In 2011, what are the challenges likely to be faced by the global supply chains, especially those related to textile and apparel?


Global turmoil during 2008 and 2009 had created disruptions and volatility in supply-chains. 2010 has seen the economies stepping ahead of the financial brink, and recovering to normal business life. The coming year of 2011 will see a much better growth of textile and apparel industry. As is common in all the processes, supply chain is not an unmixed blessing, and will face some constraints.


Challenges for the Global Supply Chain (multiple responses taken)

Demand Volatility:


Short life cycle of apparels and the unpredictability in fashion trends make the functioning of supply chain complex. A good prediction regarding the customers mindset, their preferences, their decisions regarding the buying process,expected sales figures, and the timing of when the customer will buy is more important. Companies must have good business monitoring, proactive decision making abilities, and the flexibility to adapt changes in order to sustain their slice of the pie.

Shifting nature of customer demands:


Demand of the customers regarding the product quality, and service keeps changing. Transparencies of the market and price fluctuations have deteriorated customer loyalty. This volatility is a result of the recent economic crisis, and is expected to create a bullwhip effect in the supply chain wherein even small changes in the consumer demand will result in large variations in the orders placed upstream. Apparels are becoming more commoditized in todays competitive market (a situation where one product is no different from the others), and consumers have developed a tendency to shop based on prices only.


Risk Management in the Supply Chain:


In todays business world, risk has become a big challenge at all levels of the supply chain.All the partakers involved in the supply chain process try to shift the risk from their side. Unpredictable demands from the consumers side play a vital role in this. As consumers are pressurized with cost factors, they tend to shift the supply chain risks upstream to their suppliers.


Effective working capital management also remains a crucial factor. To keep the supply chain leaner, many companies currently order only a limited amount of materials required to fulfill their current orders, and avoid giving bulk orders. They try to shift the risk of holding inventories to their suppliers, and further make sure that the finished product is shipped at the earliest.


Currency fluctuation:


Fluctuations on currencies create havoc with global supply chains. This leads to a dramatic impact on the profit margins, increases the price pressures on vendors, and attendant risks in terms of vendor delivery performance, compliance, and quality. Buyers spread the risk and hold back on their commitments. This results in smaller orders, more styles, and short lead times, which poses a threat to the supply base.


Integration and Support:


Supply chain has to be treated as a single integrated process and needs significant support and improvement. Any complications in this system will prevent the companies from utilizing the prevalent business opportunities. The business should have a strong and well organized end-to-end focus on optimization and integrating the supply chain functions both up and downstream. A recent survey states that by 2011 50% of the companies, and by 2012 60% of the companies will manage their supply chain practices on an integrated level. Companies will start spending more on hiring skilled personnel with end-to-end supply chain knowledge.


Increasing environmental concerns:


Supply chain processes have catapulted into new heights with companies giving a major part of their contribution to include ecology into it. The main concern of many companies now is to make their supply chain processes environmentally friendly. Companies have started adopting the process, but are still at the nascent stage.

 

Supply chain must aim at maintaining the customer service levels, while reducing inventory investments. Companies today have high expectations regarding their abilities to develop a mature supply chain management process. Building a global and integrated supply chain process is an important priority for any business.


References:


1.      Logisticsit.com

2.      Prtm.com

3.      Scdigest.com

4.      Iimm.org

5.      fastreact.com