Sourcing Guide for Garment Industry of Serbia Table of Contents 1. Sourcing Management 1.1. Introduction to sourcing management 4 1.2. Sourcing strategy after 2005 (When quota is phased out) 11 1.3. Domestic and International Sourcing 13 1.4. Production Sourcing and Priorities 17 1.5. Summary 21 2. Quality Standards 22 2.1. Fabric Performance Testing 23 2.2. Definition of Test Methods and Quality Standards 25 2.3. Eco-Labeling 34 2.4. Eco-Tex 39 2.5. Fabric Specification Sheet 41 2.6. ISO 9001 Quality Management Systems 43 2.7. ISO 14001 Environmental Management Systems 44 3. Guide to Import – Export Operations 45 4. Annexes 68 List of international and domestic fairs 59 Testing labs 60 1. Sourcing Management 1.1 Introduction to Sourcing Management This section looks at the basic process of researching and managing the sourcing of fabric and trimmings, an area, which, if not controlled well can impact quality and delivery. There are two elements to the process of sourcing fabrics and trimmings: the first is the initial research to find novel items to put into the collection which will differentiate the range from the competition and the second is the sourcing of bulk fabric and trims for production. a) Research Selecting fabric and trimmings can be one of the most exciting and frustrating elements within the garment production process. The Internet and trade publications are useful tools in: • Finding suppliers • Providing information on minimum orders • Price points • Fiber content • Virtual samples. To build relationships with mills and knitters, there is nothing like attending the major fabric and yarn fairs. Table 1: Common Yarn and Textile Fairs • Expofil and Pitti Filati for yarn • Elite London, Moda in Milan • Prato Florence • Premier Class Lille and Premier Vision Paris for fabric • Moda Amond for trimmings. It is advisable to work closely with fabric mills to develop a new fabric of value to both fabric supplier and garment producer. Many international fabric companies do not have representation in Serbia, which means that communication will have to be carried out directly with mills overseas. Also, there are very few of Serbian fabric producers willing to work with the garment producers on new fabric developments. b) Costing and Payments When importing fabrics from within Europe, a VAT number will be required. Care must be taken to ensure that fabric prices (often ex-factory) are converted into delivered to warehouse price, including all costs (freight, insurance, duty, and clearance costs.) The difference can be as much as 30% depending on the country source. Two important terms are FOB (Free on Board) - the price includes delivery on the ship and the CIF (Carriage, Insurance and Freight). The price includes all these three items. More details about international payment can be found in INCOTERMS 2000 (http://www.iccwbo.org/incoterms/preambles.asp) and in the chapter “Practical Guide to Import – Export Operations”. It is important to keep a record of all fabrics and trimmings within the sample room, as this will be required at a later stage when costing garments. Records should be in the form of a fabric order book (Tables 3, 4) and should include all the details about: Table 2: Details of Samples Records • The supplier/ Serbian agent • Fabric quality • Width • Composition • Color • Price • Quantity of sample order • Cost of shipment/delivery Payment terms must be negotiated with suppliers when placing orders. Common methods for payments are: • Cash payment against an invoice before shipment • Pre-pay for bulk fabric orders for new customers • Factors (credits can be obtained against orders placed by recognized credit worthy retailers to finance fabric purchases). Payments and commercial terms vary significantly so it is important to ensure that all costs are taken into consideration. European suppliers often quote ex-factory, without freight, insurance and clearance so these costs need to be included. It is also important to check carefully through the payment terms and conditions, including inspections and returns. Some fabric suppliers require Letters of Credit (L/C) from a bank. In this case terms for payment can be included. A 90day L/C would mean payment after 90 days. The interest cost could be of either the supplier or buyer account. Standard contracts for imported goods and details on these payment methods can be found in the chapter “Practical Guide for Import – Export Operations”. c) Minimums Minimum quantities are often an issue. Some new businesses may only be looking for 200 meters, yet the standard minimum for most fabric mills is 500 meters. Consideration must be given when planning the range to ensure that fabric usage is spread over a number of styles so that minimums can be met. Always establish minimum order quantities for bulk when sampling, to avoid problems later when a minimum order of 1000 meters per color might be required. Bulk sampling, may be an option, i.e. purchase 100 meters, use 10 meters for sampling now and use 90 meters later for production. You risk losing 90 meters of fabric if samples do not produce orders. If orders are greater than fabric bought, there may be difficulties in repurchasing fabric. If bulk sampling is used in the initial stage of growing the business, at some point there will need to be a transition to bulk orders. Mills supply sample lengths generally on the assumption that this will lead to bulk orders. It is likely that the relationship will deteriorate over time unless volume is achieved. d) Delivery and Quality “50% of all delays in manufacturing are caused by fabric faults or late delivery” - Supply chain benchmarking study – On time fabric delivery is paramount, yet this is an area where many garment producers feel they are most regularly let down and often feel helpless when they are dealing with a foreign mill. Constant vigilance on the state of the order needs to be maintained. Lead-time varies with: • Point of origin • Shipping methods • Materials are open stock or custom designed • Products are performance tested before production begins. Imported fabrics or accessories may require 6-9 months’ lead time, while domestically produced fabrics may require a few days to 3 months depending on availability and additional processing. Lead times for materials may be reduced significantly when Quick Response (QR) programs are put in place. Open stock materials have the advantages of: • Shorter lead times • Lower prices than goods made to the apparel firm’s specifications. • Immediate delivery • Availability in basic colors such as red, blue, black, white, and the fashion colors of the season. • Easy to reorder because mills make them to stock • Available in common fabrications such as poplin and chambray. Mills develop sample yardage, swatch sets, and sample of garments of open-stock materials that are displayed at trade shows for potential buyers. Sales reps may also show them to potential customers. Working fabric mills may develop special structure designs or fashionable items in woven or knitted fabrics. Fabric ordered to specifications may take extra time because they have to go through the sample approval process before the goods are produced. Apparel firms with basic product lines often place large orders with mills for basic greige goods like print cloth, and use converters to print or finish the fabric as needed. Prices of greige goods are based on conditions in the market. For example, cotton prices are affected by favorable or unfavorable growing conditions, a major insect infestation in one of the major producing countries, or unusually high or low demand for cotton fiber in the world market. If prices are expected to rise, orders may be placed many months ahead of the actual need. This locks in the price and guarantees the manufacturers that the fabric is available for garment production. Delivery is also related to production forecast which require sharing of data with the supply chain to ensure Quick Response. However, unless the garment buyers are willing to share their data with suppliers and manufacturers, manufacturers will constantly run into problems that cannot be solved. If manufacturers could receive timely forecast data, they could schedule both the ordering of fabrics and trim, and production. Manufacturers would be able to make intelligent decisions about what to prioritize based on the knowledge of the situation and the flow of their own factory. As an example of causes for late delivery is errors in specifications by the buyer usually result in reworking of patterns and markers. However, if the problem is not caught until the sewing floor, specification errors will result in costly garment rework. Even small errors in bills of materials (such as a wrong shoulder pad or size zipper) can result in production delays. This is another error that probably would not be discovered until the operator attempted to set the zipper. A typical zipper has a 4 week delivery, so the schedule impact is immediate and severe. Late deliveries lead to increased cost such as: • Airfreight instead of sea • Overtime costs • Cancelled orders if final delivery dates cannot be met. Poor quality of raw materials will affect delivery. Controls need to be put in place to ensure that: • The mill has the capability to deliver consistent product • Fabrics are inspected prior to delivery and • Inspection certificate included as a requirement within the payment terms • Fabrics are inspected prior to cutting Other problems associated with in the garment producers sourcing process: • The mill has no forecast of potential volume for production • The mill is given the actual order late as the garment producer calculate to the last meter on final confirmation of orders • Finance is not put in place to guarantee payment and the mill holds of putting the order into the production planning process because of internal financial controls. Garment producers should also be aware of the key trends in overall demand for fabrics as shortages of key fibers or base fabrics can occur because of either excess demand (a fabric may become very “hot”) or a sudden lack of supply (e.g. a cashmere shortage brought about by severe weather conditions in India or Mongolia). If a fabric is not delivered it is advisable to have a substitute supplier, however, the fabrics must be a close match in color, handle and weight. Table 3: Sample of Fabric Order Book Supplier Quality Width Content Color Price Quantity Value Delivery Cancellation Weight Date Date Table 4: Sample Fabric Receipt Book Supplier Quality, Color Lot Quantity Inspected Approved Comment Description no Table 5: Tips and Hints Questions to ask when you are sourcing or ordering fabrics: • What is the minimum order? • What is the price per meter? • Where is the delivery point? • Is the carriage cost included in the total cost? • What are the delivery dates of sample fabrics? • Are there premiums for sampling? • What are the lead times for delivery of bulk production? • What are the differences between the sample fabric and bulk production? • If larger quantities of fabric are purchased, will there be a discount? • Have any other designers ordered the same item/fabrics? • What are your payment terms? • Are bank or trade references required before production? • What are the care instructions for fabrics/trimmings? e) Quality Control It is recommended that all sample fabrics be tested before a sample garment is produced to ensure that fabric will perform as required. Alternatively a test certificate could be provided by the supplier. Inspections can be made to fabrics through specialist organizations, but this normally increase cost by 3-5%. Similarly test certificates for colorfastness, fabric strength etc can be required. If a certain percentage of faults are acceptable in a fabric some suppliers will mark the faults at the roll edge. This allows the factory to lay the fabric to minimize waste. When ordering fabrics check for defects, such laddering or tearing and ensure that the finish is satisfactory prior to cutting. When fabric is delivered, check all quantities immediately. Substandard deliveries must be dealt with and the implicated supplier must be notified at once. Reporting defects four weeks later is too late. Most companies stipulate that if the fabric is cut, it has been accepted and the supplier is nom longer responsible. Quality standards and specifications are discussed in details in the next chapter, called “Quality Standards”. Table 6: Quality Control Check List • Tears and Snagging • Laddering • Fraying • Irregular shading • Width • Handle • Finish • Shrinkage • Puckering • Colorfastness • Pilling • Weight • Any unacceptable flaw f) Quality Control Protocol: Case Study The following is a case study of quality control protocol conducted in sourcing contract between two companies: The items sourced are knitted 100% merino wool garments and fabrics. Table 7: Visual Defect Inspection Defect Description General Appearance Fabric Flaws Slubs, holes, irregular knitting/weaving, dyeing or finishing defects Color Poor match of color when compared to approved lab dips Shading Variation in color between and/or within panels or within a set Soilage/stains Dirt, oil, grease, pencil, pen, marker, chalk Thread Ends Thread not trimmed Skewed/Distorted Sloppy sewing or cutting results in irregular or distorted construction. Stitch Quality Stitch defects Includes: skipped, broken, run-off, puckered, in-correct