Australia

A Case Analysis TAL Apparel Limited Submitted By Abhilash Rakesh Ranjan Gaurav Gupta Amar Keshari Paresh Patra DOMS IIT Roorkee 2013-2015Buyer Driven vs. Producer Driven

Buyer DrivenProducer DrivenCore CompetenciesDesign, MarketingR & D, ProductionBarriers to entryEconomies of ScopeEconomies of ScaleTypical IndustriesApparel, Footwear, ToysAutomobiles, Computers DOMS IIT Roorkee 2013-2015VMI Vendor Managed Inventory A Business models in which the buyer of a product (business) provides certain information to a vendor (supply chain) supplier of that product and the supplier takes full responsibility for maintaining an agreedinventory of the material, usually at the buyer's consumption location (usually a store).

It is a concept and process for consumption-based Supply Chain Management.

It requires the supplier to maintain inventories within predefined and mutually agreed thresholds based on a min / max-range. The supplier can freely deliver within this indicated range. The basic requirement for a successful VMI process is a good partnership and cross company information sharing and transparency close to real-time.

DOMS IIT Roorkee 2013-2015Without VMI Inbound LogisticsOperationsOutbound LogisticsMarketing & SalesServicesTALReceive back-order from J.C. PennyAsk J.C. Penny for sales forecast and plan for productionReceive orders based on J.C. Penny requestPerform test marketing of new products at retail storesMonitor retail sales, replenish inventory, and design new productsJ.C. PennyPlace orders based on their sales forecastPerform inventory control, sales monitoringBack-order to TALMarketing, merchandizing and selling to end consumersReceive consumer feedback for product enhancement/new product DOMS IIT Roorkee 2013-2015With VMIInbound LogisticsOperationsOutbound LogisticsMarketing & SalesServicesTALPurchaseAnd receive raw materialsProduce according to customer ordersPackage & Ship to retailers warehouseNoneNoneJ.C. PennyPurchaseAnd receive garment from manufacturerPerform inventory control, sales monitoringand forecastRe-pack &distribute to retail outletsMarketing, merchandizing and selling to end consumersReceive consumer feedback for product enhancement/new product DOMS IIT Roorkee 2013-2015 Past : (inventory is controlled by J.C. Penny)

The whole supply chain is in sequential order. Without VMI, J.C. Penny manages the inventory and place order when there is stock-out.

The disadvantages were:

1.Long replenishment cycle2.Increase chance of stock-out3. Bullwhip effect : It refers to a trend of larger and larger swings in inventory in response to changes in customer demand .4.Lower customers satisfaction

DOMS IIT Roorkee 2013-2015Present : (inventory is controlled by TAL)

TAL uses VMI to improve its continuous-replenishment program with JC Penny TAL creates the purchase orders based on the demand at the store or warehouse level. TAL forecasts the demand and make fulfilment based on real-time front-line sales information.

The advantages are:

1.Reduced inventory2.Shorter replenishment cycles3.Sensitive to the inventory level avoid back order4.Reduce inventory management cost5.Reduce administration cost of the transaction cost DOMS IIT Roorkee 2013-2015Make to Measure Ready-to-wear garments are constructed to fit the manufacturer's definition of an average customer, while made-to-measure garments are constructed to fit each customer individually.

A made-to-measure garment are generally more expensive than ready-to-wear garment.Garments are well-fitted to the customer's body and the customer have the opportunity to customize the fabric and detailing.

The same production resources to manufacture a variety of similar, yet individually unique products.

TAL, Developed the body scanning technology, customer interface functionalities, and custom-tailored production machinery at the factory. DOMS IIT Roorkee 2013-2015MTM Examples

DOMS IIT Roorkee 2013-2015MTM ContdStreamline the entire order-fulfilment process from Customer , retailer and supplier point of view .

TALs Retailer :- Lands End, Brooks Brothers, and J.C. PenneyFinished products were shipped from the factory directly to the customers home address. Orders were sent electronically from the stores and finished products are shipped back to the originating stores.

Made-to-measure orders were usually manufactured within a week from the time of the purchase order, followed by one week of air freight to reach the shipping destination. DOMS IIT Roorkee 2013-2015