COMPANY PROFILE
Arvind Limited (formerly Arvind Mills) is a textile manufacturer and the flagship company of
the Lalbhai Group. Its headquarters is in Naroda, Ahmedabad, Gujarat, India. It has units at
Santej (near Kalol). It manufactures cotton shirting, denim, knits and bottom weight (khaki)
fabrics. Sanjaybhai Lalbhai is the Chairman and Managing Director of Arvind. Arvind
Lifestyle Brands Limited designs, distributes, and retails apparels and accessories in India and
internationally. The company offers its products under the Flying Machine, GAP, and TCP
brand names. Its international portfolio brands include Arrow, Gant, U.S. Polo, Elle, Nauntica,
Debenhams and Hanes. The company is also involved in apparel value-retailing business under
the international brands, such as Cherokee, Mossimo, and Geoffrey Beane. It owns and
operates approximately 800 stores and 14.2mn retail space. The company is based in
Bengaluru, India. Arvind aslo runs retail chains like Arvind store, Megamart and Unlimited. J.
Suresh is the MD & CEO of Arvind Lifestyle Brands Ltd. In 2013, Megamart decided to
change its business model by dropping the discount tag. The Bangalore-headquartered retail
chain began witnessing a lull in its business during 2013 -14 financial year, impacting margins
and growth plans, which led them to restructure the business model. The new value retail chain
format was branded under the name Unlimited. Unlimited caters to the middle income groups
offering product categories like Menswear, Womenswear, Kids wear, Ethnic wear(Women)
and Accessories. Brands under Kids wear at Unlimited are Cherokee, Karigari, Colt and
Donuts. Cherokee is an iconic American family-lifestyle brand, offering classic, casual comfort
at affordable prices. It is a licensee brand. Donuts is the in-house brand of Unlimited offering
casual and trendy clothes for the infants. Karigari is the in-house ethnic wear brand for girls (2
to 14 years) and women. Colt is the in-house brand offering character tees for kids.
Sourcing Department
Team Structure
SOURCING CATEGORY
Technical
SOURCING & Quality
Assurance
The sourcing department of the Arvind lifestyle brand Ltd is responsible for manufacturing
and delivering the selected range of styles for the season at right time, at right price points
and in accordance with the quality standards pre-defined by the organization. The sourcing
department is also responsible for scoring desired profit margins over manufacturing costs of
each style garments so that it can be sold at the MRPs decided by the buying/category
department.
RESPONSIBILITIES OF SOURCING DEPARTMENT
The responsibilities of sourcing team can be divided into three main parts:
1. Product Related responsibilities
2. Financial responsibilities
3. Vendor related responsibilities
Product related responsibilities
Sourcing team is the only part of the company which is in direct contact with the manufacturing
units or the vendors. The development of the products as per needs of the design and
buying/category teams.
The product related responsibilities of the sourcing team can be sub divided as:
i. Product development:
For every season, the design team creates an option plan, which needs to be
developed to prepare range. This option plan includes numerous flat sketches of
styles which the design team prepares. The responsibility of the sourcing team
is to develop actual samples from these flat sketches.
ii. Improvising product inputs:
As part of the new product development, the sourcing team needs to visit
various vendors for discussing the flat sketches. The vendor, then provides
various developments in the market in terms of fabrics, trims and technologies.
The sourcing team must try to incorporate these developments in their products
for improvisations.
iii. Searching suitable options/substitutes:
Many a times, the designers perception about new development are not feasible
in terms of bulk production. The sourcing team must, therefore, search for
possible substitutes. This may help in reduction of overall cost, at the same time
maintaining the aesthetic of the product.
iv. Sampling:
The product development process has to be supported by various sampling at
different stages. Sample approvals are necessary to monitor the production
process. It also helps in conveying progress to other departments of the
organization.
v. Approvals of lab dips, strike offs and fabric swatches, accessories, trims and
tags
As the sampling process continues, various constituents of the final products are
also being finalized. Lab dips approvals are necessary for approving solid
colours. Strike offs are the options provided by the vendor for the prints. Various
trims, accessories and embellishments needs to be approved from
category/buying teams to avoid downgrades in the aesthetics of the final
product.
vi. Booking orders:
As the sampling process ends and final sample is approved, the sourcing teams
must place orders as per the negotiations happened with the vendor.
vii. Monitoring production process in terms of time and quality
Actual implementation of a design is complicated and time consuming and
sourcing team has to deliver the finished product within the time limit. As the
production is initiated, the sourcing team must start follow up with the vendor.
