The Characteristics of the Fashion Industry and How They Influence Supply Chain

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Executive Summary

The fashion industry has been the latest to adopt the use of the internet as a marketing platform for its products. This is associated to the nature of the products in the industry.

People buying apparel products would probably want to feel the texture of the material, try it on to confirm the size, check the color of the material before making a decision (White, 2000, p. 95). These buying characteristics can not be carried out online. It has taken time to change this mentality and create the possibility of online shopping of apparel products among customers.

This paper examines the characteristics of the fashion industry and how these characteristics influence management of the supply chain. The paper also discuses the application of information technology in the collection of data on sales and how the data can be used to predict demand shifts. A further focus is on how information technology can be used to augment the effectiveness of an order form.

The Characteristics of the Fashion Industry and How They Influence Supply Chain Management

The fashion industry thrives on the efforts of retailers who mostly take up the role of supply, sales and merchandising of products to the consumers. The retail process of the fashion products heavily relies on the spending power of the consumers. When the consumer purchasing power is high, the sales volumes go up.

The sales consequently reduce when the consumer purchasing power reduces. Fashion markets are unpredictable i.e. the market experiences frequent shifts depending on the fashion tastes of the consumers (White, 2000, p. 87). In order for the retailers to keep up with the market dynamics, they need to be keen and master the fashion trends. They also have to develop a good management system for their inventories in tandem with the needs of their.

The fashion industry is more about designs and quality. Fashion designers spend time and resources to develop and come up with fascinating fashion designs. The law has not been structured well to protect designers from piracy. After a long time laboring and struggling to come up with a striking fashion design, photographs and drawings of the same are quickly taken and whisked to china where they are reproduced at a much cheaper cost than what the original producer would want to sell it at (Fernie & Sparks, 2004, p. 70).

The pirated fashions flood the market so fast at a much cheaper price making the designers to go back to the drawing board for new fashion designs. Fashion sales have remained high despite the effects of piracy on the fashion designs. The reason for this is attributed to the fast change in taste of the fashion, every year; customers are dissatisfied with the existing fashion and look forward for new fashions in the proceeding seasons.

Lipsey & Alec (2008, p. 78), associate the faster growth of the fashion industry to piracy; it facilitates quick delivery of products to the consumers in mass. When products reach the market fast and in mass, people grab the products in mass making the design obsolete in a short period of time.

Piracy also creates the need for more innovations in fashion, raises the level of competition and improves the sales volume in the industry. It looks like legislation or patenting fashion would be a way of killing the industry in terms of innovation and growth. Taking an example of the company that invented the pinstripe fashion. If this product was patented and all rights given to the company, there would be very little innovation along this line of business.

The supply chain for the fashion industry as earlier discussed is dynamic and very unpredictable. There is need to have an intelligent information management system to capture customer requirements. The most typical system that has been in use for this purpose in the fashion industry is the quick response. The system is used for maintaining the supply chain management system efficiently.

Recent system developments have given rise to the integration of the management information system and the e-fashion supply chain management multiple agent system (Khosrowpour, 2000, p. 1160). The integrated system is capable of capturing more essential information about the consumers. This requires establishing a stable relationship between both customers and suppliers as well as ensuring efficient and effective utilization of resources and profits.

Use of IT to Collect Sales Data and to Respond to Demand Changes

Sharing of information between suppliers and retailers is essential. The Electronic Data Interchange (EDI) is a technological tool that facilitates the sharing of business documents such as bills, purchase orders and invoices (Khosrowpour, 2000, p.1156).

Sharing information over the EDI enables quick response to market demands and prediction of the changes in the market. EDI enhances the sharing of resources, giving the supplier and retailers an opportunity to predict consumer insights. Using an EDI system in the initial stages is trickier especially if the user has not developed a network of partners to share information with.

