eThesis - School of Business electronic theses

OBJECTIVES: The theoretical objective of this study is to provide a comprehensive understanding of global sourcing in general and particularly in the fashion industry. Empirical objectives are to investigate the case companies' sourcing practices and to assess how well these practices correspond with the recommendations provided in the literature. The practical goal of the study is to provide advice and information about global sourcing for new Finnish fashion start-ups.

ACADEMIC BACKGROUND AND METHODOLOGY: In the theoretical research, relevant academic literature is reviewed with a special focus on the fashion industry. Theoretical framework is built up based on the literature review. In the empirical research, seven Finnish fashion companies' global sourcing practices are surveyed using semi-structured interviews and analyzed based on the framework.

MAIN FINDINGS: The case companies favored long supplier relations based on trust. This was well in keeping with the theoretical finding that small companies can, to a certain extent, overcome the problems related to their small size and gain more negotiation power by investing in trust building. Lower prices and improved quality were seen as main benefits of global sourcing. The most common sourcing strategy was direct sourcing from Estonia. Estonia's popularity was based on not only lower prices, but also good quality and both cultural and physical proximity. However, the biggest case companies were also engaged in sourcing from Asian low-cost locations. Even though manufacturing in Finland was considered transparent, high prices as well as lack of resources and skills were criticized.

The case companies' sourcing practices corresponded relatively well with the literature's recommendations, except those regarding performance measurement. The companies did not monitor the efficiency of their sourcing function in a very structured manner. Main reason given for this was the small size of the companies - the interviewees felt that a structured approach was unnecessary and the companies would not have resources for it. This study suggests a set of performance indicators for small fashion companies' sourcing efficiency measurement.

Many companies regarded their small size as a hindrance when working with foreign factories and material providers. With certain reservations, some companies would be open for inter-firm cooperation in global sourcing. However, a trustworthy, independent player would be needed to facilitate and orchestrate this.