Presented by: Sushmit kr singh

Indian Apparel Industry Shivani

Presentation Flow

Wills Lifestyle position in Industry & Challenges faced-Rohan Opportunities and Threats-Chandan Sourcing strategy-Vinay Supply Chain Metrics and Vendor management-Shivasheesh In-House production & its impact-Vishakh Current scenario and Learning from the case-Rohan

Indias fast-growing apparel market

Indias apparel market is in the throes of change Indian apparel sales are expected to reach an estimated $25 billion

this year, having grown in excess of 10 percent over the past 5 years a growth rate faster than that of the overall India retail market groceries), representing approximately 10 percent of the total market.

Apparel is the second largest retail category (behind food and

This growth is being driven by a number of factors: Increase in disposable income New occasions Growth in the womens segment Fashion increasingly a form of self-expression Further urbanization and the comparative youth of Indias population Continued rise of organized retail.

Traditionally dominated by small and family run stores

From made to order to ready to wear market

Pre 1990s-Lack of national level brands 1990s-Park Avenue, Beneton, Nike Adidas, Liberty, Double Bull,

Proline Indian Market-Low volumes and entrepreneur driven business, minimal investment in technology, processes and people
International market-Driven by quotas
Early 2000s-Tommy Hilfiger, Marks & Spencer, Allen Solly, Van

Heusen, Westside, Shoppers Stop, Wills Lifestyle and Pantaloons

 Apparel Industry in India

Major supplier of high quality fashion apparels

Apparel Supply Chain

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

 2006 - 51 percent investment in a single brand retail outlet was also

permitted in 2006 - FDI in Multi-Brand retailing is 51 percent in India. Strong competition may result in large-scale exit of domestic retailers, especially the small family managed outlets, leading to large scale displacement of persons employed in the retail sector Indian retail sector still in the nascent stage 2011- 100 percent investment in single brand retail allowed Quality standards and consumer expectations Supply Chain improvement Greater sourcing from Indian vendors

Wills Lifestyle
ITC's Lifestyle Retailing Business Division has established a nationwide

retailing presence through its Wills Lifestyle chain of exclusive specialty stores
Wills Classic work wear, Wills Sport relaxed wear, Wills Clublife

evening wear, fashion accessories ,John Player for male youth and Essenza Di Wills Launched in India in 2000
Focus mainly on leisure wear for men and women under the name-

Wills Sports
47 outlets opened in next 1 year

Awards won over the years

2009: Most admired Fashion Brand of the year - Fashion Forward Wills Lifestyle 2007: Most Admired Fashion Campaign - John Players 2005: Most Admired Shirt Brand of the Year - John Players 2004: Rising Star Brand of the Year - John Players 2003: Most Admired Exclusive Brand Retail Chain of the Year - Wills Lifestyle

2002: Most Admired Women's Wear Brand of the Year - Wills Sport
2001: The Most Admired Brand Launch of the Year - Wills Sport The Most Admired Exclusive Brand Retail Chain of the Year - Wills Lifestyle.

Awards won over the years

Retailer of the Year (Fashion and Lifestyle)" Award at Reid & Taylor Awards for Retail Excellence in 2011

"Best Retail Marketing Campaign of the Year" Award at Reid & Taylor Awards for Retail Excellence in 2011
Award for Customer and Brand Loyalty in Retail Sector category at the 4th Loyalty Summit, 2011 Retailer of the Year Award to Wills Lifestyle in Fashion & Lifestyle category at Asia Retail Congress 2008. Wills Lifestyle rated amongst the top 5 Luxury brands in the country in a Global Luxury Survey conducted by TIME Magazine. Front runner Award - 2007 to Wills Lifestyle in the Retail category by Real

Estate Observer & Trammel Crow Meghraj. Superbrand 2006 awarded to Wills Lifestyle by the Superbrands Council of India. The "Best Supply Chain Practices Award 2006" for time-effective and costefficient Logistics management in Organized Retail. The awards were organized by Retailers Association of India (RAI) in association with ITW Signode - the International leaders in packaging solutions.

