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2862 : Supply Chain Management : Power Sources

Question: 

1. Effective explanation of the customer/market problem that needs solving and/or the reason the innovation is required. (10%)
2. Persuasive argument of the benefits to be generated by the idea 
3. Discussion of the proposed business model 
4. Critical success factors to be managed during execution of the idea
5. Evaluation of the feasibility of the idea 

Answer: 

Introduction:

The development of a business idea can be carried out based along six different steps enumerated as follows. The development of a business idea is carried out based on evaluation of the potential and relevant markets and thereby in noting down the different ideas. Further, the ideas need to be expanded upon while carrying out a competitive analysis of other such ideas present in the market. The business idea needs to be developed into an effective business model while a sketch is required to be made of its business canvas. Finally, the business idea is required to be tested in the market to evaluate its effectiveness and thereby incorporate effective recommendations (Blecker, 2014).

The Sourcing Problem

The global fashion retailing industry is observed to face emerging challenges owing to increasing volatility in the parameters of cost and market demands for different materials and apparel products. Further, continual changes and also emerging challenges imposed relating to the global economic environment like events of recession; inflation and financial crisis also vehemently impact the performances of the fashion industry (Choi, 2014). The supply chain or logistics platform of the fashion retail industry also reflects increasing challenges owing to increase in lead times for the products to reach the stores from the manufacturing centers, development of global outsourcing centers and also the existence of shorter fashion or style seasons. The supply chain segment of the fashion retail industry now-a-days is facing greater complexity owing to problems concerning prediction of changes in fashion or style and also in the aspect of consumer demands (Brooks, 2015).

The emergence of the fast-fashion retailers has added a newer dimension in the fashion industry such that the manufacturers and also the retailers of fast fashion products face increasing pressure associated to the demand for improvement in speed-to-market channels. The fashion brands now continually focus on the generation of new product lines in a span of around two to three months or sooner for creating needed market hype (Seil, 2016). However, the supply chain segment faces potential challenges in effectively matching the fast-fashion trend owing to increased lead times and also the absence of potential synchronization between changes in market demand and the sourcing activity (Polikarpova, 2017).

The fast fashion industry requires its supply chain or logistics arm to be potent enough in sourcing the right quality and quantity of fashion merchandises such that the same can contribute in meeting of consumer demands (Blecker, 2014). Lack of availability of effective stocks discourages the consumers to which they tend to switch over to some other known brands. Moreover, the supply chain platform also face increasing challenges regarding meeting the parameters of stock visibility for enabling tracking the movement of stocks along the supply chain, providing intelligence associated to inventory and also in designing an agile supply chain framework (Beswick, 2016).

Benefits to be generated

The development and implementation of the PowerSourcers business model in the aspect of supply chain associated to the fast fashion industry is taken to generate potential benefits enumerated as follows. The incorporation of PowerSourcers business model in the fast fashion industries contributes in the generation of real-time information along the supply chain and thus provides effective information to the different stakeholders like supplier/vendor firms, manufacturers, retailers and consumers (Basu, 2017). Again, the incorporation of the PowerSourcers supply chain model would also encourage the development of a collaborative platform wherein manufacturers, suppliers and also retailers can work together for sourcing the needed merchandises for the consumers in adequate quality for the different seasons (Kale, 2017). Similarly, the development of supply chain intelligence also contributes in the generation of real-time information concerning changes in consumer demand regarding apparel styles and categories. It would thus enable in enhancing the sales levels of the hot categories while also contributes in meeting the objectives of repeat purchases by customers. The application of the PowerSourcers model would thus help in making the supply chain consumer responsive and flexible in nature and also in effectively absorbing shocks generated by abrupt changes in consumer demand (Robinson, 2016). The different types of advantages gained by the firms supported by agile supply chain paradigms are reflected in Appendix 1.

The central objective behind the development of agile supply chain paradigm through the incorporation of the PowerSourcers business model is to focus on enhancing the satisfaction level of the consumers and thereby contributing to increasing the level of customer loyalty to the firm. Moreover the incorporation of agility in the supply chain paradigm makes the organization increasingly flexible such that it can make the fashion firms effectively adapt and address the emerging consumer demands and trends (Davis, 2017).

Proposed Business Model

The proposed business model, PowerSourcers is focused on being analyzed based on the incorporation of the ‘Business Model Ontology Canvas’ as generated by Fritscher and Pigneur (2010). The same is reflected in Appendix 2.

