Global procurement and trends in India

To compete in new age global markets, garment retail companies need to constantly increase efficiency and reach beyond corporate boundaries into the global arena.  They, increasingly, need to research and find solutions to excel at delivering quality products at competitive prices.  To succeed, a company needs access to workforces, raw materials, and other resources. Products need to be sourced in unfinished, semi-finished and finished stages from the world over and delivered worldwide to consumers.

In the post-quota regime countries like China, India, Pakistan, Taiwan, Hong Kong, Brazil, Indonesia, Turkey and Egypt are poised to become destination hubs for global sourcing and procurement. China is cost competitive with regard to manufacture of textured yarn, knitted yarn fabric and woven textured fabric. While India is cost competitive with regard to manufacture of ring-yarn, O-E yarn, woven O-E yarn fabric, knitted ring yarn fabric and knitted O-E yarn fabric. The hourly wage costs in the textile industry of these countries are considerably lower in comparison with other nations, which is a blessing. The availability of raw materials, low input costs along with proximity to the major markets of the US, Europe and other eastern countries will also allow several NAFTA countries, Turkey and Pakistan to supply finished goods at quick intervals.

The current growth seen in the US consumer market is soon expected to be replicated in Canada, Russia, Europe, China, Japan and India. These factors, fueled with the booming era of Information Technology, are expected to set new trends in the global sourcing and procurement arena. Well programmed supply chain management systems and inventory management tools set up by producing companies/countries will manage supplies to upcoming markets. Significant increase is also expected in direct importing by major retailers from all over the world. Although the primary issue governing market share in the post-quota regime would, eventually, be productivity, raw material base, quality, cost of inputs including labor, design skills and operation of economies of scale.

Trends in India

Over the years India has witnessed a tremendous increase in the volumes being procured from the country. India is emerging as a preferred destination due to various comforting factors like language, ethic levels, IT maturity and management style similar to the western countries.

Global procurement helps a company spread out the risk factors. If a company continues to procure from a single country, their business is bound to be heavily impacted if the government decides to levy quotas. Therefore, by spreading out its business operations around the globe the company is not just expanding on fall back options but also tapping potential hubs for business growth. Procuring on an international scale will help enhance relations between countries around the world.

To take a leaf from 4004 Inc.’s procurement strategy, procuring from different countries from around the globe has helped us create the best of products for the consumers at the most reasonable of costs. The lead time has been considerably reduced due to globalisation and the world is becoming a smaller place in terms of information flow. Trends are no longer outdated in the west when they are introduced in India. The west and east seem to be moving at the same pace.

It is very important for a procurement company to, therefore, be aware of the pulse of their customers and be able to react. The business of procurement follows the principle of the ‘survival of the fittest and the cheapest’. We are, after all, working towards complete client satisfaction but at the best possible cost and quality. The ability to source products from the nooks and crannies of the world and present an economic product of high quality makes for a successful procurement hub.

At 4004 Inc. the global sourcing and procurement strategy has always been about “vendor partnerships".  We thrive through our ability to identify potential manufacturers that exist over diverse geographic locations. We ensure the strategic spread of our business globally to hedge against any trade and tariff structure changes. Our philosophy is to help in the growth of factories that do not have the skill sets to market to a savvy customer.

The author is Managing Director, 4004 Incorporated India, experts in creative procurement, global sourcing and strategic affiliate of Steve and Barry’s, USA.