SUPPLY CHAIN MANAGEMENT IN GARMENTS INDUSTRY

A Research Paper

Presented to Prof. Reynaldo De Vera

In Partial Fulfillment of the Requirements for the Subject

(PC8-1) Strategic Management

by

Amelia F. Pajarillo
ABSTRACT
The term “supply chain management” has become a well-liked nonsensicality,
most likely 1st used by consultants within the late Eighties & then analyzed by the
educational community within the Nineteen Nineties. if one needs an easy definition,
provide chain management links all the provision interacting organizations in associate
integrated two-way communication system to manage prime quality inventory in the
handiest & economical manner. the provision chain management reflects those actions
& values chargeable for the continual improvement of the look, development &
management processes of associate organization’s provide system, with the target of
rising its profitableness & ensuring its survival, furthermore because the profitableness
& survival of its customers & suppliers.

INTRODUCTION

A Supply chain consists of all parties concerned, directly or indirectly, in fulfilling a

client request. The provision chain includes not solely the makers, and suppliers,
however additionally transporters, warehouses, retailers, and even clients
themselves. Every stage during a supply chain is connected through the flow of product,
info, and fund. These flows typically occur in each direction and will be managed by one
among the stages or a negotiator. Here we will see raw materials' providers provide the
industrial products to the manufacturer, and build the merchandise sale to the
distributor, distributor sale this product to the retail merchant by the tiny heap, and final
shopper get the merchandise from the retail merchant. Supply chain stages:

 Raw material Supplier

 Manufacturer
 Wholesaler/distributor
 Retailer
 Customer

Figure 1: An example of Supply Stages

WHAT IS SUPPLY CHAIN MANAGEMENT?

Supply chain management (SCM) could be a method utilized by company's to

make sure that their offer chain is economical and cost-efficient. A offer chain is that the
assortment of steps that a corporation takes to rework raw elements into the ultimate
product. Typically, offer chain management is comprised of 5 stages: set up, develop,
make, deliver, and return.

Plan: an inspiration or strategy should be developed to deal with however a given

sensible or service can meet the requirements of the shoppers. a major portion of the
strategy ought to concentrate on coming up with a profitable offer chain.

Develop: It involves building a robust relationship with suppliers of the raw materials
required in creating the merchandise the corporate delivers. This part involves not solely
characteristic reliable suppliers however conjointly coming up with ways for shipping,
delivery, and payment.

Make: the merchandise is factory-made, tested, packaged, and scheduled for delivery.

Deliver: client orders area unit received and delivery of the products is planned.

Return: throughout this stage, customers could come defective product. the corporate
also will address client queries during this stage.

Another model for understanding offer chain management is grouping all management
activities into 3 categories: strategic, tactical, and operational.

Strategic: strategic activities embrace building relationships with suppliers and

customers, and group action data technology (IT) among the provision chain.

Tactical: learning competitors and creating selections concerning production and

delivery.

Operational: Operational class includes the daily management of the provision chain,
as well as the creating of production schedules.
THE FOUR PHASES OF SUPPLY MANAGEMENT

The four phases of provide management all require several views & inputs best
obtained through a cross-functional approach. These four phases of provide
management are as follows:

• Generation of Requirements: The generation of requirements could be a vital activity

that leads to the identification of the best materials & services to purchase, in
conjunction with the event of specifications & statements of labor describing these
requirements. Some eighty five p.c of the price of purchased material, services &
instrumentation is “designed in” throughout this section. So provide management ought
to be concerned up-front throughout the generation of needs to make sure that each
one commercial problems like value, convenience, substitutes & therefore on, receive
applicable consideration.

• Sourcing: the target of sourcing is that the identification & choice of the provider
whose prices, qualities, technologies, timeliness, dependableness & service best meet
the firm’s wants. the event of provide alliances could be a sourcing activity.

• Pricing: the target of valuation is that the development of prices that fitly reward the
provider for its efforts & that end in the bottom total prices of ownership for the client
firm. Whereas negotiations occur throughout the provision management method, their
most important role usually is throughout the pricing section.

• Post-Award Activities: This vital activity ensures that the firm receives what was
ordered on time & at the price & quality specific. Post-award activities include provider
development, technical help, troubleshooting & the management of the contract & the
ensuing relationships.
HOW DOES SUPPLY CHAIN WORK?

