Inverto Case: FashionForward’s Sourcing Shake-up

Your Role:

You are a junior consultant at Inverto and part of the sourcing strategy workstream. Your project manager is guiding you through this case to test your strategic thinking, analytical skills, and recommendation style.

What we expect - A MECE framework addressing:

A. Risk Exposure

• Geopolitical risk & FX exposure
• Supplier dependency
• ESG compliance risk
• Port/transport disruptions

B. Cost Efficiency

• Unit & transport cost
• Minimum Order Quantities (MOQs)
• Inventory holding costs
• Rework and quality issues

C. Flexibility & Responsiveness

• Lead time & replenishment capability
• Cancellation terms
• Fulfillment accuracy
• Forecasting / volume triggers

D. Strategic Fit

• Differentiation by product type (basics vs. trends)
• Fit with sustainability goals
• Brand perception and supply chain transparency

Bangladesh = €5.00 / Turkey = €5.62 → €0.62 difference per unit → €18,600 more/month

Assume 30,000 units monthly:

• Bangladesh:
  • Fulfillment Accuracy: 85%
  • Shortfall: 4,500 units → Lost margin: 4,500 × €2.00 = €9,000
  • Excess Inventory (due to MOQ 12,000 & Overstock Risk 17%): 2,040 units overstock × €1.50 markdown = €3,060
  • Total downside risk = €12,060/month
• Turkey:
  • Fulfillment Accuracy: 97%
  • Shortfall: 900 units → Lost margin: 900 × €2.00 = €1,800
  • Excess Inventory (MOQ 3,000 & Overstock Risk 17%): 510 units overstock × €1,50 markdown = €765
  • Total downside risk = €2,565/month

Hint: Net Evaluation should compare Cost, Flexibility and Risk dimensions.

Conclusion:

• Bangladesh is cheaper on paper, but risk & inflexibility erode margin.
• Turkey costs €18,600 more/month (30k × €0.62), but avoids up to €10K in lost margin & markdowns.
• Turkey offers strategic value for volatile products.
• Despite higher cost, Turkey offers significant benefits in agility, risk reduction, and ESG alignment. Use it for trend-driven products with volatile demand."

• Dual Sourcing: Split SKUs between low-cost and agile suppliers
• Category-Based Strategy: Basics from Bangladesh, Trends from nearshore
• Nearshore Supplier Expansion: Evaluate Tunisia, Romania, Serbia
• Flexible Framework Agreements: Volume corridors and rolling forecasts
• ESG Governance: Scoring system for supplier qualification
• Postponement Strategy: Pre-produce raw material, finish near market
• Forecasting Enhancement: Use POS data, demand sensing algorithms
• Vendor Managed Inventory (VMI): For core SKUs
• Localize high-margin, low-volume SKUs

Expected Approach:

• Split the sourcing model by category:
  • Basics: high-volume, low variability → Bangladesh
  • Trend-driven items: low-MOQ, high responsiveness → Turkey
• Define volume triggers for nearshoring based on forecast volatility
  • Introduce ESG risk filters in vendor approval
  • Develop a decision matrix balancing cost, risk, and responsiveness

Model Summary:

“I recommend a hybrid sourcing strategy. Bangladesh remains the base for stable basics, ensuring cost efficiency. Turkey should be used for fashion-sensitive SKUs to increase flexibility and reduce markdown risk. We further propose ESG filtering in supplier selection, a modular forecasting strategy, and pilot programs in alternative nearshore regions. This balances cost control, risk mitigation, and design responsiveness.”

"I recommend a hybrid sourcing model that balances cost, risk, and responsiveness. Bangladesh remains the core sourcing base for cost-effective basics, while Turkey and potentially Tunisia are used for fast-reacting, trend-sensitive categories. This model reduces geopolitical and ESG risk, improves fulfillment accuracy, and allows FashionForward to be more agile. To implement, I suggest setting clear category-based sourcing rules, ESG filters in vendor selection, and piloting flexible order structures to better manage uncertainty.”