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Supply Chain Challenges in Indian Apparel Industry

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					    Excellence in garment Fashion Industry with the best practices in
                           Translation flow

                      Alok Abhang, MBA-IB, BE - Computer, CPIM

Synopsis:

In India textile and Apparel Supply Chain comprises diverse raw material sectors,
ginning facilities, spinning and extrusion processes, processing sector, weaving and
knitting factories and garment manufacturing that supply an extensive distribution
channel.

Paper discusses Fashion Business with Time Competition and unique Supply chain
challenge when there is rapid product obsolescence.
Rapid product obsolescence creates an incentive for firms to limit their stocks and to
exploit geographical differences in consumer preferences (the differential penetration
of fashion trends) to extend product lifetimes.

Pricing strategies are commonly related to product stages: garments that are ‘in’
fashion and ‘in’ season are fewer prices sensitive, but price elasticity increases with
the product-life ageing.

Translation flows is mainly Conversion from concept to garment production. It follows
discussion on Brand-Space as the Brands of the garment are the one which unify
merchandise, ideas and organisation. Brands sync with Concept Flows–as the
concept flow carries symbolic representations of fashion knowledge, codified as a
brand identity into the marketplace.

Garment merchandise Flow which trace the pathways by which products travel from
manufacturing sites to their destinations in retail stores. Paper ends with discussion
on current Challenges faced by Indian Textile and Apparel Industry.

Key words:
Fashion, Sourcing, Process flow, Docket, Brand Space, Variant & Styles




                                                                              Page 1 of 9
The Textile and Apparel Supply Chain in India

In India textile and Apparel Supply Chain comprises diverse raw material sectors, ginning
facilities, spinning and extrusion processes, processing sector, weaving and knitting factories
and garment (and other stitched and non-stitched) manufacturing that supply an extensive
distribution channel.

The distribution channel of apparels comprises wholesalers, distributors and a large number of
small retailers selling garments and textiles. It is only recent that large retail formats are
emerging thereby increasing variety as well as volume on display at a single location. Another
feature of the distribution channel is the strong presence of ‘agents’ who secure and consolidate
orders for producers.

It is estimated that there exist 65,000 garment units in the organized sector, of which about 88
per cent are for woven cloth while the remaining are for knits. However, only 30–40 units are
large in size (as a result of long years of reservation of non-exporting garment units for the small
scale sectors – a regulation that was removed recently).
While these firms are spread all over the country, there are clusters emerging in the National
Capital Region (NCR), Mumbai, Bangalore, Tirupur / Coimbatore and Ludhiana employing
about 3.5 million people.

According to an estimate, the total value of production in the garment sector is around
Rs.1,050–1,100 billion of which about 81 per cent comes from the Indian domestic market.
About 40 per cent of fabric for garment production is imported – a figure that is expected to rise
in coming years.

The Supply Chain Process of garment fashion Industry:

Producing garments is a process which requires sound knowledge of sewing and knitting
techniques, fibres and yarns, reliable language skills, the ability to communicate ideas and
comprehend limitations, and good


                                                                                            Material
                                                                                          suppliers.
                                                                                      The product
                                                                                      development
                                                                                      process of
                                                                                            fashion
                                                                                      garment can
                                                                                                 be
                                                                                      concentrated
                                                                                      into         5
                                                                                            primary
                                                                                      steps       in
                                                                                      figure-1.

                                                                                      The process
                                                                                      begins with
                                                                                      outlining the
collection: themes, colours, silhouettes, and materials. When a collection and its styles are
designed, the sampling process begins. This step includes pattern making and gradations etc.
In this time-critical process Fashion Industry try to keep expenses low as one means to maintain
a competitive edge.

An Example of garment production Lot of variants and styles from different
Materials –




Exibit-1

As shown in Exhibit-1 above there are four types of material in four different colours where
horizontal axis show four kinds of styles and vertical axis show variants and these on
combination make the production lot.


Fashion Business as Time Competition

Conventionally, economic analyses of this industry highlight fashion’s rapid product
obsolescence, its short product life cycles and its unpredictable, volatile or fluctuating demand
conditions. The focus on the temporal aspects of fashion encourages the adoption of time-
based competitive strategies that bring production closer to the market’s changing moods.
 In this view, successful firms ride expertly along the wave of fashion – but the fashion wave
itself is formed in the mysterious depths of social processes that are external to firms and
beyond their scope of influence.

Fashion’s rhythmic aspect is significant economically because its timing regulates the pace of
fashion style changes and therefore the duration of the fashion industries’ circuits of productive
capital.

In the context of uncertain consumer reactions to each new season’s styles, firms’ sales
revenues in one season become the working capital available for investment for the next
season’s production. This creates a precarious environment characterised by shallow capital.

