World Co. Supply Chain Strategy in Japan's Fashion Market

The Japanese Fashion Retail Landscape

"Innovate or die" was the title of a recent conference on the Japanese fashion industry (May, 2010). In technology, fashion, and other aspects of modern life, the Japanese consumer has long been fascinated with what is "new." This is not simply true of product appearance, but also the way that products are displayed and accessed. For example, using mobile phones to make apparel-related purchases has become particularly popular among Japanese female consumers. "Young women will often try on items in stores, but rather than buying there, they take a few minutes out of their shopping trip to order them via their phones, not only avoiding carrying their purchases home but also collecting the loyalty points they earn from the website" (May, 2010). The brick-and-mortar store remains important for young women to have the shopping "experience," but using a store as a point-of-purchase location is less vital in the new economy. Consumers are also more value-conscious about accumulating loyalty points and rewards.

In Japan, web-based and real-life shopping are complementary, rather than at odds as they are sometimes portrayed. Portals such as ZoZo showcase a wide variety of popular items, but consumers still desire an exclusive, in-store experience. Fashion magazines often have a symbiotic relationship with retailers, using their built-in audience to showcase certain products and counsel young people to buy the latest trends. The use of all of these venues is essential to establishing a foothold in Japan as a retailer. Keeping costs down while still holding the attention of buyers is the central challenge facing Japanese fashion merchandisers, including World Co., Ltd.

One of the reasons the fashion retailer World Co., Ltd. has succeeded in Japan is its embrace of constant innovation at a low cost to consumers. Rather than emphasizing a classic approach and image, as some American companies have done, World Co. instead states: "value is never static when it comes to fashion, and instead changes with the needs of the customers. To continue evolving as a value-creation company, World must keep creating new value in response to the constantly-changing needs of our customers" (Company information, 2010, World Co.).

World Co.'s Supply Chain Design and Short Lead Times

World Co. has emphasized integration of the manufacturing process to build a more effective brand image and minimize production costs. To further quality control and integration, World Co. has been reorganizing its operations "under the product categories of knit, fabric and jersey" with an aim "toward achieving more efficient production" and to streamline its oversight of these three core aspects of production (Releases, 2010, World Co.). "Flexible and varied" production is necessary to stay on top of the fashion industry, as is minimizing waste (Releases, 2010, World Co.). World Co. achieves this through tight control over manufacturing and day-to-day operations.

Demand forecasting is a critical aspect of World Co.'s success. It is essential that new product lines are responsive to the consumer's needs and desires. Responsiveness is also required to minimize wasteful production of unpopular clothing lines and reduce the build-up of unsold inventory.

Manufacturing and Demand Forecasting

"Department stores have already lost their dominant position to specialty chains and stores. As the love for high-end designer logos fades and young consumers embrace value-driven, on-trend fashion … 44% of Japanese retailers and 58% of Japanese brands cite brand building as their single greatest challenge; a quarter also view it as their greatest opportunity" (May, 2010). World Co. has deemphasized specific department stores and instead concentrated on crafting a unique, value-based line of brands focused around several core fabrics. Inventory is also directly tailored to consumer demand, not the demands of department stores.

World Co., Ltd. has been endeavoring to maximize customer value and productivity "based on the SPARCS concept, which seeks to unify the entire business process from retail to production by converting losses and inefficiencies into new value. Under this concept, we established our production system to enable integrated control of the purchasing and production of all of our brands from the perspective of total optimization centered in the production headquarters" (Releases, 2010, World Co.). World Co.'s supply chain philosophy is thus grounded in a concept of "integrated" production whereby a single guiding principle is emphasized across all aspects of the production process — spanning how products are presented to the public as well as solidifying the company's image in the media.