Analysis Of The Indian Textiles Industry Marketing Essay
The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays a pivotal role through its contribution to industrial output, employment generation, and the export earnings of the country. It contributes about 14 per cent to industrial production, 4 per cent to the GDP, and 16.63 per cent to the country's export earnings. It would provide direct employment to over 35 million people by 2010 (Texmin 2005), which includes a substantial number of people from less privileged sections of society. The textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation.
The Indian textiles and apparel industry has an unbalanced structure, 95 % of the industry is the unorganized and only 5 % is organized. Sector consolidation process in certain segments, to take advantage of economies of scale is necessary. This will generate more employment, as smaller operations affect cost and competitiveness.
1.1 India's Position in Global Textiles and Clothing Industry
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â€¢ India's position in the World Textiles Economy Second largest producer of raw cotton.
â€¢ Second largest producer of cotton yarn.
â€¢ Second largest producer of cellulosic fibre/yarn.
â€¢ Second largest producer of silk.
â€¢ Fourth largest producer of synthetic fibre/yarn.
â€¢ Largest producer of jute.
The Indian textiles industry is one of the largest textiles industries in the world. With the abolition of quotas in 2005, Indian Textiles and Apparel exports grew by 19% to reach US$ 17 billion in 2005-06. Indian exports increased in both the major destinations of US and EU. Indian exports to US increased by 27% to reach US$ 4.6 billion, while exports to EU increased by 18% to reach US$ 6.2 billion. Despite falling prices, Indian exports were able to maintain their UVR to US and EU. Indian exports also benefited in the latter half of the year due to safeguards on China. On the account of increasing exports, most of the Indian companies experienced healthy growth in their top and bottom lines. The exports of Textile and Garments have reached to US $ 19.2 billion in 2006-07.
Major Sectors of Indian Textile Industry
The Indian textiles industry is extremely varied, with the hand-spun and hand-woven sector at one end of the spectrum, and the capital intensive, sophisticated mill sector at the other. The decentralized hand looms / hosiery and knitting sectors form the largest section of the textiles sector. The close linkage of the Industry to agriculture and the ancient culture and traditions of the country make the Indian textiles sector unique when compared to the textiles industry of other countries.
The textile and garment sectors play an extremely significant role in India in terms especially of share in value added, foreign exchange earnings, and employment. As stated by the Indian council of Research on International Economic Relations (ICRIER, 2008) the impending dismantling of quotas in 2004 under mandate from the Agreement in Textile and Clothing of the WTO, the focus has clearly shifted to the adoption and maintenance of global quality standards, all over the Indian textile and clothing exports. Because Indian textile and clothing sector is predominantly cotton based (Verma, 2003), this study would focus mainly on the cotton textile and apparel, and look at the entire value chain from fibre to garment and retail distribution.
Textile and garment manufacturing organizations are facing new challenges globally and are continually making efforts to improve their services and product, both internally and externally, to provide the highest quality at the best cost (Ghori, 2009).
Pressures to increase the quality and lower the cost of apparel are coming from accreditation boards, the media, and comparisons with other facilities and government agencies. Technology adoption has emerged as an important determinant of competitiveness in recent global trade. Gaining competitiveness in the quota free trade has become a driving force for the garment firms to adopt technologies and maintain quality of as per the accreditations and export orientation, cost of capital, technical skills, and competitive advantage ( Bala, 2006).
However as a contrast to Bala's (2006) insights on the garment industry automation to increase quality standards, Dickerson (2008) argues that most developing countries, particularly in Asia, are forced to be overly reliant on textiles industries due to economic constraints and for lack of better alternatives. The textiles and apparel sector has fewer barriers to entry and does not require huge capital investment or highly skilled workers. Yet, this sector has also been the subject of extensive protectionist policies since the beginning of the industrial revolution and continues to be the same, post quota regime as well (Dickerson, 2008).
Numerous case studies, journals, primary and secondary research works, emphasize over different postulates as far as the comparison of the Indian garment industry goes over the global quality specifications platform, but the adoption of quality improvement tools and techniques can never be ignored to maintain the competitive edge in the present global scenario.
