specifying requirements n planning supply for garment sector

8/14/2019 Specifying Requirements n Planning Supply for Garment Sector

1/16

International Purchasing & Supply ManagementModular Learning System

Specific to Garment Sector

Module 2

Specifying Requirements& Planning Supply

Unit 1Introduction

This module covers how to determine and specify all the different dimensions relating to thegoods and services that a garment enterprise needs to purchase.

What to purchase?

T-shirt, Shirt, Trousers, Dress etc.

How much to purchase?

50, 500, 50,000, 500+500+500

Where and when delivery should be made?

At Delhi Airport/Delhi Dryport (Patparganj), Dadri (Noida)

15th January 2010, 31st December 2009

What support & services are required of supplier?

24x7 communication

Allocation of one merchant for the client account.

What information the supplier will need in order to perform effectively?

Purchase Order/Letter of Credit

Fit Approval

Print Approval


2/16

Unit 2What Needs to be Specified

What needs to be specified?

Operational, capital, production & non-production

Specifying the product or service.

In terms of performance, functionality, design, colour, durability.

Specifying quantity, delivery & service.

Where, when, how the product or service should be delivered

What service is expected from the supplier

The process of specifying requirements and planning supply

How the process of specifying purchases and planning supplies should be

conducted? How supply targets are established?

How supply targets serve as a basis for developing & prioritising purchase

specifications?

WHAT NEEDS TO BE SPECIFIED

The suppliers needs complete information in order to reliably meet the buyers expectation.

If the information is not complete and correct, there is disruption in production plan, delaysin supply (clarification, correcting errors with supplier)

WHO SPECIFIES?

Merchant along with the help of Purchase Department specify. Purchase department bringssupply market knowledge/commercial awareness.

Types of requirements

a. Operational requirement Maintenance suppliers, stationery etc.b. Capital requirement Building, photocopier etc.c. Production requirement Fabric, trimsd. Non-production requirement Spare parts, tools, fuel, machine oil.

WHAT CAN BE SPECIFIED

A. Specifying the required product/service.In case of a garment, the key components are fabric and accessories. When ordering, forexample, a mens T-shirt, one needs to specify the quality of fabric (cotton, polyester,viscose, blend etc.) and the quality of accessories (button, zipper, thread etc.).

Information like specification sheet, measurement chart etc. also need to provided to the

supplier to ensure correct fit of the garment. The accompanying details should include thecutting, stitching, finishing and packing instructions.


3/16

B. Specifying the performance requirementIf we take the case of proactive and stringent buyers, the performance parameters of agarment are informed to the supplier at the time of order booking. The parameters includefactors like colour fastness to rubbing and washing(colour bleeding etc.), tear strength (theamount of stress a garment can sustain), dimensional stability (shrinkage due to washing). In

some countries, the law prohibits import of garments which have been dyed using azochemicals or which have a more that prescribed nickel content.

C. Specifying Inspection requirementsThe supplier should be aware of the level of inspection. Generally AQL 4.0 or AQL 2.5 isused in garment manufacturing. AQL means Acceptable Quality Levels. Simply put, AQL isdefined as the maximum no. of defects per 100 units that, for the purpose of samplinginspection, can be considered satisfactory as a process average. An AQL 2.5 is morestringent that AQL 4.0.

Inspections are required in various areas and at various stages. They are specified by the

buyer whenever they initiate business with any new factory. The method of inspection offabric and accessories is specified. All types of fit approvals and final approvals required togo ahead with production is informed to the supplier. The buyers also specify at the outsetthe inspections that will be required during various stages of production (pre-productioninspection, initial inspection, mid-inspection, final inspection etc.)

D. Specifying Quality Assurance documentsIn order to closely monitor the quality control systems in a factory, the buyer prescribes aninspection format which has to be diligently filled by the quality inspector and the report sentto the buyer as well as the quality control department of the factory. This may be generateddaily or as prescribed by the buyer.

E. Specifying packing requirementsFor any garment order it is very important to issue the packing instructions.For an order of mens T-shirt in 3 colours viz. red, yellow and blue and sizes small, mediumand large, it could be solid packing (one carton can have only one colour and one size eg.few cartons will have only red colour in small size, few other cartons will have only redcolour in medium size and likewise for other colours). In case assortment packing is advised,colours and sizes can be mixed as per assortment instruction.In the packing instructions one also needs to specify whether each garment needs to be put inindividual polybag or one set of garments should be put in a blister (blister is a large

polybag).Another option in packing is that the garment can be folded and put in the carton (Flat pack)or they can be put on hangers (GOH = garments-on-hanger).

