Department of Apparel Manufacturing management & technology

Subject Name: Research Methodology.

Subject Code: MMBA-704
Report No: 01
Report On: Supply chain management activities in RMG sector.

SUBMITTED TO
Mir Abdullah Shahneaz
Coordinator
Department of BBA
Shanto-Mariam University of creative Technology.

SUBMITTED BY
Name
Md. Samsul Al-Amin
Md. Deloare Hossain
Palash Paul
Md. Deluar Hossain
Md. Badrul Hoda

ID
142151001
142151011
142151016
142151017
142151018

Submission Date: 29/04/2016

April 22, 2016

To
The Course Teacher
Program MBAPFM
Shanto-Mariam University of Creative Technology

Subject: Application for Submission of Course Report.

Sir,
With due respect, we are pleased to submit our course reports on Supply Chain
Management activity in RMG Sector. We have tried our best to make this report
resourceful. For this purpose, we have gone through internet, different books, articles,
journals, interview of authorities and employees of respective organizations and class
lecture sheets for the relevant information of the assigned topic.
It will be highly cherished if you are kind enough to acknowledge our report so do that
we can go ahead.

Sincerely Yours,
GroupSemester- 3rd
Batch 8th

Acknowledgement
It would be of great pleasure for me to take the opportunity of thanking nearly everybody
who had been of great help in the completion of my dissertation. My sincere gratitude
goes to Mr. Ahsan Imran and Mr. Riyad Hossain Khan. Without whose help this
dissertation would have seemed impossible.
we owe immensely for the minute help that was forwarded to us by friends in my
organization. Both of the above mentioned persons supported me incredibly and guided
us with suggestions and probations for the betterment of our accomplished work.
It has been of great learning to be on the job and doing the dissertation simultaneously,
which enriched my knowledge and developed our outlook.
We are looking forward to continued support from our friends and colleagues in future as
well. Only with their encouragement and coorporation.

Executive Summary:

A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into intermediate
and finished products, and the distribution of these finished products to customers.
Supply chains exist in both service and manufacturing organizations, although the
complexity of the chain may vary greatly from industry to industry and firm to firm.
Supply chain management is a cross-functional approach to managing
the movement of raw materials into an organization and the
movement of finished goods out of the organization toward the endconsumer. As corporations strive to focus on core competencies and
become more flexible, they have reduced their ownership of raw
materials sources and distribution channels. These functions are
increasingly being outsourced to other corporations that can perform
the activities better or more cost effectively.
Supply chain strategy will have a major impact on creating value for a company and its
supply chain partners. An effective supply chain strategy may be formulated to meet the
needs of the market and integrate them with technology to generate the highest level of
customer satisfaction while delivering the highest value to the shareholders.

Table of Content:
S/
N

Title

Page no

Chapter -1
1
2
3

Objective of the Study

Data Collection Procedure
Limitation

7
8
8
Chapter -2

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Introduction
What is supply chain
What is supply chain management
Components of SCM
Characteristics of SCM
Supply chain decisions
Major decisions area in SCM
Functions of SCM
Supply chain strategy
SCM problem
Supply chain modeling approaches
Network design methods
Rough cut methods
SCM aims four major goals
Performance measurement in the apparel industry SCM
An Analytic Hierarchy Process Model for Vendor Selection
The AHP approach
Result and discussion
Chapter -2
Finding
Recommendation
Conclusion

10
12
12
13
14
15
17
19
21
25
25
26
28
30
31
33
36
42
44
44
45

Chapter 1

1. Objective of the Study

1.

Analyze the effects of supply chain management on Britannia

industries process.
2. Supplier Chain management in Britannia industries visa priyagold
biscuits.
3. To provide possible strategies for better implementation in SCM in
Britannia industries.

2. Data Collection Procedure

a. Primary source wed site.
b. Secondary sources- interview and personal conversations with different factory
management and employees from the garment industry
c. Tertiary sources readings from books and testimonials regarding the RMG
sector.

3. Limitation
1. Due to the short amount of time of given to write dissertation the authors were only
able to do limited amount of field research.
2. Not private datas or primary datas which really give correct information.
3. the model created in this report only internal RMG sector.

Chapter 2

1. Introduction
In todays world of globalization many apparel retailers are building strong supply chains
to gain advantage over their competitors by offering the best value to their customers.
The supply-chain management (SCM) has become very critical to manage risk,
dynamism, and complexities of global sourcing. A totally integrated supply chain is
required for the company to get gain the maximum benefits.
The objectives of the supply chain and the performance measurements need to be
understood in order to build the most effective supply chain. Performance measurements
provide an approach to identify the success and potential of supply management
strategies.
One major aspect of the SCM is to select the right sources of supply in the global
business environment that can support corporates strategy. Contrary to the conventional
adversarial relationships, effective SCM in the new competition suggests seeking close
relationships in the long term with less number of partners.
Considering the rapidly changing market conditions and customer seeking the best value,
long-term relationships with the vendors became very critical in the apparel industry.
Therefore the apparel retailers are looking for the vendors who can provide the best cost
in the fastest way. Such a relationship is regarded as partnership since it includes
activities such as information sharing, joint product design, or sharing storage spaces.
The purpose of this paper is to emphasize the importance the vendor-selection problem
and its relation to the supply-chain strategy. It presents a model, based on the analytical
hierarchy process (AHP), that an apparel company can use to select its suppliers, and
create a strategy for supplier relationship management (SRM). The framework of the
performance measurement is based on quantitative and qualitative measurements.

2. What is Supply Chain:

Supply Chain: A supply chain is a network of facilities and distribution options that
performs the functions of procurement of materials, transformation of these materials into
intermediate and finished products, and the distribution of these finished products to
customers. Supply chains exist in both service and manufacturing organizations, although
the complexity of the chain may vary greatly from industry to industry and firm to firm.
Below is an example of a very simple supply chain for a single product, where raw
material is procured from vendors, transformed into finished goods in a single step, and
then transported to distribution centers, and ultimately, customers. Realistic supply chains
have multiple end products with shared components, facilities and capacities. The flow of
materials is not always along an arbores cent network, various modes of transportation
may be considered, and the bill of materials for the end items may be both deep and large.

