TDQ Triangle

Journal for Studies in Management and Planning ISSN: 2395-0463
Available at http://edupediapublications.org/journals/index.php/JSMaP/ Volume 03 Issue 07

June 2017
Enhancing Profitability through Strengthening TDQ Triangle- a Case of

Tirupur’s Hosiery Industry
Dr.M.Bina Celine Dorathy, Associate Professor, AMET University, 135, East Coast Road,
Kanathur-603112, Chennai, India, mail id: binachristina2003@gmail.com
Abstract
One of the objectives of an exporter is to maximize profitability. He achieves this effortlessly
in an assured market, but struggles as the market becomes increasingly competitive. Tirupur a
small town in Taminadu, India, became a major exporter of hosiery products to most of the
developed countries of the world after 1985. The industry suffered a set back when the
Quantitative Restrictions (QR) on textile trade was totally phased out by the WTO in 2005.
Tirupur’s exporters reaped hefty profits during the quota system as the value realization was
high. They now complain of lower profitability after the quota removal as competition has
increased and the market has shifted from a sellers market to that of a buyers market. Exporters
in Tirupur still prefer to stick on to buyer instructions for fear of rejection. They do not prefer to
try new designs and patterns. At this juncture this paper emphasizes the significance of
technology, design and quality in reducing costs in a competitive market. It also makes an
attempt to review the upgradations happening at Tirupur in these three core areas to cope with
the changing pattern of trade.
Key words: Technology, Design, Quality, Profitability
Introduction
While financial resources, human resources and infrastructure facilities are common for
all the firms, a firm can create a unique operating proposition by focusing on the three critical
areas for success namely constant upgradation of technology, strengthening its design
capabilities and continuous improvement in quality. One of the objectives of an exporter is to
maximize profitability. He achieves this effortlessly in an assured market, but struggles as the
market becomes increasingly competitive. Tirupur a small town in Taminadu, India, became a
major exporter of hosiery products to most of the developed countries of the world after 1985.
The industry suffered a set back when the Quantitative Restrictions (QR) on textile trade was
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 303
June 2017
totally phased out by the WTO in 2005. Tirupur’s exporters reaped hefty profits during the quota
system as the value realization was high. They now complain of lower profitability after the
quota removal as competition has increased and the market has shifted from a sellers market to
that of a buyers market. Hence an exporter has to carve out his own strategy for enhancing his
profitability by increasing value realization and decreasing his costs. It is a well known business
proposition that profit = Price – Cost. Technology, design and quality play an important role in
enabling an exporter to increase his profitability by increasing the value realization and reducing
the cost. Technology upgradation simultaneously reduces the unit cost of the product and
increases its value with a higher quality and fashion design. Design on the other hand is the result
of creativity and innovation and with the use of design technology the value realization can be
enhanced substantially by taking advantage of the higher market segments. Quality again
simultaneously reduces cost and increases value. Thus technology, design and quality are
interconnected and provide the firm with a framework for enhancing profitability in a
competitive market.
Fig. 1
TDQ – Profitability Triangle
FINANCIAL
HUMAN RESOURCE
RESOURCES
TDQ - Technology, Design and Quality

PROFITABILITY
Methodology D
INFRASTRUCTURE Q
Both primary and secondary sources of information have been used for the study. Since
organized data was not available on Tirupur most of the information was gathered from primary
sources such as questionnaire and interviews. Primary data was collected from 50 hosiery export
units in Tirupur through a questionnaire. The information thus collected has been used to assess
the developments in technology, design and quality at Tirupur.

