The manufacturing sector is a vital component of the global economy, significantly contributing to economic expansion and employment opportunities (Xu, Kerbache, & El Omri, 2020). This research is necessitated by the belief that ERP system installation requires substantial investment, continuous updates, and maintenance in logic processes. As the sector continues to evolve in response to increasing competition, volatile markets, and rapid technological progress, efficient logistic processes and seamless adoption of enterprise resource planning (ERP) systems have become essential (Annamalah, 2020). The world has become a global village where businesses operate internationally (Hwang, Chen & Lin 2016). Logistic processes play a vital role not only in the transportation of goods but also in stimulating economic growth and the creation of employment. The logisticLogistics industry has created more than 11 million employment opportunities and is accountable for about 11% of the GDP of the European Union (Hwang, Chen & Lin 2016). In the same region, logistic process costs account for 11-15% of the cost of goods (Al-Shboul, 2017). This indicates the importance of this research.
Some logistics process fundamentals include insurance, transportation, inventory management, handling costs, customer relationship management, and storage (Usuga et al., 2020). These are some of the fundamentals of every product company. Thus, The logistics industry has the highest share in the services sector. The successful implementation of these systems can provide organizations with a competitive advantage by streamlining their supply chains, reducing costs, and enhancing operational efficiency overall (Lyu, Guo, & Huang 2020). Adopting an ERP system to manage logistic processes will improve revenues and profitability, increase revenue, and cut costs.
This research paper will investigate the role of Enterprise Resource Planning (ERP) systems in enhancing logistics processes in the apparel manufacturing industry. The study will systematically examine the factors that influence the selection of ERP systems, the best practices for successful implementation, and the challenges organizations face when adopting ERP systems. In addition, the research will discuss how ERP systems contribute to improving logistics processes and suggest future research directions in this area.
The Rationale of the Research
In 2021 alone, the global revenue collected in the apparel industry hit the US$ 1.5 trillion mark. This is expected to improve continuously to hit a revenue tune of US$ 2 trillion by 2026. This signifies the importance of this industry to the economy of any country. It means that every company that needs to succeed in this industry should position itself in investments that can help it improve its efficiency. That is, it helps it in improving its operations in an efficient way that helps it improves its processes by cutting costs and time required in various processes while increasing revenues and profits (Gnimpieba et al., 2015). One such strategy is in the investment of ERPs.
The apparel manufacturing sector is a multifaceted industry encompassing intricate logistics processes such as inventory management, supply chain management, and production planning (Ho & Ma, 2018). Implementing Enterprise Resource Planning (ERP) systems within this sector can streamline these procedures, reduce expenses, and enhance overall efficiency in operation (Pirmanta Pirmanta, 2021). However, the successful adoption and implementation of ERP systems remain challenging for many apparel manufacturing organizations (Gnimpieba et al., 2015). This research seeks to identify best practices and challenges in adopting ERP systems and provide valuable insights for organizations in the apparel manufacturing industry.
Existing research on ERP systems in the apparel manufacturing industry has focused on various aspects, such as technology adoption (Varukolu & Puthenpurayil, 2009) and automation systems (Kwai-Sang Chin et al., 2004). However, a lack of comprehensive research systematically investigates the interplay between ERP system selection, effective implementation practices, challenges faced during adoption, and the impact on logistics process enhancement in the apparel manufacturing industry (Kincade et al., 1993).
This research aims to fill these gaps by providing insights into the factors affecting ERP system selection, best practices for successful implementation, and challenges faced by organizations in the apparel manufacturing industry during the adoption process (Pirmanta Pirmanta et al., 2021). Furthermore, the study will explore the role of ERP systems in enhancing logistics processes, emphasizing this research’s importance in advancing knowledge and practice in the field.
Critical Operations in an Apparel Company
Some central departments in an apparel company include the accounting section, production and planning department, CAD section, merchandising department, Design department, sampling department, fabric and trim store department of the apparel industry, fabric inspection department, maintenance, production department, production department, quality assurance department, human resource department, industrial engineering, JIT inventory management system to name a few. This research will study these departments and conduct a qualitative study on how ERP can help improve processes.
The primary objective of this research is to identify the factors that influence ERP system selection, best practices for successful implementation, and challenges faced by apparel manufacturing organizations in adopting ERP systems. The study will also examine how ERP systems enhance logistics processes, such as cost reduction, inventory management, and supply chain management.
ERP System Selection for Apparel Manufacturing:
- What factors should be considered when selecting an ERP system for apparel manufacturing organizations?
Practical Implementation of ERP Systems in Apparel Manufacturing:
- What are the best practices for successful ERP system implementation in the apparel manufacturing industry?
