US apparel

manufacturers
31
Journal of Fashion Marketing and
Management
Vol. 7 No. 1, 2003
pp. 31-48
# MCB UP Limited
1361-2026
DOI 10.1108/13612020310464359
ACADEMIC PAPER
US apparel manufacturers'
company characteristic
differences based on SCM
activities
Yuri Lee
Dearlmenl cf (/clh/ng and Texl//es. 5ecu/ Nal/cna/ ln/ters/lv.
5ecu/. Kcrea. and
Doris H. Kincade
V/rg/n/a Teh. 8/a/s/urg. V/rg/n/a. l5A
Keywords Aare/. Manufalur/ng svslems. 5u/v ha/n managemenl. Iash/cn.
5u//ers. l5A
Abstract 5u/v ha/n managemenl 5(M /n lhe aare/ /nduslrv uas em/r/a//v exam/ned
lhrcugh a uanl/lal/te researh des/gn The c/tel/tes cf lhe sludv uere lc /denl/fv lhe /ete/ cf
5(M al/t/l/es and lc exam/ne lhe re/al/cnsh/ cf se/eled cmanv haraler/sl/s fcr a sel cf l5
aare/ manufalurers Thrcugh lhe //leralure ret/eu. s/x d/mens/cns cf 5(M /e arlnersh/.
/nfcrmal/cn lehnc/cgv. ceral/cna/ f/ex/////lv. erfcrmane measuremenl. managemenl
cmm/lmenl. demand haraler/.al/cn uere /denl/f/ed l5 aare/ manufalurer grcus. /ased
cn lhe/r 5(M al/t/lv /ete/s. shcued slal/sl/a//v s/gn/f/anl d/fferenes /n cmanv haraler/sl/s
/n/ud/ng rcdul fash/cn /ete/. fa/r/ su//er de//terv erfcrmane. re/al/cnsh/ u/lh fa/r/
su//ers and rela// uslcmers and re/al/te s/.e cf rela// uslcmers Icr exam/e. a h/gh /ete/ cf
5(M al/t/lv /m/emenlal/cn /s /cse/v re/aled u/lh lhe haraler/sl/s cf mcre /as/ gccds
rcdul/cn. h/gher de//terv erfcrmane cf fa/r/ su//er. and re/al/te/v //g rela//ers These
manufalurers a/sc had mcre arlnersh////e re/al/cnsh/ u/lh lhe/r su/v ha/n mem/ers
Introduction
Apparel companies should be beginning to find more fashionable items in
response to diversified consumer demands as the industry becomes global
(Pashigian, 1988; Standard and Poor's, 1998). For manufacturers, these market
changes require more product variety, which generates demand uncertainty
and supplier variability. Apparel companies under this uncertain environment
are experiencing many managerial problems in production planning,
forecasting, inventory management, production system, and timely
distribution. Supply chain management (SCM), defined as efforts to reduce
inefficiencies and solve the problems throughout the supply chain, from raw
materials to final customers, has been studied in many industries including
automobile, food service, healthcare, apparel industry, and retailing sector.
SCM, which is reflected in the strategy of quick response in the apparel
industry, is getting more attention from practitioners and academics since the
mid-1980s. Limited information is available about the functions of the supply
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chain in the apparel industry. Specification of activities within the apparel
supply chain and the related organizational characteristics would assist all
segments of the industry in promoting partnerships within the chain and
improving supply chain flow.
5u/v ha/n managemenl
Since first appearing in 1982, SCM has been studied by numerous researchers
who have tried to define, and quantify, the meaning of SCM (Cooper and
Ellram, 1993; Cooper el a/., 1997; Giunipero and Brand, 1996; Spekman el a/.,
1998). Although the term, supply chain management, has been used since the
1980s, and the academic and trade presses have given extensive attention to the
concept, confusion still persists in defining what is SCM (Bechtel and Jayaram,
1997). Among the definitions and concepts suggested by many previous
researchers, commonalities contribute to an understanding of three core
components in the definition of SCM. The first component is the range of
participants. For example, all channel members within a company or between
companies, including supplier, manufacturer, distributor, and customer, should
be involved in the chain activities and collaboration between members. The
second component is the flow of both materials and information. Agreement
across definitions is that materials, whether raw materials or finished goods,
and information flow simultaneously both upstream and downstream in the
chain. Third, integrated and coordinated value-added activities are required
(i.e. cross-functional approach, joint planning and forecasting, flexible
operations), in order to manage the flow of materials and information and to
provide high customer value.
