Sunday, 24 February 2013

Supply Chain Risks in Indian Ethnic Garment Buying



Managing ethnic garment supply chain is very challanging as the various people involved are geographically and culturally very diverse and the conditions keep on varying all the time. To forecast and manage the supply becomes very complex as so many factors are involved, I have listed a few factors on which supply chain faces challenges

1. Disruptions

These happen in cases where the design is dependent on the supplier and the lead time is more. As an example there is a supplier of chikankari based in Lucknow, and she embroiders the panels which are cut in Delhi. Whenever she goes on leave for a weak, the whole schedule takes a tumble.Also disruptions take place in South during Pongal and in North India during Eid and Diwali. All these will break the supply chain down. Some of these for example festivals are predictable and precautions may be taken, but the impact is not predictable. For example, we can plan that the production may reduce to half during festive time, but it may as well reduce by 3/4th, which make planning very difficult. For Bhagalpur fabrics, in Monsoons, no dyeing is possible and Monsoon is not predictable. To avoid that the dyeing needs to done before June for the piece dyed fabrics.

Disruptions are also caused when a supplier cannot give the required quality asked.

Disruptions are also caused by the demand. Sometimes the demand go up which cannot be met given a particular lead time for the fabrics and the processes. Sometimes it goes down which may have an impact over the stock situtation at the stores and the suppliers.

Generally this risk is avoided by keeping adequate inventory of high volume high value items. More suppliers are developed for the same product and redundancy is created to overcome the risk. However keeping inventory intelligently is a juggling, a manager is doing always.

2. Delays

Delays happen for all the reasons. Sometimes the styles get closed late. The order can get delayed because of the apporvals of the production and various samples. Orders also get delayed due to interference effect, when a supplier takes the quantum of the orders he cannot digest. Delays are prevented by adding inventory, taking higher lead time and choosing flexibility in the suppliers.

3. Systems

Supply chain also gets broken down by the failure systems, though it rare. This happens when the ERP and computer system doesn't work for sometime.  During inventory checking, no transaction happen and this is a supply chain risk. This risk is mitigated by the manual methods of logistics.

4.  Information Processes

There is a risk when after taking an order, the supplier increases the minimum order size, increases the rate and downgrade the quality. It also happens when sometimes suppliers get inundated with work and sometimes no work so they cannot plan properly.

5. Procurement

There is a risk when supplier increases price, the price of freight increases and sometimes there are inordinate delays in payment to the supplier due to some reasons. This is normally prevented by signing long term contracts, building relations with supplier and using multiple suppliers.

6. Inventory Risk

To manage all the risks above, keeping the right inventory is very vital. But inventory keeping itself is frought with risks. Generally inventory risk is dependent upon three factors: The value of the product, its rate of obsolescence and uncertainty in demand and supply. To manage it the following statragies are used:

- Pooling the Inventory: This is used in case of high value fabrics which are used all across the categories. For example for high value wild silk varieties which are piece dyed, the demand for the greige fabric is aggregated and then orders are released to the suppliers.

- Creating Common Components and Postponing and Delaying the production until all orders are in hand. As in the previous example the order for greige fabric production is given six months in advance to the supplier and the orders for colors are releasd very close to the season.

Needless to say, supply chain management is very complex for Indian Ethnic Garment Retailing as the various weavers and printers are located at diverse locations and under diverse conditions.

Further Readings

1 comment:

Pavin Fabrics said...

Nice post about home textiles. We are also manufacturer of home texiles in India

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