Future Factories

8/9/2019 Future Factories

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Apparel Outlook

Future Factoriestowards manufacturing perfection

Sourcing Trends and Indices: India and the World

Developing Skills for

Employment in Apparel Industry

Also in this issue

A Quarterly Report by | May 2011

www.technopak.com


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Not even a thousand armies can stop an idea whose

time has come...

The Apparel Industry is all set to embark on

the next level of expansion, at a scale that was

visualised but never achieved with the abolition ofquota.

With the exception of an aberration in 2009–the yearhaunted by global slowdown–the worldwide demandfor apparel products has been consistently on the rise.

As Asian economies expand, the new consumer on theblock sits at the vanguard of a wave that is fuelling thisdemand and offering exciting new opportunities for theapparel industry at-large.

By the year 2020, an opportunity:

• of around USD 360-370 Billion is likely to be createdas a result of sustained increase in global demand

• to the tune of USD 140 Billion is expected to becreated for exports from developing countries, asa result of production moving away from Westerncountries

The two put together create an additional marketopportunity of approximately USD 500 Billion fordeveloping countries including India, Bangladesh,Pakistan, Vietnam, Cambodia, Indonesia, Sri Lanka andparts of Africa, by 2020!

In addition, India’s high GDP growth has triggeredhigher private consumption elicited by higher disposableincomes. This phenomenon has lent impetus to domesticretail and consequently, to domestic production. Thereis little doubt about the unprecedented boost thatorganised retail- expected to grow at the rate of 30%-

will give to the apparel industry in the future.

India is strategically placed on a growth trajectory inthis scenario. On one hand it gains from proportionaldomestic and international demand, and on the other

from the opportunities lost by bigger players such asChina (increasing costs and rising domestic demand maycompel China to cede some export opportunities).

Introduction

While the stage is being set from the demand side,India’s success strongly depends on tying up its supplyside so as to not marginalise its position in a ercelycompetitive market.

The industry needs to make a paradigm shift fromconventional manufacturing to a modern one,encompassing the best practices of people and processmanagement with high levels of technology utilisation.

Manufacturing perfection achieved through world-class processes, supported with appropriate and cost-effective state-of-the-art technology and deliveredthrough the “right people”, is the structure upon whichfuture factories will be based. Potential opportunitiesdemand that we create many such factories and upgradethe existing ones.

Let us get ready for growth – armed with competitiveness,outperformance and sustainability, realised from ourfuture factories.

India’s USD 70 Billion Textile and Apparel industry

has the potential to grow at 11% CAGR to reach

USD 220 Billion by 2020. The stakes are high and

the industry has to strive smart to make it happen.

This Outlook also covers an analysis of “Sourcing

Trends and Indices”, and an introduction to “SEAM”

- a Government of India initiative on bridging the

labour demand-supply gap in apparel manufacturing

through structured training of BPL youth in apparel

manufacturing.


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1 Apparel Outlook

Sourcing Trendsand Indices:

India and the World

Introduction

Global apparel trade witnessed a robust growth over the years: from USD 218 billion in 2000 to USD 376 billion in2008*. The year 2009 proved to be a dismal, uninspiring year for most stakeholders of the industry due to the globaldownturn. Reduced consumer spending resulted in apparel imports dropping sharply by 12% to USD 331 billion. Agreat deal of this impact was felt due to reduced business from the United States and the European Union, whichaccount for more than 70% of total imports of the world. However, the post-recession year 2010 proved to bepromising right from its onset, with increase in imports in US and EU by 13.1% and 4.9%, respectively.

1. Trends in Imports by the US

The year 2010 proved to be a good year for all major garment manufacturing countries supplying to the US, as revealedby the recently released 2010 US garment import gures. The current year’s scenario has been the most euphoric forthe industry since 2005 (the quota phase out year).

Countries such as CBI, Mexico, El Salvador and Dominican Republic, have seen a negative growth compared to 2001

levels (Exhibit 1). At the same time, Asian countries such as China, Vietnam, Indonesia, Bangladesh, India, Cambodia,Pakistan have increased their market share.

* Source: WTO Data


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2 Apparel Outlook

China continues to hold the largest share, while Indonesia, Vietnam, Bangladesh have overtaken India and arrived asnew sourcing hubs for US buyers. China is the only country which has increased its market share consecutively in thelast 3 years – 2008, 2009 and 2010, even though the overall US market decreased in 2008 and 2009, before picking upagain in year 2010.

2.Trends in Imports by the European Union Year 2010 has been positive for countries that have been exporting to European Union (EU) as it witnessed a robust4.9% increase in imports. This is a convincing outperformance over the average 2.2% of growth during the last decade.During the year 2009, imports had dropped by 5.4%.

Indonesia, Malaysia etc. have seen negative growth compared to 2001 levels. At the same time, China, Turkey, Tunisia,Morocco, Sri Lanka, Vietnam, Indonesia, Bangladesh, India, etc. have increased their market shares (Exhibit 2).

Intra EU trade still holds the largest share of imports followed by imports from China, Turkey and Bangladesh. China, Turkey and Bangladesh have witnessed sustained growth in their share (of EU imports) over the years. However, India’sshare in EU imports reduced in 2010, though the same had grown during 2009 - when everyone else was losing.

