sourcing

Apparel Marketing and

Merchandising.

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 Definition of sourcing
Sourcing can be defined as determining the
most cost efficient vendor of materials or
production at a specified quality and service
level.
It is also a more of strategic decision

Other simple definition – the process of

selecting suppliers for manufacturing and
delivering products and their components.
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 The roll of sourcing
Sourcing is a part of strategic business plan
providing directions for the Financial
objectives of the company.
They contribute to key business functions to
materials and production sourcing

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 Make or Buy decision
A basic decision sourcing either materials or
production is whether to make or buy the desired
product.
Situation leading to make or Buy decision
1.Development of new product
2.Need for specialized equipment
3. Unsatisfactory supplier performance
4. Increasing or decrease in demand for a product.

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 Sourcing materials
The following are sourced
1. Sourcing Piece goods.
2. Sourcing material(any material).
3. Sourcing Finished goods.
4. Sourcing production space.
5. Sourcing other resources.
6. Sourcing open stock.

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 Sourcing strategies
• Financial options
• Location options
1.Invest on facility/capacity
2.Purchase material and do manufacture on
contract
3.Purchase the finished goods from
independent supplier
4.Generate part of production
5.License the production.
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 Credibility of the buyer
• Quality
• Cost
• Time
• Relationship

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 Manufacturing resource planning
MRP according to the Association of operations
management is defined as the effective
planning of all resources of a manufacturing
company.
• Men
• Material
• Money
• Time
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 Material Requirements planning to
Manufacturing Resource planning
1. In 1960s, Joseph Orlicky studied the TOYOTA
Manufacturing Program and developed
Material Requirements Planning (MRP)
2. Later Oliver Wight and George Plossl then
developed MRP into manufacturing resource
planning

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 Primary objectives of bothMRP
• Ensure materials and products are available
for production and delivery to customers.
• Maintain the lowest possible level of
inventory.
• Plan manufacturing activities, delivery
schedules and purchasing activities

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 Technicalities of manufacturing
resource planning
It is a software system that uses many forms.
They are modular in construction and usually can
take input in one module and computing
simultaneously in other modules.
On the whole the modules can be classified into
three distinct categories.
1. The primary system.
2. The auxiliary system.
3. Related system.

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 The primary system of manufacturing
resource planning
1. Master Production Schedule (MPS)
2. Item Master Data (Technical Data)
3. Bill of materials (BOM) (Technical Data)
4. Production Resources Data (Manufacturing Technical Data)
5. Inventories and Orders (Inventory Control)
6. Purchasing management
7. Material Requirements Planning (MRP)
8. Shop Floor Control (SFC)
9. Capacity planning or Capacity Requirements Planning (CRP)
10.Standard Costing (Cost Control)
11.Cost Reporting / Management (Cost Control)

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The auxiliary system of manufacturing
resource planning
• Business Planning
• Lot Traceability
• Contract Management
• Tool Management
• Engineering Change Control
• Configuration Management
• Shop Floor Data Collection
• Sales Analysis and Forecasting
• Finite Capacity Scheduling (FCS)
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 The related systems of manufacturing resource
planning
1. General Ledger
2. Accounts Payable (Purchase Ledger)
3. Accounts Receivable (Sales Ledger)
4. Sales Order Management
5. Distribution Requirements Planning (DRP)
6. [Automated] Warehouse Management
7. Project Management
8. Technical Records
9. Estimating
10.Computer-aided design/Computer-aided
manufacturing (CAD/CAM)
11.Computer aided process planning
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 Contribution of Manufacturing resource planning
towards apparel industry.
Manufacturing resource planning systems can provide
• Better control of inventories
• Improved scheduling
• Productive relationships with suppliers
For Design / Engineering
• Improved design control
• Better quality and quality control
For Financial and Costing
• Reduced working capital for inventory
• Improved cash flow through quicker deliveries
• Accurate inventory records
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 Sourcing strategies.

• Most companies simply view foreign sourcing

as a way to save money because these
countries charge considerably less in labour
costs.
• Instead of being viewed as a separate cost-
saving measure, foreign sourcing needs to be
thought of as part of the overall supply chain
strategy of the company.

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 Sourcing strategies are based on

• Location.
• Time.
• Cost.
• Patenting laws.

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 Value Chain

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 Value Chain
• Value chains concept was first proposed by
Michel Porter
Value chain can be defined as
The sequential set of primary and support
activities that an enterprise performs to turn
inputs into value-added outputs for its
external customers.

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 Supply chain
• The optimal flow of product from site of
production through intermediate locations to the
site of final use.
• A supply chain is a system of organizations,
people, technology, activities, information and
resources involved in moving a product or service
from supplier to customer.
• The total sequence of business processes, within
a single or multiple enterprise environments, that
enable customer demand for a product or service
to be satisfied.
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 Demand Chain
Demand chain management is the management
of upstream and downstream relationships
between suppliers and customers to deliver
the best value to the customer at the least
cost to the demand chain as a whole.
Same as supply chain management, but with
emphasis on consumer pull versus supplier
push

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 Materials management for Quick
response.
• This concept was introduced in the Textile and
apparel industry during the late 1985’s it gained
momentum during Kurt Salmon Associates 1990
1. uses a combination of strategies to reduce inventory
levels
2. improve merchandise quality,
3. increase worker productivity,
4. increase stock turnover, and reduce merchandise
markdowns and inventory costs.

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 Quick response
5. Fundamentally, QR is a way to gather
information about consumer preferences and
to reflect them in production decisions in a
timely manner.
6. To comply with consumers' needs, QR relies on
sales data
7. The time-based framework of Quick response
accommodates strategic variability such as
offering custom-engineered product
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 Quick response (contd.)
• Rework, rejections and alterations are reduced
by implementing quick response management.
• With quick response in place companies tend
to manufacture low volumes / Varying volumes
of a particular design or style.
• Companywide approach reaching beyond shop
floor to other areas such as office operations
and the supply chain

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 Quick response (contd.)
• Use of cellular organization structure
throughout the business with more holistic
and flexible cells. Modular manufacturing
system adopted.
• Manufacturing Critical-path Time (MCT)
metric to measure lead times.

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 Changes required in the Organisation
to implement QR
• Functional manufacturing system to modular
manufacturing system.
• Effective top management to empowered
working group or ownership.
• Specialized workers to multi tasking work
force.
• Introduction of Enterprise resource planning
management in the industry.
• Work in the principle of JIS
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 Just In Time
• Just In Time production method is also called
the Toyota Production System.
• In short, the just-in-time inventory system
focus is having “the right material, at the right
time, at the right place, and in the exact
amount”.
• Infrastructure is the back bone of just in time.

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 Elements of concern about JIT
• Environmental concerns
• Price volatility
• Quality volatility
• Demand stability
• Supply Stability

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 Advantages of JIT
• Reduced setup time – example single-minute
exchange of dies.
• The flow of goods from warehouse to shelves
improves.
• Employees with multiple skills are used more
efficiently.
• Production scheduling and work hour
consistency synchronized with demand.
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 Advantages of JIT (contd.)
• Increased emphasis on supplier relationships.
• Supplies come in at regular intervals
throughout the production day. Supply is
synchronized with production demand and
the optimal amount of inventory is on hand at
any time. When parts move directly from the
truck to the point of assembly, the need for
storage facilities is reduced.

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