June 2017
Status of Technology, Design and Quality in Tirupur

1. Technology
In Tirupur, individual firms have not set up any R & D facilities as such due to high cost.
But it is undertaken by support institutions such as Small Industries Development Organisation
(SIDO), National Small Industries Corporation (NSIC), Small Industries Service Institutes(SISI),
etc., and the result is passed on to the entrepreneurs. Most of the production in Tirupur is targeted
for the export market. Apparel designing along with quality improvements is the important
parameters for success. This in turn depends on the production technology used. Hence in
Tirupur the demand for machines that are capable of producing various types of combinations
and patterns is always on a constant rise. The agents and dealers of both indigenous and imported
machineries are based in Tirupur and they provide ample information on the latest models of
machineries available world wide. Superior technology gives a competitive edge to the industry
by increasing productivity, improving quality, design capabilities and decreasing cost. The
primary data reveals that 92% of firms are using imported technology. The secretary of Tirupur
Exporters Association (TEA) points out that with little or no chance of cost reduction the best
way to compete is through value added products for which again technology is very important.
He expressed that almost all the exporters in Tirupur have utilized Technology Upgradation
Fund Scheme (TUFS) for that matter.
Table 1
Technology adopted by firms
Indigenous Imported Total

4 46 50
Source : Primary data
Generally diffusion of technical knowledge in India spreads through journals, trade publications,
on-site plant tours, word of mouth among suppliers and customers, employee migration and
internet sources. Recently technological transfers across national boundaries are taking place

June 2017
making the industries globally competitive. In Tirupur technical knowledge spreads mostly
through word of mouth and local advertisements. Majority of the entrepreneurs here are either
relatives or close friends and they operate in unison. All information except business secrets are
commonly shared by the entrepreneurs. An entrepreneur inviting others to take a look at his new
machinery or technology is a common feature here. Thus when exporters gain access to valuable
technical know-how, they end up upgrading their manufacturing capabilities.
It is interesting to note that with an average educational background 66% of the

entrepreneurs regularly visited technology exhibitions abroad while 76% stated that they visited
technology exhibitions within the country. The countries they visit for this purpose are UK.,
USA, Canada, France, Dubai and Belgium.
Table - 2
Visit to Technology Exhibitions
YES NO TOTAL
Within India 38 12 50
Outside India 33 17 50
Source: Primary data
Also 12% of the firms stated that they have technology transfer agreements with countries such
as Canada, Italy, Finland, Norway, Sweden etc.
Table - 3
Technology Transfer agreements with other countries
YES NO TOTAL
6 44 50

June 2017
2. Quality
The quality of a product or service refers to its standard of excellence and reliability. Hill
and Jones point out that high product quality has a two fold impact on a firm’s competitive
advantage[1]. First, it helps a firm to build a brand name and reputation for quality and enables a
firm to charge a premium price for its products. Second, Production runs with fewer defects and
rectifiable faults have beneficial effects on labour productivity and efficiency. The fact that the
reputation of a firm will soar if it produces goods or services that delight the customers and that
it will be sacked out of business if they fall below the expectations of customers makes quality
much more important than other factors. Keeping up with the customers expectations is not an
easy task. It requires Total Quality Management (TQM) at every level of the organization from
top to bottom. It is therefore clear that quality can not be left to the quality manager alone, the
entire organization has to work for it. Quality problems are not always industrially,
technologically or financially based, many times they are management, communication or people
problems. So any quality improvement process calls for a change in the culture of the entire
organization. This is especially true for companies engaged in internal trade. Materials developed
for International consumption requires more thought than mere translation.
Quality improvement generally means higher prices and reduced sales because they tend to
increase productions costs. Generally management tries to achieve higher level of customer
satisfaction by increasing the level of inspection and testing which means more cost for them. So
they make an attempt to find an “Optimum level of quality” that would satisfy both sides of the
equation. It is not being observed that it takes time, effort and money to produce defective
products too. These wastages of resources could not be recovered and it is an additional overhead
for the firm [2].
Quality control measures reduce wastage considerably and in the long run this savings
could be utilized for increasing the production capacity and producing products that are more

June 2017
appealing to the customers. This in turn will increase profitability through increased sales giving
a competitive ease to the firm [3]. He argues in his work that TQM provides an unbelievable win
to win situation contributing positively to the cost equation. He directly attacked the
conventional management view that quality costs money. The following graphs illustrate the real
truth behind quality improvement.
Fig.2
Descending level of defects at increasing cost of quality
Descending level of defects at increased

Level of “Customer Satisfaction”
Increasing Cost of
Better quality
DEFECTS
Management Objective “ Optimum Quality”
COSTS
Source: Global Quality, The new management culture, John Macdonald and John Piggott.

