MDSE 4010 Final Review (All Quizzes + Vocab)
What is it called when changes in design or tracking of products are instantaneously and continuously available to all individuals involved, whether they are in the next room or across several continents?
Real-time communication
From Table 9.2, which European country in the EU is the poorest (based on GDP per capita)?
Romania
Which of the following is a trade organization of brands, retailers and manufacturers, government and nongovernment (NGOs) organizations and academic experts with a focus on creating common metrics and approaches to reduce the social and environmental impacts of apparel and footwear products around the world?
SAC
Quality assurance is important to global sourcing because it _____.
Seeks to prevent defects and plans to make the product correctly.
Hong Kong's primary business in the textile and apparel industry is now ________
Servicing (import/export) and sourcing
Which city in China has the largest population with over 22 million?
Shanghai
What is one of Australia's top exports?
Sheep's wool
Which sourcing factor primarily depends on an exporting country's geographic location?
Shipping time to a destination market
A more privatized market-oriented economy that promotes trade and growth, while still restricting the freedoms of individuals is known as a __________.
Socialist-capitalist economy
*If a company (like Patagonia) chooses to source materials and production based on whether a garment may be recycled and chooses to make less to be sure that no garments go to clearance--indeed, everything about the company is about sustainability--which of the following theories fit this kind of sourcing best?* *-* Resource Dependence Theory *-* Socio-cognitive theory *-* Strategic Choice Theory
Socio-cognitive theory (theory says that sourcing decisions are the result of the company culture, a reflection of the organizational identity.)
What is another term used to describe products made of textiles or other flexible materials including fabrics, apparel, linens, towels, upholstery and small fashion accessories?
Soft Goods
Which is the most common type of intellectual property violation in the world and in the textiles and apparel industry?
Trademark infringement
(T/F) "Outsourcing" tends to have a negative connotation today as it implies a loss of jobs in the domestic market
True
(T/F) A code of conduct is an expression of corporate social responsibility.
True
(T/F) Apparel companies may gain a competitive advantage by building strong supply chains.
True
(T/F) By reducing or removing risks, a company may save on costs; for example, by sourcing fabric which is nearby or local to the manufacturer, shipping costs are reduced and late delivery risk is lowered.
True
(T/F) By using PLM, garment information can be available to all supply chain participants, from a brand manager to factory, logistics firm to retailer.
True
(T/F) Classifying products using the HS is not easy or straightforward because there are many individual decisions about garments called 'rulings'; a knit shirt is not necessarily a knit tshirt or knit blouse.
True
(T/F) Companies who source in least developed or newly developing countries provide the means to improve the economy and raise their standard of living.
True
(T/F) Exporters must prepare and present the merchandise appropriately labeled and prepare and submit customs forms and reports according to customs rules and regulations in each importing country
True
(T/F) Fiber, yarn and fabric production are all technology-driven.
True
(T/F) In order to safely and correctly claim that an item has been recycled, the source of the waste must be verified.
True
(T/F) It is an industry norm to build in 5 to 50% additional cost to FOB to prepare for unexpected indirect costs.
True
(T/F) It is necessary to sacrifice some profit in order to be truly engaged in CSR.
True
(T/F) Most countries in Central America have ample CMT but not many full-package factories.
True
(T/F) Off-price retailers are a variation of the specialty store format.
True
(T/F) One of the reasons why global sourcing continues to grow, besides lowering costs, is that the options increase greatly when sourcing globally.
True
(T/F) Religion, not business, rules the basic patterns of the day in most nations in this region (Middle East & Africa).
True
(T/F) Tariffs are used to restrict trade and to accumulate revenue for the government.
True
(T/F) Technology is expensive, but it made it possible to go global and pursue low cost labor around the world.
True
(T/F) Textiles and apparel traditionally have a high level of trade protection throughout the world.
True
(T/F) The EU textile and apparel sector is a small and medium enterprises (SME) based industry as companies of less than 50 employees account for more than 90% of the workforce and produce almost 60% of the value added.
True
(T/F) The U.S. Customs and Border Protection is responsible for collecting tariffs on imported goods.
True
(T/F) The majority of the world's apparel production is NOT taking place in the countries with the lowest labor cost.
True
(T/F) The primary responsibility of Sourcing is to execute the strategic business plan for producing merchandise and at the micro level to ensure that the specification package is executed according to the specifications for quality and delivery.
True
(T/F) The primary source of pressure on corporations to assume more social and environmental responsibility is consumer activist organizations.
True
(T/F) The specifications are part of the contract between the manufacturer and the sourcing company, and the basis on which manufacturer is evaluated.
True
(T/F) The strongest and most important trend related to violations of IPR is the explosion in the value of CBP-seized products from China and Hong Kong, showing the violation of IPR is a worldwide problem.
True
(T/F) The three primary end uses for soft goods are apparel, household goods, and industrial products.
True
(T/F) The volatility and uncertainty of newly developing countries make it difficult to do business in these countries.
True
(T/F) When a fabric is made of yarn consisting on only one type of fiber (e.g. 100% cotton), it is easier to recover the fiber so it may be used in new materials.
True
Sourcing Agent:
individual or firm that provides services to procure and deliver products
How many nations are considered to be Sub-Saharan Africa (SSA)?
49
Brand Managers:
A former apparel manufacturer that is engaged in design and product development but owns little to no production facilities and sources garment assembly from vendors elsewhere in the world.
Consolidator:
A person or firm that combines cargo from a number of shippers going to the same destination into one container for the purpose of reducing shipping rates.
Lean Manufacturing:
A philosophy of production that emphasizes *efficiency and economy of scale*
Supply Chain Matrix:
A supply chain matrix is generally a list of the suppliers according to product category and usually with qualifiers such as status, rating, location.
Ethics:
A system of code of morals for a particular person, group, or profession and its application to decisions or particular problems of conduct.
Wholesaler:
A type of business that buys goods in large amounts and resells them to other businesses in smaller lots.
Agile Manufacturing:
An operational strategy focused on inducing *speed and flexibility* in a *made-to-order production* process with minimal changeover time and interruptions
What is a PEST?
Analysis of the political, economic, social and technological status of a country.
What is a major focus of newly developing countries in the textile and apparel supply chain?
Apparel assembly
What happens in the 3rd level of the textile complex?
Apparel is made
What is the main idea behind CSR?
Businesses have a responsibility to various groups in society
When importing apparel to the United States, import duty is commonly paid by ____.
Buyer, or importing company
(T/F) When registering a brand/ trademark, it is best to register it with the governments of the countries in which intellectual properties will be distributed because it offers significant financial and legal advantages
True
Other than ________, no other country compares to the size and depth of the _______ textile and apparel industry.
China, Indian
The number of yards of fabric required to produce a complete garment is called the ___________.
Consumption
Although it's not easy to predict risk, some risks are obvious. What kinds of plans might sourcing managers have in case of a disaster?
Contingency Plans (a plan designed to take a possible future event or circumstance into account.)
Which dimension of intellectual property cover literary, musical, and artistic works and software and gives the owner of the creative work the right to keep others from using it without permission?
Copyright law
Obligation of businesses toward communities and the society in which they operate is __________.
Corporate social responsibility
Classification of textile and apparel articles is generally determined by all of the following except: (includes 4)
Cost (Includes: - Fiber content - Weight - Type of product or garment - Gender and age of the end user )
Bangladesh is a considered best for sourcing which of the following?
Cotton garments of basic design and standard quality
Processing of waste so it can be marketed as raw materials for new products is ___________.
Recovering
Collaborative Consumption:
Redistribution of used goods from someone who does not want them to someone who does want them.
Capacity
Refers to the management of how much and how long it takes to make a certain volume of product, which represents the limits of what a factory is able to produce.
What is an RSL?
Restricted Substances List—a list of restricted or banned chemicals
Specialty Retailers:
Retailers that focus on specific classes of merchandise to the exclusion of other products.
"Global sourcing follows the trends." What does this mean?
Global sourcing must know the trends in order to maintain the right suppliers.
Another issue in trademarking and in sustainability is the issue of production overruns sold on the side. These are sometimes known as the
Gray market
How does the consumer benefit from global sourcing?
Greater selection and lower prices
GDP:
Gross Domestic Product- the total market value of all final goods and services produced annually in a country
The important of connections and personal relationships when working within China or other Asian nations is known as ____.
