Abstract
The successful implementation of push-pull supply chain management strategy has an important role in improving the competitiveness of an organization. The objective of a push-pull strategy is to minimize the holding of inventory level in finished form and rather produce finished goods from semi-finished inventory only upon receiving final order. One of the vital building blocks of push-pull supply chain strategy is postponement. The main objective of this review paper is to discuss the concept of postponement and its sub-categories such as product postponement and process postponement and their benefits. Then it is investigated how two prominent fast fashion retailers who are also categorized as original brand manufacturers in the apparel value chain apply the two variants of process postponement e.g. process standardization and process re-sequencing in their manufacturing operations to activate push pull supply chain strategy. The push-pull supply chain strategy in turn helps to reduce their order-to-delivery lead time to stores, reduce inventory holding level and minimize both physical costs and market mediation costs. The paper ends with concluding remarks. A framework is developed to illustrate the push-pull supply mechanism. This paper is a useful resource for practitioners in apparel supply chain willing to remove inefficiencies, costs and risks in their operations.
Highlights
In the age of increased globalization and shortened product life cycles, firms in order to meet the diverse needs of global customers are faced with increasingly sophisticated customer demand such as high degree of product variety, requirement for product customization and the requirement to deliver customized products very fast (Swaminathan & Lee, 2003)
Apparel industry is prevalent with the stated problems of short product life cycle, high product variety, low demand forecast accuracy and significant market-mediation cost of holding below or above required inventory levels all of which contributes to considerable inefficiency in the supply chain
This paper has attempted to address the question of how postponement is being applied in the fast fashion apparel business to reduce both physical costs and market mediation costs and proposes a framework illustrating the mechanism
Summary
In the age of increased globalization and shortened product life cycles, firms in order to meet the diverse needs of global customers are faced with increasingly sophisticated customer demand such as high degree of product variety, requirement for product customization and the requirement to deliver customized products very fast (Swaminathan & Lee, 2003). For instance lower accuracy in demand predictability mandates a producer firm to raise the inventory level stock for all types of finished goods to meet required customer service level This subsequently, can cause larger end-of-life write-offs due to high risk of obsolescence. Demand for increased product variety within short delivery lead-time reduces the ability of companies to take advantage of scale economies, making component procurement and product manufacturing difficult to be done in a cost-effective manner. The paper has considerable practical significance in that, it will suggest a framework that models the strategies of how fast fashion retailers and branded manufacturers are using postponement strategies such as process resequencing and process standardization in their production operations for basic apparel products and fashion apparel products respectively to eliminate many of the risks and uncertainties associated with product demand.
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