Retail Supply Chain Management

Final Project Report

Section B

Submitted To: Sir Hassan Rauf Chaudhry

Names Roll No.
Saad Ahmad L1s16bbam0005
Ateeqa Naseer L1s16bbam0009
Ahmad Maqsood L1s16bbam0039
 Acknowledgment

First of all, we thank to Allah Almighty that we have successfully completed our project. We feel
pleasure in expressing great gratitude to Prof. Hassan Chaudhry for his valuable suggestions and
motivation during the whole semester. He helped us to recognize that the most challenging goals
can be achieved with persistence, commitment and foresight. We had his guidance which
encouraged us through the project Moreover, in performing our project; we had to take the
interview of Sapphire Procurement Manager and HR Manager we deserve our gratitude for helping
us. Without his help, this project would not have been completed. We like to thank all of people
who helped us to complete this project.
 Table of Contents
FASHION INDUSTRY .............................................................................................................................. 4
Dynamics of Fashion Industry ............................................................................................................... 4
INTRODUCTION OF THE COMPANY ................................................................................................. 5
Target Market ............................................................................................................................................. 6
SEGMENTATION ..................................................................................................................................... 6
Geographical Segmentation ................................................................................................................... 6
Demographic Segmentation ................................................................................................................... 6
Psychographic Segmentation ................................................................................................................. 6
Behavioral Segmentation........................................................................................................................ 7
COMPETITION ......................................................................................................................................... 7
o khaadi ............................................................................................................................................... 7
o Gul Ahmed....................................................................................................................................... 7
o Nishat Linen .................................................................................................................................... 7
Dealing with Competition....................................................................................................................... 7
PRODUCT PLANNING ............................................................................................................................ 8
Value Chain ............................................................................................................................................. 8
Product Planning .................................................................................................................................. 10
Decision-Making ................................................................................................................................... 10
How decision-making take place? ................................................................................................... 10
Lead times .............................................................................................................................................. 11
Suppliers ................................................................................................................................................ 11
Organization Capabilities ........................................................................................................................ 11
It Infrastructure .................................................................................................................................... 11
Warehousing.......................................................................................................................................... 11
Website ................................................................................................................................................... 12
 FASHION INDUSTRY
Fashion industry is multibillion-dollar global enterprise dedicated to the business of making and
selling clothes. Some observers difference between the fashion industry (which makes “high
fashion”) and the apparel industry (which makes ordinary clothes or “mass fashion”). But by the
1970s the boundaries between them had blurred. Fashion is best defined simply as the styles of
clothing done by groups of people. The fashion industry encompasses the design, manufacturing,
distribution, marketing, retailing, advertising, and promotion of all types of apparel (men’s,
women’s, and children’s) from the most exclusive and expensive designer clothing to ordinary
everyday clothing. Once the clothes have been designed and manufactured, they need to be sold.
But how are these clothes reach from the manufacturer to the customer? The business of buying
clothes from manufacturers and selling them to customers is known as fashion retail.

Dynamics of Fashion Industry

The fashion industry is a product of the modern age. Prior to the mid-19th century, almost all
clothing was handmade for individuals, either as home production or on order from dressmakers
and tailors. By the beginning of the 20th century with the rise of new technologies such as the
sewing machine, the rise of global capitalism and the development of the factory system of
production, and the proliferation of retail outlets such as department stores. Clothing had
increasingly come to be mass-produced in standard sizes and sold at fixed prices. Although the
fashion industry developed first in Europe and America, today it is an international and highly
globalized industry, with clothing often designed in one country, manufactured in another, and
sold in a third.

The fashion apparel industry has significantly evolved, particularly over the last 20 years. The
changing dynamics of the fashion industry have forced retailers to desire low cost and flexibility
in design, quality, and speed to market, key strategies to maintain a profitable position in the
increasingly demanding and competitive market.

The fashion apparel industry in Pakistan is experiencing accelerated growth and youth which
comprise approximately 32 percent of Pakistan’s population appear to be the guiding force behind
it. In recent years, the apparel sector has witnessed entry of some of the biggest textile groups of
the country. These textile groups availed opportunities by introducing separate brands, lawns and
other fashion related products in the market. And the talented designers with innovative ideas and
internationally competitive designs are projecting the cultural heritage of Pakistan. There are
around 40 plus high-end fashion brands in the country and their annual sales volume runs in
billions of rupees. The fashion apparel industry in Pakistan has total revenues of $9.9bn
approximately in 2018, representing a compound annual growth rate (CAGR) of 6% between 2013
and 2018.
 INTRODUCTION OF THE COMPANY
The company that our group has selected is Sapphire. Sapphire is a famous National Fashion Brand
that came into existence in 2014 as clothing brand in Karachi and was founded by the Sapphire
Group and fashion designer Khadijah Shah of Élan. Currently it exists in almost all the major cities
of the Pakistan. The purpose of this company was to revive rich culture and heritage of the East.
The sapphire group exports its products to several regions of world. Sapphire is known for
combining 100% pure fabric with unprecedented design aesthetic to create designer wear at an
affordable price. Their range of clothing has something for everyAone: Daily wear, party wear,
formal wear, silk tunics, scarves and unstitched fabric. The overarching theme of the collections
is providing affordable designer clothes to the masses. Their exquisite design and high-class fabric
have resulted in the breakthrough of their retail brand. Sapphire’s commitment to quality fabric
over the years has made it a household name, synonymous with excellence. Sapphire has opened
up its branches into all the major cities of Pakistan and more branches in the main cities such as
Lahore, Karachi and Islamabad. Now they have a network of round 20 store nationwide. And if
we discuss about number of employees there are round 400 employees in 20 stores nationwide and
350+ employees in the head office.

