Supply Chain

Management Fast
Fashion Industry

MBA 4642 - Products & Processes

Module Leader: Dr. Louise Boutler
Venkatesh Kumar Subburaj
Assignment 2 (Individual)
Word Count: 2193
M00328327

04.04.2011

1
 Middlesex University Business School

Contents
Contents................................................................................................................ 2

ABSTRACT.............................................................................................................. 3

1. Introduction....................................................................................................... 4

1.1 Nature of fast fashion industry.....................................................................4

2. Importance of agile supply chain in fast fashion industry..................................5

3. Managing the Fashion logistics pipeline............................................................6

4. Global Quick Response (GQR) in Fashion Industries..........................................7

4.1 The new garment design and development process....................................9

4.1.1 New garment development process..........................................................9

4.1.2 Estimation................................................................................................10

4.1.3 Concurrent Engineering for new product design and development.........10

4.2 The First volume order................................................................................10

4.2.1 Decisions on Appropriate production units..............................................10

4.2.2 Learn from the established contracts......................................................11

4.3 The repeat order process............................................................................11

4.3.1 Dependable and capable network...........................................................11

4.3.2 Effective order placing process................................................................11

4.3.3 Effective control Systems........................................................................11

4.4 Enablers of GQR..........................................................................................11

5. Conclusion....................................................................................................... 12

6. Recommendations...........................................................................................12

7. References.......................................................................................................14

8. Appendices...................................................................................................... 15

Appendix 1: Key Operational practices and principles.........................................15

Appendix 2: Characteristics of Agile Supply Chain...............................................16

2
Appendix 2: Enablers of Global quick response (GQR) ........................................18

ABSTRACT
Fashion markets are synonymous with rapid change, global supply
and, as a result, commercial success or failure in those markets is largely
determined by the organisation’s flexibility and quick responsiveness.
Responsiveness is characterised by short time-to-market, the ability to
scale up (or down) quickly and the rapid incorporation of consumer
preferences into the design process (Martin Christopher, Robert Lowson,
Helen Peck, 2000).
This Report emphasize on new concept - Global Quick Response
(GQR), embedded within an agile supply chain - which strives to combine
cost and scale efficiencies by sourcing globally with quick and accurate
response to market requirements. GQR is based on lead time
compression, effective information management, dynamic planning and
strong logistics. This report also examine agile supply chain and GQR in
the perspective of the garment design and development process, the first
volume order process and the repeat order process. We also discuss its
requirements with respect to market intelligence and rapid new product
introduction; network planning and staged postponement; and network
capability.
Finally, reviewed and identified the good practice in relation to what
other ‘fast fashion’ retailing companies are doing in this context and made
the following recommendations
a) Creation of agile organisation using an agile supply chain embedded
with Global quick response(GQR)
b) SCOR model to be used as reference model in framing/managing
the supply chain and their network
c) Key operating Principles and Practices
These recommendations will give the edge for the organisation to have a
greater chance of succeeding in a very competitive environment.

3
1. Introduction
The clothing industry has become one of the most mobile industries
comprising complex global supply networks to supply clothing to world markets.
The nature of these global networks poses significant challenges for quick and
accurate response. Refer Figure 1 for understanding of generic high level
structure of global clothing industry supply chain. In order to ensure the right
product volume and mix within retail stores from a globally dispersed supply
network, it requires innovative operational strategies and practices.

Figure 1 : Generic high-level structure of the global clothing industry

supply chain

Source: MacCarthy B L and Jayarathne P G S A (2009).’Fast Fashion Industry’

1.1 Nature of fast fashion industry

Fashion industry encompasses any product or market where there is an
element of style which is expected to be short-lived. The demand for fashion
products cannot be forecasted and we need to realise that fashion markets are
complex open systems that demonstrates high levels of irregularity. Refer
Figure 2; which clearly exhibits the characteristics of fast fashion industry

4
 In such conditions, the effort must be expended on devising strategies and
structures that enable our products to be created, manufactured and delivered
on the basis of ‘real-time’ demand (Martin Christopher, Robert Lowson, Helen
Peck, 2000). This is the context that has called for the agile supply chain and the
concept of Global quick response based on philosophy of Quick Response.

