This is our first company visit for
this course; we are so excited and looked forward to this visit. Before the
visit, we have studied the case study of TAL, so that we knew about the background
information, supply chain and the technologies used by TAL. For example, TAL has
used VMI and MTM for maintaining good relationship with its customers.
During the visit, the instructors
started by introducing the innovative product produced by TAL and then followed
by a presentation about the supply chain system applied in TAL.
Lastly, it came to the Q&A session;
the instructors are kindly to answer our questions and the CEO of TAL has also
shared some point of his views about the apparel industry. We have gain a lot
from their working experiences and knowledge when they were answering our
questions.
1. TAL relies heavily on the advanced information systems
and the IS involve in most of the TAL’s operations to help TAL gains
competitive advantages. However, does TAL have any contingency plan if the
information systems go down in one day? Does TAL have any manual procedures to
maintain normal operation if it really happens?
If the information systems go down in one day, TAL has at
least one week data backup. IT backup weekly all process planned so that the
forecast of sales is not affected. And there are strong supporting teams for
contingency plan and there isn’t any personal data in it so it can avoid the
opportunity of being stolen.
2. We would like to
know if TAL is going to have the RFID tags on its products as multiple RFID tags can be read at the same time. This may
help to save the time and cost in the
inventory management. If RFID tags are used in the products, how will TAL solve the possible privacy matter that might be
encountered?
For manufacturing
industry, using bar code is enough. But TAL has prepared RFID and it is ready
for implement once it is needed. However, there are limitations for RFID. For
example, if the weather is too humid, RFID could not be detected.
Several issues need to be
taken in consideration as well. The first one is the cost, whether the tags
would be reused or just single use may affect the cost a lot. And the way that
the RFID tags are going to be places, are the tags going to be fixed on the
cloth or it is removable? Also, it is difficult to implement in internal
production as it may difficult to use RFID on a fabric.
3. What are the
reasons that make TAL believe that the IT systems they have been adopting are the right tools for their company?
• ERP: Failure due
to incompatibility; outsource to ERP solution
• Made to measure:
higher operating cost, setup cost
• VMI: Risk of
bearing the liability of stock out
According to the
instructor of TAL, here are the advantages for IT systems using by TAL
1. ERP:
ERP collects, manages and
distributes information across functional boundaries for TAL and helps them to
break down information “silos”—those barriers that stand in the way of full
cooperation between production, materials, planning, engineering, finance and
sales/marketing. The resulting higher quality, reduced time-to-market,
shortened lead times, higher productivity and lowered costs can help improve
customer service and increase sales and market share as well as margins.
2. Made to measure:
Nowadays, consumers
increasingly demand customized apparel, garments tailor-made for their
individual needs. And the made to measure programs enable TAL's customer to
provide personalized services that build consumer loyalty.
3. VMI:
Under the VMI
system, TAL can deliver their products direct to each store before their
customer even they need them. And offer costs savings of up to 15% through
reduced inventory and operational cost.
Due to the IT system can
expand the business for TAL and the using revenue is higher than the using
cost, it is believe that the IT systems are the right tools for TAL.
4.
As
an international company, how does TAL resolve the problem related to cultural differences or uncertainties?
• Political situation in Thailand
In the 2013 political crisis, opponents of the government
of Yingluck who wore yellow shirts mainly belong to the middle class. They
protested against corruption of the government. As TAL is political neutrality
in Thailand. It does not support either government or opponents. Therefore, it
will not be the target of both sides. Also, the distance between Nonthaburi,
where is the TAL’s garment manufacture location and downtown in Bangkok, where
is the main protesting location is around 20km. The manufacture location is not
close to the protest site. TAL resolves the problem of political instability in
Thailand by applying political neutrality strategy.
• Women in workplace (South Asia)
South Asia is the emerging world factory. The labor’s
wage is lower than the international standard especially the Female labor. TAL
has already set up four manufactures in Indonesia, Thailand, Malaysia and
Vietnam. Female labor working condition is the consideration that TAL concerns.
TAL understands local culture and does not violate local taboos. Also, TAL has compliance with
local labor law and does not exploit the labor right, such as providing
enough break time and suitable working time.
5.
What
is the outlook of apparel industry in the coming future?
The CEO of TAL
state that the business strategy is mainly focus on the internal company
development. In the global apparel market, the supportive customer service and
innovative products are becoming more important. One of the key competitive
advantages for TAL is the human resources. Although the production of one piece
of cloth is easy, the discipline to manage the employees in order to achieve
the company goal is not such easy and varies from different companies. For
instance, manufacturing a piece of cloth needs over 100 processes to turn it on
the hand of customer. The human management is the key to ensure the quality and
the efficiency of these processes. TAL treats human as a valuable assert for
execute either more creative and innovative products or good customer service,
therefore, they emphasis the recruitment, training and good discipline of their
employees. Besides, TAL is willing to spend time understanding the
customer needs. Combining with a good team, TAL can keep look further than the
competitors and remain as the pioneer.
6. VMI & MTM system helps to make a huge profit. How TAL
turn these innovations to a sustainable competitive advantage in long run in
order to avoid competitors’ replication?
First, TAL keeps updating the information about
customers’ preference by conducting research. With the useful and updated
information, TAL can taste the market by offering higher value. Quality of
services increases with higher value which helps TAL to keep loyal
customer/retailers. Second, TAL has valuable resources
require for the innovation such as professional personnel, technology,
equipment etc. These resources cannot be copied easily as they need a long time
and high cost to build up. Launching innovation system requires changing of
existing value chain process which may take a high cost and risk. If
competitors want to copy the innovation, they should invest a huge cost and
face high risk. So, the existing valuable resources of TAL build a great entry barrier.
Third, TAL has kept many loyal customers/retailers with good relationship. With
long term collaboration, good relationship are built between TAL and retailers
because of good trading record, good understanding between companies,
efficiency etc. These experiences provide synergy that retailers may not switch
to other competitors to bare the extra cost and risk.
Learning reflection
By viewing and touching the physical products and listening to the sharing by the instructors, we are all surprised by the business practice of TAL and realized that why TAL is regarded itself as an “innofacturer”. We can see that TAL has invested a lot in developing their technologies, providing value added services to its customers. For example, the SofTAL technology can reduce the shrinkage of the polo shirts and MTM can provide more choices and personalized service for end customers. These make TAL to become one of the largest garment manufacturers in the world and maintain its competitive advantages in the market.
By viewing and touching the physical products and listening to the sharing by the instructors, we are all surprised by the business practice of TAL and realized that why TAL is regarded itself as an “innofacturer”. We can see that TAL has invested a lot in developing their technologies, providing value added services to its customers. For example, the SofTAL technology can reduce the shrinkage of the polo shirts and MTM can provide more choices and personalized service for end customers. These make TAL to become one of the largest garment manufacturers in the world and maintain its competitive advantages in the market.
Besides, after the visit, we also
know that another important factor which makes TAL succeed is that TAL views
its staff as a valuable asset. TAL will hire potential staff around the world
and provide lots of trainings and opportunities for them. With the excellent
working environment, staff will work hard with the company and try to achieve the
company goal together.