tension, open seam, needle cut Stitch count Stitches per Inch Thread quality Type and color Needle holes Conspicuous seam repair Labels& Embroidery Poor placement Not sewn securely Incorrect label Missing label Embroidery incorrect Trims Substituted part Omitted part Damaged part Poor setting Missing stitches, distorted design, Sloppy setting of zippers, buttons, snaps Packaging Packaging damaged Crushed, torn, soiled, wet Garment incorrectly identified Style/size/color, hand tags differs from garment 1.2 Sourcing Strategy after 2005 - When Quota Is Phased out The apparel business has never been better for the apparel buyers. With tariffs and non-tariff barriers being dismantled, economic conditions in the world keep apparel prices falling. The deadline of quota phasing out is in sight, textiles/ apparel can be sourced at attractive rates from all over the world. The question is what you want to achieve for your sourcing strategy? How will you get your deliveries? Is it on time? Are the raw material shipped from half way around the world? How many middlemen are involved? The answer is that yours sourcing strategy should be based on a balance of cost and non- cost factors such as: • Shipping / lead time • Politically Stable Environment • Telecommunications • Worker efficiency level • Small runs • Raw material supply • Internal Transport • Profit Transfer / Investment ease • Language / Cultural barriers. a) Major Sourcing Countries The following is a brief analysis of the major sourcing countries: China • Large population of over 1.2 billion implies massive textile industry to cloth its own people. This gives it enormous advantages. • Abundant raw material available. Largest and second largest producer of Cotton and Synthetics. • Very low cost production. • China has a totally vertical industry. It has 40 million spindles, the world's largest weaving capacity. China will be a huge powerhouse in the post quota period. However, other regions of the world particularly those part of free trade agreements with US and Europe are likely to continue to offer great advantages over China even beyond 2005. China will remain a source for the more traditional 3-6 months lead time and is not a viable alternative for production in which quick turnaround is a factor. Mexico Mexico with its close proximity to the US has enjoyed a rapid growth in its apparel sector. In the last decade of XX century Mexican apparel exports have doubled. The Mexican industry focus was on mass production and high output. This scenario does not coincide with recent market trends in US. Currently US apparel industry is surviving by focusing on choice, differentiation, more styles and seasons. This requires that production be geared towards small lots, lower inventories and quick response. Mexican apparel industry needs to adapt to these challenging market demands. Turkey Turkey with its close proximity to EU has over the years grown into a leading textile exporting country. The major items are knitted apparel such as jerseys, cardigans, pullovers vest etc and jeans. Turkey’s focus has been on women’s wear market to cater to the fashion needs of this growing segment. The recent economic and financial turmoil in the country has lead to a close down of many apparel companies. Wide fluctuation in energy costs and high interest rates have made many producers uncompetitive. 1.3. Domestic and International Sourcing a) Domestic Sourcing In spite of great increase in international sourcing over the past 20 years, domestic sourcing still has many advantages. Domestic sourcing is sometimes called “speed sourcing” or “quick response” because of: • Easy access to the manufacturers • Minimum turnaround time • Flexibility • Short lead time • Nearness to market • Eliminates many language and cultural barriers • Eliminates tariffs and customs. Priorities for domestic contractors can be summarized in the following Table: Table 8: Priorities for Domestic Contractors • Location • Ability to work closely with the contractor • Specialization in certain types of products • Availability of equipment and skill of workforce b) International Sourcing Potential challenges with international sourcing include: • Communications • Culture • Financial, legal, and political issues • Quality • Lead times • Selection of international contractors. Developed textile producing countries generally offers more reliable service, production skills, and quality control than developing countries. They have also higher wages; when price is the most critical criteria, one of the developing countries may be the best choice. Requirements for International Sourcing When sourcing internationally, textile firms may use agents. Agents are familiar with: • Trade laws • Language • Culture • Production capabilities of apparel/textile manufacturers and contractors in their country. • The comparative abilities and performance records of the contractors in their country. Companies that source large quantities of goods in certain areas of the world often establish regional sourcing offices to work with sourcing agents. The sourcing manager or representative of the firm should make an on site evaluation of the factory which is producing their products although an agent may be extremely beneficial in developing and working with contractors in a particular country. All factories should be visited before a contract is established for doing business. Trade advisors are one of the best sources of current information on world trade. They advise on: • Trade agreements • Developing trade actions • Quota usage • Potential transshipment violations • Upcoming trade negotiations. Legal counsel is essential for the complicated sourcing process. Attorneys that specialize in international trade law can assist with contracts and agreements, letter of credit, purchase order terms. Custom brokers are licensed third parties used to interface with customs on behalf of the customer. Customs brokers can help determine product classifications for quotas and tariffs, provide documentation for customs, make payment for duties, and execute other transactions that Customs required. Quality Auditors can be hired to provide independent evaluations of fabric and finished goods. When starting up a sourcing program and working with an agent for the first time, it is often recommended to use an outside auditor to monitor quality of the goods. Quality auditors may also test for fiber content, flammability, care, etc. International Sourcing Using the Internet: Selecting fabric and trimmings can be one of the most exciting and frustrating elements within the garment production process. The internet is now a useful tool in finding suppliers, providing information on minimum orders, price points, fiber content, and even virtual samples. The easiest way to search for fabric and accessories is to log on one the search engines (e.g. www.google.com, www.yahoo.com) and use the key word “fabric sourcing”. The followings are some of names and websites for Internet fabric sourcing: www.Fastextile.com www.textiles-clothing.europages.net www.Paginialbastre.ro/firme.php www.BuyTextiles.com www.Buyfabric.com www.distinctivefabric.com/?google=fabric3 www.fiber2fashion.com/tradedirectory/fabric-buying-house-directory.asp www.business.com/directory/retail_and_consumer_services/home_and_garden/fabrics/ www.fabricshub.com; www.tradeagency.net; www.europages.com www.its-guide.com www.apparelsearch.com/Apparel_Search_2.htm, www.aaaoe.com/product/offer/31.php, www.textiledatabase.com/, http://www.ncsli.org/dsl/. c) International Sourcing Check List On making the decision for international sourcing, there are many issues that need to be evaluated by a knowledgeable person from the sourcing firm. It is essential to evaluate business practices, ethics, and services relative to the firm’s priorities and needs. At the plant level the sourcing firm needs to evaluate a facility’s capability to produce the product desired at the determined quality level. There are also many human rights and health and safety issues that a socially responsible firm will want to monitor. A sourcer needs to verify firsthand that the code of conduct is being honored. Violations are easy to overlook especially with just one visit. The checklist in the following Table provides some key elements that should be considered in evaluating sites and facilities prior to making a sourcing commitment. It is much easier to make a wise decision based on first hand information and analysis of capabilities than to enter into agreement and find major violations of human rights and safety issues and a contractor’s inability to produce the volume and quality product needed. Surprises need to be avoided. Table 9: International Sourcing Check List Country Level 1) Does the country have minimum legal age for manufacturing employment? 2) Does the country have minimum wage? 3) Does the country have standard number of hours for a work week and standard practices for overtime? 4) Is there a political unrest in the country? 5) Is the economy stable in the country? Agent Level 1) What is the relationship between contractor management and agent? 2) Is communication good between the contractor and agent? 3) How much time does the agent or agent’s representative append in the plant? 4) Who manages the operation on a day to day basis? Vendor level 1) Is the company financially stable? 2) Is the company vertical? 3) Does the contractor subcontract work? 4) Does the company provide housing and meals for employees? 5) Does the company operate in a free trade zone? 6) Does the company keep good employee records for citizenship and number of hours worked? 7) What the contractor’s product strength? Plant level 1) What types of garments are currently being produced? 2) Who are the plant primary customers? 3) How many workers are employed? 4) What type of equipment is being used? 5) Are the machine properly maintained? 6) What is the degree of automation in cutting? In assembly? 7) What are the bottleneck operations? 8) How were the operators trained? 9) Is skill level of operators adequate? Quality 1) How is the quality monitored? 2) Are specifications are available to operators? 3) Are specifications in the appropriate language? 4) How many inspectors do they have? 5) Are In-line inspectors performed? 6) Are final statistical audits performed? 7) What percent of products is audited? 8) How have they been rated on previous audits? 9) What is the plant’s audit pass rate? Human Rights 1) How many workers in the room? 2) Are the workers of legal age? 3) Are there children present? 4) How many hours do they work per day? Per week? 5) Are the workers allowed break time? 6) Is there forced overtime? Plant Safety and Health 1) How many exits are there? 2) Are safety regulations posted? 3) Is the level of lighting adequate? 4) Are there enough rest rooms? 5) Is the ventilation system adequate? 6) Is the drinking water safe? 7) Are electrical outlets grounded? 8) Are there fire safety exits? Sprinkler systems? Inspected Fire Extinguishers? Shipping 1) How products will be shipped? 2) Will additional processing be required in the distribution center? 3) Does the plant have Electronic Data Interchange (EDI) capacity? 4) How they insured against theft? 5) How safe transportation from the plant to the port? 1.4 Sourcing Priorities and Processes: Sourcing can be a profitable way for a firm to do business but it requires a great deal of advanced preparation, knowledgeable individuals, attention to detail, careful planning and timing. Losses can be minimized if the sourcing firm is well prepared. Prior to sourcing decisions, locations, plants, and potential contractors should be visited and evaluated. a) Selecting a Vendor Factors that drive sourcing decisions include: • Cost • Product quality • Specialization • Timing. Company priorities will often determine where, what, and how products will be sourced. For some firms sourcing involves extensive research and analysis of countries, agents, and contractors especially is the development of long term business relationship. Firms need to determine the level of risks they are willing to assume and the level of involvement they wish to maintain. A trade advisor can be extremely helpful with initial investigations and determine the business needs, legal restrictions and potential advantages and disadvantages of sourcing in particularly country. The assistance of trade advisor never replaces a first hand evaluation of a contractor and production plant. There are many issues that need to be evaluated by a knowledgeable person from the sourcing firm. It is essential to evaluate business practices, ethics and services relative to the firm priorities and needs. American Textile Company: Case – Study The American Textile Company is a case study for successful sourcing. The followings detail the steps taken by American Textile Company for vendor selection and how to manage sourced production goods. www.americantextile.com Background One of the largest supplier of protective and health bedding products in the USA. Mattress Covers, Pillow Covers For Home Use. Problem in 1995 Labor intensive business, labor not readily available, labor costs rising raw material and sourcing limited. SOURCING STRATEGY: WHAT DID WE NEED? Production geographically close WHAT DID WE FIND? Control El Salvador Use manufacturing and purchasing Mutual trust expertise Competitive labor