Case analysis by Shinee.

WORLD CO
World co is Japanese apparel manufacturer.
Principal activity to operate women apparel business, handling mainly men and children
garment specializing in knitted garments.
Involved in developing a nationwide retailing network based on SPA( speciality stores retailers
or private label apparel) business model
Operation carried out through division : -
I. Womens clothing
II. Men clothing
III. Accessories and Jewelry
IV. Children clothings
V. Others.
Traditional fashion industry business- problem in sustaining corporate growth , made difficult to
ensure continuity in fast moving business(maintain once brand or operation expanded rapidly)
Creativity was not universal
How the maximize customer value and ensure continuity growth?? pursued various structural
reforms under SPARCS (Super, production, apparel, retails and customer service) concept.
SPARCS aims to minimize inventory loss and loss of sales oppurtunities by unifying and
integrating the business process.
- Consists of the synthesis of manufacturing, apparel and retail segments,
conventionally separated in the fashion industry, while enhancing responsiveness to
changing customer demands.
- Focuses on the production system, and is aimed at providing flexible and rapid
response to customers need by synchronizing the entire flow of product related
operations from the development of material to production, manufacturing of hand
sewn apparel products and distribution to the outlet to the weekly operational cycle
of outlet stores.
- So the lead time is shortened and respective loss of sales opportunities and
inventory in the marketing and production process are minimized.
- Incorporate 4 platforms :
I. core operation retail outlets (personnel, accounting , IT)
II. merchandising,
III. development
IV. production
SCM based on strategies of SPARC model.
- Synchronizes a customer relationship, order fulfillment, supplier relationship to
match the flow of services, materials and info with customer demand.
- SCM serves as weapon at world co, small reduction in cost for manufacturing firms can
increase profits a lot.
Inventory handling system different from US manufacturing and retailing firms
- In flow of raw materials & supportive goods in controlled by World
- Finished good inventory are allocated through the SPA stores and other distribution
channel of World asap.
- Each retail location controls the inventory inflow by placing an initial order and then
additional or adjusted orders to the factory
- Each firm in a supply chain of world depends on other firms for services such as
production, quality control, materials and info about future demand forecasts and
fashion trends.
- Because firms are owned and managed independently, the actions of downstream
members of the supply chain can affect the operation of upstream members. Which
means upstream must react to the demand placed by downstream members in the
supply chain.
- If poorly implemented info & integrated system negative effect- bullwhip effect.
- To minimize negative effects firms should concentrate attention on some external
and internal cause.
- SPARC model focuses on these causes and allow world achieve minimum disruption
for both upstream and downstream members.
- External cause- volume changes managed by SPARCS
- increased demand fabric backup managed by factories.
- decrease demand, supplier of fabric carry risk for 1 quarter material
ordered by world. In case of huge drop in demand, the firm carries
the risk only for goods produced from 37.5% or ordered fabric not
for all 100%.
- Late deliveries and undefiled shipments from suppliers to factories
or from factories to retail stores are not likely to happen because the
initial order of raw material placed by world very early and based on
future demand forcast( this approach increases slack time for
factories , decrease unexpected late deliveries.
- Internal cause - fluctuation
- Engineering changes such as different production process control
by HQ and factories. Measurement & patterns were sent from HQ
to factories.
- Technical designers and pattern makers developed detail
instruction to line worker to avoid manufacturing problem. So
engeenring changes even though frequent due to new product
introductions, did not affect the overall flow of inventories.
- labor shortage, such as strikes and high turnover had a very low
possibility as Japanese people are usually very conservative and
highly awarded for their job.
-Product promotions did not affect overall inventory flow. Sales
were scheduled at the end of season and included only item that
were not sold during regular season. Sales promotion serves as
clearing tools from old fashion items.
-Before the season starts, initial forecast that was developed with
respect to the customers needs and age group was ready(giving
some overall picture of real future demand. Forecast made for each
location separately during the season were used in future order
placements of SPA stores. Errors in a physical count of items in stock
were very small and didnt cause shortage or too much inventory in
the store.
-About 40 different brands are managed separately. Each of them
has specific target segment of overall Japanese market of clothes.
- the marketing process of world co focuses on issues as
determining customers to target, how to target them, what
products to offer and how price them and how to manage
promotional campaign. High number of brands gives World the
opportunity to develop products that will satisfy customers with
specific tastes and to be one of a kind for its customers.
Supplier relationship world co focusus on the interaction of the firm and upstream
supplier such as supplier of fabric and factories that produces finished goods.
Supplier selection decision of the company are based on three factor :
I. Delivery factor (lead time and time delivery)
II. Quality of the supplied material (all raw material are checked at factories
before proceed futher)
III. must be located in Japan & among the cost efficient
- World co and its supplier are partners. They help each other such as information
on future buying intentions is shared with seller. SPARCS model allows supplier
to make better forecasts of future demand and schedule production process
accordingly.
- It helps to put order that can be handled in a timely manner and to adjust the
product development accordingly. Eg : if company faces unexpected demand
from particular SKU and have not ordered enough fabric, it dosent change a
supplier firm, it develops a product with similar quality but that uses fabric
which is available.
- Suppliers are guaranteed a certain volume of units each year to reduce the risk
in a venture(SPARCS model help to develop a supply chain where the supplier
become extension of World)
CONCLUSION : Measures of supply chain of world Co are the great example of SPARCS model
efficiency. SPARCS contributed to World short lead times in its supply chain.
Advanced information and communication methods keep factories in direct
contact with the corporate office. Dynamic demand forecasting allows for
effective responsiveness.























SWOT ANALYSIS
Qualitative Analysis

Industry Analysis:
Threats:
Lack of Channel Power
Uncertain Demand
Seasonality
Inventory Risk

Opportunities
Fewer Variations In Store Assortments
Fast Changing Fashion Trends (Social)
Low Inventory Levels
International Manufacturing

Company Analysis
Strengths
Worlds High Inventory Turns (5/year) (Operations)
47% Gross Margin
Keen Competitive Intelligence- reviewed competitors brands every six months (Marketing)
Decentralized Merchandising Operations- each brand was autonomous (Operations/Marketing)
High Responsiveness (Operations)
Versatile Line Workers
Recruited talented individuals who were unafraid of change and could motivate others (Management)

Weaknesses
Weak Pay-for-Performance System (Management)
Low Brand Awareness
Left over inventory is markdown 50%