Se ee FIBRE-TO-FASHION SUPPLY IN GARMENT INDUSTRY Supply CHAIN PLANNING In the garment industry, the real measure of success is how well activities coordinate ‘more; they are mere prerequisites supply chain capability. Therefore, for entering the gone Supplier se- tosaeesed inthe tasked pesto” Supply chain integration across the fibre-to-fashion supply chain to create value for the customers, asserts : Sibichan K Mathew, : Suppliers, paricularly is respect of gies, The following discussion is © devery service. Koshy (1988) de- _Srganiedaarthe evel losophy i tion is sweeping across tails the aspirations of today's cus of the enterprises dealing wit re ‘ 1¢ global economy and tomer as follows: “.wint better. buyer/supplier js dealt within under ti itis progressing fom the ‘firm’ information, pfoducls Wary cloge.to supply ebnin ibegnation,chapael t level to ‘supply chain level. The their want variations, awalue-for-, _partnetships the physical elements k supplier selection is no more based money brand, efficent service and Sf logistics under operations rman: ¢ on factors like low cost or speed of co-existence offashion and func-_agentent he benefits tough SCM é delivery alone, Nowadays, these are tion”, The abiliy tomeet these unger key result areas and te en. ‘ assumed of everyone, Prodystivity growing customer expectations enabling technologies under Supply i andquality ate not advantages any _tirely depends on the organisations’ Chain Planning 5 lection isbased on trustworthiness part of a supply chain, fizms-should The key to effective supply chain cauledy fomatensharng, Gilt ncasd fen, eer managareat in gpoy cas ep speed, flexibility and responsive- speed and responsiveness and uhose ton, suring tharall pars of ie u ness. The adversarial power-driven Who already possess them excel, supply chain work togethes rather buyer-supplier relationships have eis esimated by US retailers than ateross-purposes. Supply chain : grown inte anurturing co-operative thatthe cost of carrying inventory integration isa sate where tively, and win-win relationships, for a given product fora year equals information transmitted among ‘A supply chain isthe network of at least 25% of what they paid for trading parters ina manner tet lets organisations that ate iwvolved ~ the product. A two-week inventory them readily adjust to changes in through upstream and downstream reduction, therefore, represe requiterents for linkages, in the different processes cost-saving equal to nearly 1% of or delivery. The-progress towartis and activities that produce value in sales. Since the average US retail- the idea at sappy chai integration the form of products and services in ets" profits equal about 2% of ssles, as source of competitive advan- the hands of theultimate consumer. this saving is enough increase tage wll gain monventum asthe For example, inthecasoofecon- profits by 50%, Such revelaions growth oftime-based competition cepto-cansimer fashion tupply ide miny organisations, who are eeelerates chain, a fashion garment manufec- ‘nthe ntl stages ofsupply chain In marketsthat ae ineeasngly ture ippar.gfa supply chain that sophisucation to asses the qualily ola, respopatveness becomes ® extends upstream through design- of the in-bound delivery service critical compepittve sequirertent. ers to Weavers of knitters of fabric they receive from suppliers and its ‘The eritcal da to the manufacturersgrowers of fi- effect on inventory-holding costs. are notabout minimising coat but bres and downstream through dis- ‘After having focused heavily on about whereit the chain poettion tnibutos and retailers tothe final integration of nt inventory and available consumer. Itcould exist withina cost eduction, quality equirements, capacity in ordet t hedge 9 single company or could span etc, organisations are now atempt- uncertain demand. In the business rmuliple enieyprises before itreaches ing to integrate inierorganisational of fashion, almost 95% ofthe prod- ‘customer. Managing the supply processes. Some of the shifts that _ucts are completely new designs chain has become crical to sausfy have happened inthis process are-— and he demued forensic oe err the consumer, thereby increasing fiom supplier integration to supply by as much as 200%. This high profitability through increased rev- chain integration; from buyer-sup- uncertainty ofdemand is intrinsic enue, cost improvements and im- plier partaerships to channel part” and inherent to fashion product, proved atset ulation ership, et. Devising responsive supply chain “Todey's.customer ip virtually Let us discuss the latest devel. alone can help cope up with this every matket is demanding ever- opments in SCM, the advantages phenomenon. higher levels of performance from thereof and the efabling technclo- Companies lke Benetton and ‘The Limited have gained significant advantages through their ability 10 es, ou