In recessionary times, a focus on quality and long term success can be a great asset for any organisation. Quality controls across the value chain contribute in a major way in creating long term competitive capabilities for countering the economic downturn, and also provide operational alternatives to conventional management responses for cutting costs through cycle time and waste reduction techniques.
Waste related to system and process inefficiencies in an organisation may contribute up to 25-35 per cent of a firm’s turnover which is a lost opportunity for profits if not addressed systematically with the required expertise. A focus on long term success can ensure that an organisation does not make decisions based purely on short term benefits. This can be especially important during difficult economic times. Some organisations tend to focus on cost cutting during tough economic times, but eliminating personnel for short term benefits can compromise its ability to compete in the longer term.
Generally, personnel are laid off but work is not eliminated. Further, when as the economy starts to pick up such organisations will not have requisite trained staff to meet the work needs. A company that only focuses on cost reduction will harm its ability to grow by limiting the ability to generate new revenues.
Talking of quality improvement, using tools like Lean Six Sigma can help organisations achieve short term cost reductions and a long term ability to compete. This actually eliminates the need for rework and other tasks that do not add value to the customer, thereby freeing resources that can be used to generate new revenue. By using error reduction tools, companies can improve customer satisfaction and eliminate inspection, warranty claims, penalties, complaints, recalls, and other error related costs.
By focusing on waste reduction tools, they can further eliminate work that does not need to be done, like just-in-case activities, movement, inventory management, and redundant inspection and approvals. The way not only makes the customer happier, but organisations too get resources that can generate additional revenue. We find that the costs associated with poor quality and waste are about 25 per cent of the revenue for an average manufacturing organisation, and 35 per cent of the revenue for an average service organisation. Reducing the costs associated with poor quality allow the resources, including money, assets, materials, and personnel to be diverted to provide additional value that serves the needs of current customers better, and attracts new customers by developing new products and services.
A continued focus on customer requirements and quality can help them survive tough economic times and be positioned for success as the economy recovers. Let us take the example of Bond Stores in USA as quoted in Lean Retailing by Fredrick Abernathy and John Dunlop: In the late 1940s, Bond Stores, the largest clothing chain at the time, created a sensation in New York City by offering a wide selection of suits with two pairs of pants instead of one, reintroducing a level of product choice not seen since before the war. When the line of hopeful buyers at its Times Square store stretched around the block, Bond had to impose a limit of two suits per customer. During World War II, the apparel and textile industries had been converted to supply field jackets, overcoats, and uniforms to the U.S. and Allied Forces. But in the years immediately following the war, returning soldiers, the end of rationing, and pent-up customer demand meant apparel was in short supply. Fifty years later, it is hard to imagine a retailer–be it a high-end department store, mass merchandiser, or catalogue service–limiting an individual customer’s clothing purchase. Retailers collect detailed point-of-sales information that reflects the real-time demand for goods by customers. Through new computer systems, they share this information with suppliers who, in turn, can ship orders within days to automated distribution centers. The contemporary equivalent of Bond Stores now has a much better chance of avoiding stock-outs of popular item and the inventory gluts that lead to costly markdowns. By the same token, the overall risks associated with fickle customers, numerous selling seasons, and segmented markets–along with fierce overseas competition–has currently made this a tough arena for American retailers and manufacturers.
The transformation of U.S. clothing and textile manufacturing is very much still in progress and has by no means been successful for every company; but these industries have entered a renaissance of sorts, one that reflects new information technologies and management practices as well as the new economics of international trade. This book describes what has happened since the postwar era in three related industries–retail, apparel and textiles–and what such companies must do to improve performance. We cover the histories of these industries, including the information technologies that have transformed these enterprises, manufacturing processes, inventory management, the new role of logistics, and global trade implications and policies.
The story is a complex one, involving many individual cases and specifics. This study began with a focus on apparel manufacturing, but we soon concluded that apparel production must be viewed as an integral part of a channel. A channel is the set of all firms and relationships that get a product to market, including the original acquisition of raw materials: production of the item at a manufacturing facility; distribution to a retailer; sale of the finished item to the customer; and any installation, repair, or service activities that follow the same. A retail-apparel-textile channel typically includes the companies that manufacture synthetic fibers; produce, gather, and refine natural fibers; spin fiber into yarn; weave or knit yarn into fabric; manufactured buttons, zippers, and other garment components; and cut and sew fabric into garments. It also includes the retailers who sell garments to end consumers. The retail link often involves services or instructions to suppliers about fabric and garment design, packaging, distribution, order fulfillment, and transportation. And it is in some of these areas, particularly distribution and order fulfillment, that channel dynamics have undergone substantial change during the last decade.
For all textiles and apparel manufacturers it is important to remember that they are competing in a global market today. Not only does each have potential customers across the world, but they also have potential suppliers, work forces, raw materials, and competitors. And, to remain competitive for the future market as well, it will have to find the optimal way to reach and serve existing and potential customers.
It is critical for textiles/apparel manufacturers to determine the specific needs of their customers, and then use quality to differentiate themselves from competitors. There are quality tools that can help determine specific customer requirements and competitor’s capability. Quality Function Deployment is one such tool that can help apparel manufacturers and retailers align and focus on quality, timeliness and value. This would vastly help them weather economically difficult times.
Brands: incorporate ASQ
As part of a major national initiative, the Federation of Indian Chambers of Commerce and Industry (FICCI) has partnered with American Society for Quality (ASQ), the world’s leading quality organisation. This initiative would have a strong focus on textiles and the garment retail sector. FICCI and ASQ have started working with major retail companies by providing focused training and consulting services. Pantaloon, Reliance Retail, Aditya Birla Retail, and ITC have already implemented these techniques for building long term competitive capabilities.
To gear up for building a continual improvement culture for process improvement, organisations must adopt a structured approach towards capability building, which can be facilitated by FICCI-ASQ joint venture in the following manner:
- A diagnostic study to understand specific organisational challenges.
- Gap analysis.
- Capacity building in specific tools and techniques through focused training workshops.
- Creating improvement teams.
- Scoping study to identify improvement projects that impact quality, cost reduction and yield.
- Understanding of constraints and risks, developing a project implementation plan.
- Facilitating project implementation, establishing review and tracking systems to monitor progress of the improvement projects.
- Final project audit, initiating process of certification by ASQ.
If properly implemented and integrated with strategic goals of the business and driven by strong leadership, these methods and techniques would drive profitable growth with enhanced customer focused quality, leading to branding of India Inc. globally.