2.1 The Indian Textile/apparel industry and the Cost of Quality
Since 1951, when Dr J. M. Juran first published his Quality Control Handbook, the need for estimation of quality cost is highlighted as a stimulant for reducing the cost of non-conformance. However, very rarely does one find the application of quality costs in industries. This case study demonstrates how estimation of quality costs helped an Indian textile industry reduce its costs of non-conformance (CONC) over a period of three financial years.
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Ghori, 2009 defines quality as a multi-dimensional aspect. There are many aspects of quality based on which the garment industry is supposed to work. They mainly include:
Quality of production.
Quality of design of the product.
Purchasing functions' quality should also be maintained.
Quality of final inspection should be superior.
Quality of the sales has to be also maintained.
Quality of marketing of the final product is also important as the quality of the garment itself.
For a garment/textile exporter or manufacturer there are many strategies and rules that are required to be followed to achieve good business. The fabric quality, product quality, delivery, price, packaging and presentation are some of the many aspects that need to be taken care of in garment export business. Some rules that are advisable for garment exporters are listed below:
Quality has to be taken care by the exporter, excuses are not entertained in international market for negligence for low quality garments, new or existing exporters for both it is mandatory to use design, technology and quality as major upgradation tools.
Apart from superior quality of the garment, its pricing, packaging, delivery, etc has to be also taken care of.
The garment shown in the catalogue should match with the final garment delivered.
It is important to perform according to the promises given to the buyer, or else it creates very bad impression and results in loss of business and reputation.
In international market, quality reassurance is required at every point.
Proper documentation and high standard labels on the garment are also important aspects as these things also create good impression.Â
Timely delivery of garments is as important as its quality.
If your competitor has the better quality of garment in same pricing, it is better to also enhance your garment quality.
Before entering into international market, garment exporters have to carefully frame out the quality standards, or else if anything goes wrong it could harm the organization.
The garment quality should match the samples shown during taking the orders.
The garment exporters should know to negotiate a premium price after quality assurance is done.
In the Indian textile/apparel industry, while average companies earn a profit of about 4 to 5% of turnover, good companies earn a profit of about 10% of turnover. The report highlights the scope to bridge the gap between an average company and a good company, particularly in this era of global competition when how to exist and how to grow in a business of one's core competence areas are of paramount importance.
As stated by Mukopadhyay, 2004, The Cost of quality can be defined as the cost associated with preventing, finding and correcting defective work. One of the most useful ways of classifying quality-related costs is to distinguish between the costs of conformance (COC) and the costs of non-conformance (CONC).
Fig 1 : PRIMARY SUBHEADS OF COST OF QUALITY
COURTESY: Routledge, 2007
According to Taylor and Francis, 2004 It is only possible to reduce the CONC by investing in prevention activities. Investing in prevention of errors enables failure and associated appraisal costs to be minimized. This is a fundamental driving force behind quality improvement. However, prevention inevitably involves some costs. These are preventive costs, or the costs of conformance (COC). This includes all the costs associated with any activity designed to ensure that the right activities are carried out right first time.
Costs of non-conformance (CONC) are all the costs incurred because failures occur. Had there been no failure, there would have been no requirement for appraisal and correcting activities. It is noteworthy that normal work (NW), comprising routine activities such as marketing, purchasing, manufacturing, selling and distribution, financial management etc and prevention (P) add value to the company while appraisal (A) and failure (F)-whether internal or external-add cost to the company.
A few of the prevention costs are:
Î© Preparing quality manuals, procedures, different specific plans etc.
Î© Reviewing the quality specifications of new products
Î© Evaluation of suppliers and survey etc.
Î© Market research and studies to identify customers' requirements
Î© Developing, conducting and maintaining training programmes
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Î© Studying process capabilities and developing process control devices
Î© Formal quality improvement programmes.
Î© Auditing of the quality system.
Î© Calibration and maintenance of inspection and test equipment used in production departments and laboratories to evaluate quality.
