A Study on Supply Chain Collaboration in Textile Industry · 2018-07-29 · located in Coimbatore,...

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A Study on Supply Chain Collaboration in Textile Industry

1Dr.Swamynathan.R,

2Dr. Kannan. V,

3 Dr.Vanathi.R,

4S.Sasikala,

1Assistant Professor, PSG Institute of Management,Coimbatore, Tamil Nadu, India,

2Professor, Department of Management, Kumaraguru College of Technology,

Coimbatore, Tamil Nadu, India,

3Assistant Professor, Erode Arts and Science College,Erode, Tamil Nadu, India

4Associate Professor, Department of Electronics and Communication Engineering, Kumaraguru College

of Technology, Coimbatore, Tamil Nadu, India

[email protected],

[email protected],

[email protected],

[email protected]

Abstract

The Indian textile industry gives employment for both unskilled and skilled labor across the

country by offering direct employment to over 35 million in the country. About 27% of the foreign

exchange earnings comes from the export of textiles and clothing alone. By 2021, it is estimated that the

Indian domestic textile and apparel industry will reach 141 Billion US $.There are 9 Centre of

Excellence established for Technical Textiles all over the nation, which shows us the importance the

government gives to the Textile sector in India.Three such centers are located at Mumbai, two in

Coimbatore, one each at Ahmadabad, Kolhapur, Kolkata, and Ghaziabad. Supply Chain Collaboration

in the textile industry hasbecome a so vital for efficient supply chain management and it helps the textile

units to have competitive advantage over their competitors. This study mainly focused on the textile units

located in Coimbatore, Tirupur, Erode, and Salem, collectively known as the TEX VALLEY. The main

aim of the study is to identify the factors influencing supply chain collaboration and the reasons for the

textile units to implement the supply chain collaboration.The research was conducted in 100 textile

units, where majority of them wereExporters Garment Suppliers and remaining were domestic Garment

International Journal of Pure and Applied MathematicsVolume 119 No. 17 2018, 2621-2641ISSN: 1314-3395 (on-line version)url: http://www.acadpubl.eu/hub/Special Issue http://www.acadpubl.eu/hub/

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Suppliers, merchandisers, traders lot size, stockists. Majority of these Textileswere registered

themselves under the Tirupur Exporters Association (TEA). The SPSS (Statistical package for social

science – 16.0) was used for analysis. The result shows that supplier and market knowledge has a

positive impact on the supply chain collaboration of the textile units.

Keywords:Supply Chain Management, Supply Chain Collaboration,Competitive Advantage

1. Introduction

The textile industry is a long network which includes the raw materials, production, clothing

production, complement production, and many more. The textile supply chain is a long, complex,

fragmented and unorganized sector [1]. A supply chain is a big network, which consists of the supplier,

factory, warehouse, distribution centers and importantly the suppliers and retailers, through whom raw

materials are acquired, transformed, produced and delivered to the customer. From the flow and

transformation of goods and the information from the raw material stage reaching then on to the end

user all the activities in between them constitute a supply chain [2].

India is placed second behind our Asian neighbor China in the production of textiles and

garments. Also India is the world’s 3rd

largest producer of cotton and the second biggest consumer of

after China. The Indian textile industry is very diverse and highly complex. The strength of this industry

arises out of its strong production bases located all over the nation. A wide range of fibers / yarns from

the natural fibers like cotton, jute, silk and wool to synthetic /man-made fibers like polyester,nylon,

viscose and acrylic are extremelyavailable in the country. The growth pattern of the Indian textile

industry in the last 10 years more than the previous decades. The main reason behind this is the

liberalization of trade and economic policies initiated by the Government in the 1990s.

The Cotton producers, ginners, yarn producers, manufacturers, wholesalers and retailers all form

the supply chain. Collaboration among themcan bring benefits to all these partners in the supply chain.

