The design of the value chain is an essential part of corporate strategy. Companies in the textile and clothing industry must regularly, intensively and, above all, critically examine their own value chain and optimise it on an ongoing basis, especially against the backdrop of constantly changing market conditions.

This article provides a detailed insight into the most important issues that arise when designing and optimising the value chain. It also provides information on how you can benefit from a CMB consulting process and how we can help you to make conscious decisions towards a genuine "value chain" in a sustainable and efficient manner.

What is a value chain?

The value chain is a term used in business administration and describes the entire process through which a product or service passes from the procurement of raw materials to the provision to the end customer. The value of a product or service is created through various stages or stations in the manufacturing or service process. It is assumed that the value of a product or service is created through various stages or stations in the manufacturing or service process.

Which decision criteria are available for optimising the value chain?

The entrepreneurial mindsethas a significant influence on the performance, willingness to innovate and flexibility of any value chain. Considering the mindset of all players involved is a key factor in successfully designing a sustainably stable and competitive value chain. It is important to ensure that the company's strategic goals and values are adequately pursued and supported. A value chain that is disclosed to consumers also has a significant influence on the brand message. Care must be taken to ensure that the selected value chain maximises support for the brand values and objectives.

Pricenaturally plays a central role in the decision on the value chain. It is not only the final price of the product that is considered, but above all the costs along the entire value chain, including raw materials, production and logistics.

The available production capacities directly influence the scalability of the value chain, It is important to check whether the existing capacities meet market requirements and whether they are flexible enough to react to future changes. In addition to capacity, the product quality achieved must also be examined. The quality of the products manufactured has a direct impact on brand reputation. The definition of and compliance with high standards for manufacturing quality and the corresponding systematic testing are essential for the design of the value chain.

Technical expertise in manufacturing is just as key an aspect as the availability of technology. The integration and further development of modern technologies in production processes can increase efficiency.

It is essential to have access to highly qualified employees. It is not only the availability of trained specialists that is crucial, but also the qualifications of management staff.

The political stability in the production countries has a significant impact on the value chain. The global political events of the last three years in particular have painfully demonstrated to many players in our industry how important it is to identify the political environment and potential risks and make appropriate decisions.

In addition, corporate social responsibility (CSR) is of central importance. The consideration of ethical and sustainable principles in the value chain is essential and must be carefully evaluated.

The speed of procurement, flexibility and agility are also crucial in order to be able to react quickly and specifically to market requirements. An agile value chain is crucial for sustainable corporate development.

Special challenges when designing a value chain

There are a few key considerations that we believe are crucial when defining a value chain. In practice, it can be seen time and again that far too little attention is paid to these key considerations. These are the most essential and important decisions in this context.

The most decisive factor is the consideration of the depth of production within the company. Companies are faced with the choice between outsourced production and in-house production, as well as the option of setting up their own production facilities across multiple sourcing levels. In the current state of the global textile and apparel industry, it is common to outsource production to external partners. This means that responsibility is outsourced and transferred to a large extent. Many successful companies, on the other hand, decide to set up their own production facilities, which means they assume full responsibility for the entire production process.

The decision on the use of materials is also of central importance and includes the choice between synthetic fibres, natural fibres and the integration of recycled materials. A clear distinction must be made here between recycled materials from plastic bottles and recycled materials used exclusively in the complete textile cycle. In addition, the focus is on the recyclability of the materials used in order to ensure a sustainable product life cycle. Providing evidence of the origin and ecological compatibility of the materials also plays a decisive role. We refer to other articles published here on the subject of material use, which deal with the topic and provide in-depth insights into the discussion on the selection and significance of materials in the clothing industry. Besides  "Natural fibre, synthetic fibre or hybrid? Which material is the future of a sustainable clothing industry?", the article "Why we need innovative materials for clothing" focuses on urgently needed future material developments.

The conscious use of chemicals and dyes in the textile and apparel industry is an increasingly important area, the comprehensive understanding of which is currently available in very few manufacturing companies. However, knowledge of this subject area will be essential in the future. The selection and application of chemicals and the use of colourants not only have a direct impact on product quality, but also on environmental and health aspects along the entire supply chain. It is therefore imperative that manufacturing companies develop a deep awareness of the potential impact of their chemical processes in order to promote environmentally sustainable practices and meet the increasing demands for environmentally responsible production.

A conscious use of energy is essential in today's manufacturing industry. This includes not only the targeted optimisation of energy consumption, but also in-depth knowledge of the underlying energy sources behind the manufacturing process. The selection and origin of the energy used not only influence the economic efficiency, but also the ecological sustainability of the entire production process. A sound understanding of the sources of the energy required enables manufacturing companies to make a targeted switch to renewable energies and thus minimise their ecological footprint.

The effective handling of waste in the manufacturing process, especially in the area of ready-to-wear, is also crucial. Depending on the specific type of garment to be produced, this usually generates cutting waste in the range of 15% to 25%. The question of how this resource is handled is of great relevance for ecological and economic sustainability.
Sustainable handling of cutting waste primarily involves recycling. The development of technologies for using this "pre-consumer waste" helps to minimise the ecological footprint and make the cycle more closed. Progressive digitalisation and the use of advanced production methods also make it possible to further reduce material consumption and the associated waste. A holistic approach to resource optimisation in the manufacturing process not only helps to protect the environment, but can also enable more cost-efficient production processes.

The distribution is of particular importance when assessing the value chain. One of the main reasons for this is the fact that clothing generally needs to be available promptly in all sizes and variants. The warehousing required for this leads to enormous costs, mainly because many products are not sold and therefore have to be written off for accounting purposes. Most of the established options for reuse or subsequent utilisation still result in considerable devaluation of the products. The challenges of the circular economy significantly increase the importance of the distribution sector in the assessment of the value chain.

Claus Bretschneider