Quality and Compliance[1]

7/28/2019 Quality and Compliance[1]

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Competitivenessthrough

Productivity,Quality

andSocial Responsibility

Contents

Competitiveness

The Strategy

Productivity

Quality

Social Responsibility

Case Studies


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International Apparel Trade:

The Reality Check There is tremendous

pressure on Unit ValueRealisation

International buyers areasking More for Less

Whats happening to

Profitability?

Importance of Social

Responsibility isincreasingAs a result there needs tobe additional investments

and recurring costs to beincurred


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be socially responsible,

be cost competitive,

produce world class quality,

deliver in no time

hold inventory for buyers

and still make profit

The

Challenge The apparel

manufacturersare in fix

left wondering

how to:


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As a result of these predications

There is growing attention

to the competitiveness of

the industry and everybodyinterested in this industry is

watching the developments

in the international trade intextiles and Apparel with a

microscope


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good news

&

bad news


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The Good News

January to April2005, the Indianapparel exportshave grown over20% in respect ofexports to USA,EU and Canada.

(Apparel OnlineJuly, 2005)

The Bad News

Based on the tradetrends in 32 wovenapparel categories, onlyin one category Indiangrowth rate in exports toUS market was greaterthan China and in therest 31 categories,China enjoyed much

higher growth rate thanIndia. In many cases thedifference was over tentimes.

(Apparel Fortnightly, 2005)


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The

Bad News

How much money

can you make out

of such business

is a million dollarquestion

The

Good News

A lot of

business will

come Indias

way


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A word of Caution

a few crucial issues

low productivity,

Inconsistent quality,

Lack of industry wide initiative on

Social Responsibility

the real gains could be much smaller and

India's competitors could benefit from such a

situation.


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The Strategy for

harnessing the Competitiveness

Competitiveness

Social

Responsibility


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The

Strategy:Productivity


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P

roductivity

Ratio of Output to input

Productiveness of the factors of

production, labour and capital, in

creation of wealth. Concerned with resource

utilization along with the rate of

output Must be measured in physical

output, value as well as value

added terms at various levels

Productivity .?


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2.6213.622.167.9862Labour

3.3719.793.2409.9962Operator

3.3619.793.2410.0362Machine

Standard

Deviation

MaximumMinimumMeanValid NNumber ofProductivity

Source: Rajesh Bheda, Managing Productivity in the Apparel

Industry, CBS, New Delhi 2003

Productivity Findings:

Indian Apparel Industry


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Product

ivity Apparel Productivity in India

Sitting Pretty on a Goldmine

The Bad News

One of the lowest

9.13 shirts (1992)to 10.03 shirts(2000)

Low productivityis a nationwidephenomenon

The Good News

Great Scope forImprovement

Factories with morethan 20 shirts do exist

Learn from them

But we need to bedifferent, learn from ITand Auto Compindustry

Apparel Productivity in India


Product



Product



Product



Product



Product



Product



Product

ivity

Product

ivity


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Some of the Variables Associated

With Productivity in the Indian

Apparel Industry Age

Scale of Operations

Payment System

Operator Training

Induction Training

Method of Setting

Production Standards

Supervisor &

Manager Training Reward Creative

Suggestions

Rejection Level

Presence of

Industrial

Engineering Cell

Technology Level

Product

ivity


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Framework for

Productivity

Improvement inApparel

Industry

PhaseOne

PhaseTwo

s

Set up Operator Selection and Training Procedures

Introduce Productivity Measurement System

Strengthen Quality System

Improve worker involvement and workingconditions

Strategic Technology Upgradation-

Strengthen Production Planning andScheduling

Introduce Incentive Scheme

Introduce Information System

for productivity improvement

Strengthen work Measurement & Methods improvement

Initiate Supervisor & Manager Training

Prod

uctivity



Framework for

Productivity

Improvement inApparel

Industry

Productivity




Improve worker involvement and working

Strengthen Production Planning andStrengthen Production Planning and

Control



conditions


conditions


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The

Strategy:

Quality


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Other Industries

Defects per million

pieces oropportunities'

Six Sigma

methodologies

Qua

lity

Apparel Industry

Bad News: Still

struggles to achieve thequality performance to

meet AQL 2.5 based

inspections

The Good News:A few factories have

initiated Six Sigma

projects in apparel

industry

Quality Management:

where do we stand?


