Supply Chain Management for Fabric Manufacturers in Thailand
by JADE WONG
An increasingly popular strategy adopted by businesses worldwide, Supply Chain Management first made headlines in the early 1980s; however, it was only during the mid-1990s when this concept garnered mainstream acceptance. This article attempts to understand what Supply Chain Management entails, how it assists business processes and how it ties in with the fabric manufacturing industry in Thailand.
Supply Chain Management - What is it?
Simply put, Supply Chain Management is the supervision of the entire production process of a good or service - from its inception (e.g. preliminary market research and planning) until delivery to end-user. Active and evolutionary Supply Chain Management processes are aimed at boosting the overall customer experience and satisfaction, whilst ensuring that the company’s operating expenditure is efficiently and effectively spent without compromising product quality.
The Two Flows and How They Impact Your Business
The most visible of these processes are the physical product flows, what the NC State University’s 2017 article on Supply Chain Management refers to as, the “transformation, movement and storage of goods and materials.'' In this supply chain process, the movement is often downstream from the source of the product (e.g. fabric manufacturing, fabric distribution etc.) to the hands of the customer. Interestingly, customer service is also embedded in this process and on occasion, there can be an upstream flow of products when customers decide to return their products for various reasons. Costs are, of course, invested most wisely in downstream physical flows (making sure the product reaches the customer in a satisfactory manner the first time around); however, untoward incidents may occur - for example, product damage when in transit - and it is important that the upstream processes are given due attention through the allocation of sufficient resources in facilitating this flow. Well-trained customer service teams who respond in a timely, sensitive and helpful way help build the company’s reputation and maintain customer satisfaction.
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Less prominent, yet equally vital, in Supply Chain Management is the information that flows to and from the company. In these cases, the flow is bidirectional and can involve a multitude of information which includes, but is not limited to: product descriptions and costings, inventory levels, customer order information, company financial statements, etc. Sometimes, financial flows (the economic considerations in Supply Chain Management) are considered part of information flows although some publications prefer to analyse it independently. Today, Information Technology systems like barcoding, and even more advanced programs like SAP (which Acacia Fabrics is in the process of implementing!), help manage and monitor the large amounts of information produced and received by the company every day. In essence, the digitization of the information ensures every cent and stock piece is accounted for.
Successful Implementation of Supply Chain Management
Supply Chain Management does not only revolve around the product within a particular business but heavily involves human networks between different businesses and stakeholders. Supply Chain Management is therefore not just the process of the production of a good or service, but also the facilitation of professional relationships which have the potential to impact its reputation, either positively or negatively. As Lambert and Copper (2000) write, successful Supply Chain Management implementation requires “cross-functional integration” and can be smoothly implemented through inter-departmental co-operations. Hence, communication is key, especially with front line employees who will be dealing with the day to day procedures. A gradual roll-out of the information to various teams appears to be more effective than having to experience a sudden surge of it. A win-win situation arises as this allows the teams affected by the changes to contribute valuable feedback for improvement whilst also giving them enough time to adjust and adapt to these changes.
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- Never Rush!
It is undeniable that the implementation of Supply Chain Management is a long and arduous process, yet it is never advisable to rush as it may expose the company to greater risk of operational disruption. While the prospect of a quicker Return of Investment (ROI) facilitated by a quicker roll-out of the Supply Chain Management plan can be enticing, it may be more advantageous to the business in the long-run to adhere to a more realistic roll-out timeline. Although it is surely ideal to implement Supply Chain Management as quickly and efficiently as possible, it is important to approach the timeline conservatively as this ensures a systematic implementation of new systems - Riffel (2015) suggests implementing these changes in phases as it can potentially mitigate risk as it enables the executing team to achieve a high level of quality work “without feeling the time pressure to cut corners.” A gradual and stable ROI is certainly less risky than a quickly peaking but volatile one.
Textile Industry in Thailand
In 2005, Thailand established a free trade agreement with Australia (TAFTA), hence urging all fabric manufacturers to increase their competitiveness. The results of a preliminary study published by Kritchanchai and Wasusri (2007) revealed that Thailand fabric manufacturers fell behind other leading players in the South-east Asian Industry like Singapore and Indonesia. The duo has discovered from their findings key areas of improvement for Thai fabric manufacturers, namely poor production planning, underdeveloped information systems, disorganized inventory control and weak warehouse management. While the current scene may have shifted since 2007, it is clear that the solution to circumvent these key issues and assist Thai fabric manufacturers in achieving true efficiency and effectiveness is to implement proper supply chain management.
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- Cooper, M.C., Lambert, D.M. and Pagh, J.D., 1997. Supply chain management: more than a new name for logistics. The international journal of logistics management, 8(1), pp.1-14.
- Kritchanchai, D. and Wasusri, T., 2007. Implementing supply chain management in Thailand textile industry. International Journal of Information Systems for Logistics and Management, 2(2), pp.107-116.
- Lambert, D.M. and Cooper, M.C., 2000. Issues in supply chain management. Industrial marketing management, 29(1), pp.65-83.
- Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D. and Zacharia, Z.G., 2001. Defining supply chain management. Journal of Business logistics, 22(2), pp.1-25.
- NC State University - https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management-scm
- SearchERP - https://searcherp.techtarget.com/definition/supply-chain-management-SCM
- Supply Chain Digitial - https://www.supplychaindigital.com/scm/4-keys-successful-supply-chain-implementation
- Thomas, D.J. and Griffin, P.M., 1996. Coordinated supply chain management. European journal of operational research, 94(1), pp.1-15.