rates Consider the partners friends Ease of communication Not necessarily lowest Non-ownership of assets English speaking management Deliberate growth Do not own facility nor capital equipment Patient in developing business STEPS: PHASE Research ACTION Shake lots of hands; talk to lots of people in the industry; visit lots of factories Testing Finalize acceptable cost; place a variety of small orders; establish consistent production Become familiar with: turnaround time; customs clearance; freight Ramp up Research/test raw materials from regional suppliers; research data exchange options Evaluate capital investment to improve control and reduce costs Regular production with volume products CHANGES: Number of *SKU’s: Type of Business: From 10,000 to 850 From Manufacturing to Hybrid Plan Production Distribution Own materials Manufacturing relocation: Do Not Own Capital Assets Source of Materials From USA to El Salvador & China From USA and China to USA, China, Speed to Market Pakistan From Shipped in 1-2 Weeks to Shipped in 2-3 Days (*SKU: Stock Keeping Unit) Results • Sales increased 4 times • Profits increased 4 times • Market share 80% (protective & health bedding @ retail) Conclusion • Success relies on trust • Never over-communicate • Study and understand non-production related costs • Be deliberate and grow business over time • Reduced labor costs are just part of the savings b) Fabrics and Trim Sourcing It is essential to have all fabric and trim items for a style available before production starts. This is often a problem when styles are produced in a firm’s own plants but it is an even greater problem when sourcing is done internationally. The first issue in managing fabric and trim is to determine: • Where it will be sourced? • Will the fabric be ordered in the producing country? • Will the fabric be inspected and lab tested before it is shipped out of the producing country? • Will the fabric has a statement of origin, value statement, and shipping documents in order to satisfy customs? • Will styles that include several different fabrics have different import duties? Extra trim should be allowed for all contracted garments. The primary concern for contractors tends to be efficient use of time and little priority may be given to economically using fabric and trim. Firms frequently use a 5-8% trim allowance when using domestic contractors. When using international contractors this allowance should be doubled. Production delays due to lack of trim can be extremely costly in terms of delivery. Trims ordered in producing country should be tested for performance requirements in the country where purchased and any substitutions should be monitored closely. Finishing and packaging may be done by the sourcer or vendor. If the vendor is expected to do the finishing, specifications should be developed specifically for these operations and a finishing sample should be available in the finishing department. It should be tagged, folded, and packaged in the approved method. As long as appropriate quality specifications, methods, samples, and a quality program are in place there are controls to manage production. None of these provide guarantee that all products will meet a sourcer’s expectation but the more information that is made available the less guesswork is involved. c) Quality Management of Sourced Goods Quality instructions must be precise and understandable to the contractors. Quality instructions include method descriptions, tolerances for each operation, and step-by-step inspection procedures. These are part of quality manual and/or tape that shared with the vendor. These form of basis for quality audits and inspection procedures. According to many quality standards, there should be in line quality auditors that monitor styles while they are being produced to identify problems before products are completed. Final inspection verifies that garments meet specifications before leaving the plant. If using international sourcing a post inspection final audit may be used to detect defects before goods leave the country. If defects are found before garments are shipped the problems can be corrected at the factory that was responsible. It is extremely difficult and costly to have to make repairs in Serbia after faulty goods have been shipped. Sourcing firms may handle the quality inspections and audits in a variety of ways. Some firms may use in country independent quality audit firms. Larger firms may set up a regional quality audit center in the country where production is done and train the quality auditors to the system used by the firm. Serbian firms may use Serbian based quality managers to do quality reviews on a routine basis. If a full package sourcing is used, quality inspections may be left to the agent or the sourcer may use some combination of quality management components to ensure delivery of a specified products. More responsibility for quality can be placed on the contractor if the sourcing firm specifies the acceptability requirements for quality audits in the Letter of Credit. If products do not meet the sourcer’s standards the contractor is not paid. This is not as simple as it sounds as many stipulations must be identified and documented, but problems can be averted if provisions are made upfront. Quality standards and specifications are discussed in details in the next chapter. Case-study: The following is a typical quality management/inspection procedure in a contract for sourced goods: • Standard fabric inspections should be expected using standard procedures by fabric spreaders and cutters • In-Line sewing Quality Assurance by supervisor or Quality Assurance personnel should be expected • 100% final inspection is required for: o Critical measurements as indicated by the buyer specifications (e.g. length, width, weight, etc) o Visual inspection using Acceptable Quality Level Inspection 4.0 level II. Upon production order completion, all shipments must undergo AQL 4.0 Level II Inspection by the manufacturer/agent. If the shipments deemed acceptable, then the manufacturer shall issue an AQL Certificated stating so. This AQL Certificate is a required document on all Letter of Credits (L/C). Company will then issue a written approval to release the shipment. Company reserves the right to conduct an AQL inspection on site, or upon receipt, either by Company personnel or an independent agency. If the production order fails the AQL 4.0 LEVEL II inspection then 100% inspection shall be required to determine which pieces are first quality shippable. • Accept/reject Threshold: Example: a 100 unit run of style XYZ, under 4.0-LEVEL II, 20 units are inspected. If 3 units are rejected, the lot of 100 units is rejected.” Accept on 2, Reject on 3” Based on US military standard 105D, BS 6001, ISO 2859, DIN 40080 Summary: • Develop a long term relationship with your suppliers • Key contacts and relationships should be built gradually • Be aware of fabric technology developments which yet have to be proven commercially • Aim to work directly with mills and engineer your custom made cloth • Monitor exchange rate • Ensure costs of fabric include all costs • Allow plenty of time for sourcing and allow delays • Always note supplier’s minimum quantity-no fabric means no business • Keep good relationships with business partners 2. Quality Standards 2.1 Fabric Performance Testing Fabric Performance testing involves formalized exacting procedures and requires trained technical personnel and laboratory facilities for their undertaking. However, understanding the procedures and the meaning of the results of these tests can be and should be understood by all textile professional, both technical and non-technical. There are also reasons for textile testing besides quality control. These include development of new fabrics, analysis of the cause of the cloth problems, determination of the acceptable consumer performance level, and adherence government regulations. After the fabric tests are performed, the results must be studied in order to determine whether the fabric should be used for intended end use. Is the fabric strong enough to be made into men’s trousers? Will the swimwear fabric fade too quickly from repeated exposure to the sun? Is the shrinking of the shirting fabric considered excessive? The answers to these questions and many others determined the suitability of the fabric for the desired use. The importance of the test must also be decided. For example, the fact that a 100% wool coating fabric fades very quickly when washed should not be considered important because the coat will undoubtedly be dry cleaned and not laundered. If however, the fabric is considered to be very weak for this purpose, then the fabric should be rejected for this end use because of strength is an extremely important property of the coats. a) Types of Test Methods Although textiles testing in broad scope, encompassing many textile properties, most of tests performed on textiles can be grouped into the following major categories: • Physical tests: These tests are physical or mechanical in nature. Examples including breaking strength, abrasion resistance and pilling propensity • Tests to determine colorfastness properties: These tests are used to determine the resistance of dyed or printed fabrics to color change under various conditions. These include colorfastness to sunlight, washing and crocking (rubbing off color) • Chemical tests: In these tests, chemicals are used as part of the test procedures. Examples include fiber identification using the solubility method, determine antibacterial activity in fabrics • Optical tests: In these tests a microscope or another magnifying devise is used. Examples include inspection of textile defects b) Test Methods There are several technical and scientific organizations are the leaders in publishing methods for testing textile materials in the world: • The International Organization for Standardization (ISO) • The German Textiles Standards • The American Society for Testing and Materials (ASTM) • The American Associations of Textiles Chemists and Colorists (AATCC) • The American National Standard Institute (ANSI) The following Table illustrates the common textiles / apparel test Table 1: Common Textiles/Apparel Tests Strength Tests Definition of Tests Important For Breaking strength Force required to break a fabric Woven when it is under tension (being pulled) Bursting strength Amount of pressure required to Knits, felts, non-woven, laces rupture a fabric Surface Friction Tests Definition of Tests Important For Abrasion Resistance Resistance to wearing away of Most end uses any part of a material when rubbed against another material Appearance Tests Definition of Tests Important For Pilling Formation of pills on the surface Hydrophobic fibers and fabrics of the fabric with fuzzy surfaces Wrinkle resistance Ability to recover from folding or Smoothness and crease retention bending Color Fastness to Definition of Tests Important For Crocking Resist transference of color by Linings, upholstery, colored rubbing from one colored textile sheets, and others material to another Dry Cleaning Dry-cleaning process Dry cleaning articles Light Sunlight Outdoor articles, curtains, and draperies Washing Laundering process Washable articles Frosting Localized flat abrasive action Rear pockets of trousers and others Functional Tests Definition of Tests Important For Shrinkage Growth or decrease in the length Apparel fit, interior appearance or the width of the fabric an others Flame resistance Ability to resists burning Safety Durable press Finish that results in a garment Garment appearance being highly resistant to fabric wrinkles and seam puckering 2.2 Definition of Test Methods and Quality Standards 1. Color Fastness a) Color Fastness To Light Definition Color change under the influence of light. Method of Testing ISO 105 B02 - Exposure of a sample of the fabric to be examined under artificial light in an apparatus fitted with Xenon lamp (Xenotext) in parallel with a range of blue standards, the humidity of the apparatus being checked with a red reference. b) Color Fastness to Perspiration Definition The change and/or the staining of the dyed fabric must not be beyond the value specified under the influence of perspiration. Method of Testing ISO 105 E 04 Impregnating then stowing at 37 C two samples of fabric to be examined in contact with white reference fabrics in solutions of histidine, the one acid, and the other alkaline. Evaluating after drying of the change of color of the samples and of the staining on white reference fabrics compared with the gray scale. Note: If the garment if made up of white or light colored parts next to dark ones, the staining must be 4-5. The clothing manufacturer should specify the standard when drawing up the contract. c) Color Fastness To Dry Cleaning Using Perchlorethylene Definition The change and staining of the dyed fabric during dry cleaning must not alter beyond the value specified. Method of Testing ISO 105 D 01 A sample of the fabric to be examined bagged in a cotton material with steel discs is treated by mechanical stirring in the cleaning solvent for 30 minutes at 30 C. After drying the degradation of the color of the sample is judged compared with the gray scale. d) Color Fastness to Washing Definition Change and/or staining of the color of the fabric after washing. Method of Testing ISO 105 C 06 A sample of the fabric to be