Supplier Handbook

This is only the Executive Summary of one leading retailer and it is to provide you with an insight of your roles and obligations, plus the clients roles and obligations when you are a supplier.

There will be an accompanying supplier handbook with such large retailers which will itemize many points for you such as appropriate labeling and position of labeling for the brand you are supplying (if you are a contractor and not operating as your own brand label), where to purchase the labels from, warehouse and delivery requirements, quality control standards, fabric testing…everything is covered in a supplier handbook.

In this Executive Summary the following areas are reviewed; objectives, the clients goals and your role, quality assurance and measurement guide, (this includes the stages of fitting i.e. the sealing procedure, inspection, fabrics and a very important measurement guide), delivery procedure for both direct imports and UK, accounting procedures (extremely important – this is how you are paid!) Conditions of trading (this is legal compliance) and contact details with a glossary of terms.

There is one very very important section that you must always be aware of. Accounts and supplier terms!

When you quote a price to a potential supplier, especially with the big retailers, you must ask some very fundamental questions! How many units are you basing the price on – 50 units, 500, 1000, 10,000! The higher the quantity the significantly lower the price is. Factories are hungry elephants they need to keep their machinists busy so the bigger the price the “less” work per garment there is.

What are the suppliers discount terms i.e. what discounts apply to your cost price. This is so important and is the difference between a complete loss or making a margin for you. There are normally two types of discounts. A prompt settlement discount – this is when a supplier deducts a % of the invoice order value for the privilege of paying you on time. So it may be 5% prompt settlement discount 30 days. This means that if your order was £6,000 to a retailer they would take 5% of the £6,000 and pay you 30 days after delivery to the warehouse. So in this example £300 would be deducted deducted off your invoice value of £6,000 This sounds incredible I know but this is what most big retailers will enforce.

The other discount to be aware of is the NDC discount. This is a national distribution centre discount. This means that the retailer will deduct another fixed % for the cost of delivery your garments into one central location – the distribution centre for all the order. The distribution centre then sends out the ratio packs of merchandise to each individual store. Now this does mean you do not have to distribute one pack of merchandise to each store yourself of course and that would be a significant cost. This does happen as well. Organisations such as AIS (Associated Independent Stores) and Fenwicks expect you to deliver to the stores individually. Again this is a fixed % cost such as 4% or 6% of the invoice value.

So be aware! Potentially you could have up to 12% taken OFF your cost price by the supplier! Always negotiate too dont be afraid to ask for preferential terms with any supplier. We do!

Click here to download a copy of the Supplier Handbook