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1 PROBLEMS IN THE SUPPLY OF FABRIC IN THE APPAREL INDUSTRY OF SRI LANKA By Kosala Prathibha Dandeniya B.Sc. in Logistics Management Degree Programme 2014
1
PROBLEMS IN THE SUPPLY OF FABRIC IN THE
APPAREL INDUSTRY OF SRI LANKA
By
Kosala Prathibha Dandeniya
B.Sc. in Logistics Management Degree Programme 2014
2
PROBLEMS IN THE SUPPLY OF FABRIC IN THE
APPAREL INDUSTRY OF SRI LANKA
By
Kosala Prathibha Dandeniya
Registration no: LG/13/278
A research submitted to the General Sir John Kotelawala Defense
University in partial fulfillment of the requirements for the Degree of
BSc Logistics management Supply Chain Management
December 2014
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SELF DECLARATION
The work described in this research was carried out by me under the supervision of
senior lecturer Mr. S. Sharic and a report on this has not been submitted in whole
or in part to any university or any other institution for another Degree/Diploma
.
D.A.K.P. Dandeniya
LG/13/278
4
I/We certify that the above statement made by the candidate is true and that this
thesis/research/project is suitable for submission to the University for the purpose
of evaluation
...
Mr. S. Sharic
Senior Lecturer
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ABSTRACT
The objective of this paper is to identify the problems related with the supply of fabric in the
apparel industry of Sri Lanka. A quantitative and qualitative mixed study was carried on for
gathering data to come in to a conclusion. When selecting the sample researcher choose MAS
Holdings as it is a leading company in Sri Lanka which have a global recognition. MAS
Holdings is one of Sri Lankas largest apparel manufactures, employing more than 34450 people
in 21 factories in 10 countries. Annual revenues are US$570 million each year. MAS
manufactures 44 million garments and is Victorias secrets largest suppliers. So by giving
questionnaires to middle level management of the company the researcher was able to come in to
a conclusion that increase of cost, quality issues, and time wastage are problems caused by the
lack of indigenous fabric supply within the country. So we could say that this research paper was
a success and its based on the researchers observation about the above mention three factors
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ACKNOWLEDGEMENT
The completion of this research would not be possible without the assistance of many people. This
project could not have been compiled without
Mr. S. Sharic Research Supervisor
Not only served as my supervisor but also encourages me throughout my academic program and
helped me during the research to make it a success with his wealth of experience & guiding me in the
right path. I value his commitment and genuinely thankful to him.
My appreciation also goes out to all the divisional executive office staff, Operational level
managers, and functional level operators, Technical officers & support services staff in MAS
Holding Intimates who helped me to make my research a success.
Last but not least, I would like to extend my heartfelt gratitude to my parents, friends and other
people who helped me in various ways to completion of this project.
Thank you very much for all of you!
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TABLE OF CONTENT
SELF DECLARATION ................................................................................................................3
ABSTRACT .................................................................................................................................... 5
ACKNOWLEDGEMENT .............................................................................................................. 6
CHAPTER 01 ................................................................................................................................. 9
1.1 Introduction ................................................................................................................................. 9
1.2 Statement of the problem ......................................................................................................... 12
1.3 Theoretical Framework ........................................................................................................... 13
1.4 Research Hypothesis ................................................................................................................. 14
1.5 Research Objectives ................................................................................................................. 15
1.6 Significant of the Research .................................................................................................... 15
1.7 Methodology .. 16
1.8 Research Limitations ..17
CHAPTER 02...............................................................................................................................18
2.1 Introduction to Literature Review ............................................................................................ 18
2.2 Background of the Fabric supply .............................................................................................. 18
2.3 History of Fabric Industry ......................................................................................................... 19
2.4 Global Apparel Manufacturing Industry..................................................................................21
2.4 The apparel industry of Sri Lanka...........................................................................................22
2.6 The economic Growth of Apparel Industry .............................................................................. 23
2.7 Time Line of Fabric .................................................................................................................. 24
2.8 Literature from past studies ..................................................................................................... 27
CHAPTER 03 ................................................................................................................................ 30
3.1 Design of the Research Methodology ....................................................................................... 30
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3.2 Selection of the Sample ............................................................................................................ 30
3.3 Data Gathering .......................................................................................................................... 31
3.4 Conceptualization ..................................................................................................................... 32
Chapter 04 ..................................................................................................................................... 33
4.1 Introduction ............................................................................................................................... 33
4.2 Analysis .................................................................................................................................... 33
Chapter 05 45
5.1 Finding and conclusion45
References .47
Appendix ..48
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CHAPTER 01
INTRODUCTION
01.1. INTRODUCTION
Sri Lankans apparel industry is one of most significant and dynamic contributor for Sri Lankas
economy. The industry had grown rapidly in last few decades and had become Sri Lanka s one
of the significant foreign exchange earner. And also Sri Lanka is the leading country when
considering with the neighbor countries about the textile and garments.
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The industry give opportunities to over 300 000 direct employment and 600 000 indirect
employment and most of the employees are women. (Expo Sri Lanka 2012). Around 350
garment factors are operating in Sri Lanka and garment sector account for 52% of the total
industrial export (Sri Lanka export development board.).
This industry, virtually entirely privately owned has successfully exploited the opportunities the
international market. Further, the co-operation between the Government and the private sector
was a significant factor contributing to the spurt in apparel exports. Today, the garment industry
occupies a pre-eminent position in Sri Lanka, producing high quality garments combined with an
industry which is flexible and uniquely capable in servicing leading international brands such as
Victorias secret, Liz Claiborne, Nike, Gap etc. (board of investment).
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Sri Lankan apparel has evolved from traditional export and tailoring design to providing
sophisticated solutions, creativity through experience, fashion, R&D etc. bridging the countrys
gap between developing and developed (Sri Lanka export development board). Sri Lanka had
gathered the advantages of catering garments for different countries around the globe and USA
and UK are top market of Sri Lankan apparel industry for decades. (Expo Sri Lanka 2012).
Among them USA is the main exporting region accounting 76% of the total and Sri Lanka is
ranking 12th among the top apparel exporters around the globe. (MAS Fabric Park).Sri Lanka
main importing regions are India and China. A wide range of apparel for men, women, girls,
boys, children and babies in the categories of fashion-wear, sportswear, lingerie, work-wear,
rain-wear and swim-wear is manufactured and exported with the flexibility of catering to the
specific seasons to many countries around the world.