examined together with white reference fabrics is treated by mechanical stirring for 30 to 45 minutes in a washing solution containing a detergent with or without sodium perborate, temperature depending on the article. After drying and rinsing the change of the sample and the staining on reference fabrics are compared with gray scales. Note: If the garment is made up of white or light colored parts next to dark ones, the staining must be 4-5. The clothing manufacturer should specify the standard when drawing up the contract. e) Color Fastness to Rubbing Definition Staining of the color after rubbing dry and wet. Method of Testing ISO 105 X 12 Two samples of the fabric to be examined, one taken warp ways and one weft ways, are rubbed with a dry and a wet piece of white cotton fabric. The bleeding on the white fabric is compared with the gray scale. f) Color Fastness to Pressing or Ironing Definition Change and or staining of the color after pressing or ironing the fabric. The damp test enables change and/or staining after pressing and/or ironing to be assessed. Method of Testing ISO 105 X 11 Dry ironing: The sample of fabric to be examined is put on to a piece of dry white cotton, and ironed under specific conditions. Subsequently, the sample of fabric to be examined is put on a piece of dry white cotton and covered with a piece of wet white cotton fabric and ironed under specific conditions. g) Color Fastness to Spotting: Water Definition The fabric in question, after being sprinkled with water and dried, is spotted, the color or appearance of the surface being modified. Method of Testing ISO 105 E 07 The fabric in question is spotted in one area with distilled water. Subsequently the water is worked in the specimen with a glass rod. The change of the color of the sample is judged with the gray scale after 2 minutes and after drying. h) Color Fastness to Rubbing: Organic Solvents Definition The fabric in question is spotted. The color or appearance of the surface being modified after a test simulating the removal of a stain using a solvent. Method of Testing ISO 105 D 02 The fabric in question is rubbed in one area with a white cloth impregnated with solvent. The degradation of the sample and the bleeding on the cloth are compared with the gray scales. 2. Fiber Content a) Composition Definition The natures of the fibers of the fabric and/or their proportion in the case of a mixture differs from the conditions stipulated in the contract. Method of Testing Qualitative and quantitative analysis: In countries of the European Union one must necessarily follow: • The EEC ruling 72/276/EEC of 17th July 1972 the Official Journal of the Common Market countries - 31st July 1972, page L 173/1 and following - for binary mixtures. • The EEC ruling 73/44/EEC of 26th February 1973. The Official Journal of the Common Market countries dated 30th March 1973, page L 83/1 and following for triple mixtures. Outside the European Union unless there are special regulations: ISO 5089 - preparation of reduced samples then ISO 1833 - for binary mixtures ISO 5088 - for triple mixtures 3. Fabric Construction a) Number of Ends and Picks Definition The number of the ends and/or picks per centimeter, warp yarn and/or weft yarn of the fabric delivered, do not comply with the specification set out in the contract or with those of the standard sample. Method of Testing Follow the standard of the purchaser's country. If there are no standards, the following comments will be useful: • Count at least 100 ends or picks the counting being carried out in 5 places placed on a diagonal between the 2 selvedges and situated at least at 15 cm from these. • The average of the results will be rounded up so that the final result is given to one decimal point. 4. Weave Definition A different weave from that of the typical sample or that specified in the contract. Method of Testing Testing will be carried out according to ISO 7211. 5. Fabric Mechanical Properties a) Breaking Strength and Elongation Definition The breaking strength and elongation necessary for fabrics and linings for garments are lower than: • The necessary minimum values • The values specified in the contract or in the absence of these, of the typical sample. Method of Testing An increasing force is applied to a specimen with a width of 5 cm excluding any fringe with a dynamometer of which the jaws are separated 200 mm when starting the test. b) Breaking Strength (Grab Method) Definition The breaking strength from fabrics must not be below: • The necessary minimum value • The values specified in the contract or in the absence of this, of the typical sample. Method of Testing An increasing force is applied to specimens, which are larger than the jaws of the dynamometer. c) Tear Strength Definition Resistance of a fabric to a tearing force, or Resistance of yarns in a fabric to tear less than the characteristics set out in the contract or otherwise to those found in the standard sample provided. Method of Testing ISO 9290 - This method is intended to determine the tear strength of fabrics. The method is applicable to all types of woven fabric in which a tear will proceed from an initial cut in a direction parallel to the warp or weft threads. d) Seam Slippage Definition Displacement of the yarn used for the fabric due to a force exerted perpendicularly to the seam and producing an opening parallel to the seam. Method of Testing NF G 07 117 (French Standard). A sample consisting of two pieces of fabric sewn together with a lock stitch: 301 (ISO 4915), the seam being 1 cm from the edge, parallel to the length, as follows: Linear density of Mass in gr/m² of Needle Nm No of stitches per sewing thread fabric cm 20 Tex 30 Tex 50 100 100 to 200 200 65 to 70 75 to 85 90 4.5 - 5.5 4.5 - 5.5 Tex to 100 4.5 - 5.5 The sample is placed in jaws 25 mm wide of a dynamometer so that the seam is perpendicular to the direction of the force exerted and equidistant from the two clamps which are 75 mm apart. The slippage caused by the movement of the yarn held by the sewing thread is estimated visually. The risk of slippage of warp on weft and weft on warp is estimated. e) Resistance to Abrasion Definition Fabric wears out too quickly for normal use. Method of Testing No testing method has yet been standardized internationally, although the test methods worked out by the national organization may be used. ASTM D 1175 BS 5690 DIN 53528 - 53863 SN 198529 6. Pilling a) Resistance to Pilling Definition The fabric tends to pill quickly and the pills remain on the cloth. Method of Testing The test is carried out using the Random Tumble Pilling Tester in accordance with test method ASTM 3512. 7. Snagging a) Resistance to Snagging Definition The resistance of a fabric to the pulling or plucking of yarns or filaments from a fabric surface. Method of Testing ASTM D 3939 - 93 A fabric specimen in tubular form is mounted on a rotated cylinder. A mace (spiked ball) bounces randomly over the specimen thus causing snags to a certain degree. The degree of snagging is evaluated with standard photographs (5 = no snagging, 1 = very severe snagging). b) Resistance to Dry Raveling Definition The fabric tends to unravel too easily. Method of Testing The test is carried out using the Random Tumble Pilling Tester as follows: Take three squares with sides of 130 mm out of the fabric to be tested. Unravel to reduce the sides to 120 mm. Cut off the frayed edges. Place the three samples in one of the cages of the Random Tumble Pilling Tester, lined with cork. Turn on the apparatus for 120 seconds. Remove the threads, which are only holding to the sample along half their length. Measure the lengths warp ways and weft ways of the fabric, which is not frayed. Deduct the length of the fringes. 8. Dimensional Stability (Shrinkage) a) Dimensional Stability to Washing Definition Change in dimensions of fabric sold as washable after washing. Method of Testing In accordance with ISO 5077 Wash in a drum-type washing automatic machine with distilled water containing 5 g/l. detergents. If no distilled water is available use a commercial detergent observing the instructions of the detergent supplier. Wash during 30 minutes without spinning and dry flat at room temperature. b) Dimensional Stability to Dry Cleaning Definition Change in dimension after dry cleaning. Method of Testing In accordance with ISO 3175 Test a sample previously submitted to the test B 9.2 (page 22) given in the first part of the recommendations. Carry out 3 dry cleanings using perchloroethylene (in charged bath) in an industrial dry cleaning machine. 9. Crease Recovery Definition Insufficient crease recovery properties of the fabric. Method of Testing EN 22313. This method is intended to determine the angle of recovery of fabrics from creasing in either the standard atmosphere for testing or one of higher humidity and temperature. The method is applicable to all types of fabrics but some types of fabrics may tend to curl resulting in an unacceptable precision in making measurements. ** ISO 9867. This method is intended to evaluate the appearance of textile fabrics after induced wrinkling. It is applicable to fabrics made from any fiber or combination of fibers. Summary of Test Standards Commonly Used for Textiles/Apparel Summary Of Standard Tests Serbian German ISO USA (AATCC) Color Fastness See web site: DIN EN 20105 ISO 105-C06 Test method 61 (Washing) www.jugoinspekt.co.yu Color Fastness See web site: DIN EN 20105 ISO 105-D01 Test method (dry cleaning) www.jugoinspekt.co.yu 132 Dimensional See web site: DIN 53894 ISO 3759+ ISO Test method 96 Stability www.jugoinspekt.co.yu 5077 (Washing) Pilling See web site: ISO 12945-2 ISO 12945-2 Test method 93 www.jugoinspekt.co.yu JUGOINSPEKT BEOGRAD – expert, independent and neutral internationally recognized organization , specialized for inspection of quality and quantity of goods. JUGOINSPEKT BEOGRAD is a renowned, worldwide internationally recognized organization with long- lasting experience in inspection of quality and quantity of products in the agriculture and food industry, mining and energetic, chemistry, ferrous and non-ferrous metallurgy, oil and derivatives production, production of machinery, wood and textile industry, paper industry and other fields of economy. The company has been working on the domestic and international market and is a member of the International Federation of Inspection Agencies in cooperation with over 200 similar organizations in the world. JUGOINSPEKT BEOGRAD has made, documented and certified quality system according to the International standards ISO 9002. By contacting them you can find all the Serbian standards that address requirements for textile and accessories. Web sites for International Quality Standards The following is the web sites for international standards -ISO: www.iso.org -ASTM www.astm.org -ANSI: American National Standard Institute www.ansi.org 2.3 Eco-labeling (Öeko-Tex standard 100) a) Issuing Agency The International Association for Research and Testing in the Field of Textile Ecology, founded by the German Institute Hohenstein and the Austrian Institute for Textile Research. The Öeko-Tex 100 standard was developed by a European group of textile institutes as a testing program to screen for the presence of certain hazardous elements and compounds within consumer textiles. The Öeko-Tex certificate authorizes the products with the internationally recognized Öeko-Tex signet. b) Objective The Öeko-Tex label is to guarantee that textiles do not contain hazardous substances in amounts that could impair human health within normal conditions of use. c) Main Features The specifications exclusively contain parameters that can be tested on the final product. In other words, though the criteria in somewhat exceed legal national standards, the life cycle of the product is not considered. The label may also be awarded to products containing synthetic fibers. The textiles are tested for Acidity/alkalinity (pH level), pesticides, dyestuffs (banned azo dyes, allergenic dyes), formaldehyde, chlorinated phenols (e.g. pentachlorophenol), phthalates, biocides, flame retardants, carcinogens or allergens, extractable heavy metals, dibutyl and tributyl tin (DBT and TBT), dye-carriers (chloro-organic compounds), volatile compounds (e.g. solvents), loose dye/color, odors. The product classes included under Oeko- Tex are fibers, yarns, fabrics and accessories, products with direct contact to skin (blouses, shirts, underwear, etc.), products without skin contact (e.g. outer fabrics, linings, stuffing), household (decorative) products (tablecloths, floor coverings, mattresses, etc.). d) Application Procedure Manufacturers and importers of yarn, fabrics or final products may apply for the label. On contacting one of the relevant institutes, they are sent a questionnaire with queries on the product's composition. During a personal meeting with the official in charge from the certifying institute the prospective procedures and an estimate of costs are discussed. Certificates of pre-products are recognized for applicants of later production stages. The applicant must provide representative samples for test purposes, add detailed information and grant their correctness. The samples are tested by the institute to which the application for certification or extension of the certificate was made. In addition, spot-tests are carried out in the plant. Product groups may be formed so that similar