Continuous replenishment in the apparel industry Global vertical supply strategies in the apparel.

Continuous replenishment in the apparel
industry 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 close to 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-

Continuous replenishment in the apparel
industry 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 close to 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 Europes 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
HarvardBusiness Schools 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. Retailers 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 and Guess Inc.
Real-time collaboration is essential to driving product development in the
industry. Also a shorter product development lead time enables the delay of
design and colour decisions to maximise the on-trend opportunity. 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, and sends the data upstream. The pull
signal (Chapter 6) goes back all the way to the yarn manufacturer. Figure 8.6
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
retailers EPOS system to the manufacturer triggers replenishment responses. 2
Raw material: suppliers respond to demand signals via phone, fax, email or
integrated system. Raw cotton is compressed into bales, and fitted with radio
frequency identification device (RFID) tags (see Section 6.3.1) 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 are 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 retailers 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 50100 stores. 6 Retail: as items are purchased, EPOS
triggers replenishment responses. (Sources: Kuhel, 2002; updated by Harrison,
2005; updated by Baker, 2010)

Questions

1 Summarise 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.