In the current age of fierce competition and technologically advanced business environment, there are several factors which determines the success of any organisation. To be competitive in this continually fluctuating market corporates need to plan and structure their operations in accordance to the needs of their customers. The results achieved by the supply chain department plays a critical role specifically in clothing industry. This research will be based on the management paradigm which is otherwise known as the ‘Theory of constraints’ (TOC). TOC was developed in the industrial revolution era by Eliyahu M. Goldratt. As per this theory, every company regardless of the industry in which they have been operating have at least one constraint in their entire network which restricts them to achieve more & attain better profits (Goldratt, 1984). These constraints are also called as bottlenecks which restricts the level of performance. Inept logistics model, inadequate selection of supplier, incompetent sales & human resource practices or failure to match demand & supply can act as a constraint for any clothing company.
The following research will examine various literature which has been written on the field of supply chain optimisation within the leather industry. A mixed approach of qualitative and quantitative will be used by the investigator to check the stated hypothesis in this research. In order to gather adequate and reliable data, the author would organise personal structured interviews with the stakeholders from the top ten leather jacket shops in Auckland, New Zealand. The list of the names of these ten shops are provided in the sampling frame part of this report. Additionally, an online survey will be conducted to gather information from participants who are located outside Auckland. It will be made sure that, no harm is caused to anyone during this entire research process. Furthermore, the confidentiality of the data gathered from various leather jacket shops will be strictly kept hidden. Ultimately, the findings of this research will assist the future surveys & studies conducted within the same industry.
The prime objective of this research paper is to investigate and check whether matching demand & supply is the most significant determinant in attaining supply chain optimisation amongst all the various other determinants like the need for developing an efficient logistics model, maintaining effective human resource management, performing comprehensive sales promotions, adequate selection of supplier etc.
Supply chain optimisation means achieving the perfect balance of cost efficiency & responsiveness to satisfy the wants and needs of customers in a timely manner (Chen, 2014). In the last few decades globalisation has advanced at a high pace because of this reason corporates need to be proactive in their supply chain practices (Kot, 2014). Profit maximisation and reduction in the total cost are the two most important goals of supply chain optimisation (Uddin & Hussain, 2015). Shub and Stonebraker (2009) noted that in the 1990’s companies gradually started to integrate their supply chain processes into their day to day business routines, by doing this they were able to produce positive results. Likewise, the importance of human resource management (HRM) has also substantially increased (Zheng, 2009). However, in some countries like Pakistan ; Afghanistan the importance of HRM has not yet been realised (Harland, 1996). Cetinkaya and Lee (2000) expressed that vendor managed inventory (VMI) method for placing orders is one of the best practices which can be utilised by any company to meet the ever-changing needs of the customers. With the help of VMI, decisions regarding outbound logistics ; inventory management becomes considerably easy. Considering clothing industry, the current trend factor plays a vital role in the amount of demand achieved in a season. Providing the right product, to the right customer at the right price, quantity ; quality is the goal of the supply chain operations. The above stated phenomenon is also known as matching demand ; supply. Matching demand ; supply plays a crucial role in the overall success of the company. However, to check whether this factor is the most significant determinant amongst all the rest, a systematic research procedure needs to be conducted.
The following research will focus on the challenges faced by the leather jacket industry in New Zealand and will utilise appropriate procedures to analyse the available data by gathering in-depth information to bridge the existing gap in the area of supply chain optimisation. The following literature reviews confirms that, there are numerous determinants to consider in order to achieve supply chain optimisation like; efficient logistics model, human resource ; sales promotion practices, supplier selection, selling price ; quality of the product, matching demand ; supply and transparency within the supply chain network. All these determinants have an impact on supply chain optimisation in the clothing industry.
Consequences of implementing an efficient logistics model
Institutionalisation of an efficient logistics model is highly crucial for the enhancement of supply chain optimisation. Kot (2004) states that globalisation has forced many multinational companies to divert their focus on their supply chain practices to survive and be at the top. A systematic and cost-efficient logistics model is desirable to satisfy the dynamic customer preferences in the current complex market environment (Kovacs ; Kot, as cited by Olah, 2016). Recent trends like reducing the length of product life cycle, applied research, innovation ; development and glocalisation are the factors due to which the current business environment has become highly competitive (Szegedi, 2011). Bowen and Leinbach (2014) agreed with the findings of Kot (2004) and they expressed that supply chain network should be framed and structured in such a way that economies of scale and economies of choice is attainable. The importance of foreign logistics service providers has also increased substantially in the past few years which has a large impact on the relationships between various parties within the chain of supplies (Lukassen ; Wallenburg, as cited by Olah, 2010). Few scholars from Europe believe that utilisation of foreign logistics provider and maintaining transparency within the supply network is a good practise (Barrientos ; Smith, 2007). However, several researchers from a different part of the world question this belief (Locke et al., 2007).
