An Assignment Report on

Strategies for Apparel Industry

Submitted By,
Patel Priyanka (40)

MBA (Semester III)

Section: B

Submitted to,
Prof. Vinod Patel
Department of Business and Industrial Management
Veer Narmad South Gujarat University
Academic Year: 2014-2015

INTRODUCTION
The Indian clothing or apparel industry had its origin during the Second World War
mainly for mass production of military uniforms. Over the years, its profile has
undergone significant changes. Technology has been gradually upgraded and there is
qualitative and quantitative improvement in apparel industry in India. Now India is well
known for its fine textile products and emerged as strong destination of all types of high
end textile products. Indias garments are exported to almost all parts of developed world.
Most of the leading fashion brands are sourcing substantial quantities from India now.
One of the basic needs of civilized mankind is clothes. The garment industry
caters to the need of clothing while textile refers to the production of intermediate
products like fabric and yarn etc which are used to make the final product i.e. garment.
The textile trade around the word has expanded at rapid speed than the GDP growth and
trade in international textile and clothing has grown at higher rate than world trade.
World textile and clothing industry was around US$ 309 Bn in year 2003 and it was
expected that it would be reaching US$ 550 Bn by 2005 (when all quantitative
restrictions are gone away) and US$ 856 Bn by 2012. Textile and Clothing (T&C)
industry would be the fourth industry to cross trillion dollar mark after Auto, Computer
and Pharmaceutical sector. There is immense potential of growth with changing fashion
and rising standard of living. US and EU would be the major importer countries of textile
products.

SWOT analysis of Indian Apparel & Textile Industry

The Indian Textile industry adds 14% to the industrial production and 8% to the GDP of
India. It provides employment to 38 million people and thus, is the second largest
employment provider after agriculture. The Indian Apparel & Textile Industry is one of the
largest sources of foreign exchange flow into the country with the apparel exports accounting
for almost 21% of the total exports of the country. A systematic SWOT analysis of the textile
and apparel industry indicates the following:1. STRENGTH
I. Raw material base
India has high self sufficiency for raw material particularly natural fibres. Indias cotton crop
is the third largest in the world. Indian textile Industry produces and handles all types of
fibres.
II. Labour
Cheap labour and strong entrepreneurial skills have always been the backbone of the Indian
Apparel and textile Industry.
III. Flexibility
The small size of manufacturing which is predominant in the apparel industry allows for
greater flexibility to service smaller and specialized orders.
IV. Rich Heritage
The cultural diversity and rich heritage of the country offers good inspiration base for
designers.
V. Domestic market
Natural demand drivers including rising income levels, increasing urbanisation and growth of
the purchasing population drive domestic demand.
2. WEAKNESS
I. More dependence on cotton
Due to over specialization in cotton, the bulk of the international market is missed out,
synthetic products in India are expensive and fabric required for items like swimsuit, skywear and industrial apparel is relatively unavailable.

II. Spinning Sector

Spinning sector lacks modernization and there is a need of introducing new technology.
III. Weaving Sector
India has relatively less number of shuttle-less loom.
IV. Fabric Processing
Processing is the weakest link in the Indian textile value chain, adversely affecting its ability
to compete in exports.
V. Poor Infrastructure
High power costs and long export lead times are eroding Indias export competitiveness
across the textile chain.
VI. Low Labour Productivity
Productivity levels for manufacturing various apparel items are far lower in India in
comparison with its competitors.
OTHER WEAKNESSSES
VII. Less attention on man power training
VIII. Poor quality standards
IX. Distance of the potential market
X. Lower average consumption in domestic market
XI. Lack of professionalism and integration of supply chain
XII. Dependence on quota system
XIII. Very low investment on R&D
XIV. Limited exploitation of economies of scale

3. OPPORTUNITIES
I. Growing Industry
World textile trade would continue to grow at a rate of 3-4% to reach $200-210 billon by
2010.
II. Market access through bilateral negotiation
The trade is growing between regional trade blocs due to bilateral agreements between
participating countries.
III. Integration of Information technology
Supply Chain Management and Information Technology has a crucial role in apparel
manufacturing. Availability of EDI (Electronic Data Interchange), makes communication
fast, easy, transparent and reduces duplication.
IV. Opportunity in High Value Items
India has the opportunity to increase its UVRs (Unit Value Realization) through moving up
the value chain by producing value added products and by producing more and more
technologically superior products.
4. THREATS
I. Decreasing Fashion Cycle
There has been an increase in seasons per year which has resulted in shortening of the fashion
cycle.
II. Formation of Trading Blocks
Formation of trading blocks like NAFTA, SAPTA, etc; has resulted in a change in the world
trade scenario. Existence of bilateral agreements would result in significant disadvantage for
Indian exports.
III. Phasing out of Quotas
India will have to open its protected domestic market for foreign players thus domestic
market will suffer.

Strategies
1.

Widen up product portfolio

2.

Vertical integration of business

3.

Improve service and on time in full (OTIF)

4.

Responding to the challenges and enter in domestic market

5.

Improve work environment to drive revenue growth

6.

Setting up of planning department or strengthen existing one

7.

Minimize Style Changeover Time

8.

Develop a Lean team with proactive approach

9.

