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Table of

Introduction Denim Industry


01 02
Manufacturing Mih: The Brand
03 04
Supply Chain Logistics
06 08
Mih: Sourcing Raw Materials
12 14
Requirements CofO: Turkey
17 20
Pestel: Turkey Isko Mill
22 25

Fig. 1: Title page


Contents
CofO: Italy Pestel: Italy
26 28
Critical Paths SWOT Analysis
30 32
Conclusion Illustrations
33 34
References Bibliography
36 42
Appendix
54
Sourcing Report

Introduction
The purpose of this report is to investigate the sourcing strategy carried on by Mih
for their denim category. The global denim industry and jean manufacturing have
been explored throughout this report while the variances between market level have
been analysed. Logistics have been discussed to assess SCM efficiencies and Mih’s
sourcing strategies have been explored while requirements to produce Mih jeans at
premium market level have been mentioned. Italy and Turkey have been assessed
through a P.E.S.T.E.L analysis and a scope of each country’s textile and clothing
industr y has been examined to gain knowledge of its capabilities and performance.
Critical paths have been included to show the development of Mih’s denim jean
categor y from point of order to store delivery. Environmental and ethical issues
associated throughout supply chain have also been considered throughout this report.

1
Fig. 2
Sourcing Report

Denim Industry
The denim industry is worth $56.2 billion with United-States and Western Europe
accounting for the largest denim consumption (FashionUnited, 2016). NDP Group, a
consumer research company, reports the fastest growing segment in the denim market
is premium denim (Wang, 2013). Technavio’s market research is projecting the global
premium denim jeans market growth at a compound annual growth rate (CAGR) of 8.09%
from 2016 to 2020 (Apparel 2016). The denim industry is growing with brands proposing
new fabric innovations while quality and ethical factors are to be covered (Wang, 2013).

Trickle Up Theory
Jeans were first introduced to the market with the intent
to provide functionality to miners during the Gold Rush.
Today, jeans are a mass consumpion accross the globe.
Social and cultural context (ie. 70s era) drive the commerical
market to produce innovative cuts, styles and fits.

Fig. 3 2
Sourcing Report

Manufacturing
According to Just-style, there are 500 ‘substantial’ denim mills in the world with
more than 50% of the weaving capacity done in China, India, Pakistan and Japan
(JustStyle, 2016). China is dominating the global jean manufacturing market
accounting for nearly 40% of global production while the US and Europe are the largest
importers of jeans (JustStyle, 2016). Europe mainly imports from China, Turkey and
Bangladesh while the US imports mostly from China and Mexico (JustStyle, 2016).

Refer to figure 4 below for a breakdown of denim mills around in the world:

Country/Producer Denim Mills


China 300
Asia: mostly India and Pakistan 100
Europe 40
South America 40
North America 10
Rest of the World 10
Total Denim Mills in The World 500

Fig. 4: Denim mills around the globe (JustStyle, 2016)

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Sourcing Report

Mih: The Brand


Mih is a London based brand founded in 2005 by Chloe Lonsdale. The eclectic
brand uses denim to embody the free-spirit of the wearer (Grosso, 2015).
They provide a vintage aesthetic with an authentic 70’s heritage. The brand
values design and innovation in their premium denim while taking an ethos
approach as they want the denim to sync with the wearer ’s personality.

“ We create collections that embody the


relaxed, assured spirit of blue-jean culture,
products that people live in, that evolve with
them.” (Carlson, 2016)

- Chloe Lonsdale

4
“ The next step is to
really cement our identity
and amplify our message
through innovative
marketing projects,
inspiring collaborations,
retail concepts [...] and
select global distribution.”
(Field, 2017)

Fig. 5 - Chloe Lonsdale


Sourcing Report

Supply Chain
A s u p p ly c h a i n i s t he p ro ce ss t hroughout the de velopment of goods start i n g
f ro m ra w m ate ri a l s to p o i nt- o f- sa le. The supply c hain is a complex process th at
va r i e s ba s e d o n a reta i l e r ’s st rateg y and their market le vel. The retailer m u st
ac kn o w le d ge d i ffe ri ng t i me zo ne s, c ultural conditions and location of supplie rs
to d e v e lo p e ffi ci e nc y t hro ug ho ut all processes of the supply c hain. Evolvi n g
te c h n o lo g y ha s a l l o w e d i m p ro vements within supply c hain manageme nt
creat i n g o pt i ma l p e rfo r m a nce (Mic hel, 2017). According to Robert Sc hneide r,
m a n a gi n g p ri nci p l e o f I SO r i sk m anagement , offshore manufacturing and glo ba l
o u ts o u rc i n g t re nd s a re ca usi ng businesses to implement risk manageme nt
te c h n o lo g y fo r reg ul ato r y co m p l i ance and to minimise risk of reputation issue s
(S c h n e i de r, 2 0 0 8 ). Acco rd i ng to Tue Deleuran, founder of RTG Group, the c lo s e r
th e fa cto r y is, t he m o re a cce ssi b l e it is to oversee production (RTG Group, 2016 ) .
Th e re a re ma ny va r i a b l e s to ta ke into account when a brand’s supply c h a i n
in v o lv e s ta ki ng b usi ne ss o ffshore. These variables inc lude: quality an d
d e li ve r y ( Fe rni e , et a l ., 2 0 0 9 ). D elays in port entr y, last minute logistic costs ,
l ea d t i m e s a nd hum a n co sts (unethical conditions) must also be considere d
(Fe r n i e , et a l ., 2 0 0 9 ). Furt he rmore, there may be language barriers s o
co m m u n i cati o n m et ho d s must be considered when outsourc ing to ens u re
ef f i c i e n c y t hro ug ho ut all p ro cesses done with suppliers (Pierce, 201 1 ) .

