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How to Find Right Pharmaceutical Contract Manufacturing Company

 

Pharmaceutical contract manufacturing

How to Find Right Pharmaceutical Contract Manufacturing Companies

India is the 3rd largest manufacturer of Pharmaceuticals in the world in terms of volume. Pharmaceutical contract manufacturing companies are leading contributors in making India the pharmacy of the world. There are approximately 11,000 pharmaceutical manufacturing units in India. A large number of these companies are also involved in contract manufacturing and research services, popularly known as CRAMS.   

 

What is pharma contract manufacturing?

 

Pharmaceutical contract manufacturing is the process of outsourcing the manufacturing of pharma products on behalf of a third party. Pharmaceutical contract manufacturers (PCMS) support the manufacturing of quality backed pharmaceutical products at reasonable prices. Generally, companies seek the help of contract manufacturers to produce a product economically and within a certain period of approved time frame.

 

The COVID-19 pandemic pushed the contract manufacturing in pharma sector in a big way, as pharmaceutical sector leaned towards it to meet the increased demand. Its global growth from US$934.8 billion in 2017 to $1.17 trillion in 2021 shows the scale that is possible to achieve.

 

To meet the increasing demand, pharma companies are facing burden on several fronts. Their financial performance takes hit, especially when it comes to buying and running expensive equipment for the mass production of pharmaceuticals. To combat this, many companies have begun outsourcing their manufacturing to CMCs. CMCs have the equipment, facilities, and labor force to carry out a more cost-effective production as a result.

 

Partnering with the right contract manufacturer is becoming a practical trend among pharma manufacturing companies. Contract manufacturing majorly includes the manufacturing of pharma formulations including solid and liquid dosage forms, injectables as well as bulk drugs and APIs.

 

Advantages of pharmaceutical contract manufacturing :

 

Cost-effectiveness

 

Setting up a manufacturing pharma manufacturing facility requires huge investment in terms of both fixed and variable cost. It is more cost effective for a pharma company involved in R&D and new drug development to outsource the pharma manufacturing. A CMO, has an already established expertise and infrastructure to produce the drug at much cheaper rates which can be utilized by pharma companies.

 

Advanced Skills

Use of advanced technologies and skills for manufacturing in pharma sector is prerequisite for quality production. CMOs have already established expertise and facilities to manufacture at full scale with right regulatory requirements. They have strong ties with the raw material suppliers and have incorporated various efficiency methods to manufacture at the lowest possible operational cost.

 

Quality Assurance

CMOs have pre-established quality checks in place that have been refined over the years. They have been manufacturing in compliance with various standards used in different countries. Also, they have specific systems in place to control the quality of the end product. Pharmaceutical contract manufacturing helps the companies to make use of such quality control techniques to ensure compliance with different quality standards around the world.

Global Presence

Through CMOs, a pharmaceutical company can enter into new markets at minimal financial risks. There is no need for local investment in the areas of the capital, time and executive talent. A CMO can help such companies in minimizing these kinds of risks.

 

Capabilities of CMCs 

 

The main capabilities or capacities of pharmaceutical contract manufacturing include –

  • solid dose tablets, capsules, and oral liquid production.
  • Process development.
  • stability testing programs.
  • clinical supplies manufacturing.
  • analytical method development and validation.
  • unit dose blister packaging with barcoding, and regulatory consultation etc.

How to Find Third Party pharma Contract Manufacturer

 

Although, contract manufacturing and third party manufacturing is very common in pharma sector, there is lack of information about the CMOs in India. Indian pharma companies and multinationals entering Indian pharma market have to depend on Google Search or references to find the partners. These information sometimes are outdated with not capacity information available.

 

Online Technology platforms like Capximize becomes handy in such cases. Capximize platform helps pharma companies in finding right third party manufacturing companies for contract manufacturing. Platform helps in online manufacturing by providing in-depth and broad-spectrum information available about available spare manufacturing capacity with pharma companies in India. With its proprietary algorithm-based recommender system it helps its members to connect with global pharmaceutical manufacturers looking for manufacturing capacities across India..

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Modern Rules of Electronic Industry Manufacturing Capacities Utilization

Modern Rules of Electronic Industry Manufacturing Capacity Utilization

Modern Rules of Electronic Industry Manufacturing Capacities Utilization.

Modern Rules of Electronic Industry Manufacturing Capacities Utilization

In this fast-growing economic situation, the demand for electronic goods has skyrocketed due to the increase in buying power. Therefore, in such a scenario it will be deemed obsolete to have a conservative approach with respect to the electronics manufacturing capacities. Keeping aside excess manufacturing capacities foreseeing a surge in demand or seasonal demand is the traditional approach. However, this needs significant rethinking as the surge may be temporary and the manufacturing plants may not function at 100% capacity throughout the year.  Also There may be times when these are underutilized for prolonged periods, therefore cutting down the profits.