Guanxi
Countries who aspire to become WTO members will use which of the following so that the WTO has useable import and export data which can be reported and compared?
Harmonized Commodity Description and Classification System (HS)
HS:
Harmonized System the international Harmonized Commodity Description and Classification system, developed by the World Customs Organization.
In the "12 Tips for Sourcing Your Product" what is the last tip?
Have a backup plan
Historically, after Japan's productions costs increased, which "Big Three" countries took over the position of leading exporters of low-cost apparel? (3) (H_ , T, S_)
Hong Kong, Taiwan and South Korea
(T/F)Unfair treatment of workers in the apparel industry is not only a matter of morals, it might permanently damage a company's reputation and brand image.
True
To which decision does "make or buy" refer?
Make it internal or have it made external to the company
First Sample:
prototype of a product made for approval of the desired design features and garment fit
What is the definition of "sourcing"?
the selection of the most appropirate countries and vendors when building a supply chain to meet your business needs
The population of Africa and the Middle East together represents what percentage of the world population?
18%
There are said to be three great periods of history where "the world became smaller" and more globalized: Globalization 1.0, 2.0 and 3.0. Which one included electronic communication and the Internet?
2.0
How many time zones are there in the world?
24
Code of Conduct:
An expression of corporate social responsibility.
France maintains leadership in the marketing of _____.
Fashion-forward fabrics
What is a 'first sample'?
It is made for approval of the design and fit of the garment.
What is the most important quality a supplier can offer today?
Ability to manage continual change
AGOA:
"African Growth and Opportunity Act" A component of the U.S. Trade and Development Act of 2000; the purpose is to assist sub-Saharan African (SSA) countries in achieving economic self-reliance. Was renewed in June 2015 until the end of 2025.
CSR:
"Corporate Social Responsibility" Obligation of businesses toward communities and the society in which they operate
FOB:
"Free on Board" reflects the *cost of goods* and the *cost of loading* them *on board a vessel* at the *foreign port of export.*
What does FOB mean?
"Free on Board": the cost of goods and the cost of loading them onboard a vessel at the foreign port of export
FCL:
"Full Container Load" Refers to a *standard 20- or 40-foot shipping container* loaded with merchandise from one consigner; it is a *common measure for calculating shipping rates* and is *typically less expensive than the same weight of loose cargo.*
IPR:
"Intellectual property rights" Legal protection for exclusive use by owners of copyrights, trademarks, patents, trade secrets, and semiconductor chips.
LCL:
"Less than container load" A shipping term for cargo that is less than full container load
PPP: "Pu... Po... Pa..."
"Purchasing Power Parity" Measure that allows comparison of well-being among populations in different countries; as indicated by GDP; determined by adjusting GDP of a country by the buying power of its currency using Consumer Price Index.
SAC:
"Sustainable Apparel Coalition" A trade organization of brands, retailers and manufacturers, government and nongovernment (NGOs) organizations and academic experts with a focus on creating common metrics and approaches to reduce the social and environmental impacts of apparel and footwear products around the world
WRAP: (Wo.. Res... Accr... Pro..)
"Worldwide Responsible Accredited Production" An independent nonprofit corporation dedicated to the promotion and certification of lawful, humane, and ethical manufacturing throughout the world.
LOC:
"letter of credit" A guarantee to the seller that the buyer has the funds to complete the purchase and that they are reserved for the seller.
Despite having super billionaires in Saudia Arabia, what is the GDP per capita in US dollars?
$52,800
IMF:
(International Monetary Fund) Works with World Bank, helps integrate countries into the global economy by assisting member countries; monitors international currency transactions.
NAICS:
(North American Industry Classification System) A standardized system for collecting, analyzing, and publishing statistical data involving trade among the U.S., Canada, and Mexico; Includes textiles and apparel and many other products
True
(T/F) Canadian garment makers have become experts at producing small runs of their products since the domestic market is small, but US firms are better at supplying mass retailers.
Why do sourcing organizations prefer that the factory take ownership of all the materials by negotiating, ordering and owning them? (3)
*-* Apparel intermediary When the factory invests money in your order and owns the materials, the factory is much *more likely to take excellent care of the materials and ensure that quality is high.* *-* Apparel intermediaryIt also *makes negotiations about quality or late shipments easier.* *-* Apparel intermediaryThe *factory is responsible* for the *timing of the materials*. (all of the above)
According to the article "Digitize or Die" from Sourcing Journal Online, what would 'digitizing' the supply chain do for retail?
*-* Eliminate administrative work including "track and trace" which takes an immense amount of time in the sourcing process *-* Increase supply chain visibility *-* Reduce costs (all of the above)
What is the ethical dilemma of sourcing from a newly developing nation like Bangladesh? (3)
*-* It provides jobs but there's *so much work to be done to ensure safety.* *-* The *women work 12 hour days and it's very little pay* but it's enough to send even the girl children to school. *-* In Bangladesh, *product can be made very cheaply, but* sourcing may be a risk to the company when there is so *little transparency.* (All of the Above)
9 Goals of Global Sourcing: (only found 7)
*1. Cost Reduction:* strategies include less expensive or better sources of materials or fewer materials, lowering the cost of labor, avoiding paying taxes or duties imposed by one country or another by taking advantage of trade preference programs or free trade agreements. *2. Productivity Growth:* productivity is improved when sourcing personnel focus on core competencies. The strategy is to source special products from those who specialize in them rather than trying to do it all in-house and slowing down productivity. *3. Value Acquisition:* the intent of this goal is to improve reputation or publicity which may in turn improve consumer goodwill or brand equity. Global sourcing allows companies to gain new values that wouldn't be available to them. The value may come through a strategy of selling new unique products, or hiring people from other companies, or collaborating with other companies who already have a great reputation or well-known skills. *4. Quick response, Just-in-time and Flexible product supply (speed-to-market strategies):* consumers' demand and taste changes quickly today; most companies seek to offer the right product at the right time in order to maximize sales. *5. Supply Assurance:* refers to knowing that the product will be delivered. Even with a contract, a supplier may not be able to meet delivery due to natural disasters or lack of funds to hire labor or buy materials. To meet this goal, one strategy is direct ownership of factories which are nearby. This might help with supply assurance, but certainly wouldn't help with establishing a flexible supply chain. Many retailers choose not to own factories. *6. Quality Assurance:* knowing that the product will be correct (made correctly and according to safety standards) is often more important than cheap cost. If it's not right, then it may need fixing which means additional cost and time. It may mean it's not suitable for sale and is a total loss to all parties. If it's too late, it may mean markdowns and loss of profit. Reliability is more important. Reliable and proven suppliers mean less work, less monitoring, and possibly less inspections. This can save money and time for the company. *7. Efficient Capacity Management:* In the past, companies used to make the product, enough to have stock and then sell the inventory. Today, the textile and apparel industry has shifted more and more to an on‐demand production model where the production process starts when the order or buy is placed from the customer. This model has increased the ability of a company to respond (i.e. "agility") to orders by decreasing inventory costs and increasing response‐to‐market conditions.
Despite predictions that all textile and apparel production would completely disappear from the US, it hasn't. It is true that employment in the manufacturing side of the industry is significantly decreased from the 1990s, but there are a few bright spots. With some components completely gone from the US, it is unlikely that apparel manufacturing will return in any great numbers. But there is evidence of re-shoring. But the AAPN has been working hard, outside of governments, to connect the supply chain in the Americas from south to north and to promote the Americas as a near-shore alternative to Asia and other faraway places.
*Module Summary:*
Strategic Choice Theory:
*Suggests that firms conduct sourcing to align their firms with the market environment.* Some firms are engaged in sourcing to defend their market shares within the market environment. Others source to adapt to changes in market situations quickly. There are also firms that source to analyze new market situations or to react to such new market situations. ?would check?
Vendor compliance establishes what kinds of rules? (3)
- *How business is conducted*, including EDI and payments - That *labor is being paid a reasonable wage* and *conditions at the factory are safe* and ethical - *Manufacturing processes, timing of deliveries, and RSLs* (all of the above)
So how does US Customs seize so much merchandise?(4)
- *Known transshippers are published* so that all countries look for them - Looking at the *container's packing list and other documents* - Other methods used by law enforcement including *dogs and other technology* - *100% container scanning* (All of the above)
Extra: Who brings textiles and apparel into the U.S. or Europe or other countries? In other words, who is importing?