products only have to undergo those tests, which refer to differences in material or employed techniques. In addition to the annual license fee, costs depend on the analyses to be carried out by the certification institute. The holder of a certificate must grant constant quality within the whole production series by implementing a quality assurance system according to the ISO standards and carrying out internal tests in conformity with the Öeko-Tex specifications. The institute takes random tests on sales products twice a year. If two tests show deviations, the mark may be withdrawn. The institute may publish the withdrawal of authorizations in a suitable form. Applicants pay a fee of between 440 and 680 ECU (between USD 475 and 740). In addition, all costs of testing (typically between 260 and 2600 ECU) are borne by the applicant as well. As of February 1998, nearly 700 companies have had their products (about 1400 to date) certified. e) Validity Generally certificates are valid for a period of one year, regardless of changes of the standards. Changes in the production process or the properties of the product automatically end the authorization f) Standards Öeko – Tex 103 –Direct skin contact For Garments Certain azo-dyes Prohibited Formaldehyde 75 ppm Pentachlorophenol 0.05 ppm Pesticide Total 1 ppm Other Compounds prohib chlorogenic carriers Quality or process demands Yes Arsenicum 1.0 ppm Antimony - Lead 1.0 ppm Cadmium 1.0 ppm Chromium Cr VI prohib , Cr 2.0 ppm Mercury 0.02 ppm Nickel 4 ppm Copper 50 ppm Cobalt 4 ppm Zinc - Öeko – Tex 103 – Without skin contact For Garments Certain azo-dyes Prohibited Formaldehyde 300 ppm Pentachlorophenol 0.05 ppm Pesticide Total 1 ppm Other Compounds prohib chlorogenic carriers Quality or process demands Yes Arsenicum 1.0 ppm Antimony - Lead 1.0 ppm Cadmium 1.0 ppm Chromium Cr VI prohib , Cr 2.0 ppm Mercury 0.02 ppm Nickel 4 ppm Copper 50 ppm Cobalt 4 ppm Zinc - Öeko – Tex 106 – Baby clothing For Garments Certain azo-dyes Prohibited Formaldehyde 75 ppm Pentachlorophenol 0.05 ppm Pesticide Total 0.5 ppm Other Compounds prohib chlorogenic carriers Quality or process demands Yes Arsenicum 0.2 ppm Antimony - Lead 0.2 ppm Cadmium 0.1 ppm Chromium Cr VI prohib , Cr 1.0 ppm Mercury 0.02 ppm Nickel 1 ppm Copper 25 ppm Cobalt 1mg/kg Zinc - Öeko –Tex 109, 110 – Textile furnishing fabrics and curtains For Household and furnishing Textiles Certain azo-dyes Prohibited Formaldehyde 300 ppm Pentachlorophenol 0.5 ppm Pesticide Total 1ppm Other Compounds prohib chlorogenic carriers Quality or process demands Yes Arsenicum 1.0 ppm Antimony - Lead 1.0 ppm Cadmium 0.1 ppm Chromium Cr VI prohib , Cr 2.0 ppm Mercury 0.02 ppm Nickel 4 ppm Copper 50 ppm Cobalt 4 ppm Zinc - Öeko –Tex 111, 112 – Upholstery fabrics, Blankets, cushions (and their filings) For Household and furnishing Textiles Certain azo-dyes Prohibited Formaldehyde 75/120 ppm Pentachlorophenol 0.5/0.05 ppm Pesticide Total 1.0/0.5 ppm Other Compounds prohibit chlorogenic carriers Quality or process demands Yes Arsenicum 1.0/0.2 ppm Antimony - Lead 1.0/0.2 ppm Cadmium 0.1 ppm Chromium Cr VI prohibited , Cr 2.0/1.0 ppm Mercury 0.02 ppm Nickel 4/1 ppm Copper 50/25 ppm Cobalt 4/1 ppm Zinc - 2.4 Eco-Tex a) Issuing agency Eco-tex: Institute for Applied Ecology The label was developed for members of the Eco-tex Consortium, an independent association of about 130 companies in the textiles sector that provides assistance in the development of ecologically optimized fabrics and garments. b) Objective To identify environmentally sound products by official certification. c) Main Features Eco-tex has neither standards, nor a product label. The main goal is a comprehensive, economical assistance programmed to guarantee the ecological optimization of the product. Criteria relate to the process of production as well as to the final product. In the manufacturing process, the use of various chemicals such as chlorified substances, biocides, flame-retardants, carcinogens and allergens, are prohibited. The final product has to comply with limit values for formaldehyde, heavy metals and pesticides, as well as be recyclable. The Consortium sets limits that are more stringent than existing law. Non-members may not apply for certification; however, all manufacturers and retailers in the textile sector may apply for membership. The services provided to producers comprise the following procedures, out of which membership fees include information, access to the eco-tex® database, the analysis of the audit and certification of one product group: • Definition of goals • Corporate decision • Audit • Result • Analyses • Evaluation of audit • Correction • Assistance • Certification • Monitoring The key element is the environmental audit on which all subsequent steps 'are based. The auditing and "eco-check" systems are employed conform to the European Council directive on Environmental Management and Auditing Systems (EMAS). Deficiencies with respect to production site, product line and processes are identified, then solutions elaborated. A monitoring system can be implemented to control improvement and maintenance of environmental standards. d) Application Procedure An audit is required to verify the veracity of the applicant's claims. The audit includes questionnaires on the process, as well as onsite inspection by Eco-tex experts. The whole textile chain is subject to investigation, thus the system incorporates environmental auditing, certification and monitoring. Membership is possible for producers, trade and non producing institutions. According to the member's category a certain range of services is offered. For product certification eco-tex®~ has established a set of criteria encompassing chemicals in use, residues of hazardous substances, bio-degradability of sizes and recyclables of the product. Textile products of any stage of production and regardless of material of the fibers can be certified. Co-operation with SGS, a worldwide certifying and testing company, provides testing facilities in most countries. Consequently the main area of operation is countries outside Europe. Applicants may, but need not, use the eco-tex label. e) Validity The certificate is valid for a year and it may be used globally. 2.5 Fabric Specification Sheet The table below illustrates a typical fabric specification sheet for a European retailer Characteristics Test Methods Supplier Data 1. Construction Characteristics: a- Material composition Directive ……………………………. b- Fiber content 96/73/EC ……………………………. c- Kind of fiber [ ] spun [ ]filament d- weight 96/74EC g/sq.m g/l.m e- Overall width Cm f- Minimum usable width Cm 2. Processing Characteristics a-Length of repeat/panel print …………………….Cm b-Width of repeat/panel print …………………….Cm c-Width of printed borders …………………….Cm d-Printed border constant width [ ] yes [ ] no e- Bias distortion % f- Napped Goods [ ] yes [ ] no 3.Washing/Bleaching/Ironing ISO 3758 4.Mechanical and Physical Properties a- Tensile force ISO 13934-2 N b- Seam force ISO 13935-2 N c- Seam slippage ISO 13936-1 mm at N load d- Tear force ISO 13937-1 N e- Abrasion Martindale ISO 12947-2 revolutions 5. Dimensional Stability to Length % Width% a- Steaming DIN 53894-2 b- Washing ISO 3759 + c- Dry cleaning ISO 3759 d- Tumble drying 6. Color Fastness Color Change Staining a-Light ISO 105-B02 Light Heavy b-Washing ISO 105-C06 c-Dry cleaning ISO 105-D01 d-Water ISO 105-E01 e-Perspiration, acid ISO 105-E04 f-Perspiration, alkaline ISO 105-E04 g-Dry heat ISO 105-P01 h-Dry rubbing ISO-105-X12 l- Wet rubbing ISO-105-X12 Characteristics Test Method Supplier Data 7. Oeko Tex requirements [ ] yes [ ] no Certificate number 8. Trade Specific Information [ ] yes [ ] no a-EU origin quality according to directive 1207/2001 b- Custom Tariff no. 2.6 ISO 9001 Quality Management Systems The ISO 9000 standard provides the common definition of quality in management systems. Its primary concern is the process and how the organization manages and controls its processes to ensure that the product meets the customer's requirements. Companies implementing ISO 9000 quality systems can be assured of a greater level of control, and in many cases profitability, within their operation. Those opting for an internationally recognized certification body such as ISO will also enjoy the benefits of having a credible and experienced partner for their future operations. The Route to Certification ENQIRY FORM RECEIVED ↓ OUR PROPOSAL ISSUED ↓ YOUR ACCAPTANCE RECEIVED ↓ YOUR QUALITY MANNUAL & PROCEDURES RECEIVED (REPORT ISSUED DETAILING ANY OMISSIONS) ↓ EVALUATION OR PRE-AUDIT CONDUTED (OPTIONAL) ↓ AUDIT CONDUCTED ↓ ↓ MAJOR NON-COMPLIENCE ↓ ↓ AWARD ← VERIFICATION VISIT TO RECOMENDED CONFIRM COMPLIENCE ↓ ↓ → ↓ CERTIFICATE ISSUED ↓ AWARD PUBLICISED ↓ ON-GOING SURVEILLANCE Beyond Registration Organizations holding this certificate of registration are entitled to publicize their achievement with the use of the Ml Certification logo on stationery, advertising and for other promotional purposes (in compliance with the Rules and Regulations). In addition, optional strategic reviews are available to ensure that your company is developing along with recognized international benchmarking activities. 2.7 ISO 14001 Environmental Management Systems The ISO 14001 standard is primarily concerned with environmental systems. It aims to ensure that a company's product has the least harmful impact on the environment during production and disposal or by pollution and by the depletion of natural resources. The Route to Certification Stage 1 COMPLETED PREPARATORY INFORMATION FORM RECEIVED Stage 2 OUR PROPOSAL ISSUED Stage 3 YOUR ACCEPTANCE RECEIVED Stage 4 (PROJECT MANAGED IN CONSULTATION WITH YOU) Stage 5 GAP ANALYSIS (i.e. where you are, and what the Standard requires) This is an optional service of up to two visits that many clients find useful. Stage 6 PRE-CERTIFICATION ASSESSMENT This entails a review of your environmental management system (EMS), documentation (including legislation, aspects and impacts analysis etc) and a brief overview of your operations, focusing on operational control. At this stage we can agree areas for development prior to certification assessment. Using this approach has meant that, at the time of writing, none of our clients have had to be referred (an unsuccessful certification assessment). Stage 7 CERTIFICATION ASSESSMENT While documentation is necessary to support the EMS, our approach concentrates on the actions and controls that are in place to prevent pollution and ensure continual improvement (including legislative compliance). Considerable emphasis is placed on interviewing members of your organization at every level. Stage 8 AWARD RECOMMENDED SUBJECT TO CLOSURE OF NON-CONFORMITIES Stage 9 AWARD PUBLICIZED Stage 10 ON-GOING SURVEILLANCE Beyond Registration As a holder of the certificate you are entitled to publicize your achievement with the use of the Ml Certification logo (subject to certain conditions). Through our surveillance activities and with the help of our international office network, we are able to provide you with valuable on-going support and guidance. EMAS In addition to the requirements of 14001 there is a need for a detailed environmental statement which is verified and submitted to a 'competent body' for registration. 3. Guide to Import & Export Operations Context The Serbian garments industry is one of the most dynamic sectors of the economy with an important contribution in the total import-export operations. An important part of the garment manufacturing companies are part of lohn contractual arrangements with partner companies from Europe and USA. The rest are developing their own collections which are mainly sold on the Serbian market. However, most of the Serbian garment manufacturing companies are planning to develop or increase export operations in the near future and they realize that for this purpose they have to undertake specific development steps. The import operations are also very important for the garment producers, since more and more companies seized the difference in the cost / quality ratio between sourcing from Serbia (from Serbian suppliers or importers / agents) and having their own external sourcing agreements. Import operations may be a better return in the value chain, but it also require know-how and additional costs. The present chapter will try to provide a set of practical tools for both export and import operations for the Serbian garments manufacturers. External Sourcing Steps The most important steps a company has to undertake when sourcing abroad are: 1) Identification of external suppliers 2) Evaluation of received offers and selection of external suppliers 3) Concluding import –export contracts with selected suppliers 4) Implementation of concluded contracts (delivery, quality control, reception, payment) 1) Identification and selection of external suppliers Evaluation of potential suppliers When choosing a supplier for a component, product or service, one is inclined to focus on the obvious criteria of price and it is easy to ignore, or forget, the hidden costs described bellow: • Cost of lead time When suppliers need a lot of notice, the responsiveness to changing market conditions is impaired. Another aspect is related to the horizon effect with respect to forecasts. A lead time of 6 months requires a forecast of demand of 6 months. Therefore it is more difficult to be accurate with such a forecast