February 2009
Special Report: Global Sourcing
A World of issues
Getting product on time used to be the only worry when it came to global sourcing. Now, safety issues and social compliance concerns have made overseas business thornier than ever.
As Mitch Moungeris knows, finding a good agent to source products overseas can be "hit or miss" – at best. "My hit ratio is that one out of 10 has been a good partner to us," says the CEO and co-owner of Seattle Cotton Works, an apparel supplier in Woodinville, Washington.
He's not alone. Navigating the intricacies of the political, social and professional labyrinth that is overseas sourcing and production can be a nightmare for suppliers and distributors. Finding trusted sources and middlemen is key, say those like Moungeris who have learned to thrive in sourcing hotbeds such as Asia.
Now that the world's population – from brand name manufacturers to the consumers they serve – has been alerted to social compliance (see this month's cover story), safe manufacturing issues, product safety hazards and other production dilemmas worldwide, global sourcing is becoming that much more complicated.
Because most distributors are not sourcing products directly abroad (and aren't advised to by many in the industry), they need to develop questions and protocols for making sure the foreign-made products they order from suppliers are meeting the production standards of end-users.
"Our view is that, ultimately, a customer has a responsibility for the product, and they really need to be asking the questions and making sure that whoever they're working with has a process and procedure to address these issues," says Dave Reid, president of Design Resources, a supplier that's part of Dri Duck Traders Inc. (asi/50835).
That means distributors will need to ask appropriate questions, even if their customers do not. Where to start? Distributors might begin with basic production questions to ask either a supplier or a manufacturer overseas: Do you use lead? Do you certify your products? Can you show me those certifications in writing? Is your product biodegradable? How do you know?
But it's not just the factory in China that should be drilled. Suppliers stateside, as well, have an obligation to make sure vendors they order from in, say, India, are operating factories at acceptable standards. What kind of breaks do employees get? What's their hourly rate of pay? What are their sleeping conditions like if they live at the factory? What are meals like and what kind of condition are restrooms in? Are products produced completely within the factory, or do they get cut and sewn in one place and decorated in another?
The list of questions can be endless, industry experts say, so it's wise for distributors to develop a standing list of topics they need covered to feel assured that their and their clients' production expectations are being met.
"We wanted to establish our own code of conduct…to make sure factories comply," says Robert Ross, vice president operations for Chamberlain Marketing Group (asi/160501), a distributor that sources products from places like China, where Ross tours factories in person to make sure they're operating at acceptable standards.
One thing to keep in mind, say Ross and others: "Acceptable" standards can change from country to country, and compliance is a flexible tool of measurement. What's an acceptable age to begin working in the U.S., for example, may not apply in Bangladesh, where children as young as 12, have for years been legally allowed to work, per the Bangladeshi government. Factories where the majority of workers might be younger than they would be at comparable American plants would still be considered socially compliant. It's an eye-opener to many American distributors, says Linda Levine, director, global supply chain/QA for Vantage Apparel (asi/93390). Still, she says, "in terms of conduct, hours worked, basic rights, and working conditions, there are very consistent levels of ethical conduct required no matter where you are." In the end, what quiets the moral concerns of distributors and customers may be the same things – or not. What's ethical and acceptable for one person may not be for another.
The key to assurance, Levine and other suppliers say, is to ask for documentation from both suppliers in the U.S. and from factories abroad. The list of certifications – covering product quality, safety, materials, and other factors – is a rapidly expanding list in today's safety- and socially-conscious business place. But, regardless of which certification a distributor or end-user needs to see, any supplier who balks at showing one should make a distributor wary.
What to know: Key Definitions of Global Sourcing
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Case Study: Speedy, Socially-Compliant Sourcing Success
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How It Works
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Q & A
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Betsy Cummings is a senior writer for Wearables.