Case Overview
ITC being a private sector firm has diversified presence in cigarettes,

hotels, paperboards , agribusiness , IT, greeting cards etc. ITC had an approach of recruiting best managerial talent & spending on training & facility improvement. They wanted to reserve a share of the internationally driven quota & ensured to keep the wages & investments low. Their aim was to increase flexibility by bringing in house manufacturing instead of the third party manufacturing but the in house strategy still incurred them Rs 50/unit extra. OTIF(On Time In Full) delivery was around only 40 % & severe dearth of popular SKUs. Supply chain reconstruction implemented in 2003 but still internal production cost was high.

Case Overview
Challenges faced by organized retailing were :-

1. Preferences varied region wise & hence difficult to develop a single retail model. For example Shoppers stop was great success in Mumbai but didnt do well in Jaipur. 2. Insufficient outlets to drive sales due to high cost of real estate in Indian metropolitans. For example Wills had only 5 stores in Delhi.
Wills had a transition from self denial to indulgence by more exposure

to media and western lifestyle. Wills had focus on all sections of the affluent society.

CHALLENGES AND HOW WILLS LIFESTYLE IS POSITIONED

High real estate costs in Indian metros.
Wills Lifestyle currently has around 100 outlets across India. Competitors like Raymond have around 350 outlets across India. Opening new outlets is going to be costly .

Lack of trained manpower for retail in India.

To survive in the increasingly competitive Retail market Wills Lifestyle

will be increasing its outlets . To Establish new outlets and to survive skilled workforce needs to be hired. Opening new outlets requires people to adapt to new sales system and processes.

CONTINUED
Inadequate supply chain infrastructure.
Wills Lifestyle has a variety of goods under its umbrella coming from

different vendors. These vendors are distributed all over India. The logistics infrastructure in India is not well established.

FDI in single brand retail increased up to

100%.

It will increase competition for Wills Lifestyle from International

players like Gucci,Prada,GAP. They have well established supply chains and Wills will have to gear up to be at par with them.

CONTINUED
Product proliferation.
There is a huge variety in the products being offered by Wills Lifestyle. The demand for the different type of product at different point of time

is different. To match this demand is a challenge.

Indian consumers tendency to demand better product at a comparatively cheaper price.

Wills lifestyle caters to the upper middle and higher class customers.

Their products range starts around RS 1000 and goes upto Rs 4000 for a

typical garment.

Opportunities for LRBD

When LRBD was conceived, no clear fashion leader in western ready to

wear segment existed. So, they obtained the first mover advantage. Emergence of organized retailing ITC team comprised of managers from FMCG division to assess the business opportunities & chances of expansion. Introduction of John Players which provided garments starting from a lower range of Rs 500- Rs 1000, thereby enhancing the customer base. Along with Apparel, accessories like ties, belts & handbags were also introduced. Increase in footfalls of customers & enhanced conversion to sales due to huge store sizes of 3000 sq. feet & around 360 garment options being available. Implementation of JIT with the advise of industry experts like Pantosh Wali & Vivek Kamra who were FMCG executives & M. Vishwanathan, a garment manufacturing executive.

Opportunities for LRBD

Increase in sale seasons from 2 to 6 for greater flexibility & responsiveness.
Improved service levels at stores especially for size availability, leading to

enhanced sales. Improvement in product design by reducing total lead time from concept to delivery. Improvement in product quality. Bangalore being selected as location for JIT due to favorable industrial relation, climate & space availability. For better integration of functions between designer, merchant, garment engineer, finance resource, pattern master & retail operation resource, CPC (Concept-to-product cell) was created. Establishing design platform that encouraged commonality & reduced product development time. As a result, number of SKUs for products say for trousers reduced from 44 to 8.

Opportunities for LRBD

Body Blocks based on drape, fall & dimension of garments were

devised to reduce the product development cycle. Creating manufacturing cells ensures easier training of operators, increased workforce flexibility through multi skill & reduction in style changeover time from 72 hrs to 30 minutes or less. Change from forecast driven to demand driven by adding a pool stock which provides buffer for production queuing, manufacturing & delivery lead times. Demographics of India constituted 55 % of population below 25 yrs age which ensured rising employment & buying capacity leading to demand for fashion brands , fast food & technology.

