Chapter 3: Sourcing in Fashion Supply Chains Fashion Supply Chain Management

Flow of a Fashion Supply Chain Manufacturing Retailing Supplier Retailer (Buyer) Customers - Produce products Fashion brand owner Fashion design Place order -Purchase Company name-Presentation

Sourcing Decisions in a Fashion Supply Chain Sources of cost: flows of information, products, or funds between stages of the logistics movement Product Information Supplier Buyer Payment

Product Sourcing decisions in a supply chain Basic item Fashionable item - Trendy - Follow taste of customer - Customer may dislike it tomorrow - Not designable Every customer needs it today and tomorrow

Information Supply information Demand information Information sharing Manufacturing Retailing Supplier Retailer (Buyer) Supply information Labor efficiency Machinery condition Production capacity Demand information Consumer taste Market condition Fashion trend Information sharing

Information Supply information Demand information Information sharing Manufacturing Retailing Supplier Retailer (Buyer) Information sharing Company name-Presentation

Payment 1 2 3 Retailer (Buyer) Pay in advance Pay when the product is arrived Pay after the product is sold Supplier Supplier has healthy cash flow Retailer has healthy cash flow Click to add your text here Company name-Presentation

Pay when the product is arrived Pay after the product is sold Payment 1 2 3 Retailer (Buyer) Pay in advance Pay when the product is arrived Pay after the product is sold Supplier Click to add your text here Click to add your text here Company name-Presentation

Objectives of Sourcing Management In Fashion Supply Chains Sourcing management aims at an efficient and effective management of flows between and among supply chain stages to maximize total chain profitability. Manufacturing Retailing Supplier Retailer (Buyer) Customers Total chain profitability

Adidas: A famous sportswear retailer Case Study Shenzhou: A knitwear manufacturer in Ningbo, Zhejiang Outsource Adidas: A famous sportswear retailer

Case Study Shenzhou’s customers According to the China Knitting Industry Association, Shenzhou ranked first in terms of profit before taxation and second in terms of sales among China’s knitwear manufacturers

Questions: why Shenzhou can be so successful Shenzhou is not only an apparel manufacturer, but also provides many services such as design. Design Innovation Manufacturing Retailing Adidas Shenzhou Customers Competitive advantage: Provision of design innovation service -> pay more and pay earlier Shenzhou is a full package supplier

Summary – what do we learn from this class? Products, payment, and information in sourcing decisions. Products can be categorized into basic and fashionable items. Information can be categorized into supply information and demand information. Payment can be categorized into pay-in-advance, pay when the products are arrived, and pay after the products are sold. Find the internal relationship among products, payment, and information Shenzhou’s example on sourcing management

Extra Reading After Class Design Outsourcing in Fashion Supply Chain: OEM v.s. ODM, Journal of the Operational Research Society. 67, 259-268, 2015.