Supply Chain Management at Gap Clothing Company

Executive Summary
This report is based on GAP Inc which is a clothing company that operates online stores as well as physical stores. The company has numerous brands whose efficiency depend on supply chain management. The first part of the report offers a background and overview of the company. The second part looks at the needs of the customers in the Apparel industry that GAP operates. The next section looks at the best response strategy in relation to supply chain that GAP should adopt and the reason
. The next section then discusses supply chain outsourcing and the reasons why GAP should outsource its supply chain. The next section looks at the drivers of supply chain (IT and transportation) that are relevant to GAP Inc.














Table of Contents
Executive Summary 2
Introduction 4
Needs of Customers of GAP Inc 4
Level of Responsiveness of GAPs Supply Chain 5
Outsourcing and Competitive Advantage of GAP 9
IT and Transportation Drivers Contribution to GAPs Business 11
Conclusion and Recommendations 12
References 13














Supply Chain Management at Gap Clothing Company
Introduction
Supply chain management abbreviated as SCM refers to the coordination of network resources and facilities as well as operations for the distribution of the procured raw materials, processing the materials into finished goods and product distribution to customers. The core agenda of a supply chain is to meet the needs of the customers met either directly or indirectly in response to the market demand. Therefore, the supply chain involves the customers, suppliers, manufacturers, warehouses, and the retailers. An operative supply chain management ensures that the goods reach the customers at the right time and place to meet the demands of the customers. Simply put, the supply chain balances the supply and demands in the market. GAP Inc was established in 1969 by Doris and Don Fisher (Gap Inc., 2015). GAP Inc has since grown up to be one of the most successful clothing companies with a global representation. The organization has successfully built a network of six distinct brands, namely Piperlime, banana republic, Athleta, Gap, Old Navy, and INTERMIX (Gap Inc., 2015). There are different needs in the market, thus the need to analyze the supply chain of GAP Inc and some of the potential areas that need improvement.
Needs of Customers of GAP Inc
GAP Inc has four major brands that are strategically placed to respond to different segments of the market with diverse needs (Gap Inc., 2015). The customers of GAP Inc have assorted needs that the company must meet (Gap Inc., 2015). First off, the customers need correct placement and positioning of the products in stores and online. Secondly, the demand for the clothes that are used in different seasons makes the customers be inclined towards creating a seasonal demand for different brands (Gap Inc., 2015; Saricam, Aksoy & Kalaoglu, 2012). The needs of the customers also vary according to their locations and the value they expect (Saricam, Aksoy & Kalaoglu, 2012).
The customers also want low-priced products that are differentiated in nature (Saricam, Aksoy & Kalaoglu, 2012). The needs of the consumers in the apparel industry keep on changing as time progresses as well as with the advancement of technology (Saricam, Aksoy & Kalaoglu, 2012). The dynamic nature of the market stems from the short-life cycle of the products, higher volatility of the demands and many stocks keeping units in the market (Saricam, Aksoy & Kalaoglu, 2012). Some customers require fast fashion owing to the different designs that keep flooding the market (Saricam, Aksoy & Kalaoglu, 2012). The customers also demand respectable and quality services when accessing their products.
Some clienteles want durable goods at a better price (Saricam, Aksoy & Kalaoglu, 2012). Most new consumers are aware of the level to which the goods must comply with the child standards and ecological requirements and are keen to see this on the products (Saricam, Aksoy & Kalaoglu, 2012). Other customers are more anxious about the quality and price balance, performance of the merchandise and durability (Saricam, Aksoy & Kalaoglu, 2012).  Furthermore, some of the customers in the apparel industry require luxury brands and flexibility of the products in response to different seasons (Saricam, Aksoy & Kalaoglu, 2012). All these needs that are more or less applicable in the whole industry encompass the gap that needs to be filled by GAP Inc.
Level of Responsiveness of GAPs Supply Chain
GAP Inc has an international coverage for both its products and services. Furthermore, as earlier noted, the organization operates in a very dynamic industry that experiences volatility of customer requirements. For that matter, the responsive supply chain that combines the concept of SCM and agile manufacturing would be the best level of response for GAP to adopt. The key determinants of swift response include reduced lead time and costs of operations (Gunasekaran, Lai & Edwincheng, 2008). Well, GAP is an international organization that seeks to make profits to maintain its market share amidst the competition in the apparel industry.
  Responsive supply chain not only assures the reduction of costs and lead time but is also information enriched (Gunasekaran, Lai & Edwincheng, 2008). By definition, RSC refers to a combination of firms that is capable of creating value and wealth for the stakeholders in the competitive environment through quick reaction as well as cost reduction as per the changing market requirements. In essence, RSC combines SCM and Agile manufacturing. According to Gunasekaran, Lai & Edwincheng (2008), Agile Manufacturing (AM), an extension of lean manufacturing is the best to meet changing demands.
 In essence, agile manufacturing has the capability of meeting the changing market conditions by taking into consideration the shift in the product consumption patterns or the performance of the product lines, for a better response to the customer demands (Gunasekaran, Lai & Edwincheng, 2008). Some of the benefits organizations get when using RSC is optimized procurement, better tracking on inbound and outbound logistics (reduced costs of transportation), reduced costs of operations or production and increased product range and availability in the market (Gunasekaran, Lai & Edwincheng, 2008). The key components of the responsive supply chain to be adopted by GAP include Knowledge management, information systems, Network of firms, and speed and flexibility (the expected outcome) as represented in the diagram below.