F. Specifying Transport requirementsWhen giving an order to a factory the buyer should discuss the method of transportationwhether the goods need to be sent by train or by sea or by aero plane depending on thefragility of the product as well as urgency to receive the goods. It can also be a combinationof modes of transportation. For eg. The goods can be sent from the factory in Gurgaon to the

New Delhi Railway Station by truck. The goods can be loaded on train and sent to Mumbai.In Mumbai, the goods can be stuffed in the container and sent to New York by sea.

G. Specifying quantity and delivery


4/16

The purchase order for one style of garment should clearly specify the quantity. Forexample, an order of mens T-shirt style XYZ in colour Red, Blue and Green in sizes ExtraSmall, Small, Medium and Large, the order quantity table would look like this:

STYLE XYZ : MENS SHORT SLEEVE T-SHIRT

SIZECOLOUR

EXTRASMALL

SMALL MEDIUM LARGE

RED 100 200 250 50

BLUE 200 400 500 100

GREEN 100 200 250 50

Sometimes when the buyer has limited space in the warehouse, instead of taking the deliveryof entire quantity, they split the quantity and instruct the supplier likewise.

Total quantity 50,000 pcs.25000 pcs delivery

Delivery schedule for STYLE XYZ : MENS SHORT SLEEVET-SHIRT. Total quantity 50,000 pcs.

Quantity Delivery

25000 pcs Jan 11, 2009

15000 pcs Jan 25, 2009

10000 pcs Feb 8, 2009

Since garment manufacturing is labour intensive, there is always a variation in quality levelsof each garment. The quality of the garment can be controlled, but only to an extent. Theefforts are made to avoid the rejections but they cant be eliminated totally. At the outset of

an order it cant be determined how many correct pcs. of garments the factory will be able todeliver. As an international norm, a factory should deliver the order qty with a variation of5%. For an order quantity of 100 units, the factory can deliver a maximum quantity up to100 + 5% =105 (in case the rejections are very less) and a minimum quantity of 100 5% =95 (in case of substantial rejections). This clause is mentioned in the documents given by the

buyer to the factory while booking the order.

H. Specifying Point of DeliveryWhen the price and delivery dates are being negotiated, it is important for both buyer as wellas supplier to finalise the point of delivery as well. For example, if the price of mens T-shirtis agreed upon as $5.00 ex-Mumbai F.O.B., it clearly means that for $5.00 the supplier based

in Gurgaon will manufacture the T-shirt, bear the cost of transportation to Mumbai and alsobear the documentation charges over handing over to customs. Beyond that point, the seafreight, insurance etc. and all other charges will accrue to the buyer.Some examples of points of delivery are ex- Gurgaon, ex-Delhi railway station, ex-DelhiIndia Gandhi International Airport, ex-Mumbai, ex-Rotterdam port, ex-buyers warehouse.

I. Specifying supplier service and responsivenessAs a buyer, one needs to explain the level of responsiveness expected from the supplier eg. amerchandising team allocated to handle the buyers orders. Reply to all e-mails within 24hours is highly desirable. A credit of 3-6 months would be an added advantage. Today every

buyer also requires the supplier to create new ranges every season, make range presentation,offer new fabric qualities and most important of all - Develop samples within specified timeframe!!


5/16

J. Other informationSpecify what is and what is not included in the purchase

E.g in exports, specify whether supplier will pay for transport from Delhi to Mumbai,insurance charges and custom charges, sea freight, air freight. (These issues are

generally covered by use of INCOTERMS) Information like Contact Person & details, Company Profile etc.

What purpose is the product being purchased for, eg. Sporting activity, promotionalevent, special discount offering, casual wear or active sports

Any legislative policies? Eg. No azo dyes, No child labour, No nickel/no palladium,Needle detection machine mandatory.

Companys buying policies for example- L/c at site, DEPB, T/T payment- Discount / cancellation in case of delays- Buying at specified price points

- Seasonal bookings


6/16

SPECIFYING THE PRODUCT OR SERVICE

Product/service specifications serve to define factors such as design, performance, andfunctionality. Size, colour, safety requirements, labeling are other issues to be included.

Over as well as under specifying are equally bad.