The role of manufacturers in the supply chain is critical for the efficiency of
the whole supply chain because they have to build a direct relationship with
suppliers as well as with customers and handle both interfaces efficiently. This
critical need directs the selection of the sample for this study.
5u/v ha/n managemenl al/t/l/es. Many authors have attempted to clarify
the characteristics of SCM through qualitative or quantitative research
methods. By reviewing many authors' views, six specific dimensions of SCM
can be identified. Each dimension may contain multiple activities for which the
adoption levels of chain members can be assessed. The level of SCM activities
can be determined by the extent to which supply chain members understand
the characteristics and key issues, implement techniques of SCM, and are
willing to eliminate the barriers between members.
The first dimension of SCM is the establishment of collaborative
partnerships between chain members. Partnership is defined as:
. . . an agreement between a buyer and a supplier that involves a commitment over an
extended time period, and includes the sharing of information along with a sharing of the
risks and reward of the relationship (Ellramand Cooper, 1990).
A close partnership is not only a prerequisite for SCM, but it can also result
from successful SCM. Therefore, activities that can enhance the long-term
US apparel
manufacturers
33
relationship through collaboration between chain members (e.g. joint planning
and demand forecasting, accurate and timely information sharing throughout
the chain, and technology sharing) are required activities to advance to a
partnership (Spekman el a/., 1998).
The utilization of information technology is the second characteristic to be
measured. Examples of the information technology are computer-to-computer
communication, electronic data interchange (EDI), POS data communication,
and barcoding. Electronic links between suppliers and carriers or customers
are critical for information sharing. Technologies at each stage of the supply
chain should be compatible with their partners' to better streamline the
information. Types of information fed into this electronic links are data on
sales, usage, product changes, promotions, discontinuations, and product and
process (Sabath, 1998).
Flexibility of operations is the third dimension. Agile manufacturing is
achieved by flexible operations, which can handle frequent style changes in the
production line. Flexibilities can be described as an ability to vary production
volumes economically in response to market demands, to implement minor
changes in product design for customization purposes, and to reduce delivery
lead times, respectively (Narasimhan and Das, 1999). Increasing the agility of
manufacturing operations, via just-in-time (JIT) manufacturing, procurement of
raw materials on a JIT basis from suppliers, and JIT distribution are required
for successful SCM(Higginson and Alam, 1997).
A service and performance measurement, established for each stage of the
supply chain, is the fourth dimension. Performance measurements, as well as
financial information, are needed to monitor SCM performances. Examples of
key performance indicators are supplier reliability and supplier lead-time to
monitor the supply performance. Process reliability, changeover time, and
schedule attainment can be measured to monitor the production. Perfect order
completion, order fill rate, on-time delivery, and replenishment lead time are
used to measured the delivery performance. Importance of metrics to facilitate
change or to adopt an innovation in apparel manufacturing is noted by Regan
(1997).
The fifth dimension is top management's commitment and leadership. For
the success of any new management initiative, top management's awareness of
benefits, their willingness to implement, and desire to continue change are
required to be a better participant in SCM (Higginson and Alam, 1997; Vass
and Kincade, 1999). Top management is responsible for creating the culture of
the company. When the outcome of a supply chain is uncertain to a company,
strong leadership relieves employees from insecurity and motivates them to act
toward the new direction. Bechtel and Jayaram (1997) noted that the most
important barrier to reengineering is people, not systems or technology.
The final and sixth dimension is the knowledge of demand characteristics.
Knowledge of demand characteristics determines the success of SCM.
Characteristics of demand such as certain and uncertain, dependent or
independent, seasonal or staple, are closely associated with key operational
JFMM
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decisions. Characterizing demand patterns, aligning supply capabilities with
demand cycles, and understanding the operational implications of surge or
uncertainty caused by product proliferation and product-line complexity issues
are related activities to this dimension (Copacino, 1998).
Aare/ /nduslrv and su/v ha/n managemenl. The apparel industry has
practiced the philosophy of SCM as part of the strategy of quick response (QR).
QR was originally initiated by the need to reinforce US domestic apparel
manufacturers' competitive advantages against global competition from low-
labor wage countries in the 1980s (Dickerson, 1995) but has become more of a
general business strategy on howto forecast, manufacture and deliver the right
goods to the right customers (Kincade el a/., 2001). Depending on how QR is
defined, one can argue that SCM is a more sophisticated and evolved form of
QR. In contrast, some researchers regard QR as identical with SCM (Byrne and
Young, 1995). According to the definition repeated by many researchers, QR is
a concept that emphasizes the importance of timely flow information and
merchandise between trading partners, and the reduction of lead-time and
inventory throughout the chain to maximize the value-added activities in the
chain (Kincade el a/., 1993). With these concepts, QR is one example of SCM
already executed by the apparel industry; however, the range of the involved
members of QR as noted in previously mentioned studies is rather focused on
the linkage between apparel manufacturers and retailers. This focus does not
include second tier suppliers such as fiber producers or primary textile
producers (i.e. yarn, fabric).
