TAL Visit (10 February 2014)

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.

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.