SUPPLY CHAIN MANAGEMENT OF UNIQLOS
TABLE OF CONTENTS
Executive Summary .2
Assignment Body .. …2
Company Size and Structure .. …
Company Size 2
Company Structure 3
Integration of Decisions
2.1 Tactical Decisions 3
2.2 Operational Decisions 4
2.3 Supply Chain Integration 4
Cooperation of Operations ..
Operation Management 5
3.1.1 Lean & Agile system 5
3.2 Cooperation Strategies 6
3.2.1 Outsource 6
3.2.2 Concept Store and Collections 6
Potential Coordination … … ..
Integration Challenges .. ..
5.1 Focus on products quality and lower price
5.2 Digital usage in Commerce
5.3 Differentiation Through Innovation
Appendix … ..
Uniqlo Co., Ltd. is a Japanese casual wear designer, manufacturer and retailer, which own several fashion brands such as GU, Comptoirdes Cotonniers, Theory and J Brand,
represents as the core brand of Japan fast-retailing industry. Uniqlo approaching precise standardization operation and create high advantage of cost performance through establishing their own SPA mode integrates product design, production, distribution, and sales.
The main purpose of this report is to explore the supply chain integration and cooperation of Uniqlo; demonstrate the importance of the Uniqlos special supply chain management, in addition, analyze how the integration and cooperation strategies could help Uniqlo to make better decisions and have more efficient operations.
Company Size and Structure
Uniqlo was established in June 1984, and by 2017, 1920 Uniqlo stores were in operation worldwide. Uniqlo has started its business in Australia with opening the first shop in Melbourne in 2014 and in the later years, Uniqlo expands rapidly with opening 17 shop stores around Australia includes Sydney (Uniqlo, n.d.). Uniqlo Southeast Asia & Oceania is developing into a highly profitable operation, with revenue reaching ?140.0 billion and the operating profit margin increasing to approximately 15% in FY2018. (UNIQLO Business Strategy, n.d.) Australia has such a high growth potential due to different climates, region and fashion tastes, therefore, Uniqlo has established a specialist planning team to satisfy Australian local needs.
As an SPA(Specialty Store Retailer of Private Label Apparel) mode company, means that they would produce their own clothing and sell it exclusively (UNIQLO Business Strategy, n.d.).Uniqlo integrates the value chain from design to production, quality control, distribution, sales, and promotion. In the early stage, Uniqlo has built a low-price advantage by opening stores in suburbs, ordering directly from the suppliers and positioning on basic wear-style and taking much lower price than its competitors. Also, the operation model of Uniqlo was pretty rough and extensive such as their profit growth was driven by opening stores; and their products had low quality and sold at low price.
In 1998, Uniqlo has transformed into SPA mode and cooperated with Toray Industries, Inc, have innovated a number of explosive products. Approaching precise standardization operation and creating high advantage of cost-performance with channel expansion and profit of shop increase significantly have driven the Uniqlo company stands out and grows as a global garment giant and makes the company’s product advantage from low price to high cost performance, supplemented by stores, warehouses, talents management and lays the foundation for the long-term growth of income..
Integration of Decision
Uniqlo organized their whole supply chain as product design & planning, production, distribution and retail, which eliminate waste and operate more efficiently. For production, Uniqlo has reduced the number of factories and SKUs to reduce costs, and cooperated with Toray to develop fabrics to improve products quality. For inventory, Uniqlo has achieved weekly SKU units of commodity management and adjustment of production and promotion plans timely which tapped the sales potential of individual stores. At the end of each season, businesses and marketing departments work together to coordinate the timing of any price changes to help ensure sales inventory.
Uniqlo not only focus on the business within Japan but also expand their business worldwide through opening shop stores and building social networking, e-commerce and mobile app services. In the aspect of store management, Uniqlo has returned to the essence of retailing, it changed the headquarters-led to the shop-led, and strengthen the role of store manager. Uniqlo has introduced all kinds of talents and trained them provide support for the growth of store efficiency and channel expansion. In addition, Uniqlo used today’s digital technology connect and communicate directly with customers so that can translate their aspirations into real products quickly.
