The Apparel Supply Chain Today and the Path to Successful Collaboration

1
The Apparel Supply Chain Today and the Path to
Successful Collaboration

• Anna Lin
• Chief Executive
• GS1 Hong Kong

2
Global Commerce
Global Sourcing for Cheaper Product and Wider
Product Range
Consumer Base
Manufacturing Base
Total Export from China to Foreign Countries
Amounts to US762 billion in Year 2005 (An
Increase of 28.4)
3
A Typical Global Apparels Textiles Supply Chain

• An interlinking system of raw materials
  suppliers, garment manufacturers, buying/trading
  offices, and brand retailers.

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

US/Europe
Asia Pacific
Raw Materials Suppliers
M
D
Garment Sourcing
M
Garment Manufacturers
O
D
L
O
L
P
P
Agents (Buying/Trading Offices)
D
O
L
P
Brand Retailers
D
O
L
Upstream apparel
P
D
O
L
P
Raw Materials Sourcing
SC Interactions D Development O Ordering L
Logistics P Payment
Downstream apparel
M Manufacturing
4
Retailer Fashion on Demand

• Fashion changes from month-to-month rather than
  season-to-season.
• Over 10K new products per year for a typical
  brand retailer.
• New Product Introduction (NPI) once a week.
• 3 5 weeks of final design to sales cycle.
• This imposes tremendous pressure to adopt Quick
  Response, enhancing end-to-end supply chain
  efficiency, visibility and reducing total supply
  chain costs.

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

5
Industry Challenges

• Continuing efforts to shortening the production
  cycle time.
• Fierce competition from emerging manufacturers in
  terms of cost.
• High flexibility, responsiveness and reliability,
  plus a lot of last minute changes.
• Facing various market impacts like abolition of
  Quota in 2005, Chinas WTO accession and
  globalization of market.
• Short product life cycle and low order quantity.
• Fragmented industry, lacking of consistent
  operational practices and heavily relying on
  manual-based operation.

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

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Collaborative Efforts Needed to Combat Challenges
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Apparel Supply Chain Interaction

• Sourcing and developing raw materials in the
  upstream supply chain accounts for some 70 of
  the time spent in the supply chain interaction.

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

D
L
O
P
SC Interaction
B2B Business Processes
Cycle Time
Supporting Systems
8
Business Processes(Upstream Raw Material
Sourcing Development)

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

Scenario 1
Buying Office
BrandRetailer
Raw Materials Supplier
Requirements
Product Development
Garment Manufacturer
Scenario 2
Product Development
Buying Office
BrandRetailer
Raw Materials Supplier
Specification
Garment Manufacturer
9
Operational Inefficiency

• The apparel and textiles industry continues to
  suffer from a tremendous lack of discipline,
  standardization, and transparency, as most of
  the companies are still using a smorgasbord of
  proprietary methodology for specifying and
  exchanging the specification of raw materials.
• This leads to a serious interoperability issues
  and operational inefficiencies and problems among
  the business partners along the apparel supply
  chain.
• End-to-end supply chain integration is the new
  business paradigm that companies need to adopt in
  order to derive competitive advantages and to
  meet their new business challenges.

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

10
Operational Inefficiency Survey
Total number of respondents 63 companies
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Reasons of Inefficiency

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

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AppTex Vision
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Groundwork - AppTex Program

• GS1 HK in collaboration with a group of
  forward-thinking upstream apparel and textiles
  companies are taking charge of developing raw
  materials specifications standard aims at
  integrating upstream apparel supply chain.
• This project was backed by 33 key players and
  industry bodies, accounting for some 60 percent
  of the local market share, with professional
  people to provide suggestions and comments for
  developing the standards of raw materials
  specifications of
• Button Interlining Knitted woven fabrics
  Label Thread and Yarn.
• The raw materials standards cover
• Classification Product attributes Attribute
  values Unit of measure International article
  identification Party identification.

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

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Participating Companies

• American Efird (HK) Ltd INVISTA (HK) Ltd
• Avery Dennison HK B.V. Keung Hing Mfy Intl Ltd
• Central Fabrics Ltd Luen Thai Intl Group Ltd
• Central Textiles (HK) Ltd Milos Knitwear (Intl)
  Ltd
• Chargeurs Interlining (HK) Ltd Mou Fung Ltd
• Coats China Pacific Textiles Ltd
• Crystal Group Paxar Far East Ltd
• East Sun Button intl Ltd Peninsula Knitters Ltd
• Esquel Group TAL Apparel Ltd
• Fang Brothers Knitting Ltd Texful Textile Ltd
• Fountain Set (Holdings) Ltd Top Form Intl Ltd
• Freuenberg Vilene Intl Ltd Tristate Holdings
  Ltd
• GS1 Hong Kong Ltd Union Button Factory Ltd
• Grand Gain Industrial Ltd Wing Tai Enterprieses
  Ltd
• Gunzetal Ltd Xetex (HK) Ltd