Figure 2 : Characteristics of fast fashion industry

Source :Primary Research

2. Importance of agile supply chain in fast

fashion industry
Clothing products can take a circuitous route from fabric production,
through garment production and distribution, to reach an end customer. A global
supply network will include designers, buyers and merchandisers, distribution,
logistics and warehousing companies and may include additional finishers that
ensure products are ready for display and sale to meet anticipated demand in
specific retail chains and stores. Key issues that need to be addressed comprise
the different participants within the network; the nature of their relationships;
ownership, power and control structures; how the network is managed,
coordinated and controlled and how information flows in the entire supply chain
network (Martin Christopher, Robert Lowson, Helen Peck, 2000). Refer Figure 3
for the suitability of agile chain in fast fashion industry.
Figure 3 : Suitability of agile chain in fast fashion industry

5
 Source :Primary Research

3. Managing the Fashion logistics pipeline

The volatility of demand and the short life-cycles found in fashion markets
make forecasting highly unfavourable, that can predict sales consistently and
accurately. Instead, we can find ways to reduce the reliance of organisations
upon the forecast and focus on lead-time (Martin Christopher, Robert Lowson,
Helen Peck, 2000). The idea of agility in the context of supply chain management
focuses around ‘responsiveness’ emphasising on shorter lead times and thus
making forecast horizon shorter. Refer Figure 4 for the three critical lead-times
that must be well managed to compete successfully in fashion markets.
Figure 4 : Critical lead-times

Source :Primary Research

A further distinction is that conventional supply chains are forecast-driven

that implies that they are inventory-based. Agile supply chains are more likely to

6
be information-based. Fashion markets are volatile and difficult to predict and
hence the need for agility. Agile supply chain has a number of characteristics.
Specifically the agile supply chain is:
• Market sensitive – it is closely connected to end-user trends
• Virtual – it relies on shared information across all supply chain partners
• Network-based – it gains flexibility by using the strengths of specialist players
• Process aligned – it has a high degree of process interconnectivity between the
network members

Figure 5 suggests that there are a number of practical ways in which these four
key dimensions can be brought into play. (Refer Appendix 2 for detailed
description of these characteristics)

Figure 5 : Generic process in clothing industry

Source :Harrison, Christopher & Van Hoek (1999)

4. Global Quick Response (GQR) in Fashion

Industries
Quick Response (QR) has been a governing premise in the clothing sector
for almost two decades (Hunter, 1990). QR is premised on understanding precise
market demands and on compressing the three key lead times to meet demands
quickly and accurately. However, much of the emphasis in QR initiatives has
been on internal production systems. When the value chain is geographically

7
distributed with diverse forms of supply chain relationships and ownership
patterns, QR needs a global outlook. As highlighted earlier, here we define a new
concept, Global Quick Response (GQR), which has emerged in buyer-driven
global supply networks. GQR can be defined as follows:

Global Quick Response (GQR) is a strategy that seeks to achieve accurate,

rapid and cost effective response to specific markets dynamically by leveraging
the potential of dispersed global supply and production resources through lead
time compression, effective real time information management, flexible pipeline
management and optimal logistics and distribution systems (MacCarthy B L,
Jayarathne, 2009).

Global Quick Response (GQR) must be considered with respect to the

generic garment industry structure and processes (Refer Figure 6 for generic
process in garment industry) in the context of the global supply network and the
factors affecting lead time and the ability to respond. Here we identify three key
processes:
1. The garment design and development process
2. The first volume order process
3. The repeat order process
Figure 6 : Generic process in clothing industry

8
 Source: MacCarthy B L and Jayarathne P G S A (2009).’Fast Fashion Industry’

4.1 The new garment design and development

process
4.1.1 New garment development process
It requires more and better market intelligence. Earlier and greater
sensitivity to changes are needed particularly in rapid new product introduction
and in specifying repeat orders. This should require capabilities to extract and
utilise relevant market information, leverage design resources, modify existing
designs, logistics and understand what is practicable and realisable with
available manufacturing resources , all focussing on fast turnaround times.
If the design is successful in the market with buyers, merchandisers or
retailers then first volume orders are placed. The process must be capable of
‘ramping up’ to volume production if a substantial volume order is placed. The
flow of garments may then be sustained for a period of time by repeat orders
that will typically vary in mix during the period, i.e. the quantities for each repeat
order may vary in terms of colour, size and style details (MacCarthy B L,
Jayarathne, 2009).
Substantial pre-production stages are needed in order to move from the
production of small scale sample designs for showing or merchandising purposes
to large scale volume production capable of sustaining multiple repeat orders

9
with varying mix over a season. Thus, for each unique style variant, garment
specifications need to be defined, including sizing and pattern making and
providing relevant instructions for cutting, assembling, sewing, finishing and
packing.