Many users begin by sharing information with a small number of partners, and then slowly expand the network to involve more partners. A number of researchers argue that it is not easy to justify the cost involved in the use of EDI as a communication channel in business. Most of the challenges pointed out regard the difficulty to forge co-operation between suppliers and retailers.

In the wake of several options of alternative communication channels, many users of the EDI system are tempted to use different forms of communication. This makes EDI use more costly and time consuming in its coordination.

Collaboration within the supply chain management in the fashion industry is supported by quick response (QR) methods. Fernie & Sparks (2004, p. 56) Indicates that QR is a collaborative planning among the supply chain players to see to it that the right products are delivered where they needed and at the right time.

QR system is made supported by both the EDI and the EPOS programs. The system captures and displays the most current demand data, demand data is important to the suppliers for predicting possible shifts in the inventory. After determining the right product on demand and where they are required, the suppliers then deliver the products to the stores. Capturing first hand information from the product consumer enables the supply chain partners to deliver the right product to the consumers every time.

Unlike the traditional supply chain management programs which rely on purchase orders and guessing the possible trends, QR is more accurate and responsive to immediate customer needs (Fernie & Sparks, 2004, p. 62). QR gives the supply chain partners a competitive advantage edge by enabling them get the accurate information about the needs of the consumers. Armed with this information, the suppliers get the products to the consumer as required of them.

With information about the trends of consumer purchase behavior, manufacturers are also in position to regulate production of the fashion products by focusing on what is needed in the market by (Gourdin, 2001, p. 147). Guessed trend information does not give a clear picture in this scenario, manufacturers and supply chain partners who rely on this traditional mode of business prediction are more likely to run into loses by delivering to the market what is not needed.

EDI systems helps reduce costs involved in the supply process by providing information about the supply chain process from the manufacturer, suppliers, retailers to the consumers. This information is essential in improving consumer service and dealing with possible inefficiencies and avoiding excesses in the supply chain.

The EDI information is also used in planning for the movement of the products from the manufacturers to the final consumer with the storage demands being catered for in the process. The supply chain partners gain a competitive advantage by delivering products to consumers at a lower cost, accurately and within the required time.

As a result of heightened industrial production and the need for high quality customer service, bar codes have found a greater application in the supply chain management. Bar codes help in generating more accurate information about inventory so that the suppliers can be able to deliver only what is exact according to the needs of the consumers (Gourdin, 2001, p. 154).

Bar codes have endured for a long period of time as tools that provide reliable and accurate information to suppliers. They reduce the time consumed on data entry by allowing transfer of information into the system through scanning. The accuracy of bar code data entry and collection is quite reliable; use of bar codes also improves the labor productivity in the supply chain.

The fashion industry is gradually adapting to e-commerce and many enterprises are able to sell their wares via the internet (Waters, 2007, p. 34). One company in the fashion industry that has adopted e-commerce is Zara. Zara displays its designs on the website and allows for up-close viewing of the same through application of latest computer technology (Zara, 2010). To facilitate easy access to new designs and ordering, the website has customized applications that are phone user friendly.

Fashion sales on the internet have picked up fast, companies are able to sale their products to customers in various parts of the world through the internet (Lipsey & Alec, 2008, p. 82). Fashion companies have set up websites through which they are able to transact with buyers.

Pictures of the fashion products and some times the cost are displayed on the site and a purchase can be made by clicking on the item, and then defining the desired characteristics in terms of size and colour. Payments are made through any of the online payment methods and the product is delivered to the buyer’s location (Sehgal, 2009, p.178). The most common e-fashion shop is the e-fashion brand name products trading company limited, which runs on the website www.tradekey.com.

Use of IT to Increase Efficiency and Effectiveness of Order Fulfillment

Because of the increased competition from the global fashion companies, there is an urgent need for supply chain partners to develop a mode of supply that responds quickly to the needs of the customers. Applying an efficient mode of supply and management means that the products reach the consumer well on time before the other suppliers have delivered theirs (Waters, 2007, p. 56).

