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Product Development Final

Terms in this set (46)

Basic Styles-Pyramid
Carry little risk and can be ordered in large quantities and assortments. Makes up the lowest and broadest part of the pyramid. Margin Builders
Key Items-Pyramid
Product developer's interpretation of current fashion trends for the core customer. Makes up the middle level of the pyramid and carries more risk.
Fashion Items-Pyramid
Help create an image and expose the customer to new trends. Forms the point of the pyramid, not produced in large quantities.
Specs
graphic representations and written descriptions of styling, materials dimensions, production procedures, and finishing instructions for a garment style
Open Specs
Provide generic info and basic facts allow for flexibility on the part of the producer or contractor but can create quality issues and unexpected results
Closed Specs
Usually closed-99% of the time. Provide detailed and specific info, can require an exact material or supplier. Limit flexibility of producer and increase end cost, but ensures quality and consistency.
Real-time systems
record each operation within the written specifications as it occurs providing instant access to info about every project within the system to everyone involved; manufacturers, contractors, management, production, designers, pattern makers, and sample makers
Tolerances
the variation from established criteria that will be allowed during production
Phase 1a: Design Specs
the first phase is based on the line plan summary and the initial prototype garments for each style. The focus at this stage is on the development of the design itself and decisions about the first sample.
Phase 1b: Costing
preliminary cost sheet: used to establish the cost of materials to produce the first sample and estimates of labor and other costs incurred in production and distribution.
Phase 2: Technical Specs
- prepared after a style has been adopted. The focus at this stage is on the development of first production patterns and sales samples. Include detailed info regarding specific material and their quality requirements, fit standards and tolerances, identification of preferred construction methods
Phase 3 production specs
- production specs are also called engineering specs. Includes precise information for producing quantities of a product, rather than an individual prototype. Rework preliminary cost estimates to reflect actual costs
Elements of fit
grain, set, line, balance, ease
Company owned facilities pros/cons
-Can respond quickly to shifts in market demand
-Require shorter lead times and can accommodate shorter runs
-Equipped with cutting edge technology and skilled workforce
-Easier to control quality, costs, scheduling, working conditions
-BUT difficult to remain price competitive
Domestic Contracting pros
-Similar advantages as company owned facilities
-Allow for increase in order size for styles that see beyond expectations
-Ease of communication
-Costs of quota, customers clearance and overseas shopping are eliminated
-Certification visits less costly
Offshore sourcing
By far the largest supplier to the US apparel market
There is considerable pressure on product developer to offer the best possible product for the lowest price, so the low wage manufacturing available off shore is an obvious way to cut cost.
Working with offshore contractors pros/cons
-May not understand American design concepts, consumer expectations or quality standards
-Require more detailed specifications and rules regarding workers rights
-Less security over product designs, specifications, and technical information
-Product developers may lose some control over quality, scheduling and shipping
-Do provide significant flexibility and cost saving compare with in-house domestic production
Cut, make, trim (CMT)
The brand provides the designs and patterns and arrange the delivery of fabric. The contractor cuts, manufacturers and finishes the garments
Full package/sourcing agents
Contractors, trading companies or agents source materials and provide design, pattern making, cutting, sewing, finishing, quality assurance, packaging, and shipping.
tariff
A tax on imported goods assessed by the country of import
Quota
An annual limit on the volume of a product that may be shipped from an exporting country to an importing country
Embargo
A prohibition from importing products from an exporting country to an exporting nation
Hidden costs of off shore production
-Packaging and transportation of cut goods, if using fabric sourced from another country
-Delivery of fabric and garments to the port of embarkation from the factory
-Insurance, custom duties and clearance, agent fees, banking fees
-Ocean freight or if deliveries are late, air freight
-damaged goods
-shortages
cost
The amount of money you must pay to produce (or acquire) the product
Price
The amount of money you receive when you sell the product
Price =
Cost + Profit
Gross Sales
all the money earned from sales in a period of time
Net Sales=
gross sales-returns/allowances
Cost of Goods Sold
the value of unsold inventory from the previous period + the amount paid to obtain new merchandise
Gross margin=
net sales-cost of goods sold
FAS- free along side
the cost of production plus it includes the delivery of the goods to the port. The price does not include loading into the ship or any other charges incurred from that point on
FOB (free on board)
Same as FAS(covers production and delivery to the port) but also includes loading onto the ship
CIF (cost, insurance, freight)
Same as FOB(Includes cost of production, delivery to the port, loading onto the ship) and also includes ocean freight and insurance along the way
LDP (landed duty paid)
Same as CIF(includes cost of production, delivery to the port, loading, freight, insurance) and also includes the duty at the destination port, but it does not include delivery to final destination
Gross Margin
Shows profitability of company when comparing revenue and costs involved with production
Apparel Supply Chain
(People doing jobs-making garments)- complex network of suppliers and vendors involved indirectly or directly to consumer needs
A linear supply chain
when each role is distinct/independent/each person has one specific job
Collaborative Product Supply chain
Work together to do several jobs- adds value. Interactive networks of independent manufacturing specialists.
Value chain
A chain of activities that a firm performs in order to deliver something valuable
Vertical Integration
One company performs the first four steps of the supply chain (or several steps). Enhances competitive advantage in getting the right product to market at the right time and price. Whole sale brands that own their own stores are vertical.
Horizontal Integration
Buy or licenses other companies that make or sell similar products to knock out competition. This expands their market penetration and reduces competition.
Diversification
Growth strategy where you expand your assortment (product mix) to capitalize on brand recognition and increase sales.
Variable costs of production
-Fabric trims
-Labor
-Labels and hang tags
-Packaging
-Shipping
-Tariffs- average tariff for apparel is 9%
-Quality Control
-Fees for agents and factors
Fixed costs of production
-Rent or property payments
-corporate overhead
-equipment tools
-Office supplies
-insurance and taxes
Grading
how we scale up or scale down a garment for each size
vanity sizing
placing a smaller size label on a larger size garment
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