UNIQLO Supply Chain Management in Vietnam: Its Uniqueness and Ongoing Initiative

UNIQLO has opened nine shops in Hanoi and Ho Chi Minh cities for nearly two years of penetrating the Vietnamese market (from opening the first store in Dec. 2019 to the end of Oct. 2021). On Nov. 5, 2021, UNIQLO introduced a large-scaled online store with a website and smartphone application to Vietnamese customers. By using the SPA (Specialty store retailer of Private label Apparel) business model, UNIQLO has embraced end-to-end business processes and centrally managed planning, production, and sales. In addition, the SPA business model helps UNIQLO develop a supply chain that can utilize the latest advances in information and technology. In this second session of the UNIQLO Vietnam seminar series, attendees had the opportunity to learn more details about UNIQLO’s Supply Chain and the “Ariake project,” which helps the company become the world’s leading fashion retail company.

On Nov. 17, 2021, Mr. Shota Miura, CFO of UNIQLO Vietnam, conducted the second UNIQLO Vietnam seminar series session. This time, he talked about “UNIQLO Supply Chain Management in Vietnam: Its Uniqueness and Ongoing Initiative.” The seminar started with a brief review of the previous session and asked about the distinction between two basic terms: “Logistics” and “Supply Chain.” From this differentiation, Mr. Shota continued to lead attendees to UNIQLO’s Supply Chain Management model. One of the characteristics of UNIQLO’s supply chain management model is the “End-to-End” supply chain, where its departments as a whole work with full functionality (SPA business model). The strength of this system is the quality control of all stages from partner factory selection, material selection to planning, designing, as well as production and sales. Specifically, for the above description, Mr. Miura took an example and analyzed the salient features of each department and how UNIQLO closely links all departments in the supply chain system. UNIQLO has its own R&D centers that research the latest global fashion trends. Besides the order management department – like many clothing companies worldwide, UNIQLO operates its own material development and production department to ensure a large and stable supply of raw materials with the highest quality while negotiating directly with manufacturers to get the finest price.

In terms of production, UNIQLO has more than 45 factories in Vietnam, ranking 2nd for the production volume in In terms of production, Vietnam is one of the main production countries for the group. For the goal of producing high-quality products, both raw materials and production management are vital. The Takumi (skilled artisan) team supervises the production process. In addition, the facilities and the factors of laboring must also meet the requirements set forth by the company. Specifically, UNIQLO periodically monitors each factory’s performance in many angles to ensure sufficient quality and meets the company’s requirements. With UNIQLO’s detailed processes, the quality of the factory and the products always meet the expectations of the most demanding customers. Regarding transportation, UNIQLO is cooperating with third logistics companies (3PL) and they control warehouse for UNIQLO Vietnam.

According to Mr. Shota Miura, the SPA business model has helped UNIQLO build a competitive advantage in providing quality products at reasonable prices. However, in the dynamic fashion industry, UNIQLO recognizes the urgency of digital transformation in order to respond more rapidly to consumer needs. Ariake Project runs in the fall of 2016, is UNIQLO’s effort to transform into a “digital consumer retail company” model with a completely new customer approach strategy. To revolutionize the entire supply chain, UNIQLO integrates modern technologies into its model and forms up partnerships with top-runners in each industry. Specifically, at the Design & Planning segment, UNIQLO works with Google to collect and analyze vast volumes of information from around the world, thereby creating products according to the actual needs of customers.

In the production process: UNIQLO has close cooperation with Toray and Shima Seiki to create unique products In the production process: UNIQLO has close cooperation with Toray and Shima Seiki to create unique products like HEATTECH, Ultra Light Down, and 3D Knit on a large scale within a short time. In distribution process: UNIQLO has chosen Daifuku Co., Ltd, one of the top logistic companies in Japan. Daifuku provides modern equipment, and the automatic system then creates a smart warehouse. Besides that, the company applies RFID technology on all of its single products and connects to digital platforms. Those facilities and tools enable UNIQLO to manage their product and inventory efficiently. Shortly, we can expect that this integrated process helps UNIQLO stores conduct promotion, such as season-end sales, with a more organized plan.

We believe that Vietnamese companies could study by forestalling trends and strategies of modern supply chain operations from UNIQLO, then develop and gain a competitive advantage. Therefore, we are looking forward to having a chance to understand more about UNIQLO’s sustainable supply chain in the next seminar.

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