Learning Goal: Differentiate between CMT, FOB, and ODM manufacturing models and select appropriate factory partners.

 

  • Complete Lesson Content: Choosing the correct business relationship with your manufacturer determines your operational workload, profit margins, and financial risks.The three main manufacturing business models in apparel are:
    • CMT (Cut, Make, Trim): The brand buys and ships all fabric, threads, zippers, and labels to the factory. The factory only charges for labor and machine usage.
    • FOB (Free On Board / Fully Package): The factory manages fabric procurement, trim purchasing, cutting, sewing, and loading onto the ship at the origin port. The brand pays a single bundled unit price.
    • ODM / White Label (Original Design Manufacturer): The factory designs, sources, and manufactures the clothing. The brand simply places its logo tag on pre-existing designs.
  • Definitions:
    • MOQ (Minimum Order Quantity): The lowest number of units a factory or fabric mill will produce per style/color.
    • FOB Price: Full garment price covering raw materials, labor, and delivery to the port of origin.
    • RFQ (Request for Quotation): A formal document sent to factories asking for cost estimates based on tech pack specifications.
  • Step-by-step Explanation:
    • Determine Brand Strategy: Early-stage startups usually prefer FOB to reduce logistics overhead, or CMT if using exclusive custom fabrics.
    • Draft RFQ: Send tech packs to 3–5 candidate factories.
    • Evaluate Proposals: Compare prices, MOQs, sample lead times, and factory certifications (e.g., WRAP, BSCI, Sedex).
    • Request Counter Sample: Assess factory sewing quality before committing to bulk production.
  • Best Practices:
    • Never choose a factory based solely on the lowest price; factor in communication responsiveness, sample quality, and compliance.
    • Always request audit reports (BSCI, WRAP) to ensure fair labor practices.
  • Common Mistakes:
    • Working with a massive factory when your order size is small; your order will be deprioritized behind major clients.
    • Failing to clarify who owns pattern digital files (CAD files) generated during sampling.
  • Real Industry Example: Patagonia relies on Full Package (FOB) sourcing with certified Fair Trade suppliers, specifying exact bluesign-approved fabric mills that Tier 1 factories must purchase from.
  • Mini Case Study: Scenario: Startup “EcoActive” orders 200 custom leggings. They select an FOB factory charging $12/unit. Upon arrival, the fabric feels thin and cheap because the factory picked an inferior sub-supplier to maximize profits. Solution: EcoActive should have specified exact fabric weight (GSM) and composition in their FOB agreement and approved a fabric lap dip / swatch approval beforehand.
  • Practical Activity: Write a professional 5-sentence email inquiry (RFQ) to a potential overseas factory requesting quote details for 300 custom cotton hoodies.
  • Assignment: Compare CMT vs. FOB models in a comparison table evaluating: Financial Risk, Overhead Effort, Quality Control Control, and Minimum Order Quantities.
  • Lesson Summary: Selecting between CMT and FOB defines your brand’s operational responsibility. FOB offers convenience for emerging brands, while CMT provides total material control.
  • Key Takeaways:
    • Emerging brands benefit from FOB suppliers to streamline trim and fabric procurement.
    • Factory selection requires balancing MOQ, quality, pricing, lead time, and social compliance.
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