SCM Case Polo Discussion

Serena | Jason | Sam

Supply Chain Management Case : Polo Ralph Lauren & Luen Thai -Using Collaborative Supply Chain Integration in the Apparel Chain

Dr. Benjamin Yen SCM Case

AgendaIntroduction

Relationship Among the 3 Partners

Framework for SCM Collaboration

Traditional SCM Vs. Collaborative SCM

Use of Technology

The Supply Chain City


Introduction

Dr. Benjamin Yen SCM Case 4

Discussion

Examine how Polo’s relationship with Luen-Thai has evolved and examine the impact of collaboration on Polo’s business model?


Relationship


RelationshipThree players within the strategic collaboration

• Polo, Luen Thai, Ruentex

A few important concerns:• Sharing information would be critical• fulfill the market gap for shorter lead times• post-quota environment…• Using the old IT tool such as CAD, the transferring

information between designers and manufacturers was still difficult

• mismanagement of inventory, production and delivery.


Their relationship gradually development since the mid-1990s

Initial involvement (1996)• upstream and downstream activities• five major processes• three major problems

Second involvement (1998)• “partner relationship” with tier-one partners• critical three major industry factors• still not enough…

Relationship


Third involvement • implemented a number of initiatives• ASNx/FGA• However, fragmented…

Fourth involvement• strengthen their supply chain collaboration across each

dyad as well as the whole triad• D2S supply chain model• a “collective” view of relationship…

Conclusion: collaboration is essential in the future development for all the parties.

Relationship


Discussion

Develop a framework to understand the collaborative supply chain issues between the three partners.



D2S –Polo would outsource the key areas design and logistics processes to Luen Thai and would involve horizontal integration among the 3 partners


Three Dimensions to Supply Chain Collaborations Issues

Strategic ProcessualOrganisational



Strategic – Need to align their strategic philosophies

Is it a platform that can allow all 3 partners to take advantageof future market opportunities

Intra-organisation to inter-organisation perspectives – require real time information exchange across all business processes of the 3 partners

Reconsider the value they add to the supply chain

Revenue Sharing Model



Processual - Need to consolidate different business processes as compared to business functions

What Integrative Mechanisms should they use

What Performance measures should they adopt

Organisational – Need to decide how to build the collaboration infrastructure e.g. Oshkosh, VF, Supply Chain City

Current use of technology & integration is fragmented

Current supply chain is asset based and designed for mass manufacturing and collaboration would involve a serious resource & financial commitment



Discussion

Highlight supply chain conceptual underpinnings and differentiate between traditional supply chain management and supply-chain collaboration in the context of Luen Thai and Polo.


Traditional SCM vs. SC Collaboration

Traditional SCM


Traditional SCM vs SC CollaborationSC Collaboration

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Traditional SCM vs SC Collaboration

Summary• Traditional Supply Chains usually operate through

temporary cooperation, rather than act as organized & integrated clusters

• Limited & fragmented technology result in inefficient information exchange

• The “D2S” Strategy allows partners to share information, better manage inventory, and thus significantly reduce costs

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Discussion

Examine how technology will enable collaboration amongst Luen Thai and its partners, and the effect of such collaboration?


Current Use of Technology

Ruentex: supporting collaborative SC• Adopted the SAP system to restructure corporate

resources• Built a database for information query and

knowledge accumulation

• Instant order checking, 3D display, won international quality certification...

• Quickly response to customer needs



Luen Tai: The interdependency between Polo is driving LuenTai to transform from an OEM to a service-oriented, D2S provider

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Ralph Lauren: building collaboration• Introduced Internet-based Electronic Data

Interchange (EDI) helped partners to design common interfaces and build a common platform

• Vendor Managed Inventory(VMI): will help Polo automatically create purchase orders based on warehouse or store demand levels in real time.

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TechnologyEffects of Technology

One key element in SC collaboration is real-time/near real-time information exchange, including design, sourcing, manufacturing

The Internet acts as a platform for information management and address the “Bullwhip” Effect

The collaboration leads to growing interdependency: decreases mutual audits & inspection of incoming materials reducing costCreate visibility of Luen Thai’s logistics process

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Discussion

How does Supply Chain City initiative complement the D2S initiative? What are the synergies?



D2S is Luen Thai's business model that will provide customers with a one-stop shop of supply chain services ranging from design and development; material management; manufacturing and logistics.

• Supply Chain City is “One location” solution – all supply operations from design to development to sample making



D2S customers are looking for suppliers that can provide more products and services, perform faster but still offer a competitive cost.

• Supply Chain City provides access to all technical support enabling Luen Thai to take up additional processes

• Close to major hubs like HK and Guangzhou to help Luen Thai provide logistical services

• 30 upstream partners on site (Vendors & Customers)• Standardises work procedures across partners



Through D2S, achieve speed-to-market solutions that will help our clients bring the right apparel with the right volume, to the right place and right time.

• Supply Chain City provides instant communication and information exchange helping to achieve speed to market & flexibility

• Fast product turnaround• Substitutes information for inventory • Reduced lead time



The first Supply Chain City in China is located in Dongguan, 30 minutes away from the Hong Kong border. Another one is currently being developed in Qing Yuan, 30 minutes away from Guangzhou.

Documents

SCM Case Polo Discussion