4.1.2 Estimation
Price estimation is a part of the garment development process. The time
taken for cost estimation for a new design may also have to be factored into the
new garment development process. This should also consider the time and risks
associated when it is done by contracting garment producer (MacCarthy B L,
Jayarathne, 2009). It is done before a garment is offered to retail buyers or
merchandisers then decisions on where volume production is to be carried out,
as well as detailed garment engineering and specification details need to be
completed.

4.1.3 Concurrent Engineering for new product design

and development
Concurrent engineering is particularly important and challenging when
design, development and production are not co-located but dispersed
internationally (MacCarthy B L, Jayarathne, 2009). Concurrent engineering
principles are well developed for engineered products in sectors such as
aerospace and automotive and there is significant potential for the clothing
sector to exploit concurrent product development concepts.

4.2 The First volume order

4.2.1 Decisions on Appropriate production units
A strong supply network with multiple capabilities that can respond
appropriately to diverse and changing demands is essential in achieving GQR. It
requires profound Network planning, structure and composition.
A key part of ensuring that volume garment production can be initiated for
a new style or range of related styles is the sourcing of the required fabrics and
accessories in the required volumes and with appropriate timings and resources
(MacCarthy B L, Jayarathne, 2009). Multiple garment styles may often be
produced from a specific fabric type. Fabric supply is a substantial part of the
overall supply process, with typically substantially longer lead times than
garment production cycles. Having a ready source of fabric that is delivered with

10
the anticipated volume of orders is therefore important to ensure quick response
to volume orders.

4.2.2 Learn from the established contracts

In a buyer driven network, initial volume orders may also enable
significant learning e.g. in regard to quality and distribution. Lessons learned
from a new supply route may well mean changes for subsequent orders. At the
very least there will be learning opportunities for repeat orders or new styles
using the supply route (MacCarthy B L, Jayarathne, 2009).

4.3 The repeat order process

4.3.1 Dependable and capable network
A dependable and capable network is needed for replenishment orders.
The network needs to be capable of working at the required pace for the supply
chain and, importantly, be capable of accommodating changes in volume and
mix requirements. Quality and logistics issues need to have been eliminated to
ensure that a supply route can respond to mix changes and costs with the
required speed and responsiveness (MacCarthy B L, Jayarathne, 2009). Fabric
sourcing should be agreed and capable of supplying at the rate required.

4.3.2 Effective order placing process

An effective order placing and confirmation process must be in place.
Supply networks cannot maintain high levels of unutilised capacity in anticipation
of demand. The potential downside of a strongly demand-driven order fulfilment
system is that volume sales opportunities that arise quickly may not be capable
of being fulfilled (MacCarthy B L, Jayarathne, 2009).

4.3.3 Effective control Systems

GQR systems must have sufficient supply capacity, accurate market
intelligence and effective controls to deal with both the volume and mix issues.
Supply networks need to be able to absorb the negative effects of volume and
mix changes.

4.4 Enablers of GQR

GQR needs to incorporate many of the elements of QR systems in the context of
globally dispersed production and supply resources. They are as follows (Refer
Appendix 3 for detailed explanation)

11
• Strive for fast and accurate information transmission:
• Develop flexible production resources:
• Utilise technology and automation where appropriate:
• Develop fast logistics:
• Exploit all opportunities for lead time compression:
• QR must be a key part of an organisations strategy and have a supportive
organisational culture:

5. Conclusion
This report has provided a conceptual focus upon the main supply chain
issues involved in fashion retailing and has recommended GQR embedded within
an agile supply chain as the operational strategy to be followed. The need for
agility and Global quick responsiveness in the Logistics pipeline has been
identified and discussed in terms of industry’s volatility, complexity and
dynamism. This report re-examines the concept of Quick response in the context
of globally dispersed production, distribution and retailing networks and have
defined and described a new concept - Global Quick Response (GQR) with
respect to Generic chain in fashion industry.
Following this, there are few recommendations illustrating key principles
and operational practices, which are observed from key players like Zara and
H&M in the industry. Apart from this, Supply Chain Operation reference (SCOR)
model is recommended to be used as reference model in framing/managing the
supply chain and network.

