In the past two years, the global economy has been sluggish, terminal sales have been sluggish, and the clothing industry’s inventory has continued to rise. In this context, apparel companies are looking for a way to out-discount sales, increased e-commerce channel launches, transfer to second and third-tier cities and other commercial methods are various.
The above-mentioned various methods belong to the “elimination of inventory” and “disposal of inventory” after the occurrence of inventory. To fundamentally solve the inventory problem of the clothing industry, it is necessary to start from the source of the inventory-the supply chain, to maximize “Prevent” inventory generation.
“Customer Order Separation Point” and the Production Organization Mode of the Apparel Industry
1.1 Understand “customer order separation point”
An important goal of supply chain management is to meet customer requirements while maintaining a reasonable inventory level. In other words, it is to make a trade-off between “inventory level” and “customer service level”.
How to weigh the inventory level and the service level, there is an important concept in the supply chain management “Customer Order De-coupling Point” (CODP for short, as shown in Figure 1), which refers to how to determine the location of the inventory to make Certain operations or entities can operate independently in the supply chain. For example, a piece of clothing is stored at a retailer, and the customer takes it off the shelf and pays for it, while the agent and brand cannot see the process of placing an order. Here, the retailer’s inventory is the buffer between the customer and the manufacturer, and this inventory point is the customer order separation point. The closer the separation point is to the customer, the faster the customer can be served. The location of this point involves a trade-off between quick response to customers and greater inventory investment.
Understanding the corporate strategy and market environment is very important for the choice of “customer order separation point”. Companies that use finished product inventory to serve customers are called Make-To-Stock companies; companies that assemble pre-installed modules according to customers’ specific requirements are called Assemble-to-Order companies; Companies that produce customers from raw materials to parts to components are called Make-to-Order companies; Engineer-to-Order companies are customers and companies design together, and then from From raw materials to parts and then to components for product production.
1.2 The production organization of the clothing industry
The customization of clothing is similar to the model of order-oriented assembly, order-oriented production, and order-oriented design. Many domestic clothing companies have already tried this, and the results are currently good. This attempt conforms to the trend of the garment industry’s transformation from manufacturing to service and adapts to people’s requirements for personalized clothing. In the clothing personalized customization model, the “customer order separation point” is closer to manufacturing, which is an innovation of the clothing industry business model, belongs to the category of the clothing industry’s strategic decision-making, and has an important impact on inventory investment
The clothing industry inventory we are talking about is concentrated in stock-based production companies, and a large number of companies in the clothing industry belong to this mass production method. In mass production methods, only sales activities are driven by customer orders, and companies reduce the finished product inventory of existing products by moving the “customer order separation point” (CODP) position back.