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Present Strategyof average

manufacturer

Defect

Identificationthroughinspection

Qua

lity

Required Strategy

Defectprevention

through

organization wide

right the first timeand right every

time philosophy

Quality Strategy


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The average repair levels between

the processes like cutting, sewing and

finishing is 6% to 8%

Repair levels in the factories are as

high as 50%.

Average rejection levels between the

processes vary from 0.25% to 3 %.

The cumulative impact of such high

repair and rejection level can be

disastrous

Quality

Quality status

C t f Q lit i th I di A l


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The Bad News

An average apparel factory loses 14.05% ofits annual sales on account of poor quality.

The 'Cost of Quality' (COQ) was as high as33% of sales in certain organisations

Qu

ality

The Good News

If COQ goes down to about 6% of sales, the

firm could improve its profitability byalmost 50%.

This means an additional profit of 18million for a firm that has sales turnover ofRs.230 million.

Cost of Quality in the Indian Apparel

Manufacturing Industry The first study of its kind

in apparel industry globally!!!


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Quality: The Double Bonus

The Unit Value Realisation of the

Indian apparel exports could go

up through product qualityimprovement.

Qua

lity

Cost of Quality in the

Indian Apparel

Manufacturing Industry


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The Strategy:

Social

Responsibili

ty


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No manufacturer can dream

of having a world class

factory, world class product oran overall world class

performance if its workforce is

not happy and works in anunsafe environment.

S

ocialR

espons

ibility The Truth

Th t f th t k d dit


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The story of three garment workers and an auditor

What are you doing?Cant yousee

I am earning my livelihood

I stitch high quality

garments for

global customers

You have to decide

what kind of work

force you would

like to have?


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Most of the factors positivelyinfluencing productivity and quality

are human related as stated below

SocialResp

onsibility

Operator training + Induction training

Supervisor/ Manager training

Suggestion scheme

Labour turnover

Absenteeism

Most of the factors positivelyinfluencing productivity and quality

are human related as stated below

SocialResp

onsibility


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So far.

Social Codes of Conduct' were used as pre-

qualification for doing business. This was

followed by aggressive audits program to

assess implementation and report violations

We have been arguing against this approach

as this does not give manufacturers

ownership

Apparel retailers have learnt their lessons,

now. they have started taking about

rewarding suppliers that have better track

record of Social Responsibility with greater

business or some kind of premium

Socia

lResponsib

ility The changing scenario

Socia

lResponsib

ility The changing scenario


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Nikes CR Report says

The company believes transparency willencourage factories to use corporateresponsibility as a point of differentiationto be rewarded by brands that are

proactively seeking responsible factories

Hence CSR is an area where we must

take leadership role to harness ourcompetitiveness


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Case Studies


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CaseStu

dies

Case Study : 1

Parameters January

2001

February

2001

April 2001

Operator

Productivity(number of trousers

per shift)

5.37 6.04 7.94

End of sewing line

repair level

50.89% 32.26% 29.42%

Defects per 100

units

57.68 43.06 32.55

Implementation of productivity Improvement

strategy in Mens formal wear


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C

aseStudies

Case Study : 2

Pilot Project on SPC Implementation in aFashion Apparel Manufacturing Unit

Particulars Pre-SPC

Implementation

Post-SPC

implementation

Improvement

Repair Level 11.85% 05.78% 51.00%

Machine Productivity

(Garments per shift)