Figure 1. Components of Responsive Supply Chain (RSC) market (Gunasekaran, Lai & Edwincheng, 2008).
A well-established RSC entails strategic planning, the virtual enterprise or the organization, and knowledge and information technology management (Gunasekaran, Lai & Edwincheng, 2008). For the success of the RSC GAP should realign its practices and organizational culture to fit in the new systems (Gunasekaran, Lai & Edwincheng, 2008). The company will have to plan on how to run the current operations parallel to the new operations for the responsive supply chain. Virtual manufacturing will also aid in the development of different designs in the markets based on forecasts made from the customer information (Gunasekaran, Lai & Edwincheng, 2008). This means that for the whole level of response to materialize, the company should ensure that at least most of the customer’s data is available. The knowledge and IT management is supported by Data Management Frameworks (DWF) that function to collect, analyze and present relevant data on the market.
The data management framework also facilitates the communication between the stakeholders in the supply chain on matters that are of importance to each one depending on their roles (Gunasekaran, Lai & Edwincheng, 2008). The framework also supports the e-business platforms through providing the exact information that the stakeholders in the supply chain need (Gunasekaran, Lai & Edwincheng, 2008). E-business streamlines all the operational decisions of the firm making it even easier for the coordination of the supply chain from different points say the suppliers, customers, and the manufacturers to meet the ever rising demand (Gunasekaran, Lai & Edwincheng, 2008). Additionally, RFID can be used to track the goods from the manufacturers, while on transit and when they are being delivered to the retailers for sale as have been achieved by many companies (Gunasekaran, Lai & Edwincheng, 2008). With RSC, a firm is assured of an agile response to the global business since coordination’s can either be centralized or decentralized through global outsourcing. Furthermore, there are various Knowledge and IT tools such as ERP and CRM that can be utilized to transform totally the operations of a business (Gunasekaran, Lai & Edwincheng, 2008). Below is a framework for the development of the RSC that is applicable in GAPs case.

