SUPPLY CHAIN MANAGEMENT IN TEXTILE

Supply chain management (SCM) is the oversight of materials, information, and

finances as they move in a process from supplier to manufacturer to wholesaler to
retailer to consumer. Supply chain management involves coordinating and
integrating these flows both within and among companies. It is said that the
ultimate goal of any effective supply chain management system is to make
products available when needed.

Supply chain management flows can be divided into three main flows:
• The product flow
• The information flow
• The finances flow

The product flow includes the movement of textiles from a supplier to a customer,
as well as any customer returns or service needs. The information flow involves
transmitting orders and updating the status of delivery. The financial flow consists
of credit terms, payment schedules, and consignment arrangements.

Some SCM applications are based on open data models

that support the sharing of data both inside and outside
the enterprise (this includes key suppliers,
manufacturers, and customers of a textile
manufacturing company). By sharing this data
“upstream” (with a company's suppliers) and
“downstream” (with a company's clients), SCM
applications have the potential to improve the time-to-
market of products, reduce costs, and allow all parties
in the supply chain to better manage current resources
and plan for future needs.

Supply chain management is typically viewed to lie between fully vertically

integrated firms such as Reliance who produce the raw material – polyester yarn
and also the finished product - Vimal a single firm and those where each channel
member operates independently. Coordination between the various players in the
chain is key in its effective management.
 Supply chain decisions

The decisions for supply chain management can be classified into two broad
categories -- strategic and operational. As the term implies, strategic decisions are
made typically over a longer time horizon. These are closely linked to the
corporate strategy and guide supply chain policies from a design perspective. On
the other hand, operational decisions are short term, and focus on activities over a
day-to-day basis. The effort in these type of decisions is to effectively and
efficiently manage the product flow in the “strategically” planned supply chain.

There are four major decision areas in textile supply chain management:

1) location,

2) production,

3) inventory,

4) transportation (distribution), and there are both strategic and operational

elements in each of these decision areas.

Location decisions

The geographic placement of production facilities, stocking points, and sourcing

points is the natural first step in creating a supply chain. The location of facilities
involves a commitment of resources to a long-term plan. Once the size, number,
and location of these are determined, so are the possible paths by which the
product flows through to the final customer.

These decisions are of great significance to a firm since

they represent the basic strategy for accessing customer
markets, and will have a considerable impact on
revenue, cost, and level of service. These decisions
should be determined by an optimisation routine that
considers production costs, taxes, duties and duty
drawback, tariffs, local content, distribution costs,
production limitations, etc. Although location decisions
are primarily strategic, they also have implications on an operational level.
Production decisions

The strategic decisions include what textiles to produce, and which plants to
produce them in, allocation of suppliers to plants, plants to customer markets. As
before, these decisions have a big impact on the revenues, costs and customer
service levels of the firm. These decisions assume the existence of the facilities,
but determine the exact path through which a product flows to and from these
facilities.

Another critical issue is the capacity of the manufacturing facilities--and this

largely depends the degree of vertical integration within the firm. Operational
decisions focus on detailed production scheduling. These decisions include the
construction of the master production schedules, scheduling production on
machines, and equipment maintenance. Other considerations include workload
balancing, and quality control measures at a production facility.

Inventory decisions

These refer to means by which textile inventories are managed. Inventories exist at
every stage of the supply chain as either raw materials, semi-finished or finished
goods. They can also be in-process between locations. Their primary purpose to
buffer against any uncertainty that might exist in the supply chain. Since holding of
inventories can cost anywhere between 20 to 40 per cent of their value, their
efficient management is critical in supply chain operations. It is strategic in the
sense that top management sets goals.

However, most researchers have approached the management of inventory from an

operational perspective. These include deployment strategies, control policies ---
the determination of the optimal levels of order quantities and reorder points, and
setting safety stock levels, at each stocking location. These levels are critical, since
they are primary determinants of customer service levels.

Transportation decisions

The mode choice aspects of these decisions are the more strategic ones. These are
closely linked to the inventory decisions, since the best choice of mode is often
found by trading-off the cost of using the particular mode of transport with the
indirect cost of inventory associated with that mode. While transportation by sea or
rail is cheaper, it necessitates holding relatively large amounts of inventory to
buffer against the inherent uncertainty associated with them. Therefore customer
service levels and geographic location play vital roles in such decisions. Since
transportation is more than 30 per cent of the logistics costs, operating efficiently
makes good economic sense. Shipment sizes (consolidated bulk shipments versus
Lot-for-Lot), routing and scheduling of equipment are key to effective
management of the firm's transport strategy.

Supply chain modeling approaches

Clearly, each of the above two levels of decisions require a different perspective.
The strategic decisions are, for the most part, global or “all encompassing” in that
they try to integrate various aspects of the supply chain. Consequently, the models
that describe these decisions are huge, and require a considerable amount of data.
Often due to the enormity of data requirements, and the broad scope of decisions,
these models provide approximate solutions to the decisions they describe. The
operational decisions, meanwhile, address the day to day operation of the supply
chain. Therefore the models that describe them are often very specific in nature.
Due to their narrow perspective, these models often consider great detail and
provide very good, if not optimal, solutions to the
operational decisions.

Network design methods

As the very name suggests, these methods determine

the location of production, stocking, and sourcing
facilities, and paths the product(s) take through them. Such methods tend to be
large scale, and are used generally at the inception of the supply chain.

Breitman and Lucas attempt to provide a framework for a comprehensive model of

a production-distribution system, “PLANETS”, that is used to decide what
products to produce, where and how to produce it, which markets to pursue and
what resources to use. This was successfully implemented at General Motors,
USA.

