On The Supply Chain; Are You Choosing Or Being Chosen?

"The choice and optimization of suppliers are two-way. When suppliers are selected as objects, their discourse power is often reflected in the needs of consumers, which is the choice of downstream to upstream; when suppliers are selected as subjects, which is the choice of upstream to downstream, their discourse power has created new consumption objects and consumption patterns." The "2011 Global Textile and Clothing Supply Chain Conference" concluded recently Du Yuzhou, president of China Textile Industry Association, said.

In fact, textile and clothing supply chain management involves suppliers, manufacturers, distributors, retailers, the Internet of Things and consumer terminal services. Many factors involved around this theme have attracted extensive attention in the textile and clothing industry. Especially in the current complex and changing economic situation, as a supplier, who decides your choice?

Challenges of supply chain

Supply chain management has both advantages and disadvantages.

On the positive side, supply chain management enables the orderly flow of logistics, information flow and capital flow, which not only brings professional division of labor to enterprises, but also concentrates the resources of enterprises in advantageous areas, reduces unnecessary cost input, and maximizes the value of all stakeholders involved in the whole supply chain to obtain resource sharing. However, with the concentration of interests towards the dominant party, the cruel side of supply chain management has gradually emerged.

From the outsourcing of the initial processing link, to the outsourcing of the design link, to the outsourcing of the procurement link, the international supply chain, who can control the resources in the chain strongly, who can get the voice to decide the direction of the benefit distribution, and transfer the risk to others. Production enterprises have to bear more responsibilities, while brand owners are in a strong position and dominate the whole supply chain.

Europe, America and other developed countries have now formed a very complete supply chain management system. In contrast, China's textile and clothing supply chain needs to be improved to further optimize supply chain management. With the increase of demand uncertainty in the textile and clothing market, all partners should try their best to reduce the impact and risk of demand uncertainty; Supply chain partners should not only consider the transaction price itself between enterprises, there are many aspects that deserve attention from both sides.

Qiu Ying, head of the Industrial Business Department of Zhejiang Yaying Garment Co., Ltd., said that although Yaying, as a growth oriented women's clothing brand, is developing relatively fast at present, it is confused about the problems of the supply chain.

First of all, Yaying has a large number of products. There are nearly 4000 to 5000 SKUs (inventory units, that is, the unit of inventory measurement) a year. The products are divided into four lines, and the products are delivered almost every half month. Yaying's product production is characterized by small batch, multiple varieties, and requires fast speed, especially fast replenishment. As a result, there is such a problem in its supply chain: Yaying needs a small amount of fabric. Every time the amount of fabric required is about 1000 to 2000 meters, 3000 to 4000 meters is a big order, which may lead to its position in the suppliers being "light" and not being valued.

Secondly, Yaying is positioned as a medium to high grade company with high quality requirements, so customers have high expectations.

Third, Yaying is a relatively fashionable brand, and the fabrics used should have a considerable popularity. Some fabrics may be used for production before they are mature developed. This brings a certain test to the product quality.

In this regard, Qiu Ying believes that win-win cooperation in the supply chain is crucial to the sustainable development of the brand. The parties in the supply chain are not simply buying and selling relationships, but mutually dependent and developing relationships. As Du Yuzhou, president of China Textile Industry Association, said: "Buyers, retailers and service providers do not exist in isolation. They have both the right to choose and the risk of being chosen."

Qiu Ying said that Yaying has done a lot to strengthen supply chain management. Yaying extends its IT all the way to the supplier terminal, and makes public the warehousing rate, product inspection qualification rate, product sales and other information to some strategic cooperation suppliers, so as to truly promote the development of suppliers together with the relationship of partners. {page_break}

At the same time, Yaying incorporated the advanced performance management model into the supplier, and formulated a balanced scorecard for the supplier every year (according to their different situations, the scorecard is made according to six or seven indicators, such as product qualification, product development, and quality problem handling, with different weights). If the supplier delivered goods in a week or a month, In order to carry out timely feedback, communication, tracking and coaching, and form a positive interaction.