Traditionally in the apparel industry, each chain member runs its business
based upon separate concerns and interests, sometimes causing conflicts in the
relationships with chain partners. Hammond (1992) noted that in the apparel
industry, very little coordination exists among companies. Each segment has
built production schedules based on their own forecasting method, which may
not accurately represent actual demand. Lack of information sharing on actual
demand between chain members creates long lead-times and high levels of
inventory with consequent risks of obsolescence at each segment (Kincade el a/.,
2001). This practice is still prevalent in the apparel industry. According to Aron
(1998) and Byrne and Young (1995), retailers do not partner with their vendors
well and abuse their powers to secure low prices by threatening suppliers with
order withdrawals. Retailers are pressured by consumers to provide a wide
assortment of products at prices that are considered reasonable by consumers.
At the same time that consumers desire lower cost products, they are requiring
increased variety and increased quality. Consumers want value in their
purchases (Ko and Kincade, 2000; Singletary and Winchester, 1998). Retailers
must seek low wage sources of production; demand strict costing structures
from vendors; require improved quality control, and in general have
manufacturers reduce margins to provide lower cost but better made products.
In the apparel industry, the upper end of the supply chain contains an
abundant supply of available manufacturers and low wage workers from
various countries (Bonacich and Appelbaum, 2000; Hill el a/., 1999; Iyer and
US apparel
manufacturers
35
Bergen, 1997). Manufactures compete for retail business, and retailers select
vendors, primarily on a cost basis. Retailers can use this competition among
manufacturers to their own advantage in demanding lower costs and improved
quality for goods and services.
(cmanv haraler/sl/s
lrcdul fash/cn /ete/. One of the characteristics, exhibited by apparel
manufacturers, and included in this study is product fashion level. Product
fashion level is a concern for many companies that manufacture or sell
products to consumers. Automobiles, window shades and restaurant foods
have fashion characteristics and change with consumer demand. Many apparel
companies, either manufacturer or retailer, deal with both fashion goods and
basic goods to offer product variety to their customers (Standard and Poor's,
1998). Basic and fashion goods can be classified based on the volume of
production, degree of style variation, and frequency of style changes (Lin el a/.,
1995). For example, fashion goods are hard to forecast the demand; have high
fashion level and seasonality, and have varied style change (Glock and Kunz,
1995). Basic goods are relatively easy to forecast the demand, have low fashion
level and limited seasonality, and have a basic garment style that remains
constant.
Ia/r/ su//ers. Buyer-supplier relationships are agreed by researchers to
be a key component in determining a company's competitive success (Artz,
1999; Goffin el a/., 1997; Provan, 1993). For apparel manufacturing, the major
supplier is a fabric supplier because fabric accounts for the largest part of
apparel products in terms of production cost and raw materials (McPherson,
1987).
For apparel manufacturers to select fabric suppliers, they need to evaluate
the suppliers by use of performance indicators. In many industries, total cost is
used to evaluate suppliers' performance (Goffin el a/., 1997). Total costs include
unit product price and transaction costs, delivery performance including
product and service quality, speed to order completion, reliability in order
completion, and relationship characteristics between supplier and buyer. How
these costs apply to the apparel industry has received limited academic study.
In the apparel industry, the questions of howapparel manufacturers select their
fabric suppliers and/or howthe characteristics of fabric suppliers affect apparel
manufacturers' performance need to be explored.
Rela// uslcmers. Manufacturers' business activities can also be affected by
their customers' characteristics. For apparel manufacturing, the typical
customer is a retailer. Retailer size and nature of relationships have been
researched most as the factors that significantly affect the partnership between
manufacturer and retailer (Hansen and Skytte, 1998). For an example regarding
retailer size, Cooper and Ellram (1993) stated that if a customer (i.e. retailer)
commands a sufficient market share of the supplier's business, the supplier (i.e.
manufacturer) might choose to remain in the supply chain even though the
share of the supplies is quite limited.
