MINOR PROJECT REPORT ON SUPPLY CHAIN MANAGEMENT OF BIG BAZAAR

A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF

REQUIREMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION (BBA)

UNDER THE GUIDANCE OF SUBMITTED BYMR VIPUL SINGH ARCHITAGGARWALASSISTANT PROFESSOR BBA 3B(EVENING) 11121401712

SESSION:2012-2015

Jagannath International Management school VASANT KUNJ , NEW DELHI-110070

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CERTIFICATE

This is to certify that Archit aggarwal, 11121401712 of Jagannath International Management school has successfully completed his major research project on SUPPLY\CHAIN MANAGEMENT OF BIG BAZAAR under my guidance and as per requirements of Guru Gobind Singh Indraprastha University.

This project is original and has not been submitted elsewhere.

Date:

Signature of Guide

Place: Vipul Singh

(Assistant Professor)

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ACKNOWLEDGMENT

I have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals and organizations. I would like to extend my sincere thanks to all of them.

I am highly indebted to Mr.Vipul singh (ASSISTANT PROFESSOR) for their guidance and constant supervision as well as for providing necessary information regarding the project & also for their support in completing the project.

I would like to express my gratitude towards my parents & member of Jagannath International Management school for their kind co-operation and encouragement which help me in completion of this project.

I would like to express my special gratitude and thanks to industry persons for giving me such attention and time.My thanks and appreciations also go to my colleague in developing the project and people who have willingly helped me out with their abilities.

Date: 15 September 2013 Archit aggarwal BBA 3-B EVENING

11121401712

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TABLE OF CONTENTS

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TOPIC PAGE NO.

1. OBJECTIVE OF THE STUDY 7

2. INTRODUCTION 9

3. PORTERS FIVE FORCE

MODEL

28

4. SUPPLY CHAIN WITH PDC

FOR INDIAN APPAREAL

INDUSTRY

38

5. RESEARCH METHODOLOGY 46

6. DATA ANALYSIS AND

INTERPRETATION

60

7. CONCLUSION 64

8. RECOMMENDATION 66

9. REFERENCES 68

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7

OBJECTIVES OF THE STUDY

8

• To analyze how outsourcing has transformed supply chain dynamics in the apparel

industry.

• To analyse the complexity resulting from outsourcing in the early development

process.

• To examine loss of efficiency in the supply chain process arising out of

outsourcing and globalisation.

• To suggest some measures for improvement in the existing complexities in the

supply chain process for the long term sustenance of multiple players in the

apparel industry.

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INTRODUCTION

The history of textiles in India dates back to nearly five thousand years to the days of the

Harappan civilization. Evidences that India has been trading silk in return for spices from

the 2nd century have been found. This shows that textiles are an industry which has

existed for centuries in our country. Recently there has been a sizeable increase in the

demand for Indian textiles in the market. India is fast emerging as a competitor to China in

textile exports. The Government of India has also realized this fact and lowered the

customs duty and reduced the restrictions on the imported textile machinery. The intention

of the government’s move is to enable the Indian producers to compete in the world

market with high quality products. The results of the government’s move can be visible as

Indian companies like Arvind Mills, Mafatlal, Grasim; Reliance Industries have become

prominent players in the world. The Indian textile industry is the second largest in the

world-second only to China. The other competing countries are Korea and Taiwan. Indian

Textile constitutes 35% of the total exports of our country.

The history of apparel and textiles in India dates back to the use of mordant dyes and

printing blocks around 3000 BC. The foundations of the India's textile trade with other

countries started as early as the second century BC. A hoard of block printed and resist

dyed fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat, Egypt, are the

proof of large scale Indian export of cotton textiles to the Egypt in medieval periods.

During the 13th century, Indian silk was used as barter for spices from the western

countries. Towards the end of the 17th century, the British East India Company had begun

exports of Indian silks and several other cotton fabrics to other economies. These included

the famous fine Muslin cloth of Bengal, Orissa and Bihar. Painted and printed cottons or

chintz was widely practiced between India, Java, China and the Philippines, long before

the arrival of the Europeans.

India Textile Industry is one of the largest textile industries in the world. Today, Indian

economy is largely dependent on textile manufacturing and exports.

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INDIAN TEXTILE INDUSTRY

Textile Industry in India is the second largest employment generator after agriculture. It

holds significant status in India as it provides one of the most fundamental necessities of

the people. Textile industry was one of the earliest industries to come into existence in

India and it accounts for more than 30% of the total exports. In fact Indian textile industry

is the second largest in the world, second only to China. The Indian textile industry has a

significant presence in the economy as well as in the international textile economy. Its

contribution to the Indian economy is manifested in terms of its contribution to the

industrial production, employment generation and foreign exchange earnings. It

contributes 14 percent of industrial production, 9 percent of excise collections, 18 percent

of employment in the industrial sector, nearly 20 percent to the country’s total export

earning and 4 percent to the Gross Domestic Product.

It is closely linked with the agricultural and rural economy. It is the single largest

employer in the industrial sector employing about 35 million people. If the employment in

allied sectors like ginning, agriculture, pressing, cotton trade, jute, etc. are added then the

total employment is estimated at 93 million. The net foreign exchange earnings in this

sector are one of the highest and, together with carpet and handicrafts, account for over 37

percent of total export earnings at over US $ 10 billion. Textiles, alone, account for about

25 percent of India’s total forex earnings.

India’s textile industry since its beginning continues to be predominantly cotton based

with about 65 percent of fabric consumption in the country being accounted for by cotton.

The industry is highly localized in Ahmadabad and Bombay in the western part of the

country though other centres exist including Kanpur, Calcutta, Indore, Coimbatore, and

Sholapur.

The structure of the textile industry is extremely complex with the modern, sophisticated

and highly mechanized mill sector on the one hand and the hand spinning and hand

weaving (handloom) sector on the other. Between the two falls the small-scale power

loom sector. The latter two are together known as the decentralized sector. Over the years,

the government has granted a whole range of concessions to the non-mill sector as a result

of which the share of the decentralized sector has increased considerably in the total

production. Of the two sub-sectors of the decentralized sector, the power loom sector has

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shown the faster rate of growth. In the production of fabrics the decentralized sector

accounts for roughly 94 percent while the mill sector has a share of only 6 percent.

Being an agro-based industry the production of raw material varies from year to year

depending on weather and rainfall conditions. Accordingly the price fluctuates too.

POSITION OF INDIAN TEXTILE INDUSTRY

The Indian textile industry contributes about 14 per cent to industrial production, 4 per

cent to the country's gross domestic product (GDP) and 17 per cent to the country’s export

earnings, according to the Annual Report 2009-10 of the Ministry of Textiles. It provides

direct employment to over 35 million workers directly and it accounts for 21% of the total

employment generated in the economy and is the second largest provider of employment

after agriculture. Some of the textile clusters in which productions happens are very huge

and significant for the overall industry, for example

Panipat produces 75% of all blankets produced in India

Tirupur contributes 80% of the country’s cotton hosiery exports

Ludhiana makes 95% of total woolen knitwear produced

According to the Ministry of Textiles, Export target in textiles in 2010 at USD is 50

billion. the cumulative production of cloth during April’09- March’10 has increased by

8.3 per cent as compared to the corresponding period of the previous year. Moreover, total

textile exports have increased to US$ 18.6 billion during April’09- January’10, from US$

17.7 billion during the corresponding period of the previous year, registering an increase

of 4.95 per cent in rupee terms. Further, the share of textile exports in total exports has

increased to 12.36 per cent during April’09-January’10, according to the Ministry of

Textiles.

As per the Index of Industrial Production (IIP) data released by the Central Statistical

Organisation (CSO), cotton textiles has registered a growth of 5.5 per cent during April

March 2009-10, while wool, silk and man-made fibre textiles have registered a growth of

8.2 per cent while textile products including wearing apparel have registered a growth of

8.5 per cent.

