The biggest gains have been reducing time lags along the chain and freeing up working capital.
The competitive landscape of textile and apparel business in the country has changed drastically over the last few years.
For most branded textile players, sourcing and supply chain management are key cogs in the wheel. As locations and capacities for manufacturing multiply, more companies are moving away from focusing their efforts on plant-level production planning and are adopting a demand-driven approach — to try and manage demand more efficiently. Aligning production, delivery and the entire sales channel with that mindset has become make or break. And time is of the essence in all this.
Textile major and fashion retailer, Raymond Group is reorganising its supply chain to meet these new challenges.
Leveraging digital tools, Raymond has effectively reduced life cycle for products which are now Made-to-Available (MTA) from 80 days to less than 15 days in business-to-consumer segment. A shorter supply chain helps the textile player react faster to market trends and frees up working capital. In financial year 2017-18, the company clocked ~2,915 crore in sales in the branded textile segment witnessing a 7 per cent growth over FY 2016-17 when sales stood at ~2,714 crore. Riding on its digital capabilities and retail expansion, Raymond is eyeing double-digit growth in the textile business over the next few years.
Sudhanshu Pokriyal, president, textiles, Raymond Ltd, says, “The textile business has been known for its long supply chain and product lifecycle. It’s no surprise that our reaction time to respond to popular fashion trends is slower as compared to say a Zara or an H&M which are into fast fashion.”
To survive and grow in the business — if you consider yourself not just a textile player but a fashion brand — it is important for a player to understand trends every season or what is ‘in’ and what is ‘out’. S Swaminathan, chief executive officer and co-founder, Hansa Cequity, says, “Unlike in the past, product and fashion lifecycles are becoming shorter and shorter. Accurately predicting the design in vogue can reduce the cost of doing business. It also helps predict market trends and sales patterns accurately and therefore get better conversions per footfall across stores.”
The competitive landscape of textile and apparel business in the country has changed drastically over the last few years. Raymond is up against domestic players like Siyaram’s, Vimal, Grasim in the fabric market. It also faces stiff competition in the branded segment from the likes of Marks & Spencer, H&M and Zara. The silver lining is that country’s textile market is poised for tremendous growth offering space for numerous brands to co-exist and grow. According to industry sources, India’s textile market as of November 2017 was estimated at $150 billion. The market is expected to touch $223 billion by 2021, growing at a compound annual growth rate of 12.2 per cent between 2009 and 2021.
On its part, Raymond is gearing up to make the most of the growth opportunity that the market offers.
First and foremost, the company has started working on stock management. It is working to make its MTA supply chain leaner. At present, MTA comprises 1,050 never-out-of-stock SKUs (stock keeping units) that contribute 50 per cent to the company’s sales volume. These SKUs are available with dealers on an auto-replenishment basis guided by daily sales monitoring. These products are made available to the dealers within 48 hours of the placement of an order.
The company claims that over the last few months, it has managed to reduce its MTA portfolio by almost 33 per cent.
Pointing out the advantages of reducing the MTA portfolio, Pokriyal, says, “The moment we have an effective and fixed (limited) MTA portfolio, it helps us reduce the lead time for sourcing. And lead time reduction improves the business’ ability to react to demand.”
As demographics and lifestyle choices change across metros, tier 1 and tier 2 markets, there is a critical need to speed up the fabric-to-fashion cycle across the country. “The data or information about demand, availability, and reduction in inventory carrying costs can make a big difference to the profitability of the business. Real-time data can be a huge competitive advantage for the textile business to understand trends and recalcitrate manufacturing and design strategies,” says Swaminathan.
The goal is to reduce the wholesaler’s forecast error as regards to MTA SKUs, therefore freeing up working capital stuck in inventory and ensuring better stock turns.
The made-to-order (MTO) model, on the other hand, is aimed to cater to the seasonal as well as region-based fashion preferences of buyers. This model comprises SKUs aimed at creating seasonal looks.
Along the way, Raymond has also changed the way it works with its wholesalers and dealers with the launch of its business-to-business (B2B) ordering app, Midas. With this app, the textile major has moved the ordering system from an offline to an online platform, ensuring quicker turnaround time in the delivery of the MTA portfolio. The use of the app has helped dealers reach out to Raymond directly, removing the middlemen in the way. The app helps the company stay connected with dealers offering them complete catalogue view of the products in stock, besides communicating information related to brand campaigns and promotions.
Going online has also helped Raymond reduce the teeth-to-tail time — that is, the company is able to redeploy and engage its sales force — which was earlier preoccupied with managing dealers — more efficiently now.