3. What is supply chain management?

Supply chain management (SCM) is the combination of art and science that goes into
improving the way your company finds the raw components it needs to make a product or
service and deliver it to customers.
SCM is also called extending which means integrating the internal and external
partners on the supply and process chain to get raw materials to the manufacturer and
finished products to the consumer. Most companies fail to integrate their supply chain
strategies for a number of reasons; among them a lack of system integration due to
fragmented supply chain responsibilities. But in neglecting integration and the broader
concept of supply chain management, firms might be missing an opportunity to cut costs
and boost customer service.

5. The following are five basic components of SCM:

1. Plan This is the strategic portion of SCM. You need a strategy for managing all the
resources that go toward meeting customer demand for your product or service. A big
piece of planning is developing a set of metrics to monitor the supply chain so that it is
efficient, costs less and delivers high quality and value to customers.
2. Source Choose the suppliers that will deliver the goods and services you need to
create your product. Develop a set of pricing, delivery and payment processes with
suppliers and create metrics for monitoring and improving the relationships. And put
together processes for managing the inventory of goods and services you receive from
suppliers, including receiving shipments, verifying them, transferring them to your
manufacturing facilities and authorizing supplier payments.
3. Make This is the manufacturing step. Schedule the activities necessary for
production, testing, packaging and preparation for delivery. As the most metric-intensive
portion of the supply chain, measure quality levels, production output and worker
productivity.
4. Deliver This is the part that many insiders refer to as logistics. Coordinate the receipt
of orders from customers, develop a network of warehouses, pick carriers to get products
to customers and set up an invoicing system to receive payments.
5. Return The problem part of the supply chain. Create a network for receiving
defective and excess products back from customers and supporting customers who have
problems with delivered products.

6. Supply chain management has the following characteristics:

An ability to secure raw material or finished good from anywhere in world.
A centralized, global business and management strategy with flawless local
execution.
On-line, real-time distributed information processing to the desktop, providing
total supply chain information visibility.
The ability to manage information not only within a company but across
industries and enterprises.
The seamless integration of all supply chain managements, including third-party
suppliers, information systems, cost accounting standards, and measurement
systems.
The development and implementation of accounting models such as activitybased costing that like cost to performance are used as tools for cost reduction.
A reconfiguration of the supply chain organization into high-performance team
going from the shop floor to senior management.
Traditionally, marketing, distribution, planning, manufacturing, and the purchasing
organizations along the supply chain operated independently. These organizations have
their own objectives and these are often conflicting. Marketing objectives are high
customer service and maximum sales dollars conflict with manufacturing and distribution
goals. Many manufacturing operations are designed to maximize throughput and lower
costs with little consideration for the impact on inventory levels and distribution
capabilities. Purchasing contracts are often negotiated with very little information beyond
historical buying patterns. The result of these factors is that there is not a single,
integrated plan for the organization---there were as many plans as businesses. Clearly,
there is a need for a mechanism through which these different functions can be integrated

together. Supply chain management is a strategy through which such integration can be
achieved.
Supply chain management is typically viewed to lie between fully vertically integrated
firms, where a single firm and those own the entire material flow where each channel
member operates independently. Therefore coordination between the various players in
the chain is keys in its effective management. Cooper and Ellram [1993] compare supply
chain management to a well-balanced and well-practiced relay team. Such a team is more
competitive when each player knows how to be positioned for the hand-off. The
relationships are the strongest between players who directly pass the baton, but the entire
team needs to make a coordinated effort to win the race.

7. Supply Chain Decisions:

Supply chain management is a cross-functional approach to managing the movement
of raw materials into an organization and the movement of finished goods out of the
organization toward the end-consumer. As corporations strive to focus on core
competencies and become more flexible, they have reduced their ownership of raw
materials sources and distribution channels. These functions are increasingly being
outsourced to other corporations that can perform the activities better or more cost
effectively. The effect has been to increase the number of companies involved in
satisfying consumer demand, while reducing management control of daily logistics
operations. Less control and more supply chain partners led to the creation of supply
chain management concepts. The purpose of supply chain management is to improve
trust and collaboration among supply chain partners, thus improving inventory visibility
and improving inventory velocity. Supply chain activities can be grouped into strategic,
tactical, and operational levels of activities.
Strategic decisions: strategic decisions are made typically over a longer time horizon.
These are closely linked to the corporate strategy (they sometimes the corporate strategy),
and guide supply chain policies from a design perspective.

Strategic network optimization, including the number, location, and size of

warehouses, distribution centers and facilities.

Strategic partnership with suppliers, distributors, and customers, creating

communication channels for critical information and operational improvements
such as cross docking, direct shipping, and third-party logistics.

Product design coordination, so that new and existing products can be optimally
integrated into the supply chain, load management

Information Technology infrastructure, to support supply chain operations.

Where to make and what to make or buy decisions

Align Overall Organizational Strategy with supply strategy

Tactical decisions:

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, locations, scheduling, and planning

process definition.

Inventory decisions, including quantity, location, and quality of inventory.

Transportation strategy, including frequency, routes, and contracting.

Benchmarking of all operations against competitors and implementation of best

practices throughout the enterprise.

Milestone Payments

Operational decisions: operational decisions are short term, and focus on activities over
a day-to-day basis. The effort in these types of decisions is to effectively and efficiently
manage the product flow in the "strategically" planned supply chain

Daily production and distribution planning, including all nodes in the supply
chain.

Production scheduling for each manufacturing facility in the supply chain (minute
by minute).

Demand planning and forecasting, coordinating the demand forecast of all

customers and sharing the forecast with all suppliers.

Sourcing planning, including current inventory and forecast demand, in

collaboration with all suppliers.

Inbound operations, including transportation from suppliers and receiving

inventory.

Production operations, including the consumption of materials and flow of

finished goods.