Key Activities 

The key activities of PowerSourcers would be to develop effective interaction between the different channel partners like vendor/supplier firms, manufacturers and fashion retailers with also the warehousing team through the generation of electronic data interchange or EDI interfaces like RFID (Radio Frequency Identification) scanners. In terms of resources, the generation of RFID tags enables merchandise information to be stored in tags that are thereby scanned and information is both stored and transmitted over the internet based on the use of ERP (Enterprise Resource Planning) software powered by internet. The same helps in sharing of real-time information concerning product flow from the different units and thereby helps in servicing the demands of the customers (Osterwalder & Pigneur, 2011).

In terms of cost, the application of PowerSourcers business model would effectively contribute in reducing the business costs of the fashion retailing firms regarding the transmission of information from the end of the manufacturers to the final retailers. However, the application of the agile supply chain paradigm requires the fashion retailers to focus on bringing about new apparel styles and trends along the different categories for different seasons. The same would tend to enhance the operational cost for the firm (Sabri, 2015).

The partner selection process is needed to be carried out in terms of evaluating the competency of the manufacturers or producers of the right quantity of apparel products, vendor firms sourcing right quality and quantity of raw materials and finally the retailers involved in retailing the right style and quantity of apparels to the customers. PowerSourcers being consumer responsive in nature is required to make a pool of like partners that would generate needed customer satisfaction (Gattorna, 2016).

Different client segments of the PowerSourcers business model are identified to be the customers, supply chain vendors, manufacturers and fashion retailers. Relationship building with the different clients in the business model was mainly evaluated based on the parameters of trust, commitment, mutual communication and information exchange, sharing of risk and rewards and also collaboration between the partners for generation of investment in a joint fashion. Further, the partners/clients in the agile supply chain model are required to work in a mutually flexible and agile fashion in meeting the objectives of customer satisfaction and revenue enhancement (Gattorna, 2016).

The application of the PowerSourcers business model requires the fashion retailers to focus on the incorporation of both brick-and-mortar and digital retail spheres such that the use of electronic and mobile commerce need to be carried out with the opening up of traditional exclusive brand outlets or EBOs for reaching customers. Use of electronic and mobile commerce contributes in reaching a larger target audience that can easily and comfortably track, view and order fashion merchandises (Fazlollahtabar, 2018).

Real time visibility of merchandise flows enabled by the PowerSourcers business model of supply chain ideally contributes in generating revenue growth while also helps in enhancing the operating margin and asset efficiency of the fashion retailing firms. Further, it also contributes in enhancing efficiency of the workforce from 5 to 8 percent while also helps in reducing the level of freight charges and inventory levels for the retailers (Jacoby, Kishorepuria, Madane, & Thakurta, 2014). The same is depicted in Appendix 3.

Finally, in terms of value proposition the incorporation of PowerSourcers in fashion retailing contributes in developing an innovative platform for bringing about real-time interaction between the different strategic units and profit centers. It encourages the use of internet technology for sharing of real-time information with customers and also in planning of inventory and sales forecasting (Blecker, 2014).

Critical Success Factors 

Three Critical Success Factors or CSFs were identified that potentially influences the success of PowerSourcers in the fashion retail industry.

Firstly, the aspect of Quick Response to market changes and thereby in adapting to such in the production of effective merchandises is accounted to be an effective factor that promotes the success of the business model. The incorporation of PowerSourcers in the fast-fashion industry would likely require the retailers to install point-of-sales or POS systems and also RFID tags in the different merchandises displayed on the shop floor and also in the warehouses (Davis, 2017). The scanning of the RFID tags and barcodes by the POS scanners would help in storing of needed data concerning the movement of stocks and also the preference patterns of the customers. Further, the use of ERP systems is required in the firms that would help in the instantaneous transmission of data to the manufacturing centers wherein other systems like Computer Aided Design or CAD can be used by the manufacturers for designing of demanded garments (Choi, 2014).

Secondly, in addition to Quick Response, PowerSourcers business model also reflects on the system of effective collaboration between different channel partners and staffs operating along the manufacturing, warehousing, vendor firms and retailing units. Effective teamwork, mutual dependence and trust are required in bringing about success and fulfillment regarding meeting of customer satisfaction and revenue enhancement (Fazlollahtabar, 2018).

Finally, the fast-fashion merchandises having smaller shelf life and also requiring to be liquidated in a faster fashion are required to be effectively priced for attracting consumers. Considerable amount of promotional activity is required to be carried out both in-store and also through the use of digital, broadcasting, outer and print media for attracting potential customers to the stores (Gattorna, 2016).

Feasibility Analysis

The feasibility analysis of the strength of the business model or idea, PowerSourcers is reflected in the following table.

