1. Value Chain: mapping and analysis

2. Why do we need to know about Value Chain? • Look at the past in order to analyze the future • How much is the accumulated economic value of your belonging item? • If that item is further traded with greater demand, how many people behind would benefit/loose? • Also, what are impacts (-/+) that roll back to the origin of the value chain?

3. Video: Textile Fair Trade Supply Chain

4. GLOBAL VALUE CHAIN: TEXTILE AND GARMENTS Raw materials Textile Apparel Wool Raw cotton Spinning Weaving Knitting Dyeing, Printing, Finishing Cutting Sewing Finished Garments Component network Production network Brand-name apparel companies Overseas buying offices Trading companies Export networks Marketing networks Retail Outlets

5. VALUE ADDED FORMATION IN THE TEXTILE AND GARMENTS SUPPLY CHAIN Finishing Garment production Raw Cotton Textile Yarn 16.0% 54.5% 11.3% 11.3% 6.9% Source: Gherzi

6. GOVERNANCE STRUCTURES OF VALUE CHAINS Integrated Firm Lead Firm Buyers Buyers Lead firmscoordinate the value chain : innovate, create brands, control the whole production process • Producer driven • Large firm or TNC controls production network • Upstream and downstream linkages • Capital and technology intensive industries (i.e. automobiles, aircraft) • Buyerdriven • Decentralised production network • Labour intensive industries (large retailers and brandedmanufactureres, i.e. GAP, Nike) price Suppliers Suppliers Suppliers

7. UPGRADING IN GLOBAL VALUE CHAINS • Improving Process • Improving Products • Specialising in new functions • Moving to a new VC Introduction of better quality control systems or new production equipment. A footwear producer shifts from mass produced low-cost shoes to more fashion-intensive footwear sold for higher prices Moving from a manufacturing to a design function. Move from TV to computer monitor production