This includes the costs involved in various activities, a few of which are:
Î© Inspection and testing of quality of purchased products.
Î© Inspection and testing of in-process products.
Î© Inspection and testing of finished products.
Î© Evaluation of stock for its degradation and evaluation of product at customer end.
Internal Failure Costs
Some of these costs are explained below:
Î© Rework, repair and reprocessing
Î© Re-inspection and retest to verify the quality requirement after rework or reprocessing
Î© Failure analysis
Î© Downgrading of product
Î© Downtime, i.e. idle facilities due to quality failures.
External Failure Costs
These are the costs associated with defects that are found after the product is shipped or handed over to the customer. For example:
Î© Settling customer complaints due to poor quality.
Î© Product rejected or returned.
Î© Loss of sales.
Î© Marketing errors.
Î© Product recalls and product replacement.
Î© Warranty claims.
Î© Allowances, i.e. cost of concessions made customary due to poor quality.
The most critical quality related problems in a garment manufacturing that cannot be overlooked have been categorised as follows (Vincent et al, 2006)
Sewing defectsÂ - Like open seams, wrong stitching techniques used, same colour garment, but usage of different colour threads on the garment, miss out of stitches in between, creasing of the garment, erroneous thread tension and raw edges are some sewing defects that could occur so should be taken care of.
Colour effectsÂ - Colour defects that could occur are - difference of the colour of final produced garment to the sample shown, accessories used are of wrong colour combination and mismatching of dye amongst the pieces.
Sizing defectsÂ - Wrong gradation of sizes, difference in measurement of a garment part from other, for example- sleeves of 'XL' size but body of 'L' size. Such defects do not occur has to be seen too.
Garment defectsÂ - During manufacturing process defects could occur like - faulty zippers, irregular hemming, loose buttons, raw edges, improper button holes, uneven parts, inappropriate trimming, and difference in fabric colours.
2.2 Six Sigma and the Indian Textile/Apparel Industry:
Kumar, 2009 states that textile is among the leading sectors in the Indian economy in terms of production, exports, employment and contribution to the exchequer. India needs to reform its laws, modernize machinery and scale up capacities to global level to exploit this opportunity.
Apart from the above factors, the application of quality improvement techniques in the business will bring long term stability in the market and better company reputation. The paramount need for a paradigm shift is essential for today's business scenario. Six sigma is such a management tool is viewed as a systematic, scientific, statistical and smarter approach to create quality innovation and total customer satisfaction. This section emphasizes the six sigma concepts and possible area of six sigma applications in textile industry.
Six Sigma - Definition:
Six Sigma may be defined in several ways:
Tomkins defines Six Sigma to be "a program aimed at the near-elimination of defects from every product, process and transaction."
Harry defines Six Sigma to be "a strategic initiative to boost profitability, increase market share and improve customer satisfaction through statistical tools that can lead to breakthrough quantum gains in quality."
The following table shows the comparison between the old and new six sigma quality improvement practices with respect to the global apparel/textile manufacturing industry (courtesy: www.fibre2fashion.com)
Possible Areas in Textile Industry for Six sigma application:
Textile/ Fashion Houses/ Export Houses or Buying Houses have potential of applying Six Sigma in following improvement projects:
Reducing rejections in shipments.
Improving first sample approval percentages while working with buyer
Improving supplier evaluation processes
Improving AQL performance in shipments.
Improving merchandiser performance
Reducing non conformances in audits by buyer
Improving processes at the source (including fabric purchase and inspection,
stitching, embroidery, packing and shipping) to reduce rejections at later stages.
Eliminating manufacturing errors/ defect
Convincing apparel executives to accept the process, other than as a selling tool, has been a difficult task. About the only agreement reached is that every garment cannot be manufactured to the perfect specification. However, the typical manufacturing plant is producing apparel at about a 3 sigma level with 2.5 to 4 % defects. That is 4 defects per 100 not the 3.4 defects per 1,000,000 produced by a Six Sigma manufacturer. The gap is wide enough that significant improvement can be made in any such plant. Two financial facts are important to note. Historical studies have shown overall savings in the $10,000 to $20,000 range for an improvement of just one Sigma. Apparel managers are generally astounded by the "True Cost of Quality" in their manufacturing facility. Typically, these costs are hidden in overhead but include inspection and marking, sorting, transport, reinspection, supervisor time, downstream operator repair, cleaning, and irregulars.