In addition, Yaying attaches great importance to the unity of values when selecting suppliers. "We don't care about the price, but everyone must love this industry and work together for the fashion industry. To achieve long-term common development, values must be unified," said Qiu Ying.

Miguel, executive manager of Xurong Group, said that Xurong would first let employees understand the importance of supply chain management, use some convenient ways to let employees have a direct sense of the supply chain in their work, and at the same time train employees in relevant links of the supply chain.

Miguel also introduced that Xurong also learned from the international advanced supply chain management system and made changes according to the specific situation to adapt to its own reality.

It is worth mentioning that Huang Guanhua, Executive Director of Xurong Group, once introduced to the reporter that in order to change the situation that manufacturers passively accept the requirements of brand names, Xurong actively changed from passively accepting specifications to cooperating with specification makers.

According to Huang Guanhua, Xurong has created a "customized collaborative development" system to subvert the previous brand operation mode. "The advantage of this collaborative development model is that when the designer of the brand side formulates what he wants, the downstream manufacturers of Xurong have intervened in his development, rather than wait until the brand discussion is over before Xurong passively accepts the specifications they set. Next, we will carry out all the development simultaneously. For example, Xurong can participate in the planning meeting of the brand dealer and actively provide advice to the other party. This product development mode gives Xurong the initiative. " Xurong calls this model VFM, namely Value, Fashion and Manufacture, which is a value based popular marketing service.

This action of Xurong just fits in with such a phenomenon: it is not necessarily the end brand that dominates the supply chain, but who has the ability to control resources, and who has the technical strength, can gain more voice. At the same time, a good phenomenon has emerged in the operation of the domestic textile and clothing supply chain: a number of domestic processing manufacturers have begun to choose foreign brands in the opposite direction, and upstream fiber and raw material enterprises have also begun to actively choose downstream enterprises. In the past, the pattern of choosing processing manufacturers by end consumer brands has changed.

Social responsibility in the supply chain

Sun Ruizhe, vice president of China Textile Industry Association, said that social responsibility management includes the harmony of labor relations, the harmony of the environment and the harmony between various stakeholders in the supply chain. He once said that the social responsibility of China's textile and clothing industry, at the macro responsibility level, is an important manifestation of stabilizing and optimizing the international supply chain and value chain so that Made in China can benefit the people of the world.

It seems that supply chain management and social responsibility are not two isolated "events".

Hu Kehua, deputy director of the Social Responsibility Office of China Textile Industry Association, said that the supply chain management driven by social responsibility can effectively reduce the systemic risk of the supply chain. "The management ability of employees determines their production efficiency. Through the analysis of the supply chain, such as process analysis, production process analysis and improvement, enterprises can effectively shorten working hours, improve production efficiency and reduce costs, and solve some social responsibility problems in the supply chain." {page_break}

Up to now, 44 enterprises in the industry have publicly released corporate social responsibility reports, involving 10 sub industries, including textile machinery, clothing, knitting, printing and dyeing, industrial use, silk, cotton spinning, chemical fiber, wool spinning and accessories, among which 8 are in the clothing category.

Hu Kehua believes that for core enterprises in the supply chain, social responsibility can extend to product quality, style and even price. "At present, in China's textile and clothing industry, the homogenization of various textile and clothing products is serious. How do we form differentiation? From what perspective to enhance our brand value? Social responsibility can be a direction."

Social responsibility analysis can obviously be incorporated into the analysis of supply chain. In fact, supply chain is more about value management. From the perspective of products, we can find a lot of space to be managed and improved in the product life cycle from the aspects of procurement, R&D, design and manufacturing. For example, in textiles, there is a lot of room for improvement in the whole process, from basic fiber to printing and dyeing, to manufacturing, to sewing. In this process, the enterprise improves the process, such as how to reduce the number of washing times, save water, reduce the damage to the environment, and at the same time, shorten the working hours of employees and improve their welfare. This not only requires enterprises to take social responsibility in the supply chain, but also to improve the added value of products.

Such examples are well documented.

