Posted: May 25th, 2022

Supply Chain Management at World Co Ltd.

Supply Chain Management at World Co Ltd.

Supply Chain Management at World Co, Ltd. — Surviving and thriving in the Japanese fashion industry

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Features of fashion apparel retailing in Japan: Use of the supply chain ‘Innovate or die’ was the title of a recent conference on the subject of 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,’ making it difficult for clothing retailers to survive and establish brand loyalty. Until recently retailers had little bargaining power in terms of the venues through which they could sell their products. In 2000, securing heavily-trafficked areas in department stores was essential for clothing companies to sell their products to trend-conscious Japanese consumers. Risk for decisions about inventory, purchasing, and trying out new ideas laid with vendors, while stores had a tremendous amount of control in dictating their terms to sellers, given that most consumers bought their clothing at department stores.

The significant of department stores in reaching the public was essential to establishing a foothold in Japan as a retailer. Keeping costs down to buy the best department store spaces, reducing risk and inventory build-up, while still holding the attention span of buyers with the next ‘new thing’ in clothing was the challenge of all Japanese fashion merchandisers, including the highly successful company World Co, Ltd. In most instances, a lack of brand strength and desirability of location put Japanese clothing companies at a disadvantage, but World Co. was able to flourish.

Salient aspects of World Co’s supply chain design and management: Short lead times

One of the reasons the fashion retailer World Co, Ltd. has succeeded in Japan is because of its embrace of constant innovation. World Co believes: “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 was an early adapter to new communication methods, using information technology to enable sellers to monitor sales figures and inventory tabulations with a click of a mouse. Data accuracy, with the exception of high-traffic ‘sales’ periods was close to 100% for the company.

Links in company’s supply chain: Responding to market trends quickly


World Co established a close relationship with a small group of Japanese manufactures that handles its orders. This enabled the company to respond to small, but significant shifts in consumer demand that affected inventory totals. The company reduced delays in responding to demand because of factory responsiveness. There was a bond of trust between World Co and the factories, which meant that small, necessary changes in production plans did not necessarily have to be pre-approved, also reducing delays. On-site inspection also reduced lead times. World Co additionally had some natural advantages regarding product composition, in comparison to U.S. firms — for example, in terms of product offerings, clothing sizes in Japan are far less varied (Raman & Fisher, 2001, p.3).

World Co has emphasized integration of the manufacturing process to build a more effective brand image and minimize production costs. “Flexible and varied” production is necessary to stay on top of the fashion industry, as is minimizing waste (Releases, 2010, World Co). World Co achieved this through establishing tight control over manufacturing and day-by-day operations. Space in factories was reserved even before the product lines were established, and the measurements and information about the new products were sent immediately to manufactures electronically. Communication was kept constant, so any problems were dealt with before they resulted in delays.

Demand forecasting

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. Both aggregate demand for the products sold by the company, as well as category-specific demand for specific types of clothing was closely monitored (Raman & Fisher, 2001, pp.6-7). Responsiveness was also required to minimize wasteful production of unpopular lines of clothing and reduce the build-up of unsold inventory. Monitoring of past inventory and current sales, as well as speedy transmission of information between headquarters and the factory floor enabled demand forecasting to have a significant impact upon inventory waste reduction.


Department store’s significant impact upon sales of product lines such as Untitled meant that brands were constantly struggling for better placement within expensive retail spaces. But cost savings were achievable through Accurate Response monitoring, which enabled World Co to balance overstocking and under-stocking cost risks and achieve a happy medium between these two extremes.

Quick inventory turnovers are useful in the fashion industry because inventories that build up frequently are usually sold at a loss, once the trends have become stale. Yet small inventories may mean that some customers may leave stores dissatisfied and there may be insufficient capitalization upon new trends. Accurate Response was thus an effective risk management technique.

Production planning

Through materials preparation, such as standardizing zipper lengths and other relatively inconsequential details, production time was reduced. This also reduced waste, as inventory for obsolete products was less apt to become stockpiled. Also, this enabled the company be more responsive to demand, as existing input materials could be used in new clothing.

Financial impact: Supply chain design, short lead times and quick inventory turnovers

By increasing its ability to respond to subtle changes in demand in an immediate fashion, World Co managed to achieve high levels of consumer responsiveness and innovation. Its lean, tightly-controlled supply chain proved effective in reducing costs for the company but kept quality high. Short lead times for product releases and making use of adaptable raw materials increased inventory turnover, as this allows the company to be a ‘first mover’ in meeting demand without building up an inventory that had to be sold at a loss.

What can other companies learn from World in terms of managing their own supply chains?

Minimizing waste through close monitoring of the production process and consumer demand enabled World Co. To create value for the consumer and succeed as a brand even when brand names were in a relatively powerless position in the Japanese market, relative to the dominance of department stores. Perhaps the most striking feature of the company’s success, however, is its reliance upon domestic production sources. This is a notable deviation from the current trend towards outsourcing to cut costs. However, for World Co., domestic production facilitated responsiveness, reduced production costs and delays, as well as improved quality.


Company information. (2010). World Co, Ltd. Retrieved June 17, 2010 at

Raman, A. & Marshall Fischer. (2001, November 19). Supply Chain Management at World Co,

Ltd. Harvard Business Case Study. 9-601-072.

May, Nina, with Lucy Green & Geraldine Gitel, (2009, April). Japan’s changing fashion retail

landscape: Innovate or die. WGSN. Retrieved June 17, 2010 at

Releases. (2010, January 9). World Co. Retrieved June 17, 2010 at

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