Apparel supply chain: from the supply chain to see the apparel inventory problems

The past two years, the global economic downturn, garment exports decline, the domestic consumer market cold, resulting in sluggish sales terminals, clothing inventory backlog continued to rise. In this context, garment enterprises have to find a way - discounts, increased e-commerce channels running, switch to second and third tier cities and other commercial means of tricks.


Said a variety of means are all in stock occurs after the "inventory digestion", "deal with inventory," to fundamentally solve the inventory problem garment industry, but also the root causes of produce from inventory - supply chain proceed, the maximum "Prevention" stock production.


A. "Customer Order Decoupling Point" and garment production organization


1.1 Understanding "Customer Order Decoupling Point"


An important objective of supply chain management is to meet customer requirements while maintaining reasonable inventory levels, in other words, between "stock levels" and "customer service" to make trade-offs.


How to balance inventory levels and service level, there is an important concept of "customer order decoupling point" in the supply chain management (Customer Order De-coupling Point, referred CODP, Figure 1), which refers to how to determine the inventory position to make running certain operations or entity in the supply chain can be open to independent. For example, a clothing store in the retailer, the customer himself scored from the shelf, bought payment, and agents, see the brands under a single process. Here, the retailer's inventory is the buffer between the customer and the manufacturer, the stock point is the customer order decoupling point. The closer the customer point of separation, the more and faster customer service. The position of a point to relate to weigh on customer responsiveness and greater investment between the inventory.


Understand the business strategy and market environment of the "customer order decoupling point," the choice is very important. With finished goods inventory to customer service-oriented enterprise called stock production (Make-To-Stock) Enterprise; according to the specific requirements of customers pre-assembled modules of enterprise called for ATO (Assemble-to-Order) enterprises; for customers from raw materials to production parts and then to member companies called MTO (Make-to-Order) enterprises; to-order design (Engineer-to-Order) is a customer-oriented enterprises with the corporate design together, and then from raw materials to the production of components parts and then.

1.2 garment production organization


Clothing custom of similar orders for assembly, MTO, to-order design patterns, there are many domestic garment enterprises are already doing this attempt, the moment with good results. This attempt to conform to the trend apparel industry shift from manufacturing to services, to adapt it to the requirements of individual garment. Clothing customization mode, the position of "customer order decoupling point" closer to manufacturing, is an innovative business model and garment industry, garment industry belongs to the category of strategic decisions, have an important influence on stock investment.

We are talking about apparel inventory, concentrated in-stock production-oriented enterprises, a large number of garment enterprises belong to this mass production mode. In mass production mode, only the sales activity is driven by the customer orders, the enterprise through the "customer order decoupling point" after (CODP) position shift and reduce finished goods inventory of existing products.


II. Consideration apparel inventory problem from the perspective of supply chain management


Innovation is the continuing operations of the garment industry innovations include continuously improve product design capabilities, using advanced management methods to reduce costs, warehousing, transportation and logistics outsourcing to a third party, optimize marketing strategies, and so on. But these innovative approaches seem to be confined to a single point of supply chain optimization to improve, more focus on cost management, the main focus in how to effectively reduce costs, and no from the global supply chain for corporate strategy, analysis and optimization of product operations for all-round , thereby improving the overall efficiency of enterprises.


The following from the overall supply chain management point of view, from sales forecasting, information systems, logistics and distribution, flexible production four talk garment stock.


2.1 Sales Forecast and "bullwhip effect"


For a long time, China's garment industry has been intentionally or unintentionally embarked order to win the road to excess production to meet the needs of the downstream part of the supply chain.


On the distribution model "Manufacturer - Brands - agents - Retailers" model in the garment industry the most common sales channels, sales forecasting information in this mode is by a year (spring and summer, autumn and winter) in two orders all aspects of the flow of sales channels. Agents by local retailers estimate orders to orders for brands, brands with agents on the basis of the order quantity for the next single to the manufacturer.



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Prediction information generated along the channel doped game all stakeholders, not necessarily a true reflection of the consumer's purchasing logic, there is not a small difference with the actual needs of consumers. Agents often a tendency to order more goods to prepare stock; brands to meet the needs of agents and store more goods to prepare for replenishment; manufacturers to respond to the needs of brands and a lot of risk production processes, and then expand production the amount. Along the supply chain from retailers to manufacturers progressively larger production, eventually leading to pressure on stocks in all sectors.