Sri Lankan garment industry is now progressively moving towards the fashion industry from a
purely manufacturing industry. The team of designers and technical experts being mindful of the
fast changing trends in modern designs, use the latest technology in the production of finely
tailored and customize products in high volume. (Expo Sri Lanka 2012).
But still Sri Lankan garment sector has not able to cater their fabric need from indigenous plants.
So my research would be carried out to find the problems associated with the indigenous supply
of fabric in the apparel industry of Sri Lanka.
Throughout the research the researcher will be mainly focusing on MAS holdings as it is the
leading garment manufacturing company in Sri Lanka and as it covers a major share of the
apparel market of Sri Lanka. MAS Holdings was started 25 years ago and it built a reputation
among the world that a South Asian manufacturer could produce fine apparel worthy of the most
respected brand names in the world. Today, MAS Holdings are the region's leading manufacturer
of intimate apparel, performance wear and swimwear, with an annual turnover surpassing USD
1bn. (MAS Holdings official web site). MAS Holdings is now comprises of 41 factories out of
whole 350 factories in the country & caters jobs for more than 60,000 employees. (MAS fabric
plant). As per MAS holding they have been a major export in the apparel industry of Sri Lanka
with their product Victorias secrets. Intimates are the major garment in MAS holding and the
research may be carried out by researching MAS Intimates factories.
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01.2. PROBLEM STATEMENT.
There is a lack of indigenous fabric supply in the Apparel industry of Sri Lanka. Apparel industry
of Sri Lanka is based on the quality of raw materials, efficiency and innovations. (H.R.A.T.
Ranaweera, University of Moratuwa, 2014 February). When comes to the quality of raw
materials indigenous fabric supply plays a major role as it could be cost effective and good
inspection can be carried out easily. In 2010 the country spent USD 260 to import knitted fabric.
(Lanka Business Report, 2011, June). Lack of indigenous plant means there are less alternative to
go for. And when a quality problem arise Sri Lankan apparel industry find it difficult to return or
take necessary actions as most of the suppliers are foreign. And according to my primary data
gathering I could find the following problems arise as a result of lack of indigenous fabric
supply,
When transporting the garments there are some problems arise like wrong garment or raw
material is transported, or delays.
Less alternatives to go for means when there is a problem with the supplier, like defects
in material, problem with design, delays etc. industry find it difficult to move to another
source.
Now days the apparel industry is using JIT system but as most of the suppliers are foreign
there is a crash between holding cost and transportation cost.
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03. THEORETICAL FRAMEWORK
A conceptual domain will be built for the following variables and by managing the Cost, Time
and Quality the company may be able to overcome the problem of lack of fabric supply so the
theoretical framework is designed as the independent variables, Cost, Time, and Quality directly
influence the dependent variable, lack of fabric supply.
Lack of supply of
Fabric
Cost
Time
Quality
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04. RESEARCH HYPOTHESIS
The researcher would carry out the study by assuming that Sri Lankan garment sector (especially
MAS Holdings) has still not overcome the problems associated with perfect supply of fabric to
the garments plants for their manufacturing purposes from the country itself.
Cost positively contribute to the lack of supply of fabric in Sri Lanka.
Time positively contribute to the lack of supply of fabric in Sri Lanka.
Lack of quality of fabric contribute to the lack of supply of fabric in Sri Lanka.
Expectation
:
Give the priority for indigenous supply as it could overcome lots of
issues related to supply of fabric
Gap between actual and expected in practical world
What are the reasons for lack of indigenous fabric supply
and causes of it?
Actual: A larger proportion of Raw materials is imported from foreign
countries when compared to local supply
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05. RESEARCH OBJECTIVES
Core objective
Researcher would like to study and explore the problems encounter from the lack of indigenous
supply of row of material (fabric) in the apparel industry Sri Lanka.
Secondary objectives
Minimize the impact of inbound cost associate due to lack of fabric base.
Reduce the lead time created due to lack of fabric base on business efficiency.
To examine the crash of holding cost and ordering cost.
Optimize the problems arising with the poor quality of raw materials and the difficulty in making
fabric within the country.
06. SIGNIFICANT OF THE STUDY
As researcher is doing this research about the problem associated with the indigenous supply of
fabric it will be very much important for garments in Sri Lanka that they can take steps to
overcome them. Researcher strongly believe that by analyzing this problem the garment sector
will find it easy to manage their fabric base. By managing their fabric base they will be able to
provide their customers an optimum service and in return the garment factories will optimize
their profit.
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As researchers main focus is on indigenous fabric supply it will be important for the new
investors who are going to invest in the industry of fabric and garments in Sri Lanka as this
research will provide them a clear understanding about the lack of indigenous fabric supply and
the cost generating from it.
This research will be use full for the policy makers to promote and develop the indigenous fabric
base. And also the policy makers could use my study to promote certain areas in fabric supply
and give necessary infrastructure for that selected areas especially fabric supply area.
08. METHODOLOGY
A qualitative & quantitative mix method will be used to collect data for the research. The
methodology will be engaged with questionnaires and interviews to gather necessary data to
explore the empirical gap. All the factories for the research will be based on MAS Holdings as
my sample as it comprises 41 factories out of whole 350 factories in the country & caters jobs for
more than 60,000 employees. (MAS fabric plant). As per MAS holding they have been a major
export in the apparel industry of Sri Lanka with their product Victorias secrets. As intimate
are the major garment in MAS holding the researcher may be focusing this study on MAS
intimates.
The questionnaires will be handed over the some senior managers and senior executives. And a
general manager for supply chain will be interviewed to gather necessary primary data for the
research. Some data records and accounts of the company will be examined together with related
web sites to gather secondary data.
When deciding the questionnaire the researcher will be focused on a structured questionnaire
with simple questions and technical questions mix as the interviewers will be personals related to
the field.
As the first step the researcher will have to identify how significant the problem that arise from
supply of raw materials to the garment sector. So for that structured question to identify the
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significant of the problem will be forward upon in the questionnaire and some personal views of
the personals will be look upon to identity this in the interview.
