By: Iyyappan. C --
29 September, 2015
Apparel industries, at the current stage, faces two major hurdles. One is that the industry players are forced to face the cost pressure by themselves as consumers are not ready to see any hike in the retail price. This brings us to the next, which is that the so far “low cost needle” markets, such as China, India, Bangladesh, etc., are no more being attractive enough to see benefits from them in terms of cost and compliances. These hurdles leads to two major questions – one, where should the CPOs focus next, to find another low cost sourcing market to have a competitive advantage in their retail pricing? Most apparel players are expecting the rise of labor cost and energy to continue and are looking to move from their most obvious manufacturing locations like China to a surprising new souring market. And the other is, even if they find one, will it be efficient enough to bring a healthy financial return without hurting the consumer demands? The article will provide the facts and comparison on the Asian markets that are considered to be best low cost locations for garment manufacturing and their cost drivers to evaluate the potential of Myanmar to for outsourcing garments. The information gathered for the article will also state the necessity of choosing the untapped markets like Myanmar (Burma) which is an upcoming sourcing market for ready-made clothing.
It is well known that when a company can have a successful access to a low cost market, it can realize a significant amount of savings. The till-now low cost garment manufacturing giant, China, is losing its attractiveness because of its increase in labor wages, production costs, government regulation changes which forces the local suppliers to focus on to feed their productions to the domestic market rather than international market. And such a situation, which diminishes the attractiveness of a market, is seen more or less with every low cost sourcing country right now, which was attractive a few years ago. Such a change of the supplier market scenario has made the western companies to think of an untapped market where they can benefit the most out of them. So, how to identify an untapped market? An important step to identifying such a market for the category is to identify the cost drivers that determine the overall cost of the product, and thus, we can understand and differentiate the market from the rest. And the other benefit by doing so is that the company can devise the strategies to reduce the biggest cost driver, and also help in the negotiation process with the service provider.
Author: Iyyappan. C
American Red Cross CPO will talk about the Art of Stakeholder Management on Aug 4