6
Fibre
Yarn
Fabric

Garment manufacturing
Cut-Make-Trim

Warehouse Retailer Consumer


Fig. 6: Basic jean production process

“ Everyone is looking for increased transparency, shorter lead


times, and more flexibility, and the next big thing will be increasing
productivity. All of that you can only change if you collaborate with
a smaller number of vendors, and it is digitisation that will make
that entire process more efficient.” (Twigg, 2017)
- Achim Berg, co-leader of McKinsey’s global apparel, fashion and luxury practice
Sourcing Report

Logistics
i. Transportation
Transportation highly affects production costs particularly for companies that work with
multiple suppliers from around the world (Handfield, et al., 2011). The retailer usually pays for
the freight of goods entering their warehouse unless terms are negotiated with the supplier.
Since the buyer assumes liability, it is important that they ensure the products arrive in the
right place, at the right time and for the right price. The management of transportation can
often become complex within the sourcing strategy. According to Toby Brzonznowski, CEO
of LLamasoft, Transportation Management Systems (TMS) are used to create a digital model
in supply chains which adds transparency and effectively predicts the impact of all elements
related to cost factors (Beckwith, 2017). Furthermore, ensuring efficiency throughout logistics
is important in order to meet the critical path lead times and ultimately, customer satisfaction.

“ Without a strategy, supply chain and transportation run the risk of


becoming cost centers that can negatively impact a brand." (Bowers, 2017)
- Andrew Lynch, CEO of Zipline Logistics

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Sourcing Report

ii. Packaging & Labelling


Retailers often give suppliers packaging requirements and get them to package their
goods for shops. The retailer is responsible for complying with Europe packaging
standards in order for products to be imported. Since denim is sensitive to ultra-violet
light, UV-resistant polybags are often used to preventative fading in the jeans (CBI, 2017).

Textile products being imported into Europe, must have labels. The labels must include:
fibre names, percentage of fibre composition, size of garment and the country of origin (CBI,
2017). European companies commonly use the International Association for Textile Care
Labelling’ system to provide instructions on how to maintain the denim garment (CBI, 2017).

iii. Distribution
Goods are shipped to a distribution centre where the merchandise is than inspected
for damages, packaged and organised for their designated store (Cash, et al., 2006). The
improvements in IT capabilities allows for efficient ordering and distributing (Cash, et al., 2006).

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Sourcing Report

Mih’s warehouse and distribution centre is located at Vulcan Way, Magna Park, Lutterworth
LE17 4XR, UK. Mih work with CML, a supply chain service company, to ensure quality
assurance is in place between all distribution channels including e-commerce (CML, 2015).
The brand has a large online presence and sell their denim product globally with over 130
stockists (see appendix A). The brand is sold in multiple countries around the globe including:

• United Kingdom • Russia


• Canada • Saudia Arabia
• Germany • South Korea
• Australia • Sweden
• Belgium • Switzerland
• France • Turkey
• Greece • Ukraine
• Indonesia • United Arab Emirates
• Irland • United States
• Norway

10
“ CML’s warehouse and distribution
operations ensure flexibility to achieve
our customers’ individual requirements.
Our full spectrum of distribution and
transportation solutions range from
timed consumer parcel deliveries to
direct DC deliveries and retail store
deliveries.” (CML, 2018)
- CML Experts
Sourcing Report

Mih: Sourcing
Mih works closely with six mills across Italy, Japan and Turkey to produce denim that
meets style and fit specifications (Christie, 2016). Since the brand is positioned in the
high market level, they work to establish strong relationships between suppliers to
ensure quality standards are being met (see appendix A). The Mih development team
visit their Italian suppliers every season to be a part of the laundering process and
ensure fit and washes meet standards (Mih, 2017). The relationships built between
the brand and their exclusively chosen suppliers allows transparency throughout
the supply chain and minimises risk. Lead times and minimums are closely sought
out when working with suppliers across their supply chain (see appendix A).