Then the next step will be based on the issues that arise in the problems in the supply of the raw
material (fabric). In the beginning of this session general questions will be forwarded upon in the
questionnaire and interview both, and then the researcher will be very specific when forwarding
questions. That means the scope of the question will be much more limited to the hypothesis of
cost, time and quality measure.
Then the ideas of personals will be interviewed to find out the remedies that the apparel industry
can take to overcome the above identified problems using direct questions in both questionnaire
interview. Those ideas will be analyzed with other researchers done in the past (literature review)
and the researchers will be come out with an optimum solution.
09. RESEARCH LIMITATIONS
This study will provide solutions for the problems arising with the supply of fabric and what are
the mechanisms to apply. As my study is based on samples the findings may not be related to
every garment of Sri Lanka and as I do not have 100% access to accounts this study may have
some sort of limitations in this.
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CHAPTER 02
LITERATURE REVIEW
2.1 INTRODUCTION
Basically literature review is consist with basic definitions, concepts and relevant areas of fabric
supply by examining the past studies done by different scholars. Previous research articles,
relevant books and relevant web sites have been used to build this literature review. When comes
to the supply of fabric and its problems related, cost, time, quality comes in to play. This section
reviews about the past findings related to those three fields generally. This review may be not
very specific but it will give idea for the researcher to carry on the study.
2.2 BACKGROUND OF FABRIC SUPPLY
A supplier is a company that provides goods or services to another company. In here it is fabric
manufacturing company. These fabric may be used to make a different apparels which is then
sold to customers (Financial Dictionary).
Hau L Lee et al (1993) from Stanford University did a research and found that a fabric supply
chain is a network of facilities that performs the functions of procurement of fabric,
transformation of fabric to intermediate and finished products, and distribution of finished
products to customers. Often, organizational barriers between these facilities exist, and
information flows can be restricted, cost of fabric will effect, quality of fabric may come in to
practice as a problem. So the companies must know how to overcome this.
When we talk about fabric we have to have a general idea of what is fabric. Fabrics are
manufactured from various raw-materials which are available from nature or artificially
generated or mix of both. Fabrics can be classified based on the origin of fibers and its processes
or its end usage.
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Natural fabrics are those which are created from the fibers of animals coats, the cocoons of
silkworms, and plants seeds, leaves and stems. It is breathable and never cause rashes apart from
being soft and durable. Natural fabric is the best choice for everyone. It does not change color
from UV light and there is no warming until the material loses its tensile strength.
Synthetic or man-made fabrics are made from fibers which are either completely made from
inorganic materials or organic materials combined with chemicals. Synthetic fabrics have
numerous properties with the purpose for which it is produced and finished. Some are
lightweight with ultra-sheer while others are moisture wicking and fast drying. Few are very
luxurious to imitate some other natural fabrics and some are very strong and tough. (Textile
school)
Common definition given for fabric by business dictionary is manufactured assembly of
interlacing fibers, filaments, and/or yarns having substantial surface area in relation to its
thickness, and adequate mechanical strength to give it a cohesive structure. Most fabrics are
knitted or woven, but some are produced by non-woven processes such as braiding, felting, and
twisting. Applied loosely, 'fabric' also includes laces, meshes, and nets.
2.3 HISTORY OF FABRIC
It is better to have a look about the history of the fabric industry to take a general understanding
about the industry. Fabric is woven into humanity and has touched so many livesbeginning in
ancient times when primitive peoples used flax fibers, separated into strands and plaited or
woven into simple fabrics colored with dyes extracted from plants. Given the intimate history of
people and fabric, it is hard to imagine that the industry or art of making fabric has evolved
into one that adversely affects the environment. The fabric business is often used to symbolize
the transformation of manufacturing brought about by the industrial revolution, as it was one of
the first industries to benefit from the energy produced by the steam engine powered by fossil
fuel. With industrialization, the fabric industry transformed from one grounded in nature to one
that relies heavily on synthetic materials and chemicals. (Textile School)
For thousands of years before the introduction of synthetic fibers, the four great fibers in the
fabric industry were flax, wool, cotton and silk, all products created from natural, rapidly
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renewable and abundant sources. Innovators developed synthetic fabrics to overcome some of
the inherent limitations of natural fibers: cotton and linens wrinkle; silk requires delicate
handling; and wool shrinks and can be irritating to the touch. Rayon, the first man-made fiber
produced to emulate silk, became commercially available in 1910.Nylon, the Miracle Fiber,
came to market in 1939 as one of the first synthetic fibers created from petrochemicals. It
established an entire new world for synthetic fibersincluding thread and womens hosiery
and quickly replaced silk in a range of applications. Nylon became the dominant fiber for tents
and parachutes in World War II. Nylons successful adaptation opened the door for other
synthetic fibers. (Textile school)
At the time nylon was introduced, cotton was the king of fibers, making up 80 percent of all fiber
production. By 1945, cotton production had decreased to 75 percent and its use in the home
furnishings market continued to decline. Synthetic fibers made up 15 percent of the balance of
the market, with wool and other fibers making up the remaining 10 percent. As more synthetics
were developed, however, the manmade cellulose-based fibers like rayon, and the new fossil fuel
fibers and filmsacrylic, nylon, polyester, and polyvinyl chloride continued to replace natural
fibers. Synthetics delivered greater comfort, soil release, broader aesthetic range, dyeing
capabilities, improved fiber cross section and longitudinal shape, tensile strength, abrasion
resistance, colorfastness and better blending qualities, as well as lower costs.
The man-made fibers, and a steadily growing palette of synthetic additives, made it possible to
add flame-retardancy, wrinkle and stain resistance, antimicrobial properties and a host of other
performance improvements. By the mid-1960s, synthetics increased in market share to over forty
percent. In the 1970s, a wave of greater consumer awareness and recognition of increasing
product liability stimulated market demand for flame resistance in childrens sleepwear, carpet
and other products, including upholstery fabrics. For some, manufactured fibers meant life
made better.(Textile school)
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2.4 GLOBAL APPAREL MANUFACTURING INDUSTRY
Textile industry has come a long way to be an organized industry from being a mere domestic
industry. Starting with the Industrial Revolution, it has gained a state of supremacy with time.
