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Supply Chain


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Fashion, apparel, textile, merchandising, garments

Published in: Business, Lifestyle
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Supply Chain

  1. 1. Application of Information Engineering to model the complex supply chain relationship for a textile and clothing industry in Hong Kong/China Jimmy K.C. Lam Institute of Textiles & Clothing The Hong Kong Polytechnic University
  2. 2. Agenda <ul><li>Introduction </li></ul><ul><li>What is Information Engineering ? </li></ul><ul><ul><li>Information Pyramid </li></ul></ul><ul><ul><li>Four Stages of implementation </li></ul></ul><ul><li>The Study </li></ul><ul><li>The Results </li></ul><ul><ul><li>Current business Practices </li></ul></ul><ul><ul><li>Critical Success factors </li></ul></ul><ul><ul><li>Application Portfolio </li></ul></ul><ul><li>Conclusion </li></ul>
  3. 3. Introduction <ul><li>Hong Kong is one of the leaders in the world of textile and clothing and the industry accounts for one-third of local output and employed over 324,000 people in about 30,000 industry in 1997. </li></ul><ul><li>However, the global market has become more competitive and with the relocation of many manufacturing establishment to other regions, activities like sourcing, quality assurance and development of textile products are becoming more and more important. </li></ul>
  4. 4. Introduction <ul><li>In 90’s “world class” organizations purchase, produce, move and market goods and services on a global basis meeting customers’ needs in a timely, cost effective way. </li></ul><ul><li>To remain competitive, good Supply Chain Management (SCM) is vital. </li></ul>
  5. 5. Information Engineering <ul><li>The application of an interlocking set of formal techniques for the planning, analysis, design and construction of information systems on an enterprise-wide basis or across major sector of the enterprise. </li></ul><ul><li>Unlike software engineering, which applies structured techniques to one project, information engineering, applies structured techniques to the enterprises as a whole, normally with automatically tools. </li></ul>
  6. 6. Information Pyramid Characteristics <ul><li>IE applies structured techniques on an enterprise-wide basis, rather than on a project-basis; </li></ul><ul><li>IE processes in a top-down fashion; </li></ul><ul><li>As it progresses through these stages, IE builds a steadily evolving repository of knowledge about the enterprise, its data model, process model and system design; </li></ul><ul><li>IE identifies how computing can best aid the strategic goals of the enterprise. </li></ul>
  7. 7. Four Stages of Information Engineering <ul><li>Stage 1: Information Strategy Planning </li></ul><ul><ul><li>Concerned with top management goals and critical success factors </li></ul></ul><ul><li>Stage 2: Business Area Analysis </li></ul><ul><ul><li>Concerned with what processes are needed to run a selected business area; how these processes interrelate; </li></ul></ul><ul><li>Stage 3: System Design </li></ul><ul><ul><li>Concerned with how process are implemented and in what procedure </li></ul></ul><ul><li>Stage 4: Construction </li></ul><ul><ul><li>Code generation, prototyping </li></ul></ul>
  8. 8. The Four Stages of Information Engineering
  9. 9. The Study <ul><li>A listed company in Hong Kong Stock Exchange with 450 retails shops in China and close to 200 Australian sales outlets selling young causal wears was selected. </li></ul><ul><li>The operation covers a) apparel retailing; b) trading and merchandising; c) garment manufacturing and d) fabric production. </li></ul>
  10. 10. <ul><li>The IE model was used to firstly strategic overview the current business operation and secondly a detail business analysis on current problems and improvement areas. (The first and second layers of pyramid) </li></ul>
  11. 11. Data Collection <ul><li>The studies was carried out in Hong Kong/China from Jan-July 2000 and the data collection is done in three phases. </li></ul><ul><li>Phase One : Understand the existing mode of operation of the Enterprise </li></ul><ul><li>Phase Two: In depth interview of its senior executives in different organization units on 1) goals and problems analysis; and 2) critical success factors. </li></ul><ul><li>Phase Three: Brainstorming exercise for the Enterprise to access the technology impact to the business operation in the coming three to five years. </li></ul>
