Challenges for Vertically Integrated Apparel Manufacturers


An apparel supply chain is traditionally vertically integrated. The procurement of raw material, spinning, weaving, dyeing, processing, designing, manufacturing, and selling all the way through to branded retail stores and concessions, are all completed under a single market entity.

The advantage of apparel supply chain vertical integration is that it allows companies to have the intrinsic ability to control all aspects of their process. The disadvantage is that vertical integration also creates more pressure to maximize efficiencies in the supply chain by reducing inventory, whilst simultaneously maintaining super-responsiveness to volatile market demands. The key benefit overall however, is the ability to pick up trends and create collections far more quickly than manufacturers or retailers with a more disparate supply chain. There is a basic correlation between the different types of fashion products that retailers produce (basic, basic-fashion and high-fashion) and their respective demand uncertainty – which may concern retailers operating in more than one segment of the demand grid.  The connection between the three broad types of products and their volatility highlights why an apparel supply chain needs to adapt at both the top level and within the product portfolio itself.

The winners will be those who are able to analyze large amounts of disparate data, making informed decisions the backbone of robust supply chains. Optimized processes and contained costs are the Holy Grail for apparel retailers and manufactures.

This white paper looks at the key trends influencing supply chain management for vertically integrated apparel manufacturers and retailers, highlighting the need to reevaluate systems and processes so that retailers can truly delight today’s empowered customers.