6. Recommendations
1) The SCOR model can be used and referenced for implementing and
improving the supply chain management. It has the ability to sustain an
environment that optimizes the entire supply chain rather than each step. The
SCOR model covers the followings levels of abstraction:
- Top level (level 1)
- Configuration level (level 2)
- Process element level (level 3)
- Implementation level
Figure 7 : Supply chain operation reference (SCOM) Model

12
 Source :Supply chain Council
The SCOR Model can analyze many more levels apart from these. It can go into
the core details of any company and try to bring out the best possible results.
Though the SCOR Model speaks of 5 steps to analyze and apply (As shown in
figure 7), these 5 steps are further categorized and each sub level has a different
functionality. When they are all added together, the end result is a well
coordinated study which can revamp a company’s supply chain model into a
profit making model.
2) Refer Appendix 1 for recommendations illustrating key principles and
operational practices, which are observed from key players like Zara and H&M in
the industry.

13
7. References
• MacCarthy B L and Jayarathne P G S A (2009). ‘Fast Fashion: Achieving Global
Quick Response (GQR) in the Internationally Dispersed Clothing Industry’,
Nottingham University Business School Research Paper No. 2009-09 (Revised,
August 10, 2009). Available at SSRN: http://ssrn.com/abstract=1360684

• Kasra Ferdows, Michael A. Lewis, and Jose A.D. Machuca (Nov 2004). ‘Rapid –
Fire Fulfilment’, Harvard Business Review, Available at Web:
http://hbr.org/2004/11/rapid-fire-fulfillment/ar/1
• Martin Christopher, Robert Lowson & Helen Peck (2000). ‘Creating Agile
Supply chain in the Fast Fashion Industry’. Available at Web:
http://martin-christopher.info/wp-content/uploads/2009/12/CREATING-AGILE-
SUPPLY-CHAINS-IN-THE-FASHION-INDUSTRY.pdf
• Christopher, M., (2000), “The Agile Supply Chain: Competing in Volatile
Markets”, Industrial Marketing Management, Available at Web:
http://martin-
christopher.info/wpcontent/uploads/2009/12/agile_supply_chain.pdf
• Birtwistle G., Fiorito S S, Moore C M (2006), “Supplier Perceptions of Quick
Response Systems”, Journal of Enterprise Information System, Vol. 19, Issue
3, pp. 334-345
• Bruce M, Daly L, Towers N (2004), ‘Lean or agile: A solution for supply chain
management in the textiles and clothing industry?’ International Journal of
Operations & Production Management, Vol. 24 No. 2, pp. 151-170

14
• Fernie, J. (1994) ‘Quick Response: an International Perspective’, International
Journal of Physical Distribution and Logistics Management, Vol. 22, Issue 6, pp
38-46.

8. Appendices
Appendix 1: Key Operational practices and principles

Those are key operational practices and principles observed from key
players like Zara and Benetton in the Fast Fashion industry

a) Super Responsive Supply chain: Like how Zara has developed a super
responsive supply chain. The company should be able to design, produce and
deliver a new garment and put it on display in its stores worldwide in a mere 15
days. This constant flow of updated data mitigates the so called Bullwhip effect.

b) Rigid Time Schedule: The Organisation should hold its retail stores to a
rigid timetable for placing orders and receiving stock.

c) Leverage your capital assets to increase supply chain flexibility:

Instead of relying on outside partners, the company can manage all its major and
complex activities in house and can outsource the simple process outside. In
other words, move towards vertical integration.

d) Facility of Prototype Shops: A small proto type shop can be setup in the
centralised design centres, which encourages everyone to comment on new

