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15. Technology, Innovation and Supply Chain Management Competitive Sessions Demand-Supply Chain Management for the Chinese Fast Fashion Apparel Industry

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15. Technology, Innovation and Supply Chain Management Competitive Sessions Demand-Supply Chain Management for the Chinese Fast Fashion Apparel Industry Page 1 of 26 ANZAM 2013 15. Technology, Innovation and Supply Chain Management Competitive Sessions Demand-supply Chain management for the Chinese fast fashion apparel industry Abstract This paper explores the applicability of the demand-supply chain management (DSCM) approach to help improve the supply chain performance of the Chinese fast fashion industry. Based on a comprehensive desktop research, the paper provides a thorough literature review on the paradigm evolvement from demand chain management (DCM) to DSCM and investigates the current supply chain approaches used by the apparel industry in China. The paper attempts to develop a theoretical DSCM framework that incorporates the various underlying drivers and obstacles of DSCM application. The proposed DSCM framework extends the conventional one-size-fits-all solution by advocating a dynamic outside-in thinking that integrates marketing value stream with multiple supply chain network solutions under an aligned organizational culture and leadership style. Keywords Supply chain Management (SCM); Demand chain management (DCM), Demand-supply chain management (DSCM), Responsiveness, Efficiency and Innovativeness 1. INTRODUCTION Fashion textile (FT) industry has raised the concern in the study of supply chain management (SCM) for many years. There are many studies targeting the dynamic characteristics of it with many different kinds of SC solutions (Bruce, Daly, & Towers, 2004; Castelli & Brun, 2010; Christopher, Lowson, & Peck, 2004). It could be traced from the early traditional one-size-fit-all solutions of lean, agile or leagile strategy to recently overarching approach that aligning market management with supply capabilities. The contemporary study presents the exploratory idea of integrating all these strategic solutions and packing them into flexible combinations for segmented value streams under demand-driven supply chain (DSC) paradigm (Jüttner, Christopher, & Baker, 2007; Masson, Iosif, MacKerron, & Fernie, 2007). With the growing complexity of current global context, the success of a FT company is largely determined by how the organization design its network package to achieve the optimal balance of SC responsiveness and efficiency (Christopher et al., 2004). Retailers that can successfully manage the complex supply network to achieve supply chain speed and flexibility will maximize profits when they do ANZAM 2013 Page 2 of 26 15. Technology, Innovation and Supply Chain Management Competitive Sessions meet market needs, while at the same time minimizing the penalties associated with missing the market (Masson et al., 2007). Chinese market as one of the most influential market in the global FT trade (Candace, Ngai, & Moon, 2011), undergoes dramatic challenges for recent years. From macro-environment perspective, since the 2010 labor strike triggered huge labor-cost raising, Chinese economy is gradually losing the advantage of world factory position (CN, 2011, 2012). The model of OEM and mass production is confronted with phasing out (Chuang, 2008). From industrial development perspective, in line with many fashion trends take-over, large invasion of international fast fashion retailers put a fierce competition in the local market after 2010 with many famous brand launches, such as Gap, Zara, H&M, Uniqlo, C&A (Li & Fung, 2011). Furthermore, consumers who are largely exposed to these fickle changes tend to shop with more fashion consciousness and savvy buying behaviors (Dickson, Lennon, Montalto, Shen, & Zhang, 2004; Flaven, 2013; Parker, Hermans, & Schaefer, 2004; Zhang, Li, Gong, & Wu, 2002). Figure 1 shows the various issues faced by the local fast fashion industry categorized into three general aspects. In this context, these challenges add more supply chain complexities for the local FT industry. Compared with global fashion brands, domestic brand retailers have less marketing experience result from years of industrial focus on labor-intensive manufacturing(Chan, 2011). Some of them try to jump on the ‘fast’ fashion bandwagon as a way-out with imitating classic successful model which ends up with model dislocation and fatal lost (International Trade Centre, 2011; Lu, 2011). Which way should Chinese FT industry go in this critical transitional trend? A more dynamic solution tailored for local FT environment would be urgently needed. Though there are many SCM studies focusing on the research of global FT industry, limited research has been done upon the Chinese FT industry. According to the literature review, it lacks of systematic studies in this field from the overarching