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Outsourcing May Hurt Fashion Manufacturers' Bottom Line

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Executive Summary

Fast fashion-designing products that capture the latest consumer trends, and then spending extra money to get them to market quickly, can be well worth the extra expense, increasing profits exponentially, says Stanford Graduate School of Business Professor Robert Swinney, coauthor of a recent study. Most companies in the fashion industry are firmly entrenched in a business model that involves outsourcing production and distributing products through cheaper, "Slow boat" channels. New research at Stanford Graduate School of Business, however, suggests that while this approach seems to make economic sense it may actually create gross inefficiencies that cause firms to miss out on significant profits.

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