|
| Apparel exporters face reduced lead times |
| Archana M Prasanna / Chennai/ Bangalore Oct 21, 2009, 00:05 IST |
|
US, UK buyers wait till last minute to place orders
Even as apparel exporters across the country heave a sigh of relief over orders picking up, uncertainty in demand and trends have led to buyers in the US and Europe adopting a wait-and-watch strategy where they prefer to place orders at the last minute. Due to this, the lead time for exporters has declined in the last few months resulting in a tighter competition with countries like Bangladesh, Sri Lanka and China.
The lead time is the duration between placing an order and the receipt of the goods ordered. Till two years ago, apparel exporters had the luxury of having up to 4-5 months to execute their orders. However, during 2008-09, exports to the top two destinations, the US and UK fell 8.8 per cent and 13.7 per cent respectively owing to the economic slump which made buyers cautious about the quantum of stock they require for the upcoming spring-summer season.
“Most buyers react quickly to trends. They want to wait till very close to the season where the full picture of fashion trends emerge before placing their orders. This has reduced lead time considerably,” said Naseer Humayun, MD of Bangalore-based Indian Designs whose clientele include H&M and Old Navy.
Exporters say that many buyers made a mistake of piling on inventory for the last season not anticipating the recession which resulted in losses for them. “Buyers are cautious and don’t want to be caught like last year with too much inventory. This puts the onus on exporters to execute orders faster and overcome competition,” said Rahul Mehta, president of the Clothing Manufacturers Association of India (CMAI).
It has been learnt that some buyers who are prolonging their decision to buy are not averse to offering a 5-7 per cent premium to exporters who can execute their orders in quick time. This has raised some doubts on exporter’s minds on whether companies that bought from them for many years would stand by them.
“Loyalty has certainly taken a beating. In the last 6-8 months, everyone is fighting to survive. Whether it is a small or a big exporter, lead time could be an important element in deciding if some companies switch to new suppliers in the short term. However, in the long term, relationships do play a role in retaining clients,” said Mehta.
In such a situation, companies are scrambling to get their lead times dropped as low as possible to attract new orders and the industry estimates that not all companies would be ready to make the change. “From nearly 90-120 days lead time we are looking at 60-70 days this year. The trend would be more prominent among the US buyers since traditionally US buyers place bulk orders two to three times a year compared to buyers from Europe who don’t mind placing smaller orders 10-12 times a year. However, with uncertain trends, even US buyers are looking at smaller orders to be placed more frequently at lesser lead times,” said R Krishna Kumar, CEO of Integra Apparels and Textiles which is the apparel division of the Ashok Piramal Group and supplies to brands like Dockers, Levi and Benetton.
The US and Europe collectively account for 70 per cent of India’s apparel exports, which is close to $10 billion, according to industry estimates. The share of apparel in total textile exports is 55 per cent as of 2008-09.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