sane ‘Marken & Merch vane Second akties Fea PRES Aes & Meche Pew respond rapidly fain ca markets that they serve. The SOFThe Indian Tene Journal, jane 1999 ———Limite bon eter women's apparel with tendy cloth ing, stated goa iso bring a prod uct fom the mind ofthe customer to he body in 1,000 hous or about 2 sik weeks tine though tadition- aly this proces took five months or longer Through the vs of high- 1y coordinated logistics and supply chan stuctres, driven bythe rea lime capture of sales data its able to accomplish this process in 760, bout, making the Company a lead érin the logs field among firms of al sizes and from all industries, A central theme of supply ebain i tegration i fo ideny the unneces- sabatvs which do not ada Salue to the siply chan or activ ties which would be beter eamied outta different pace or tne in the Supply cain adress the seins cits caused by them and develop Solutions by working closely with Supply chal parers cpre-requste fran efficent supply Ehuin "seamless" flow of infomation: Keshy (1997) emai ¢s the "need for continuous informa fon flow on tacking of purchase orders, production scheduling, progress of raw materials sourcing Ind everal other related elements Which today need the suppor of Computer networking for online in- formation stems and management” Having information was considered tobe empowerment and now itis essential for survival Aay tim, anywhere avalabity of information and product ste Key for survival inthe changing competitive world Channel partnerships Channel partnerships have be- com poplin he appa ind ty. VE Comoration, Levi Suauss, and othe leading manufacturers have formed channel partnerships ‘ith both discounters and depart ‘nent stores. Inthe apparel industy, ne factor motivating ales ang Suppliers to change their operations hat been the rapid growth of vert Cally integrated speciality store chain, The most successful ofthe Speciality chai, The Limited, re= IRS on alovostentizely on private label merchandise from offshore contract suppliers, The entire sys- tem is centrally managed based on pointof-sale (POS) data captured teach store foreach stock keep- ing unit (SKU). This system nas enabled The Lied to replenish Te inventory of fastselling items rapidly while reducing prices on slow movers cary inthe season 'VF Corporation, which began in 1899 asa distnbutor of lingers une der the Vanity Fai name eso owns Wrangler, Riders, Rustler and Lee VF's goals to keep retaiers”shelves stocked with right sizes and styles and to keep consumers fom leaving stores empty handed. It has designed 2 logistics systems to accommodate its small as wel as large reallers ‘Through this system even when & small retailer sells a par of Wraa- Bers, it links to Replenishment lus EDI (REDD), «simple and in- Expensive electronic inventory te Plenishment Gal. To hook into this fechnology, the smaller retailer purchases an inexpensive handheld computer. VF experts come in and help install equipment and tain personpel in ts use, The customer fay choose o place an automatic replenishment order, by which VE Assumes the inventory function of the store or itean elect to continue ordering manvally. Sales associates remove barcode tickets as ethan: die sells and sean the garments, automatically sending the data ‘Wrangler via atll-free number ‘Wrangler receives the POS data and creates an order of the items i Sold. After receiving the inventory E data, VF creates an order to replen- ish the depleted inventory, In the case of retail giants like \Wal-Man, computer acts as the agent cof this process. In the speed+to-mar- ket process, the buying funtion is ‘ot eliminated but rather elevated to 1 mote efficient evel. This smooth logistics system heaps benefits on every member of the supply chan, ‘ncliding consumers, In the past, the practice was'to spread the total purchase of an itera across several suppliers. Noweiiey- aim ‘single-sourcing’ ic, t0 the size ofthe supplier base andito sek iter com eduons. Todas customer is a more sophisticat buyer, used to working with co cepts such as total cost ownership, life-cycle costing and costbenefit analysis. Many customers now ac- tively pursue a ‘partnership soure- ing” concept, whereby they seek to establish long-term relationships with preferred suppliers based upon “win-win” philosophies Operations improvement A shared characteristic ofthe best practices in improving operations 'sthat they rely on eo-opetation e- ‘ween dierent rw of sey chain, In the past, operations ovements would achieve new levels of productivity and quelity, and so brought cost and service benefits. But there was ony so much cost to drive out ofa particular part othe supply chain in isolation ‘Working tn partnerships with ether supply chai players can allow for nonevalue added activities to be eut ‘out, and for other activities to be farried out more efficiently ata Aifferent