Quick Response Implementation in the Fashion Industry

Abstract

QR systems represent just-in-time inventory strategic partnership between suppliers and general merchandise retailers and involve supply techniques that allow retailers to change demand as a result of fashion trends and seasonal variations in sales. The QR strategies in the fashion industry are different from the ordinary strategies of any other business organization. Therefore QR is one of the best policies in fashion industry with important consequences at the level of electronic data interchange and automatic replenishment system, improving planning and activity-based cost accounting and performance measurement systems, reducing the time between the moment of the sale and the one of the replacement of goods on the retailer's shelf. Taking these into consideration, in this paper we want to focus on the development of quick response techniques in fashion retailers. Will present advantages and disadvantages of QR implementation and discuss the impact of seasonality on QR strategy. Therefore, the purpose of this paper was to investigate some significant cases of quick response implementation in the fashion industry and we concluded that, in general, retailers and their suppliers have accepted QR as a response to the fast fashion trend. [PUBLICATION ABSTRACT]

Headnote

Abstract

QR systems represent just-in-time inventory strategic partnership between suppliers and general merchandise retailers and involve supply techniques that allow retailers to change demand as a result of fashion trends and seasonal variations in sales. The QR strategies in the fashion industry are different from the ordinary strategies of any other business organization. Therefore QR is one of the best policies in fashion industry with important consequences at the level of electronic data interchange and automatic replenishment system, improving planning and activity-based cost accounting and performance measurement systems, reducing the time between the moment of the sale and the one of the replacement of goods on the retailer's shelf.

Taking these into consideration, in this paper we want to focus on the development of quick response techniques in fashion retailers. Will present advantages and disadvantages of QR implementation and discuss the impact of seasonality on QR strategy. Therefore, the purpose of this paper was to investigate some significant cases of quick response implementation in the fashion industry and we concluded that, in general, retailers and their suppliers have accepted QR as a response to the fast fashion trend.

Keywords: fashion industry, quick response, fast fashion, global quick response

JEL Classification: O33

Introduction

ECR (Efficient Consumer Response), QR (Quick response), which are management strategies specific to the supply chain, are two concept that have arisen due to the increase of the competitive pressure and the consumers' demands, against the background of the active cooperation between the partners within the supply chain management (SCM).

Both concepts were coined by a US consultancy company, Kurt Simon Associates and have reached recognition in the theory and practice of SCM in general and in fashion history in particular [Cachon, 2009]. Thus, the dynamics of the fashion industry generated the implementation of this concept at the level of chain supply management as a defining prerequisite for quickly answering the ever changing demand. Companies such as Zara and Benetton have been promoters of this trend.

Although the QR strategies have been analyzed in the specialized literature, which highlights advantages such as reducing the time elapsed between the reception of the order and the delivery, the decrease of stocks, acceleration of the stock rotation speed and the increase of the cash flow, the majority of the studies conducted in this field have approached the concept more from the suppliers' point of view, and less from the consumers' point of view [Hunter, 1990; Fisher & Raman, 1996; Eppen & Iyer, 1997; Holweg, 2005; Caro & Gallien, 2010] .

Starting from these premises, this article will present the defining coordinates of QR, as well as its specificities in the fashion industry and will analyze the results of some researches on the implementation of QR by companies that are beneficiaries of these strategies.

1. New trends in the fashion industry

1.1. The Global Quick Response and the Fast Fashion concept

The need to survive in the more and more intense international competition, given the shiftfrom self-production to outsourcing to foreign low/cost companies and the migration of the apparel production from developed countries to developing countries, has forced companies to be more and more concerned with adopting commercial practices aimed at providing a better receptivity and flexibility in dealing with the demands of the market. Thus, the QR strategies, the "just in time" techniques and the agile supply chains have resulted in the reduction of the buying cycles, of the performance of the partners involved in the supply chain and the decrease of the delivery term. As for the definition and the content of the QR strategy, Lowson and Vinelly have had remarkable contributions:

- a state of responsiveness and flexibility in which an organization seeks to provide a highly diverse range of products and services to a customer/consumer in the exact quantity, variety and quality, and at the right time, place and price as dictated by real-time customer/consumer demand [Lowson et al., 1999].

- modifying the current organizational system of the chain and speeding up the physical and information flows, in both directions, between all the phases of the value operative chain system [Forza & Vinelli , 2000].

Just as with ECR, the main instrument for applying QR is EDI (the electronic data interchange), which led to a new orientation of the management of operation and commercial technologies, particularly with respect to the content of the supply processes. The computer assisted design (CAD), automated re-supply (AR), computer integrated manufacturing (CIM) and total quality management (TQM) is representative to this end. These technologies enabled companies to enhance their operative performance, to respond fast to the demand by reducing the delivery terms and increasing, at the same time, the flexibility of the food chain and the quality of communication between manufacturers and retailers.

