Upload
kumar-mayank
View
220
Download
0
Embed Size (px)
Citation preview
7/30/2019 Fashion value and supply chain
1/35
1
Fashion Value and Supply Chain
-Role of Designers,
Manufacturers and Retailers.
7/30/2019 Fashion value and supply chain
2/35
2
What is Supply chain?
A supply chain is a system of organizations,
people, technology, activities, information and
resources involved in moving a product or
service from supplier to customer.
Supply chain activities transform natural
resources, raw materials and components into afinished product that is delivered to the end
customer.
7/30/2019 Fashion value and supply chain
3/35
3
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-originto point-of-consumption
7/30/2019 Fashion value and supply chain
4/35
4
A supply chain consists ofSupplier of
Raw materials
Manufacturer/ Designer Distributor Retailer Customer
Upstream
Downstream
7/30/2019 Fashion value and supply chain
5/35
5
Classic textile Business Process:
Design Mfg Dist Sell
Purchas
e RawMat
Discount
7/30/2019 Fashion value and supply chain
6/35
6
Supply chain aims to Match Supply andDemand, profitably for products and
services
SUPPLY SIDE DEMAND SIDE
7/30/2019 Fashion value and supply chain
7/35
7/30/2019 Fashion value and supply chain
8/35
8
Flow in a Supply Chain
Customer
Material
Information
Funds
Supplier
The flows resemble a chain reaction.
7/30/2019 Fashion value and supply chain
9/35
7/30/2019 Fashion value and supply chain
10/35
10
Cycle View of SupplyChains
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
7/30/2019 Fashion value and supply chain
11/35
11
Push vs Pull System
What instigates the movement of the work/Production in thesystem?
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 actual demand or theactual status of the downstream customers
May cause long delivery lead times
Acts reactively
e.g. Ur neighborhood tailor !!!!
7/30/2019 Fashion value and supply chain
12/35
12
Push/Pull View of SupplyChains
Procurement,Manufacturing and
Replenishment cycles
Customer Order
Cycle
Customer
Order Arrives
Push-Pull boundary
PUSH PROCESSES PULL PROCESSES
7/30/2019 Fashion value and supply chain
13/35
13
Role of Designers, Manufacturers and
Retailers.
Customer
DemandCreation &
Forecast
ProductDevelopment
InventoryManagement
Distribution
7/30/2019 Fashion value and supply chain
14/35
14
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 practicesin the 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 trends
and pass on the information to the design team toincorporate it in the seasons line.
7/30/2019 Fashion value and supply chain
15/35
15
Product Development andcommercialization ( Designers)
Once the retailer knows what is it that the market wantsit needs to create options that can be commerciallyexploited
It is imperative that the products on offer aredifferentiated from 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
7/30/2019 Fashion value and supply chain
16/35
16
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.
7/30/2019 Fashion value and supply chain
17/35
17
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 the
daily sales report of each retail outlets and re- align the inventory and alsopass on the information to the buyers on the sales trend
7/30/2019 Fashion value and supply chain
18/35
18
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 bestfit 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.
7/30/2019 Fashion value and supply chain
19/35
19
Case Study
ZARA
7/30/2019 Fashion value and supply chain
20/35
20
7/30/2019 Fashion value and supply chain
21/35
21
Zarais 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.
7/30/2019 Fashion value and supply chain
22/35
22
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.
7/30/2019 Fashion value and supply chain
23/35
23
How they do it ?
Discuss the role of the designing ,
marketing and merchandisingteam.
7/30/2019 Fashion value and supply chain
24/35
24
ZARA design process:
Crative
Design
OUTSOURCE
and
SCAN
Preliminary
Designs
COPY
and
SIMPLIFY
Final
Product
Design
ADAPT
and
OPTIMIZE
7/30/2019 Fashion value and supply chain
25/35
25
Step 2: Simplify
hits & producelibrary of designs
Step 1: Scanfashion shows
Purchase
Raw Mat
Step 3: Final
Design of nextbatch
Mfg
Shopping
experience
Dist
Step 2: Shoppers (and store mgers) pull next design (shape) &
designers adapt
Step 3: Designers pull next batch
ZARA Supply Process in full:5 day lead time!!!
7/30/2019 Fashion value and supply chain
26/35
26
7/30/2019 Fashion value and supply chain
27/35
27
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 haveloading docks to load and unload goods fromtrucks.
7/30/2019 Fashion value and supply chain
28/35
28
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 onhangers so they don't need ironing when theyarrive at stores Price tags are affixed
Unpack them & they're ready to be sold
7/30/2019 Fashion value and supply chain
29/35
29
7/30/2019 Fashion value and supply chain
30/35
30
7/30/2019 Fashion value and supply chain
31/35
31
7/30/2019 Fashion value and supply chain
32/35
32
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 dyesfrom 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.
7/30/2019 Fashion value and supply chain
33/35
33
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.
7/30/2019 Fashion value and supply chain
34/35
7/30/2019 Fashion value and supply chain
35/35
35
Fleet Graphics-
Promotion and Logistics in action !!!!