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Supply Chain 101
The Journey of a T-Shirt
What is a Supply Chain?
• The sequence of processes involved in the production and
distribution of a commodity
PLAN MOVEMA...
Supply Chain Impacts You Everyday
• Your clothes - Brought to you through a supply chain that includes:
• Cotton farmer
• ...
Why a T-Shirt?
• Simple product – very few inputs
• Product familiar to everyone
• Global product – supply chain spans the...
Raw Materials - Cotton
• Cotton can be grown where land and labor are cheap, but…
• US cotton is still king – US is #1 pro...
Yarn
• The cotton is shipped to Indonesia
• The cotton is combed
• And combed again until it is like cotton candy
• Then p...
Cloth
• The yarn is shipped to Bangladesh
• Yarn is knitted into cloth
• Six miles of yarn in one t-shirt
• Washed
• And d...
Assembly
• T-shirt assembly was in Bangladesh (men’s) and Columbia (women’s)
• Sewing is still done by hand
• Garment manu...
Why These Countries? MFA
• In 1970’s, S. Korea became major garment exporter, threatening US
jobs
• Under President Nixon,...
Why These Countries? Tariffs
• “The book of everything," officially the Harmonized Tariff Schedule of
the United States de...
Tailor Shops to the World
• Textiles and clothing as a share of a
country’s total manufacturing
exports
• Most countries m...
Old way of shipping
• Loading ships used to be more art than science
• Each pallet, bale, container or barrel loaded indiv...
Containerization / Intermodal
• Devised in 1955 by Malcom McLean to bypass pre-Interstate roads
• Goods loaded at originat...
The Last Mile Problem
• Getting the goods to the end customer
• Most expensive cost in the t-shirt
• Can be 28% of total i...
Amazon and the Last Mile
• Amazon is experimenting with
multiple channels to deliver
packages
• Currently uses traditional...
T-Shirt Cost breakdown
• $12.42 approximate cost per t-shirt
• The men’s shirts cost approximately
10 cents to ship to the...
T-Shirt Travels
Cotton
Yarn
Cloth
T-Shirt
Customer
Supply Chain of the iPhone
• The iPhone is sourced from dozens of countries, from every continent except
Australia and Ant...
And Dozens of Suppliers
• Samsung – in Austin TX – makes the A9 Chips
• 3M – makes the film between the glass and the elec...
Layers of Suppliers
• Each supplier in the iPhone example has suppliers, some back to raw materials
• Apple has at least 2...
Conflict Minerals
Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone
• Amnesty International tried ...
Planet Money Podcast
• Much of this presentation is drawn from the NPR Planet Money
podcast series on The Journey of a T-S...
Questions?
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Supply Chain 101 The Journey of a T-Shirt (Updated)

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Using a t-shirt as an example, shows the entire supply chain from planning to customer delivery. Can be used in conjunction with the NPR Planet Money series on the manufacturing of a t-shirt.

This version has been updated to include new slides showing the complexity of the supply chain beyond a simple product.

Published in: Business, Technology
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Supply Chain 101 The Journey of a T-Shirt (Updated)

