SAFSA FAQ | Source asean

SAFSA FAQ

Source ASEAN Full Service Alliance (SAFSA)

What is SAFSA?

The global garment industry is undergoing tectonic change. In the past, a factory that shipped a decent product, on time, and at a reasonable price was assured a customer. Today these attributes are not competitive advantages, but minimum requirements. Today’s customer assumes that a factory is a competent product supplier. In this new industry the preferred factory is full-service providing speed-to-market from first designer sketch, to DDP stock delivery, to customer’s warehouse. SAFSA is a three year program to promote ASEAN as the leader in the new full-service paradigm.

To apply for SAFSA immediately, scroll straight to the bottom of this page!

Download the SAFSA service standards manual, which specifies and quantifies the complete list of services required by a Virtual Vertical Factory (VVF) in order to meet full-service status. The services covered begin with the first step of the manufacturing process — MATERIAL SOURCING — and end with the last step — EXPORT CREDIT. There can be no single list of services applicable to all VVFs. Different product types and customer types may lead to a variety of combinations applicable to each VVF structure.

What advantages does the ASEAN region offer customers and suppliers?

ASEAN is home to some of the world’s leading textile and garment producers. The region has a culture of cooperation and service, and is moving towards economic integration. By 2010, seven of ASEAN’s ten member countries will have eliminated duties and tariffs on textile and apparel products, and by 2012, all members will have eliminated duties and tariffs. Because ASEAN is already achieving regional economic integration and integrating its textile sectors, creation of full-service textile and apparel alliances can be fast tracked through “virtual vertical factories” or VVFs.

Why form VVFs?

ASEAN includes some of the world’s most important garment factories, and several of its members have large garment industries. Even so most factories will not be able to provide all services or achieve speed to market standards if acting alone. Through SAFSA they will be able to form virtual vertical factories with downstream material suppliers and other upstream suppliers in order to provide particular buyers full service and speed-to-market. Outside of a VVF alliance, each supplier will be free to do business independently. Speed-to-market cannot be achieved without integrating the textile and garment supply chain. However, as the economies of scale are so different, we seldom find the best garment supplier matched with the best material supplier in a single company. The solution is the virtual vertical factory where an independent garment factory joins together with an independent textile mill to provide a customer with full-service.

How will SAFSA benefit suppliers?

Through SAFSA, factories and industries can make the transition from being simple FOB suppliers to being full-service suppliers. As the customer is an integral part of the SAFSA structure, the supplier can be certain that the services they develop will be the services required by their target customer. SAFSA will enable suppliers to:

Understand customers’ needs.

Understand what they themselves can achieve within a certain timeframe.

Form VVFs.

Establish and audit service standards.

Attend an annual buyer-supplier product sourcing forum.

Continually raise and refine service standards through a membership organization.

How will SAFSA benefit customers?

Through SAFSA-sponsored VVFs, customers will be able to work with suppliers that provide the specific services that they want. Customers will have access to competitive suppliers who:

Offer a range of products at different price points.

Are part of a highly developed industry.

Can be trusted to ship quality goods on time.

Are located in a region that has all raw materials inputs and is achieving economic integration.

By enabling customers to work with a broad base of factories on a regional basis, SAFSA can help customers not only secure a range of products at a range of price points but also:

Lower production costs. Cutting and making accounts for only about 6 percent of the cost of garment production. Through SAFSA buyers will be able to transfer expensive services—pattern making, design sample making, material sourcing, etc.—from their home countries to factories in suppliers’ countries, drastically lowering labor costs and converting an overhead expense into a direct cost.

Get saleable products to market faster. Markdown loss at retail averages 30 percent and for most U.S. retailers this exceeds the cost of the garment. Markdowns are usually the result of long product lead times; it sometimes takes up to 45 weeks from designer sketch to arrival of stock at the warehouse!

How will the SAFSA program work?

The program is designed to help participating customers and suppliers reach mutually beneficial goals by:-

Establishing what customers want and agreeing on what suppliers can achieve. SAFSA will form an advisory board of senior sourcing executives from U.S. and European brand importers and retailers working in different sectors with different products and different price points. This board will specify and, where possible, quantify services it considers important to buyers’ goals. This list will be shared with the ASEAN Federation of Textile Industries (AFTEX) board for comment and final consensus-based agreement. This will result in a final list of agreed services that can be achieved within the three-year span of the SAFSA program.

Establishing and documenting service standards. On the basis of the agreed services, SAFSA will define services standards and the phasing in of standards. For example, the standard for designer samples could be 2 days and for trial orders a minimum of 500 pieces shipped in 20 days. The achievement of the design sample standard could be in three phases: 1 = 7 days; 2 = 4 days; 3 = 2 days). A manual of services will provide details on each service by product and, where necessary, buyer type. The standards, timeframes, and manual will reflect the agreement of participating buyers and suppliers.

Forming VVFs. At the outset, a majority of the garment factories will individually not be able to provide fully the necessary services or achieve true speed to market. To meet the SAFSA goals, factories must join/collaborate with independent upstream suppliers to form partnerships - virtually vertical factories (VVF). Additionally, garment factories and material suppliers will not be able to afford the investment or risk required for speed-to-market, unless the customer is at the center of the partnership. The VVF is a partnership of the suppliers and their customer for the sole purpose of providing services and speed-to-market to that customer.

Creating an auditing facility to ensure minimum service standards and levels. SAFSA will retain a well known auditing organization to carry out audits and help create a detailed check list for audits. This will ensure that a single standard is maintained.

Convening an annual ASEAN World Textile/Garment Forum. At this invitation-only event, buyers and VVF suppliers will discuss product sourcing arrangements, attend seminars, and hear from guest speakers chosen by AFTEX.

Establishing an independent, registered, member supported organization for long-term development. SAFSA will become an officially registered organization supported by monthly dues from member VVFs, initially US$1,000 per VVF (US$500 per mill, US$500 per factory). SAFSA will audit members’ service standards and levels, provide training as needed, and organize the annual ASEAN World Textile/Garment Forum.

How to apply?

This is a simple three-step process:

1. Download and fill in the application form

(To download the application form and the appropriate information form in step 2, right-click on the underlined link and click "Save as...". A left-click will open a new browser window.)

2. Download and fill in supporting information as appropriate.