SCM for Pakistani Textile Industry State Bank of Pakistan’s annual report for 2013-14 states that although forex reserves have risen from last year, the main source is home remittances from overseas Pakistanis and international borrowing rather than exports. In fact the home remittances have now exceeded the collective textile exports of the country. This shows that our economy’s capacity to earn foreign exchange is steadily being eroded and textile being the largest export industry needs to do some seriously introspection. Under these conditions, the first formal ‘Buyers Forum’ is being established in Pakistan next week with a view to promoting decent work for a sustainable garment and textile industry. The forum, supported by ILO, IFC and the Netherlands government, was envisioned to improving productivity and competitiveness of the garments and textile sector through compliance of 27 UN conventions under the GSP+ status. Over thirty buyers sourcing garments, textile and apparel including H&M, Adidas, Levi Strauss, Hema, and C&A will participate in the launching of ‘Buyers Forum’. (Source: DAWN newspaper) The above scenario poses both a threat and an opportunity to our textile industry. While they have been running a hurdle race to tackle energy crisis, security crisis, quota restrictions etc., now comes the added (financial) burden of complying with 27 UN conventions. Out of these, the following are more relevant: 1. Minimum Age for Admission to Employment 2. Elimination of All Forms of Discrimination against Women 3. Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor 4. Equal Remuneration of Men and Women Workers for Work of Equal Value 5. Discrimination in Respect of Employment and Occupation 6. Application of the Principles of the Right to Organize and to Bargain Collectively 7. Montreal Protocol on substances that deplete the Ozone Layer 8. Stockholm Convention on persistent Organic Pollutants 9. Convention on Biological Diversity 10. Cartagena Protocol on Bio safety 11. Kyoto Protocol to the UN Framework Convention on Climate Change 12. Mexico UN Convention Against Corruption Most of the above will fall under the ambit of supply chain and operations managers who will have to ensure compliance on all counts and prove the same via documentary evidence and independent audits. For supply chain managers, the game doesn’t stop at compliance. In fact, it only begins from this point. Compliance will invariably result in increased cost from such heads as increased labor costs, cost to control emissions, use of more expensive chemicals and dyes, waste recycling and disposal arrangements etc. not to mention working straight if corruption option is to be discarded. With increased cost will come the challenge of remaining competitive in the world markets. The opportunity lies in the possibility to open up the doors to further export markets and attracting more customers or even increasing business with the existing ones. Supply chain managers will have to come up with innovative thinking to optimize costs and add value using latest SCM professional concepts. They should keep in mind that customer retention is not just a factor of low prices. A strategic approach to customer and supplier relationship management and correct design of the logistics network can offset the cost advantage by creating even greater value for the customer. There is a recent example of this textile manufacturer in Karachi who installed a latest equipment to reduce water use in dying by upto 70%. The value in the eyes to the customer was so great that it offered to raise the price by much more than the manufacturer had hoped for! Fashion industry is also characterized by strong demand fluctuations depending on the seasons and popularity of designs. This makes the global brand owners highly sensitive to inventory levels. Suppliers who can help reduce response time coupled with smaller order sizes would carry a premium over those who just offer lower prices. Adoption of state of the art CRM and SRM software and aligning of operating processes accordingly also create immense (non price) customer value. Upgrading supply chain processes and technologies to state of the art enables manufacturers to qualify as strategic supply partners of blue chip buyers, resulting in deep rooted collaboration and integrated processes that cross inter organization barriers. Such relationships once formed last a life time and steadily increase in value. Another very important strategic aspect is for manufacturers to gradually come out of the ‘slave’ mindset of only supplying in bulk to foreign buyers. They should keep in mind that a shirt sold ex factory for say $10 is retailed in buying countries in the range of $70-100 or even higher. It’s high time Pakistani manufacturers take advantage of their manufacturing expertise and competitive cost to start tapping the world shopping capitals with their own brands to maximize the export potential. This of course will require a totally different supply chain strategy and open the gates of success not only to the business owners but also to the marketing, manufacturing, fashion design, IT and supply chain professionals.
Posted on: Sun, 14 Dec 2014 09:16:18 +0000
Trending Topics
Recently Viewed Topics
© 2015