Quality in Supply Chain Management (leather Industry)

Undertake a critical assessment of trends, problems and opportunities associated with improving quality within the supply chains of leather industry.

Table of Contents 

1.1 Introduction
1.2 Diamond Model of National advantage
1.3 The Made in Italy Concept
1.4 Gucci’s Tops the List (a case study)
1.5 Lag and Quandary in Indian Industry (Problems)
1.6 The Competitive Protocols (Benchmark)
1.7 Quality Assurance Competency
1.8 Fabricating an Effective, Efficient and Qualitative Supply chain
1.9 Embark Managing Uncertainty
1.10 Current Trends and Opportunities
1.11 Conclusion 10

1.1 # Introduction

The objective of this essay is to undertake a critical assessment of trends, problems and opportunities associated with improving quality with in the supply chain of leather industry.Contemporary trends in communication and information technologies have made supply chain contingency a strategic tools for leather industries to enhance their value creation. Despite the advanced trends the uncertain nature of ventures in developing countries shows an evident difficulty in terms of competitiveness and efficiencies. The manufacturing Industries all over the world are continuously upgrading the manufacturing techniques such as quality assurance, business process reengineering, lean technology, indispensable audits, laboratory testing, etc; in-spite of all the efforts, the leather industries in developing countries has not yet reached the industrial benchmarking. The demanding market competition are forcing industries to apply quality management in the entire supply chain rather that in end products only. This is due to the competitive scenario that have moved from business to business concept to supply chain to supply chain concept. The established leader of this industry in the international level is Italy, and India is one of the emerging market; by comparing the contemporary strategy in both will perceive the emphasis of quality assurance techniques integrated in the supply chain (Georgise, Thoben, and Seifert 2014).

1.2 #Diamond Model of National Advantage

This model reveals the fact that the ability of the firms in an international arena is whose origin is in a particular country to succeed in International arena is framed by four factors.

(1) their home country’s demand condition,

(2) their home country’s factor condition,

(3)related and supporting industries with their home country, and

(4) Strategy, structure, rivalry among their domestic competition (Ketchen and Short 2012).


 1.3 The ‘Made in Italy’ Concept 

World wide it is accepted The Made in Italy Concept is synonym to quality. Italian leather apparels especially foot wears are considered to be superior when compared to other countries like Indian in spite of the resources being high . Italian industries ‘lead’ because of the concept of ‘relating and supporting industry’. Shoemakers such as Salvatore Ferragamo, Prada, Gucci, and Versace benefit from the availability of top-quality leather within their home country and could produce fine products . If these shoemakers needed to rely on imported leather, they would lose flexibility and speed. The Italians have already reached the second stage of industrial benchmarking and started focusing on total quality improvement in system and business processes (Guillaume et al. 2014); (Pirolo1, and, and Nenni2 2013). Italian brands such as Gucci and Prada have become another name for style and high fashion globally. The designer brands have achieved its popularity not only because of its unique designs but also Italy produces approximately 50% of the machinery used to produce footwear and leather goods around the world and 80% of tanning machinery globally. The Italian leather making machineries can efficiently provide information about the defect cause; that occurs after a month the customers buys it. Italy is the leading country in Europe with more no of establishment, employees, production and sales.By rectifying the causes and continuous improvement in quality had made them reach the long term sustainability (Katz 2009).But Indian industries are still striving to cross the first stage of competence protocol even after holding a huge raw material resources (21% of cattle and buffalo; 11% of world sheep and goat) and second and third largest producers of footwear, leather garments and saddlers and harness items respectively. This is mainly because of the quality of the hide procured, the processing techniques, design and crafting, efficient manufacturing and proper distribution and promotional channels are not up to the mark to meet the world standards

1.4 Gucci’s Tops the List (a case study)

‘Quality is remembered long after the price is forgotten’. Gucci (Lester 2014) According to Nicola Ruiz Gucci is the “worlds’s most desirable brand”(Ruiz 2008) Being an iconic Italian brand Gucci ensures that the quality of the leather is consistent to meet the customers expectation. All the luxury leather brands in Italy are emphasising their standard by owning the supply chain from supply of raw material through to the retailer. Above this it maintains a good customer relationship management and completes its order on time through traditional as well as direct distribution. Offers after sales services, priority waiting list ,corporate gift services and alterations as value added services. All the above factors makes the Gucci products highly sustainable. The company earned the ISO 14001 and began Eco friendly initiatives and moved into green supply chain.Hence most of the Italian leather industry follow the same strategic principals and have crossed level II of industrial bench marking (Keach 2012).

1.5 Lag and Quandary in Indian Industry (Problems)

India’s leading brands such as Red tape, Metro, Khadims, Lakhani, Liberty, etc are brands of eminence but confined to Indian market. Capable of producing niche leather products like Italy, India can become a sustainable market with a low labour cost that refers to 10% of the production cost. Where in Italy The labour cost exceeds 38% and the companies are looking for joint venture with India to increase trade. India with highest population of buffalo in the world and increased exports throughout the world could not achieve the reach of Italy because of low availability of fine quality leather from abattoirs.Current scenario of Indian industries are insufficient tanning technologies, low productivity and poor workmanship, Lack of efficient environmental control, lack of trade information and market intelligence, high capital cost and investment climate (DSIR INDIA). The leather apparel statistics shows that India is lagging behind Italy by a huge margin. Italy facing labour constrains could achieve a turn over ten times more than India this is because 80% of the work in India is manual which is mostly automated in Italy. As mentioned earlier in this report Italy produces most of the automated machineries used in leather goods making.