sage inthe supply chain In the US, the joint industry project on Efficient Customer Response ECR) estimates that supermarket Teuailers and suppliers could save Usisid2 blot making sre level changes in ordering, receiving, merchandising ad abot schedul? ing and incentives, Working part netsh; therefore, open up new levels of effective working such as cross-docking and foot ready "The Indian Textile Four, Tone TOBBRTPSY fesse FIBRE-TO-FASHION SUPPLY IN GARMENT INDUSTRY merchandise. Cross-docking In this system, gods ae contin. uously delivered to warehouses, Where they ae selected, repackes 2nd then dispatched to stores often Without eve siting in inventory. Instead of spending valuable tie inthe warehouse gods jus cross from one loading dock to snother 148 hous or ess AtTHe Liatd’s ‘massive ditibuton centre unpack ing, reassembling and shipping of the produts happen with suck blazing speed that most merchandise Sin and out within 18 to 24 hours Some ests have used cross docking to make tei distribution Centres rua warehouses" whete no goods are actualy stored. Some ofihe merchandise i crose-dosked 21 The Limited's DC at the ate of nearly 25,000 units an hour mean- tng Ut he computers coordinate delve so tightly that merchan- ‘ise i unloaded from the aeroplane tothe delivery tnicke without ever ‘ering a warehouse ‘WalrMarg, the world’s largest real wthsles oF US 05 en as achieved a stock turover of 66, IMs highest ofthe top 200 US discounters: Crost-docking enables ‘Wal-Mart to achieve the economies that come wih porehasing fl uk Toads of goods while avoiding the Usual inventory and banding oss ‘WatMar rane 2 ful 83% oft pods Shrough ts warehouse system se opposed to only 50% fr Kart This reduces Wal-Mart's costs of tales by 2% to Ye compared wth the industry averages Tha ost i ference makes posible the every- dy low prices. Floor-ready merchandise (FRM) Tes known that goods can be smadefoorseady at ny stage inthe Supply eban, because the process isnot complex adding product l- bela price labels and security tags, and preassortng and packagings Butt can be beneficial to cary out these ative at manufactures oF distribution centrea, ater than at Stores, Pepasing FRM eatir in the supply chain is normally more Saribe indian Texte Suppty Cuain Panning efficient and cosvetfective because goods for al stores can be prepared In lager batches and there is snore floorspace to work in rather than cramped storerooms or oa the sll ing floor uel: Making goods foor- ready before they reach the store also means tha they ean be dsiv- éred to the store more quickly, and thea taken straight from the tick {0 the shelf oral FRM may ao include the se of re-usable Cages, Tacks and sticking uni, which Aluces store handling tine and climates wastlpackaping atthe Store. Kohls it the 11th biggest depart ‘ment store chain inthe US, with 150 sores anda tumover of over US S24 ion, 196, over 1s nllion garmenis were pie-hung by Kohl's vendor partner and the initiative was to be extended t all apparel vendors, Pre-ticketing a- ing and carton making programmes are being extended, to produce ad- ditional labour and cont efficiencies Catton-marked bar codes enable cross-docking inthe new dstibu- fon cen in Virginia. Key result areas Some ofthe areas where the mem- bers in the supply chai nay greatly ‘benef through supply chat inte gration and also may add value to Eustomers are product development, product harmonisation and custom: Eaton, inventory management and collaborative forcasting, Produet development ‘Traditionally, products are de- signed solely by the reailer or the manufacturer. When retailers design the product, then they goto the el- evant suppliers to make it. But by this ume they may well have missed opportunites to modify the design to cut manufacturing costs or ead times. Simjlarly if manufacturers develop new products alone, they may fall to capitalise on the retail ef's knowledge of consumer tastes and sales tends. ‘The most effective way to develop new products is for retailers and Suppliers to work in partnership Before the product launch, the f- taller provides input on the constim ex preferences for styles, colours and Sizes and market opportunites also on practical considerations such as Packaging dimensions. The supplier provides input on how t design the Droduct for production a the low est cos, while providing the desired features. The product launch itself isin planned, volving aber Parts ofthe supply chain such as Gistribution centres to ensure that products available as planned ‘The oes of fervent product development ae, reduced new product failures, beer product aval for succesful launches and reduced introduction costs. By working in partnership from the star, the product can be taken from design to sales far more quickly, providing the valuable benefit of fast response 1o market trends. Some cases of companies