THE NETWORK APPROACH AS AN INSTRUMENT FOR IMPROVING VALUE CHAIN CREATION IN APPAREL MANUFACTURING

Abstract

Creating value chains for decades have been a common practice in the apparel industry with the aim to improve cost management. This approach involves building value chains in the sector of garment manufacturing as well as providing an opportunity analysis with regard to cost optimization for each link in the chain. Thus, cost optimization occurs through improving business processes within the enterprise. It is emphasized that the process of creating apparel value chains have traditionally been viewed locally, within a single company which has to consider market demand, carry out design and engineering works, deliver logistics support, manufacture, store and sell its products. However, in modern realia, value creation is greatly affected by garment manufacturers’ contractors, their partnership being the heart of building value into products. It is argued that the apparel product value, apart from clothing companies, is created by different legal entities, i.e. suppliers, outsourcers, external consultants and others. In turn, partner companies create their own value chains which closely resonate with apparel value chains. In addition, given the apparel industry dependence upon seasonal sales, fashion trends and other factors, the garment companies have to obtain information on consumers’ preferences. It has been proven that value creation is strongly influenced by the company relationships with their partners. With this in mind, it is proposed to apply a network approach to apparel value chains which is able to harmonize the interests of all stakeholders. The suggested model of the network approach assumes vertical integration with main suppliers, outsourcing of design and engineering services and gaining information from distributors who deal with end customers. This approach will contribute to cost optimization of garment manufacturing along with enhancing the product competitiveness.