Intermediate products like yarns and fabrics cane be made out of fibers [3]. Gaining a competitive

supply chain network in textile and apparel industry needs innovation, flexibility, efficiency, and high

quality along with their strong strategic approaches towards the supply chain partners[4]. A long-term

relationship with the suppliers will have a lasting effect on the competitiveness of the entire supply

chain[5]. Kaya.O and Öztürk.F [6] says, those who manage and build the management of supply chain

in effective, economic and productive way will enjoy more market share. Supply chain is to be agile in

International Journal of Pure and Applied Mathematics Special Issue

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other words to adapt the changes in supply and demand fast.Small firms with 100-200 machines are the

most flexible. Compared to the smaller firms, the larger ones have more trouble in adjusting to global

market shifts.India has a labor aristocracy of unionized or unorganized workers and the large scale en-

terprises are protecting the organized workers [7].

Indian garment and textile industry is present at the top of the garment sector in the global

market. Butthe major problem is India is full of diversities and faces many infrastructural issues and

differentstature of players involved at each and every level. These issues have their impact on the supply

chain activities our Companies. Also, Indian companies which are already facing various logistics and

Supply Chainrelated challenges [8]. Another important issue is the competition where the Indian

industry generally faced competition from both domestic and foreign firms [9].

The clothing and textile industry is always has the highest amount of political scrutiny

and The Industry is also sculptured by the international trade agreements. Because of the number of

small firms and subcontractors active in the area makes the job of estimating the number of people

working in these sectors is extremely difficult. The Indian Textile Industry, being one of the oldest and

important sectors earns lot of foreign exchange and employs a considerable percentage of population

from both urban and rural areas[10].Exports of cotton have emerged has a major source of foreign

exchange earnings for the country. Cotton being the, commercial crop of India, is grown in 84 million.

hectares but the per hectare yield in India is at lowest level compared with other countries like Israel,

Australia, Syria, Turkey, China and USA and the quality does not measure up to the world

standard[11].The cotton cultivation not only engages around 6 million farmers, but also includes about

40 to 50 million people relating to cotton cultivation, cotton trade and its processing[12].

2. Review of Literature

The Supply chain refers to a group of companies that are bound by physical,informational and

financial flows [13].Supply chain management in the textile industry is a cutting edge tool for the

industry to enhance its competence. It is also an important stage for the Indian textile industry to

advance and upgrade its position in the global industry chain[14].In the current era of globalization,

industries are adopting new tools and techniques to produce goods to compete and survive in the market

[15].In addition to the effect of globalization, the markets are becoming hyper competitive and the

global players from all corners of the world are increasingly becoming more demanding in their

requirements [16].


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Lambert in 2000 [17] defines Supply Chain Management as the integration of key business

process from end user through original suppliers that provide products, service and information and

hence add value for customers and other stakeholders in his research paper.

Supply chain Collaboration refers to Sharing of information[18], making decisions jointly and

sharing benefits between two or more supply chain members so that the profitability is improved and

customer needs are satisfied [19]. A successful collaboration requires the coordination among all the

supply chain members [20] as well as the inter-industrial partnerships (co-marketing alliances) [21]. The

major variables affecting the supply chain collaboration in garment sector in India are; trust among the

supply chain partners, top management commitment, long term relationships, information sharing and

risk and reward sharing [22].

Flow of information, product and material is very crucial. The flow of material and product

occurs in a forward way which depends on the flow of information about the customer orders, market

needs, demandsand the trends heading backward from customers towards the retailers and through them

it flows in the direction of manufacturers who in turn pass on the information regarding the raw material

needs to the suppliers.

Indian supply chain is full of complexities and unlike the European countries and other parts of

the world, huge amount of work is needed to be performed in India in terms of the supply chain

management practices [23]. All these challenges and issues needed to be resolved for gaining the

competitiveness [24].

Indian Companies are considerably[26] aware collaboration, but problems in its successful

implementation and so, they generally fail to create a longterm collaborative relationship. The following

areas requires more supplier’s involvement [27] theyare,JIT implementation, quality improvement, and

supply planning andtransactional performance mainly at the stage of finished production [25]. The

whole supply chain is driven by real and current market needs [28].


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3. Research Objectives

To identify factors influencing supply chain collaboration in textile industry.