How to utilize Electronic Manufacturing Capacities Optimally to Increase Revenues?

The following modern rules of electronic manufacturing capacities provide the solution.

1. Use Production Planning Software for Electronics Manufacturing

Production planning and scheduling software solutions help in generating an effective and scalable production plans. The plans are based on actual capacity, material availability and customer delivery requirements. This in turn will increase the efficiency of resources, shorten lead times, and help in identifying unutilised capacities. This leads to reduced costs and increased revenue.

2. Invest in Equipment and Manufacturing Technology

Investing in new equipment and technologies not only helps in improving operations, it also enable speedy production of higher quality electronic goods. For example, the use of 3D printing to create new tooling has shown to provide promising results in aiding production and testing.

Therefore, the electronics manufacturer should make an objective assessment of the available latest technology. Based on assessment he should choose the one that best fits his product line and business needs.

3. Utilise the Concept of Shared Manufacturing

Manufacturing industry is moving in the direction of socialization, interconnection and platformization. As a result, the concept of shared manufacturing is gaining popularity.

What is Shared Manufacturing?

Shared manufacturing to put it simply is the sharing of manufacturing capacities through peer-to-peer (P2P) collaborations.

Traditional factories have difficulty balancing their manufacturing resources, production orders and manufacturing capabilities. Some factories may have sufficient manufacturing resources and capabilities but few production orders. Meanwhile others may have sufficient production orders but lack manufacturing resources and capabilities. Shared manufacturing comes to the rescue in such scenarios and bridges the gap. 

In this kind of approach, depending upon the scenario, the electronics manufacturer can either be the customer and use the manufacturing capacities of other manufacturers. Or be the producer, where he provides his unutilized manufacturing capacities to other manufacturers.

The different kinds of shared manufacturing capacities are as below:

  1. Sharing of production orders where the electronic manufacturer has too many orders to deliver on time. In such cases he may share these with other manufacturers in order to fill the gap of insufficient manufacturing capabilities.
  2. Sharing of manufacturing capacities to others who lack sufficient manufacturing resources to expand production.

For eg., a computer numerical control manufacturer (CNC) can have a large amount of production resources. At the same time, a start-up company may be unable to purchase the CNCs due to their high cost. Then, the start-up can use the manufacturing resources of the CNC manufacturer and derive economic benefits by not investing in CapEx.

contract manufacturing is a kind of outsourcing where the electronics company outsources few or all parts of its end-to-end manufacturing needs to contract manufactures. The contract manufacturers utilise their excess manufacturing capacities to produce the goods on order from these companies.

Many of the prominent and well-known electronic brands make use of contract manufacturing facilities, thereby saving cost, and increasing revenue by focusing on core business activities such as design and development, marketing, R&D , etc.

There are several listed companies in cities like Mumbai, Bangalore, Coimbatore, Kannur, Gandhinagar, Hyderabad, etc. who do big-time contract manufacturing for well-known electronic brands.

The recent announcement of the Indian government of a Rs. 76,000/- crore package for the development of a sustainable semiconductor and display ecosystem in the country will provide a major thrust to the semiconductor and display manufacturing industry.

The program aims to provide attractive incentives to companies / consortia that are engaged in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT) and Semiconductor Design. This will definitely boost the contract manufacturing opportunities in the electronics sector.

To facilitate shared manufacturing and contract manufacturing in the electronics manufacturing sector, there needs to be an intermediary mechanism. Mechanism can enable electronics manufacturers to share information about their excess manufacturing capacities worldwide. And at the same time assist potential customers to get sufficient relevant information on available manufacturing capacities.

A digital technology platform like Capximize (https://capximize.com/) through its algorithm-based recommender system enables to connect these entities and provide global visibility. This platform provides up-to-date information about manufacturing capacities that deal with PCB assembly, encasing, plastic moulding/injection moulding and electronic components such as capacitors, resistors, switches, transformers, etc.

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Effective Ways of Reducing the Cost of Manufacturing

Effective Ways of Reducing the Cost of Manufacturing

Effective Ways of Reducing the Cost of Manufacturing.

Effective Ways of Reducing the Cost of Manufacturing

Global economy is going through a churn with increased inflation and volatility in fuel prices. The manufacturing sector is facing several challenges such as high material cost, high logistics cost, supply chain disruptions due to contingencies, business uncertainties, etc. Hence, reducing the cost of manufacturing has become a top priority for this sector. 

