Supply Chain Management at World Co:

1. Examine the features of fashion apparel retailing in Japan. How

can a company use its supply chain to compete in this environment?

- Apparel retailing was characterized by products with short lifecycles and

extremely uncertain demand, where speed and responsiveness were vital
for company to survive under this highly competitive environment.
- SPARCS system – focus on consumer demand to maximize the efficiency of
its store support operations. Coordination between product planning,
product development, production, and marketing allowed each area to
make better decisions about production volumes and lead-times.
Merchandisers in the corporate office quickly reacted to actual sales data
by placing additional orders or modifying existing orders.
- World’s supply chain also enabled it to change product assortment
frequently based on recent sales data after every two-week period
- Facilitate communications between all parties of business; empowering
each parties’ decision making authority in order to respond quickly to
market changes

2. Identify salient aspects of World’s supply chain focusing on the

processes for manufacturing, demand forecasting, and inventory
planning.

Manufacturing
- Domestic manufacturing where factories could respond to the inevitable
small changes that were necessary more quickly than overseas
manufacturing facilities
- Lower inventory turns would be highly detrimental to the company’s
financial position in the long run due to their extremely fast fashion cycles
- Factories worked very closely with the merchandisers located at the
corporate offices which maintained open lines of communications
- In the process of constructing the sample garments, the pattern-makers
developed detailed instructions for the line workers to circumvent
manufacturing problems when the garments actually ran on the
production lines
- Line workers were very versatile and able to perform many different
operations, they were compensated for their ability to perform more
operations
- Fabrics are purchased in advanced due to long lead time.

Demand forecasting
- Initial demand forecast and updating this forecast based on early sales
data
- Aggregate demand forecast
 Distribution side forecast (Market management system (MMS))
- Historical sales data, growth rates, seasonality, competitor
actions, changes in macro-economic conditions
 Category-side forecast
- Projected chain-wide sales plans for the brand, and product
features for the products in a particular category
- Based on historical data, market trends and advertising expense
planned
- SKU-level forecast
 Based on the opinions of managers and assistants of World Co. stores
 Participants of Obermeyer Method are similar to target customer base
 Took the votes of participants to perform an ABCD analysis

Inventory planning
- Based on Accurate Response approach
 Materials Preparation
- Based on aggregated demand for various SKUs in order to be
accurate and able to negotiate volume discounts
 First Order Quantity
- 50% of SKU demand forecast
 Replenishment Quantity
- Updated forecasts every week during the season in order to place
additional orders as necessary

3. How do the features of the supply chain explain the company’s

remarkably short lead times (relative to US apparel supply chains)?
Examine the features of the supply chain, and identify why the
company is able to respond so effectively.

The financial advantages of quick response and short lead time:

- Inventory turn 8.5 times with a gross margin of 47.8% compare to US
apparel only achieved 2.6 turns and 41% gross margin
- Markdowns was only 11% of total sales compare to 31.8% for American
women’s apparel

Examine the features of supply chain:

Plan
- “Test” the product in advance of the actual season to identify sales
patterns
- Demand forecasts were updated with real sales data frequently
Source/Inventory
- Prepare the fabric in advance,
- Maintain an inventory of undyed fabric to allow for faster response time
- Competent IT system for inventory control (availability and accuracy)
Make
- Domestic manufacturing could respond to small changes more quickly
- Factories worked very closely with the merchandisers located at the
corporate offices
- Designers were on the front line with the workers to develop detailed
instructions
- Line workers were flexible and able to perform many different operations
- Automated processes
Deliver
Anything??

4. Can the World’s supply chain processes be replicated at the other

apparel companies? What about non-apparel supply chains? Identify
potential barriers.

Can the world’s supply chain processes be replicated at other apparel

companies?

World Co.’s system can be replicated at other firms given sufficient resources.
However, given the secret to succeed from the case, certain apparel
companies would still have difficulties replicating the process.
For example, World Co. uses advanced online inventory management. These
information systems require highly competent IT personnel and sufficient
capital. A start up may have difficulty meeting these requirements.
For companies located outside of Japan would not be able to use the exact
same system, at least not cost effectively.

What about non-apparel supply chains？

Not for service industries, as the supply chain functions for service are very
different from manufacturing.
Also with industries facing the following barriers, will not be able to replicate
the process effectively

Potential barriers:
- Unreducible lead times
- Involve perish goods (unable to prepare material in advance)
- Location of different parties
- Inflexible Organizational structure - ie, strict hierarchy
- Ability to maintain effective and efficient IT functions
- Unable to reach economic of scales