WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-OCTOBER 2013 EDITION

Journal of Logistics & Supply Chain Management

October 2013 VOL.1, No,8

Study of Supply Chain Management of Apparel Order Process: A Case Study of Uzbekistan Apparel Industry
Ravshan Mirzamakhmudov (corresponding Author) 1, Li Wei 2 & Nicholus Tayari Akankwasa 3 1. MS Textile Science and Engineering, Donghua University, Shanghai 201620, China. 2. Professor (Textile Engineering), Textile College Donghua University, Shanghai 201620, China. 3. MS Textile College Donghua University, Shanghai 201620, China Accepted 23 October 2013 Abstract Uzbekistan’s Apparel has registered development since her independence from the soviet state (USSR). Being land locked despite the supporting factors such as political stability, fast growing economy, infrastructure and rich raw materials, supply chain management is strongly required to reduce lead time. The main objective of this study was to understand apparel supply chain difficulties starting from new orders, supply of raw materials, production processes to finished goods distribution. We collected data from trade statistics, structured interviews and survey questionnaires were sent to manufacturers. We identified supply chain practices influencing the industry, came up with guidelines for improvement and sustainable growth of the sector. This study focused on companies in major Uzbekistan cities of Tashkent, Andijan, Fergana, Namangan, Kokand and Samarkand. The study revealed that, to reduce lead time by 80%, reduction of import dependency, improving machinery technology and attracting foreign investors in the apparel industry is required. Key Words: SCM: Supply Chain Management RMGI- Ready Made Garment Industry, Uzbekistan Textile and apparel Industry, Lead time. 1. Introduction Uzbekistan textile and garment industry is a very crucial business sector. There is need for companies in this industry to use business strategies that would help sustain its growth. By improving the existing business practices and filling the gaps as well as dealing with the setbacks would be a considered a good move towards continuous improvement of the sector. This is achievable through identification of the current supply chain management set up of the Uzbekistan garment companies and identifying areas for improvement. This may bring about devising better supply chain management set up that would lead to the development of the apparel industry. The growth of the supply chain management in this Uzbekistan apparel industry can also likely build up her relationships with the worldwide market. The textile industry is among the most developing industrial sectors in Uzbekistan. Companies within this sector produce yarn, thread, gray cloth (woven and knitted fabrics), and finished fabrics. Knitted products and apparel, and production of clothes and household items are continuing in their development.
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Why the development of this economic sector is so significant is primarily related to the country’s availability of its own raw materials (cotton, silk, wool) and the relatively high labor intensity textile manufacturing requires, which is important from the perspective of addressing employment issues and improving living standards (Osborn bulletin, 2011). Supply chain management, the information between business partners are improved and collaborated; most significantly, supply chain management systems benefit in reducing inventories, which in turn can reduce operational costs, reduce lead time, improve asset productivity as well as increase the companies’ alertness to the market. Apart from these benefits, the apparel industry is able to realize fast response through effective supply chain management and order process. Quick response refers to the cooperation and sharing of information among manufacturers, suppliers and distributors, enabling them to respond faster to customer needs. Previous studies have noted that quick response concept brought about by supply chain management is beneficial to the apparel industry as well as to fashion-oriented businesses (Magret and Bruce, 2005). Gireffi (2002) reports that the companies’ relationships with the retailers is also an important factor that relates the apparel industry to SCM. Even if some apparel companies distribute their products directly to consumers, most manufacturers find the services of the retailers inevitable. The use of SCM system is to strengthen the relationship between both parties as well as in realizing positive business results. Bearing in mind that the apparel sector meets the problem of demand ambiguity, SCM permits the companies to connect with their retailers; this part of the SCM allows them to predict product demand together. The contribution of the retailers with the SCM system of the company supports the apparel companies to get valuable consumer data such as end-customer demand levels; this will then benefit in decreasing the manufacturers’ inaccuracies in determining raw material and production volume. Order process time management is one of the big issues for Uzbekistan readymade garment industry. Importers are likely to require short lead time to manufacture the apparel. This is due to apparels seasonal demand. Importers place orders according to their customers’ demands and if the production is delayed buyer can’t catch up with the season. 1.1 Research Objective The study on Uzbekistan apparel industry is the main source for economic development of Uzbekistan demands examination and evaluation of multidimensional features of textile and apparel sector and its influence on the economic situation of Uzbekistan. The main objective of the study is to examine, evaluate and analyze order process as well as identify key challenges and how they can be addressed. 1.2 Aim of the Research The general aim of the research is to consider the Uzbekistan order management procedures used in the textiles and apparel sector. This is addressed through case studies of companies in different geographical locations in Uzbekistan as well as considering different contact points in the whole supply chain. 1.3 Research Methodology Primary and secondary data has been considered for this study. Secondary data was collected from a number of publications, books, Uzbekistan Economic review and the annual reports, audit reports, interview of key person of the garments factory. Primary data were collected through administering questionnaires to respondents from the apparel sector. To cater for different geographical factors, the study focused on apparel companies in major Uzbekistan cities of Tashkent, Andijan, Fergana, Namangan,
