Apparel Supply Chain: The Inventory Problem Of Apparel Industry From The Supply Chain Perspective

In the past two years, the global economy has been sluggish, and terminal sales have been sluggish.

trade

Backlogs continue to rise.

In this context, garment enterprises are looking for a way out - discount sales promotion and increase.

There are many kinds of commercial means such as channel delivery and pfer to two or three tier cities.

All kinds of means are to "eliminate inventory" and "deal with inventory" after the inventory takes place. In order to solve the inventory problem of clothing industry fundamentally, we must start with the source of inventory supply chain, and maximize the prevention of inventory.

1 "customer order separation point"

Organization of production in garment industry

1.1 understand "customer order separation point"

An important goal of supply chain management is to maintain a reasonable inventory level while meeting customer requirements. In other words, it is a trade-off between "inventory level" and "customer service level".

How to balance the level of inventory and service level is an important concept in supply chain management. CustomerOrderDe-couplingPoint (CODP), as shown in Figure 1, refers to how to determine the location of inventory so as to enable some operations or entities to run independently in the supply chain.

For example, a piece of clothing is stored at the retailer's place, the customer takes it from the shelf, pays for it, and the agent and the brand can not see the order.

Here, the retailer's inventory is the buffer between the customer and the manufacturer. The inventory point is the customer order separation point.

The closer the separation point is, the quicker the customer will be served.

The location of this point concerns the trade-off between fast response and greater inventory input.

Figure 1: customer order separation point

Understanding the enterprise strategy and market environment is very important for the selection of "customer order separation point".

The enterprises that use finished goods inventory to serve customers are called Make-To-Stock oriented enterprises. The enterprises that assemble pre assembled modules according to the specific requirements of customers are called Assemble-to-Order, and enterprises that call customers from raw materials to parts and then parts are called order oriented (Make-to-Order) enterprises. Engineer-to-Order is designed by customers and enterprises, and then from raw materials to parts and then to components.

1.2 production organization of garment industry

The customization of clothing is similar to the pattern of order - oriented assembly, order - oriented production and order - oriented design. Many domestic garment enterprises have been trying this way. At present, the effect is also good.

This attempt complied with the trend that garment industry changed from manufacturing to service, and adapted to the requirements of clothing individuation.

In the fashion customization mode, the location of "customer order separation point" is closer to manufacturing, which is an innovation of the business mode of garment industry. It belongs to the category of strategic decision of garment industry, and has an important impact on stock investment (Fig. two).

Figure two: customer order separation point in clothing industry

The clothing industry inventory we are talking about is concentrated on stock based production enterprises, and a large number of garment enterprises belong to this mass production mode.

In mass production mode, only sales activities are driven by customer orders, and enterprises can reduce the finished product inventory of existing products by shifting the location of customer order separation point (CODP).

2, from the perspective of supply chain management.

Thinking about inventory problem in garment industry

Innovation is the foundation of enterprise continuous operation. The innovation of garment industry includes constantly improving the design ability of products, adopting advanced management methods to reduce costs, outsourcing warehousing and pportation to the third party logistics, and optimizing marketing strategies.

However, these innovative methods seem to be limited to optimizing and improving the single point of supply chain, paying more attention to cost management, mainly focusing on how to effectively reduce costs, and do not carry out omni-directional analysis and optimization from the overall situation of supply chain to enterprise strategy and product operation, so as to improve the overall efficiency of enterprises.

From the whole of supply chain management, we will talk about the inventory of clothing industry from four aspects: sales forecast, information system, logistics distribution and flexible production.

2.1 sales forecast and "bullwhip effect"

For a long time, China's clothing industry has consciously or unconsciously embarked on the road to win by quantity, with the excess output to meet the needs of the downstream links of the supply chain.

In the distribution mode, the "producer brand business agent retailer" mode is the most popular selling channel in the clothing industry. The sales forecast information under this mode is that the two orders will flow through all aspects of the sales channel through a year (spring, summer, autumn and winter).

The dealer estimates the order quantity from the local retailer's order quantity, and the brand manufacturer orders the manufacturer according to the order quantity of the agent.

The prediction information generated along the above channels has mixed the game of stakeholders, which does not necessarily reflect the purchase logic of consumers, and is not different from the actual demand of consumers.

Agents tend to place more orders for goods to be discontinued. Brand dealers store more commodities for replenishment in order to meet the needs of agents, and manufacturers in order to cope with the needs of brands and the risks of production links, they expand their output.

From the beginning of the retailer, the supply chain to the manufacturer gradually increases the output, and ultimately causes inventory pressure in all links.

