A Case Analysis TAL Apparel Limited

Submitted By
Abhilash Rakesh Ranjan Gaurav Gupta Amar Keshari Paresh Patra

DOMS IIT Roorkee 2013-2015

Buyer Driven vs. Producer Driven

Buyer Driven

Producer Driven

Core Competencies

Design, Marketing

R & D, Production

Barriers to entry

Economies of Scope

Economies of Scale

Typical Industries

Apparel, Footwear, Toys

Automobiles, Computers

DOMS IIT Roorkee 2013-2015

VMI Vendor Managed Inventory

A Business models in which the buyer of a product (business) provides certain information to a vendor (supply chain) supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location (usually a store).

It is a concept and process for consumption-based Supply Chain Management.

It requires the supplier to maintain inventories within predefined and mutually agreed thresholds based on a min / max-range. The supplier can freely deliver within this indicated range

.
.

The basic requirement for a successful VMI process is a good partnership and cross company information sharing and transparency close to real-time

DOMS IIT Roorkee 2013-2015

Without VMI
Inbound Logistics Operations Outbound Logistics Receive orders based on J.C. Penny request Marketing & Sales Perform test marketing of new products at retail stores Services

TAL

Receive backAsk J.C. order from J.C. Penny for Penny sales forecast and plan for production

Monitor retail sales, replenish inventory, and design new products

J.C. Penny

Place orders based on their sales forecast

Perform inventory control, sales monitoring

Back-order to TAL

Marketing, Receive merchandizing consumer and selling to feedback for end product consumers enhancemen t/new product

DOMS IIT Roorkee 2013-2015

With VMI
Inbound Logistics Operations Outbound Logistics Marketing & Sales Services

TAL

Purchase Produce And receive raw according materials to customer orders

Package & Ship to retailers warehouse

None

None

J.C. Penny

Purchase And receive garment from manufacturer

Perform inventory control, sales monitoring and forecast

Re-pack &distribute to retail outlets

Marketing, merchandizi ng and selling to end consumers

Receive consumer feedback for product enhanceme nt/new product

DOMS IIT Roorkee 2013-2015

Past : (inventory is controlled by J.C. Penny)

The whole supply chain is in sequential order. Without VMI, J.C. Penny manages the inventory and place order when there is stock-out. The disadvantages were:

1. 2. 3. 4.

Long replenishment cycle Increase chance of stock-out Bullwhip effect : It refers to a trend of larger and larger swings in inventory in response to changes in customer demand . Lower customers satisfaction

DOMS IIT Roorkee 2013-2015

Present : (inventory is controlled by TAL)

TAL uses VMI to improve its continuous-replenishment program with JC Penny TAL creates the purchase orders based on the demand at the store or warehouse level. TAL forecasts the demand and make fulfilment based on real-time front-line sales information.
The advantages are:

1. 2. 3. 4. 5.

Reduced inventory Shorter replenishment cycles Sensitive to the inventory level avoid back order Reduce inventory management cost Reduce administration cost of the transaction cost

DOMS IIT Roorkee 2013-2015

Make to Measure

Ready-to-wear garments are constructed to fit the manufacturer's definition of an average customer, while made-to-measure garments are constructed to fit each customer individually. A made-to-measure garment are generally more expensive than ready-to-wear garment. Garments are well-fitted to the customer's body and the customer have the opportunity to customize the fabric and detailing. The same production resources to manufacture a variety of similar, yet individually unique products. TAL, Developed the body scanning technology, customer interface functionalities, and custom-tailored production machinery at the factory.

DOMS IIT Roorkee 2013-2015

MTM Examples

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MTM Contd

Streamline the entire order-fulfilment process from Customer , retailer and supplier point of view . TALs Retailer :- Lands End, Brooks Brothers, and J.C. Penney Finished products were shipped from the factory directly to the customers home address. Orders were sent electronically from the stores and finished products are shipped back to the originating stores. Made-to-measure orders were usually manufactured within a week from the time of the purchase order, followed by one week of air freight to reach the shipping destination.

DOMS IIT Roorkee 2013-2015