R. Postle Department of Textile, The University of New South Wales, Sydney, Australia



Similar documents
THE DEVELOPMENT OF SUPPLY CHAIN MANAGEMENT IN THAILAND TEXTILE INDUSTRY

Supply Chain development - a cornerstone for business success

Defining supply chain management: a historical perspective and practical guidelines

: AN EFFECTIVE FRAMEWORK FOR TEACHING SUPPLY CHAIN MANAGEMENT

consulting group Increase Competitiveness Reduce Costs

Supply Chain Management

Strategic Framework to Analyze Supply Chains

INTRODUCTION TO SUPPLY CHAIN MANAGEMENT

Creating the Agile Supply Chain. Martin Christopher, Cranfield School of Management

WHITE PAPER. Responsive Supply Chain. Abstract

Logistics Management SC Performance, SC Drivers and Metrics. Özgür Kabak, Ph.D.

Supply Chain Management

Content. Chapter 1 Supply Chain Management An Overview 3. Chapter 2 Supply Chain Integration 17. Chapter 3 Demand Forecasting in a Supply Chain 28

Reduce your markdowns. 7 ways to maintain your margins by aligning supply and demand

The Network Approach to Inventory Management

Operations Management Coursework ECCO Shoes Global Value Chain

HISTORY AND INTRODUCTION

SUPPLY CHAIN MODELING USING SIMULATION

Aligning Supply Chain Strategies with Product Uncertainties. Lee, Hau L. California Management Review, Vol. 44, No. 3, (2002) pp.

Globalization Drives Market Need for Supply Chain Segmentation: Research & Key Strategies

The Utilization of Shared Demand Information in a Textile Supply Chain

Electronics Components Manufacturing: The Path to Excellence

Dealing With Multi-Country Businesses

TWX-21 Business System Cloud for Global Corporations

SCM. Logistics, Service, and Operations Management

Weiqiao Textile Announces its 2015 Interim Results

Cutting-Edge Concepts in Inventory Management

COORDINATION IN THE SUPPLY CHAIN: VENDOR MANAGED INVENTORY IS THE WAY TO GO

Supply Chain Management

Redesigning the supply chain for Internet shopping Bringing ECR to the households

Seminar 3: Beer Game. - Analysis -

Operations and Supply Chain Management Prof. G. Srinivasan Department of Management Studies Indian Institute of Technology, Madras

Supply chain planning and control

4 Key Tools for Managing Shortened Customer Lead Times & Demand Volatility

The Evolution of Textile and Apparel Industry in Asia. Dr. Gordon YEN Executive Director & Chief Financial Officer

Master Complexity with Apparel and Textile for Microsoft Dynamics AX 2012

Making Strategic Decisions with Oracle Advanced Planning. An Oracle White Paper September 2006

Management of Uncertainty In Supply Chain

A True Roller Coaster Ride: Sourcing Markets Force Fashion Players to Paradigm Change. Kurt Salmon Global Sourcing Reference 2015 [12th Edition]

Supply Chain Performance Achieving Strategic Fit and Scope. Bent Steenholt Kragelund

Koç University OPSM 305 Supply Chain Management

Primary Logistics Activities

An Analysis of Inventory Management of T-Shirt at Mahanagari Bandung Pisan

CSCMP Level One : Cornerstones of Supply Chain Management. Learning Blocks

Supply Chain Management Think Global, Go Global. Hau L. Lee Stanford University

GAINING COMPETITIVE ADVANTAGE USING EFFECTIVE SUPPLY CHAIN MANAGEMENT By Osita Chukwuma

Six Key Trends Changing Supply Chain Management Today. Choosing the optimal strategy for your business

The business case for agile supply chains

Expanding Apparel and Textile Market through effective Marketing Strategies: A case study of Bangladesh

Omni-Channel Logistics

Supply Chain Management Build Connections

SMALL AND MID-SIZE COMPANIES

INTRODUCTION. What is Enterprise Resource Planning?