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Kokand and Samarkand. Qualitative method has been used in this study where we found out how people feel or what they think about a supply chain management process, the process, difficulties, lead time, and how it can be reduced for smooth running of the textile and apparel industry in Uzbekistan. The descriptive research approach was employed however, in-depth interviews with textile associations, z and company owners especially from Namangan which is the biggest city in Uzbekistan. 2. Literature Review According to Uzbekistan stock join company report (2012-2013), a major issue in the Uzbekistan apparel sector is lack of streamlined Supply Chain Management for textile and apparels such as wool, viscose, polyester, nonwoven and mixture fabric. Uzbekistan has factories which produces knitted fabrics just for textile clothes or natural silk and Uzbekistan national clothes. There is a large concentration of apparel manufacturers but few upstream fabric manufacturers. Suppliers are broken down into two segments: local producers and importers. The local producers of raw materials are few and have limited presence. Most fabric is imported largely from China. Wholesale and retail distributors are well represented in the cluster. The traditional markets and bazaars provide an important channel for meeting domestic and foreign demand of consumers. Nowadays there many different kind of sewing textile factories which produce men’s garment: jackets, coats for men. All these companies import apparel, woolen fabric, nonwoven, polyester, viscose, linings from other countries like China, Turkey, Italy. They have no choice to buy apparel and fabrics for suit production in Uzbekistan because of the lack of supply change management (Osbon bulletin, 2011). The apparel industry stands out as one of the most globalized industries in the world and it is a supply driven commodity chain led by a combination of retailers, contractors, subcontractors, merchandisers, buyers, and suppliers; each plays an important role in a network of supply chains which spans from fibers to yarn, to fabrics, to accessories, to garments, to trading and to marketing. The peculiar characteristics of apparel supply chain are short product life cycle, high volatility, low predictability and high impulsive purchasing. These factors bring high pressure to apparel retailers to manage their supply chains. Moreover in today’s competitive environment, markets are becoming more international, dynamic, and customer-driven and customers are demanding more variety, better quality and service, including both reliability and faster delivery. Yurif (2009) on his article about “Uzbekistan’s textile industry: How can its development potential be captured? Center for Economic Development annual report” reveled that Because of high competition in local and international business sectors, most players in the apparel industry have resorted to creative ways of handling supply chains. Such initiatives lead to the growth of original SCM systems to more technically advance and improved ways. There has been change of supply chain management occurred from the 1980s up to present. With more cooperation among manufacturers and suppliers, SCM has been enhanced greatly. However there are still big challenges as the resources are not fully utilized and new models have to be created to create better business environment (). Christopher & Peck (1997) report the three criteria in the apparel market, time to market; time to serve and time to react clearly shows that the world business environment is constantly looking for ways of reducing lead time in order to serve customers better. Lead time reduction is key in supply chain as it comes with cost saving, value for money and customer royalty. 2.1 Overview of Uzbekistan Garment Industry The textile sector (which includes textile and the apparel industry, according to the economic
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classification in Uzbekistan) is a rapidly developing sector of the country’s economy. Since 2004, the textile industry’s output in dollar terms, according to the State Statistics Committee of Uzbekistan, has increased 1.5 times, and clothing manufacturing doubled. Two Companies belonging to the O ’zbekengilsanoat SJSC, the association of textile companies, which manufactures the bulk of the sector’s output, doubled their production since 2004.Exports of O’zbekengilsanoat increased by 76.1% from USD 213 million to USD 375.5 million according to European profiles report (2011). In 2008, this figure increased to 39.6%, but went down to 28.2% in 2009. A higher percentage of non-exported cotton in 2008–2009 may be explained both by increased domestic consumption and an increase in stocks due to the global economic crisis. Uzbekistan accounts for merely 0.8% of the global volume of cotton consumption, which speaks to the huge potential for the sector’s development. Subsequently, although Uzbekistan’s share in the global output of cotton fibre is 4%, its share in the global output of cotton yarn is 0.7%. Uzbekistan’s share in the production of fabrics and linen, finished knitted products, and clothing is even less, with only 50% of domestically produced yarn being used domestically. [Figure 1] The greatest divide in the value chain is in the production of fabrics. Since 2004, the output of cotton fabrics declined 2.6 times, while the production of knitted linen (including lower increase in value-added) increased 2.3 times over this period. In many aspects, this divide is caused by most investments primarily being channeled towards the production of knitted linen