The textile sector has increased their investment in projects to upgrade their equipment

amid fierce market competition and to meet the growing demand for more textile

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products. Total investment in the textile industry between 2004 and 2008 was around

Rs.65,478 crore in India, which is expected to reach Rs.1,50,600 crore by 2012. This

enhanced investment would generate 17.37 million jobs-- 12.02 million direct and 5.35

million indirect—by 2012.

INDIA’S MAJOR COMPETITIORS IN THE WORLD

To understand India’s position among other textile producing the industry contributes 9%

of GDP and 35% of foreign exchange earning, India’s share in global exports is only 3%

compared to Chinas 13.75% percent. In addition to China, other developing countries are

emerging as serious competitive threats to India. Looking at export shares, Korea (6%)

and Taiwan (5.5%) are ahead of India, while Turkey (2.9%) has already caught up and

others like Thailand (2.3%) and Indonesia (2%) are not much further behind. The reason

for this development is the fact that India lags behind these countries in investment levels,

technology, quality and logistics. If India were competitive in some key segments it could

serve as a basis for building a modern industry, but there is no evidence of such signs,

except to some extent in the spinning industry.

MAJOR MANUFACTURERS AND THEIR MARKET SHARE

In 2006, the largest apparel manufacturers and exporters were countries from the Asia-

Pacific region which included countries like China, Hong Kong, Philippines, Malaysia,

Indonesia, Bangladesh, Srilanka, Pakistan, Thailand and India. The other major apparel

manufacturing nations were USA, Italy, Germany and Mexico.

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INDUSTRY SUPPLY CHAIN

The apparel industry supply chain can be broadly categorized into six major components -

raw materials, textile plants, apparel plants, export chains, retail stores and customers.

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INDIA’S COMPETITIVENESS CONTRIBUTION TO ECONOMY:

With 3.9 million handlooms, India is the highest handloom producing country in the

World. 30% of the total export income is generated by textile alone, it is second largest

Employer industry after agriculture. The textile industry constitutes approximately 14% of

country's total industrial production.

THE WORLD MARKET SHARE:

In spite of the Chinese dominance, India has a fair opportunity to grab a substantial stake

in the projected garment market share. According to PHD Chamber of Commerce and

Industry (PHDCCI), post-MFA, India's market share in the US is expected to go up to 15

per cent from the present 4 per cent. In the EU, the market share increase is expected to be

50 per cent from the current 6 per cent to 9 per cent .

Table showing the India’s Competitiveness with Other Country:

There is no denying India is competitive enough and will become even more competitive

once its infrastructure issues are sorted out. China has probably already reached its peak

and further improvements may not be as dramatic.

Countries and their positive and negative aspects with regard to textiles

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Indian Textiles targets- 11th Five year Plan (2007-2012)

Market size of US$ 115 Billion

Export target US$ 55 Billion

Domestic market US$ 60 Billion

India’s market share in world textiles trade to grow from 3% to 8 %

12 Million additional jobs

Investment Rs.150,600 Crs

Textiles Export Target (In Billions)

Year ( April March) Target Achievement

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Key countries / regions Key positives Key negatives

China Efficient, low cost,

vertically integrated

Growth at the cost of profits

India, Pakistan Vertically integrated,

low cost

Lacks economies of scale

and infrastructure support

Mexico (NAFTA), Turkey Proximity to market,

duty and quota free

Lack of China and India’s

degree of competitiveness

ASEAN (Vietnam,

Cambodia, Indonesia)

Cheap labour No other cost or location

advantage

AGOA (African)

countries, Bangladesh

Quota and tariff free,

cheap labour

Lack of integration and

China and India’s has degree

of competitivenessHong Kong, Korea,

Taiwan

Trading hubs

proximity to China

No cost advantage, protected

currently by quotas

USA and EU Non-quota barriers

likely to prove irritant

to imports

Huge but choosy market

2008-09 24.18 24.162007-08 21.16 21.142006-07 19.73 19.622005-06 15.565 17.802004-05 15.16 13.042003-04 16.31 13.162002-03 15.05 12.412001-02 13.72 10.76

17

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TEXTILE WORKERS’ REHABILITATION FUND SCHEME (TWRFS):

Textile Workers’ Rehabilitation Fund Scheme came into force with effect from 15th Sept.

1986.The objective of TWRFS is to give interim relief to the workers rendered jobless due

to permanent closure of the mills. Another reason also was to curtail the widespread

disguised employment in the textile industry. Relief under the scheme is available only for

3 years on a tapering basis, 75% of the wage equivalent in the first year, 50% in the

second year and 25% in the third year.

The government has established various research associations for the textile industry like

Ahmadabad Textile Industry Research Association, Ahmadabad

Bombay Textile Research Association, Mumbai

South India Textile Research Association, Coimbatore

Northern India Textile Research Association, Ghaziabad

Silk and Art Silk Mills Research Association, Mumbai

It has a few export promotion councils also like

Handloom Export Promotion Council, Madras

Apparel Export Promotion Council, New Delhi

Cotton Textile Export Promotion council, Mumbai

The Synthetic and Rayon Textiles Export Promotion Council, Mumbai

Indian Silk Export Promotion Council, Mumbai

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Wool and Woollens Export Promotion council, New Delhi

Carpet Export Promotion Council, New Delhi

Export Promotion Council for Handicrafts

Power loom Development & Export Promotion Council

Textile companies in India

India being one of the fastest growing economies of the world, which has both positively

and negatively, affected the Indian textile industry. On one hand it has become a major

retailing hub and a host for various multinational companies on the other hand this has a

negative effect on the domestic players. The emergence of mall, brand slavery, fashion

awareness, rise in the income level has further reinforced the competition among the

multinationals and the domestic players and has lead to opening of number of retail outlets

in India.

The introduction of VAT and the growth of organized retail industry are also likely to

push up growth in the textiles and apparel sector domestically too. While the garments

business will pose its own set of challenges in terms of providing flexibility in operations

and dealing with labour productivity issues, an increasing contribution to revenues from

the garments business, which is less capital-intensive and margins-accretive, would augur

well for earnings growth.

GOKALDAS EXPORTS

Incorporated in 1979, based in Bangalore, it’s one of India's largest manufacturers and

designer of garments for men, women and children and caters to the needs of several

international fashion brands and retailers. Gokaldas Exports has been a major player in the

readymade garment industry across the globe. In the present Indian fashion retailing,

Gokaldas has grabbed a distinguished place for itself in the form of "The Warehouse"

catering to the specific fashion needs of the people. The Warehouse has high profile

outlets in Bangalore, Chennai, Hyderabad and Coimbatore. An ISO 9001:2000 Certified

Company has a capacity to produce and export 2.5 million garments a month. The Group's

products include coats, suits, jackets, parkas, windcheaters, ski wear; warm-ups, surf

wear, swim wear; trousers, shorts; casual wear shirts, ladies blouses and dresses for

customers in international market. It mainly operates in India but exports its products to

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countries like the United States of America, Canada, Mexico, United Kingdom, Germany,

Austria, Spain, Italy, France, Netherlands, Middle East, South Africa, Japan, Denmark,

Taiwan and Hong Kong. A few of the manufacturing units are 100% export units with

capabilities of mass production. They have the license to import duty-free fabrics and

accessories from all over the world for re-export. It has over 48,000 employees who work

in around 48 fully equipped, modern, manufacturing factories.

ARVIND BRANDS

Arvind Mills Ltd. was incorporated in 1931 with share capital Rs.2525000 ($55000) in

Ahmedabad by the Lalbhai group. The Company's operations are divided into the Textile

Division, telecom division and garments division. We will be majorly concentrating on

the garments division. Products manufactured are dhotis, sarees, mulls, dorias, crepes,

shirting’s, coatings, printed lawns & voiles cambrics, twills gabardine etc. Arvind Brands

is part of the Lalbhai Group, which holds licenses for leading international brands such as

Arrow, Lee, Wrangler, Gant and Tommy Hilfiger for retail and wholesale sales in the

local market. Its mainstream brands are Excalibur and Flying Machine. In addition, it

owns an array of casual sportswear and denim brands marketed in India, including Flying

Machine, Newport and Ruf & Tuf jeans and Excalibur shirts along with licensed

relationship with various international brands like Nautica, Jansport, Kipling, Hero by

Wrangler, Lee Riders and Tommy Hilfiger, and joint ventures with VF Corporation and

Diesel. but the company is facing severe competition from major brands like Louis

Philippe, Park Avenue and small brands like Trigger and Blackberry. It produces about

110 million meters of denim every year and the garment section is doing extremely well

because of the customer loyalty it enjoys. The demand for jeans, in particular, is expected

to rise, as manufacturing companies in the US have shut operations.