Operations management: Special topic: supply chain management

A Relational View of Resources-based Theory: The case of Internationalization of Li & Fung Group

Supply Chain Management

A simulation study on supply chain performance with uncertainty using contract. Creative Commons: Attribution 3.0 Hong Kong License

SPORTING GOOD RETAILERS ebook

Information Systems in the Enterprise

ORIGINAL RESEARCH: A system dynamics approach to supply chain performance analysis of the ready-made-garment industry in Bangladesh

Enterprise Systems: From Supply Chains to ERP to CRM

Learning Objectives. Supply Chains & SCM Defined. Learning Objectives con t. Components of a Supply Chain for a Manufacturer

Section D: Logistics APICS All rights reserved Version 1.4 Draft 2

Lecture Series: Consumer Electronics Supply Chain Management

Meeting the Challenges of Supply Chain Management

Global Sourcing Highlights and Trends for 2015 Onwards

Strategic Planning for the Textile and Clothing Supply Chain

Meeting the Quick Response Challenge: A Winning Solution For Textile Manufacturers

A Best-Practice Approach to Transforming Global Supply Chains

The FashionPro Retail Solution

How To Outsource Mro Supply

CHAIRMAN S STATEMENT. William Fung Group Chairman

RESEARCH DIRECTION AND KNOWLEDGE MANAGEMENT OF SUPPLY CHAIN AND LOGISTICS IN THAILAND

Supply Chain. cinagement. IStlGS USO OS.S. Fourth Edition. Donald J. Bowersox David J. Closs M. Bixby Cooper John C. Bowersox.

Exploding Demand for Fashionable Swimwear An ERP System to Manage the Business Becomes Inevitable

Key Development Trends in Supply Chain Management

Strategic procurement

The Global Supply Chain Goes Collaborative

Business Challenges. Customer retention and new customer acquisition (customer relationship management)

Clothing Consumption By. On Fibre Manufacturer Supply Chains. Arvind Singhal Chairman, Technopak Advisors. 6 th Nov, 2012

Information Systems for Business Integration: EDI, SCM, CRM Systems

Supply Chain Management

This paper describes a framework for designing the distribution network in a supply chain. Various

Considerations. Change your viewpoint. Understand and pursue The Primary Metrics

EVERYTHING YOU NEED TO KNOW ABOUT INVENTORY

The Supply Chain Excellence Study Long version

THE VALUE OF POINT-OF-SALES DATA IN MANAGING PRODUCT INTRODUCTIONS: RESULTS FROM A CASE STUDY

Operations Management Part 12 Purchasing and supplier management PROF. NAKO STEFANOV, DR. HABIL.

Locating outsourced and offshored production based on supply chain strategy: Findings from Swedish fashion/trend apparel companies

Analysis of the Premium Denim Market

Five Tips to Achieve a Lean Manufacturing Business

P R E S S R E L E A S E

American Wear. Business Overview/Executive Summary

Today, the Cisco Enterprise B2B team has created automated and standardized processes in the following areas:

THE VALUE OF INFORMATION SHARING IN THE RETAIL SUPPLY CHAIN: TWO CASE STUDIES

Management Information Systems MANAGING THE DIGITAL FIRM, 12 TH EDITION GLOBAL EDITION

Demand Chain Management: The Other Side of Supply Chain Management. Abstract

SUMMARY. Capitalised terms are defined in the section headed Definitions.

Scope of Supply Chain Management (SCM)

Examples of Different Value Chains. -BISWAJIT NAG IIFT, New Delhi

Transcription:

The current issue and full text archive of this journal is available at wwwemeraldinsightcom/0955-6222htm Textile and apparel supply in Hong Kong Jimmy KC Lam Institute of Textiles and Clothing, the Hong Kong Polytechnic University, Hunghom, Hong Kong, and R Postle Department of Textile, The University of New South Wales, Sydney, Australia Apparel supply 265 Received October 2004 Revised March 2006 Accepted March 2006 Abstract Purpose This paper aims to review the concept of supply The typical problems facing with textile and apparel supply are short product cycle for fashion articles, long production lead-time and forecasting errors for fashion items The Hong Kong textile and apparel supply faces additional problems of distance from customers in the US and European markets, long production lead-times and minimum batch sizes for production, and, recently, elimination of quota restriction in the US market, all of which force them to improve efficiency and enhance competitiveness through supply Seeks also to provide a selective bibliography for industrial practitioners with sources which can help them develop their supply strategies for the fashion market in Hong Kong Design/methodology/approach A range of recent published (1993-2005) works, which aim to provide practical advice are critiqued to aid the individual practitioner to manage its supply strategies in Hong Kong These sources are sorted into sections: supply in Hong Kong, textile and apparel supply in Hong Kong, and problems faced by small and medium-sized enterprises for textile and apparel supply Findings The differentiation of product demands into functional and innovative products helps the supply company to employ different supply strategies for different products, namely responsive supply strategy for innovative products and efficiency supply strategy for functional products These two supply strategies are focused on the downstream supply aiming at shortening the time to research the market and also to reduce the stock levels in the retailing industry Research limitations/implications This is not an exhaustive list and cases are mainly from the Hong Kong textile and apparel industry, which perhaps limits its usefulness elsewhere Practical implications A very useful source of information and impartial advice for industrial practitioners to develop their own supply strategies for the fashion market in Hong Kong Especially recently with the elimination of quota to the US market, the of the supply is critical Originality/value This paper fulfils an identified information/resources need and offers practical help to industrial practitioners on then supply for the Hong Kong textile and apparel industry Keywords Supply, Textile industry, Hong Kong Paper type General review 1 Introduction In recent years, world class organizations purchase products, move and market goods and services on a global basis in order to meet customers needs on a timely basis, with relevant and high quality products produced and delivered in a cost effective manner International Journal of Clothing Science and Technology Vol 18 No 4, 2006 pp 265-277 q Emerald Group Publishing Limited 0955-6222 DOI 101108/09556220610668491

IJCST 18,4 266 To achieve this goal, the concept of supply (Cox et al, 1995) has proven to be of vital importance especially for the Hong Kong textile and garment industries Hong Kong has become an important sourcing and control centre for the global garment industry with production plants in China, Indonesia, Thailand and India (Hong Kong Government Industry Department, 1995) Although billions of dollars of apparel business are conducted in Hong Kong, relatively little knowledge about the of supply s is reported in published research The technologies of electronic data interchange (EDI), flexible manufacturing, automated warehousing and rapid logistics appear to achieve little improvement in the supply (Fisher, 1997) New concepts such as quick response, efficient consumer response, mass customization, lean manufacturing again fail to deliver the cost saving and performance improvements in the supply (Fisher, 1997) 2 Supply Companies have traditionally viewed themselves as entities that exist independently and have to compete against each other in order to survive However, such mindset cannot be sustained as no organization can operate alone in complete independence Firms are finding that they can no longer compete effectively in isolation of their suppliers or other entities in the supply and are realizing the benefits of collaborative relationships within and beyond their own organization (Cox et al, 1995) The concept of the supply and its are attracting increasing attention on behalf of both academic and industrial practitioners 21 Definition of supply Various definitions of a supply have been offered in recent years as the concept has gained popularity The APIC dictionary (Cox et al, 1995) describes the supply as: the process from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies; and the functions within and outside a company that enable the value to make products and provide services to the customers The Supply Chain Council (1997) uses the definition: The supply a term increasingly used by logistics professionals encompasses every effort involved in producing and delivering a final product, from the supplier s supplier to the customer s customer Four basic processes plan, source, make, deliver broadly define these efforts, which include managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order, distribution across all channels and delivery to the customers Quinn (1997) defines the supply as: all of those activities associated with moving goods from the raw materials stage through to the end-user This includes sourcing and procurement, production scheduling, order processing, inventory, transportation, warehousing and customer services Importantly, it also embodies the information systems so necessary to monitor all of those activities