Innovation is a part of Mih’s sourcing process as they develop denim fabrics specifically
for their jeans. The brand cares about the quality of workmanship behind their jeans as
they prioritise quality over cost (Schuessler, 2016). They directly source their fabrics and
collaborate with denim washing companies that minimise water waste (Singer, 2017).

“We always prioritise quality as we want our jeans to


fit immaculately and last for ages.” (Schuessler, 2016)
- Chloe Lonsdale

12
Fig. 7

“ There are patented fabric innovations that we use


from the best denim mills in the world that help the denim
retain its shape and create shape on the body while still
looking like authentic jeans. These technological and
innovative denims are certainly more expensive than the
regular 100% cotton denims.”(Schuessler, 2016)
- Chloe Lonsdale
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Sourcing Report

Raw Materials
The supply of raw materials need to be strategically planned in order for the
manufacturer to start producing units during the planned timeframe on the critical
path as production cannot begin until the manufacturer recieves all required
materials (Cooklin, 2006). The following materials are needed to produce jeans:

i. Cotton
Denim is a material comprised of 100% cotton. Upland cotton is the most common
type of cotton used in denim jean production (Black, 2008). According to denim experts,
the way cotton is picked and processed highly effects fabric quality (Bojer, et al., 2016).

Top Countries for the Production of Cotton (Bojer, et al., 2016):

• China • Brazil
• USA • Turkey
• India • Australia
• Pakistan

Cotton farmers in America use industrialised mechanical processes to maximise


production efficiency since demand for USA cotton has spiked (Black, 2008). The
farmers can expect the added beenefit of lower costs since less human labour is
needed during these industrialised processes. Developing countries with farming on
a smaller scale such as India and Africa, tend to use manual methods (Black, 2008).
The production of cotton highly impacts the environment. According to WWF, it takes

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Sourcing Report

20,000 litres of water to produce 1kg of cotton , causing concern towards the wellness
of the environments in which clothing and textile farming take place (BOF, 2015).

Conventional Cotton vs. Organic Cotton


Conventional cotton uses pesticides and insecticides to increase quality and efficiency
of cotton farming (Black, 2008). West Africa uses a chemical called ‘Clorpyrifos’ in
cotton farming which is known to cause brain damages (Ethicalfashionforum,
2017). According to a report conducted by WHO, FAO and UNEP, pesticides and
insecticides endanger agricultural workers with at least a million workers seeking
medical attention each year (Ethicalfashionforum, 2017). Furthermore, chemicals
travel into waterways, contaminating drinking water. Studies have detected
contaminated waterways in countries such as; USA, Uzebekistan (Turkey), Brazil,
Greece, India and Africa (Ethicalfashionforum, 2017). According to Organic Exchange
, USA, Turkey and India are top producing countries of organic cotton with Pakistan,
Uganda, Peru, Mali and Tanzania to follow on a smaller scale (Black, 2008).
M.i.h sources their cotton from a variety of suppliers located around the
world that are BCI certified (Singer, 2017). Better Cotton Initiatives tackle
social and environmental issues in the global textile industry. They work
lower the usage of pesticides in cotton farming and strive to implement safer
working conditions (BCI, 2017). According to Mih experts, their recommended
countries to source cotton from are: USA, Egypt, Pakistan and Africa (Mih, 2017).

Blended Cotton
M.i.h uses denim that is blended with Lyocell/Tencel, Polyester, Polyurethane/
Elastane and Elastomultieser depending on the functionality of the jean.

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Sourcing Report

ii. Trims & Finishes


Mih source all of their denim trims from Turkey (see appendix A). This includes: (1) branded
rivets, buttons and zippers, (2) cow leather patches, (3) thread and (4) fabric content
tags and swing tags. Raw materials used to achieve desired washes and finishes on Mih
jeans may include: enzyme or pumice stones for abrasion, sandpaper and wire wool for
distress as well as the use of approved chemicals, bleaches, tints and dyes (Mih, 2017).

“Being a leading responsible textile


mill it is imperative that sustainability of
the raw materials industry, particularly
cotton, is ensured both locally and
globally. Better Cotton provides a
desirable option for the wellbeing of
all supply chain actors, and ultimately
benefits business and society.” (BCI, 2017)
- Bashir Ali Mohammad of Gul Ahmed Textile Mills Ltd

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Sourcing Report

Requirements
i. Manufacturing
Mih jeans require a highly skilled labour force during all production phases of their
premium denim to ensure their standards of craftsmanship, design and innovation
are met. Innovation through fabric technology is something that the brand holds
as a competitive advantage so it is imperative the fabric mills are technologically
advanced. The supplier must be experienced with producing premium denim
jeans and have a skilled labour force for CMT. According to Chloe Lonsdale, the
manufacturing process can become costly if extra care is being considered because
of the hours that the workers put into the garments assembly (Schuessler, 2016).