  12. 12. Data Analysis <ul><li>Business Systems Planning (BSP) and Critical Success Factors are used as a portfolio of information for data analysis. </li></ul><ul><li>Business Systems Planning is a structured interview technique developed by IBM on identifying the problems and decisions associated with an organization process and determine what information is needed to address them. </li></ul><ul><li>Critical Success Factors focus on key performance areas that must be function effectively for the organization to be successful and associated information requirement </li></ul>
  13. 13. Business Systems Planning
  14. 14. Critical Success Factor
  15. 15. Results <ul><li>Current Business Practices and Environment </li></ul><ul><li>Critical Success Factors </li></ul><ul><li>Application Portfolio </li></ul>
  16. 16. Current Business Practices <ul><li>Apparel Retailing </li></ul><ul><ul><li>Apparel spending in China is still high (up to 20-30% of average income). </li></ul></ul><ul><ul><li>However, consumer behaviors among different provinces are very diverse. Eg. Shanghai and Guangdong </li></ul></ul><ul><ul><li>Fashion trend in China is roughly a year behind the West. </li></ul></ul><ul><ul><li>Replenishment is normally take 3 days using services similar to Federal Express/DHL </li></ul></ul><ul><li>Trading and Merchandize Procurement </li></ul><ul><ul><li>Complex tasks to co-ordinate different manufactures for the same order </li></ul></ul><ul><ul><li>Normally takes 75 days to produce a woven products and 50-60 days for knitwear products </li></ul></ul>
  17. 17. Current Business Practices <ul><li>Garment Manufacturing </li></ul><ul><ul><li>Need to source more suppliers to ensure timely material delivery and more buyers to fill up the spare capacity </li></ul></ul><ul><ul><li>Difficult to maintain single partnership relationship </li></ul></ul><ul><ul><li>Garment quality in term of workmanship is a common production problem. </li></ul></ul><ul><li>Fabric Manufacturing </li></ul><ul><ul><li>The most important task is to get the suitable level of stock and in the right item for garment manufacturing </li></ul></ul><ul><ul><li>Accurate forecast of the market demand is necessary </li></ul></ul><ul><ul><li>Information is collected from sales and practitioners in the industry. </li></ul></ul>
  18. 18. Critical Success Factors <ul><li>Apparel Retailing </li></ul><ul><ul><li>Brand Name </li></ul></ul><ul><ul><li>Inventory </li></ul></ul><ul><ul><li>Shop Image </li></ul></ul><ul><li>Trading and Merchandizing </li></ul><ul><ul><li>Competitive price, quick response and punctual delivery </li></ul></ul><ul><ul><li>Value added customer service </li></ul></ul><ul><ul><li>Bar code and scan and pack service. </li></ul></ul>
  19. 19. Critical Success Factors <ul><li>Garment Manufacturing </li></ul><ul><ul><li>Quota Price </li></ul></ul><ul><ul><li>Delivery on time </li></ul></ul><ul><ul><li>Competitive cost </li></ul></ul><ul><ul><li>Good relationship with forwarder </li></ul></ul><ul><li>Fabric Manufacturing </li></ul><ul><ul><li>Fast and accuracy delivery </li></ul></ul><ul><ul><li>Accurate Inventory </li></ul></ul>
  20. 20. Application Portfolio <ul><li>Based on the above information strategy planning and business area analysis, it became obvious to reduce inventory turnover time so that unnecessary financial “wastage” can be recovered. </li></ul><ul><li>At present, the inventory turnover for the Company is 90 days while the benchmarked best practice in the industry is about 45-50 days. </li></ul><ul><li>The reasons are due to inability to use existing sales and market information about current consumers’ buying behaviors, buyers’ preferences, fashion trend and feedback on the effectiveness of marketing strategy. </li></ul>
  21. 21. Application Portfolio <ul><li>Sales Analyzer </li></ul><ul><ul><li>to recognize the best seller in the shop/region, to recognize the poor performance item; support comparison of sales. </li></ul></ul><ul><li>Sales Forecast and Planning System </li></ul><ul><ul><li>provide summary of performance in the past buy plan; support forecast of sales catalogue based on past performance, current trend and budget </li></ul></ul><ul><li>Logistics Control on Sales Operation System </li></ul><ul><ul><li>link with warehouse system to support inventory information, provide analysis for possible routes of goods transfer </li></ul></ul>
  22. 22. Conclusion <ul><li>This paper discusses the methodology, characteristics and implementation stages of IE and a textile/clothing/trading/retailing complex organization was selected for studies. </li></ul><ul><li>The current business practice and trend, critical success factors were identified and results were formulated in a set of application portfolio to minimum stock out and increase stock turn over for the Enterprise </li></ul><ul><li>The IE methodology proved to be useful in studying the complex supply chain with its enterprise-wide approach. </li></ul>