International Labor Organisation - Essay Example

1. Presumably, the greatest challenge faced by companies in fashion retail industry is the uncertainty of the market. Even if a company has managed to guess what its customers want right, it does not make the decision making in wear manufacturing for the next season easier. There are no or very little logical connections between fashion trends, which makes it particularly difficult to predict the next one for business analysts. Manufacturers have to rely on talent, professionalism and flair of their designers for future market demands. The challenge gets even worse with the great variety of products presented with every single wear vendor. Product lines vary in styles, cloths and sizes - the range of goods a vendor must produce to attract the attention of buyers is enormous. Minding the fact that only a small part (50% in the case of Jossey Menswear) of the whole stock is sold at full price it becomes clear that wear vendors put up with significant wastes. And because of what Because of inaccuracies and misconceptions of fashion forecasts. Since the production cycle of clothes is rather long (it takes 18 months from the first sketch of a designer) companies have wear in their stores, which were presumed to be popular a year and a half ago. Obviously, there are two ways a company can take to improve its chances of hitting the bull's eye of customers' popularity. The first one, extensive, lies in broadening its product range and increasing volumes of production. The second path is intensive, and tries to improve the accuracy of forecasts, which only can be made through shortening the production cycles. Of course, the second path is better for Jossey Menswear since it leads to full price sales proportion increasing, while keeping the production volumes the same, or even lower than before, which increases profits for the company. Meanwhile, the first way simply increases revenues along with manufacturing costs. Thus, the efficiency of forecasts falling over time and wastes associated with manufacturing of unpopular products are the main reasons behind the choice of quick response (QR) manufacturing system. The main driving factor between the strategies based on QR manufacturing is the reduction of lead time - this business concept is also known as 'agile manufacturing' (Suri, 2003). Another business concept, known as 'lean manufacturing' uses wastes elimination as the main driving factor. Despite the common opinion these two theories are not mutually exclusive and can be applied together (Martin and Towill, 2000). So the question for Jossey Menswear is not stated as "agile or lean approach" - both concepts should be used, because the main objectives of supply chain improvement for Jossey are both reducing lead time and eliminating wastes. Inevitably, every improvement action taken by the company should be monitored in order to learn lessons from it. The implementation of QR manufacturing requires to be monitored from several dimensions: informational, financial and external (customer). The informational perspective can be considered primary, as it reflects the main goal of improvement increase the speed of information flow between different segments of supply chain. Financial perspective can be analysed with the help of total cost analysis. TCA assessment offers a final statement reflecting not only the cost of improvement but all aspects in the further use and maintenance of inventory. For instance, TCA may show that while direct costs of the improvements may be high, a further reduction of material and inventory costs acquired from the increased velocity will be beneficial (Kauffman, 2004). The customer perspective may be reviewed through customer profitability analysis (CPA). This technique assigns revenues and costs to groups of customers rather than to organisational units, products, etc. By doing so, CPA gives its users the information, which customers are the most beneficiary for them, which in our case will show how helpful is the improved supply chain in adding revenue from customers. 2. It is often not the improvement plan itself, but its implementation plays the crucial role in increasing the efficiency of manufacturing process. Indeed, critical analysis of actions taken by the management in order to prepare Cornwall plant for new QR manufacturing provides much more practically usable knowledge than the decision to implement QR by itself. Overall performance of Frank Hawkins, operations manager, and his team was good during QR implementation. The operational strategy chosen may be called optimal, yet there were some flaws, which become visible only after a thorough analysis of actions taken. First of all, the decision to use gradual approach to QR implementation is reasonable. On the one hand QR provides certain benefits over conventional manufacturing, such as reduced lead time, decreased waste and as a consequence overall increase of efficiency. On the other hand quick response manufacturing is a whole new system, previously unused with Jossey, and therefore, containing risks regarding to its implementation. As can be seen from a case study, a lot of employees expressed their doubts about the effectiveness of QR at the Cornwall plant. That is why the decision to make a 'pilot line' of QR manufacturing while leaving the production process as is on the other lines of Cornwall seems to be completely adequate. The next wise choice made by Hawkins was to organise teams of volunteers working in the new production process. The key effort that should be made by every firm trying to implement QR is to promote teamwork as much as possible. The emphasis of QR on co-operative efforts of all of its members has been stressed by Blackburn (1991). Providing workers with the choice of whether to enter or not the experimental line along with the degree of autonomy and informality provided with management to them (e.g. encouragements to name team with themselves, and no supervisors) has created a great combination of responsibility and trust. Workers felt that their job was important and yet, they were not watched carefully on every step they took - a mix that inspires greatly commitment to the cause. The only critique that may be made on this aspect roots from the lack of information provided: it is said that Hawkins understood the teams would need careful handling, however no information of how it was done is given. Indeed, such experimental autonomous teams had to be handled carefully, but it is vague how to do that. The improvement of payment system is the weakest spot of the whole implementation. While the focus of the new payment system on promoting skills development among operators is completely logical it is not the main focus that should be made in the QR. Since the whole manufacturing process is directed towards shortening the lead time, operators should be interested in that too. It is also important to stress that workers should be paid incentives not for on-time delivery performance as in Just-In-Time manufacturing, but for lead time reduction. The empirical data provided by Ericksen and Suri (2001) serves as the evidence that rewarding the lead time reduction is followed by a significant increase of the proportion of products delivered on time. Obviously, companies can use different strategies of implementing QR in their manufacturing process. Most reasonably, the choice of the strategy depends on the market characteristics. For example, the company operating in highly volatile market segment with a strong need of special and customised products, should use rapid transition to full-scale QR on its plants, which will allow the company to decrease the production time significantly, which means, faster and more adequate response to customers' needs. At the same time, a company operating on a market with stable demand and a small proportion of special products needed, may use a top-up QR production line in order to better meet the specialized needs, and leave the whole manufacturing process as is. 3. While the future upholds many opportunities after successful implementation of QR manufacturing for Jossey Menswear, some of them seem to be more beneficial than others. Most of them can be divided into three groups: further development of QR in manufacturing; improving the effectiveness of cooperation with suppliers; and improving the efficiency of merchandising department. Before determining the most perspective initiatives, let us once again reconsider the main principle of QR: it is about reducing lead times on all stages of supply chain by improving co-operation between all of its members. That is why, while further development of QR in production has some potential, the manager's sight should be turned to relations with suppliers and merchandising department instead. Indeed working closer with Jossey cloth suppliers may remove the second important problem of the company after inaccurate forecasts: delays associated with cloth selection, ordering and purchasing. QR approach once again will be extremely useful in this field, as it changes both the operation of the suppliers and the structure itself of the interaction between a company and its suppliers (Suri, 1998). So the opportunity provided with that initiative is a further significant curtailment of the production cycle time. However, there is also a risk, which is based on the current relations of Jossey with its suppliers. It may be difficult for some of them to adopt new management principles imposed by the manufacturer. One of the ways of improving the responsiveness of cloth suppliers contains another initiative in itself: working together with suppliers on the stage of cloth development. Since the cloth manufacturer is most likely unaware of the needs of its customer on the early stages of production, later Jossey's designers have to choose the cloth suiting to their demands from the existing range, which is sometimes a complex process, especially for highly customised wear. Meanwhile, the co-operation of Jossey with its suppliers on development stages could lead to constant availability of the desired machinable cloths, which will in turn speed up the interaction with suppliers. The main risk here is the inefficiency of co-operation of Jossey with suppliers on the stage of development, which may root from lack of expertise of Jossey's staff in the cloth manufacturing process. Finally, the third most perspective initiative deals with improving the efficiency of the merchandising department. Rethinking how market information is captured, possibly, the change of grouping techniques in merchandising will lead to the increase of accuracy for forecasts of customers' preferences. Realising what do customers want, along with the ability to quickly replenish stocks in case if the trend changes may be the winning combination for fashion retail industry. Once again a QR approach is of great help here: "To comply with consumers' needs, QR relies on sales data. Through computerized information systems, sales data are transmitted and transformed as useful information that reveals consumers' preferences and reactions." (Kang and Sullivan, 1999, p.1) The implementation of cloth development integration with suppliers may be as follows. Jossey is required to create a new unit consisting of designers and skilled operators, where a decision of the cloth required may be clearly formed by putting the needs of designers and operators' knowledge of cloth's machinability together. Then needs are clearly stated to suppliers' production department and the ongoing manufacturing of the required cloths occurs. This new unit of Jossey should be always on a close connection to suppliers, which may be achieved through the use of Vendor Managed Inventory Systems. The VMI is a helpful solution of improving the data flow between the customer and suppliers. Customer inventory transactions are fed online to the manufacturer who can automatically identify when an item drops below the minimum on-hand quantity and launch a sales or work order. (Tempelmeier, 2006) In this way suppliers will be always able to see the demand of Jossey beforehand, and produce the exact quantities a company needs. 