Columbia Sportswear 2004 Annual Report Download - page 11

Our 2004 brands consisted of three product segments: our high-end performance Titanium products (high-
end, technical, generally sold in specialty stores); our moderate Vertex™products (mid-priced, technical,
generally sold in sporting goods stores); and our most broadly distributed Outdoor Issue™products (classic, non-
technical, generally sold in department stores). We believe that increased differentiation allows our retailers to
better target their specific customers.
Mountain Hardwear products focus on innovations in fabrics, designs and technical features. The products
are intended for extreme environments but also extend themselves to broader uses such as skiing and hiking. The
outerwear line features such fabrics as Gore-Tex®and Windstopper®fabrics for shellwear, softshells, and
technical fleece garments. Mountain Hardwear uses its waterproof/breathable technology, Conduit™, in both
shell and softshell garments. Unique features such as external seam taping and welded construction position
Mountain Hardwear as an industry leader in innovation.
Sourcing and Manufacturing
Our apparel and footwear products are produced by independent manufacturers selected, monitored and
coordinated by regional Columbia employees to ensure conformity to strict quality standards. We believe that the
use of these independent manufacturers increases our production capacity and flexibility and reduces our costs.
Unlike many apparel companies, we use few independent agents in our sourcing activities. We maintain
fifteen sourcing and quality control offices in the Far East, each staffed by Columbia employees and managed by
personnel native to the region. Personnel in these offices direct sourcing activities, help to ensure quality control
and assist with the monitoring and coordination of overseas shipments. Final pricing for all orders, however, is
approved by personnel from our U.S. headquarters. We believe that Columbia personnel in the Far East, who are
focused narrowly on our interests, are more responsive to our needs than independent agents would be and are
more likely to build long-term relationships with key vendors. We believe that these relationships enhance our
access to raw materials and factory capacity at more favorable prices.
In 2004 we sourced nearly all of our products outside the United States, principally in the Far East. We
monitor the selection of independent factories to ensure that no single manufacturer or country is responsible for
manufacturing a significantly disproportionate amount of our merchandise.
We believe that the use of independent manufacturers, in conjunction with the use of Columbia sourcing
personnel rather than agents, increases our production flexibility and capacity and allows us to maintain control
over critical aspects of the sourcing process. Our approach also enables us to substantially limit our capital
expenditures and avoid costs associated with managing a large production work force. We believe that our
relationships with our contractors and suppliers are excellent and that the long-term, reliable and cooperative
relationships that we have with many of our vendors provide us a competitive advantage over other apparel
distributors.
By having Columbia employees in regions where we source our products, we enhance our ability to monitor
factories to ensure their compliance with Columbia’s Standards of Manufacturing Practices. Our policies require
every factory to comply with our code of conduct relating to factory working conditions and the treatment of
workers involved in the production of our products.
Our quality control program is designed to ensure that our products meet the highest quality standards. Our
employees monitor the quality of fabrics and other components and inspect prototypes of each product before
starting production runs. In addition, our employees perform quality control checks throughout the production
process up to and including final shipment to our customers. We believe that our attention to quality control is an
important and effective means of maintaining the quality and reputation of our products.
Independent manufacturers generally produce our apparel using one of two principal methods. In the first
method, the manufacturer purchases the raw materials needed to produce the garment from suppliers that we
6