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Abernathy, Frederick

This article describes how information technologies have reconfigured retailing and in turn the operation of a core US manufacturing industry, apparel. “Lean retailers” exchange point-of-sales information with their suppliers and require them to replenish orders quickly based on actual sales. This shifts part of the risk arising from changing consumer tastes from retailers and onto suppliers. In response to this shift in risk, we argue that manufacturers must reshape planning methods, cost models, inventory practices, production operations, and sourcing strategies. We then show that suppliers that adopt comprehensive changes to their manufacturing processes perform better along a number of dimensions compared to firms that have not.

This paper formulates production policies to maximize the performance of an apparel manufacturing system that replenishes basic items characterized by a flat average demand. The simulation-based model compares a number of production strategies and chooses an ordering and scheduling policy that increases the overall performance of the supply chain. In doing so, different supplier configurations (i.e., different capacity resources and cost structures) are compared and the optimal strategy is selected to maximize the supplier’s profit while maintaining a high order fill rate and minimizing the risk of carrying inventory. The system’s performance is then compared to an upper limit, calculated using Linear Programming.