It implies path dependent trajectories of growth or decline over sequential seasons. The
economic significance of fashion changes are frequently explained in terms of a modified
version of Vernon’s (1966) product cycle model, in which production moves through sequential
stages, beginning with design and progressing through development, initiation, growth,
saturation and decline.

The Product Cycle for Fashion Garments
[Source: Adapted from Vernon (1966) and Horn (1968).]


                                                                                        Fashion
                                                                                      garments
                                                                                  that capture
                                                                                      consumer
                                                                                  interest are
                                                                                   characterise
                                                                                  d by rapid
                                                                                  growth and
                                                                                  high market
                                                                                   penetration.
                                                                                       Because
                                                                                      consumer
                                                                                          moods
                                                                                        change,
                                                                                         fashion
                                                                                      garments’
                                                                                   marketability
                                                                                       declines
more rapidly than more standardised goods. Fashion clothing’s value to consumers collapses
with the change in the fashion season. In effect, fashion garments have no ‘mature’ stage of
development – they are structurally positioned in the most uncertain (development and initiation)
stages of product life cycle (Wasson 1981)- Exhibit-2.


Even today in Indian fashion industry these characteristics have important implications on their
operations strategy. Rapid product obsolescence creates an incentive for firms to limit their
stocks (through limiting supplies and exhaustion strategies), and to exploit geographical
differences in consumer preferences (the differential penetration of fashion trends) to extend
product lifetimes.
Pricing strategies are commonly related to product stages: garments that are ‘in’ fashion and ‘in’
season are fewer prices sensitive, but price elasticity increases with the product-life ageing.
Because fashion garments experience a rapid declines in demand after their appeal has
peaked, firms favour break- even and cost recovery pricing strategies combined with
conservative sales projections.

Therefore, a fashion product that leads a popular market trend —becoming a fashion ‘icon’ for a
particular season— will attract high profits by virtue of its initial pricing structure. Firms that
predict most accurately the communal fashion mood are rewarded with windfall profits. Brands
of the garment are the one which unify merchandise, ideas and organisation. Each brand is the
centre of its own micro-level fashion system. Each fashion system can be conceptualised as
comprising three interconnected fields of activity:

Brand space:


                                                                                         1.     The
                                                                                           creation
                                                                                                 of
                                                                                            fashion
                                                                                         ideas
                                                                                         2. Their
                                                                                         productio
                                                                                         n        in
                                                                                          merchan
                                                                                         dise flow
                                                                                                and
                                                                                          distributi
                                                                                         on
                                                                                         3. Their
                                                                                         reception
                                                                                                 by
                                                                                         consume
                                                                                         rs
                                                                                          Together
                                                                                              these
fields connect the world of ideas about fashion to the world of goods.
Above Figure depicts brands as positioned in the landscapes of fashion and as integrating flows
of knowledge and flows of merchandise. Each field of activity displays distinctive organisational
and spatial characteristics.
In the field of Representations, generalised fashion knowledge is transformed into brand-
specific interpretations. It connects the brand with the specialisations that define and promote a
distinctive brand identity.

The knowledge accumulated in this field provides the raw material from which both garment
designs and brand images are created. In the field of Production, designs are made up as
samples and then into multiple reproductions as merchandise garments.
The field of Consumption includes retailing, the structures and ambiences created to promote
sales, and the socially constructed consumption practices that develop in such spaces. Firms
that control a brand are in the best position to maintain an overview of these processes and to
coordinate their various aspects to ensure that merchandise bearing a season’s favoured styles
arrive at retail stores at the same time as consumers’ desire for those styles flourishes.

The concept flow carries symbolic representations of fashion knowledge, codified as a brand
identity, into the marketplace. It includes tasks associated with predicting, harnessing,
accommodating or manipulating consumer preferences to maximise the extent to which the
characteristics of garments develop in tandem with consumers’ ever-changing perceptions. This
flow incorporates conceptual, business and artistic specialisations including concept
development, design, marketing, point of sale strategy and market intelligence.

Marketing and advertising strategies, brand positioning and retailing strategies construct (and
reconstruct seasonally) the brand image in the minds of consumers. These functions are
necessarily located close to the market and in places with marketing and market research
expertise.


Concept Flows– Design and Consumption



                                                                                              The
                                                                                        decision
                                                                                       s in this
                                                                                       field —
                                                                                            about
                                                                                            brand
                                                                                        positioni
                                                                                       ng and
                                                                                             price
                                                                                         orientati
                                                                                       on, the
                                                                                       scope of
                                                                                               the
                                                                                         brand’s
                                                                                         product
                                                                                           range,
                                                                                       and the
definition of a target market — are made in relation to dynamically changing market and
business conditions as well as in relation to rival brands’ strategies (given that each brand is
positioned relative to others in fashion’s hierarchies).