perspective which could not only focus either on supply capability strengthening or marketing behavior analysis but integrate both from macro- institution and organization settings. Issues like new economy transition, specialized institutional environment, diverse customer segmentations, and transforming consumer psychographics, all add complexity for Page 3 of 26 ANZAM 2013 15. Technology, Innovation and Supply Chain Management Competitive Sessions supply chain operation in local FT companies. It could be preliminary seen, A more dynamic outside-in solution, which configures multiple supply chain networks based on separated value streams, would be needed for the local FT industry. In this study, demand-supply chain management (DSCM) is proposed as an overarching collaborative solution for the current Chinese fast fashion industry. The term and concept was introduced by Hilletofth (2011, p. 187) as “… the management of a supply chain network that links customers and suppliers together through market segmentation, strategic alignment, and differentiation of supply solutions with the objectives to improve efficiency through value creation and waste reduction and enhance responsiveness by meeting diverse customer needs.” DSCM requires not only integration of marketing strength and supply chain capabilities at the demand chain management level but also requires the alignment of organizational culture and leadership style with the external market (Hilletofth, Ericsson, & Christopher, 2009; Hilletofth & Hilmola, 2008; Hoover Jr, Eloranta, Holmström, & Huttunen, 2002; Jacobs, 2006; Lau, 2012). The purpose of this study is to explore the possibility of applying the DSCM approach to help improve the demand-supply chain performance of the Chinese fast fashion apparel industry. The research question is as follows: How can Chinese FT supply chain network and operation be restructured and aligned with market demand under DSCM approach for performance improvement? This study reviews current literature research on DCM and DSCM across a broad spectrum and then highlights existing fast fashion demand and supply network studies conducted in the context of China. A framework specifically tailored for the Chinese fast fashion industry is proposed. The paper is structured as follows: First, a thorough literature review is given on the DSCM definition, paradigm evolution and the benefits that bring to the current supply chain network and fast fashion industry. Based on historical literature and case studies review, the necessities and challenges when DSCM is implemented in the real industry will also be elaborated. Then, a theoretical DSCM framework based on alignment theory (Chorn, 1991) for Chinese fast fashion industry is proposed and presented. ANZAM 2013 Page 4 of 26 15. Technology, Innovation and Supply Chain Management Competitive Sessions After that, the methodology of the study, which is primarily a desktop research with secondary data, is discussed. Finally, limitations of the study are discussed and directions of future research are also suggested. 2. LITERATURE REVIEW 2.1 Evolution of Demand Supply Chain Management DSCM is a concept or approach that merged from Supply Chain Management (SCM) and demand chain management (DCM). The Conventional SCM practices began in 1980s optimize internal production efficiency with supply-focused process comprising inbound logistics, operations and outbound logistics (Oliver & Webber, 1982; Priem & Swink, 2012). It aims at cutting cost and refining the intra-business processes (Esper, Ellinger, Stank, Flint, & Moon, 2010). SCM practices gradually became demand-drive due to the emphasis on consumers/customers and the change in the way products are distributed and manufactured ((Langley, Gibson, & Novack, 2008)). The change brought about the need to manage supply chain from a demand perspective that considers the end-users of a company as the departure point and not its final destination (Wieland & Wallenburg, 2011). Porter (1985) first put forward the concept of disaggregation of two paradigms. In this regards, the whole value chain is separated into supply activities and demand marketing service. According to Porter (1985), Marketing, sales and service on the end half of the value-chain, and collectively driving and sustaining demand, are the three main elements of the demand chain (Figure 2). Christopher (2005, p. 5) also argues against the limitations of the uni-dimensional, cost-focused supply chain and suggests the following: “Supply chain management should be termed demand chain management to reflect the fact that the chain should be driven by the market, not by suppliers. Equally the ‘chain’ should be replaced by ‘network’ since there will normally be multiple suppliers and, indeed, suppliers to suppliers as well as multiple customers and customers’ customers to be included in the total system” Page 5 of 26 ANZAM 2013 15. Technology, Innovation and Supply Chain
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