Global Sourcing Essay

Developing a sourcing strategy is vital with my new “buyer” position at General Mills. I need to consider what General Mills is looking for and what best suits their company.

Sweatshops a big issue in today’s society, even though their existence can sometimes stay hidden from the public’s eye. A famous author named Berry states, “ most of us get all the things we need by buying them and most of us know only vaguely, if at all, where those things came from; and most of us know not at all what damage is involved in their production. We are almost entirely dependent on an economy of which we are almost entirely ignorant.” The majority of people in the US have no idea where the clothes they are purchasing are actually coming from. Most people would not support the exploitation of their own race of people. If they were able to see and come to realization about what is actually happening they would have a much different change of heart.

This expansion demonstrates how the luxury industry is now run by massive corporations whose focus is only on growth, visibility, brand awareness, advertising, and most importantly, PROFITS! With growth and expansion, has come a decrease in quality and rarity. The luxury garments produced are mostly not handmade but are even outsourced to large factories in places such as China and Turkey. Also, to meet quarterly turnover projections, “designers churn(ed) out increasingly trendy collections of clothes, handbags, and shoes.” (Thomas, Pg. 246) With hundreds of new stores around the globe the surplus of designer labeled merchandise is immense hence, the proliferation of outlet malls.

A majority of the clothing worn and purchased today in the United States has been manufactured overseas in sweatshops. Since the beginning of factories and businesses, owners have always looked for a way to cut production costs while still managing to produce large quantities of their product. It was found that the best way to cut costs was to utilize cheap labor in factories known as sweatshops. According to the US General Account Office, sweatshops are defined as a “business that regularly violates both wage or child labor and safety or health laws”. These sweatshops exploit their workers in various ways: making them work long hours in dangerous working conditions for little to no pay. Personally, I believe that the come up and employment of these sweatshops is unethical, but through my research I plan to find out if these shops produce more positive than negatives by giving these people in need a job despite the rough conditions.

V.F. Corporation (VF) designs, manufactures, distributes and markets lifestyle apparel, footwear, and accessories. The company offers jeanswear, outdoor and action sports clothing, imagewear, sportswear and contemporary brands. The company markets its products under famous brands namely, the North Face, Wrangler, Timberland, Vans, Lee, and Nautica, among others. It sells its products to specialty stores, department stores, national chains and mass merchants, as well as through direct-to-consumer channel consisting of VF operated stores and internet sites.

“Global sourcing is defined as sourcing the technology, materials and components from sites and supplies located throughout the world. It also means the integration and coordination of requirements across worldwide business units” (Monczka & Trent, 1991, pp2-7).

It is impossible to beat a cheap price. In today’s world, finding a sought after item at a dirt cheap price is one the main motivation American’s get in the car and battle the craziness in the mall. And as the basic American human beings that we are, it is never possible for us to be complacent with the amount of stuff we currently have. Eventually, we will come across a friend that has the next must have item that will cause us to run to our local mall and purchase a similar item at the lowest price possible. With all that said, it is no wonder why the industry of fast fashion has taken off over the past decade. Felipe Caro and Victor Martínez-de-Albéniz, researchers for UCLA’s school of supply chain coordination, define fast fashion as “a business model that combines four elements: (i) fashionable clothes mostly for consumers under 40; (ii) affordable prices in the mid-to-low range; (iii) quick response; and (iv) frequent assortment changes”. Retailers like H&M, Forever 21, Target, and Wal-Mart have been able to take this business model and make a fortune. But while all these quick trends and cheap prices are great for the consumer, its cost on the foreign worker and the environment does not go uncovered. In the book Overdressed by Elizabeth Cline, she presents many arguments supporting the claim that fast fashion is unethical based on

We often question how our food and clothes can be sold so cheap, this all comes down to where it is made or grown. Our clothes are made overseas in factories by women and in some cases even children in unsuitable conditions. They work long hours and don’t get paid much in return, it is said to be less than what they can afford to live on and made to work extra hours. This is why large stores like Primark and Asda can sell their clothes at such little cost. Some of the workers are said to be working 60 to 90 hours every week for as little as £17 per month. (Making social lives pg.88) The workers in the factories are grateful for their small wage and would struggle if the factories were to close and business was took elsewhere.

In today’s business world, production cost was an increasing concern for companies working to stay competitive in the global marketplace. The top management must search for a global solution to drive down costs and reduce difficult activities associate with inventory management and production management. Global sourcing aimed to exploit global efficiencies in the delivery of services and goods across geopolitical boundaries, including low cost skilled labor, low cost raw materials, tax benefits, and price breaks. Whelan Pharmaceutical was the best example to illustrate how the company chose the best manufacturing site for global sourcing from different perspectives.

Globalization is the process by which different societies and cultures integrate through a worldwide network of political ideas through transportation, communication, and trade. Generally, globalization has affected many nations in various ways; economically, politically, and socially. It is a term that refers to the fast integration and interdependence of various nations, which shapes the world affairs on a global level. Simply put; globalization is the world coming together. In this essay I will discuss multiple perspectives on globalization through the analysis of these three sources.

With the elimination of U.S. government subsidies, cotton textile manufacturers will pay more for cotton. As the leading buyer of cotton, the Chinese apparel industry’s profitability will be reduced due to their inability to pass on increased cotton prices to their buyers. China’s manufacturing costs had already increased by as much as 40% due to higher market wages and costs with complying with worker and environmental protections. Although China has substantial labor and is accused of utilizing sweat shops to keep their costs extremely low, their increasing manufacturing costs have opened the door to other countries with cheap labor such as Vietnam and Pakistan.

Labor costs in the United States are much higher than in many parts of the world. Consequently, the costs of production for labor-intensive manufacturing can be significantly reduced by moving factories overseas mainly to third world countries this is a common practice of Nike who outsource there manufacturing to other companies in countries such as Thailand and Indonesia.[ ]

Rivalry among existing competitors: The apparel industry is highly competitive with a great number of both local and global competitors. As the market is mature, its growth is small. Accelerated growth and expansion to new markets are not easy goals to achieve. The barrier to get out of the industry is quite low for distributors, but high for producers. Most fashion manufacturers moved their production base to low-cost countries like China as wage and raw materials in developed markets like Western Europe are high. Besides, there is no great discrepancy in terms of quality of products, so customers make their purchase choices based on price and brand recognition.

In order to have higher profit margin, one of the most effective ways is to cut down production costs. In view of the low labor cost in developing countries, global sourcing seems to be a good choice to reduce costs. With the development of global production networks and the increasing competition, fast all fashion clothing firms have shifted their manufacturing operations to low lost locations over the past decades.

The cost is kept low with labor and the production. This helps competing in the export trading world. “I am telling, in textile nobody can beat Bangladesh in price and quality”