Dynamics of the Apparel Industry Fashion industry, comprising textile and apparel is the second largest business in terms of global trade and is valued at USED 1. 44 trillion. The Indian fashion industry currently accounts for 14% of the manufacturing sector and is 4. 5% of GAP. India is one of the largest manufacturers of textiles and apparels and contributes significantly to the world trade In this sector. The Apparel Industry comprises of organizations that design and sell clothing, accessories and footwear.
These can be broadly categorized as apparel manufacturers and apparel retailers. Traditionally, apparel companies were wholesalers, selling goods to retailers. However, in the present scenario, the point of differentiation between wholesaler and retailer Is becoming increasingly difficult. The supply chain in this dynamic and fast moving Industry Is diverse and complex. There are multiple tiers including design, raw material production, garment production and eventually selling at retail outlets.
Most of the industry segments compete with each other primarily on cost and yet the industry wastes are estimated at over $30 billion/year through inefficient practices. Both retailers and manufacturers find it difficult to fulfill the demands of this highly enigmatic marketplace. The designing of a garment starts at least arrears before this product is likely to hit the retail stores. Uncertainty is built and interwoven into the production process at every stage. A designer forecasts customer requirements and develops designs.
Based on these designs and speculative forecasts, the retailer plans his sales and accordingly places a demand with the apparel manufacturer. The design, demand and sales uncertainty Is Inherent In this system – the time lags and errors in landing process lead to losses primarily as stock-outs and high inventory levels in the system. In an attempt to minimize their losses, retailers tried to shift this risk either to the apparel manufacturers or to the customers.
This attitude of the retailers has resulted in an adversarial relationship between the retailer and the manufacturer. It is not possible to achieve sustainable production without sustainable design. Supply Chain Management: Concept Evolution Supply chain management is a critical area that is fast gaining importance. According to the Council of Supply Chain Management Professionals (SCAMPI SCM can be fined as encompassing “the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities.
It also includes coordination and collaboration with channel partners, who can be suppliers, management integrates supply and demand management within and across companies”: (Source: From Lean Manufacturing to Lean Supply Chain: A Foundation of Change, R McKee and Dry. D Ross) The perception that SCM refers to logistics function is now changing. Today, inter- departmental and inter-organizational linkages are of integral importance to any organization.
The concept of supply chain being the back-bone of any organization has evolved over the past few decades through the five distinct stages as shown below Five Stages of Supply Chain Management: Evolution Source: From Lean Manufacturing to Lean Supply Chain: A Foundation of Change, R McKee and Dry. D Ross Till sass’s Stage 1 1970-1980 Stage 2 1980-1990 Stage 3 1990-1999 Stage 4 2000 onwards Stage 5 Warehousing and Transportation Total Cost Management Integrated Logistics Management Lean Supply Chain Management Management Focus Operations, Performance, Efficiencies Optimizing Operations Cost & Customer Service Tactics / Strategies,
Logistics Planning Supply Chain Strategies, Channel Speculation, Goals Internet, e-Business, e-Marketing, SCM Synchronization Organization Design Decentralized Functions Centralized Integration of Logistics Partnering, Virtual Organization, Market Speculation Networked Channel, Exchanges, Agility, Scalability Supply Chain Linkages: Apparel Retailer – Manufacturer A supply chain linkage refers to the process of acquisition of raw materials to manufacturing of the garment and eventually delivering it to the end customer.
From the fiber manufacturer to the yarn manufacturer, from the fabric manufacturer to the apparel manufacturer and finally the retailer, each of the partnering entities are equally responsible towards delivering the right product at the right time, including firms providing supporting information and distribution services. In view of the growing competition and shrinking geographical boundaries, it has become increasingly important to coordinate and collaborate with your supply chain partners.
Retailers and manufacturers who have successfully aligned their supply chains have not only gained cost advantage but also flexibility and improved response time. Retailers like Benton, Liz Collarbone, Ezra have effectively managed o collaborate with their supply chain partners – performance of a retailer is also a function of the performance/capability of its supplier.
Supply Chain Partners in the Apparel Industry With growing awareness of the importance of supply chain partners and how a well aligned supply chain can reap benefits, most supply chain entities are now partnering and collaborating to gain competitive advantage with the retailer- manufacturer linkage playing a pivotal role. Essential Elements & Wastes Employed Effective Information Flow Effective and rapid information sharing is essential for a supply chain to perform well.
This helps the suppliers in improving their performance and in turn also improves the performance of the retailer Better production planning: Plan and produce only those goods that are needed first and not waste resources on things that can be performed later Elimination of unnecessary distribution practices Bring in automation wherever possible: Reduce paper work linked to order processing and inventory management Ensure changes made are transparent and known to all associated partners Direct Material Sourcing and Global Collaboration Communicating and information sharing with vendors quickly and efficiently is the deed if the hour.
Manufacturers and retailers should be able to source materials quickly whenever they need it. Collaborative Line Planning and Calendar Management Align supply with demand Production costs have to be continuously re-worked to maintain competitive. Also there is a dire need to fine tune based on historic sales date and forecasts Improved Response Time Collecting and transmitting data to the concerned in no way helps the supply chain to perform better.
Employing effective decision support systems that are capable of analyzing past trends with current sales data to develop accurate demand forecasts. Reducing time wasted and also loss of sales due to non-availability of replenishment. Automatic and real-time data transfer for replenishment systems managed by retailer Rap’s to be linked with the manufacturer database to reduce the turnaround time of replenishment Test Marketing Whenever a new design or product is launched in the market, understanding customer response if of tremendous importance.
