The Yarn Forward Rule is a trade regulation affecting the sourcing of textile and apparel products in free trade agreements. It requires that the yarn used in the production of goods originates from member countries to qualify for preferential tariffs. This rule impacts inventory optimization by influencing sourcing decisions and supply chain design. Companies must strategically manage raw material inventory to comply with regulations while minimizing costs. Supply chain managers often analyze the yarn forward rule’s implications to optimize procurement, production scheduling, and inventory positioning, ensuring compliance without sacrificing efficiency or responsiveness.