The analysis of the advantages of QR (table 1) reflects, for the participants in the supply chain, the increase of effectiveness in terms of global, commercial and marketing performance, such as: increase of sales, limiting the price cuts, the decrease of the stock exhaustion and the increase of the cash flow.

The globalization, the mobility, the dynamics and the changes occurred in the fashion industry after 1990 have generated the emergence of new industry specific concepts: the Global Quick Response (GQR) and the concept of Fast Fashion (FF) or throwaway.

"Global Quick Response (GQR) is a strategy that seeks to achieve accurate, rapid and cost effective response to specific markets dynamically by leveraging the potential of dispersed global supply and production resources through lead time compression, effective real time information management, flexible pipeline management and optimal logistics and distribution systems" [MacCarthy & Jayarathne, 2009].

The specificity of GQR, compared to the established approach of QR, consists in combining global resources with the quick response, so as to satisfy the demands of the market in the shortest possible terms, given the need to render SCM costs more efficient. The increase of the mobility in the apparel market has led to various initial advantages, in terms of manufacturing costs, but also to limits generated by the long distances between members of the supply chain, the geographic spread, various forms of relationships and types of property at the level of participants in the value chain. As a consequence, it has become absolutely necessary to approach QR in a global vision, by implementing processes that would ensure the prerequisites of reducing the delivery terms, so as to answer, in real time, to trends and clients' demands. GQR refers to both the general processes and the structure of the apparel industry, and to the demands and the existing challenges and opportunities; three key processes can be identified here: the design and the development of the new products, the initial order and the process of completion or repeat of the order.

"Fast Fashion is defined as an expression that is widely accepted by a group of people over time and has been characterized by several marketing factors such as low predictability, high impulse purchase, shorter life cycle, and high volatility of market demand" [Fernie & Sparks 1998, Bhardwaj 2009].

Understanding the FF concept requires a double approach: from the perspective of the supplier and of the buyer. Thus, from the supplier's point of view, the emergence and implementation of the FF strategies have been generated by the need to provide an increased flexibility to the supply chain, against the background of the increased assortment diversity and rapid changes in the structure of the demand.

As for the consumers' approach, FF is a concept resulted from the mutations occurred in the consumers' behaviour, particularly with regards to their wish to find immediate diversity and satisfaction. The increase of the consumers' sensitivity to style and fashion and of the awareness of the fashion phenomenon have led to the supply of high fashion at low price, which turned the throwaway market - or the fast fashion market , by its new name - in a trend, or a norm [Bailey 2001, Tokalti et al. 2008].

Certainly, the FF strategies will maintain their importance in the apparel industry in the next 10 years as well, with direct effects on the purchase manner of consumers and reaction to trends.

1.2. A comparative analysis of the quick response and fast-fashion systems

In a brief definition, the quick response mechanism consists in the following: conveying information on the sales (quantitatively and structurally) directly to suppliers (through the above-mentioned technologies), reducing the assortment plan established, by the supplier, depending on the evolution of the sales, manufacturing the requested products and renouncing the production lines with slow sales, given the existence of flexible production techniques. The factors that determine the implementation of this strategy are the cooperation among the members of the supply chain and the existence of the technical support required for conducting technical and logistic operations. In operative terms, the main difference between the system of the traditional supply-delivery chain system and quick response system is the capacity of the latter to ensure a quick correlation between offer and demand. In addition, the fast-fashion system combines two major elements [Passariello, 2008, Rohwedder and Johnson 2008, Cachon & Swinney, 2011]:

1. Ensuring short execution terms for production and distribution, able to ensure a good correlation between the offer and the uncertainty of the demand, by means of quick response techniques. Meeting these terms requires combining the resources of production with complex information systems, which facilitate the monitoring, ensures the frequent restructuring of the stocks and effective distribution methods [Cachon & Swinney, 2011]

2. A "latest trend" design of the product - enhanced design techniques. In order to meet this requirement, the tastes of the consumers and of the industry are monitored, so as to identify the hidden, unpredicted whims and to reduce the execution terms for that model.

Starting from the quick response strategy models existing in the specialized literature, Cachon, 2009, presents the order of the processes of the existing production systems (figure 1) and developed his own mathematical model on the fast-fashion system.