June 2017
Fig.3
Descending level of defects at decreasing cost of quality
Descending level of cost of wastage
Better quality at lower cost
Descending Level of defects
Moving towards delighting the customers

DEFECTS
COSTS
Source: Global Quality, The new management culture, John Macdonald and John Piggott.
Objective Product quality is the end result of an entire process mechanism – starting from
collection of raw material to the disposal of finished goods to the buyer and ISO standards are
the internationally recognised system methodology to achieve quality standards in the entire

June 2017
production mechanism, ultimately leading to better and consistent quality end products.
Achievement of ISO 9000 standards was, therefore, identified as both the means and the end to
engulf quality issues in the “work culture” of the firms.
Quality upgradation at Tirupur

In Tirupur, the export units were supplying low value products to small orders for a long
time[4]. They took up production on buyer’s instructions and were operating without any brand
name of their own. Quality standards were adhered to for fear of rejection. But today quality has
become a necessary feature to compete, especially when efforts are being made to develop a
brand name. Quality seems to be a primary issue for this town because the primary data collected
revealed that 96% of the firms faced rejection due to quality while 60% of the firms faced
rejection due to defective material or faulty production. The UNIDO intervention has enhanced
the level of quality consciousness here. The objective of this intervention was to spread the
message of need for quality upgradation throughout the cluster, identification of suitable
Business Development Service (BDS) providers for the same, demonstrating the results of
quality upgradation by actual implementation of ISO9000 in some firms and creating a
mechanism to carry forward activities related to propagation regarding need for quality
production and provision of services for quality up gradation in the cluster. Tirupur has got
maximum number of ISO 9000 and SA 8000 Certified export units in the country due to the
cluster development initiatives taken at Tirupur[5].
The quality awareness workshops conducted by Cluster Development Programmes

(CDP) has given the entrepreneurs an insight into the significance of quality improvement in
international trade. An awareness programme on ISO 9000 was first conducted at TEA in August
1999 in association with SISI, Coimbatore Branch. SISI had the technical capacity to provide
guidance for implementation of ISO. Another meeting was organised in September 1999 to
address these concerns and to further raise awareness. A similar awareness programme was
conducted for SIHMA. In order to help SMEs obtain ISO Certification, officers of SISI,
Coimbatore branch had got trained in the lead assessors’ course. As a neutral body SISI had

June 2017
higher chances of trust building with the firms, while working in groups. It was found that Indian
Statistical Institute (ISI) Coimbatore branch was another quasi-public institute whose services
could be utilised by the firms for ISO certification. The availability of such expertise was
unknown to the cluster and hence quality related services of SISI and ISI were not fully utilised
by the firms[6].
The ISO 9000 programme was implemented through SISI, ISI and SIHMA. These
institutions worked out the programme at reasonable costs for the entrepreneurs. Although the
programme was officially launched in October 1999, it gained momentum only after February
2000.The outcome of the programme was a great success. Those firms who obtained ISO
certification were able to bring the benefits of operational control and information system into
the organization. This gave them confidence to accept more orders and concentrate on value
added products. Having learnt about the control procedure, many large firms started investing
more in plant and machinery to manufacture internally their entire output. Strict quality control,
adherence to delivery schedules and total in house facility attracted the attention of many leading
foreign buyers like ‘Mother Care’ within a short period of time. News about this soon spread and
even small exporters who never thought about quality certification earlier, started showing
interest.
With quota restriction coming to an end with effect from 1st January 2005 the
competition in the field of textile business in general and garment industry in particular has
increased manifold. Though the quota restrictions are removed, non-tariff trade barriers in areas
like consumer safety, eco labeling, social accountability, etc are fast replacing quotas. With
introduction of such non-tariff trade barriers, competition in garment sector is no more restricted
in terms of cost, quality, and delivery schedule. The overseas buyers (specially the buyers from
USA & Western Europe) have become increasingly concerned over ethical sourcing of products
and not just price alone. Buyers insist the supplier to conform to certain social responsibility
norms, such as non-engagement of child as forced labour, payment of minimum wage, provision
of safe & healthy working environment, etc. This has led to the evolution of SA 8000. The SA-
8000 standard is an auditable standard based on international work place norms of International

