Outsourcing Australian Production to China

The Challenge

To ease the significant margin pressure for an Australian branded apparel and footwear supplier following the reduction in import duties.

The Solution

After being engaged to evaluate the production that could be outsourced to China, we analysed the product portfolio to evaluate the volumes, life cycles and demand variability of products to determine which products could sustain the import supply chain. It then went on to work with the business to:

• Show the benefits of maintaining production capacity locally for short runs and quick response capability for
  new product and fashion lines

• Find suitable suppliers in China and negotiate supply contracts

• Establish third-party warehousing consolidation of orders and products from suppliers within the constraints of the export customs regulations

• Implement processes and systems to support the managing of orders, inventory and shipments from planning
  through to the China factories, to the consolidation centre and the freight forwarder.

The Benefits

• Improved margins on imported high-volume lines, at the same time ensuring flexibility and fast response on fashion and new lines

• This was achieved with only a small increase in inventory with the introduction of the offshore consolidation centre, enabling quick response to orders

• Service levels to retail were improved as the supply chain implemented