outsourcing in apparel industry
TRANSCRIPT
APPAREL INDUSTRYIT OUTSOURCING
Apparel Industry
Global Apparel Industry – Around US $ 2000 Billion
Market value forecast – By 2013, forecasted value of US $2751.2 Billion an increase of 39%
Market segmentation – Apparel, accessories and luxury goods account for 67.6% of the total industries value
Market segmentation – Europe generates 33% of the total apparel industry value
IT Spending – North America & Europe : About 3 to 5% of their revenuesIndia : Less than 1% of their revenue
33%
32%
25%
10%
GeographicEurope Asia-PacificAmericas Rest of the World
2004 2005 2006 2007 2008 2009
1759.2
1847.2
1948.2
2041.81972.2
2028.8Revenue ($ Billion)
Market Segmentation
Textile Mills
Fiber, Yarn and thread Mills
Fabric Mills
Textile and Fabric finishing and fabric coating mills
Textile Product Mills
Textile furnishing mills
Other textile product mills
Apparel Manfacturing
Apparel knitting mills
Cut and sew apparel manufactring
Apparel accessories and other apparel manufacturing
18.3
2.2
7
9.1
31.8
12.3
19.5
49.9
2.7
43.7
3.5
Segmentation
34.1
7.7
16.5
9.9
25.3
14.5
10.8
40.8
6
31.6
3.2By EstablishmentBy Employment
Cotton, Wool,Silk
Natural Fibers
Oil, Natural
Gas
Synthetic Fibers
Yan (Spinning)
Fabric (Weaving, knitting)
Petro-chemical
Synthetic Fibers
US Garment factories (Designing,
Cutting, sewing)
Domestic & Mexican
(Subcontractors)
Asian Garment Contractors
Domestic & Overseas
(Subcontractors)
Textile Companies Apparel Manufacturers North America
Raw Material Networks
Component Networks
Asia
Production Networks
All retail outlets
Brand Names Apparel
Companies
Overseas Buying Offices
Trading Companies
Export Networks
R E T A I LThe Apparel Value Chain
Supply Chain ManagementInventory
Management
Procurement & Merchandising
Quality ControlCustomer
Service Support
IT Support
Value Added Services
Staff Functions &
Admin
What Can Be Outsourced?
Organizational Dimension
External External Onshore Outsourcing
External Nearshore Outsourcing
External Offshore Outsourcing
Internal Internal Domestic Supply Internal Nearshoring Internal Offshoring
National Within the EU Outside EU
Geographic Dimension
Location Decisions
Determinants of location decisionsLabour costs and ProductivityCapital Investment Access to Markets and Inputs – such as workers, suppliers, and businessMarket Knowledge
DelocalizationLess Value Added ActivitiesLess Tactic Knowledge Required
Access to Markets and Inputs – such as workers, suppliers, and businessMarket Knowledge A
Offshore and Nearshore OutsourcingLow cost countries
Less Tactic Knowledge RequiredAccess to Markets and Inputs – such as workers, suppliers, and businessMarket Knowledge A
REACH• Registration• Evaluation• Authorization• Restriction of Chemical Substances• EU Based
EPA• Environment Protection Agency –
Monitory Agency• Covers Clean Air & Clean Water Act• US Based
Compliance
Primary• Cost• Quality• Lead Time
Complementary• Political Stability• Infrastructure• Compliance• Incentives• Labor
Market Drivers For Outsourcing
Third Party•IT operations outsourced completely•Outsourced due to continuous system outage
Captive•Pioneer in the Industry for IT•Increase in profitability
Hybrid•Has outsourced to Infosys•Also has a captive unit
Current Outsourcing Model
Growth
Profitability Enhancement
Improved Process & Technology Efficiency
Supply Chain OptimizationOperational Excellence
Improved Quality & Customer Value
Financial Benefits
Strategic Long Term Business Goals
Collaborative Product, Lifecycle Management Capability
Phases of Outsourcing
Fast Fashion Lead Time Captive
Seasonal Quality Hybrid
Basic Cost Third Party
Proposed Models of Outsourcing
THANK YOU