This provides timely updates on the progress and also proves helpful if any
problem arises.
viii. Communicating between vendor and other departments of company:
Many a times, changes in the construction and design aspects are changed, for
which sourcing team acts as a medium of communication between company and
vendor.
ix. Following up the production process:
Production process must be completed within the time to be in sync with the
T&A calendar for the season. For the same, the vendor must be questioned time
to time.
x. Following up the dispatch and shipment
Once the production is done and packed, the sourcing team must provide
necessary details for getting the goods to the warehouse. The goods must reach
the warehouse in time to avoid loss on sales.
Financial responsibilities
As it is the sourcing team who actually produces the product to sell for the company, they must
produce it at lowest possible costs to help in acquiring highest amount of profit margins.
In Arvind lifestyle brand Ltd, following are the financial responsibilities that the sourcing
team must handle:
xi. Sampling costs:
The company do not provide and sampling charges. The vendor must bear all
the sampling costs at any level.
xii. Raw material procurements:
The sourcing must be updated with the current market rates of all the materials
and making charges for the garment. The sourcing team must suggest cheaper
options in case the cost of material procurement provided by the vendor is
higher. Also, the sourcing team must be aware if the vendor himself has fabric
or accessories production facility so that the procurement cost and also the
overall manufacturing cost per garment can be brought down.
xiii. Product costing:
A rough product costing must be done while taking handovers from category
team. The sourcing team must be prepared in terms of various cost saving
parameters of the style. For the negotiations with vendor, the garment costing
must be estimated by confirming costs of fabrics, trims, etc. from other related
sourcing teams of the company.
While negotiating costs with vendor, the sourcing team must try to achieve
lower costs than estimated, so that higher profits can be derived from each style.
Also, the negotiations must be kept realistic to avoid vendor losses.
xiv. Maintaining profit margins:
The negotiations must aim at maintaining profit margins (Range 60 to 70
percent) per style. Lower the manufacturing costs, higher will be profits derived
on full MRP sale.
xv. Avoiding product and raw material liabilities :
The sourcing team must monitor the vendor to avoid excess procurement of raw
materials or over production of garment pieces. This excess production creates
liability over the company and binds use of same raw materials over upcoming
season. This should be avoided wherever possible.
xvi. Safeguarding payments
Arvind lifestyle brand Ltd has a list of nominated vendors who supply raw
materials for garment productions. The garment vendor needs to pay them
once their order is fulfilled. The sourcing team must insist the garment vendor
for completion of such payments.
Also, the company must safeguard timely payments to the garment vendors
once they complete their order as per the pre decided terms and policies.
Vendor Related Responsibilities
The sourcing team must search for vendors who can provide better performance in terms of
delivery, quality and costing. These new vendors must be evaluated in terms of various
parameters like
The new vendors must be registered with the company and all the related policies must be
conveyed.
Negotiations techniques followed by
A successful negotiation outcome does not generally occur though luck, but by following a
clear process. The process reflects the different levels of knowledge of the subject of
negotiation, various parties and the way they communicate at various stages in the negotiation.
The following is an outline of steps essential to effective negotiation.
Prepare, prepare and prepare:
Enter a negotiation without proper preparation and youve already lost. Start with
yourself. Make sure you are clear on what you really want out of the arrangement.
Research the other side to better understand their needs as well as their strengths and
weaknesses.
Pay attention to timing:
Timing is important in any negotiation. Sure, you must know what to ask for. But be
sensitive when you ask for it. There are times to press ahead, and times to wait. When
you are looking your best is the time to press for what you want. But beware of pushing
too hard and poisoning any long-term relationship.
Leave behind your ego:
The best negotiators either dont care or dont show they care about who gets credit for
a successful deal. Their talent is in making the other side feel like the final agreement
was all their idea.
Ramp up your listening skills:
The best negotiators are often quiet listeners who patiently let others have the floor
while they make their case. They never interrupt. Encourage the other side to talk first.
That helps set up one of negotiators oldest maxims: whoever mentions number first,
loses. While thats not always true, its generally better to sit tight and let the other side
go first. Even if they dont mention numbers, it gives you a chance to ask what they are
thinking.
If you dont ask you dont get:
Another tenet of negotiating is Go high, or go home. As part of your preparation,
define your highest justifiable price. As long as you can argue convincingly, dont be
afraid to aim high.