JFMM
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The nature of the relationship between a supplier and a customer (e.g.
manufacturer and retailer) can be described along a continuum from adversarial
to partnership and from short term to long term. As with fabric suppliers, the
relationship between manufacturers and retailers in the apparel industry is
traditionally an adversarial relationship for several reasons. Low thresholds for
entry into the industry have ensured over the years an abundant supply of
apparel manufacturers. This supply condition has resulted in cost competition as
a basis for a retailer's selection of a supplier. Other characteristics such as
uncertainty of demand, long range, qualitative forecasting, and a competitive
edge gained by product uniqueness from fashionability, which cannot be
patented and is often pirated, has promoted secrecy and fear between partners
(Abernathy el a/., 1995; Bonacich and Appelbaum, 2000). In addition, some
retailers have by-passed manufacturers and have become their own suppliers.
Although a clear trend is noted in trade literature about the movement toward
collaborative partnerships, especially when a QR programis practiced, change in
supply chain relationships between apparel manufacturers and retailers is slow
in this industry (Kincade el a/., 2001; Rabon, 1998). Although the nature of
relationships along the supply chain have been explored in several industries,
limited research is available about the nature of the relationship between apparel
manufacturers and retailers, especially relative to SCM.
In Subramanian and Nilakanta's (1996) review on organizational innovation
studies, a number of organizational characteristics, such as the characteristics
of product characteristics, fabric suppliers, and retail customers, are
significantly related to the innovation adoption level. Furthermore the adoption
of innovations results in better organizational performance. Considering SCM
is a relatively new concept to apparel manufacturers, apparel manufacturers
may vary in the level of adopting the concept of SCMand execute relevant SCM
activities according to their unique company characteristics. Apparel
manufacturing is characterized by bi-polar size of plants (i.e. very large and
very small plants); a high number of stock-keeping units, and an exceptionally
high ease of entry (Abernathy el a/., 1995; Bonacich and Appelbaum, 2000;
Singletary and Winchester, 1998). Research has shown that, in many
industries, adopter organizations have identifiable organizational
characteristics that distinguish them from non-adopters, and innovations
enhance organizational performance (Ko, 1995; Sullivan and Kang, 1999). For
example, issues such as what kind of product they are manufacturing and what
kind of business partners (i.e. supplier, customer) they have may be influential
in their adoption of a new management concept and in their execution of it. In
this study, SCM is assumed as the innovation, and therefore, the main concern
of this study is to examine how company characteristics are related with the
varying levels of SCMactivity adoption as shown in Figure 1.
Researh uesl/cns
Based on the concerns for the SCM activities and company characteristics, the
following questions are presented:
US apparel
manufacturers
37
.
Do apparel manufacturers showvarying levels of SCMactivities?
.
Are apparel manufacturers' levels of SCM activities related to company
characteristics in terms of product characteristics (i.e. fashion goods,
basic goods), fabric suppliers (i.e. total cost, delivery performance,
nature of the relationship), and retail customers (i.e. size, nature of
relationship)?
Methodology
The research adopted the single cross-sectional quantitative design using the
mail survey method. The population consists of US apparel manufacturers
whose main products are men's or women's garments. The sample companies
were selected from purchased directories (Marche Publishing, 1997; 1998).
From the list of the directories, a stratified random sample of 1,195 apparel
manufacturers without location limitation was selected. The list was stratified
into four groups by a cross tabulation of size (i.e. number of employees) and
product type (i.e. men's, women's). In this study, operational definitions of
small and large apparel manufacturers were from data compiled from county
business patterns (US Census Bureau, 1996). A small apparel manufacturer
was defined as a US apparel manufacturer, with one to 19 employees, which
accounts for 59.7 percent of the US apparel manufacturing population. Medium
to large apparel manufacturers was a US apparel manufacturer with more than
19 employees. The medium to large manufacturers in this sample may not be
homogeneous in terms of company characteristics because of its still wide
range of employee numbers. This stratification was adopted in order to secure
feasible numbers of participants from each company size bracket, and not
treated as an independent variable.
lnslrumenl
The questions to measure SCM activities and company characteristics were
adopted and compiled from previous studies (e.g. Artz, 1999; Droge and
Germain, 1998; Jones, 1999; Kanakadurga, 1994; Kincade, 1995; Ko and
Kincade, 1998).
5(M al/t/l/es. Respondents were assessed for their level of agreement with
17 SCM statements on a six-point scale with endpoints of not at all (0) and very
high (5). The 17 statements, identified through literature analysis, characterized
the SCM activities into six dimensions: partnership, information technology,
Figure 1.
