[SOLVED] Global ‘vertical’ supply strategies in the apparel

Global ‘vertical’ supply strategies in the apparel industry aim to emulate retailers such as Zara, which sources everything from set manufacturing plants that are situated within the same geographic region as most of its retail outlets. Setting up a similar operation in the US would be problematic – for a start, there is not much left of the apparel manufacturing base because it went overseas long ago for cost reasons. Competitive pressures are constantly increasing – a significant percentage of the industry is fashion-driven – and fashion changes continuously. Thus, time-to-market is increasingly important. Kumar and Arbi (2008) note:
Turnaround time is important for US fashion retailers intending to compete with Europe’s low-cost fashion providers, including H&M and Zara. Both European stores have created production models that deliver inexpensive fashion apparel in weeks, rather than months. Zara designs, produces and delivers a garment in 15 days to US stores according to a 2005 profile by Harvard Business School’s Working Knowledge. For American apparel chains, Central America is a potential outsourcing destination, with lower production costs than the USA, falling tariffs and approximately 21 days to get designs made and delivered, 43 days if American material is used.
The internet has further impacted the importance of competing on turnaround time.
Chaudhry and Hodge (2012) observe that:
The resulting shortening of product lifecycles has been further exacerbated by the ubiquitous use of the internet which equips the consumer with information about competing products, special offerings and the prices.
Retailers, both ‘bricks-and-mortar’ and online, drive the industry and – in a fragmented and very competitive marketplace – they are moving quickly to address its longstanding logistics problems. Increasingly, they are turning to suppliers to respond faster to better quality information, including the use of systems such as Product Lifecycle Management (PLM). Kurt Salmon Associates (Rubman and del Corrado, 2009), consultants to the industry, have highlighted that many retailers have embraced the concept of integrating retailer PLM and supplier sourcing systems, including JC Penney, Guess Inc and Men’s Warehouse. Real-time collaboration is essential to driving product development in the industry. Also a shorter product development lead time enables the delay of design, material selection and colour decisions to maximise the on-trend opportunity.
Mark Harrop (2017), a long-standing apparel industry observer and MD of Which- PLM remembers that in the late 1990s, his company provided a complete design and development platform that would allow brands and retailers to share key product data with their extended supply chains. However, the internet was still fairly primitive, and in many non-Western regions remained a barrier to supply chain connectivity for some time. Still, today, almost two decades later, Harrop finds it frustrating to see that a significant percentage of the PLM’s customers do not make use of their solution’s ability to power end-to-end collaboration, and instead revert to emailing PDFs of technical specifications back and forth. He believes it to be a matter of mindset:
Retailers must embrace the idea that sharing information with their supply chain partners is the only possible way they can take part in this future... and communicate in real-time.
Kuhel (2002) proposes an apparel supply chain of the future that is based on continuous replenishment, which we have adapted. Let us assume a designer and retailer of fashion apparel is situated in the north-eastern USA. A new range has been designed, and early sales are encouraging. These early sales figures are used to refine forecasts quickly, and to prime the logistics pipeline with a flow of product that matches expected demand. After this, it is essential to regulate the flow of finished goods to match actual demand. This is how it is done.
As soon as an item is purchased, the retailer collates the electronic point of sale (EPOS) data from its stores or on-line, and sends the data upstream. The ‘pull’ signal (Chapter 6) goes back all the way to the yarn manufacturer. Figure 8.10 represents the path that a garment might take from concept to delivery. Six stages are involved.
1. Planning: apparel retailer determines design for a product, evaluates costing with the supplier and then sends demand data and forecast upstream. These signals set the supply chain in motion. Later, once the product has gone to market, a web-based link from the retailer’s EPOS/online system to the manufacturer triggers replenishment responses.
2. Raw material: suppliers respond to demand signals via phone, fax, email or integrated Internet based system. Raw cotton is compressed into bales, and fitted with radio frequency identification device (RFID) tags to specify source and type.
3. Fabric: manufacturers weave and ship product in response to demand from the retailer. Inventory/shipment tracking starts here. In-transit data is passed downstream via the internet or integrated system workflow.
4. Assembly: fabrics and trims come together at the final assembly plant, which in this example is situated in the Caribbean. (Manufacturers situated within short shipping times of the USA are favoured over Far East suppliers.) The plant has an ERP system that processes orders received electronically. Finished goods are assembled and barcoded by store prior to dispatch. All suppliers to the apparel retailer use compatible or integrated systems.
5. Distribution: the product is shipped by container to the retailer’s national distribution centre (NDC). Here, store orders are cross-docked using the barcode to identify the destination store. They are then forwarded to regional distribution centres (RDCs) that serve 50–100 stores and on-line retail.
6. Retail: as items are purchased, EPOS/on-line triggers replenishment responses.

Questions
1. Summaries the ‘current state’ problems that are typical of the apparel industry, and their implications for supply chain integration.
2. Identify potential barriers to executing the proposed apparel ‘supply chain of the future’.

Question: Global ‘vertical’ supply strategies in the apparel