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KOUTONS

The winner of “ best retailer leadership award 2008” organized by retail congress,

Mumbai, Koutons Retail India Limited engages in the design, manufacture, and retail of

men’s wear and integrated apparel in India. It currently sells its apparel using the

“Koutons” and “Charlie Outlaw” brands. Mr. Kohli along with his brother in law Mr.

Sawheny partnered to set up Charlie's Creation. In 1997 the Company diversified its

business by introducing non-denim trousers in the existing product range of denim

apparel. The company has inaugurated its 89th family Store in Hyderabad, which it claims

to be its largest store in the country. Koutons India has an annual finishing and

manufacturing capacity of 22.92 million pieces and 12.36 million pieces of apparel,

respectively. The capacity utilization for the same was 41.21% and 21.99% respectively at

the end of FY2007.Koutons has 18 manufacturing/finishing units and 14 warehouses

spread across various locations in and around Gurgaon. The company's strategy is to have

small, but more stores. This helps to save costs and at the same increase reach of the

company. The company has a phenomenal growth record.

ZODIAC

Zodiac Clothing Company Ltd manufactures, exports and imports garments, textiles

accessories etc. Zodiac has been in the apparel business for a period of 50 years by now 23

and is known for its quality shirts. Zodiac, is today, the largest selling shirts & tie brand at

Shopper's Stop according to Brand Equity (The Economic Times) The Company started

business in 1954 and export of readymade garments to Europe started in early '60s, which

included mainly ties and shirts. For many decades, Zodiac has been synonymous with ties.

The business of ties is a high fashion business and Zodiac has taken this to new highs in

India and across the globe. In fact, one can say that in India Zodiac is generically

associated with ties. Following Zodiac's huge success with ties, the company entered the

arena of men's accessories with Cuff links, Belts, Wallets and Handkerchiefs. In 1973,

Zodiac had a stand-alone exclusive shirt shop in Hotel Taj in Mumbai. The company then

entered the domestic shirt segment in late '80s.It employs around 3500 people in 7

manufacturing units in 16 offices located in UK, US, Germany, UAE etc. Each

manufacturing unit is spread over 35000 sq.ft and has modern equipment to spread 60

yards of cloth at a time. All the manufacturing units are same in design and layout.

Quality is maintained throughout the 40 stages of assembly line. All the units have their

own power generating units in order to be efficient. It has its own 80 exclusive outlets and

around 2000 multiband outlets. Its continuously showing profit and has a consistently

growing export business.

HOUSE OF PEARL

House of Pearl Fashions Limited is a multinational ready to wear apparel manufacturing

company. The company also provides supply chain solutions for the fashion industry

globally along with warehousing & distribution networks in the UK & US. It operates in

11 strategic locations in six continents. It has two brands Kool hearts, DCC in the United

States of America. The brand Kool hearts focuses on the young fashion, where as the

focus of DCC is more towards the Missy segment It basically deals with 3 streams which

are manufacturing to Retailers, souring solutions for retailers, Marketing, Distribution &

Branding for Retailers. It takes care of the whole process from design & development,

manufacturing or sourcing till offering a range of pre retailing services, warehousing to

delivering at the door step on a call off basis. It manufactures a broad range of products

comprising of knits, woven, sweaters and bottoms in basic as well as complex designs. It

has a good manufacturing capacity; the present in-house manufacturing capacity of the

company is twenty million pieces. Per annum spread over more than 725,000 sq feet of

built up area with efficiently designed layouts to ensure smooth flow of materials. The 24

company is planning to double the capacity by expanding the operations in Chennai,

Bangladesh & Indonesia. It intends to have a capacity of 30million pieces by the end of

2009. The company adopts integrated marketing techniques and has merchandising teams

in Canada, Europe, HK, UK, and US, closely interacting with existing and potential

customers at their doorstep. The Company shares were listed on the stock exchanges first

time in Feb, 07. It recently went for a joint venture with LERROS, a premium apparel

brand from Germany.

HARIA EXPORTERS

Haria Exports Ltd. is a leading garment exporter in the country for the last twenty four

years. It is a Star Trading Company and has won the golden status certificate in the year

1999. This company occupies a unique place in the industry of the by its contribution to

Industrial output, employment generation and Foreign exchange earnings. Even though

the textile industry has the distinctive advantage in respect of raw material and skilled

labor, the industry is suffering from technology obsolescence which in turn affects the

quality, productivity and cost effectiveness. The high capital cost is impeding the process

of Hi-Tech up gradation. Therefore, the Government of India, Ministry of Textile has

launched Technology Up gradation Fund Scheme for Textiles & Jute Industries of

Rs.25000.00 crores at a concessional rate of interest of appx.5%. In order to compete with

the outside world, the company is paying attention to the application of technology,

closely following up the fashion trends and improved product quality. In order to be more

cost efficient the company has acquired latest machinery which ascertained exact material

consumption depending upon the style and pattern. The Government policies, interest

rates, export incentives etc may also affect the overall performance of the company, but

even then the company is optimistic about its revenue and growth.

EVINIX

The company started in 1996 with the manufacture of headgears, baseball caps and high

altitude jackets, using cotton textile and leather, mainly for exports. The company was

incorporated on 1st May 1996 as Evinix Fashion Accessories Private Limited under the

Companies Act, 1956. Mr. Sanjay Taneja, brother of Mr. Raujeev Taneja (the original

promoter of the company) joined the Company as a Promoter replacing Mrs.Anuradha

Taneja, who disassociated herself from the company. The name of the company was 25

changed to Evinix Accessories Private Limited from Evinix Xsesryz and a fresh

Certificate of Incorporation dated 20th March 2003 was taken. In March 2005, M/s

Ambros Exports Private Limited took equity stake in the company.

The apparel category constitutes men and women’s shirts, trousers, skirts and tops,

kidswear and nightwear. Organic cotton wear for expecting mothers and infants is an

additional strength. They use Organic cotton and its products through its brand name

“Othentix”- Authentic Sustainable Textiles, lends a unique personality to each garment

manufactured and supplied by Evinix. The company came out with a principle of Rapid

Retail suggesting that every merchandise has a limited shelf life at CUT stores; CUT is an

acronym for Comfortable, Urban and Trendy. Evinix is setting up CUT stores (averaging

4000-5000 sq feet) in fast urbanizing young Indian towns. It recently launched the CUT

youth style store in Rajkot. The Rapid Retail business concept embraces the e.t.o.a.d

concept i.e. the exact time of awaited departure when the product will move out to the

next best price bracket.

PEARL GLOBAL

Pearl Global Limited was incorporated on 23rd October, 1979 under the name Pearl

Agencies Private Limited. The Company became a Deemed Public Company with effect

from 1st July, 1991 The name of the Company was change to PEARL GLOBAL

LIMITED (PGL) on 2nd September, 1993 in terms of Section 21 of the Companies Act,

1956 as per fresh Certificate of Incorporation issued by the Registrar of Companies, Delhi

& Haryana. PGL manufactures, sells, and exports ready to wear apparel in India. The

company primarily produces garments in woven and knitted fabrics. Its products include

casual wear dresses, ladies’ blouses, and bottoms. The company is based in Gurgaon,

India. PGL is a subsidiary of House of Pearl Fashions Limited.

BANG OVERSEAS LTD

Bang Overseas limited’s principal activity is to manufacture and market textiles and

apparels. The Group's textile includes readymade garments, under garments and hosiery.

