Textile value chain management

Value chain management

Step-by-step business model for transforming a product or service from idea to reality.

Value chain prioritizes value-addition in products and boosting value across the journey.

Supply chain management

Practical, physical flow of the materials

A part of the value chain.

The functions within and outside a company that enable the value chain to make products and provide services to the customers.

Focuses on sourcing materials and delivering goods to the customer. 

Enterprise

Business, company or project created to provide goods, services or social value

Carryover product

Bring back a past product

Fashion loop steps

Step 1: Research and merchandising

Step 2: Design brief

Step 3: Design development and style selection

Step 4: Marketing the fashion brand and apparel line

Step 5: Preproduction

Step 6: Sourcing

Step 7: Production processes, material management and quality assurance

Step 8: Distribution and retailing

Step 1: Research and merchandising

Definition: research the market, trends, consumers and product opportunities

• Trend research (mega trends, micro trends and general trends)

• Market research (consumer research, product research, market analysis and target customer profile)

• Fashion research (trend, colour, material and trim research)

• Sources to gather from → forecasting services, exhibitions, music, TV, travel, etc.

Step 2: Design brief

Definition: define what the product should be and what the design needs to achieve

• Design department usually leads

• Plan the line (larger companies might have multiple lines)

• Funnel metaphor - start with many styles and drop as you move forward

• Sketch the design

• Obtain vendor samples

• Garment specification sheet (tech-pack)

• Colour palette

• Collection planning (consider budget, product groups, styles per group, colours, prices, quantities, lead time, etc.)

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Lead time

The time from which a company or buyer places an order till the goods are delivered

Continuous product

Products that remain in the selection for a longer duration of time, become part of the brands image

Star product

A star product in a line, might be of smaller quantity but will cost more

Step 3: design development and style selection

Definition: develop design and select the final styles/product

• Make first pattern using tech-pack

• Receive style/product with cost of each product

• Tech-pack will usually be sent with a target price - revising the styles to match the price

• When receiving the 50 styles back in the office - meeting will be held to approve, revise and drop style and then choose the final styles for the line

Step 4: marketing the fashion bran and apparel line

Definition: promote the brand/product and communicate with the target customer group.

• Campaigns have photos shoots, billboard, etc. planned ahead of their product release

• Sale samples received from suppliers get brought to retailers - showing the retailers their new line who then choose products to sell in their stores

Step 5: preproduction

Definition: prepare everything needed for manufacturing: materials, patterns, markers, cutting, patterns, etc. 

Step 6: sourcing

Definition: find and select suppliers, materials and production partners based on different factors.

• Production sourcing (focus on labour supply, transportation, geographical location of key materials, product development, competitive prices, lead times and product quality)

• Sub-suppliers → work under or for the main supplier instead of directly supplying the buyer

• Countries with more sub suppliers are good to work with - otherwise it can end up expensive

• Factors to consider for sourcing (cost, capacity, minimums to meet, quality, distance, competition, etc.)

• Domestic sourcing → EU based

• Offshore sourcing → international

• Internal manufacturing → producing goods in house using ones own facilities

• External manufacturing → outsourcing production to a third part partner

Step 7: production processes, material management and quality assurance

Definition: make the product, manage materials during production and quality check

• The manufacturer has the tech pack - starts the preproduction (make the fabric, dyeing, etc.) then production (making the product)

• Roles of buyer, agent and supplier weigh in in this step

• Buyer decide product, request prices, place order, approve of sample, production instructions, purchase orders (POs)

• Agent finds suitable suppliers, negotiates prices, coordinate samples, forwards POs, follow up on production and preproduction, help in quality control, communicate information between supplier and buyer

• Supplier calculates production cost, confirms price, confirms PO, makes samples, plan production, carries out production and preproduction, conducts quality checks, arranges transport and shipping

Step 5,6,7

• Can have different order of steps

• Most common way is 6,5,7 - sourcing, preproduction, production

Stakeholders

People, groups, companies, etc. that are involved or are affected by the supply chain

Agents

A middleman, only use their expertise to help connect brands/buyers with suppliers or manufacturers

Step 8: distribution and retailing

Definition: move the finished product to where it can be sold to consumers through retailers, wholesalers, direct sales, etc.

Marketing channels

• The pathway through which products, ownership, information and payments move from manufacturer to consumer

• One company can use multiple marketing channels

1. Direct marketing channel (manufacturer -> consumer) 

2. Limited marketing channel (manufacturer -> retailer -> consumer)

3. Extended marketing channel (manufacturer -> wholesaler -> retailer -> consumer)

4. Even more extended (manufacturer -> wholesaler -> jobber -> retailer -> consumer) 

Wholesaler

the ones who get the product in a bulk quantity - selling them in smaller batches to retailers or other business not individual consumers 

Jobber

Located nearby manufacturing area, can do anything other than assemble product. Usually buy the product in smaller bulks and resells them in smaller quantities to retailers.

Marketing channel flows

Physical flow -> movement of the actual product, where materials flow in a flow diagram

Ownership flow -> who owns the product at each stage, from brand to consumer (pre and post)

Information flow -> information moving between participants (communication)

Payment flow -> money moving through the channel 

Promotion flow -> advertising/marketing information reaching the customer