Under specifying: may leave room for error- leaving supplier to establish the best method toachieve them. The resultant product may or may not perform as required.

Over specifying: specifying something to a point that it will be impossible to source. In thiscase the buyer must bear the risk if the product doesnt perform.

PRODUCT SPECIFICATIONS

There are different types of product specifications.

a. Brand or trade names. Eg. Lycra, Tencel, poplin by Century. b. supplier/industry codes industrial catalogues. Thread shade card by

Telephone, Pantone book.c. Samples fit samples, button or trim samples to be followed for production.d. Technical specifications

- Physical characteristics (count, construction, gsm)- Design details (specification sheet, measurement chart, flat sketch, colour

standard, print artwork, checks/stripe details)- Tolerances (+ 0.5 cm tolerance in measurement, AQL 2.5 or 4.0)- Materials used (Cotton, Polyester, Viscose)- Process/methods involved in production (1 way cutting, fabric to relax for 24

hours before cutting, embroidery process, enzyme wash etc.)- Maintenance requirements (wash separately, iron reverse)- Operational requirements (shrinkage, stretch, colour fading)

e. Composition specification [eg. (i)45% viscose/40% cotton/15% linen (ii)120gsm, 100% cotton, single jersey, bio-polished, mercerized (iii) trims 100%wool.] Third party verification is often required by the buyer.

f. Functional & performance specification: active sports wear breathability,stretch, resistance to sweat, colour fastness 3 to 4, seam slippage 25 lbs,shrinkage 1 to 2%, Dimensional stability and appearance after laundering

Maximum -5 % length x width

FIGURE 3.2-1 WHEN TO USE DIFFERENT PRODUCT SPECIFICATION TYPES

spec type where appropriate

Information on product specifications

Can be obtained form sources like

a. specialized industry journals, directories, technical handbooksb. business contacts (suppliers & other buyers)c. fairs, exhibitions


7/16

d. nift, aepc, nitra etc.

specifying testing & inspection requirements

a. review and approval at design stage (fit/size set approvals)

b. pre-production, inline, final inspectionsc. f.p.t/g.p.t prior to shipmentd. o.k. to ship report required while sending the shipment.

internal standardisation

it means reducing the numbers of different spec to the extent possible. internalstandardization has many benefits:

a. reduces time and effort needed to develop specs.b. allows a firm to buy larger quantities of fewer items and negotiate better prices.

c. large volumes with fewer vendors results in better understanding andcommunication.

d. fewer items need to be stocks, cost of inventory less.

lack of internal standardization often results in increased costs.

vaule analysis/value engineering (vlaue)

valve is a structured problem solving approach that is used to develop ne design and improveupon existing designs. simply put value seeks to increase the value of something.

value = function/cost

value can be increased by :

1. providing the same function at a lower cost e.g?2. increasing the quality/scope of the function at the same cost e.g?3. increasing the function proportionately more than the cost e.g.?

the value approach

the preparation phase define the scope of analysis and select a team. a cross functionalteam (merchant, designer, fabric and trims purchases, production coordinator) should carryout the exercise. it may be useful to involve a supplier representative. the marketingdepartment and customers may be involved depending on what is being value engineered.the team should frame the objectives of the study.

the information phase collect info about the product (mens t-shirt) being analyzed,including what itss intended to do (covers the body), its performance levels (should bestylish, different, should retain its physical and visual attributes even after 15-20 washes),what components are used (single jersey, pique, rib, buttons, stitching thread, packingmaterial, mode of shipping) and what the costs are (including cost of inventory, manpower

employed to control warehouse etc.)


8/16

the functions analysis phase : the team must establish the functions that the product isexpected to perform primary as well as secondary functions.

e.g. mens t-shirt : primary function to provide coversecondary function serves as a style statement, status symbol.

having established the functions, allocates the costs amongst the functions. it is radicallydifferent way of looking at cost (i.e looking at the cost of functions rather that cost ofcomponents)

speculation phase.the team must now review the functions in order of cost highest first. it should discussquestions like.

it should discuss questions like

is the functions necessary?

does it add value?

is its cost proportional to its usefulness?

what else achieves the same function?

is there anything better for the intended use?

can it be sourced for less?

can it be made in a different way?

can standard product do the same job?

once all the ideas have been captured, they should be refining and combined into a small no

of potentially workable solutions.

the development phase

different groups within the team may be set up to develop each alternative potentialsolution.

the evaluation phase.

such potential solution should be reviewed by the full team to zero in on whichsolution is to be taken forward based on how well are the objectives, costs and risklevels met.

the implementation phase.

an implementation team should be formed which will prepare the specs for thechosen design solution against which the suppliers would quote their prices.

when to undertake value studies

even when standard items(mens t-shirts) are available, a value study needs to be undertakenwhen competition forces prices down, and the firm needs to cut costs to maintain profits(reliance selling denim pints for rs. 199.00)

specifying quantity, delivery and service

when planning the quantities to be purchased, a buyer needs to be able to determine thelikely demand over a given period of time.


