Apparel Sourcing Company case study
Document Type:Case Study
It has roughly 120 employees in Hong Kong headquarters, 50 employees in Dhaka branch, and 80 employees in Shanghai offices. Its service scope ranges from sourcing materials to product delivery. The company serves small to medium fashion retailers in Europe and USA and charges 4% of the sourcing orders as service charge. Thus, its primary focus is on beauty and fashion. The concept used by ABC pertains to having a quick fashion in target markets. In that case, Porter's Five Forces will be used to analyze the industry. 1 Porter’s Five Forces Porter's Five Forces model proposes five competitive forces that determine an industry's structure. These forces include the threat of new entrants, the intensity of rivalry, the bargaining power of buyers and suppliers, the threat of substitutes (Grundy, 2006).
The nature of these factors determines the profitability of firms in the given industry. Thus, any successful firm should put the five forces into consideration when designing its business model. • Undifferentiated products (Researchgate, 2002). However, there is a likelihood of other sourcing agent offering the same products, which means that the firm may be easily be replaced. • Low switching cost, in that, customers are paying no investment to switch to another sourcing agent, which makes the firm vulnerable to losing its clients. • Finally, the advancements in information technology mean that buyers can easily access market-related information such as the cost of production, production designs, price, and quality of materials, which allow them to weigh the pros and cons of dealing with individual firms.
Bargaining power of Supplier Suppliers' bargaining power depends on their concentration level, the threat of integration, and volume (Grundy, 2006). • Buyers can integrate backward, for example, acquiring manufacturers or souring agents. Threats of substitution The threat of substitute products can be analyzed in the context of its availability, consumers' switching costs, and performance and propensity of the substitute (Grundy, 2006). China's apparel sector has a high threat of substitutes in that the apparel consumers have a wide option of where to shop. The flexibility of the market has been enhanced by: • B2B trade platform that allows manufacturers to sell their product directly to customers. • The ability of the apparel brands to set up their sourcing teams. SWOT analysis is an essential inclusion in any business context at it provides insights that make it possible for a business to come up with a sustainable niche in the given market (Taylor, 2016).
It helps the firm to develop by taking advantage of its strengths and opportunities. Strength, weaknesses, opportunities, and threats lets a business design strategic approaches to handle the existing competition. The analysis helps a firm understand where it stands in the broader fashion industry. Strengths: Among the strengths of the apparel sourcing firm include: • Holistic supply chain management and active value-added service that is manifested by; ◦ Vast Supplier Network to provide flexibility for production allocation ◦ Lower operational cost ◦ Ability to negotiate a lower price • Skilled personnel that includes technical Expertise. Consequently, the firm’s operational weaknesses are as outlined below: • High operation cost structure, that is, labor and travel costs. • Vast geographical distance, that is, located far away for end-users. • And inefficient business process evident by intensive manual operations and low response to market demands.
Opportunities Some opportunities available to the firm include digitalization. Notably, using a digital technology will transform the business by changing its value chain and business model that will necessitate a whole new process. S economies, which are the major markets. • Trade conflicts, that is, unfavourable U. S trade tariffs on China products • Fluctuations in currencies. For example, the rising and falling U. S. Material Sourcing Material sourcing relates to supply chain, purchase, and procurement as well as inventory functions. It can be defined as a procurement strategy aiming at contracting raw materials from countries with lower production and labor costs on behalf of a firm. Individual responsible for sourcing procurement materials may include designers, purchasing agents, merchandisers, or sourcing specialists. Mostly, the process results in buying affordable products from reliable vendors.
Product/ Apparel Sourcing Apparel sourcing is a procurement process for clothing including footwear. The product remains on purchase mode until purchased or cancelled. Notably, most customers are responsible for order placement. Production Management Production management refers to applying management principles to the production of goods. It involves planning, organizing, controlling, and directing the production process. Production managers are responsible for production management. They ensure that right and quality products are delivered to the expected location at the scheduled time and affordable cost. Product Delivery Product delivery refers to transporting goods from its original destination to a predefined location. Product delivery may take various forms. Physical goods may be delivered via air, road, train, or water bodies. Mostly, the entire team is responsible for the successful delivery of products.
Coordinating shipments between suppliers and customers can be enhanced by consolidating the distribution network. For example, products from the supplier should have one release time, be consolidated into a single shipment so that they reach the consolidation canter simultaneously. In that case, the firms should determine a conducive pickup time from the suppliers and delivery time to the end user as well as the transportation means available. Improving coordination requires the firm to use EDI (electronic data interexchange) to enable real-time data sharing and data analytics as well as demand forecasting. EDI refers to computer-to-computer exchange of business information between business partners in a standard electronic format. The two groups are obliged to set a vision about what needs to be achieved, explain why the project is essential and prioritize activities related to the project.
b. Set clear, ambitious targets. Set achievable goals (McKinsey& Company, n. d. d. These include customer service activities. That means that there is the need to start with automation of internal process to create awareness of benefits for digitalization among team members. b. Appoint a high-caliber launch team; to avoid duplication by devising a methodology that can be replicated and extended across the organization. d. Notably, the more value the digital transformation creates as it progresses, the more it becomes reliable. Sequencing can be ensured by; prioritizing projects in backlog based on payback period and impact as well as tracking the return b. Build capabilities; investing in other areas apart from digital technology. For example, promoting skill development through regular trainings.
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