Authored by Áslaug Magnúsdóttir and can also be found here: http://is.gd/KFoLFH
This is the seventh in a series of articles on the Business of Fashion basics, and is taken from the business of fashion website. Originally published in 2007, this series is used to educate those interested in going into the business of the fashion industry. NosaFashions claims no copyright to this material and is used strictly for educational purposes.
The Basics is BoF’s recurring series on how to set up a fashion business from scratch, developed in partnership with Ari Bloom, a NYC-based strategic advisor to growth brands. Today, we examine one of the most important parts of running a fashion business: production.
LONDON, United Kingdom -- The least glamorous, but possibly the most important aspect of bringing a fashion product or collection to market is production and manufacturing.
Production describes the process by which concepts are made into a saleable physical product. In most cases, this means going from a small set of samples or prototypes to commercial quantities of the item or style, often across multiple sizes, colours and patterns. As you can imagine, it’s impossible to separate production from the overall success of a brand, as great concepts can be designed, developed and sold, but a fashion business will ultimately live or die based on what is produced and delivered to the end consumer.
For most small fashion brands and start-ups, finding sources of production is the most challenging element to get right. Too often, early-stage businesses leave this until too late, and sometimes find themselves with orders to fulfil, but nobody to produce them. This is something to avoid at all cost. Once you have taken orders, you must be able to fulfil them, or you risk scaring away retailers for years to come. Remember, this is a small industry and everybody talks.
While there are endless options for production, both domestic and international, finding quality suppliers can be difficult, especially in the UK and and USA, where many top young fashion designers are based. As a result, many in the industry tend to be secretive and protective of their production sources.
In recent years, producers in France and Italy have become more open to working with young designers. But your orders (in small, unpredictable quantities) may tend to get pushed to the back of the order queue, meaning that your deliveries may be later than bigger brands, which can negatively impact sell-through rates and vendor relationships.
With so much competition for vendors, it’s essential to make sure you can secure production before you invest time and money in the design process, sales process and marketing costs.
IDENTIFYING PRODUCTION PARTNERS
So how can you track down production resources? As with most things in fashion, it comes down to leveraging your relationships and seeking out help wherever you can find it:
Former Partners: If you’ve worked for another company previously, especially a larger one, some of your former producers may be willing to work with you, or at least make a referral.
Accounts: Often a retailer will have preferred production partners that their other accounts work with. They may even use them for their own private label product, and, if you ask nicely, they may be willing to make some introductions.
Sample Makers: Many small manufacturing labs or factories who create samples often have associated production facilities, or know the best local manufacturers. Use them as a resource as they may be able to point you in the right direction.
Fashion Schools: If you are a student or alumnus of a fashion school, check in with your professors and tutors to see what resources are available to you. They may also have relationships you can leverage.
Friends and Colleagues: It never hurts to ask. But beware, you may not get a straight answer.
Online Resources: There are some very helpful sites that, for a fee, will give ratings and testimonials on apparel and textile manufacturers. Panjiva.com is a great example, although you may be hard-pressed to find top-quality resources if you operate at the luxury end of the business.
PRICING AND PLANNING
Another good reason to identify your production partner early in the process is because their execution capabilities and associated costs need to be figured in to your early design decisions, and ultimately into your pricing. If you’ve followed our advice from earlier in this series, you should have already set wholesale and retail pricing targets for your product. Then, by simple comparisons of these prices to your quoted costs, you should be able to tell whether they will allow you to make enough profit margin on each item, at the right level of quality.
Many designers ask what a reasonable margin target should be. The answer, of course, varies depending on the size of your business, its overhead, development, sampling costs and many other factors. Most companies try to achieve close to 50 percent margins at wholesale and over 70 percent in retail. But again, there are no hard and fast rules, as each circumstance requires different treatment.
Remember that not all factories will have all the raw materials, fabrics and trims required to construct your product. If procurement falls on your company, you will need to source these yourself, and in doing so, incur costs that will likely need to be paid on an accelerated timeline. Most suppliers will require some sort of deposit or prepayment to cover raw materials and/or the labour needed for production. Whatever balance remains will usually be required once the goods are ready to ship. Some suppliers will be flexible on terms, allowing you to delay these payments for weeks to months, which will help your cash flow, as you are not likely to get paid by your accounts or customers for some time. Always ask for terms so you can give yourself some cushion on payments. And remember, whatever arrangements you agree on with your suppliers should always be captured in an official Purchase Order that should detail all transaction and delivery terms.
THE IMPORTANCE OF SAMPLING AND QUALITY CONTROL
In order to get started with production, you will need to create or designate an approved sample to work by. This “sew by” sample, or design prototype, is the model by which the factory will use to create “bulk” production. If you are an apparel company, you will use these samples to define construction guidelines, as well as fit specifications and the grading of sizes up and down.
When production is in process, it’s important to monitor quality, as compared to your samples, which are what buyers will use to write their orders. The single best way to do this is to visit the facility regularly. This is obviously made easier when producing locally, but do not underestimate the value of an investment in travel to see production before shipping. Depending on the situation, you may be able to conduct fittings on test or bulk units to make sure that they are executing correctly. If this is possible, it is highly advisable. If you are unable to visit your facilities, there are third party auditors that can oversee quality control for a fee.
SHIPPING AND DELIVERY
When goods are ready and approved to be released, you will likely have them shipped or delivered. Some companies will “drop ship” directly to their own retail stores or accounts. Most often, the goods are received in an office or distribution warehouse. Once you take possession of the final products, you should make sure to pull some (or all) of the units to check for quality on execution. This extra time and money is well spent considering that your customer or account is likely to return any faulty or ill-fitting product. Remember to have a clear understanding of any packing parameters required by specific accounts, as failure to adhere to these parameters can result in charge backs and even order cancellations.
All in all, production can be the most complicated and cumbersome part of running a fashion business. If you have the resources to hire an experienced production manager, they will often be able to bring both know-how and sourcing contacts to your company. In fact, a production specialist is often one of the first hires a growing brand will make. Those of you still considering a career direction in fashion, and who have a mind for managing complex processes and logistics, and an eye for product, should keep this in mind as it is consistently one of the most in-demand skills in the fashion industry.
Ari Bloom has worked with numerous fashion brands as a consultant and as a mentor to the CFDA fashion incubator program. He collaborated with Imran Amed to continue The Business of Fashion Basics series.
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