Following my findings, I have decided to use the following countries to source from:
• India
• Romania
• China
• Mauritius

China
China is the world’s largest textile and clothing manufacturer in the world. There are around 100,000 garment manufactures, which employ approximately 10 million workers. Its exporters are currently having to deal with the strain of higher wage costs, lower demands and fluctuations in raw material prices.

Advantages Disadvantages
• Largest manufacturer in the world - can produce almost anything required
• Manufacturers may help with design of product
• Typically good quality products
• Relatively low prices
• Efficient machinery
• Large population and therefore large work force allow the country to lead in the worlds production
• Continued industrial upgrading • Language barrier
• Long distance (if problems occur)
• Long lead time
• Cultural barriers (different national/religious holidays)
• Chinese lunar new year occurs in January or February each year, and therefore factories may be shut at this time.
• Time difference – small window of opportunity for direct communication
• Factories having to pay higher prices for more materials and higher wage costs as the price of living increases – may impact on cost pricing
• Growth of environmental protection issues

India

Advantages Disadvantages
• Skilled workers that produce beautiful handmade and embellished garments
• Low prices
• Business creates jobs for local people, including women
• Factories constantly improving and developing (e.g. Roverco ‘equipped with modern equipment’) • Language barrier
• Long distance (if problems occur)
• Long lead time
• Cultural barriers (different national/religious holidays)
• Time difference – small window of opportunity for direct communication

Romania

Advantages Disadvantages
• Closer to UK than other sourcing regions
• Less distance means shorter lead time
• As regions such as Mauritius can be used for casual jersey, regions like Romania are strong in producing more tailored items • Usually more expensive to source from than the far east
• Language barrier

Mauritius

Advantages Disadvantages
• Good producer of casual jersey – important area for top department
• Cheaper than Eastern Europe • Language barrier
• Long distance (if problems occur)
• Long lead time
• Cultural barriers (different national/religious holidays)
• Time difference – small window of opportunity for direct communication
• Can be unreliable

Types of Supplier
Manufacturers/Factories: Topshop buyers deal directly with the suppliers by sending their order, and in return receive samples that have to be signed off by the buyer before the product goes into mass production.

Advantages Disadvantages
• Arcadia are committed to supporting the Benefits for Business and Workers Model (BBW), which involves 110 factories in India and Bangladesh over two years and will focus on improving factories’ management systems
• Access to new original products
• Cheaper cost prices than sourcing from wholesale import companies
• Large companies like Arcadia who are committed to overseas sourcing may use local agents or establish their own buying office which provides a permanent point of contact with the supplier • Factories must be thoroughly assessed to ensure that ethical working standards are adhered to
• The buyers company usually takes responsibility for the freight of the products to the UK – they have to ensure that the products arrive safely
• The further away the supplier is, the more difficult it becomes to control the quality and the delivery of the product
• Occasional issues (particularly in China) where suppliers have agreed to take on more work than they can deliver so that they do not have to say no, and potentially lose business
• Additional costs to consider after cost prices, such as freight costs, duty and possibly agents fees

Overseas buying offices: Many large retailers have offices around the world.

Advantages Disadvantages
• Buying offices can monitor the quality and delivery of products
• They can look for potential new suppliers
• Oversee product development
• Send samples back to head office
• They take much of the risk and uncertainty out of sourcing from overseas • Cost to the retailer to own/run the buying offices
• Although a link between the retailer and supplier, there is still the issue of a long distance between UK based retailers (head offices), and the overseas buying office and supplier

Suppliers are monitored against KPIS:
Flexibility
Compliance
Design
Quality
Lead time
Minimums
On time delivery
Price
Communication

How to split the business between suppliers
From analysing the findings of my competitive shop, they would indicate that the majority of my business should go to suppliers in India. The ratio between India, China and Romania was 4:1:1. However firstly I will now have to account for the fact that I have introduced another country to supply from (Mauritius). I also feel that it may not be commercial to have a range so heavily weighted on the type of garment that is usually sourced from India, so I think it would be beneficial to balance this more equally. For instance, 50% of business can go to Indian suppliers, as this should be about right for the amount of tops that would ideally be produced in India to get the best outcome in terms of detail and embellishment. I would then split the remaining 50% as follows: 25% to China, 15% to Mauritius and 10% to Romania.

Payment Terms
Topshop typically use discount of 14.25%, landed duty paid on items, with 120 days to pay, which then allows them to negotiate a bigger discount. Topshop may also use freight on board (FOB) if there is an array of different products. The discount on FOB would be approximately 5.5%.