Imports in US in 2001 and 2010

Source: OTEXA/Technopak Analysis

Exhibit 1:

2001 2010

0

5,000

10,000

15,000

20,000

25,000

30,000

C h

i n a

A S E

A N

C B I

V i e t n

a m

I n d o n e

s i a

B a n g l a d e s h

M e x

i c o

I n

d i a

O E

C D

H o n d u

r a s

C a m b o

d i a

E l S a l v a d o r

P a k i s

t a n

C A F T A -

D R

V a l u e i n M i l l i o n U S D

Value of Imports to EU in million Euros

Source: OTEXA/Technopak Analysis

Exhibit 2:

2001 2009

0

5000

10000

15000

20000

25000

30000

35000

40000

C h i n a

T u r k e y

B a n g l a d e s h

I n d i a

T u n i s i a

M o r o c c o

V i e t n a m

S r i L a n k a

P a k i s t a n

I n d o n e s i a

T h a i l a n d

M a l a y s i a

V a l u e i n M i l l i o n E U R


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3. The Global Fashion Industry

The fashion industry is one of the most important sectors of the economy in terms of investment, revenue, trade andemployment generation the world over. The apparel industry is known to have short product life cycles, tremendousproduct variety, volatile and unpredictable demand, and long and inexible supply processes. The industry has been ina transition over the last twenty years. Some of its major contributors are:

• Signicant consolidation in retail

• Increasing use of electronic commerce in retail

• Wholesale trade

Industrialised players such as US, EU and Japan have been the major drivers of demand for global apparel trade. Therefore, the apparel trade has been very sensitive to the economic conditions of these countries. This was evident inthe downturn of global imports in the year 2009. However, the last few years have seen the emergence of many newconsumption centers in the form of developing countries like China, India and Russia. This rising demand will add

millions of new consumers every year, and may lead to new equations of pricing and sourcing.

Rising input costs in the form of increasing cotton prices and labour costs have created an upward strain on thegarment exporters, forcing them to increase the prices. Cotton prices in recent past have grown from an average ofUSD 0.85 / lb to USD 2.29/lb, an increase of around 170% in the last 12 months alone. Similarly, the cost of labourhas gone up signicantly throughout the production world. The global garment industry–which has paid the lowest

wages traditionally–is facing a spike in wages. In Bangladesh, the minimum wages went up by as much as 80% and inChina, Vietnam and India the wages went up by more than 30%.

The garment industry has been typically witnessing a reduction in the FOB value of the product. The FOB prices havereduced by 24% in last 13 years, while the cost of inputs has only gone up. This disparity in cost and price was partlynegated by an improvement in the operating efciencies of factories. In the current situation, these prices seem to have

reached a point from where a further decline seems highly unlikely.

4. Indian Apparel Sector – Statistically

India’s apparel export has more than doubled in the past decade. In the year 2009, the export gure stood at USD 11.3Billion, accounting for more than 3% of the world’s apparel exports. India’s position in the world apparel trade in theyears 2001-2010 is illustrated by Exhibit 3:

Total World Apparel Trade(Export- In Billion USD)

India’s Apparel Trade(Export- In Billion USD)

% Share of India

2001 197 5.04 2.56

2002 201 5.50 2.74

2003 226 5.92 2.62

2005 250 6.41 2.56

2006 274 8.20 2.99

2007 311 9.01 2.90

2008 345 9.34 2.71

2009 362 10.3 2.85

2010 375 11.3 3.01

Exhibit 3:

Source: UN Comtrade

India’s share in Global Apparel trade


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5. The Road Ahead

With challenges being posed constantly, there is a need to continuously evolve. The Indian garment sector must lookinto expanding to new markets. Countries of the likes of Australia and Japan have still not been targeted aggressively.

To move ahead, and increase the volume of Indian exports, Indian manufacturing needs to get more advancedtechnically. Investing further in automation, engineering, world class manufacturing processes, software for ERP wouldbe a good bet ahead. Further, the industry needs more vertical integration, which it is slowly and surely attaining, butthe numbers are still on the lower end.

The stage is set for future factories to become an entity of the present!


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5 Apparel Outlook

Future Factoriesin IndiaPerspective

Apparel manufacturing in India, has witnessed turbulent timesin the recent past. The industry has been plagued with issuesof low efciency, high direct to indirect ratio and rising input

costs. However, in the last two years, the availability of labouritself has become a signicant issue.

The value of the opportunity for apparel manufacturing inIndia cannot be underestimated. Positive signals represent thisreality more than ever, such as the domestic market growingfaster than expected, China’s reluctance to export and theexpected signing of the Indo–EU trade treaty.

However, the industry needs to drastically alter its current stateto take an advantage of this upswing in the macro environment.It is a clarion call to a comprehensive approach to garment

manufacturing–one that takes into account people, processesand technology. Moving to a lower wage location might notbe the only answer. Instead, it is also about modernising thoughts and ideas, thinking strategically and investing in thetraining and development of human resources.

