A Hidden Champion? An Experimental Journey for Digital Integration of a First-Tier Supplier in the Apparel GVCs

Hyunji Kwon () and Seri No ()
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Hyunji Kwon: Seoul National University
Seri No: Korea Labor Institute

A chapter in Knitting Asia, Weaving Development, 2023, pp 105-125 from Springer

Abstract: Abstract The purpose of this chapter is to investigate the process by which a Korean garment manufacturer, Hansoll has evolved into one of the major strategic suppliers as an emerging multinational within apparel global value chains (GVCs). In light of recent consolidation strategies implemented by US buyers for GVCs, which involve shedding production-related functions and focusing investment on marketing and sales, first-tier suppliers (FTSs) seize the opportunities for a further upgrade by establishing competitive differentiation strategies while still maintaining their price leadership. This chapter explores one such differentiation strategy employed by an FTS through a single case study. The strategy involves embracing the smart factory movement gradually and experimentally, resulting in a hybrid production approach that combines price-competitive mass production with flexible product diversification and labor-intensive production with machine-controlled production. While this movement is widely discussed in the apparel industry, its implementation poses significant challenges, including a substantial initial investment that can be a major risk for a manufacturer operating on very narrow margins. In addition, there is little accumulated knowledge on applying smart factory systems to pliable fabric materials, and the company lacks experience in adopting advanced and automated production processes. Moreover, the company must justify the potential employee outcome of downsizing resulting from digitalization. This chapter focuses on how the company has utilized institutional resources and its organizational capabilities to effect changes as an organizational outcome.

Date: 2023
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DOI: 10.1007/978-981-99-3764-6_5

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