Supply chain management to a phenomenon called the "bullwhip effect", "bullwhip effect" is similar to the Volkswagen brand apparel inventory for manufacturing enterprises such natural defects such stock structure is not only finished products, raw materials and semi-finished products and contain. Rapid growth phase in the market, this effect is overwhelmed by market growth, and once the market has undergone a little trouble, inventory supply chain links on the immediately apparent.


The brand's marketing department in advance if you can research and then reference designers keen antennae to grasp the market demand, and guide buyers to buy, so to maximize the preventive information from market sources distortion.
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2.2 Terminal Information "accurate", "timely" is transmitted to the brands


"Bullwhip effect" is due to a large extent, the garment industry from end customers to the brand through retailers, manufacturers transfer process, can not achieve accurate, timely sharing of information so demand forecasting progressively enlarged and distorted form.


Network technology enables real-time information sharing becomes, reliable, and inexpensive. Through sale systems (POS), radio frequency identification tags, bar code scanner and automatic identification applications, information can be obtained directly from the source. Management Information System Model based Internet technology sub operating system, software and operating system in three parts.

Many foreign brands have been using the Internet-based management information system. In ZARA example: throughout the ZARA each store sales information summary sent to the headquarters every day, at the same time based on the current store inventory and sales twice a week when the weekly issue replenishment orders to headquarters. Headquarters based on the store's sales and replenishment order information, you can analyze and judge whether selling a variety of products. once the analysis showed sluggish sales, the first time to cancel the production plan; if the product sells well, then arrange redundant capacity reservation can quickly produce additional, rapid replenishment, to maximize sales to seize the opportunity. So fast real-time response, there is no efficient and reliable information system is unthinkable.


From the domestic apparel industry business model point of view, brands are not responsible for the basic production process and sales terminals, for information on the industry chain partners control more difficult, but the application of information technology, the establishment of effective communication of information sharing is the trend.



Fortunately, information technology has gradually expanded in the domestic garment enterprises, such as EPR systems, the retailer managed inventory (RMI) and vendor-managed inventory (VMI) systems have been applied to a large extent can help integrate enterprise information systems , to achieve the effective management of the entire supply chain, so that the operators can pay more attention to the connotation of information and the use of information to make better decisions.


2.3 Distribution System


Customer Order Decoupling point after the shift in favor of the customer's understanding of the true information, such as agents or brands hold stock, but this mode of distribution system put forward higher requirements. Clothing enterprise inventory management model that is most in use RMI retailer managed inventory model, but VMI VMI model, which is an advanced supply chain management approach, which derived from the "zero inventory Full Return" is a more Advantages of marketing policy, simply put, means retailers can inventory, and 100% can be returned, distributors through the establishment of VMI logistics system to achieve inventory optimization and redistribution of resources through the integration of upstream production, leveraging the distribution center, Support terminal information management and logistics system to achieve lower sales terminals "zero inventory" situation "to sell a fill one."

Of course, VMI logistics and distribution model has not only a central distribution model, its commercial value is that this model has attracted a large-scale retailers to shop, closed shop rate also dropped significantly, it is a good brand expansion mode.



ZARA is the way of logistics distribution center to meet scattered around the retailer. Except in the first floor area of ??headquarters Deportivo over 50,000 square meters of distribution centers, in October 2001, ZARA has spent one hundred million euros in the Spanish capital of Madrid northeastern city of Zaragoza set up a Logistics Center. Not only that, ZARA also established the two air bases, one in La Coruna, another Santiago in Chile. ZARA marketing expenses almost all investment expanded and improved logistics system to expand the distribution range, improve delivery speed, rapid delivery of the stores need.


Support these distribution centers, ZARA can ensure that all European stores receive the goods within one day, two days to reach the United States, a little further in China, Japan controlled delivery within three days.


Manufacturer finished apparel products, shipped to the distribution center via underground conveyor network. To ensure that every order on time, accurately reach their destinations, ZARA can choose to take more than 80,000 hourly and sorting clothes and the error rate is less than 0.5% of the laser barcode reading tool for sorting of finished garments. According to orders placed by each store distribution, usually after orders received within eight hours of goods can be transported away to the store picking twice a week. In Europe, the store shipped directly from the logistics center by truck; the two air bases after the delivery of the goods reach the United States and Asia, then shipped to the store third-party logistics; if necessary, will use boats to transport, combined with third-party logistics service stores.


2.4 Adaptation of small quantities of many varieties of lean production model


ZARA Kester, CEO of Serrano once said, "In the fashion industry, inventory is like food, will soon degenerate. Everything we do is to reduce the response time."