‘Manufacturing Excellence’ is what the aim

should be and therefore, apparel factories haveto be ready for the future.

People need to be considered and utilised as

‘critical resources for survival and growth’.

Processes need to be leaner and more efcient,

effective, productive, sustainable, yet exible.

Technology, in terms of capital expenditure,

needs to be ‘to the purpose’.


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6 Apparel Outlook

‘Manufacturing Excellence’ is what the aim should be and therefore, apparel factories have to be ready for the future.People need to be considered and utilised as ‘critical resources for survival and growth’. Processes need to be leanerand more efcient, effective, productive, sustainable, yet exible. Technology, in terms of capital expenditure, needs

to be ‘to the purpose’.

Before we dene the future factory, we need to understand a few key trends that will dene the growth of

the apparel industry –

• Lowering cost of production – not necessarily by relocating to cheaper labour areas, but by improving productivity

• Lowering cost of quality – it will not just be about producing excellent quality. What about the associated cost?

• Labour cost and shortage, leading to unprecedented level of automation

• Shorter CTS (Concept to Shelf) time, ensuing pressure on reducing lead times in factories

• Modern management and manufacturing techniques to replace outdated processes and thoughts

• Emergence of the next generation of professional managers in a largely entrepreneur driven industry

• Scale and vision to be much larger than before

• Recognition of human resources (workmen, middle management and top management) as a vital ingredient forsuccess

• Corporate Social Responsibility (CSR) to be integrated with long-term business outcomes by major brands andretailers

• Approach for selecting apparel plant locations to undergo a major transformation

Let us put all this in perspective and

take a walk to the factories of our future.

1. The Future Factory

The future factory/enterprise will ensure its sustenance and growth in the global arena, through best practices andthought leadership. It will be continuously evolving, exible, cost-effective, resilient and lean. It will create enduring

value for all the stakeholders – customers, workers and employees, shareholders, environment and society at large. It will take cues from the Government’s plans and vision and make the best use of funds that are earmarked for thegrowth and development of textile and garment industry. It will manifest operational excellence in its pursuit to becompetitive by using its key components – the people, the processes and the technology to its best advantage, whilecreating sustainable results.

Let us delve into the ner details of a ‘future factory’ from all the three perspectives – people, processes andtechnology.

1.1 People

Apparel manufacturing is a labour intensive process. An efcient enterprise cannot be built without a clear andstructured focus on the most critical component – The People!

Numerous factories in the present day are manned by unstable and/or sporadic manpower supply, resulting from anunstructured recruitment policy. Adhoc strategies and a “here and now” approach look simple prima facie as a cost

optimisation approach, to handle irregular order books and manage seasonality in a few cases. However, a closer lookat the garment factories today clearly articulates the vicious effects of the so-called “exible manpower”. The mostprominent setbacks are:


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7 Apparel Outlook

• Cost in terms of a hefty amount charged by the contractor as commission from the Principal Employer

• A major portion of the directly employed labour is of the migrant kind, leading to absenteeism, attrition andinconsistency

• Ad hoc skill build-up. There is no focus on training and creating a sustained skill base

• A casual outlook to the truly compliant code of conduct

What essentially follows is that rstly, the exibility advantage of lean and peak period is negated due to cost, inconsistency,absenteeism, attrition and sub-optimal skills, and secondly the ostensible benets further get discounted in the formof quality issues, the absence of skill supply at the time of need and the inability to plan for effective utilisation ofresources. Add to this, the intangible disadvantages such as cultural disorientation, compliance manipulation, managerialattention towards ‘managing crisis’ instead of ‘managing objectives’, dissatisfaction and fatigue. All these factors puttogether are capable of causing catastrophic damages to the overall health of the organisation.

Skill availability and its management is the need of the hour. Factories will have to resort to more sustainable and

upgradable recruitment strategy in the form of captive workforces, rural bases and productivity based rewards. What this means:

• Rural Base: Shifting factories to locations with adequate labour supply. Going further, creating newer manufacturingzones or hubs around labour supply destinations

• Captive workforce: Shifting workers to factory locations. Making arrangements for their stay in dormitories, forexample

• Labour effectiveness: Making the most effective use of people by continuously upgrading their skills and buildingadditional remunerations for added competence and skill set

The key to success will be effective training and then retaining the trained workforce by creating a “unique value” which an alternate occupation may not be able to offer. Employee value creation is a dynamic process with its set of variables that needs to be thoroughly understood and built into the human resource strategy. Some guiding principlesmay be:

• Understanding local needs – the real driver of a person for employment. Creating value for the employee on thisbasis

• Understanding the regional limitations and building a HR policy that mitigates them

• Understanding long term needs and requirements of people and building long term value

• Transparency of development and growth and creation of a roadmap for future prosperity

• Clear communication of linkages between performance and remunerations, and performance and developmentintegrity

Correct HR strategies built on correct evaluation of dynamics will not only create a sustainable workforce supply, butalso create the right platform for structured training, skill build-up and management by controlling absenteeism andattrition.

