Session 12

Vendor Selection and

Development

Sourcing Options
Internal Manufacturing
Adv-Control, Quality, Response
External Manufacturing
Approaches-CMT and Full package
CMT/Off-shore assembly/807

Parameters Beyond Pricing

Strategic SourcingLeveraging Supply Base

Strategic Focus
Reduce Total
Cost of Ownership (TCO)
Total Cost Focus
Reduce Purchase Price
Price Focus

Retailers are Looking to work

differently with Suppliers

From
Transactional
relationships
Many Vendor
Relationships
Fragmented Sourcing
Numerous Vendors

To
Strategic Long term
Relationship
Consolidated vendor
base
Commit to Large volume
orders
Greater Operational
Efficiency
Full Package Suppliers

Supply Chain Partners/Service

Providers
Now Suppliers play increasing role across the Supply Chain
Consumer Research

Supplier

Demand Forecasting

Supplier

Designing

Supplier

Merchandise Planning
Production/CMT

Supplier

Warehousing

Supplier

Logistics

Supplier

Retail Sales

Percentage of Volume Sourced

Past

Transaction
al Vendor
Relationship
s

Future

20%

90%

Strategic Partners
80%

Strategic Partners10%

Transactional
Relationships

So What Does it Mean for the

Suppliers?
Traditional
Competencies

Price
Quality
Design
Lead Time
Transactional
Relationship
Bulk Order Quantities

New Competencies
Required
Value
Service
Innovation & New
Product Development
Cycle Time Reduction
Strategic Partnership
Order Flexibility

Factors in Sourcing decisions

Cost Elements
Capacity
Minimums/MOQ
Labor Skills and Equipment Assessment
Infrastructure
Throughput time/lead time
Quality
Competition
Distance
Government regulations
Duty
Special trade agreements
Political and Economic Environments
CSR/Social issues

Buyers look for...

Essentials
Manage whole production process
Conform to ethical standards
Source other processes
Ship on time, in ratio and required quality

Desirables
Local integration
Short lead times

Buyers look for...

Nice- to- have
full complement of trim locally available
factories who can do a full package

Individual preferences
language of business
convenience of manufacturing location

Successful Buyer-vendor
relationship
Is based on Merchandise suitability
Meeting store merchandise policies
Production capacity
Distribution policies (concept of selective
distribution)
Production to specification

Benchmarking
How does it help in vendor selection and
analysis?

References
1)Chapter 10-Sourcing Strategies,
Book-Apparel Merchandising-The line
starts here by Roseneau and Wilson
2) Chapter 9-Analysing and Selecting
Resources
Book-Fashion Buying by Elaine Stone