Quick Response implementation implementation Quick ... - ecr-uvt

Supply Chain Management for Efficient Consumer ResponseConference18 - 19 May 2012,Valahia University of Targoviste, RomaniaSCM 4 ECRQuick Response implementationin the fashion industrySîrbu Mirela OctaviaSăseanu Andreea SimonaThe Bucharest Academy of Economic Studies

Agenda:1. QR - definition, benefits, technologies2. Particularities of QR in fashion inustry3. Significant cases of quick responseimplementation in the fashion industry© SCM 4 ECR Conference 2012

QR-QuickResponse- just in time inventory partnership strategy betweensuppliers and retailers of general merchandise involve supply techniques that allow retailers tochange demand as a result to fashion trends andseasonal sales variation the main objective of QR is to respond quickly tomarket changes and cut ordering lead times; QR isfocused on agility - which leads to efficiency© SCM 4 ECR Conference 2012

BENEFITS OF QR reduce stockholdings quicker deliveries - shorten lead timesfrom order receipt to delivery faster inventory turns and lower inventoryinvestment increase cash flow develop communication throughestablishing a strong partnership© SCM 4 ECR Conference 2012

The benefits of QR implementation© SCM 4 ECR Conference 2012

Enabling TechnologiesElectonic data interchange - EDIBar CodeRadio Frequency Identification -RFIDActivity Based CostingNote: the organization that is promoting QR is VICS(VoluntaryInterindustryCommerceStandardsAssociation)© SCM 4 ECR Conference 2012

Automatic replenishment using a tracking system for inventory, thecustomer’s supply of products is replenishedautomatically when stocks run low; AR Systemswill alert stores to problems automatic ordering and replenishment based onprevious sales automatic replenishment relies on supply source (DC or supply depot) being able torespond directly to demand QR is a form of AR system© SCM 4 ECR Conference 2012

The mechanism of QR Sales information transmitted directly tosupplier Supplier replenishes directly to store Supplier replenishes according topredetermined assortment plan for season Supported by swift and flexible manufacturingtechniques that can switch to making fastselling merchandise instead of slower lines© SCM 4 ECR Conference 2012

PARTICULARITIES OF THE QRIN FASHION INDUSTRY Thetraditionalfashionmarkets arecharacterised by two fixed seasons peryear Fashion industry havebeen affected by theneed for more rapid refreshing of ranges,styles and colours. QR fashion is the ability to scale up (ordown) quickly and the rapid incorporation ofconsumerpreferences intothedesignprocess.© SCM 4 ECR Conference 2012

Characteristics of fashion markets1. Short life-cycles– months or evenweeks2. High volatility of demand3. Low predictability4. High impulse purchasing5. There are three critical lead-times: time to-market, time-to-serve and time-toto-react.© SCM 4 ECR Conference 2012

Key processes ofGlobal Quick Response1. Thenewgarmentdevelopment processdesign2. The initial volume order process3. Thereplenishmentprocess.orrepeatandorder© SCM 4 ECR Conference 2012

Trends of the QR-Short term- extendingthe use of EDI to all partnersinvolved in the supply chain increased efforts to combine educationalinformation on supply chain solutions tospecific operational practicesproviding CIE color coordinates© SCM 4 ECR Conference 2012

Trends of the QR design of specific demand management techniques inrelation to fashion trends in general and especially thecolors- long term-interactive designing customer-retailerretailer offering garmentsstructure using CADthemanufacturer/ retailer systems will have to use reliablePoS data so that the industry can be attached into the verycomplicated up-streamsystems to support the demand-activated production© SCM 4 ECR Conference 2012

Quick Response implementation in thefashion industry-research and case studies-1. Quick Response in the JapaneseFashion Sector2. Quick response: perceptions of UKfashion retailers3. Quick Response systems in in theScottish textile and clothing industry4. Quick Response at Benetton5. Quick Response at Zara© SCM 4 ECR Conference 2012