“The fit is the most important thing, and it is


affected by two things: the patent (or cut), and the
quality of the denim itself.” (Design Bureau, 2011)

- Chloe Lonsdale

17
The quality of the stitching and seams is critical in the development of quality
jeans so the supplier must have a skilled manual labor force that can use industrial
sewing machines and stitch required seams (i.e flat felt seam). Furthermore, a
highly skilled manual labour force is needed for washes, finishes and design
detailing. The distressing, sandblasting and whiskering effects created on Mih
denim jeans are all done by hand to provide an authentic worn-in look (Mih, 2017).

“You can tell when jeans are of the best quality in


everything, from the finish of the fabric to the length
of the top stitch” (Design Bureau, 2011)
- Chloe Lonsdale

ii. Ethics
The global denim industry has proved labor injustice throughout the supply chain. Cotton
picking and finishing methods such as sandblasting have been the cause of recorded deaths
due to inadequate safety measures (Tsai, 2017). Poor management within facilities create
these issues so it is imperative that the brand builds a relationship with their manufacturing
for transparency and ensures all participating parties have respectable standards.

18
“We use vary high-quality
denim. Denim wasn’t traditionally made
to stretch, and that’s the success of MiH
denim. This quality of weave and the
quality of product.” (Schuessler, 2016)
- Chloe Lonsdale
Sourcing Report

Country of Origin:
Turkey
International brands began sourcing products from Turkey in the mid-1980s (Cochrane
& Flusfelder, 2011). The Turkish Ministr y of Economy estimates Turkey exported £13.4
billion of apparel goods in 2015 (Bearne, 2017). They currently have over 11,000 clothing
manufacturers (Fashion Design Solutions, 2016). The countr y is known for offering a full
range of manufacturing processes including; cotton growing, spinning, manufacturing,
and garment making (Textile Exchange, 2013). Turkey is composed of many large-scale
companies that have integrated facilities. These mills work through ever y step of the garment
production process from fibre processing to finishes and are mainly located in Istanbul,
Bursa, Kahramanmaras, Adana and Gaziantep (Ministr y of Economy, 2016). For small-scale
companies, non-integrated production facilities cooperate with Turkey’s finishing industr y
(Ministr y of Economy, 2016). Turkey manufacturers are known to offer low minimum order
quantities (MOQ) (Fashion Design Solutions, 2016). This is an advantage for Mih because
it allows them to test the market with new styles and limits their risk of over stock.

Turkish manufacturers can offer fast deliver y times, allowing buyers to quickly replenish
high turnover stock (Bearne, 2017). Sourcing within an accessible radius allows a

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Sourcing Report

company to be proactive with quality control. Since Turkey is close to the EU, this gives
Mih the advantage to make more frequent visits to their suppliers for quality assurance.
Furthermore, Mih is reducing their carbon footprint by sourcing out of Turkey verse
another countr y in a larger radius to their warehouse (Textile Exchange, 2013). The logistics
behind Turkey’s export Is that they have a strategic location with free-trade between the
EU markets, lowing the overall production cost of Mih’s goods (refer to pestel on page 22).

The Turkish Clothing Manufacturers’ Association (TCMA) has estimated their denim sector accounts
for $1.6 billion of their apparel exports (Cochrane & Flusfelder, 2011). Turkey manufacturers are
known to specialise in denim (Cochrane & Flusfelder, 2011). The Turkish garment and textile
industry has a competitive advantage on an international scale in terms of the technology,
innovation, quality and design (Textile Exchange, 2013). These capabilities are critical for
Mih when they outsource suppliers since they have to meet high market level standards.

“If you want to do jeans, Turkey is famous for


jeans.” (RTG Group, 2016)
- Tue Deleuran, founder of RTG Group

21
Political
Turkey
• The EU and Turkey customs Union have an agreement in place for free movement of goods (Deliotte,
2014)
• The Ministry of Economy states that Turkey has Free Trade Agreements with 19 countries (Deliotte, 2014).
These zones permit corporate, customs and income tac, VAT and RUSF exemptions (Deliotte, 2014)
• In 2012, According to TCMA, the Government of Turkey announced an insurance incentive scheme for
garment manufacturers. Investments made January 1, 2012 and onwards, the government will employee
insurance costs on minimum wage for 10 years (Kariyo, 2012)