9/16

it is important since

1. demand changes over a period of time2. quantities purchased should not be substantially deviate from actual.3. its required when negotiating long term contracts with suppliers.

4. stock replenishment systems require the estimates to calculate requirement in thesupply lead time, determine safety stocks & order quantities.

a continuing demand generally reflects four characteristics:

a.

past future

b.

past future

trend demand follows continuous progression

cyclical fluctuations demand increase or decrease our expended period of time

(economic recession)

seasonality demand is often predictably above or below average due to weather,

holidays, festivals etc.

random variations accessional random events that affect demand in ways that are

not generally repeated.

forecasting demand

expert opinion

market testing

quantitative analysis

using computer based materials planning system.

Expert opinion involves consulting experts for their opinion.

a. scenario analysis experts determine the likely demand scenario based on certainassumptions. involves identifying best and worst care scenario and then settle for the

most likely scenario. b. deplane technique group of experts make predication anonymously &

independently. such prediction is compared/debated and a consumed is arrived at.


10/16


11/16

-----------------------------

period demand quantities quantities xweighting factor

weighted quantities

-4 10 10 x 0.05 =0.50

-3 25 25 x 0.10 =2.50

-2 30 30 x 0.175 =5.25-1 35 35 x 0.275 =9.625

0 50 50 x 0.40 =20

straightaverage

30 total weight = 1.0 =37.875

mwa is better than msa, but, again it is only suited to relatively stable demand pattern.

moving exponentially weighted forecast

same as mwa except weights are taken from an exponential series.

recalculating projection for each period is easier than mwa.

new forecast = past forecast (past forecast error)= past forecast = (actual demand past forecast)

the value of is normally between 0.1 and 0.4.higher means more notice is taken o recent demand.

by computers we can find value of that minimizes the errors.

bias persisted under or over forecasting is know as bias computers use trackingformula that detects and alert when there is a bias.

example

period(t) 1

past forecast ft 50

actual demand dt 60

forecast error (dt- ft )

+10


12/16

ft+1

given < =0.2actual demand=72

past forecast as calculated for period 1=52

trend and seasonality adjusted forecasts

requires a computer based forecasting system

refer to page 4p 51 for solved example

simple linear regression

applicable when one independent variable influences the demand of a product and therelationship is linear.

d = a { bx p}

d = the forecasted demand for mens t- shirts

a = a constant which expresses the value of demand when the independent variable p is setto zero.

b = the slope ( or regression coefficient ) which expresses the causal relationship betweenindependent p and dependent d variable

p = the price of mens t-shirts

the values of a and b are developed from past experience i.e. by analyzing past data.

multiple linear regression

applicable when 2 or more independent variables influence the dependent variable in alinear relationship.

d= a { b,x p} { b2 x t}

d= forecasted demand for t-shirtsa = maximum production capacity of the firm

p= price of t-shirtt=temperature

b1 = quantity of t-shirts by which demand increases or decreaseswhen price p decreased as increases by rs.10.00

b2 = quantity of t-shirt by which demand increases or decreases when temperature tincreases or decreases by 10c

today there are computer- bases methods which normally provided a wide choice of trendline forecasting techniques , with the ability to test each technique in order to decide which is

best suited to the available data.


