Supply Chain Management of Garments

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Topic: - Supply Chain Management of Garments


The US, Japan and Europe are major importers of garments in the world. In year 2004 till date, US alone imported garments worth US $ 80 billion (INR 3600, 000,000,000) or 15,000 million garments. Last year the US decided to end its 30-year-old ‘Textile and Garment' quota system, the trade policy that limited amount of fabric and garments that 50 odd countries can export to the US. One of its direct impacts is increased competition among garment manufacturers demanding them to become more cost effective and service efficient in order to survive the competition and consumer demands. Considering size of exports market and India already being one of the leading suppliers of garments, in c competition with other Asia Pacific countries, it is now imperative for Indian garment manufacturers to make best use of advanced Supply Chain Information Technology to design and maintain an agile supply chain and to become adaptive to changing business situations. Every possible business processes should be mapped in a Supply Chain system to derive maximum benefits. Without due importance to application of IT systems for business performance improvement Indian manufacturers would f all in line with those in countries such as Dominic Republic, Caribbean & Latin America whose market shares are on decline. This paper is targeted towards readers who wish to gain insights into Supply Chain Planning processes of a typical garment manufacturing company, those who are choosing or assisting to choose a right Supply Chain Planning and Transaction Processing system for their business or for their clients, and towards those consultants who wish to bring in positive change in their client's business processes. It focuses on industry specific business processes to be considered while selecting, configuring, and implementing a Supply Chain system that would lead towards ultimate goal of increased revenue, reduced costs and customer satisfaction.

Challenges to implement Supply Chain System

Biggest challenge Indian garment manufacturers facing today are to meet delivery expectations and price pressures from foreign buyers. Supply Chain planning in a garment manufacturing industry is quite complex with numerous factors contributing towards it. One, garments are highly seasonal goods. Every season has new ‘styles' (items). This makes demand forecasting a big challenge given that relevant demand history is not available. Second, each style has sizes, dimensions, colours and fabric attributes that lead to numerous SKUs for single style. This demands to deal with huge amount of styles & SKUs in planning and operations. Third, supply chains of medium to big players in this industry are truly global wherein sourcing of fabrics and sub-mats & trims is done from different countries (mostly China, Korea, HK, India etc), manufacturing happens in different countries (China, India, HK, Vietnam, Thailand, Malaysia, Caribbean etc) and products are shipped to and sold in big markets such as America, Japan, Europe etc. In few cases even manufacturing of one garment happens in different countries due to what I call government's three ‘R's - rules, regulations and restrictions. Fourth, overall demand and supply lead-time here is one of the longest compared to that in many other discrete goods industries. The outerwear you are wearing today might have been conceived in development studio 1.5 to 2 years ago if it is a new style. Fifth, garment manufacturers are actually in business of selling factory capacities and not selling garments. Production Capacity management is thus a key in meeting buyer's expectations in terms of delivery and price. With help of advanced Collaboration Systems available in the market, big brands and retailers follow VMI (Vendor Managed Inventory) and CPFR (Collaborative Planning, Forecasting and Replenishment) model to reduce the investments in inventory & transaction costs by sharing latest forecast and sales data with vendors and relying on them to replenish the inventory on regular basis. This adds to complexity, as not all customers of a firm want to follow this model. But engaging in VMI and CPFR model with retailers gives manufacturers competitive advantage over similar suppliers due to potential of long- term relations and shared vision to fulfil end user demands. For one playing role in designing or maintaining the Supply Chain system for the garment manufacturing company it is necessary to understand basic business processes involved and specific requirements that must be addressed.

Importance of supply chain management

Managing and handling supply chain has unique challenges in case of apparel industry because this industry faces a lot of demand uncertainly depending on trends like fashion and consumer preferences. With the help of innovative techniques which would require product variety, management of production systems, forecasting and inventory management, the apparel industry can meet its supply chain demands for both volatile and non-volatile goods.

If supply chain management is done properly, it can help the companies reduce their inventories which will lead to cutting of operational costs, reduce order cycle time, enhance asset productivity as well as increase the companies' responsiveness to the market. Better and advanced SCM practices also leads to quick response which is a concept pertaining to the collaboration and sharing or information among manufacturers, suppliers and distributors, allowing them to respond more rapidly to the needs of the customers.

The relevance of supply chain management becomes even more important with regards to raw materials used in the apparel industry. Since the apparel industry requires various types of raw materials yarns, fabrics and other textile mill products from suppliers to meet their highly-diversified product lines, deal with multiple suppliers which in turn need a highly organized SCM technique to keep track of these suppliers and also make regular assessment thequality of their services and supplies. Keeping alternation supply options open, one can reduce uncertainty in supplies of raw materials and also improve inventory performance. Data on the suppliers' product stocks, costs, speed and reliability can be obtained through SCM.