- *Retailers with Private Brands:* examples include Macy's, JCPenney, Gap, Children's Place, Zara, Forever21 (do you remember which one of these are 'store brands'?) - *Brand Manager:* long ago, these were called 'supplier labels' or even 'national brands'; they mostly operate as wholesalers and are the importer of record; examples include VF Corporation, Levi Strauss, Kellwood, PVH - *Apparel Sourcing Intermediary:* do not own brands, generally used to be apparel manufacturers; Komar, Li & Fung
Where might a company look for technology solutions for all aspects of the apparel business? (3) (A... M...) (T.... F...) (N.... w... V...)
- Apparel magazine's "Buyer's Guide" - Trade fairs - Networking with vendors (all of the above)
Measures of fairness in human rights focus on ____.(3)
- Fair wages with gender equity - No child labor - Healthy working conditions (all of the above)
Why is the bureaucracy of a country important to global sourcing? (2)
- If efficient, it ensures clear and transparent procedures for exporting and importing. - If excessive, it results in unnecessary delays, stagnation of business operations, increased costs.
Why is the COO (country of origin) important? (2)
- It helps to *establish the tariff rate for duties charged on imported products*. - Customers are beginning to *want to know where their clothing is made*.
Why is the apparel industry one of the first to enter developing countries?(3)
- It is *labor-intensive* and not capital-intensive - It requires *little training* - It *doesn't require a knowledge of the language* to be a worker. (all of the above)
Why is it difficult to measure Sourcing's contribution to the company? (2)
- Sourcing is highly interdependent with other functions and it's not easy to isolate what they did. - There isn't one specific set of criteria for evaluation for Sourcing
Why do opponents of global sourcing argue that it hurts nations? (3)
- Unscrupulous people *take advantage of workers* - Sourcing follows the *cheapest labor leaving workers unemployed when companies leave* - *Draws workers from agriculture to urban* living in cities unprepared for the *population explosion* (all of the above)
All Sourcing Theories-- -R_ _ _ - R _ Theory - St.. C.. Theory - So..-c... Theory - C.. Theory
1. *Resource-Based View of the firm (RBV):* says that the competitive advantage of a company is in the effective and efficient use of all its useful resources;In other words, whatever a company can't do well, they must seek elsewhere. 2. *Resource Dependence Theory:* is similar to RBV but focuses on the dependence factor. This theory says that if the resource needed is critical to the competitive advantage of the company, then the company should decide whether to 'make or buy' in order to acquire permanent ownership of the resource. 3. *Strategic Choice Theory:* says that sourcing managers *make their sourcing decisions based on market environment*. According to this theory, top managers face 3 types of organizations problems: a) entrepreneurial, b) engineering, c) administrative. 4. *Socio-cognitive Theory:* says that *sourcing decisions are the result of the company culture, a reflection of the organizational identity.* These companies are more likely to continue the same strategies; for example, if a company has a strong identity as American, it may be more likely to source domestically." "Made in America" marketing has a strong appeal for them, so they source to be able to say "Made in America". 5. *Critical Theory:* says the companies source with a mission to improve society. Sourcing decisions are considered an important means to improving society, not the business. This helps explain companies like TOMS shoes.
7 Steps of Global Sourcing: 1. N.. 2. Selecting.... 3. Selecting..... 4. B..., P... order and Methods of ..... 5. Pre...., Pro.... and Quality A.... 6. Lo.... and Imp... proc..., Vendor C...., C... Cust.... 7. Post-p....., So... P..... E...., including Fin... Co....
1. New product development and Existing products 2. Selecting Location 3. Selecting Vendors 4. Bids, Purchase order and Methods of payment 5. Preproduction, Production and Quality Assurance 6. Logistics and Importing processes, Vendor Compliance, Clearing Customs 7. Post-production, Sourcing Performance Evaluation, including Final costing
In order to identify individual products, the NAICS uses a product code using how many digits?
10
Companies who have implemented PLM have reduced time required for product development by at least _______ percent.
50%
What percentage of EU textile and apparel production is sold intra-EU?
80%
How many imported goods are physically examined by customs inspectors?
<1%
Ad Volorem Tariff:
?
Import Intermediaries:
?
Internationalization:
?
Supply Chain Management:
??managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
A method used to restrict quantities of certain types of goods that can be imported or exported is called:
A Quota
What is the NAICS?
A classification system based on the Harmonized System (HS)
Full Package Factory:
A factory capable of offering many services, from design to packaging and shipping.
An Ad Valorem Tariff is:
A fixed percentage of the value of the product.
Which one of the following is an example of a trade association?
AAFA (American Apparel & Footwear Association)
*Which statement is NOT true about the African Growth and Opportunity Act (AGOA)?* *-* AGOA allows the use of fabrics from outside the region for apparel exported from eligible SSA countries to enter US market duty free. *-* AGOA covers all African nations. *-* AGOA is a US trade act designed to assist SSA nations. *-* AGOA provides the tariff-free entry of eligible products to the US.
AGOA covers all African nations.
China's fastest growing export market is now the __________ region, which increased by 30.15 percent, making the region China's third largest apparel export market.
ASEAN
Bureaucracy:
Administrative system leading any large institution or government.
An operational strategy focused on inducing speed and flexibility in a made-to-order production process with minimal changeover time and interruptions is called which of the following?
Agile Manufacturing
What is the issue being addressed in Case Study 9.1?
Aging and low birth rate
What statement about APEC (Asia-Pacific Economic Cooperation) is NOT correct?
All APEC members are Asian countries. (True: - APEC has 21 member nations. - The main purpose of APEC is to promote trade, economic development and cooperation among the member countries. - APEC was established in 1989.
Inside China, there is an ongoing investigation into ____________; the result has been a steep fall in the sale of French Cognac and Swiss watches, as well as widespread resentment among officials.
All of the above - Cronyism - Bribery - Corruption
Why is the Whole Garment knitting system special in the industry of Japan?
All of the above.
*Module Summary:*
Asia is the largest trading bloc of the global textile and apparel industry. Individually, China and India produce massive quantities of textile and apparel products for their own growing domestic markets, but also for export to the rest of the world. Several of the poorest nations in the world are also in this region: Bangladesh, Cambodia, Nepal and Pakistan. While rebounding from the recent recessions, some have found niche markets in which they can complete and others, such as Malaysia, diversified their economies. Asian countries are following a path to development much like developed economies of the West. Beginning with a population in which the labor force was needed to fill basic survival needs (e.g., Sir Lanka, Bangladesh), attention then shifts to more advanced technologies (e.g., Taiwan), and finally to consumption (e.g., Japan) as the overall economy developed. As Japan and Australia developed, production moved to Taiwan, South Korea, and Hong Kong. This cycle continues today as countries participate in basic apparel production, followed by higher wage demands and movement to production of more advanced products (e.g., electronics), and finally higher overall economic productivity, which leads to consumption of textile and apparel products over production of these products. China has been called the "workshop of the world", but the government of China has imposed higher wages for factory employees, and apparel companies began to move production to lower-wage countries such as Vietnam, Cambodia, and India. Even Chinese factory owners are beginning to acquire factories in low-wage countries in order to compete and stay in business. The question for apparel companies that are sourcing textiles and apparel production is: "How can we incorporate sophisticated technologies, efficient and effective management systems of supply chains to create competitive advantages?"
The Asian nation whose economy depends most heavily on exporting apparel is____.
Bangladesh
The earliest members of the organization that became the EU were:_________. (3) (B,L,N)
Belgium, Luxembourg and the Netherlands
What is the capital of Germany?
Berlin
The cost of the fabric may be __________.
Between 50 to 70% of the total cost of the product.
Vanity Fair (VF) is an example of _____________.
Brand manager
Which type of factory requires very detailed specs?
CMT
Of the 9 goals of global sourcing, which one refers to the management of how much and how long it takes to make a certain volume of product, which represents the limits of what a factory is able to produce?
Capacity
NAICS 314 is the Textile Product Mills subsector. Which one of the following is an example of the products made in this subsector?
Carpet
Select one country that is not considered a developed economy based on GDP per capita.
