Impact of COVID on Textile and Apparel Landscape
Coronavirus wreaked havoc on most of the consumer businesses all over the world in 2020. Textile and apparel businesses were no exception. It is estimated the global apparel consumption which was US$ 1.6 trillion in 2019, declined by almost 22% and became US$ 1.2 trillion in 2020 (Exhibit 1).
Additional lockdowns in 2021 due to the ongoing second wave of COVID-19 in India and other key markets will lead to further fall in production output and exports.
Exhibit 1: Global Apparel Market Size
Apparel retail sales were marred by global lockdowns for almost 3 to 5 months in all major markets. Several brands cancelled or delayed orders and many factories remained shut for days at stretch due to the looming uncertainty. Supply chains across the world were also disrupted. As a result, the global trade in textile and apparel reduced by approximately 30%; from US$ 838 Bn. in 2019 to US$ 600 Bn. in 2020 (Exhibit 2).
Exhibit 2: Global Textile & Apparel Trade (In US$ bn.)
The pandemic caused acceleration of some key trends in the industry which will have a far reaching impact over the next few years. (Exhibit 3)
Exhibit 3: Market & Industry Trends Accelerated Because of COVID Pandemic
Indian Textile and Apparel Industry Performance
In recent years, Indian industry’s performance has not been up to the mark, especially in exports of textiles and apparel. Albeit a large raw material base and manpower pool, our exports have rather stagnated since 2015. While on the other side, several smaller Asian exporting nations that are majorly dependent on imported raw material have surpassed India in exports (Exhibit 4).
Exhibit 4: Textile & Apparel Exports of Emerging Manufacturing Hubs (In US$ bn)
There are 5 key reasons behind India’s sub-optimal performance in the textile and apparel sector (Exhibit 5)
Exhibit 5: Five Woes of Indian Textile & Apparel Industry
At company level, there are seven most common mistakes that are prevalent in the Indian manufacturing units (Exhibit 7).
Exhibit 6: Seven Common Mistakes in the Manufacturing Units
Way Forward for Indian Textile and Apparel Companies
There is a silver lining for the Indian industry in the fact that global buyers are looking to diversify out of China. US-China trade war and US & EU sanctions on cotton produced in China’s XUAR region are the key reasons behind this trend. As a result, leading global investors will also invest in destinations other than China, either on their own or in JV with local investors. India can position itself as the most suitable alternative to China leveraging its inherent strengths. Recently announced schemes by Government of India viz. Production Linked Incentives (PLI) and Mega Investment Textiles Parks (MITRA) are also poised to be game changers as they intend to support world class, mega capacities which is need of the hour for Indian industries.
The answer to addressing various woes, and tapping the emerging opportunities for Indian textile and apparel companies is to strive for Manufacturing Excellence (Exhibit 7). The paradigm can help companies counter input cost increase, improve overall performance and make it ready for the next level of growth. Such companies will be positioned best to attract large buyers and international JV partners.
Exhibit 7: Manufacturing Excellence Cycle - Key to Global Competitiveness
Practical Approach to Achieving Manufacturing Excellence
No two companies, their technology, management, manpower skillset, issues and challenges are same. Hence, the interventions to achieve manufacturing excellence also are different. They need to be customized for each company based on an initial understanding of on-the-ground situation.
Hence, the first step on the entire process (Exhibit 8) is conducting Diagnostic Study of the unit covering products, processes, technology, infrastructure and manpower.
Exhibit 8: Approach to Achieving Manufacturing Excellence
The diagnostic study helps answer the following questions:
• What is the current status of production, quality, KPIs and operations vis-à-vis industry benchmarks?
• What is the scope of improvement from the current status – with investment and without investment?
• What are the possible savings under different heads?
• What are the interventions required to be implemented for improvement?
• What will be the timeline and associated costs?
Once the complete action plan is mapped out, actual implementation work is undertaken - first as a pilot, which is then replicated on the complete set-up.
Wazir’s Manufacturing Excellence Services
Wazir has worked with leading textile and apparel companies providing manufacturing excellence services for more than a decade now. Our team comprises of experienced textile engineers, industrial engineers, fashion technologists and subject matter experts who have helped clients re-engineer their manufacturing operations to work effectively. We have a long track record of helping our clients get best value for money in a time bound manner.
If you are looking to improve your operations, reach out to us. We will be keen to understand your challenges, and opportunities before guiding you on the path towards manufacturing excellence.