4. Needless to say that the ever-changing environment affects the performance of companies not only in the fashion retail industries, but in every business sphere. The globalisation trend opens new overseas markets for enterprises, as well as new abilities to improve its operations. For example, outsourcing widely used in almost every industry allows manufacturers to cut costs on their production (e.g. labour costs). This is a rising challenge to business ethics, as the new labour markets offering cheap and qualified labour at the same take away jobs from specialists of the developed countries. Further on, the technology allows new means for use in manufacturing and increasing the efficiency of supply chains. Globalisation has also made regulatory frameworks more standardised throughout the world, which also influences the expansion of international trade positively. Every of the stated issues are discussed below. No doubt, the globalisation trend influences the development of multinational corporations positively. In some industries it also prepares new markets for Western manufacturers. For example, the globalisation has brought the Western dressing style to cultures previously closed for fashion retailers from the developed countries. While social researchers fear that globalisation may eliminate all the cultural variety of our world, its current action of moving cultures closer to each other definitely influences the international trade positively. Along with Western lifestyle, its business culture is also instilled in new regions to the companies from the developed countries. Further increase of globalization has led to wide spread of outsourcing among businesses. For example, Lowson (2001) provides the data that 70% of purchases of fifty European Union retailers came from outside the EU at purchase prices up to 35% lower than could be obtained locally. This shift to worldwide transactions transforms the world into a united marketplace. In strive for cutting costs companies often forget about ethical principles, which creates new challenges for business ethics. For example, companies tend to outsource their production facilities overseas, leaving employees of their factories without jobs. Moreover, often such outsourcing activities are not backed up with careful financial analysis considering all the costs. Therefore, while managers tend to decrease the direct unit costs of manufacturing, they increase the length of the supply chain, which puts them further away from customers both in structural and geographical senses. The good thing from globalisation is the standartisation of regulatory frameworks. An eloquent example from the apparel industry, shows that textiles and clothing untial recently were the only major manufacturing sector that did not come under the rules of the General Agreement on Tariffs and Trade (GATT). Instead it was subject to extensive use of quotas by the major importing countries, such as United States. The resulting trade regime was higly distorted and unpredictable, particularly from the point of view of exporters that faced binding quotas, such as China, India and Pakistan. (International Labour Organisation, 2005) Current standartisation of regulatory frameworks will provide every of the market players with equal opportunities from the legal perspective. References Blackburn, J. D. (1991). "The Quick-Response Movement in the Apparel Industry: a Case Study in Time Compressing Supply Chains", in J.D.Blackburn (Ed.) Time Based Competition, Business One Irwin, Homewood, pp. 246-269. Christopher, M. and Towill, D.R. (2000). "Marrying the Lean and Agile Paradigms", Proc. EUROMA Conference, Ghent, pp. 114-121. Ericksen, P.D. and Suri., R. (2001). "Managing the Extended Enterprise," Purchasing Today, Vol.12, No.2, pp. 58-63. International Labour Organisation. (2005). "Promoting fair globalization in textiles and clothing in a post-MFA environment". A Report for discussion at the Tripartite Meeting. International Labour Office, Geneva, Switzerland. Kang, J. and Sullivan, P.M. (1999). "Quick response adoption in the apparel manufacturing industry: competitive advantage of innovation." Journal of Small Business Management, Vol. 37, No. 1, pp. 1-33. Kauffman, R.G. (2004). "Cost Savings in the Supply Chain". Business Briefing: Global Purchasing & Supply Chain Strategies. Retrieved December 25, 2006 from http://www.touchbriefings.com/pdf/199/ifpm032_r_kauffmann.pdf. Lowson, R. (2001). "Analysing the Effectiveness of European Retail Sourcing Strategies", European Management Journal, Vol. 19, No. 5, pp. 543-551. Suri, R. (1998). Quick Response Manufacturing: A Companywide Approach to Reducing Lead Times, Productivity Press, Portland, OR. Suri, R. (2003). QRM and POLCA: A Winning Combination for Manufacturing Enterprises in the 21st Century. Technical Report, Center for Quick Response Manufacturing, University of Wisconsin-Madison. Tempelmeier, H. (2006). Inventory Management in Supply Networks - Problems, Models, Solutions, Norderstedt:Books on Demand. Read More