Threats for LRBD

Indian consumer who only travelled abroad had exposure to European

& American benchmarked products. Providing varied size options to customers every season due to their ever increasing expectations. Strong competition in several categories. For e.g Louis Phillipe & Van Heusen in formal wear, Lee, Tommy Hilfiger, Levis & Dockers in leisure wear. Investments in opening stores was huge i.e. around Rs 7.5 million. Multiple vendor allocation for shirts, trousers etc. demanded proper coordination between them. Since full range had to come to market simultaneously, entire volume had to be manufactured in a small time window. Lead time for delivery of garments was long i.e. about 8 months.

Threats for LRBD

Retailing in two seasons summer & winter led to increased inventory.
Rapid expansion of stores caused increased inventory obsolescence &

stock out of popular products & sizes. No questions asked returns policy resulted in a 2% returns which could hamper the brands image. Increased forecast error avg. up to 50 % would result in improper stock allocation causing overstock or lost sales. Stringent government regulations in stock allocation. Failures & delays at any stage of the process were not visible to other stages due to lack of coordination among sales dept., design dept., merchants & vendors. Constant pressure for production of styles immediately after release of style specifications.

Threats for LRBD

Indian government allowing FDI of up to 51 % in single brand retail

,hence enhancing the competition for Wills in the form Zara, Ikea , The Gap & Giordano.
Usage of internal manufacturing capacity was more expensive than

third party manufacture usage.

Struggle to get a proper metric to judge the efficiency of supply chain in

place of existing parameters like sourcing cost.

Advent of players like Pantaloon & Shoppers stop due to higher

customer expectations.

LRBD Sourcing Strategy

Sourcing Pure Make

Pure Make

"Make" with external consultants

"Make" with subcontracted functions "Make", followed by spin-off "Buy" from provider and customize in-house "Buy" from provider, with financial investment in the provider "Buy" from provider, but "nurture" provider with partnership and long-term contract

Pure Buy
Pure Buy

100% of the functionality is developed in-house

Advantages
Tailored solutions for in-house needs Critical knowledge is kept in-house

Disadvantages

Lack of knowledge of building and maintaining state-

of-the-art IT systems. Difficulties of keeping the IT staff busy after the end of the implementation phase Difficulty of retaining good IT staff

100% of "the" functionality is developed by a provider

Advantages
"Economies of Scale": Provider can occupy resources with projects from other customers and share development and maintenance costs among customers. Provider may provide additional knowledge, gained from other companies in the sector. The customer can profit from continuous development of functionality.

Disadvantages

Provider interests may not fit fully with customer interests (roadmap development, functionality, ) The application software is more complex if it needs to fit more than one customer.

Buy 90% of the functionality and make 10% extensions

Advantages
Critical knowledge is kept in-house In-house staff is able to react rapidly to company's needs Bulk of non-strategic functionality is outsourced with more

efficient provider Fits with "Strategic or Not" section (see below)

Disadvantages
architecture

Difficulty to manage the partnership In-house developers need to learn the provider's software

Sourcing Metrics
Quality
Lead time Reliability

On-time delivery
Price

Strategic Sourcing Activities

Conduct Spend Analysis
Assess Customer Requirements Analyze Supply Markets

Develop Category Strategy

Complete Supplier Evaluation Develop Implementation Plan Manage Supplier Performance

SCOR

Supply chain management flows can be divided into three main flows: The product flow The information flow The finances flow

Decision Metrics
Facility Metric Capacity Utilization Cycle time of Production Product Variety Transportation Metric Both Inbound & Out bound Transportation cost Size & Cost of the Shipment Mode of transport cost/usage

Idle time
Batch Size Service Level Inventory Metric Average Inventory Products

Information Metric Forecast horizon Frequency of update

Replenishment order size

Safety/Cycle/Seasonal Inventory Time out of stock

Error in forecast
Seasonal factors Variance from plan

Objectives of new SCM strategy at LRBD

Rapid response to Winning Styles

Reduction of Financial Risks associated with losers Development and Production of new styles using

fabric left-over from early losers Service Levels Improvement especially for size availability, leading to enhanced sales Improvement in Product design relevance through reduction in lead time from concept to delivery Improvement in Product quality

Strategic Changes made to increase Supply Chain responsiveness

Creation of Concept to Product cells
SKU reduction and use of design platforms Creation of Manufacturing cells

Demand driven replenishment

Most significant change and why??

