ICIL International Conference on Industrial Logistics 14th - 18th February, 2005 Montevideo, Uruguay

Transcription

1 ICIL International Conference on Industrial Logistics 14th - 18th February, 2005 Montevideo, Uruguay LOGISTICS PROCESSES IN THE APPAREL INDUSTRY IN MEXICO Rodrigo Alarcón, Juan Pablo Antún, Angélica Lozano y Rodolfo Hernández Laboratorio de Transporte y Sistemas Territoriales Coordinación de Ingeniería de Sistemas INSTITUTO DE INGENIERIA UNIVERSIDAD NACIONAL AUTÓNOMA DE MÉXICO ralarconmo@iingen.unam.mx jantunc@iingen.unam.mx

2 Introduction The apparel industry is a relevant sector for Mexico s economy. This sector was chosen to be analyzed in order to apply a recent development methodology (Antún,, JP; Lozano, A; Hernández,, R; Alarcón,, R; 2004). For the characterization and the formulation of a prospective diagnostic on logistics practices of this sector, as well as in the identification of its more relevant problems. The final purpose is to formulate innovative strategies in the logistics processes operations. This article presents the logistics practices within the apparel sector, obtained from 30 Cases of Study among the most representative companies,, taking into account their localization, size, as well as their importance inside the productive chain of the sector. The results here presented are part of the Study Great Vision of Logistics, carried out by the Institute of Engineering at the UNAM, for the Ministry of Economy, Federal Mexican Government (Antún,, JP; Lozano, TO; Hernández,, C; Alarcón,, R; 2003).

3 LOGISTICS PRACTICES IN SMALL COMPANIES OF THE APPAREL SECTOR

4 Fiber maker Wholesaler Thread maker (Synthetic fiber) Fabric maker Small Clothes maker Sales (regional) Thread maker (Regenerated fiber) Regional Boutiques Fabric Pieces supplier Tianguis Downtowns

5 LOGISTICS PRACTICES IN SMALL COMPANIES OF THE APPAREL SECTOR Costumer Service Regenerated thread maker With the lack of flexibility of the fabric pieces suppliers, the customer service of the regenerated thread maker is almost null. Synthetic thread maker The costumer service is centered in the product quality and probably in some technical advisory for its handling during the productive process. Clothes maker Clothes maker offers a basic customer service,, based on the quality of the product, on the product price and probably on affordable terms of payment.

6 LOGISTICS PRACTICES IN SMALL COMPANIES OF THE APPAREL SECTOR Transport In general, the transport operations are made of one link of the chain to the next one (fiber suppliers transport the product to the thread maker's door.) There is not outsourcing in transport operations within the small companies of the apparel sector. The majority of the small companies take in charge transport operations, with the objective of offering product delivery as a service to their clients,, however, in general terms they ignore the cost that this action represents.

7 LOGISTICS PRACTICES IN SMALL COMPANIES OF THE APPAREL SECTOR Inventory Management It is important to highlight that, from the production of the fiber to the elaboration of the garment the product is pushed,, that means, the production comes first so later on can be sold. What has been mentioned above, creates an entire series of complications in the inventory management and it shows a very diffused idea among small managers: to have an inventory of finished product implies to have a chance of latent sale.

8 LOGISTICS PRACTICES IN SMALL COMPANIES OF THE APPAREL SECTOR Order processing Many times the characteristics of the garments to be produced as well as the production plan are defined by the owner of the company advised by an agent of sales, who feels market trends. The order processing is very simple, it only consists on phone calls and in logged orders by hand.

9 LOGISTICS PRACTICES IN SMALL COMPANIES OF THE APPAREL SECTOR Warehouses and Distribution Centers Usually warehouses of raw material (as well as the finished product) are barely defined areas within a factory,, and in extreme cases (specially among small producers) even living rooms can be utilized with such a purpose.

10 LOGISTICS PRACTICES IN SMALL COMPANIES OF THE APPAREL SECTOR Information management for logistics chain control Within this market fashion trends are not developed,, it is only a matter of copying and improving what expensive stores and public media offer. There is any systematic or formal mechanism for data collection in order to control the logistics chain, that means, there are not precise data of what garment has been already sold, where that happened and in what amount. Within the logistics chain the rule is to define on intuitive terms what is marketable or not.

11 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR

12 Fabric suppliers (International) Maquila Full Package Global Brand Commercial Chain 3PL C.D. Department Store Fabric suppliers (National) Medium Clothes maker Design Sales Trading Cutting Fabric suppliers (National) Washing Regional Boutiques Commercial Chain C.D. Department Store Regional Wholesaler

13 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR Costumer Service National fabric suppliers Costumer Service is generally good,, offering regular prices,, standard quality and enough flexibility within a minimum production level; however there are important design problems. Clothes maker Concerning the maquila maquila, companies offer good quality as well as efficiency in their productive processes. Regarding Full Package, in addition to the above-mentioned features, they offer self-designed samples and sometimes delivery on client's door. With reference to the internal market, clothe companies offer response capacity,, in some cases provide door to door" service (to stores or to distribution centers) and mainly product high quality.

14 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR Transport National fabric suppliers Usually done or at least negotiated by fabric makers, (product price includes transportation costs). International fabric suppliers Suppliers negotiate transportation until the Mexican border,, where clothes makers transport the product by means of a hired company. The supplier negotiates transportation until clothes maker s door.

