Global Supply Chain of the Clothing Industry - Term Paper Example

Global supply chain of the clothing industry Introduction The apparel industry in the world has been very active in global distribution of fashionable and new designs especially from china, USA, United Kingdom and Australia. The supply chain is characterized by different elements depending on the availability of the channel, accessibility, cost and convenience. The channel of distribution should also be very flexible in order to allow for changes in marketing and distribution should the market conditions change. In this case, the clothing industry can change their distribution structures from time to time to cope with the changes experienced. This should be done easily without any inconveniences or conflicts with the existing structures (Barnes, & Lea-Greenwood, 2006). Global supply chain of the clothing industry The global distribution channels in this industry are categorized into different activities which form part of the distribution channel. The supply chain of the clothing industry contains four broad distribution channels and activities which are retailers, agent middlemen virtual marketing and merchant wholesalers. Retailers Retailers have been used in this industry’s supply chain since they have the direct link to the customers than other middlemen. The retailers are the source of the information regarding the market to the manufacturers since they are actively involved in the filed than the manufactures. They help the manufacturer in learning the new trending fashion and introduction of any designs in the market which may affect the sales of their clothes. The retailers are located in different countries and as such, they seek to provide the market with diverse designs and fashion from different countries. Most of the retailers in this industry specialize in selling of clothes and foot ware from different countries and thus they stock a variety of clothes. The retailers may not get their merchandise directly from the manufactures and thus, they are in the third level of the supply chain as most of them deal with the wholesalers and the agent middlemen other than the manufacturers directly. The retail stores are operated in the stores and malls in the big cities worldwide. In the United States, there are very many retail stores which are served alongside other international retail stores. The retail stores get their clothes through importation where they acquire the full rights over the clothes they have already imported (Fung, Chen & Yip, 2006). Agent middlemen The agent middlemen are used in the supply chain in the clothing industry in order to represent the interest of the manufacturers in the market. They are involved in the selling and distribution of clothes into the target markets. As the middlemen represent the interests of the selling party and not of their won, they do not take title for the clothes they have under their custody. Middlemen are very crucial in supply chain in this industry since they link the manufacturers and the market by taking care of marketing the clothes. We can classify the middlemen into different classes depending on the nature of their relationship with the marketing of the clothes in the global and domestic markets. However, manufactures agents are mostly used in this industry. They are mostly used in the selling of footwear more than in the selling of clothes. The manufacturer’s Agents represent the interests of the manufacturers especially in areas in territories where the manufacturer has not been able to support the salespersons through the sales of their products. They are very useful in opening new markets and manufacturers are able to penetrate in the apparel industry of another country by using the manufacturer’s agents of that country. This enhances them to sell and distribute their clothes and footwear globally (Choi & Hong, 2002). Merchant wholesalers The type of merchant wholesalers in the supply chain of the apparel industry specialize in different type of clothing products while others specialize in one type. Those who diversify their activities may include shoes, menswear and women’s ware of all types. The merchants wholesalers buy clothes from different designers and manufacturers and engage in the marketing of those clothes. The buying of those clothes give them the title to the clothes and are compensated by a margin in the price of the clothes such that they are market price of the clothes is able to cater for the costs involved ion buying, distribution and promotion of the clothes. The merchant wholesalers are located in different countries (Subrahmanyan, 2000). They also have their distribution networks and retailers who they use to sell the clothes in to the retail market. They are mainly involved in the re-sell of the clothes to other wholesalers in different countries or selling to the retailers who sell the clothes to the final consumers in the stores and malls. The wholesalers may export the clothes to their outlets in other countries. This distribution channel is very common in the supply chain of the clothing industry in the United States and Australia. The United States alone has a record of more than 200, 000 wholesalers in the clothing industry (Christopher, Lowson, &Peck, 2004). Virtual marketing This type of distribution is powered by technological advancement. The marketing and distribution of clothes in made easy by designing a website in the internet where the designs and fashion of a particular manufacture are showcased. All the retailers worldwide are able to view the designs which are then paid for online and delivery is made no matter the distance. The internet has connected many markets globally. This is done through advertisements where the market is made aware of the presence of new fashions and designs so that they are able to shop online and select the types of clothes they want. This has been used in most of the unites states and united kingdom where sales of clothes have intensified after online shopping especially where such clothes are associated with celebrities and influential people. The internet also helps people throughout the globe to find the nearest wholesale or retail shop where they can get the designs of nay international manufacturer. This allows them to help their outlets grow in different territories by increasing sales in different regions (Hines, 2001). Challenges in the supply chain of the clothing industry The supply chain in the clothing