Overall, the supply chain shows the kind of composition depicted in Figure 7, depending on the product typology (basic/elevated fashion content) and on the possibility of forecasting demand (volatile/planned). The majority of products purchased are of the basic type, and the basic product supply chain extends more or less world-wide, with China, India and Bangladesh22being the dominant foreign countries by virtue of the advantage they offer in terms of price/quality ratio. It is also worth pointing out that with regard to the type of clothing considered here, the garments produced by firms in these three countries reach qualitative standards that are not far from those which could be purchased from a local supply chain. Therefore the economic advantage is a fundamental driver in sourcing the supplier, and it is not balanced out by the geographic distance (logistics, transport etc.) or by costs connected to cultural distance (management of orders, etc.). Global sourcing is justified both by the nature of the product, which is essentially basic and can be planned 7-8 months before it actually goes on sale at the outlet, and also by the product’s positioning on the textiles-apparel market, which remains at a medium position. When it is necessary to include products with a higher fashion content in the range, then European sourcing is adopted (Italy, Mediterranean coastal countries, Eastern Europe), since for this product typology the driver for choice of supplier shifts from the cost factor to the time/service factor because the distributor needs to be able to offer products renewable at a rate of three flows per season. Therefore the time factor represents an element that seems capable of reallocating competitive advantage to the local supply chain as compared to the offshore supply chain. In contrast, choice of one supplier as opposed to another does not at present seem to make use of specific performance indicators (GMROILS, etc..) that could act as a guide in the choice among alternative supply chains, such as estimates of the 22But estimates for 2005 by referents of the cooperative point to the hypothesis of a growing weight of foreign purchases from China, the country which, together with India, remains the main source of supplies.
Sourcing strategies in clothing retail firms13Fig. 7 – Indifference curve in Coop Italia VolumeBase level demand(basic products)Surge demand(high fashion content products)cost per unittime/serviceCoop Italiacost per unittime/serviceCoop ItaliatimeDemand and productsIndifference curveSource: author’s elaboration contribution of each source in terms of reduction of lost sales or of loss leader sales. Clearly, in this regard the unspecialized nature of the retailer must be taken into account: the level of sophistication of these indicators would not be in accordance with the rationale of managing the entire assortment by adopting a rather different approach from that of a specialized industrial retailer.