Economical
Turkey
• The Turkish economy is heavily dependent on UK fashion retailers as Turkey account for majority of the
UK’s imports (Bearne, 2017)
• In 2014, Turkey was ranked 4th largest labour force compared to 27 EU countries with roughly 28 million
people making up their labour force (Gov Uk, 2014)
• In 2015, Turkey accounted for 16.7% of the EU’s total textile imports and 11.7% of clothing imports
(Fashionating World, 2017)
• Today, Turkey’s labour force is growing with around 30.5 million workers and is the 3rd largest labour
force compared to EU countries (Invest, 2017)
• In 2016, TurkStat, Government statistics, recorded the country has the largest youth population
compared to EU countries with half of Turkey’s population is below the age of 31 (Invest, 2017)
• Current minimum wage is 1,777.50 liras ($516 US) and has increased by roughly 8% from 2016 where the
minimum wage was 1,647 liras ($478 US) (Donaldson, 2017)
• Textile and clothing industry accounts for 7% of Turkey’s GDP, one of the largest sectors performing in the
Turkish economy (Fibre2Fashion, 2017)
• According to Yusuf Gecü, chairman of Merter Industrialists’ and Businessmen’s Association, Turkey’s
textile and apparel sectors export $30 billion annually (Friedman, 2017)
• Time zone: GMT +3 (Invest, 2017)

22
Social
Turkey
• Research and development grants are distributed with the highest expenditures in the higher education
sector (Deliotte, 2014)
• Turkish supply chains cause concern with the vast employment of illegal immigrants (Uysal, 2017)
• Roughly 650,000 Syrian refugees are working in Turkey with majority illegally employed a part of a
garment manufacturing workforce. Turkey has banned children under the age of 15 from working, but
violations have been recorded and child labour is a current crisis (Reuter, 2017)

Technological
Turkey
• Turkey produces technical fibres including; waterproof, windproof, breathable, flame retardant,
antibacterial fabrics and garments, tire cord fabrics, military and protective wear (Ministry of Economy,
2016)

Environmental
Turkey
• They are known for the producing organic and conventional cotton and according to Textile Exchange,
they are ranked second in the world for producing organic cotton (Textile Exchange, 2013)
• BCI - IPUD Turkey is responsible for implementing the BCI Standard System and is responsible for
communicating sustainable Turkish cotton initiatives throughout multiple sectors including; farmers,
agricultural sales unions, manufactures and other industry players. (BCI, 2017)

Legal
Turkey
• Use of carcinogenic dyes (Azo dyes) are banned in Turkey & Europe (Fashion Design Solutions, 2016)

23 Fig.8: Pestel - Turkey


Fig. 9

“ We’ve been working closely with


our favourite denim mill, Isko who
are brilliant at finding solutions to
any problems we bring them.” (MihJeans, 2014)

- Mih Expert
ISKO ™

One of the denim mills that Mih currently do business with is ISKO™ located in
Turkey. ISKO™ works with premium denim brands around the world covering over
35% of the global premium denim market (Rooney, 2014). Mih and other brands
seeking premium jeans do business with ISKO™ since innovation and technology
are key components in the mill’s manufacturing strategies (Rooney, 2014).
Furthermore, the mill adheres to sustainable practices in fabric production and
works with Better Cotton Initiatives (Isko, 2017). The ISKO REFORM™ technology
that Mih use in their bodycon collection reduces the need for frequent washing
as it retains its shape. Therefore, saving on water consumption (Isko, 2017).

25
Country of Origin:
Italy
Italy is ranked 3rd for textile and clothing exports in the world while India and China are
above (Fibre2Fashion, 2017). The countr y’s manufacturing sector is the 2nd largest in Europe
(Gov Uk, 2015). According to OEC 2016 stats, the UK is a top export destination for Italy with
$24.9 billion out of $455 billion of total Italian exports (OEC, 2017).The textile industr y is an
important part of the economy so the Italian government has put focus on furthering the
development of infrastructures within industries for innovation. Italy exports $9.2 billion US
in textiles and $22.8 billion US in clothing (yarnsandfibres, 2009). Italy is widely known for
having a strong reputation with large designer brands producing ‘Made In Italy’ garments
with majority of industrial districts located in Biella, Carpi, Castel Goffredo, Como, Prato
and Vicenza (yarnsandfibres, 2009). ‘Made In Italy’ labels could entice Mih consumers to
purchase goods with the perception of quality and innovation reflected into the denim goods.

Quick Response (QR), customization and innovation are all main assets carried out by
Italian factories (yarnsandfibres,2009). Mih and other brands working with suppliers using
QR systems, could expect efficiency throughout business. QR allows the retailer to increase
their profitability, reduce production time and lower inventories (Fernie, et al., 2009).

Italy is an exporter of premium denim (Agarwal, 2013). TRC, Ital, Gentex and CDI
Parras are a few of their denim mills (DJ, 2017). High labour costs are associated with
outsourcing from Italy with high-quality textile and garment production, high-tech
processes, and/or design as the countries manufacturing strengths (Shaw et al., 2017).