To understand the level of awareness in SCC among textile workers.

To recognize the importance of supplier selection in textile industry.

To understand factors leading to competitive advantage.

To understand the relationship between supply chain collaboration and

competitive advantage.

4. Research Methodology

The research design is descriptive, involving both primary and secondary data. The primary data

for the study was collected by using a survey questionnaire through which the quantitative data as well

as qualitative responses about supply chain practices among textile units in Coimbatore, Tirupur, Erode

and Salem were collected. These 4 districts along with Karur and Madurai is referred to as the “TEX

VALLEY” of India. The TEX Valley contributes nearly 50% to the nation’s textiles sectors of raw ma-

terial, production, trading and exports.Since 1870’s, Tirupur has been the center of textile business in

Tamil Nadu. This district located near Coimbatore dominated the yarn trading and cotton pressing. All

these textile mills are set up by colonial rulers mostly British, to counter the high cost of labor associated

with the European mills [27].

The sampling frame of 100 included Export garment suppliers, Domestic garment

suppliers, Merchandisers, Traders and stockists. All 100 units were interviewed individually using a

questionnaire to collect data.

Initially a pilot test was conducted among 26respondents to make sure about the accuracy

of the questions in the questionnaire. The variables and indicators of the questionnaire were justified to

be relevant to the textile sector. The questionnaire consists of nine parts. They are Demographic details,

Supply Chain Collaboration, time spent on business, Reserves for uncertainty, supplier relationship,

Supplier selection, Cost advantage, Differentiation advantage, Competitive advantage. The questions

were framed using the five point Likert scale.SPSS (statistical package for social science – 16.0) was

used for analysis.


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5. Research Model

The following research model is used for the study.

Independent Variables 1 includes first generation entrepreneur, online supply of goods,

possessing very good market knowledge and supply of goods.

Independent Variables 2 includes up to date knowledge about the industry, taking

overdraft for business and the last one is the supplier relationship.

Objective and Hypothesis:

To determine the type of business setup affects the process of attaining competitive advantage.

To prove efficient Supplier selection and role of supplier relationship leads to supply chain

collaboration which influences competitiveness.

H1: Business type has a positive influence on competitive advantage

H2: Supplier selection and supplier relationship has a positive influence on competitive

advantage.

Dependent Variable- Supply Chain Collaboation

Independent Variables 1 Independent Variables 2


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Analysis and Result

The factors influencing supply chain collaboration and competitive advantage are first generation

entrepreneur, online supply of goods, possessing very good market knowledge and supply of goods to

other part of Tamil Nadu. Also thorough knowledge on textile industry, good supplier relationship

influences the competitive advantage. The frequency analysis, revealing the percentage of influence, is

exhibited in the following tables.

Percentage Analysis in SPSS

Table 1: First generation entrepreneur

The above table 1 shows the percentage of first generation entrepreneurs in our study.About 66%

of them are intextile business for generations.


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Table 2: Online Supply by Textile Units

The above table 2 shows the percentage of textile units who supply online in our study. Only a

mere 18% of them are supplying online.

Table 3: Textileentrepreneurs market knowledge

The above table 3 shows the percentage of entrepreneurs who have a good market knowledge.

The results showthat 91% of them in textile business have good knowledge about the market.


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Table 4: Supply of Goods to other parts of Tamilnadu

The above table 4 shows the percentage entrepreneurs in our study supplying to other parts of

Tamil nadu. About 89% of the respondents opine that they are supplying to other parts other than their

home district.

Graph: 1 Percentage of Textile owners response to 4 Independent variables.


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Table 5: Up to date Textile Knowledge

The above table 5 shows the entrepreneurs understanding of the current happenings in industry.

Surprisingly only about 51% of the respondents in textile business are aware of what is happening in

their industry.

Table 6: Overdraft issue

The above table 6 shows the percentage of textile entrepreneurs in our study drawing overdraft

every month. About 27% of the respondents in textile business take overdraft every month.


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Table 7: First generation entrepreneurs.