ERP Systems and Logistics Processes Enhancement:
- How do ERP systems enhance logistics processes in apparel manufacturing organizations, such as inventory management, supply chain management, and cost reduction?
Challenges and Risk Mitigation in ERP System Adoption:
- What are the main challenges apparel manufacturing organizations face during the ERP system adoption process, and how can they be addressed?
Silver Jeans Co.: Company Overview
Silver Jeans Co. was established in 1991 and operated up to date as a family business. The company is an extension of Western Glove Works, the second-oldest private company producing denim in North America. Silver Jeans Co. has more than 20 years of experience in the design and manufacture of denim. In 1991, when the company was established, it produced its first silhouette, unisex jeans commonly referred to as “Frisco. The company sold 2 million pairs of this product in the same year. Since then, the company has diversified its product line to include various outfits for everyone. The company now produces lasting, premium, high-quality fabrics reinforced by a strong stitching technique, rivets, and buttons.
The company prides itself in crafting high-quality, authentic, and sustainable products. Mainly, the company sells through its two outlets located at Mall of America and Crossroads Center in Minnesota, independent retailers, and another major department across North America and Canada. The company also sells on online platforms, their website,silverjeans.com being the main ecommerce outlet. The company has around 250 employees and is headquartered in Winnipeg, Canada.
Analysis of Key Operations.
The accounting department is responsible for recording transactions, keeping financial records, maintaining the books of account, handling letters of credit, invoicing, and preparing the packaging list. It also handles all the cash flow matters of the organization.
Production Planning department.
When the order is confirmed, the pre-production sample is approved. The firm heads then hold meetings with various department heads to outline the details of the intended production. The planning department then analyses the order and comes up with estimates which are then discussed, and if appropriate, they are approved. The department then plans the order quantity, plan cut date, breakup of the order, operation breakdown, et cetera depending on the nature and size of the order.
This department collects the required inputs for the order, for example, the tech pack, fabric details, patterns, purchase order, parameter details, et cetera, and comes up with the required output in the form of lay reports and consumption rate of the raw materials.
Merchandising department has been interacting with buyers and therefore understands the market needs. Therefore, they return to the company from the field with buyer’s feedback reports. They explain their recommendation to other departments regarding the market needs through merchandising process. Merchandising process involves planning, developing, executing, and finally dispatching the order to the buyer. The method used here involves providing guidance and overseeing successful order processing.
Unlike many organizations, Silver Jeans Co. has a standalone design department solely dedicated to a product’s design areas. Its responsibility is to create new designs adhering to the requirements of the current market trends. It also has the responsibility of analyzing the designs received from the buyers.
This is one of the company’s key departments and is responsible for confirming bulk orders. The department is also referred to as the product development department. Here, various types of samples are prototyped to the best form. The merchandising department oversees the creation of prototypes since the latter is aware of the market needs and trends.
Fabric and Trim Store Department
This department’s primary role is housing the material ordered and comparing it with the bill of material (BOM). BOM is a detailed data source used in product manufacturing. It details the amount of material required in fulfilling an order. It entails components, instructions to guide the manufacturing process, and the raw materials. BOM is the first step in production. Fabric and trim store department responsible for tracking inventory, identifying the dead stock, and preparing inventory reports.
Fabric Inspection Department
The primary responsibility of this department is to inspect the received fabric against the set standards. The inspection process is done using either of the two methods, namely, the 4-point inspection and the 10-point inspection, which are aimed at assessing the fabric quality. Accepted quality level (AQL) 1.5 assesses the trims and garments.
This department is responsible for ensuring that everything is working correctly at all times. It ensures zero breakdowns and continuous preventive maintenance. The department ensures reduced downtime and an increase in lifetime. To achieve its objectives, it uses tools such as mean time to repair (MTTR), which assesses the time required to repair a failed machine, and Mean time between failures (MTBF), used to measure the time between successive defeats.
The production department forms the heart of this company since every product is manufactured here. The department is responsible for ensuring maximum production level, continuous improvement of productivity, and efficiency by minimizing the wastage of resources.
Quality Assurance Department
The department has a responsibility to ensure quality maintenance and control. Its work is divided into different inspection stages, which include pre-inspection, end-line inspection, and final inspection.
Human Resource Department.
The primary responsibility is to manage human capital. It is involved in recruiting new employees, maintaining the current employees, and managing human resources affairs. The human resource department establishes employee policies besides employee pay scale planning. They strive to keep the attrition and absentees rate at bay.
Industrial Engineering Department.
This department improves productivity, production, quality, and efficiency and maintains historical data to assess production capacity.