26
“ We get the denim from Italy because we used
to get it from them in the ‘70s and I think they’re
one of the best mills in the world. I spend a lot
of time in Tunisia. I work on the factory floor and
in the wash houses. I go to Istanbul to do that.
And ecologically, ethically, they have very high
standards, which is really important. The carbon
goes neutral, the working conditions – I think it’s
better than in my office sometimes!.” (Krentcil, 2007)
- Chloe Lonsdale
Political
European Union
• Free movement of goods for internal markets (EU) (Gov Uk, 2015)

Economical
Italy
• 9th largest economy in the world and 3rd in Euro Zone (Taborda, 2017)
• Median age in Italy: 46.3 (worldometers, 2017)
• Italy’s manufacturing sector is the 2nd largest in Europe (Gov Uk, 2015)
• Current population: 59, 328, 650 based on united nations estimates (worldometers, 2017)
• Italian Ministry of Economic Development launched ‘Industry 4.0’ in fall 2016 which
communicates the countries ambition to generate billions of dollars for R&D through a
series of public and private sources (ITA, 2017)
• GDP - industry & services is expanding while agriculture has declined (Taborda, 2017)
• GDP from manufacturing 2017: 69, 269 [EURO Million] (+1060.2) compared to: 2016 at 68,
208.8 [EURO Million] (Taborda, 2017)
• Export of goods and services account for 30% of GDP while imports of goods account for
27% (Taborda, 2017)
• September 2017 - 4% growth rate in GDP, Q3 ended at 5% (trading economics, 2017)
• Economy experiences the fastest growth rate since 2011, (+1.8% year on year) (Taborda,
2017)
• Domestic demand and rising export grows Italy’s GDP, ultimately strengthening the econo-
my (Taborda, 2017)

Social
Italy
• Prato, Italy has the largest Chinese-run facilities in Europe with over 50,000 Chinese
immigrant workers. Manufacturing facilities have been accused of Illegal migrants working
in poor conditions that don’t comply with health and safety rules (theguardian, 2016).
28
• Italy does not have a government regulated minimum wage, leading to higher levels of
unemployment (Hanke, 2014)

Technological
Italy
• According to Michele Scannavini, president of Italian Trade Agency, Italy’s advancing in
manufacturing, machinery and robotics. 40% of Italian manufactures use 3D printers for
prototypes and 25% of Italian manufacturers use robotics throughout manufacturing
processes (ITA, 2017)

Environmental
Italy

• Italy is a net importer as the country has no major deposits of natural resources such as;
oil, minerals or coal. 80% of energy raw materials are imported (Smith, 2015)
• The country is known for their environmentally efficient manufacturing systems (ITA, 2017)
• Air pollution and industrial waste are two major environmental concerns for Italy (Smith,
2015)

Legal
European Union
• Sand blasting is prohibited in Europe due to health hazards (CBI, 2016)
• The EU requires fibre composition on garments being imported. This includes: fibre
percentages, size and country of origin (CBI, 2016)
• Goods imported into the EU must comply with ‘Registration, Evaluation, Authorization and
Restriction’ (REACH) regulations (ECA, 2017)

Fig. 10: Pestel - Italy


29
Turkish
Japanese Fabric Mill Mih Jeans Garment Manufacturer

Purchase order sent to Purchase order sent to


garment manufacturer for fabric mill for denim; trims
units ordered; packaging and
labels ordered

Bulk wash standard Pattern & grading: size sent


approval to retailer for approval

Wash standard &


grading approval

Fabric arrival
& inspection; recieve trims,
packaging & labelling;
markers / lay plan

Follow up with
manufacturer to ensure all
materials were recieved to CMT; send to laundry
proceed with manufacturing [washes & finishes]
Send denim materials to
garment manufacturer
Quality check [seams, thread,
alignment and fit]; steam and
package for distribution

Note: Transport goods by truck


to London, UK
This critical path is constructed
2 weeks

based on the manufacturer


Goods recieved in
having their own laundry room to warehouse; quality
complete washes check [AQL]; package
and organise goods for
designated store
Fig. 11: Critical path - Turkey
Italian
Turkish Fabric Mill Mih Jeans Garment Manufacturer

Purchase order sent to Purchase order sent to


garment manufacturer for fabric mill for denim; trims
units ordered; packaging and
labels ordered

Bulk wash standard Pattern & grading: size sent


approval to retailer for approval

Wash standard &


grading approval

Fabric arrival
& inspection; recieve trims,
packaging & labelling;
markers / lay plan

Follow up with
manufacturer to ensure all
materials were recieved to CMT; send to laundry
proceed with manufacturing [washes & finishes]
Send denim materials to
garment manufacturer
Quality check [seams, thread,
alignment and fit]; steam and
package for distribution

Note: Transport goods by


truck to London, UK
This critical path is constructed
2 weeks

based on the manufacturer having


Goods recieved in
their own laundry room to warehouse; quality
complete washes check [AQL]; package
and organise goods for
designated store
Fig. 12: Critical path - Italy
S


