The document proposes a new business model for a garment supply chain service provider that aims to reduce transaction costs through innovative solutions. The key aspects of the model include cluster manufacturing using specialized factories, a virtual warehouse system, demand-driven ordering, and an activity-based management system to coordinate the partners and processes.

1. An Reengineer’ed Garment Supply Chain Business Model (For Discussion Purpose Only) August 4, 2011 Confidential

4. August 4, 2011 Confidential Coase, Ronald, “ The Nature of the Firm ”, “ The Problem of Social Cost ”

5. August 4, 2011 Confidential

7. Manufacturers PUSH - Pre ordering based on estimate - Receiving - Storage Retailer Or Importer Customer Or Stores PULL Physical Inventory By Each Manufacturer Pick and Pack August 4, 2011 Confidential PUSH

8. August 4, 2011 Confidential Merchandiser Retailers’ Buyers Manufacturers Buyers Distribution Centre Retailers’ Stores Design Promote & Sell Review Place P/O to Manufacturers Make Sample Line Planning & Sales Forecast Receive Orders Place Material Orders Receive Material Manufacture Deliver Receive Into Warehouse Pick/Pack Deliver Receive Into Stores Place Orders Supply Chain Process

9. August 4, 2011 Confidential Sales 100 Cost Of Sales 40 Gross Profit 60 Selling Expenses 25 Product Develop’t 10 Distribution 6 Overhead 10 Tax ? Net Profit B4 Tax ?

10. August 4, 2011 Confidential - From “Time is money”

13. Cluster Manufacturing Virtual DC Demand Driven Ordering Retailer or Importer Customer or Stores PULL Supplier Z Physical Inventory X Supplier A1 Supplier A2 Supplier A I Cluster A Supplier B1 Supplier B2 Supplier B i Cluster B Supplier Z1 Supplier Z2 Supplier Zi Cluster Z QR Product Development August 4, 2011 Confidential PULL ------------------------Activity Based Management System-----------------------------------

15. August 4, 2011 Confidential

21. Customer/Store A Order Customer/Store B Order Customer/Store C Order Customer/Store i Order New Focus Garment Supply Chain Service Manufacturer A1 Manufacturer A2 Manufacturer Ai Cluster A Cluster B Manufacturer B1 Manufacturer B2 Manufacturer Bi Process 1 – Order Segregation August 4, 2011 Confidential Stores A, B, C Stores A, C Stores C Stores A, B Stores A, C Stores A

22. Customer/Store A Customer/Store B Customer/Store C Customer/Store i Manufacturer A1 Manufacturer A2 Manufacturer Ai Cluster A Cluster B Manufacturer B1 Manufacturer B2 Manufacturer Bi Process 2 – Order Products Consolidation & Shipment Customer/Store A Order Shipping Package From Cluster A Customer/Store B Order Shipping Package From Cluster A Customer/Store C Order Shipping Package From Cluster B August 4, 2011 Confidential Customer/Store A Order Shipping Package From Cluster B Customer/Store B Order Shipping Package From Cluster B Customer/Store C Order Shipping Package From Cluster A

25. August 4, 2011 Confidential       Cut To Orders Ship To Users Customer Orders Product Development Sales Manufacturer DC Retail Pick/pack

26. August 4, 2011 Confidential

27. August 4, 2011 Confidential

30. August 4, 2011 Confidential Catalogue Order

32. August 4, 2011 Confidential

33. August 4, 2011 Confidential