Therefore, any improvement in quality has a triple effect of reducing indirect labor, lowering total fabric cost, and improving customer satisfaction. DuPont uses the program for its productivity and quality improvement strategies. It considers Six Sigma a business-management process that concentrates on eliminating defects from work processes. The company now has more than 4,000 completed or inprocess Six Sigma projects. Other textile companies, such as Burlington Industries, Collins and Aikman, and PGI have also started Six Sigma initiatives. As stated by George, 2005 Six sigma is a new strategic paradigm of management innovation for company survival in this 21st century which implies three things such as statistical measurement, management strategy and quality culture. Six Sigma with its 4S (systematic, scientific, statistical and smarter) approaches provides flexibility in managing a business unit. Textile industry being a field dealing with lot of variations and defects in each process is the exact place for six sigma application. The speedy implementation of the right method will make a significant and successful difference in many of our company's futures.
Indian textile industry and Statistical process control
Â The first reports on statistical quality control practice in the Indian textile industries, appeared during the late 1970s and early 1980s(welmer, 2007) . These documents emphasized product quality and defect detection rather than defect prevention. At that time, quality assurance was very much a departmentalized function. Unfortunately for many companies in the Indian textile industry, this condition still exists. As stated in the annual reports of the Arvind Mills pvt ltd (2001), Â In spun-yarn manufacturing, testing focused on three areas: end-product testing of characteristics such as linear density, twist, strength and elongation, short-term evenness, and count variation; inspection of defects such as thick and thin places, slubs and neps, and repeating faults like mechanical errors or drafting waves; and frequency checks for end breaks during spinning. In recent years, companies have begun to focus on electronic monitoring of processing weights, faults and running performance.
Â However welmer, 2007 emphasises that one of the problems many companies using electronic monitoring and controls face is that the adjustments are made on predetermined target values rather than through statistical control limits. This often leads to far more variation when overcontrol is added to the process.
Â Another critical test for yarn production occurs in the filament and texturing areas. Here, chemical and mechanical properties are important. Tested characteristics include dyeability, yarn crimp, contraction and permanence, package density and build, strength and elongation, and shrinkage. Modern companies seek to control the factors in the process that produce these characteristics; for example, consistent tensions and temperatures during texturing will lead to more consistent dye uptake in textured yarns.6
Â Statistical process control is also used in woven-, knitted- and nonwoven-fabric manufacturing. Many indian companies still focus on defect detection, sorting, situation resolution and other firefighting activities, although the recent trend has been toward continuous improvement and prevention. The relationship between yarn and fiber quality and the final fabric's quality is now better understood and managed.
Â The third area of SPC in textiles is in dyeing and finishing. Dyeing a textile yarn or fabric is one of the most difficult, monitored and controlled processes in the textile manufacturing chain. The finishing process, by contrast, still has few controls and relies heavily on inspection and testing. The two main processes used in finishing are chemical and mechanical. Evaluating the results of both these methods is still highly subjective, and very little SPC has been applied in these areas.
Â There are difficulties when using online quality controls and advanced control charts in textile manufacturing. Because many steps in textile manufacturing are dependent, as are many of the quality characteristics, dynamic control isn't feasible without new methods to handle these problems.
Â But steady progress has been made. As early as 1989, companies were looking for a way to compare yarns. Shahi, a textile manufacturer located in Noida and Bangalore, India, started collecting data at the international level. In 1997, statistical information about twist statistics using new methods from the Swiss Textile Testing Institutes was added to the 40th edition of the annual company database. Yarn count, strength, elongation, twist, uniformity, coefficient of friction and hairiness are now all regularly analyzed.