benefing fom on product devel opment progranames areas follows "The Spanish ein Zara can have a product on the shopfloor within a week of the original concept—an ‘exceptional time to market, ina sector where typical eycle times are 6 t0 12 months, The average time from design through to store seceipt is four weeks, Zara as the benefit in terms of product development of being a semi-vetially integrated company; it sources much of its fabrie direct and uses a local manu- facturing base to make this up into garments, often using relativelysimple or tried and tested designs. Zara still Books production in ad- vance, but confirms precise design requirements at the latest possible point of time. Meldisco is the division of Melville Corp that supplies all of KMan’s footwear, Shoe box sizes ‘were re-designed for every stock ‘keeping unit (SKU) so that shoes fitted more compactly into a small- er box. This generated savings in international shipping costs of 5%, and allowed stores to get eight pairs planogrammed where previously seven pairs had been displayed, Product harmonisation and customisation For some products, the main el: ements ofthe design are the same and there are many minor features ‘which define the final products in the customer's eyes. Other product may need minor changes from one market to another. The retailer, and manufacturer, therefore, often face 4 trade-off: On the one hand, make all the different variants in advance, which may reduce manufacturing costs per uni, but will increase i- ventory and on the other hand, aim to order and manufacture specific product variants as required in e- sponse to consumer sles, but risk higher product costs and stock-outs ifthe desired variants cannot be ‘made in time The key to mass-customising ef- {ectively is postponing the task of differentiating a product fora speci: te customer uatl the latest pout in the supply network In readymade semen manufacturing the pee fons like tailoring and iting option al accessories could be delayed to the last minut. This i preferred and is possible because ofthe fol- lowing reasons: + There is high compulsion to provide vanety, + There is need for customisation ‘on physical dimension of cloth; + Tailoring operation is not capital intensive; * Rapid obsolescence of garment design; *+ Obsolete designs end up being slow-moving Stock which forces ‘manufacturers to sell them at heavy discounts; + High variance in demand; * Short-tailoring operation lead time; * Low value addition in transpor- tation; * High Value addition in postponed ‘operation, ‘An alternative approach is to harmonise the product in question though this may reduce the choices for the consumer. It may not be practical if the product is supplied fomany retailers. Whichever option is taken, open discussion is needed to weigh up the many factors in- volved: demand information, pro- duction costs, potential increased costs for smaller batches or reduced lead times and potential increased sales through wider consumer choice. Inventory management Ina co-operative relationship, the inventory is managed by the ven- ddor. In Vendor Managed Inventory (VMD, the focus is on maintaining agreed stock levels, withthe suppli- er deciding how frequently to fe- plenish and what quantities to deliver. In this case, the responsibility of "splenishment is shifting from he retailer to the supplier. The suppli- cr decides how much stock to de liver and when in order to maintain agreed stock levels. The supplier may hold title to stock until tis de- livered to stores or until itis sold. A Portion ofthe buyer's plan is ship Drior tothe start ofthe season, ‘The retailer then makes weekly replen- ishment orders based on renewed demand estimation via EDI. A cus- tomer focused organisation need to be agile enough to be responsive to this continuously changing demand still make a profit. Collaborative forecasting The inability to be responsive results in stock-outs or mark-downs, affecting profitability, the root-cause often being lack of igformation regarding the exact “would-be-de- mand” ofa particular style. Tradi- tional forecasting based on “gt fel ‘or based on sophisticated models always proves wrong. If all the sec tors participate in the forecasting exercise, it is definitely going to be ‘more accurate and it will result in profitability through the supply chain which could ultimately lead to increased customer satisfaction. ‘This is possible only if transparent relation exists between the members in the pipeline based on mutual trust, ‘The information needed in such cases, the non-transactional infor- ‘mation exchange, is broader and ‘more far-reaching. The manner in which it will need to be accessed will be more often in a “pull” mode, rather than traditional EDI, which, distributes information in & “push” ‘or “when available” mode, Pull ‘mode sharing of information can 'be most