Analysis
of Supply Chains
Andreas Bruckner, Svetlana Mueller and Beata Spitz
report on a German project that has produced both a methodology
and an IT tool to analyse clothing-industry supply chains
Identifying
and realising the potential for improved collaboration seems to
be a matter of some significance to companies already working
together in Europe's clothing supply chains. In fact, they are
confronted with a number of difficulties in introducing such promising
concepts as Supply Chain Management (SCM) technology, which are
already successfully established in some other industry sectors.
In
their drive to enhance competitiveness, European clothing companies
continually try to take on best practices from the other industries,
as well as to look for new ones. The development and implementation
of new organisational concepts for the clothing industry have
gained even more importance in recent years because of the weak
economic situation, loss of sales volume and closure of a large
number of clothing firms.
In
order to provide methodological support for the enterprises of
the clothing industry, several European and national research
projects have so far been initiated, from different institutes.
This article is a report on the 'Supply Chain Management in the
Clothing Industry' national research project, which was carried
out by Research Institute for Operations Management (FIR), at
Aachen University of Technology (Germany), in co-operation with
the German Research Clothing Association (FB). Scientific know-how
and long-standing industry experience in the field of order processing
led, through the project, to the practical ~ development of a
new logistics concept i for clothing supply chains.
This
project contributed to the improvement of supply-chain collaboration
in the clothing sector. The analysis methodology for inter-company
order processing was developed within the scope of the project.
This will support clothing enterprises in the reorganisation of
their logistics processes, as well as in introducing SCM. A variety
of companies from the clothing industry took part in the project
work, including clothing firms, production plants, suppliers of
fabrics and accessories, finishing companies and logistics service
providers.
1.
The Need for Reorganisation 1 in Clothing Supply Chains
The
clothing industry is one of the oldest industrial sectors in Germany.
Since the 1960s, the German clothing industry has experienced
a downturn, as revealed by the number of firms and employees.
In 1950, the West German clothing industry had 700,000 employees.
By 1997, only 132,000 of the jobs remained in both East and West
Germany. The general production decrease and high import rate
of textile products dramatically influenced the economic situation
of particular clothing companies.
These
and other relevant factors, like strong competition in the fashion
industry, a high rate of change and impermanence in this sector,
are forcing clothing firms to continuously search for new management
approaches and reorganisation measures for their existing supply
chains.
In
order to reduce production costs, most clothing firms have already
outsourced production of their goods to low-cost countries, and
subcontractor companies have taken on some production steps. Thus
the structure of clothing supply chains has become even more complex.
Not only foreign manufacturing companies, but also a number of
different service companies (logistics service providers, textile
finishing companies, etc.) are today involved in the clothing
supply chains.
Furthermore,
a worldwide trend to the creation and marketing of complex fashion
collections has led to additional organisational difficulties.
Many clothing companies have been placed in a position where they
must operate within several supply chains at the same time. Different
production and delivery activities have to be synchronised and
streamlined in highly dynamic supply networks.
Logistics
managers from a large number of German clothing companies have
been forced to accept the fact, that the old in-company and interplant
management methods do not come up to the increasing market demands
for dynamic and interdisciplinary supply-chain management. Organisational
changes at different levels must be performed in order to stabilise
the economic situation in the clothing industry.
The
first project to analyse basic logistics conditions in the clothing
industry revealed that all former research and attempted improvement
were limited to particular industry sectors such as men's and
boys' clothes, or women's outer garments. The prevailing organisational
wisdom supported separate logistics management within the above
mentioned industry sectors. Synergies, which could be realised
by an inter- company supply-chain optimisation, were generally
not used.
Some
big companies, like ADIDAS, Gerry Weber or Gardeur, have initiated
extensive reorganisation within their internationally spread supply
chains. The main goals of these measures were stock and lead-time
reduction, delivery service improvement and an increase in logistics
flexibility. These enforced supply-chain reorganisations seem
to be successful for some fashion leaders. But the important experience,
gained in the inter- company projects, has remained mostly as
knowledge within certain big companies. Thus, the small and medium-sized
enterprises, which account for 95% of all companies in the clothing
industry, cannot benefit.
Taking
into account the above- mentioned factors, the lack of an organisational,
interdisciplinary and inter-company approach was obvious in the
clothing sector. A basic concept was required, that would be useful
for the sustainable introduction of SCM in the clothing industry
and for efficient management of the flows of material and information
in clothing supply chains.