What is Cost of Manufacturing?

Manufacturing cost is the total cost incurred during the process of manufacturing a product which includes the following components:

Direct material cost: Cost of the raw material that is used in manufacturing a product.

Direct labour cost: Cost of labour directly involved in the manufacturing process. For eg., assembly line workers.

Manufacturing overheads: Includes indirect labour costs such as supervisors and material handling team who are not directly involved in production. Also includes indirect materials cost such as water, lubricants, etc., that are not used as raw materials. Other costs are rent, insurance, electricity, equipment depreciation, freight and transportation.

Why Should Companies Reduce the Cost of Manufacturing?

Reducing cost of manufacturing is very important as it has the following implications:

Competitive Pricing: A significant portion of the expenses incurred in production is the cost of manufacturing. Higher cost of manufacturing leads to higher product pricing. Reducing the cost of manufacturing will help in providing competitive pricing, especially when your company sells a price sensitive product.

Increased Profits: Lowering of your manufacturing cost will increase your profitability.

Improved Sustainability:  Reduction of manufacturing costs often calls for streamlining the manufacturing process, incorporating recycling practices and minimising waste. Thus improving sustainability in production.

Ways to Reduce the Cost of Manufacturing

  • Evaluate and Improve the Manufacturing Process

    Evaluate your manufacturing process periodically to find our wastage in terms time, raw materials and other resources. Make necessary improvements in those process to reduce the manufacturing costs. 

For eg., in the automobile and electronics manufacturing sector, take the help of highly skilled product engineers to identify the waste-producing steps. It will reduce the amount of raw materials needed for these particular steps. This will in turn reduce the overall manufacturing cost. Also, upgrading to equipment that could produce better products at a lower energy cost and raw material input can be considered.                                                                                                                                               

  • Consider Lean Manufacturing

    Lean manufacturing involves measures to reduce waste during the manufacturing process to an absolute minimum.

    One of the ways to achieve this in the manufacturing sectors such as textiles and pharma is to analyse if the waste and by-products of manufacturing can be reused in making new products. This requires innovative thinking and making use of reverse logistics. (a type of supply chain management which entails moving of goods from the customers back to the sellers or manufacturers for the final disposal of the product, including recycling and refurbishing). Companies can reclaim the functional parts to use either in manufacturing current products or when developing new products.

  • Survey different suppliers and negotiate prices

    Manufacturing industries such as the pharma, electronics and textile sectors will benefit immensely if they are able to procure raw material at a reduced cost. Negotiate long-term contracts with the existing suppliers for price reduction or look for other suppliers providing raw materials at a lower price. But, they must also ensure that there is no compromise on the quality. And ensure that the raw materials meet the demands of production, both in terms of quality and quantity.

  • Reduce Overhead Costs

    Companies can accomplish manufacturing cost cutting by cutting down overhead costs that include utilities, office supplies, insurance and maintenance costs. Invest in energy-efficient technologies and equipment to reduce utility bills. Have a clear budget for overheads and explore different cost-saving options.

  • Go for Outsourcing

    Outsourcing has become a very feasible option nowadays as there are many manufacturers. They can offer their surplus manufacturing capacities to manufacturing partners seeking these excess capacities for manufacturing their products. This will substantially reduce the manufacturing costs as not investing in CapEx will save a lot of money. 

Look out for firms that have lower labour costs, access to better manufacturing technology and can comply with your business’s quality standards. These firms can either be local or international. Digital platforms like Capximize provide Information with respect to such firms.

  • Use Third-Party Manufacturing

    In Third Party Manufacturing process, an enterprise uses another company to manufacture its products under its own brand name. This is a very common practice in pharmaceutical industries. It reduces the cost of production and the lead time and therefore is a very suitable option for upcoming companies who are in their developmental stage and find it difficult to invest in capital expenditure.

Advantages of third-party manufacturing
  1. Companies can invest time in core business activities such as marketing, quality control, design and development, etc.
  2. The third- party manufacturers may have better experience and expertise and also a well-connected manufacturing ecosystem that may help the hiring company in reducing manufacturing costs.
  3. Some manufacturers may not only produce goods but also offer other value-added services such as transport and distribution, which may work at a lower cost than arranging your own logistics.

How To Find Information on Third-Party Manufacturers?

An innovative technology platform like Capximize can provide access to Information on third-party manufacturers. Capximize platform provides up-to-date information on surplus manufacturing capacities available globally. It helps companies seeking manufacturing capacities to connect with third-party manufacturers or other manufacturers through its algorithm-based recommender system.  

