cmss roundtable anna lin

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©2008 GS1 Hong Kong

The Apparel Supply Chain Today and the Path to Successful

Collaboration

Anna Lin

Chief Executive

GS1 Hong Kong

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Global Commerce

Manufacturing Base

Consumer Base

Global Sourcing for Cheaper Product and Wider Product Range

Total Export from China to Foreign Countries Amounts to US$762 billion in Year 2005 (An Increase of 28.4%)

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A Typical Global Apparels & Textiles Supply Chain

An interlinking system of raw materials suppliers, garment manufacturers, buying/trading offices, and brand retailers.

Raw MaterialsSuppliers

GarmentManufacturers

Agents(Buying/Trading

Offices) Brand Retailers

Raw Materials Sourcing

Garment Sourcing

D O L P

M

MD

OL

P

D O L P

D O L PD O L P

SC InteractionsD: DevelopmentO: OrderingL: LogisticsP: Payment

Upstream apparel

Downstream apparel

Asia Pacific US/Europe

M: Manufacturing

• Apparel Supply Chain

• Collaborative Efforts

• AppTex Vision

• CMSS

• Way Forward

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Retailer: Fashion on Demand

• Fashion changes from month-to-month rather than season-to-season.

• Over 10K new products per year for a typical brand retailer.

• New Product Introduction (NPI) once a week.

• 3 – 5 weeks of final design to sales cycle.

• This imposes tremendous pressure to adopt Quick Response, enhancing end-to-end supply chain efficiency, visibility and reducing total supply chain costs.



• AppTex Vision

• CMSS

• Way Forward

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Industry Challenges

• Continuing efforts to shortening the production cycle time.

• Fierce competition from emerging manufacturers in terms of cost.

• High flexibility, responsiveness and reliability, plus a lot of last minute changes.

• Facing various market impacts like abolition of Quota in 2005, China’s WTO accession and globalization of market.

• Short product life cycle and low order quantity.• Fragmented industry, lacking of consistent operational

practices and heavily relying on manual-based operation.



• AppTex Vision

• CMSS

• Way Forward

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Collaborative Efforts Needed to Combat Challenges

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Apparel Supply Chain Interaction

Sourcing and developing raw materials in the upstream supply chain accounts for some 70% of the time spent in the supply chain interaction.

SamplingPhysical

Touch & Feel

Raw Materials Specification

Data Exchange

Ordering &Order Tracking

Goods Dispatching or

Receiving &Payment

B2BBusinessProcesses

SupportingSystems

Phone, fax or e-mail B2B & ERP systems

Product DevelopmentProduct Ordering, Logistics &

PaymentSCSC

InteractionInteraction

Cycle Time More than 70% Approximately 30%

D LO P



• AppTex Vision

• CMSS

• Way Forward

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Scenario 1

Scenario 2

Raw MaterialsSupplier

GarmentManufacturer

Buying Office

BrandRetailer

Raw MaterialsSupplier

GarmentManufacturer

Business Processes(Upstream Raw Material Sourcing & Development)

Buying Office

BrandRetailer

ProductDevelopment

ProductDevelopment

Specification

Requirements



• AppTex Vision

• CMSS

• Way Forward

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Operational Inefficiency

• The apparel and textiles industry continues to suffer from a tremendous lack of discipline, standardization, and transparency, as most of the companies are still using a smorgasbord of proprietary methodology for specifying and exchanging the specification of raw materials.

• This leads to a serious interoperability issues and operational inefficiencies and problems among the business partners along the apparel supply chain.

• End-to-end supply chain integration is the new business paradigm that companies need to adopt in order to derive competitive advantages and to meet their new business challenges.



• AppTex Vision

• CMSS

• Way Forward

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Operational Inefficiency – Survey

No. of Days to identify the right raw material specification per new order (Cycle time)

No. of times in this “Back & Forth communication” (frequency)

7 Raw Materials Average Longest Shortest Average Maximum Minimum

Button 2 – 5 14 – 40 At once to 1 2 – 7 5 – 10 1 – 7

Interlining 7 – 10 10 – 40 At once to 1 2 – 6 6 – 20 At once to 3

Knitted Fabric 2 – 14 14 – 60 1 – 4 2 – 6 5 to > 10 1 – 10

Label & Tag 1/2 – 7 7 – 14 At once to 5 3 – 7 5 – 25 1 – 8

Thread 1 – 4 7 – 10 At once to 3 2 – 3 5 – 8 1 – 3

Woven Fabric 2 – 7 14 – 60 At once to 5 3 – 6 5 to > 10 1 – 4

Yarn 2 – 5 14 – 90 At once to 3 2 – 6 3 to > 10 1 – 4

Total number of respondents: 63 companies

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Reasons of Inefficiency

Main reasons for “ Back & Forth communication”

Average range

Missing information 10% to 25%

Inaccurate information 10% to 30%

Changes in raw material specification

10% to 20%

Price negotiation 30%

Follow up on delivery status 20% to 40%

Others (e.g. raw material functional performance)

10%



• AppTex Vision

• CMSS

• Way Forward

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AppTex Vision

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Groundwork - AppTex Program

• GS1 HK in collaboration with a group of forward-thinking upstream apparel and textiles companies are taking charge of developing raw materials specifications standard aims at integrating upstream apparel supply chain.

• This project was backed by 33 key players and industry bodies, accounting for some 60 percent of the local market share, with professional people to provide suggestions and comments for developing the standards of raw materials specifications of:– Button; Interlining; Knitted & woven fabrics; Label;

Thread; and Yarn.• The raw materials standards cover:

– Classification; Product attributes; Attribute values; Unit of measure; International article identification; &Party identification.