Supply chain management calls this phenomenon "bullwhip effect" and "bullwhip effect" is a natural defect similar to the popular clothing brand oriented stock production enterprises, making inventory structure not only finished products, but also contains raw materials and semi-finished products.

In the period of rapid growth of the market, this effect is overwhelmed by market growth, and once the market is in a bit of trouble, inventory in the supply chain will appear immediately.

If the brand marketing department can investigate ahead of time and refer to the designer's sensitive antennae to grasp the market demand and guide the buyer's purchase, the information distortion can be prevented to the maximum from the market source.

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2.2 terminal information "accurate" "timely" passed to the brand.

The bullwhip effect of clothing industry is largely due to the fact that information is pferred from the end customers through retailers to brand manufacturers and producers, so that the accurate and timely sharing can not be achieved and the information of demand forecast is distorted and enlarged step by step.

Network technology enables information sharing to be real-time, reliable and inexpensive.

Through sales terminal system (POS), RFID tags, bar code scanners and automatic identification applications, information can be obtained directly from the source.

The management information system model based on Internet technology is divided into three parts: operation system, software system and operation system (Fig. three).

Figure three: Internet based management information system model

Many foreign brands have used the Internet based management information system.

Take ZARA as an example: ZARA stores across the country gather sales information to headquarters every day, and issue replenishment orders to headquarters at two times a week according to current store inventory and weekly sales status.

Based on the sales volume and replenishment order information of the stores, the headquarters can analyze and judge whether the products are selling well.

Once the analysis shows that the product is unsalable, the original production plan should be cancelled at the first time. If the product is salable, the reserved redundant capacity will be arranged to rapidly increase production and replenish the goods quickly, so as to maximize the sales opportunity.

Such a fast and real-time response is unimaginable without efficient and reliable information systems.

From the perspective of operation mode, the domestic garment industry is not responsible for the production process and sales terminals, and it is more difficult for the partners to control the information in the industry chain. However, the application of information technology to establish effective information communication and sharing is the general trend.

Gratifying is that information technology has been gradually launched in domestic garment enterprises, such as EPR system, RMI and VMI, have been applied to a large extent, can help enterprise information system integration, to achieve effective management of the entire supply chain, so that operators can pay more attention to the connotation of information and make better decisions with information.

2.3 logistics distribution system

The shift of customer order separation point helps to understand the real information of customers, such as agents or brand owners holding stock, but this mode puts forward higher requirements for logistics distribution system.

The inventory management of clothing enterprises mostly follows the RMI mode, that is, the retailer management inventory mode, but the VMI seller management inventory mode, which is an advanced supply chain management mode. The resulting "zero inventory total return" is a more advantageous marketing policy. In short, it means retailers can have zero inventory, and 100% can return the goods. Distributors can achieve the optimization and redistribution of inventory through the establishment of VMI logistics distribution system. By integrating upstream production resources, relying on the support of distribution centers, terminal information management and warehousing logistics systems, the sale terminal can achieve "zero sales" in the case of "zero sales", as shown in Figure four.

Figure four: VMI logistics distribution system

Of course, VMI logistics distribution mode is not only a central distribution mode, but its commercial value is that this mode attracts retailers to open stores in a large scale, and the closing rate is also greatly reduced, which is a good brand development mode.

ZARA is a logistics distribution center to meet the retailers scattered everywhere.

In addition to the first distribution center with a building area of over 50 thousand square meters in La Coruna, in October 2001, ZARA spent one hundred million euros on a logistics center in Saragossa, Spain's northeastern Madrid.

Not only that, ZARA also built two air pport bases, one in La Coruna and the other in Santiago, Chile.

Almost all the marketing expenses of ZARA are devoted to the expansion and improvement of the logistics system, so as to expand the range of distribution, increase the speed of distribution, and quickly deliver products to all stores.

With the support of these distribution centers, ZARA can ensure that all European chain stores receive goods within one day, and the US can arrive in two days, and a further distance from China and Japan can be delivered within three days.

The finished garments finished by the manufacturer are pported to the distribution center through the underground conveyor network.

To ensure that every order can arrive at the destination on time and accurately, ZARA selects and sorted more than 80000 clothes per hour, and the laser barcode reading tool with the error rate of less than 0.5% selected the finished products.

According to the orders issued by the stores, the goods can be shipped within 8 hours after the order is received, and two times a week.

The stores in Europe are directly pported by trucks by logistics centers. After the goods pported by two air bases arrive in the United States and Asia, they are pported to stores through third party logistics. If necessary, they will also be pported by ships and then delivered to stores under the third party logistics.

