Supply Chain Management

Case : Polo Ralph Lauren & Luen Thai Using Collaborative Supply Chain Integration in the Apparel Chain
Serena | Jason | Sam

Agenda
Introduction Relationship Among the 3 Partners Framework for SCM Collaboration Traditional SCM Vs. Collaborative SCM Use of Technology The Supply Chain City
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Introduction

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Discussion
Examine how Polos relationship with Luen-Thai has evolved and examine the impact of collaboration on Polos business model?

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Relationship

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Relationship
Three players within the strategic collaboration
Polo, Luen Thai, Ruentex

A few important concerns:

Sharing information would be critical fulfill the market gap for shorter lead times post-quota environment Using the old IT tool such as CAD, the transferring information between designers and manufacturers was still difficult mismanagement of inventory, production and delivery.
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Relationship
Their relationship gradually development since the mid-1990s Initial involvement (1996)
upstream and downstream activities five major processes three major problems

Second involvement (1998)

partner relationship with tier-one partners critical three major industry factors still not enough
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Relationship
Third involvement
implemented a number of initiatives ASNx/FGA However, fragmented

Fourth involvement
strengthen their supply chain collaboration across each dyad as well as the whole triad D2S supply chain model a collective view of relationship

Conclusion: collaboration is essential in the future development for all the parties.
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Discussion
Develop a framework to understand the collaborative supply chain issues between the three partners.

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Framework for SCM Collaboration

D2S Polo would outsource the key areas design and logistics processes to Luen Thai and would involve horizontal integration among the 3 partners

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Framework for SCM Collaboration

Three Dimensions to Supply Chain Collaborations Issues Strategic Processual Organisational

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Framework for SCM Collaboration

Strategic Need to align their strategic philosophies
Is it a platform that can allow all 3 partners to take advantage of future market opportunities Intra-organisation to inter-organisation perspectives require real time information exchange across all business processes of the 3 partners Reconsider the value they add to the supply chain Revenue Sharing Model
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Framework for SCM Collaboration

processes as compared to business functions
What Integrative Mechanisms should they use What Performance measures should they adopt

Processual - Need to consolidate different business

collaboration infrastructure

Organisational Need to decide how to build the e.g. Oshkosh, VF, Supply Chain City
Current use of technology & integration is fragmented Current supply chain is asset based and designed for mass manufacturing and collaboration would involve a serious resource & financial commitment

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Discussion
Highlight supply chain conceptual underpinnings and differentiate between traditional supply chain management and supply-chain collaboration in the context of Luen Thai and Polo.

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Traditional SCM vs. SC Collaboration

Traditional SCM

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Traditional SCM vs SC Collaboration

SC Collaboration

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Traditional SCM vs SC Collaboration

Summary

Traditional Supply Chains usually operate through temporary cooperation, rather than act as organized & integrated clusters Limited & fragmented technology result in inefficient information exchange The D2S Strategy allows partners to share information, better manage inventory, and thus significantly reduce costs

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Discussion
Examine how technology will enable collaboration amongst Luen Thai and its partners, and the effect of such collaboration?

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Current Use of Technology

Ruentex: supporting collaborative SC

Adopted the SAP system to restructure corporate resources Built a database for information query and knowledge accumulation

Instant order checking, 3D display, won international quality certification... Quickly response to customer needs
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Current Use of Technology

Tai to transform from an OEM to a service-oriented, D2S provider

Luen Tai: The interdependency between Polo is driving Luen

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Current Use of Technology

Ralph Lauren: building collaboration Introduced Internet-based Electronic Data Interchange (EDI) helped partners to design common interfaces and build a common platform Vendor Managed Inventory(VMI): will help Polo automatically create purchase orders based on warehouse or store demand levels in real time.

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Technology
Effects of Technology
One key element in SC collaboration is realtime/near real-time information exchange, including design, sourcing, manufacturing The Internet acts as a platform for information management and address the Bullwhip Effect The collaboration leads to growing interdependency: decreases mutual audits & inspection of incoming materials reducing cost Create visibility of Luen Thais logistics process
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Discussion
How does Supply Chain City initiative complement the D2S initiative? What are the synergies?

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The Supply Chain City

D2S is Luen Thai's business model that will provide customers with a one-stop shop of supply chain services ranging from design and development; material management; manufacturing and logistics.

Supply Chain City is One location solution all supply operations from design to development to sample making

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The Supply Chain City

D2S customers are looking for suppliers that can provide more products and services, perform faster but still offer a competitive cost.

Supply Chain City provides access to all technical support enabling Luen Thai to take up additional processes Close to major hubs like HK and Guangzhou to help Luen Thai provide logistical services 30 upstream partners on site (Vendors & Customers) Standardises work procedures across partners
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The Supply Chain City

Through D2S, achieve speed-to-market solutions that will help our clients bring the right apparel with the right volume, to the right place and right time.

Supply Chain City provides instant communication and information exchange helping to achieve speed to market & flexibility Fast product turnaround Substitutes information for inventory Reduced lead time
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The Supply Chain City

The first Supply Chain City in China is located in Dongguan, 30 minutes away from the Hong Kong border. Another one is currently being developed in Qing Yuan, 30 minutes away from Guangzhou.
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