• AppTex Vision

•CMSS

• Way Forward

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Participating Companies

American & Efird (HK) Ltd INVISTA (HK) LtdAvery Dennison HK B.V. Keung Hing Mfy Int’l LtdCentral Fabrics Ltd Luen Thai Int’l Group LtdCentral Textiles (HK) Ltd Milo’s Knitwear (Int’l) LtdChargeurs Interlining (HK) Ltd Mou Fung LtdCoats China Pacific Textiles LtdCrystal Group Paxar Far East LtdEast Sun Button int’l Ltd Peninsula Knitters LtdEsquel Group TAL Apparel LtdFang Brothers Knitting Ltd Texful Textile LtdFountain Set (Holdings) Ltd Top Form Int’l LtdFreuenberg & Vilene Int’l Ltd Tristate Holdings LtdGS1 Hong Kong Ltd Union Button Factory LtdGrand Gain Industrial Ltd Wing Tai Enterprieses LtdGunzetal Ltd Xetex (HK) Ltd



• AppTex Vision

• CMSS

• Way Forward

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STEERING COMMITTEE

Project Manager: GS1 Hong Kong

Project Start: 2002

Chaired by Mr. Andrew Leung, Chairman of Textile Council

Garment manufacturers: Top Form, Tristate

Raw material suppliers: Central Textiles, Fountain Set, Freudenberg & Vilene, Gunzetal

Sponsors: Esquel, Luen Thai, TAL, Wing Tai

Supporting Association: Textile Council

• East Sun Button• Esquel• Keung Hing• Luen Thai• TAL• Tristate• Union Button• Wing Tai

• Freudenberg & Vilene• Luen Thai• TAL• Tristate• Wing Tai

Button Interlining• Avery Dennison • Esquel• Grand Gain• Luen Thai• Paxar • TAL• Top Form• Tristate• Wing Tai

Label & Tag• Esquel• Fountain Set• Luen Thai• Pacific Textiles• Top Form

Knitted fabric• Gunzetal• Luen Thai• TAL • Top Form• Tristate• Wing Tai

Thread• Central Textiles• Esquel• Freudenberg & Vilene• Luen Thai• Mou Fung• TAL• Texful Textile• Top Form• Tristate• Wing Tai

• Central Textiles• Crystal• Fang Brothers• Fountain Set• INVISTA (HK) •Luen Thai• Milo’s Knitwear• Pacific Textiles• Peninsula Knitters•TAL• Tristate• Wing Tai

Yarn

USER CONSULTATION GROUP:American & Efird (HK), Chargeurs Interlining (HK) Coats China and Xetex (HK), just to name a few

Key Drivers from the Industry

Woven fabric

WORKING COMMITTEEIndustry Work-Groups: Chaired by Mr. Dennis Chung, Corporate Logistics Director of Luen Thai

MARKETING COMMUNICATION UNITChaired by Ms. Woo Yuk Lynn, Director of Central Textiles , in collaboration with Textiles Council & HKTDC

TECHNICAL CONSULTING GROUPVetting Committee: Chaired by Mr. Andrew Leung, Chairman of Textile CouncilTechnical Work Group: Chaired by Mr. Stanford Kuo, Director of Gunzetal Vice-chaired by Mr. Ricky Tang, Regional Director, ISCR & South Asia of Freudenberg & Vilene

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Specifications for Thread and Knitted Fabric

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Results of AppTex

• All the participating companies agree that an industry-wide raw materials standards will ease the communication between business partners, enabling them to streamline their supply chain operations and enhance overall efficiency.

• Alignment with brand retailer to achieve end-to-end supply chain integration is critical to the success of the AppTex project.

• The industry expects that at least a 15-20% reduction in overall cycle time of product development can be achieved if the AppTex standards is deployed properly.



• AppTex Vision

• CMSS

• Way Forward

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Progress of AppTex

• 2002 Project granted

• 2003 Complete AppTex Industrial Survey

• 2004 Launch of AppTex

• 2005 Host of Suppliers roundtable

• 2005 Specifications Refinement

• 2005 Share AppTex with VICS members

• 2007 Marketing Event with Textile

Handbook

• 2008 AppTex Implementation Pilot

• 2008 Co-organize CMSS Roundtable



• AppTex Vision

• CMSS

• Way Forward

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Collaborative Material Standards Specifications

(CMSS)

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CMSS

• Set up by VICS to establish raw materials/garments specifications for item identification

• To turn industry consensus into global standards with the involvement of buyers and sellers in the Apparel and Textiles Industry.

• To transform unstructured data into structured data format for raw materials and product specifications presentation and to enable enterprise systems integration for Business-to-Business communication with the aids of the best-of-breed technology.



• AppTex Vision

• CMSS

• Way Forward

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Turn into Action

• Embrace CMSS/AppTex as a tool to step forward the enhancement of end-to-end global apparels/textiles supply chain

• Leverage existing work and industry players via VICS members and GS1 HK’s apparels/textiles industry forum

• Great opportunity to create common vision and implementation of Collaborative Commerce encompassing both Downstream and Upstream apparels/textiles supply chain



• AppTex Vision

• CMSS

• Way Forward

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Questions?

Thank You

cmss roundtable anna lin

Business

upstream apparel supply

upstream supply chain

total supply chain costs

specification of raw

development o

cheaper product

new order cycle time

new business challenges