2.4 adapt to small batch and multi variety lean production mode.

Kay Strano, chief executive of ZARA, once said, "in the fashion world, inventory is like food, and it will soon deteriorate.

What we do is reduce reaction time.

To adapt to the lean production mode of small batch and multi variety market environment, the JIT can be realized by Kanban pulling, so that the time for products to be purchased from the raw materials to the finished products will be greatly reduced. Using the U production line and the Cell production mode to ensure the flexibility of the manufacturing system, we can realize the co production of different products and balance the flow so as to minimize the WIP of the production system.

Lean production comes from the TPS system in Japan, namely the TOYOTA production system. Toyoda Kiichiro, as the founder of TPS, initially set up a production mode to achieve the efficiency of mass production mode in meeting the market demands of small quantities and varieties. The original intention is similar to the market environment facing the clothing industry today.

Unfortunately, according to the author's observation, most of the garment enterprises in China have not made great efforts to build their own lean production system. They only rely on production outsourcing to solve manufacturing problems, and have abandoned the opportunity to excavate gold in the manufacturing industry.

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The manufacturing system studies how to organize between different manufacturing processes, how to set the production capacity, how to monitor the operation time of each unit, how to monitor the quality of production, and how to coordinate the plan.

A successful manufacturing system enables all the steps of the process to be coordinated, and it can maintain low cost and minimize waste.

The lean manufacturing system is shown in Figure five.

Figure five: lean manufacturing system model

Three. Collaborative supply chain operation mode.

3.1 helpless "game"

In the distribution mode of apparel supply chain participants, under the distributor mode of "producer brand agent retailer", the futures system is generally used, that is, the brand dealer sells goods to the agent or retailer, and successfully pfers the inventory risk. The brand does not form a risk sharing mechanism or a common advance and retreat mechanism with the retailer.

In order to improve the market share, brand agents often ask agents (retailers) to overstock, causing retailers to be overloaded.

In order not to let the brand know the true sales and inventory, the retailer selectively makes the system data error, so that the system data is good for itself. The brand can not judge the authenticity of the data, in order to achieve the established sales growth target, take the policy of purchase and rebate to attract.

The game of brand, agent and retailer, under the premise of constant market demand, contributes to the increase of inventory in each link, and further worsens the management situation of participants.

To break this game, it is necessary to establish a supply chain collaborative operation mode with brand players as the core, and tie all participants to a single ship.

3.2 supply chain collaborative operation mode with brand as its core.

The "game" causes the whole garment industry to lose. What we can do is how to improve the original business mode, reduce inventory effectively and manage the inventory balance among producers, brands, agents and retailers with more effective and meticulous management mode, and establish a fast and convenient allocation mechanism in the region or even across regions. Finally, producers, brands, agents and retailers will achieve an increase in performance under low inventory conditions.

In the supply chain collaborative operation mode with brand players as the core, the brand manufacturers introduce products through the product organization design system. Through the lean manufacturing system and concurrent engineering technology, the manufacturers reduce production volume and make low-cost flexible manufacturing, reduce the total delivery time of procurement and production. Brand agents (or agents) speed up the process of product entering the sales channel through efficient and tacit logistics and distribution; brand dealers quickly feedback and adjust through retailers' timely and accurate sales information, so as to drive the whole supply chain to operate in a fast and coordinated way, thus eliminating the bullwhip effect in the entire supply chain and alleviating the high inventory problem faced by the apparel industry.

Figure six: the collaborative operation mode of supply chain with brand players as the core.

In the supply chain collaborative operation mode with brand players as the core, all participants in the supply chain operate around the brand's target customers in the whole supply chain planning system.

Sales and feedback modules can be divided into pre sale forecast, order plan and promotion plan; product organization design is divided into design plan, product promotion plan and collaborative supply chain plan; procurement production is divided into surface accessories procurement plan, outsourcing production plan, self production plan, and material flow distribution is divided into inventory planning, distribution plan, replenishment meter and so on (as shown in Figure six).

The main goal of the collaborative operation mode of the supply chain centered on brand players is to shorten the lead time around consumers through smooth information feedback mechanism, eliminate all kinds of waste including time in the supply chain, reduce or cancel those links that can not bring value added, and cooperate to meet the market demands of small batch and multi varieties.

In terms of theory and practice, there are no special points in the various aspects of collaborative operation of supply chain. The key lies in effective implementation, so as to integrate the entire apparel supply chain, shorten the distance from design, production to retail terminals, and serve the brand's enterprise strategy, thereby enhancing brand value and competitiveness.