15
garments as they evolve. The cross-functional teams can examine prototypes in
the hall, choose a design, and commit resources for its production and
introduction in a few hours, if necessary.

e) IT enabled Infrastructure: The organisation can deploy the latest

information technology tools to facilitate storage and transformation of all kinds
of data such as hard data as orders and sales trends and such soft data as
customer reactions and even the buzz around a new style.

f) Flat organisational culture: Fast fashion system depends on a constant

exchange of information throughout every part of supply chain - from customers
to store managers, from store managers to market specialists and designers,
from designers to production staff, from buyers to subcontractors, from
warehouse managers to distributors, and so on. Most companies insert layers of
bureaucracy that can bog down communication between departments. The
organisation should develop operational procedures, performance measures, and
even its office layouts are all designed to make information transfer easy.

g) JIT systems: Specialized by garment type, the company can use

sophisticated just-in-time systems, which allow the company to customize its
processes and exploit innovations.

h) Staged postponement: The postponement principle delays commitment to

final product attributes until close to the point of real demand (Christopher,
2000). It avoids the risks and costs of carrying large inventories. For example,
like Benetton, Zara uses “postponement” to gain more speed and flexibility,
purchasing more than 50% of its fabrics un-dyed so that it can react faster to
midseason colour changes.

Appendix 2: Characteristics of Agile Supply Chain

These are four specific characteristics of agile supply chain and are briefed as
follows

a) Market sensitivity
Being close to the customer is vital for fashion retailing (Martin
Christopher, Robert Lowson, Helen Peck, 2000). Successful fashion retailers
capture trends as they emerge using a variety of means. Point-of-sale data is
analysed daily and is used to determine replenishment requirements and often

16
though the selling season is only intended to be short and product will not be
replenished, in such situations the data is used to analyse trends.
Beyond point-of-sale data are real consumers and identifying their
preferences and changing requirements should be a continuing priority. Zara,
the Spanish-based fashion retailer, has teams of fashion ‘scouts’ who seek out
new ideas and trends across the markets in which they compete. They also use
their own salespeople to identify customers’ likes and dislikes and to feed this
information back to the design team. Using computer aided design and computer
aided manufacturing (CAD/CAM), these ideas can quickly be converted into
tangible products and be in the marketplace in a matter of weeks.

b) Virtual integration
The agile supply chain is virtual in the sense that it is connected and
integrated through shared information on real demand so that all the players in
the chain, from the fabric manufacturers to the garment makers to the retailer,
are all working to the same set of numbers. Retailers and their suppliers need to
be more closely connected through shared information. Shared information can
enable higher levels of on-the-shelf availability to be achieved with fewer
inventories (Martin Christopher, Robert Lowson, Helen Peck, 2000).
Co-managed inventory (CMI) can be adopted and it is a process through
which the supplier collaborates with the retailer to manage the flow of product
into the customer’s distribution system and can reduce transaction costs
simultaneously. The supplier and the customer jointly agree the desired stock
levels that need to be maintained in the retailer’s operation. The customer
feedback sales data is sent on a regular basis to the supplier who then uses that
information to plan replenishments.

c) Network based
A distinguishing feature of agile companies is their use of flexible
arrangements with a wide supply base. Zara and Benetton are two fashion
companies that have achieved high levels of customer responsiveness by
working closely with specialist, often small, manufacturers.
The strategy at Zara is that only those operations which enhance cost
efficiency through economies of scale are conducted in-house (such as dyeing,
cutting, labelling and packaging). All other manufacturing activities, including the
labour intensive finishing stages, are completed by networks of more than 300
small subcontractors, each specialising in one particular part of the production

17
process or garment type (Martin Christopher, Robert Lowson, Helen Peck, 2000).
These subcontractors work exclusively for Zara’s parent, Inditex S.A. In return,
they receive the necessary technological, financial and logistical support
required to achieve stringent time and quality targets. The system is flexible
enough to cope with sudden changes in demand.
Benetton, likewise, have long used a numerous of small manufacturers to
give them additional capacity in activities such as knitting and final assembly.
The principle behind an agile network in some ways runs counter to the
prevailing idea that organisations should work with a smaller number of
suppliers, but on a longer term basis. Instead in an agile network there is a
tendency for the focal firm to act as the ‘orchestrator’ of the network, the
membership of which will change according to requirements.