China
The Trans-Pacific Partnership excludes this country but the Free trade Area of the Asia Pacific includes this country. Which country?
China
Which country is both a major producer and a major consumer with a growing domestic market, and is the #1 destination for US cotton?
China
Which country is repeatedly identified as one of those who frequently violate intellectual property laws?
China
Which of the following countries is NOT an ASEAN member?
China
*Module Summary:*
Clearly, global sourcing will not end anytime soon and as long as so many advantages are available, it's likely to continue to grow in importance. Most companies today either have an internal sourcing function or have hired an organization to do the sourcing for them. The five theories of sourcing help us to understand the motivations behind sourcing within a company: resource-based view of the firm (RBV, resource dependence, strategic choice, socio-cognitive, critical theories. Like anything, global sourcing has positive effects and negative effects. The consumer benefits by greater selection and lower prices and the company may benefit from increased profit, but as business moves from one country to another, it may leave people unemployed. Sourcing has tremendous responsibilities to fulfill in the company and must be skilled in many business activities. It's detail-oriented work but also requires being able to see the big picture. The scope and complexity of sourcing decisions make it imperative that Product Development and Sourcing work closely together. And they must work closely with many people and teams internal and external, who are often foreign. Being a sourcing manager will challenge body and soul. Many sourcing personnel start in Product Development or Merchandising and them move to Sourcing. Without knowledge of textile and apparel materials and manufacturing, it would be difficult to be a good sourcing manager. As a business function, Sourcing must meet the long-term strategies of the business, execute the specification package to meet the requirements of the customer by managing materials and vendors, reduce costs, grow production, learn from other companies, ensure quick response and a flexibility, assure product supply, ensuring quality and managing capacity. All this must be done while managing the triple bottom lines of sustainability: economic, environmental and social goals of the business. A lot of risk comes from sourcing production from factories around the world. Risk may come from foreign law and currency, distance, language barriers, publicity, labor, delivery, natural disasters and more. Risk is why sourcing managers have contingency plans. But it's not always easy to predict risk. The question of whether to make or buy hinges on minimizing cost, maximizing profit, the opportunity cost, the capabilities of the company and suppliers, and the risk involved. The 7 steps of global sourcing are high-level and may be subdivided into further tasks. Sourcing is involved with new product development by providing information and expertise. For existing product, of course, the product and the suppliers for last season are reviewed for performance.
Japan's Teijin was the first company to develop _______________ of polyester.
Closed-loop recycling
Redistribution of used goods from someone who does not want them to someone who does want them is ___________________.
Collaborative consumption
Vendor:
Company that supplies services or goods to other companies who are known as 'customers'.
Which trade theory suggests that trade happens when two countries can benefit from trade due to their relative costs to produce the same products?
Comparative Advantage theory
China is generally considered a country where _____________ goods are sourced, requiring ___________ labor
Complex, highly-skilled
Which of the following phrases is NOT true about the Global Competitiveness Index (GCI)?
Considered better for a country if the index value is high
A person or firm that combines cargo from a number of shippers going to the same destination into one container for the purpose of reducing shipping rates is known as a ________.
Consolidator
In the article, "The Consumer Recession Is Hurting Macy's..." by Walter Loeb, the main topic is which of the following?
Consumer apathy
In 2014, worldwide, the combination of cybercrime and espionage was estimated to have cost world businesses and government 1 percent of global income; that is $445 billion per year. Who pays for these costs ultimately?
Consumers
What is the source of pressure to drive down textile and apparel product costs?
Consumers
The success and future of the fair trade movement ultimately depends on __________.
Consumers' decisions to support the movement by purchasing fair trade products
Which statement is NOT correct about counterfeit goods and counterfeiting?
Counterfeiting is the same as making a knockoff (Correct: - Consumers contribute to the counterfeiting problem. - Counterfeiting involves the unauthorized use of trademarks. - Counterfeiting is illegal)
Intellectual property includes all but which of the following? - Semiconductor chips - Country of Origin - Copyrights - Trade secrets
Country of Origin (Includes: - Trade secrets - Copyrights - Semiconductor chips
Which one of the following is NOT part of the purpose and activities of customs services?
Creating new regulations
*A CMT factory is capable of performing all but one of the services listed below. Which one would they NOT offer?* *-* Supplying basic trims for garment assembly *-* Manufacturing apparel *-* Creative and technical design *-* Inspecting and packaging finished products
Creative and technical design
What is the primary reason for the huge market and the ongoing vigorous activity of counterfeiters?
Customer Demand
Which of the professionals below will help you achieve the lowest duty rate?
Customs broker
What is is called when the computer is used as the primary means of commission of illegal activity?
Cybercrime
What is the latest emerging trend?
De-globalization
*Several sourcing strategies are intended to improve both sustainability and speed-to-market goals. Which one of the following is NOT intended for those goals?* *-* Near-shoring (the practice of transferring a business operation to a nearby country, especially in preference to a more distant one.) *-* Local sourcing *-* Decentralizing sourcing activities
Decentralizing sourcing activities
The sourcing calendar is based on which of the following? *-* Delivery or floor set date *-* Selling period *-* How long each process needs to be complete
Delivery or floor set date
Most of the Middle East is a ___________.
Desert
*Which one of the following is NOT a core competency of sourcing?* *-* Apparel production *-* Knowing the product development process *-* Designing product *-* Vendor selection and management (Core Competency- a defining capability or advantage that distinguishes an enterprise from its competitors.)
Designing product (What is: - Knowing the product development process - Vendor selection and management - Apparel production)
An activity performed by a licensee is __________.
Designing, producing, and sourcing goods
An activity preformed by a licensee is ___________
Designing, producing, and sourcing goods
What is the capital of Bangladesh?
Dhaka
What made it possible for sourcing to become globalized?
Digital Technology
*A Private Brand Retailer typically performs all but one of the supply chain functions listed below. Which one do they NOT do?* *-* Retails its own product lines *-* Determines where to source apparel for selling in the domestic market *-* Owns apparel manufacturing facilities and produces its own lines *-* Designs and develops its own products
Do Not: Owns apparel manufacturing facilities and produces its own lines ( Do: - Determines where to source apparel for selling in the domestic market - Retails its own product lines - Designs and develops its own products )
The design of which of the following products cannot be copyrighted in the United States but could be in Europe?
Dress design
What was the primary effect of the MFA (Multi-Fiber Arrangement) which proves that trade policies have unintended consequences?
Driving apparel production around the world.
CMT
Due to CAFTA-DR, the apparel production in most countries converted from 807 (US shipping cut pieces of garments to factories in CAFTA-DR) to what kind of factory or vendor?
Obligations of an individual, group, or society to use all resources efficiently and minimize waste is ___________ responsibility.
Economic
Which characteristic is often judged to be the most important for sourcing professionals to consider when selecting a country location for producing high quality apparel?
Education
Which country had a temporary setback with the Arab Spring but has recovered and were able to attract many US retailers by updating record-keeping ability?
Egypt
In the speech given by Christine Lagarde, Managing Director of the International Monetary Fund to students at the University of Maryland, what did she point out in the first part of her speech, "The Role of Emerging Markets"?
Emerging and developing markets matter to us because they make so many of the things we use every day.
*Recent changes in apparel manufacturing and retail in China include all but one of the following:* *-* Greater emphasis on Chinese apparel designs *-* Emphasis on low-end, inexpensive apparel *-* Quickly growing production costs *-* Industry consolidation into clusters that specialize in certain types of products
Emphasis on low-end, inexpensive apparel
According to NAICS, wholesalers by definition do not sell to which of the following?
End consumers
There are many ways to avoid paying the correct duty which are illegal. Which of the following is not an illegal way of avoiding duties?
Engineering the garment to a lower duty rate
What is the name of the EU common currency established in 2001?
Euro
Which definition of 'trade' below implies and thus includes protected trade, free trade and fair trade?
Exchange of goods and services across political boundaries.
(T/F) For the most part, the EU focuses on mass production and fashion basics.
False
(T/F) International trade in textiles and apparel is a relatively new phenomenon.
False
(T/F) Most fabric mills have fabric already made, ready to be shipped to the factory.
False
(T/F) The only goal of sourcing is to find low-cost labor.
False
What do textile mills produce? (F,Y,T,F)
Fibers, yarns, threads, and fabrics
Members of a trade association are typically who?