It markets with a brand name of Thomas Scott. The Group operates only in India. It was

incorporated in the year 1992 and is presently providing fashion fabrics and meeting ready

to wear requirements of the customers in apparel, textile and Retail segment. The

company started the business from trading in textile and since 1998, they are

conceptualizing and designing fashion fabrics and outsourcing the manufacturing process 26

of the same from countries like Turkey, Portugal, Mauritius and other European

Countries. In the same year, they launched our seasonal fabric collections in textile under

the name "Body waves", marketed through their own distribution channel to different

brands and retailers. They have ventured into ready-to-wear men’s' segment in 2000 by

outsourcing manufacturing process and in turn selling to various international brands.

They launched ready-to-wear mens' garments under our brand name "Thomas Scott" in

2002. They started their own first apparels manufacturing unit in Bangalore in the year

2005 in the name of Reunion Clothing Company with an installed capacity of 350,000

pieces per annum and in the year 2006 then they started the second manufacturing unit in

the name of Formal Clothing Company with an installed capacity of 360,000 pieces per

annum. At present they have installed capacity of 720,000 and 540,000 pieces per annum

at their Reunion Clothing Company and Formal Clothing Company. Their products are

presently retailed through 157 point of sales comprises of our own Retail outlets, Large

format stores (LFS) like Shoppers' Stop, Pyramid, Globus, the LOOT, SAGA and Multi

Brand Outlets (MBO) spread all over India. They cater to the demand of various other

apparel manufacturer and brands also. They have centralized warehousing and logistics

centre at Kalher Village near Bhiwandi to facilitate our supply chain management as well.

BCG MATRIX

BCG Matrix is also called the Boston Matrix because it was created by Bruce Hendeson

for the company Boston Consulting Group in 1970. The BCG matrix method is based on

the product life cycle theory that can be used to determine what priorities should be given

in the product portfolio of a business unit.

Star

The high growth and high market share brands that exist in Indian market and are the

market leaders. This category consists of the companies like Zodiac, Du Pont etc. These

companies are regularly investing in R&D and gaining market share as time passes. These

stars try to become the cash cows of the future and want to remain in the market.

Cash Cows

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The companies which have low business growth and high market share are the cash cows

that generate milk continuously with the small investment to be as the mature company in

the market.

Question marks (also known as Problem Childs)

The companies that have high growth rate and lower market share are the question mark

as they could be new ventures started or they are companies that do not have liquidity

enough to increase their share in the market. But these companies have potential to be the

star in the market due to good growth rate and thus they could invest more into their

business to expand as the star and then becoming the cash cows.

Dogs

The dogs are more charitable pets that exist in the market and have the low market share

and low growth rate so these companies are better to get out of the market or much cash is

required to set them up. These companies have the cash traps which ties up the money in a

business with the lower potential.

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BCG MATRIX digram

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PORTERS FIVE FORCES MODEL

I. Risk of new Entry by potential competitor

1. Brand Loyalty

The existing players have been in the industry for a long period of time and have

established a good reputation with their customers in domestic as well as foreign market.

This has resulted in the high brand loyalty by customers. But this will not act as a

potential barrier for other companies because most of the Indian textile companies operate

in B-To-B segment and all the players keep competing among themselves for new

consignments from the clients.

2. Absolute cost Advantage

Abundant availability of raw material is one of the key advantages of the Indian textile

industry; this also gives a major opportunity to Indian textile industry and creates a barrier

for foreign players to compete with Indian companies in cost advantage.

30

India is more cost competitive vis-à-vis countries like Brazil, China and South

Korea in manufacture of textiles

Cost advantage arises mainly from the large pool of low cost but skilled manpower

available in India

In case of textured yarn and fabric, India is less competitive, which is a result of

the higher tax burden (excise duty) on manmade textiles in the country

India’s position is strong vis-à-vis other countries in most raw materials

Largest producer of jute

Second largest producer of silk

Third largest producer of cotton, accounting for nearly 16% of global

production

Third largest producer of cellulosic fibre/yarn

Fifth largest producer of synthetic fibres/yarn

Eleventh largest producer of wool

Cotton - Predominant fabric used in the industry

With 4.13 million metric tons of production, country accounts for almost

16% of global production of cotton

India also leads the world in cultivated area under cotton (roughly 8.82

million hectares in 2004-05)

Jute - Occupies an important place in the Indian economy

Has a strong contribution to direct employment as well livelihood in the

tertiary sector and allied activities

India leads globally in jute with its annual production of 7.5 million bales

in 2004-05

Silk - Highly remunerative cash crop, with minimum investment and sustained

attractive returns

India accounts for 18% of world raw silk production (15.74 thousand tones

production in 2003-04)

India has the unique distinction of being endowed with all 4 varieties of

silk - Mulberry, Eri, Tasar, Muga

31

Wool - With its annual production of 50.7 thousand tons of raw wool fibre, India

accounts of roughly 2% of global production

3. Economies of Scale:

The textile industry across the value chain is largely decentralized

Units mostly independent and small scale in nature, rather than composite

units undertaking all activities together

Large scope for entry of organised integrated textile manufacturers

4. Customer switching cost:

As earlier mentioned that the existing players are operating in this industry for a long

period and also have established long term relationship with their customers. Over a

period of time these companies have customised their products as per the needs of the

customers therefore customers also prefer to still to the existing suppliers rather than

moving to others as there is a high switching cost involved here and if the customers

switch to new suppliers than again he need to train the suppliers as per their requirements

5. Government Regulations:

Historically the textile industry in India has been reserved for the small scale

sector, which has been exempted from taxes, thus discouraging investments in

increasing scale

The government, through its various Budget announcements has sought to

rationalize taxes

Budget 2002-03: Textiles brought under the ambit of Cenvat (credit for

duties paid on inputs or capital goods) and introduced on all yarns

Budget 2003-04: Cenvat extended across the entire textile chain to

include fabrics, made-ups and apparel; excise duty exemptions on

many sectors and processes, specially SSI removed; excise duty rates

reduced

Budget 2004-05: Cenvat made optional - every manufacturer allowed

to choose between a complete exemption from payment of excise duty

or adopt the Cenvat route; excise duties lowered to 4% on cotton

textiles and 8% on non cotton textiles (except man made fibres,

32

polyester filament yarn, nylon filament yarn) for those claiming Cenvat

credit

Always government regulations aimed at improving competitiveness of industry to face a

post quota regime

Several government initiatives targeted to attract investments:

Technology up gradation fund scheme:

Scheme launched in 1999 to provide firms access low interest loans for technology

up gradation and setting up new units with state-of-art technology

Scheme has disbursed INR 91.61 bn till 31st December 2005

Policy related to foreign investment:

Up to 100% foreign direct investment allowed in textile and apparel

manufacturing industry, with approval of the Foreign Investment Promotion

Board (FIPB)

USD 1.02 bn of FDI in the sector approved between 1991 and 2004

Companies free to set up fully-owned sourcing (liaison) offices, as well as

marketing operations

Upgrading Infrastructure:

“Scheme for Integrated Textile Parks” (SITP), based on public-private

partnership model to build world class infrastructure facilities

Product specific “Cluster Approach” targeting development of 100 additional

clusters in textiles

Technology Mission on Cotton (TMC), focusing on cotton R&D,

dissemination of technology to farmers, improvement of market infrastructure

and modernization of ginning and pressing sector.

II. The extent of rivalry among established firms

1. Industry competitive structure:

Since this industry is highly fragmented there is always high probability during the boom

phase that many new players could enter this industry which would lead to a price war and

ultimately end up with the bankruptcy of some players or consolidation of industry. So,

this is a treat to the existing players.

33

But also the existing players work a lot on cost efficiencies therefore the treat of new

entrant is negated by the cost efficiencies of existing players

2. Industry Demand:

In the current scenario textile exports have declined drastically and even in domestic

demand there is a little slowdown. Due to which textile companies are working on

reducing cost by ways of reducing the work force, decrease in operation cost etc. Also this

will evoke more rivalry among the existing players as they all will like to maintain their

market share in spite of the slump in industry

3. Exit Barrier:

This is not just a labour intensive industry but even the cost involved in plant setup is very

high along with that with the invent of many new technologies many companies have

adapted to modern techniques to remain competitive in industry as well as to produce

better products for their customers in lesser time and with lesser cost.

