Apparel Brands need Open Costing to be Sustainable

Sustainable through Open Costing

Open Costing means that you know what goes into your products. If you don’t, then how can you say that you are sustainable? You either know that you are sustainable or you are not sustainable.

What is Open Costing, really?

Open Costing is about much more than costs. It’s about paying attention to the production details that matter and costing knowledge.
Unfortunately as production has been outsourced, so has the knowledge. Many brands don’t really know what actually goes into their products, it’s a bit of black box with an FOB price which seems reasonable. Of course that is not the case at your brand, surely.

And it does depend on the type of apparel brand. Fast fashion brands move too quickly to do real open costing, they buy ready-made from a supplier they trust. We aren’t judging, that’s a legitimate business model but please don’t yap about being sustainable. Outdoor brands however shouldn’t just trust their supplier, they should be knowledgable and when it comes to their products know:

Open Costing Questions

• How much are the workers paid?
• What is the breakdown of the overhead line item?
• Who are component suppliers and how well do you know them?
• What is the consumption per product?
• What is the unit price?
• What’s the waste %?
• What are the commercial terms (payment terms, minimum order quantities, raw material indexes, currency)
• What is the supplier profit?

Have a look at the Bill Of Materials / Costing Sheets of your key styles and just go line by line and make a list of of notes and questions that come to mind. By analysing and comparing BOMs from other suppliers one can find areas that can be improved without necessarily paying more.

If you want to have a neutral party assess your BOMs / Costing Sheets, reach out and we can show you how BOMs should look like and start a conversation.