Figure 2: QR Components Implementation(1=Low; 5=High / Mean Scores) **. Positively significant at the 0.01 lhttp://2011.fashion-networks.com/images/article_pdf/qr_lrn.pdfnetworks.com/images/article_pdf/qr_lrn.pdf© SCM 4 ECR Conference 2012

The foundations for agility in afashion business© SCM 4 ECR Conference 2012

Quick Response in the JapaneseFashion Sector the official QR initiative in the Japanesefashion industry was commenced in 1994 the QR philosophy has naturally emergedamong the apparel firms in their pursuit ofa system whereby they can proactivelyincorporate the on-goingand the futuretrends into their merchandising© SCM 4 ECR Conference 2012

Current QR in the Japanese fashion sector isdrivenmore bythetraditionaltradingrelationship and the technical excellence of themanufacturers rather than a conceptual set ofQR enabling technologies. The"apparelfirms"haveachievedmorebenefits through their QR programs than theSME suppliers. Positioning of QR as the survival strategy ofdomestic apparelmanufacturinghasbeendiluted in the course of the regionalization of theglobal economy and this severely underlines itsfuture existence.© SCM 4 ECR Conference 2012

Quick response: perceptions ofUK fashion retailersPurpose of research: determining the level ofquickresponse implementationby fashionretailers, their understanding of quality response(QR)isexploredandtheprocessesforreplenishments examined.Results: retailers have not fully understood thebenefits of implementing a QR strategy andperceive it more often as a strategy for internalsupplychain managementratherthananexternal supply chain strategy.© SCM 4 ECR Conference 2012

Quick Response systems in in the Scottishtextile and clothing industryPurpose of research: to explore the levelsupplier used automatic replenishmentsystems, quick response implementation (QRI),and relationships within the supply chain.Results: less than a third of the companiessurveyed in Scotland had implemented AR/QRIsystems and that many supply chain membershad not fully understood the benefits ofimplementing information technology (IT) tosupport an AR/QRI strategy. They perceive itmore as a strategy for retailers than as a virtualsupply chain strategy.© SCM 4 ECR Conference 2012

Quick Response at BenettonThe QR Strategy: a Benetton retailerreorders a product through a direct link withBenetton’s mainframe computer in Italy.Benefits of strategy:- manufacturing, warehousing, sales andretailers are linked together- Benetton is capable of shipping a neworder in only four weeks, several weekearlier than most of its competitors.© SCM 4 ECR Conference 2012

Qr strategy mechanism at Benetton1. Integrated Information Systems• Global EDI network that links agents with productionand inventory information• EDI order transmission to HQ• EDI linkage with air carriers• Data linked to manufacturing2. Coordinated Planning• Frequent review allows fast reaction• Integrated distribution strategy© SCM 4 ECR Conference 2012

© SCM 4 ECR Conference 2012Benetton’s collections

EDI technology allows Benetton to transmitdocumentation aheadof consignmentarrivals, to allow speedy clearance throughcustoms and on forwarding to the retailoutlets. These functions are managed orperformed by WIDE. The result of this rationalization was a 55 percent reduction in physical distribution costsand a reduction in lead times to the USAfrom 22 days to seven days.© SCM 4 ECR Conference 2012

Quick Response at Zara ShortclothesLeadTime = More Lower quantities = Scarce supplyfashionable More styles = More choice, and morechances of hitting it© SCM 4 ECR Conference 2012

canmove from identifying a trend to havingclothes in its stores within 30 daysproducea response in terms of a new styleor a modification within 2-4 weeksdeliversmerchandise to its stores twice aweek, and since re-ordersare rare the storeslook fresh every 3-4 days© SCM 4 ECR Conference 2012

© SCM 4 ECR Conference 2012Zara’s business model

CONCLUSIONQR is one of the best policies in fashionindustry withimportant consequences at the levelofelectronic datainterchangeand automaticreplenishment system,improvingplanning andactivity-basedcost accounting and performancemeasurement systems, reducing the time betweenthe moment of the sale and the one of thereplacement of goods on the retailer’s shelf.We concluded that, in general, retailers andtheir suppliers have accepted QR as a response tothe fast fashion trend.© SCM 4 ECR Conference 2012

Thank you.