Therefore because of high involvement and emotional attachment with the business as it

has been a traditional business for generations for many companies they still prefer to

stick and continue with the business. But in the current scenario many textile mills have

closed down because of deep cut in demand and high operational cost due to severe global

crisis.

III. The bargaining power of buyers

Indian textile companies are facing a tough competition from Chinese,

Brazilian and South Korean companies as they are able to produce at a lower

cost compared to Indian companies

This industry is fragmented and there are large number of players in the

industry, therefore buyer get the option of choosing from many suppliers

Indian textile industry is no more just a mass producer of textile rather it has

moved into niece segment and has developed capability to produce finest

quality of fabric which provides them distinctive competencies against other

countries as well as small players who could cater to mass consumers only.

Therefore overall buying power of buyer will defer from company to company.

Companies like Arvind mill, Raymond, aditya birla group have achieved certain degree of

34

distinctive competencies therefore with them buying power of buyer is negated to large

extent against their competencies.

But many small companies who are mass producer of textile face a strong buying power

of buyer.

IV. The bargaining power of supplier

Here again bargaining power of supplier dictated by the segment that they are targeting to,

for a niece players and companies who have achieved operational excellence can dictate

terms to buyers but for small players who just produce for mass consumption do not have

much say in the business deal and the prices are mostly dictated by the buyer.

V. The threat of substitute product

Textile itself is a very broader term and is a solution to a very basic need of any human

being therefore there is as such no substitute to this but within the textile industry there are

many substitutes to different category of textiles. In India there are various types of textile

produced from cotton, silk, synthetic etc.

There is always a risk of substitution of one type with the other type also there is constant

research carried out to develop new types of textiles but combining different textiles in

different proportion. But in broader perspective there is no substitute to textile.

Segment Analysis

India’s textile industry comprises mostly small-scale, non-integrated spinning, weaving,

finishing, and apparel-making enterprises. The figure below depicts the overall value

chain and the number and type of units within the industry.

Textile Sector – High Level Value Chain

35

Spinning mills

With an installed capacity of 40 million spindles, India accounts for about 22 per cent of

the world’s spindle capacity. In 2005, India’s spinning sector consisted of about 1,161

small-scale independent firms and 1,566 larger scale independent units. Independent

spinning mills account for about 75 per cent of capacity and 92 per cent of production.

Knit/Weaving/Knitting Units

India’s weaving and knitting sector is highly fragmented, small-scale, and labour-

intensive. The woven fabric production industry can be divided into three sectors: power

loom, handloom and mill sector. In 2005 it consisted of about 3.9 million handlooms, 1.8

million power looms, and 0.1 million looms in the organised sector. The decentralised

power loom sector accounts for 95 per cent of the total cloth production. The knitted

fabric forms 18 per cent of the total fabric production.

Processing Units

The processing industry is largely decentralised and marked by hand processing units and

independent processing units. Composite mill sectors are very few falling into the

organized category. Overall, about 2,300 processors are operating in India, including

about 2,100 independent units and 200 units that are integrated with spinning, weaving or

knitting units.

Garment Manufacturing Units

Small-scale fabricators dominate garment manufacturing. Most garment manufacturing

units fare reasonably well on the technology count. The bulk of apparel is produced by

about 77,000 small-scale units classified as domestic manufacturers, manufacturer

36

exporters, and fabricators (subcontractors). The fragmented structure of the industry

provides the advantage of a large pool of skilled workers in different areas of textile

manufacturing, and also gives scope for entry of organized integrated textile

manufacturers. Small scale units in different sectors can also be leveraged as a supply base

for sourcing materials at low cost. Apart from these advantages, the industry has also been

experiencing consistent growth across different sectors, making it one of the key potential

sectors in India.

SWOT ANALYSIS OF TEXTILE INDUSTRY

Strengths

Removal of quota restrictions to give a major boost to the exports.

37

India is one of the largest exporters of Yarn in international market and contributes

around 25% share of the global trade in Cotton Yarn.

Low per capita consumption of textiles in India as the world consumption is 6.8,

India only consume 2.8 of it. That’s why there is large scope of manufacturing and

exports.

Availability of the cheap labour in India would help the development of the

textiles at the lower cost.

Cost competition is not much in India as majority of Indian population is not

dependent on the big brands like Armani, United Colours of Benetton etc, so India

itself does not hold much competition with these brands.

The large cotton production in India would lead to the development of the textile

mills in the better way, as India does not have to import the raw material from

outside.

There are well established production bases for made ups export as well as for

domestic purpose.

Weakness

The most serious problem of the industry is the lack of adequate processing

facilities; there is over-dependence on hand processors and traditional items.

The Indian textile industry is fragmented. Most of the SMEs are tiny and cottage

type units without sufficient capital back-up.

The government policies in India for the textile industries are traditional as they

are not upgraded like the up gradation of the policies for the IT industries.

The quality of wider-width fabrics for meeting the export demand is lacking in

many respects, which is acting as a disadvantage to the growth of the industry.

The technology used in the most of the textile mills is old enough that they can’t

be modified, but there have to be new machineries imported to give the edge in

technological advancements in this sector.

Opportunities

As per available information, the market for processed cotton fabric will increase

in the European and other markets and, therefore, the power loom industry may

38

benefit and expand substantially. Further the growth in the export segment will be

mainly from cotton made-ups and garments along with processed fabrics.

Grey fabric export is continuing to grow and will show increasing trends.

Value added products will have greater demand and, therefore, processing will

play an important role.

India with traditional designs and craftsmanship can command a greater market

share for niche products in made-ups and garments.

Indian companies need to focus on the product development and this could easily

be possible as there is the greater scope in the Indian Market.

As the new generation is keen towards the western culture the training for

specially textiles could be provided to them and they could be encouraged to

develop the efficient sector of India.

Increased use of computer aided designing to develop the designing capabilities of

the textile. Using new technologies and software ease the use of virtual design on

the computer and then choosing from various alternatives.

Threats

Increased competition in the domestic market yield to the development of the more

SMEs which invest more to survive in the market.

The working area of most of the industries in the textile industries is not hygienic

enough to give the workers more comfortable area to work in. so this condition has

to be improved.

Need to revamp consumer consciousness

Chinese goods are cheap as well as the machinery provided by them is also cheap.

So the threat for the export and designing is the Chinese Aggression over the

International market.

Continuously quality improvement is needed to make sure that people would rely

on Indian goods not on the foreign goods.

Traditional items like terry towels are manufactured in EOUs all over the country

with superior quality. This has been eroding the traditional markets for power

loom and handloom products forcing them to go for product diversification.

39

SUPPLY CHAIN WITH PDC FOR INDIAN APPAREL INDUSTRY

40

The apparel supply chain is indeed complex. Even simple garments like t-shirts are often

touched by hands in several countries before ending up in the target markets of Europe or

the United States. A more complex product, like a winter parka, often sports components

from all over the world: snaps from Germany, zippers from Japan, insulation from China

and Thailand, and the outer shell from Taiwan. To manage this complexity, many brand

owners turn to facilitating agents like Li & Fung who add value by coordinating the far-

flung supply chains. Brands and agents that bring their products to market orchestrate a

long supply chain

starting with fibres (wool, cotton, synthetic) that are spun, woven, knit, and dyed in large

mills, then on to cut-and-sew assembly operations, and finally laundry and finishing

facilities before joining a global distribution system. With components like zippers and

snaps added along the way, the final garment is the joint effort of many companies like

DuPont (fibre), Burlington (mill), Kellwood (cut and sew), Liz Claiborne (brand),

Dillard’s (retailer), along with numerous transportation providers, freight forwarders,

export agents, and warehouse providers. This whole process typically takes six to 12

months. The actual cycle time through the system is far less. Including transportation

times, the value-added cycle time without problems or changes is more like six to 12

weeks. But along the way, the complexity of coordinating the product definition and

managing the associated miscommunications across multiple companies slows the process

to a crawl. So, brands routinely begin working on their product lines well over a year

before the selling season.