because lower risk and lower capital investments are required. Thus, the development of weaving should become a priority of government policy, which could provide incentive for developing cloth manufacturing. According to Uzbekistan state joint company report, 2012, 2013 foreign investment attracted in the textile sector has been increasing over years since 1994. Attracted Investment in 2011 is 1.9 billion USD while foreign investment is 1.6 billion USD. This is a good progress for a developing country. The income of the textile industry can be significantly increased through deep processing of the raw materials and then selling them as finished products. According to the estimates, the greatest value-added increase in the value chain of the textile industry comes from sewing finished knitted and clothing items. For instance, while 1 kg of cotton costs USD 1.4 in the domestic market, apparel produced will fetch USD 16 on average, and knitted products about USD 5.4. As a result of the low rate of deep processing of raw materials, the textile exports of Uzbekistan are insignificant; international comparisons illustrate this, too. While in 2008, the textile exports of Uzbekistan amounted to USD 0.4–0.5 billion, Chinese textile exports topped USD 185.2 billion, Turkey USD 23.6 billion, India USD 22.4 billion, and Bangladesh—USD 12.1 billion. Being a lead exporter for products with low value-added, such as cotton (12.2% of sales on the international market and cotton yarn (10–15% of sales on the international market), Uzbekistan in essence, deprives itself of the opportunity to manufacture and export more expensive products, as their sales could significantly increase the country’s export earnings (Uzbekistan state join stock company, 2011). 2.1.1 Challenges to Uzbekistan Textile industry. Although the output of the textile and clothing industry increased in monetary terms over the last five years, the share of this sector in the economy is approximately 2–2.5%. This is quite a low indicator for a country with its own commodity base. More so the specific feature of the textile sector of Uzbekistan is its dominance of primary textile production and low degree of processing raw materials. Although deep processing of raw materials is profitable and Uzbekistan is 5th in the world for cotton output, only
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20.4–21.5% of total cotton output was consumed domestically in 2005–2007 (because there is no data on cotton stocks, this indicator was estimated as the difference between cotton output and its exports). 2.1.2 Restricted access to top quality cotton and high prices they are charged: Most developing countries, which pursue a strategy aimed at the rapid development of their textile industries, have set favorable prices for raw materials. Until recently in Uzbekistan, however, raw materials for the national textile industry were based on the residual principle - after the sale of cotton fiber for export. Enterprises vary in their access to raw materials and the prices they pay. 2.1.3 High tax burden and the unstable financial situation of textile enterprises The tax burden on local textile enterprises is much higher in Uzbekistan than in the neighboring countries. Even under the most favorable circumstances, when an enterprise exports its goods and reimbursed VAT, the level of profitability is much lower than that not only of China, Bangladesh and other developing countries but also of Kazakhstan and Russia. Furthermore, compulsory payments to the Road, School and Pension Funds, which are calculated based on the total volume of the produced goods, add considerably to the tax burden. Social taxes paid by employers and personal taxes paid by employees are also much higher in Uzbekistan than in other countries. There are also huge differences in the tax privileges enjoyed by selected textile enterprises, which distorts the competitive environment; especially since they are not transparently given in accordance with any structured government policy. Such differentiation is to the advantage of local enterprises with shares from foreign investors as well as those included in the system of Uzbeklegprom Company (Uzbek Light Industry Company). 2.1.4 Relatively high import dependency of readymade garments and knitted wear on raw material, interim goods and accessories Uzbekistan, unlike other competing countries, does not have adequate manufacturing capacities for the production of accessories, modern fabrics for clothing, 14 woolen cloth15 and high-quality leather. These deficiencies affect the domestic production of ready-made garments. As a result, both textile enterprises and the local population have to rely on imported fabrics for tailoring, especially when preparing for wedding celebrations, which is an important domestic market. In China, India and Pakistan today, the preparation of an industrial piece with accessories and ornaments takes 7-10 days. In Uzbekistan this process can take up to 20-30 days since local accessories are not available and printing/embroidery is imported mainly from Turkey or the United States. Uzbekistan also depends on imported equipment spares, lubricants and chemicals; a dependency, which causes higher production costs because of current import regulations, transit time, transportation, etc. High customs duties for imported fabrics and accessories render domestic textile industry uncompetitive 2.2 Theoretical Analysis of Uzbekistan Garment Industry 2.2.1 RMG Business Structure Readymade garment is a labor intensive industry and relatively simple technology compared to other high-tech industries. The RMG manufacturing units are like tailor’s shop; getting order from the foreign buyers and then import raw materials specially fabrics from the foreign suppliers or sometimes buy from the local market as per order, then manufacture garments and supply those to the buyers (Uzbekistan Join stock company report, 2011). [Figure 2] In the RMG sector, the Manufacturer - Raw materials Supplier relationship is different. In this Industry the main raw materials are fabrics (Cloths) and few accessories are like button, collar etc. About 80% of the