Zhejiang Fulida Co., Ltd. has its own ideas on supply chain development and seeking differentiation. In 2007, Fulida cooperated with Xinjiang Yumian Company to set up Xinjiang Fulida Fiber Co., Ltd. with a total investment of 1.5 billion yuan, which has formed a circular industrial chain with an annual production of 100000 tons of viscose staple fiber and supporting thermal power projects. In 2010, Xinjiang Fulida accumulatively produced 118000 tons of various viscose staple fibers, realizing sales revenue of 2 billion yuan and total after tax profit of 123 million yuan.

In the face of the crisis of raw materials in recent years, Fulida Company actively seeks other resources to replace traditional raw materials. According to the rich pulp resources in the world, after technical breakthrough and process adjustment, it is the first company in the industry to successfully use "pulp processing and transformation dissolving pulp" for production. At present, the proportion of Xinjiang Fulida Company has reached 45% - 60%. This project has not only solved the problem of shortage of pulp raw materials, but also greatly reduced the production cost. The price of using paper to change pulp has dropped by nearly one-third compared with that of dissolving pulp, and the economic benefits have been significantly improved.

With the approval of the National Development and Reform Commission and the Ministry of Commerce, Fulida Group successfully acquired all the shares of the resource based enterprise in the upstream of the industrial chain, New Zealand Specialty Cellulose Co., Ltd., Canada, with 250 million dollars, becoming a successful example of cross-border "resource based acquisition". The company is one of the suppliers of Fulida, a professional manufacturer of wood dissolving pulp (commonly known as wood pulp) in the world, and one of the three companies in Canada that produce special dissolving pulp. Through this acquisition, Fulida Group fully owns and controls the company's assets and raw material procurement channels, as well as all production, operation and sales networks, effectively solving the bottleneck constraints of raw materials. Fulida Group has successfully entered the upstream raw material industry of viscose fiber, obtained a stable supply of raw materials for viscose staple fiber production, and strengthened its "voice" in the viscose staple fiber market.

In 2010, Jiangsu Danmao Textile Co., Ltd. carried out technical transformation on production capacity equipment. The company reduced COD emissions by 20 tons, ammonia nitrogen emissions by 7.5 tons, suspended solids emissions by 21 tons, saved more than 200000 tons of water, saved more than 300000 yuan of water fees, and saved 100000 yuan of pollution reduction fees. Meanwhile, in 2010, the company used 81.04 tons/km of water for worsted fabric production, 4.58% less than 84.93 tons/km in 2009, 2315 kilowatt hours/km of electricity, 5.32% less than 2445.2 kilowatt hours/km in 2009, and 1.546 tons/km of coal, 4.45% less than 1.618 tons/km in 2009.

It can be seen that from the perspective of social responsibility, it seems to be a good choice to seek the optimization and improvement of enterprise supply chain, the improvement of product added value, and the practice of energy conservation and environmental protection.

More importantly, the era of low-cost competitive advantage formed by China's textile and clothing industry relying on cheap labor has gone, while environmental protection, resources, land and other constraints factor Will become more and more prominent. In particular, at present, more than 90% of the raw materials for chemical fiber production come from petroleum, and China's dependence on crude oil and chemical fiber monomer imports is difficult to change in the short term. Therefore, the circular economy development mode of "reduction, reuse and resource" is imperative. {page_break}

There are opportunities for success in all links of the supply chain

In recent years, the research on supply chain in China's textile and clothing industry has become more and more professional and systematic. How to optimize supply chain management and select appropriate suppliers has become a key and difficult problem to improve the competitiveness of the industry. What kind of situation is China's textile and clothing industry facing under the current situation of fluctuations in raw material prices, rising labor costs and rising domestic inflation in China's domestic market? Where is its development breakthrough? On related issues, after the 2011 Global Textile and Clothing Supply Chain Conference, our reporter interviewed Sun Ruizhe, Vice President of China Textile Industry Association.

Reporter: The macroeconomic data in May this year shows that China's textile and clothing exports are slowing down. According to the current economic situation, the domestic demand of this year may also be affected. So, what kind of development situation will our industry face in the second half of the year?

Sun Ruizhe: From the perspective of the whole industry, the era of high cost will become an irresistible "new normal", which contains certain and uncertain factors.