Firms
When a retailer has a sourcing matrix with small suppliers, medium suppliers and suppliers capable of large volumes throughout the world, many of whom offer specialty textiles and apparel, we would call this strategy:
Flexible supply chain and flexible sourcing
A port or other site within a nation designated for duty-free entry of selected goods to be displayed, stored or used for manufacturing is known as a ____________.
Free trade zone
Peru and Colombia
From which two countries do most Andean exports to the US come?
What is the term which refers to a factory capable of offering many services, from design to packaging and shipping?
Full Package
Which one of the following stores sells ONLY private label brands? *-* Gap *-* Macy's *-* Walmart
Gap (Macy's and Walmart don't)
Production Sample:
Garments made at the factory where the apparel line will be mass produced, to check for quality and potential production issues, usually made in all ordered sizes
In the United States, this activity is the major contributor to the emission of greenhouse gases.
Generation of electricity
Which European country is global leader in the development and export of textile and apparel production machinery?
Germany
Who is Japan's competitor in the technical textiles business?
Germany
*Module Summary:*
How is this information relevant to you? As globalization increases, the economic wellbeing of foreign nations becomes more and more important to all of us. Not only do we need markets to sell our goods, we need the raw materials, labor and other resources that African countries (and the rest of the developing nations) provide. Economic problems in one region can reverberate around the world, instigating economic recession in a variety of places, as evidenced by the financial crises in Europe. This is not just true of our economic lives—as we can see in Afghanistan and Iraq, how we interact with other governments and people can produce not only terrorists but also allies, not only conflict but also peace. With a view to improving trade with Africa, the United States government has increased spending and promotion of trade with Africa
0
How many American countries generate a per capita GDP that is higher than the US?
One of the world's major trade shows is held in Germany; it is the world's largest sporting goods trade show. Many designers and retailers attend this show. What is it called?
ISPO
What trade show is held twice a year and is considered the leading textile trade show?
ISPO
Which of the following is true about illegal transshipment?
Illegal transshipment involves shipping goods to a third country to declare that the goods were made in that country before re-exporting them to the intended market
For a product with the same nominal tariffs, the importing firms in the EU need to pay a higher duty than the importing firms in the US, because _________.
In the EU, the transaction value includes freight and insurance, whereas in the US it is calculated based on product cost only.
*Module Summary:*
In this module we looked at an overview of the textile and apparel matrix, including the following: - North American Industry Classification System (NAICS) facilities communications among industry professionals. - The textiles and apparel industry relies on technology in the areas of product development, communication, transportation and logistics, and inventory management using UPCs and RFID tags. Technology has reduced required time in merchandising, design, production and distribution; thus, consumer satisfaction and profitability can be improved simultaneously. - The textile industry is highly automated and requires less labor in the manufacturing process, but the apparel industry remains labor intensive. To be competitive in meeting consumers demands for the lowest cost, many apparel companies and retailers source production is low-wage countries (e.g., least developed and newly developing economies).
Module Summary:
In this module, you learned more detail about the sourcing process. Steps 4-7 were covered in the module. Together with Modules 6, 7, 8 and this Module, a complete picture emerges of the responsibilities and processes of global sourcing. Sourcing options must be compared carefully with cost, lead time, place, quality, and consistency; it's important to know which is most important with each sourcing program. Deciding which factors are the most important come with experience in global sourcing. Each step has its own processes and involves legal requirements (external to the company) and internal requirements. Read the article in the link below and consider how these tips relate to this module.
Which statement is NOT correct about India?
India has a very limited supply of domestic cotton production for its textile industry.
In the ASEAN community, economic activity is concentrated among 4 countries—together producing 75% of GDP. Which 4 nations are those? (I, M, T, S)
Indonesia, Malaysia, Thailand and Singapore
Japan's textile and apparel industry has shifted focus to _______________.
Innovation and sustainability
Why is it not appropriate to take the unemployment data for European nations at face value?
Large portions of populations are underemployed.
IPR is an acronym for which of the following?
Intellectual Property Rights
What is the name of the imaginary line of longitude located 180 degrees east or west of the Prime Meridian and what does it do?
International Date Line; it marks the divide where the date changes by one day
What characteristic listed in Table 12.1 indicates the extremely low rate of technological development in the regions?
Internet Users
Pro Forma:
Invoice an *estimate cost of goods or services sent by vendor to consumer*, not a request for payment; includes descriptions of products such as quality, value, weight, transportation charges, etc. *that can be used for customs purposes.*
Product Stewardship:
Involves minimizing the pollution from production and all environmental impact throughout the full product life cycle
*Which of the following countries has a labor cost most similar to the U.S.?* *-* Israel *-* Turkey *-* Morocco
Israel
Besides Sub-Saharan African nations, the following countries have a free trade agreement with the United States. (3) ( I , J , M )
Israel, Jordan, Morocco
What is a 'letter of credit" (LOC)?
It is a customer's guarantee to pay vendor if delivery date is met
Why is PPP (Purchasing Power Parity) important?
It is a measure that allows comparisons of well-being among populations in different countries.
Which statement is NOT a correct description of full container load (FCL)? (3 correct)
It is more expensive to ship a 20-foot container of merchandise than to ship the same merchandise as loose cargo (It is less expensive) (Correct: - Most international shipping is done using standard 20- to 40-foot containers - It is a common unit for calculating shipping rates - It is less expensive to consolidate merchandise in a container that to ship it separately.)
What does "customs compliant" mean and why is it important?
It means that the merchandise is in accordance with customs rules and regulations; it's important so that the merchandise can be cleared in a timely manner
Why is it easier to begin producing apparel than to produce textiles?
It requires relatively less capital investment; it is labor-intensive.
In Table 7.1, in the developed nations, who ranks the lowest for Ease of Doing Business?
Italy
In which country in the EU is it the most difficult to conduct business?
Italy
Which countries are the biggest textile and apparel producers, also the 5 most populated countries? (I,F,U,G,S)
Italy, France, UK, Germany, and Spain
What is the major challenge in Africa to alleviating poverty?
Its underdeveloped infrastructure
As this Asian country developed, it saw a rapid increase in apparel imports and now focuses on technically advanced textiles.
Japan
*Select one strategy that describes Lean Manufacturing.* *-* Flexibility *-* Speed-to-market *-* Small batch orders *-* Large orders to achieve economy of scale.
Large orders to achieve economy of scale.
A philosophy of production that emphasizes efficiency and economy of scale is known as which of the following?
Lean manufacturing
When a retailer wants to concentrate on selling garments while transferring the rest of the supply chain activities onto its suppliers, it is called ____________.
Lean retailing strategy
How can intellectual property rights be transferred from the owner to another legal user?
Licensing
Which statement about licensing is correct?
Licensing is a means of legally extending the use of a brand without actually having to produce the new product.
The science of moving products through the manufacturing and distribution system to their final destinations in a timely manner is known as ________.
Logistics
The science of moving products through the supply chain to their final destination in an efficient and timely manner is known as:
Logistics
Which company is today aggressively defending its patents in order to deflect competition in the athletic wear market?
Lululemon
The source of quota regulations for textiles and apparel was the ___.
MFA (Multi-Fiber Arrangement)
*Module Summary:*
Major changes have occurred since 2008. With several recessions, the growth of China, more trade agreements which didn't perform as expected, and the growth of sustainability and the issue of transparency, it's a wonder any company is still in business and making a profit. But some companies are making very good profits. Current trends include decentralizing sourcing activities, sourcing locally to minimize costs, near-shoring, re-shoring, vertical integration, flexible supply chain, and using technology for forecasting and capacity management will likely continue. A flexible sourcing mix and a combination of factors, not just low-cost labor, have resulted in more countries than ever being involved in the textile and apparel industry. With economic and political instability all over the world, the sourcing manager must manage risk. But global sourcing is not going away. China is still the top sourcing location but not for adding new sourcing activities due to rising labor costs. The U.S. dollar and commodity prices continue to be a risk throughout the world, but using technology to forecast can help create contingency plans. Creating good relationships with suppliers and committing to long-term relationships is one strategy to minimize risk. Diversifying where the suppliers are located is another strategy. But reducing calendar timing and creating better speed-to-market seem to be the major trend and means of reducing the risk of having leftover inventory or markdowns. As sourcing shifts from country to country, people are left without jobs. Can this effect be minimized or will it eventually end as the 'race to the bottom' finally reaches the bottom? To produce sustainably, it must be verified by independent third-party service providers. This costs money which means either businesses raise prices or accept less profit. But profits are already thin for some businesses. And this is an additional cost that wasn't needed in the past. At the moment, as consumers, we enjoy a wide variety of low cost merchandise. If you were to shop in Europe, most everything is much more expensive. Finally, the ability to analyze and forecast trends isn't just for fashion. Global sourcing managers are expected to keep in touch and know what is happening in the world so they, too, can do their own research and determine what will happen in the world of sourcing.
