Network Structure Management & Supplier Relationship Management by The MSEs in Danish fashion industry: An inductive research of 10 Danish fashion brands

Adam El-khattabi

Student thesis: Master thesis

Abstract

This thesis investigates execution of Network Structure Management and Supplier Relationship Management by MSEs in Danish fashion industry and the reasoning for their actions. A continues increase of interest in MSME contributes to the research field. However, so far no research on Network Structure Management and Supplier Relationship Management by MSEs in Danish fashion industry has been made. Primary data was collected via semi-constructed interviews with 10 purchasers and it serves as the primary source of information throughout the paper. Theory on the field is used to understate the analytical results when suitable. The designer’s uncompromised passion for their vision characterises the industry. Their lack of economical insight reduces the designer’s willingness to accept investors into the company. This is justified by the fear of being pushed to accommodate profit seeking demands, at the expense of their vision. Financial decisions are controlled by the purchaser, as they handle the cost-intensive part of the brand. This underlines the importance of an experienced purchaser. The purchaser’s network helps them obtaining information related to business and economical benefits. The national part of the network is based on the idea of “sharing and caring”, where business and industry related information is made available for members. The network is informal, thus easy to collect information from. Economical benefits are gained via the international network and their relationship with the producer. The purchaser’s commitment and loyalty to their supplier base, is the foundation for trust. Trust is rewarded with benefits such as free prototypes. At the same time a distinct degree of intercommunication reduces the workload, as the purchaser knows the capabilities and how to secure quality. The long time line and costs related to achieving trust, is why the purchaser rarely adds suppliers. The few times the purchaser scouts the marked for a new producer, it is done with minimum costs and resources invested. The process appears rather unstructured compared to more formal procurement processes. Due to the focus on production, purchasing is highly prioritised despite not being the core business. Managing the producer relationships correctly is key for the survival of these MSEs. MSEs experience restricted resources, knowledge and liquidity leading to a weak negotiation position against cost-intensive producers. They manage this by accepting the unequal relationship and mastering the ability to retrieve the benefits from the producer using immaterial tools like loyalty and trust. The lack of balance was manifested when raw material prices start increasing. Instead of sharing the costs with the supplier, the producers forwarded them to the purchaser. The purchasers feared determination of the relationship if an apportionment of costs was demanded. Instead they accepted the increased costs, because the economical gains are far more important right now.

EducationsMSc in Supply Chain Management , (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2012
Number of pages173