A SYNOPSIS REPORT

ON
Factors affecting lead time and reasons of late shipments in Indian apparel
export industry

Submitted by

Under Guidance of

A SYNOPSYS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR

EXECUTIVE MBA
(Logistics and Supply Chain Management)
OF
UNIVERSITY OF PETROLEUM & ENERGY STUDIES, INDIA
CENTRE FOR CONTINUING EDUCATION

UNIVERSITY OF PETROLEUM & ENERGY STUDIES, DEHRADUN

Factors affecting lead time and reasons of late shipments in Indian apparel export
industry

1 Introduction

Indian apparel export industry is one of the largest industries in India providing direct
and indirect employment to over 3 million people. The apparels export accounts for 17%
of total exports. It contributes almost 2% to India’s GDP. It has been estimated that
India has approximately 30,000 apparel-manufacturing units and around three million
people are working in the industry. India has 4.3 per cent of the global textile market
share and approximately 3.3 per cent of the global apparel market share in 2006
(Business World 2004, WTO 2007). Indian apparel export sector comprises
approximately 7,500 firms registered with Apparel Export Promotion Council (AEPC).
However this sector is also one of the largest unorganized sectors in India. The intense
competition from other countries like Bangladesh and China, especially in the post WTO
regime has created a need for this industry to be more competitive in terms of cost,
quality and lead time. Apparel being a fashion item with small shelf life, a lot of stress is
being imposed by the buyers to cut the lead time of shipments. Lead time is the time
duration from receiving an order to shipping it to buyer. Normally ex-factory date is
considered as shipping date. Lead time is expressed in number of days.

The Indian exporters are therefore compelled to accept orders with short delivery
commitments. Inability to deliver the shipments in the committed time leads to high
costs to the exporter in terms of compensations and even to the extent of cancellation of
orders.

Timely shipment is one of the causes of concern for apparel exporter, there being a
number of factors affecting the timely shipment. The factors are internal as well as
external. The internal factors include high rejects, low productivity, excessive time for
pilot studies etc. The external factors include reasons like non fulfilment of commitments
by the vendors and even the frequent specification changes by the customers.
The inability to ship the goods in committed time not only causes a heavy financial loss
to the exporters but also impacts the customer confidence and eventually affects the
market share of Indian apparel export trade.

The supply chain of the apparel industry is depicted in the following diagram.

The apparel supply chain consists of a large number of processes usually carried out by
different elements and that makes the management of lead time even more complex.

This study is an attempt to identify the factors that affect the lead time and result in late
shipments of apparel export orders.

2 Problem Statement

Even though the Indian apparel industry has the advantage of cheap labour, skill
availability and favourable government policies and procedures, it is losing business
because of substantially large lead time and lack of control over processes causing the
shipments to be late. This is causing Indian export industry to lag behind in
competitiveness to other competing countries.
3 Literature review

It has been estimated that India has approximately 30,000 apparel-manufacturing units
and around three million people are working in the industry. India has 4.3 per cent of the
global textile market share and approximately 3.3 per cent of the global apparel market
share in 2006 (Business World 2004, WTO 2007). Indian apparel export sector
comprises approximately 7,500 firms registered with Apparel Export Promotion Council
(AEPC).
With the phase-out of MFA quotas and termination of the same at the end of the ten-
year transition period on 31 December 2004, the apparel exporting countries are
competing intensely with each other for market share without the umbrella of bilateral
quota system. China, Bangladesh, Pakistan, Mexico, Vietnam, and Sri Lanka are posing
a tough competition to India in the international market. India has 3.3 per cent share in
world apparel trade in 2006 and is facing stiff competition from countries like China
(30.6 per cent), Turkey (3.8 per cent), Bangladesh (2.8 per cent), and Mexico (2.0 per
cent).
India has not been able to take much advantage of the opportunities coming its way due
to certain structural constraints, whereas China has set about altering the post-quota
scenario with latest technology, huge capacity building, and innovations to capture
larger chunk of the global trade. Huge industrial facilities in the form of apparel
complexes are being developed in China (Business World 2004). The analysis reveals
that countries like Turkey, Mexico, and Bangladesh have managed to increase their
share due to certain factors like market proximity or due to duty free access into the
importing country, whereas India did not have any such advantages. Still, India has
been registering a growth rate though not so impressive.
Apparel exporters need to make efforts to reduce the lead time in a planned manner,
from the stage of order placement to delivery. Exporters have to understand that
apparel in general and fashion apparel in particular are perishable products. Exporters
need to provide considerable attention towards quick sample development, fast
turnaround in production, and shorter lead times..