effectively implemented as ‘query interface into the electronic commerce database available to Selected users extemal to each en- texprise but intemal to the supply. chain. “Push” information is av able atthe schedule of the informa- tion provider, “pull” information is available at the schedule of the in- formation receiver or user. ‘This can be achieved only through proper systems and technology the Supplier implements, ensuring that the customer is not awaiting a par- ticular design or pattern to "trickle- down” rather can just “pull-up” the design or pattern he desires to view, imtespective of time and place, To cut it short, the key to the benefits is information as seen in the above cases. The lack of informa- tion sharing can result in the fol- lowing situations and the resulting losses: * Retail distribution functions regularly find thatthe first they know of a product promotion is en staff sce it for themselves ina store, by which time wild ‘swings in demand have already hit the unsuspecting distribution gente, Manufacturing plants set mini fu econo: production ‘quantities, usually without con- sidering the natdre of demand for different categories of product or taking into account how inventory costs may vary—an “economic ordet” isnot economic, The Taian Textile Joumal, ne WHRSSFIBRE-TO-FASHION SUPPLY IN GARMENT INDUSTRY Surety Cuain Plannin ire nba he eh ‘going past its sellby date or ung the peaks of abana demani Supply chain planning Given the complexity of a typi- cel supply chain, supply chain planning systems (also known as Advanced Planning Systems) enable Companies to ineligenty toenege the activities ofthe supply chain Every actvityamust perform five basic activities or processes within «supply chain: buy, make, move, store and sel, Within each of these Processes, there are short-term de- cisions (which product should be ppt on theruck?) and long term: decisions (do we need a new facto- 1y to meet demand?), et, With better information, supply chain planners can get visibility into the future market conditions Decisions that are made further out into the future (Years away) have ‘mote flexibility than decisions that se made close to now (hours away) ‘This concept s called the Planning Funnel. The funn] shape indicates that you Have fewer option as one "mgwes closet to execution ofthe plan. ‘A manufacturer of garments can ‘make strategie decisions as to what products to offer (basic of fashion}; ‘Which markets to cater to, and dis tribution methods to use (direct vs channels), etc a year from now. But as the timefame moves closer now, ‘mote constraints come into play and things that were changeable ate now committed. Enterprise Resoutee Planing (GR#) sms tre nes of planning or deesion supper fuctonalty, What ERE Be wed tionally exceiled is at wanmecton ‘management, An ERE sysen hes the functionality to proces anor der, butt provides lite ot na formation shout the profanity of the order or the begt vay fo deliver itto te curomer All sess, cess the winston "Phe difference in he way ERP and SCP (Suppiy Chain Piging) Approsch the planning problem represents fendamentl andi asthe question becomes “Shoutd take your order instead of Can take Jour order”. An SCP syiem IS designed to oveay exisibe spe ts tpl ata or vy ep the supply chan proving eee, Blobel pcre of where teem Brie is heading Creag pan fom S25cr bt slow Somme i> quickly ases the impact of tee dctons on the ene suply shat including the customer demand Companies ve SCP to antcite Sendtons and “ack not rac the fture, data maining tpl will’ detive information, ens faster deeion making fr te sap chain sa whole AS drosed above, the rea mea sucof sccess show well acti Ses coordinate acfos the supply chain to create value for cutoners Leaders win even inthis most com pene cninent adopting co ve path by gh mtepaiog he Supp chats heapag weet {o.cach link inthe chain and most importantly by delivering value to customers and shareholders, REFERENCES 1, Blackwell B (1997) From Mind te Market New Vork, Harper Buss Buzze & Bano Onmeyer (1995) (Chae! Farmerhie Seearne Bese, Sn ges restos Maa (1997; Marketing Kagites, OxfouButernor Ear Maral 1997; Whig te Right Supply Chain for Your lotuc? ‘Harare Busines Reviews Marche i Ten er res Sere Ebeovsm- cures Ea coc ume Fe Og she hr BEA nacre Cs eae ee oul cearee aking "1, Rome 896 Sip Cay Mana ‘gement, Fess Aso, Api p30 1, Shah J and 8 avieathu proving ‘Sepoly Chan Performance troup Fostponeent Suey MS Stak George, Piven and LE Shulman (1992) Competing on Capabilies, The Rules of Coporate ‘Steg, Harvard Business Review Maret Aort pp 87-63 13. Supply Chain the Business Vision, ERE Jour forthe intligent Entepnse, Voll, NO January 1999. ‘ifthe Indian Texile Touma, Jane 1999 | IF TEXTILES IS YOUR BUSINESS BE INFORMED FOR A BETTER TOMORROW | READ The Indian Textile Journal Redhdau Wiliadiunce: © | asrmau | ankiien