Checklist an effective tool

10.
Elimination of overtime work
The first five points are considered as mid to long term strategies that can be implemented in
one to two years time frame.
1. Widen up product Portfolio: Companies who already have a business in some product
categories have to move up to more complex products. There are number of companies who
are producing casual shirts and trousers but few who are into products like premium formal
shirts, dress pants, lingerie, suits etc. Basic products make sense for a company who is new to
the business but existing companies need to make the transition by getting into high value
products and replace high cost production bases in Europe and America by offering an
irresistible value proposition of costs and services. To be able to offer these, companies either
need to set up separate dedicated factories or a factory-in-factory with separate cutting,
sewing and finishing, catering to such orders with dedicated teams.
2. Vertical integration of the business: A forward or backward integration plan for the
external processes of the current business is become essential to move next level of business.
By integration there is a cost advantage and a lead time advantage. The bigger garment
companies need to invest in processing and weaving/knitting while textile companies need to
quickly get into value added garment exports, rather than just yarn or fabrics exports. The
medium sized companies can look at integration with process houses or
weavers/knitters/converters by either a formal arrangement of committed production off-take
or investing capital by picking up an equity stake. The funds thus available can be used by
smaller companies to finance their working capital and/or technological up gradation. Classic
examples of vertically integrated companies are Li & Fung and Esquel.

3. Improve Service and On Time In Full (OTIF)

Building trust with buyers goes beyond answering their e-mail queries on time. The buyers
has to be won over by his having to invest very little time on production follow ups and
wondering if he will get his order in full and on time (OTIF- On Time In Full).
Manufacturing or infrastructure can be replicated but great service is very difficult to copy.
This can become a truly distinguishing feature for Indian companies if they put their heart
and mind to it. If the buyer cant be provided with online access to his order status, then
needs to be updated on all relevant information without them asking for it. No last minute

surprises should be sprung upon them! Companies need to set the benchmark and have self
belief that they can actually deliver 100% of the orders on time and in full. Apparel
companies should move up from providing just a product to a product plus service bundle
which can take up a large part of what the buyer has to do. This can include pre-production
pattern making, prototype development, production monitoring, in house inspection and
testing including shipment audit. An example in this category is TAL Apparel
4. Responding to the challenges and enter in domestic market: Apparel exporters need to
focus on the domestic market also, as there is huge growth in domestic apparel retail (Indian
market). Exporters can give a much better product at a lower cost. This will help them
mitigate and diversify their risks; spare capacities can be used more effectively.
Another aspect which merits serious consideration is going for two shifts. Needless to say
that production can be almost doubled while cost per unit would come down. Factories
should look at forming alliances with other factories in a particular region so that spare
capacities can be effectively utilized. So a particular factory which has an order booking
more than its capacity can utilize the capacity of another factory which may be facing a
shortfall of orders. The important thing is that factories should be running at peak capacities
throughout the year.
5. Improve work environment to drive revenue growth: Apparel companies should look at
novel human resource practices to make their organizations a place which attracts the
brightest young talents of the country. The work atmosphere should be such that it helps a
person be at his creative best rather than a culture of getting work done through stick alone.
Also senior management should give a patient hearing to these youngsters who may be
brimming with radical ideas which could provide an innovative new method or even a
breakthrough. Everyone needs to be respected no mater how low they are in the
organizational hierarchy.
The following five strategies can be classified under immediately addressable areas (3-6
months time frame).
6. Setting up of planning department or strengthen existing one: Production planning and
control (PPC) is a key area in the entire manufacturing cycle but perfection in this area is still
lacking. This could be because of a mindset that anyway fabric will get delayed so why to
bother about planning accurately. We need to get away from this mindset and plan every
little activity and trim to the smallest detail. Nothing can and should be left to chance. Last
minute changes in the name of flexibility may be accepted in some orders but not in majority
of the cases. At times buyers may have to be told No for any changes in the specs, once
production has started. There has to be a senior person heading PPC at the factory level as
this function has a critical bearing on factory efficiencies and OTIFs.
7. Minimize Style Changeover Time: Changeover losses need to be minimized and one way
could be to set the line the previous evening so that there arent any days of zero production
because of style changeovers. Again the key is proactive planning. Supervisors should be
aware of the details of the next style thats going to hit the line including outsourcing
operations. PPC has a key role to play here again in terms of blocking capacities with subcontractors on special operations and give clear input and output dates. If external operations
like embroidery and washing can be brought in-house this would lead to reduction in set-up
time, cycle time, cost and wastage.

8. Develop a Lean team with proactive approach: Line allocation should be kept tight as
per operation bulletin without buffer. Combining of operations should be an ongoing exercise
with the Industrial Engineering (IE) department constantly looking at methods improvement.
Too often IE is caught up in post event analysis where the need of the hour is to be able to
demonstrate to the operator and the supervisors the correct method at the correct pace at
acceptable quality levels. The IEs need is to master in sewing skills. They need to change
from a reactive approach to a proactive approach.
9. Checklist an effective tool: Basic planning tools like checklist should be widely adopted
and people trained on this to ensure they dont miss any activity or parts. Though the apparel
business is complex, it can be simplified by training people about their job responsibilities in
detail and ensuring there are able to do a certain set of activities, day in day out, error free.
Sounds simple but there any number of cases where insufficient fabric was ordered because
somebody forgot to add shrinkage allowance to the base pattern and this happens even in the
Good factories.
10. Elimination of overtime work: Last but not the least is the controversial topic of
overtime. In peak season there is at least some justification for doing overtime to be able to
do 110% or 120% of capacity but where the justification in the lean season is or where
factory efficiency is 40% to 45%. Overtime in such cases only encourages inefficiency and a
false sense of more time available. When people on the floor know that overtime will not be
allowed for any reasons, no matter what (usually it is to meet a delivery date, other wise the
dreaded air shipment!) and management backs this up with actually sticking to their words,
the impact can be quite significant.
One could go on and on but even if few of these mid to long term strategies and immediately
addressable areas are looked at, apparel companies would definitely stand to gain.