As we move on to evaluate the importance of processes in apparel manufacturing, it is important to understand the key

role that is played by training of middle management in best practices, industrial engineering and relevant functionalareas specic to an enterprise. A classic discourse between a CEO and a CFO is worth quoting: “CFO to CEO: ‘Whatif we train and develop our people and they leave the company?’ CEO to CFO: ‘What if we do not train our peopleand they do not leave?’ ”

Worker amenities- glimpsesFigure 1:


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9 Apparel Outlook

1.2.2 Lean Manufacturing

Lean Manufacturing advocates the long term approach tothe fact –‘Right processes will deliver right results’. It aimsat eliminating fat, waste or undesired components from aprocess chain, facilitating a self-sustaining and relentlesslylearning organisation. The outcome is in the form of a lean,effective and empowered enterprise, which draws its strengthfrom the obvious and latent capabilities of one and all. Leanmanufacturing focuses on waste elimination, right processes,continuous ow, maximising value added works, minimisingnon value added works and continuous improvement.

A properly implemented lean system would be modeled around the following principles:

• Waste Elimination – 3 M and 5 S

• Right processes for right results - no shortcuts, no deviations

• Continuous process ow – surface the problems

• Pull systems – avoid overproduction

• Level out the workload – avoid stress

• Building a culture of stopping to x problems – get it right the rst time

• Standardised task – foundation of improvement and empowerment

• Visual controls – no hidden problems

• Value stream mapping - what is and what should be

• Process ow and administrative analysis - reduction of non-value added works

• KAIZEN – continual improvement

1.2.3 Theory of Constraints

Theory of Constraints (TOC) aims at maximising throughput through elimination of bottlenecks. It proposes four keytools towards scheduling and optimising production, as shown in Exhibit 3.

Drum-Buffer-Rope is a production technique that maximises the ow of product through the plant for which thereis near term demand. The ‘Drum’ is the slowest operation or the ‘control point’ that sets the pace at which the entireplant processes material. The ‘Buffer’ is the amount of work that is currently being processed before the drum that issized to ensure that the drum never runs out of work. The ‘Rope’ is the material release schedule that releases ordersinto the plant synchronised with the pace of the ‘Drum’, dening how much material goes into the plant.

“Right processes will deliver right

results’

Lean manufacturing focuses on

waste elimination, right processes, continuous

ow, maximising value added works,

minimising non value added works and

continuous improvement.

Quality | Cost | Lead Time | Safety | Morale

Just in Time People SelectionCommon Goals

Suggestion CrossTraining

Jidoka

- Right Part, Right Amount, Right Time. Takt-Time Planning, Continuous Flow- Pull System- Quick Changeover - Integrated Logistics

- Andon- Automatic Stops- Error-Proofing- In station Quality control- Root Cause Analysis

Continuous Improvement

Genchi Gembutsu5 Why’s

Waste EliminationProblem Solving

Levelled Production (Heijunka) | Stable and Standardised Process | Visual Management

Exhibit 2: Lean Manufacturing – The TPS (Toyota Production System) Grid


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The Five Focusing Steps is a process of Ongoing Improvementthat provides enhanced focus to improvement of actions:

• Identify the system constraint

• Exploit the system constraint

• Subordinate to the system constraint

• Elevate the system constraint

• Identify the next constraint and decide if you want to move it

Continuous Replenishment for Distribution is a consumption-based replenishment approach that denes the location andamount of the inventory – both within the company and acrossthe supply.

Thinking Process Problem Solving is a methodology derived from‘hard sciences’ used to design business, operating and marketingstrategies as well as assist in tactical problem solving. There are ve ‘cause and effect based’ Thinking Process tools –Current Reality Tree (CRT), Future Reality Tree (FRT), Conict Diagram, Prerequisite Tree and Transition Tree.

1.2.4 Six Sigma, SPC (Statistical Process Control) and Other

Statistical Control Tools

These involve a methodology to manage process variations that cause defects, dened as unacceptable deviation fromthe mean or target; and to systematically work towards managing variation to eliminate those defects. The objective

of Six Sigma/SPC/SQC (Statistical Quality Control) is to deliver world-class performance, reliability and value to theend customer.

The approach is to continuously monitor, control and improve the process and aim at reducing variability or non-conformities. This is done through DMAIC (Dene, Measure, Analyse, Improve and Control) and DOE (Design ofExperiments) techniques standardised through application of Statistical Process Control Tools.

Properly implemented SPC results in signicant reduction in cost of quality and rework percentage,

enhanced consistency in processes and manufactured products, as well as increase in production though

improved process capability.

