The fashion industry operates through a complex supply chain where raw materials are transformed into finished products and delivered to customers. To optimize efficiency, brands analyze the value chain, which consists of primary and supporting activities. Additionally, IVAT analysis helps classify production processes based on material flow.
1. Flow of Material in the Fashion Industry
Material flow in the fashion industry starts from raw material sourcing and moves through various stages of production, distribution, and retail. It can be divided into the following steps:
Step 1: Raw Material Procurement
- Natural fabrics like cotton, silk, and wool are sourced from farms.
- Synthetic fabrics like polyester and nylon are produced in factories.
- Accessories like buttons, zippers, and embellishments are procured from specialized suppliers.
Example: A luxury brand sources high-quality silk from China for its new couture collection.
Step 2: Fabric Processing & Dyeing
- The fabric is treated, dyed, and finished to achieve the desired texture and color.
- Eco-friendly brands use sustainable dyeing techniques to minimize pollution.
Example: A sustainable fashion brand uses plant-based dyes to color organic cotton fabrics.
Step 3: Garment Manufacturing
- Cutting: Fabrics are cut into patterns.
- Stitching: Pieces are sewn together.
- Quality Check: Ensuring each piece meets design specifications.
Example: A mass-market retailer like H&M uses automated cutting machines for efficiency, while luxury brands use hand-cutting techniques.
Step 4: Distribution & Retail
- Finished garments are transported to warehouses, then distributed to retail stores or sold online.
- Logistics and supply chain efficiency play a crucial role in reducing lead times.
Example: A global brand like Zara ships new collections twice a week to maintain fast fashion trends.
2. Value Chain in the Fashion Industry
The value chain is a concept developed by Michael Porter that identifies the key activities businesses perform to create value and gain a competitive advantage. The fashion industry’s value chain consists of primary and supporting activities.
Primary Activities in the Fashion Value Chain
1. Inbound Logistics (Material Sourcing & Supply Management)
- Efficient procurement of raw materials and trims.
- Establishing relationships with reliable suppliers.
Example: Nike partners with sustainable cotton farms to secure ethical raw materials.
2. Operations (Manufacturing & Production)
- Converting raw materials into finished goods.
- Implementing lean manufacturing to reduce waste.
Example: A denim brand uses laser technology to distress jeans instead of water-intensive methods.
3. Outbound Logistics (Distribution & Warehousing)
- Managing inventory and timely delivery to retailers and customers.
- Use of technology like RFID for real-time tracking.
Example: Amazon Fashion optimizes warehousing with AI-driven stock allocation.
4. Marketing & Sales
- Creating brand awareness and demand.
- Digital marketing, influencer collaborations, and customer engagement strategies.
Example: Gucci leverages social media campaigns and celebrity endorsements for product launches.
5. Service (Customer Support & After-Sales Service)
- Managing returns, repairs, and customer support.
- Offering alteration services for high-end fashion brands.
Example: Louis Vuitton provides free lifetime repairs for its luxury handbags.
Supporting Activities in the Fashion Value Chain
- Firm Infrastructure: Efficient management systems, financial planning, and company policies.
- Human Resource Management: Skilled designers, production staff, and retail employees.
- Technology Development: AI, automation, and digital design tools.
- Procurement: Negotiating supplier contracts and ensuring ethical sourcing.
3. IVAT Analysis in the Fashion Industry
IVAT analysis classifies production processes based on the flow of materials and value creation. It consists of four shapes:
1. I-Shape (Job Shop Production)
- Low volume, high customization.
- Best for luxury fashion and haute couture.
- Production follows a linear flow, meaning each order moves through a unique set of steps based on the design requirements.
Example: A bridal designer creating a custom wedding gown with unique embroidery and fabric selection.
2. V-Shape (Divergent Production Process)
- One raw material transforms into multiple final products.
- Suitable for textile manufacturers and multi-product brands.
- The process starts with a single input and diverges into several outputs.
Example: A textile mill starts with raw cotton fibers and produces different fabric types like denim, linen, and jersey from the same material.
3. A-Shape (Assembling Process)
- Multiple components are combined into a single product.
- Common in mass-market fashion and ready-to-wear segments.
- Different materials and accessories come together to form a final garment.
Example: A sportswear brand assembles polyester fabric, zippers, and branding labels into a finished jacket ready for sale.
4. T-Shape (Complex Manufacturing)
- Combines mass production with customization options.
- Allows differentiation at later stages of production.
- Suitable for brands that offer personalized or semi-customized fashion items.
Example: Nike produces a standard sneaker design in bulk but allows customers to customize colors, materials, and logos through its online store.
4. Conclusion
Understanding the flow of materials and value chain helps fashion brands optimize efficiency and maximize profitability. Primary activities like logistics, operations, and marketing drive value creation, while supporting activities like technology and HR ensure smooth operations. IVAT analysis further classifies production processes to align business models with manufacturing strategies. By leveraging these concepts, fashion companies can improve cost efficiency, sustainability, and customer satisfaction.
