Overseas sourcing has always played a crucial role in enhancing value addition to any global supply chain. This importance has been elevated in recent years due to the escalation of local production costs and price pressure from competitors. The apparel business is no exception, relying on global sourcing for competitiveness. Retailers and back-end manufacturers of garments, textiles, and accessories are constantly searching for new global bases for competitive sourcing. This article is based on the author's experience in developing overseas sourcing from China.

Many apparel companies have set up their own liaison offices in China and Hong Kong to manage sourcing. Over the years, sourcing from China became attractive due to lower direct sourcing costs compared to similar items sourced elsewhere. However, managing the supply chain right from China posed various challenges.

Among the problems companies typically faced, long and unpredictable transit times slowed down inventory turnover. This made purchase and inventory managers uneasy about sourcing from the land of the dragon. Logistics managers had reasons to be cautious, as China sourcing involved nightmarish entanglements with ports, customs officers, and negotiations with shipping lines. Ensuring quality also became challenging, with most quality officers expressing concerns about sourcing fabric and trim from China.

In addition to these issues, difficulties in managing expected time of dispatch and arrival (ETD and ETA) and synchronizing them with in-house manufacturing schedules were nearly impossible when sourcing from China. Disruptions due to different time zones, disparate cultures, and language barriers added to the challenges faced by apparel companies. Commercial documentary intricacies, from not mentioning the country of origin clause in L/C to mistyping consignee names or ports of destination, led to L/C amendments and delays in releasing goods from ports. Quality and quantity assurance posed hurdles, with bureaucratic port and customs delays affecting parts of every consignment.

However, it is possible to overcome these challenges by formulating a logical and sustainable strategy to manage China sourcing. The first and foremost of these strategies is to develop the "Total Sourcing Cost (TSC)" concept to measure sourcing efficiency from China. TSC comprises the ex-factory price, freight cost, inventory cost, cost of rejected goods, duties, and the cost of after-sales service. Management can rightly focus on where to control costs while sourcing from China only after determining the TSC. Without calculating TSC, management might focus solely on the ex-factory cost from China and end up paying more due to other associated costs.

It is also necessary to create a Hybrid Sourcing Model based on direct involvement, third-party, and agent-based sourcing. All three can add significant value while addressing the challenges companies might encounter in their China sourcing.