Labor costs, leather and other raw material costs, freight, costs associated with consumer safety testing …

If the prospect of higher costs and lower margins keeps you up at night you are not alone.

In a recent USFIA survey of fashion executives, 81% ranked rising sourcing costs as their greatest business challenge.

Here’s an approach that just might lead to a better nights sleep.more

When Costs Rise, Value Engineer Your Product

Sometimes, it feels like costs go up like a rocket, and down like a feather. But in the face of rising costs there ARE things you can do.

Value engineering is a tried and true manufacturing strategy that can help keep your prices down as costs rise.

Value engineering is just a fancy term for a basic concept.  It refers to the process of examining your product from the point of view of the consumer, to justify each feature and expense. Are there any features of the product that the consumer doesn’t value?

We’ll give you an example.

A few weeks ago we bought a car, and replaced a 6 year old Nissan Maxima with the lastest model. While the original had full leather seats, the new model had leather facings, and the sides and back were made of a perfectly matched synthetic leather.

Most consumers would not notice this, and most wouldn’t care.

Sneakers are another example.  Remember the phrase “leather uppers” from years past?  Now, the label says “lightweight synthetic uppers”.  More value engineering!

Value Engineering: Glove Manufacturers Example

How can you apply this principal to gloves?

By studying the design of your product, holistically, and also component by component.

Begin by asking “What does the consumer want?

Then consider: Is this glove/line intended to fill the gold, silver, or platinum part of the range? In other words, is it intended to meet an opening price point, or is there room on the cost sheet due to more premium pricing?

Within the context of this basic brand price/value determination, then ask:

  • Can we use a different grade or type of leather without compromising the aesthetics of the glove?
  • Can we use a different lining without compromising the function?
  • Is a brand name waterproof/windproof/breathable liner — or branded insulation — worth a premium to the consumer?
  • Can we pack the product differently to get a better utilization of the container and reduce freight and distribution costs?

These are just a few questions we ask, meant to demonstrate a thought process. Our guide on hidden costs will give you some more ideas.


Knowing What to Ask Your Manufacturer

As a buyer, cost is a big driver of your performance. Sales revenue, margin and bottom line are all impacted by cost.

While the price of a few commodities are actually flat or lower – polypropolene, aluminum, nylon 6 – many key cost components are up.

When was the last time you worked with your glove manufacturer to take a fresh look at your line?  After working together to value engineer it, you may get better margins … and a better night’s sleep!

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