6 Advanced Tips to Scale Up Production
6 Advanced Tips to Scale Up Production
Scale up production involves having the manufacturing capacity for growth and also for expansion of production operations.
How can textile manufacturing companies in India scale up their production?
Do they have the necessary business systems, infrastructure and teams to accommodate growth?
Do they have to depend on third parties (reliable partners) to scale up their business in a cost-effective way?
Therefore, this blog aims to provide an overview about the two broad approaches to scaling up production, i.e.,
- Capital Investment
The blog will also provide several other advanced tips to textile manufacturers to scale-up production and increase their business profits.
Capital Investment Vs Outsourcing
The textile manufacturers should weigh the pros and cons of both the options and choose the most suitable option that blends well with their business goals.
The investment made by the textile manufacturer on capital expenditure to establish manufacturing unit. Capex for example includes land, building, plant, machinery, vehicles, etc. It also considers the expansion of future business operations.
- May improve the efficiency of your firm drastically.
- A good capital investment can have a competitive edge as it can help in providing better goods and services to the customers than the competitors.
- Very resource-intensive, both in terms of cost as well as time. As a result, the textile manufacturer will have less resources available for core activities like brand building, marketing, new product development, etc.
- Capital investments continue to incur a fixed cost of capacity. Major part includes insurance, depreciation on equipment, property taxes, rent payments, maintenance and repair. Also, this cos will incur even when there is underutilization of manufacturing capacities.
This approach involves outsourcing complete or parts of the production operations by the textile companies to external manufacturers. External parties have required infrastructure in place and are ready to offer their capacities to companies looking for the same. India seems to be a promising destination in this aspect.
- Outsourcing is a win-win situation for both the parties. Manufacturers looking to utilize this option and the manufacturing units who are ready to outsource their spare capacities to these manufacturers.
- The textile companies outsourcing their production operations can save cost by not investing in capex. As a result, their resources are better utilized for their core business activities.
- Outsourcing production operations provides sustainability in the dynamic global environment. International outsourcing brings substantial cost benefits to the textile manufacturers as they can take advantage of low-labour costs and advanced manufacturing infrastructure in certain countries.
Types of Outsourcing
i) Contract Manufacturing:
It is the type of outsourcing, where the textile manufacturing company can use the manufacturing capacities of another company to produce its products.
In this approach, the company seeking the contract manufacturers should provide the fabric or garment specifications, packaging and labelling instructions, etc. to the contract manufacturer to enable him to produce the garments as per provided specifications.
- More control over the final product as the specifications and packaging instructions are provided by the hiring textile company.
- Huge cost savings as the textile company does not have to build a production facility and spend on human resources.
- Launching new products is easier and less expensive.
- Helps the textile company to focus on core activities such as marketing, branding, research and development, etc.
Larger minimum order quantities demanded by contract manufacturers may be a deterrent for smaller companies with less orders.
ii) Private-Label or White-Label Manufacturing:
This is a kind of plug-and-play approach. This is highly suitable for small textile manufacturers who do not whish to create their own product specifications. Or they do not have the components and resources for building a product from scratch.
The private-label manufacturer produces goods for several textile retailers with varying levels of customization. These retailers in turn sell these products under their own branding and logo. Larger companies who want to focus their resources on other core business activities can also avail this.
– As these manufacturers take up even smaller minimum order quantities, the seeking textile company can spread its investment by ordering different types of garments instead of one.
– Higher profit margins can be achieved as the manufacturing costs are lower when compared to producing your own products.
– Lead time is greatly reduced as these manufacturers have the generic products already stocked.
– The textile enterprise will have very less control over product creation. It does not own the specifications and sometimes there may be inconsistency in quality.
How Can the Textile Manufacturers Find the Right Outsourcing Partner?
Manufacturing units having underutilized manufacturing capacities and companies looking to utilize these facilities, need access to up-to-date and reliable information to find manufacturing partners. A technology platform like Capximize (https://capximize.com/) through its algorithm-based recommender system will enable to connect these entities.
Other Advanced Tips to Scale Up Production
1. Have clear objectives: Having well-defined objectives will help the company to prioritize its areas of growth and figure out how to go about these.
2. Invest wisely in technology: Investing in technology helps scaling up production in a less expensive manner. Automation aids in gaining economies of scale and more throughput in an efficient and cost-effective manner.
3. Keep processes simple: Achieving scale requires repeatable and predictable processes and systems. Hence, keeping processes simple is the key.
4. Do your research: Researching about similar businesses that have scaled up production helps one to gain a better understanding about which ideas to implement and which one to avoid..