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?

Video: Textile Fair Trade Supply Chain

GLOBAL VALUE CHAIN: TEXTILE AND GARMENTS

SpinningWeavingKnitting

Dyeing,Printing,Finishing

SewingCuttingFinishedGarments

Brand-name apparel

companies

Overseasbuyingoffices

WoolRaw cotton

Tradingcompanies

Retail Outlets

Textile Apparel

Component network

Production network

Export networks

Marketing networks

Raw materials

VALUE ADDED FORMATION IN THE TEXTILE AND GARMENTS SUPPLY CHAIN

YarnRaw

Cotton

Textile Finishing Garment production

11.3% 16.0%6.9% 54.5%11.3%

Source: Gherzi

GOVERNANCE STRUCTURES OF VALUE CHAINS

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

Producer driven

Large firm or TNC controlsproduction 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)

LeadFirm

price

Suppliers Suppliers Suppliers

Buyers Buyers Integrated

Firm

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