High production of wool, cotton and silk all over the world has given a boost to the textile
industry in past years. Though the industry originated in UK, the art of textile production passed
to Europe and North America after mechanization of textile manufacturing process in those areas.
Asian countries also industrialized their economies and took steps for the growth of this sector.
Japan, India, Hong Kong and China have become leading producers of textile because of the
availability of cheap labor which is a very important factor for this industry.
The World Trade Organization (WTO) has taken important steps for development of this sector.
In 1995, WTO had adopted Agreement on Textiles and Clothing (ATC), which provided for
removal of quotas on textile and clothing among WTO member countries. This agreement was
enforced on 1-1-2005 and all the quotas were abolished. Although high tariffs and quantitative
restrictions are imposed by the economically developed countries, the developing countries are
increasingly exporting textiles to developed and other countries.
Companies in this industry manufacture garments made from purchased fabric and from fabric
they produce themselves. Major companies include Levi Strauss, PVH, Ralph Lauren, VF
Corporation, and Warnaco, all based in the US, along with Armani (Italy) and Youngor Group
(China).
Demand is largely determined by consumer tastes and the comparative costs of manufacture in
the US and overseas. The profitability of individual companies depends on efficient operations
and the ability to secure contracts with clothing marketers. Small companies can compete
effectively with large ones by specializing in a particular type of apparel manufacture. There are
few economies of scale in manufacture, because of the high labor content of most apparel. The
US industry is fragmented the 50 largest companies generate less than 40 percent of revenue.
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2.5 THE APPAREL INDUSTRY IN SRI LANKA
The design, manufacture and export of textiles and apparel products is one of the biggest
industries in Sri Lanka, and one which plays a key role in advancing the country's economy. The
apparel industry of Sri Lanka employs about 15% of the country's workforce, accounting for
about half of the country's total exports, and Sri Lanka is among the top apparel-producing
countries in the world relative to its population.
Sri Lanka's apparel industry began to grow significantly in the 1980s as an alternative to India's
garment manufacturers, because of its open economic policy as well as the trade and investment
friendly environment. Under the Multi Fiber Agreement, quota regime Sri Lanka became an
attractive new venue for businesses. In 1985 Martin Trust one of the pioneers in the development
of speed sourcing for the American fashion retail sector, began working with Sri Lankan textile
and apparel companies. In 1986 and 1987 he established joint venture partnerships with The
Omar Group (formerly known as LM Apparels and part of the Brandix group) and The Amalean
Group which helped make the country more competitive through knowledge transfers and
technology, attracting further foreign investors. These were the first of nearly two dozen joint
venture companies in Sri Lanka which made the country competitive in the garment sector.
Including Trusts partnership with German brassiere maker, Triumph International, and Sri
Lankan company, MAS Holdings, to create a new venture called Bodyline.
When the U.S. and other countries eliminated quantitative restrictions on garments produced in
China, many garment facilities in Sri Lanka were consolidated. As of 2010, most of the exports to
the U.S. are from MAS or Brandix with smaller amounts coming from the Hirdaramani & Jay
Mills Groups. Together, these three companies account for a majority of the value of exports of
garments to the U.S. market.
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2.6 THE ECONOMIC GROWTH OF THE APPAREL INDUSTRY
Exports of apparel per capita to the U.S. market from leading garment-manufacturing countries,
1989-2009 over the next few decades, the apparel industry grew to represent Sri Lanka's number
one export. Following a 38% increase in textile-based revenue from 1996 to 1997, in which the
industry generated $2.18 billion in earnings, 50 new textile factories opened in Sri Lanka in
1998.As of 1998, the Sri Lanka apparel industry employed about 300,000 people. Sri Lanka
nationals are primary owners of 85% of the small-to-mid-sized factories, while larger operations
are typically joint ventures or foreign-owned. (Central Bank of Sri Lanka, 2010. Annual Report
2010)
The end of Sri Lanka's civil war in 2009 relieved pressure on the country's garment industry.
After fighting ceased, Brandix, a garment manufacturer with 25,000 employees, announced that
its factory in Punani would double its exports. Later that year, Sri Lanka held its largest ever
Design Festival, highlighting the country's high-fashion merchandise, upcoming designers and
advancing the industry's desire to become known as a hub for design, as well as manufacturing.
More exhibits followed once the Conference and Exhibition Management Services began
operating out of Sri Lanka in 2010. In doing so, the global company announced three
international textile exhibits in Sri Lanka, each to highlight a different aspect of the local textile
and apparel industry while allaying fears about political instability and to show that Sri Lanka can
compete with the EU market.
As of the late 2000s (decade), the Sri Lankan textile industry contributes 39% to the industrial
production of the country and represents 43% of the country's total exports. Since the 1970s, the
industry has grown to become the country's largest single source of export revenue.
The United States is the main importer of textile goods from Sri Lanka, accounting for 76% of
total exports from Sri Lanka. As of 2009, Sri Lanka ranked 12th among apparel exporters to the
United States in terms of value. Sri Lanka partnership was advanced in 2000 in part by setting up
logistics centers at key U.S. ports to smooth the importation of Sri Lankan goods. Beginning in
2004, Sri Lankan officials have sought to increase textile deals in North Carolina, the American
state with the largest concentration of textile industries.
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2.4 TIMELINE OF FABRIC
It is important to look about the revolution of fabric to understand the development of it and to
look about how important fabric is to the world.
6000 BC
The title of "earliest textile" has recently shifted from Egypt to Anatolia (modern day Turkey),
with Egypt and Israel close contenders. James Mallet's dig at the Neolithic village of Catal
Huyuk in southern Turkey dating from 6,000 BC, exposed fine-spun and plied-thread, plain
weave tabby cloths and garments, some of the tabby designs showing signs of being darned.
4500 BC
Weaving loom invented.
4000 BC
Cotton seed dating from this time period have been found in Pakistan.
3600 BC
The origin of silk production and weaving is ancient and clouded in legend. The industry
undoubtedly began in China, where, according to native record, it existed from sometime before
the middle of the 3rd millennium BC.
715 BC
Rome establishes wool dyeing craft.
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694 BC
Trees bearing wool (cotton) were introduced to Assyria by Sennacherib.
327 BC
India develops the art of cotton dyeing. Alexander (the Great) finds "beautiful printed cottons".