Conceptual framework
of the study
JFMM
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operation flexibility, performance measurement, management commitment and
leadership, and demand characterization.
lrcdul fash/cn /ete/. One open-ended question was used for respondents to
divide their product line into two groups, fashion goods and basic goods and to
describe the proportion of each type of goods to the total production in
percentage. In the questionnaire, a detailed definition of fashion goods and
basic goods was presented to eliminate confusion from misunderstanding of
the terms. The definitions were adopted from Priyadarshi's research
instrument (1996) and were also used by Lin el a/. (1995) in studies of the
apparel industry. For example, the following sentences were provided:
. . . fashion goods refer to products of which the demand is hard to forecast due to high
fashion level and seasonality and have quite varied style changes season by season.
Ia/r/ su//ers. Respondents were asked to evaluate their suppliers' cost-
offering and delivery performance. Delivery performance questions were
formed by adopting three questions from Artz's (1999) study. These questions
were asked in order to address the quality of products, satisfaction with the
delivery performance of the supplier, and on-time delivery on six-point scales
with endpoints of not at all (0) and very high (5). Also, respondents were asked
to indicate the most appropriate description for the nature of their relationship
with fabric suppliers on a six-point bipolar scale with adjectives at both ends
(i.e. adversarial vs. partnership-like, short-termbased vs. long-termbased).
Rela// uslcmers. Respondents were asked to evaluate the retailers' relative
size and relationship. The extent of size relative to the respondent's company
were asked to address the retail customers' characteristics on a six-point scale
with endpoints of not at all (0) and very high (5). The same questions that
addressed the nature of relationship with fabric suppliers were asked again to
describe the relationship with retail customers as well.
Dala c//el/cn and ana/vses
Questionnaires were mailed to the stratified random sample of apparel
manufacturers. Intensive follow-up activities, including calls, postcards, and
letters were used to improve return rate. The questionnaire was addressed to
the plant manager or inventory planner who was assumed, based on the pilot
test information, to be in charge of all the activities of developing, executing,
and delivering the product line. These people were also shown in the pilot test
to be aware of the general characteristics of the company. Factor analysis,
cluster analysis, ANOVA, Tukey test and Chi-square analysis were mainly
used for data analysis.
Findings and discussion
Relurn rale fcr lhe surtev
The adjusted response rate, based on the exclusion of the non-deliverable
subjects, was 9.49 percent (93/980). In terms of the number of companies, the
sample explains 0.8 percent of the population (i.e. 93/11,791); however, in total
US apparel
manufacturers
39
number of employees, the sample represented 26,105 employees. Considering
the estimated number of employees of the population in 1997, which was
543,100 (US Census Bureau, 1998), the sample explained about 4.8 percent of
the population. Return rates are notoriously low in industry studies, especially
within the apparel industry. Industry studies vary but are often at or below 20
percent (e.g. D'Souza and Williams, 2000; Pagell and Krause, 1999). Again, the
traditions of adversarial relationships and secrecy, pervasive in the industry,
extend to the process of research and consultation. In addition, this survey
asked very detailed questions about quantitative measures of plant operation.
Broader and more general questions may have allowed for a higher response
rate but the content would have lacked the quantification that is important to
the value of this study.
5(M al/t/lv /ete/
H1
0
. Levels of SCM activity implementation among apparel manufacturers
are not different.
To explain significant characteristics of each classified cluster in terms of SCM
activity dimensions, factor analysis with Varimax rotation was used to verify
the six dimensions that were identified through the literature review. First, the
six factors were formed a priori and tested for reliability. The 17 items and
results are displayed in Table I.
Factor analysis verified the underlying six dimensions of SCM activities. Six
factors were identified and could be labeled according to the a r/cr/ labels from
the literature, and SCM activities were assigned with the factor analysis to each
dimension. The items with factor loading values higher than 0.60 on one factor
and lower than 0.45 on the other factors at the same time were retained for the
next analyses.
Then, agglomerative hierarchical cluster analysis with Ward's method was
used to cluster respondents into / number of relatively homogenous groups
based on levels of SCM activities. As a result of the cluster analysis based on 17
SCM activity measures, three homogenous groups were identified. Each group
has 33, 35, and 23 members respectively (Table II). Two respondents were
excluded from the analysis because of their lack of responses on partnership
dimension questions.
An ANOVA and cslhc tests (i.e. Tukey test) were used to identify the
mean differences of the six SCM activity dimensions across the clusters (see
Table III). In addition, to profile each cluster in terms of company size, the mean
differences of the number of employees were also examined. These analyses
were run to further test H1. Each SCM activity dimension score was obtained
by dividing the summation of the scores assigned to each activity question by
the number of the activity items under the corresponding dimension.