Supply Chain Integration
Uniqlo has vertically integrated their supply chain and controlled the whole business from production design to retail. In this case, vertically integration is able to improve predictability and stability to avoid uncertainty and risk in somehow. Second, reduce the marketing cost and the transaction cost of the whole supply chain. Third, Uniqlo can ensure the supply and quality of raw materials and manage inventory more effectively. In addition, Uniqlo has integrated its physical stores and virtual stores in order to create the real omnichannel experience for customers to get better customer feedback and enhance profit.
Cooperation of Operations
The operation management of Uniqlo includes production design, plan, implementation, control and improvement of transformation systems in order to create higher efficiency and greater business.
Lean & Agile system
Uniqlo adapted the principles from lean manufacturing to fit its operation and integration and I think these ideas actually provide the premises for its agile supply chain. Uniqlo optimize the whole supply chain to eliminates waste that cannot add value and build its position as high cost-performance. The agile factor more expressed on open-shelf shopping experience and digital experience provided by concept store HEATTECH. Uniqlos push -pull system has mixed two shopping experience perfectly and provided customers a new style retailing and greater shopping satisfaction.
The approaches that Uniqlo corporate management was more efficiently than other fast retailing company is because it merging sales, products, and marketing. In addition, Uniqlo has good coordination in areas of manufacturing, R&D, systems and administrative management.
Uniqlo has over 70 contract manufacturing companies as business partners, and uniqlos R&D, merchandising and materials planning teams all coordinate closely together with Chinese contract manufacturers on material development and supply (Materials, n.d.).
Concept Store and Collections
Uniqlo has opened a HEATTECH concept store which integrated its physical stores and virtual stores perfectly to create a true full-channel experience for customers. Also, Uniqlo has launched many famous collections cooperate with other companies such as Uniqlo ? KAWS and Uniqlo ? Marvel. These collections products always were quickly snapped up because the limited release could led a hungry marketing phenomenon, hence, Uniqlo is able to enhance its business profit and reduce stocked inventories at the same time.
Uniqlo has defined six areas to launch sustainability activities. When determining these six areas, Uniqlo referred to the United Nations Sustainable Development Goals (SDGs), investors key Environmental, Social, Governance (ESG) indicators, customer expectations, and potential impacts. These six areas are respectively Create New Value Through Products and Services, Respect Human Rights in Our Supply Chain, Respect the Environment, Strengthen Communities, Support Employee Fulfillment and Corporate Governance. For example, Uniqlo has reduced energy, greenhouse gas emissions at stores, and slashed water use in processing, which reduced the environmental impact. Second, Uniqlo has monitored working environments protecting employee rights, which improved transparency. Third, Uniqlo supported women in the workplace and corporate vision-sharing convention.
5.1 Focus on products Quality and Lower Price
Uniqlo needs to shift its focus from low-price to high product quality in order to remain its strategy advantages and differentiation when compete with other company in same industry. Although Uniqlo has high popularity among women, kids and the old population, it still need to start to investing a strong brand position and communicating with customers.
5.2 Digital Usage in Commerce
Nowadays, Internet has changed the way consumers shop. Uniqlo entered the e-commerce area by opening its first online store in the United States in 2012. In the later years, it has opened many online stores in Asia, Southeast Asia and Oceania. Uniqlo integrates its physical stores and virtual stores perfectly to create a true full-channel experience for customers (UNIQLO Business Model, n.d.). Uniqlo can try to expand more online services to enhance profit.
5.3 Differentiation through Innovation
Through emphasing the innovation of fabric, Uniqlo succussed in focusing its products everywhere. Although Uniqlo has great reputation in fabric innovation, it should take itself as the biggest competitor in the industry and surpass itself. In this case, innovation can be the key factor which effect the improvement of Uniqlo brand in the future.
After analyzing the integration and the cooperation of Uniqlo, I think Uniqlo should focus on SPA mode continuously to expand its business worldwide. Additionally, Uniqlo can still focuses on products quality and lower price to remain its strategy advantages and differentiation when compete with other company in same industry. Second, it is a good chance for Uniqlo leverages today’s increasingly digital world to communicate directly with customers and quickly transform their desires into actual products. At last, as innovation can be the key factor to impact the improvement of Uniqlo brand in the future, Uniqlo should continuous research and innovate new fabric or new product types.
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Uniqlo 2018. Building a Sustainable Society through Clothes 2018,viewd September 15, 2019.