As you reached to this page, you must be looking for something that explains what the CMT order and FOB order are when dealing with apparel sourcing and exporting business. In the export gament manufacturing, these two terms commonly used by stakeholders accross apparel supply chain - like garment manufacturing, suppliers, sourcing agents and buyers. In this article, we will compare these two terms.
Navigating the global apparel supply chain requires understanding the core language of export contracts. For students entering the merchandising or sourcing field, two fundamental pricing and responsibility terms are crucial: CMT (Cut-Make-Trim) and FOB (Free On Board).
These models determine who buys the materials, who manages the risk, and how the final price of the garment is calculated. Deciding between them directly impacts a brand’s cash flow, quality control, and speed-to-market. Let's break down the essential differences between these two foundational sourcing orders.
| Feature | CMT (Cut-Make-Trim) | FOB (Free On Board) |
|---|---|---|
| Focus | Labor Only. The price quote covers only the service of converting materials into a garment. | Full Package. The price quote covers everything from raw materials to final delivery at the port. |
| Materials Management | The Buyer is responsible for sourcing, purchasing, and shipping all materials (fabric, thread, zippers, buttons) to the factory. | The Manufacturer is responsible for sourcing, purchasing, and managing all raw materials and logistics up to the port. |
| What the Price Includes | Factory labor, overhead (rent, utilities), and profit. (The lowest value-add price). | Materials Cost + CMT Cost + Factory Overhead + Profit + Local Logistics to the Port. (The most common export price). |
| Risk | Factory risks idling if buyer's materials are delayed. | Manufacturer assumes the risk of sourcing materials correctly, negotiating material costs, and meeting the production schedule. |
| Link to OEM/ODM | CMT is often used by small factories or when the buyer wants total control over expensive or highly specified fabrics. | FOB is the modern standard and is the model used for both most OEM and ODM orders. |
Related Article | Cost Structure of Garment FOB (One case)