Uniqlo operates internationally with product development functionsbased on a worldwide RD infrastructure that connects the two majorfashion hubs, Tokyo and New York, in order to become a globalbrand.Talents around the world will be employed to help them to catchup with trends and control the next fashion trend. The RD Centers arein charge of gathering and synthesizing information on the newestfashions, lifestyles, and materials. Every day, Uniqlo service countersare open to accepting comments and understanding consumerexpectations.
GROUP ASSIGNMENT SCM201_MKT1602_SU2022 REPORT Lecture: Vo Thi Minh Phuong Subject: Supply Chain Management Group’s Member: Pham Anh Tuan- SS160575 Pham Ngoc Thach- SS160580 Nguyen Vinh Hung- SS160582 Nguyen Minh Chien-SS160573 Nguyen Duc Manh-SS160531 Table of Contents: I Executives summary II Introduction III Overview of Uniqlo Supply Chain 1.Planning process: 1.1 Research and Development 1.2 Procurement of material and suppliers’ relationship Production department 2.1 Production: 2.2 Warehouse and Inventory control IV Analysis of strengths and weaknesses of the supply chain Strengths: 1.1 SPA model 1.2 Total Chain Management system Weakness 2.1 Globalization issue 2.2 Lack of accessibility and e-retailing operations: 2.3 Lack of market-segment responsiveness: V Potential solution Globalization issue: Lack of accessibility and e-retailing operations: Lack of market-segment responsiveness: VI Conclusion: VII References: I.Executive summary This report's objective is to analyze Uniqlo's supply chain Uniqlo is a market leader in the fast-fashion sector, and one of its key strategic goals is to offer customers high-quality goods at affordable prices Uniqlo has effectively vertically integrated its whole supply chain and stayed clear of a number of dangers thanks to a business strategy centered on the competitive use of the SPA model The paper examines business strategies and the company's competitive supply chain in addition to highlighting Uniqlo's advantages and disadvantages In order to offer information for the analysis process, this report will apply a number of searching techniques to data gathered from a variety of sources, including corporate reports, company websites, third parties' business reports, case studies, and online newspapers II Introduction "Uniqlo was first a minor section of a bigger Japanese men's clothes business when it was established in the late 1940s in Japan" Since opening its first shop in 1984, Uniqlo has grown its distribution network to include more than 15 nations, over 1300 physical locations, and online outlets Thanks to its distinctive features and the incorporation of technologies into each and every product, such as Heattech, Airism, and Ultra Light Down, Uniqlo has become renowned for its contemporary styles and premium "basics" collection The company has also become a leading apparel organization in Asia and internationally Although Uniqlo is the top clothing brand in mainland China, the company is actively expanding to markets in Asia, Europe, and North America Following an in-depth review of the company's strengths and shortcomings, our research analyzes the company's present supply chain from design to production and sales Finally, there will be space for potential solutions, giving Uniqlo additional options for technology solutions in the future III Overview UNIQLO supply chain Planning process 1.1 Research and Development Meetings will be conducted at the start of the year to plan the launch date and new concepts The goal is to create high-quality textiles overall The R&D division regularly investigates the newest in new materials and international trends to assist Uniqlo in creating goods that will meet the demands of future customers The R&D centers will develop concepts based on sales data from physical stores one year prior to the introduction of targeted items After that, it will be up to the designers to prepare prototypes and send them to merchandising for approval The designs will be sent for mass production in accordance with the illustration after multiple iterations of color and silhouette refinement -Uniqlo operates internationally with product development functions based on a worldwide R&D infrastructure that connects the two major fashion hubs, Tokyo and New York, in order to become a global brand.Talents around the world will be employed to help them to catch up with trends and control the next fashion trend The R&D Centers are in charge of gathering and synthesizing information on the newest fashions, lifestyles, and materials Every day, Uniqlo service counters are open to accepting comments and understanding consumer expectations Customer’s opinions can be gathered via email, telephone, letter, etc Since 2011, FR has launched the Customer Satisfaction Web to encourage foreign customers to send comments in their native language before directly transmitting them to the Customer Center in Japan It collects feedback from product sizes, functionality to product features 1.2 Procurement of material and suppliers’ relationship First off,Uniqlo’s strategic plan is determined by considering suppliers with high-quality materials which helps Uniqlo differentiate itself from other competitors For instance, to develop their core material, Uniqlo collaborates with a partner named TORAY, one of the well-known Japanese textile makers To ensure that all of its goods are made using environmentally friendly materials, Uniqlo also practices ethical and responsible sourcing For instance, because the Uzbek government unlawfully used minors and forced laborers, Uniqlo does not utilize cotton made there As part of its supply chain