Magazine article International Trade Forum

Get Connected

Magazine article International Trade Forum

Get Connected

Article excerpt

Buyers are pushing clothing manufacturers to use information technology to speed up delivery, lower costs and improve services.

Before rushing to invest in technology solutions, manufacturers should piece together the value chain "puzzle", from fabric mill to retailer.

Information technologies are changing trade in textiles and clothing. A few years ago, a cheap product was incompatible with fast delivery. Clothing manufacturers produced either standard goods in bulk at low prices with long lead times, or pricey fashionable items with short time-to-market. If buyers wanted faster delivery, they had to pay a higher price. With the evolution of e-solutions, this has changed.

Many developing country producers are not aware of these changes and what they imply for participation in global, buyer-driven value chains. They don't always realize that the ability to adopt e-applications is a key survival tool in the post-quota era.

Major international buyers are shifting to new ways of buying, and developing country exporters have to adapt. As quotas cease to restrict buyers' choices, their sourcing requirements and patterns are changing. Looking to get the most benefit from quota-free markets, shorten lead times and reduce expensive inventories, larger buyers are exploring ways to connect the entire value chain electronically, including sourcing of fabrics and accessories, garment manufacturing, and sales to the final customer. This goes hand-in-hand with an increased demand for service-oriented suppliers.

Lean retailing

Retailers are concentrating on their core business, which is selling to the end consumer. Many are turning to "lean retailing", or cutting down inventory to the minimum, as a means to achieve this. Reducing stocks requires fast and on-time delivery from the manufacturer. Shipments become smaller but more frequent, with pointof-sale data transmitted directly to the manufacturer, who gets alerted when to produce and ship garments.

Raising the bar for manufacturers

More and more, clothing manufacturers are becoming service providers to retailers. With lean retailing and the evolution of electronic solutions, retailers give up more responsibilities, which manufacturers who want to remain competitive have to take up.

From product development to fabric and trim sourcing, these developments create new challenges for garment manufacturers in developing countries, on top of those they faced before. To stay competitive, manufacturers need to find innovative solutions that go beyond "just" manufacturing good-quality products. In many cases, information technology or "e" can help them become more efficient and offer new services.

Adopting "e" successfully

The use of e-applications per se does not guarantee success. To adopt e-applications successfully and develop fruitful long-term relationships with major buyers, many manufacturers will have to move from a "fire-fighting" approach to a more systematic way of doing business. An important success factor is to reorganize the company's business and management structure, and then decide where to apply e-solutions along the value chain.

Manufacturers need to develop business processes to implement and manage e-technologies efficiently. For example, to provide buyers with a "quick response", manufacturers have to analyse the complex problem of what is their optimal time-to-market. Quick response is like a puzzle made up of the entire value chain, which manufacturers should piece together before introducing e-solutions. They can learn from exporters in other developing countries that have already found ways to integrate their systems with those of customers and suppliers, opening up long-term perspectives. …

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