Supply Chain Management in Textile and Fashion Industry
Shubham Anil Jain
Aditya Birla Fashion and Retail Limited
Nowadays, for the key success of textile and apparel industry, supply chain management is very essential and important. That’s why the deep attention of top management is to develop and manage an effective supply chain management system. The process of managing resources, the movement of resources from one party to another, one place to another place, one department to another department, and one section to another section is called as supply chain management. Here, management of resources should be in a way so that the availability of the correct resources in the right place, at the right time, with sufficient quantity, where the process cost is least. The important aspect over here, is supplying the required resources at a minimum cost. Manage the flow of goods and services through the supply chain network and it is mainly related to logistic. To avoid this problem, logistic planning is one of the key focuses. In a supply chain management, the management of resources should be done in every stage of manufacturing.
Principles of Supply Chain Management:
1) Enough Supply Chain to Consumer’s Needs:
Initially, both business people and supply chain experts are trained to give attention towards customer’s needs and preferences. In order to understand customer better and in detail, segregate customers into different groups that is called “segmentation”. The primary way to segment customer is ABC analysis that segregate customer based on sales volume or profitability. Groupism can also be done by product, industry and trade channel.
2) Personalize Logistics Network:
Whenever the situation comes like, one segment customer based on service needs, one may have to cater different logistics networks to serve different segment. However, this principle doesn’t hold true for all time.
3) Manage Demand Planning for all Supply Chain:
Supply chain specialists are taught to release demand data with trading partners so nobody has to hold unnecessary stock. In many situations, this principle holds true. But in reality, the only company which is actively sharing demand data to trading partners is Walmart.
4) Segregate the Products Close to Customer:
This principle is being followed Dell, keeping components, parts with them and assemble them only after customer demands the order in order to increase product variety. This principle is still true, but, there is another principle that one can consider. “Standardization” is in the opposite side of “Segregation”. For example, some cosmetics manufacturers formulate products and choose packaging and labelling that deals with regulations of multiple countries in Asia.
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5) Deploy Strategically:
This principle basically, stands the test of time. In short, don’t ever outsource the inner competency. To know more about this, one can find it from the infographic named “7 Pitfalls of Outsourcing and How to Avoid Them”.
6) Integrate with IT System that Support Multi-Layered Decision Making:
If one search on Google for the term “critical success factor ERP”, one find lots of information about how to implement Enterprise Resource Planning (ERP) successfully.
7) Inculcate both Service and Financial Metrics:
Anderson et al told that activity based costing (ABC) be implemented to determine customer’s profitability. However, there is the interesting twist about ABC concept.
Components of Supply Chain Management:
It is fact that, nothing can happen without proper planning. Planning is the primary requirement of all companies and they must plan at multiple stages. Firstly a company must decide about what to manufacture and sell. It is necessary to plan sources for various aspects such as raw materials, machinery, space, and technology. They must study the market for such items and whether it will earn them enough profits to justify forming a company.
This is another major component of supply chains. Without a smooth flow of information, this can’t work appropriately. Information about market demand and trends must convey to the operations team so that they can plan and arrange for raw materials. Data about raw material availability must flow to those in the purchasing department. It will definitely help them to ensure an adequate supply to complete production as per requirement.
This is considered as one of the primary purpose of supply chain management that will help to save majorly on costs and ensure that production continues without any problem. It is truth that companies can make finished goods only with raw materials. While purchasing they must be carefull to ensure the manufacture of good quality products. It is the responsibility of supply chain managers to check raw materials from various sources and ensure they are of the desired quality.
Correct inventory management is another aim of supply chain management. If it is done correctly then, it will save a lot of money. Excess inventory will only add to dead investment but also take up valuable space in warehouses. Even, shortage of stocks can result in a break in production and unfulfilled orders. This will end with losing customers. Inventory mangers must keep themselves constantly aware about what materials are available in their stores.
Production basically, falls under a various set of people who verify that they produce goods as per standards and quality goals. They also make sure that all necessary and important machines are kept ready to manufacture products without any breakdowns. Supply chain managers must keep in constant contact with the production team to ensure that things are moving as scheduled. They must also say those in charge of making goods about arrival and stocks of raw materials.
Importance of Supply Chain Management in Textile Industry:
The apparel industry is very vast and dynamic industry producing millions of garments per day. Here, one of the greatest challenges found and faced by this industry is increased cost of garments making and the price of both local and imported raw materials also increasing. Manufacturers manufacture garments both for the local and export markets but industrial-oriented production is majorly for export. It is known that, the export market is highly competitive because China, Bangladesh, Vietnam, India all are competing for offering a good price to the garments buyers to hold the export share high. One can compete and survive in the market but first of all, it need to minimize the direct and indirect costs engaged with the production of the garments and the right solution is to use supply chain management by which appropriate sourcing is possible where cost is minimum. And this is the reason why supply chain management is very much important for the apparel and textile industry.
Another thing is, many public know about the concept of supply chain management but many of them are not sure of how to use and how to plan for the proper supply chain management. Apparel manager should pay attention and carefully develop their supply chain and they will be successful only if they have accurate planning for the supply chain management. The future is very much of competitive nature for the garments business. Those who manage and handle Supply Chain (SC) properly will get a competitive advantage over their competitors. So, it is the right time to hire some Supply Chain Management (SCM) professionals and experts to develop supply chain management for the textile and garment factory.
Its key benefits includes:
- It basically create flexibility in operation
- The positive effect of the movement of resources
- Minimization of Total Cost of owing (TCO)
- Optimum use of available resources
- Ensure logistics management in terms of both raw materials sourcing and delivery of the final product.
Supply chain management (SCM) is nothing but a discipline that manages the flow of supplies through all of the stages of a production cycle. SCM is applicable to any organization or industry that executes projects, produces goods or provides services, as those activities require a supply chain to maintain a steady flow of resources. The main goal of supply chain management in textile and fashion industry are to reduce cost, improve the overall organization performance, brand value and customer satisfaction by improving product or service delivery to the consumer.
- Agrawal, N., Smith, S.A. & Tsay, A.A. (2002). Multi-vendor sourcing in a retail supply chain. Production and Operations Management, 11(2), 157-182.
- Journal of Business Logistics, 21(1), 75-9. Bruce, M., Daly, L. & Towers, N. (2004). Lean or agile: a solution for supply chain management for textile and clothing industry?
- International Journal of Operations and Production Management, 24(2), 151-170.
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Founder & Editor of Textile Learner. He is a Textile Consultant, Blogger & Entrepreneur. He is working as a textile consultant in several local and international companies. He is also a contributor of Wikipedia.