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©2008 GS1 Hong Kong
The Apparel Supply Chain Today and the Path to Successful
Collaboration
Anna Lin
Chief Executive
GS1 Hong Kong
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©2008 GS1 Hong Kong
Global Commerce
Manufacturing Base
Consumer Base
Global Sourcing for Cheaper Product and Wider Product Range
Total Export from China to Foreign Countries Amounts to US$762 billion in Year 2005 (An Increase of 28.4%)
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©2008 GS1 Hong Kong
A Typical Global Apparels & Textiles Supply Chain
An interlinking system of raw materials suppliers, garment manufacturers, buying/trading offices, and brand retailers.
Raw MaterialsSuppliers
GarmentManufacturers
Agents(Buying/Trading
Offices) Brand Retailers
Raw Materials Sourcing
Garment Sourcing
D O L P
M
MD
OL
P
D O L P
D O L PD O L P
SC InteractionsD: DevelopmentO: OrderingL: LogisticsP: Payment
Upstream apparel
Downstream apparel
Asia Pacific US/Europe
M: Manufacturing
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Retailer: Fashion on Demand
• Fashion changes from month-to-month rather than season-to-season.
• Over 10K new products per year for a typical brand retailer.
• New Product Introduction (NPI) once a week.
• 3 – 5 weeks of final design to sales cycle.
• This imposes tremendous pressure to adopt Quick Response, enhancing end-to-end supply chain efficiency, visibility and reducing total supply chain costs.
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Industry Challenges
• Continuing efforts to shortening the production cycle time.
• Fierce competition from emerging manufacturers in terms of cost.
• High flexibility, responsiveness and reliability, plus a lot of last minute changes.
• Facing various market impacts like abolition of Quota in 2005, China’s WTO accession and globalization of market.
• Short product life cycle and low order quantity.• Fragmented industry, lacking of consistent operational
practices and heavily relying on manual-based operation.
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Collaborative Efforts Needed to Combat Challenges
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©2008 GS1 Hong Kong
Apparel Supply Chain Interaction
Sourcing and developing raw materials in the upstream supply chain accounts for some 70% of the time spent in the supply chain interaction.
SamplingPhysical
Touch & Feel
Raw Materials Specification
Data Exchange
Ordering &Order Tracking
Goods Dispatching or
Receiving &Payment
B2BBusinessProcesses
SupportingSystems
Phone, fax or e-mail B2B & ERP systems
Product DevelopmentProduct Ordering, Logistics &
PaymentSCSC
InteractionInteraction
Cycle Time More than 70% Approximately 30%
D LO P
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Scenario 1
Scenario 2
Raw MaterialsSupplier
GarmentManufacturer
Buying Office
BrandRetailer
Raw MaterialsSupplier
GarmentManufacturer
Business Processes(Upstream Raw Material Sourcing & Development)
Buying Office
BrandRetailer
ProductDevelopment
ProductDevelopment
Specification
Requirements
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Operational Inefficiency
• The apparel and textiles industry continues to suffer from a tremendous lack of discipline, standardization, and transparency, as most of the companies are still using a smorgasbord of proprietary methodology for specifying and exchanging the specification of raw materials.
• This leads to a serious interoperability issues and operational inefficiencies and problems among the business partners along the apparel supply chain.
• End-to-end supply chain integration is the new business paradigm that companies need to adopt in order to derive competitive advantages and to meet their new business challenges.
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Operational Inefficiency – Survey
No. of Days to identify the right raw material specification per new order (Cycle time)
No. of times in this “Back & Forth communication” (frequency)
7 Raw Materials Average Longest Shortest Average Maximum Minimum
Button 2 – 5 14 – 40 At once to 1 2 – 7 5 – 10 1 – 7
Interlining 7 – 10 10 – 40 At once to 1 2 – 6 6 – 20 At once to 3
Knitted Fabric 2 – 14 14 – 60 1 – 4 2 – 6 5 to > 10 1 – 10
Label & Tag 1/2 – 7 7 – 14 At once to 5 3 – 7 5 – 25 1 – 8
Thread 1 – 4 7 – 10 At once to 3 2 – 3 5 – 8 1 – 3
Woven Fabric 2 – 7 14 – 60 At once to 5 3 – 6 5 to > 10 1 – 4
Yarn 2 – 5 14 – 90 At once to 3 2 – 6 3 to > 10 1 – 4
Total number of respondents: 63 companies
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©2008 GS1 Hong Kong
Reasons of Inefficiency
Main reasons for “ Back & Forth communication”
Average range
Missing information 10% to 25%
Inaccurate information 10% to 30%
Changes in raw material specification
10% to 20%
Price negotiation 30%
Follow up on delivery status 20% to 40%
Others (e.g. raw material functional performance)
10%
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
AppTex Vision
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©2008 GS1 Hong Kong
Groundwork - AppTex Program
• GS1 HK in collaboration with a group of forward-thinking upstream apparel and textiles companies are taking charge of developing raw materials specifications standard aims at integrating upstream apparel supply chain.
• This project was backed by 33 key players and industry bodies, accounting for some 60 percent of the local market share, with professional people to provide suggestions and comments for developing the standards of raw materials specifications of:– Button; Interlining; Knitted & woven fabrics; Label;
Thread; and Yarn.• The raw materials standards cover:
– Classification; Product attributes; Attribute values; Unit of measure; International article identification; &Party identification.