In addition to defining the supply, several authors have further defined the concept of supply As defined by Ellram and Copper (1993), supply is an integrating philosophy to manage the total flow of a distribution channel from supplier to ultimate customer Monczka and Morgan (1997) state that: integrated supply is about going from the external customer and then managing all the processes that are needed to provide the customer with value in a horizontal way They believe that supply s, not firms, compete and that those who will be the strongest competitors are those that: can provide and leadership to the fully integrated supply including external customer as well as prime suppliers, their suppliers, and their supplier suppliers From these definitions, a summary definition of the supply can be stated as: All the activities involved in delivering a product from raw material through to the customer including sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order, distribution across all channels, delivery to the customer and the information systems necessary to monitor all of these activities Supply coordinates and integrates all of these activities into a seamless process It links all of the partners in the including departments within an organization and external partners including suppliers, carriers, third-party companies and information systems providers Recently, a new type of supply is emerging in the industry, namely the late design responsive supply (Macedo, 2005) This supply combines the traditional supply and agile design-responsive supply together to eliminate product inventories and delivery times for fashion market Apparel supply 267 22 Supply in Hong Kong Two local supply studies have been conducted in Hong Kong The first study titled Supply Chain Management, linkage to total industry benefits was initiated by HKANA (1996) and commissioned by Coopers & Lybrand Consultants to access the impact of supply on the domestic industry The second study titled Supply Chain Management in Global Trade was again initiated by HKANA (1997) and commissioned by Kurt Salmon Associates to access the supply for export industry The first report identified the bottleneck to the implementation of supply s in Hong Kong in terms of technology, information sharing, training and skill in understanding the supply concept Figure 1 shows that no information sharing is the major barrier to the implementation of supply in Hong Kong This may be due to the lack of trust amongst the trading partners and/or the lack of knowledge about the benefits of supply This issue was reported again by Borneman (2005) on his study in textile industry in US Figure 2 shows that the awareness of supply in Hong Kong is very low Only 4 per cent of those surveyed indicated that they were quite knowledgeable about supply About 27 per cent of those surveyed

IJCST 18,4 268 showed had heard the term, but that s all and over 52 per cent mentioned that they had never heard of it The low awareness of the supply concept in the industry makes it difficult to share information amongst trading partners The first report also benchmarked the supply performance of the Hong Kong manufacturers and retailers to the world average Both are below the world average with the retailer supply performing slightly better than the manufacturer supply As a result of this first Hong Kong report, the supply resource centre was established by HKANA in 1998 to provide training and to increase the awareness of supply for the Hong Kong industry The second Hong Kong report by Kurt Salmon Associates (HKANA, 1997) identified that by implementation of supply practices, Hong Kong s export industries would save up to HK$92 billion (Australian $21 billion) on logistics and administration costs The consultants concluded that the route for Hong Kong to excellence is to become the supply thought-leader in global trade The consultants further suggested that speed sourcing and replenishment are two key factors for Hong Kong to succeed in global supply (HKANA, 1997) The two Hong Kong reports clearly show how important supply is to the Hong Kong domestic and export industry These reports indicate that the supply practices in the Hong Kong industry are far below the world average Figure 1 Barriers to the implementation of SCM in Hong Kong Figure 2 Awareness of SCM in Hong Kong

3 Textile and apparel supply in Hong Kong Although the two consultant reports show that Hong Kong industry in general is not well prepared for the supply, the textile and apparel industry in Hong Kong, however, is quite different A report on the techno-economic and market research study on Hong Kong s textile, clothing and footwear industries (Trade and Industry Department, Hong Kong Government, 2000) shows that some supply is already being undertaken by large enterprises in Hong Kong in response to demand from their buyers for supply co-ordination The tactics includes: integration of supply through vendor partnership; streaming of supply through elimination of intermediaries; and focussing on core competency to gain competitive advantage, as shown in the following three examples Apparel supply 269 31 Supply backward integration Fountain Set (Trade and Industry Department, Hong Kong Government, 2000) which is a major Hong Kong knitted fabric manufacturer, entered into agreements with several cotton yarn spinning mills in the Mainland of China to enhance control over the supply and quality of raw material The manufacturer can reduce order lead-time as well as inventory levels On the other hand, the spinning mills can receive a transfer of advanced production know-how to enhance their production efficiency 32 Supply forward integration Textile Apparel Limited (TAL) (Trade and Industry Department, Hong Kong Government, 2000) is the major shirt manufacturer for the US market It has partnered with JC Penney to monitor the weekly stock level of all its retail outlets and through its SPEED program, shirts can be manufactured and shipped to US within 48 h Yue Yuen which is a Hong Kong-listed footwear manufacturer, has assisted Nike to source cheap but reliable raw material, manage inventories and deliver products, through a just-in-time system (Wall Street Journal, 2000) 33 Supply virtual integration As the biggest trading firm in Hong Kong, Li & Fung provides a one-stop-shop for its customers from product development, raw material sourcing, production planning and, quality assurance, export documentation to shipping consolidation As Li (Magretta, 1998) said: The policy of not owning any production facilities keeps the supply flexible and adaptable; encouraging the constant search for quality-conscious, cost-effective producers that can deliver to a deadline Li & Fung (Magretta, 1998) has been a pioneer in dispersed manufacturing It performs the higher-value-added tasks such as design and quality control in Hong Kong and out sources the lower-value-added tasks to the best possible locations around the world The result is a truly global product To produce a garment, for example, the company might purchase yarn from Korea that will be woven and dyed in Taiwan, then shipped to Thailand for final assembly, where it will be matched with zippers from a Japanese company For every order, the goal is to customize the value to meet the customer s specific needs