09.97 12.58 32.77%

Q lit & P d ti it


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0

5

10

15

20

1 8 15 22 29 36 43 50 57 64 71 78 85 92

Number of days

0

2

4

6

8

10

12

14

16

18

1 6 11 16 2 1 2 6 3 1 3 6 4 1 4 6 51 56 6 1 6 6 71 76 8 1 8 6 9 1

Number of days

Decrease in percent defective

Increase in productivity level garments per machine shift

Quality & Productivity

Post Implementation

Performance


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Case

Studie

s

Case Study : 3

SPC Implementation in a

production line of aformal men's shirt manufacturing unit

ParticularsPre-SPC

Implementation

Post-SPC

implementationImprovement

percent defective rate

of the shirt

production line

4.30% 1.66% 61.39%

Productivity of

sewing line .

(shirts per machine

per shift of 8 hours)

9.4 14 32.85%

There isa strong correlation of - 0.59 betweenMachine Productivity and percent defective.

Case Study : 4


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CaseStudie

s

Case Study : 4

Initiatives taken apart from

implementation of codes of conduct

childcare facilities

free eye-care

access to medical services

rainwater harvestingBenefits reported

low turnover rates

high productivity

GAP Inc. CSR Report talks of

an Indian factory

This is not an exception there are many more factories like this

Case Study : 4


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C

aseSt

udies

Case Study : 4

GAP Inc. initiated a pilotprogram in China

To determine if initiatives focused onimproving factory operations and

productivity would also lead to better

working conditions

The results have been positive

In a nut shell if you


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PhaseOne

PhaseTwo

In a nut shell, if you

once gain look at my

productivity

improvement

strategy it does talkabout quality and

social responsibility.

The trio is

inseparable!!!

s



Strengthen Quality System

Improve worker involvement and workingconditions

Strategic Technology Up-Gradation

Strengthen Production Planning andScheduling

Introduce Incentive Scheme

Introduce Information Systemfor Productivity Improvement




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Various StandardsWorldwide Responsible Apparel Production (WRAP) : Created

by the American Apparel & Footwear Association 1n 1998

Social accountability 8000 (SA8000) : Created by the Council on

Economic Promotion Accreditation Agency (CEPAA) in 1997.

BSCI : Germany based alliance of retailers.

Fair Labor Association (FLA) : Grew out of the Apparel Industry

Partnership, White House Initiative begun in August 1996, FLA

chartered in June 1999.

ICS: France based alliance of retailers.

Ethical Trading Initiative (ETI) : UK-based alliance of companies,

NGO and trade unions.

C-TPAT : C-TPAT was established by the U.S. Bureau of Customs

after the 9/11 terrorism in the USA. Its goal is to develop, enhance,

and maintain effective security processes throughout the global

supply chain.


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Occupational Safety and Health

Administration (OSHA)

The Occupational Safety and HealthAdministration (OSHA) works under theUnited States Department of Labor. It was

founded in 1970 to address and preventhazards and injuries to workers caused byunsafe workplace practices

Its job is to define safe workingenvironments, and enforce safe workingenvironments


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Occupational Safety and Health

Administration (OSHA)

One of the most compelling works of

OSHA was a ten-year study assessing the

ergonomics of the workplace, which

included recommendations on how toimprove work conditions from an

ergonomic standpoint
http://www.wisegeek.com/what-is-ergonomic.htmhttp://www.wisegeek.com/what-is-ergonomic.htmhttp://www.wisegeek.com/what-is-ergonomic.htmhttp://www.wisegeek.com/what-is-ergonomic.htm


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A greater focus on the quality of CSR management.

With a greater understanding of good practice and the

search for a clear link between social and financial

performance, there is increasing focus on the quality

of management of CSR, rather than whether a

company does it at all.

CSR standards and quality management approachesare converging as each takes on aspects of the other.

For example, the European Foundation for Quality

Management (also known as Total Quality

Management) now uses such terms as empowermentand values. It is clear that CSR must be driven by a

clear business case approach, with outcomes aligned

both to the business objectives and societal needs.


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Quality and Compliance[1]

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