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Creating and preserving value in the fibre to consumer supply chain - II

This paper is based on a firm wide effort utilizing the insights that Kurt Salmon Associates and KSA-Technopak have developed during work with various clients across the global textile supply chain. this paper was written by Arvind Singhal, chairman; Sushasini Sood, senior consultant and Vishesh Singh, consultant KSA Technopak, India.

The second part of this paper talks about the improvement potential in the textile supply chain.

Manufacturing process improvement

Potential for cost reduction through further productivity improvement is minimal in spinning and weaving. The sectors run at relatively high level of efficiencies and are automated to a large extent as compared to garmenting. Quite a few technological innovations are taking place in processing. This includes machineries that combine multiple steps within the production process to save on cost and time. Power and steam account for a large percentage of the cost in processing. Reduction in the water consumption during the process to reduce costs further is currently taking place.

Production efficiency in apparel factories can be improved to quite an extent. The efficiencies can be improved by around 15-20 per cent, leading to cost reduction of around 10 per cent. Since apparel manufacturing is very labour intensive, focus on methods and training of manpower can lead to major improvements in productivity.

In case of apparel manufacturing, focusing on the following areas can reduce production costs:

• Standardised industrial engineering practices in apparel factories

- With accurate standards

- With a focus on method improvement

- With advanced and specialized machinery and attachments

- Machine Layouts that are most suited to the production.

• Efficient production management
• Flexibility in operations thus reducing the idle time
• Operator training
• Middle management development
• Focus on quality.

Business process optimisation: Collaboration

Because of changes that have occurred in the way apparel is marketed to the consumer, there has been constant pressure on retailers and suppliers to find alternatives to their earlier strategy of cutting costs by minimising labour costs. As we have already seen, cost reduction possible by increasing productivity is now minimal. Also within the more targeted and responsive consumer market, both time and unpredictability become significant cost factors. In order to make the supply chain efficient, collaboration amongst partners is becoming a necessity. Retailers prefer to partner with suppliers who have gone ahead and implemented processes and systems that enable collaboration. Automobile and consumer durable companies have been active on that front for some time. Vendors work in close co-ordination with the front end in those sectors. The textile and the clothing industry needs to graduate to that level of co-ordinated supply system.

Collaboration has a lot of advantages. It would help in de-risking the business in many ways. One can target to achieve the following goals with collaboration:

• Reduced inventories
• Higher capacity utilisation
• Optimised logistics
• Lower product development expenses.
• Supply chain relations are very high on the strategic agenda of many retailers. The key elements in buyer collaboration would be
• Production capacity dedicated to the buyer
• Transparent cost accounting system
• Collaborative product development
• Standardise processes and control
• Optimise logistics and routing
• Exchange of POS data for planning purposes.

As one of the leading retailers found, benefits to be gained by collaborating with the buyers could be:

• Reduce manufacturing cycle time by 20 per cent
• Increased capacity utilisation up to 40 per cent
• Reduce charge backs by improved order conformity to more than 96 per cent
• Improve on-time delivery to more than 98 per cent
• Reach less than 1 per cent rejection within quality procedure
• Improve sample adoption rate to up 70 per cent.

Technology has become major facilitator in information sharing through the supply chain. It is estimated that the opportunity to increase earnings for the retailers could be as high as 45 per cent. This benefit could then be passed down the chain.

A supplier in order to collaborate with its front end needs to:

1. Develop effective back end processes -

a. Effective sales and marketing workforce
b. Effective materials procurement and inventory management
c. Accurate forecasting
d. Product development skills
e. Use of standardised procedures

2. Effective manufacturing

a. Effective production planning
b. Reduction of WIP
c. Efficient operations
d. Co-ordination and collaboration with product development

3. Develop effective front end processes

a. Efficient Distribution Centre (DC) operations
b. Customer visibility to order status
c. Value added services like

i. Collaborative Planning, Forec asting and Replenishment (CPFR):
ii. Vendor Managed Inventory (VMI)
iii. Direct to store delivery
iv. EDI - Exchange of information through Electronic Data Interchange.