The brand sources within the EU so imports
are duty free tax which lowers the cost of
their goods (Gov Uk, 2015)
The short proximity between retailer and
W • They use pumice stones in denim washing,
an unsustainable material since stones are
removed from their natural habitats and it
supplier allows the retailers to physically
becomes waste sludge (Black, 2008)
oversee productions for ethics and quality
• The countries that manufacture Mih jeans
assurance. The development team travels
(Italy and Turkey) are known to have ethical
seasonally to ensure high standards are
issues regarding labour displacement (refer
being met (refer to appendix A)
to pages 23 and 28). These issues could
• Denim mills (Japan, Turkey and Italy) have a
effect the brand’s supply chain if suppliers
reputation for producing premium denim
are not transparent (ie. sub-contracting)
• Both countries of origin (Italy and Turkey) are
technologically advanced with reputations
of manufacturing premium denim

T
• The brand works with suppliers adhere to
Better Cotton Initiatives (BCI). These ethical
behaviours are a reflection of the brand
image • According to International Cotton Adviso-
• The brand produced Innovative fabrics that ry Committee (ICAC), the increase of cotton
are patent protected, creating a competitive demand spiked causing a shortage in cotton
edge supply therefore, costs increased (Donaldson,

O
2016). It is argued by the U.S Department of
Agriculture (USDA) that the worlds cotton con-
sumption could be higher than supply (Donald-
• Technavio’s market research is projecting son, 2016). If this is the case, denim buyers will
the global premium denim jeans market will experience cost pressures in the supply.
grow at a compound annual growth rate of • Office for National Statistics (ONS) states import
8.09% from 2016 to 2020 with sustainability costs for clothing retailers have a consistent rise
and innovative fabrics as a main driver of 4.6% (BBC, 2017). These rises may affect the
(Apparel, 2016) cost of goods being sold since margins are to be
• Laser Technology, G2 Dynamic Ozone and considered.
E-flow are technological advancements
produced by Jeanologia that take ethical
steps in the denim production process
(InterregEurope, 2017)

32
Conclusion
Mih compete in the premium denim market with their innovative fabrics and
craftsmanship. They take necessary steps to ensure quality throughout all stages.
Transparency throughout supply chain management is imperative in order
to comply with ethical standards. Workforce displacement from low wages,
long working hours and health and safety are common ethical concern that
companies face when doing business offshore. Furthermore, the global denim
industry impacts the environment, effecting the livelihood of many (ie. denim
production results in high levels of water consumption). Since sustainability is a
main factor in Mih’s sourcing strategy (see appendix A), the brand must be aware
of all processes throughout supply chain and logistics to meet their mission.

33
Illustrations
Figure 1: MIHJEANS., 2017, The definition of a cult jean [Instagram]. 27 April, 2017. Available at: https://www.
instagram.com/p/BTZHg3sDjdW/?taken-by=mihjeans [Accessed 15 January 2018].

Figure 2: Charchian, A., 2018. Cult project [digital image]. Available at: https://www.mih-jeans.com/cult-
jean-project [Accessed 15 January 2018].

Figure 3: MihJeans, 2018. Niki Jean [digital image] Available at: https://www.mih-jeans.com/womens-jeans/
niki-jean-paz.html [Accessed 16 January 2018].

Figure 4: Just-Style, 2016. Global market review of denim and jeanswear - forecasts to 2021. Aroq Limited.

Figure 5: MIHJEANS., 2015, Tomboy Tailoring [Instagram]. 19 September 2015. Available at: https://www.
instagram.com/p/7znH9Pj2Om/?taken-by=mihjeans [Accessed 15 January 2018].

Figure 6: Basic jean production process (Authors Own, 2018)

Figure 7: MihJeans, 2018, Marty Jean [digital image]. Available at: https://www.mih-jeans.com/wom-
ens-jeans/marty-jean-2e590a.html [Accessed 15 January 2018].

Figure 8: MihJeans, 2018, Marty Jean [digital image]. Available at: https://www.mih-jeans.com/wom-
ens-jeans/marty-jean-2e590a.html [Accessed 15 January 2018].

Figure 9: Pestel - Turkey (Authors Own, 2018)

Figure 10: Pestel - Italy (Authors Own, 2018)

Figure 11: Critical path - Turkey (Authors Own, 2018)

Figure 12: Critical path - Italy (Authors Own, 2018)

35
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52
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53
Appendix
A p p en d i x A : Q&A

A conversation on Linkedin was held between


a senior production manager and myself.
The purpose of this conversation was to gain
industry knowledge behind Mih’s denim
55 sourcing strategy.
Appe n dix B : D en i m Ex p er t I n ter vi ew
M.i.h Jeans Research Questions | Nottingham Trent University | 21 October 2017

Interviewer/Student: Samantha Maciel

Interviewee: Jodi - Denim sales specialist at Selfridges (+3 years), London

What are your best selling jeans?

