How to prepare for impending changes?

How to prepare for impending changes?

There is more and more demand from customers to move from one trend to another trend making it imperative for fashion organisations to respond to customer’s needs. In the post Covid era the customers would seek products here and now especially with all the digitization and personalisation, says Swaminathan Ramachandran.

The Indian textile industry is probably on the cusp of one of the best periods in terms of global demand. The next 5 years is probably going to be best ever in terms of both demand and profitability for the industry. The global demand especially due to the geopolitical changes across the world, the exponential penetration of digital commerce will offer us new opportunities for our industry. As I look around the Indian textile industry landscape I am left with a mixed feeling in terms of our preparedness to capitalize on this opportunity.

Let me try to give my views on what should the Indian industry be doing to capitalize on this. The first action for the Indian industry is too move ahead with confidence and set up high quality manufacturing capacities at scale which would make us a meaningful sourcing destination for the world and deliver economies of scale. We have examples of countries like China, Vietnam and Bangladesh which have succeeded by adapting this strategy. I believe with the schemes like the PLI which is encouraging industry to set up capacities which are large and grows rapidly over the next 5 years, we should significant manufacturing capacities to get a bigger share of the global trade.

Even though I expect a positive tail wind to this Industry because of the geo political changes and how global apparel businesses are consciously managing supply chain risks in the next 5 to 10 years, global fashion demand will be going through dramatic changes in terms of shape of business with the rapid e-commerce penetration expected in this category in the next decade especially in the post covid era. The rest of the world would be heading closer towards the e commerce penetration of around 25 % which is the current e commerce penetration in China! In the post Covid era the customers would seek products here and now especially with all the digitization and personalisation.

The success of fashion companies would depend on their ability to convert the walk in and the clicks with the right assortment. With all this there is more and more demand from customers to move from one trend to another trend making it imperative for fashion organisations to respond to customer’s needs. The changing scenario makes it even more important to be agile and build abilities to respond to the changes in a short lead time. Another important change is consumers are increasingly becoming conscious of the impact of excess production by apparel companies on the environment.

How should the textile and apparel industry respond to the impending changes?
Agility in the supply chain: One of the biggest challenge of the apparel business has been the long lead time. The mind to market lead time is in the range of 8-9 months which is one of the biggest challenges of the industry. Textile and apparel organizations should resist the immediate temptation of just capitalizing on the increased demand by pushing their customers for large lot sizes. Instead of that the organisations should focus on building the capability to reduce their lot size and the lead time for manufacturing without dramatically impacting their manufacturing capacity utilizations and efficiencies. We should take the leaf out of automobile industry across the globe which has built a lean and efficient supply chain.
Digitization: Our Indian textile and apparel industries lack of foresight in focusing on digitization is one of my biggest concerns as a supply chain professional. I was surprised to see even organizations in countries like Bangladesh, Sri Lanka, Pakistan and Turkey are showing keen interest in the digitization journey. This is despite the fact we have one of highest number of tech savy population in the world. Many of the leading digital organization in the world are being led by Indians! In a few years most us will start feeling we are far more digital in our personal life compared to the digitization in our organization. I am afraid without digitization we cannot keep pace with the rest of the world and we will know this only after a few years by that time we would have lost valuable time.

Digital ways
Let me try to capture what will digitization deliver to us.
Digitization would bring in agility in the organization which is critical for the long term success of any organization in the industry. Digitization can deliver a single version of truth in the supply chain makes interaction with various functions and partners extremely efficient. Most of the fashion organizations in the world would be digitizing their design and preproduction processes as the lead time for these processes are anywhere between 5 to 6 months. Our organizations need to focus our digitization efforts to be ready for this change.

Digitization and automation would drive the costs down. We have seen how the demand moves in this industry move to the next cheapest country in the world. Digitization would improve your planning thereby lifting the capacity utilization and also improving productivity leading to lower costs which is critical for the survival of the industry in the long term.

Digitization & industrial automation would definitely make some jobs redundant. I would rather not worry about a few jobs which are being redundant just because the machine can do it far better than human beings, but focus on making a large proportion of people being made more productive. The human – machine combination is going to achieve far better results than what we have ever achieved in the past and this is going to generate new levels of performance and also new roles/jobs for people.

Another important outcome of digitization is going to be make our organizations more sustainable. Digitization is going to reduce wastage/ leakage of resources and reduce unnecessary creation of merchandise thereby making our organization ready for the future. I strongly believe the customers and investing community are going to shape the way organizations will behave in terms of sustainability.

I am sure with the right policy support from the government and visionary leadership from our businesses, we as a country can make a mark in the global apparel and textile supply chain. This also has the potential to generate employment to a large number of people probably next only to agriculture!

About the author:
Swaminathan Ramachandran
is the Chief Supply Chain Officer at Aditya Birla Fashion and Retail Ltd.

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