Extent

PowerSourcers as a business model associated to agile supply chain is observed to be potentially linked to changes in market trends. It tends to adapt to new trends and works in a flexible fashion for generating demanded products. It serves in rendering innovative solutions for enhancing transparency along the supply chain paradigm and thereby serves in addressing gaps associated to customer satisfaction and in generating success to fast-fashion retailing (Osterwalder & Pigneur, 2011).

Timeliness

The application of PowerSourcers as a business model earned a timely entry when the fashion industry was suffering from loss owing to customer dissatisfaction for lack of availability of needed stocks and also owing to increase in inventory cost.

Value Addition

PowerSourcers contributed in adding value through cultivation of end-to-end visibility of merchandise movements and also in encouraging potential collaboration between the different channel partners in meeting of stated objectives. Further, it also contributed in making the fashion industry work based on an innovative environment (Gattorna, 2016).

Customer Satisfaction

The application of PowerSourcers in the fast-fashion industry helped customers gain access to trendy merchandises and other fashion wears and styles they demanded whether during seasonal or non-seasonal periods. This enhanced customer satisfaction (Beswick, 2016).

Changes in Consumer Behavior

The enhancement of customer satisfaction encouraged the customers to go for repeat purchases such that they focused on demanding the same pattern and style of fashion wear they had worn last season (Sabri, 2015).

Conclusions: 

The report reflects the development of an effective business model, PowerSourcers which contributes in bringing about needed agility in the existing supply chain systems of the fashion industry. The emergence of fast-fashion industry with also the incidence of fashion trends have made the customers look for trendy and fashionable wears. The same requires the fashion retailers to generate seasonal merchandises at effective price ranges for attracting customer attention. Herein, the business model serves in bringing about effective collaboration along the retailing and supply chain paradigm while introducing innovative ideas for generating needed value to the end users.

References: 

Basu, R. (2017). Managing Project Supply Chains. New York : Routledge.

Beswick, L. (2016, November 21). The Top 5 Challenges in the Fashion and Apparel Industry. Retrieved September 3, 2018, from https://www.gtnexus.com/resources/blog-posts/top-5-challenges-fashion-apparel-supply-chains

Blank, S. (2017, February 28). Business Model Canvas. Retrieved September 4, 2018, from https://steveblank.com/2017/02/28/dont-let-process-distract-you-from-finding-the-strategy/

Blecker, T. (2014). Innovative Methods in Logistics and Supply Chain Management: Current Issues and Emerging Practices. United States : epubli.

Brooks, A. (2015). Clothing Poverty: The Hidden World of Fast Fashion and Second-Hand Clothes. United States : Zed Books Ltd.

Choi, T.-M. (2014). Fashion Retail Supply Chain Management: A Systems Optimization Approach. United Kingdom : CRC Press.

Choi, T.-M. (2016). Service Supply Chain Systems: A Systems Engineering Approach. United Kingdom : CRC Press.

Davis, J. (2017, April 28). The Benefits and Disadvantages of Agile Manufacturing by Carter Mathews. Retrieved September 3, 2018, from Brithe Publishing : https://brithe-publishing.com/2017/04/the-benefits-and-disadvantages-of-agile-manufacturing-by-carter-mathews/

Fazlollahtabar, H. (2018). Supply Chain Management Models: Forward, Reverse, Uncertain, and Intelligent Foundations with Case Studies. United Kingdom : CRC Press.

Gattorna, J. (2016). Dynamic Supply Chain Alignment: A New Business Model for Peak Performance in Enterprise Supply Chains Across All Geographies. United Kingdom : CRC Press.

Jacoby, C., Kishorepuria, P., Madane, A., & Thakurta, A. G. (2014). The New Era of the Agile Supply Chain. New York: Kurt Salmon.

Kale, V. (2017). Agile Network Businesses: Collaboration, Coordination, and Competitive Advantage. United Kingdom : CRC Press.

Osterwalder, A., & Pigneur, Y. (2011). Business Model Generation: A handbook for visionaries, game changers and challengers. African Journal of Business Management , 5 (7), 1-5.

Polikarpova, M. (2017, December 12). Fashion Industry: Supply chain challenges. Retrieved September 3, 2018, from Logistics Minded: https://www.logisticsminded.com/fashion-industry-supply-chain-challenges/

Robinson, A. (2016, February 18). Agile Supply Chain: Why Agility is Trumoing Lean in the Supply Chain? Retrieved September 3, 2018, from https://cerasis.com/2016/02/18/agile-supply-chain/

Sabri, E. (2015). Optimization of Supply Chain Management in Contemporary Organizations. United Kingdom : IGI Global.

Seil, L. (2016). Fashion specific challenges occurring within the supply chain and how these can be approached using Fast Fashion: Based on the example of the Spanish clothing retailer Zara. Netherlands: GRIN Verlag.


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