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1、Assessing the future challenges in strategic sourcing commodity from China: a case-study analysisNeil Towersa* and Yi SongbaDepartment of Management and Languages, Heriot-Watt University, Edinburgh, UK; bSchool of Materi
2、als, University of Manchester, Manchester, UKThere has been an increasing trend of global sourcing garment supply from South-East Asia but the challenges confronting retailers sourcing commodity and seasonal garments fro
3、m countries such as China are less well understood. A supplier evaluation model developed from the Kaufmann and Hedderich (2005) framework assesses the delivery, flexibility, cost, quality, reliability and culture sourci
4、ng challenges from China using a case study approach of a UK-based garment sourcing company using a fuzzy logic method. The results have identified that the highest challenges include unforeseen risk in delivery process,
5、 rigid negotiability, language barriers and Chinese-style business customs. The most important challenges are improvement, sourcing location, languages barriers, unforeseen delivery risks and customer services.Keywords:
6、China; Chinese garment supply; commodity; fuzzy logic methodology; strategic global sourcing; trading relationshipsIntroductionMany firms are combining international and global sourcing to achieve sustainable competitive
7、 advantages such as lower prices, better quality, access to new market and shorter product life cycles (Shook et al. 2009). Globalization has become one of the most inevitable trends in recent years as garment retailers
8、have to deal with customer-inspired change more quickly and more frequently than ever before whilst focusing on cost reduction. Leading retailers in developed countries depend heavily on overseas manufacturers as their s
9、ource of garments. Many brands cooperate through alliances with overseas partners to produce branded clothing and footwear (Lee et al. 2004). Global sourcing has been defined as ‘the integration and coordination of procu
10、rement requirements across worldwide business units, looking at common items, processes, technologies, and suppliers’. (Monczka and Trent 1991, p. 3). It can generate cost savings from 10% to 40%, which makes it an attra
11、ctive strategy to pursue for garment retailers (Frear et al. 1992, Zeng 2003). Some popular European fashion brands have progressively moved their supply regions from Europe to South-East Asia, as these countries are ver
12、y competitive for their low product prices and increasing quality levels (Towers and Peng 2006, Masson et al. 2007). With the large volume garment producers of China and India gradually increasing access to foreign compa
13、nies, there is an increasing trend of multinational companies who regard a global procurement strategy as an important part of the new business strategy. To follow the trend of globalization, garment retailers choose glo
14、bal sourcing as theirISSN 1360-2381 print/ISSN 1743-792X online q 2010 Taylor & Francis DOI: 10.1080/13602380903068071 http://www.informaworld.com*Corresponding author. Email: N.Towers@hw.ac.ukAsia Pacific Business R
15、eview Vol. 16, No. 4, October 2010, 527–544A merchandise range is divided into three major segments of basic, seasonal and short season (Lowson 2003), which provide a number of challenges for global sourcing of garments.
16、 A basic or commodity garment, such as a single colour tee shirt is typically available all year, with a demand forecast profile based on historical sales performance. Supply into the market is driven by an allocative pr
17、ocess that responds to volume requirements and apportions deliveries accordingly. Demand is relatively predictable, with forecast error typically between 10% and 20% (Mason-Jones et al. 2000). With a focus of minimizing
18、cost in the supply process, more frequent deliveries with smaller batch sizes is an important contribution from the supplier to reduce inventory in the supply pipeline. A seasonal product such a men’s summer jacket is av
19、ailable for a specific time period, typically ten to thirteen weeks, and is characterized by fashion trends. A short season garment such as a fashion ladies’ top is available for a limited period of time, often within a
20、season or across two seasons. The important market driver for both these season-related products is availability of the garment range in store for the limited period of time in the selling season. The sales forecast is u
21、npredictable, often with an error of more than 100% and requires a very responsive supply chain to service the fluctuating retailers’ demand requirements, particularly at the item (or product) level. Hence, connecting th
22、e demand requirements with the supplier’s capability is the key to servicing the final customers’ requirements of availability in store. There are a number of benefits that can be gained from global sourcing, including c
23、ost reduction, quality, availability, shortening time of product development, improving company image, satisfying obligations, better delivery terms and international competitiveness (Cho and Kang 2001). However, due to
24、the geographical distance and differences in language and culture, there are many challenges for a garment manufacturing company engaged in global sourcing. Cho and Kang (2001) identified 13 challenges for sourcing garme
25、nts abroad that included cultural and behavioural factors such as language barriers, different customs and business practices, as well as operations management and economic influences. There has been a growing recognitio
26、n that offshore retail trading with suppliers has become highly dependant on the strength of the relationships that incorporate sociological issues. As well as the mutual exchange of information relating to material, cap
27、acity and order requirements, understanding the needs and capability of the supplier is also important in the longer term (Towers and Burnes 2008). Buying firms have been developing closer sourcing relationships in their
28、 decision-making for global sourcing with suppliers, involving such issues as new product introduction, image and aesthetics. A focus on achieving the operational objectives of cost, quality, delivery and flexibility thr
29、ough a number of performance measures, shown in Table 1 below, is required (Pyke and Johnson 2003). Hence, sourcing from China offers challenges from a number of influences, including economic, communication, sociocultur
30、al and political/regulatory considerations. For instance, UK garment retailers sourcing from China need to include the extended lead time of delivery to the point of sale from the manufacturer. The sea freight transporta
31、tion time is typically six weeks from Shanghai to London, and is compounded by an internal lead time often extended by the underdeveloped rural Chinese infrastructure. Further, outside of regional cities it is difficult
32、to integrate Chinese suppliers due to the lack of IT infrastructure, which also increases search costs for potential suppliers and market data. Although English is the business language in China, there still exist langua
33、ge barriers and cultural problems between UK companies and Chinese suppliers (Towers and Peng 2006). Also, the regulatory system in China is not transparent, which generates unusual problems in selecting and sourcing whe
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