June 2017
Labor Organisation (ILO) conventions, the Universal Declaration of Human Right & the UN
Convention on the Right of the Child. SA-8000 is increasingly becoming an essential pre-
requisite in market access and customer satisfaction. Accordingly, business icons throughout the
world have already initiated actions for implementing SA-8000.
In Tirupur the benefits of implementing quality control system is now well understood.
The primary data collected reveal that 74% of the firms in the export business have obtained ISO
certification so far. Exporters who have already obtained ISO 9000 are now trying to obtain ISO
14000 and SA 8000 certification.
Quality improvement is a continuous process and needs constant attention. Everyone in a

firm needs to be educated according to either their role in the company or their role in
implementing the quality control process. This is reflected by the fact that many firms in Tirupur
are facing rejection on the grounds of quality even after obtaining ISO certification. This calls for
constant upgradation of quality. In Tirupur, the Textiles Committee has taken the initiative to
provide TQM consultancy.
4. Design
The design capabilities in Tirupur are not upto the mark. The exporters here have been
designing their products purely based on the buyer’s instructions and the trend continues even
today. 88% of the firms still depend on buyer instructions as their primary source of design. But
with the dismantling of quota restrictions, designing has emerged as an area to compete. By
exporting garments with exclusive design patterns Tirupur’s hosiery products can stand in the
international market. In the present context there is heavy competition from China and Tirupur is
unable to withstand the price pressure from it. It has become almost impossible to offer products
at a lesser price than China. Under such circumstances the best way to compete is to concentrate
on other areas such as quality and design so as to enhance the demand for Indian garments. But
unfortunately in Tirupur nothing much seems to have taken place in the area of designing even
though the National Institute of Fashion Technology (NIFT) is functioning at Tirupur.

June 2017
NIFT has pioneered major changes in the industry in terms of strategy, approach,
technology upgradation, design intervention and management practices in this era of
liberalization and globalization of the economy. NIFT maintains close Industry Linkages with
industry experts contributing to the curriculum development and delivery, internships, projects,
placements and training.
Exporters in Tirupur still prefer to stick on to buyer instructions for fear of rejection.
They do not prefer to try new designs and patterns. Moreover, investment in technology
innovation and creativity are a pre-requisite for building up design capabilities. Machines that
can do complicated design patterns have to be developed and acquired. In China the southern
Yangtze University has developed a design and simulation system of multi-Raschel lace
(MDS1.0) Its ability to design difficult patterns help to shorten the product development cycle
and improves the quality of design and increases design efficiency. The system is user friendly,
intuitive, fast and accurate[7]. But in Tirupur so far nothing of this sort had happened, even
though there are many research centres and laboratories for SSIs in India. But the National
Institute of Design (NID) in Ahmedabad along with UNIDO has implemented an action plan for
Tirupur knitwear sector to evolve a brand for garments originating from Tirupur
The AEPC whose role has been reduced after the removal of quotas has set up Apparel
Training and Design Centres (ATDC) and is playing a key role in Training and Designing in
Tirupur. It provides solutions to fast growing garment industry to increase productivity &
technological enhancement through adequate human resources training. TEA and India Knit Fair
organize Fashion Shows to enable the exporters to know the latest fashions and designs.
Exhibitions are conducted where machines of various design capabilities are displayed. The
entrepreneurs at Tirupur are very much aware of the significance of fashion shows and
exhibitions. The primary data collected showed that 50% of the exporters visited fashion
exhibitions abroad while 80% regularly visited fashion exhibitions within the country.
Table - 4
Particulars about participation in fashion exhibitions

