Domestic apparel scene is buzzing with new start-ups and newer brands while established retailers are also coming up with newer formats. Sophisticated technology is being used by all retailers and brands to attract more and more consumers. But who is manufacturing for them? How organised is their set-up? How tech enabled are those manufacturers? Prabir Jana, Professor, NIFT, peeps into the backstage of mega retail boom.
According to the latest estimate, the Indian domestic textile and apparel market is worth US $ 125 billion, out of which apparel consists of US $ 87.5 billion which is equivalent to Rs. 7.25 lakh crore. India also imports an estimated US $ 2 billion worth of apparel.
Traditionally apparel manufacturing in India (rather in most of Southeast Asia) was associated with export-centric organisations. The stringent quality and benchmarked productivity and also the compliance requirements laid out by international retailers forced these contract manufacturers to adopt modern technology and systems. The large volume of orders encouraged these manufacturers to go for scale. In fact all the large apparel manufacturing giants in India and Southeast Asia are contract manufacturers which do not have their own brands (like Shahi, Pearl Global, Busana, Brandix, Mas Holdings, DBL, Hameem, TAL, Crystal and so on).
Just to give an idea, five large apparel retailers of India (Reliance, Trent, Myntra, Max and Fabindia) together account for more than Rs.50,000 crore of revenue and ironically 100 per cent of their goods are manufactured by numerous unnamed contract manufacturers. However there are exceptions which include a few vertically integrated retailers like Madura (now ABFRL), Arvind, Raymond etc., which have their own state-of-the-art manufacturing as well.
Manufacturing infrastructure
Technology infrastructure for apparel manufacturing is primarily divided into pre-sewing, sewing and post-sewing machineries and sewing accounts for the maximum investment. If we take cue from the technology exhibitions of the last five years, it were primarily the small domestic manufacturers from all over India which thronged the shows while the large export-oriented manufacturers were conspicuously missing. Small manufacturing set-ups with 50-100 machines have mushroomed during the last five years. If we look at the technology invested in the sewing department, it’s the very basic industrial sewing machines that are sold; numerous well-known machine giants have in fact been forced to launch economical brands (such as JIN from JUKI). The one that has been worst hit is the pre-sewing investment where there is no scale and no scope for automated spreaders or CNC cutters. Basic flat-bed fusing machines have therefore re-emerged as a popular option outselling the superior continuous belt fusing machines. Even the technologies bought for the post-sewing department are just vacuum tables and electric-steam iron. The premium technologies like finishing tunnels, buck press or even all-steam irons have found no buyer! Manufacturers invest in very basic cut-sew-finish technologies, because these are enough to cater to domestic brands and retailers. For example, a 100+ crore turnover manufacturer would make anything between 8000-10000 pieces per day and hence ideally can invest in CNC, while the export-oriented ones may opt for CNC cutters whereas the domestic counterparts may not; that’s the difference between domestic and export-oriented manufacturers. The same goes for investing in superior technology continuous belt fusing machines and/or superior consumables like fusible interlinings.
Management infrastructure
How are these small manufacturing set-ups run? Over the last quarter century, the large contract manufacturers have learned the science of assembly line manufacturing by scientifically managing WIP, optimising style changeover loss by applying SMED, minimising waste by applying 7S, cutting down the handling time during sewing by investing in overhead material handling system, conducting VSM to analyse and ensure that every second worker who did value added work used PMTS to calculate the ‘should cost’ of sewing operations, etc. On the quality front, it has been an arduous journey from ISO 9000 to SPC to six sigma. But are these knowledge and practices really required for these small manufacturers? This is indeed a million dollar question.
On one hand, these small manufacturers have very basic machinery infrastructure, on the other hand, their managing style is an age-old make-through system. Neither any requirement for a professional degree nor any lean manufacturing knowledge have resulted in lower overhead cost. As export orders dwindled, export-oriented large contract manufacturers with higher overhead costs are now made to compete with small manufacturers to get a pie of the booming domestic production and ultimately they are moving out of business.
Software technology has kept pace with hardware development and CAD, with ERP, PLM, real-time dashboard etc., are being widely adopted by all large contract manufacturers. Although most of these are beyond the reach of small manufacturers, interestingly a new breed of tech start-ups like Groyyo are starting to provide the necessary support to small manufacturers by affordable SaaS model, but these too are facing technological and operational challenges.
Flashback to 1990s
Garment manufacturing in northern India is dominated by merchant exporters who engage small contract manufacturers doing cut-sew-finish using the most basic machinery infrastructure and make-through sewing systems.
Why this great manufacturing rewind?
First, while the strict technical and social compliance by large retailers and brands have uplifted the manufacturing standards, today most domestic brands (barring a selected few) lack any compliance standard.
Secondly, the technical standard of a garment has deteriorated over the years due to a shift in attention. Now more attention is being given to ‘sustainability’ and product technical details are ignored.
The other reasons behind the deteriorating technical standards of garments are online e-commerce and social media platforms. Products are never felt-touched, rather only seen on screen.
In the year 2000, Government made the necessary corrections in SSI (Small Scale Industry) policy to encourage large-scale investment in apparel manufacturing (especially to prepare for 2005 quota phase-out). After nearly two decades, the focus has shifted to rejuvenating MSME again!
| It’s like the modern consumers are being sensitised / acclimatised to accept garments of inferior technical standard. If any consumer hasn’t ever seen/felt/touched better workmanship, how will he/ she know the existence of such a product? |
Many culprits, difficult solutions
The only constant that has happened globally for international as well as domestic brands is the reducing order quantity. Therefore there is a continuous search for technology and systems that support small order quantity manufacturing. Technology has well responded to small order quantity manufacturing in the form of digital textile printing, single ply CNC cutting, SaaS-based CAD software and so on. Similarly, the management principles like teamwork or modular manufacturing also exist to support quick response to small order quantity manufacturing. But it seems there are no takers for the same and instead our manufacturing industry is heading back to the mid ’90s.
We have to remember that all the good practices like equal wage, regulated overtime, no child labour, occupational safety, even ISO/SPC/Lean manufacturing, were imbibed in apparel manufacturing by the coercion of international retailers and brands. I am apprehensive that in absence of such regulations, our domestic manufacturing may again go back to sweat shops!
Assuming an average retail multiplier of 2.5 times and an average manufacturing cost of Rs. 400 per piece of merchandise at manufacturer’s end, we can estimate that approximately 19.7 lakh sewing machines are engaged in domestic manufacturing. According to MSME classification, this is equivalent to 56,700 micro enterprises (with 5+ crore turnover) or 5670 small enterprises (with 50+ crore turnover) or 2835 medium enterprises (with 100+ crore turnover), in fact a mix of all. In stark comparison, the export counterpart is little less than US $ 18 billion, which includes slightly less than 1500 medium enterprises (with 100+ crore turnover).
