Creating an effective domestic production model for Fashion & Apparel
Fashion & Apparel makes up a small portion of US imports but contributes to a disproportionate amount of the tariffs collected by the United States government. As the White House continues to hint at an expansion of tariffs to include a wide range of consumer goods that includes apparel and footwear, heavy reliance on imports is a major risk for the industry. Few Fashion & Apparel retailers and designers have the capacity to establish in-house production, and creating that capacity in a short period is no mean feat. However, moving away from full package sourcing and outsourcing specific manufacturing processes to US factories is a comparatively easier and more manageable change in production operations that the industry can still explore. Apparel, footwear, and travel goods represent 6% of US imports, but they contribute to 51% of the tariffs collected by the United States government. The benefits of a domestic outsourcing production model are obvious: shorter lead times, the flexibility of easier in-season reorders, faster store replenishment, collaborative product design, more direct and on-the-spot quality control, flexibility in production capacity, centralized materials requirement planning (MRP), easier material safety and reorder point management, and, of course, lower tariff costs only paid for material imports. However, there are many challenges that need to be managed for a successful transition: 1. Establish strong domestic partnerships with contractors and factories The single most important aspect is onboarding the right contractors and factories for serving your product lines and categories. Building strong partnerships is essential for securing consistent lead-time commitments from contractors and factories. This requires supply chain visibility by continuously and consistently sharing sales and demand plans of new product lines,