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Slide American Apparel and Footwear Association Political Risk

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					      SESSION III
HOW INDUSTRY EXPERTS
  ADDRESS SUPPLY
   OPPORTUNITIES
         MODERATED
              BY
       CHARLIE GILBERT
  CHARLES GILBERT ASSOC., INC.
            PANELIST
• TED TAYLOR - VP TARGET SOURCING
  SERVICES/AMC TARGET/AMC

• STEVE DI BLASI - VP MFG. LANIER
  CLOTHES DIV. OF OXFORD IND.

• ROGER MCDIVITT - COO HORNY
  TOAD
      RANK THE FOLLOWING
•   Initial and Final Cost
•   Service Level & Impact on Inventory
•   Demand Cycle
•   Hemisphere
•   Direct Ship to Store
•   Political Risk
•   Any other
  WHAT IS YOUR PLAN “B”?
• FOR THE FAILED LOGISTICS LIKE:
  – SHIP SINKS
  – DOCK STRIKES
  – POLITICAL UPHEAVAL
  – EARTH QUAKE
  – TSUNAMI
  – HURRICANE
  QUOTE FROM CARLOS ARIAS
        OF KORAMSA

“If buyers are rewarded for first cost, Central
   America doesn‟t have a chance. On the
   other hand if buyers are asked to look at
   GMROI, we‟re enormously competitive.”
   TED TAYLOR – VP TARGET
   SOURCING SERVICES/AMC
• THE THIRD LARGEST SOURCING ORG. IN
  THE WORLD
• HAS A 90 YEAR HISTORY OF PRODUCT
  DEVELOPMENT, SOURCING, & QUALITY
  ASSURANCE
• 55 OFFICES WORLDWIDE
• SOURCE FOR TARGET, LORD & TAYLOR,
  BLOOMINGDALE‟S, BON TON, BOSCOV‟S,
  TJX, SAKS, THINGS REMEMBERED, LINEN
  SOURCE AND OTHERS
• TED GRADUATED FROM LASALLE UNI.
STEVE DIBLASI – VP MFG. LANIER
   CLOTHES DIV. OF OXFORD

• CURRENTLY RESP. FOR GLOBAL
  SOURCING AND MFG. OF TAILORED
  CLOTHES; BOTH BRANDED AND
  PRIVATE LABEL
• HAS SERVED IN A NUMBER OF
  CAPACITIES AT LANIER OVER 15 YRS.
• AT ONE TIME OWNED A TAILOR SHOP
  IN PHILA. AND IS A 3RD GEN. TAILOR
    ROGER MCDIVITT – COO
        HORNY TOAD
• BEGAN HIS CAREER MAKING ALPINE
  CLIMBING EQUIP. FOR THE
  PREDECESSOR OF PATAGONIA(30 yrs)
• INSTRUMENTAL IN DEVELOPING FAIR
  LABOR ASSOC.
• HELPED CARHARTT START THEIR
  SOURCING ORG.
EEC/AAFA Conference
    January, 2007
   Associated Merchandising Corporation
                 History
1916: Founded by Lincoln Filene, inheritor of Filene‟s Department Store
in 1901 and co-founder of Federated Department Stores in 1929, to
establish an association in which retailers could work together to exchange
ideas and information. The cooperative concept became a reality called the

Retail Research Association (RRA)
1918: The Associated Merchandising Corporation is formed

1920s: AMC goes international, opening buying offices in Shanghai, Paris,
London, and Berlin

1998: AMC is acquired by the Dayton Hudson Corporation

2006: Target Sourcing Services/AMC: 3rd Largest Sourcing Organization
with over $3 billion in shipments
              Department Store Group

DEPARTMENT STORES   CATALOGUE/INTERNET   SPECIALTY STORES

                         Target.com



                     OFF PRICE STORES



                                         MASS MERCHANTS
       Target Sourcing Services/AMC Worldwide Offices


                                                                                                MILAN, ITALY


                                                                               POLAND             FLORENCE, ITALY
                                                                                                                           SEOUL, SOUTH KOREA
                                                         UNITED KINGDOM
                                                                                                                                                    TIANJIN, CHINA
                      MINNEAPOLIS, USA
                                                             FRANCE                                                                                   QINGDAO, CHINA
                                         NEW YORK, USA                                          ISTANBUL, TURKEY
                                                         PORTUGAL                                                                                      SHANGHAI, CHINA

                                                                                                           PAKISTAN                                      GUANGZHOU, CHINA
                                                             SPAIN
                                                                                                                                                           DONGGUAN, CHINA
                                                                                                                      CAMBODIA
                                                                     DENIZLI, TURKEY                                                                         SHENZHEN, CHINA

