SUBJECT: FASHION RETAIL & VISUAL MERCHANDISING

UNIT – 3 – b Module - THE SUPPLY CHAIN MANAGEMENT

The Supply Chain Management Concept, Purchasing and Supply Management. Operations,
Integrated Logistics Management, Quality Customer Service and Integrated Logistics, Service
Response Logistics.
The Supply Chain Management Concept:
Supply chain management is the handling of the entire production flow of goods or services—
starting from the raw components to delivering the final product to consumers.
The steps in the fashion supply chain typically involve designing the apparel, evaluating and
selecting raw material suppliers, sourcing those materials, manufacturing the apparel,
transporting it to wholesalers, distributing it to retailers, and finally selling it to customers.
Supply chain management (SCM) is management of the flow of goods, data, and finances
related to a product or service, from the procurement of raw materials to the delivery of the
product at its final destination.

The analysis of the existing literature and the existing models for sustainability assessments, a
set of five key processes was identified for the fashion supply chain, namely: (1) supply, (2)
warehouse, (3) production, (4) distribution and (5) reverse logistics.
The five processes that make up supply chain management are demand planning, sourcing raw
materials, manufacturing products, delivering goods and accepting customer returns.
Introduction:
Nowadays, for the key success of textile and apparel industry, supply chain management is
very essential and important. That’s why the deep attention of top management is to develop
and manage an effective supply chain management system. The process of managing resources,
the movement of resources from one party to another, one place to another place, one
department to another department, and one section to another section is called as supply chain
management. Here, management of resources should be in a way so that the availability of the
correct resources in the right place, at the right time, with sufficient quantity, where the process
cost is least. The important aspect over here, is supplying the required resources at a minimum
cost. Manage the flow of goods and services through the supply chain network and it is mainly
related to logistic. To avoid this problem, logistic planning is one of the key focuses. In a supply
chain management, the management of resources should be done in every stage of
manufacturing.
Principles of Supply Chain Management:

1) Enough Supply Chain to Consumer’s Needs:

Initially, both business people and supply chain experts are trained to give attention towards
customer’s needs and preferences. In order to understand customer better and in detail,
segregate customers into different groups that is called “segmentation”. The primary way to
segment customer is ABC analysis that segregate customer based on sales volume or
profitability. Groupism can also be done by product, industry and trade channel.

2) Personalize Logistics Network:

Whenever the situation comes like, one segment customer based on service needs, one may
have to cater different logistics networks to serve different segment. However, this principle
doesn’t hold true for all time.

3) Manage Demand Planning for all Supply Chain:

Supply chain specialists are taught to release demand data with trading partners so nobody
has to hold unnecessary stock. In many situations, this principle holds true. But in reality, the
only company which is actively sharing demand data to trading partners is Walmart.

4) Segregate the Products Close to Customer:

This principle is being followed Dell, keeping components, parts with them and assemble
them only after customer demands the order in order to increase product variety. This
principle is still true, but, there is another principle that one can consider. “Standardization” is
in the opposite side of “Segregation”. For example, some cosmetics manufacturers formulate
products and choose packaging and labelling that deals with regulations of multiple countries
in Asia.
5) Deploy Strategically:
This principle basically, stands the test of time. In short, don’t ever outsource the inner
competency. To know more about this, one can find it from the infographic named “7 Pitfalls
of Outsourcing and How to Avoid Them”.

6) Integrate with IT System that Support Multi-Layered Decision Making:

If one search on Google for the term “critical success factor ERP”, one find lots of
information about how to implement Enterprise Resource Planning (ERP) successfully.

7) Inculcate both Service and Financial Metrics:

Anderson et al told that activity based costing (ABC) be implemented to determine
customer’s profitability. However, there is the interesting twist about ABC concept.

Components of Supply Chain Management:

1. Planning:
It is fact that, nothing can happen without proper planning. Planning is the primary
requirement of all companies and they must plan at multiple stages. Firstly a company must
decide about what to manufacture and sell. It is necessary to plan sources for various aspects
such as raw materials, machinery, space, and technology. They must study the market for
such items and whether it will earn them enough profits to justify forming a company.

2. Information:
This is another major component of supply chains. Without a smooth flow of information,
this can’t work appropriately. Information about market demand and trends must convey to
the operations team so that they can plan and arrange for raw materials. Data about raw
material availability must flow to those in the purchasing department. It will definitely help
them to ensure an adequate supply to complete production as per requirement.