Outbound operations, including all fulfillment activities and transportation to

customers.

Order promising, accounting for all constraints in the supply chain, including all
suppliers, manufacturing facilities, distribution centers, and other customers.

Performance tracking of all activities

8. Four major decision areas in supply chain management:

1) location
2) production
3) inventory
4) transportation (distribution)

And there are elements in each of these decision areas.

Location Decisions
The geographic placement of production facilities, stocking points, and sourcing points is
the natural first step in creating a supply chain. The location of facilities involves a
commitment of resources to a long-term plan. Once the size, number, and location of
these are determined, so are the possible paths by which the product flows through to the
final customer. These decisions are of great significance to a firm since they represent the
basic strategy for accessing customer markets, and will have a considerable impact on
revenue, cost, and level of service. These decisions should be determined by an
optimization routine that considers production costs, taxes, duties and duty drawback,
tariffs, local content, distribution costs, production limitations, etc. Although location
decisions are primarily strategic, they also have implications on an operational level.

Production Decisions
The strategic decisions include what products to produce, and which plants to produce
them in, allocation of suppliers to plants, plants to direct customers, and direct customers
to customer markets. As before, these decisions have a big impact on the revenues, costs
and customer service levels of the firm. These decisions assume the existence of the
facilities, but determine the exact path(s) through which a product flows to and from
these facilities. Another critical issue is the capacity of the manufacturing facilities--and
this largely depends on the degree of vertical integration within the firm. Operational
decisions focus on detailed production scheduling. These decisions include the
construction of the master production schedules, scheduling production on machines, and
equipment maintenance. Other considerations include workload balancing, and quality
control measures at a production facility.
Inventory Decisions
These refer to means by which inventories are managed. Inventories exist at every stage
of the supply chain as either raw material, semi-finished or finished goods. They can also

be in process between locations. Their primary purpose is to buffer against any

uncertainty that might exist in the supply chain. Since holding of inventories can cost
anywhere between 20 to 40 percent of their value, their efficient management is critical in
supply chain operations. It is strategic in the sense that top management sets goals.
However, most researchers have approached the management of inventory from an
operational perspective. These include deployment strategies (push versus pull), control
policies --- the determination of the optimal levels of order quantities and reorder points,
and setting safety stock levels, at each stocking location. These levels are critical, since
they are primary determinants of customer service levels.
Transportation Decisions
The mode choice aspects of these decisions are the more strategic ones. These are closely
linked to the inventory decisions, since the best choice of mode is often found by tradingoff the cost of using the particular mode of transport with the indirect cost of inventory
associated with that mode. While air shipments may be fast, reliable, and warrant lesser
safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much
cheaper, but they necessitate holding relatively large amounts of inventory to buffer
against the inherent uncertainty associated with them. Therefore customer service levels
and geographic location play vital roles in such decisions. Since transportation is more
than 30 percent of the logistics costs, operating efficiently makes good economic sense.
Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling
of equipment are keys in effective management of the firm's transport strategy.

9. Functions of Supply chain management:

Supplier management: the goal is to reduce the number of suppliers and get
them to become partners in business in a win/win relationship. The benefits are
seen in reduced purchase order (PO) processing costs; increased numbers of POs
processed by fewer employees, and reduced order processing cycle times.

 Inventory management: the goal is to shorten the order-ship-bill cycle. When a

majority of partners are electronically linked, information faxed or mailed in the
past can now be sent instantly. Documents can be tracked to ensure they received,
thus improving auditing capabilities. The inventory management solution should
enable the reduction of inventory levels, improve inventory turns, and eliminate
out-of-stock occurrences.
Distribution management: the goal is to move documents related to shipping
(bills of lading, purchase orders, advanced ship notices, and manifest claims).
Paperwork that typically took days to cycle in the past can now be sent in
moments and contain more accurate data, thus allowing improved resources
planning.
Channel management: the goal is to quickly disseminate information about
changing operational conditions to trading partners. In other words, technical,
product, and pricing information that once required repeated telephone calls and
countless labor hours to provide can now be posted to electronic bulletin boards,
thus allowing instant access. Thus electronically linking production with their
international distributor and seller networks eliminates thousands of labor hours
per week in the process.
Payment management: the goal is to link the company and the suppliers and
distributors so that payments can be sent and received electronically. This process
increases the speed at which companies can compute invoices, reducing clerical
errors and lowering transaction fees and costs while increasing the number of
invoices processed.
Financial management: the goal is enable global companies to manage their
money in various foreign accounts. Companies must work with financial
institutions to boost their ability to deal on a global basis. They need to assess
their risk and exposure in global financial markets and with global information as
opposed to local market information.

 Sales force productivity: the goal is to improve the communication and flow of
information among the sales, customer, and production functions. Linking the
sales force with regional and corporate offices establishes greater access to market
intelligence and competitor information that can be funneled into better customer
service and service quality. Companies need to collect market intelligence quickly
and analyze it more thoroughly. They also need to help their customers introduce
their products to market faster, giving them a competitive edge.
In sum, the SCM process increasingly depends on electronic markets because of
global sourcing of products and services to reduce costs, short product life cycle, and
increasingly flexible manufacturing resulting in a variety of customizable products.

10.

Supply Chain Strategy:

Supply chain strategy will have a major impact on creating value for a company and its
supply chain partners. An effective supply chain strategy may be formulated to meet the
needs of the market and integrate them with technology to generate the highest level of
customer satisfaction while delivering the highest value to the shareholders.