Concept to Product Cells Good example of Concurrent Engineering: Comprised of Designer, Merchant, Garment Engineer, Pattern Master, Finance Resource and Retail Operations Resource. Advantages: Integration at Brand level Product centric Reduction in Lead time

Why focus on manufacturing and does single piece flow helps?

Increase flexibility Reduce batch size Reduced setup time from industry norm of 72 hrs to 30

mins or less Multi-skilled employees Challenges: Training of operators, supervisors and managers High variety and low volumes affecting labour productivity Capacity usage

Outsourcing: Boon or Bane?

Prime factors include: Cost, Quality, Lead Time Minimum(Economic) Order quantity:

Total Ordering cost = Total Holding cost Q = (2*D*S/H) Benefits of Reduction in Minimum Order quantity maintaining single advance order quantity: Low inventory carrying cost Try different designs in market Better financials with less capital blocked Production could be spread to the whole season

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Trend Forecast

<TimeLine>

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Range Design

Trend Forecast

<TimeLine>

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Range Design Range Approval

Trend Forecast

<TimeLine>

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Range Design Range Approval Quantity Forecast

Trend Forecast

<TimeLine>

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Range Design Range Approval Quantity Forecast Sourcing

Trend Forecast

60-90 days <TimeLine>

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Range Design Range Approval Quantity Forecast Sourcing Manufacturing Vendors 60-90 days

Trend Forecast

60-90 days <TimeLine>

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Manufacturing Vendors 60-90 days Range Design Range Approval Quantity Forecast Sourcing Warehouse

Trend Forecast

60-90 days <TimeLine>

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Manufacturing Vendors Range Design Range Approval Quantity Forecast Sourcing Retail Stores Warehouse

Trend Forecast

60-90 days <TimeLine>

60-90 days

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Manufacturing Vendors Sourcing Customers Range Design Range Approval Quantity Forecast Retail Stores Warehouse

Trend Forecast

60-90 days <TimeLine>

60-90 days

15-25 days

Initial Supply Chain Processes

Decision to bring production InHouse & its impact

Manufacturing Vendors Sourcing Customers Range Design Range Approval Quantity Forecast Retail Stores Warehouse

Trend Forecast

Outsourced Vendors specialized by product Large Numbers

Outcomes:

Decision to bring production InHouse & its impact

Lead time of 8 months

Bulk Ordering & Manufacturing at Season start

Obsolete Inventory at Season end, Loss of sales

Problems Identified

Decision to bring production InHouse & its impact

Forecasting
Unpredictability of Demand Stock allocation Complexity with increased store base. Poor Stock Visibility

Production Volumes
PV far lower than industry standards Garment manufacturers were geared for exports

Co-ordination
Decisions taken were not concurrent Lack of interprocess visibility

Decision to bring production InHouse & its impact

Why In-House Manufacturing?
1. 2. 3. 4. Flexibility Agility Batch-Size reduction Prevent Loss of sales & Obsolescence

Decision to bring production InHouse & its impact Comparing with Zaras Model
Complete in-house manufacturing No subcontractors Partial In-house manufacturing Subcontractors work exclusively for Zara

Production seeks to fulfill demand

Forecast driven Decoupling point downstream Inventory held at SKU level Inefficient lean systems

Production less than the demand

Demand driven Decoupling point further upstream Inventory held at generic level Excellent hybrid strategy

CURRENT SCENARIO
Product life cycle is of 6-8 weeks as opposed to 3-4

months in its earlier days. Wills Lifestyle has recently come up with Designer wear collection by famous designers of India. In addition to apparels Wills lifestyle even has products like .Essenza Di Wills. The competitors for Wills lifestyle in India are Koutons,Marks and Spencer,FabIndia.

CONTINUED
Wills Lifestyle is planning to open 50 more exclusive

brand outlets and expand its presence in 40 cities from 30 cities currently. They are planning to open these outlets in Tier-2 and Tier-3 cities.

Learning from the case

Insight into Indian Apparel Manufacturing
Food for thought: Apparel Retailing Sourcing

Cellular Manufacturing
Concurrent Engineering JIT Inventory Control Technique

Thank You