What is the term used for a process in which a vendor's expected performance is compared with actual performance?
Manufacturing control
The degree of conformity with generally accepted or prescribed standards of goodness or rightness in conduct is ____.
Morals
Sourcing managers face many risks every day. One of the most interesting is that U.S. consumption levels of clothing are dropping. What does this mean to an apparel company?
More competition if people are buying less
Taiwan, as a developed country, is also focusing on which sector of textiles?
Technical textiles
Global Value Chain (GVC):
Most people in the industry use the term "supply chain" to refer to the network of suppliers needed to create a product for the end-user. But there is a new term which you may hear: "global value chain" or GVC. In usage, it doesn't seem to be much different except that it does recognize the global aspect of supply chains today.
MFA:
Multi-Fiber Arrangement: A set of import quotas that for many years restricted imports of textiles and apparel from developing countries into developed countries .
Which statement is correct about the North American Free Trade Agreement (NAFTA)?
NAFTA includes three countries: Canada, Mexico and United States. ( Incorrect: - NAFTA was developed and implemented in the 1960s. - NAFTA includes several Central American countries. - The trade agreement includes only two countries: Canada and the United States. )
What type of product is the primary export of these two regions? (Middle East & Africa)
Natural resources
According to US Customs and Border Protection, the most counterfeited brand in 2013 was
Nike
Which company today was among the first apparel companies to disclose a complete list of factories around the world that product apparel, footwear and accessories under its brands, is considered as having a good standard of social responsibility yet is still remembered by consumers as a business that could improve its social responsibility practices? It is proof that consumers long remember the mistakes of companies.
Nike
According to the CBP's tips for new importers, does the CBP require a license to import into the U.S.?
No
Which of the following statements is true about the EU currency and its acceptance in the EU?
No, not all nations accept the EU currency.
Which group of countries is known for importing textiles and exporting apparel? (Middle East & Africa)
North Africa area
To which of the following U.S. government offices could you go to online and find out about textile trade throughout the globe, using both volume and dollar amounts?
OTEXA (Office of Textiles and Apparel)
There is another type of factory in-between CMT and full-package; what is it called and how is it different from the two ends of the spectrum?
Package: *everything but product development services* like design, technical design and spec
What is the final step in any sourcing process?
Performance Evaluation
What is the imaginary line of longitude that runs through Greenwich, England from the North Pole to the South Pole?
Prime Meridian
After receiving the quotes and deciding which bid to accept, the customer requests a ___________ from the selected vendor that includes all information for the sale.
Pro Forma invoice
Recovering:
Processing of waste so it can be marketed as raw materials for new products.
PLM:
Product Lifecycle Management. The process of managing a products life cycle from inception, design, development of related materials, manufacturing, delivery, distribution, marketing, sale, and in some cases, service and disposal.
Garments made at the factory where the apparel line will be mass produced, to check for quality and potential production issues, usually made in all ordered sizes is which of the following?
Production Sample
Technological developments resulted in decreased amount of manual labor required in all but one of the following operations:
Production of Apparel
Soft Goods:
Products made of textiles or other flexible materials including fabrics, apparel, linens, towels, upholstery and small fashion accessories.
Which sourcing factor is determined by an exporting country's economic development level? (2)
Quality of transportation and means of Communication
*Which one of the following is NOT a typical company involved in apparel importing?* *-* Apparel intermediary *-* Brand manager *-* Sourcing agent *-* Private brand retailer
Sourcing agent (Who are: - Brand manager - Private brand retailer - Apparel intermediary
Which one of the following sourcing methods adds to cost but may be necessary if the sourcing organization lacks knowledge of a country? (2)
Sourcing agent or Intermediary
What is "outsourcing"?
Sourcing outside of the company
Which of the following is NOT used as a trademark?
Spokesperson (What is: word, logo, and phrase)
Which sourcing theory states that sourcing managers make their sourcing decisions based on market environment?
Strategic choice theory
Module Summary:
Supplier selection is never easy especially when beginning to source globally. The right conditions, right product, right quality, right time, right cost require a constant balancing act. The needs of the company need to be established—what will be sourced? An understanding of costing and terms of sale is essential. Suppliers are required to sign a lot of legal documents including purchasing contracts, non-disclosure agreements, vendor compliance contracts and they may be required to have certain kinds of production certificates from third-parties. Signing up to be a new supplier to a company is a long process and not cheap for the supplier! And there are the ongoing audits of production from various companies. Suppliers may be found through word-of-mouth (other sourcing professionals), trade shows (MAGIC, Texworld, Intertextile, Techtextil), sourcing agents, off-shore or joint venture operations, and licensing. These are the indirect methods. Sourcing may also be direct through CMT, package and full-package suppliers. Some full-package suppliers will do everything from design to shipping. A sourcing mix is a dynamic balance of suppliers offering the ability to manufacture different product categories, different blends of speed-to-market, capacity, value and efficiency. The right sourcing mix allows the company the flexibility to pursue trends. Knowing what is happening in the world and staying in touch with changing conditions makes a smarter sourcing manager. Everything is very important in these modules, but the most important quality a supplier can offer is the ability to manage continual change.
Which statement is NOT a correct description of sustainability?
Sustainability involves only corporate responsibility to promote cooperation and equality among people. (Correct: - Sustainability should be considered from the perspective of four dimensions: social, economic, environmental. - Corporate, government, and consumer responsibility are essential for a holistic perspective on sustainability. - Sustainability systems can exist forever without undermining other beings' needs in the present and in the future.)
Which FTAs are currently being negotiated, yet to be ratified?
TPP and T-TIP???? *Said Was Wrong*
Based on the Resource Dependence Theory, which one of the following resources would JCPenney, Macy's, and Nordstrom be most unlikely to acquire permanent ownership of? *-* Design *-* Textile Mills *-* Laboratory: ability to do own quality testing
Textile Mills
1950s
Textile industry employment in the United States peaked in the ____.
What part of the US textile complex has been advocating for protected trade the longest?
Textile manufacturers
In terms of exports, which of the following is expected to remain the primary driver of Korean textile & apparel sector exports?
Textiles
CMT:
The *CMT Factory is responsible for garment production and packaging only*, and the *customer is responsible for all preproduction activities and post production* activities (like design, patternmaking, grading, making samples, etc) - CMT is the* traditional model used, especially when sourcing in newly developing nations.* - In the model, the *apparel company develops products sources fabric, delivers fabric to the vendor, and pays transportation and duties.* - C: cutting fabric, M: making garments, T: providing trims, as well as cleaning and packaging finished products.
U.S. apparel manufacturers began to rely primarily on sourcing garment assembly overseas in what decade?
The 1990s
Which statement is true about the European Union (EU)?
The EU is the largest economy in the world.
*Which one of the following items would be considered by a hiring company to be the MORE valuable asset of a sourcing manager?* *-* The amount of traveling the sourcing manager has done *-* The contacts the sourcing manager brings *-* The volume of garments previously handled by the sourcing manager
The contacts the sourcing manager brings
Which of the following is an indirect cost which will raise the cost of the final garment?
The cost of making and shipping sample
Where would we look to know in which countries the U.S. dollar can buy more?
The currency exchange rate
1980s
The decline in the number of US apparel workers began in the ___.
Morals:
The degree of conformity with generally accepted or prescribed standards of goodness or rightness in conduct.
