Supply Chain Strategy in Textile and Apparel Industry

The global textile and apparel is valued nearly 3 trillion dollars and it contributed 2% world GDP. Everybody needs a shirt, a pant and shoes to wear and it makes textile and apparel is indispensable industry. Have you ever asked what the supply chain flow of your shirt is and how they can manage it efficiency?

In a mass market, mostly garment companies have been set 3 priorities of supply chain: (1) Reduce cost as much as possible, (2) Increase speed to market and (3) Flexibility. What are strategies to support these 3 priorities and make apparel companies growing?

Global Sourcing

Textile and Apparel industry is global, there are millions manufactures over the world from Asia, Europe to America with difference sizes from small, medium to large. To optimize supply chain cost and minimize risk, increasing sourcing is one of the right strategies. The global sourcing is considering both low cost and speed to market, therefore there are two kinds of sourcing: (1) Low cost sourcing: Asian countries accounted over 80% (2) Sourcing near the market: Central America for US market, Turkey & North Africa for EU market that accounted 20% for each market.

• China: Account for over 50% of global production of global textile and apparel. The percentage will be decrease in next few years; however China will still remain the biggest production because the industry has full range of players from spinning to fabric, FG factory as well as increasing of China's domestics market.
• South East Asia: Vietnam, Indonesia are the two biggest production countries besides two rising sourcing destinations Cambodia, Myanmar. With the advantages of low labor cost and FTAs with the biggest importers (USA, EU, Japan), the countries will continuously increase export value of textile and apparel year by year. The challenge for SEA region is local sourcing for fabric and having full range of players.
• South West Asia: There are 4 main-players in SWA- Bangladesh, India, Pakistan and Sri Lanka. Same as SEA, SWA also has advantages in low wages and FTAs with the biggest markets. Besides lacking of full range of players, SWA in particular Bangladesh is facing with the difficulty in import- export process.
• Turkey: The country is a member of European Union; obviously there is no duty for the goods sold in EU. By high quality of products and close to EU market, Turkey will be remained their position for trending & high fashion products for EU market.
• North Africa: To solve the challenge of speed to market, since 2013 some European companies (H&M, Tesco and Ireland-based Primark) began souring from Ethiopia. The sourcing destinations for apparel has been listed not only Ethiopia but also other North Africa countries (Egypt, Tunisia, Morocco) as potential.
• Central America: Like European companies, US companies also took the sourcing destination for some of their garments from Honduras, Mexico, Nicaragua, El Salvador, and Guatemala. The total sourcing from these countries reached at 15% US apparel market share.

Supply Chain model & Delivery mode

Nowadays many people are taking about going from 'Push' (Make to Stock) to 'Pull' (Make to Order); from my point of view the company should diversify supply chain model in order to minimizing supply chain cost and increasing speed to market. Depending on business model and features of products or the most priority strategy the company can define the Supply Chain Model and Delivery mode.

The table below is showing an example how to choose the supply chain model & delivery mode:

Group of product	Feature	Example	Supply Chain Model	Delivery model
Basic consumer	The basic products can be consumed in the whole year; the design is simple and may not change often.	Men-underwear, Boxer, Sleeping clothes, Sock	Make to Stock (100%)	Sea Transportation
Seasonal	The products can be consumed in season such as Spring-Summer, Autumn-Winter and the design may not change in each season.	Swimming, Heat-tech, Gloves	Make to Stock (xx%) Make to Order (xx%)	Sea Transportation
Trendy & Fashion	The products can be changed frequency depends on trend of each season, mostly effected by color and form.	Women dressing, High fashion product	Make to Order (100%)	Air & Sea Transportation

For Trendy & Fashion products, demand driven supply chain, there are 2 criteria to define delivery mode:

• The cycle of trending & products’ cycle: It is very important to know when this trending is finished. If the products arrive the market late, the value of products may lose 30-50%.
• Selling price in the market: As a research on customers' behavior, people don't compare on the saving amount but on the ratio of saving. If you set the price of your product by sea shipment is 10.0 USD and 11.0 USD if it is shipped by air, how many customers you may lose? If your product is 100 USD, for sure your customers will be willingness to pay extra 1 USD to have the goods as soon as possible.

Besides two main transportation modes (Sea, Air), company can consider rail, multi model transportation (Sea & Air, Air & Sea, Road & Air, etc.) to balancing between cost and speed to market.

Supply Chain Integration

The supply chain of textile and apparel is completed and involved many parties. How the company manages million orders through supply chain flows? How can they reduce the cost and lead time, increase visibility and flexibility?

The figure 1 shows the flow of information and product in a traditional textile supply chain. To produce a shirt you are wearing, it involves 3 manufactures from spinning, fabrics to finished goods before come to distribution center. It takes around 2 days to confirm purchasing order (PO) from each party, thus the lead-time to get PO is around 6 days.

To answer the two questions above, integrated information can help company to solve. The figure 2 describes a supply chain with full integrated information in order to no delay in passing information and visibility & transparent PO management:

To balance system cost and efficiency supply chain performance, there are 3 questions to answer before choosing integrated system:

1. What is ERP solution: Software and interface solution depends on size and model of business. 
2. Level of integrating: Integrate all parties even 3PL (third-party logistics), 4PL (fourth-party logistics) or only main parties. 
3. The willingness of users: Changing a process and system is not easy; it takes long time with a suitable road-map.

Supply Chain Innovation

Think about innovation, it is not only green supply chain but also optimization soft-wear, applying technology and the new process, method or channel. There is no limited in innovation, nowadays supply chain innovation trends are:

• How to reduce global impact to environment?
• How to reuse packaging and hanger?
• RIFD to track products .
• Optimization software: Loading, Inventory, Distribution, etc.
• Going on Online and Omni-channel: Last-Mile Delivery.
• Automation in reception and warehouse management and road delivery.
• 3D printing.
• Blockchain in supply chain.