The above table 7 shows the percentage of textile owners having knowledge about their

suppliers. About 64% of the respondents intextile business think that they know very well about the

suppliers.

Graph: 2 Percentage of Textile ownersresponse to 3 Independent variables.

Current Knowledge OverdraftSupplier

Relationship

Yes 59 27 64

No 41 73 36

0

10

20

30

40

50

60

70

80

Pe

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nta

ge

Hypothesis 2


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Table 8: Relationship with the suppliers.

The above table 8shows the percentage of textile owners maintaining a highly professional

relationship with suppliers. About 93% ofthem intextile businessopine that they maintain a highly

professional relationship with suppliers.

Table 9: Attracting Customers by product differentiation


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The above table 9shows the percentage of textile units providing product differentiation to attract

customers. Nearly 87% of them think that they are gaining the competitive advantage by providing

something different and special.

Table 10: Textile Advertising.

The above table 10shows the percentage of entrepreneurs in our study advertising their business.

About 38% of them in this study are advertising their business.

Cost AdvantageDifferentiation

AdvantageHighly

ProfessionalAdvertise

Yes 83 87 93 38

No 17 13 7 62

0

10

20

30

40

50

60

70

80

90

100

Pe

rce

nta

ge

Result


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Graph: 3 Percentage of Textile owners response to 4 Dependent variables

Friedman Test

Ranks

Mean Rank

Rank my purchases –

Quality 3.36

Rank my purchases - Cost 2.64

Rank my purchases –

Variety 2.12

Rank my purchases - Stock 2.61

Rank my purchases -

Delivery Time 4.26

Table 11: Friedman Test –Ranking of purchase dimensions

The above table 11 shows the ranking of various attributes that influences purchase. Thus

decreasing order of importance is delivery time, quality, cost, stock and variety.


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Visual PLS Modelling

Figure 1: Visual PLS Structural Equation Model.

Where in Fig 1,

In 1 and In 2 denotes the Independent variables and out indicates the dependent variables.

In_1 in the image includes 4 components namely, first generation entrepreneur, online

supply of goods, possessing very god market knowledge and supply of goods.

In_2 in the image includes their up to date knowledge about the industry, taking overdraft

for business and the last one is the supplier relationship.

Output of the model includes their ability to save money in business, maintaining a

professional relationship with suppliers, product differentiation to attract customers, advertisement for

their textile units.


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The Rsquare value of 0.523 is obtained from the Visual PLS Software after the analysis of the

variables. This value indicates that these variables will influence the Supply Chain Collaboration and

leads to competitive advantage positively by 52.3%. The AVE values for all constructs are greater than

0.40 as per the standard AVE rule showing convergent validity and also the Composite Reliability

values for all constructs are greater than 0.4. Thus the reliability scale is proved to be higher in this

research indicating the effectiveness of the study.

In the boot strap analysis, the impact of all independent variables on the dependent variable will

be evaluated and as a rule, the T-statistic value should be greater than 2.0. The T-Statistic value indicates

the effectiveness of the independent variables on influencing the dependent variable.From the above

figure, it is clear that the all the independent variables have sufficient T values to affect their dependent

variables.

6. Conclusion

The Indian Textile Industry is going towards having an efficient supply chain strategy for gaining

competitive advantage.Supply Chain collaboration is vital factor of it.The factors of Supply Chain

collaboration includes seven dimensions, namely first generation entrepreneur, online supply of goods,

possessing very good market knowledge and supply of goods, upto date knowledge about the industry,

taking overdraft for business and the last one is the supplier relationship, their ability to save money in


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business, maintaining a professional relationship with suppliers, product differentiation to attract

customers and advertisement for their textile units.

A total of 100 textile companies participated in the research study. All the factors of supply chain

collaboration were studied. From the results it is well-understood that apart from business type supplier

relationship contributes to competitive advantage significantly.The technological and managerial

assistance along with exchange of information during product development and production stages needs

more attention. The study proves that competitive advantage through supply chain collaboration is the

way to move forward for the textile units. The results highlights that technological assistance is required

for sustainable competitive advantage.

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