*Which one of the following is NOT one of the major changes that occurred between 2007 and 2011 according to the Kurt Salmon Association report?* *-* The degree of diversification of sourcing regions *-* The focus on improving information visibility throughout the supply chain *-* The degree of de-globalization
The degree of de-globalization
*Module Summary*
The factors which must be considered when selecting a location include cost, political and economic stability, customs requirements, infrastructure, communication, ease of doing business, culture, skills, level of development, education and technology and trade regulations. *A PEST analysis looks at the Political, Economic, Social and Technology level of countries; it is generally used for new countries only.* Picking a location isn't just a matter of cost. It involves a lot of other information. But at the end of the day, the reputation of a country in managing its trade and business can make the difference between more business or less. Most sourcing personnel will agree that there's some level of intuition—based on experience—in selecting the location and a supplier.
*Module Summary:*
The focus of this module was international trade, especially at it relates to the textile and apparel industry. Trade protection is initiated when countries create barriers to reduce the amount of goods coming into a country. *These trade barriers may be in the form of tariffs (taxes) or non-tariff barriers, which increase the cost of imported goods. Non-tariff trade barriers include currency exchange rates, price support programs, quotas, and others*. The World Trade Organization is the only global organization dealing with international trade among nations, and it dramatically changed trade within the textile and apparel industry when the quota system ceased. This week we looked at different economic systems of government, political positioning related to international trade, especially in the textile and apparel industries. Politics define how a country manages government, and the primary motivations are power, influence and manipulation of people and resources. Government activities including subsidies to businesses and price supports are generally regarded as unfair competition in the global market. Governments can impose antidumping duties when companies/countries engage in dumping practices (i.e., selling products below cost of production or fair market price). Regionalization has expanded in the last two decades in the textile and apparel industries. The EU formed a powerful political and economic coalition; Asia has achieved dominance in the production of textiles and apparel; the Middle East and Africa face unique challenges for economic and industrial development; and the United States is working to unify the Americas.
What is the phrase used to describe a matrix of interconnected structures and activities located all over the world including the suppliers of materials, manufacturers, designers, sourcing, quality, and more, beginning with and ending with the consumer?
The global textile complex
Caribbean Basin countries
The group of countries in the Western Hemisphere that has suffered the most from the end of the quota system is ________.
Specific tariffs are calculated based on _______, and ad valorem tariffs are calculated based on ______
The number of units of the product, the value of the product
Haiti
The poorest nation in the Western Hemisphere is _________.
Logistics:
The science of moving products through the manufacturing and distribution system to their final destinations in a timely manner.
*Everything below is a risk. But which of the risks below would be the number one fear of a sourcing manager?* *-* U.S. consumption levels dropping *-* Increased labor costs *-* The shipment isn't delivered on time
The shipment isn't delivered on time
What is the main area of controversy between supporters of outsourcing production to newly developing countries and the anti-sweatshop movement?
The standards used to define a sweatshop
Protectionism:
The use of trade barriers to minimize imports in order to protect domestic industry.
Which one of the following statements is true about trade surplus?
The value of exported goods is greater than the value of imported goods.
*Module Summary:*
There is no doubt that this trend of sustainability is affecting the textile and apparel industry in both good and bad ways: - By bringing new fibers, better dyestuffs, and better chemicals to the table. - By asking the difficult questions of what is just and fair in labor. - By creating new regulations: NGOs have protested many issues leading to more federal legislation (for example: CPSIA (2008), which although it is mainly about children, has mandated Reasonable Testing Programs and ultimately has forced businesses to find ways to know what their products are made of and where they come from, as well as knowing how they perform; it also increased costs). - By requiring transparency: in order to prove that a business is 'sustainable', there must be a way to prove it. This is a massive challenge. At the end of the day, unless a business has someone who is trusted standing over the factory workers or the textiles mills observing every detail, a supplier may still substitute incorrect or illegal materials. That's why suppliers are so important; a level of trust has to be established. - By leading to the creation of the Higg Index for guiding businesses in determining the best course, proving and communicating sustainability.
Why is counterfeiting so attractive?
There's little investment in product development, no taxes and no advertising required
If a company based in the U.S. wants to sell a garment in a foreign country, it must have the care labeling written in the foreign language. If it is to be sold in 27 different countries with 27 different languages, the care label must be written in 27 different languages. How did the ISO solve the issue? (ISO-International Organization for Standardization)
They created pictograms which symbolized the standard care label instructions.
If there is not enough population to supply the apparel factories, what will happen to the wage rates?
They increase.
According to the article "Digitize or Die" from Sourcing Journal Online, what will happen to retailers who do not digitize?
They will go bankrupt
Quality control focuses on everything that happens after production begins; what is the goal?
To be free of defects
What is the objective of preproduction processes? Select the best answer.
To ensure that all the raw materials and components are correct
Why is it important for sourcing organizations to be aware of fashion trends?
To ensure the sourcing matrix is capable of manufacturing the latest trends
What is the #1 goal of having a well-balanced sourcing mix?
To provide flexibility to follow the trends
What is the main responsibility of sourcing during the first step of the Sourcing Cycle?
To share cost and quality performance for the goods sold in past seasons
Supply Chain:
Total sequence of business precesses involving single or multiple companies and countries that enables demand for products or services to be satisfied.
What happens when a country has a negative trade balance?
Trade Deficit
Official objectives, laws and actions designed to influence the flow of exports and imports of goods and services is known as which of the following?
Trade Policy
What is "domestic trade"?
Trade within a nation.
PLM is the one source of the __________.
Truth
*Of the three countries below, which is most active in textile and apparel?* *-* Turkey *-* Jordan *-* UAE
Turkey
Confidence in which country has been undermined by a climate of insecurity caused by terrorist attacks and political problems against a backdrop of a drift towards authoritarianism?
Turkey
In 2013, the top apparel importers in the region were ____. (2) (Middle East & Africa)
Turkey and UAE (United Arab Emirates)
*Which statement is NOT true about Turkey?* *-* Turkey is the most Westernized nation among Muslim countries. *-* Turkey is a new member of the EU. *-* Turkey is the biggest contributor to textile and apparel trade in the Middle Eastern/African region. *-* Among developing countries, Turkey has the most efficient textile and apparel industry, following China.
Turkey is a new member of the EU. (True: - Turkey is the biggest contributor to textile and apparel trade in the Middle Eastern/African region. - Turkey is the most Westernized nation among Muslim countries. - Among developing countries, Turkey has the most efficient textile and apparel industry, following China.
Labor cost for textile production in __________ is almost four times lower and in _____ is seven times lower than in the United States. (Middle East & Africa) *-* Israel, Morocco *-* Tunisia, South Africa *-* Turkey, South Africa *-* Israel, South Africa
Turkey, South Africa Labor cost for textile production in TURKEY is almost four times lower and in South Africa is seven times lower than in the United States.
Who represents the United States in trade negotiations?
USTR (Office of the United States Trade Representative)
From Table 9.2, which European country is the poorest (based on GDP per capita)?
Ukraine
Based on GCI, the most productive nation in the regions is ______. (Middle East & Africa) (GCI- Global Competitiveness Index)
United Arab Emirates
Which nation joined the EU but with considerable resistance and just this year voted to exit the EU?
United Kingdom
Which country imports the most clothing?
United States
What is the term used to describe company that supplies services or goods to other companies who are known as 'customers'?
Vendor
What is the document which helps ensure the 'right conditions' for contracting with a supplier?
Vendor compliance
What is the term for the performance standards or business rules established by the customer?
Vendor compliance
One of the current trends in global sourcing is for increasing speed-to-market by buying and owning the supply chain needed to make the product. What is this called?
Vertical integration
Which of the following is an independent nonprofit corporation dedicated to the promotion and certification of lawful, humane, and ethical manufacturing throughout the world?
WRAP (Worldwide Responsible Accredited Production)
From the Bloomberg article regarding China, what is China attempting to control in order to remain competitive in the world market?
Wages for labor
The U.S. dollar, for the first time in many years, has more value (ex: on 11/22/2016, 1 U.S. dollar = .94 euro; in the past, it was almost always 1 U.S. dollar = 1.29 euros). What does this mean for sourcing?
We can buy more overseas.
