Case Study of Supply Chain Management at Luen Thai
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Published: Mon, 5 Dec 2016
1. Develop a framework to understand the collaborative supply chain issues between the three partners.
Comparing with traditional supply chain system, in collaborative supply chain, parties go along with on universally distinct goals, and use their exclusive but corresponding abilities in order to achieve long term competitive advantage. The common objectives are defined with regard to specific tasks and realized it.
raw material sourcing, product design, manufacturing, logistics by a third party, logistics provider and retail, all these operations take place during the collaborative supply chain.
The foremost limitation in the supply chain process is effect that all operations occurred in a sequential manner rather than a synchronic one. For example, the product design was implemented by the design team of Polo, but the prompt and rapid convey of information to other partners, especially when last minute changes in design had to be featured , practically was never attained .
Decision making process was based on old information due to inter not Intra Company keeping information.
Value creation could be obtained by the better inventory management, operation and logistic. Effective supply chain allows to be achieved All these factors. In EDI conditions, operation was fragmented, sectioned and portioned, which was caused by not sophisticated communication tools, such as email and fax. In a whole communication in the company was not systematic and ordered.
Once more to emphasize this issue, prompt information delivery was the most important weak spot in the total system. This problem caused raise of inventory cost, replenishment time, reoccurrence of bullwhip effect, which leads to coordination loss in supply chain, because of misinterpretation of demand information. All the above mentioned points and issues could cause stock out which ends with customer and revenue losses.
Silo Approach_ reduction capabilities tracing logistic. Difference and inequality of databases between vendors and retailers. Excel documents were filled manually so, human mistake could cause radical results.
Well calculated order replacement and anticipation could not been attained due to obstacles concerning collaboration and information distribution as far as the parties were on duty only on their machines.
2. Highlight supply chain conceptual underpinnings and differentiate between traditional supply chain management and supply chain collaboration in the context of Luen Thai & Polo.
As we see from the case, originally, there is sequential interdependence between the partner’s activities in the chain. Consequently only when one stage accomplished the other only then started. Afterward there is shared interdependence information of exchange which leads to the delay of the process which is the threats of the post quota regime. So, it is vital to shift on the modern and more sophisticated model of supply chain.
Therefore, traditionally each part of the apparel chain operated more or less independently, without attempt together solves common problems. Each member distrusted partner members and believed in only individual abilities. Although the collaboration idea was good, significant dedications were never made towards achieving it, neither terms of information sharing nor serious financial commitments. Nevertheless, the triad was mutually supporting, they performed as detached parties.
Real time information flow between the parties will be ensured by the new adopted supply chain. The modification «Original Equipment Manufacturer” (OEM) into “Design-to-store” (D2S) model would initiate retailer’s more and deep involvement in the process which ensures more effective collaboration than it was during the time of the tradition al practice.
3. Examine how technology will enable collaboration amongst Luen Thai and its partners and the effect of such collaboration?
D2S, The new model adopted by the Polo, made possible better cooperation in:
Logistics by assisting the company and its partners compose better resolutions, implement more efficient procedures.
.Efficient and effective transfer of information between manufacturers and designers ensured improvement of product design. A web base plat form of real time information and standardized communication facilitated partners extensive collaboration.
The new technology let partners to communicate information referring product designs and immediate changes during the production process. By integrating the new expertise between the company and other parties, it will tolerate information web-based exchange to be carried out in a manner that eliminate past communication drawbacks with phones and faxes.
Polo applies technology to accumulate information where they can observe, check and respond to client’s demand. Using this method the company is capable to deal and cope with the wants and needs of its buyers by saving the information in one precise space on the web. The new technology guarantee clear and comprehensible information, which can be also transferred from one part of the company to another.
4. Examine how Polo’s relationship with Luen Thai has evolved and examine the impact of collaboration on Polo’s business model?
Every fashionable apparel company needs to be extremely competitive in the market in order to attain customers and market share. It is vital to have capability to meet customer’s demands promptly and be on the right time on the right place. The most important role in this situation is operations effectiveness and efficiency. Operation, on its side requires effective and collaborative supply chain management, which avoids miscommunication and information delay. Crucial aspect in supply chain as we see from the case is that all the partners need to work and operate in the synchronized manner. The collaboration helps company to stand out from the competitors. Luen Thai has the essential function in all these above mentioned issues. It also manages in minimizing stocks.
The three partners had built a strong foundation to a lasting and committed relationship but the relationship was not institutionalized till Luen Thai committed itself to a greater role in the entire apparel supply chain. This greater role leads to better collaboration among all channel partners and greater integration in the supply chain. . In the case of Polo, it was the market pressure that leads to the change and role in the supply chain while in the case of Luen Thai it was a reassessment of the company’s role in the value chain that made them get involved in design development, logistics and greater collaboration with upstream and downstream partners.
Luen Thai thus had to co-ordinate with Ruentex and ensures that the correct fabric supply as well as with Polo for their design requirements so as to manufacture the right garment cost effectively and speedily.
Henry Tan, CEO of Luen Thai being a visionary had evaluated various supply chain models before incorporating the present one. The major models that were evaluated included models adopted by Liz Claiborne, Howick, PTC and VF. All these apparel manufacturers to some extent had incorporated various Supply Chain Technologies to ensure that every player of the supply chain was up to date with the designs and other requirements.
Effective communication between Polo and its partners will be achieved by this sophisticated method of supply chain, such as collaboration. It leads to anticipation of product designs and prompt transformation during the production route. It wills also eliminate drawbacks which occurred often during the earlier procedures, while they used faxes and phones. This supply chain system has another advantage as well, which is gathering and collecting information in one place, this organized data helps company and its partners to answer drastically customer’s need and demands.
5. How does Supply Chain City initiative complement the D2S initiative? What are the synergies?
Supply Chain City, implemented by Luen Thai was an alternative model for their business. At first, Luen Thai received a range of products essential for manufacturing the goods from distributors and manufacturers to extend worldwide. This required strict control of supply chain to ensure that the needed number of goods reach the Luen Thai manufacturer. Above and beyond, this also raised the cost of transportation to the manufacturers. The most critical point was the delay in receipt of drawings and ideas from the designer to the manufacturer. Keeping this as the major object, Luen Thai developed the idea of a supply Chain City that would run various apparel supply operations such as design & development, logistics & distribution, supplies, embroidery testing, production, printing, washing and sample making in one location.
Contribution to Collaboration
This method allowed Luen Thai to advance relationships between the upstream and downstream partners.
This as well allowed the manufacturing unit to access the design Centre of Luen Thai and provide technical support such as washing and sample making, embroidery, printing
This enabled Luen Thai to adopt design process for Polo in addition to assembled smaller batches of supply.
It allowed faultless exchange of information and experience between LuenThai and Ruentex the fabric manufacturer.
The supply chain city initiative complements D2S by facilitated run different apparel supply operations such as, logistics and distribution, design and development, supplies testing, printing, washing, embroidery, production, and sample making in one setting. Supply Chain city initiative would consent Ralph Lauren to make straightforward and coordinate their design process efficiently by administering apparel supply operations in a single location. SCC would convey all the different apparel supply operations to a single set which will make proficient in terms of communication within the processes.
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