Demand flow
strategy

Collaboration
strategy

Supply chain
strategy
framework

Technology
integration
strategy

Supply chain strategy framework

Customer
service
strategy

1. Collaboration strategy: opportunity for collaboration among business partners will

vary depending upon the organizations perspective role in the supply chain.
Manufacturing/supplier collaboration: by collaborating with suppliers, manufacturers
will derive benefits in activities such as products development, order fulfillment and
capacity planning.
Manufacturer/customer collaboration: the opportunities of collaboration between
manufacturers and customers are focused on demand planning and inventory
replenishment. This approach ensures that the customer requirements are met efficiently.
Collaboration with third party and fourth party logistics providers: the collaboration
of companies with 3rd party logistics providers focuses on jointly planning logistics
activities. It also gives the company the added advantage of better packaging. The 4 th
party logistics organization is one of the intermediate stages along the logistics spectrum
that combine the benefits of the outsourcing and in sourcing.
2. Demand flow strategy: traditionally, in supply chain management, the key focus and
scope has been in managing flow of goods from suppliers through the manufacturing and
distribution chain to the customer.
3. Customer service strategy: customer satisfaction level is directly proportional to the
service provided by the company. Formulating a customer service strategy involves
addressing three steps, namely, customer segmentation, cost to service and revenue
management.
Customer segmentation: a company has to decide on the segment it wants to target for a
particular commodity. It can decide not to have a homogenous market, which is
unacceptable.
Cost to serve: it is important to obtain an impartial assessment of whether the things that
the customers want the feasible for the company.

Revenue management: determination of the appropriate response to the identified needs

and expectations of each customer segment must be completed. The response that
maximizes the firms profitability and growth should be determined.
4. Technology integration strategy: developments in IT enabled the integration of
business information systems, both horizontally and vertically. A number of IT-based
supply chain information management tools are now available to provide intelligent
decision support and execution management

Demand &leadtime mgt

Customer
analysis

Purchasing

Manufacturing

Supply chain
management

Transportation

Inventory mgt &

control

Materials
management

Cost benefit and

analysis

Integrated SCM approach

Supply chain management problems:

Supply chain management must address the following problems:

Distribution Network Configuration: Number and location of suppliers,

production facilities, distribution centers, warehouses and customers.

Distribution Strategy: Centralized versus decentralized, direct shipment, pull or

push strategies, third party logistics.

Information: Integrate systems and processes through the supply chain to share
valuable information, including demand signals, forecasts, inventory and
transportation.

Inventory Management: Quantity and location of inventory including raw

materials, work-in-process and finished goods.

Supply Chain Modeling Approaches:

Clearly, each of the above two levels of decisions require a different perspective. The
strategic decisions are, for the most part, global or "all encompassing" in that they try to
integrate various aspects of the supply chain. Consequently, the models that describe
these decisions are huge, and require a considerable amount of data. Often due to the
enormity of data requirements, and the broad scope of decisions, these models provide
approximate solutions to the decisions they describe. The operational decisions,
meanwhile, address the day to day operation of the supply chain. Therefore the models
that describe them are often very specific in nature. Due to their narrow perspective, these
models often consider great detail and provide very good, if not optimal, solutions to the
operational decisions.
To facilitate a concise review of the literature, and at the same time attempting to
accommodate the above polarity in modeling, we divide the modeling approaches into
three areas --- Network Design, ``Rough Cut" methods, and simulation based methods.
The network design methods, for the most part, provide normative models for the more
strategic decisions. These models typically cover the four major decision areas described

earlier, and focus more on the design aspect of the supply chain; the establishment of the
network and the associated flows on them. "Rough cut" methods, on the other hand, give
guiding policies for the operational decisions. These models typically assume a "single
site" (i.e., ignore the network) and add supply chain characteristics to it, such as explicitly
considering the site's relation to the others in the network. Simulation methods are a
method by which a comprehensive supply chain model can be analyzed, considering both
strategic and operational elements. However, as with all simulation models one can only
evaluate the effectiveness of a pre-specified policy rather than develop new ones. It is the
traditional question of "What If?" versus "What's Best?"

Network Design Methods:

As the very name suggests, these methods determine the location of production, stocking,
and sourcing facilities, and paths the product(s) take through them. Such methods tend to
be large scale, and used generally at the inception of the supply chain. The earliest work
in this area, although the term "supply chain" was not in vogue, was by Geoffrion and
Graves [1974]. They introduce a multi-commodity logistics network design model for
optimizing annualized finished product flows from plants to the DC's to the final
customers. Geoffrion and Powers [1993] later give a review of the evolution of
distribution strategies over the past twenty years, describing how the descendants of the
above model can accommodate more echelons and cross commodity detail.
Breitman and Lucas [1987] attempt to provide a framework for a comprehensive model
of a production-distribution system, "PLANETS", that is used to decide what products to
produce, where and how to produce it, which markets to pursue and what resources to
use. Parts of this ambitious project were successfully implemented at General Motors.
Cohen and Lee [1985] develop a conceptual framework for manufacturing strategy
analysis, where they describe a series of stochastic sub- models, that considers annualized
product flows from raw material vendors via intermediate plants and distribution
echelons to the final customers. They use heuristic methods to link and optimize these

sub- models. They later give an integrated and readable exposition of their models and
methods in Cohen and Lee [1988].
Cohen and Lee [1989] present a normative model for resource deployment in a global
manufacturing and distribution network. Global after-tax profit (profit-local taxes) is
maximized through the design of facility network and control of material flows within the
network. The cost structure consists of variable and fixed costs for material procurement,
production, distribution and transportation. They validate the model by applying it to
analyze the global manufacturing strategies of a personal computer manufacturer.
Finally, Arntzen, Brown, Harrison, and Trafton [1995] provide the most comprehensive
deterministic model for supply chain management. The objective function minimizes a
combination of cost and time elements. Examples of cost elements include purchasing,
manufacturing, pipeline inventory, transportation costs between various sites, duties, and
taxes. Time elements include manufacturing lead times and transit times. Unique to this
model was the explicit consideration of duty and their recovery as the product flowed
through different countries. Implementation of this model at the Digital Equipment
Corporation has produced spectacular results --- savings in the order of $100 million
dollars.
Clearly, these network-design based methods add value to the firm in that they lay down
the manufacturing and distribution strategies far into the future. It is imperative that firms
at one time or another make such integrated decisions, encompassing production,
location, inventory, and transportation, and such models are therefore indispensable.
Although the above review shows considerable potential for these models as strategic
determinants in the future, they are not without their shortcomings. Their very nature
forces these problems to be of a very large scale. They are often difficult to solve to
optimality. Furthermore, most of the models in this category are largely deterministic and
static in nature. Additionally, those that consider stochastic elements are very restrictive
in nature. In sum, there does not seem to yet be a comprehensive model that is
representative of the true nature of material flows in the supply chain.