Among them, the outstanding performance of the uncertain factors is the uncertainty of the policy trend. Most of the textile and clothing industry are small and medium-sized enterprises, and their ability to analyze market expectations is weak. Therefore, the industry should help enterprises to grasp policies. Especially for the issue of export tax rebate rate, the industry has repeatedly communicated with the relevant national departments, and it is recommended not to introduce a downward policy, because it will have a great impact on the development of the industry. The policy environment of ups and downs will certainly bring uncertainty to the development of the industry, and the panic formed by this uncertainty is destructive to the development of the industry. The stability of policies is the most important for the stable development of an industry.

The industry is also actively working to solve the problem of SMEs' difficulty in financing. Judging from the overall credit scale of the industry, it is far lower than last year. So in the second half of the year, people may pay attention to whether the country will make targeted easing in policy orientation. At present, some banks have been actively contacting with us. They hope to cooperate with the industry and let the industry recommend some enterprises with good qualifications and development potential for SMEs to strengthen their loan support.

In addition, the certainty factor is that costs continue to rise, and the era of high costs is coming. Enterprises must be able to control costs and maintain their competitiveness through measures such as the selection of raw materials, the development of technology, and the use of financial instruments.

If problems cannot be solved through product development and technology, enterprises should try their best to bring some breakthroughs in the selection and innovation of business models.

"Go up with strength, go down with patience, cross the border with courage, and follow those who can't see clearly." enterprise In any link of the supply chain, there are opportunities for success.

Reporter: You mentioned the business model. Then, will the business model affect the textile and clothing supply chain?

Sun Ruizhe: At present, industry There is a strange phenomenon: the price of domestic products in Chinese department stores may be higher than that of similar products in foreign department stores. This is a phenomenon of high prices. Consumers do not benefit, which inhibits consumers' desire for consumption. At the same time, enterprises are also attached with a lot of unnecessary business costs. The business model of China's department store industry actually has a great room for improvement.

However, there are actually some new business models emerging now. For example, the wholesale market in central cities is turning to retail by a large margin, represented by Dahongmen, Guanyuan, Zoo and other places in Beijing. They used to do B2B, but now they are actually doing B2C mode, facing consumers directly. We will wait and see whether this new business mode will evolve into a professional shopping center similar to that of foreign countries in the future. In addition, online shopping is also a new business model, and textile and clothing are currently ranked first in domestic online shopping.

These new business models will bring new opportunities to the industrial development, and at the same time impact the unhealthy aspects of the original business model, forcing it to improve.

Reporter: Now the domestic network is more and more developed, and the manufacturing level is also higher and higher. In this case, how will the future supply chain affect the textile and clothing industry? {page_break}

Sun Ruizhe: This should be discussed from the perspective of rapid information sharing in supply chain management. In supply chain management, a more realistic problem is the transmission and sharing of information.

In the foreign trade sector in the past, we know more about the electronic data interchange system (EDI system). With this system, when the product is produced and processed to a certain stage, the process can be mastered. If there is a problem in any link, it can quickly respond. However, there are still many imperfections in domestic supply chain management. Supply chain management has just started. We mainly focus on four aspects, namely quality management, social responsibility management, information management and integrated innovation.

Reporter: You mentioned integration innovation. At present, the industry's integrated innovation present situation how?

Sun Ruizhe: From the industry level, since 2000, the industry has not only started to conduct research on fashion trends, but also started to gather a number of excellent enterprises. Now, our industry has 108 excellent base enterprises for product development. At the same time, the industry is actively building a trade platform that can link, integrate and innovate in the construction of quality system and social responsibility management system.

From the enterprise level, such as the Tianzhu Fiber Alliance, which is an enterprise producing Tianzhu fiber and fabric enterprises, the next step will also include some clothing brand enterprises, who will gather around bamboo pulp fiber to develop products that meet the market demand and are favored by the market. Its products are not only limited to traditional towels, bath towels, etc., but now this field has been further expanded to home textiles, clothing and other fields. This is a relatively successful integrated innovation model.