The results showed that respondents in the three SCM activity clusters
displayed significantly different means in four dimensions (i.e. partnership,
information technology, management commitment and leadership, demand
characterization). Although the I-value was not statistically significant for the
JFMM
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40
performance measurement dimension, the cslhc test showed the potential of
mean differences in this dimension. The company sizes were different among
three SCM activity clusters. Cluster 1 was significantly larger than the other
two clusters and Cluster 2 had more small companies than the other clusters in
terms of number of employees.
Cluster 1 was characterized by its high level of SCM activities and the
company size was the largest compared to the other two clusters. This cluster
was considered a leader group who was actively implementing every
dimension of SCM activities. Cluster 2 was also implementing every dimension
Table I.
Factor analysis result
for SCM activity
dimension and
Cronbach alpha
SCM activity
dimension Item (detailed activity)
Factor
loading
Variance
explained
(%) Eigenvalue
Cronbach
alpha
Partnership Information sharing with
suppliers/retailers 0.911 15.2 2.58 0.8894
Information sharing with
suppliers/retailers 0.850
Forecasting with suppliers/
retailers 0.896
Information
technology
Computer-to-computer
communication 0.702 6.1 1.044 0.7102
Electronic data exchange (EDI) 0.926
Operation
flexibility
Small lot delivery on a daily
basis 0.954 8.1 1.381 0.9177
Small lot order on a daily basis 0.937
Performance Fill rate 0.823 25.0 4.250 0.8661
measurement Order lead-time 0.838
On-time delivery rate 0.919
Product quality 0.758
Management
commitment
Improvements in production
systems 0.805 11.1 1.882 0.7587
Improvements in education
training 0.783
Improvements in employee
empowerment 0.774
Demand Setting production capacity 0.878 12.2 2.078 0.7874
characterization Setting production run cycles 0.842
Raw material purchasing 0.725
Total variance explained by six dimensions 77.8
Note: Six-point scale from 0 to 5
Table II.
Results of cluster
analysis
Valid Frequency Percentage Cumulative percentage
Cluster 1 33 36.3 36.3
Cluster 2 35 38.4 74.7
Cluster 3 23 25.3 100.0
Total 91 100.0
US apparel
manufacturers
41
of SCM activities at an average or above average score, except for one
dimension, Information Technology. Its usage level of information technology
such as computer-to-computer communication and EDI was lower than the
other groups and was well below the average (1.44 <2.5). For this group,
understanding product demand pattern for their operation was important
compared with the other groups (4.09). Cluster 3 was characterized by its
relatively low level of SCM activities. Except for demand characterization
dimension, its SCM dimension score was near or below the average score.
Cluster 3 was least active of apparel manufacturers in implementing SCM
activities.
The findings from cluster analysis, factor analysis, one-way ANOVA, and
cslhc tests revealed that specific SCM activities could be grouped into
underlying dimensions, and these dimensions could be used to assess the
apparel manufacturers' level of SCM activity. This result was consistent with
the findings in previous studies where apparel manufacturers could be
classified into subgroups based on their QR technology adoption level (Ko,
1995; Sullivan and Kang, 1999). Based on the findings, H1
0
, which stated no
difference in levels of SCM activities among apparel manufacturers, was
rejected.
5(M al/t/lv /ete/ and rcdul haraler/sl/s
H?a
0
. The levels of SCM activities do not differ based on apparel
manufacturers' product characteristics.
To test this null hypothesis, ANOVA and Tukey test were used (see Table IV).
The respondents in Cluster 2 were found to produce more fashion goods than
basic goods compared with the other two groups. Their fashion goods volume
accounted for about 65 percent of the total production, and basic goods about
35 percent. On the contrary, Cluster 1 and Cluster 3 respondents' total
production consisted of 40 percent and 60 percent of fashion goods
respectively. Cluster 2 respondents were defined as the apparel manufacturers
whose fashion levels were relatively high and Cluster 1 and 3 were those with a
lowfashion production level.
Table III.
Results of ANOVA for
the six SCM activity
dimensions and
number of employees
Mean by cluster Mean total
SCM activity dimension Cluster 1 Cluster 2 Cluster 3 (%) I-value Significant
Partnership 3.80
a
3.18
b
1.57
c
3.00 36.80** 0.000
Information technology 3.95
a
1.44
c
2.26
b
2.56 39.30** 0.000
Operation flexibility 3.48 3.50 2.59 3.26 2.87 0.062
Performance measurement 3.68
a
3.24
a,b
3.00
b
3.33 2.94 0.058
Management commitment 3.53
a
2.68
b
2.13
b
2.85 16.00** 0.000
Demand characterization 4.11
a
4.09
a
3.26
b
3.89 8.67** 0.000
Number of employees (n) 750.0
a
69.80
b
114.30
b
310.50 11.70** 0.000
Notes: Six-point scale from 0 to 5 for six SCM dimensions;
a
,
b
,
c
: shares same letter when
the mean difference is not statistically significant; ** <0.01
JFMM
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42
5(M al/t/lv /ete/ and fa/r/ su//er haraler/sl/s
Fabric suppliers' characteristics of the respondents were evaluated on three
variables: total cost concern, delivery performance, and the nature of the
relationship with the respondent.
