SUPPLY CHAIN MANAGEMENT PRACTICES

IN A BUYING AGENCY
WITH SPECIAL REFERENCE TO APPAREL INDUSTRY
Authors :
A.Ka!a"# $ PGDGMT %NIFT&' MBA. %R(s(ar)h S)hoar $ S)hoo o* Ma"a+(,("t
Stu-#(s' U"#.(rs#t! o* H!-(ra/a-& 0#th E#+ht !(ars I"-ustr! E12(r#(")(
Dr. G3RK A)har!uu %R(s(ar)h Su2(r.#sor $R(a-(r' Su22! )ha#" 4 O2(rat#o"s'
S)hoo o* Ma"a+(,("t Stu-#(s' U"#.(rs#t! o* H!-(ra/a-&
1
SUPPLY CHAIN MANAGEMENT PRACTICES IN A BUYING AGENCY
WITH SPECIAL REFERENCE TO APPAREL INDUSTRY
5. INTRODUCTION
In any industry there exist different kinds of organizations like 100% Integrated Yarn-
Garment, 100% Manufacturing, Jo- !ontracting, Merchant "x#orter and $uying %gencies&
% $uying agency is one 'hich does not manufacture the #roducts, ut it outsources the
(endors for the #ur#ose of manufacturing& )ale 1&1 sho's the different kinds of
organizations&
)ale 1&1 * )y#es of +rganizations
T!2( o*
Or+a"#6at#o"
I"7Hous( Out7 Sour)(8 9o/7 )o"tra)t R(,ar:s
100% Integrated
Yarn-Garment
1&Yarn ,knitted- or .aric ,'o(en-
%ccessory /rocurement
0&1nitting
2&/rocessing-3yeing, /rinting,
4ashing etc&
5&Manufacturing- !utting,
6titching, "mroidery, !hecking,
.inishing, /acking

---7%---
8 9arge !om#anies 'ith large
in(estment in infrastructure for
#rocessing : manufacture&
8 "xcellent ;uality !ontrol at
each stage
100%
Manufacturing
1&Yarn ,knitted- or .aric,knitted
or 'o(en-, %ccessory #rocurement
0& Manufacturing- !utting,
6titching, etc&
1& 1nitting ,if <e=uired-
0& /rocessing 3yeing >
/rinting, 4ashing etc&
8 ?a(e com#lete manufacturing
infrastructure i&e& from .aric to
Garment&
2
Jo- !ontracting
1& Yarn ,knitted- or .aric,knitted
or 'o(en-, %ccessory /rocurement
0& !utting,
2& !hecking, .inishing, /acking
1&1nitting ,if re=uired-
0& /rocessing-3yeing>/rinting,
4ashing etc&
2& 6titching
8 6titching outside since
constraints due to 9aor
/rolems, 6#ace ,in #lace like
Mumai-&
8 !utting In-house to !ontrol
!onsum#tion : ;uality
Merchant
"x#orter
--7%--
1& /lace order for ready- made
garments as #er s#ecification&
%ll #rocessing, manufacturing
is outside&
0& /acking may e in-house&
8 +rganization 4ith excellent
marketing net'ork> marketing
infrastructure&
8 7o manufacturing
infrastructure> kno'-ho'
$uying %gent --7%--
1& /lace order for ready- made
garments as #er s#ecification&
%ll #rocessing, manufacturing
is outside&
8 +rganization 4ith excellent
marketing net'ork> marketing
infrastructure&
8 7o manufacturing
infrastructure> kno'-ho'
Su22! Cha#" #" T(1t#(s $ Indian textile and clothing industry has one of most com#lex,
fragmented and long su##ly chain in the 'orld right from ra' material #rocurement to
shi##ing #ort handling facilities& )he follo'ing figures sho's different ty#es of su##ly chains
in(ol(ed in textile industry&
)he follo'ing figure 1&1 'ill gi(e the com#onents of su##ly chain& )he Indian textile
industry s#ans all acti(ities across the (alue chain&
.igure 1&1 * )extile @alue !hain
,6ourceA )extiles and %##arel * Market : +##ortunities-
3
<a' Material
: Ginning
6#inning 4ea(ing>
1nitting
/rocessing
%##arel
Making
3istriution><et
ailing
5. Ra0 Mat(r#as $ )he maBor ra' materials for the textile industry include cotton, silk,
'ool and man-made fire& It is the asic com#onent of any faric&
;. S2#""#"+ $ )he s#inning sector in India is com#letely organized& %nd is gloally
com#etiti(e in terms of (ariety, #rocess and #roduction =uantity& )he s#inning #rocess is
technologically intensi(e, the out#ut is affected y the =uality of fire and the cleaning
#rocess of ra' materials&
<. W(a.#"+8K"#tt#"+ $ IndiaCs 'ea(ing>knitting sector is highly unorganized& )his is the
'eakest link in the su##ly chain suffering from #rolems such as high #o'er tariffs and lo'
in(estments in technology&
=. Pro)(ss#"+ $ Indian #rocessing sector is largely decentralized 'ith lo' le(els of
automation, marked y hand>inde#endent #rocessing units& )he #rocessing stage is