Rough Cut Methods:

These models form the bulk of the supply chain literature, and typically deal with the
more operational or tactical decisions. Most of the integrative research (from a supply
chain context) in the literature seems to take on an inventory management perspective. In
fact, the term "Supply Chain" first appears in the literature as an inventory management
approach. The thrust of the rough cut models is the development of inventory control
policies, considering several levels or echelons together. These models have come to be
known as "multi-level" or "multi-echelon" inventory control models.
Multi-echelon inventory theory has been very successfully used in industry. Cohen et al.
[1990] describe "OPTIMIZER", one of the most complex models to date --- to manage
IBM's spare parts inventory. They develop efficient algorithms and sophisticated data
structures to achieve large scale systems integration.
Although current research in multi-echelon based supply chain inventory problems shows
considerable promise in reducing inventories with increased customer service, the studies
have several notable limitations. First, these studies largely ignore the production side of
the supply chain. Their starting point in most cases is a finished goods stockpile, and
policies are given to manage these effectively. Since production is a natural part of the
supply chain, there seems to be a need with models that include the production
component in them. Second, even on the distribution side, almost all published research
assumes an arborescence structure. Each site receives re-supply from only one higher
level site but can distribute to several lower levels. Third, researchers have largely
focused on the inventory system only. In logistics-system theory, transportation and
inventory are primary components of the order fulfillment process in terms of cost and
service levels. Therefore, companies must consider important interrelationships among
transportation, inventory and customer service in determining their policies. Fourth, most
of the models under the "inventory theoretic" paradigm are very restrictive in nature.

Mostly they restrict themselves to certain well known forms of demand or lead time or
both, often quite contrary to what is observed.

SCM aims four major goals:

1) waste reduction:
2) time compression;
3) flexible response; and
4) unit cost reduction.
These goals have been articulated in several contexts associated with SCM, emphasizing
the importance of both intra- and inter-firm coordination. (Brewer & Speh, 2000)

Figure 1. Supply Chain Management Framework (Brewer & Speh, 2000)

Firms practicing SCM seek to reduce waste throughout the supply chain by minimizing
duplication, harmonizing operations and systems, and enhancing quality. When
production and logistics processes are accomplished in less time, all entities in the supply
chain are able to operate more efficiently, and primary result is the reduced inventories
throughout the system. Flexible response is in order handling, including how orders are
handled, product variety, order configuration, order size, and several other dimensions
means that a customers unique requirements can be met in a cost-effective manner.
Overall, all of these goals help keeping the costs at the minimum for a given value for the
customer (Brewer & Speh, 2000).

3. Performance Measurement in the Apparel Industry SCM

According to Chan (2003), the aim of supply chain management is to gain an advantage
in terms of customer service and cost over competitors. Traditionally, performance
measurement is defined as the process of quantifying the effectiveness and efficiency of
action. It plays a critical role in monitoring performance, enhancing motivation and
communication, and diagnosing problems. Furthermore, performance measurement helps
identifying the success and potential of management strategies, and facilitating the
understanding of the situation.
Traditionally, performance measurement is defined as the process of quantifying the
effectiveness and efficiency of action. From the management perspective, performance
provides the necessary information for feedback to decision makers and process
managers. It plays a critical role in monitoring performance, enhancing motivation,
facilitating communication, and diagnosing problems.
Performance measures are categorized into two groups; qualitative and quantitative.
These measures involve customer satisfaction and responsiveness, flexibilty, supplier
performance, and costs. There are three types of measures: resources, output, and
flexibility. A framework for measuring the strategic, tactical and operational level of
performance in a supply chain, which deals mainly with supplier, delivery, customer
service, and inventory, and logistics costs, exists.
Customer satisfaction is level is an indication of the required standard of service level of
a particular company, which is closely related to the whole performance of its supply
chain. For different industries, customers look at different measures, such as delivery
service, where time is no doubt their major concern; whereas for parts manufacturing, the
accuracy of specification may be the most importance consideration. Thus, the weighting
of each performance measurement can be different for each industry.
It is common practice for apparel retailers to deal with manufacturers, with centralised
buying and considerable negotiation on prices, quality and delivery schedules. However,
Popp (as cited in Bruce, Daly & Towers 2004) suggests that in addition, in many chains
there is an intermediary, often an import or export agency, acting as a significant figure

within the chain. The addition of the intermediary has come about as a result of
increasing globalisation within the industry. Globalisation of the textile and clothing
supply chain is currently intensifying, with many companies either sourcing components
from overseas, or moving manufacturing to countries with lower labour costs. In addition,
the fashion industry is characterised by a number of factors, namely a short lifecycle,
high volatility, low predictability, and high impulse purchase. (Bruce, Daly & Towers
2004)
In the textile industry, sourcing strategies must reflect the performance capabilities of the
supply base. In most cases there are a variety of possible vendors that differ in cost, lead
times and flexibility of production. Vendors with lowest cost generally offer virtually no
flexibility booking capacity and shipment times of several weeks and often require that
the total production be allocated relatively evenly throughout the year. More responsive
vendors may have shorter lead times and allow greater flexibilty vis-a-vis production
commitments. Additionally, different vendors may be willing to store limited amounts of
finished product prior to delivery for a fee. (Agrawal, Smith & Tsay, 2002)
Retailers tend to to leverage a portfolio of two types of vendors: Type 1 vendors are
characterized by long lead times, lower unit costs and less flexibility whereas Type 2
vendors offer short lead times, high unit costs and more flexibility. This enables such
strategies as exploiting lower cost production for the most predictable segment of
demand, while sourcing the more speculative segment via the more flexible, but more
costly, vendors. Operationalizing this in multi-product, multi-vendor setting is nontrivial
and is further complicated by many production and logistical contraints. (Agrawal, Smith
& Tsay, 2002) Apparel retailers deal with both fashion goods and basic goods to offer
product variety to their customers. Basic and fashion goods can be classified based on the
volume of production, degree of style variation, and frequency of style changes. For
example, fashion goods are hard to forecast the demand; have high fashion level and
seasonality, and have varied style change. Basic goods are relatively easy to forecast the
demand, have low fashion level and limited seasonality, have a basic garment style that
remains constant (Lee & Kincade, 2003). Therefore, the retailer will place the fashion
goods with the Type 2 vendor and the basic goods with the Type 1 vendor.

