Merchandising in the garments industry involves a complex series of steps to bring clothing from concept to market. This flowchart will help to visualize and understand this process.
In this article, I’ll break down the flowchart of merchandising each step, providing real-world examples to illustrate each sequence.
Table of Contents
Flowchart of Merchandising
Contract buyer
⬇️
Audit (for initial orders)
⬇️
Receive inquiry sheet
⬇️
Develop sample
⬇️
Consumption of material
⬇️
Costing
⬇️
Quotation
⬇️
Negotiation with buyer
⬇️
Order receive
⬇️
Receive master L/C
⬇️
Make a TNA (time and action calendar)
⬇️
Booking fabrics, trimming, & accessories
⬇️
Open BB L/C (back to back L/C)
⬇️
Sample approving
⬇️
Receive fabrics, trimming & accessories
⬇️
Swatch card making & approval
⬇️
Approval for bulk production
⬇️
Lab test
⬇️
Pre-production meeting
⬇️
Star bulk production
⬇️
Link inspection
⬇️
Ex Work (Mode of delivery)
⬇️
PSI (Reshipment Inspection)
⬇️
Shipment (Ex-factory)
Contract Buyer:
The journey begins with securing a buyer interested in your product. For example, a clothing manufacturer may contract with a retail chain to supply a line of summer dresses for the upcoming season. This contract outlines the terms of the agreement, including price, quantity, and delivery schedule.
Audit (for Initial Orders):
Before proceeding further, an audit of the initial order is conducted to ensure accuracy and feasibility. For instance, a manufacturer may review the specifications provided by the buyer to verify that they align with the company’s production capabilities and resources.
Receive Inquiry Sheet:
Upon receiving an inquiry sheet from the buyer, the merchandising team evaluates the requirements and prepares to respond. This could involve assessing the product specifications, quantity needed, and any special instructions or customization requests.
Develop Sample:
To give the buyer a tangible idea of the product, samples are developed based on the provided specifications. For example, a shoe manufacturer may create prototype designs to showcase to the buyer for feedback and approval.
Consumption of Material:
Once the sample is approved, the next step is to calculate the material required for bulk production. This involves estimating the quantity of fabric, trimmings, and accessories needed to fulfill the order. For instance, a denim jeans manufacturer calculates the amount of denim fabric required based on the size range and style of the jeans.
Costing:
Costing is a crucial step in determining the pricing of the product. This includes factoring in material costs, labor expenses, overheads, and profit margins. For example, a handbag manufacturer calculates the total cost of production, including leather, hardware, stitching, and assembly costs, to determine the selling price.
Quotation:
Once the costing is finalized, a quotation is prepared and submitted to the buyer for consideration. This document outlines the pricing details, terms of payment, and delivery schedule. For instance, a jewelry supplier provides a detailed quotation to a retail chain interested in stocking their products.
Negotiation with Buyer:
Negotiations may ensue as the buyer reviews the quotation and seeks to negotiate terms that are favorable to both parties. This could involve discussions on pricing, delivery deadlines, or quality standards. For example, a clothing manufacturer may negotiate with a retailer to adjust the payment terms or order quantity.
Order Receive:
Upon reaching an agreement, the buyer places an order with the manufacturer, specifying the quantity and delivery requirements. This formalizes the commitment between the two parties and initiates the production process.
Receive Master L/C:
If the transaction involves international trade, the buyer issues a Master Letter of Credit (L/C) to secure the payment. This document serves as a guarantee of payment from the buyer’s bank to the seller’s bank upon fulfillment of the terms and conditions.
Make a TNA (Time & Action Calendar):
A Time and Action Calendar is created to outline the key milestones and deadlines for each stage of production. This helps to ensure that the project stays on track and that all parties involved are aware of their responsibilities and deadlines.
Booking Fabrics, Trimmings, & Accessories:
With the order confirmed, the next step is to procure the necessary materials for production. This may involve booking fabrics, trimmings, and accessories from suppliers based on the specifications provided.
Open BB L/C (Back to Back L/C):
In some cases, a Back-to-Back Letter of Credit (L/C) may be opened to facilitate the procurement of materials or components needed for production. This allows the manufacturer to use the buyer’s L/C as collateral to obtain credit from their own bank.
Sample Approving:
Before proceeding with bulk production, the buyer must approve the final sample to ensure that it meets their quality and design standards. This may involve making any necessary revisions or adjustments based on feedback provided by the buyer.
Receive Fabrics, Trimmings & Accessories:
Once the materials are procured, they are received and inspected for quality and quantity. This ensures that the production process can proceed smoothly without delays or shortages.
Swatch Card Making & Approval:
Swatch cards are prepared to provide a visual representation of the fabric, trimmings, and accessories to be used in the production. These are submitted to the buyer for approval before proceeding with bulk production.
Approval for Bulk Production:
With all preparations in place and approvals obtained, the manufacturer proceeds with bulk production. This involves coordinating various activities such as cutting, stitching, and finishing to meet production targets and deadlines.
Lab Test:
Quality control is essential to ensure that the finished products meet the required standards and specifications. Samples are sent to accredited laboratories for testing to verify aspects such as colorfastness, durability, and safety compliance.
Pre-production Meeting:
A pre-production meeting is held to review the production plan, address any concerns or issues, and ensure that all parties involved are aligned on the expectations and requirements for the production run.
Start Bulk Production:
With everything set, bulk production commences as per the agreed schedule and production plan. This involves managing the workflow, monitoring progress, and addressing any issues that may arise during the production process.
Inline Inspection:
Regular inspections are conducted throughout the production process to identify and address any quality issues or deviations from the specifications. This helps to ensure that the final products meet the desired quality standards.
Ex-Work:
Once the production is complete, the goods are prepared for shipment. Ex-works (EXW) is a shipping arrangement where the buyer is responsible for arranging transportation and covering all associated costs and risks from the seller’s premises.
PSI (Reshipment Inspection):
Prior to shipment, a Pre-Shipment Inspection (PSI) may be conducted to verify the quality, quantity, and compliance of the goods with the agreed specifications and standards. This provides assurance to the buyer and helps to prevent any issues or disputes upon receipt of the goods.
Shipment (Ex-factory):
Finally, the goods are shipped to the buyer’s designated location or port of destination. Ex-factory (EXW) shipment terms mean that the seller’s responsibility ends once the goods are made available at their premises, and the buyer assumes all responsibility for transportation and risk from that point onwards.
Conclusion:
The merchandising flowchart provides a structured framework for managing the complexities of bringing a product from concept to market. By understanding each step of the process and incorporating real-world examples, businesses can streamline their operations, enhance efficiency, and deliver high-quality products that meet the expectations of their customers.
Whether you’re involved in sourcing, production, or retail, mastering the merchandising flowchart is essential for success in a dynamic and competitive garments industry.
