Textile and Apparel Industries

Investigating the Role of Open Costing in the Buyer-Supplier Relationship: Implications for Global Apparel Supply Chain Management

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Abstract

A key to increasing a firm’s competitiveness is building long-term, collaborative buyer-supplier relationships (BSR) is collaborative costing practices.  “open costing” is an increasingly popular method by which a supplier uses the best knowledge available to compile an itemized list of factors deemed necessary in the production of the product sought by the buyer, rather than a fixed price. Few studies have examined how the supplier’s costing methods in the context of the global apparel industry. In this study, the theoretical framework of social exchange theory was employed to investigate the role of open costing practice in the BSR. Interviews were conducted with 30 apparel suppliers in China and Bangladesh. The results identified several factors important to open costing and the BSR, including Mutual Trust, Fairness, Flexibility, Efficiency, and Sustainability. Findings shed light on the practice of open costing within the BSR and apparel SCM from the perspective of suppliers.

Keywords: China, sustainability, buyer-supplier relationship, global sourcing, open costing, social exchange theory

How to Cite:

Wu, H. J., Su, J. & Hodges, N. N., (2019) “Investigating the Role of Open Costing in the Buyer-Supplier Relationship: Implications for Global Apparel Supply Chain Management”, International Textile and Apparel Association Annual Conference Proceedings 76(1). doi: https://doi.org/10.31274/itaa.8432