequently asked question on setting up garment business

5. Would you recommend getting samples made working with a small sampling team and purely production CMPT with factories?

Yes, you can follow this strategy. Even big brands follow this strategy. They develop their product (samples) from sampling team and the bulk production is done from the suppliers having bulk production facilities.

6. Is it possible to grow a business like that? Is there paperwork that is necessary before placing any production order?

Yes, you can grow following this model. But if you give sampling work (product development) to the factory, you can minimize the sample development cost.

What kind of paperwork you are referring here? Business related or product related? For legal documents and paperwork follow the law of the land. Hire a CA or legal consultant for legal things and document requirement.

7. Is it possible to get samples made from factories without setting up an own sampling unit, even if paid?

Yes, you can get the sample made by garment factories. They may charge for it. In case you ensure the factory for the regular bulk order, you get the sample made for free of cost.

8. Since my background is design, I am looking to either buy finished garments to retail or manufacture with factories, would you recommend India or going further from India for production in very early stages - i.e. Bangladesh, Vietnam etc.

Everything depends on your business strategy. There are many criteria for choosing the sourcing destination. Like, product development capability, pricing of the finished product, logistics and more. It is also important how you will connect the right supplier in the destination country.

I would suggest you start working with the country where you feel comfortable and where you know someone in the garment business. If you are based in India, better to initiate your sourcing from India.

This also depends on the order volume. If you have small order qty per design, it is better to source from a country where you have good contacts and where you know some suppliers. When you have a big order, you can look for the low-cost countries for sourcing your products.

9. Would you be able to recommend a small sampling + production team i.e. what designations to hire, one must employ in the earlier stages of starting an export house? Since I realize people who have worked in factories and export houses know their job and environment better, who all can I employ to run operations if I have to concentrate on business development.

If you plan on starting a small scale manufacturing set up, you need following people in your team. Hire one pattern master, for making patterns, who can act as sampling in-charge as well. You need one sampling merchandiser for coordination as well as sourcing raw materials. Hire a couple of tailors. Sampling tailors and helpers can be supervised by the pattern master.

Select a pattern master who is well versed of the products you like to develop (like Knits/woven/basic products/high-value fashion item etc.)

Again the size of the small production team will depend on the production capacity requirement. You can start with 10 tailors having skill in running different sewing machines. Must have one supervisor for the production team to manage and work distribution among the tailors. The sampling merchandiser can coordinate with the production team and do local sourcing of trims and fabrics. You may need to hire one guy for sourcing fabrics or you can source fabric through fabric traders.

For inventory management (fabric and trim store) and general item, you need one person.

Hiring a skilled worker is always better.

10. Would you be able to recommend any roles more suited to my background or something that I am missing that may be to my better advantage?

As your background is apparel design, I would suggest you start your own apparel brand. You can also work as an independent designer. If you are still in dilemma, do SWAT analysis.

11. Lastly, what are some of the ways to work with domestic manufacturers? I am clueless on this since I mostly come across exporters. Are there quality issues here or MOQ issues?

If you are based in India, and considering sourcing garments from domestic manufacturers is a good idea. There are thousands of garment manufacturers in India. Many garment manufacturers work for both domestic customers and international customers. Even you can manufacture your design from a sub-contractor.

Small size factories and sub-contractors those work unorganized way, you may find quality issues. But the quality issue can be improved. The best way is you have to choose a right supplier to get the desired quality goods. Minimum order quantity (MOQ) is applicable to most of the big manufacturers. If you place an order with a manufacturer for an order qty less than their MOQ, they may charge you a higher price per garment. What would be the minimum order qty for processing one particular order, solely depends on the production design and supplier’s MOQ policy.

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Online Clothing Study: Starting Business in the Apparel Supply Chain - 11 Questions Answered
Starting Business in the Apparel Supply Chain - 11 Questions Answered
Can you help me understand what bases to cover when working as a middle person, in fabrics and materials and if such a role is viable?
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