Textile is a sector where quality is one of the key competitive factors, and current
competition does not only concern the individual firm but, rather, involves the entire
supply chain. Indeed, the quality of the final product that reaches the customer is clearly
the result of a chain of successive, inter-linked phases: spinning, weaving, apparel and
distribution. In this new competitive environment, quality, but must be a feature of all
market segmentsbasic and fashionto meet the specific requirements and tastes of all
types of customers. Furthermore, quality cannot be restricted to the area of the intrinsic
quality of the goods themselves, but must also take even more operational aspects into
account in (Romano & Vinelli, 2004).
The fashion industry is beset by problems of volatility, making it difficult to predict
fashion trends and consumer demands. Despite recent improvements, traditional
forecasting techniques cannot deliver the accuracy required for managing logistics in the
fashion market. Hence, forecasting risks could be reduced by being less dependent on
forecasts. This can be achieved by shortening lead times, since this allows better response
to consumer demand. Speed-to-market has become a fundamentally important way to
cope with the increasing demand for fashion variety. (Birtwistle, Fiorito & Moore, 2006)

4. An Analytic Hierarchy Process Model for Vendor Selection

Supplier selection decisions are taken following the creation of a supplier shortlist during
the pre-qualification phase of the supplier relationship framework shown in Figure 2.
They are complicated decisions since various criteria must be considered in the process.
A significant number of quantitative and qualitative supplier attributes should be
examined. Assessments should be made using objective and subjective criteria, and trade
offs should be established. A strategic approach towards purchasing may further
emphasize the need to consider multiple criteria (Onesime, Xiaofei & Dechen, 2004).

The evaluation of vendors is a complicated decision problem, (Chan & Chan, 2004). The
complexity comes from: 1) the relative difficulty to conceptualize and structure the
numerous components of the evaluation problem into an analytical framework; 2) the
nature of the components in this process; some are quantitative whereas others are
subjective; and 3) the large number of alternatives as the competition in the marketplace
increases.
AHP is a decision making tool that decomposes a complex problem into a multi-level
hierarchical structure of objectives, criteria, sub criteria and alternatives. Applications of
AHP have been reported in numerous fields such as conflict resolution, project selection,
budget allocation, transportation, health care and manufacturing (Wang, Huang &
Dismukes, 2005).
The AHP provides a framework to cope with multiple criteria situations involving
tangible and intangible, quantitative and qualitative aspects (Saaty, 2000, 2001). It
consists of three steps:
1. Decomposing the complex problems into a hierarchy of different levels of elements.
2. Using a measurement methodology to establish priorities among the elements.
3. Synthesizing the priorities of elements to establish the final decision.

First a complex problem is broken down into sub-problems in hierarchical levels, which
is a set of criteria or attributes relative to each sub-problem. The top level is the goal, and
consists of only one elementthe broad, overall objective. Subsequent levels may each
have several elements. The elements are to be compared with one another against
criterion in the next higher level, but must be of the same magnitude. With reference to
this case, the main goal is simply to choose the best or most optimum supply chain. At the
subsequent levels, the relevant performance measures are listed. These are all the criteria
necessary to achieve the goal. (Chan & Chan, 2004)
All available choices are listed and quantified; they are then converted to weights that are
used to prioritize a portfolio of alternatives. The weights of each element in each
hierarchical level are aggregated to the next level.

Pairwise comparison (different alternatives or attributes) can be used to determine the

priorities of each pair of criteria, indicating the strength with which one element
dominates another with respect to a higherlevel element. It provides a clearer priority for
each of the criteria, using a nine point scaling system (see Table 1). It helps to quantify
intangible and non-economic factors included in the hierarchies, which make an explicit
and informed trade-off among many attributes or criteria possible in selecting the best
goal. (Chan & Chan, 2004)

Figure 4. A Model for Supplier Relationship Management (Lash & Janker, 2005)

The AHP provides a framework to cope 9 Extremely preferred with multiple

criteria involving tangible and 8 Very strongly to extremely intangible,

quantitative and qualitative 7 Very strongly preferred aspects. It consists of three

steps:
1. 6 Strongly to very strongly decomposing the complex problems into a
5 Strongly preferred hierarchy of different levels of elements;
2. 4 Moderately to strongly using a measurement methodology to 3
Moderately preferred establish priorities among the elements; and 2
Equally to moderately
3. synthesizing the priorities of elements to 1 Equally preferred establish
the final decision.

First a complex problem is broken down into sub-problems in hierarchical levels, which
is a set of criteria or attributes relative to each sub-problem. The top level is the goal, and
consists of only one element the broad, overall objective. Subsequent levels may each
have several elements. The elements are to be compared with one another against
criterion in the next higher level, but must be of the same magnitude.

With reference to this case, the main goal is simply to choose the best or most optimum
supply chain. At the sequent levels, all the performance measures defined as listed. These
are all the criteria necessary to achieve the goal (Chan & Chan, 2004). Once, all available
choices are listed and quantified, they are converted to weights that are used to prioritise a
portfolio of ideas. The weights of each element in each hierarchical level are aggregated
to the next level.