A framework for the development of responsive supply chain (Gunasekaran, Lai & Edwincheng, 2008).
Outsourcing and Competitive Advantage of GAP
Supply chain or logistics outsourcing has gained ascendancy in most global business environment literature (Szymczak, 2013). Outsourcing is slowly being embraced by companies that operate in competitive environments with a key aim of cutting down on operational costs and meeting the ever growing and vibrant customer needs (Szymczak, 2013). Outsourcing entails the transfer of the daily management and operations of a business to an external service provider who specializes in such business processes (Szymczak, 2013). There are many benefits that accrue from outsourcing of the supply chain. First off, outsourcing assures the company of flexibility in the production. Basically, the external company takes all the risks on behalf of the outsourcing company. Thus, the latter can be flexible to the changing business environments (Szymczak, 2013). Secondly, with the outsourcing of the supply chain comes the benefit of efficiency because the contracted company has all the capabilities to meet their tasks (Szymczak, 2013).
Because outsourcing generally handles the processes within the business organization, the costs that are saved can be used in growth related operations for the company. Additionally, with efficiency the value of the products to the customers is increased (Szymczak, 2013). Moreover, the reputation of the firm also increases as a firm that produces quality products. Consequently, the firm is able to attract consumers based on its good reputation. Some of the costs reduced include costs of research and development, training, and manufacture of goods among others (Szymczak, 2013). Through outsourcing, a company is able to get access to technologies that would otherwise be expensive to acquire and would eat into its operational costs. Quality is also assured through outsourcing as long as the external providers have the needed competencies (Szymczak, 2013). The company is also assured of having access to the different changes in the markets that need to be addressed.
Generally, Outsourcing of the supply chain optimizes the operations of an organization (Szymczak, 2013). Therefore, GAP should consider outsourcing some of its non-core business operations through companies that have the competencies to handle such operations. Some of the potential areas that can be outsourced include warehousing services, transport services, and customer relationship management (Szymczak, 2013). However, for the core activities GAP has an option of in-house outsourcing. Outsourcing of the supply chain makes an organization evade losses and thus remain competitive in the market. Therefore, it is conclusive that outsourcing comes with the assurance of competitive advantage.
IT and Transportation Drivers Contribution to GAPs Business
Information Technology and Transportation are some of the key drivers of the supply chain of different organizations (Shahzadi, Amin & Chaudhary, 2013). Transportation and IT come in especially in the responsive phase where the agile reaction is needed to meet the market demand (Shahzadi, Amin & Chaudhary, 2013). Transportation should be flexible and fast so that the customers get the goods and services on time (Shahzadi, Amin & Chaudhary, 2013). GAP has both online and offline stores which mean that it highly utilizes transportation systems for the delivery of its goods (Shahzadi, Amin & Chaudhary, 2013). Transportation remains a bigger problems for most supply chains especially for organizations that have a global presence (Shahzadi, Amin & Chaudhary, 2013).  However, with an efficient and effective transport arrangements a company is able to gain competitive advantage. Research indicates that outsourcing to third party transport companies have boosted the logistics of many companies (Shahzadi, Amin & Chaudhary, 2013). Most of the products of GAP are currently being delivered through air freight to reach the customers faster (Gap Inc., 2015). However, recently, the company has been keen on introducing rail transport and using third party transport organizations (Gap Inc., 2015).
Information Technology is also another driver of the supply chain that assures an organization of its efficiency whether in manufacturing or service delivery (Shahzadi, Amin & Chaudhary, 2013). IT systems have developed to include forecasting capabilities that are used by most firms in responding to the volatile demands of the market. Management information systems stabilize the supply chain and enable communication between the suppliers, manufacturers and the customers among other people within the supply chain. Information Communication Technology is utilized in planning, collaboration, delivery coordination, order tracking and stock management (Shahzadi, Amin & Chaudhary, 2013). GAP Inc recently adopted the use of scorecards to evaluate the suppliers’ readiness to meet the demands of the customers, tracking the quality and quantity of the products and monitoring customer performance through the use of technology (Dolgui & Proth, 2010). GAP uses RFID in tracking the sales of denim clothes in order to keep track of the sizes, sales and the types of clothes available for stocking in the shops (Dolgui & Proth, 2010). Most importantly the information collected through the e-commerce websites of GAP Inc is used in the supply chain to meet the diverse demands of the customers (Gap Inc., 2015).
Conclusion and Recommendations
The supply chain of an organization plays an integral role in its success. Proper management of the supply chain reflects the success of the business. GAP is a clothing company that has existed for decades. The company’s brands heavily depend on the supply chain that comprises of the IT framework, transport network and the network of manufacturers. There are different customer needs that the company needs to meet in order to fill the gap and remain competitive. The apparel industry is dynamic making the responsive supply chain, the best responsive mechanism that GAP Inc can use to remain relevant. IT and Transport form part of the supply chain and have helped GAP in meeting its objectives. Lastly, GAP Inc should consider outsourcing so as to gain a competitive advantage in the market. As part of the recommendations, GAP should outsource some of the supply chain operations so as to have a competitive advantage. There is scanty information on how GAP Inc has integrated its supply chain thus the need for more research into the area.

References
Dolgui, A., & Proth, J. (2010). Supply Chain Engineering: Useful Methods and Techniques. London: Springer.
Gap Inc. (2015). Old Navy. Gapinc.com. Retrieved 10 November 2015, from http://www.gapinc.com/content/gapinc/html/aboutus/ourbrands/OldNavy.html
Gunasekaran, A., Lai, K., & Edwincheng, T. (2008). Responsive supply chain: A competitive strategy in a networked economy☆. Omega, 36(4), 549-564. http://dx.doi.org/10.1016/j.omega.2006.12.002
Saricam, C., Aksoy, A., & Kalaoglu, F. (2012). Determination of the Priorities of Customer Requirements and Quality in Apparel Retail Industry. International Journal of Business and Social Science, 3(16), 242-250.
Shahzadi, I., Amin, S., & Chaudhary, K. (2013). Drivers of Supply Chain Performance Enhancing Organizational Output: An Exploratory Study for Manufacturing Sector. European Journal of Business and Management, 5(14), 53-64.
Szymczak, M. (2013). Managing towards supply chain maturity: business process outsourcing and offshoring (2nd ed.). Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.