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suppliers of accessories are local and accessories suppliers are not responsible to Increase l time. Uzbekistan garment manufacturer need more time is getting higher due to import of fabrics mainly from China, Turkey and India, In the process of import of fabrics from the foreign suppliers lies the main reason for long lead time. The process is visualized in fig.3 below. [Figure 3] 2.2.2 Analysis of Supply Management of Apparel Orders Douglas There is high competition in todays’ business with customers expecting their orders to be worked on in the shortest time possible. The more competitive it is , the more need for shorter lead time. C. W. (2006) reported that, with the stiff competition, companies need to struggle to being the lead so as to win big sales and customer royalty. Lead time is one of the main competitive factors among companies. Quick delivery of the customer’s orders is a true measure of company’s competence and commitment to its customers. Technology adoption and optimization could create a great breakthrough in lead time reduction which is every company’s goal in supply chain management. According to Naumov, 2009, At present, Uzbekistan the average lead time is 45 to 120 days. This is not a constant figure as it also depends on the type of product, supplier and country of origin. In some cases the lead time ranges from 34 to 85 days. Suleyman et al, (2010) on their study on supply chain based conflict- a study from textile exporters’ perspective, defined total lead-time as the time spent during order processing to purchasing and manufacturing an item until the item is transported to different stages in the supply chain. lead times however can always be decrease when items are delivered as soon as they are manufactured or arrived from suppliers. Lead-time generally can be divided into two Information lead times (that is to say the time take to process an order) and Order lead times (also known as the time taken to manufacture and ship the product). Information lead time can be decreased through deployment of advance communication systems such as EDIs (Electronic data Interchange system) where as Order lead time can be reduced through employing effective supply chain management system. Marc Smith (www.elsmar.com, 2004) clarified lead time in two major ways First, Customer lead time, which means the time taken by customer placing an order up to receiving goods. The other one is manufacturing lead time, which means the time taken from material availability at the first processing operation to finishing stage. Smith derived theories to reduce lead time during manufacture. This is also applicable in the readymade garment industry. It is however very important to identify the whole process from the beginning to the end depending on what kind of products is being involved, source and as well as looking into the set policies in customs and clearing department. This process can be broken into –ORDER submission, Scheduling and sequencing, manufacturing and sequencing, manufacturing and distribution. Understanding. Lead time can be shortened by manipulating these stages through strategic measures. 3. Result and discussion 3. 1. Bio data of respondents The questionnaire included bio data of companies that participated in the study. 90% of the companies were dealing in both garment and fabric business while 10% were solely dealing in garments. When respondents were asked whether their business was 100% export oriented, both companies were both dealing with domestic and international market at an average of 65% domestic and 35% international market. Respondents were further asked on the way they export their products, 45% of the respondents use both buying agents and direct means, 40% use buying agents while 15% of the respondents used direct buying. The basic illustration of supply chain of Uzbekistan can be as in figure 4.
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Figure 4 The present estimated time from point A to point D is unnecessary. Here the main task is unloading the container and carry it to the manufacturing point. The total procedure can be done by only 2 or 3 days through efficient management in port and good transportation system. But due to inefficiency of port management and poor transportation system it takes 15 to 20 days. From the above observation it is clear to us that, just for import of raw materials Uzbekistani manufacturers are forced to spend 55-75 days more. So import dependency for fabrics is the main reason of longer lead time. From the above illustration, it appears that the manufacturers of RMG sector mainly face "order lead time" problem and this problem occurred in the supply chain due to inefficient management. Time consumed in the first four steps in the supply chain is the basic reasons for increasing lead time. It is possible to reduce a major portion of order lead time by improving the other three areas namely, communication, port management and transport management in the supply chain. We can get a clear idea about lead time in the supply chain by considering the equation of lead time and put average estimated time collected from the interviews for each step. 3.2 General Analysis of SCM of Uzbekistan’s apparel industry. In order for the researcher to get the general overview and status of supply chain management as well as lead time, respondents were asked general questions about Uzbekistan’s apparel business in relation to supply chain management and lead time. This was mainly to help the researcher to deeply analyze the system as per the research objectives. To understand what drives raw material procurement respondents were asked whether they procure from specific places as per customer direction. 60% of the respondents said no while 40% of respondents mention both implying that they had some customers who are specific on the origin of the raw materials and others who only mind quality regardless of the origin of the material. A graph was plotted to clearly show the countries where the respondents buy their raw materials. Figure 5 illustrates the sources of raw materials with respective percentage of respondents (figure 5). Figure 5 According to primary data from questionnaires, most of the raw materials used in Uzbekistan are procured from China which accounts for 47.37%. 