Supply Chain Management in Fashion Industry - Essay Example

STUDENT NAME: STUDENT NUMBER: COURSE NAME: TOPIC: SUPPLY CHAIN MANAGEMENT IN FASHION INDUSTRY INSTRUCTOR NAME: DATE: INTRODUCTION Supply chain management, otherwise known as (SCM), is a process that mainly encompasses management of a network of organized businesses that mainly engage in the ultimate provision of service packages and products that are required by final customers. Supply chain management includes management of the entire supply chain of a business that is composed of the finished goods, work-in-progress, as well as raw materials from the original point of production to the final point of consumption or rather to the end customer (Gerefii & Memedovic, 2003). Supply chain management has been considered, and indeed, it is, one of the best ways of cutting down on unnecessary distribution costs that takes so much of the company’s profits and hence the reduction in the net income of the company. In Australia for example, most firms have been found to incur huge expenses in their supply chains and if proper supply chain management is introduced, then many companies in Australia will reap extra benefits from the process given that many costs will be saved. Supply chain management addresses quite a number of issues in the supply chains as shall be shown below. To begin with, supply chain management addresses problems of distribution network configuration, which covers production facilities of a given business, the distribution centers, the network and mission suppliers of the business, the warehouses as well as the cross-docks and finally the customers. In addition, the supply chain management process addresses the problem of fully implementing the distribution strategy of a given business that includes all the problems concerning the operational control of the firm’s supply chain as well as issues with transportation control of the business. Moreover, the supply chain process also takes care of problems associated with the common trade-offs in all logistical activities of the supply chains in businesses. Lack of careful coordination of logistical activities will eventually result into extra costs from all logistical work involved. Optimizing one activity will increase costs due to trade-offs and it is necessary to take a systems approach in ensuring efficient logistical planning activities (Bruce, Daly & Towers, 2004). LEAGILE SUPPLY CHAIN IN FASHION INDUSTRY In relation to fashion and textile industry, the market situation is very volatile and this results into rapid changes in demand due to changing fashion trends (Towill & Christopher, 2010). Demand in fashion and textile industry is very unpredictable and with in a short period, demand can vary and change completely thereby making supply chain management in this industry very difficult. Effective supply chain management in fashion and textile industry has been observed as one way for retailing companies in fashion and textile industry to maximize their performance and remain competitive. Leagile supply chain (agile and lean) is one of the contemporary issue in fashion industry which the managers and the investors in this industry need to pay attention to as the fashion market continue being volatile and unpredictable in the current globalization of the world market. In fashion and textile industry, it is impossible to remove the element of uncertainty from the supply chain due to the nature of products involved in this industry. From the word ‘fashion’, it implies that products from this industry are highly fashionable. In a market where the products involved are highly fashionable, then the demand for these products becomes very unpredictable based on the intrinsic nature of the products. Therefore, in the case of fashion and textile, specific supply chains need to be developed with appropriate strategies that can enable the industry match its supply with the demand (Towill & Christopher, 2010). Lean approach in supply chain management is generally concerned with elimination of waste in all stages of supply chain. Application of lean manufacturing can be traced to the Toyota Production Systems whose focus was to reduce and eliminate wastage in the production process. However, lean approach in supply chain can be traced back during the World War II in Spitfire aircraft production. According to Naylor et al. (1999), leanness mean to develop a value stream for eliminating all waste including time and enabling a leveled schedule. On the other hand, agile approach in supply chain management is used where the demand is very volatile and the customers’ requirements fro variety is very high. Agility is a business wide facility that encompasses organizational structure, informational systems, logistics procedures and in particular, mindsets. Flexibility is the key element in agile approach in supply chain. In respect to the flexibility element, the origin of agility as a business concept lies partly in flexible manufacturing systems (Hilletofth & Hilmola, 2008). Originally, it was thought that the course to flexibility in manufacturing was through mechanization to enable speedy changeovers and thus enable a larger responsiveness to changes in product mix and volume. Later, according to Nagel and Dove (1991), this idea of flexibility in manufacturing was extended into wider business context where the concept of agility as a supply chain orientation was born. According to Naylor et al. (1999), agility means, “using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile market place.” A combination of the two paradigms, agile and lean, results into high competitive supply chains those are capable of winning in volatile and cost-conscious environment like the one present in the fashion and textile industry. Lean approach is very powerful when the winning criteria is cost in the supply chain. However, where the winning criteria are service and customer value enhancement, then agile approach becomes a critical dimension. Agile and lean approach application in the fashion industry can vary depending on the manufacturing strategies adopted and depending on the winning criteria applied by the firm (Hilletofth & Hilmola, 2008). SIGNIFICANCE OF LEAGILE SCM IN THE FASHION INDUSTRY In the recent years, significant interest has been observed in the fashion and textile industry on lean manufacturing and lean enterprises. Lean approach in supply chain management is concerned with elimination of waste. Waste elimination in the fashion industry is a key element as this industry especially in terms of raw materials and time. Time management in the fashion industry is very important since it requires that the speed of fashion supply chain to very fast given the volatility of fashion market. For companies in the fashion industry to be able to save significantly in terms of time management, it requires that the speed of supply chain to be fast starting from the product conception stage to distribution of the products to