Supply Chain

Management
in Fashion
Industry
Submitted by:
Dishita Kaushik
Divyanshi Goel
Swaraj Patil
Supply Chain Management
A supply chain is a network of individuals and companies who are involved in creating a
product and delivering it to the consumer. Links on the chain begin with the producers
of the raw materials and end when the van delivers the finished product to the end user.

Supply Chain Management is a crucial process because an optimized supply chain

results in lower costs and a more efficient production cycle. Companies seek to improve
their supply chains so they can reduce their costs and remain competitive.

A supply chain includes every step that is involved in getting a finished product or service
to the customer. The steps may include sourcing raw materials, moving them to
production, then transporting the finished products to a distribution center or retail
store where they may be delivered to the consumer.

The entities involved in the supply chain include producers, vendors, warehouses,
transportation companies, distribution centers, and retailers.
 Main Supply Chain Models

Continuous Flow Model: This traditional supply chain model works well for companies that
produce the same products with little variation. The products should be in high demand and
require little to no redesign. This lack of fluctuation means managers can streamline
production times and keep tight control over inventory.

Fast Chain Model: This model works best for companies that sell products based on the
latest trends. Businesses that use this model need to get their products to market quickly to
take advantage of the prevailing trend. They need to rapidly move from idea to prototype to
production to consumer.

Flexible Model: Companies that manufacture seasonal or holiday merchandise often use the
flexible model. These companies experience surges in demand for their products followed
by long periods of little to no demand. The flexible model ensures they are able to gear up
quickly to begin production and shut down efficiently as soon as demand tapers off. In order
to be profitable, they must be accurate in forecasting their need for raw materials, inventory,
and labor.
Network Design
The supply chain network design is defined as a working
model that delineates the overall framework of a supply chain
to assess the time and costs required to bring goods to the
market. This model helps a business spot inefficiencies and
potential risks in the supply chain. The model also helps
analyze "what if" scenarios to optimize operations to reduce
costs, improve service and increase responsiveness.
Benefits of Network Design

Discerning parts for streamlining and potential cost savings

Reduction in purchase costs and inventory
Working capital reduction
Reduction in freight costs
Route optimization for reducing transit time and fuel costs
Reduction in network fixed costs (facilities, equipment) and supply chain variable costs
(labor, handling, 3PL costs)
Optimization of service levels and delivery dates for customer satisfaction
Process and cost visibility across the supply chain network
Providing performance visibility of the complete supply chain network by comparing its
capabilities/costs against set benchmarks
Factors that influence
Network Design decisions?
1. Location and Distance: Distance between the different locations of the supply chain and the locations
themselves are important factors to be considered. The location of the supply chain network includes
customers, suppliers manufacturing abilities, airports, ports, and so on.

2. Current and Future Demand: The current and future demands of the company are taken into account
as well and should be grouped appropriately.

3. Service Requirements: The maximum allowable transit time and distance are used to determine the
location of the warehouses to be added to the supply chain.

4. Size and Frequency of Shipment: The size and frequency of the shipment are essential factors for
determining the costs – the higher the frequency, the greater the cost; the smaller the shipment, the
higher the cost.

5. Warehousing and Labour Costs: Warehousing costs are fixed costs and are factored into the decision-
making process. The labor costs are not fixed, and they play a role as well.

6. Trucking Costs: The cost and type of trucking are of considerable importance.

7. Mode of Transportation: Which mode of transportation is used in the running of the supply chain
matters as well.
Importance of network design in supply chain

The supply chain has proved to be the backbone of businesses in the current scenario especially post
COVID-19. The supply chain needs to be stronger and more efficient to meet the uncertain market needs
in various industries.
Organisations need to focus on building a network that can configure their supply chains in a future-
ready and market-oriented way. This means that before configuring and putting the various blocks
together, they need to dig deep into the areas like demand, supply, capacity, storage, technological
requirements. The cost and time required also needs to be studied well.
The rapidly shifting consumer choices and preferences and the uncertain demands of the services and
products make it important to pre-design the network involved in the supply chain. In the e-commerce
environment delivery within 24 hours or next-day-delivery is becoming a new requirement. A delay in the
delivery or unavailability of a product could easily become the reason for a customer to switch brands.
 Framework for Network
design descisions

Define Supply Chain Strategy/ Decision Define the regional facility configuration

Select a set of desireable potential sites Location Choices

Gravity Location
Model
 Gravity Location
Model
Gravity models are used to find the location that minimizes the cost of transporting raw
materials from the supplier and finished goods to the markets served. This model also
assumes that the transportation cost grows linearly with the quantity shipped. The gravity
model incorporates two basic factors that affect the level of flow between places: the
population of each place (or some measure of the potential for flow), and the distance
between them.
Modelling Framework
Gravity models assume that both the markets and supply sources can be located
as grid points on a plane. All distances are calculated as the geometric distance
between two points on the plane. These models also assume that the
transportation costs grow linearly with the quantity shipped. We discuss a gravity
model for locating a single facility that receives raw material from the supply
sources and ships finished products to markets. The basic input to the model is
as follows:

xn, yn = coordinate location of either a market or supply source n

Fn = cost of shipping one unit for one mile between the facility and either market
or supply source n

Dn = quantity to be shipped between facility and market or supply source n

If (x,y) is the location selected for the facility, the distance dn between the facility
at location (x,y) and the supply source or market n is given by
 Network Optimisation Model

Network optimization compromises of the techniques, tools,

and technologies that enable us to maintain, maximize, and
improve performance across all network domains. These
elements are used for monitoring, managing, and optimizing
performance metrics to help make sure that there is the
highest level of service for all customers and users throughout
the network.

Network performance optimization is vital because our

interconnected real-time world is fully dependent on the
available, secure, and reliable transfer of data. With every year
that passes, there are more and more demands that are being
placed on networks.
Capacitated Plant Location Model

Merge the companies

Solve using location-specific costs

yi = 1 if factory i is open, 0 otherwise

xij = quantity shipped from factory i to market j

Min f i y i + i=1 n å c ij x ij j=1

 Capacitated Model with Single
Sourcing
Market supplied by only one factory
Modify decision variables yi = 1 if factory i is open, 0 otherwise xij= 1 if market j is supplied by factory i, 0
otherwise Min f i y i + Dj c ij x ij j=1 m å i=1 n å i=1 n å subject to x ij = 1 for j = 1,...,m i=1 n å Di x ij £ Ki y i
j=1 m å for i = 1,...,n x ij , y i Î {0,1}
Locating plants and warehouses
simuntaneously
Market supplied by only one factory
Model inputs
m = Number of markets or demand points
n = Number of potential factory locations
l = Number of suppliers
t = Number of potential warehouse locations
Dj = Annual demand from customer j
Ki = Potential capacity of factory at site i
Sh = Supply capacity at supplier h
We = Potential warehouse capacity at site e
Fi = Fixed cost of locating a plant at site i
fe = Fixed cost of locating a warehouse at site e
chi = Cost of shipping one unit from supply source h to factory i
cie = Cost of producing and shipping one unit from factory i to warehouse e
cej = Cost of shipping one unit from warehouse e to customer j
Goal is to identify plant and warehouse locations and
quantities shipped that minimize the total fixed and variable
costs
Yi = 1 if factory is located at site i, 0 otherwise
Ye = 1 if warehouse is located at site e, 0 otherwise
xej = Quantity shipped from warehouse e to market j
xie = Quantity shipped from factory at site i to warehouse e
xhi = Quantity shipped from supplier h to factory at site i
Thank You