IJCST 18,4 270 331 Problems face by small and medium size enterprises for textile and apparel supply Despite the success of the enterprises that have adopted the supply concept in the textile and apparel industry, the industry members on the whole are still relatively small in order to take full advantage of the new concept The success stories mentioned previously all involve large enterprises in Hong Kong They are either the biggest trader (Li & Fung to 7,500 network producers) or the biggest manufacturer (TAL to JC Penny stores) or the biggest customer to suppliers (Fountain Set to China yarn suppliers) in the supply However, most of the manufacturers in Hong Kong are small to medium scale and they lack the resources and bargaining power (unlike the big enterprises) in the supply The findings from Hunter and Valention (1995) on the low success rate of quick response after a ten year period in US, may explain some problems facing supply in the textile and apparel industry Four problems were identified by Hunter and Valention (1995) on the failure of quick response in the apparel industry in USA The following four problems were identified: (1) Too high expectations on behalf of the from the program and the slow pace of changes in practices and corporate culture (2) Adversarial relationships between sectors change readily so partnerships do not remain: The major problem is that increase in profits coming from the practice of quick response goes to the retailer, while the up-stream participants take on most of the cost burden Without some sharing of the benefits as well as the costs, partnerships are unlikely to develop (3) The structural difference of the textile/apparel pipeline in industry: In sharp contrast to the automobile, appliance and electronic businesses, where the fabricator of the end-product dominates the smaller-parts suppliers and distributors, the apparel manufacturer is typically small with little influence over either the textile supplier or retailer (4) The technical problems of standardization, communication and data accuracy in the industry: Although EDI has been used in industry for decades as a data exchange between different systems, no standard EDI format has been developed Different vendors have their own EDI format and thus make the communication and data mapping difficult The same is true for product identification and article numbering It has been estimated that up to 70 per cent of EDI transactions, including barcodes, contain wrong or incomplete information (Hunter and Valention, 1995) The Hong Kong textile and apparel supply is faced with the similar situation to that described by Hunter and Valention (1995) Most garment manufacturers are small to medium scale not having the resources and power to negotiate with big players in the supply An interview with one of the Hong Kong medium size sweater manufacturers (Ho, 2001) found that the company has to deploy three different EDI systems for its US buyers for its order and production monitoring system in the supply In addition, since most of the sweater production is carried out in China and Bangladesh, the must ensure that the three systems would work properly in a remote and under-developed area