than with one for 6 week. In the garments industry the lead longer time is a serious risk because of the continuous change in style, season, etc. • Cost of quality A supplier who delivers poor quality at best incur costs of inspection, at worst such a supplier will incur costs to the customer’s reputation. In the garment industry low quality of fabrics and trim means automatically low quality of final product. A low quality supplier may incur extremely high cost and even permanent image damage. • Cost of unreliable delivery When supplier’s delivery promises are not kept then operations are disrupted and sales lost. In general, when sourcing abroad, five factors are considered to be the main ones in the analysis of potential suppliers: 1. Quality – specification and conformance to specification 2. Cost – not only delivered cost but all the other costs which add up to the “Lifetime Cost” 3. Delivery – Lead time and reliability of delivery promise 4. Development capability 5. Management quality When choosing between several suppliers the factors listed above may be combined into a single measure to give a supplier rating. Each supplier is given a rating for each factor. The scale used is inevitably arbitrary and its size should be influenced by the relative importance of the factor concerned. i.e. If the quality of the goods and the reliability of delivery are very important, then they may be scaled 1-10. The size of the supplier and its likely survival in the market may be rated less important – scale 1-5. The ratings for each factor are added to give an overall supplier’s rating. The main objectives to be taken into consideration when selecting a good range of suppliers are: • Lower prices for materials and items used; • Faster inventory turnover • Continuity of supply • Reduced replenishment lead times • Reduced transport cost • Reduced materials obsolescence • Improved suppliers’ relationships • Better control of quality • Effective administration and minimization of organizational effort In order to reach these objectives, the whole process of sourcing should be effectively managed. In important issue is whether the sourcing process should be centralized and to what extend. In many garments manufacturing units, the purchase department is not a stand alone department, but it is included either in the operations department or the marketing department. This kind of approach may work up to a certain size of the company, but cannot ensure efficient sourcing in the long run. When sourcing is from abroad, things are becoming even more complicated and a team (or at least one or two qualified persons) must take over the external purchasing operations. The principal benefits associated with a professionally organized purchasing department may be summarized as follows: • The possibility of standardizing specifications and establishing common needs regarding quantity, quality, specifications, etc; • The possibility of more economic purchase through, for example, larger batch quantities; • The reduction in administrative cost through the purchase of larger quantities on few occasions, possibly from fewer sources; • The possibility of purchase staff specialization and thus increased knowledge of sources and supplies; • The possibility of the use of more effective, detailed and accurate purchase information and records. The standard contracts for import sourcing: contents and hints When negotiating an import contract, the beneficiary has to pay attention to all the provisions included taking into consideration that some of them may imply additional costs for the importer that reflect in the total purchase price and automatically in the total production cost, such as the delivery terms (that are further detailed); there is a strong relation between final price, insurance and delivery terms. The import-export contract provides for the following main terms: parties, object of the contract, price, delivery terms, payment conditions, guarantees, reception of goods, arbitration, guarantees, transport of goods. a. The parties of the agreement, in which each part is thoroughly identified with exact name, address, registration numbers and legal representatives. b. The object of the contract which contains the exact identification of goods, the agreed quality according to standards, quantity agreed (expressed in a commonly agreed measurement unit), any specifications involved, origin of goods, packaging. If no such reference on quality can be established by both parties, there will be special appendices to the contract called technical specifications. Regarding packaging, this contract paragraph mainly refers to the way the goods are packed and whether the cost of packaging is included in the selling price or not. The special labeling for fragile or dangerous goods may also be part of the contract. c. The price of goods. Price can be expressed per unit or per total, mentioning exactly the currency commonly accepted. In international contracts price vary always according to the delivery arrangements established in the contract. d. The delivery obligations. This part of the contract includes Terms of delivery, which stipulate the exact place and time on which the sellers’ rights and obligations regarding the risk and transportation are transferred to the buyer. The delivery terms are regulated by INCOTERMS 2000, uniform regulations from the International Chamber of Commerce in Paris. In the present form there are 13 optional delivery conditions, which become mandatory once included in the international trade agreement between the parties. INCOTERMS 2000 Incoterms are standard trade definitions most commonly used in international sales contracts. Devised and published by the International Chamber of Commerce, they are at the heart of world trade. Among the best- known Incoterms are EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid), and CPT (Carriage Paid To). ICC introduced the first version of Incoterms - short for "International Commercial Terms" - in 1936. Since then, ICC expert lawyers and trade practitioners have updated them six times to keep pace with the development of international trade. The English text is the original and official version of Incoterms 2000, which have been endorsed by the United Nations Commission on International Trade Law (UNCITRAL). Authorized translations into 31 languages are available from ICC national committees. Correct use of Incoterms goes a long way to providing the legal certainty upon which mutual confidence between business partners must be based. To be sure of using them correctly, trade practitioners need to consult the full ICC texts, and to beware of the many unauthorized summaries and approximate versions that abound on the web. ICC now publishes a brief introduction to Incoterms on a new special section of its website. The section does not provide all the answers but will help understanding of what Incoterms are for and how they are organized. The site describes how to order Incoterms in the original English version and many of the world's main languages from ICC Publishing in Paris and New York, or ICC national committees around the world. The site includes the Preambles to each term. The Preambles explain the areas the terms cover but do not spell out the obligations of buyer and seller - information that can be obtained only by consulting the full published texts of the 13 Incoterms. As the guardian and originator of Incoterms, ICC has a responsibility to consult regularly all parties interested in international trade to keep Incoterms relevant, efficient and up-to-date. This is a long and costly process for ICC, which is a non-governmental, self-financed organization. The work is financed out of sales of Incoterms 2000 and related publications, which are protected by copyright. Serbian Copy of Incoterms 2000 Copies of Incoterms 2000 in Serbia can be obtained from the Chamber of Commerce and Industry in Belgrade. • Group E – ex-works 1) The seller is fulfilling the delivery obligation at the gate of its headquarters • Group F (group of non paid transportation – the seller deliver the goods to a buyers’ carrier) 1) Free carrier (delivery to carrier in a certain place) – FCA 2) Free alongside ship (delivery in the port, next to the ship) – FAS 3) Free on board (delivery on the board of the ship) – FOB 4) FBO stewed – the seller has the obligation to arrange goods on ship • Group C – group of paid transportation – the seller has the obligation to pay for transportation, without taking the risk after forwarding of goods. 1) Cost and freight (CFR) – the seller pay transportation, but does NOT pay insurance 2) Cost, insurance and freight (CIF) – pays for both transportation and insurance 3) Carriage paid to (CPT) – is used for the terrestrial transportation, the seller pays for transportation only 4) Carriage and insurance paid to (CIP) is used for the terrestrial transportation, the seller pays for transportation and insurance • Group D (group arrival) – the seller pays for all related costs of transportation and insurance until the final destination is reached. 1) Delivered at frontier (DAF) – is used for the railway and highway transportation. The seller is fulfilling the delivery obligation in the moment when the goods were put the buyer’s disposal, with export duty paid, at the frontier of the exit country, but before the frontier of the import country. 2) Delivered ex-ship (DES) – The seller is fulfilling the delivery obligation in the moment when the goods were put at the buyer’s disposal on the board of the ship without import duty paid, but in the final destination port. 3) Delivered ex-quai (DEQ) – The seller is fulfilling the delivery destination in the moment when the goods were put at the buyer’s disposal on the dock, in the final destination port, with import duty paid. 4) Delivered duty unpaid (DDU) – used especially with post and parcel delivery. The goods are put at the buyer’s disposal in the final destination point, with import duty unpaid. 5) Delivered duty paid (DDP). The goods are put at the buyer’s disposal in the final destination point, with all import duty paid. The obligations which bind both seller and buyer (10 for each) are part of two special chapters of the INCOTERMS 2000: chapter A and chapter B. Here is also mentioned the agreed time of delivery which can be established by the two contract parties either as a fixed calendar date or as a variable one (i.e.: six months from the opening of the letter of credit). In this chapter should also be clearly stipulated who will make the receipt of goods and where the receiving process should take place. The receipt will be done from quantitative and qualitative point of view. In the specific case of textiles, the qualitative receipt has to be done according to the quality requirement of the contract, namely a quality standard, sample, etc. It is unlikely that a piece by piece reception can be done, but a random inspection for quality, including specific quality testing has to be undertaken and clearly stipulated in the export – import contract. e. The payment conditions include the payment modality: letter of credit, incasso, wire transfer, bank guarantee, which imply immediate payment, at a certain date, at the conclusion of the delivery f. Guarantees - The payment guarantees are generally under the form of bank letter of guarantees and are provided by the buyer / importer. The bank letter of guarantee is a very used instrument since it has two major advantages: it does not affect the cash flow of the buyer and it increases significantly the level of trust between the two business partners. This is a common practice in the international commerce, especially at the first few transactions between new trade partners. g. Specification of the law to be applied, as this type of contract implies two parties from different countries. Claims and disputes may arise. No matter how trustworthy both partners are, there are many situations when claims may arise. The most usual claims can be related to: delivery term, quality and quantity. The settlement of disputes has to be clearly expressed in any contract. The most usual settlement clauses are: penalties to be paid to the affected party, discounts on the future deliveries, image reparatory payment, etc. The clause of jurisdiction establishes how and where the potential disputes are going to be settled: • by mutual agreement • via arbitration Courts The arbitration courts are a function of the Chamber of Commerce and Industry of Serbia, and they are being used more and more by Serbian companies. It is always important to be mentioned the country where arbitration will be used or the legislation under which any dispute will be settled. It may be the case when the parties agree that arbitration will be undertaken in the country of the seller/ exporter or in the International Chamber of Commerce in Paris, as a neutral party. If no mention is made in this respect, the legislation which will govern the contract will be the one of the country where the contract is signed. h. Validity of the contract, which also includes the conditions when the contract becomes null. Force Majeur is the chapter which foresees the conditions under which the parties will be exempted by the contract obligations in case of for force majeur. It is very important the detail in which the special conditions are described. Generally, if no dispute arises, the cease of