Changing Trade Competitiveness:
The ITC Approach
6 Technical Assistance Needs
6 ITC responses
1.
1st Need: A Sector Strategy (Action Plan)
Develop overall country response
Build critical country mass
Build PPP based on strong sector
associations
Make a sector value chain analysis
2.
1st Response: The SHAPE
3.
1st Response: The SHAPE
A Structured Thinking Process:
Analyse
Brainstorm
Action Plan
Strategy
4.
The SHAPE – Ten Step Approach
1. Analyse Domestic Supply/Exports/Imports
2. Analyse the Value Chain (VC)
3. Identify problems in the VC and define the Actions
4. Identify export and sourcing Opportunities and define
the Actions
5. Group Similar Actions together
6. Prioritize Actions and assign Time Frames
7. Working Group
8. Finalize Strategy
9. Official Launch
10. Implement and Monitor the Strategy
5.
BORDER
BORDER
CUSTOMS PROCEDURES
AGENTS/BUYING HOUSE
Sales
(+Marketing,
and Services)
TEXTILE
INSTITUTE
DESIGN
INSTITUTE
DOMESTIC
SUPPORT SERVICES
DOMESTIC
RAW MATERIALS
DESIGN
Outbound Logistics
Customs-GSP/Quota
Export Clearance
Business
Inbound Logistics
Customs,
Import Clearance
TESTING
YARNS
TEXTILE
RMG
Mnf. & Exporter
Mnf. & Exporter
ACCESSORIES
& PACKAGING
MARKET
RESEARCH
Other Associations
DONOR
ACTIVITIES
Sourcing
BORDER
MACHINERY
Clothing
Associations
Textiles
Associations
LARGELY KNITWEAR
FABRIC SUPPLIED
AGENTS
CUSTOMS PROCEDURES
TPO
BORDER
6.
2st Need: Know your Competitors
Quotas stifle competition
Now competitors are everywhere
7.
2st Response: THE FiT
8.
THE FiT: Benchmarks performance
It is divided into 4 broad areas
Management &
Organization
Sales & Marketing
Financial Planning
Production,
Sourcing &
Operations
9.
10.
3rd Need: Information on Sourcing and
Supply Chain Management Skills
Cost-structure of a woven shirt up to the FOB point
75% of
cost =
sourcing
10%
8%
7%
59%
16%
Fabric
Trimmings
Cut& make Labour
Other overhead
Profit
11.
Profit $0.10
WOVEN SHIRT:
For every 1
Dollar earned
approximately
60cts is spent on
inputs
Overheads
$0.08
Labour
$0.07
Fabrics: $0,59
Trimmings:$0.16
Profit now
$0.16 !
Overheads
$0.08
Labour
$0.07
Input supplies
& Logistics
$0.75 $0.69
A 10 % reduction in the
supply cost of fabric and A 60 % increase in its Gross
profits without increasing sales
trimmings =
… Any reduction in purchasing and logistics costs has a direct and large
impact on export competitiveness
12.
3rd Response: “Source-it” ITC textbook
1.- New ITC textbook on fabric sourcing, training and
supply information
1.Introduction
2.Material Sourcing Process
3.The Buyer/Designer Side
4.The Factory Side
5.Salesmen Samples
6.Ordering Stock Materials
7.Fabric Inspection
8.Final Checks
9.Trim
10.Production Schedule
11.Things Go Wrong
The Art of Sourcing
12.Where to Source What
13.Satisfying the Buyers’
Needs
2.- Training
3.- Sourcing Data Base (SAARC and ASEAN countries)
13.
4th Need: Understand changing markets and
adapt products accordingly
Numerous competitors and complex trade
structure;
Opportunities in higher-end and niche
markets with value-added products;
Exploit market potential in other developing
countries, especially in a regional context.
14.
4th Response: Providing Information
A new T&C website
http://www.intracen.org/textilesandclothing
T&C workshops on the business implications
and how to prepare for increased competition
Development and implementation of tailormade projects
15.
16.
Providing Business Information
17.
Providing Data Analyis
18.
Providing Technical Assistance
19.
5th Need: E-Trade to attract larger buyers
The use of «e» in light of the quota phase-out
Overview of technology developments
e-requirements imposed by buyers in the US and
EU
The role of HGK & Singapore trading houses
Case studies of e-successful manufacturers
Dissemination and training
20.
5th Response: Business Guide
A Business Guide on e-Applications in the T&C Sector
21.
5th Response: Business Guide
A Business Guide on e-Applications in the T&C Sector
Overview of technology developments
e-requirements imposed by western buyers
The role of HGK & Singapore trading houses
Case studies of e-successful manufacturers
Dissemination and training
22.
Market Pressure on Clothing Manufacturers
after the quota phase-out
Rivalry between manufacturers
10
9
8
7
6
5
4
New Market Entrants
Supplier Power
3
2
1
0
Threat of Substitutes
Retail Power
e-influence
e-influence
23.
Likely evolution of the T&C Industry
Today
Producer
Conflicts
Response
Customer
Retailer
Producer
Demand
Retailer
Competition
Conflicts
Producer
Retailer
Competition
Competition
Producer
Conflicts
Future
Customer
Retailer
Response
Demand
24.
The Global T&C Value Chain and the use of
e-Applications
E-Linking of the Value Chain
Sales Info +
Direct Order
Fabrics
Delivery
Status Info
Clothing
Agent
Retailer
MARKET
Physical Delivery
Clothing Value Chain
R&D
Inbound
Logistics
Production
Outbound
Logistics
Marketing to
Retailers
25.
6th Need: Develop a Regional Approach
Strategic Response: Critical
(country/regional) mass
Rules of Origin require regional
cooperation
Regional/Sub-regional Partnership
Regionally integrated industry
Link foreign investors to local
business
26.
6th Response: Strengthen regional trade
cooperation
South-South Trade Development
Regional trade development along
the regional value chain
27.
ITC’s TA to the Clothing Sector
Need 1: Sector Strategy Development
Clothing Sector Strategy Development «the Shape»
Need 2: Know your competitors
Benchmarking tool The « FiT »
Need 3: Sourcing Information and SCM skills
Skills development & regional supply information
Need 4: Understanding changing markets
New website; workshops; tailor-made projects
Need 5: E-Applications in T&C
A Business Guide
Need 6: Intra-regional trade along the value chain
South South Trade Development Approach
28.
1.- Sectror Strategy
Develpment
2.- Undersatnding it’s
own and competitors’
performance
Sales
(+Marketing,
and Services)
Sales
(+Marketing,
Outbound Logistics
and Services)
Customs-GSP/Quota
“The SHAPE”
“The FiT”
Export Clearance
3.- Developing fabric
sourcing skills to
become
“full-package”suppliers
4.- Understanding
changing markets
5.- Applying
Outbound Logistics
Customs-GSP/Quota
Export Clearance
Manufacturing
Inbound Logistics
Customs,
Import Clearance
Manufacturing
Inbound Logistics
Customs,
Import Clearance
Implementing tailor
made market penetration
approaches in line with
buyer requirements
Garment-Maps
and
ITC T&C website
Sourcing
e-applications in the
T&C sector
Sourcing Guide
and
database
Business Guide
in e-commerce for T&C
Sourcing
ITC
Tailored Consultation
29.