undoutedly the most significant #rocess in the (alue chain of (arious textile #roducts
contriuting the essential user re=uirements of easy maintenance, colour fastness and also
aesthetic (alue addition in terms of colours, motifs and designs& )he (alue addition at this
stage of #roduction is maximum, often manifold, 'hat 'ith io-finishes, (arious surface
finishes such as #each finish, sand finish, raised finish, or rush farics, coated, im#regnated
farics, 'ater re#ellent, fire retardant and antiacterial finish etc&
>. A22ar( Ma:#"+ $ %ccess to a (ariety of ra' materials and flexiility of su##ly chain
enales a##arel manufacturers to mix and match (arious constituents and come u# 'ith
inno(ati(e designs&
?. D#str#/ut#o"8R(ta##"+ $ )he Indian textile industry is 'eak in the su##ly chain and
logistic system of distriution>retailing& )he industry asically faces #rolem 'ith the
logistics&

.igure 1&0 * )extile 6u##ly !hain
!otton !ustomer
,6ourceA Im#lementing 6u##ly !hain Management in )hailand )extile Industry-
6ho's the flo' of <a' material to finished #roduct
6ho's the flo' of Information
)he ao(e figure 1&0 sho's the )extile su##ly chain& )his figure sho's the (arious ste#s
in(ol(ed in the textile su##ly chain& !otton is the ra' material and forms as yarn y yarning
#rocess 'hich includes the #rocesses like ginning and spinning& )he yarn is made into fabric
y using weaving/knitting technique.
)he dyeing can takes #lace in the form of yarn or faric& If the yarn is dyed and then faric is
#roduced then it is called as yarn dyed faric& If the dyeing takes #lace in the faric form then
it is called as faric dyed& )hen it goes to different manufacturing units de#ending on the
4
.arication Yarning 3yeing Garment
=uantity ordered y the manufacturer& )he faric is made into garment as #er the customer
s#ecification& )his ,Garment- is the finished #roduct 'hich reaches the end consumer&
)he follo'ing figure 1&2 sho's the %##arel as 'ell as )extile 6u##ly !hain and #artici#ants
in(ol(ed in it& )he flo' of demand and su##ly is also sho'n in the figure&
.igure 1&2 * )extile 6u##ly !hain
%##arel 6u##ly !hain
,6ourceA %##arel 6u##ly chain and its @ariants-
F#/r( Ma"u*a)tur#"+ $ )he ra' materials undergoes the #rocesses like ginning and cleaning
machines to get the fire as an out#ut& )he #artici#ant is the fire manufacturer&
Yar" Ma"u*a)tur#"+ * )he fire undergoes s#inning #rocess 'hich gi(es the yarn as an
out#ut& )he #artici#ant is the yarn manufacturer&
Fa/r#) Ma"u*a)tur#"+ $ .aric is the out#ut of the #rocess called as 'ea(ing>knitting of the
yarn& )he #artici#ant is the .aric manufacturer&
Gar,("t Ma"u*a)tur#"+ $ )he garment is the finished #roduct 'hich is made y using
different ty#es of farics& )he #artici#ant is the garment manufacturer&
R(ta#(r $ <etailer forms the distriution channel& <etailing can e done through outlets or
stores& <etailer 'ill e in direct touch 'ith the customer& )he #artici#ant is the retailer&
F#"a Custo,(r $ )he finished #roduct finally reaches the end user that is the customer& )he
#artici#ant is the final customer&
;. LITERATURE RE3IEW
5
Yarn Manufacturing
.ire Manufacturing
.aric Manufacturing
<etailer
.inal !ustomer
Garment Manufacturing
F
l
o
w

o
f


S
u
p
p
l
y
F
l
o
w
o
f
D
e
m
a
n
d
Su22! )ha#" * consists of all #arties in(ol(ed, directly or indirectly, in the #rocurement of a
#roduct or ra' material in fulfilling a customer re=uest&
Su22! )ha#" ,a"a+(,("t %SCM& * in(ol(es the management of
information flo's et'een and among stages in a su##ly chain to maximize
total su##ly chain effecti(eness and #rofitaility&
D 6u##ly-chain management is a total system a##roach to managing the
entire flo' of information, materials, and ser(ices from ra'-material
su##liers through factories and 'arehouses to the end customer&
)he flo' of materials, information and funds across the su##ly chain takes