Exhibit 4:

Six Sigma - Defects Per Million Opportunitiesat Various Sigma Levels Six Sigma Cost of Quality as % of Total Sales

308537

668076210 230

5 6

3.4

432

35

23

12

1

6543

Defects per million opportunites Sigma level Cost of Quality Sigma level

Source: : Apparel Resource

Exhibit 3:

Drum-Buffer-

RopeProduction

Planning

Thinking

Process- ProblemSolving

Techniques

The Five

Focusing

Steps of OngoingDevelopments

Continuous

Replenishment forDistribution

Theory ofConstraints

Theory of Constraints – Tools


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11 Apparel Outlook

1.2.5 Benchmarking

Benchmarking is the process of “raising the bar” byevaluating oneself against the best known. It aimsat discovering the best and creating a foundation forbridging the gap between “yourself” and “the best” in

various functions, spheres or processes. Benchmarkingand re-aligning towards the best helps in reaping thefollowing advantages:

• Financial: Investors’ perception of value – Topline andBottomline. The benchmarked process facilitates ingenerating a better balance sheet

• Customer Perspective: Customers’ perception of value. The benchmarked process creates appreciation and

respect among customers• Internal Operating Perspective: Effective, excellent back-end. The benchmarked process creates more, delivers

more

• Innovation and Learning Perspective: The excellence is sustained and built upon. It fosters continuous learning,improvement and innovation

1.3 Technology

Apparel manufacturing is traditionally considered a labour-intensive industry where technology has a limited role toplay. Rightly so, on a traditional view, where garments are churned out on a basic single needle lockstitch machine,

and there is no dearth of takers. A closer view, however, warrants our attention to changing dynamics in apparelmanufacturing. Supply chain maturity in recent times has been pushing manufacturers to deliver:

• Consistently superior quality

• Lower Prices

• Sustainability and Consistency

• Reliability

These deliverables place altogether different challenges on modern manufacturing. The load of expectation fromthe two factors-other than manpower (technology and process)-becomes substantially high. To serve as a sustainablesupply base which delivers consistently superior quality, the focus needs to move to technology. Appropriate technologyis capable of signicantly deskilling the manufacturing process, thereby reducing the reliance on manpower- both

numbers and skill-sets. A state-of-the-art manufacturing set-up with the right balance of re-engineering and automation,supported with proper processes can easily reduce manpower requirement by 20% or more, along with improvingperformance by lowering the dependence on skill-sets.

The need is to have a completely re-engineered and appropriately automated manufacturing

setup that creates long term sustainability through consistency, reliability and cost

advantages.

Exhibit 5:

Benchmarking – To discover the Gap left despiteimprovements, by evaluating against the “Best”.

Performance Gap

Time

B e n c

h m a r k

c o m p

a n i e s

G o o d c o m p a

n i e s w i t h c o n

t i n u o u s i m p o

r v m e n t s

P e r f o r m a n c e


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1.3.1 Automation

The objective of automation is to achieve high yield with consistent quality while de-bottlenecking the critical operationsand offering a cushion against labour turnover, missing skill-sets and absenteeism.

Of course, automation needs to be implemented only after a thorough techno-commercial analysis of the parametersof cost of production, compatibility, quality and reasonable exibility. An investment in automation can be renderedredundant if the nature of input or output is not aligned to its capability. For example, an automatic pocket setter cannotbe expected to work with check fabrics of inconsistent repeats and bowing, to create perfectly matched pockets! A run-stitch machine requiring jigs is prohibitive if jigs are to be imported from Germany for every style change! In certaincases, especially where exibility depends on minor setups and jig changes, it may be important to evaluate internaland local capabilities of jig making and the agility of changeover required to run the automates. The competence tobuild exibility into automation at lower cost and faster turnaround can be unique manufacturing value proposition.

Typically, automates are capable of delivering outputs at costs lower than manual operations–and consistent qualitycomes free.

Automation helps to achieve the following objectives:

• Exponential productivity

• Consistent quality

• Complete de-skilling

• Reduction of manpower

• Long term cost optimisation

• Standardisation

Glimpses of Automation, Shirt ManufacturingFigure 2:

Figure 3: Glimpses of Automation, Jeans Manufacturing


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13 Apparel Outlook

1.3.2 Re-Engineering

The objective of re-engineering is to achieve optimum yield at standard quality while de-bottlenecking the critical andnon-critical operations. Re-engineering means changing the original conguration of the machine in various ways

including:

• Adding Folders: To aid the folding of the fabric part to be sewn, for de-skilling and consistency

• Adding Guides: To provide a reference point to the operator, for de-skilling and consistency

• Adding Fixtures: To aid the pick and dispose of parts, for handling optimisation and reduction of fatigue

• Adding Bed Size: To aid the maneuvering of bigger garment parts, especially during assembly, for ease of handlingand consistency, leading to higher productivity and lower fatigue

• Reducing Bed Size: To help speed up small parts operations by reducing work area, often accompanied with theaddition of a pick and dispose station for reduction in handling time Adding Pneumatic or Mechanical MovementDevices: To automatically move parts after operation to a dispose station

• Adding Stackers and Cutting Devices: Manual, mechanical, pneumatic stackers with or without cutting devices toshrink handling time

• Adding Pullers: Rollers, belt pullers or motorised pullers for de-skilling and quality consistency

Re-engineering of technology helps achieve the following objectives:

• Higher productivity through reduction of handlingtime

• Consistent quality by standardising materialmaneuvering

• De-skilling by reducing the demand on dexterity

• Reduction of manpower by eliminating certain supportprocesses

• Reduction of manpower by increasing output permachine

• Capex Optimisation: Re-engineering is inexpensive, more so for the value it delivers