273 AD
The wife of Emperor Aurelian orders a Purpura dyed silk garment...the Emperor orders the sale
canceled. The silk was imported from China (the China "silk road" trade route was established
just before this date). The cost of the silk garment for Aurelian's wife would have cost its weight
in gold. That is how much the various traders charged for silk per order.
1327 to 1377
Need to improve the wool and textile industry in England, and to keep it ahead of other nearby
nations foreigners are offered protection by the "Royal Wool Merchant" King Edward III.
1519
Cotton is discovered in Central and South America by Pizarro and Cortez.
1688
Scottish dyers become so profitable that they pose a threat to English dyers. James II prohibits
undyed cloth from England to other countries.
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1783
Roller printing developed.
1802
A form of resist wax technique a form of batik (on a large scale) was purchased by Sir Robert
Peel from a traveler for approximately $25.00.
1948
Textiles become the second largest industry in the US. The consume consumption per capita of
fibers 27 pounds of cotton, 6.3 pounds rayon, 4.9 pounds of wool.
1968
Manmade fibers top natural fibers for US consumption. This is the very first time that this
happens.
After that the fabric supply of the world improved drastically in order to cater the rising demand
of the customers. Asia positioned in the top with good fabric with less cost due to their lower
labor cost. (Textile school)
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2.5 LITERATURE FROM PAST STUDIES REGARDING THE PROBLEMS FACED
DUE TO FABRIC SUPPLY IN THE APPERAL INDUSTRY
H. Yan et al did a research and found out that in a typical supply chain in the textile industry,
particularly in a developing industrial region, a fabric manufacturing company often needs to
deal with a large number of both upstream yarn providers and downstream garment
manufacturers simultaneously. A large final buyer, usually representing a brand name or retailer
chain, provides and confirms demand data in consecutive time periods during the manufacturing
process. The difficulties faced by the fabric manufacturer are thus: the fabric manufacturer must
be capable of a quick response, since it always receives the demand order from the final buyer
very late, which leaves a tight lead time for production. In addition, both the material quality and
price at the supply side is often noticeably unstable. To cope with the quick response
requirement, the fabric manufacturer needs to purchase a certain amount of material (yarn) based
on general business experience and informal information exchange with the final buyer before
the order arrives. Such an early purchase not only gives the fabric manufacturer a reasonable
production preparation period but also provides room for quality material searching and better
price bargaining. When the integrated demand order is given by the final buyer, the fabric
manufacturer then adjusts the material inventory accordingly by purchasing more and starts the
production. Such a demand order, however, needs to be confirmed by the final buyer within a
pre-agreed time period, since the apparel market is highly uncertain. Therefore, the fabric
manufacturer often needs to buy at a higher price if the inventory is short, or to deal with the
over inventory with a salvage cost. As researchers preliminary data gathering researcher found
out that Sri Lankan apparel industry is using JIT system so they need a quick response from
fabric suppliers in order to cater the demand of the customers. So this research is a good research
to find out the effect of time in the fabric supply. They investigated normal & urgent raw
material purchasing cost, holding cost, over stock cost, as well as availability of raw materials for
urgent orders. This research shows that fabric manufactures plays a critical role in operations
efficiently and overall cost control in typical apparel supply chain. (Quick response procurement
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cost control strategy for fabric manufacturing, department of logistics, the Hong Kong
polytechnic university, international journal of production research 2007).
Fisher and Raman (1996) modelled and analyzed the decisions for a fashion skiwear firm (a
brand) under the quick response requirement. Based on the assumption that there is a production
capacity limit in the second period, they minimized the overstock and understock costs at the end
of the sales season.
Due to the long history of the textile industry and its vast influence on the global economy,
extensive researches have been conducted in the area of inventory management related to the
apparel-textile supply chain (e.g. Hunter and Valentino 1995, Chandra and Kumar 2000, Kilduff
2000, King et al. 2000, Raman and Kim 2002). Based on the observation on the significant
demand uncertainty in the final market faced by the final buyers (retailers or brands), most
research has focused on the final buyers inventory or production management problems
involving demand uncertainty, limited sales season, and early sales information. So the
researchers questionnaire will be focused on an area for seasonal and off seasonal demand
change also where time come in to practice.
According to researchers preliminary data gathering researcher found out that Sri Lankan apparel
industry is using JIT system when comes to purchasing raw materials in other words fabric. So
Sri Lankan apparel sector must adapt efficient and effective fabric purchasing process to
overcome the challengers when using JIT system. The challengers emerge due to the changing
market of suppliers and other factors like oil prices, transporting cost, competitiveness etc. JIT
system had been so far successful but the problems is whether the cost incurred by transportation
of raw materials can be further bearable or not for the garments. Due to the cost of oil and
overall supply situation, manufacturers must push to increase raw material stock says Michael
Apperson, President and CEO of American fibers and yarn. (Industrial outlook, 2006 retail
planning guide)
When comes to supply chain of fabric Ha Jin Hwang et al had done a study to search for the
better answer of satisfying customer demands in the face of fierce global competition, companies
have experienced dramatic changes in the way they operate. For more than a decade, companies
have reengineered and restructured in an effort to improve efficiency and meet customer
expectations. The goal is to develop value-added processes that deliver innovative, high-quality,
29
low-cost products on time with shorter development cycles and greater responsiveness. In a
global supply chain of textile industry, the main objective is to supply a quality product to
customers at an affordable cost and to increase the profit margin for investors and shareholders.
They have found out that raw material purchasing cost is one of the main components of cost
when comes to production. They out came with that intelligent supply chain management can
improve customer service, delivering time, product life cycle time and will ensure efficient
follow of information to provide customers a better, faster, cheaper, and reliable service
intelligent supply chain management important (an intelligent supply chain management system
to enhance collaboration in textile industry , Kazakhstan institute of management ,economics and
strategic research , international journal u and e- service, science and technology ,2011
December)
Supply chain management (SCM) is an approach that has evolved out of the integration of these
considerations. SCM is defined as the integration of key business processes from end user
through original suppliers that provide products, services, and information and hence add value
for customers and other stakeholders (Lambert et al., 1998)
According to Sameer Kumar et al study the cost savings through outsourcing in the low-cost
labor countries in Asia for the US apparel producer supply chain can be huge and the lead-time is
quite substantial. Thus, outsourcing is not a viable solution for meeting short-term market
demands. However, for large seasonal orders, outsourcing could be an enormous cost-saver. The
lead-time of the US apparel producer supply chain could be improved if certain controllable
factors such as order processing could be made more efcient. Outsourcing strategy for apparel
manufacturers they have found that garment industry can reduce lead time and cost incurred in
Supply chain activities by outsourcing certain areas. (Outsourcing strategy for apparel
manufacturers, Opus College of business, University of St Thomas, Minnesota, 2007)
30
CHAPTER 03
METHODOLOGY
The main purpose of this study is to identify the problems related with the supply of fabric in the
apparel industry of Sri Lanka due to lack of indigenous fabric base.