Anticipate Compromise:
You should expect to make concessions and plan what they might be. Of course, the other
side is thinking the same, so never take their first offer. Even if its better than youd
hoped for, practice your best look of disappointment and politely decline. You never
know what else you can get.
Offer and expect commitment:
The glue that keeps deals from unravelling is an unshakable commitment to deliver. You
should offer this comfort level to others. Likewise, avoid deals where the other side does
not demonstrate commitment.
Dont absorb their problems:
In most negotiations, you will hear all of the other sides problems and reasons they cant
give you what you want. They want their problems to become yours, but dont let them.
Instead, deal with each as they come up and try to solve them. If their budget is too
low, for example, may be there are other places that money could come from.
Close with Confirmation:
At the close of any meeting- even if no final deal are struck-recap the points covered and
any areas of agreement. Make sure everyone confirms. Follow up with appropriate letters
or emails. Do not leave behind loose ends.
Functioning of the Sourcing Department
Process flow and time required to garment manufacturing:
A seasons sourcing process can be divided into two main parts:
1. Sampling &
2. Bulk production
Sampling process mainly consists of developing new styles according to the option plan for a
season, which are then presented before the category team for range presentation. While the
bulk production part, as the name suggests, is the process of bulk production of the selected
styles at the range production.
As per the objective of the project it very important to focus on all the steps of garmenting. All
the steps of the process have to be taken down and analysed so that there can be clarity in
understanding and finding the proper solution. The factors that to be noted down are as
follows:-
Time taken for each process
Breaking down each and every process
Complexity of each process
Problems faced by the departments in the process.
Basic and Major requirements
Some fixed rules and measures of the company are:
Lead time for the garment production is 90 days
Payment to the vendors will be done after 120 days of garment in-house date.
Complete Break-Down of the process, starting from the fabric mill presentation to the final
product dispatch to warehouse:
Getting Tech-Pack and Developing Sample for Presentation
Total time given for Sampling- 50 After 50 Days date fixed for
Days Presentation
In Presentation; Samples decided for Bulk Production
15 Days taken to decide the Also the costing is done in the
Quantity same time
After 10 Days; Fabric booking and Trim Booking is done
60 Days was the lead time for 50 Days were taken to get the
Fabric whole Trims
After 60 Days production process starts
First made fit sample; its takes 10 Now Pre-Production Sample; it again
Days takes 10 Days.
Inspection
Dispatch
Fabric mill presentation
Every textile mill who is vendor for the company arrange a presentation of their fabric for the
coming season.
Main objectives of the presentation are:-
To present the new innovated fabric for the coming season
To present their best quality fabric
To get the orders for the fabric from the apparel company for the season
To maintain their sustainability in the competitive market.
To increase their quantity of order from the apparel brands
Major Textile mills who work with Arvind lifestyle Brands are -:
In the presentation designers and various sourcing department heads selects the various no of
fabric for the sampling of the coming seasons.
The selected fabric where sent for the sampling to the various garment vendors.
Getting Tech-Pack and Developing Sample for Presentation.
After the selection of fabric through from the presentation, designer give the tech-packs for the
sampling to the sourcing department to develop the sample for the coming season.
There are various categories of samples made in the process of sampling:-
[Link] New Development
This is first development of any sketch sheet. Three pieces are made in similar kind of fabric
[Link] Proto Sample
A proto sample is typically made in triplicates in actual fabric.
The proto sample is made for the presentation of the company for the coming season.
The total time given for the sampling process is between 50 to 60 days. It is very important to
develop the sample in between this time period. As to follow the time & action chart it is very
important to do the presentation of sample in the fixed date.
Flexibility given to the department.
Generally it is very important to present at least 65 percent of total styles given for the
sampling purpose. The rest of the styles can be presented after some time but to be on
safe side the company has to finalize his approx. 70 percent of its styles for the coming
season, so that there should not be any delay in launching.
5.1.3 Sample Presentation
Sample presentation is the presentation of sample made by the designers to the industry leaders.
In the presentation every designer gives the presentation on each and every sample he/she
designed.
The presentation contains:
The story of the sample
Reason of developing such type of sample
Its future possibility of sale
Present fashion trend in relation to the sample and the upcoming fashion trend.
After the presentation various company heads finalize the sample that have to be undergone
for the bulk production.