13/16

process of forecasting demand

collection and analysis of past dataadding deterministic overridesmanagement review and action

collection and analysis of data

take the historical demand datacleaner it for nay analysis (eg. stock outs etc when demand for those period appear to bezero)

select the best fit technique to forecast

adding deterministic overrides

new conditions arise (change in fashion, production tech logy, govt. policies, usedpreferences, prices etc)

the above may comes the past demand patterns to require adjustment or in some cases setaside altogether |

statistical forecasts based on post data is like driving a car using only rear view mirror. thedeterminative over rides are road sinus up ahead warming the car driver, for example to slowdown.

management action

regularly check actual demand agist forcasts.understand the reasons for variancestake required actions e.g. reduce costs, better designing, more realistic pricing, better

promotions.

determining the quantity to order.

the main issues to consider are

the conomic order quantity

this approach seeks to balcne two dimensions that affect costs.a. inventory holding costs (tied up capital and costs of physically holding stocks) which

increase with order size.b. ordering costs (admin costs of placing orders) which decrease as order size increase.

stock replenishment systems

it takes eoq as starting point, along with demand forecasts and desired levels of safetystocks.

two approaches can be adopted to determine the quantities and timings of orders:a. re-order level replenishment systems this type of system triggers orders whenever

inventory drops to a pre-determined level.

b. periodic review replenishment systems in this case, the time interval betweenorders is fixed instead of order quantity. at each fixed interval the order quantity is setto cover demand over the next period.


14/16

just in time : deliveries are made by suppliers directly t the companys production line.

call off, framework or blanket contracts buyer specified the total amount to be purchasedin a season as per forecasted demand (+ certain margin to account for forecast error) and

then take specific deliveries as and when needed. this reduces admin & stock holding costs.

specifying delivery

includes specifying delivery times and schedules, the point (s) of delivery , transport andpacking. the type of stock replenishment system and the constrict type influences the timingor orders and deliveries. e.g. mens t-shirt with embroidery on contrast collar pillar is indifferent women fabric and body is single jersey 100% cotton)

the leas time available to a supplier depends on when certain infor is received form thebuyer,

the most critical longest lead time component is the fabric at the time of order, the buyerhas to specify the fabric detail or specify the data by which the fabric details will beconfirmed. based on this data (and if fabric is regular) the supplier can quote the del date. theother design details via. emb designs, thread colour, mment chart many come at a later datewhich also need to be specified by buyer.

if the buyer wants to approve the fit sampled etc. colour of fabric and emb. design @ officein eu or usa itll affect the del. data.

lab testing and inspections prior to shipment affect the lead time.

to ensure on time delivery, buyer should demand time & actioncalendar from supplier and later take progress reports against the plan buyer may have tovisit the supplier to ensure that the supplier has sufficient spare capacity.

liquidated damages clause may be specified in the contract (which is signed by supplier)which further reinforce the importance of on-time delivery.

for availability of supplies for the long term, the buyer should enter into long termcontractual arrangement with more than one supplier.

specifying the delivery point

the lead time depends on the point of deliveryif ex-factory date is 1st june thenex-delhi airport will be 2nd juneex-mumbai sea port will be 7th to 10th juneex-rotterdam port will be 28th to 30th june.goods shall be released form customer in 3-5 working daysgoods can reach the mother warehouse in 2-3 days.

specifying the method of transport and packingmethod of transport by sea

- by air


15/16

method of packing - flat pack or stand up pack- individual packing/blister packing- hanger packing + flat pack- hanger packing + hanging in container

- poly bag quality (peld, pp)- carton quality (3 ply, 5 ply, 7 ply)- carton marking- packing list/packing criterion

specifying supplier service and responsiveness

a. supplier responsiveness.

specific merchant allocated for the account

new designs + costing to be given within 3-5 days.

daily production & finishing reports to be sent. e-mail replies within 24 hours.

b. technical support & trainingin case of special stitching machines, computer embroidery machines or new software formerchandising & production, following must be specified.

no. of work days of technical supervision or assistance during commissioning and

start up

training requirements

provisions for a minimum no of hours of technical support.

c. maintenance and repair

e.g. repair technician to be on site within 48 hours of notificatione.g. critical spare parts to be delivered within 24 hours.

d. other information

contact information technical, purchasing and finance contact person and contact

details

background inform the supplier should be educated about buyers organization interms of what products & services the firm offers, which markets it caters, its

position in key markets, its turnover, no of employees, total purchase budget.

statement of intent what occasion is the t-shirt being bought for, how important is it

high/low, whether its a part of new launch or a discount campaign.

basic for evaluating the offers

buyer should specify approximate quantity-high, very high, low very low, target price+ quality level, very near deliveries or late deliveries.

e. applicable legal requirements

buyers should communicate the legislative requirements to the suppliere.g. azo testing is mandatory.


16/16

specifying requirements n planning supply for garment sector

Documents