Source: adapted from K. Fernandez-Stark, S. Frederick and G. Gereffi (2011) The Apparel Global Value Chain: Economic Upgrading and Workforce Development, Duke University Center on Globalization, Governance and Competitiveness.
- Fabrication (1; value chain entry). In this basic stage the manufacturer provides simple fabrication processes, often using imported inputs (parts and raw materials). This is usually to take advantage of lower labor costs and had particularly occurred in export oriented economies. It is either the outcome of outsourcing and offshoring investments made by multinational corporations or the setting of domestic firms subcontracting on their behalf.
- Supply chain (2; functional upgrading). The manufacturer is involved in a broader range of activities. This can involve moving upstream along the supply chain such as for the procurement of parts and raw materials. The manufacturer is therefore building its own network of suppliers and is able to have a better control of the quality, quantity and frequency of inputs. Also, this can involve moving downstream along the supply chain to assume tasks such as packaging and shipping to the buyer.
- Product design (3; functional upgrading). In this case, the manufacturer assumes the additional pre-fabrication activities, namely design or product development.
- Product brand (4; functional upgrading). At this stage, a manufacturer is able to develop its own products and sell them on regional or global markets. This particularly involve the development of recognized brands.
- Product upgrading. Eventually, a manufacturer becomes able to undertake the fabrication of increasingly complex products as well as the development of additional capabilities to innovate.
- Process upgrading. The main goal at this stage is to improve productivity through new fabrication methods, which commonly involve capital investments (e.g. fabrication equipment). Additional supply chain strategies can be developed so that fabrication becomes highly responsive (lower lead times) and flexible.