Logistics had been in existence since the beginning of civilization when raw materials and finished goods were moved from one place to another, though on a small scale. What is the importance of this process in the textile industry?
Global apparel retail industry grew by 2.87% with a CAGR of 2.6% during 2009. During 2010, the industry was in a recuperating phase following the global turmoil during 2009. It grew by 2.1% to reach $1, 078.2 billion. During the years to come, expansion is predicted on a large scale for apparel makers. Industry organizations will assume more importance in the commercial sector. In 2011 global apparel industry is expected to have a CAGR of 3.24%. A research by Northbridge Capital states that global apparel retailing will grow further to reach $1,222.7 billion by 2014, an increase of 13.4% since 2009.
Apparel Retail & Logistics:
Apparel retail forms a huge part in the consumption driven society of every country. While customers role completes with their communication with the retailers, there are other people such as manufacturers, wholesalers, and distributors who are involved in this complicated network. Logistical implementations are needed to support these high velocity retail operations. In traditional selling, retailers order merchandise far in advance of the selling period, as delivery required longer lead time. The obvious difficulty under this method is the variability in demand. Changing consumer tastes, new trends springing in the drop of a hat, and volatility of the market makes ordering merchandise in advance; a risky practice.
Todays retailers need frequent shipment of merchandise with shorter lead times. Logistics play an integral role in contributing to the business model, and its success in the market. Globalization of apparel sourcing, manufacturing, and distribution results in a complexity of moving materials. As more competitors enter the market; not only from the domestic country but also from abroad, companies attempt to reduce their inventories. They expect shipment of goods frequently, and in small quantities, so as to make sure that they keep apparels currently on trend, and enable quick service to their customers.
Trends of globalization and nationalization fuel the growth of logistics. In a global perspective, apparel manufacturing has reached a stage where production requires the right blend of cost, quality, and lead time. Apparel makers use various materials in their garments. Every apparel manufacturing company needs to work out with logistics to bring the required fabrics on the cutting table at the right time. Good delivery system is a promising promotional strategy that helps in getting repeat orders by creating goodwill for the supplier. Therefore, utmost care has to be taken in selecting the right type of logistics to suit every business.
10-15% to the total product cost is logistics related. For any country, logistics is estimated to be around 9-20% of its GDP. Apparel resources reports Anura Paranavithana, Commercial Manager at Cargoplan International, a major supply chain service provider of the Apparel Industry, saying companies with best-in-class supply chain management practices achieve 10-30% superior on-time delivery performance than average performers, while spending 30-50% less in total supply chain management expenses. The savings potential is substantial; it can range from 3% to 7% of revenue, not to mention the competitive advantage gained.
Rising fuel prices would be a major constraint in moving goods. Adequate focus should be placed on building right infrastructure to aid transportation in the right time. Companies need to develop a steady partner throughout the complete supply chain process. During recession many carriers were sold off and drivers lost their jobs. This resulted in capacity shortages, making the process difficult for quick execution.
Logistics is an area that offers good growth potential. Global explosion has publicized the practice of logistics, making it vital for the existence, and success of every business. With e commerce and internet growth, delivery time, speed of information, ordering, and payment is of utmost importance.
1) International Apparel Federation, iafnet.com