When new products can be made available at a retail outlet in a matter of weeks, consumer test marketing becomes critical. A real-time system of customer feedback can help the manufacturer/retailer cake necessary changes to its sale/demand plans Effective Demand Forecasting Uncertainty is interwoven into the fashion industry. The fast moving nature and changing customer trends make it extremely difficult for the retailers to predict how much to order and how much will sell.
Reducing wastage arising out of over stocking Reducing loss due to under stocking Reduced Lead Time in Product Development The dynamic and short-lived nature of the apparel industry makes it even more necessary to bring in coordination with supply chain partners both within and outside the organization. Cycle time should be reduced at every step of the supply chain During this phase, instead of making actual samples, the designers can see the design patterns in the form of a garment on virtual platforms.
This will not only reduce the turnaround time but also reduce the pressure on the subsequent supply chain partners. Employing EDI can be tremendous help Short Cycle Manufacturing Providing timely delivery through managing inter-organizational linkages. Risks are added to the manufacturing process if the manufacturing lead time is long. Organizations should look at employing some of the below listed systems to bring own their lead times.
Computer added design and pattern making Employing Unit Production Systems Laser cutting technologies AD printing technologies Product Life Cycle Management Software (PALM) Enterprise Resource Planning Software (ERP) Manufacturing Resource Planning II (MR. II) Electronic Data Interface (DEED’) Automatic Replenishment Planning Software (ARP) Report Generation Software (Example : Cons) Computer – Aided Cutting Computer- Aided Pattern Making Computer Aided Fabric Marker Making AD Printing Technology With the increased globalization and reduced geographical boundaries, it is essential o align the supply chains and bring in transparency in data and information. Secure software platforms are needed to aid in delivering comprehensive management capabilities to fulfill complex specification development. Also, ensuring that all supply chain partners are able to collaboratively work from the same set of information.
The end result ensures that in each season, the right product is delivered and at the right time and place. Project Life Cycle Management Software & Enterprise Resource Planning Software Sourcing and supplier relationship management capabilities available through Product Lifestyle Management Software facilitate in communicating and streamlining activities like sampling, lab dipping, costing and supplier performance management. Capability to source well and also collaborate globally reduce risk, deliver cost efficiencies and increase speed-to-market. All this in turn allows the retailer/ manufacturer to deliver new styles and designs when customers are most likely to buy.
The line planning process is greatly enhanced by PALM Software’s ability to let you easily make changes to a line plan, manage your development schedules and provide he visibility needed for enabling product teams to determine which styles are going to fly. Taken together, these capabilities facilitate team productivity, helping you to launch more products per season. Enterprise Resource Planning helps in providing data from marketing to production to sourcing and finance all on a single platform. This also provides transparency of information and helps all associated teams to plan and perform better. Most importantly in the competitive, global world of retailing, you need to connect sourcing and materials management to the rest of the product development process. Liability of right materials, produced in the right color-ways, the right sizes and in a timely fashion will affect the performance of the supply chain as a whole. Enterprise Resource Planning Software & Manufacturing Resource Planning II Enterprise Resource Planning Software in association with Manufacturing Resource Planning II can give an organization the desired edge in production planning and planning of internal processes. Often organizations face problems of lack of information or incorrect information being passed on in the supply chain. Employing these software packages can reduce he ambiguity between activities and how these activities have to be performed. All jobs and Ski’s once generated on an ERP package will be available across the organization for use and analysis.
This will avoid unnecessary paper work and transferring of data and information from desk to desk and bring in discipline and clarity instead. Automatic Replenishment Planning As organizations go global and as competition increases with every passing season, it is becoming increasingly important to cater to customer needs and demands. If a software package can help collect point of sale (POS) data and transmit it real-time to he retailer and manufacturer, they will be able to plan their replenishment quantities faster and serve the customers better. Report Generation Additional report generation software can be put in place and data can be generated in custom made formats.
Many software packages like ERP have a built-in report generation tool, but often this tool collates data in a set format. Organizations and people in it are usually used to collating and analyzing data in specific fashion and might feel the need for an additional report as per their needs. Computer-Aided Design / Pattern Making / Cutting / Marker Making Using computer aided techniques to perform the regular tasks for pattern making, cutting, marker making and designing not only saves operator time but also improves The process improves both in terms of time taken and also wastes generated. This helps the retailer and manufacturer to save costs of manufacturing and provide a better price for their product and thereby gaining competitive edge.
Disruptive Technologies The future of the apparel industry is by improving its Focus of the retailers is now shifting from reducing costs to increasing profit margins Reducing lead time for new products and providing value-added services to the customers Building business intelligence abilities Alignment across all supply chain partners and activities Disruptive technologies that will change the face of the apparel business in the future are: Cloud Computing Change from internally aided business applications to include: Enterprise Resource Planning (ERP) Customer Relationship Management (CRM) Buyer’s Market for enterprise application production Big Data Retail industry is UN-organized and customer data is scattered and diverse. There is therefore a need to cluster this data and use this for developing analytical abilities Undertaking Loyalty Programs / Reward points Merchandise Performance to be tracked and managed Making the customer aware of new product in pipeline and also making them differentiate your product with the other market players Manage in-store replenishments and merchandise procurement Augmented Video Communication It will be important to make the shopping experience as easy and comfortable as possible. Customer should enjoy the shopping and not consider it to be a hassle.