  1. 1. Supply Chain 101 The Journey of a T-Shirt
  2. 2. What is a Supply Chain? • The sequence of processes involved in the production and distribution of a commodity PLAN MOVEMAKE SELL Planners ManufacturersSuppliers Wholesale, Retail, DirectShippers End Users
  3. 3. Supply Chain Impacts You Everyday • Your clothes - Brought to you through a supply chain that includes: • Cotton farmer • Textile, button, thread manufacturers • Shipper • Clothing manufacturer • Retailer • Your morning coffee - Consider the various supply chains involved to provide you with: • Municipal water and electricity • Coffee beans • A filter • Cream • Sugar • A cup
  4. 4. Why a T-Shirt? • Simple product – very few inputs • Product familiar to everyone • Global product – supply chain spans the globe
  5. 5. Raw Materials - Cotton • Cotton can be grown where land and labor are cheap, but… • US cotton is still king – US is #1 producer in the world • Cotton is treated as a high-tech product • Ninety percent of US cotton is from genetically modified seed • Harvesting equipment is mostly automated • All US cotton is tested and graded after harvest, giving consistency • Subsidies • Crop insurance • Price protection • Direct payments • One farm in Mississippi grows enough cotton for 9 million t-shirts every year
  6. 6. Yarn • The cotton is shipped to Indonesia • The cotton is combed • And combed again until it is like cotton candy • Then pulled, twisted and spun to create yarn (thread) • All in an automated factory running 24x7 • Indonesia is current sweet spot for yarn
  7. 7. Cloth • The yarn is shipped to Bangladesh • Yarn is knitted into cloth • Six miles of yarn in one t-shirt • Washed • And dyed
  8. 8. Assembly • T-shirt assembly was in Bangladesh (men’s) and Columbia (women’s) • Sewing is still done by hand • Garment manufacturing moves from one low labor cost country to another as labor rates rise (England -> US -> S. Korea -> China -> etc.) • T-shirts are then shipped to New York, where printing occurred
  9. 9. Why These Countries? MFA • In 1970’s, S. Korea became major garment exporter, threatening US jobs • Under President Nixon, US and Europe signed the Multi-Fiber Arrangement (MFA), setting strict import limits by source country • S. Korea hit the limits, so opened shops in Bangladesh • Bangladesh now has over 4,000 garment factories • The MFA did not stop the flow of jobs from the US and Europe – just where those jobs went
  10. 10. Why These Countries? Tariffs • “The book of everything," officially the Harmonized Tariff Schedule of the United States determines tariff rates • Average tariff on goods imported is 2% • For T-shirts, it is 16.5%, unless for select countries, then its zero • Textile tariffs have been in place since 1789
  11. 11. Tailor Shops to the World • Textiles and clothing as a share of a country’s total manufacturing exports • Most countries move into new industries over time • Bangladesh stands out on the graph for a few reasons • Apparel exports make up a bigger share of Bangladesh’s exports than they ever did for any of the other countries • That share is still rising.
  12. 12. Old way of shipping • Loading ships used to be more art than science • Each pallet, bale, container or barrel loaded individually • It could take weeks and hundreds of workers to load / unload a ship
  13. 13. Containerization / Intermodal • Devised in 1955 by Malcom McLean to bypass pre-Interstate roads • Goods loaded at origination point, unloaded at receiving point • Same container used on ocean, rail and truck (intermodal) • Standard size is 40’ long x 8’ wide x 9’ 6” tall • Drastically cut cost of transport around the world
  14. 14. The Last Mile Problem • Getting the goods to the end customer • Most expensive cost in the t-shirt • Can be 28% of total item cost
  15. 15. Amazon and the Last Mile • Amazon is experimenting with multiple channels to deliver packages • Currently uses traditional carriers (UPS, FedEx, USPS) • Experimenting with Uber-like package delivery
  16. 16. T-Shirt Cost breakdown • $12.42 approximate cost per t-shirt • The men’s shirts cost approximately 10 cents to ship to the United States from Bangladesh. • The women’s shirts cost about 7 cents to ship to the United States from Colombia.
  17. 17. T-Shirt Travels Cotton Yarn Cloth T-Shirt Customer
  18. 18. Supply Chain of the iPhone • The iPhone is sourced from dozens of countries, from every continent except Australia and Antarctica • Austria • Belgium • Brazil • China • Czech Republic • France • Germany • India • Indonesia • Norway • Philippines • Singapore • South Korea • Taiwan • Thailand • United Kingdom • United States • Vietnam • Ireland • Israel • Italy • Japan • Malaysia • Malta • Mexico • Morocco • Netherlands Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone
  19. 19. And Dozens of Suppliers • Samsung – in Austin TX – makes the A9 Chips • 3M – makes the film between the glass and the electronics • Corning – makes the Gorilla Glass • Texas Instruments – makes chips that make the phone understand touch • Largan Precision – makes the camera lens in Taiwan • Cirrus Logic – makes audio components • Murata Manufacturing – makes ceramic capacitors • Vishay Intertechnology – makes electronic components such as capacitors and resistors Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone
  20. 20. Layers of Suppliers • Each supplier in the iPhone example has suppliers, some back to raw materials • Apple has at least 200 suppliers • If each supplier also has five suppliers, and each of those three, you are quickly at 5,000 suppliers and sub-suppliers • Creates very complicated supply chains – small disruptions and ripple quickly • Also creates potential legal and moral complications Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone
  21. 21. Conflict Minerals Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone • Amnesty International tried to trace one mineral – cobalt – from one supplier to eventual end user
  22. 22. Planet Money Podcast • Much of this presentation is drawn from the NPR Planet Money podcast series on The Journey of a T-Shirt • Listen to the entire t-shirt podcast series: http://www.npr.org/tags/190719989/planet-money-t- shirt • A podcast just on what UPS is doing to make the last mile more efficient: http://www.npr.org/blogs/money/2014/05/02/308640135/episode-536-the-future-of-work-looks-like-a-ups-truck
  23. 23. Questions?

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