The industry is also actively cooperating with the Ministry of Science and Technology to apply for some technological alliances for industrial innovation. At present, the field of fiber materials and chemical fibers has been launched, but the next step will be to extend to industrial textiles, fabrics and other fields, and form relevant industrial innovation technology alliances in the industry.

Reporter: How do you understand the statement that "industry development is downstream demand driven upstream innovation"?

Sun Ruizhe: It can't be simply said that the downstream demand drives the upstream demand innovate Any demand will drive innovation, but it is not a simple upstream and downstream problem. Such problems as the substitution of raw materials and the use of financial instruments for innovation are actually the content of innovation.

During the "12th Five Year Plan" period, the total fiber processing volume is expected to reach 51.5 million tons, and the per capita fiber consumption will reach 22 kg. This increase in consumption demand will bring a large demand for raw materials, but we cannot convert cultivated land into cotton and other natural fiber cultivation in a large area. Therefore, it is necessary to carry out development and innovation in high cotton imitation and super cotton imitation.

In addition, the use of financial instruments should be popularized in the industry. But in fact, many enterprises do not combine effective financial instruments with production and operation. In foreign trade, enterprises use more financial instruments in forward foreign exchange, export credit guarantee and other aspects in order to avoid risks, but rarely in other aspects.

Therefore, in the future, the industry will produce many innovations not only in technology, but also in operation and financial management.

Reporter: Please talk about green management from the perspective of supply chain.

Sun Ruizhe: On the one hand, we should carry out more systematic implementation of relevant national laws and regulations, that is, we should strengthen supervision.

More importantly, our industry itself. The industry itself needs to do two things. One is the backward pressure from the industrial chain, that is, the terminal brand forces the upstream of the industrial chain, and everyone abides by the standards and rules of green supply chain management. The second is to be self aware and voluntary. There should be self-discipline in corporate social responsibility, and enterprises should carry out social responsibility management. Because social responsibility management includes the harmony of labor relations, the harmony of the environment, and the harmony between various stakeholders in the supply chain.
 

Social responsibility is the character of supply chain. The competition in the supply chain comes first from the power of science, secondly from the cooperative power in the supply chain, and finally from the productivity skills transferred to the machine. The process of supply chain reflects modern people's understanding and pursuit of beauty, and supply chain also reflects the true, the good and the beautiful. The supply chain can create beauty and deliver love, which is also the people-oriented principle embodied in the supply chain—— Du Yuzhou, President of China Textile Industry Association

Under the "new normal" of high costs, two phenomena need special attention. First, the advantage of factor cost is gradually diluting, which means that the concentration of existing advantages is decreasing; Second, the trend of industrial polarization is gradually intensifying, which indicates that the density of high-quality resources is increasing. We need to adjust the excessive dependence on the original advantages and shape a new core competitiveness, that is, an effective supply chain management capability - including the ability to discover resources in a timely manner, the ability to integrate effectively, the ability to open and share, and the ability to continuously increase the value of resources—— Sun Ruizhe, Vice President of China Textile Industry Association

To be a supplier is to make a good brand. Not only the product brands sold in department stores, but also how enterprises manage, treat employees, give back to the society, and provide promised services to customers must be met. The supplier must have a corporate culture and social responsibility, and the customer will be willing to be your partner in the end—— Dr. Che Ketao, Vice Chairman and CEO of Hong Kong Yida Group

We have our own set of standards for selecting suppliers. For example, we will check whether the other party has its own laboratory, so that we can immediately check their fabric and the actual cost. We should examine the management of the other party to see whether they have sustained research and development in management, advanced management methods, and financial stability. At the same time, we attach great importance to each other's environmental protection concept and management. Although product quality is important, a responsible enterprise is more important—— Zhu Dexiong, Senior Vice President of Clothing Sales and Marketing of Hong Kong Lianye

The supply chain is extensible and must have efficient output. Efficient production comes from specialty. Powerba headquarters The reason for moving from Fujian to Shanghai is that Shanghai has a larger business platform, which can gather more industry elites to do more professional things. The professional meeting involves business administration, procurement management, production management, quality management and technological innovation—— Mike Jiancheng, Vice President of Production and Supply System of Jinba Men's Wear (Shanghai) Co., Ltd.