15 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR Transport Clothes maker Goods movements during de production process When a company subcontracts an specific process, transportation is made by the providers. When processes are made by the company,, but goods must be physically moved, this kind of transportation is carried out by the company itself (with its own fleet). Final product delivery is generally carried out door to door",, by means of its own fleet or subcontracting a local transport supplier

16 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR Transport Regarding departmental stores or commercial chains, garment delivery is made in their Distribution Centers. On the other hand, when clients are small regional boutiques, delivery is carried out through a non centralized (multiple stops) physical distribution operation. Clients located abroad Maquila (International subcontracting), Mexican manufacturer negotiates good transportation either to Mexican port or foreign port,, from where the client will take the load and will carry out the final transportation Full package, negotiate all the transport operation to the place required for the client.

17 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR Inventory Management As in the previous segment but in a smaller scale, the information available for the medium companies of this sector, related to their potential demand, it is very reduced,, generating high inventory levels of raw materials as well as in the finished product.

18 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR Order processing National market Order processing is usually carried out through a salesperson,, to whom the client informs the quantity of the required product The salesperson consults the existing stock in the warehouse and in the case of not finding the required product, the order is sent directly to the production line Once this is carried out, the salesperson informs to the client the delivery conditions Maquila or Full package The ordering process becomes complicated,, since a period of time is required in order to show the designs and the garment to the client,, during this process the client defines the quantity to be bought.

19 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR Warehouses and Distribution Centers In this segment the warehouses start to play a certain important role,, however these warehouses are simply used for storage,, without implementing any adds value services during the process. Regarding distribution centers,, these are used exclusively by big commercial distributors in Mexico and abroad, for example departmental stores and commercial chains.

20 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR "Sourcing", purchasing and supplies In this segment the purchase department takes relevance,, due to quality requirements of export and relevant national clients, quality standards are more demanding not only in fabric but in gears, boxes or labels.

21 LOGISTICS PRACTICES IN MEDIUM COMPANIES OF THE APPAREL SECTOR Information management for logistics chain control In this segment, companies do not generate any information coming from the sale point, which obviously causes dysfunctions in the supply chain. Besides there is no flow of information between the apparel company and the transportation supplier, therefore he must attend the immediate company s necessities.

22 LOGISTICS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR

23 Fabric suppliers (International) Maquila Full Package Global Brand Commercial Chain 3PL C.D. Departmental Stores Fabric manufacture Confection Design Trading Sales Printings and fabric design Cutting Washing Fiber maker C.D. Commercial Chain Departmental Stores Sales Point

24 LOGISTICS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR Costumer Service The strategy of big Mexican apparel companies consists of being vertically integrated in order to carry out all operations from cutting to garment elaboration, including storage and physical distribution Big clothes makers companies offer a Costumer Service that focuses on good garment quality,, with an appropriate price, innovative fashion design for the global market, post sales services and delivery service in the right place. Also, design departments have been developed,, looking for top fashion positions in fairs, exhibitions and world showrooms

25 LOGISTICS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR Costumer Service National fibers suppliers Offer a well developed service to the client; usually they provide technical advising in terms of fiber management within production processes of thread, time limit of payment of 30 days, time delivery depending on client requirements and direct deal with sale agents in case of any eventuality National fabric suppliers Generally provide a poor Costumer Service,, which is translated into high prices, variable fabric quality, poor design and innovation,, key issue focused on the lack of flexibility in relation to their minimum production volumes. International fabric suppliers Offer good quality, good designs in fabric and printings, competitive prices (in fact better than the national ones), as well as a great flexibility concerning the minimum production level, but the main inconvenient is the time of delivery.

26 LOGISTICS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR Transport The vertical integration mentioned above has come to a point where the tendency of these big companies has been to buy transport companies or to develop business units that are focused on logistics aspects. In general raw material transportation is carried out by the supplier,, but the internal and final delivery is carried out by the company. In case clients are located abroad,, transport of goods from the Mexican port to the client s door will be negotiated through a 3PL.

27 LOGISTICS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR Inventory Management In many cases, the stock management is carried out using a specialized software,, which gives the advantage of having a better control of the goods that are in the warehouses of raw material and finished products and in traffic.

28 LOGISTICS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR Order processing In general terms, order processing systems are totally automatic An agent of sales process a client order, which enters to the system that defines if there is product in stock or if it is necessary to pass an order to production Once this is carried out, the salesperson informs the client the delivery conditions Like in the previous segment, in the case of maquila maquila and Full package, the order processing its complicated: : Before closing a contract, a series of design and garments samples are presented to the client, who chooses one or several samples, defining the quantities needed from each one

29 LOGISTICS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR Warehouses and Distribution Centers Warehouses and Distribution Centers play a central role within the supply chain Many of them are equipped with last technology concerning: racks, freight elevator, transportation belts, code bar readers, etc. Also, it is important to point out that inside these facilities, adds value processes are already being developed. It is important to highlight that it prevails the idea of using the Distribution Center basically for storage.

30 LOGISTICS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR "Sourcing", purchasing and supplies This segment has focused itself on a global market in which the quality demands, design and garment innovation are quite relevant,, a purchase department is required to identify suppliers,, both national and international, which not only fulfill completely high performance standards but also are able to design unique products that can be adapted to what companies wants.

31 LOGISTICAS PRACTICES IN BIG COMPANIES OF THE APPAREL SECTOR Information management for logistics chain control Vertical integration, has allowed them to optimize and to systematize tools that can manage useful information within their supply chain. However these companies have expanded so much that such information has difficulties to flow through the several departments and business units

32 MUCHAS GRACIAS!!