Sapphire desire is to fulfill the Clothing needs of Women and Men in an Eastern manner and
currently it has the following products:

 Unstitched Lawn Collection

 Unstitched Chiffon Collection
 Stitched (Ready to ware Formal, Semi Formal, Prêt, Solid colors and Casuals)
 Men’s Wear (Waist coat, Kurtas, Kurta Shalwar, Bottoms)
 Accessories (Bags, Jewelry, scarves, dupatta’s, Bottoms, hanging’s, mobile cover’s and
sun glasses).
 Foot Wear (men, women)
 Home (Bed Linen, Baby Cot ,Bed-in-a-Bag, Cushion Cover, Table Linen ,Towels ,Bed
Throws, Fillings)
 Target Market
Sapphire targets the middle and upper class. As their products prices are between Rs 900-14,000
which is a very diverse price range that’s why they are targeting a huge segment. They have
something for everyone in their product range. Their main focus is to target brand conscious
women and they are successful in it because of their uniqueness in design and good quality.

SEGMENTATION
In order reach target market identifying a right segment is very important. And sapphire is doing
the same they have identified four basic segments which are as follow:

Geographical Segmentation

 Sapphire has always put comfort of consumers first, therefore the stuff of fabric they
manufacture, is according to the climate of different regions like in Karachi, climate is mild
and Lahore comes to face all four seasons with severe Summer/Winter. As we know,
Sapphire is an urban brand so on the geographical basis, it is segmented in different regions
of Pakistan. Karachi being the most populated city of Pakistan will be the main focus,
afterwards the focus will be on other urban areas like Lahore, Islamabad and Multan. Due
to the population ratio the sales will be accordingly.

Demographic Segmentation

 Sapphire wants to make sure they serve and they make product for each category. Sapphire
being an elite brand, so their product is for people specifically falling into upper middle
and upper class as the prices are affordable to them because of the high income they earn.
The variety they are offering to their customers are available with different price ranges so
that maximum number of people can be benefited from it. They are offering trendy outfits
for both genders which will purely define eastern culture.

Psychographic Segmentation

 Sapphire makes sure that they become the part of making one’s personality. As we all know
that wearing designer’s clothes is merged in everyone’s mind. People will definitely want
them to look good in order to maintain their class. One’s wearing Sapphire feels graced
and satisfied as they are reflecting the symbol of high social class. Our lifestyle mainly
consists of two components, status and role. Sapphire being the brand of High social class
and high income make sure that status conscious people get their need fulfilled by them.
The products they offer are definitely within the values of this society.
Behavioral Segmentation

 Sapphire is serving almost everything under one roof. One important question is that, when
do people shop? Other than seasonal shopping, everyone goes for shopping on occasions
Ramzan aftars and Eid-ul Fitr, Eid-ul Azha, and Wedding ceremonies. Every time people
want to wear something different; no one repeats their occasional dresses. Sapphire will
not only be making seasonal dresses (Summer/Winter) but they would also have a section
for occasional clothing with different colorful combinations. Providing quality Chiffon and
lawn in dress which is different from other brands, satisfies the customer unlike other
brands. People might shop from two or three other brands but the satisfaction provides by
Sapphire will not be provided by any other brand. So, in return they become loyal to
sapphire.

COMPETITION
There are many players in the market who are the competitors of the Sapphire in fashion retail but
the 3 major large-scale competitors are:

 Khaadi
 Gul Ahmed
 Nishat Linen
o khaadi is known for its “hand-woven” products, specially a wide clothing range
for women in Prét wear, it also provides unstitched lawn, stitched children’s
clothing, shoes, bags, jewellery, and men's wear. They have won several awards
but on the other hand their image on how they treat their employees is not
satisfactory and this effect the perception of people about their brand.
o Gul Ahmed has set a mindset of people that they are the Leader in Textile Mills.
One of the reasons, why people prefer it because they believe it is one of the oldest
brands. Gul Ahmed positioned itself on emotional values where it makes you look
and feel great. They try to promote cultural heritage and bonds which is quite visible
through their commercials.
o Nishat Linen is also providing quality products in terms of clothing but their
core competency is brand retailing. Because of the popularity of Nishat Groups,
Nishat brand didn’t had to made much effort to aware customers about their brand.