It is important to understand that re-engineering is a demanding exercise. It requires very clear understanding of theinput requirements and the deliverables of a workstation or machine. The operation needs to be understood froma view of skill and technological inputs, changes that happen to the part during the process in consideration, themovements that it takes on the part of operator, and the way the machine should take in (input and pick) and give out

(output and dispose).The capability of a factory to re-engineer its technology depends on:

• Garment Analysis: Depth and diligence of analysis

• Maintenance Setup: Capability of fabricating and sourcing work-aids and attachments

• Dialogue: Between garment engineering, process engineering and machine engineering functions

• Mindset: That anything, which can be re-engineered, will be re-engineered

Glimpses of Re-EngineeringFigure 4:


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14 Apparel Outlook

1.3.3 Managing Technology

Once the right technology is in place, the next step is to optimise technology uptime, or simply to ensure that machinesrun when they are supposed to be running. Every moment of an idle machine is comparable to “disguised under-deployment of technology” which means that machine has been planted in a running factory, but is actually notrunning!

Any downtime, slow operation, parking for maintenance delays, time loss in line changeovers etc. reduce operationalproductivity, and also the capital productivity, i.e. the productivity per day per unit of capital employed ontechnology.

Effective deployment of a machine can be achieved by:

• Using only thoroughly tested and reliable technology that serves people and processes

• Total Productive Maintenance (TPM): autonomous maintenance, coupled with preventive maintenance, thorough

breakdown analysis and “user’s ownership of equipment”• SMED (Single Minute Exchange of Dies) or quick changeovers, optimising idle time of machine during process and

layout transitions

• Continuous training and up-gradation for the user to operate the machine optimally

• Dynamic re-engineering to improve “yield per machine” consistently on a case-specic basis

2. Summing Up

We have deliberated in details the future models of people,process and technology in an optimised manufacturingsetup. We may still believe that we have an option of‘being correct’, the reality is that the sooner we get intocorrect ways, the better. The need of the hour is that webring these concepts into our existing and new setups,and our factories start personifying the best practices:

• Captive or local rural manpower

• Modern training centres with well-structured trainingprograms, such as Technopak’s Advanced AnalyticalMethod of Training (AAMT®)

• Well-kept dormitories or hostels for workers

• On-site facilities such as canteen, medical room, crèche,education centre and recreation centres

• An overall healthy factory environment with integratedsocial compliance approach

• A mature and empowered ‘Industrial and Process Engineering’ function with clear deliverables

• Continuously learning and evolving manpower, processes and technology

• Implementing best practices and innovating new paradigms

• State-of-the-art technology – a combination of robust and dependable machines, thoroughly re-engineered to therequirement of the process, and selective automation researched to deliver optimum results

• Practicing Lean: 3M (Mura-Muri-Muda), TPM, 5S, TSS (Toyota Sewing System), Value Stream Mapping, SMED(Single Minute Exchange of Dyes) and others in action

• High degree of employee participation in the day-to-day administration of the factory – making use of enormouscumulative knowledge within its employees through tools like Kaizen.

Exhibit 6: Concept of a sustainable factory

• Continuous Training and Skill Upgradation

• Empowerment through knowldeg & correctculture development

• Process Excellence, Benchmarked Process Capabillity

• Self Sustaning and Evolving Systems- rather thanpeople dependent

• State of the Art, Cost Effective

• Robust, Dependable, Dustomized, Maintanable

People

Processes

Technology

Stakeholder Value

Stakeholder

Employee

Customers

Competitive Cost

Effective

Productive

Correct

Social(CSR)

Contributing More

Consuming Less

Empowering


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15 Apparel Outlook

Needless to say, such companies would be clock builders and not time-keepers. They will lead the way by being a modelfor others to emulate. Through their implementation leadership, they would not only command a higher degree ofsustainability, but would also maximise shareholder wealth by creating sustainable customers and commanding better

prices for their superior output at a better than peers’ efciency and lower per unit costs.

Apart from nancial and operational edge, it would be less heavy on social resources. It would take lesser from thesociety by using fewer resources per unit of output- machines, effort, time and place. It would be environmentallygreener with lesser emissions: it would generate lesser waste, heat and pollutants while consuming lesser power, waterand chemicals by increasing productivity per usage.

It would create sustainable value for employees by rewarding them for enhanced performance. It would create a systemto enable the delivery of extra-ordinary performance from ordinary people, thus personifying knowledge leadership.It would meet its CSR objectives by enabling and empowering the people around to learn more, earn more and livebetter.

The shareholder value will simply follow: higher returns per unit of capital employed,sustainability through knowledge leadership and continuous out-performance, socio-

economic respect and acknowledgement for CSR endeavours.


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16 Apparel Outlook

Developing Skillsfor Employment in

Apparel IndustrySEAM (Skills for Employment in Apparel Manufacturing) is an initiative by the Ministry

of Rural Development (MoRD). SEAM has been conceptualised with the dual objectives

of helping the industry on one hand and the BPL families on the other. While the industry

is able to look forward to a sustained supply of appropriate manpower, the trainees can

look forward to a respectable and growth prone employment.