Therefore
the goal of the 'SCM in the Clothing Industry' research project
was the development of a methodology for supply-chain analysis,
which is especially oriented towards small and medium-sized enterprises.
The concept of supply-chain management was taken as an initial
basis. The developed methodology should basically contain a supply-chain
model to act as a reference process, as well as a methodological
procedure for the actual process analysis (al/c analysis) and
for the identification of concrete improvement measures.
In
order to simplify supply-chain reorganisation for small and medium-
sized companies, a prototype analysis IT tool (OPLIKET) was also
developed within the scope of the project. The OPLIKET tool will
be described in Chapter 3.2.
2.
Modular Supply Chain Model as Basis for the Analysis Process
2.1
Identification of the Supply Chain Types
In
order to derive organisational improvement in measures for order
processing in existing clothing supply chains, a clear vision
of their structure was required. Since the analysis of the actual
logistical situation in the clothing industry revealed a number
of organisational difficulties, especially at the inter- company
interfaces along the supply chains, these interfaces became the
main investigation point of the project analysis.
The
specific and varying conditions of the clothing sector, such as
fashion, fast-moving, seasonal dependency, etc, have brought about
the existence of different order-processing patterns in clothing
supply chains, including collection development, continuous replenishment
and production for stock. For this reason, a clearly defined classification
of order-processing types was worked out, which is based on the
analysis of typical similarities and discrepancies between existing
order processing types.
Despite
numerous organisational discrepancies between the companies and
their supply chains, a set of characteristics was defined, which
enables the allocation of analysed company processes to certain
order-processing types. Afterwards the most relevant characteristics
were chosen and transferred into the description matrix, also
called a morphological characteristic scheme (Figure
1).
Based
on the developed morphological scheme, six types of inter-company
order processing in the clothing supply chains were derived. Every
type results from one typical combination of characteristics and
their specifications, clearly describing a specific model of order
processing in those particular supply chains.
An
important finding was also that, altogether, three logical phases
within inter-company order processing could be derived from the
combination of relevant characteristics. These phases are order
preparation, procurement/production and distribution.
The
classification of order processing types enabled the subsequent
modelling of the logistics processes in clothing supply chains.
For this purpose the flows of material and information of the
companies accompanying the project were analysed (Figure
2).
2.2
Development of the Modular Supply Chain Model
The
project investigations reflected high complexity in the inter-company
organisation and order processing of the clothing supply chains.
The FIR modelling approach was aimed, therefore, at illustrating
the manifold forms that clothing supply chains, as well as interfaces
between the supply-chain participants, can take (Figure
3).
The
model created by FIR is divided into three phases (preparation
of the order, procurement, production and distribution), which
is analogous to the order- processing classification (Chapter
2.1). The individual phases were specified further with the help
of different process modules (in Figure 3 - A 1, A2, D1). Thereby
three modules were developed for the phase 'order preparation',
two for the 'procurement and production' phase as well as one
for the 'distribution' phase. The individual modules contain standardised
process models of material and information flows within the selected
phase. It was important not only to map certain order-processing
steps, but also to 'make visible' weak points in the material
flow and information flow. In order to give a model user a better
oversight of the entire supply chain on the one hand, and to enable
a detailed process analysis on the other hand, both generalised
process mapping and detailed process mapping were performed (Figure
4).
Each
process module can be considered as an independent model component,
whereas one module of the order processing must be chosen from
each phase for the visual representation of an entire supply chain.
Altogether
six general types of supply chain (with appropriate order- processing
types) can be mapped by means of this approach. The model thereby
enables a specific analysis of relevant types of order processing
arising from a flexible choice of particular modules (Figure
5). Besides the 'As-Is' process models, idealised process
models (target models) were developed within the scope of this
project as well. These were built according to the same modelling
principle as the As-Is process models. The target models can be
seen as an organisational proposal for order-processing configuration,
which is free from identified As-Is logistics problems in the
clothing supply chains (Figure
6).
The
modular supply-chain model became an important basis for the developed
methodology, because the further identification of improvement
opportunities and the organisation measures for efficient order
processing were based on it. With the help of comparison with
the developed As-Is and target models, and by means of additional
investigations in the companies participating in the project,
improvement opportunities and measures were derived and catalogued.
The
following project steps were dedicated to the development of the
analysis concept, required for investigation and reorganisation
of clothing supply chains.
3.
Analysis concept for collaboration improvement in clothing supply
chains
Several
research methods were applied for further development of the analysis
concept. The most important are the general systems theory, model
theory as well as decision theory. The combination of these theories
made it possible to work out a practical methodology on the basis
of information gained in project and literature investigations.