Dealing with Competition

Sapphire is dealing with this competition by offering high quality fabric with unique designs, funky
color combinations. Its Digital printing is different from all other brands. Most importantly, the
Cutwork also known as ‘Embroidered Lace’ is being used differently and in a beautiful manner by
Sapphire. They are also providing quality fabric in prices less than their competitors which acts as
a differential advantage for them. Their merchandise space interiors are also one of the basic
differences they have with their competitors.

PRODUCT PLANNING

Sapphire has most of their operations inhouse so the most of planning about product is also inhouse
that why their lead time are less due to this they are following fast fashion concept fully. Now
discussing about the product planning firstly we will discuss the value chain of the fashion apparel
products, then the how product planning & decision-making take place, lead times, suppliers and
sales per year. (the parts which are not covered in this phase will be covered in next phase)

Value Chain

In This section it is showed that from where the product making is started and how it reaches
customers

The cotton procurement department buy cotton from farmers collect it in the collection center
and then send it to the spinning unit. There are three spinning unit at Sapphire textile mill at each
unit different type and quality of yarns or spindles are made. After yarns are made, they are sent
to another division of Sapphire textile mill which is weaving unit at this point after all the
processing’s the yarns are converted into the fabric which is raw fabric called as grey fabric. This
the process which is done early we can call it postponement process so that when the order arrives,
they will not start from zero there are some processes which are done so that it takes less time to
deliver the order. When the order arrives, the request is sent to another division of Sapphire textile
mill which is the processing department. Under the processing department there are two divisions
one deal with home textile and other deal with garments manufacturing. After the production the
final products are packed and sent to the warehouses where they are stored. When the demand
arises or new season comes these products are sent to the retail outlets of Sapphire from where
customers buy the products otherwise customers have option to buy the products online which
they get through the delivery service.
Raw Cotton

Spinning Unit

Weaving Unit
(grey fabric)

Processing
Unit

Home textile/
Garment unit

Warehouse

Retail store

Customer
(store visit/
delivery)

(Value Chain of Sapphire)

 Product Planning
In the product planning there are 5 steps:

1. R&D (inhouse)
2. Designing (In & out house)
3. Cataloguing (In & out house)
4. Selection of designs (Inhouse)
5. Approval for production. (Inhouse)

After the approval production take place and products are ready to be displaced.

Decision-Making
In the decision-making phase there are many people involved but the major decision makers are:

1. Category managers
2. Designers (inhouse/outsourced)
3. Fabrication department
4. Higher management

How decision-making take place?

The designers will prepare the designs and send them to the category managers. They will

approve the designs and send them to the fabrication department. The fabrication department

now suggest the fabrics to be used for these designs send to them and after that the finalize

portfolio will be sent to the high management. They will approve the final designs out of those

which are selected and then the final request for production is sent to the production department

for the selected designs. All the designs are not produced and launched at the same time. They

are produced in form of volumes so that if the new trends emerge the company can come up with

the designs within the same season. That’s why decision making in Sapphire is time taking

process and is usually started 2-3 months before the season so that arrival for next season will be

out on time and as said earlier the decision making is not only for seasons but for volumes as

well within the seasons that’s why it take more time than usual planning. And this is the

continuous process and it never ends throughout the year.

Lead times
 For Planning phase: 2-3 months
 For production phase: 1-1.5 months

As all functions are done inhouse so due to this the estimated lead times usually not vary.

Suppliers
For the cotton company have some farms as well as they buy cotton from different farmers. All
other processes are done inhouse (from spinning till weaving and then processing/production) so
they don’t have any specific suppliers for these processes

Their designing is 50% out sourced they have certain designer or designing agencies from where
get designs and the rest 50% of designing job is done inhouse.

The source some of their accessories (buttons, laces etc.) used in the products from the
wholesalers and manufactures of these accessories.

Organization Capabilities
It Infrastructure
 The company is using ERP software for the inventory management. The name of the
software is Candela. This software help company to links it warehouse with all the
retailers so that if any article is sold so every concerned person know that as well as if
there is shortage of certain article so, the retailer can confirm it from software that this
article is available at any other retailer or warehouse so that customer demand can be
meet. This software is also used for the purpose of forecasting so that the estimated
amount of certain article is always present with in the stores and the warehouse to fulfill
the estimated customer demand.

Warehousing
 Sapphire owns its main warehouse in Raiwind with the capacity of 10890 square foot and
they have some other rental warehouses as well in different cities.
Website
 Sapphire has its own website as well through which it offers its customer an online
shopping option as well. They offer free nation-wide deliveries within 3-5 working days
and for international deliveries they charge according to carrier’s rate and the delivery
time for international orders are 10-15 working days. For deliveries they don’t have their
own carrier’s. They have outsourced their delivery operations to major carriers of every
city like TCS, Leopard, DHL.