The Apparel Industry - Business Plan Example

Textiles You are forming a new company with a friend who is a talented designer. You have a lot of “hands on” experience with wholesale sales. In addition, you want to produce and market a women’s fashion forward dress line in the better price range. What type of company would you start? Why? How and where will you produce the dresses? What production environment and method will you use? Why? If you were to use a contractor, where and what type of contractor would you use and Why? How will you distribute and cost your products? Describe three retailers that you will target to sell your products and identify why? Introduction The Apparel Industry in US is in its growth stages. The apparel industry enjoys a strong position in the country due to the fact that fashion changes every year and people want to remain up to date with fashion. Thus, investing in Apparel Industry is lucrative at this point of time. Moreover, the Apparel Industry has become highly price competitive as outsourcing has increased in the country. Therefore wholesale production and distribution of Apparels has its advantages (Euromonitor, 27). In this paper, a business plan would be put forward with respect to a women fashion line. Women evening wear would be the main product sold by the company. These gowns would be available at reasonable prices for the customers. Given the recent recession, people cannot afford expensive evening wear. They want quality products at reasonable prices and therefore our company, ‘Angels’ would be providing affordable evening dresses to its customers. Production Process The production process for an apparel company that deals in evening wear requires buying the raw materials, dyeing, designing and finally stitching of the final piece. The process would be divided into two parts. In the first part, the designers would create a collection. The company already has a designer who is also the owner of the company. The designer would initially work along but with time he would hire more designers as the need arises. These designers hired by the company would be fresh graduates who would be willing to work at a comparatively lower pay scale but would have fresh ideas and concepts. The designer would consider latest fashion trends, colors and other pertinent details when designing the collection. The designer would also be responsible for designing prototypes of the evening gowns to serve as references for the production process. Once the collection is designed, the first part of the production process would end. In the second part, the designers would be sending over their designs and prototypes to production facilities located in emerging countries. The concept is to outsource production of the gowns to another country. This will allow us to cut down labor costs since emerging countries offer cheap labor and good infrastructure. Also outsourcing allows the company to reduce over heads costs associated with utility bills and manufacturing plants (Hamlet). Once the designs are outsourced, the company’s representative in the country would hire the necessary people for the job. These would include buying managers, production managers and other employees such as tailors. The buying manager would obtain the necessary raw materials for the production people. His job would be to get the best price for the material. This would be done by buying the materials in bulk quantities. Once the buying process is completed, the entire materials would be handed over to the production managers. They would then begin the production process by dyeing the clothes according to the right colors. Later tailors would turn them into the required designs. In the entire process, the prototypes designed by the company’s designers would be consulted periodically to make an exact replica of the design but better in terms of finishing and tailoring. Also the company’s designer would be in constant touch with the production and buying managers to ensure that the production process moves smoothly. He would be willing to make small changes in the designs and colors if the need arises. Once the designs are ready, they would be shipped to US. For some clothing items, such as skirts, jeans etc. the company would directly buy its product from wholesale dealers. This would eliminate the designing process, thus making the end product much cheaper. In order to ensure flexible and smooth movement of goods, the company would outsource its production to three different countries. Since this is an apparel company, outsourcing would be considered in China, India and Bangladesh. This is because these countries are considered as the top apparel exporting countries and at the same time offer good infrastructure and cheap labor (“Top 10 Apparel Exporters”). Also three different suppliers are considered for the purpose that if internal problems within one country hinder exports, the company can rely on its other suppliers. Also the power of the suppliers is reduced in this manner. Supply Strategy The outsourcing part of the business requires the hiring of contractors. Contractors are hired as intermediaries for the purpose of performing a part of the business activity. In this case, contractors are hired for handling the outsourced work. There are generally three types of contractors: General Contractors, Specialty Contractors and consultants (Transportation Research Board, 17). In this case, general contractors would be hired. General contractors perform all the functions related to their contracts and even hire other employees to undertake the contract. In all three countries, China, India and Bangladesh, there are general contractors who are willing to form the outsourced part of the business. These contractors would be given the task of handling all phases of the production process, except designing of the clothes. The main reason for hiring these contractors is that at this point of time is that it would be difficult to develop and oversee a production facility outside the country. The main reason for outsourcing is cutting down costs while also benefiting from the country’s infrastructure. The general contractor would be hired on a monthly retainer ship basis. The contractors would be responsible for hiring employees according to their needs. The contractors would then be responsible to ensuring that their employees are treated fairly and provided with good working conditions. If the company receives any notice of mishandling of the employees, any further contract with the supplier would be seriously considered. The company would be hiring three contractors initially. These would be from three different countries: China, India and Bangladesh. The work would initially be divided equally between the three contractors. With time and based on the performance of the contractors, the work load of the contractor would begin to vary as the company would reward good performance with more work and more benefits. Cost and Distribution Strategy The company aims to sell fashion evening wear to its customers at reasonable prices. Given the recent recession, customers want good price for their company and this is what the aims to provide to its customers. The cost of the products would therefore be evaluated on the basis of this strategy. The company would charge minimum profit for its products. The main aim is to derive profits by making the maximum number of sales and by keeping the prices low. For this, the company would produce products at bulk quantities and achieve economies of sales. The company would be producing limited designs initially. For instance, 6 designs would probe produced initially. These designs would be equally divided among the three contractors. Each contractor would be given 2 designs to complete. However, he would be making 500 pieces per design in order to reduce per unit cost of the final product. For distribution purposes, the company would make a contract with clothing retailers already functioning within the US. If the company would develop its own store, it would increase overhead costs and would require heavy investment in the beginning. However, when liaising with retailers already existing in the market, the company can benefit from their exposure and customers. At the same time, the company would be able to considerably bring down initial investment in the business. For this strategy, the company would have w approach clothing retailers within the US who have strong market presence and a good number of stores throughout the US. Wholesale retailers would be given preference since they will buy the stock in bulk quantities. Conclusion The Apparel Industry in US is at a crucial time right now. With the recent recession, consumers have become conscious of their apparel buying. Therefore wholesale apparel products have enjoyed an increase in demand. The company, ‘Angels’ would be using this opportunity to develop a clothing line that is focused on mainly evening wear for women. The manufacturing of these dresses would be outsourced to emerging countries while the owner and designer of the company would be retaining the designing part of the dresses. The company would distribute its products to different clothing retailers in the US. Work Cited Euromonitor, “Apparel in the US”, 2013, Retrieved from http://www.euromonitor.com/apparel-in-the-us/report Hamlet, Kenneth, “Reasons for Outsourcing in a Manufacturing Industry”, n.d., Retrieved from http://smallbusiness.chron.com/reasons-outsourcing-manufacturing-industry-1292.html “Top 10 Apparel Exporters”, 2013, Retrieved from http://asicentralblog.com/blog/2013/06/03/top-10-apparel-exporters/ Read More