H?/
0
. SCM activity level does not differ based on fabric supplier
characteristics.
One-way ANOVA and Tukey cslhc test were used (Table V). Fabric
suppliers' characteristics in terms of delivery performance were found to have
statistically significant relationships with the level of SCM activity.
Respondents in Cluster 2 were those who least consider the cost aspect when
doing business with fabric suppliers. Cluster 1 respondents rated their fabric
supplier delivery performance most high, and respondents in Cluster 3 seemed
to have fabric suppliers whose delivery performance was relatively less
desirable. Considering the mean scores of each measure, many apparel
manufacturers' primary concern in selecting the fabric suppliers was the total
cost. Most respondents evaluated their fabric suppliers favorably, and their
relationship with the fabric suppliers were more partnership-like than
adversarial, and more long-termbased.
In summary, overall evaluation on their fabric suppliers in terms of delivery
performance among three clusters was statistically significant. Therefore,
Table IV.
ANOVA and Tukey
test results to test SCM
activity cluster and
fashion goods
production level
Ratio of goods Mean by SCM activity clusters (%) Mean total
to total production Cluster 1 Cluster 2 Cluster 3 (%) I-value Significant
1 Fashion goods 43.4
b
65.2
a
39.0
b
50.7 5.59** 0.005
2 Basic goods 56.6
a
34.8
b
61.0
a
49.3 5.59** 0.005
Notes:
a,b
: shares same letter when the mean difference is not statistically significant;
** <0.01
Table V.
ANOVA results for the
relationship between
SCM activity cluster
and fabric supplier
characteristics
Mean by SCM activity cluster Mean total
Characteristics Cluster 1 Cluster 2 Cluster 3 (%) I-value Significant
1 Total cost concern 3.25 2.71 3.17 3.01 1.70 0.189
2 Delivery performance 3.98
a
3.54
a,b
3.22
b
3.60 3.45* 0.036
Quality of the component 4.29 4.06 3.64 4.02 2.03 0.137
Satisfaction with the
performance
375.0 3.29 3.00 3.36 2.55 0.084
On-time delivery 3.89
a
3.24
a,b
3.04
b
3.40 3.34* 0.040
3 Nature of relationship 3.86 4.04 3.59 3.87 1.43 0.245
More partnership-like
than adversarial
3.70
a
4.03
a
3.14
b
3.69 4.10* 0.020
Long-term based 4.03 4.03 3.95 4.01 0.044 0.957
Notes: Six-point scale from 0 to 5;
a
,
a,b
,
b
: shares same letter when the mean difference is
not statistically significant; * <0.05
US apparel
manufacturers
43
H?/
0
, SCM activity level does not differ based on fabric supplier
characteristics, was rejected.
5(M al/t/lv /ete/ and rela// uslcmer haraler/sl/s
H?
0
. SCM activity level does not differ based on retail customer
characteristics.
To test the hypothesis (H?
0
), one-way ANOVA and Tukey cslhc test were
used for relative size and the nature of the relationship. The results are shown
in Table VI.
As revealed in Table VI, mean differences in the two retail customer
characteristics scores were statistically significant. Regarding the relative size
of a major retail customer, respondents in Cluster 1 did business with relatively
big retail companies. Cluster 2 respondents were found to have relatively small
retail customers. Regarding the nature of the relationship with a major retail
customer, Cluster 1 respondents managed the most partnership-like
relationship with their retail customers, and Cluster 3 respondents showed the
lowest score in this characteristic.
In brief, SCM activity level showed statistically significant relationships
with retail customer characteristics in terms of relative size and nature of
relationship. The two selected retail customer characteristics were found to
have a significant relationship with SCM activity level. Therefore, H?
0
, SCM
activity level does not differ based on retail customer characteristics, was
rejected.
