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

MR VIPUL SINGH
ASSISTANT PROFESSOR

SUBMITTED BY
ARCHITAGGARWAL
BBA 3B(EVENING)
11121401712

SESSION:2012-2015
Jagannath International Management school
VASANT KUNJ , NEW DELHI-110070

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)

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

TABLE OF CONTENTS

TOPIC

PAGE NO.

1. OBJECTIVE OF THE STUDY

2. INTRODUCTION

3. PORTERS FIVE FORCE MODEL 28

4. SUPPLY CHAIN WITH PDC

38

FOR INDIAN APPAREAL

INDUSTRY
5. RESEARCH METHODOLOGY

46

6. DATA ANALYSIS AND

60

INTERPRETATION
7. CONCLUSION

64

8. RECOMMENDATION

66

9.

68

REFERENCES

OBJECTIVES OF THE STUDY

To analyze how outsourcing has transformed supply chain dynamics in the apparel
industry.
6

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.

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
governments move is to enable the Indian producers to compete in the world market with
high quality products. The results of the governments 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.

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 countrys 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 Indias total forex earnings.
Indias 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
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.
9

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 countrys 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 countrys 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 April09- March10 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 April09- January10, 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 April09-January10, 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 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
indirectby 2012.
10

INDIAS MAJOR COMPETITIORS IN THE WORLD

To understand Indias position among other textile producing the industry contributes 9%
of GDP and 35% of foreign exchange earning, Indias 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 AsiaPacific 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.

11

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.

12

INDIAS 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 Indias 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

13

Key countries / regions

Key positives

China

Efficient,

Key negatives

low

cost, Growth at the cost of profits

vertically integrated
India, Pakistan

Vertically

integrated, Lacks economies of scale

low cost
Mexico (NAFTA), Turkey

and infrastructure support

Proximity to market, Lack of China and Indias

duty and quota free

ASEAN

degree of competitiveness

(Vietnam, Cheap labour

No other cost or location

Cambodia, Indonesia)
AGOA

(African) Quota and tariff free, Lack

countries, Bangladesh
Hong

advantage

Kong,

cheap labour

of

integration

China and Indias has degree

of competitiveness
hubs No cost advantage, protected

Korea, Trading

Taiwan

proximity to China

USA and EU

Non-quota

currently by quotas

barriers Huge but choosy market

likely to prove irritant

to imports
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
Indias 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)
2008-09
2007-08
2006-07
2005-06

and

Target
24.18
21.16
19.73
15.565

Achievement
24.16
21.14
19.62
17.80
14

2004-05
2003-04
2002-03
2001-02

15.16
16.31
15.05
13.72

13.04
13.16
12.41
10.76

15

16

17

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
Wool and Woollens Export Promotion council, New Delhi
Carpet Export Promotion Council, New Delhi
Export Promotion Council for Handicrafts
18

 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, its 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 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
19

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,
shirtings, 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.

20

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
mens 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
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.
21

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
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
22

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 HiTech 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
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.
23

The apparel category constitutes men and womens 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 limiteds 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 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
24

have ventured into ready-to-wear mens' 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
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)
25

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.

BCG MATRIX digram

26

27

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-ToB 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.
India is more cost competitive vis--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
28

 Indias position is strong vis--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
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
29

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, 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
30

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.
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:
31

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 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.
32

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
Indias 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

Spinning mills
With an installed capacity of 40 million spindles, India accounts for about 22 per cent of
the worlds spindle capacity. In 2005, Indias 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.

33

Knit/Weaving/Knitting Units
Indias 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
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.

34

SWOT ANALYSIS OF TEXTILE INDUSTRY

Strengths
Removal of quota restrictions to give a major boost to the exports.
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. Thats 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
35

 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 cant 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
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
36

 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.

37

SUPPLY CHAIN WITH PDC FOR INDIAN APPAREL INDUSTRY

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 farflung 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), Dillards
(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,
38

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
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
39

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 childs 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.
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, couldnt 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
40

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.

At Dillards, 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, Dillards 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

41

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 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. Levis 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 Levis product development, sourcing,
pattern-making, and quality. For Dillards, even the simplest features of these tools
dramatically changed their product content management. Using a publishing and content
management tool called Free borders CPM Design, Dillards 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

42

 Faster time to volume production

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 Dillards have migrated all of their vendors to a Web-based system for
product assembly specifications, more complex specifications of the fabric itself and color
43

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
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
44

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
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

45

46

SCOPE OF THE STUDY

Reducing costs and speeding the design process are important benefits of webcentric 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.
47

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
48

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

49

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 womens 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 customers
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 company to
designers. Designers are able to access inspiration for designs through this, and there
50

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 worlds 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 full
retail opportunities for visitors. This is contracted through Yahoo and AOL. This has
51

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 ecommerce 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.

52

53

54

55

56

57

58

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

Factor
34
27
21
18

Rail container service

JIT approach
Cost effective logistics system
Customer service

4. How does different Channel would utilize the cost optimization technique for the supply
chain management for the Appeal industry?
A. Through cost Audit
59

B. Implement quality function

C. Reducing the wastage.
D. Increasing capacity of container.
Cost optimisation Strategy
35
39
22
4

Through cost Audit

Implement quality function
Reducing the wastage.
Increasing capacity of container.

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
C. Transportation management system
60

D. Regulatory Management system

Technological advancement
54
15
12
19

Material Management system

Warehouse Management system
Transportation management system
Regulatory Management system

Q5. Quality of ordering process

Adequacy of the details provided in the monthly dispatch statement (MDS)
Ease of understanding monthly dispatch statement
Providing accurate statement on stocks to be dispatched for the month
Availability of all products & pack size (SKU) as required
Ability to handle urgent requirement
Care taken to minimize dumping of stocks

61

Excellent
Very good
Good
Fair
Poor
Dont Know
Refused

Details Easy
to Providing Availability
of
Understand accurate
of
all
MDS
of MDS
statement products &
MDS
pack
size
(SKU)
54
23
66
71
16
22
17
9
5
19
6
2
7
11
6
8
7
12
3
1
5
6
1
3
6
7
1
6

Ability to
handle
urgent
requirement

Care taken to
minimize
dumping of
stocks

43
32
1
9
6
7
2

67
12
9
4
3
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
62

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.
OKeefe 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.

63

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.
64

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 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.
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 step
65

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 Webcentric technology are vital to move forward

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66

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