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
•CMSS
• Way Forward
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©2008 GS1 Hong Kong
Participating Companies
American & Efird (HK) Ltd INVISTA (HK) LtdAvery Dennison HK B.V. Keung Hing Mfy Int’l LtdCentral Fabrics Ltd Luen Thai Int’l Group LtdCentral Textiles (HK) Ltd Milo’s Knitwear (Int’l) LtdChargeurs Interlining (HK) Ltd Mou Fung LtdCoats China Pacific Textiles LtdCrystal Group Paxar Far East LtdEast Sun Button int’l Ltd Peninsula Knitters LtdEsquel Group TAL Apparel LtdFang Brothers Knitting Ltd Texful Textile LtdFountain Set (Holdings) Ltd Top Form Int’l LtdFreuenberg & Vilene Int’l Ltd Tristate Holdings LtdGS1 Hong Kong Ltd Union Button Factory LtdGrand Gain Industrial Ltd Wing Tai Enterprieses LtdGunzetal Ltd Xetex (HK) Ltd
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
STEERING COMMITTEE
Project Manager: GS1 Hong Kong
Project Start: 2002
Chaired by Mr. Andrew Leung, Chairman of Textile Council
Garment manufacturers: Top Form, Tristate
Raw material suppliers: Central Textiles, Fountain Set, Freudenberg & Vilene, Gunzetal
Sponsors: Esquel, Luen Thai, TAL, Wing Tai
Supporting Association: Textile Council
• East Sun Button• Esquel• Keung Hing• Luen Thai• TAL• Tristate• Union Button• Wing Tai
• Freudenberg & Vilene• Luen Thai• TAL• Tristate• Wing Tai
Button Interlining• Avery Dennison • Esquel• Grand Gain• Luen Thai• Paxar • TAL• Top Form• Tristate• Wing Tai
Label & Tag• Esquel• Fountain Set• Luen Thai• Pacific Textiles• Top Form
Knitted fabric• Gunzetal• Luen Thai• TAL • Top Form• Tristate• Wing Tai
Thread• Central Textiles• Esquel• Freudenberg & Vilene• Luen Thai• Mou Fung• TAL• Texful Textile• Top Form• Tristate• Wing Tai
• Central Textiles• Crystal• Fang Brothers• Fountain Set• INVISTA (HK) •Luen Thai• Milo’s Knitwear• Pacific Textiles• Peninsula Knitters•TAL• Tristate• Wing Tai
Yarn
USER CONSULTATION GROUP:American & Efird (HK), Chargeurs Interlining (HK) Coats China and Xetex (HK), just to name a few
Key Drivers from the Industry
Woven fabric
WORKING COMMITTEEIndustry Work-Groups: Chaired by Mr. Dennis Chung, Corporate Logistics Director of Luen Thai
MARKETING COMMUNICATION UNITChaired by Ms. Woo Yuk Lynn, Director of Central Textiles , in collaboration with Textiles Council & HKTDC
TECHNICAL CONSULTING GROUPVetting Committee: Chaired by Mr. Andrew Leung, Chairman of Textile CouncilTechnical Work Group: Chaired by Mr. Stanford Kuo, Director of Gunzetal Vice-chaired by Mr. Ricky Tang, Regional Director, ISCR & South Asia of Freudenberg & Vilene
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©2008 GS1 Hong Kong
Specifications for Thread and Knitted Fabric
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©2008 GS1 Hong Kong
Results of AppTex
• All the participating companies agree that an industry-wide raw materials standards will ease the communication between business partners, enabling them to streamline their supply chain operations and enhance overall efficiency.
• Alignment with brand retailer to achieve end-to-end supply chain integration is critical to the success of the AppTex project.
• The industry expects that at least a 15-20% reduction in overall cycle time of product development can be achieved if the AppTex standards is deployed properly.
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Progress of AppTex
• 2002 Project granted
• 2003 Complete AppTex Industrial Survey
• 2004 Launch of AppTex
• 2005 Host of Suppliers roundtable
• 2005 Specifications Refinement
• 2005 Share AppTex with VICS members
• 2007 Marketing Event with Textile
Handbook
• 2008 AppTex Implementation Pilot
• 2008 Co-organize CMSS Roundtable
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Collaborative Material Standards Specifications
(CMSS)
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©2008 GS1 Hong Kong
CMSS
• Set up by VICS to establish raw materials/garments specifications for item identification
• To turn industry consensus into global standards with the involvement of buyers and sellers in the Apparel and Textiles Industry.
• To transform unstructured data into structured data format for raw materials and product specifications presentation and to enable enterprise systems integration for Business-to-Business communication with the aids of the best-of-breed technology.
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Turn into Action
• Embrace CMSS/AppTex as a tool to step forward the enhancement of end-to-end global apparels/textiles supply chain
• Leverage existing work and industry players via VICS members and GS1 HK’s apparels/textiles industry forum
• Great opportunity to create common vision and implementation of Collaborative Commerce encompassing both Downstream and Upstream apparels/textiles supply chain
• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward
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©2008 GS1 Hong Kong
Questions?
Thank You