d) Process alignment
Process alignment is meant the ability to create ‘seamless’ connections, in
other words there are no delays caused by hand-offs or buffers between the
different stages in the chain and transactions are likely to be paperless. The
underpinning processes are probably managed by ‘horizontal’ and cross-
functional teams. In an agile network, process alignment is critical and is enabled
by the new generation of web-based software that enables different entities with
different internal systems, geographically dispersed and independent of each
other in terms of ownership to act as if they were one business (Martin
Christopher, Robert Lowson, Helen Peck, 2000). In the fashion business there can
often be many different entities involved in the process that begins with product
design and ends with the physical movement of the product onto the retailer’s
shelf. Co-ordinating and integrating the flow of information and material is
critical if quick response to changing fashion is to be achieved. Creating ‘virtual
teams’ across the network where information is shared in real-time, a much
higher degree of synchronisation can be achieved.

Appendix 2: Enablers of Global quick response (GQR)

GQR needs to incorporate many of the elements of QR systems in the

context of globally dispersed production and supply resources. Enablers of GQR
as follows:
a) Strive for fast and accurate information transmission

18
 The processes and speed of transmission of both product and order
information need to be analysed. The formats for design and garment
specifications need to facilitate both rapid transmission of design requirements
and the rapid production of new designs (MacCarthy B L, Jayarathne, 2009).
Speed and accuracy are also important in the transmission of order information,
particularly for replenishment orders where time is of the essence.

b) Develop flexible production resources

Traditional garment manufacturing uses batch production methods. Many
opportunities exist to reconsider layouts and organisation of factory processes,
particularly cellular manufacturing where whole garments or parts of garments
are produced or assembled in flow driven cellular processes (MacCarthy B L,
Jayarathne, 2009). If such cells are rapidly reconfigurable then advantages can
be gained in quickly responding to the required mix changes. In addition, flexible
human skills are valuable in responding to changing garment designs
(MacCarthy B L, Jayarathne, 2009). This is critical, particularly in the time
consuming making up processes in garment production. When flexible skills are
combined with cellular team based production, then rapid response to design
and mix changes can be enacted without incurring significant set up costs.

c) Utilise technology and automation where appropriate

Human skills perform much of the value adding activities in garment
production. However, every opportunity needs to taken to adopt new technology
in areas such as laying up and marking of fabric, cutting, sewing, pressing and
packing (MacCarthy B L, Jayarathne, 2009). Also technologies that assist in rapid
material identification, material handling and material flow and technologies that
enable flexibility need to be adopted, particularly for quick changeovers and set
ups processes.

d) Develop fast logistics

Rapid material flow needs to be encouraged and enabled in any QR
system. The corollary to this is that stationary material and large inventory
buffers should be avoided. The entire distribution channel from production to the
retail floor needs to be considered. Implementing fast logistics for in bound fabric
supply, for material flow within plants and outbound into the distribution
channels is important (MacCarthy B L, Jayarathne, 2009). The technologies noted
above can assist in achieving this. The last ‘50 metres’ of the supply chain

19
should not be ignored; hence the importance of ‘floor ready’ garments that are
appropriately tagged and packaged for immediate display once delivered.

e) Exploit all opportunities for lead time compression

The combination of the above initiatives reduces many of the time delays
affecting overall response times. All aspects of processes, systems and
procedures for gathering and transmitting demand information and for the
design, production and distribution of garments must be looked at for
opportunities to compress lead times. One of the keys to compressing overall
response times is to ensure fabric availability. In addition, QR initiatives will try
to identify specific opportunities for lead time compression in the systems and
processes of any specific producer or supply chain prime partner and those
aspects of the system that need close management and control.

f) QR must be a key part of an organisations strategy and have a

supportive organisational culture
An organisation that seeks to pursue QR must see it as a fundamental part
of its business strategy. Not all organisations should attempt or will be successful
at QR. In pursuing a QR strategy, every effort needs to be made to develop a
supportive organisational culture. Strong QR basics are needed in GQR systems.

20