The Structure of the Apparel Industry

Broadly the skeleton of the apparel supply chain is as following,

Level 1: Textiles & finding manufacturers (Mill Level)
Level 2: Apparel manufacturers, contractors, retail product development (Apparel Manufacturing Level)
Level 3: Manufacturer-owned retailers, outlets, catalog retailers, warehouse
Level 4: Consumers

Level 1: Mill Level - Textiles & finding manufacturers: Fabrics, zippers, threads, trims, and buttons.
A few apparel manufacturers are vertically integrated with textile production. some apparel manufactures buy from vendor’s open stocks.

Level 2: Apparel manufacturing level 
Apparel manufacturers: Marketing, merchandising, and production. Apparel production is categorized in two types.

     1) Perform manufacturing within own facilities and employees.
     2) Contact some or all of the manufacturing functions to other firms. Contracting even categorised in 3  sub category. These are like -

         i) Cut-make-trim (CMT) contactors: supply operators, machines, and thread and make garments.
         ii) Full package program (FPP): source materials and develop patterns as well as make garments. Greater financial responsibility. FPP might higher CMT contractors.
         iii) Specialty contractors: provide services such as pattern grading, cutting, embroidering, belt making, fabric pleating, or screen printing.

Level 3: Retail level
Retailing means selling clothing to the consumer. Apparel manufacturers may be forward vertically integrated into the retail sector through owning their own stores.
Retailing format: there is seven different format of garment retailing as following,
  • Catalog retailers (Examples: Land's End, L.L. Beans). 
  • Department store retailers (Examples: Dillard’s, Macy’s). 
  • Internet retailers 
  • Mass retailers: offer consumer goods in a discount with self service environment (Examples: Wal-mart, Target, and J.C. Penney). 
  • Specialty retailers: offer a large selection of a limited line of consumer goods with narrow target customers (Examples: Victoria’s Secret, Nordstrom). 
  • Ware house/wholesale clubs (Examples: Costco, Sam’s Club, BJ’s). 
  • Retailer outlets: clearance centers of the previous season’s and year’s. 
Retailers use multiple channels of distribution and channel integration.
Example: Department store + Web sites+ Catalog distribution.

Level 4: Consumers
Decisions at all levels are based on forecasts of customer demand.

Extracted from a presentation by S.H. Shin

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