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

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STEERING COMMITTEE Project Manager GS1 Hong
Kong Project Start 2002 Chaired by Mr. Andrew
Leung, Chairman of Textile Council Garment
manufacturers Top Form, Tristate Raw material
suppliers Central Textiles, Fountain Set,
Freudenberg Vilene, Gunzetal Sponsors Esquel,
Luen Thai, TAL, Wing Tai Supporting Association
Textile Council
Key Drivers from the Industry
TECHNICAL CONSULTING GROUP Vetting Committee
Chaired by Mr. Andrew Leung, Chairman of Textile
Council Technical Work Group Chaired by Mr.
Stanford Kuo, Director of Gunzetal
Vice-chaired by Mr.
Ricky Tang, Regional Director, ISCR South Asia
of Freudenberg Vilene
MARKETING COMMUNICATION UNIT Chaired by Ms. Woo
Yuk Lynn, Director of Central Textiles , in
collaboration with Textiles Council HKTDC

• WORKING COMMITTEE
• Industry Work-Groups Chaired by Mr. Dennis
  Chung, Corporate Logistics Director of Luen Thai

Button
Interlining
Label Tag
Thread
Yarn
Woven fabric
Knitted fabric

• East Sun Button
• Esquel
• Keung Hing
• Luen Thai
• TAL
• Tristate
• Union Button
• Wing Tai

• Freudenberg
• Vilene
• Luen Thai
• TAL
• Tristate
• Wing Tai

• Avery Dennison
• Esquel
• Grand Gain
• Luen Thai
• Paxar
• TAL
• Top Form
• Tristate
• Wing Tai

• Esquel
• Fountain Set
• Luen Thai
• Pacific Textiles
• Top Form

• Gunzetal
• Luen Thai
• TAL
• Top Form
• Tristate
• Wing Tai

• Central Textiles
• Esquel
• Freudenberg
• Vilene
• Luen Thai
• Mou Fung
• TAL
• Texful Textile
• Top Form
• Tristate
• Wing Tai

• Central Textiles
• Crystal
• Fang Brothers
• Fountain Set
• INVISTA (HK)
• Luen Thai
• Milos Knitwear
• Pacific Textiles
• Peninsula Knitters
• TAL
• Tristate
• Wing Tai

USER CONSULTATION GROUPAmerican Efird (HK),
Chargeurs Interlining (HK) Coats China and Xetex
(HK), just to name a few
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Specifications for Thread and Knitted Fabric
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Results of AppTex

• All the participating companies agree that an
  industry-wide raw materials standards will ease
  the communication between business partners,
  enabling them to streamline their supply chain
  operations and enhance overall efficiency.
• Alignment with brand retailer to achieve
  end-to-end supply chain integration is critical
  to the success of the AppTex project.
• The industry expects that at least a 15-20
  reduction in overall cycle time of product
  development can be achieved if the AppTex
  standards is deployed properly.

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

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Progress of AppTex

• 2002 Project granted
• 2003 Complete AppTex Industrial Survey
• 2004 Launch of AppTex
• 2005 Host of Suppliers roundtable
• 2005 Specifications Refinement
• 2005 Share AppTex with VICS members
• 2007 Marketing Event with Textile
• Handbook
• 2008 AppTex Implementation Pilot
• 2008 Co-organize CMSS Roundtable

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

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Collaborative Material Standards Specifications
(CMSS)
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CMSS

• Set up by VICS to establish raw
  materials/garments specifications for item
  identification
• To turn industry consensus into global standards
  with the involvement of buyers and sellers in the
  Apparel and Textiles Industry. 
• To transform unstructured data into structured
  data format for raw materials and product
  specifications presentation and to enable
  enterprise systems integration for
  Business-to-Business communication with the aids
  of the best-of-breed technology.

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

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Turn into Action

• Embrace CMSS/AppTex as a tool to step forward the
  enhancement of end-to-end global
  apparels/textiles supply chain
• Leverage existing work and industry players via
  VICS members and GS1 HKs apparels/textiles
  industry forum
• Great opportunity to create common vision and
  implementation of Collaborative Commerce
  encompassing both Downstream and Upstream
  apparels/textiles supply chain

• Apparel Supply Chain
• Collaborative Efforts
• AppTex Vision
• CMSS
• Way Forward

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Questions?

• Thank You