JNB537 Strategic Procurement - Supply Management

Need Risks in Supply Chain of Textile Industries. Just List out few risks related to supply chain .

Answer

Introduction

In general, the demand associated to the business environment and the trends in the emerging markets associated to the textile industry is seen with the presence of intricacies and dynamism associated to the industry. The risks in the different areas of the SCM in the textile industry are depicted with production planning, inventory, maintaining of inter-organizational relationships and performance measures. Moreover, the concept of fast fashion is overcoming the traditional practices in the apparel industry. The main discourse of the report has considered the different nature of risk in the textile industry. In addition to this, it has also considered the various implication of the risk areas along with the recommendation plan for such risks (Börjeson and Boström 2018).

Risks in Supply Chain of Textile Industries      

    

The main classification of the risks in the supply chain needs to be considered as per the following points:

Supply Management

The risks pertaining to the supply management in the textile industry needs to be identified as per the following heads:

• Supply Network Design
• Supplier Relationship
• Process of the supplier selection process
• Uncertainties of demand, supply lead times, supply cost and supply capacity pertaining to supplier order allocation
• Supply Contracts (Nazam et al. 2015)

Demand Management

In several situation there may be a considerable amount of mismatch with the capacity and mitigation of risks. The consideration of the various types of the risk associated to the demand management are listed as follows:

• Shifting demand across time- This is depicted as per the changes in the revenue management and seasonal demand management. This is able to capture the sentiments of the different segments of the customers who pay varied range of prices at different moments of time (Venkatesh, Rathi and Patwa 2015).
• Shifting demand across market- it may happen that there are changes in the seasonal demand in for the textiles which may lead to revising the overall pattern in the SCM. This is further seen to be identified with the overall changing trend of the consumer demand with variations in the seasonal demand.
• Shifting demand across products- The shift in the demand for the individual products may be a result of several factors which are identified as per the seasonal demand or changes in fashion for a particular apparel. These changes are likely to bring significant transformation in the textile industry with the variations in the product demand (Chopra and Sodhi 2014).

Product Management

The variations in the complexity of the manufacturing process are considered with the trade-off among them to take full advantage of profits. These are considered with the reduction in the uncertainties associated to:

• Process Sequencing- This may be a result due to the presence of a modular design
• Postponement Strategy- This is related to the uncertainties considered with the sequencing of the manufacturing process in the SCM.

Information Management

The risks in the textile industry associated to the information management needs to be identified as per the fisher classification of the risk management. Some of the important items of the risk in the supply chain associated to the information management are listed as follows:

• Strategies for fashion products- There may be situation that the fashion products have faced reduced level of inventory which is associated to the main concern for reduction in the demand.
• Strategies for the functional products- Longer life cycles are seen to be critical for generation of accurate demand and forecasting of the customer demand of the textile products. However, it is not always possible to keep proper track of the different types of the concerns related to the timespan for which there will be demand for a particular product (Martino et al. 2017).

Material Flow Risk in Textile Industry

Operational Level Risk

1. Sourcing Risk- There may be only a single source of supplier which is related to flexibility, selection of supplier and supply of the products associated to capacity risks.
2. Risk associated to making product- Products processing may face several complications which are associated to the problems associated to production capacity and design.
3. Risk related to Delivery of the products- The demand associated to the volatility and balance in the seasonality are considered as per the excess inventory and obsolescence risks.
4. Scope of SC- This is considered as per the volatility in the price and commodity risks (Boström et al. 2015).

Risk in External Value Chain

1. SC Scope- This is considered with the risk associated to the partnership relation
2. Financial Flow Risk- This risk is depicted in terms of the financial strength of the SC partners
3. Risk in information flows- These risks needs to be identified as per the risk pertaining to the information accuracy, information system security risk and possible disruptions. In addition to this, some of these various types of the other risk in this segment needs to eb identified as per the risk associated with outsourcing risk (Duhamel, Carbone and Moatti 2016).

Macro Environmental Risks

• SC Scope- The alternative energy and degradation towards environments are also seen as lack of material flow
• Financial Risk- The financial risk needs to be depicted as per the exchange rate risk

Functional Risk

• SC Scope- The absence of the key customers is considered as the main form of the material flow risk.
• Financial flow risk- This risk needs to be considered as per the cost and price risk. In addition to this, this risk is also considered with the financial handling risk.
• Information flow Risk- This risk is associated to the intellectual property risk (Ngai et al. 2014)

Conclusion

The depictions of the study have identified the various types of the risk in the textile industry pertaining to Supply Network Design, Supplier Relationship, Process of the supplier selection process, Uncertainties of demand, supply lead times, supply cost and supply capacity pertaining to supplier order allocation and Supply Contracts. Moreover, the shift in the demand for the individual products may be a result of several factors which are identified as per the seasonal demand or changes in fashion for a particular apparel. These are directly considered as some of the main form of the risks pertaining to the textile industry.

References

Börjeson, N. and Boström, M., 2018. Towards reflexive responsibility in a textile supply chain. Business Strategy and the Environment, 27(2), pp.230-239.

Boström, M., Jönsson, A.M., Lockie, S., Mol, A.P. and Oosterveer, P., 2015. Sustainable and responsible supply chain governance: challenges and opportunities. Journal of Cleaner Production, 107, pp.1-7.

Chopra, S. and Sodhi, M., 2014. Reducing the risk of supply chain disruptions. MIT Sloan Management Review, 55(3), pp.72-80.

Duhamel, F., Carbone, V. and Moatti, V., 2016. The impact of internal and external collaboration on the performance of supply chain risk management. International Journal of Logistics Systems and Management, 23(4), pp.534-557.

Martino, G., Fera, M., Iannone, R. and Miranda, S., 2017. Supply chain risk assessment in the fashion retail industry: An analytic network process approach. International Journal of Applied Engineering Research, 12(2), pp.140-154.

Nazam, M., Xu, J., Tao, Z., Ahmad, J. and Hashim, M., 2015. A fuzzy AHP-TOPSIS framework for the risk assessment of green supply chain implementation in the textile industry. International Journal of Supply and Operations Management, 2(1), p.548.

Ngai, E.W.T., Peng, S., Alexander, P. and Moon, K.K., 2014. Decision support and intelligent systems in the textile and apparel supply chain: An academic review of research articles. Expert Systems with Applications, 41(1), pp.81-91.

Venkatesh, V.G., Rathi, S. and Patwa, S., 2015. Analysis on supply chain risks in Indian apparel retail chains and proposal of risk prioritization model using Interpretive structural modeling. Journal of Retailing and Consumer Services, 26, pp.153-167.