ses 23-24 fashion value and supply chain

8/2/2019 Ses 23-24 Fashion Value and Supply Chain

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Fashion Value and Supply

Chain

-Role of Designers,

Manufacturers and Retailers.


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What is Supply chain?

A supply chain is a system of organizations,people, technology, activities, information and

resources involved in moving a product orservice from supplier to customer.

Supply chain activities transform natural

resources, raw materials and components into afinished product that is delivered to the end

customer.


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Supply chain management

Supply chain management (SCM) is the processof planning, implementing, and controlling theoperations of the supply chain with the purpose tosatisfy customer requirements as efficiently as

possible.

Supply chain management spans all movementand storage of raw materials, work-in-processinventory, and finished goods from point-of-origin topoint-of-consumption


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A supply chain consists ofSupplier ofSupplier of

Raw materialsRaw materials

Manufacturer/ DesignerManufacturer/ Designer DistributorDistributor RetailerRetailer CustomerCustomer

Upstream

Downstream


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Classic textile Business Process:

Design Mfg Dist Sell

Purcha

se RawMat

Discount


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Supply chain aims to Match Supply and

Demand, profitably for products and

services

SUPPLY SIDE DEMAND SIDE


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Supply Chain achieves

The right

Product

Higher

ProfitsThe right

TimeThe right

CustomerThe right

QuantityThe right

StoreThe right

Price

=++ ++ +


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Flow in a Supply Chain

Customer

Material

Information

Funds

Supplier

The flows resemble a chain reaction.


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SCM in a Supply Network

Supply Chain Management (SCM) is concerned with themanagement and control of the flows of material, information,and finances in supply chains.

Supply

Demand

Products and Services

Cash

Supply Side OEM Demand Side

THAILAND INDIA MEXICO TEXAS US

N-Tier Suppliers Suppliers Logistics Distributors Retailers

Information

The task of SCM is to design, plan, and execute the activities at the different stagesso as to provide the desired levels of service to supply chain customers profitably


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Cycle View of Supply

Chains

Customer Order

Cycle

Replenishment Cycle

Manufacturing Cycle

Customer

Supplier

Procurement Cycle

Retailer

Distributor

Manufacturer

Any cycle0. Customer arrival

1. Customer triggers an order

2. Supplier fulfils the order

3. Customer receives the order


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Push vs Pull System

What instigates the movement of the work/Productionin the system?

In Push systems, work release is based on

downstream demand forecasts Keeps inventory to meet actual demand

Acts proactively e.g. Most of the retailers work in this format

In Pull systems, work release is based on actualdemand or the actual status of the downstreamcustomers May cause long delivery lead times

Acts reactively e.g. Ur neighborhood tailor !!!!


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Push/Pull View of Supply

ChainsProcurement,Manufacturing andReplenishment cycles

Customer Order

Cycle

Customer

Order Arrives

Push-Pull boundary

PUSH PROCESSES PULL PROCESSES


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Role of Designers, Manufacturers and

Retailers.


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Demand Creation and Forecast

(Marketing + Merchandising) Actually this answers the basic Question What is to be

supplied and how much

Its the first step where a retailer can go wrong even afterhaving the best SCM systems, processes and practices inthe world

Demand Creation is done by the by the marketing teamthrough effective advertising and promoting the product.

Forecasting is mostly done by the buyers andmerchandising team, it studies the past selling data andgenerates the forecast for the future.

Buyers/Merchandisers also identify the upcoming trendsand pass on the information to the design team to


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Product Development and

commercialization ( Designers)

Once the retailer knows what is it that the market wants itneeds to create options that can be commerciallyexploited

It is imperative that the products on offer are differentiatedfrom those available already.

The retailer can show value attributes, packaging andprice to make the offer attractive

The designing of new products or creative adaptation isdone by the design team.

Once the proto types are ready and the pricing strategy is

in place one needs to find ways to optimize productionand take advantage of scale.

Creative

Design

Preliminary

Designs

Final

Product

Design


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What is an inventory?

It is the products or goods which are

produced/manufactured in bulk by the

supplier or manufacturer (i.e he has

invested in those products) & is kept in thewear house or store before its sold to the

end customer.


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Inventory Management The term inventory management implies limitations of planning, ordering

and forecasting in a system

Given a set of macro and micro conditions in a dynamic businessenvironment it is possible that decisions are not 100 % correct

If you have low sales you will obviously have more inventory and why youwill have low sales is simply because

---- your product development or demand forecasts were inaccurate.---- Also it could be a great product with a reasonable demand forecast butdue to lack of marketing and information to the customers it could not besold as predicted

---- Not priced correctly (MRP)

---- Great product but did not reach on time or season.