                                                                                                                      THAILAND
GUADALAJARA, MEXICO                           HAITI                    EGYPT                                                                        TAIWAN
                                                                                                DUBAI
                                                                                                                                                                     HONG KONG
                                                                               ISRAEL
                                                                                                NEW DELHI, INDIA
          GUATEMALA                           COLOMBIA                                                                                                          PHILIPPINES
                                                                                 JORDAN              BANGALORE, INDIA

                                                                                                                                                       HANOI, VIETNAM
             EL SALVADOR                                                                KENYA
                                                                                                         SRI LANKA
                                                                                                                                                        HO CHI MINH CITY, VIETNAM
                      HONDURAS                                   ACCRA
                                                                                                   DHAKA, BANGLADESH

                        NICARAGUA
                                                                                                 CHITTAGONG, BANGLADESH
                                                                                                                                        INDONESIA
                                              BRAZIL

                                                                                                                                    SINGAPORE
                                                                SWAZILAND
                                                                                                          MAURITIUS
                                                                                                                                 MALAYSIA

                                                                                                DURBAN




                                                                                                LEGEND
                                                                                                               OPERATING LOCATIONS – 51
Evolving Sourcing
 Strategic Sourcing Criteria
• Raw Materials
   • Apparel
   • Home Furnishings

• Labor Force
• Infrastructure
   • Political
   • Banking
   • Logistics

• Speed to Market
• Trade Relations
• Global Balance
Global Sourcing in Today‟s
       Environment
   Where in the world are my
           clothes?
       Sourcing Matrix
                       Product
       Political
                                   Process
       Stability




Cost                                    Compliance
                       Factory



  Cycle
                                        Capacity
  Time


               Trade          Fabric
             Agreements      Sourcing
                Product

                          Product
3 Dimensional

Expression

Silhouette
                          Factory

Detail
                  Process

                              Product
In-Line Quality Audits                  Process


Statistical Quality Audits

Marking / Grading Systems
                              Factory

Electronic Data Interchange

Inventory Controls
                Compliance

                              Product
Oxford Terms of Engagement
                                        Process

Environment, Health, Safety

Fair, legal labor practices                 Compliance
                              Factory

WRAP

Customer Audits

Conflicting Requirements

C-TPAT Certified
                Capacity

                      Product
Multi-Line Product              Process


Quota charges
                                    Compliance
Quota Limitations
                      Factory

TPL
                                   Capacity
          Fabric Sourcing

                     Product
Vertical operation
                                Process

Close proximity

                                     Compliance
Reduce cycle time
                     Factory



                                     Capacity


                           Fabric
                          Sourcing
        Trade Agreements

                                      Product

Duty Free                                         Process


Quota Elimination
                                                       Compliance
Short Supply                          Factory


Details, Details, Details
                                                       Capacity


                              Trade          Fabric
                            Agreements      Sourcing
               Cycle Time

                                      Product
Faster is Better                                 Process


Hemisphere Integrity
                                                      Compliance
Transit Time                          Factory


Inventory costs     Cycle
                                                      Capacity
                    Time
Speed has a price
                              Trade         Fabric
                            Agreements     Sourcing
                      Cost

                                   Product
Program Cost                                   Process


FOB
               Cost                                 Compliance
Investment                         Factory


Direct Ship
                 Cycle
                                                    Capacity
                 Time
Terms
                           Trade          Fabric
                         Agreements      Sourcing
             Political Stability

                                       Product
                       Political
                                                 Process
                       Stability

Experience
                Cost                                   Compliance
Lower risk                             Factory


Relationship
                 Cycle
                                                       Capacity
                 Time


                               Trade         Fabric
                             Agreements     Sourcing
                  Plan „B‟
• Pre-Approved Compliant Facilities

• Multiple facilities in various locations

• On going approval process

• Strength of Oxford
       Contingency Re-Cap

• Low Risk countries

• Excess Capacity

• Pre-Approval

• Multiple Carriers
Lanier Clothes Global Sourcing
                           Product
           Political
                                       Process
           Stability




    Cost                                    Compliance
                           Factory



      Cycle
                                            Capacity
      Time


                   Trade          Fabric
                 Agreements      Sourcing
                QUESTIONS
• If looking for high tech or Perf. Characteristics of
  fabric does that change your sourcing decision?
• Have you sourced anything in Far East and had
  problems that caused you to come back to this
  Hemisphere?
• Do you see pricing pressures from raw material,
  labor, etc in Far East?
• What is your process for making a decision to
  switch your sourcing strategy from East to West
  or West to East?

				
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Description: Slide American Apparel and Footwear Association Political Risk