China has a 13 per cent cost advantage in shipping garments from Shanghai to the US
east coast. Also, only transportation time from India to the USA is twenty-four days as
compared to eighteen days from Thailand, fifteen days from China, twelve days from
Hong Kong. In the case of customs processing, India takes 10.3 days as compared to
seven days in Korea and Thailand (Winters and Mehta 2003 cited in Ananthakrishnan et
al. 2005). Another study conducted by World Bank highlights that Indian transaction
costs are 15 per cent higher than that of its competitors (Business World, 2003).
Apparel has to be, often, airlifted because of the delays associated with poor
infrastructure, which adds to the shipping cost and making apparel exports from India
less competitive. The Government of India should take immediate steps to improve the
existing road, rail, power, and port infrastructure. High cost of power, poor rail and road
system, and lack of adequate facilities at the ports increase the transaction cost of the
apparel exporters.

As per Amit Gugnani, senior vice president, Fashion (Textile and Apparel), major
strengths of Indian apparel industry are

1. A large raw material base

2. Design skills
3. Ability to handle small orders
4. Trained and skilled manpower

As per a study by C. K. Karekatti, garment exporters catering to high fashion markets

demand a responsive supply chain with a very short lead-time. CMT exporters in India
typically work with a lead-time of 75-90 days, vertically integrated plants are known to
work with even longer lead-time. With turnaround time becoming a prime factor in
attracting business, manufacturers are increasingly exploring options to reduce the
cycle times.
The reasons of shipment delays in the apparel export industry have been identified as
below
 Activity Specific causes for delays
Lack of clarity regarding exact customer requirement, in terms of
styling, fabric specifications, trims , constructional clarity and
consumption.(Between both sampling & merchandising)
Lack of technical understanding regarding exact customer
requirement wrt. Form and Fit of the Garment, resulting in
Pre- repeated communication and reworks.
Production Poor flow of buyer communication between merchandising and
activity sampling.
Poor planning, especially in prioritizing the sample delivery
schedules.(FIFO etc)
Fixed pick up time by courier service providers often result in
failure in meeting the pickup deadline for ready samples arriving
a little late from sampling Dept.
Loss in production due to non-availability of work aids, like
attachments and folders, when the new style hit the bulk
Production.
IE No history record of the problem faced at Product development
stage is maintained to counter similar problem when the bulk
production is initiated.
Delays caused in receiving trims due to fixed delivery time lines
given by buyer nominated vendors.
Purchase Non availability of alternative /substitute vendor to counter
contingency
Delays caused in approval of trims.
Administratio Delays caused due to manual tasks of generating hard copies
n for authorization
Delays caused due to high operator absenteeism
Production Delays caused due to Non-availability of required skill set etc.
Delays caused due to shipment clearance procedures.
Delays caused due to failure in meeting the shipment window.
Post Particularly for vessels leaving to destinations on a particular
production day of the week. Missing the cut off date at port causes the
activities consignment to be delayed at port .It also incurs additional cost
by way of dock charges.

When asked why Indian apparel export is increasing fast but not the same for
Bangladesh, Bangladesh Garments Manufacturing and Exporters Association (BGMEA)
President Siddiqur Rahman said, “Garments buyers are going to Indian market from
Bangladesh due to inefficient port facility and extra lead-time”. He also informed that the
value of taka against dollar, poor infrastructure and shortage of power and gas are the
key challenges for the export oriented RMG sector.

India recently is expecting to earn USD 20 billion in FY 2017-18 banked on the

competitive advantages the country has got recently. Bangladesh on the contrary is
fighting heard with the cost increase and infrastructure back logs. BGMEA asked for
immediate policy support from the government.

According to BGMEA, the government meanwhile has ordered all the ports including the
port of Chittagong to remain open for 24 hours for 7 days of the week to ease the export
activities. The government has also taken several positive steps at Hazrat Shahjalal
International Airport, which has reduced the lead-time.