contract can be done with the agreement of both parties. i. Signatures and stamps of the two legal representatives Once the import-export contract has been agreed, then the actual delivery-reception of the products according to the contractual provisions follows. Delivery – reception implies another series of contracts, such as transport and insurance contract. The responsible part for taking care of the formalities is either the seller or the importer, depending on the delivery conditions agreed. Transport of goods can be made by train, by road, by sea or by air, depending on how quickly the goods are needed, location of the two parties, costs willing to be paid, but also type of products. Each means of transportation implies a specific document/type of contract, used in the international transport practice: • By road – CMR letter • By train – CMR letter • By air – airway bill • By sea – charter party Each of the transport contracts mentioned above is signed in three copies, one for each party involved: seller, importer (beneficiary) and transport company or forwarder. The insurance contract is represented by the insurance policy, through which the insured party (owner of goods) agrees with the insurance company to transfer a series of risks to be covered in case the loss occurs, in return of an insurance premium paid by the beneficiary. For a better coverage, the beneficiary must take into consideration all the possible risks that may occur to be included in the insurance policy. The insurance practice mentions groups of insurance risks, such as group A, B, C, but also standard insurance policies. Another step is represented by the customs procedures (the moment products enter the beneficiary country). In Serbia, the Customs authority has a complex role, very similar to that in the European Union. The main functions of the Customs Authority are: a) Fiscal - all importers have to pay import taxes according to the customs tariff of Serbia b) Control – random physical and documentary control for all imported goods. c) Statistical – on the basis of the customs declaration for import. The data is sent to the National Statistics Biro. The documents needed for imports in to Serbia: • Customs Import Statement • License of import (if necessary) • The specification, necessary when goods are diversified • The International transportation document • The external invoice • Payment documents according to the payment agreements • The international buying – selling contract • Prove of VAT payment – 18% of the customs value of goods • Prove of payment of the import duty according to the Customs Tariff Specific details related to product clearance when in Serbia are available under the Customs authority site http://www.fcs.yu/ Regarding this procedures, in case that a company decides, a representation contract with specialized companies called “Comisionari Vamali” (Customs Clearance Companies) can be signed. In order to be able to use the services of a specialized company, special juridical and legal representation documents have to be signed. Others companies decide to develop their own customs clearance operations through their internal import division. Types of imports in Serbia • The permanent import • The temporary import In Serbia the temporary import is regulated by the Custom Law article no. 139 paragraph 2 which introduces in Serbia the “draw-back” customs regime. The “draw – back” regime is a specific regime for the imported goods which are going to be re-exported. The temporary import is a very common practice in the garment industry for the lohn type contracts. The fabrics and trims are imported with a temporary regime until production is finalized and the garments are exported back in the customer’s country. This type of import is different from the permanent import in the sense that import duty is paid and then is reimbursed to the importer. The condition for reimbursement of the import duty is that both temporary import and final export operations are done via the same Customs Unit. In this case, the necessary documents are: • Import statement, with the mention “draw- back” • Export statement and a personal statement of the owner company or of its legal representative through which is required the reimbursement of the paid import duty. A special case related to the export – import operations is the one related to the export or import of samples or master patterns. In the garments industry there is a common practice when contracts and various agreements are signed based on samples approvals. Samples also play an important role in the quality control in the sourcing operations. Therefore, it is very important to know how samples can circulate from one country to the other without payment of regular duties. Samples have to reach not only business partners, but are an important item when it comes to participation to various international trade shows and industry fairs. In the case samples are forwarded, the Convention of International Customs comes into force. According to this Convention, a special booklet is issued which allows the samples to circulate in various countries without need to fulfill the customs related formalities and without payment of related import – export duties. The main condition for this facility to be put into practice is the return to Serbia of the respective products qualified as samples. If a sample is sold in the one of the destination countries, there is the possibility of transformation of the temporary import into a permanent import with the obligation of payment of all related customs duties according to the rules and regulations valid in the respective country. Another option in case of sample forwarding is the use of services of a Forwarder. The procedure is simpler but it involves higher costs. Payment methods for international sourcing contracts The international payment methods can be defined as the totality of banking instruments, of the operations and of the documents through which the seller is cashing from the buyer the amounts foreseen in an international import export contract. The most usual payment modalities used in the international commerce are: 1) The documentary letter of credit 2) The incasso 3) The wire transfer 4) The bank guarantee 5) Bill of Exchange) 1) The Documentary Letter of Credit The documentary letter of credit (L/C) is a payment modality used in the internal and international commercial relationships in all countries. It has an extensive use because it is a safe payment modality for the seller / exporter. The main characteristic of the letter of credit is the intervention of at least two banks (the one of the seller and the one of the buyer) in the payment arrangement. This is why when a contract is concluded and prices are negotiated, it is mandatory that the cost of banks commissions is also taken into account. The letter of credit is opened by a bank from the order and in conformity with the instructions of the buyer / importer and it is approved or confirmed to the seller / exporter by another bank, usually from the country of the seller / exporter. This second bank is called confirming bank. For the seller / exporter, the letter of credit represents a firm and permanent payment promise from a bank. This payment promise is conditioned by the presentation of a set of documents by the seller / exporter. The exact description of the set of documents is stipulated in the conditions of the letter of credit and is usually the same with the ones stipulated in the import - export contract. The seller / exporter can use the approved letter of credit from the paying bank (the bank of the importer) in order to obtain advance payment from banks from its own country, so that he can prepare the export. From the point of view of the importer, the letter of credit is a firm and non changeable promise of payment which is conditioned by the presentation of the seller / exporter of a set of documents, usually the prove of delivery of goods, according to the signed contract. The delivery documents are to be presented to the paying bank via the seller / exporter bank at a certain term and has to fulfill all delivery conditions exactly as stipulated in the import – export contract. Though this payment modality is part of the import – export contract, the letter of credit is a separate contract in itself, to which the import-export contract is not opposable in Court. This means that, the letter of credit is even a stronger agreement between the two business partners, due to the involvement of at least two banks. Due to its stand alone status, the letter of credit can have special clauses, which may have no connection with the import – export contract, but are generally drafted in the spirit of the partner’s agreement. The economic functions of the letter of Credit. • Instrument of safety and control The letter of credit has as main function the insurance given to the seller that the payment will be done with certainty, if the delivery conditions are fulfilled in a proper manner, as well as the insurance given to the buyer that the exporter has exactly fulfilled all delivery conditions. In the implementation of this double guarantee, the main role is played by the involved banks. In the process, a series of very strict juridical relations are created via the banks, but in the end, the most important factor is the trust the seller / exporter and his bank have in the bank of the buyer / importer. On the other hand, the buyer / importer has to have full trust in the bank of the seller / exporter, that it will carefully analyze the delivery documents and that these documents are fully reflective the reality. (i.e. as long as the delivery documents are accepted as fulfilling the conditions of the letter of credit, one can even export sand instead of sugar!). • Instrument of credit A letter of credit can facilitate a export preparation loan to be obtained by the seller / exporter from a local bank. In such a case, the seller/ exporter has to make sure the opening of the letter of credit is made few months before of the date of delivery, and stipulated as such in the import – export contract. It is a common practice that the letter of credit is considered as a reliable collateral by banks. Classification of the letters of credit • Amendable – they can be amended or canceled without prior consultation of the issuing bank. This is valid mainly in theory and it is not used in practice due to the lack of insurance to be generated. • Non – amendable – they generate firm juridical relationships between the paying bank and the beneficiary (seller / exporter). It generates an insuring guarantee for the fulfillment of the contractual clauses, on the condition that the conditions stipulated in the letter of credit are strictly respected. It cannot be modified unilaterally, and for this all parties involved have to fully agree of the conditions. For the acceptance of the two corresponding banks, the one of the seller / exporter and the one of the buyer / importer, a thorough analysis take place, including a presentation of financial statements of the respective banks and information gathering from the banking community. If necessary, a third bank gets involved in the arrangement, named confirming bank. The cost of the confirming bank, as an additional insurance given to the seller / exporter are quite high and the payment for these additional costs are to be bared by the seller / exporter. • Letter of credit with address in the country of the seller / exporter. This means that the cashing of the final payment is done at the front desk of the bank in the country of the seller / exporter. • Letter of credit with address in the country of the buyer / importer. This means that the cashing of the final payment is done at the front desk of the bank in the country of the buyer / importer. • Letter of credit with address in a third country, established by all involved parties. • Partial letter of credit. This type is stipulating partial payments according to partial deliveries. If one delivery was not made accordingly, the bank is exempt by all obligations related to the remaining payments. • Complete letter of credit. The payment is done once, upon one single delivery. • Letter of Credit with immediate payment. In this case, the payment is done upon submission of the right delivery documents. • Letter of credit with term payment. In this case, the payment is done after a certain number of days after the presentation of the right delivery documents. Conclusions: • The letter of credit is a completely separate contract from the import – export contract. • In the letter of credit are taken into account only the documents, not the goods. • In order to be put into effect, the documentation related to the letter of credit has to be FULLY drafted according to the letter of credit. This is why the conditions of the letter of credit have a sterling importance and have to be analyzed with a lot of attention by all parties, before signature. • The banks only take into consideration the text of the letter of credit, being the only binding document. • The banks are not responsible for the authenticity of the documents and the validity of their content. 