#lace as sho'n in the figure 0&1&
.igure 0&1 Management of flo' of materials, information, and funds across the
entire su##ly chain&
!oyle, et al, 6u##ly !hain ManagementA % 9ogistics /ers#ecti(e
)he follo'ing figure 0&0 sho's the general su##ly chain in(ol(ed in the manufacturing unit,
'hich consist (endors, different ty#es of su##liers in(ol(ed i&e, faric su##liers, trims
su##liers and #acking su##liers&
.ig& 0&0 General 6u##ly !hain sho's different su##liers in(ol(ed ,6ourceA %uthor-
6
6u##lier .aric 1
6u##lier .aric 0
6u##lier .aric 2
6u##lier )rims 1
6u##lier )rims 0
6u##lier )rims 2
6u##lier /acking 1
6u##lier /acking 0
6u##lier /acking 2
6u##lier .aric
7
6u##lier .aric 1
6u##lier .aric 0
6u##lier .aric 2
6u##lier )rims 1
6u##lier )rims 0
6u##lier )rims 2
6u##lier /acking 1
6u##lier /acking 0
6u##lier /acking 2
6u##lier .aric 1
6u##lier .aric 0
6u##lier .aric 2
6u##lier )rims 1
6u##lier )rims 0
6u##lier )rims 2
6u##lier /acking 1
6u##lier /acking 0
6u##lier /acking 2
!ustomer 1
$uyer
$uying
%gency
!ustomer 0
!ustomer 2
@endor 1
@endor 0
@endor 2
6u##lier)rims
6u##lier /acking
6u##lier .aric
6u##lier .aric
6u##lier)rims
6u##lier /acking
6u##lier)rims
6u##lier /acking
<. Fu")t#o"#"+ o* a" A22ar( A+(")!
% uying agency is an intermediary organization 'hich takes care of the selection of @endors,
distriution of orders according to the style, a##ro(alsE follo' u# 'ith the (endors regarding
the sam#les, a##ro(als, #roduction and shi#ment&
$uying agency coordinates 'ith the $uyer and the @endor regarding the orders& 7o
direct corres#ondence 'ill e there in et'een the $uyer and the @endor& %ny clarification,
a##ro(als or delays 'ill e informed to the $uying agency merchandiser 'ho in turn 'ill
inform the uyer and gets ack to the (endor&
)he information of the order confirmation is #assed on to the ;uality !ontrol
de#artment of the uying agency y the concerned merchandiser of the uying agency& )he
Merchandiser 'ill for'ard all the sam#les to the ;! de#artment, 'here the ;!Cs 'ill check
the sam#les and if they find the sam#les are +1 then the sam#les 'ill e sent to the uyer for
a##ro(al& If the sam#les are a##ro(ed y the $uyerCs ;! then the comments 'ill e sent to
the uying agency ;! 'ho in turn 'ill for'ard the same to the merchandiser& )he same
comments 'ill e for'arded to the (endorCs merchandiser so that they can #roceed 'ith the
next set of sam#les 'ithout any delay& If the ;! ,uying agency- himself>herself finds the
sam#les are not ok then the sam#les 'ill e returned to the (endor along 'ith the comments
and they ha(e to remake the sam#les&
)he merchandiser of the uying agency 'ill for'ard all the details to the (endorCs
merchandiser, 'ho in turn coordinates 'ith all the de#artments in(ol(ed in the factory like
store, cutting, #roduction, checking, finishing : #acking and ex#ort de#artment i&e&,
documentation de#artment&
%ll the materials like farics, #rint, emroidery, accessories like * uttons, zi##ers ,if
they are metals-, and laels 'ill e sent for testing efore #lacing the ulk order& If any of
them fails in the test then they ha(e to #rocure them again and send it for testing until they
#ass the re=uired test&
)he farics, #rints and emroidery 'ill e tested for color fastness, ruing fastness,
#ers#iration and chemicals& $uttons and zi##ers 'ill e tested for the nickel free test&
)he ;! of the uying agency 'ill (isit the (endorCs factory 'here the #roduction
takes #lace, for in line, mid and final ins#ection& )his is to assure that the #roduction is going
on as #er the s#ecifications gi(en y the uyer&
)he ao(e #rocess is sho'n in the flo' chart 2&1
.lo' !hart 2&1 /rocess of +rder !onfirmation
8
$uyer

6am#les
$uying %gency
+1
7ot +1
+1 7ot +1
+1 7ot +k
,6ourceA %uthor-
9
6am#le 3istriution to the (endors 6am#les gi(en for costing
6am#le 3e(elo#ment !osting sent to $uying agent
$uying agent ;!
