News Flash

'Our ERP solutions bring down rising textile costs'– SAP India

25 Aug '11

7 min read

Since the adoption period of these solutions are in weeks and not in months/years, the customers start reaping benefits in record time which brings a ROI of < 6 months to their IT investment. Further, the rapid deployment also encompasses adoption of Best Practices for the Textile Industry, which means that they can deploy world class processes to run their business better.

Fibre2fashion: Can you provide a real time explanation of 'shorter lead times' achieved by adoption of SAP solution?
Mr Mohapatra: Every textile industry value chain player, i.e. raw material manufacturer, yarn mill, fabric creator, fashion house & retailer has a dependency on the previous player's output capacity, their own manufacturing / logistic lead times and push / pull demand / forecast from their customers.

Lack of a system which can consolidate this value chain visibility and single view of lead time dependency, leads to buffers are every handshake point and also within the organization. SAPs solution brings in the amazing capability of single consolidated view of the value chain for the organization and thus helps reduce the buffers. This improves internal agility/better response times to dependent players due to shortened lead times.

Fibre2fashion: Production costs are on the rise and they are prime concern for any textile company. How can SAP ERP solution bring them down and help raise the bottom as well as top lines for a textile entity?
Mr Mohapatra: Key business requirements for companies in this vertical are fiscal discipline and better working capital management. SAP solutions enable customers to map their business processes end-to-end thus providing complete visibility on costs as well as capacities. Using the SAP solution customers can systematically build their production capacities; optimize machine usage, create procurement strategies and plan capital investments.

WIP (Work in progress) is probably the largest sunk cost for a textile company. Even if the company streamlines its input raw material costs, it still needs visibility into WIP at various stages and the costs being incurred due to various other inputs like manpower, electricity, steam, chemicals, and consumables. SAP ERP solution, firstly, plans the various cost elements from an ideal Bill of material & Routing perspective which can go to the details of manpower, electricity etc.

When the actual production is processed, it helps capture these details, thus revealing the real costs as well as the deviations. Fixing the main deviations on manufacturing leads to improvement in better capacity utilization & higher production volume, hence improving top line. Addressing the other deviations on quality, process losses, rejections, scrap helps improve the bottom line as well. This enables the companies to meet customer commitments in time and with predictable cash flows. They are then in a better position to plan for profitable growth.

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