The elimination of quota restrictions to US market imposes another problem in the supply Major findings of the study Opportunities and Challenges as the Garment Quota System Ends conducted by Hong Kong Productivity Council (Chow, 2005) shows that 90 per cent of the interviewed manufacturers cut their price up to 25 per cent in the first half 2005 About 62 per cent of the total respondents agreed that US/EC customers tended to purchase more because of lower prices in the absence of quota cost To improve the competition, 69 per cent of the respondents agreed to improve the efficiency and enhance competitiveness through supply 332 Fashion demand efficiency and responsive supply Besides the technology and issues in the supply, Fisher (1997) found that most companies failed in their supply because of their mismatch between supply strategy and the nature of demand for their products Based on the demand pattern, Fisher divided products into two categories in the supply : either primarily functional or primarily innovative Functional products such as those obtained from grocery stores or patrol stations, normally do not change quickly with time; they have a stable and predictable demand and a long life cycle However, their stability invites competition, which often leads to low profit margins Innovative products like fashion apparel or personal computers, can enable companies to achieve higher profit margins However, the very newness of innovative products makes demand unpredictable In addition, their life cycle is short, usually just a few months, because as imitators erode the competition advantage that innovative product enjoy, companies are forced to introduce a steady stream of newer innovations The short life cycles and the greater variety which are typical of these products further increase unpredictability Table I shows the demand nature for functional and innovative products in the supply With their high profit margins and volatile demand, innovative products require a fundamentally different supply than do stable, low-margin functional products Fisher (1997) suggests that an efficiency supply strategy with focus on cost minimization should be used for functional products A responsive supply strategy with focus on products availability, matching the marketplace with customer demands, should be used for innovative products The failure of supply is often due to mismatch between supply strategy and the nature of product demand Apparel supply 271 Functional Innovative Aspect of demand Predictable demand Unpredictable demand Product life cycle More than 2 years 3 months to 1 year Contribution margin (per cent) 5-20 20-60 Product variety Low (10-20 variants per catalogue) Average forecast error (per cent) 10 40-100 Average stock out rate (per cent) 1-2 10-40 Average season markdown (per cent) 0 10-25 Lead-time required for made-to-order products 6 months to 1 year 1 day to 2 weeks High (often millions of variants per catalogue) Table I Demand for functional versus innovative products in the supply

IJCST 18,4 272 Table II shows the two different supply strategies used for functional and innovative products As can be seen, the primary focus of the efficiency supply strategy is to minimize the overall production cost The responsive supply strategy focuses on the maximum product availability to market, reduced stock out and forced markdowns The problem with these two strategies is that the same product, for example apparel goods, can be both functional and innovative A fashion garment in the early introduction stage can be an innovative product However, at the end of the product life cycle, it becomes a functional product It is therefore difficult for the companies to judge whether they should use responsive or efficiency supply strategies for each product in different stages of the life cycle Nevertheless, Fisher provides a framework for the to match the nature of the product with the supply strategy Another problem with the textile and apparel supply is the product forecast and short life cycle for fashion and apparel goods A fashion garment, by definition, is changing all the time and therefore, it is highly volatile and unpredictable The challenge in managing the supply for fashion articles is to ensure product availability while keeping product obsolescence low The ability to respond to market signals and to develop accurate demand forecasts (and to update them based on current information) is critical Fisher and Raman (1994) developed an accurate response for women s apparel sold by catalogue using the early sales data as an accurate predictor of life-cycle demand He found that conventional forecasting based on a team of expert merchants has an average forecast error of 55 per cent However, using the early sales data of the first two weeks of demand, the life-cycle forecasts for the same products developed by simple extrapolation can improve the average forecasting error by 8 per cent (Figure 3) Fisher and Raman (1994) also found out that if the committee has a strong agreement on the forecast, the forecast error would be reduced Conversely, if the committee has a low agreement on the forecast, the error of forecasting would increase (Figure 4) This technique would improve the forecast error for high fashion articles and make the supply more responsive to the market demand 333 Upstream supply problems faced by Hong Kong textile and apparel industries Considering the problems of the Hong Kong textile and apparel Efficiency supply process Responsive supply process Table II Efficiency supply and responsive supply processes Primary purpose Manufacturing focus Inventory strategy Lead-time focus Approach to suppliers Product design strategy Supply predictable, demand efficiently at the lowest cost Maintain high average utilization rate Generate high turns and minimize inventory throughout the Shorten lead-time as long as it does not increase cost Primary on cost and quality Maximum performance and minimize cost Respond quickly to unpredictable demand to minimum stock out and forced markdowns Deploy excess buffer capacity Deploy significant buffer stocks of parts or finished goods Invest aggressively in ways to reduce lead-time Primary on speed, flexibility and quality Use modular design in order to postpone product differentiation