strategy, the corporation also collaborates with NGOs to stop the exploitation of child and forced labor in this nation -Long-term suppliers and Uniqlo are connected through a strategic, trust-based partnership that enables the firm to make significant promises to the suppliers Because that Uniqlo will send an apology and even compensation for its suppliers if any unwanted situation happens Product department: 2.1 Production - Partner factories To reduce production costs, UNIQLO outsources manufacturing to partner manufacturers, the majority of which are located in China (including over 120 plants) Because of direct negotiations and large orders, UNIQLO is able to buy clothing materials for less money, which allows it to charge fair prices for its items - quality control For the purpose of guaranteeing the quality and safety of its products, the UNIQLO Quality Assurance Committee incorporates its own Global Quality and Safety Standards Additionally, in order to promptly address any material flaws, UNIQLO's Product Quality and Customer Care Team also incorporates feedback from customers Last but not least, prior to mass production, UNIQLO relies on outside quality and safety inspections to carry out sample tests These tests include color fastness, which tracks the longevity of dyed fabrics, and formalin, which determines whether the chemical produces any skin allergies - The Takumi Team This is a team of top authorities from Japan's renowned textile sector that are engaged by UNIQLO to collaborate with the producers to carry out a meticulous and in-depth investigation of product quality and safety Takumi Team members explain their dyeing and stitching methods, which they have developed over 30 years of expertise, and offer advice on how to maintain product quality and workplace safety As a result, the partners' organizational infrastructure grows and gets better 2.2 Inventory management in the warehouse In 2018, Fast Retailing worked with Daifuku, a logistics company and supplier of material handling equipment, and spent over 100 billion yen automating its present warehouses As a result, 90 percent of UNIQLO's warehouse labor has been reduced Additionally, Fast Retailing Group worked with Mujin to create two-armed robots with 3D vision that can fold a T-shirt and utilize suction hands to pick up clothing that has been wrapped in plastic UNIQLO accomplishes this by fully automating the main warehouse in Tokyo The new automatic method seeks to cut storage costs while ensuring timely delivery Only a limited amount of labor necessitates employee assistance with the robotic system IV Analysis of strengths and weaknesses of the supply chain Strengths 1.1 SPA mode As the first Japanese firm to implement the SPA model into its business strategy, UNIQLO set itself apart from rivals by constantly improving the SPA model UNIQLO had a successful application and elevation as the second generation of SPA's representative (Tong 2014) UNIQLO is able to trace business operations using this specific model from the point of origin all the way to the point of sale (Ivanov, Tsipoulanidis, & Schönberger 2019) By using the SPA model, UNIQLO can save store operating costs like rent and labor while adjusting production to the newest trends The SPA model, which connects production/producers and sales/consumers directly in place of middlemen like the previous way, enables the business to be more nimble in reacting to customers' requirements and speed up delivery Additionally, the SPA model contributes to a reduction in the average number of days for inventory turnover, positioning UNIQLO as a market leader in the apparel sector (Wei 2017) Additionally, UNIQLO's SPA model, which eliminates a lot of middlemen and establishes a direct link between manufacturing and sales, is more affordable, giving UNIQLO a competitive edge in terms of pricing The SPA model aids in creating more effective marketing and manufacturing strategies The SPA enables UNIQLO to actively engage in the operating management of various locations, allowing the business to gather operating data for each store By analyzing this data, UNIQLO is able to better understand customer behavior and forecast future sales trends (Wang & Li 2018) 1.2 Total Chain Management system Total Chain Management (TCM) is an enhanced system built based on the traditional supply chain management (SCM) Wei (2017) asserts that by putting an emphasis on store sales data, market information collecting, and analysis, the capacity of commodities management has been increased A team from the marketing and sales planning department and store managers will coordinate the management meetings once a week The POS system's store data will next be examined in order to assess inventory, manufacturing capacity, and market demand forecasts Stores will only perform their duties by determining the needed order, followed by the delivery to the headquarters and logistics center According to reports, the corporate office will watch each store's inventory on a weekly basis If a store needs to place an additional order, the corporate office will instantly provide the relevant sales data to the factory (Wei, 2017) The manufacturer verifies the product's color, size, and other details, promptly makes revisions in light of new information, and ships subsequent orders within ten days Weaks 2.1 Globalization issue Even though it strives to be a global player, Uniqlo is having a difficult time extending its supply chain to other markets The company's networks and operating operations have been very small in the markets of Europe and North America, and it is yet unknown in Africa, Central America, or South