To monitor consumer preferences, market intelligence spans the immediate monitoring and
feedback on sales, formal market research, longitudinal analyses of changing demand patterns,
studies of trends in consumer behaviour, and informal knowledge collected through personal
exchanges.
Apparel styles carry the aesthetic values of brands into the material world of merchandise. In
the translation flow, the aesthetic preoccupations of designers are converted into a language
that can be comprehended by manufacturers. This flow conveys ideas, information and
instructions from the representational to the production field.
Organisationally, the translation flow is the most difficult aspect of garment production because
activities in the field of production, where work is framed by the discourses of competition,
benchmarking and factor costs, exist in a social world opposed diametrically to design, brand
definition and brand development specialisation.

Translation Flows: Conversion from concept to garment production



                                                                                                 In
                                                                                          fashion
                                                                                         industry
                                                                                         translati
                                                                                                on
                                                                                         process
                                                                                              and
                                                                                          binding
                                                                                                 of
                                                                                        antagoni
                                                                                               stic
                                                                                         element
                                                                                        s     into
                                                                                          fashion
                                                                                         garment
                                                                                        is done
                                                                                                by
                                                                                        merchan
                                                                                           disers
                                                                                              and
                                                                                            brand
                                                                                         manage
rs.
The translation flow contains mechanisms to ensure that manufactured garments accord with
the design qualities and standards of each brand. The work of translation incorporates into sewn
fabric the aesthetic qualities that reflect both the motivations of the brand and the contemporary
fashion mood.

Merchandise flows trace the pathways by which products travel from manufacturing sites to their
destinations in retail stores. The flows of merchandise from manufacture through wholesale,
distribution and retail are shown in following Figure as a stock replenishment cycle focused on
the timely delivery.

Feedback mechanisms in the merchandise flow are also the final filter of the fashion process
that eliminates unpopular styles (of those available) and replenishes popular styles.
It influences firm profitability because it anticipates and accommodates ‘spur of the moment’
fashion purchases and minimises the sales lost when stock is unavailable.
Merchandise Flows– Production to Consumption


                                                                                          Challen
                                                                                          ges of
                                                                                            Indian
                                                                                           Textile
                                                                                              and
                                                                                          Appare
                                                                                                  l
                                                                                          Industr
                                                                                          y

                                                                                            Textile
                                                                                             supply
                                                                                             chains
                                                                                          compete
                                                                                          on low
                                                                                              cost,
                                                                                               high
                                                                                            quality,
                                                                                          accurate
delivery and flexibility in variety and volume. Several challenges stand in the way of Indian firms
before they can own a larger share of the global market:

1. Scale:
Except for spinning, all other sectors suffer from the problem of scale. Indian firms are typically
smaller than their Chinese or Thai counterparts and there are fewer large firms in India. Some of
the Chinese large firms have 1.5 times higher spinning capacity, 1.25 times denim (and 2 times
gray fabric) capacity and about 6 times more revenue in garment than their counterparts in India
thereby affecting the cost structure as well as ability to attract customers with large orders. The
central tendency is to add capacity once the order has been won rather than ahead of the
demand. Customers go where they see both capacity and capabilities. Large capacity typically
goes with standardized products. These firms need to develop the managerial capabilities
required to manage large work force and design an appropriate supply chain.


2. Skills:
There is an acute shortage of trained operators and supervisors in India. It is expected that
Indian firms will have to invest close to Rs. 1400 billion by year 2010 to increase its global trade
to $ 50 billion. The real bottleneck to growth is going to be availability of skilled manpower.


3. Cycle Time:
Cycle time is the key to competitiveness of a firm as it affects both price and delivery schedule.
Cycle time reduction is strongly correlated with high first pass yield, high throughput times, and
low variability in process times, low WIP and consequently cost.
4. Domestic Market:
The Indian domestic market for all textile and apparel products is very competitive at the low
end of the value chain; the mid or higher ranges are overpriced. Firms are not taking advantage
of the large domestic market in generating economies of scale to deliver cost advantage in
export markets.

5. Institutional Support:
 Textile policy has come long ways in reducing impediments for the industry – sometimes driven
by global competition and, at other times, by international trade regulations.
However, few areas of policy weakness stand out like labour reforms (which is hindering
movement towards higher scale of operations by Indian firms), power availability and its quality,
customs clearance and shipment operations from ports, credit for large scale investments that
are needed for up-gradation of technology, and development of manpower for the industry.

6. Innovation & Technology:
The Technology Up-gradation Fund of the Indian government is being used to stimulate
investment in new processes. However, there is little evidence that this deployment in
technology has accompanied changes in the managerial regimes – a necessary condition for
increasing productivity and order winning ability.

About the author
Alok Abhang, MBA (International Business), BE (Computer), CPIM, is presently working as Manager
(Forex) at Union Bank of India –FORT (Mumbai). He specializes in Supply Chain Management (SCM)
from Symbiosis Institute of International Business-Pune (India).

Alok Abhang can be reached at alok.abhang@gmail.com
Mobile: 9970519329

				
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