Supply Chain Management Is Lagging Behind &Nbsp; Garment Enterprises Are Tired By "Fast".

The fast fashion mode created by ZARA is the most favorite direction for Chinese clothing companies in the past few years. But a number of garment enterprises recently found themselves tired of "fast", because "fast" slowed down.

Recently, Metersbonwe casual wear brand (002269.SZ) being plagued by the stock crisis, according to the three quarterly report of 2011, the company has a total current assets of 6 billion 18 million yuan, of which inventory has reached 2 billion 982 million yuan, accounting for 49.55%, accounting for nearly half of the current assets, which has become the main reason for its continuing operation.

Hai Lan, a clothing enterprise listed on the small and medium-sized board, has also been questioned because of its high inventory. According to its prospectus, the company's inventory reached 3 billion 863 million yuan at the end of 2011, accounting for 56.82% of the total current assets. In 2009 and 2010, the inventory turnover rate was only 0.79 and 0.88 (the industry's good operating stock turnover rate was usually between 2~3).

Electricity supplier clothing enterprises also can not escape this robbery, founded in 2007, fan Ke Cheng pin, in the past 4 years to achieve sales of nearly 4 billion yuan. However, due to the continuous introduction of new products, marketing is not in place, resulting in an increase in inventory. According to the Samsung Research Institute, by the end of September 30, 2011, the total inventory of van guest was as high as 1 billion 445 million yuan, and by the end of 2011 and the end of 2010, the figure was 850 million yuan and 198 million yuan respectively.

The fashion of fast fashion has witnessed a series of "acclimatized" phenomena among Chinese garment enterprises.

Orange growing in Huaibei

Zhang Dazhi, senior consultant of management consulting in China's apparel industry for a long time, is still recommending ZARA's successful mode to the first Financial Daily reporter. ZARA is both a clothing brand and a chain store brand specializing in ZARA brand clothing. It was founded in Spain in 1975. It is ranked third in the world and ranked first in Spain. It has more than 2000 apparel chains in over 56 countries around the world. In the past five or six years, the average growth rate has reached 25%. Even in 2008, when Europe was in recession, its growth in the third quarter was still 18%.

"Many domestic enterprises only stay in one aspect of ZARA learning, such as its buyer model, but have little knowledge of other management modes." Zhang Dazhi told reporters.

Metersbonwe was once regarded as China's closest ZARA company. Unlike most of the factory based clothing brands, Zhou Chengjian, founder of production outsourcing, created a "virtual business" mode to set off the shackles of his own factory. In order to understand the operation mode of ZARA, Zhou Chengjian also gave some orders to ZARA's foundry in China, and went to these factories to understand the whole operation process in detail.

Another ZARA who openly studies the business is VAI, who is close to the business enterprise. A person close to the company told our reporter that everyone has been studying the Buyer Mode of ZARA and other fast fashion brands. The so-called buyer mode is to collect popular information and understand the needs of consumers in the retail market, and follow the fashion with the fastest response. All customers will be on the market. Fashion The elements are collected together with minor changes made by the designer, and then the design template is quickly taken to the factory to process.

Any ZARA imitator will be told that keeping low inventory in fast supply chain is the foundation of fast fashion mode profitability. But because most Chinese enterprises are still in the stage of rapid expansion, for them, more production means expansion.

"Buyer mode allows ZARA imitators to learn widely, but few people learn about supply chain time management and inventory management." Zhang Dazhi said. In the clothing industry, these clothes are devaluated every day in the warehouse. Metersbonwe's net assets are about 3 billion 200 million yuan, while those in the warehouse account for nearly half of its net assets.

Solution

In fact, inventory problem has been a problem for most Chinese clothing enterprises. Analyzing Lining (02331.HK) annual report from 2007 to 2010, it is easy to see that the stock is increasing gradually. In 2010, the inventory increased by more than 62% over 2007. At the same time, according to the relevant data of Hong Kong stocks, as of June 2011, Lining's stock grew unabated, reaching nearly 1 billion.

At the same time, the company's stock balance in the three quarter of 2011, such as Semir, 002563.SZ, 002029.SZ and 601566.SH, increased by 37.36%, 78.43% and 52.69% compared with the beginning of the year.

In Zhang Dazhi's view, there are three main reasons for the high inventory of Chinese clothing brands.

First is the malpractice brought by the distributor's business mode, and the product sales can not be timely feedback to the brand. In China's clothing industry, every 1 goods sold, manufacturers should prepare at least 2.5 goods for inventory turnover, sometimes exceeding this proportion, resulting in a large number of stocks. For example, terminal customers actually need 100 items, retailers think they need 150, distributors will expand to 200, and it will become 250 when it comes to manufacturers. Although the demand for terminal customers has not fluctuated very much, after the enlargement of retailers and wholesalers, the order quantity has increased at the first level, and the larger the supply chain, the greater the order deviation.

Secondly, the ordering mode relies on distributors rather than consumers to provide market information. Every clothing brand has two orders every spring, summer, autumn and winter. The enterprise will guide the merchants to order through the ordering, on-site model presentation and shopping guide commentary, and then arrange the production and sales plan according to the order quantity.

In this mode, the real demand becomes a product that takes longer time. Most manufacturers in China need an average of 90 days from receiving orders to finished products, and some can reach more than 120 days. This resulted in many stores selling last season's fashions.

In addition, ignoring the design itself and ignoring the needs of consumers is also a problem. Many manufacturers believe that "the current international fashion can be sold in second tier and three tier cities after being sold in the first tier cities in China," which can only lead to backlog of products, because they ignore the power and role of the Internet.

Zhang Dazhi believes that there are several ways to solve the problem, such as strengthening management and feedback system, and closer to customers. For example, some fast fashion brands abroad can directly feedback sales volume and production volume by sweeping barcode during sales. Another way is to set up factory shops far away from the core area of the city, and quickly remove the backlog products.

"Small batch, quick turnover, catch up fashion" is the key. And ChinaVenture group analyst Wan Ge believes that clothing enterprises inventory is divided into raw materials, inventory of goods (unlisted new products, off-season inventory) and turnover materials (packaging, etc.) three categories, only based on the simple inventory data in the earnings report, it is difficult to fully explain that the enterprise inventory caused by overstock inventory backlog. If the company's stock is mainly unlisted, it shows that the enterprise is in good condition. Because of the different ways of cooperation between each enterprise and franchisee, the statistics of earnings reports show great differences. Some enterprises will count all the stores in the franchised stores and the direct stores, and some enterprises will only store their stocks in the stores. Therefore, the inventory figures alone are not enough to show that the enterprises are in a business crisis.