Product Design Collaboration: Capturing Lost Supply Chain Value in the Apparel Industry

12 Pages Posted: 15 Apr 2002

Date Written: April 2002

Abstract

The growing complexity of both the supply chain and often the product itself has strained organizations in every sector making new product introduction more uncertain. Such supply chain problems are often the worst for short life products like high-tech electronics, toys, and fashion apparel where product lifecycles have shrunk to only a few months. In these environments, changing customer tastes and rapid innovation drive demand. Late entries are typically forced to slash prices to liquidate inventories, hoping the next product will hit the market on time and generate profits. Nowhere are these challenges greater than the apparel industry. Besides relentless pressure on product lifecycle, pricing pressures have driven many players in the supply chain to the brink of bankruptcy. Over the past eight years, apparel has consistently landed at the very button of the consumer price index. Racking up negative price increases in every year but one, apparel makers have been unable to increase prices while the overall index has increased by around three percent each year. For every player in the apparel industry, pressure at the retail level has translated into a struggle to reduce costs throughout the supply chain. From retailers and brands like Macy's and the Gap, to mills and manufacturers like Warnaco and Burlington, the cost pressures have been excruciating. After a decade of searching the globe for ever-lower costs, it is becoming clear to everyone in the industry that adversarial relationships focused on extracting cost reductions from suppliers is unsustainable. Winners in this industry must find ways to leverage their supply chain partnerships through information integration and collaboration - improving products, driving down cycle times, and reducing supply chain costs. In this paper, we will examine how players throughout the supply chain are reinventing their businesses through web-centric product collaboration. Starting from raw fiber producers and working our way to the retail stores, we will see how companies like Dupont - a fiber producer; Burlington - a fabric mill; OmegAlpha Industries - a cut and sew operation; Liz Claiborne - a brand; and Dillards - a retailer, can collaborate and change the structure of the supply chain.

Suggested Citation

Johnson, M. Eric, Product Design Collaboration: Capturing Lost Supply Chain Value in the Apparel Industry (April 2002). Tuck School of Business Working Paper No. 02-08. Available at SSRN: https://ssrn.com/abstract=307461 or http://dx.doi.org/10.2139/ssrn.307461

M. Eric Johnson (Contact Author)

Independent

No Address Available

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