PESTEL Report
India

Political • There has been a number of big scandals since 2010, which have involved very high levels of government, including Cabinet Ministers and Chief Ministers, such as in the 2G spectrum scam, the 2010 Commonwealth Games scam
• High levels of corruption and scams may threaten to derail the country's credibility and economic growth
• Terrorism is a threat in India, and is primarily due to religious communities. There has been a series of attacks over the last few years which could cause major disruption
Economic • Higher oil prices are having a negative impact on the Indian market
Social • 80% of Indians earn less than 2$ per day and every second child is malnourished
• India suffers from the issue of over population
Technical • Highly skilled workers means that factories can produce intricate embellished products and this has made India the favourable region for this type of product
Environmental • India is one of the most environmentally hazardous countries in the world, due to increasing output of pollution from factories
• High risk region for natural disasters, especially flooding which can affect the production of materials made from plant fibres e.g. cotton
Legislative • Around 70% of clothing workers are women. In the garment industry, women typically sew, finish and pack clothes. Supervisors, machine operators and technicians tend to be men – who earn more

Romania

Political • Political unrest concerning an unstable government
Economic • In line with the rest of Europe, Romania is in great financial difficulty. The collapse started with construction industry and construction material factories, and has now affected a wider range of business. This is predicted to continue until at least 2015 before any chance of recovery, and will impact on inflation which may in turn affect the cost of sourcing from this area
Social • Controversy in the treatment of women, e.g. issues with the human rights of women and children forced into work, often illegal practices
Technical
Environmental • One of the main environmental issues for Romania is the risk of flooding – can have knock on effects on sourcing materials/transport
• Romania also criticised for air pollution levels – factories may contribute to problem
Legislative

China

Sourcing in the Buying Environment

For the sourcing assignment, and other related assignments I have chosen to study Topshop, and focus specifically on the department of tops. I carried out a competitive shop in order to gain information in areas such as pricing, fabric composition and countries of origin. In terms of sourcing, it is the countries of origin that I am particularly interested in. Whilst doing the competitive shop, I chose six tops that I felt best reflected the range of tops that were in the store at that time. I found that out of these six, four were made in India, one was made in Romania and one in China. India is a good sourcing region for garments that require detailed embellishment and handcrafted designs. This type of garment is something that features strongly in Topshop’s winter 2011 range. It is also a good sourcing region for garments to be made of cotton. Romania tends to be used for more tailored wear, as well as knitwear and China can be used to source almost anything as it is the biggest manufacturer in the world.

Political • Last year, there were a large number of protests, demonstrations or riots. China is relatively bad in terms of political unrest, much of it caused by regional and local government corruption – this could affect areas such as delivery of goods or efficiency/numbers of workers in factories
Economic • A slowdown in demand from Western consumers has come at the same time as an increase in wages from the local workforce, due to increased living costs, as well as a huge hike in the cost of raw materials
• The government invested in the garment manufacturing industry and between 1997 and 2000 oversaw the scrapping of 110 million outdated cotton spindles, 280,000 wool spindles and one million silk spindles. It then provided CNY 3.1 bn in public funds for the industry to be restructured and new equipment was imported to upgrade facilities
Social •
Technical • Workers considered highly efficient
• China continually progressing through industrial upgrade in the garment and textile industry.
Environmental • Air pollution in China is ranked at one of the worst cases in the world, and therefore it is controversial using factories that will contribute to this issue
Legislative

Bibliography

http://manufacturingsourcing.com/ - accessed 5/12/11 http://www.rovercoindia.com/low/operate.htm - accessed 5/12/11 http://www.arcadiagroup.co.uk/fashion-footprint/our-products/Ethical%20Trading - accessed 6/12/11 http://en.wikipedia.org/wiki/Terrorism_in_India - accessed 6/12/11 http://en.wikipedia.org/wiki/Socio-economic_issues_in_India - accessed 6/12/11 http://ibnlive.in.com/news/india-second-in-world-for-natural-disasters-un/141401-2.html - accessed 6/12/11

sustainability project: http://www.ifm.eng.cam.ac.uk/sustainability/projects/mass/uk_textiles.pdf

http://europeaninternationalrelation.wordpress.com/2010/09/07/the-romanian-economy-will-collapse-in-2011/ - accessed 6/12/11

http://en.wikipedia.org/wiki/Category:Floods_in_Romania – accessed 6/12/11

http://www.wgsn.com

retail buying techniques Fiona Elliott and janet rider first published 2000 by management books 2000 ltd

fashion buying and merchandising management - tim Jackson and david shaw 2001 published by palgrave macmillan

http://newsfan.typepad.co.uk/pestle/2009/03/pestle-summary-china.html