Managing the Product

One of the biggest challenges in the industry is simply defining the product. Each garment

has many technical specifications. First there is the fibre and fabric itself. Working with 41

fiber producers and mills, brand designers first must define many attributes of the fabric:

its make-up, texture, weight, associated strength and elastic qualities, colour, and finish.

Even for what seems like a simple product, like Jeanswear, this process can take months.

After developing the concept with the brand, the mill runs a pilot production run of the

fabric and submits it for testing. After review with the brand, changes are made and

another pilot is run. Because of the scale of a high volume mill, each pilot run means

producing several thousand yards of material that ultimately gets scrapped or dumped as

off-goods. Getting the fabric right can mean multiple trials – each requiring weeks. But

developing a technical specification for the fabric is only the beginning. Artwork for

prints that are transferred to the fabric surface come next. Then there is the specification of

the garment itself – the patterns, cutting and sewing instructions, sizing specifications, and

preferred vendors for buttons, snaps, zippers, and other components.

Together with the bill of materials, associated drawings, process instructions, testing

specifications, and technical colour definitions, the total information content defining each

product is massive. Even final garment finishing can be complex. For Jeanswear products,

the science behind laundering the garments to achieve the desired look is a key area of

competition among brands and a high value-adding step to the garment. As with many old

industries, the information management supporting all the different facets of a garment

specification has been slow to keep up with the increased complexity of the supply chain.

Ensuring that everyone in the supply chain has an accurate and up-to-date description of

the

product is one of the biggest challenges. Like all products, once designed, garments are

subject to many design changes in the preproduction phases. Typical products see more

than 50 changes or enhancements before production is complete. And often changes made

by brand designers are slow to reach the production floor of a contract manufacturer. In

many companies, the change process is conducted through faxes, phone, and emails – all

poor means of managing a distributed, complex supply chain. An executive at Burlington

lamented that the change process looks like a child’s whispering game. Starting at one end

of the chain, a designer may call a manufacturing coordinator requesting a change to the

left rear pocket of the pants. But, by the time the request makes its way to the

manufacturing floor in Mexico, the request becomes a change to the right front pocket.

42

Getting the right information to the right people at the right time is the biggest challenge.

Equally important is visibility to the entire product and sourcing team with a documented

history of product changes. All too often, a change made by one member of the design

team would be unseen by others creating confusion and finger pointing. Off-spec products

arriving at a brand distribution centre would be turned back by inspectors only to find out

later that a single manager in the chain verbally approved the changes. At Liz Claiborne,

the first step toward information integration was bringing designers online using a

consistent set of tools.

Designers, long focused on hand sketching, were hesitant to move to computer-aided

design. The organizational change of bringing hundreds of users online with digital design

tools was painful, but after a five-year effort they have cut design time by 50 percent. Yet

firms like Liz found out that automating the design process, while improving internal

efficiencies, did not help solve the supply chain problems. Vendors, who were less

technically sophisticated or used different proprietary design systems, couldn’t profit from

the digital product designs. Often artwork created in a CAD system by a brand would be

printed and shipped by overnight mail to a manufacturing partner where the document

would be scanned (re-digitized) to drive the manufacturing system that actually created

the material. Even for those who could use the digital artwork, moving very large files

over the Web required more than

simply attaching the CAD file to an email message. It required a content management

system that provided centralized product information, where changes could be tracked and

everyone was sure to have the most recent information.

43

At Dillard’s, information transfer between in-house private-label designers and their 50

subcontracting partners once depended on massive faxing and overnight mail shipments.

As recently as two years ago, Dillard’s employed a staff whose sole job was to send 300

to 500 faxes a day during crunch periods. For each of the more than 6,000 styles

produced, a 12-page fax is sent, including the bill-of-material, sketches, cut and sew

instructions, and other process information. Colour pictures and print specifications were

transferred by express mail throughout the world. At a subcontractor in India or China, the

collection of documents would arrive over a period of days and weeks – completing the

specification of the products. However, if there was a change in the design and assembly

process the product would be side-lined until the issues could be resolved and the required

people in each organization had signed-off on the changes. When crunch time came,

changes often happened over the phone or via email with others in the design team left out

of the loop, causing confusion and mistakes.

Web-Centric Product Content Management

Tormented by the rising cost of complexity, many apparel designers began adopting

digital design systems 10 years ago, but like Liz, found that transferring the information

44

within the rapidly disintegrating supply chain was tedious. Large firms like Gap and The

Limited invested in their own systems only to be paralyzed by the integration issues. With

the opportunities of moving design processes onto the Web, third party apparel product

management software companies like Applied Intranet (now Free borders) and later

Gerber began developing Web-based solutions. Levi’s was one of the first large apparel

companies to begin implementing a collaborative product management system from

Freeborders to facilitate fabric development, linking textile mills to Levi’s product

development, sourcing, pattern-making, and quality. For Dillard’s, even the simplest

features of these tools dramatically changed their product content management. Using a

publishing and content management tool called Free border’s CPM Design, Dillard’s

eliminated the faxing and emailing of product documents to their vendors. Each style is

now managed with a virtual folder where designers and manufacturing partners can access

documents over the Web. With important product content stored in a single place,

everyone is assured to be working from the most recent version. More importantly,

changes cannot occur without being visible to all parties. Email is limited to reminders to

check changes in the folder and no changes can be made outside of the system. Besides

saving weeks in communication time, the system helped eliminate costly mistakes and

confusion. Liz implemented a similar system, cutting weeks out of the cycle time. At Liz,

the time saved using a Web-based system ensured more on-time deliveries and helped

avoid costly markdowns due to late shipments. In some cases, with extra time in the

design cycle, products could be further improved or shipments could leverage less-cost

ocean transport rather then air freight. The advantages of even a simple

Web-based system are enormous including: • Reduced cycle time • Reduced faxing and

express mail costs

• Faster time to volume production45

• Reduced scrap costs and mistakes

• Fewer markdowns due to late arrivals

• Secure environment using fewer paper and emailed documents

• More reuse of standard design elements saving time in the design process

• Archived product history and product change information leading to better

accountability

For contractors and mills, getting the product right the first time reduces scrap and costly

delays that drive down manufacturing utilization. But escaping the the endless blame

game when changes occur is one of the largest benefits.

Making the Leap to Collaboration

Reducing costs and speeding the design process are important benefits of Web-centric

product management systems. However, the biggest prize is leveraging the intelligence of

all partners to enhance the product. Study after study has shown that the majority of the

final product cost (80 percent or more in some cases) is locked in early in the design

process when concepts are considered and materials selected. More importantly, the

options for cost-effective product improvement are also greatest in the early stages of

design. At this point, designers could benefit from collaborating with suppliers, like

DuPont, to better understand the cost of their product and alternative concepts. Material

suppliers and manufacturers could bring their knowledge of new materials and processes

to designers and help them brainstorm enhancements and entirely new products. The

results of such collaboration are better products, more innovation, lower costs, and higher

customer value. For the apparel industry, examples of true collaboration are hard to find.

While firms like Dillard’s have migrated all of their vendors to a Web-based system for

product assembly specifications, more complex specifications of the fabric itself and color

management sill reside in the off-line world. In some cases, the barriers are technology

adoption and cost. For example, spectrophotometers can precisely measure color of

sample items, but some designers are not comfortable abandoning personal, eye-witnessed

samples. Information transfer speed in many third-world countries where most apparel is

produced is also a limitation of true, two-way collaboration. While plants may be able to

successfully download specifications and sketches, the concept of real-time interaction

around the product design is limited by long intervals between communications.

Additionally, complex CAD specifications of fabrics with detailed colour pictures create 46

data movement problems even within the United States and Europe, let alone rural China

or Thailand. For a vendor in Sri Lanka to download a specification over a phone

line could take hours. In those cases, physical samples of materials and drawings still must

be moved by express mail. As with many other industries, trust and technology adoption

are still the largest barriers to collaboration. Technology itself is rarely the limiting factor.