Pairwise comparison (different alternatives or attributes) can be used to determine the

priorities of each pair of criteria, indicating the strength with which one element
dominates another with respect to a higher-level element. It provides a clearer priority for
each of the criteria, using a nine-point scaling system (see Table 1). It helps to quantify
intangible and non-economic factors included in the hierarchies, which make an explicit
and informed trade-off among many attributes or criteria possible in selecting the best
goal. (Chan & Chan, 2004)

The AHP helps to rank and make decision in a rational and systematic way. Weighting
can be changed according to different companies and industries, thus it provides
flexibility into the decision process (Chan, 2003). Three features of the AHP differentiate
it from other decision-making approaches: its ability to handle both tangible and
intangible attributes; its ability to structure the problems, in a hierarchical manner, to gain
insights into the decision-making process; and, finally, its ability to monitor the
consistency with which a decision maker makes a judgement

The AHP approach, as applied to the supplier selection problem, consists of the
following five steps:

1. Specify the set of criteria for evaluating the suppliers proposals.

2. Obtain the pairwise comparisons of the relative importance of the criteria in achieving the
goal, and compute the priorities or weights of the criteria based on this information.
3. Obtain measures that describe the extent to which each supplier achieves the criteria.
4. Using the information in step 3, obtain the pairwise comparisons of the relative
importance of the suppliers with respect to the criteria, and compute the corresponding
priorities.
5. Using the results of steps 2 and 4, compute the priorities of each supplier in achieving the
goal of the hierarchy.
In this paper, there are three vendors chosen in the suiting category who produce
garments for a global apparel company based in the United States (US). Two of its
vendors are located in Turkey and the third vendor is located in Egypt. The goal is to
select the supplier that can provide the best material aligned with company strategies and
is willing to build a collaborative relationship in the long-term. This goal is placed on the
first level of the hierarchy. The competitive priorities proposed by Watts are adopted with
the addition of trust as the criterion in the supplier selection model. Thus, six criteria
namely cost, quality, delivery, flexibility, innovation and trustare identified to achieve

this goal, and constitute the second level of the hierarchy. The third level of the hierarchy
involves the subcriteria that are chosen regarding the success factors for the apparel
supplier (Chan & Chan, 2004).

There are three important subcriteria which can be considered as cost success factors for a
textile company. The first one is the first cost which is basicly composed of the raw
material (fabric and trims), the cut-andsew, packing cost and the vendors profit. The
second one is the competitiveness of the landed cost. The landed cost is different than the
first cost since other costs are included such as duty fees and transportation. In this case
one of the vendors is in Egypt and there is a trade agreement where Egyptian vendors can
ship to the US duty-free which brings a big advantage in reducing the costs. The third
criterion is the fixed costs which can be considered as the development costs that are put
with the related vendor.

The quality factor is measured in terms of suppliers ability to provide samples in good
quality. In the development and production process there are a lot of samples that are
requested from the vendors such as fit samples, promotional samples, shipment samples
etc. It is important for the suppliers that the quality of the samples conforms to the buying
firms specifications. The second subcriterion is the passing rate of the shipment audits.
The third subcriterion is the returns to the vendor. Moreover, the conformance of the
garments to the firms standards is being tested before the shipment and the results of the
product integrity (PI) testing is used as a subcriterion since it measures the quality of the
vendors production capabilities.

Vendors ability and willingness of submitting the samples and costing to the buying firm
is one of the delivery success factors that needs to be considered during the vendor
selection process. Considering the shortening cycle times in fashion, speed is very
important when evaluating the suppliers. This includes both the production lead time
(cut-to-ship time) and sampling turn time. In addition, the on-time shipment rate is one of
the key success factors which can be quantified very easily through the weekly reports.

For each PO, vendor commits a shipment date for a certain quantity. A delay can cause to
missed sales and financial loss, and also shipping less quantities than ordered will have
the same consequences. The timeliness of costing and its accuracy are also important.

Vendors ability to change order volumes and to change the mix of ordered items (style,
color, size etc.) is very important in the fashion industry. Also vendors capability of
handling quick response (QR) orders is an important criterion however especially in the
suiting category where the fabrics have long lead times, it is often impossible to
implement the QR system. Vendors willingness to go to other countries to make joint
ventures or strategic alliances to pursue for trading and cost advantages is another
criterion important when widening the vendor base.

One of the innovation dimensions is to have an in-house design team to support buyer
firm with new ideas and details as per the latest market trends. It is important that the
vendor has a clear idea about the aesthetics of the buying firms designer and execute it
correctly on the product. Development and prototyping is the initiation of the final
product so the sample room capacity of the vendor, and the speed and quality of sampling
is one important success factor in the vendor selection process. Vendors capability of
thinking upfront to apprehend market trends will help the buyer to adopt the right
product.

As far the trust between the company and its suppliers is considered, the dimensions of
customer service include the vendors ability of handling complaints, following up the
orders etc. The financial stability is strongly expected from the vendors as they are
required to buy raw materials, open the letter of credits (L/Cs) and so on. When
evaluating the vendors, the in-house production capacity is always preferred; the usage of
subcontractors increases the risk in the production process. The reliability of the vendor
increases with in-house activities including cutting, sewing, washing, embroidery,
printing, and packing. Exchange of sensitive information among partners brings the issue
of confidentiality into attention. The compliance issues have been a very important matter

in the late 90s, as the largest retailers went globally for sourcing; the attention of public
was into the sweatshops in the developing countries where the workmanship is much
cheaper. Therefore firms created independent audit departments to ensure that the
workers at the suppliers work in proper conditions which are standardized in the
certifications as well in order to establish and improve social responsibility.

All these criteria and subcriteria that are listed above can be put in the hierarchical tree as
shown in Figure 6. The criteria and subcriteria used in these two levels of the AHP
approach of pairwise comparison of elements in each level with respect of every parent
element located one level above. A set of global priority weights can then be determined
for each of the subcriteria with weights of all parent nodes above it.

The nine-point scale as suggested by Saaty is used to assign pairwise comparisons of all
elements at each level of the hierarchy. As suggested by Saaty, the geometric mean
approach, instead of the arithmetic approach, is used to combine the individual pairwise
comparison matrices to obtain the consensus pairwise comparison matrices for the entire
team. In the Mediterranean sourcing office of the company, the merchandise managers
and merchandisers of the related category were questioned using this approach.

