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200%

400%

Most fashion retailers enjoy mark-ups as high as 100% over procurement prices. At times, the mark-ups go up to 200% to 400% in overseas market and ppremium brands.

It is the retail chains, which have to deal with the unreliable long-term forecasts, which results in significant value loss in terms of sales loss and the markdowns

of surpluses.

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Typically, each player in the chain has tried to squeeze the most of out of the supplier firm to gain money. But over the years, the win-lose approach has not helped anyone. However, if one can unlock the value loss at the fashion

retail point through a collaborative approach, the chain as a whole stands to benefit!

Factory Inventory Supplier

Unlike fashion garments, if season time is much bigger than introduction frequency like in case of home furnishings or core garments, the level of inventory at the retail point can be used by upstream plaplayers to understand true urgeny of an order, instead of considering a fixed lead time for every order. Such flexibility of lead time will allow the downstream players to plan production with more flexibility andand offer a variable batch

StockOuts

UnwanterdSurplus

SupplyChain

The way out of this is to shift away from paradigm of “local efficiencies” to a paradigm of flow. The shift to paradigm of flow does not mean that every entity needs to manufacture order by order and drop the capacity utilization. This requires an approach of flow where focus is on

flushing out set of orders within a predefined time horizon and limiting the batching opportunities across the horizons. At the same time, key players like the garmenters and fabric makers should collaborate to reduce minimum batch sizes.

Factory Inventory Supplier

Size breaks at around 3 weekresulting in dip in sales

The key question before is how does one reduce the lead time of supply chain without causing any partner in the chain to lose out.

One of the key charecteristics of the fashion supply chain is the high capital investment required to set up the plants. As a result the one of predominant practices of most manufacturing setups is to seek very high quantities per “manufactured entity” to reduce set ups. For example a dyeing unit would want to maximize its own efficiencies.

The irony is that most garment retail chains, with very few exceptions, are hardly making profits. In the entire supply chain from Yarn to final garment retailing, they are the ones with the lowest ininventory turns and highest locking of working capital.

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