This is an inventory management method that only avails the raw materials only when needed for production. This method is much used when a firm’s product is done in different designs and specifications. In the apparel industry, the products must reflect various market demands; hence, the designs keep changing to follow the demand trend.
Silver Jeans Co. has many departments, which might make it hard to coordinate manually. There is a necessity to devise a way that can be used to manage and coordinate these departments to save on time and cost and improve efficiency and productivity. When the merchandising department comes in with an order, all the other departments should have this knowledge immediately to meet the order on time, in specified quality and quantity. The management should be able to instantly locate any asset of the organization, including products and raw materials, at any given time (Yin et al., 2021). The many different types of departments found in Silver Jeans Co would only be able to do this with an ERP.
Separate management of these departments is not easy and leads to time wastage, exhaustion, wastage of resources, and inefficiency. If a particular order comes in, the merchandising department presents it to the accounting department, which authorizes and records it. It is then taken to the design department, and after prototype approval, it is taken to the fabric department, which then forwards it to the inventory management department. The engineering department is informed and sets the required equipment for this production. If the required raw materials are unavailable, it is requested, and when received, the production process begins, followed by the quality assurance department.
Research Findings and Discussion:
A sound ERP system should help the overall administration, operations, and efficiency, free some people and resources, and enable business growth while winning new businesses. It should therefore help in connecting and coordinating all the departments. The following steps should be considered in selecting a sound ERP system.
- List all the business requirements.
It should therefore help in fulfilling various tasks, for example, help in accounting, scheduling stock purchases, managing inventory, et cetera. After analyzing all the business requirements, select an ERP software that would fulfill all these requirements (Lorenc & Szkoda, 2015). Generally, it should streamline overall operations and efficiency in financial data, ordering, accounting, inventory, logistics, production planning, and production.
Apart from analyzing the current business requirements, looking into future requirements is advisable. This is because ERP software may only be sufficient to accommodate some tasks in the future (Oltra-Badenes et al., 2019). It is therefore vital to look into the business strategy for the following 5 to 10 years, how the key performance indicators will be measured, company strategy in introducing new products into the market, entering new markets, and further expected growth in the future.
Efficiency improvement in all departments should be the deciding factor. It is crucial to assess all the departments for any overlap in functions and processes. Assess how redundancy can be cut down and how functions can be combined efficiently. The product should also be analyzed regarding production requirements and how efficiently it can reach the market. Assess any unnecessary delay between the time production is done, when it gets to the market, and how it can be reduced.
The benefits anticipated from the ERP system should exceed the cost of installation and operation. The benefits should be long-term and have a significant return on investment. Involving a consultant would be necessary for this analysis.
It is essential to consider future growth and that the system will accommodate it. The ability to scale up in the future is critical (Xu, Xu, &Li, 2018). In most cases, the vendors should assist in customization to adapt the system to the organization. Sometimes, it is crucial to begin applying some modules before adapting the whole system.
ERP Systems and Logistics Processes Enhancement:
An efficient ERP system will enhance logistic processes by simplifying orders and returns processing. It should help in tracking both processes. The system should help predefine discounts, track packages, shipping, and return terms, analyze clients for credit facilities, et cetera (Muscatello, Parente, & Swinarski, 2016). It helps in simplifying processes, which leads to short delivery times.
It also helps reduce operational costs by automating some activities, such as generating orders. It also helps in planning material requirements while reducing administrative costs. This is because it allows the storage of information in one database and streamlines the process, which will help reduce the staff needed. It also helps automate and address customer queries leading to improved customer relationships.
The system helps in reducing stock-outs. Since processes are automated, the ERP system will help alert management when the stocks need replenishment. It also helps in time management, automatically fulfilling purchase orders, assigning tasks, and scheduling order fulfillment (Lee, Bagheri, & Kao, 2015). It also helps in reducing errors and repetitive data entry. An ERP system organizes multiple functions in one convenient dashboard, which offers a view of most departments at a glance.
Challenges in Implanting ERP
Selection of a sound ERP system is itself a challenge. It is hard to determine processes that would be integrated. In many cases, there is employees resistance to change. Some would end up sabotaging the whole process. It is also challenging to get a system that would meet all the organization’s requirements without taking some time and incurring extra costs in customizing it (Wang et al., 2012). In most cases, the cost involved in maintenance is very high. Data migration from the current system to the new one also becomes challenging.
The apparel industry has many departments, which makes it hard to coordinate efficiently. Implementing an ERP system is a process that is to be taken cautiously since it costs much (Damir et al., 2017). The first step is to analyze current logistic processes and assess which ones can be automated. A good ERP will help streamline logistic processes, thus reducing production time and cut on costs.
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