The New Holitistic Supply Chain: Where is it:?

A request from John

Thanks for your investment in writing the blog.  I would like to see an address of why sourcing is a strategic area for the buyer.  Often there is such a laser-like focus on “who can make this widget” rather than the holistic view that an existing supplier partner could possibly make the widget and thus be more significant in the buyer’s overall supply chain.  Any experience you could share or decision-making methods for this type of scenario would be welcome.

For the past twenty years, I have been struggling with this problem.

I still have no answer, but I am getting close.

The answer clearly lies with costs.  The customer wants to buy the right garment at the lowest cost.

The problem is that most customers are unable to add-up the numbers

Let me start at the beginning.  Part I

The industry began with garment buying: The customer’s buyer came to the factory with a sample.  The job of the factory was to supply the materials and labor.

About 20 years ago customers shifted to garment sourcing.  The customer’s sourcing-specialist, broke the garment down to its constituent materials and processes.  The sourcing specialist sourced the material; selected the material and trim suppliers, negotiated prices, and instructed the factory who to buy from and how much to pay.  In the new garment sourcing world, the factory still shipped FOB; however, all factory profit was More...

Posted in Customer Strategies, Factory Strategies, Garment Costs, Garment Prices, Internet | Tagged , , , | 1 Comment

Transfer Pricing: Government v Buying offices and their Parent companies

My new book Birnbaum’s Global Guide to Agents and Buying Offices is due out in the next two weeks.  The subject is described in the title. The following is taken from the back cover:

20 years ago, every middleman —every agent and every buying office —provided the same basic services.  Today the list of required services has expanded geometrically and skill-set needed to provide those services have expanded exponentially.  The days when the middleman needed only merchandisers and QC are long gone. 

Today, the difference between a first class and a mediocre middleman is the difference between success and bankruptcy.


Are you an agent or a buying office?

This book will tell you whether you are in front, on the cutting edge or at the back, about to fall off.


Are you a brand importer or retailer?

This book will tell you what is on the cutting edge, and what you may be missing.


Every customer asks the same basic question: What is a fair commission?


The answer depends on three factors:

Who are you?

What do you need?

How good is your middleman?

The short answer is:

In some cases 5% is too high. More...

Posted in Transfer Pricing | 2 Comments

Operating a Successful Small and Medium Size Factory in a World of Giants

On 11 November, I posted a note on for readers to suggest topics of special interest.

Here is the first request

Dear David
Glad to hear your proposal; always a bit afraid to ask, knowing your tight schedule….
Here is something I will like your to see your point of view: You frequently talked about the big suppliers to macro international factories with capacities in many countries and one buying office for all, like Hong Kong. What do you think of the rest of us (suppliers) small suppliers should do? Do you think we will be swallowed just like Walmart has done with all the small retailers in the US; or do you think we will have hope working with smaller customers that could not reach the minimum of this macro factories?
All the best ! Love the blog

Operating a Successful Small and Medium Size Factory in a World of Giants

An average small and medium size factory cannot work with a large customer:

1.    The large customer cannot afford to work with the small supplier because the customer’s overhead costs would be too great.  The factory that ships 100,000 units annually requires the same follow-up as the factory that ships 1,000,000 units annually, with the result that the cost per unit working with the small factory is 10 times greater than working with the large More...

Posted in Customer Strategies, Factory Strategies, Garment Factories, Garment Prices, Garment Sourcing | 5 Comments

Looking for Input

Dear Reader:

I have been writing this blog for the past three years. According to the usage statistics data, as well as comments from friends and colleagues, has attracted a surprising large following, for which I am very grateful.

However, to date the conversation has been mostly one-way.

I write.    About 6000+ people read.

A blog should be a two-way .

I would like to suggest the following. If you are a student or a professional, I want your input

If you have a question, let me know.  I will answer.

I you have a topic about which you want information or even an opinion, let me know.  I will try to write an article.

Help me with you input.


Posted in Uncategorized | 6 Comments