“The garmenting sector would be the key driver of the employment in the textile sector. Major portion of the human

resource requirement will be for operators who have the adequate knowledge of sewing machine operations anddifferent types of seams and stitches.” - A report by National Skill Development Corporation (NSDC) on HumanResource and Skill Requirement of Textile and Clothing Sector

An Insight into the Indian Garment Industry

With apparel shipments hitting the $1-billion a month mark in December 2010 for the rst time in nine months,garment manufacturers are becoming increasingly condent of achieving $11 billion in exports during the currentnancial year. This would be 6% higher than the previous year*.

An estimated 33 million people are employed in the Textile sector in India. This is expected to increase to 45 millionby 2012. The Ready Made Garments (RMG) sector, which accounted for 17% of the employment, is estimated tocontribute as much as 25% to the total employment in the textile sector**.

* http://timesofndia.indiatimes.com/business/india-business/Apparel-exports-on-course-to-hit-11-billion/articleshow/7518094.cms

**Human Resource and Skill Requirements in the Textile Sector (2022) – A Report by NSDC


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17 Apparel Outlook

As per a report by the NSDC:

“The current training infrastructure is inadequate

on both number of people trained and also the

quality of training being imparted. Also, very

few of the training initiatives are targeted at the

shop oor level. The newly inducted workers

learn through informal training and also from

the experiences of the existing work force.”

The availability of trained manpower is a key issue for thegarmenting sector. Institutes like The ATDCs and ITIs trainup to 50,000 workers annually. A few private sector playersalso provide training specic to the garmenting sector. A

signicant portion of the requirement of human resource atthe operator level is met by on the job training. Hence trainingat the operator level is a key gap that needs to be lled. Acuteshortage of skilled man power leads to poaching and acts as adetriment to spending on in house training initiatives.

Projects like SEAM solve the above problem by providing a platform to bridge the gap between the supply side andthe demand side for skilled manpower.

SEAM – what is it all about?

SEAM is a part of Swarnjayanti Gram Swarozgar Yojana (SGSY) -special scheme by the MoRD, Government of India. The objective ofeach Special Project for Skill Development is to ensure a time-boundtraining and capacity building programme for bringing a specicnumber of Below Poverty Line (BPL) families above the poverty line,through placement ensuring regular wage employment.

The special project component of SGSY is placement linked skilldevelopment programme which works through public privatepartnership (PPP). In view of success of the pilot projects, efforts havebeen made to up scale the skill development programme, as it was feltthat regular wage employment to at least one member of rural BPL

family will enable it to meet the ends sustainably. In this perspective,MoRD has made concerted efforts in bringing about paradigm shift inthe delivery mechanism and in involving industry stakeholders, besidesstrengthening the process through output linked support. MoRD hasso far assisted several PPP or private sector led initiatives emanatingfrom industry, civil society organisations etc. In this module, the MoRDprovides funding support up to 75% of the training cost while 25%contribution towards project cost is borne by the implementing agency,employer, industry or sources other than the government.

An Insight into the Poor of India

A few points from UNDP (India) -

Poverty Reduction Project :

• 27.5 percent of Indians live below the national

income poverty line

• More than 60 percent of women are chronically poor

• More than 90 percent of the overall workforce is

employed in the informal economy; 96 percent of

women are in the informal economy

• 48.6 percent of farmer households are in debt, and

only 27 percent have access to formal credit

As we continue to progress and present an “IncredibleIndia” to the world, there exists an India where people

struggle to get bare minimum human needs as stomach

full of food and a shelter to live.


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18 Apparel Outlook

Strategy & Approach

• Placement Linked: Assured placement for at least 75 % of the trainees. This is a demand-driven programme and oneof the main pre-requisites of the program is the commitment of the industry to employ the trained persons

• Physical Infrastructure: No new infrastructure creation is supported by MoRD under the Program. Utilisation ofexisting infrastructure and facilities for operation of training centers is the fundamental principle. This enables theappropriate use of under-utilised infrastructure and helps immediate start of the training programme at decentralisedlocations

• Machinery and Equipment: The requisite machinery and equipments have to be arranged by the prospectiveemployers to the extent possible - on lease or as contribution of employer or the implementing agency

Training Process

• Training Content: The Implementing agency has to ensureinnovative content development with inputs from the industry

to ensure employability as per current industry practices. Thecurriculum should preferably be designed jointly with prospectiveemployers. Course content and training should be developed andimparted in local languages to ensure better absorption by BPLyouth who may not have exposure to English

• Skill Sets: The objective of the program is to impart skills necessaryfor regular employment, so that the initial wages are not less thanthe prescribed minimum wages. In addition to technical skills, softskills are also to be imparted to beneciaries to prepare them toface transition challenges of moving from an agrarian backdrop tothe industrial environment

• Training Partners: Partnership with training agencies and employers

who have the aptitude and capability to conduct training andplacement of the rural BPL youth (after certication acceptable tothe industry) is solicited

• Course Duration: Preferably short duration of up to three months,so that the opportunity cost of being away from productive workopportunities during training period are minimised

• Certication and Assessment of Trainees: Independent certication and assessment by third party agencies acceptableto the industry or employers is mandatory to ensure high quality standards and employment