5.1.4 Samples selected for Bulk Production
Now after the sample is selected for the bulk production, it is the time to decide the quantity of
the production for each style selected, also to calculate the cost of garment.
Category department decides the no of quantity of production for each style. The quantity of
style is decided by understanding and analysing the following, measures which are as follows:-
Analysing the last year sales data
Response of the customer
Coming fashion trend
Aesthetic appeal of the garment, etc.
Costing
Costing is the most important factor in the process. In order to achieve perfect garment costing,
one must know about all the activities including purchase of fabrics, sewing, packing, transport,
overheads, etc. and also about their costs, procedures, advantages and risk factors.
Garments costing:
There are two types of garments, namely woven and knitted garments. Shirt, trouser, bed
spreads, blankets, towels and made ups are woven. T-shirts, sweaters, undergarments, pyjamas
and socks are knits.
Costing is the deciding factor for fixing of prices and the important thing to follow in all stages
like purchase, production, marketing, sales, etc. Also update knowledge about everything
related to garments, is essential to make perfect costing.
Costing includes all the activities like purchase of fabrics and accessories, processing and
finishing of fabrics, sewing and packing of garments, transport and conveyance, shipping, over
heads, banking charges and commissions, etc.
We must be aware that there are always fluctuations in the costs of raw materials and
accessories, charges of knitting, processing, finishing, sewing and packing, charges of transport
and conveyance. The method of making costing will vary from style to style. As there are many
different styles in garments. Hence let us take men's basic T-shirt style as example which is in
regular in use.
To find out the costing of a garment, the following things should be calculated?
Fabric consumption.
Gross weight of other components of garment.
Fabric cost per kg.
Fabric cost per garment.
Other charges (print, embroidery, etc.)
Cost of trims (labels, tags, badges, twill tapes, buttons, bows, etc.)
CMT charges.
Cost of accessories (hangers, inner boards, polybags, cartons, etc.)
Cost of a garment.
Price of a garment
Costing format of Arvind Lifestyle Brands L.t.d
The garment costing at Arvind Lifestyle Brands L.t.d happens on open cost sheet basis. The
open cost sheet format is forwarded to the garment vendor along with the sample for bulk
production and tech pack. This open cost sheet is format which is used as a base to note all cost
inputs to the garment.
The cost inputs in term of fabric, trims, accessories, embellishments, etc. are confirmed from
related team of sourcing department for current market rates.
The same open cost sheet format is used by the sourcing team to arrive at estimated cost per
garment. The costing happens for medium sized garment. When the same open cost sheet is
received from the vendors side, it is compared with sourcing teams cost sheet and negotiations
begin.
An example of open cost sheet is provided:
Fabric Booking and Trim Booking
Now after getting approval of garment quantity it is the time for fabric booking and trim
booking. It is very important to book the fabric and trims for production process.
Total time given for the fabric delivery from the day of booking= 60 days
Total time given for the trim delivery from the day of booking= 50 days
Fabric should be ordered as soon as possible as it is the most time taking component in the
garmenting process, but there are many steps that have to be taken by the sourcing person to
order the bulk fabric for the production.
Some of these steps are:
Getting approval of the no of colours
Lab dip approval from the designer for the selected colours
Order quantity of fabric according to the consumption of fabric for each garment.
Checking whether the fabric fits in the company measures.
Importance of lab-dip approval; its problems and process
Now after the presentation the first process that comes in to action is the Lab Dip
Approval process.
After the selection of the style the designer select the no of colours that has to be made
in the selected range.
Now the colours are not directly ordered for bulk dying, first of all ; the small length of fabric
is dipped in the selected colours and then it is send for the approval to designer and the after
getting approval the bulk dying of fabric is started.
The fabric mill send 2 to 4 options of swatches for bulk production under the same colour and
get the approval from the sourcing department and design department.
Complexity in the lab dip approval process are:-
From the similar looking colour with slight difference one colour is selected for bulk
production; and according to that selection all the trims were ordered.
Now the problem comes in this is even after the full approval process in bulk production
there can be a possibility of colour difference.
This one of the most difficult situation that comes in front of sourcing team; as all the trims
were ordered according to the lab dip approval. For ex. Zipper (DTM); Buttons and Threads.
Vendor Allocation
Now the most important task that has to be performed by the sourcing department is the vendor
allocation. For this it is very important to understand the vendor management.