The supply chain is a composition of members all with a common goal of delivering the products to the consumers. Sometimes coordination of these members to have them equally responsive is not possible.

Many companies have now resorted to forming strategic alliances for outsourcing. The RFID technology has come up to improve the tracking process of products as they move from the manufacturers to the consumer (Khosrowpour, 2006, p. 362). RFID is a tiny chip that bears the identification information for the product which is usually tacked to the product. Such a product can then be tracked on its supply line effectively within a short time and using less labour.

RFID is very vital in demand planning, using the RFID; it is easier to get information about the inventory of the goods that are ready for supply, the amount of work in progress and the products on transit (Zentes & Morschet, 2007, p. 316). This information can be obtained with high level of precision, including the dates. Companies are competing to obtain information about consumers, regarding specification of the products that they need, in terms of quality and price.

Order fulfillment is the key to attaining the supply chain management objectives. The main objective of supply chain management is to meet the customers requirement and on time. The RFID technology aims at automating supply chain processes such as shelving, and picking (Khosrowpour, 2006, p. 364). This can eliminate possible supply mistakes such as sending a wrong item to a customer.

This can be costly to the suppliers as in many cases when such a mistake is incurred; the product has to be returned at the cost of the supplier and the right product taken to the supplier. With RFID, the supplier can be able to track a product through the supply chain route and find out the exact location of the item (Sehgal, 2009, p.173). The technology is implemented by mounting the RFID at strategic distribution points, the products coming in are automatically matched to the right purchase order reducing the time and labour involved.

Automation in the assembly line, in operation process can be achieved by use of RFID. This reduces time and increase production levels. RFID technology enables tracking of the products both within the manufacturing process and distribution channel (Khosrowpour, 2006, p. 368).

Returns back to the company can be tracked effectively and efficiently by use of the RFID technology. Manufacturing processes have also gone an extra mile to adopt the material resource planning (MRP) system (Marchand & Kettinger, 2002, p. 57). This system enables the manufacturers to precisely determine the amount of material required for producing a particular product to avoid wastage. To bring every business department on the focus of the ERP comes in handy in monitoring every business department.

Conclusion

The internet has transformed the way business is transactions are carried out. Virtually all business processes are utilizing information technology to achieve a competitive advantage in business processes. The objective of supply chain management is to reduce the time in meeting the customer requirement and reduce the cost of supply.

EDI facilitates sharing of information between suppliers and retailers to get proper insight into the consumers’ demands. This information helps the suppliers to accurately meet the demands of the consumer at the right time and avoid loses. RFID, ERP and MRP are essential technology tools that suppliers are relying on to achieve efficient and effective results in the supply chain.

References

Fernie, J., & Sparks, L., 2004, Logistics and Retail Management: Insights into Current Practice and Trends. Kogan Page Ltd, London.

Gourdin, K., 2001, Global logistics management: a competitive advantage for the new millennium. Blackwell Publishing Ltd, New York.

Khosrowpour, M., 2000, Challenges of Information Technology Management in the 21st Century. Idea Group Publishing, Hershey.

Khosrowpour, M., 2006, Emerging Trends and Challenges in Information Technology Management, Volume 1, Idea Group Publishing, Hershey

Lipsey, G., & Alec, K., 2008, Economics, Oxford University Press, New York

Marchand, W., & Kettinger, J., 2002, Information Orientation: The Link to Business Performance. Oxford University Press, New York.

Sehgal, V., 2009, Enterprise Supply Chain Management: Integrating Best in Class Processes. John Willey & Sons Inc, New Jersey.

Waters J., 2007, Global Logistics: New Directions in Supply Chain Management. Kogan Page Ltd, London.

White, N., 2000, The Fashion Business: Theory, Practice, Image, Oxford International Publishers, New York.

Zara, 2010, Zara. Web.

Zentes, J., & Morschett, D., 2007, Strategic Retail Management: Text and International Cases. Springer Science + Business Media, London.

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