Kathuria, Lalit Mohan Singh, Raghbir (2008) state that lead time in Apparel industry
plays a vital role, so every department has to focus on Lead time reduction to meet the
customer’s demand properly. Lead time can be measured on the total manufacturing
process it indicates how quickly raw material is converted into finished product. Lead
time will be the one of the most important factor which will help the organization to gain
competitive edge in global competitive environment of global business which is driven
by customer’s expectations.
Shahidul Kader, M.Sc., Maeen Md. Khairul Akter (Nov2014) in their study on “Factors
affecting the lead time for export of readymade Apparels”, states that An extended lead
time is one of the major problems that the apparel sourcing world is facing when
exporting readymade apparels from Bangladesh is concerned. Apparel sourcing bodies
are one of the major stake holders of the readymade apparel trade and they endow
their investment in improving the factors affecting the lengthened lead time issue.
Improvement of the backward linkage industry to a standard to be able to support the
readymade apparel industries with export quality fabrics is a continuous process and it
will take some time. But the development of the production and manufacturing system
can be implemented in a short while and it has a proven impact on the lead time.
Behrooz Asgari and Anyul Hogue in their study on “Leadtime management in garments
industry: A system dynamics exploration” states that, the demand driven apparel
industry is increasingly being marked by its players (brands, retailers and specialty
stores) competing for who can move faster their fashions to better respond to today’s
time sensitive customers. This competition of running against time has posed a great
deal of challenges which are ultimately to be kept pace with by the apparel
manufacturing firms. Therefore, time (lead time for garments delivery) has become a
crucial performance parameter among apparel manufacturing economies around the
world.

4 Need of research

The Indian apparel industry being one of the largest contributors to India’s exports and
also contributing significantly to the Indian GDP is significant for the counties economy.
It is therefore important that the industry enhances its competitiveness and secure its
place in the world trade. Lead time is one of the most important factors towards this
goal. So it is important to understand the factors that affect the lead time and the
reasons causing the shipments to be late. The understanding of these aspects will help
the industry to manage the export orders better and control the lead time of the
shipments.

5 Research problem

The research is aimed towards identifying the factors affecting the lead time of the
apparel export orders and measures to reduce the same with an objective of minimizing
the problem of late shipments and subsequent tangible and intangible losses arising out
of same.
6 Research objectives

The proposed research has following objectives

1. To identify the stages in the apparel supply chain affecting the lead time
2. To determine the significance of identified factors in timely shipment of export
shipments
3. To establish reasons of late shipments in apparel export orders and identify
measures to ensure timely shipments

7 Research Methodology

7.1 Research flow

Literature review Development of

questionnaire

Identifying the Administering the

factors affecting lead questionnaire to
time respondents

Collection of data
relating to late
shipments Analysis of data

Recommendations
and conclusion
7.2 Type of research: The proposed research is descriptive research. It intends to
describe the reasons and factors affecting lead time and timely shipments of apparel
export orders. A combination of qualitative and quantitative techniques will be used for
the research.

7.3 Sample: the data will be collected from apparel export house in NCR region.

7.4 Sample size: Data of 5 export shipments will be analyzed. Senior managers of the
organization will be the respondents for the questionnaires relating to factors affecting
lead time.

7.5 Research tool: A questionnaire will be developed for collecting data on the factors
and reasons affecting lead time.

The questionnaire will address the following

1. Stages in apparel supply chain

2. Factors affecting lead time
3. Relative importance of the factors
4. Causes of delayed shipments
5. Measures to reduce lead time

7.6 Data Collection: Both qualitative and quantitative data will be used for study.
Primary data will be used for the purpose of study. The data relating to late shipments
will be collected from the apparel export houses. The qualitative data will be collected
from the respondents of the questionnaire.

8 Expected outcome of research

The research will focus on the measures that can be taken by the apparel export
industry to reduce its lead time as a step towards enhancing its competitiveness in the
world market. The research will also highlight the major factors and reasons that have
caused the apparel export shipments to be late and will be useful to the industry in
creating better control measures to reduce the late shipments.
9 Bibliography

1. A Study on Manufacturing Lead Time in Apparel Industry With Special Reference

To Apparel Exporters in Tirupur City” Institute of Management Technology, 2008
2. Lead time management in garments industry: A system dynamics exploration”
Volume : 5, Issue : 4, April 2016 ISSN - 2250-1991, Indian Journal Of Research
3. Business World 2004, WTO 2007
4. Winters and Mehta 2003
5. Ananthakrishnan et al. 2005
6. “Factors affecting the lead time for export of readymade Apparels” by Shahidul
Kader, M.Sc., Maeen Md. Khairul Akter (Nov2014)
7. “Lead time management in garments industry” by Behrooz Asgari and Anyul
Hogue