3.1 DESIGN OF THE METHODOLOGY
As this research is done by going through objectives of the research the data gathering will be
done in order to finally succeed the objectives of the research which is mentioned below
Minimize the impact of inbound cost associate due to lack of fabric base.
Reduce the lead time created due to lack of fabric base on business efficiency.
To examine the crash of holding cost and ordering cost.
Optimize the problems arising with the poor quality of raw materials and the difficulty in
making fabric within the country.
A qualitative & quantitative mix method will be used to collect data for the research. The
methodology will be engaged with questionnaires and interviews to gather necessary data to
explore the empirical gap.
3.2 SELECTION OF SAMPLE
Sampling is used to represent a big population for the purpose of the research. This sampling is
done as researcher has some limitations in accessing to the whole population. So the researcher
select a sample that will perfectly represent the whole population and identify it as the target
group to evaluate.
As the researcher has some limitations in reaching all the garment factories in Sri Lanka, all the
factories for the research will be based on MAS Holdings as researchers sample as it comprises
31
41 factories out of whole 350 factories in the country & caters jobs for more than 60,000
employees. (MAS fabric plant). As per MAS holding they have been a major export in the
apparel industry of Sri Lanka with their product Victorias secrets. As intimate are the major
garment in MAS holding the researcher may be focusing this study on MAS intimates.
3.3 DATA GATHERING
The questionnaires will be handed over to some senior executives. And a general manager for
supply chain will be interviewed to gather necessary primary data for the research as per the
general managers view regarding the research area. Some data records and accounts of the
company will be examined together with related web sites to gather secondary data.
When deciding the questionnaire the researcher will be focused on a structured questionnaire
with simple questions and technical questions mix as the interviewers will be personals related to
the field.
As the first step the researcher will have to identify how significant the problem that arise from
supply of raw materials to the garment sector. So for that structured question to identify the
significant of the problem will be forward upon in the questionnaire and some personal views of
the personals will be look upon to identity this in the interview.
Then the next step will be based on the issues that arise in the problems in the supply of the raw
material (fabric). In the beginning of this session general questions will be forwarded upon in the
questionnaire and interview both, and then the researcher will be very specific when forwarding
questions. That means the scope of the question will be much more limited to the hypothesis of
cost, time and quality measure.
Then the ideas of personals will be interviewed to find out the remedies that the apparel industry
can take to overcome the above identified problems using direct questions in both questionnaire
interview. Those ideas will be analyzed with other researchers done in the past (literature review)
and the researchers will be come out with an optimum solution.
32
3.4 CONCEPTUALIZATION
A conceptual framework is designed by the researcher to address the most important measures
that can be used to gather information as mentioned above. These three factors are decided from
researchers secondary data gathering from the literature and from a conversation with an
industry expert.
A conceptual domain will be built for the following variables and by managing the Cost, Time
and Quality the company may be able to overcome the problem of lack of fabric supply so the
theoretical framework is designed as the independent variables, Cost, Time, and Quality directly
influence the dependent variable, lack of fabric supply.
Cost
Time
Quality
Lack of supply of
Fabric
33
CHAPTER 04
ASSESMENT OF THE QUESTIONNAIRE
4.1 INTRODUCTION
This section will be focused on analyzing the answers given by the respondents for the
questionnaires addressing the topic of problems in the supply of fabric in the apparel industry of
Sri Lanka. The questionnaire is design according to the hypotheses like Cost positively
contribute to the lack of supply of fabric in Sri Lanka, time positively contribute to the lack of
supply of fabric in Sri Lanka, and lack of quality of fabric contribute to the lack of supply of
fabric in Sri Lanka.
4.2 ANALYSIS
First a filter question was asked from the respondents about the source they purchase raw
materials and every one gave the same answer as Asian region. So this is a kind of problem and
researcher recommend to focus on indigenous suppliers as it will reduce the impact of time,
quality and cost to the raw materials.
Source of raw material
Questionnaire 01 Asian region
Questionnaire 02 Asian region
Questionnaire 03 Asian region
Questionnaire 04 Asian region
34
100%
Source
Asian Region
Then they were asked what was the common problem faced by Sri Lanka to supply fabric within
the country and most of them answer was common as less fabric mills and not enough yarn. So
the policy holders can develop a policy to support indigenous fabric supply like giving
incentives, tax holidays and financial support to motivate them. If we could at least cater the
demand of the Sri Lankan garments that will be a huge success.
Common Problem
Questionnaire 01 Only 5-6 fabric plants to cater 400 garments
Questionnaire 02 Less fabric mills, Unavailability of yarns
Questionnaire 03 Incapability of producing inside the country
Less fabric mills
Questionnaire 04 Less fabric mills, Unavailability of yarns
35
After that a question was put forward to ask the common benefit their company get from purchasing
raw materials from the source they purchase now, Asian region. Mostly China and India according to
researchers data gathering. Sri Lanka still have cheap labor and Sri Lanka still have a good capability of
having the above mentioned benefits within the country
Common benefit from the source
Questionnaire 01 Price, Capacity, Technology
Questionnaire 02 Price
Questionnaire 03 Price, Capacity, Technology
Questionnaire 04 Price, Quick Delivery, Capacity, Technology
Price 04 36.36%
Capacity 03 27.27%
Technology 03 27.27%
Quick Delivery 01 9.1%
37%
27%
27%
9%
Common Benefits
Price
Capacity
Technology
Quick Delivery
Then the respondents was asked whether they are satisfied with the source now they purchase
raw materials or not, they all said yes they are satisfied and everyone agreed that though they are
satisfied there were some quality issues also.
