Value Chain: mapping and analysis

1
Value Chain mapping and analysis
2
Why do we need to know about Value Chain?

• Look at the past in order to analyze the future
• How much is the accumulated economic value of
  your belonging item?
• If that item is further traded with greater
  demand, how many people behind would
  benefit/loose?
• Also, what are impacts (-/) that roll back to
  the origin of the value chain?

3

• Video Textile Fair Trade Supply Chain

4
GLOBAL VALUE CHAIN TEXTILE AND GARMENTS
Raw materials
Textile
Apparel
Spinning
Weaving Knitting
Dyeing, Printing, Finishing
Sewing
Cutting
Finished Garments
Wool Raw cotton
Component network
Production network
Brand-name apparel companies
Overseas buying offices
Trading companies
Export networks
Marketing networks
Retail Outlets
5
VALUE ADDED FORMATION IN THE TEXTILE AND GARMENTS
SUPPLY CHAIN
Finishing
Garment production
Raw Cotton
Textile
Yarn
16.0
54.5
11.3
6.9
11.3
Source Gherzi
6
GOVERNANCE STRUCTURES OF VALUE CHAINS
Integrated Firm

• Producer driven
• Large firm or TNC controls
• production network
• Upstream and downstream linkages
• Capital and technology intensive industries (i.e.
  automobiles, aircraft)
• Buyer driven
• Decentralised production network
• Labour intensive industries (large retailers and
  branded manufactureres, i.e. GAP, Nike)

Lead Firm
Buyers
Buyers
price
Suppliers
Suppliers
Suppliers

• Lead firms coordinate the value chain innovate,
  create brands, control the whole production
  process

7
UPGRADING IN GLOBAL VALUE CHAINS

• Improving Process
• Improving Products
• Specialising in new functions
• Moving to a new VC

• Introduction of better quality control systems
  or new production equipment.
• A footwear producer shifts from mass produced
  low-cost shoes to more fashion-intensive footwear
  sold for higher prices
• Moving from a manufacturing to a design
  function.
• Move from TV to computer monitor production