Adapt lean production model of small quantities of many varieties of the market environment, by pulling kanban achieve JIT, so that products from the purchase of raw materials to finished products significantly reduced the time; the use of U-shaped production line, Cell production patterns to ensure flexible manufacturing systems, to achieve different products collinear production, balanced flow to make the production system in the product is reduced to a minimum. Lean Production from Japan namely Toyota Production System TPS, Kiichiro Toyoda, the founder of a TPS, the beginning of the original intention is to establish a mode of production to achieve efficiency in mass production methods to meet the small quantities of many varieties of market requirements, the How similar mind and today's market environment facing the garment industry.


Unfortunately, the author's observation, most of the domestic garment enterprises is not well focused on building its own lean production system, relying solely on outsourcing of production to solve manufacturing problems, gave up the chance to tap the manufacturing gold mine.


Manufacturing systems between different manufacturing processes study how to organize, how to set up the production capacity of each processing step operating time per unit of product, how to process quality control, as well as how to plan for coordination and other issues. Successful manufacturing system so that all the process steps are coordinated with each other, but also to maintain a low cost and a minimum of waste.

III. Collaborative supply chain mode of operation


3.1 helpless "game"


Garment industry supply chain participants, in the "Manufacturer - Brands - - Agent Retailers' distribution model, futures system that is commonly used brands to sell to distributors or retailers, successfully passed inventory risk, brands no with retailers or form risk-sharing mechanisms closely aligned. Brands in order to increase market share, often require agents (retailers) excess inventory, causing retailers stock overburdened. In order to keep the brands know the real sales and inventory, retailers selecively system data errors, the system data in their favor; brands can not determine the authenticity of the data, in order to complete its sales growth target, take rebates and other inducements to purchase policies to. Brand, agents, retailers, this game, in the same premise of total market demand, fueled by the increase in all aspects of the stock, so that the participants their business situation to deteriorate further.


Break this game, you need to establish brands as the core of supply chain collaborative mode of operation, all the participants tied boat.


3.2 with brands as the core of supply chain collaborative mode of operation


"Game" causing the entire garment industry lose all parties, we can do is how to improve the existing business model, a more effective way to reduce the fine management of inventory, keeping manufacturers, brand owners, distributors and retailers inventory balance, the allocation mechanism established within quick and easy regional and even inter-regional, and ultimately the manufacturers, brand owners, distributors and retailers at a low stock situation reach increased performance. Next to brands as the core of supply chain collaborative mode of operation, the brand launch through product design system organizations; manufacturers through lean manufacturing systems, concurrent engineering, reducing production volume, low-cost flexible manufacturing, procurement and production to reduce the total cross Delivery; brands (or agents) through efficient logistics and distribution tacit accelerate the process of access to distribution channels; brands timely and accurate sales information feedback to adjust quickly through retailers to drive fast throughout the supply chain collaborative operation, thus relieved the "bullwhip effect" on the entire supply chain, alleviate high inventory problem facing the garment industry.

In order to brands as the core of supply chain collaborative mode of operation, all participants around the brand's target customers in the supply chain, running at full collaborative supply chain planning system. Sales and feedback module is divided into pre-market sales forecasts, plan orders, promotional programs; organizational design into product design program, product promotion plan, collaborative supply chain planning; purchasing procurement of materials into the production plan, production plan outsourcing, production plans; logistics and distribution into inventory planning, distribution planning, replenishment meter.


The main goal of collaborative supply chain mode of operation to the core brands is around the consumer, through the seamless flow of information feedback mechanism, shorten lead times, eliminate all waste including time, including through the supply chain, reduce or Cancel those who can not bring value-added component, coordinated operation to meet market requirements for small quantities of many varieties.


In co-operation of all aspects of the supply chain, both from a theoretical or practical point of view, there is nothing special, the key lies in effective implementation, in order to integrate the entire apparel supply chain, shorten the design, production to the distance between the retail end, for the brand's business strategy services to enhance the brand value and competitiveness.


Conclusion


Apparel inventory problem is not just confined to the stock itself, it is largely caused by poor supply chain operations. Any business in the current market slowdown in the real environment, relying on it alone, immune to address efficiency issues at this stage is unlikely. Possible way out is to explore changing the traditional division of labor organization ,, garment business process relationship, the use of supply chain management techniques, the full release of the stock of resource efficiency and improve resource allocation efficiency, efforts to develop, explore adapt apparel market more variety, small batch, short delivery requirements of the new format.


At the forefront of brands should explore the use of operations and supply chain management approach to as closely as possible and expeditious manner so that the supply chain balance, to solve the industry's high inventory problems for enterprises to open up more space for development.