This article is written by Prafull Sundriyal
The apparel industry operates within a multifaceted environment shaped by various factors such as government regulations, economic conditions, customer preferences, and competition. These elements, along with strategic operational decisions like order qualifiers, order winners, and manufacturing strategies, influence how businesses meet market demands while maximizing profitability. This article delves into these factors with examples from both Indian and international markets.
Government Regulations
Government regulations significantly impact the apparel industry's operations, particularly in areas like trade policies, labor laws, environmental standards, and taxation policies. For example, the implementation of the Goods and Services Tax (GST) in India has streamlined the tax structure, facilitating easier operations for apparel companies across states.
Internationally, the European Union's stringent regulations on textile waste management and chemical use in garment production have compelled brands like Zara and H&M to adopt sustainability initiatives.
Example: In India, the Apparel Export Promotion Council (AEPC) under the Ministry of Textiles ensures compliance with international trade laws, helping Indian apparel brands meet foreign market quality standards, and promoting eco-friendly practices.
Economic Factors
Economic conditions, including inflation rates, disposable income, and consumer spending patterns have a heavy influence on the apparel industry. In rapidly growing economies like India, the expanding middle-class drives increased demand for fashion products. Conversely, in developed economies like the US or Europe, economic downturns can lead to reduced consumer spending, affecting apparel sales.
Example: During the COVID-19 pandemic, economic challenges caused a decline in global apparel demand. However, companies like Reliance Retail in India adapted by focusing on digital sales channels, while brands like H&M enhanced their online presence to capitalize on the growing e-commerce market.
Customer Preferences and Market Trends
Understanding customer needs is crucial for the success of any apparel brand. In today's competitive landscape, customers seek fashion and style, quality, ethical manufacturing practices, and aƯordability. The Indian market, for instance, shows a growing preference for ethnic wear, while international markets like the US favor casual and athleisure wear.
Example: In India, ethnic brands like Fabindia have established a niche by offering traditional apparel that resonates with local tastes. Meanwhile, international players like Nike have experienced significant growth due to the rising demand for sportswear.
Competition
The apparel industry is marked by intense competition from both local and global brands. International brands like Zara, H&M, and Uniqlo compete with domestic brands like Myntra, Fabindia, and Raymond in India. This competitive landscape forces companies to diƯerentiate themselves based on factors such as price, quality, and delivery times.
Example: H&M's "fast fashion" strategy allows it to quickly transform runway designs into aƯordable, ready-to-wear collections, giving it an edge over local competitors. However, Indian brands like Biba and Westside have gained a competitive advantage by focusing on affordability and locally relevant designs.
Order Qualifiers vs. Order Winners
In the apparel industry, order qualifiers are the minimum criteria that must be met for a company to compete in the market, such as price, quality, and delivery standards. For example, any apparel brand entering the competitive fast-fashion market in India must meet acceptable price points and quality standards to attract consumers.
Order winners, on the other hand, are the factors that set a brand apart from competitors and secure customer loyalty. These could include unique designs, superior quality, or exceptional customer service.
Example: For global brands like Zara, the order winner is the fast delivery of trendy fashion at affordable prices. In contrast, for Indian brands like Fabindia, the order winner could be the emphasis on sustainable production and authentic, handcrafted products.
Manufacturing Strategies
Manufacturing strategies are crucial in determining how apparel products are produced, stored, and delivered. The chosen strategy depends on factors such as delivery lead times, order volumes, and customer demands.
- Made to Order: Products are manufactured only after an order is received, reducing excess inventory. This model is common in customized fashion products.
- Made to Stock: Products are manufactured in advance and kept in inventory. This is typical for fast-fashion brands like H&M, which rely on quick stock turnover.
- Assemble to Order: Products are assembled based on customer specifications after an order is placed. This is used by companies like Dell, which allows customers to customize their products.
- Configure to Order: Products are configured according to customer needs, such as choosing color or size, but the base product is already manufactured.
- Engineered to Order: Products are designed and manufactured from scratch based on specific customer requirements, often seen in high-end fashion or luxury items.