The main structural components of the methodology are a set of
different models. Every model has its special function in the
analysis process and is strongly connected with the other models.
The function of the developed models, as well as the form of their
correlation, is described in the following chapter.
3.1
Components and sequence of the analysis methodology
Altogether
five models were identified as analysis-methodology components
in the scope of this project. The supply chain model(Chapter 2.2),
creates a starting point for practical analysis of clothing supply
chains. This model enables a visualisation of relevant logistics
processes and a determination of initial collaboration conditions
of the supply chain. Moreover it gives an idea about important
correlations in inter- company order processing.
Based
on the particular initial situation, the appropriate problem fields
can be acquired by
means of the potential model. Afterwards, the most relevant issues
are selected and concretised
with the help of the operation model.
The
decision model supports, in turn, selection and prioritisation
of measures and instruments, which can i be applied to improve
order processing in the analysed supply chain. Decision support
is an essential part of the entire analysis methodology. On the
basis of users' specific prioritisation of relevant issues, these
are allocated to the improvement measures. For this allocation,
the method of comparison in pairs is applied. The defined improvement
measures can be basically prioritised according to their practical
applicability.
The
analysis model is finally responsible for connecting and enabling
all models mentioned above.
Thus
the supply-chain model, potential model and operation model are
describing models, containing the relevant information for the
execution of certain analysis steps. The analysis model can be
characterised as an explaining model and the decision model is
defined by its title. The essential characteristics of the individual
models are shown in Figure
7.
The
sequence of analysis process and the task allocations of particular
models are represented in Figure
8. This analysis principle was additionally realised in the
prototype OPLIKET tool (Optimisation of modular supply chains
in the clothing industry), whose purpose is the implementation
of a methodology, as well as the simplification of supply-chain
analysis for clothing companies.
3.2
Supporting tool for the identification of improvement f)otentials
in the reorganisation of clothing supply chains
The
OPLIKET tool enables companies in , the clothing industry to independently
analyse order processing in their own supply chains. In doing
so, the inter- company collaboration aspects as well I as logistics
process quality at the interfaces are of basic importance. The
OPLIKET tool supports the identification of improvement opportunities
and of appropriate organisational improvement measures for different
company types (clothing firm, fabric supplier, finisher, etc.)
in the clothing sector.
In
order to provide easy navigation within the tool, a menu-supported
interface was designed, which simplifies the analysis process
for the user (Figure
9).
After
a short welcome, the user is asked to answer some questions concerning
his company type, supply- chain structure, type of order processing
and available information and communication means. Thereby the
OPLIKET tool depicts the concrete initial situation of the analysed
supply chain. In addition, the user's priorities concerning the
order and the Importance of particular analysis issues are inquired
into. This helps to a1ign the supply-chain investigation with
the relevant company purposes.
Once
the gathering of basic data is complete, the user receives a summarised
description of the analysed supply chain and can see the appropriate,
selected process model for order processing within this supply
chain.
Afterwards
the user is guided through the specially structured questionnaire,
whose questions are different, depending on the user's analysis
priorities. As soon as all entries are confirmed, the tool starts
evaluating the improvement potential, using the developed analysis
protocol. The selected issues are then presented to the user with
the help of overview templates. In these templates, selected problem
fields and improvement measures are specified in the so called
"problem improvement measure matrix" (Figure
10). The specified problems and improvement opportunities
can be also seen as separate description forms.
As
the last analysis step, the discrepancies between the data entered
by the user and the analysis results are examined. In case the
user already initiates a proposed improvement measure, but the
problems in this analysis field still remain, the IT tool calls
the user's attention to practical realisation of this measure.
This means, that the initiated improvement activity might be insufficiently
realised in that particular company and should therefore be reviewed.
Exemplary
use of the analysis methodology in clothing companies
The
developed analysis methodology and the OPLIKET tool were validated
in different companies of the clothing industry, which participated
in this research project. It was acknowledged, in three case studies,
that the identification of improvement measures for inter-company
order processing is efficiently supported by both the methodology
and the introduced prototype IT tool. The experts from several
clothing-industry companies confirmed that the application of
this methodology can effectively contribute to the improvement
of clothing supply chains. With the help of the OPLIKET tool,
the finding of practical organisational improvement measures can
be essentially simplified, which is highly important for the successful
introduction of supply-chain management in the clothing industry.
FBI
