What is Fabric Ordering Process in Garments Sector?

Based on PO, PI, BOM - fabric ordering process is places by the merchandiser in terms of quality, price and delivery.
Fabric Ordering in Garments Sector involves with the mill. The most important points to be taken care of during this activity are:

■Accurate computation of the requirement. This is essential to ensure that during bulk production the materials do not fall short nor are they in access and there are leftovers after the order is shipped.
An accurate calculation of material requirement can be done if the BOM (Bill of Materials) as provided by the buyer in the specification sheet is studied thoroughly.  Apart from just ensuring that the quantity is correct the BOM also helps in checking that all materials required in completion of the order are ordered and nothing has been missed out.

•Selecting the best vendor for the materials in terms of quality, price and delivery.

▪The fabric order is places by the merchandiser by means of a purchase order. The purchase order should list down the following very clearly –

Name & Reference no of the article
Quality description of the article
Quantity
Price
Delivery date
Quality parameters as required by the buyer
Payment terms
Pilot yardage requirements if any

■The mill sends a PI (Performa invoice) confirming the details as mentioned in the PO. In case of any changes required in the PO the same are also mentioned in the PI. The mill also provides its bank details on the PI so that the factory can work out the payments. 

■There can be various kinds of payment term agreements between the buying and the selling parties as below.

■Some %c of payment in advance, the balance at sight – example, 20% advance, 80% at sight. This means that 20% of the total value of goods is paid in advance, the balance 80% is pain once the goods are received by the buyer (factory). This payment can be done by means of DD (demand draft), cheque or TT (Telegraphic Transfer)

fabric ordering process
■LC (letter of credit) – in this payment mode the banks of both parties are involved. The buying party (factory in case of fabric) opens up a LC with its bank and the same is transferred to the mills bank. On acceptance of the LC by the mills bank, this becomes a legal contract between the two parties. Once the goods are dispatched the mill submits the dispatch details (Invoice, packing list and Air way bill details) in its bank and get the payment for the goods. The mills bank then approaches the factories bank and gets its payment from the same. The factories bank then gets the payment from the factory. The LC once made, a copy of the same should be called in by the merchandiser and studied to make sure all details as mentioned are correct. 

The details to be looked at are:
Name & Reference no of the article
Quality description of the article
Quantity
Price
Delivery date
LC expiry date

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