Decades of cost-focused procurement has created an environment of distrust in the

industry that hinders firms from working together. Resistance to change itself also leaves

many companies squabbling internally rather than moving forward. Nevertheless, given

the current financial

state in the industry, few firms have the luxury to do nothing. With cost and efficiency

improvements available in the current generation of Web-based tools, the benefits of

content management systems are easily justified. Adopting these tools is the first step in

the move towards product collaboration. Possibly some of the most exciting initiatives to

enhance collaboration have been focused on helping the designers and manufacturers

early in the textile and garment development process. For example, DuPont has vast

experience working with textile mills to help them better use DuPont fibres in

manufacturing. When fashions move towards more stretch garments, DuPont is there to

help fabric producers better use Lycra to produce a wide variety of stretchy material. This

service offered to mills has given DuPont a working knowledge of worldwide textile

producers to help designers find plants that can produce the high-quality fabrics required

by the brands. Building on this service has opened an exciting opportunity for DuPont to

collaborate and add value in the apparel supply chain. By developing a Web-based system

that can be integrated into a product content management system, DuPont could help

designers both design fabric and find manufacturing

partners to produce it. Recently, DuPont introduced the Lycra Assured Network, a

collection of textile and apparel industry partners that collaborate to bring innovative

stretch garments to market faster and at reduced costs. A cornerstone of the Network is the

development of a suite of online collaborative tools that will increase the efficiencies and

the marketing reach of the partners. The first generation of this tool, the Lycra.com®

Online Fabric Library, allows users to develop libraries of fabrics and reduce the need for

physical samples. Additionally, it speeds up the search process for high-quality fabric

vendors. Integrating those libraries into product content management systems is the next

47

step in creating a valuable tool for the apparel industry and bringing DuPont into a

collaborative relationship with designers.

For the apparel industry, making the leap to true collaboration will be the key to survival

for many firms. Building trust and an organization that embraces Web-centric technology

are vital to move forward

48

49

SCOPE OF THE STUDY

• Reducing costs and speeding the design process are important benefits of web-

centric product management systems. However, the biggest prize is leveraging the

intelligence of all partners to enhance the product. The study will show that the

majority of the final product cost (80 percent or more in some cases) is locked in

the early design process when concepts are considered and materials selected.

• The study will probe how cost-management and time management can be

effectively done through web-centric product management process.

• The study would through light on how the supply chain complexity can be reduced

through real-time communication. Companies that are technology enabled would

find real-time inventory solution,and thereby capture lost supply chain value in the

process.

• The scope of study will be organized by findings obtained from respondents

selected from Delhi & NCR particularly the apparrel retail store like Pantaloon,

Shoppers stop,buying agents like Li & Fung,Ikea etc, areas in commensuration

with the decided research methodology stated below. Respondents will be drawn

from two categories – retailers (Pantaloon, Shoppers stop, Li & Fung etc) and

customers – in order to better answer the research questions stated below.

WHAT CONTRIBUTION WOULD THE PROJECT MAKE AND TO WHOM

The contribution from the project will significantly impact the Apparel Industry which is

the ultimate objective. The study intends to provide recommendations for overall

efficiency of the supply chain process in the apparel industry. Recommendations will be

broadly in the area of design concept and design development.

Information from the study will lead to suggesting models for improving effectiveness and

efficiency of the supply chain process addressed by the study. The study will benefit all

stakeholders in the supply chain process of apparel industry broadly involving

manufacturers, wholesalers, retailers, and ultimately the customers.

50

RESEARCH METHODOLOGY

PURPOSE OF THE RESEARCH

• The purpose of the project is to carry out an in-depth analysis of the driving forces

in the complex supply chain process of the apparel industry.

• To study how web-centric co-ordination in the supply chain process would help in

capturing lost supply chain value.

• The purpose of the study is to understand the impact of outsourcing and

globalisation on the efficiency and effectiveness of the supply chain in the apparel

industry.

The research has been conducted based on according data and it is a discipline study

This project would incorporate and entail all the aspects about the complexities in the

supply chain process arising out of outsourcing and globalization. This information can be

gathered from primary as well as secondary sources of data. Keeping in mind the above

mentioned hypothesis and the better comprehension of the area of study it becomes

mandatory to have an access to both the sources. Thus I have adopted a comprehensive

research methodology which depicts a judicious blend of both primary as well as

secondary sources.

SECONDARY RESEARCH

The study would be starting with secondary research to understand the existing scenario in

the apparel industry. The study would use the following as source for Secondary Data

collection:

• Internet

• Journals

• Articles

• Newspapers

51

The main aims of the research:

1. To identify how companies in textiles and clothing are using e-commerce

2. To identify how e-commerce benefits such companies

3. To identify salient issues facing companies moving into e-commerce

52

This paper illustrates three case studies from the companies involved in the study. The

study was carried out with 10 companies, both in the UK and the US, but due to

limitations of space only a small sample will be discussed.

Results

Case 1

Company 1 is a US based global producer of women’s clothing. They produce 5

different and have just acquired licensing rights to DKNY Active and Jeans.

Company 1 has recently established a new department, concerned with design

technologies, such as the use of CAD for surface design. The company has had to

restructure to integrate different departments. CAD was first introduced into the

company in 1995, but it took the company 2 years to fully convert from doing hand

painted textiles to using the CAD system. The company has over 40 users of CAD and

50 workstations. Through the use of Style Manager the company has moved from

doing specification packages by hand to on-line and now all the designs are now

transmitted through the company electronically. This was a huge initiative for the

company, and was a complex process. One of the main challenges was teaching

people who could hand-paint to paint on the computer. 75-100% of all textiles in the

company are designed on the CAD system.

The company uses the Internet for B2B transactions, Specnet being one of the

applications. They have Lizlink, which is available for vendors to access, and small

companies are able to order online via EDI systems. They are currently in the process

of considering using the Internet for B2C activities. In consumer markets their

products are available on line through department stores that sell their products and

also sell online. Company 1 does not have input into their section on any of the

customer’s websites. They see one of the greatest challenges of the Internet as being

inventory.

The company has an Intranet site, which is not accessible to manufacturers, and is just

used as a corporate communication tool. It has been in operation since November

1999 and is used to communicate trends and colour information throughout the 53

company to designers. Designers are able to access inspiration for designs through

this, and there are different inspirations for each month. Offshore offices are able to

access the information, as they help the company to source. These offices are in Hong

Kong and Taiwan. They also have agents, Egypt, Israel, Sri Lanka, Japan, and Korea.

The Intranet is also used to publish all of the company newsletters, and is used as a

corporate communication tool. The system has been operating since November 1999.

The company finds that one of the major benefits of using the Intranet for such

purposes is reduced cost. They have found that there is less copying of resources such

as mood boards, a better sell through, improved communication and reduction in the

time needed to do certain activities. They are now able to move the conceptual design

phase much closer to the end of the process.

Case 2

The Company 2 is the world’s largest manufacturer of apparel, with revenues in 1999

approximately $5.6 billion. They have a number of global brands. They are also the

largest supplier of work wear in heavy industry, special products such as space suits

and fire fighters uniforms, and uniforms for the postal service and Federal Express.

The philosophy of the company is growth by acquisition on a global basis, and then to

implement common strategies and processes.

Company 2 sees e-commerce, as a major step forward – for them B2B is a major

priority, whereas going directly to the consumer is not, and includes customer/retailer

affiliations as part of B2B. They feel that retailers need some solutions and services

from them as a company – there is a role for them to play. Their business model

concerning e-commerce has not yet emerged, but could possibly include inventory

holders, fulfilment and ownership of customer care.

In April 1998 Company 2 had their first e-commerce venture. They had a lot of

individual brands with informational sites. They then carried out some research into

what competitors did, and then moved forward to decide what the role of Company 2

should be. They identified one of their Brands, which had numerous small accounts,

and so less dependence on one major company therefore reducing channel conflict,

and decided to offer the brand to the end consumer over the Internet. The site offers 54

full retail opportunities for visitors. This is contracted through Yahoo and AOL. This

has seen some success, although it has not yet reached the purchase goals that were

initially predicted.

