Supply Chain for Fashion Products

Supply Chain for Fashion Products

The competition of the market place today is higher than ever before. Especially in fashion apparel industry where the current business trends of short product life-cycle, expanding product variety, increasing outsourcing and globalisation of businesses, makes managing supply chain a very challenging task. Those challenging task in managing the supply chain for these products is to ensure availability of the product while keeping product obsolescence as low as possible. The first section of this paper will address the challenges and the involved difficulties in forecasts, planning, production and distribution of fashion products.

Matching supply and demand is vital to a successful business. In order to match the demand, an accurate forecast is necessary. However, for short life cycle such as fashion apparel, accurate forecast is very difficult. The difficulties in forecasting of this kind of product arise from the characteristics such as long process lead-time, high demand volatility, unavailability of historical data, growing variety of products and factors from customers' preferences.

Firstly, lead-time induced forecast difficulties. Typically, the time from start of planning to produce products for a particular season to the time the product can actually reach the customers can take as long as two years (Fisher and Raman, 1996). Because of these long lead times, demand forecasts and production commitments for a particular style and color must be made well in advance of the actual sales. This is not a problem if the forecast was as accurate as we would have hoped for, however, in reality this is extremely difficult to forecast long-range, let alone week-by-week demand.

High demand volatility is another characteristic of the fashion products. The demand of these products is rarely stable. Virtually anything could influence it (i.e. movies, celebrities and weather) Because of the high volatility of demand, it is extremely difficult to produce accurate forecasts.

Also other factors that influence shoppers to make decision to buy these products are very difficult to be factored in, making the prediction even less predictable. For example, many buying decision are made at point of purchase. In other words, the shoppers when confronted with the product, their decisions to buy are stimulated by the product itself. Therefore availability of the product is very important.

Moreover, as many retailers and manufacturers extend the number of variety of products in their stores to increase their competitiveness, products proliferate and divided over a growing number of stock-keeping units (SKUs). This makes it very difficult for retailer and manufacturer to predict how an predicted aggregate demand will be distributed among the many SKUs they sell, stated by Fisher M. et al (1994). An extreme example is the successful fashion retailer,