36
Satisfied with the source or not
Questionnaire 01 Satisfied
Questionnaire 02 Satisfied
Questionnaire 03 Satisfied
Questionnaire 04 Satisfied
100%
0%
Satisfied or not
Satisfied
Not
Was there any quality issues
Questionnaire 01 Yes
Questionnaire 02 Yes
Questionnaire 03 Yes
Questionnaire 04 Yes
100%
0%
Was there any quality issues
Yes
No
37
After that a question was asked about the remedies they normally follow if there are any quality
issues and answers were 50% for adjust accordingly and 50% for the answer other. When
looking at the answers given in other we can see a similarity with the answer adjust accordingly.
The answers of other were inform to supplier / customer and use the material by doing some
additional activities and if there are any additional costs involve that will put on supplier. In that
sense it will tend to tarnish customer supplier relationship so it is better to have inspection before
they bring raw materials. For that a predefined process is needed like having an agent of the Sri
Lankan garments in the source.
1. Remedies followed if there were any
Questionnaire 01 05 25%
Questionnaire 02 04 25%
Questionnaire 03 05 25%
Questionnaire 04 04 25%
50%50%
Remedies
Do Nothing
Return back
Tell to Refund
Adjust accordingly
Other
Then they were asked how to select the service provider and all of them gave answer number
four that the service provider is developed by the customer and they have to select according to
what customer want and one gave answer two with answer four that by the brand. In the present
market the customer is the king, so the companies should have a clear idea of the customers
choice and should do market survey to gather data.
38
How to select the service provider
Questionnaire 01 4
Questionnaire 02 2,4
Questionnaire 03 4
Questionnaire 04 4
0%20%
0%
80%
Service provider
Contract Brand Open market Customer developed
Then as a general question the mode of transport was asked and every one replied as ship and
airline. Companies should try best to cope with shipping lines as airlines cost a lot. In that sense
early delivery and pre plans will help to do that.
Mode of Transport
Questionnaire 01 Ship, Air line
Questionnaire 02 Ship, Air line
Questionnaire 03 Ship, Air line
Questionnaire 04 Ship, Air line
39
After that very specific and an important question was asked that raw material cost as a
percentage and most of them gave answers around 60%. So that we can understand how
important raw material to be controlled is very well as it cater for the majority of the cost of the
production. If we can reduce this raw material cost we can have a better competitive advantage
of less cost over other countries and this can be done by promoting indigenous fabric supply.
Raw material cost as a percentage
Questionnaire 01 60%
Questionnaire 02 60%
Questionnaire 03 65%
Questionnaire 04 58%
Then we have to see the impact of the time bound of the material to the effectiveness of the
production. So a question was asked to examine the impact of the time bound to the organization
production. Two people responded as high and another two responded as very high. So we can
come in to a conclusion that time bound has a high impact to the production. So better plans to
reduce the time of raw material delivery should be adopted and again if we can promote
indigenous fabric supply we can reach this goal and can give customers a better service on time.
40
Impact of time bound
Questionnaire 01 High
Questionnaire 02 Very High
Questionnaire 03 High
Questionnaire 04 Very High
When we say that there is a high impact of the time bound to the production we have to look in
to what are the consequences faced due to not receiving orders on time. Among the answers
delivery extension was a common answer given by all respondents so we can see that order
fulfillment time of the garment for their customers will get delay and production discontinuity
and line idle will occur as shortage of raw material for one part of the production will keep the
other part idle for some time. And also companies will have to go for air freight when giving the
finished product to the customer if the supply of raw material get late. So it will cost a lot and
decrease the profit margin of the garment company. So we should have good plans when
ordering the raw materials and we should have sound contingency plans too.
41
Consequences of not receiving orders on time
Questionnaire 01 Production discontinuity, Delivery
Extension, Line idle
Questionnaire 02 Line idle, Air freights, Delivery extension
Questionnaire 03 Line idle, Air freights, Delivery extension,
Production discontinuity
Questionnaire 04 Line idle, Air freights, Delivery extension
Production discontinuity 2 15.38
Delivery Extension 4 30.76
Line Idle 4 30.76
Air freight 3 23.1
When looking at the plan for buying raw material their forward sales contracts and trade
agreements come in to play as per the respondents. And that is a fifty percent chance for both of
them. If we can pre plan and have fixed suppliers there will be a huge improvement in
production and the best solution is to promote fabric manufacturing within the country.
42
Plan for buying raw materials
Questionnaire01 3
Questionnaire02 2,3
Questionnaire03 2
Questionnaire04 2,3
There are certain occasions that the source of fabric may fail some times. So for the question put
forwarded for this is answered as inform the source and correct mistakes by the respondents and
that is answer two.
Options if source fail
Questionnaire01 2
Questionnaire02 2
Questionnaire03 2
Questionnaire04 2
43
0%
100%
0%
Options if source fail
Go for another source Inform the source and correct mistakes Other
And also we got to know that all of them have signed agreements with the Sri Lankan suppliers
too. And also they have tried them and sometimes still buying a very small amount from them
Any attempts on Sri Lankan Fabric suppliers
Questionnaire01 Yes
Questionnaire02 Yes
Questionnaire03 Yes
Questionnaire04 Yes
Effect of material cost in production plan was asked and three people responded as strongly and
one responded as highly. So we can see there is a huge impact of the material cost to the
production plan.
Effect of material cost on production plan
Questionnaire01 1
Questionnaire02 1
Questionnaire03 2
Questionnaire04 1
44
Then a question was asked whether an additional cost was incurred due to late delivery of raw
materials (fabric) and everyone replied yes for that and for the question asked about what was
that most of them replied as the cost of going for air freight to fulfill the deliveries for their
customers and together with that one replied as cost of losing their reputation due to extra time
required to fulfill their orders. So that we can understand that there is a huge impact to the cost
from late deliveries.
Cost incurred due to late deliveries
Questionnaire01 Air Freight
Questionnaire02 Air Freight and loss of reputation and sales
Questionnaire03 Air Freight
Questionnaire04 Air Freight
And when the question was asked why dont they trust mostly on Sri Lankan fabric suppliers
they answered that Sri Lankan fabric is too expensive and they never have enough supply need
for their production from Sri Lankan suppliers due lack of fabric manufacturing industries. When
comes to MAS Holdings they have their own fabric manufacturing plants but it is not enough to
cater the demand and there is less alternatives to go for and less designs.