The impact of human resource practices on supply chain optimisation
Human resources are the face of any organisation therefore corporates should make sure that they maintain the quality of their workforce. Mac Duffie (1995) stated that the HRM functions will only produce fruits if the employees of the firm are trained properly, given appropriate incentives and systematically maintained. However, he failed to justify the consequences of not having a well organised HRM team. This was a major limitation in the approach of Mac Duffie (1995). During 1990’s corporates started to integrate supply chain management in their daily operations, this was then realised to be a strategic advantage for the development of the company (Shub & Stonebraker, as citied by Khan, 2013). Studies conducted by Zheng (2008) describes how human resource management (HRM) boomed and started gaining reputation because it had a substantial impact on the development of various organisations. Similarly, other functions of HRM assisted the companies to increase their level of supply chain optimisation (Wellins & Rioux, as cited by Khan, 2013). On the flip side, few authors believed in a different theory and they found out that supply chain management (SCM) has an indirect impact on the HRM practices (Kinnie et al., 2013). Traditionally the HRM functions are categorised into four distinct categories which are; training, staffing, compensation & evaluation (Dessler, 2008). Recent studies have proved that these different functions of HRM facilitates the overall success of supply chain optimisation (Shub & Stonebraker, 2013). According to Harland (1996) SCM is a inter related network of systems, which needs to be systematically carried forward to get the maximum returns. Furthermore, Cox (1999) believes that supply chain management is a technique that is closely connected with lean production systems. Nevertheless, the philosophy of SCM is developed in such a way that it links itself with the customers, human resources, suppliers and other stakeholders of the company (Yoiung, 2005).
Sales promotion practices in apparel retail sector
Previous studies in the area of retail sales predominantly in leather industry have proved that sales promotion activities have a direct relationship with the total level of sales achieved. Dhir and Jain (2011) stated that in the past decade Indian apparel market had developed considerably however, only 16% of it was organised. Moreover, their study found out that the women’s sector has substantially improved. Pal (2010) supports the findings drafted by Dhir and Jain (2011) ; explains how Indian apparel market had evolved through many revolutions. Pal (2010) concluded with a statement that in the next five years the growth rate of Indian apparel market would increase by 80%. The study conducted by Rahil (2007) focused on the challenges the textile and leather industry faced while going through many transformations. According to Liu and Yuping (2007) the buying behaviour of the customers were dependent on the promotional activities performed by the companies and was dependent on the way they treated their customers. Heerde and Gupta (2003) explained how the promotion activities impacted the overall success of the firm which consequently resulted in supply chain optimisation, their work was moderately similar to that of Liu and Yuping (2007). However, it was proved that 74% of sales were motivated by the promotions made by different brands (Heerde ; Gupta, as cited by Ram, 2014).
Supplier selection dilemma
The supplier plays a crucial role in the overall value generated by any organisation, due to this reason selecting the best supplier from the available pool of alternatives is an imperative task which any company needs to make (Shin, as cited by Pakasoy, Ozceylan ; Weber, 2013). Sometimes when any product or service fails to meet the quality standards set by the firm, additional costs and efforts are needed to be placed to fix the problem (El Saadany ; Jaber, as cited by Pakasoy, Ozceylan ; Weber, 2013). It has been noted that in recent times a clear shift in the production of leather goods from developed countries to developing countries has been clearly visible, this shift was mostly because of the cost of production of leather goods and availability of cheap labour (Sharif ; Mainuddin, as citied by Ghafoor, 2012). On the other hand, Turkey had increased the level of their leather goods productions because of the upgrades they successfully achieved in the area of business policies, technologies and infrastructure advancements (Yamamoto, 2005). Similarly, South Africa had also increased their leather goods productions in the last decade (Jordaan ; Eita, as citied by Ghafoor, 2012).