Cohen and Lee present a normative model for resource deployment in a global
manufacturing and distribution network. Global after-tax profit is maximized
through the design of facility network and control of material flows within the
network. The cost structure consists of variable and fixed costs for material
procurement, production, distribution and transportation. They validate the model
by applying it to analyse the global manufacturing strategies of a textile
manufacturer.
Clearly, these network-design based methods add value to the textile firm in that
they lay down the manufacturing and distribution strategies far into the future. It is
imperative that firms at one time or another make such integrated decisions,
encompassing production, location, inventory, and transportation, and such models
are therefore indispensable. Although the above review shows considerable
potential for these models as strategic determinants in the future, they are not
without their shortcomings. Their very nature forces these problems to be of a very
large scale. They are often difficult to solve to optimality.

Strategy of the supply chain

With comprehending the need of the first changing business environment in textile,
apparel and in the supply of raw materials such as polyester, cotton, etc, it requires
proper business and planning strategy without which the supply chain management
will not be successful. The following are the strategies and planning:

• Foresight of the business, ie, right idea, right supply at right time.
• Proper market survey for the customers’ requirements, demand and supply.
• Proper production planning at supply end and that of consumer end with proper
information technology.
• Product consignment to match the demand supply curve.
• Business expansion strategy.
• Marketing and distribution strategy.
• Strategic industry studies.
• Predicting industry trends.
• Market entry strategy.
• Financial planning.
• Market feasibility studies.
• Strategic Alliances.
• Mergers and acquisitions.
• Tap management recruitment/training.

The concept of supply chain management

The concept should be the following for a fruitful supply chain management:
• Timely delivery at customer’s end.
• Proper quantity to reach at destination.
• Intact material.
• Reasonable cost.
• Customer must not suffer because of non-availabilities of raw material.
• Even the small quantity must not matter in reaching at customer end.
• With proper planning the raw material dispatch should be in such a way that
customer must not suffer because of any delay or unforeseen incidences such as
road condition, traffic jam, etc.
• Although, there are frequent changes in fashion trend which leads to
unpredictable market situation but with proper policy matters distribution system,
right communication, production planning, the customer must get the required
quantity of materials at its door step within stipulated time.

The difficulties faced at supply chain

The following difficulties are being faced in supply chain in textile industry for
yarn, cloth, apparel, garment, industrial yarn, etc.
• Distance: Larger the distances, larger are the difficulties in reaching the materials
at proper time at customers end.
• Improper production planning at both manufacturer and consumer end. It
becomes more erratic when there are fluctuations in demand of consumer product.
• Transportation cost: Larger the distance, larger is the transportation cost, some
customers are not in a position to get the right raw material from the right resource
because of high cost of transportation.
• Government policies
• Taxation
• In case of rise in market demand, the supply becomes more critical because of
non-availability of trucks, manpower and resource problem. At that time, the
manufacturers are unable to cope up with the growing demand of their customers
need because of their limited capacity. In such case a thorough vision in planning
is must to maintain demand supply. Outsourcings are being done to meet the
demand supply through proper supply chain. In such cases the transporters, the
concerned loaders and unloaders start demanding more wages disturbing the chain
link.
• In case of increasing the uncertainty in the international market, the customers
start stocking of the materials and hence, subsequent problems arise in logistics
and distribution. At that time, it is necessary to see customer profile, his routine
demand & accordingly distribution is made. Importances are being empathised on
valuable customers for upkeeping the customer’s business online.
• Sometimes any special customer needs any special product at remote place where
logistic becomes difficult but to fulfil the customer need it requires to know the
presence of other customers in the nearby areas, so that proper distribution can be
made at a reasonable logistic cost.
• During off-season, say in heavy rain, bad road condition, natural calamities, etc,
it becomes difficult to dispatch the material at customers end in time but to keep
the supply chain on, adequate materials are being dispatched by keeping the proper
information with the dealers and the customers.

Proper implementation

There should be proper implementation of the chain management to keep the

production on & to minimize the cost of production. The manufacturer must have:

• Engineering concept.
• Machinery evaluation.
• Architectural & structural details.
• Humidification, gas & energy consultancy.
• Civil & electrical & water management.
• Fire fighting & safety system.
• Improved designing & work practices.
• Process audit & benchmarking.
• Process improvement & optimisation.
• Complete project management.
• Advance analytical method of training.
• Management training & development.
• Quality assurance systems.
• Improving the planning process.
• Establish performance monitoring tools through application of IT solutions.
• Establish business targets.

Mode of transportation
For a perfect supply chain management the mode of transportation is an essential
integrated part, which can be international or inter-modal. It can be either by ship,
train, truck, inland barge.
In the worst scenario,

• Sea transport by container is 72 to 73%

• Rail transport 3 to 14%
• Road transport 14% to 24%

Difficulties faced in transport during supply chain

1. Road transport/Surface transport

Within India the majority of the supply chain is done through road transport and
the following are difficulties faced:

• Non-availabilities of proper type of trucks to load the required quantity of the

customer. For example, in India 80% trucks are Punjab body (both sides closed),
which makes difficulties in loading the trucks through Fork Lifter from all sides. It
becomes time consuming, chances of material damage, less quantity loaded than
the standard practices and enhanced costing.

Because of road conditions materials get damaged even with proper packing and it
creates misunderstandings among the suppliers and customers.

2. Sea transport
• It is the cheapest and the best way to send the materials from one country to
another. But because of certain policy matters, some times the consignment gets
delay from the manufacturers end to Port.
• Then it is transported either by truck or by train, which creates more material
handling and damage. It requires proper implementation of supply chain
management.

3. Rail transport
• It is cheaper but time consuming.
• The customers need to wait for the loading/unloading operation at goods yard.
• During monsoon, etc, the textile material has got the bad impact if proper care is
not taken in time.
• Some times it takes more time to reach the destination and customers suffer.