45
CHAPTER 05
CONCLUSION
5.1 FINDINGS AND CONCLUSION
As for the conclusion researcher can prove that above hypothesis is corrects as cost, time and
quality has an impact on fabric supply of the garment sector in Sri Lanka. According to
researchers point of view extra cost incurred due lack of indigenous fabric base is affecting
negatively for the garment sector in Sri Lanka. As per researchers preliminary findings the raw
material cost contain around 60% of the total production cost so as Sri Lanka do not have a
sound fabric base the increase of the cost will increase this percentage as well and finally it will
be added to the final product loosing Sri Lankas competitive advantage of low price. And as
most of the materials are imported the extra cost for due to these expenses will tarnish the
reputation of the Sri Lankan apparel industry. So the garments of Sri Lanka must find a way to
reduce this cost.
And also as raw materials are imported to the country if there are any quality issues Sri Lankan
garment sector find it difficult to cope with that kind of situation as they cant return them back
and if they want to return that is a huge process and a huge cost as have to return to overseas. So
they neglect the quality issue most probably or remove the part with less quality and go on with
the other part. So that is a waste and it will tarnish their goodwill when users use their products.
As per researchers findings there are quality issues they find in raw materials and they make
adjustments accordingly and inform the supplier to make sure that it will not happen again. But
they put the extra cost incurred on suppliers and it is a burden to the suppliers also. But if Sri
Lanka have indigenous fabric base this problem will not occur this mush as less quality fabric
can be easily transferred back as it is within the country, so less quality of raw materials is a huge
factor that influence the garment sector in Sri Lanka.
Then when talking about time there is some effect on time also as the raw material sources are in
overseas and it take time to deliver fabric to Sri Lanka. As per researchers findings the biggest
problem incurred from more time consuming is the garment manufacturers have to go for Air
46
Freight when fulfilling their orders and another thing is that tarnishing of the reputation. But as
the cost incurred from Air Freight is put back on the supplier that will be not a huge problem to
them when comes to the cost. But as Sri Lankan apparel industry is practicing JIT system if they
dont receive orders on time it will be a huge problem as they cant continue their production and
line idling will occur.
As for the conclusion researcher came in to final finding that increase of Cost and Quality issues
has a big impact on Sri Lankan apparel industry when comes to fabric (raw material) supply as
Sri Lanka do not have a sound indigenous fabric base within the country. And also time has an
effect too when come in to certain areas though it do not impact hugely.
47
References
Expo Sri Lanka 2012
Sri Lanka board of investment report 2012
Sri Lanka Export Development Board
H.R.A.T. Ranaweera, University of Moratuwa, 2014 February
MAS fabric plant official website
Financial Dictionary
Textile school
Central Bank of Sri Lanka, 2010. Annual Report 2010
Quick response procurement cost control strategy for fabric manufacturing, department of
logistics, the Hong Kong polytechnic university, international journal of production
research 2007
Industrial outlook, 2006 retail planning guide
An intelligent supply chain management system to enhance collaboration in textile
industry , Kazakhstan institute of management ,economics and strategic research ,
international journal u and e- service, science and technology ,2011 December
Outsourcing strategy for apparel manufacturers, Opus College of business, University of
St Thomas, Minnesota, 2007
48
APPENDIX
1. QUESTIONNAIRE
There is a lack of fabric supply within the country for the apparel industry of Sri Lanka. These
questions are designed to find out factors affected for rising problems in the fabric supply of Sri
Lankan apparel industry.
1. Kindly state the sources Sri Lanka bring raw materials for the production?
a. Within Sri Lanka
b. Asian Region
c. European Region
d. Any other Please state .
2. Kindly state the sources you bring raw materials for the production?
a. Within Sri Lanka
b. Asian Region
c. European Region
d. Any other Please state .
3. What are the reasons Sri Lankan fabric base is not strong enough to cater the demand?
4. Is it common with your plant as well?
5. How long you purchase materials from your source?
6. What are the benefits you find from your source of purchase?
49
7. Are you satisfied with the quality of fabric you purchase?
a. Yes
b. No
8. Are you able to make quality products from your raw material?
a. Yes
b. No
9. Was there any quality issues of the fabric you purchased?
a. Yes
b. No
10. What do you do as a practice if there are any quality issues in fabric after you
purchase?
a. Do Nothing
b. Return Back
c. Tell to Refund
d. Adjust accordingly
e. Other- Please state
11. How do you select your service provider?
a. Contract
b. Brand
c. Open Market
12. Have you signed agreements for supply chain in long term perspective or short term
perspective?
13. What is the source you bring fabric to Sri Lanka?
a. Ship
b. Airline
14. What is the system you transport materials from port to the industry?
15. Do you do material requisition seasonally or normally?
50
16. What is the annual expenditure on fabric as a raw material in your plant of production
as a percentage?
17. What is the impact of time bound of the supply chain for the production of your plan?
a. Very high
b. High
c. Low
d. Very low
18. How material cost effect the company production plan?
a. Strongly
b. Highly
c. Normally
d. Weekly
19. Do cost, quality and time effect in completion of the supply chain agreement in
bringing raw materials and for the market?
a. Yes
b. No
20. Have you had any experiences on not receiving orders on time, if so what were there
consequences you faced because of that?
21. What is the quarter you bring raw materials a lot?
a. First
b. Second
c. Third
d. Forth
51
22. What are the remedies you follow in order to overcome the risk of not receiving ample
of fabric within the busiest quarter?
a. Port contracts
b. Forward sale contracts
c. Trade agreements
d. Joint ventures with other garments
23. What is the Plans toy follow for buying materials?
a. Short terms,
b. Long term
c. Master plan
24. Do you bring materials individually or as a whole with other companies?
25. What are the options you follow if your source of raw material fail?
a. Go for another source
b. Inform the existing source and correct the mistake
c. Other Please state.
26. Do you have any agreements with raw material providing companies in Sri Lanka?
a. Yes
b. No
27. Have you tried takin fabric from any local fabric suppliers?
a. Yes
b. No