June 2017
Have not
Participated
participated in
in Fashion Total
Fashion
exhibitions
exhibitions
Within India 80 20 100
Outside India
50 50 100
Currently in Tirupur Fashion Designers, catalogues, magazines and computer aided design have
also become sources of design in addition to buyer’s instructions. The following table shows that
fashion designers are the most sought after. Primary data reveal that About 58% of the firms
approach them for new designs and patterns. Computer designing is also becoming popular and
around 48% of the firms utilize them. Catalogues and magazines are used as sources of design by
38% of the firms.
Table - 5
Particulars about the sources of design
Sources of design % of firms
Fashion designers 58
NIFT -
Buyer’s instructions 88
Catalogues / magazines 38
Computer aided design 48
TEA has started a public school for fashion by signing an MoU with NIFT. SIHMA is
providing CAD courses for exporters. Further exporters here have tremendously improved their
CAD- CAM facilities. Lakshmi Machine Works located in Coimbatore supplies exporters with
circular knitting machines that produce fabrics on which different patterns of designs could be
made. The primary data indicate that there has been considerable increase in the CAD-CAM

June 2017
production facilities in the past five years and that the percentage production of design garments
for export market has increased more than the domestic market and that the investment levels of
firms have increased significantly in the past five years.
Conclusion
Technology, design and quality are the key for success in a competitive business environment.
The entrepreneurs at Tirupur have understood this which in turn has spurred a host of
developmental activities in these three areas. Being a town of export excellence it has attracted
special attention not only from the government but also from international institutions. It is
interesting to note that several institutions of international reputation are having their branch in
this small town. But despite all this Tirupur still has a long way to go in order to match
international standards in the areas of Technology, design and quality. Upgradation in these areas
requires heavy investments. Being a highly fragmented industry, individual firms may not be
able to go for such huge investments. Therefore the industry can think of establishing common
facilities and labs that can be jointly utilized for this purpose.
References
1. John Macdonald and John Piggott, 1998, Global Quality –The new management culture,
Management Books 2000 Ltd
2. ibid
3. Philip Crosby, 1979, Quality is Free, McGraw-Hill
4. Rangarajan, 2016,Case study on Tirupur, available online at http://www.unido.org/
5. Garment industry – an over view, Chapter– III, retrieved from
shodhganga.inflibnet.ac.in/jspui/bitstream/10603/126134/9/09_chapter%203.pdf
6. Case Study of Tirupur - UNIDO retrieved from
www.unido.org/.../41692_DynamicCity_doc_CaseStudyTirupur_Rangarajan.pdf
7. News Desk-China, April 18 2008,available online at www.fibre2fashion.com

TDQ Triangle

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

TDQ Triangle

Uploaded by

Copyright:

Available Formats

Journal for Studies in Management and Planning ISSN: 2395-0463

Available at http://edupediapublications.org/journals/index.php/JSMaP/ Volume 03 Issue 07

Enhancing Profitability through Strengthening TDQ Triangle- a Case of

TDQ - Technology, Design and Quality

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 304

Status of Technology, Design and Quality in Tirupur

Indigenous Imported Total

Source : Primary data

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 305

It is interesting to note that with an average educational background 66% of the

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 306

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 307

Descending level of defects at increased

Management Objective “ Optimum Quality”

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 308

Descending level of cost of wastage

Better quality at lower cost

Descending Level of defects

Moving towards delighting the customers

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 309

Quality upgradation at Tirupur

The quality awareness workshops conducted by Cluster Development Programmes

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 310

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 311

Quality improvement is a continuous process and needs constant attention. Everyone in a

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 312

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 313

Within India 80 20 100

Source: Primary data

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 314

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 315

You might also like