The Indian textile sector will see its margins under pressure after the phasing out of the Multi Fibre Agreement by 2004-end in addition to the loss of assured markets, according to a study.
Almost all the categories that are expected to go off quota have seen a 10-20 per cent fall in sourcing prices in the past one year. Therefore the entire supply chain needs to reinvent itself to remove hidden costs elements and become really competitive, the study by KSA Technopak said.
The study defines textile and apparel as a buyer driven value chain. "The maximum value addition happens at the retail level. By removing inefficiencies in the supply chain at all levels partners can create and preserve value in supply chain," Arvind Singhal, chairman, KSA Technopak, said.
Business processes, including planning, sampling, administration and other overheads account for 35 per cent of the costs at the retail stage. Collaboration among members of the value chain facilitates business process optimisation that can make value chain more efficient.
The key elements of collaboration identified by the study are production capacity dedicated to buyer, transparent cost accounting system, collaborative product development, standardised processes and control, optimise logistics and routing.
It is estimated that the opportunity to increase earnings for retailer through information sharing could be as high as 45 per cent, the KSA Technopak study said.
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