Clothing retailers place orders with huge makers United Nations agency then
subcontract to smaller factories, which in turn typically source to homeworkers. This is
often the essential provide chain within the rag trade. Their square measure several
alternative players United Nations agency square measure a part of the availability
chain. So as for employees to organize effectively, it should be necessary to grasp the
United Nations agency all the players' square measures.

Retailers – Area unit the businesses that sell to the general public or ‘consumers’.
Retailers might own their own chain of stores, generally in several countries. Or they will
sell their product in alternative outlets, by mail order, or of late through the net. Retailers
don't build the goods; they simply sell them. Some have brand-names or ‘labels’ that
area unit known worldwide, that facilitate to sell their garments. Others area unit
abundant less famous.

Manufacturers – Organize the creating of the garments. However initial they need to
win the order from the distributer. The regional workplace of the distributer asks variety
of makers to contend to win the orders. They talk terms on worth, materials and
delivery. The distributer selects the manufacturer that offers the simplest deal.

Smaller factories – Typically a giant manufacturer subcontracts production to smaller

factories. It may do that once it cannot handle the quantity, meet the point in time, or do
the work for the united price. Quality standards and dealing conditions area unit worse
in smaller factories. They keep their prices down by hiring and firing staff in step with
demand, forcing them to try to overtime, and so on.

Homeworkers: Smaller factories typically conjointly subcontract a part of the work like
stitching or finishing to individual agents. They will be former workers, or still operating
within the factory, for instance as line-leaders. The agent takes the total to the area
people. This could be to a mill, maybe that they run, or to homeworkers, largely ladies
operating in their own homes.
THE GLOBAL GARMENT INDUSTRY

Many countries are concerned in manufacturing clothes for the large retailers.
The US sportswear company Nike sources from concerning seventy five countries
round the world. The number of corporations concerned is additionally large. Take, as
an example, the US-based chain of stores referred to as Walmart. It sources its wear,
textiles and footwear things from 60,000 suppliers round the world. Those are the
principal suppliers and that they, on average, have five or half dozen subcontractors
every. Thus this one international distributor is sourcing from concerning 400,000 or
even maybe half a million suppliers. What is more, Walmart changes its suppliers from
season to season.

WHY AND HOW THE GARMENT INDUSTRY WENT GLOBAL

Most companies at the top of the supply chains have their head offices in the US
and Europe. It is from here that they manage their global operations. They use
computer technology to send and receive designs, orders and sales figures around the
world, 24 hours a day. They can shift production from one location to another while
keeping overall control.

EASY TO MOVE FACTORIES

To maximize their profits, companies want to keep down costs. Garment

production is ‘labor intensive’ - it uses many workers. So, companies want to control
their labor costs (including wages and social security costs). Other costs they want to
control include transport costs for cloth and components coming in, and for the finished
goods to go to their markets.

The garment industry can be easily moved about. It relies on skills that are
available around the world, especially women’s sewing skills. Also the machinery is
relatively light and easy to move.

At first, Northern manufacturers moved and set up their own factories in the
South, particularly in Asia and Central America where wages are lower. They rented
land and buildings, installed equipment, and employed workers directly. But this meant
they had to take responsibility for employing those workers, and they risked opposition
from trade unions. So, from the 1980s they found another strategy. Increasingly they
contracted other companies to take on those burdens and make their goods. They
‘outsourced’ or ‘subcontracted’.

Today, famous sportswear and clothing companies such as Nike, Adidas, and
Gap just promote and sell a ‘name’, a brand label. They get their profit from design and
marketing, and they reduce their costs and risk by getting subcontractors to do the
manufacturing. The big retailers such as Marks & Spencer and Walmart, who used to
buy goods from importers, now send their own buyers overseas to place orders directly
with subcontractors.

During the first phase of relocation in the 1960s and 1970s, European and US
companies went to countries such as Hong Kong, Singapore, South Korea and Mexico
where labor costs were lower than in the North. Later, they went to even lower wage
economies such as the Philippines, Indonesia and Thailand, and then Bangladesh and
Central America. More recently they have moved to Vietnam, Laos and, above all,
China which today produces almost 13% of the world supply of clothing.

Within countries too, labor costs are kept down by moving from one area to
another. In many countries, governments have assisted foreign investors by setting up
special export-processing zones, also known as Free Trade Zones (FTZs). These
zones are governed by special laws which prevent workers from organizing.

Or manufacturers deliberately employ people whose rights under labor law are
very weak. These include homeworkers and undocumented migrant workers, both of
whom may have no rights under labor law. And sometimes workers from low wage
economies are taken to other countries, for example Chinese workers to Mauritius.