2) The Documentary Incasso In this payment modality, the involved parties are the seller / exporter and the buyer / importer. The involvement of banks is minimal, the main role is the one of the mutual trust. Because of this reason, the use of the documentary incasso is diminishing. The banks are receiving the delivery documents and keep them at the exporter’s disposal until payment is made. The documents are not released until the payment is not made, but the decision of payment is with the buyer. He decides when, and how much he pays. The incasso is cheaper than the letter of credit. It is generally used when the demand for the respective goods is very high. A good method of diminishing the risk involved by the documentary incasso is the forwarding of goods via a forwarding company or at the disposal of o certain bank, therefore not addressed directly to the buyer / importer. 3) The payment order The order of payment is an order given by the buyer / importer to his bank to pay a certain amount to the seller / exporter. The order stipulates the purpose of payment and it is generally used as an advance payment. Upon reception of the respective amount, the seller / exporter delivers the goods according to the import – export contract. If wire transfer is used, the buyer / importer has to make sure that the paid amount is to be reimbursed if the delivery is not made according to the clauses of the import – export contract. 4) The bank letter of guarantee This payment instrument has a much more complex juridical involvement and it is more difficult to be used. The main problem when using the bank letter of guarantee is that there is not an internationally accepted procedure and the local banking regulations always prevail. It is common that banks escape responsibility in case of non payment through local regulations which are not fully familiar to the seller / exporter. 5) Bill of Exchange The bill of exchange is considered a written order given by a person named drawer to another part called drawee to pay a certain amount of money on spot or at maturity to a beneficiary. It is used for short term crediting, the maturity usually does not exceed 90 days. Out of all the means of payment mentioned above, a conclusion would be that for regular customers one can use any type of payment, and for new contacts it is advisable to use the documentary letter of credit. 4. Annexes List of international and domestic fairs in 2005 Testing labs (In Serbia or neighboring countries) Annex 1 International garment fairs: • Feninver, Sao Paolo, Brasil, January Feninver is a Brazilian Garments and Fashion Accessories Fair dedicated to the garment and fashion accessories market. • International Fashion Fair – Tokyo, Japan, January The International Fashion Fair is the only Global Business-Oriented Fair in Japan. Exhibit items includes ladies wear, men’s wear, casual item, children’s & maternity wear, inner wear & leg wear, leather & fur clothing, bag, shoes, accessory, display, information & system. • Hong Kong Fashion Week , January The major exhibits include all kinds of Fall/Winter clothing, fashion & clothing accessories, garment related products, services & supplies like ladies' wear, men's wear, babies and children's wear, sportswear, lingerie, evening wear, handbags. • InNaTex – Frankfurt, Germany, January This is a leading trade fair for natural and organic textiles held two times every year. • India International Garment Fair – New Delhi, January and July India International Garment Fair (IIGF) is one of the world's largest and most popular apparel fair, considered by organizers to be a perfect amalgamation of fashion, design and quality. Organized twice a year. Official web-site: www.indiaapparelfair.com • Global Fashion – Düsseldorf, Germany, February and July Global Fashion, Private Label, Production & Sourcing, taking place parallel to and within cpd woman_man, the world’s largest fashion trade fair, is a platform for non-branded producers addressing volume buyers and private label customers. Global Fashion is a prime opportunity for non-branded producers to meet new customers. It is also a first choice for branded manufacturers to look for new suppliers and products. Organized twice a year. • Copenhagen International Fashion Fair - February - August Exhibitors within the following product categories exhibit at CIFF: women's fashion, men's fashion, children's fashion, young fashion, jeans, shoes, bags and leather goods, lingerie/swim wear, accessories, other. Organized twice a year. • The ASAP Global Sourcing Show, SUA, Las Vegas, February Held twice a year, ASAP has become known in the U.S. apparel industry as the premier show and one-stop marketplace for sourcing apparel overseas. Featuring hundreds of manufacturers of men’s, women’s, children’s apparel, textiles, and leather from over 35 countries, ASAP also features its unique Match Making Sessions and Educational Seminars on the latest international trade laws, innovative financing, labeling and quality assurance. • InterTextil Balticum, Riga, Latvia, February This event is an International Exhibition of Textile, Clothing, Leather Garments and Production Equipment INTERTEXTIL BALTICUM that will take place in Riga, Latvia. Fashion shows and new clothes collections’ presentations were held during all days of the exhibition. • Moda UK - Birmingham, February The national trade women wear biannual exhibition previews of the collections, providing an important overview of women wear trends for the coming season. Now in its sixth season, Moda UK will preview over 700 women wear collections covering women’s mainstream fashions, casual wear, eveningwear, occasion wear, accessories and bridal wear. • Moda UK - Birmingham, February Moda Menswear the UK s national men’s wear show enters its sixth season, it remains the only national trade exhibition for mainstream and lifestyle men’s wear, providing a much needed commercial platform for men’s wear brands and buyers across the UK and Ireland. It will preview over 150 collections, covering tailoring, casual wear, shirts and knitwear, underwear and accessories, which provide an important overview of men’s wear trends for the coming season. • Turkey Textile Industry Fair, February, Istanbul ITSE is International Textile & Accessories Exhibition. It is the unique and the biggest exhibition which brings together all the textile industry companies (fabric, yarn and textile accessory) takes place and presents their products, continues its development day by day. In the meantime, it gives the opportunity to presents the latest trends of textile industry in a meeting point of well-known international buyers. • Seamlessworld & Innovation Knit, Milan, February This is the 2nd International Show of Seamless wear. It will be time for introducing new companies, which have brought in all their experience and expertise offering innovative products with great future in mind. • HYPE and Futura Fair– Dublin, Ireland, February HYPE is the Ireland’s fair for street wear, sportswear, jeans and design-led casual wear, related to Futura Fair, Ireland's only Women wear, Menswear, Children’s wear, Footwear and Accessories Trade Fair. Allows regional participation. • Spin Expo – China, March (Sourcing Fair) International offer from European and Asia producers organized by specialists in the field, targeting on quality and creativity: fibers & yarns for knitwear, fibers & yarns for circular knit a weaving for apparel, fibers & yarns for upholstery, knitwear & knitted fabrics, light creative machinery for knitwear, textile computerized technology (CAD/CAM/CIM), design & styling, trade publications. • CPM Collection Premiere - Moscow , Russia, March International Trade Fair for Women-, Men-, Kids wear, bridal wear, lingerie, accessories exclusive. CPM is the only fashion trade fair in Russia of international standing, offering a professional atmosphere for Western labels and high level Russian brands. The products to be offered at the show are women’s ready-to-wear, knitwear, infants / children’s wear, leisurewear, leatherwear, leather and fur fashion, lingerie items, swim and beachwear, hosiery, footwear, accessories, fashion jewelry, etc. • Cairo Fashion – Cairo, Egypt, March and September at the same time with Cairo Textile (Sourcing Fair) The International Exhibition for types of Ready Made Clothes. Show fields include - women fashion, men fashion, lingerie, men & women night wear, sports wear, special garments, knitted garments & tricot, related to Cairo textile, which includes yarns, fabrics, lining, narrow weaves, buttons, labels, models, zippers models & rack systems, textile, machineries, tricot. Organized twice a year. • Textile Expo-Dubai, March Textile Expo Dubai, the International Machinery Trade fair for the textile and fabric industry will take place at the Airport Expo Dubai – DUBAI WORLD TRADE CENTRE in March. The exhibitors to the show include manufacturers from all sectors of the textile machinery industry (spinning, non-woven, weaving, knitting, dyeing and finishing, garment making, testing, software, leather and shoe making) as well as dyestuffs and chemicals, fabrics, fiber and yarn producers. • READY TO SHOW – Milan, Italy, March and September, at the same time with Intertex Milan READY TO SHOW marked the first time that such an event was organized in Italy to give non E.U. apparel, accessory, textile and leather manufacturers direct access to major European buyers, including importers, private label large retailers and all other users of imported apparel and textiles. Intertex Milano is the International Textile Exhibition in Italy dedicated to producers outside E.U. Selected collections from non E.U. exhibitors, mainly manufacturers of fabrics for women’s, men’s and children’s wear, laces, embroideries, knitted and woven fabrics but also accessories, yarns and clothing. Both are organized twice a year. • INDIGO Paris – March (Design Fair) This event is an International Exhibition of Design and Textile Production. Taking textile creation a step further, Indigo presents the opportunity for fashion and home furnishings professionals to meet leader in fields of design and textile creation. A collection of new designs, an ideas forum and IT applications that will help realize the future collections. The exhibitors include designers, CAD designers, design studios and workshops, and art schools from all over the world. • Source It – Sourcing fair, Hong Kong, March Product groups include fibers & yarns, trimmings & accessories, fabrics, garment, specialized machinery, dyeing & finishing facilities, design services and other related services. • CHIC – Beijing, China, March – April The fair is divided into 2 sessions: March for men’s wear and casual, as well as April for Women’s wear, Children’s wear and accessories. • Motexha Series – Dubai, April and September This event is the largest fashion & textiles trade event in the Middle East. It takes place twice a year and is the host to more than 750 exhibitors from more than 30 countries annually. Products include ladies & men’s fashion, textiles, leather goods, lingerie, swimwear and bridal wear. Organized twice a year. • SIBA – Piacenza, May (Sourcing Fair) The International Exhibition of Buttons, Accessories, Raw Materials, Machinery and Technology. The well-established bi-annual exhibition dedicated to buttons widens its interests towards all fashion accessories. SIBA was born in 1971 in order to satisfy clothing industry's needs. Today the well-established bi-annual exhibition distinguishes itself for the selection of the best traditional and advanced button industries, both in national and international. A section of the exhibition is dedicated to raw materials, machines, colors, instruments and technologies. SIBA expands its interests towards all fashion accessories, including metal small parts, buckles, zippers, strings, pearls, mother of pearls, beads, strass, crystals, trimmings for cuffs, collars, edgings, and also laces, glasses, foulards, labels, leather articles and components for jewels. • Bangkok International Fashion Wear – June Thailand BIFF 2005 prepares to flaunt the region’s latest collections of ready-to-wear, brand name clothing, silk and ethnic products, textiles, yarns, threads and a huge variety of accessories, all in the form of customized and finished products. • ShanghaiTex 2005 – June Since its inception in 1984, ShanghaiTex has been successfully creating enormous business opportunities for overseas suppliers and China users in the industry. It is now being widely recognized as the leading International show for the textile industry in China that worldwide suppliers can totally rely on for their promotional activities. • BGate – Sofia, Bulgaria, October Balkan Apparel & Textile Exhibition is the only dedicated event in Bulgaria for the textile and apparel industry. For more information about organizers, location, participants and participation registration forms, please visit the web page http://www.fibre2fashion.com , the Upcoming Fairs and Events section. Annex 2 1) International Quality labs – Serbia offices • JUGOINSPEKT BEOGRAD Trg Republike 3/I; 11000 Belgrade; YUGOSLAVIA Telephone: ++381 11 622-166; 622-187 Fax: ++381 11 2626-349 E-mail: Office@Jugoinspekt.co.yu Jugoinspekt Beograd is a renowned, worldwide internationally recognized organization with long-lasting experience in inspection of quality and quantity of products in the agriculture and food industry, mining and energetics, chemistry, ferrous and non-ferrous metallurgy, oil and derivatives production, production of machinery, wood and textile industry, paper industry and other fields of economy.