industry is very complex and thus unresponsive to the market needs and changes. The supply chain involves very many players before reaching the global customers. However, managing the supply chain in with all the players in it is very difficult. Furthermore, the nature of the fashion industry is very unpredictable since trends and market preferences keep changing and taste of the customers are very dynamic an short lived. This prompts the need to adopt a very flexible supply chain which is able to serve the volatile nature of the industry without inconveniencing the manufacturers and the middlemen in the supply chain. The flexibility of the supply chain is very important because it allows for the fashionable clothes or footwear to reach the market at the intended time no matter the distance from the place of manufacture. Identifying the market needs and being able to serve them by increasing the sales and market share of the company is always the greatest achievement in this market. Thus, the supply chain should not be very complex such that it is not able to accommodate the changing nature of this industry. The supply chain should be the aiding vehicle of the manufacturers to achieve their objectives effectively and sufficiently (Masson et al., 2007). Global supply chains in the clothing industry are very prone to longer lead times caused by factors beyond the control of the distributors. Some international issues are beyond the control of the company or the middlemen especially where it operates on diverse geographical areas. This could include war on terrorism, political issues, and geopolitical instabilities, natural and man-made disasters, among others. These reasons can disrupt the operation of particular countries where the clothes are on high demand at a particular time which is very crucial to the manufacturer. There are also problems of transit from country to country caused by manufacturing and logistics of different countries. Some counties impose very strict rules and regulations which are meant to promote their local production of clothes. This negatively affects the distribution of the foreign clothes in different countries. Most of the developing countries are the majority of the countries who import the clothes from the more developed countries but regulation and rules of some countries to promote local production increases the cost of business which discourages importation (Danese, Romano &Vinelli, 2004). The global supply chains are very difficult in sustaining competitive advantage due to problems of information sharing and responsiveness due to the longer lead time. Due to the combination of local and overseas supply activities in the fashion industry, customized response in required in order to be able to make informed decisions affecting the market. Competitive advantage is maintained by the firm which has enough information to deal with any situations in the market. However, to achieve this, the supply chain has to be very extensive which means that it will increase in complexity. The complexity will then increase the lead time meaning that the urgent information needed by the manufacturers to respond to the market gets to them later then their domestic competitors. While they try to cater for both he domestic and the global market at the same time, their competitiveness is highly jeopardized as their rivals take the lead in the market information. There is a very huge risk in balancing competitiveness in the domestic market and the global market without jeopardizing the performance in the market(Peng & Ilinitch, 1998). Solution to the supply chain challenges Improvement of the supply chain visibility will solve the problem of complexity of the supply chain by increasing the control of both the retailers and the manufactures. The longer the supply chain, the less visible it becomes and thus, its responsiveness to the market becomes very limited. However, transparency can be improved such that the supply chain becomes clear as to the time the manufacturer will respond to what news in the market and the middlemen receive the merchandise. This prevents cases of late merchandise arrival or shipment by maintaining the tracking systems in the supply chain. This has been implemented in some parts of USA and United Kingdom. For instance, a global supply chain visibility system has been implemented in Liz Claiborne, which is an apparel and accessories producer and retailer in the united kingdom. The retailer sources out those products from 35 countries which makes the risk of distribution very difficult. But with the visibility systems, control is more enhanced (Hoole, 2005). Another solution which is commonly used in the international supply chain in the clothing industry is the adoption of supply chain finance. This method is very convenient especially where the trading distance is very long between the manufacturing country and the retailing countries. This helps them to connect and keep in touch by connecting then electronically. The procedure involves the combination of financial institutions and technology platforms. This helps the two parties to exchange the market information and payments electronically which is more fasts and improves the responsiveness of the market than the traditional supply chain. This also allows the importers and the wholesalers to pay their money to the manufacturers in a timely way which allows them to take advantage of the discount which significantly lowers the unit cost and improves the quality of the supply chain. This method is utilized by AJT retailers based in Europe which has helped the fast-fashion retailer to lower its unit costs to up to a rate of between 5% and 10 % due to implementation of supply chain finance services (Jackson & Shaw, 2001). Transformation of the supply chain through implementation of commercial global supply chain technology will help the industry to solve the problems of information access and unresponsiveness to the market. The actors in this industry are fast moving from the traditional in-built applications which have been used for the longest time in this supply chain to more technologically updated applications. With the changing times and the technological improvement in most parts of the economy, there has been a need to integrate the technology in the supply chain in order to increase its efficiency. The software vendors are currently making software systems which are designed to handle the global supply chain due to their