Therefore it is important that an organization sees Inventory as part of abigger picture and not in exclusion. The focus should be on what causedhigher or low inventory and not on inventory itself.

Inventory Management is done by Retail Merchandisers who scan thedaily sales report of each retail outlets and re- align the inventory and also


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Distribution Network Configuration

The supplier matrix would depend largely on the scale of operationsand positioning of the store.

Large suppliers with compliant factories and state of the artequipment are tend to be costlier. The retailer must look for a best

fit model so that the business is relevant and valuable for bothparties.

If the product is design oriented and the customers can pay more toget it faster one may decide to get it produced in the best facilitynearest to the point of sales.

If the product is value oriented and customers look for least pricedproducts then one can have it sourced in bulk ( like importing fromChina rather than getting it from Tirupur !).

The final end of the distribution network is the retail store.


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ZARA


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Zara is the flagship chain store of Inditex Group owned bySpanish tycoon Amancio Ortega.

1st store opened in 1975 in Spain

Zara was described by

Louis Vuitton

fashion director as

"possibly the most

innovative and devastating

retailer in the world."

Zara has also been

described as a

"Spanish success story"

by CNN.

Zara is the flagship chain store of Inditex Group owned bySpanish tycoon Amancio Ortega.

1ststore opened in 1975 in Spain

Zara was described by

Louis Vuitton

fashion director as

"possibly the most

innovative and devastating

retailer in the world."

Zara has also been

described as a

"Spanish success story"

by CNN.


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Zaras Supply Chain

While its rivals start planning their lines onaverage nine months before they hit the shelves,Zara has a reputation for instant reaction tofashion trends and rapid restocking of stores to

meet demand on items that are hits.

Zara can make a new line, from the initial conceptto when it arrives in the shops, in just three

weeks.

It's also not afraid to pull items from shelves andcancel ones that aren't selling.


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How they do it ?

Discuss the role of the designing ,

marketing and merchandisingteam.


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ZARAdesign process:

Crative

Design

OUTSOURCE

and

SCAN

Preliminary

Designs

COPY

and

SIMPLIFY

Final

Product

Design

ADAPT

and

OPTIMIZE


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Step 2: Simplify

hits &produce library of

designs

Step 1: Scanfashionshows

Purchase RawMat

Step 3:

Final Designof nextbatch

Mfg

Shopping

experience

Dist

Step 2: Shoppers (and storemgers) pull next design

(shape) & designers adapt

Step 3: Designers pull next batch

ZARA Supply Process in full:5 day lead time!!!


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What's a Ware house?

A warehouse is a commercial building for storage

of goods.

Warehouses are used by manufacturers, importers,exporters, wholesalers, transport businesses,

customs, etc. They usually have loading docks toload and unload goods from trucks.


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Fast Fashion!

La Coruna warehouse is 5 million square feet =90 football fields. Nine times the size of Amazon's warehouse These facilities move about 2.5 million items a week.

Connected to 14 Zara factories through tunnels withceiling-mounted rails.

Cloth is ironed and products are packed on

hangers so they don't need ironing when theyarrive at stores Price tags are affixed Unpack them & they're ready to be sold


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In-house or Outsource?

Does Zara outsource production?

Why Not? Production is the critical success factor for Zara Fast Fashion.

Vertical Integration Zara produces 60% of its merchandise in-house. Zara makes 40% of its own fabric and purchases most of its dyes

from its own subsidiary. Fabric is cut & dyed by robots in 23 highly automated Spanish

factories. 50% of fabric arrives undyed so the firm can react to mid-season

color changes.

What about competitors?

H&M has 900 suppliers and no factories.


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Fresh Fashion

At Zara, most of the products you see in stores didn't existthree weeks ago, not even as sketches.

What about the Madonna concert example?

How often does the average Zara store accept delivery ofnew products?

Twice-a-week! It's like groceries!

Items rarely remain on shelves for more than a week. You essentially walk into a new store each time you visit.

What advantage does this give Zara? Exclusivity! No single Line is on the market for more than four

weeks.


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All this translates into speed.

Turn-around from idea to shelves is 15

days. H&M takes 3-5 months from creation to delivery

VF Corp (Lee, Wrangler) takes 9 months

J. Jill takes up to a year

Average = six months to design + three months to

manufacture.

Zara is 18 times faster than competitors!


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Fleet Graphics-

Promotion and Logistics in action !!!!

ses 23-24 fashion value and supply chain

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