31.58% of the respondents mentioned Turkey as their mains source of raw materials, 10.53% purchase from India while 5.26% purchase from United Arab emirate and 5.26% mentioned other countries. 65% of the respondents purchase cloth while 35 purchase accessories from the named countries. Chemicals are highly imported by air with 45% of respondents, mainly because its quick, 30% does this by ship while 25% by train. When respondents were asked whether they think importing blended yarn is the major cause of longer lead time, 80% said yes while the remaining 20% said no. Respondents reported 35 to 120 days as delivery time depending on their location. 70% of the respondents mentioned that delivery time is not specific since there are many factors to consider ranging from what is being imported, from where, means of transport involved and other unpredictable factors like delays in customs and clearing. 100% of respondents in our study have a fully functioning internet facility and communicate to their suppliers through email and instant messengers. 5% of the respondents think that lead time reduction is possible through another means of communication and 100% of the respondents are satisfied with their communication system. None of the respondents showed interest in use of EDI (Electronic data interchange) for managing and tracking order systems and 100% of the respondents think communication inside the manufacturing affect lead time. Language barrier was
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mentioned to be a major problem during communication as in most cases they need to hire translators during the procurement process. Respondents were asked whether they think supply chain management is efficient in their companies, 80% said yes while 20% said know. They cited import dependency and poor technology to be the leading hindrance to business in terms of supply chain since most of the imported raw materials could be manufactured from home hence solving longer lead time problem. Replacement of old looms and attracting more foreign investors was highly cited by most respondents as the main way lead time could be history in the Uzbekistan’s apparel industry. 3.3 Challenges of supply chain management of apparel industry in Uzbekistan The respondents were first asked whether they think they might face supply chain problems in the near future. 80% of the respondents think they will experience problems while 20% think their current supply chain will not face any problems. Respondents were asked to give challenges that they are facing in fabric business in terms of supply chain management. Out of the 18 companies that were considered in our study, 55.56% (figure 6) of the respondents mentioned import dependency as the main challenge in supply chain siting that for good quality garments the country depends on imports especially from china and Turkey. 22.22% mentioned delays in clearing and customs departments, 16.67 attributed challenges to the communication system whereas the minor 5.56% mentioned other challenges such as geographical location, language barrier and lack of commitment in textile association bodies. [Figure 6] 3.4 Lead time Lead time is an important element in supply chain management. Regulating lead time is a very important approach to effectively handle the supply chain. In our study, respondents were asked to rank the possible causes of longer lead time ( figure 7). [Figure 7] Import dependency was the mostly mentioned cause of longer lead time with up to 33.33% of the respondents followed geographical location and communication with suppliers and buyers at 16.57%. None of the respondents attributed lead time to political unrest. Total supply time = [{Information lead time} + {(Order lead time)}] Or, = [{Information lead time} + {(time to manufacturing fabrics) + (time to shipment of fabrics)+(time to unloading fabrics and customs formalities at port) + (time to take fabrics from port to manufacturing point) + (time to sample approval and production of final product)+ Time to shipment or export of final products)}] Or, 120 = [{7} + {(15)+ (25)+(14)+(6) + (23)+(30)}] From the above equation, we can say that through the first four stages a manufacturer received fabrics from the suppliers after 60 days on average. Out of this the shipping time of 25 days is constant. There is no chance to reduce this shipping time but we can reduce the rest 35 days. There are two parties and various activities involved between suppliers and manufacturers in the supply chain. It can be seen in the fig.-8 broadly. The activities and time consumption area have been illustrated here through four boxes (P-S) or stages. [Figure 8] After final contract with the buyers, manufacturers first place order to the foreign fabrics supplier (P). Then the supplier manufactures fabrics (Q) and sends fabrics by shipment. After a certain time the ship reaches at the port (R). Here after unloading and completing some custom formalities fabrics are sent through train or road transport to the manufacturers production-plant/warehouse (S). For this total process from P-S manufacturers