Apparel supply 273 Figure 3 Accurate response to market signals Figure 4 Forecast error and degree of agreement amongst the committee supply, most garments produced in Hong Kong are intended for export and large amounts of the required materials are imported Managing the international logistics therefore is crucial for the Hong Kong clothing industry Moon (1999) surveyed 105 clothing manufacturing firms in Hong Kong with 25 companies for in-depth interview to understand the supply logistics for Hong Kong garment manufacturers Results show that the overall logistics cost for in-coming fabrics, expressed as a percentage of total fabric cost, ranges from 15 to 8 per cent, with an average value of 37 per cent Transportation consumes over 95 per cent of the overall logistics cost Most surveyed firms, however, consider that the logistics are not important in their supply This finding is rather contradictory to conventional thinking in the supply Moon (1999) concluded that the Hong Kong clothing manufacturers like

IJCST 18,4 274 to focus on their core business function, for example sourcing, production, marketing, which are always regarded as the determinants of the firm s existence The clothing manufacturers therefore spent less effort on supply-side logistics and were not aware of the importance of developing logistics excellence in honing their competitive edge Hong Kong has long been regarded as an important sourcing centre for clothing production in the Far East for the world market Leung (1999) therefore, studied the Hong Kong textile and apparel supply from the supplier viewpoint By analysis of the case study of a skiwear supply in Hong Kong (Hammond and Raman, 1995), Leung (1999) found that two reasons to limit the flexibility of the supply in Hong Kong were long production lead-time and large batch requirements for production, as shown in Table III Leung found that the key issues that constrain the flexibility of the supply were: little sharing of information amongst retailers, distributor and suppliers; and fluctuation of fabric demand For the suppliers, key constraints for the supply flexibility were: batch size of greige goods; quota restriction to US market; lead-times; and insufficient experience in managing demand To increase the supply flexibility, Leung (1999) concluded that inventory-holding points should be located for the greige goods in the supply This pre-positioning of greige fabric has enabled the skiwear company under study in the supply to react more quickly to the market demand for its distributor and trading partners in Hong Kong They were able to print/dye the right pattern/colours for their styles, based on market information The problems of information sharing and communication amongst the supply members are reported by Chen (2005) for his study on supply in fashion industry between UK retailer shops and Chinese clothing manufacturers He pointed out that misunderstanding is a big issue in translating specifications from English into Chinese and estimated that the manufacturers in China on average receive and understand 655 per cent of the retailer s information (Chen, 2005) Items Lead-time Minimum quantities Table III Lead-time and batch size in Hong Kong for skiwear production Raw material information Greige fabric 45-90 days 5,000-10,000 yards Dyeing of fabrics 45-60 days 1,000 yard per colour Garment Production Information Weekly output 12 parkas 1200 units in same style Line configuration 40 people/line Shipment information HK Seattle Denver 42 days

4 Conclusion From definition, the supply involves all the activities in delivering product from raw material to the final customer The supply activities span from internal organization to external trading partners of suppliers, carriers, third-party companies and information system providers The of the supply, therefore, is a complex process and involves trust; partnership and information sharing between the upstream and downstream supply partners The consultancy reports on supply surveys show that Hong Kong industry is generally not aware of the concept of supply The industrial benchmark for both manufacturing and retailing industries in Hong Kong for the supply performance is below the world average Although some large enterprises in the textile and apparel industry in Hong Kong have adopted some forms of supply with their US trading partners to streamline the supply process, the real benefit of supply is still largely restricted to big players in the industry The typical problems facing with textile and apparel supply are short product cycle for fashion articles, long production lead-time and forecasting errors for fashion items The Hong Kong textile and apparel supply faces additional problems of distance from customers in the US and European markets, long production lead-times and minimum batch sizes for production and recently, the elimination of quota restrictions in the US market; all these force the industry to maintain its competitiveness through supply The Accurate Response suggested by Fisher and Raman (1994) helps to improve the forecast for short cycle and high fashion apparel items and thus would be very useful to manage the supply in downstream retailing industry The differentiation of product demands into functional and innovative products helps the supply company to employ different supply strategies for different products, namely responsive supply strategy for innovative products and efficiency supply strategy for functional products Again, these two supply strategies are focussed on the downstream supply aiming at shortening the time to reach the market and also to reduce the stock levels in the retailing industry The Hong Kong textile and apparel industry, however, is mainly an export-oriented industry It occupies the upstream position in the textile and apparel supply It focuses on design, material sourcing, sample making, dispersed manufacturing, co-ordination, transportation, documentation, quality assurance and testing in the supply The strength of the Hong Kong textile and apparel supply lies in its close relationships with all suppliers in the The geographical and cultural affinity to the Mainland of China further enhances the relationship between Hong Kong and its trading partners Hong Kong, on the one hand, is able to access a pool of quality suppliers in the Mainland of China; on the other hand, Hong Kong can take advantages of its own leading position in sales, marketing and professional services to assist overseas buyers explore the China market, which has become the largest market in Asia The supply in Hong Kong, therefore, instead of focussing on logistics, transportation, time to market and forecast demands, should focus on product Apparel supply 275