Â In 1992, a new benchmark test for the Eco-Tex Standard 100 for human ecology-optimized textiles was introduced. This standard specifies minimum requirements for textiles that aren't harmful to human skin. By the end of 2000, more than 20,000 Eco-Tex certificates had been issued to textile manufacturers throughout the world including India (welmer, 2007).
Â A related problem in Indian textile manufacturing concerns the quality of raw materials in relation to the final product's quality. When raw materials include natural resources such as cotton, controlling quality can be quite difficult. For many years, classifying cotton quality was a subjective and labor-intensive process. In 1979 the Minsitry of Agriculture(India) began developing instruments capable of rapidly and objectively making these classifications. Today 73% of commercially manufactured cotton is classed using this system. Consequently, cotton mills have been able to lower cost and improve product quality. Essentially all mills spinning cotton in India now use this system (Welmer,2007).
Spinning ISO 9000
Â The textile industry, especially in India, has recently begun to use the ISO 9000 series of standards as a quality assurance system, though registration is still seen by many companies as only necessary as a factor for exports. Ten years ago there were fewer than 1000 textile companies registered. By 2006 the number had soared to 2,600, and by the end of last year, there were 3,673 registered textile companies.
Â The number of ISO 9000 certificates in the textile industry increased 29.6 percent from 2008 to 2009. China, Italy, France and Germany lead the world in numbers of certified textile companies, whereas only a few of the more than 30,000 Indian companies have been registered.
Â With the publication of the ISO 9000:2000 revision, more textile companies will likely find value in using the standards as the basis for their quality assurance systems. Also, an increase of exports, textile and apparel industries will make adopting the standards more critical. The new standards have many advantages over the original series published in 1987 and updated in 1994. These include a focus on a process model, continuous improvement and customer satisfaction. The revision also includes eight management principles similar to the Malcolm Baldrige National Quality Award(U.S based) and European Quality Award criteria. These can be summarized as customer-focus, leadership, people involvement, process approach, system approach to management, continual improvement, factual approach to decision making, and a mutually beneficial suppliers relationship.
Â Total quality management
At the very top end of the industry spectrum stands one of the largest Denim manufacturers and exporters in the world, The Arvind Mills India ltd(Sanjai Lalbhai Group) . The company's senior management launched its Pursuit of Excellence initiative, a commitment to customer satisfaction pervading all company levels and locations. By 1999, Arvind Mills was ahead of its competition in all 15 measures of customer satisfaction and won the American Baldrige Award. Arvind Mills has consistently compared itself to the best-managed companies in the world and has incorporated the best practices from them. It now has an extremely flat organizational structure with self-managed teams in all areas of the business. Arvind Mills has released almost 20 percent of management and engineering positions to create an enviable strike force of process-improvement specialists.
Â The company has perfected the use of improvement teams to address specific problems and to change and improve processes in all areas of the company. Arvind Mills also has been a leader in building measurement systems and making decisions based solidly on factual information. It has also realized that quality management extends to all work processes. For example, by the time the company won the Baldrige Award, it had improved on-time delivery from 75 percent in 1994 to an industry best of 99 percent in 1999.
Supply-chain management and lean thinking
Â Intense competition, both nationally and globally, has caused a new focus on quality management in Indian textile companies. An influx of senior management from outside the industry has brought some new methods into the industry, but most initiatives have come from companies within the industry looking at all avenues of improvement.
Â One of the first things many of the new senior managers noticed was their companies' enormous inventories. The number of inventory turns per year in textiles remains among the lowest of all industries. Supply chains are extremely long and complex, and products are routinely stored, loaded and shipped many times during the production cycle. Warehouses represent a large part of the space and costs in the textile manufacturing process.
Â The National Institute of Fashion Technology, Ministry of Textiles , Government of India documented many of these stages for apparel manufacturers in a landmark study funded by the Central government and published in 2003. For some companies, implementing lean supply-chain management has become a No. 1 priority. Special projects in reducing inventories, creating fast response strategies and cutting product development times are now common in many leading companies spread across India.
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