Fast fashion: supply-chain management as the basis for disruptive business model innovation - a case study in the context of the theory of the firm

Neukirchen, Daniel (2017) Fast fashion: supply-chain management as the basis for disruptive business model innovation - a case study in the context of the theory of the firm. Doctoral thesis (PhD), Manchester Metropolitan University.

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Abstract

Supply Chain Management has been traditionally understood as the management and optimisation of logistic processes regarding the management of flows of goods. Business research recognises the Supply Chain as mainly a support service for its key activities, and which is generally examined in regard to the technical and engineering aspects with the sole objective of finding the minimum cost solution. This research argues instead that, in the fashion industry at least, Supply Chain Management becomes a key activity in Value Chain management and therefore in the business model. As a consequence, this study is not a Supply Chain Management Study in the traditional sense but rather examines the disruptive fashion business model focusing on innovation, starting with the restructuring of the Supply Chain, based on information technology revolutionising the retail business and, particularly, the fashion industry. Information technology has generated a completely new Supply Chain Management model, leading to disruptive competitive advantage. This research focuses on the exploration of the Supply Chain at the level of the theory of the firm and the concept of the business model, rather than at a technical or operational level. The theoretical lens is at firm level examining the concept of the business model. The empirical part of this study applies qualitative and quantitative methods, as indicated. The main quantitative method is financial analysis, which enables the examination of fifteen industry-leading companies within the fashion industry. Additionally, descriptive and bivariate statistical analysis are applied to examine the statistical strength and significance of relationships between Supply Chain and business performance variables. The second part of the empirical research uses expert interviews with industry professionals to verify or falsify the findings of the statistical analysis, and to develop the findings further. The classical Supply Chain research approach is also questionable and should be revisited; typical Supply Chain research variables include efficiency, effectiveness, cycle time, postponement, whereas the main objective of Supply Chain research is the optimum configuration and design of a Supply Chain. This research study makes a unique contribution to knowledge situating the supply chain within the context of the theory of the firm and provides evidence that the Supply Chain is more than a support function, it represents a key business activity to increase competitiveness providing the infrastructure for disruptive business model innovations. The overall result of the industry case study and the expert interviews is that digitalisation changes the possibilities in the Supply Chain configuration considerably. New Supply Chain configurations enabled by digitalisation have led to disruptive business model innovations, so that Supply Chain Management has become a key business activity because it is the basis of the reorganising of the relationship between the firm’s purchase markets, product development, manufacturing, distribution channels, and the consumer market. This development represents a restricted change at a lower level of business operations but a major one at the strategic level, with implications for the theory of the firm and the theory of a firm’s growth. In this regard, the main issues of future Supply Chain research may therefore be the challenges of delivering the right goods at the right time to the right location and how to deliver the right data regarding commodity flows to the right decision maker, within the right time. The Supply Chain department may gradually become a Value Chain Management department, the business model development department, at least in the industrial firm. However, the term management may be somewhat misleading in this context because management means controlling, implementing and supervising network-centric operations in which defined production processes, reporting, distribution processes and decisions almost always initiated by real-time POS data leading to a highly responsive value chain.