IJCST 18,4 design, material control, and production co-ordination The Hong Kong supply activities should streamline the whole production process from fibres to yarn, knitting, weaving, dyeing and finishing, through to the garment manufacturing process 276 References Borneman, JM (2005), Trust: supply s weakest link, Textile World, Vol 255 No 9, p 9 Chow, CK (2005), Hong Kong, competitive supplier, Textile Asia, Vol 36 No 9, pp 11-12 Chen, Z (2005), Fashion clothing in supply : Britain to China, Textile Asia, Vol 36 No 9, pp 53-6 Cox, JF, Blackstone, JH and Spencer, MS (Eds) (1995), APICS Dictionary, 8th ed, American Production and Inventory Control Society, Falls Church, VA Ellram, L and Copper, M (1993), Characteristics of supply and the implications for purchasing and logistics strategy, International Journal of Logistics Management, Vol 4 No 2, pp 1-10 Fisher, M and Raman, A (1994), Making supply meet demand: in an uncertain world, Harvard Business Review, Vol 72 No 3, pp 83-94 Fisher, ML (1997), What is the right supply for your product, Harvard Business Review, Vol 75 No 2, pp 105-16 Hammond, JH and Raman, A (1995), Harvard Business School Case 695-022, revised 14 April 1995), The President and Fellows of Harvard College, Cambridge, MA HKANA (1996), Hong Kong Supply Chain Road Map: Linkage to Total Industry Benefits, The Hong Kong Article Numbering Association, Hong Kong HKANA (1997), Supply Chain Management in Global Trade Made by Hong Kong, The Hong Kong Article Numbering Association, Hong Kong Ho, KK (2001), EDI systems for small to medium size factories in Hong Kong, personal commnication, Hong Kong Hong Kong Government Industry Department (1995), Techno-economic and Market Research on Hong Kong s Textiles and Clothing Industries, Hong Kong Government Industry Department, Hong Kong Hunter, NA and Valention, P (1995), Quick response ten years later, International Journal of Clothing Science and Technology, Vol 7 No 4, pp 30-40 Leung, SYS (1999), World-class apparel sourcing enterprises and the restructuring of existing global supply s, Journal of Textile Institute, Vol 91 No 2, Part 2, pp 73-92 Macedo, J (2005), Emergence of late design responsive supply in the clothing industry, Textile Asia, Vol 36 No 9, pp 31-4 Magretta, J (1988), Fast, global and entrepreneurial: supply, Hong Kong style, Harvard Business Review, Vol 76 No 5, pp 102-15 Monczka, RM and Morgan, J (1997), What s wrong with supply?, Purchasing, Vol 122 No 1, pp 69-73 Moon, KL (1999), Supply-side logistics: managing in-coming materials by Hong Kong clothing manufacturers, Journal of Textile Institute, Vol 90 No 2, Part 2, pp 163-75 Quinn, FJ (1997), What s the buzz?, Logistics Management, Vol 36 No 2, pp 43-7 Supply Chain Council (1997), available at: wwwsupply-org

Trade and Industry Department (2000), Techno-economic and Market Research on Hong Kong s Textiles and Clothing Industries, Trade and Industry Department, Hong Kong Government Wall Street Journal (2000), Overseas suppliers to US brands are thriving, The Wall Street Journal, 10 March Further reading Lee, H, Padmanabhan, V and Whang, S (1997), The bullwhip effect in supply s, Sloan Management Review, Spring, pp 93-102 Apparel supply 277 To purchase reprints of this article please e-mail: reprints@emeraldinsightcom Or visit our web site for further details: wwwemeraldinsightcom/reprints