The Hindu Business Line : IT can be tool to address hidden cost, make textile sector competitive

Excess inventory hidden in the existing production system has been one of the factors that renders domestic textile sector uncompetitive. The industry has made no strong effort to capture this in-process inventory that would otherwise bring down the cost of operation.

According to Mr Manikam Ramaswami, Chairman, Confederation of Indian Industry's (Southern Region) Textiles Sub-committee, the hidden costs mainly in the form of the in-process inventory held between various stages of textile production chain is estimated in the range of 10-20 per cent of the cost of manufacture.

"Though India enjoyed raw material advantage in the form of lower cotton prices and its spinning sector being world class, the fragmented industry, especially in the downstream operation where the enormous costs are being allowed to go uncaptured, make the textile production uncompetitive," said Mr Ramaswami.

Mr Ramaswami, who was addressing the two-day textile industry conference `Comptex 2006' which has its theme as `Advantage IT' here today, felt that the better way to capture this hidden cost and eliminate it could be through use of information technology.

ERP solutions

With the cost of the ready-to-use software showing a downward march and lower cost of enterprise resource planning (ERP) solutions, specially meant for textiles being made available, the industry should go in for IT enabled operations. "If we have an online data available and are able to use it effectively, the textile manufacturers can bring down the cost by 10 to 20 per cent," he said.

He felt that the last 15 months of experience under the quota free global textile market had revealed that exporters from China expanded their shipments by 50 per cent and those from Pakistan increased exports by 30 per cent against India's increase in export volume of 15 per cent. "Our exports of grey, dyed fabrics and made-ups were felt uncompetitive and the retailers in the US and Europe chose to import from India as business strategy to have the latter as an alternative source to China than any cost competitive consideration," Mr Ramaswamy said. The conference is being attended by over 300 CEOs from key textile production centres of the South.

Deterrent factors

Speaking on the occasion, the Chairman of the Southern India Mills Association (SIMA), Mr S.V. Arumugam, felt that the cost and the gestation time were being seen as the deterrent factors, especially among the spinners in undertaking IT solution, despite its inherent advantage as an effective tool for data interlink for cost and quality management.

The organisational method studies by SIMA, too, revealed that though majority of the textile mills had gone for ERP solutions, the level of their implementation at the shop floor and other inter-departments remained just halfway. This is despite the introduction of cost effective ERP packages suitable for the textile industry made available to IT companies.

Earlier presenting the overview of the conference theme, the Chairman of Comptex 2006 and Managing Director of the city-based Premier Evolvics Pvt Ltd, Mr Sridhar Varadharaj, pointed out that in today's market scenario textile producers canwere to win over customerdelight for their products, which can be achieved only through right quality, timely delivery of products and quick customer response. To meet these attributes, they needed good quality information. "Good quality and timely data as input for the ERP are needed otherwise it would be a failure at the worst in textiles," he added.