This article does not aim at covering, in an exhaustive manner, the existing quick response (figure 2) and, respectively, the fast fashion models; nevertheless, we would like to underline that the element of novelty brought by Cachon's model consists in approaching separately the impact of enhanced design over the consumer's buying behavior and of the interaction between enhanced design and rapid response, with the purpose of generating a fast fashion type system.

2. Implementing QR strategies in the fashion world- case studies

Both the perception of the necessity and the degree of implementation of the QR strategies varies from country to country and from industry to industry. Moreover, the research conducted in this field highlights important differences in the SQM partners' (producers, commercial intermediates and consumers) understanding of the role and the importance of QR in the economic performance. Last but not least, we should notice a difference in terms of level of implementation between companies which activate within the same field or have similar dimensions. Irrespective of the degree of implementation of the QR strategies, it is certain that the closing of partnerships between retailers and suppliers from various markets, as well as promoting their own brands [Tyler et al., 2006] have led to an increase in profits.

With a view to explaining some similarities and differences in the applicability of the QR strategies, we will present, further on, features of these strategies in the British fashion industry, as it is considered representative for the fast-fashion systems, , as well as the results of implementing Quick Response strategies in the Japanese fashion world .

2.1. Implementing QR strategies in Great Britain

The QR strategies and the "fast fashion" system have been successfully implemented by companies such as Zara, H&M, Mango, New Look and Top Shop; the British fashion industry had been recognized globally for implementing these policies [Barnes and Lea-Greenwood, 2006]. The emergence and implementation of the QR strategies are due to the price pressure exerted on the producers and retailers by the dominant players, who have had, from the early stages of the fashion industry, flexible supply chains [Hines & Bruce, 2001].

Against this background, the need to survive in a competitive environment has determined some retailers, such as New Look and George, to use Eastern resources for reducing costs, thus providing the premises for supplying high level fashion at a low cost on the throwaway market. Due to the increase in the distance between members of the supply chain, such commercial orientations have resulted in an increased complexity of the supply chains, in the introduction and development of the practices and technologies of JIT and CIM - computer integrated manufacturing, TQM - total quality management, with a focus on shorter supply lines and of the quick response on the market [Bruce et.al, 2004]. Other consequences of implementing the QR strategies are the increased diversity of the offer with a higher fashion profile for clients, the adding of an intermediate season to the previous calendar, which had 2 seasons, reducing the average execution terms of the models and the production terms - 6 to 12 months - for many international retailers (Gap, for example).

Apart from the decrease in the production price, which has represented a triggering factor for implementing the QR strategies, and the "demystification" of the fashion process had decisive role to this end [Sydney, 2008]. The intense media coverage of the models and styles presented in the fashion shows and on the catwalks, starting with 1999, has drawn the consumers' attention and increased their interest in the sense of the immediate availability of the fashionable apparel. In response to these demands, retailers such as Zara, H&M, Mango, New Look and Top Shop adopted these models quickly, in order to attract consumers and to introduce in the stores interpretations of the catwalk models in a short period of time, from three to five weeks [Barnes & Lea-Greenwood 2006].

The issue of the costs generated by the rapid adaptation of production to the consumers' demands (which is not the topic of this article) is particularly complex; it is important to underline that the specialized literature refers to the need of additional research on the analysis and the strategy for establishing a price in the apparel industry. For example, even though it was demonstrated that the fast-fashion system leads to higher balance sales price, this does not mean necessarily that a fast-fashion company (such as Zara) has higher prices than a company which uses traditional production (Cachon, 2011). Studies on the willingness of consumers to pay more for ecological and sustainable fast fashion apparel are also of particular importance -for example, organic apparel and organic cotton apparel, sold by Zara and H&M [Bhardwaj & Fairhurst, 2010] .

2.2. Implementing Quick Response strategies in the Japanese fashion world

The Japanese fashion industry is a particular case of QR strategies implementation; it is a highly segmented industry, which has developed in a fast changing environment. With a view to highlighting these features, we will present, further on, the emergence and the evolution of the QR concept and the features of this strategy in Japan. We will dedicate a special part to the comparative analysis of the QR approaches in Europe, USA and Japan. The Japanese market has known QR specific approaches, previously to the adoption of this concept by the American and European managers [Fernie, 1994]; it is important that, even today, many companies use the QR concept occasionally, without being aware if this fact, as the appetite for variety of the Japanese apparel market is a "must" for the members of the supply chain, who aim at providing frequent orders, with a variety of apparel.

