Fashion / Garment / Apparel Industry
Standard Operating Procedures (SOPs) for Fashion / Apparel Industry
According to a study by the University of Florida, modern humans started wearing clothes some 170,000 years ago. That being said, we must also consider that because of the lack of holistic scientific evidence, it is also difficult to state any precise timeline with absolute authority. Whenever clothing might have originated, today, clothing is one of our most fundamental needs. Anything more than that is a matter of choice, comfort, and fashion.
Every human being has clothing requirements making it a massive business industry in a world of over 7 billion people. From handkerchief and socks to formals and casual wear, the apparel or clothing industry fulfils all our dressing requirements. Apparel businesses include manufacturers, retailers, exporters/importers, distributors, franchises, etc. And for each one to succeed in their respective business, their products and associated services must live up to the demands and expectations of the market they are serving or intending to serve. Here, our focus is not on business ideas and marketing strategies but business processes and operations.
Challenges Faced Due to Poor Processes and Management Systems
Lack of Availability of Products on Time and Timely Delivery. There are many reasons why an apparel business may fail to make the right products available in the right quantity at the right time. These include inaccurate demand forecasting, untimely procurement of stock/inventory, slow operations in warehouses/distribution centres, lack of logistical planning, etc. It leads to losses in sales and revenue and failed opportunities to serve customers and build customer confidence. And the root of all these causes is a lack of a process-oriented approach in executing the mentioned operations. Even when demand forecasting is done, certain, predefined step by step procedure must be followed. In procurement decision-making also, a planned process must be followed to ensure that triggers are initiated on time, purchase quantities are correctly identified, right authorizations are followed, concerned departments are duly communicated so that they can play their part, etc.
Returns. Returns may include final products, products in-process, or raw materials. At any stage in the value chain, a product may be returned to its previous source in the supply chain for not complying with the required standards. For example, customers may return products because of product defects, logistics-inflicted damage, failing to meet customer expectations in terms of quality and sizes, etc. This leads to unnecessary space consumption in warehouses, additional costs in the form of reverse logistics, additional workload of delivery staff and those employed in the distribution centres/warehouses, etc. And defective outputs emerge from poor manufacturing processes, lack of strong QMS (Quality Management System), poor packaging and handling procedures, poor storing standards, poor return management processes, etc.
Managing Multiple Channels. With omnichannel quickly becoming an effective strategy to cater to a wider customer base, more and more businesses in the industry are opting to go with this new standard. In omnichannel operations, functions like inventory control, staffing, logistics, procurement, warehousing, and distribution have to be planned and executed with higher synchronization. For example, in procurement, purchase ordering has to be optimized as far as possible to cover the requirements of both offline and online stores when ordering from the same supplier. When the goods arrive in the warehouse/distribution centre, there has to be proper segregation for both channels. Incorporating such business requirements into the operational functioning is not possible without strong processes defined in advance.
Poor Vendor and Supplier Management. From the supply of office stationeries, materials or final products to fulfilment of outsourced services like IT and housekeeping, vendors and suppliers play a vital role in keeping a business running. This calls for defining how they interact with a business enterprise for providing the required supplies and services. If there is no operational framework for managing them and the value they deliver, it will affect business functioning and the results so produced. For instance, if there is no provision in the procurement system to specify the delivery timelines, suppliers will prioritize their business commitments over that of their clients’ in delivering inventory.
Weak Operational Coordination. Every business enterprise has to create room for operational coordination. It will not happen on its own. The operational planning has to be done keeping in mind how the different functions and teams are related to various business processes. If these operational linkages are broken, it will slow down the processes and create scope for mistrust, mistakes, frauds, etc. We can use the example of product returns in an apparel business having poor processes and systems. In such businesses, when returns become an issue, the quality team blames the production team, the production team blames the suppliers, the suppliers return the blame to the purchase team, and while all this goes on, it is the brand name that takes the beating.
Cost Optimization. Ecommerce changed the pricing game for retail apparel businesses. If you could list your product cheaper by even a small margin, the deal is yours. Even a thin pricing advantage to customers can make huge differences in sales and revenue. Poor business process management (BPM) deprives businesses of this opportunity. For example, combined scheduling of delivery and pick up based on routes can help bring down the costs of reverse logistics. The scheduling activity must be defined to incorporate this objective. If managers or supervisors in the distribution hubs have no scheduling procedure to follow, they will go by their judgement that may or may not be best for business.
Benefits of SOPs to Garment or Apparel Industry
Timely Procurement. We discussed earlier that because of poor process management businesses in the apparel industry will experience making the materials and goods available to their clients and customers leading to a dent in revenue and reputation. To ensure that the procurement function is executed with planned perfection, Standard Operating Procedures (SOPs) must be followed in letter and spirit. Procurement SOPs are expected to define how the purchase decisions will be made and the flow of work will take place towards achieving the business and functional objectives of procurement.
Reliable Inventory Control. Some important questions that need to be answered in inventory management are when should be reorders initiated, who will raise and authorize a formal request for inventory requirements, what should be the ROQ (reorder quantity), who will check and approve/disapprove the quality of incoming and outgoing inventory, etc. There is a sequence in which these activities must take place. The output of each step serves as the input for the next step. For example, if ROQ is not mentioned in the purchase request by the inventory or warehouse team, how will the purchase department know? Or say, if the checks are not done for incoming inventory before it goes for processing, the supplier may not accept any complaint on quality or quantity parameters later on. SOPs can ensure that the right procedures are defined and mapped in advance following which the flow of activities will be as it is required. Nowadays, like other business processes, inventory management is also highly automated. Once the SOPs for various inventory operations are defined, these can be used as critical inputs for process automation.
Quality Assurance. Apart from providing a pricing advantage to customers, eCommerce also raised the bar of customer expectations in terms of product quality and product return and refund feature. And ensuring quality standards became a powerful tool to win or lose customer loyalty. But the essence lies in the fact that defects should be exceptions, not a norm. SOPs used in QMS (Quality Management System) help apparel businesses in building processes where adherence to quality standards can be strictly maintained. Quality filters can be incorporated across the supply chain under the control of a business enterprise. It will significantly eliminate the chances of defective or poor quality inventory entering a business.
Smooth Operations in Warehouses and Distribution Centres. Warehouses and distribution centres play the role of storage and distribution. In other words, these two functions are responsible for the flow of inventory internal to a business. These two constitute the physical juncture between the sources of supply and destinations for distribution. How operations are managed in these places affect both the ends of incoming and outgoing inventory. SOPs help to ensure that the operational activities to be carried out here are planned to meet the various business and functional objectives pertaining to inventory management.
Better Coordination with Business Associates. For an apparel business, associates include suppliers and service providers. How these entities interact with a business enterprise is defined by the agreed policies and procedures. If there is a strong operational framework, it will be easier for both businesses and their associates to function with efficacy. In the absence of a strongly defined way of working, the standards of performance and output will take a beating. Such deviations could appear by ways of quality compromises, delay in payments, miscommunications, frauds and misappropriations, etc.
Why BPX as SOP Experts
We are a management consulting firm specialized in SOP writing and development with over eight years of experience across a multitude of industries. Our team comprises engineers, MBAs, financial experts, business process consultants, SOP consultants, and SOP writers who help us bring diverse perspectives to the table in finding the best solutions to problems. And in delivering our process consulting and SOP writing services, we follow planned, systematic, and proven ways of working while observing the highest standards of business morals and truthfulness.
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