Vendor Management
Efficient vendor management involves selecting the right vendors capable of giving the right
quality of merchandise and meeting delivery deadlines. Besides, they should be able to deliver
the right quantities as well, so that the retailer can get the right hit ratio. The right hit ratio
measures the gap between delivery and purchase orders and helps eliminate backlog in
deliveries. In a chain store scenario, a vendor directly delivering to stores is an important
element in attaining good supply chain efficiency. The vendors directly manage inventories in a
few retail [Link] Managed Inventory (VMI) is ideal for retail organizations as
it totally eliminates inventory-carrying costs. Here, vendors manage the inventory at every
store, monitoring the flow of information and ensuring just-in-time deliveries. The vendors are
able to take back slow-selling and non-moving merchandise, thus reducing the scope for mark-
down losses for the store.
Business houses in India are presently undergoing a major transformation in the Purchasing and
Supply management functions with the objective of achieving effective and optimum sourcing.
Bought-in costs currently represent a significant portion of the cost base of any manufacturing
enterprise and therefore this programme is of major strategic importance. Several specific
objectives need to be laid down as follows:
Developing the Organisation towards an effective and optimum sourcing capacity.
Developing closer relationships with the suppliers and foster win-win atmosphere
that eliminates inefficiency and waste.
Building strong linkage between user departments and materials management function.
Improving materials procurement and management processes.
Developing focused sourcing strategies across all commodities. To achieve these
objectives and to perform the purchasing function efficiently/effectively, a sound
vendor community of vendors should be motivated and capable enough to supply the
best at the required time in a cost-effective manner, thus becoming a reliable link for
the company. It is to arrive at this end result that Vendor Management assumes great
importance. Some of the best practices are described in the subsequent sections.
Acquisition of A Vendor
This process should be such that only the required and proven vendors get into the vendor base.
Vendor acquisition process could be started from one or more of the following sources:
Through market intelligence, a vendor is identified to be suitable for a commodity.
Through commodity research.
End users make specific recommendation.
Vendor approaches company for business.
One (or more) vendor on commodity panel is found unsatisfactory. The last three factors are
basically reactive actions whereas acquiring a vendor through market intelligence and
commodity research/expert opinion are proactive ways of identifying a suitable vendor.
Building and Maintaining The Relationship
After a vendor gets associated with the company, it becomes essential to foster a health
relationship whereby both develop trust in each other and perceive the relationship as a
mutually lucrative one. Various steps are taken to achieve this objective which is discussed
further herein.
Vendor Assessment
Performance assessment of a vendor is a pre-requisite to continual relationship. Poor
performance would be penalized (refer termination) and good performance would be rewarded
suitably. For suppliers of goods, rating is done on four parameters viz. price.
Delivery compliances, quality of the product and vendor professionalism, each is given
weightage of 32%, 32%, 26% and 10% respectively.
Production process
As now the vendor is finalized it is very important that the vendor should start working on the
fit sample and size set before receiving the bulk fabric
FIT SAMPLE
If buyer likes any of the meeting samples, then he provides the size chart. Now that
sample is made according to that measurement and sizes. This is called fit sample. Fit
samples are made of base size as per the measurement specification sheet. And these
samples are then test fitted on the dummies provided by the respective buyer.
SIZE SET
Size sets are a translation of the graded specification sheet into garment. These are sent
in all sizes. A size set approval is important before starting production to ensure that
the construction and the workmanship required for the style for various sizes is correct.
Now after getting the approval of Fit sample; it is the responsibility of the vendor to ask for
some yardage from the bulk producing fabric mill. So that the pre-production sample can be
made from that. This process will save the time of vendor instead of waiting for the bulk fabric
to make pre-production sample.
PRE PRODUCTION SAMPLE
As the name suggests a sample made before production is stated in actual approved
fabric with the correct styling. All approval has to be obtained from the buyer on
the pre-production sample before commencing production.
Now as the pre-production sample was approved and send to the vendor, the vendor start
its production process as per decided.
Inspection
After the production was completed and the goods are ready to dispatch, the vendor send
the shipment sample to the company for approval and send the mail for the inspection of the
goods to the department of sourcing.
Now the shipment sample is approved by the category department, the company send their
QA to the vendor for the inspection of the garments. Until and unless the garments are not
approved by the QA, vendor cannot dispatch the garment to warehouse.
Dispatch
After the approval of garments by QA of the company, the goods are dispatch to the
warehouse by the vendor.