Summary and implications
The results revealed the existence of three clusters differentiated in levels of six
SCM activity dimensions. The profiles of companies in these clusters were
examined in relation to company characteristics (see Figure 2). Cluster 1
showed the highest level of SCM activity implementation in five SCM
dimensions excluding operation flexibility. Respondents in this cluster
manufactured goods in the proportions of 43 percent fashion goods and 57
percent basic goods to the total production volume. They were most likely to
have fabric suppliers whose delivery performance was desirable, and their
relationship with suppliers was partnership-like. They were likely to maintain
the relationship with major retail customers to be more partnership-like and
Table VI.
ANOVA and Tukey
test for relationship
between SCM activity
cluster and retail
customer
characteristics
Mean by SCM activity cluster Mean total
Characteristics Cluster 1 Cluster 2 Cluster 3 (%) I-value Significant
1 Relative size 4.10
a
2.53
b
3.10
a,b
3.25 8.17** 0.001
2 Nature of relationship 4.14
a
3.97
a,b
3.41
b
3.89 4.07** 0.020
Partnership-like 4.10
a
3.78
a
2.77
b
3.62 8.60 0.000
Long-term based 4.25 4.09 4.05 4.14 0.306 0.737
Notes: Six-point scale from 0 to 5;
a
,
a,b
,
b
: shares same letter when the mean difference is
not statistically significant; * <0.01
JFMM
7,1
44
long-term based. Their major retail customer was likely to be a relatively big
company. In terms of the number of employees, this cluster consisted of rather
large apparel manufacturing companies. These findings support the discussion
in the literature that SCM is based on the partnership between chain members
(Ellram and Cooper, 1990), and large companies that produce basic goods are
more apt to adopt the advanced technology in their operation (Ko and Kincade,
1998). Apparel manufacturers in this cluster can be called ``high level of SCM''
in the apparel industry.
Cluster 2 respondents' information technology level was low compared with
the other two clusters, while their implementation level of demand
characterization dimension was high. They were the manufacturers who
produced more fashion goods than basic goods (60 percent to 40 percent,
respectively). Their fabric suppliers' delivery performance was relatively high
and the relationship with them was partnership-like. Their relationship with
retail customers was partnership-like and long-term based. This cluster of
apparel manufacturers can be called ``medium level of SCM'' in the apparel
industry.
Lastly, Cluster 3 respondents were found to be least active in
implementation of the SCM activities compared with the other cluster
members. Their SCM activity level was lowest except for information
technology dimension. They manufacture basic goods more than fashion goods
(60 percent to 40 percent respectively). Their rating on major fabric suppliers'
delivery performance was lowest. Their major retail customers were most
likely to be rather large companies of assorted types. Compared with the other
clusters, the relationship with the retail customers is least partnership-like or
long-term based. Apparel manufacturers in this cluster can be called ``low level
Figure 2.
SCM activity clusters
profiles
US apparel
manufacturers
45
of SCM'' in the apparel industry. Although basic goods production has the
potential to adopt SCM more effectively than fashion goods production as
proven in Cluster 1, basic goods production alone may not correlate with
improvements in SCM.
In brief, out of the three company characteristics (i.e. product, fabric
supplier, retail customer), SCM activity implementation was closely related
with the retail customers' characteristics and fabric suppliers' delivery
performance according to the results by SCM activity clusters. This finding is
consistent with the definitions of SCM (Giunipero and Brand, 1996) that the
cooperation between chain members determines the SCM activity
implementation level. A desirable relationship with the retail customers, as
found in this study, supports the observation (Cooper and Ellram, 1993) that
close partnership is not only a prerequisite for the SCM, but also a benefit of it.
In future research, the SCM activity clusters identified in this study (i.e.
model of SCM, mixed use of SCM, low level of SCM) need to be profiled with
additional company characteristics not used in this study. For example,
management strategies, manufacturing and sourcing strategies, human
resource activities, and financial situation can be used. In this study, SCM
activity implementation levels were analyzed in a group. To benefit the apparel
industry, further exploration of Cluster 3 is needed to determine reasons why
manufacturers in this cluster were not adopting SCM activities. Basic goods
production seems to be in line to receive the efficiencies of SCM, but this cluster
had low levels of SCM activities. The cluster had high levels of technology,
which might be attributed to manufacturing innovations. Internal changes may
have taken priority over external changes. The cluster presents a challenge to
those who study and promote the benefits of SCM.
Additional research methods and methods of analysis can also be used to
examine SCM activities in the apparel industry. ANOVA and Tukey test were
mainly used for this study. To examine the relationship between integrated
SCM activity implementation level and other categorical and continuous
variables, multivariate analyses can be used for future study, such as
MANOVA and cannonical correlation analysis. To better understand the
motivations and reasons for the differences that were observed in this study, a
case study or qualitative research design may be employed in future work.
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