3. Purchase:
This is considered as one of the primary purpose of supply chain management that will help
to save majorly on costs and ensure that production continues without any problem. It is truth
that companies can make finished goods only with raw materials. While purchasing they
must be carefull to ensure the manufacture of good quality products. It is the responsibility of
supply chain managers to check raw materials from various sources and ensure they are of
the desired quality.

4. Inventory:
Correct inventory management is another aim of supply chain management. If it is done
correctly then, it will save a lot of money. Excess inventory will only add to dead investment
but also take up valuable space in warehouses. Even, shortage of stocks can result in a break
in production and unfulfilled orders. This will end with losing customers. Inventory mangers
must keep themselves constantly aware about what materials are available in their stores.

5. Production:
Production basically, falls under a various set of people who verify that they produce goods
as per standards and quality goals. They also make sure that all necessary and important
machines are kept ready to manufacture products without any breakdowns. Supply chain
managers must keep in constant contact with the production team to ensure that things are
moving as scheduled. They must also say those in charge of making goods about arrival and
stocks of raw materials.
Importance of Supply Chain Management in Textile Industry:
The apparel industry is very vast and dynamic industry producing millions of garments per
day. Here, one of the greatest challenges found and faced by this industry is increased cost of
garments making and the price of both local and imported raw materials also increasing.
Manufacturers manufacture garments both for the local and export markets but industrial-
oriented production is majorly for export. It is known that, the export market is highly
competitive because China, Bangladesh, Vietnam, India all are competing for offering a good
price to the garments buyers to hold the export share high. One can compete and survive in
the market but first of all, it need to minimize the direct and indirect costs engaged with the
production of the garments and the right solution is to use supply chain management by
which appropriate sourcing is possible where cost is minimum. And this is the reason why
supply chain management is very much important for the apparel and textile industry.

Another thing is, many public know about the concept of supply chain management but many
of them are not sure of how to use and how to plan for the proper supply chain management.
Apparel manager should pay attention and carefully develop their supply chain and they will
be successful only if they have accurate planning for the supply chain management. The
future is very much of competitive nature for the garments business. Those who manage and
handle Supply Chain (SC) properly will get a competitive advantage over their competitors.
So, it is the right time to hire some Supply Chain Management (SCM) professionals and
experts to develop supply chain management for the textile and garment factory.

Its key benefits includes:

1. It basically create flexibility in operation

2. The positive effect of the movement of resources
3. Minimization of Total Cost of owing (TCO)
4. Optimum use of available resources
5. Ensure logistics management in terms of both raw materials sourcing and delivery of the
final product.
Conclusion:
Supply chain management (SCM) is nothing but a discipline that manages the flow of
supplies through all of the stages of a production cycle. SCM is applicable to any
organization or industry that executes projects, produces goods or provides services, as those
activities require a supply chain to maintain a steady flow of resources. The main goal of
supply chain management in textile and fashion industry are to reduce cost, improve the
overall organization performance, brand value and customer satisfaction by improving
product or service delivery to the consumer.

Purchasing and Supply Management:

The process of obtaining and managing of materials, components or services needed to operate
a business or other type of firm.
Purchasing can be distinguished into strategic sourcing (supply planning, supplier selection
and contracting) and operative procurement (material ordering, expediting and paying). The
activities of a purchasing department can be organised in a purchasing year cycle, which repeats
on an annual basis.
Objective of purchasing and supply management:

 reduce costs
 ensure a reliable supply chain
 mitigate risks
 contribute to sustainability goals
  build strong relationships with suppliers.
Quality Customer Service and Integrated Logistics:
Delivering good customer services relies on logistics operations, including speed, quality,
cost and fulfilment. And that's where integrated logistics often steps in. It connects all stages
of the supply chain - from production, storage, transport, and delivery – to optimise the flow
of goods.
Customer service starts with order entry of the product from the inventory to the transport of
the final product to the desired destination. Well-organized customer service logistics focuses
on providing technical support as well as required equipment service maintenance.

Service Response Logistics:

Service response logistics is the process of responding to individual service requests. Agents,
retailers, wholesalers, franchises, electronic channels, etc. acts as an intermediary in service
response logistics. Service response logistics is the process of ensuring that customer service
requests are processed quickly and effectively. It involves setting up systems and procedures
to respond to customer needs in a timely manner and to provide reliable solutions that meet or
exceed customer expectations.