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need 55-75 days. At the time of import a proper management in the supply chain can reduce 30-35 days. The rest of the time of 25-35 days is needed only for shipment. Management in the supply chain can reduce 30-35 days. The rest of the time of 25-35 days is needed only for shipment. The proper and efficient management at port and good transportation system can reduce time to receive raw materials from port to manufacturing plants. But if we avoid fabric import altogether then we can reduce 55-75 days from the total lead time and we will be able to assure export of RMG products by 45-60 days regularly. 3.5 Interview For the researcher to get deep information for this study, three companies were selected and interviews conducted with managing directors. The interview was taken very closely with the Managing Director of Akrom-teks service LLC, one of the cotton weaving enterprise on small scale. At the time of interview he was found scared for the possible awful situation in the post that may arise in the near future. “Our problems are delicate. We buy raw cotton yarns for weaving and make raw fabrics for different uses. Such as, there are more than 100 units just in Namangan city, where weaving is centralized in this part of Uzbekistan. So the sales and the competition are the challenges, actually they aren’t problems”. In his view as a producer of 100% cotton fabric, replacement of low speed Russian looms to modern and speedy looms could do a big change in terms of lead time. “we make 100% cotton fabrics and use our local raw yarn, change of machineries could make a twist in lead time” said Azam, the managing director of Akrom-teks Service LLC . "We have all but just need fabrics and accessories". What he said about the business operations of the company could be summarized as follows. After getting the final order, the company communicates with the suppliers through e-mail and over telephone. For this task the company spends few days. Mr. Azam said that they were worried about the information lead time since they have always experienced such problems with their suppliers. “In fact, sometimes documents have to be re-sent by air especially with most of our Chinese suppliers” He said, “In our business, we have tried to make long term relationships with some suppliers, who we are used to and are used to the procedures so that they always know what to do whenever we place an order”. Email, messengers and telephonic communication are sufficient communication ways for the RMG companies. At the time of interview it was gathered that the company was facing problem mainly in the supply chain i.e. missing documents hence delays in clearing and customs. The company, Akrom-teks service LLC also faces problem in the sample approval process. In the supply chain the company had to spend 45 days on a Lead Time Management in the Garment Sector of Uzbekistan. It takes enough time and thus contributes to increase lead time problem. Mr. Mohammad, the procurement assistant at Akrom-teks service LLC, expressed that the company could reduce a certain portion of lead time by taking some appropriate measures but 80% of lead time can be reduced by avoiding import dependency and by upgrading technology from old Russian looms for fabric to advanced and speedy looms. Degez-teks LLC a fabric company with specialty in T-shirts, under wears gowns among other garments. At the time of interview, the CEO expressed fear of challenges of lead time, “since we deal in garments, most of the raw materials are imported from China, we encounter all sort of supply chain management problems” he lamented. The CEO reported that its very difficult to forecast lead time as it varies from material to material. However, he reported that establishing a long term relationship with suppliers in china has made a big deal for his company. He also mentioned that sometimes they have to purchase some raw materials ahead of time due to season change however in some cases the materials go
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bad which leads to financial loses. Because there is no production of blended yarns for knitting in Uzbekistan, there is need to import them from china and India. The delivery of yarns sometimes cause the longer lead time as per the CEO Degrez-teks LLC. This is an indication that lead time could solved once textile investment is embraced in the country such that most of the raw materials are produced within the country. He expressed some disappointments in documentation process citing a scenario where sometimes goods delay in the clearing/customs department due to missing documents. This leads to longer lead time as the papers have to be re-sent for goods to be cleared. Since most of the imports come from china, the respondent expressed much emphasis on streamlining china Uzbekistan trade relations, in relation to this, one of the respondents was quoted saying “As we are landlocked, and as a cheaper means of transportation we use trains for the delivery from abroad. So the biggest lead time depends on this transportation. In order to reduce the clearing process in the customs I would request our Chinese counterparts to learn the documentations for the exports well so as to make them more accurately”. An interview was also taken with the head of procurement of Istiqlol Tekstil Dizayn LLC, www.ideal-garments.uz/com/ru, a company specializing in suits jackets, winter jackets, trousers, shirts and shoes. One of the way they have been managing lead time is buying in bulk and stocking in prediction of the coming season. This however sometimes leads to some getting spoilt which leads to regrettable losses. The procurement manager expressed disappointments that sometimes they lose international sales because of longer lead time since customers always want their orders in time. When asked on the present supply chain management system, he expressed confidence on how the company has come up with different system that seems working perfectly to cater for most uncertainties in the procurement process. “Our company has its own supply management system. We established this system periodically dealing with different kind situations and problems. Presently, in this political condition and transportation conditions our supply management is in normal pace in terms of its works”. He said. When asked on suggestions to reduce lead time, the respondent expressed that it would be helpful if the government invests heavily in the international transportation system as Uzbekistan is a land-locked country. This respondent also showed concern for internal investment such that most of the raw materials can be produced at home citing the different resources the country is endowed that would boost foreign investment. The head of procurement expressed this in a more logical way that, “Although we won’t be able to avoid the import dependency totally, we may reduce it gradually. In Uzbekistan there is all the potential to produce all the raw material types used in our garments. Previously in Soviet era we were used as a big cotton warehouse for Russian industry uses with some small manufacturing, we were more engaged in centralized agriculture sector. After the independence, we are growing and learning the industries. So our economy is in the process of renewing to industries”. To sum up respondents’ views on supply chain management in Uzbekistan, 80% of lead time could be saved through reduction in import dependency, investments in infrastructure, attraction of foreign investors, creation of associations and government involvement in handling of textile business problems as a union. 