Example: In India, companies like Myntra use a mix of Made to Stock for their regular collections and Made to Order for custom clothing services, catering to both mass and niche customer bases.
Postponement Strategy
Postponement is often used in industries like apparel to delay the final product configuration or packaging until the order is confirmed. For example, an apparel brand might manufacture the basic garment (e.g., a plain t-shirt) in bulk and then wait until the order is received before adding region-specific labeling or packaging.
Example: International apparel brands such as Levi's use a postponement strategy by manufacturing garments in bulk and customizing them in distribution centers for different countries, reducing production costs and enhancing flexibility.
Supply Chain Metrics and Performance Measurement
Supply chain metrics help evaluate the efficiency of a company’s operations. These metrics can be qualitative or quantitative and may include factors such as delivery lead time, inventory turnover, and order accuracy.
Performance Measure Example: One important performance measure in the apparel industry could be the number of orders processed per day or on-time delivery rates. For instance, an apparel company aiming to improve its order fulfillment process might set a performance target of achieving a 98% on-time delivery rate.
Manufacturing Planning and Control
Effective manufacturing planning and control (MPC) is essential for ensuring smooth operations. This includes:
- Production Planning: Involves forecasting demand, creating master production schedules, and planning material requirements.
- Implementation and Control: The actual execution of production plans on the shop floor.
- Inventory Management: Ensuring the right balance of raw materials and finished goods inventory to meet customer demand without excess stock.
Material Management
In the apparel industry, material management is a crucial function that ensures the timely and cost-effective flow of materials from suppliers to manufacturers and then to customers. This includes everything from raw materials procurement to the final delivery of finished goods.
Example: Companies like Nike invest in advanced supply chain technologies to streamline material flow, reducing lead times and lowering costs while maintaining high customer satisfaction.
Conclusion
The apparel industry operates in a dynamic environment where government regulations, economic conditions, customer preferences, and competition play significant roles in shaping strategies. By understanding and leveraging key concepts such as order qualifiers, order winners, manufacturing strategies, and supply chain metrics, companies can ensure they remain competitive in the global market. Whether adapting to customer demand in India or meeting international sustainability standards, the apparel industry must continuously innovate to thrive in an ever-evolving marketplace
References
Books:
1. "Operations Management in the Supply Chain: Decisions and Cases" by Roger G. Schroeder, Susan Meyer Goldstein, and M. Johnny Rungtusanatham
2. "Supply Chain Management: Strategy, Planning, and Operation" by Sunil Chopra and Peter Meindl
3. "Fashion Logistics: Insights into the Fashion Retail Supply Chain" by John Fernie and David B. Grant
Articles and Journals:
1. "The Impact of Government Regulations on the Apparel Industry" - International Journal of Business and Social Science
2. "Consumer Preferences and Apparel Choices in Emerging Markets" - Journal of Fashion Marketing and Management
3. "Sustainability in Fashion Supply Chains: An Indian Perspective" - International Journal of Textile and Fashion Technology
Industry Reports:
1. McKinsey & Company – "The State of Fashion 2024"
2. PwC – "Global Apparel Sourcing and Trends"
3. IBEF – "Indian Textiles Industry Analysis"
Websites:
1. Apparel Export Promotion Council (AEPC) India
2. Fashion Revolution (Global)
3. Textile World (Global)
Government Websites:
1. Ministry of Textiles, Government of India (India)
2. European Union - Textile and Garment Industry Regulations EU
Note- All the images are generated by Google Gemini and Microsoft Copilot.
About the Author:
Prafull Sundriyal is a seasoned professional in Supply chain management with a solid academic background, holding an MFTech degree from NIFT Bengaluru and a BTech in Mechanical Engineering. With over five years of extensive experience in the Apparel and Fashion Industry, he has effectively collaborated with both domestic and international clients to deliver optimized solutions and enhance operational efficiency. Currently serving as an M3 Consultant at Infor, Prafull specializes in streamlining workflows, executing timely project implementations, and reducing operational costs. His expertise encompasses Project management, Product development, Operations, Strategy, and Customer success, making him a trusted advisor for seamless system transitions and impactful business outcomes.