IMPRESSIONS from a Cross-section

Topic

Amidst COVID-19, factories have reported cancellation of orders from brands /retailers. What steps are you taking to tackle this situation?

Cooperate and collaborate for greater good
The world has come to a standstill and Covid-19 wreaks havoc on the textile industry too. Fibre2Fashion spoke to few industry stakeholders about how they are coping with the situation.


Since we are an integrated textile player, we plan to focus on maximum capacity utilisation post restart after lockdown by manufacturing basic products across the chain, and each division helping upstream division by giving maximum orders. We plan to approach customers with the idea of giving them integrated solutions rather than segmented solutions.

Not much thought has been given to how we would tackle this problem as it can be done only when we have more clarity of the market forces and the timing of re-starting the operations. Looking at the current situation, the lockdown is likely to extend further, and re-starting of operations will be delayed, as there will be no market/customers for the products being manufactured.

Our prime objective is to ensure that all our staff and workers are safe including their families and we would take all appropriate steps to make them feel secured. Once we are allowed to start operations legally, we would convert the Work-In-Progress (WIP) to finished form and keep the goods ready for shipment so that we can serve our customers well.

We are studying the credit terms of the customers’ business in detail and will see how we can support the business jointly. We are studying the market closely and would like to ensure that we satisfy all our stakeholders by adapting good risk management policies laid down by our company.

Once the market reopens fully, we would bring in new strategies to see how we can safeguard such disruptions in the future and grow our business.

We are just hoping that the situation becomes normal again. Because almost every country which is importing garments, is affected by COVID-19. At the same time, we are requesting our buyers to take the orders rather than cancelling or holding them. And we have started making Personal Protective Equipment (PPE) sample which we will show to the people concerned. If they are satisfied with the standard and quality, then we might start producing PPE for doctors, nurses and law enforcement team.

We are open. Our mill has resumed productions after staying closed for 5 days. Production constraints will be there owing to fewer work forces having fear of COVID-19 disease and we too cannot force them to attend work. We are working in roaster form from our offices/homes. Enquiries for the Fall/Winter are pouring in with buyers asking for spaces to be booked. We feel this situation may get better and clearer if this disease doesn’t extend beyond May’20. The overall business has been pushed back by atleast 4-5 months and the financial cycle will have a bigger impact of atleast 6 months which means that the financial crunch has to be immediately supported by the govt to keep the economy floating and then work on revival which we can look from year 2021 for the business and countries at large.

We will request our vertical partners on both sides to please react more sensibly by putting in thoughts for discussions, debates and should not react as they have done this time. It shows their poor side of the so called word partnership/nominations. Govt of Bangladesh has acted very swiftly coming out with the relief package for the industry for $8.6 billion.

There is not much which can be done to tackle the current challenges. The priority right now is to ensure that our people are taken care of. It's going to be a new world when we reopen and how we do business going forward, will be defined by the space available in the industry and whether it is enough for everyone to maintain their presence.

Minimise inventory by liquidating the stock by giving hefty discounts so that the fixed cost is recovered. Even give cash discount because recovery will be very risky. Overhaul the plant or factory in terms of housekeeping, hygiene and some skill training etc for the staff and workforce, in-house.

Renegotiate the buying price and think out of box whether by slightly changing the current products if one can have significant cost benefits. Health and hygiene of factory overhaul and make it as selling proposition. Do not desert your current trading partner. Maintain a minimal relationship and look for new ones by increasing the network.

From the perspective of Coats we’ve been going for over 200 years and, although not on this scale, we have faced extraordinary challenges in the past.  Our operating footprint and flexible supply chain means that we have been able to shift our manufacturing and continue to deliver products and services to our customers.

At Coats one of our current key priorities is maintaining the critical elements of our supply chain.  Our customers choose and count on us as a global leader and in turn we choose and count on our trusted suppliers. So, we have developed technology that enables them to work even more closely with us, by keeping us up to date on the latest status of their operations.   

And even in a storm there are still opportunities – like working together in partnerships for the greater good. The Gerber PPE Task Force which we have just joined as a coalition partner is a great example. It empowers manufacturers to switch personal protective equipment (PPE) production and match supply and demand for critically needed products.

We are working closely with our customers and remain flexible on supply and deliveries to support them through this crisis.

We are maintaining close communication with the buyers, urging them to work with us to solve the issues by helping each other. We understand the difficulties time has put all of us into, but we also have to cooperate and collaborate. We are not pushing our buyers with any unrealistic demands and we expect them to behave responsibly and do justice to their brand value. I thank the social partners who have also come forward to support us in unprecedented manner. Our government has been extremely supportive and has offered a number of policy supports to buy some breathing space.

The order postponement/cancellation to few extent have given us the opportunity to increase our focus on R&D and innovation and increase our product offerings.

We have plans to retain all our workers/staff and we have conveyed this message to all our workers. They will be paid as usual during the lockdown period and after the factories reopen. We will take the extra expenditure as an investment in people and will try to recover the loss in the next two years. We will avail loans given by the government to finance the direct labour expenses during this period and beyond.

If we don't have sufficient orders for all the lines once factories re-open, we will eliminate overtime work. Machine layout will change to keep the workers busy while keeping them productive.

We will perhaps have to take orders with very low profit margin or no profit at all to keep the lines fed. As workers will sit idle for want of orders, we will have to go all out to secure low-margin orders that we would not have done during pre-Covid situation.

Worker safety and compliance measures will be remodeled and new work processes will be instituted. We might have to live with this virus for a long period. Therefore, we will have to fundamentally change our housekeeping, compliance, and health practices in our factories for at least a year or two.

We will have to revise our business strategy to select which brands/ retailers we will serve in future. We have to be selective in deciding to serve 'all-weather' buyers who are ethically strong with sound sustainable business outlooks. This will help us minimise order cancellation in events like this.

Published on: 13/04/2020

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.

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