• Trainee Accommodation: Wherever necessary, boarding and lodging facilities are to be provided to the trainees bythe implementing agency, so that BPL youth in remote locations can be covered. In other cases, trainees are to beprovided with to and fro transport and meals

• Mobilisation and Selection of Trainees: All the trainees in the age group of 18- 35 years with requisite aptitudedepending upon the trade or job requirements are to be selected from rural BPL families, as per the list maintained bythe District Rural Development Agencies (DRDAs) / State Government. The project implementing agency createsappropriate awareness and publicity campaign in local electronic/print media and organises meetings especially inSC, ST and minority pockets in rural areas for the selection of beneciaries. Priority should be accorded to SC/STcerticate holders, minorities and women heading rural BPL households, duly veried by the Panchayat/Block/

Tehsil functionary as BPL may be treated as sufcient for candidate selection by Implementing Agency/DRDA. Theimplementing agency ensures that out of the total beneciaries covered, a minimum of 50% will be from SC/ST.

Women and minority categories have to be accorded priority in selection of candidates, depending on demographicprole and trade requirements

• Preliminary Screening of Candidates: The trainees mobilised are put through an assessment process or other basicscreening tests to assess the need and aptitude that are fundamental to the trades in which training is to be imparted

and also to reduce mid course/post training dropout of candidates before placements

Identifying pool of BPL youth

Mobilization of BPL Youth

Selection of Operators

Orientation of the BPL Youth to Apparel Industry

Training at Nodal Training Centre(only if required by Industry)

Setting up of Factory Training Center Recruitment of Trainers

Training of Trainers

Fresh Batch of Operators at Training Center

Training of Operators

Transfer of Operators to Production Floor

Stamina Build Up

Exhibit 1:


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19 Apparel Outlook

• Website: The implementing agency maintains a website with complete MIS for transparent access of status andprogress

• Audio-Video training aids for better orientation and training of the operators

• Soft skills manual for training of the operators on issues like health and hygiene, nutrition, change management andfactory disciplines

Benefits of SEAM

• Generating employment for rural BPL youth

• Reducing poverty – Providing livelihood

• Access to trained manpower for the Industry

• Lower annual hiring cost to the Industry • Reduced Attrition & Absenteeism levels in the factory

• In-house training center for future sustainability

• Improved factory performance & work culture

Technopak is currently working on SEAM for both North and South India Regions.

Through SEAM, while the industry can look forward to a sustained supply of appropriate

manpower, the trainees can look forward to a respectable and growth prone employment.

It is indeed a balanced poverty alleviation effort by the MoRD, Government of India.


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About Technopak

India’s leading management consulting firm with more than 20 years of experience in working withorganizations across consumer goods and services.

Founded on the principle of “concept to commissioning”, we partner our clients to identify their maximum-value opportunities, provide solutions to their key challenges and help them create a robust and high

growth business models.

Ability to be the strategic advisors with customized solution during the ideation phase, implementationguides through startup and a trusted advisor overall.

Drawing from the extensive experience of 200+ professionals, Technopak focuses on six major divisions,which are Fashion & Textile, Retail & Consumer Goods, Healthcare, Education, Food & Agriculture andLeisure & Tourism.

Our key services are:

Business Strategy. Assistance in developing value creating strategies based on consumer insights,

competition mapping, international benchmarking and client capabilities.

Start-Up Assistance. Leveraging operations and industry expertise to ‘commission the concept’ onturnkey basis.

Performance Enhancement. Operations, industry & management of change expertise to enhance the

performance and value of client operations and businesses.

Capital Advisory. Supporting business strategy and execution with comprehensive capital advisory in our

industries of focus.

Consumer Insights. Holistic consumer & shopper understanding applied to offer implementable business

solutions.


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Insights and innovation led product, packaging, space and strategic design, including design research,concepts, engineering and prototyping. A blend of unique, contemporary and relevant concepts andsolutions.

www.foleydesigns.com

Strategizing, planning and managing creation, development and growth of brands through a scientific,

transparent and process-driven methodology.www.vertebrand.com

Planning, implementation and project management of plants, warehouses and entertainment centers with afocus on modernization, process improvement, technical valuation, power & water audit and environmentalengineering.www.arvana.in

B u i l d i n g T o m o r r o w

Technopak Financial Advisory Services (TFAS) is the financial and transaction advisory services arm ofTechnopak . With its team of experienced transaction professionals located in India and across US andEurope; TFAS offers its clients a global transaction ability, deep understanding of its industries of focus,and an efficient negotiating platform for stakeholders.

Financial Advisory Services

Technopak Partner Companies


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Technopak Advisors Pvt. Ltd.

Gurgaon4th Floor, Tower A, Building 8, DLF Cyber City, Phase II,

Gurgaon 122 002, (National Capital Region of Delhi)

(India)

T: +91-124-454 1111, F: +91-124-454 1199

Website: www.technopak.com

For further information, please contact:

Sharad MehraSr. Vice [email protected]

Amit Gugnani Vice President

[email protected]

Ashish Dhir Associate Vice President

[email protected]

Arindam Saha Associate Vice President

[email protected]

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