3.5.1 First case We know that; Total lead time = [{Information lead time} + {(Order lead time)}] Or, = [{Information lead time} + {(fabrics manufacturing time) + (fabrics shipment time)+ (unloading and transportation time) + (sample approval and production time of garments product)+ (shipment time for export of final products)}according to Considering Akrom-teks service LLC, this totaled to = [{2}+ {(10) + (15) +(12)+(15+12)+(20)}] So, total average lead time = 86 days. It was however expressed that in some cases it could be less or more depending on
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goods and other circumstances more especially when one of the parties makes a slight mistake. 3.5.2 Second case “Degez-teks” LLC, in Namangan city was considered for this study. It was revealed as per lead time equation, that; Total lead time = [{Information lead time}+ {(Order lead time)}] Or, = [{Information lead time} + {(time to manufacturing fabrics) + (time to shipment of fabrics)+(time to unloading fabrics and customs formalities at port) + (time to take fabrics from port to manufacturing point) + (time to sample approval and production of final product)+ shipment time to export of final products)}] = [{3} + {(8)+ (18)+(10)+(4) + (20)+(25)}] this makes the total average lead time = 88 days. 3.5.3 Third case Istiqlol Tekstil Dizayn LLC, revealed that as per lead time equation, Total lead time = [{Information lead time}+ {(Order lead time)}] Or, = [{Information lead time} + {(time to manufacturing fabrics) + (time to shipment of fabrics)+(time to unloading fabrics and customs formalities at port) + (time to take fabrics from port to manufacturing point) + (time to sample approval and production of final product)+ shipment time to export of final products)}] = [{1} + {(4)+ (15)+(10)+(5) + (15)+(20)}] this makes the total average lead time = 70 days. It was expressed by the respondent that establishing long term relationships with suppliers helps in bringing down the lead time as time is saved since they already have temperate and framework for dealing with orders. Mr. Aziz, imports manager mentioned that lead time could go to more than double especially when dealing with new products with new supplier since a lot of time is wasted in choosing the best deals as we struggle to match customer specifications. While incorporating all the findings from the survey and the case study we can come a conclusion that in the Uzbekistan apparel industry is facing lead time problem mainly import dependency, limited technology, and due to geographical location of the country. Import dependency being the leading problem, Lead time could be further reduced by attracting foreign investors, government investment in transportation sector, revising systems in clearing and customs and encouraging apparel associations to support the apparel business growth. 4. Conclusion Uzbekistan’s apparel industry has more capacity than it holds now if the right things are put in place. According to Uzbekistan’s state join company report (2012-2013), SWOT analysis of the apparel industry reported that the opportunities out weight the threats. There is great potential for foreign investment. This study clearly brings it out that import dependency is a major challenge to the supply chain management system of apparel industry in Uzbekistan, therefore addressing this would be a great deal for the industry. However, still more could be addressed if the current technology is boosted, utilizing country’s raw materials as cited by respondents in this study. “We must attract foreigners to invest in bigger blended and synthetic yarns production in Uzbekistan. We have a domestic potential and resources of all kinds. So could make those yarns by ourselves as well as export them abroad”. Said the managing director Akrom-teks service LLC. It was also emphasized that streamlining customs policies by the government could have a big impact on the lead time since some more time is as well being spent in clearing and customs. The Uzbekistan’s RMG industry is set to pick growth if the basic hindrances sited could be addressed. Lead time could be seen go down to one quarter of the current time especially if domestic production is boosted. References: BARUTÇU S., Hulusi. D., Esin B., Atik K. (2006). Supply chain-based conflict: A study from textile exporters’
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perspective, Journal of Global strategic management, 1(08), 90-102. Douglas C. W., (2006), Textile and Apparel supply chain management technology adoption The Burlington Industries Case and Beyond, Journal of Textile and Apparel Technology and management, 5(2), 1-22. Gereffi, G. 2002. The International competitiveness of Asian economies in the Apparel commodity chain, working paper No: 15, Asian Development Bank. Margret Bruce and Daly, (2005), Lean or Agile, A solution of supply chain management of Textile and Clothing industry, United Kingdom. Mohammad, S. I. and Qing Liang, G. (2013). Supply chain management on the apparel order process: A case study in Bangladesh Garment Industry. Asian Journal of Business and Management Sciences, 2(8), 60-72 Osborn Bulletin , source www.osborntextile.uz accessed on 24th Nov. 2013, 14:00 The state committee on statistics of the republic of Uzbekistan, 2011 Uzbekistan stock join company report, 2012-2013 Yuriy N., (2009), Uzbekistan’s textile industry: How can its development potential be captured? Center for Economic Development annual report, Tashkent, Uzbekistan Information at www.elsmar.com, accessed on 4th October, 2013. Figures