In order to construct the model, Web-HIPRE, an AHP program at www.hipre.hut.fi, was

use to determine and calculate the normalized weights. This software has been designed
to support hierarchy design, construction, and implementation for decision making
models and problem solving. It is based on the software called HIPRE +3 developed at
Helsinki University of Technology (Mustajoki and Hamalainen, 2000). As per the survey
results, the program normalized the weight of each criterion (cost, quality, delivery,
flexibility, innovation and trust ) and the results show that the quality is the most
important criterion whereas the innovation is the least important one.

Figure 6. AHP Model for the Selection of Best Vendor

After computing the normalized priority weights for each pairwise comparison matrix,
the next phase is to synthesize the solution for the supplier selection problem. The
normalized local priority weights of criteria and subcriteria from third phase are
combined together with respect to all successive hierarchical levels to obtain the global
composite priority weights of all subcriteria used in the third level of the AHP model.

5. Results and Discussions

After calculating the weights of each criterion of second level, they are arranged in Figure
7. The result shows that the quality, delivery and trust are the most important strategic
priorities to be considered in the supplier selection problem for suiting category,
representing more than 65 per cent of the the total weight. Since the suits category is
mostly high-end products with the most expensive fabrics and the best fit, the quality is
very important in the supplier selection decision. The vendors are expected to be
equipped with most sophisticated machinery and the know-how to produce this highquality products is very important during both development and production stages.

Delivery and trust have almost the same importance: 0.204 against 0.197. The on-time
shipment in the correct quantity rate is very critical in evaluating the vendors
performance in delivery whereas the customer service is the most important factor when
evaluating the trust criteria. It is interesting that the cost has less weight than the delivery
and trust. However considering the strength of the suiting vendors in this region
comparing with the other competitors in Far East or South America, the cost has a less
weight when giving the supplier decision. The cost will definitely have more importance
in other apparel categories where there are a lot of global competitors capable of offering
the same product.

The flexibility factor is ranking as fifth factor followed by innovation as last. It has a
quite small importance in the weighting which can be explained that the suiting category
is a more rigid category depending on the fabric lead times. There is mostly very
expensive Italian fabric used in this category not allowing so many changes during the
season. Once a fabric is booked for a style, unless you can carry the liability you cannot
decrease the quantity as the fabric mills are not willing to make these changes or it is not
feasible to change the color or the quality. In our case, the category is mens suits where
the numbers of styles are limited and the innovation mostly depends on fabric
development. Therefore there are not many expactations from the garment supplier. The
most important factor is the sampling lead time and quality of the samples which has the
weight of 68 per cent.

Eventually Vendor 1 is the strongest vendor followed up by Vendor 2 and Vendor 3.

Figure 8 helps to explain the strengths and weaknesses of each vendor considering the
criteria.
Accordingly, although Vendor 1 is ranking third in the cost, it is still chosen as the best
vendor since the weight of quality, delivery and trust are quite strong for this supplier.
There is a visible trade-off of cost against quality, delivery and trust.

Figure 7. The Rank of the Criteria that Effect the Best Vendor Decision

Figure 8. Summary for Rating of Vendor 1, 2 and 3

Chapter - 3
1. Findings
a.
b.
c.
d.

Supply chain management is very important for readymade garments sectors.

We get some model for follow the future.
This is the way to achieved the organizational goal in a short and easily.
We found some field for supply chain management.

2. Recommendation
a. Among the factors, which have contributed the most towards growth are market related
factors
b. The RMG is very big and is very dynamic .for these accurate supply chain information is
absolutely key, not just for planning, but also for operational efficiency.
c. The common factors which have contributed towards manufacturing and service both are
rise sourcing out. Globalisation and Liberalisation policies have benefited the service
sector more than the manufacturing sector.
d. Improving supply chain processes requires better collaboration between retailers and
suppliers. So keep good relation with them.
e. The customers today are not very forgiving, referring to the consequences of missed
delivery schedules. If a company was able to manufacture a product with the right quality
and the right price but missed on delivery, the other two got nullified. So company should
deliver on right time. Services should be standardized.
f. Managing the supply chain was not just about transportation of goods. It was about
managing the mismatch of stocks, looking at high inventory and eliminating premium
freight, and managing many suppliers.

3. Conclusion
Suppliers are viewed as critical resources for the textile/apparel retailers. They have to be
managed to derive the maximum potential in the supply chain, and the selection of the supplier is
the most critical task in the supply management. In this study, six strategic priorities were

identified as the criteria, and the priority measures as the subcriteria, and then an AHP-based
model was formulated to select the best supplier. After finding the global priority weights, they
can be used to determine the final composite priority weights of supplier occupying the last level
of hierarchy.

Using the AHP model, the criteria for vendor selection are clearly identified and the problem is
structured systematically. This enables decision makers to examine the strengths and weaknesses
of the supplier by comparing them with respect to appropriate criteria and subcriteria. Moreover,
the use of proposed AHP model can significantly reduce the time and effort in decision making.
However we noticed that the weights will need to be fine-tuned for the apparel categories other
than suiting since the priorities will change definitely. A future work can be conducted for other
categories. AHP can be widely used when making decisions regarding the qualitative aspects of a
problem.

However, Web-HIPRE provides the opportunity to incorporate hard data into the model. In fact,
this feature helps decision makers use the model for monitoring the performance of the existing
supplier portfolio as well. This, in turn, can be used to negotiate further contracts in different
segments with the existing vendors, given the data and their current capabilities.

Finally it is proven in this work that AHP is a very practical tool that helps the stakeholders to
gain a clear idea of selecting the best vendor considering all the aspects of the business which
need to be aligned with the company strategy and goals. The regular usage of this tool will also
help for checking the plans and ensure that there is no deviation from set-up goals.

Reference:
www.assignmentpoint.com
www.textilelearner.com,

Hand note of our supply chain management subject, and other