Costing and Negotiation Skills for Apparel Professionals
Case study – A merchandiser’s workday during Costing and Development at XYZ Export House, a reputed apparel exporter dealing with major brands and retailers of US and Europe.
Samir is a sincere, hardworking merchant working in XYZ export house. For him, it’s that time of the year again. The beginning of a new season, proto sampling deadlines, endless coordination with fabric suppliers and garment vendors to stick to the dates to make sure the samples reach in time for the ‘ oh so important meeting’, and above all costings, costings, costings..
A period of crazily hectic activity, and pressures mounting from all sides…buyers, suppliers, bosses… Given the crazy workload that hits Samir at this time, it is little wonder that some details, often with important implications, get overlooked. If you had more than 100-150 cost sheets to populate, prepare and quote prices on, being a supplier’s merchant… to err in some costings would be human indeed.
But wait a minute… let’s just understand the implications before brushing it aside as a simple as that scenario. In one of his cost sheets, Samir, instead of typing $ 0.59 for a certain leather patch in the garment, typed $ 0.059. Price was sealed and order was confirmed for 25,000 pcs for a pant. It’s only later that his buying office counterpart noticed this error. Now imagine the amount of money left on the table … $ 13,275! Wow, Samir could do the Europe holiday that He often dreams of in that kind of money!!
Samir is thinking… why these buyers have to change their target prices so many times… He has to rework on his costings several times… He just made 7th revision to the same cost sheets and is now waiting for his boss to get free, so that he can take approval and send the cost sheet to the buying office merchant, who have been after his life since morning today…..What a waste of effort and time ?
Is there a way out to simplify Samir’s life? Yes. Go to the next tab to find out.
After going through this module on costing and negotiations Samir will learn –
- How to approach the job of costings from the mindset of a ‘marwari businessman’, for whom every cent counts, leaving no room for any errors whatsoever.
- How to ensure that the cost quoted is neither under quoted so as to lose money on order, nor over quoted so as to lose the order itself.
- How the buyer’s approach the job of costing and negotiation and be armed to deal with all the tricks and tools employed by buyers, while doing costings and negotiations.
- How to make sense of the buyer targets based on the buyer’s profit margins and figure out in advance at what price the fob is likely to get sealed and avoid multiple revisions
- How the knowledge of his local and global competition and his buyer’s profit margins can arm him with powerful information while doing cost negotiations with buyers
Samir will participate in exercises so that his learning is driven by doing, not just by listening.
Course Outline
What is your CQ?
An interactive quiz session to assess the participants’ knowledge and understanding of various nuances involved in apparel costings and negotiations.
Costing 20.
A discourse on a 20-point program highlighting various tools and methods that a merchant can apply while doing costings and negotiations to make the process more accurate and effective.
What is in it for your buyer?
A focused discussion on understanding how the buyers arrive at their profit margins. How this knowledge can then be applied by merchants to figure out the fob targets that the buyer is likely to close the orders on? This session will involve practical exercise to ensure that learning is absorbed by doing.
Know your competition – local and global.
A group discussion on understanding the competitive advantages of their local competitors, as well as whom are they competing with on a global platform. Where do they stand with respect to their competitors? A simulation exercise will be conducted in which participants and or groups thereof will represent each competing country or region and highlight the strengths and competitiveness that they bring to the table in an effort to bid for an order from a buyer.