America (Anwar 2017, p 31) As a result, the corporation has struggled to introduce its goal of providing apparel for everyone in other markets According to reports, the fast fashion behemoth has failed consumers not just in the US but also in other regions like Hong Kong, Taiwan, or South Korea due to weather sensitivity (Mallory 2016) Martinroll (2019) asserts that the company's attempt to make its products "everything for everyone" has resulted in the worst conundrum it has ever put itself in Because of the unexpected changes in the temperature, Uniqlo's renowned HEATTECH material quickly lost its appeal and did not meet the demands of American consumers, particularly millennials 2.2 Lack of market-segment responsiveness Uniqlo markets itself as a provider of high-quality basics with competitive pricing, a deep and limited product selection, and a focus on mass production On the other hand, quick fashion businesses are able to dominate some fashion categories because to their broad and shallow selection strategies Therefore, despite the fact that Uniqlo's strategy against Zara/H&M has many benefits, it will make the company unresponsive to the newest fashion trends or seasonal changes because they produce clothes at a steady rate throughout the year rather than incorporating seasonal-trendy items made from specialty factories (Woo & Jin 2014) V Potential solution Globalization issue: For Uniqlo, expanding internationally is crucial, especially now that it has almost fully tapped the Japanese market's advantages The difficulty that Uniqlo is experiencing could result from ineffective market analysis, which would cause a disconnect between consumers and stores There are numerous technological solutions that enable retailers to close the gap with their customers in the age of technology In addition to selling clothing, Uniqlo has been proud of its technology capabilities As a result, the business should be in constant contact with its clients via an online platform like gmail, mobile message, social media, or even the company website More than two thirds of fashion retailers feel that investing in new media platforms will be the main topic in the coming years, according to Meaghan (2019), who predicts that "Next Gen Social" will be a new buying trend in 2020 In order to get closer to its clients, particularly in the markets of Europe and America, Uniqlo must invest more in finding novel ways to communicate with them Lack of accessibility and e-retailing operations: Because brick-and-mortar stores are difficult to access, Uniqlo's e-retailing business should be prioritized in order to increase brand recognition globally and to meet the changing fashion industry trend of migrating from offline to online sales (Joyce 2019) Uniqlo may improve customer experience and raise awareness of the distinctive qualities of each design by putting the OMNI channel marketing strategy (integrating offline and online) into practice (LUND Consultancy 2019) This technique can be carried out by creating an online community where consumers can exchange videos or written reviews of things they've purchased with others, as well as by redesigning the Uniqlo My app, which has received poor reviews from many users As a result, Aliexpress, Amazon, and other retail sites account for the majority of Uniqlo's online sales Additionally, online and offline retailers can use technologies like QR codes attached to web pages and product displays to inform customers about the special materials and technologies of Uniqlo's products Flagship stores can also incorporate RFID tags to enhance consumer data collection and inventory management (Mack, Sn.d) Lack of market-segment responsiveness: Uniqlo needs to concentrate on accurate initial forecasting of demand changes and the seasonal tastes in terms of operational processes, along with investing in specialty manufacturing lines to increase the proportion of seasonal-trendy products, in order to minimize excess inventory as well as improve market responsiveness and productivity in light of a variety of market factors Several cutting-edge technologies, including Artificial Intelligence (AI) and Big Data analysis, can carry out such tasks, according to Kupper, D et al (2018) AI and Big Data analysis support forecasting of customer demand by analyzing and learning from data including product launches and media information or weather conditions, etc In fact, Uniqlo and Jetlore, a specialist AI tech startup, have partnered to analyze consumer data and produce a real-time, tailored purchasing experience (Myjer, A 2017) The relationship will need to be implemented further in other processes as it has only been used to increase sales of basic products VI Conclusion In conclusion, a complete examination of Uniqlo's supply chain activities has been conducted utilizing a variety of aspects, including discussion of the company's business strategy and strategies, procurement, R&D, manufacturing, warehousing, and distribution networks The SC's strengths and shortcomings have been thoroughly examined, and a number of potential AI technology-based solutions have also been put out to assist Uniqlo in overcoming these difficulties and enhancing the performance of the SC as a whole VII Reference Abrahams, J 2019, 'Uniqlo heads towards full warehouse automation with groundbreaking robot that can fold and box clothes', The Telegraph, 24 December, viewed July 17, 2022, Alexander, J 2010,’Japan's Just-in-Time Clothes’, CBS News, 22 February, viewed July 17, 2022 10 Joyce, A 2019, "E-commerce, international sales help boost Uniqlo parent’s Q3 results", Inside Retail Australia, 16th July, viewed July 17, 2022,