“M.i.h is known for their bell and thick fabrics. Our best selling jeans right now are the mom jeans. Women come here
asking for these jeans all the time.”
(Phoebe Boyfriend Jean - Yoshida wash)

The M.i.h wall merchandising has a ton of high rise skinny units in an assortment of washes, colors and
trimmings. Is there a reason why M.i.h didn’t put their mom jeans on the wall?

“They tend to put their top sellers on the table because people tend to go towards the tables rather than the walls. The
skinny jean is popular amongst all these denim brands right now.”

During my secondary research, I found that J Brand and Frame were main competitors. With your
experience in the denim department, would you say that the woman shopping for M.i.h look at the CofH
and 7 For All Mankind?

“Honestly, they don’t. Frame is a huge competitor to them and everyone looks at J Brand.”

How do you think the brand M.i.h can improve their customer experience?

“They need to have more fits for a wider range of body types to compete with their competitors.”

Do you think a maternity range would be a good idea?

'Absolutely! J Brand already has one.”

Do you think that M.i.h would gain more exposure if they open a stand alone store in London?

“Yes, definitely! They should have their own store because we get customers coming here asking for products with pho-
tos off the internet and the problem with that is, we are limited with stock. If M.i.h have their own store, a wider range of
stock will be offered to customers. We are limited with what we carry here.”
56
How old is your average consumer and where do they travel from to shop here at Selfridges for their den-
im?

“ Women 30-40. We don’t see younger than that shopping here. It could be because the price points are high. I would
say a lot travel from South Kensington, but also all around other parts of London.”

57
P
Appendix C: The Denim Retail Industry

European Union, Turkey


• The EU and Turkey Customs Union have an agreement in place for free movement of goods
(Deliotte, 2014).

International

E
• Producing jeans in countries that have an abundance of water resources results in higher costs
and higher retail prices (WSGN, 2015).
• The United States accounts for $13.7 billion in denim sales making them the largest international
competitor. Western Europe is the secound largest with $10.4 billion in sales (FashionUnited,
2016).

United Kingdom
• Unemployment rate is set to increase due to less jobs. It is projected to rise from the 2017
unemployment stat of 4.7% to 5.4% in 2018 (BBC, 2017). The result of fewer working citizens will
affect consumer spending habits within the UK due to potential less disposable income.
• The rise in inflation while wages are stagnate result in higher cost of living within the UK (BBC,
2017). A customer’s buying decision can be deeply affected by this if their annual income is
lower than their expected expenses . Ultimately, this can drive consumers to shop for discounted
merchandise.
• Office for National Statistics (ONS) states import costs for clothing retailers have a consistent rise
of 4.6% (BBC, 2017). These rises may affect the cost of goods being sold since margins are to be
considered.

S International
• Technavio’s market research is projecting the global premium denim jeans market will grow at
a compound annual growth rate of 8.09% from 2016 to 2020 because of athleisure trends and
sustainability demands (Apparel, 2016).
• An in-depth market analysis conducted by industry experts argues that innovative features in
premium denim jeans will cater to female consumer demands. These features includes: anti-
odor, windproof lines and heat technology (Apparel, 2016).

58
T
International
• Laser Technology, G2 Dynamic Ozone and E-flow are technological advancements produced
by Jeanologia that take ethical steps in the denim production process. Laser technology and
G2 Dynamic Ozone both diminish the physical strains of manual scraping to produce effects
on denim. G2 Dynamic Ozone technology adds bleached effects without the use of any
chemicals (Russell, 2015). E-flow is a less water intensive technology where chemical products
for finishes get into contact with wet air to form micro-nano bubbles that go onto the prod-
ucts fibres (InterregEurope, 2017).

United Kingdom
• The UK is ranked 3rd in the world as an online exporter with their main customers being
from China. Paypal analysts warn UK government that International online consumers are
less likely to purchase products if return charges seem high and/or costly delivery charges.
Foreign buyers are aware of international holidays are are likely to purchase during seasonal
promotions on UK sites (Sabur, 2015).

E International
• Denim production results in high levels of water consumption. According to WWF, it takes
20,000 liters of water to produce 1 kg of cotton (BOF, 2015). Higher regulations could
minimize the depletion of clean water in countries with limited water supply (Pratt, 2017). If
these regulations come into account, it will increase production costs (WGSN, 2015).

L International
• Transparency with corporate social responsibility to legal approaches such as Fairtrade
is important as a lot of companies use denim manufacturing facilities with poor working
conditions (Carter, 2008).

59
Samantha Maciel | N0722934
Retail Buying | FASH30110 | Sourcing Report
Word count: 2,739

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