$uyer
6am#le !hecking
<eBect : remake
6ent for $uyers a##ro(al
/lace the order 7o order
$uying %gent
@endor
$uying %gent
@endor
.lo' !hart 2&0 %##ro(als of .aric and %ccessories
+1 7ot +1
10
6am#les and !osting +1
+rder !onfirmation
Issue of /urchase +rder
+riginal .aric : %ccessory sam#les sent to the @endor
3e(elo#ment of .aric : %ccessories y the @endor
$uying %gency for a##ro(al
$uyer
<eBect : remake %##ro(ed : Go-ahead 'ith ulk
$uying %gent
@endor
6u##lier
6umission of 6am#les y 6u##liers
@endors
)he flo' chart 2&0 sho's the (arious ste#s in(ol(ed in the faric : accessories a##ro(al&
,6ourceA %uthor-
.lo' !hart 2&2 3ifferent )y#es of 6am#les in(ol(ed in the +rder /rocessing
,6ourceA %uthor-
.lo' chart 2&2 sho's the different sam#les in(ol(ed in the order #rocessing& If at each and
e(ery stage the sam#les are a##ro(ed then only the (endor can go-ahead 'ith the next set of
sam#les& +ther'ise they ha(e to remake the sam#les until they get the a##ro(al&
.lo' !hart 2&5 3ocumentation
,6ourceA %uthor-
.lo' chart 2&5 sho's ho' the documentation #rocess goes on& )he 'hole information 'ill e
#assed on to the @endorCs Merchandiser and he>she 'ill take care of it y co-coordinating
11
!ounter 6am#le
/hoto 6am#le
6ize set 6am#les
/re * #roduction 6am#les
6hi#ment 6am#les
$uyer
$uying %gency
@endorCs Merchandiser
3ocumentation 3e#artment
'ith the other de#artments like, stores, cutting, #roduction, checking, finishing : #acking,
documentation&
)he documentation #eo#le 'ill take care of the ooking of the (essel according to the
deli(ery date of the goods& )hey should kno' the /+ 7o&, 6tyle, !olor, +rder ;uantity, /rice
#er #iece, numer of cartons, "x#ected )ime of 3eli(ery etc&
CONCLUSION
In any organization it is must that there should e a #ro#er coordination et'een all the
de#artments to function #ro#erly& 4ithout #ro#er coordination there exist a huge ga# and
there is a chance of making mistakes 'hich in turn 'ill lead to the delay in shi#ment& .or e&g&
if there is a change in the s#ec sheet ,measurement chart- and is not informed to the
#roduction de#artment, the #roduction 'ill go on as #er the old s#ec and there is a chance of
shi#ment going to e reBected& ?ence #ro#er coordination et'een all the de#artments, uyer,
su##lier and the (endor is must&
+rders should e #laced 'ell in ad(ance to the (endor and su##lier so as to a(oid delays, to
get the good ra' material 'ithout any defects&
R(*(r(")(s
12
1& )extiles and %##arel Market : +##ortunities <etrie(ed Jan 0F, 0010& from
htt#A>>'''&ief&org
0& 3uang#un 1ritchanchai : )hananya 4asuri& Im#lementing su##ly chain management in
)hailand textile industry& <etrie(ed Jan 00, 0010 from
htt#A>>'''&knu&edu&t'>iBislm>#df>@ol&0 7o&0 ,000G&F->10G-11H&#df
2& 3easis 3as#al& %##arel su##ly chain and its (ariants& .ire0fashion&com&<etrie(ed 6e#&
1F, 0011, from '''&fire0fashion&com
5& <onald Maurice %llen& /erformance Measurement of )extile and %##arel 6u##ly !hains in
3e(elo#ing !ountries& <etrie(ed March 0F, 0010 from re#ository&li&ncsu&edu
13