complexity and longer time leads. Many organizations in this industry have invested much in enhancing application of technological in-house applications to be used in the supply chain for efficient distribution of their products globally (Meijboom, 1999). Significance of Information and communication technologies in enabling the functioning of the global supply chain Information is very crucial in enhancing the functioning of the global supply chain. Firms which are highly competitive in the global supply chain value the role played by the market information they receive of the feedback and response about their products. This helps them to improve their products in accordance with the market changes and dynamism of the customers. The fashion industry is very dynamic and constantly changes with every season, festivity and tastes. This makes information a very crucial tool in enhancing effective responsiveness of the manufacturers to the market. Information improves the competitiveness of the firms involved in the supply chain since information about the market is important in ensuring that products needed by the customers reach the market before those of the rival producers. Such information could involve identification of new products in the market, looming news of fashionable clothes in the market, consumer preferences and modification of the current products to fit into new applications. The customer and supplier interaction is the core source of information (Sen, 2008). The importance of information in the global supply chain can be viewed in the perspective of the type of information to be delivered. Information can either be about the products generated between the between the supplier and the customer and also information about payment. Information is generated from both parties. With the complexity of the global supply chain, information flows can be evaluated from the different activities in the supply chain. Inventory level information Inventory information is very important to both the supplier and the manufacturers. Sharing of inventory information between the supplier and the customers reduces the uncertainty in the supply chain. It also improves the efficiency of the chain which prevents any cases of production delays. Sales data and forecasting information Foresting and sales data information is useful in the supply chain as it enables the reduction of uncertainties introduced in the supply chain through the use of order information alone. Thus, both parties to the supply chain should provide accessibility of their forecast data to each other to achieve a more seamless supply chain which consecutively leads to a more efficient supply chain. The forecasts information should be very accurately prepared otherwise the supply chain will be distorted. Order status for tracking Access to information about the status of the order enables both parties to be able to trace which order is being processed at what time. This increases the rate of call problem resolutions. This also allows the manufactures to get the answers to their inquiries about their suppliers on the internet. This allows processing or urgent order on the basis of first come first serve. Information on performance metrics Performance metrics provide the information needed to solve the problems of quality of the products, customer response, lead time, the delay in the queuing or orders made, service performance of the suppliers and the manufacturers among others. Sharing on this type of information is very essential in helping both parties identify the problems they are facing in the supply chain and device appropriate solutions. Communication technologies are also very important in integration of the supply chain. Globalization has given importance to technology in all spheres of all especially due to the economic practices which require transactions to be processed internationally. This is termed as ‘digital economy’ since it allows the economies of different countries to efficiently perform their activities across international borders through the use of technology has enhanced communication. In the supply chain, the use of communication technologies in highly enhanced and serves to integrate technology in the supply chain by providing high frequency information across the supply chain. This is done by using the internet to communicate across longer distances and also alternative electronics networks which are implemented in what is known as electronic-commerce. This allows easy access to information from both ends of the supply chain (Hines, 2001). The supply chain involves activities which take place in different countries without restriction on any particular country to undertake any activities and as such, the worldwide scale of application of information is essential in relaying the procedures taking place in other countries. Communication technologies relay information across the supply chain to able effective purchasing, distribution, marketing and feedback from different players in the supply chain. Conclusion The global supply chain contains a lot of activities which facilitate the integration of the distribution of products from the country of manufacture to the target markets in different countries. The suppliers involved in the supply chain are every important as they help the manufacturers in bridging the distance and space gap between manufacturing and marketing. Suppliers take care of marketing and selling the products. In the clothing industry, most of the activities in the supply chain are carried out by wholesalers who acquire the value for the clothes and market them in different countries. Some of the wholesalers diversify their operations by combing clothes and footwear from different manufacturers and export them to their outlets globally. Information in the supply chain is very important since the clothing industry is very dynamic and keeps changing. Thus, the manufacturers relay on the information about the market to change the manufacture of the products according to the tastes and preferences of the market. Bibliography Barnes, L. & Lea-Greenwood, G. 2006. Fast fashioning the supply chain: Shaping the research agenda. Journal of Fashion Marketing and Management. Vol.10. No.3. pp.259-271. Choi, T.Y. & Hong, Y. 2002. Unveiling the structure of supply networks: case studies in Honda, Acura, Daimler Chrysler. Journal of Operations Management. Vol. 20. No.5. pp. 469–493. 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