final delivery of the products to the customers. As mentioned earlier, lean approach in supply chain management is appropriate where the winning criteria is based on cost. Therefore, a firm in the fashion and textile industry will embark on pulling out excess time out of the product development stage and garment production cycle resulting in time saving and hence money. Nowadays, many manufacturers of apparel and clothing stores are seeking to implement product lifecycle management solutions and supply chain management solutions by use of lean approach in their operations (Apparel Search, 2009). Fashion designers, suppliers of soft goods such as apparel and footwear, and private brand clothing retailers are currently focusing on improving their ability to distribute new products in the market as quick as possible. The lesser the time used in distribution of products in the market, the more cost effective the process is. Again, for suppliers and retailers to stay ahead of the fashion trends in the industry, they need to ensure that they move their products as fast as possible. Lean approach therefore becomes the most effective way of achieving cost effectiveness and staying ahead of fashion trend in the fashion and textile industry (Apparel Search, 2009). Agile supply chain in fashion and textile industry is increasingly gaining popularity given the volatile nature of the fashion industry and the unpredictable nature of products in this industry. Women clothing and wears are a good example of products in the fashion industry that are very volatile and unpredictable. Women’s fashion change with weather and there is usually an extreme variability in women product lines. This unpredictable nature of products requires the manufacturer to be very flexible in order to be able to adapt to the rapid changes. Managers and investors in such a supply chain need to have swift production lines with the capability of reconfiguring for changes in the product requirements. Swift and flexible shipping lines are also required to get the latest fashion to the customers before the fashion becomes an erstwhile. In addition, the amount of inventory to be shipped to the merchants requires some guesswork in the fashion industry in order to manage cost effective inventory costs. If fashion retail stores and suppliers are able to keep up with the latest fashion by remaining flexible, demand for their products will be high and they will be able to earn greater profit margins to cover up the excess costs in inventory management (Hilletofth & Hilmola, 2008). Despite agile supply chain being effective in volatile and highly unpredictable markets, it has a disadvantage of being wasteful. Greater profit margins are required to cover high inventory and shipping costs. In cases where the competitors are engaging in price wars, a competitor who manages to produce the products at a lesser cost, then agile supply chain may fail to bear any fruits to such a competitor. It is therefore important to note that agile and lean supply chains are driven by demand in the market. Since agile supply chain is inconsistent with lean supply chain, and the vice-versa, it would be advisable for players in the fashion industry to have the benefits of both supply chains without any drawbacks. That is, combining the two, lean and agile, to form Leagile supply chain. A vital concept of Leagile supply chain is the decoupling point where supply chain goes from the customer in an agile fashion to the decoupling point where the supply chain takes on leaner characteristic (Towill & Christopher, 2010). A decoupling point can be located anywhere between the customer and the supply of raw materials. For instance, in supply of women fashions, a decoupling point may be placed closer to the factories where new technological advancement like internet can be taken advantage. This can be achieved by sending smaller predictable supplies to the retailers at the same time holding-on to inventory neat the top of the supply chain. With proper shipping and marketing approaches, clothing manufacturers can profit from agile nature of electronic market place, at the same time leaning down the supply chain to retailers. THE IMPLICATIONS AND FUTURE DIRECTIONS OF LEAGILE SUPPLY CHAIN IN FASHION INDUSTRY As the fashion and textile industry continue to being volatile in the current highly competitive market place, there is a need for cloth manufacturers and retail stores to adopt supply chain management strategies with capability of increasing their profitability and reducing operational costs. A combination of Leagile and decoupling point’s concepts in manufacturing and distribution of fashion and cloths is very helpful in analyzing supply chains and in identifying processes of innovative supply chain designs. As manufacturing operations required by buyers become more complex in the fashion industry, adopting flexibility and speed in supply chain will enable players in this industry to survive its volatile nature. Agile and lean supply chain management approaches stands to give players in the fashion industry a better chance to continue earning greater profits at the same time maintain low operational cost. In future, Leagile supply chains will become very effective in the fashion and textile industry as there is no better way achieving flexibility while reducing waste other than combining agile and lean paradigms in supply chain management. CONCLUSION Supply chain management is very essential in management of every business in ensuring ultimate efficiency and cost reductions. There are many challenges faced by businesses in the fashion industry today and the need for the supply chain management programmes or systems are indisputable in the modern day business dynamics. It is necessary to integrate supply chain processes that are efficient to propel the business into achieving greater profits. Agile supply chains provides means for adopting flexibility in the unpredictable fashion market through use of customer value enhancement as a profit criteria while lean supply chains provides means for reducing operational costs as a means of gaining high profitability in the fashion and textile industry. REFERENCES Apparel Search. 2009. Terms of Interest to the Fashion Industry. (2009). Retrieved November 9, 2010, from http://www.apparelsearch.com/terms/S/Supply_Chain_Speed_apparel_industry.htm Bruce, M., Daly, L., and Towers, N. 2004. Lean or agile: A solution for supply chain management in the textiles and clothing industry? International Journal of Operations & Production Management , Vol 24 (2), 151-170. Gereffi, D, and Memedovic, O. 2003. The Global Apparel Value Chain. United Nations Industrial Development Organization: Sectoral Studies Series , 2-46. Hilletofth, P, and Hilmola, O. (2008). Supply chain management in fashion and textile industry. International Journal of Services Sciences , 127-140. Towill, D., and Christopher, M. 2010. An Integrated Model for Building Agile Supply Chain. 1-17. Read More