Officially, QR concepts were launched in the Japanese fashion industry in 1994; according to the classic definition, it represents a time-based strategy of survival of the domestic apparel market [Stalk & Hout, 1990], faced with the low-priced imported apparel [Finnie 1992]. In time, as a consequence of the regionalisation of the global economy and of the industrial development of the foreign markets [Gereffi, 1999], the goals and even the competitive advantages conferred by the implementation of these strategies on the Japanese market have diversified. Thus, the objective of the QR strategy, of obtaining advantages from drawing close to the US (domestic) market, by decreasing the production terms and by increasing flexibility [Finnie, 1992] is no longer a central goal of the QR practices in Japan; at present, an important advantage of this strategy is the supply from domestic resources. Moreover, as a consequence of the regionalization process of the global fashion industry [Gereffi, 1999], the QR programs in other countries/regions have become more and more viable, thus diluting the original proposal brought by the QR concept.

The features of the QR strategies in Japan are generated mainly by the following factors: the prevalence of the creation and marketing functions in the Japanese apparel companies, the opportunities conferred by the use of QR, following the prospect of the economic development on the Pacific Coast and the creation of a market which is similar to the Japanese one [Azuma, 2011].

A comparative analysis of the QR approaches in Europe, USA and Japan reflects differences in terms of priority destination of the production, the control over the supply chain and the nature of its members, who are mainly interested in implementing the QR strategies, priority competitive elements. We will approach these aspects further on.

Unlike the US, the Japanese QR strategy is not built on a simplified/consolidated textile-apparel-retailers supply chain and on the standardized technologies. Another difference is that the US fashion industry produces, in particular, for the international market, which is controlled by the large retailers, the true promoters and the main members of the supply chain who take advantage of QR [Scarso 1997; Taplin & Ordovensky 1995], whereas in Japan the main beneficiaries of the QR strategies are the apparel companies. Unlike the Europe and the US, the "super QR" examples, referring to the reduction of the execution terms and modifying the products with a short life cycle are noticed in particular at the level of large wholesale apparel producers and of retailers in the SPA category - Specialty Store Retailer of Private Label Apparel- [Fortune 1998; Abernathy et al. 1999]. Last but not least, the proprietary competitive advantage provided by the QR strategies in the USA consists in the costs in the basis segment of fashion, while in Japan it resembles the Italian one, as practice a bridge type of fashion, between the exclusive one and the high fashion.

Conclusions

The analysis of the QR strategies in this article was based on specialized literature sources and the research conducted in this field, with a view to gaining a proper understanding of the importance, content and applicability of this strategy. Although there are differences in terms of perception of the place of these strategies based on standardized technologies in the SCM, of the manner and degree of implementation, depending on the country/field/company, the QR strategies are, essentially, a competitive advantage. Reducing the execution terms of the orders and deliveries, increasing the pace of stock building at the retailers' level, with various fashionable products, are major advantages of the QR and fast/fashion systems.

In our future research, we will exceed the scope of this article, by looking into the degree of awareness and implementation of the QR strategies in the Romanian fashion industry. Although a preliminary investigation conducted to this end had highlighted a low degree of knowledge of these practices, at least at theoretical level, ever since the mid 90's regionalization of production, given the cheap workforce had an impact in Romania as well, by involving small apparel companies in the production for export.

We will conclude by underlining, once more, the impact of the receptivity and the flexibility of the supply chain operations on satisfying the demands of the fashion consumers, against the background of the active cooperation among its members.

References

References

Azuma. N. (2011) "The Reality of Quick Response (QR) in the Japanese Fashion Sector and the Strategy Ahead for the Domestic SME Apparel Manufacturers" available on-line at http://2011.fashion-networks.com/images/article_pdf/qr_lrn.pdf

Barnes, L., , Lea-Greenwood, G. (2006)" Fast Fashion", Vol. 10,3rd Edition of the Journal of Fashion Marketing and Management, an international journal, Emerald Group Publishing, available on - line at http://www.emeraldinsight.com/journals.htm?articleid=1881824&show=html

Cachon G., Swinney, R. (2010) "The Value of Fast Fashion: Quick Response, Enhanced Design, and Strategic Consumer Behavior" available on-line at http://opim. wharton.upenn.edu/~cachon/pdf/FastFashion_R2_v3.pdf

Fernie, J., Sparks, L. (2004), Logistic and Retail Management, London: Kogan Page

Lowson, R.H, King, R., Hunter, N.A. (1999) "Quick Response: managing the supply chain to meet consumer demand", Chichester: John Wiley & Sons

MacCarthy, B., Jayarathne, P. (2009) "Fast Fashion: Achieving Global Quick Response (GQR) in the Internationally Dispersed Clothing Industry", available on-line at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1360684

Mollah, M., T. I. (1994) "Quick Response The ultimate challenging way to success in fashion (clothing) business" available on-line at http://www.textiletoday. com.bd/index.php?pid=magazine&id=94