Presently Company 2 does not use e-commerce in their supply chain at all with

suppliers. They are starting to use e-commerce supply purchase in the next few

months, and then move into direct purchasing. The company found that they could not

convince themselves that there were true gains for them in the B2C area of e-

commerce. The company feels that they are ‘past driving on the edge’, and feel that

they are ahead by not spend large amounts on money producing websites for all of

their brands. They have seen a huge move towards B2B, and can see a lot of change.

Company 2 feels that they rely less on the ‘first mover advantage’ and more on doing

something correctly when it is done. To Company 2, ‘correctly’ will bring a lot of

change to the company. They feel that they need to fully understand the company,

what makes them successful, and then to capitalise on these strengths. This might

include brands, technical expertise. They want e-commerce to enhance what they are

currently offering, not to replace. They also feel that there is no point in rushing the

process, but prefer to take a considered look at the whole of the business. They feel

that they have learnt from their experiences of AOL – and that the main lesson from

this is to take the process much slower.

Company 2 feels that the business model and e-commerce are closely linked and that

e-commerce is intrinsic to the business model. Company 2 does not regard e-business

as something separate, but as something that is intrinsic to the business model.

The company would like to take part in a partnering venture with a retailer, rather than

attempt this alone, so that they do not miss out on the e-commerce market. Research

has projected that overall, apparel sales via the Internet will still be less than 10% of

the apparel market in the US – the project is around 8%. Company 2 is trying to keep

this in perspective.

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DATA ANALYSIS AND INTERPRETATION

1. As per your understanding to this industry what are the critical success factor for

Supply chain does have for Apparel industry i.e pantaloon, big bazaar, etc.?

A. Rail container service

B. JIT approach

C. Cost effective logistics system

D. Customer service

Critical Success

FactorRail container service 34JIT approach 27Cost effective logistics system 21Customer service 18

4. How does different Channel would utilize the cost optimization technique for the

supply chain management for the Appeal industry?62

A. Through cost Audit

B. Implement quality function

C. Reducing the wastage.

D. Increasing capacity of container.

Cost optimisation StrategyThrough cost Audit 35Implement quality function 39Reducing the wastage. 22Increasing capacity of container. 4

5. What kind of technological support that required for Apparel Industry Supply chain

taking for the targeting more market share.

A. Material Management system

B. Warehouse Management system

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C. Transportation management system

D. Regulatory Management system

Technological advancementMaterial Management system 54Warehouse Management system 15Transportation management system 12Regulatory Management system 19

Q5. Quality of ordering processAdequacy of the details provided in the monthly dispatch statement (MDS)Ease of understanding monthly dispatch statementProviding accurate statement on stocks to be dispatched for the monthAvailability of all products & pack size (SKU) as requiredAbility to handle urgent requirementCare taken to minimize dumping of stocks

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Details of MDS

Easy to Understand of MDS

Providing accurate statement MDS

Availability of all products & pack size (SKU)

Ability to handle urgent requirement

Care taken to minimize dumping of stocks

Excellent 54 23 66 71 43 67

Very good 16 22 17 9 32 12

Good 5 19 6 2 1 9

Fair 7 11 6 8 9 4

Poor 7 12 3 1 6 3

Don’t Know 5 6 1 3 7 2

Refused 6 7 1 6 2 3

As per the graph and data table suggested that the quality of the Ordering process of the

Grasim would be very good in terms of the Retailers view. the Grasim providing details in

the monthly dispatch statement (MDS) which 70 retailers out of 100 are agree on that

while details of the MDS also taking care of the easy to understandable process which 45

people are agree on that which is very good satisfaction level that the Grasim stockiest and

retailers has. Almost 80 of the Retailers are saying that the Grasim gives an accurate MDS

which is clear transparency maintained by the firms.

CONCLUSION

Rose (2001) suggests creating personalised experiences for different customer segments in

order to build loyalty. This was an issue for the UK companies involved in the study, three

of which had separate websites for different target markets, in order to minimise factors

such as confusion and channel conflict. However, Rose (2001) argues that this will build

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loyalty amongst customers, but this study has indicated that loyalty is built upon trust of

the brand and the company, and also by the company addressing issues such as fulfilment.

One of the companies in this study felt that trust and confidence in the company is built by

providing the customer with contact details and the opportunity to speak with the

company, rather than just a faceless website.

O’Keefe et al (1998) suggest that IT provides small companies with the opportunity to

gain competitive advantage, but that such companies are likely to be forward thinking and

less likely to find the demands of the web inhibiting. Research carried out as part of this

study would suggest that this might not always be the case. One company only went

online during the course of this study, not as a result of not being forward thinking, or

finding the demand inhibiting, but merely because the owner-manager was too involved

with other aspects of the business to find the time to devote to online activities. Small

companies face many constraints, including skills, time, resources and finance, and the

companies in this study indicated that these were inhibiting factors to building and online

presence.

E-commerce literature suggests that through e-commerce sellers are able to take

advantage of additional channels with little disruption to existing distribution, and achieve

a way of disposing of surplus inventory. Although physically this may be possible,

research carried out with companies in the US has indicated that in reality this is not

possible due to the risks of channel conflict between existing customers and new profile

customers. Company 2 cited the example of a traditional manufacturer selling to retailers

and using e-commerce to also sell directly to retailers to illustrate this point, indicating

that a major issue would be becoming a competitor to your customers.

Globalisation has been cited as an issue in both supply chain and textile and apparel

industry literature, with the move to sourcing overseas. E-commerce enables the small

company to become involved in this, and opens the global market up to companies other

than large international corporations. All of the companies involved in this study cited one

of the major outcomes of having an internet presences as being the increased interest from

potential overseas customers – something that many of them they had not experienced

before building their site.

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RECOMMENDATION

1. For a vendor in India to download a specification over a phone line could take

hours. In those cases, physical samples of materials and drawings still must be

moved by express mail.

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2. As with many other industries, trust and technology adoption are still the largest

barriers to collaboration. Technology itself is rarely the limiting factor. Decades of

cost-focused procurement has created an environment of distrust in the industry

that hinders firms from working together.

3. Resistance to change itself also leaves many companies squabbling internally

rather than moving forward. Nevertheless, given the current financialstate in the

industry, few firms have the luxury to do nothing. With cost and efficiency

improvements available in the current generation of Web-based tools, the benefits

of content management systems are easily justified.

4. Adopting these tools is the first step in the move towards product collaboration.

Possibly some of the most exciting initiatives to enhance collaboration have been

focused on helping the designers and manufacturers early in the textile and

garment development process.

5. For example, DuPont has vast experience working with textile mills to help them

better use DuPont fibres in manufacturing. When fashions move towards more

stretch garments, DuPont is there to help fabric producer’s better use Lycra to

produce a wide variety of stretchy material. This service offered to mills has given

DuPont a working knowledge of worldwide textile producers to help designers

find plants that can produce the high-quality fabrics required by the brands.

6. Building on this service has opened an exciting opportunity for DuPont to

collaborate and add value in the apparel supply chain. By developing a Web-based

system that can be integrated into a product content management system, DuPont

could help designers both design fabric and find manufacturing partners to produce

it. Recently, DuPont introduced the Lycra Assured Network, a collection of textile

and apparel industry partners that collaborate to bring innovative stretch garments

to market faster and at reduced costs.

7. A cornerstone of the Network is the development of a suite of online collaborative

tools that will increase the efficiencies and the marketing reach of the partners.

8. The first generation of this tool, the Lycra.com® Online Fabric Library, allows

users to develop libraries of fabrics and reduce the need for physical samples.

Additionally, it speeds up the search process for high-quality fabric vendors.

Integrating those libraries into product content management systems is the next

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step in creating a valuable tool for the apparel industry and bringing DuPont into a

collaborative relationship with designers.

9. For the apparel industry, making the leap to true collaboration will be the key to

survival for many firms. Building trust and an organization that embraces Web-

centric technology are vital to move forward

REFERENCES

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1. Angeles and Nath (2000) The importance of congruence in implementing

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product development, The Design Journal, Vol 1, Issue 3, pp 2-15

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