Figure 1: Attracted Investment in textile sector since 1994 Source: Uzbekistan state joint company report 2012-2013

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Foreign buyers

Local raw materials Suppliers

Garments Company Manufacture

Foreign raw materials suppliers

Collect raw material

Information flow

Supply finished product

Source: Mohammad, S. I. and Qing Liang, G. (2013). Figure 2: Business Structure and raw material suppliers

Buying

Foreign buyers

Local raw materials suppliers

Garment Company Foreign raw Material Problem area

Order flow

Collect raw materials

Final product

Information flow

Source: Mohammad, S. I. and Qing Liang, G. (2013). Figure 3: Business Structure and raw material suppliers

A Raw materials supplier

B Sea Port

C Manufacturer

D Buyers

Figure 4 Basic illustration Supply chains of Uzbekistani RMG Industries

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Respondents

8

Respondents

6

4

2

0

UE

Turkey

India Country

China

Other

Figure 5: Countries where raw materials are procured Source: Primary data.
Import dependency Delays in Clearing communication system Others 22.22% 16.67%

5.56% 55.56%

Figure 6: Challenges of SCM of Uzbekistan apparel Industry Source: Primary data.

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Import dependency Ineficient port management Geographical Location Communication system with supplies and buyers Lack of backwaord linkages Poor Infrastructure(Roads and Rail) Political unrest

16.67% 16.67% 5.56% 11.11% 11.11% 33.33% 0% 5.56%

Figure 7 Causes of longer lead time Source: Primary data (P) Supplier received Order of fabric (Q) Manufacturing Fabrics and shipment (R) Unloading Fabrics at Sea (S) Manufacturer’s Plant/Warehouse

Figure 8: Lead-time and fabrics importing process Manufacturing time Source: Primary data Shipping time Unloading & transportation time

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