Again, Supply Chain Management comes into prominence when these companies have to distribute their products either to the retailers or directly to the consumers. The application of an SCM system on the other hand helps in strengthening the relationship between both parties as well as in achieving positive business outcomes which is of utmost importance considering the fluctuations in demand associated with this industry. The efficient communication of the manufacturers with the retailers helps to obtain valuable consumer data such as end-customer demand levels which helps the manufacturers determine their production level and inventory performance.

Business Processes and Flow of Operations

Garment manufacturing is a pure make to order (MTO) production scenario unless production houses have their private labels. Typical business processes in this industry include Style Development, Sampling, Customer Order Management, Fabric & Trims Procurement, Inventory Management, Production Planning, Material and Factory Capacity Planning, Sub-contracting in overload scenarios, Raw Material Distribution between warehouses, Production, Finishing & Packing, Shipments, and other non engineering processes.

Following is flow of operations in garment manufacturing:-

Ø Style Development or Style Design from Buyer

Ø Sample Making and approval from Buyer

Ø Salesman samples for Market Testing

Ø Bidding and negotiations for capacities

Ø Customer order and Final Style Approval

Ø Fabric bulk booking, fabric testing & approvals

Ø Pre production sample approval

Ø Production(cutting,sewing,finishing,packaging)

Ø Garment inline and final inspection

Ø Shipping and Invoicing

Functionality Requirements from a Supply Chain System

While selecting Supply Chain system, team has to ensure that application is specifically designed f or Fashion Industry and has functionality & features to support all mentioned business processes. Consideration should be given to domain knowledge of technology partner, without which even best applications remain under utilized of their fullest capabilities & features.

Following five are most challenging business processes in MTO production scenario

a. Style & Attribute management

b. Sampling

c. Capacity Planning & Scheduling

d. Inventory Management, and

e. Order life cycle management and buyer interaction.

Garments are always planned & inventoried in units or dozens. Many top garment manufacturers have numerous buyers and each deal in different types of garments and thus may have variation in planning and manufacturing process. As mentioned, garment style has various attributes such as size, colour, major dimension (as length in pants), and fabric type. Attributes play very important role in garment planning and operations business processes. Fabric needs to be procured, received, inventoried and issued to production at attributes levels such as colour, fabric type, width, construction etc. Garments need to be planned, produced, inventoried and distributed at attribute levels as well depending upon buyer requirements. Attribute level planning can be complex to configure, implement and to use due to possibility of numerous variations and amount of processing resources required. One of the most important requirements from the Supply Chain systems in MTO scenario is tracking operations and orders by customer's order or style number. System should have required functionality or provide flexibility to design work around without adversely affecting original business process. Fabric procurement is a long lead-time process that involves fabric capacity bulk booking, informing colour breakdowns to fabric suppliers, colour and shrinkage testing and final delivery schedules. Since garment colours are not known till later stages, fabric booking and procurement planning in an application a challenging process. One can look for specific functionality in system or configure a workaround to design this process. Material and capacity planning are other complicated & challenging processes. This is because factors such as last minute changes to the sty les and BOM by the buyer, quality defects in Fabrics, late Fabric deliveries, rejections on production lines, sample failures and other numerous reasons affect factory operations showing false picture of effective capacity available delaying the garment deliveries to buyers. In a typical case, buyer first blocks capacity with manufactures by intimating orders months in advance so that fabric can be booked at mills and other priority processes can be triggered. Only information known at this time is style number and bulk quantity at style level. Without knowledge of colour and sizes of end garment items required, phantom items and codes are used to plan capacity and to initiate procurement process f or long lead-time items. This helps production planners to look for other alternatives such as other factories, sub- contracting etc to meet the production plan in case of capacity overload or capacity mismatch and also helps sales team to get idea of available-to- promise capacity during sales negotiations or capacity auctions. Without right capacity plans, sales is directly affected by loosing orders, and production is suffered with delayed schedules and late deliveries to customers During design and configuration of planning process, consideration should be given to flexibility in Material and Capacity Planning at style level, at SKU level and at attribute level as well. Planning logic should establish link customer order to purchase order to manufacturing order to shipment for easy & necessary tracking, which is complex job if system does not provide similar functionality or flexibility in configuration. ‘Matrix ' and Attribute Management functionality present in Supply Chain applications like that of Intentia's Movex gives tremendous advantage over other similar systems where it allows end users such as order entry, production & distribution planners etc to enter orders in Matrix format instead of entering line by line for each colour, size & dimension. Production reporting, FG inventory planning can be done in Matrix format making job more than easier. Even fabric purchase orders can be entered in Matrix format. On the other hand buyers can use scalable & intelligent forecasting and planning software like Manugistics to increase forecasting accuracy and plan large amounts of data. Different algorithms and forecasting parameters in this software makes forecasting job much easier provided mapping process is right and history streams are available. If forecasting is accurate, all downstream Supply Chain processes have greater chance of being effective and efficient in meeting buyer's price and delivery expectations.

