Using a t-shirt as an example, shows the entire supply chain from planning to customer delivery. Can be used in conjunction with the NPR Planet Money series on the manufacturing of a t-shirt. This version has been updated to include new slides showing the complexity of the supply chain beyond a simple product.

1. Supply Chain 101
The Journey of a T-Shirt

2. What is a Supply Chain?
• The sequence of processes involved in the production and
distribution of a commodity
PLAN MOVEMAKE SELL
Planners ManufacturersSuppliers Wholesale, Retail, DirectShippers End Users

3. Supply Chain Impacts You Everyday
• Your clothes - Brought to you through a supply chain that includes:
• Cotton farmer
• Textile, button, thread manufacturers
• Shipper
• Clothing manufacturer
• Retailer
• Your morning coffee - Consider the various supply chains involved to provide you
with:
• Municipal water and electricity
• Coffee beans
• A filter
• Cream
• Sugar
• A cup

4. Why a T-Shirt?
• Simple product – very few inputs
• Product familiar to everyone
• Global product – supply chain spans the globe

5. Raw Materials - Cotton
• Cotton can be grown where land and labor are cheap, but…
• US cotton is still king – US is #1 producer in the world
• Cotton is treated as a high-tech product
• Ninety percent of US cotton is from genetically modified seed
• Harvesting equipment is mostly automated
• All US cotton is tested and graded after harvest, giving consistency
• Subsidies
• Crop insurance
• Price protection
• Direct payments
• One farm in Mississippi grows enough
cotton for 9 million t-shirts every year

6. Yarn
• The cotton is shipped to Indonesia
• The cotton is combed
• And combed again until it is like cotton candy
• Then pulled, twisted and spun to create yarn (thread)
• All in an automated factory running 24x7
• Indonesia is current sweet spot for yarn

7. Cloth
• The yarn is shipped to Bangladesh
• Yarn is knitted into cloth
• Six miles of yarn in one t-shirt
• Washed
• And dyed

8. Assembly
• T-shirt assembly was in Bangladesh (men’s) and Columbia (women’s)
• Sewing is still done by hand
• Garment manufacturing moves from one low labor cost country to
another as labor rates rise (England -> US -> S. Korea -> China -> etc.)
• T-shirts are then shipped to New York, where printing occurred

9. Why These Countries? MFA
• In 1970’s, S. Korea became major garment exporter, threatening US
jobs
• Under President Nixon, US and Europe signed the Multi-Fiber
Arrangement (MFA), setting strict import limits by source country
• S. Korea hit the limits, so opened shops in Bangladesh
• Bangladesh now has over 4,000 garment factories
• The MFA did not stop the flow of jobs from the US and Europe – just
where those jobs went

10. Why These Countries? Tariffs
• “The book of everything," officially the Harmonized Tariff Schedule of
the United States determines tariff rates
• Average tariff on goods imported is 2%
• For T-shirts, it is 16.5%, unless for select countries, then its zero
• Textile tariffs have been in place since 1789

11. Tailor Shops to the World
• Textiles and clothing as a share of a
country’s total manufacturing
exports
• Most countries move into new
industries over time
• Bangladesh stands out on the
graph for a few reasons
• Apparel exports make up a bigger
share of Bangladesh’s exports than
they ever did for any of the other
countries
• That share is still rising.

12. Old way of shipping
• Loading ships used to be more art than science
• Each pallet, bale, container or barrel loaded individually
• It could take weeks and hundreds of workers to load / unload a ship

13. Containerization / Intermodal
• Devised in 1955 by Malcom McLean to bypass pre-Interstate roads
• Goods loaded at origination point, unloaded at receiving point
• Same container used on ocean, rail and truck (intermodal)
• Standard size is 40’ long x 8’ wide x 9’ 6” tall
• Drastically cut cost of transport around the world

14. The Last Mile Problem
• Getting the goods to the end customer
• Most expensive cost in the t-shirt
• Can be 28% of total item cost

15. Amazon and the Last Mile
• Amazon is experimenting with
multiple channels to deliver
packages
• Currently uses traditional carriers
(UPS, FedEx, USPS)
• Experimenting with Uber-like
package delivery

16. T-Shirt Cost breakdown
• $12.42 approximate cost per t-shirt
• The men’s shirts cost approximately
10 cents to ship to the United States
from Bangladesh.
• The women’s shirts cost about 7
cents to ship to the United States
from Colombia.

17. T-Shirt Travels
Cotton
Yarn
Cloth
T-Shirt
Customer

18. Supply Chain of the iPhone
• The iPhone is sourced from dozens of countries, from every continent except
Australia and Antarctica
• Austria
• Belgium
• Brazil
• China
• Czech Republic
• France
• Germany
• India
• Indonesia
• Norway
• Philippines
• Singapore
• South Korea
• Taiwan
• Thailand
• United Kingdom
• United States
• Vietnam
• Ireland
• Israel
• Italy
• Japan
• Malaysia
• Malta
• Mexico
• Morocco
• Netherlands
Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone

19. And Dozens of Suppliers
• Samsung – in Austin TX – makes the A9 Chips
• 3M – makes the film between the glass and the electronics
• Corning – makes the Gorilla Glass
• Texas Instruments – makes chips that make the phone understand touch
• Largan Precision – makes the camera lens in Taiwan
• Cirrus Logic – makes audio components
• Murata Manufacturing – makes ceramic capacitors
• Vishay Intertechnology – makes electronic components such as capacitors and resistors
Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone

20. Layers of Suppliers
• Each supplier in the iPhone example has suppliers, some back to raw materials
• Apple has at least 200 suppliers
• If each supplier also has five suppliers, and each of those three, you are quickly at 5,000
suppliers and sub-suppliers
• Creates very complicated supply chains – small disruptions and ripple quickly
• Also creates potential legal and moral complications
Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone

21. Conflict Minerals
Source: The Consumerist, It Takes Dozens Of Companies To Make Your iPhone
• Amnesty International tried to
trace one mineral – cobalt – from
one supplier to eventual end user

22. Planet Money Podcast
• Much of this presentation is drawn from the NPR Planet Money
podcast series on The Journey of a T-Shirt
• Listen to the entire t-shirt podcast series: http://www.npr.org/tags/190719989/planet-money-t-
shirt
• A podcast just on what UPS is doing to make the last mile more
efficient: http://www.npr.org/blogs/money/2014/05/02/308640135/episode-536-the-future-of-work-looks-like-a-ups-truck

23. Questions?