*Which one of the following is NOT a criteria to determine whether to 'Make or Buy' a product?* *-* Profit maximization *-* Capabilities *-* Who has the cheapest labor *-* Cost minimization
Who has the cheapest labor (What are: - Cost minimization - Capabilities - Profit maximization )
*Module Summary:*
We can look at sourcing from many perspectives, many of which were introduced in this module: economic and business, political and governmental, sociological, labor and culture. Because of the many viewpoints possible, there are often conflicting opinions regarding the many issues facing sourcing today. Countries trade today in order to create jobs and improve their economies; they trade because different countries have different advantages or efficiencies. For example, some countries have highly skilled workers; other countries have low labor costs. Some countries are known for innovation; others are known for supplying commodities. The level of development indicates what a country is capable of doing: *newly developed countries and developing countries tend to be focused on production and export while developed countries focus on product development and then importation or consumption of goods.* The textile complex incorporates many options in the supply chain to create a textile or apparel product. Building strong supply chains allows businesses to gain advantage over their competitors by offering the best value to their customers. In the supply chain matrix, it is critical to manage risk and the complexities of global sourcing. Supply chain goals guide strategies and to ensure consumer benefits, and efficient and effective supply chain management can optimize consumer and financial benefits. The textile or apparel business must carefully evaluate all the options available throughout the world in order to create a product according to specifications with the least cost and the right delivery.
Thirty-five percent of the commodities seized by the US CBP in 2013 were from which of the following product categories?
Wearing apparel and accessories
All of the above. - To consolidate their *production within self-contained cities* - To produce very *labor-intensive products* - The *availability of labor is becoming a problem*
What is one of the trends in China in regards to manufacturing? (3)
Cultural values related to time, work, frugality, education, merit, community and ethics vary widely among the member nations.
What is the main challenge to meeting the goals of the Organization of American States?
MAGIC
What is the name of the largest trade show in the US?
To establish Pan-American Union for closer economic, cultural and political relationships
What is the purpose of the Organization of American States (OAS)?
NAFTA's major focus was the political and economic unity of its member countries. (True: - NAFTA was established in 1994. - NAFTA significantly reduced trade barriers among the member countries. - Because of NAFTA, the trade among its member countries has increased significantly.)
What statement is NOT correct about NAFTA?
Trade Deficit:
When a country has a negative trade balance. Value of imports exceeds value of exports
Real-time communication:
When changes in design or tracking of products are instantaneously and continuously available to all individuals involved, whether they are in the next room or across several continents.
The country on a country of origin (COO) label is determined by
Where the last substantial transformation was carried out
How is COO determined?
Where the product received its last "substantial transformation"
Brazil
Which Mercosur country is known for growing cotton and is one of the world's leading denim producers?
Columbia
Which South America country specializes in high-quality fashion apparel and is recognized as a main fashion center in Latin America?
Chile
Which country is considered the most stable?
Korea
Which country is heavily invested in Central America by owning apparel factories?
The major focus of the Los Angeles apparel industry is tailored men's wear. (True: - Many apparel businesses in the area, such as Forever 21, are owned by Korean families who immigrated to the US> - The Los Angeles area is now the largest - Los Angeles has a readily available supply of workers because of the immigrant population.
Which statement about Los Angeles' apparel industry is NOT correct?
The US apparel retail market is becoming more and more competitive.
Which statement about retailers in the US is TRUE?
The US apparel retail market is becoming more and more competitive.
Which statement about retailers in the US is true?
Most countries in the Americas are ranked in the top 50 countries in terms of productivity (True: - Haiti has the lowest productivity (GCI) in the Americas. - Canada has higher productivity than Chile. - The United States is the most productive country in the Western Hemisphere, based on the GCI.
Which statement is NOT true about the global competitiveness of American countries (refer to Table 10.2)?
US and Canada
Which two countries are considered developed in the Americas?
*When determining whether to 'Make or Buy', which of the following criteria would NOT help the company make the decision?* *-* Which is less expensive? *-* Who will make the product best for the most profit? *-* Which offers the lowest risk? *-* Who is friends with the VP?
Who is friends with the VP? ( What would: - Which is less expensive? - Who will make the product best for the most profit? - Which offers the lowest risk? )
Application of new technology
Why did employment in textiles in the US decline from 1950 to 1980?
Small businesses cannot supply the volume needed for huge retailers.
Why is it difficult for small-to-medium businesses to become suppliers of huge retailers?
When it is summer in the United States, what season is it in Australia?
Winter
What statement is NOT true about Vietnam's textile and apparel manufacturing trade?
With Trans-Pacific Partnership (TPP) implemented in the early 2000s, Vietnam had an advantage of duty-free access to the US apparel market
The United Kingdom is known for what kind of high quality fabrics?
Wool and cottons
Within the economic sphere of sustainability, the first two areas to be cut when cost need to be reduced are:
Work hours and wages
Higher productivity indicates that ____________.
Workers are less educated and have lower skills
Which of the following is a specialized agency of the United Nations whose goal is to improve the living standards of people in the developing world? This agency is able to provide interest-free loans and direct contributions from developed countries. *-* WTO *-* World Bank *-* IMF
World Bank
Square meter or square yard is the unit to measure trade in which category?
Woven fabrics
Because there isn't enough volume produced in China, what must be imported to support the production of apparel?
Yarns and fabrics
Is it possible that the width of the fabric may affect the design of the garment or vice versa (the design of the garment may require a certain width of fabric)?
Yes
OTEXA:
a division of US Department of Commerce that monitors textile trade throughout the globe in terms of both quantity and value
Global Textile Complex:
a matrix of interconnected structures and activities located all over the world including the suppliers of materials, manufacturers, designers, sourcing, quality, and more, beginning with and ending with the consumer
Manufacturers:
a person or company that makes goods for sale.
Sourcing Calendar:
a time line related to the sequence of design, product development, production, and delivery to the retail sales floor.
Higg Index
aims to create a standard approach to measure and evaluate the sustainability impacts of all apparel and footwear products and inform business-to-business decision-making that identifies ways to improve products and processes.
Outsourcing:
contracting out selected functions or activities of an organization to other organizations that can do the work more cost efficiently
Package Factory:
everything but product development services like design, technical design and spec All but product development services
Resource Dependence Theory:
is *similar to RBV but focuses on the dependence factor*. This theory says that *if the resource needed is critical to the competitive advantage of the company, then the company should decide whether to 'make or buy' in order to acquire permanent ownership of the resource.* If a particular product is critical to the company and there's only one supplier who makes it, then the company is also dependent on that supplier to make delivery and offer a fair price. Resources that are not important to competitive advantage, where many suppliers are available and may be substituted, could be sourced from outside the company, because dependence on another company is not great.
When contracting with an FOB factory, the sourcing firm _____________.
is often responsible for customs clearance and paying import duties
*Module Summary:*
llegal and unethical trade activity is harmful to consumers and businesses. It takes profit away from businesses and ultimately means that goods become more expensive! And it's just not fair that someone works so hard and they are not compensated or their reward is stolen from them. To protect the well-being of its consumers, economies, and businesses, governments rely on customs services to ensure that trade is fair. To avoid compliance with trade laws, companies engage in illegal transshipment of goods, improper country of original labeling, using undocumented workers, and human trafficking. Sometimes, they simply copy outright and brazenly. Due to consumer demand for branded goods, counterfeit goods are increasingly available in marketplaces. Most consumers do not realize that they are supporting organized crime and terrorist activities by purchasing counterfeit goods. Individuals and businesses are increasingly recognizing their responsibilities to engage in ethical and sustainable practices that are the hallmarks of good citizenship.
Socio-cognitive Theory:
says that sourcing decisions are the result of the company culture, a reflection of the organizational identity. These companies are more likely to continue the same strategies; for example, if a company has a strong identity as American, it may be more likely to source domestically." "Made in America" marketing has a strong appeal for them, so they source to be able to say "Made in America".
Resource-based view of the firm (RBV) :
says that the *competitive advantage of a company is in the effective and efficient use of all its useful resources*; anything they are not capable of doing effectively and efficiently must be identified, explored and transferred to the company. In other words, *whatever a company can't do well, they must seek elsewhere.*
Critical Theory:
says the *companies source with a mission to improve society.* Sourcing decisions are considered an important means to improving society, not the business. This helps explain companies like TOMS shoes.
Dumping:
selling products in a foreign country at lower prices than those charged in the producing country or lower than it costs to produce.
International Trade
the exchange of goods and services among nations
Transshipment:
to transfer or be transferred from one conveyance to another in order to continue shipment
Intra EU:
trade among nations that are members of the EU
Extra EU:
trade with nations that are NOT members of the EU
Domestic Trade:
trade within the same region or country