Some of the functional requirements Supply Chain system should have other than those mentioned above are,

- Flexibility in configuration of Items, Factories, Warehouses.

- Flexibility in configuring Multi-Company set-up

- Attribute Management capability and features

- Style management and Matrix functionality.

- MTO - customer referencing in order entry, planning, PO, DO and shipments

- Flexibility on multi-level BOM configuration. BOM at Size/colour level

- Constrained production and material planning

- Aggregate level planning and display of information

- Kit handling, Kit inventory and Kit level planning and reporting

Some common on-site difficulties and problems faced by garment factories:

Production workers at garment factories usually have a habit of keeping their job ticket. This not only increases the factories' overtime expenses due to compliance requirement of extra compensation but also prohibits the factories from accurately estimating its workers' productivity.

Low efficiency in production is mainly due to a lack of sense of quantification in the management's mind. It may also be the consequence of a lack of planning in production, a low utilization rate of equipment as well as a poor coordination of production departments.

Loss of control in monitoring: For example, when there is bottleneck in certain production steps in the line, the system fails to issue a warning within a short period of time. In most factories, there are no measuring tools or standards which actually display the workers' performance. This finally causes serious production jam.

There is no database built up for in-depth analysis. In reality, a lot of factories already have various types of computerized technology networks in place for monitoring their production. These computerized processes and models do support a lot of different settings. This will only significantly increase the factories' maintenance costs. Furthermore, the factories will also find it very difficult in obtaining the necessary data for enterprise planning (some real-time statistical data regarding the production). Therefore, a complete enterprise-information management and planning system, like MSC's Apparel ERP Solution, coupled with MSC's new technology regarding the WIP production flows - a product by its R&D Department, looks set to be an enterprise's silver bullet.

MSC utilizes RFID technology in the management of garment factories' production processes

Workers' attendance cards: When a worker goes to work, he/she will scan the RFID (Worker ID Card) instead of the attendance card. Then, the computer system will record the total working time and transfer the data to the company's wages and accounting systems. This way, the payroll department will be able to calculate his/her wages and finish the relevant human-resources management works in a shorter time. Upon requests from the clients compliance (code of conduct), workers' RFID cards can also be used by the factories for worker identification, work records, salary calculation, etc, giving extra edge to the factories.

Typically, the management does find it difficult to monitor and understand the factory's production flows by using the traditional paper-based ticket records. The workers will accumulate the records until just before the pay day (or will they use those records for manipulating their overtime works). This will present extra difficulty for the factory in calculating the salaries payment and related costs, hence further confusing the production progress. MSC ERP System records pre-defined order step information stored in the RFID Cards for production flows management. RFID Production Cards are registered through the readers at every machine or production equipment, so that the information for the start and end of each job can be transmitted to the main server for storage and processing. The application will calculate automatically and perform statistical analysis on the production progress and unit salary costs, further achieving “Real-Time Production Management Flow” and carrying out a complete monitoring processing in the shop floor. The system is designed to show alert on the line balancing of each production department as well as provide a large amount of data on staff production value and equipment utilization rate for analysis.

To obtain information / data and trace it more accurately and real time: By employing wireless technologies, MSC ERP manages to transform the traditional paper-based information system in the production line into a fully-computerized system for data storing and processing. Industry can benefit less administrative costs and faster processes and feedback. Meanwhile, RFID and ERP systems are collaborately used for management-control in areas of material control, monitoring the production WIP progress, order tracing, storage, logistics, recording sales data and related security to improve the entire efficiency of the business process. It is the world trend that the RFID technology is becoming more popular to replace the bar codes at a low cost.

High technology at low cost: MSC's R&D Department is specialized in developing the RFID solution regarding WIP production flows. At the same time, it is dedicated in exploring some low-cost investments, including those simple parts like the readers at each of the sewing machines and other related equipments. In consideration of the working environment amongst all the sewing machines, the wireless network technology is also adopted to facilitate cabling and infra-structure building. In fact, it is easy to upgrade the relevant equipments and parts. It is not only is a low-cost equipment but also an innovative application of technology.