1.6 The Competitive Protocols (Benchmarking)

A critical analysis of competitive protocols in leather industries shows that India is unsustainable to current industry benchmarking due to inefficient and cumbersome cost structure, labour productivity, process timings, rejecting and waste control, quality accreditation, working environment, capacity utilisation, system improvement and business leadership (DSIR). If quality assurance can be applied in each of this area and by reengineering the supply chain India could reach its ‘Long Term Sustainability’.

1.7 Quality Assurance Competency

“The leather product industry plays a prominent role in the world’s economy, with an estimated global trade value of approximately 100 billion US dollars” (UNIDO 2010). The quality assurance would entitle industry with a futuristic, sustainable, hand on solutions that leads to profit in an ethical manner. In todays competitive world of business ‘quality’ has become a major influential factor in capturing the market or effective reach-out to the customers. A supply chain has many possibilities of failure due to waste, process slowing down, poor quality and lost sales that can drastically reduce the profit margins. And with cost continuing to raise the supply chain cannot make the most effective use of the resources. Hence quality management should be implemented right from the beginning; especially in leather garment industry quality of the product plays a vital role.

 1.8 Fabricating an effective, efficient and qualitative Supply Chain (Lester 2014)

To rejig the mores of leather industry to deliver a sustainable leading-edge supply chain practices three main input variable should be considered; effective, efficiency and quality.

This could be achieved by assuring quality through out the supply chain that would eliminate the cost of poor quality that easily exceeds 10% of the factory cost in general.

Abolishing the inefficiencies unseen in a supply chain such as wasted time, labour, material and capital that would ever exceed the purchase cost.

Abolishing the cost of recalls, reworks, delivery delays and penalties by performing a laboratory testing of products. This would in turn save the brand equity and organisational repose.

Indispensable Audits: Specialised audits conducted in all factories such as tanneries as well as footwear, apparel, outdoor gear, leather goods , etc would give an opportunity to manage risk and more enlightened business resolutions .

Constantly monitored warehousing: This is the most important area where the quality management plays an important role. One of the most consequential problem faced by the leather goods industry and its products is that the molds. Moldy products landing up at the destination will create a devastating effect in economic value. The cost to the industry would be several million dollars. Substantial monitoring will result in eliminating the time, energy and resources essential to overhaul the dissenting effects on the brand and company created by mold-havoc shipments (Neeta Nigam, &, and Nair 1994).

 Implementing ‘Lean, Agile and Green supply chain’ principles, techniques, tools and training that would eradicate waste and increasing value to reach the current industry benchmark. Review by Anh and Vinh explains the importance of integrated green supply chain that includes the nexus of lean production, agile manufacturing and green supply chain (Anh and Nguyen Quang Vinh).

A customised ‘Quality Ensuring Programs and Trainings’ within the industry will result in sustaining production quality and eradication of waste. This will definitely increase the profit margins or returns.

TQM: An empirical study on implementation TQM in supply chain management and found out that it not only improves that quality of supply chain but also the aspects in which the company recognises their limitations (Casadesús and de Castro 2005).

1.9 Embark Managing Uncertainty

Prior to all a company must understand the customer and supply chain uncertainty which is the customer needs for each targeted segment. The supply chain uncertainty helps the company identify the intensity of demand uncertainty and performance cycle uncertainty for which the company should be prepared for (Bowersox et al. 2013). Uncertainty is inversely proportionate to decision making in collaborative supply chain (Guillaume et al. 2014). Hence for creating effective value chain uncertainty should be taken into consideration. The study on challenges of value chain on African market shows that it was due to the poor value addition initiatives (Mwinyihija; and Quiesenberry 2017), according to Mwinyihiji and Quisenberry a vague quality assurance strategy, irrelevant policies and legal framework was the defect in prevailing supply chain strategy and suggested that eliminating uncertainty to a maximum level would aid in building up an effective supply chain (Mwinyikione Mwinyihija and Quisenberry 2013).

1.10 Current Trends and opportunities

According to Mwinyihija though Synthetics has predominantly increased its market prevalence, great opportunities still exist will a future carrying a vivid forecast. In recent days leather industries are concentrating more in environmental wellness and green supply chain by moving to environmental friendly technologies. And followed by communication technology plays a vital role in globalising the leather industries and firms to reinforce the online business sales and services. (Mwinyikione Mwinyihija 2014) Indian Industries by enhancing its participation in world leather trade through joint venture, upgrading to OEM(oracle enterprise manager) and OBM (original brand manufacturer), outsourcing and triangular manufacturing have a greater opportunities to hit the global market by achieving the benchmarking (Mwinyikione Mwinyihija 2014). Other quality management areas in general of keen attention are standardisation of quality process, quality management softwares, creating business process platform, quality metrics programs, supplier quality management. The recent innovation is 3D printing in supply chain while other trends are global labour cost equalise, innovative replacement in raw material scarcity, skill specialisation, emergence of control tower etc. Government of India has submitted a twelfth five year plan on leather and leather products to cope with the global market (DIPP 2011).

1.11 Conclusion

The discussion brings forth the Qualitative Supply Chain strategies of developed countries had set a hight standard or benchmarking for the emerging countries to restructure and reengineer the current supply chain trends. There are different variable that effect and affect the supply chain and quality; hence efficient planing, operating and executing will eliminate all ignorance and uncertainty in the present field. Italian leather sectors have efficiently manipulated their qualitative strategies and carrying themselves to the next level of improvement. But Indian sectors have to work far more ahead to cross over Italy. But India could commensurate by accommodating the current trends and technologies with efficient strategies.


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