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interlinked levels of the value chain. (To clarify and highlight this powerful positioning, it is
useful to view the impetus generated by the retail buyer in the clothing and textile
industry’s value chain, with an altogether different process as exemplified in, say, the motor
industry, wherein the value chain is driven by the manufacturer.)
Retail Buyers for brands and retailers have the option to choose from a number of
producers both locally and internationally, according to a number of criteria, namely:
standards of quality, weighed against local demand for such standards, as against speed
of delivery and price. In determining those suppliers most strategically favourable for use
by the retailers, the retail buyers also take account of the geographic location of
producers, as well as the labour laws of various countries and their trade policies (Kaplinsky
and Morris, 2001).
Dismantling each link in the entire chain allows for analysis of specific issues relating
primarily to its particular functions and character; secondarily, study of the entire value
chain process in terms of broader considerations (such as ethical sourcing, labour
conditions, market access, skills development and pricing) builds knowledge around and
targets identification of value chain flaws and weaknesses that require reinforcement and
restructuring.
Kaplinsky and Morris (2001: 23) elaborate on the importance of value chain analysis, saying
that there are five reasons to study the value chain: first, it provides a platform for the
researcher to obtain a global view of the industry from one particular business through to
various linked operations. The second reason is that insight is given into the activities of all
the role-players and the “rents” derived from each activity. The third reason focuses on
understanding the returns within the value chain policy format, which helps to inform the
upgrading of chain’s sectors, so as to create better returns. The fourth reason is that the
value chain reveals local linkages and government responses in relation to a specific
sector of the country’s economy, thereby providing indicators for the re-design of certain
mechanisms that might better equip companies to meet global and local challenges. The
fifth advantage resides in studying the trajectoral view of the industry and of the global
changes taking place within it.
6.2 Upgrading and Governance
Upgrading and governance are two elements that are fundamental to the value chain.
Kaplinsky and Morris (2001:37) hold that upgrading and innovation is critical for clothing
operations if competitive edge is to be maintained and market share sustained and
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