This digital platform provides information on pan-India manufacturing capacities. Helps in conservation of capital and saving lead time by offering information on ready-to-use facilities. All of which will subsequently lead to reduction in manufacturing costs.

Register your company on Capximize Platform(https://capximize.com/) and experience the benefits that you will be reaping for making this wise decision.

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Global Visibility to Surplus Manufacturing Capacities for Improved ROI

Online manufacturing as enable to manufacturing companies

Mr. Avinash Bapat

Global Visibility to Surplus Manufacturing Capacities for Improved ROI

Surplus Manufacturing Capacities and Role of Technology in Giving them Visibility to Global Manufacturers

Online manufacturing as enable to manufacturing companies

Make in India and Online Manufacturing Platforms as enablers

“Made in India” should become a national movement like Swachh Bharat -P.M. Modi

I urge all the citizens to make “Made in India” and “Vocal for Local” as much of a movement as “Swachh Abhiyaan.”

Manufacturing industries should strive to utilize their manufacturing capacities to their fullest extent. It will push the “Made in India” and “Vocal for Local” movements further. One way to achieve this is by outsourcing surplus manufacturing capacities. Tech platforms promoting online manufacturing can drive this by providing global visibility to such companies.

Underutilized manufacturing capacities 

Many of the manufacturing facilities (production units) are lying idle or underutilized in India. Thanks to the global slowdown due to COVID-19 pandemic that has made global economies go for a toss, situation has worsened. The Covid-19 pandemic has caused many global companies to withdraw from China. As a result, India is now emerging as an alternative manufacturing destination. Due to favorable manufacturing climate in terms of well-equipped manufacturing capacities, Government subsidies that encourage global investments and availability of skilled and productive workforce, India is we placed. There is huge scope for manufacturing units in India for maximizing their capacity utilization and rationalization of their capital expenditure.

According to the April 2021 data released by the RBI, the capacity utilization of 700 manufacturing companies in the third quarter of 2019 – 2020 was 68.6% . It further declined to 47.3% in the first quarter of 2020-21. The third quarter of 2020-21 saw a resurgence in the manufacturing capacities (based on the data from 610 manufacturing units) to 66.6% due to easing of lockdown restrictions. But, it still means about one-third of manufacturing capacities in India are remaining idle or underutilized.

What is the reason for surplus manufacturing capacities?

Unplanned investment in capital like plant and machinery leads to creation of excess manufacturing capacities. This is a persistent scenario in India since decades and the pandemic has made this situation of underutilized manufacturing capacities even worse.

The automobile industry, electrical and electronics industry and textile industry have further been hit due to resource crunch at global level. This is result of global supply chain disruption resulting in further addition to underutilized capacities worldwide.

What Happens When There Are Idle Manufacturing Capacities?

Full utilisation of capacity is necessary to achieve higher rate of growth. Leading to higher rate of output, employment, income, investment and to make the best use of the scarce capital resources.

The manufacturing units will continue to incur fixed costs such as depreciation, property taxes, plant manager’s salary, etc., even if they are idle. This will adversely affect the profitability of the company. Too much idle capacity can hurt an economy.

Hence, Indian manufacturing units can leverage their unutilised capacities by outsourcing their facilities to global companies. These are those Global companies that are looking to set up pan-India manufacturing operations. Global companies can collaborate for better utilisation of already established manufacturing facilities. However, there is no dedicated and centralised source that can provide up-to-date information on the availability of idle manufacturing capacities. Such online manufacturing platform source enables potential manufacturers to access instant information. Currently, they have to rely only on references, which may not always be reliable. Online manufacturing platforms can be enablers for these companies. 

Technology Can Be the Enabler For Discovery of Available Surplus Manufacturing Capacities

Technology can be the answer to this problem of lack of information. It can bridge the gap by providing ready-to-use information about the available surplus manufacturing capacities. Subsequently, this information will be shared with global companies that are looking up to set manufacturing facilities pan-India.

The best potential solution would be a digital platform that offers a simple and secure user interface.  On the platform, the manufacturing units having surplus capacities and the global companies looking for pan-India manufacturing facilities can connect with each other.

One of the themes under the “Digital India Programme” is “IoT-based advanced analytics and automation to improve manufacturing processes with plant availability, yield, and throughput, and save costs through asset management.” This serves as a boost to set up such digital platforms supporting online manufacturing, as the Government would provide the necessary subsidies.

India’s manufacturing industry is already moving in the direction of industry 4.0 where everything will be connected and every datapoint will be analysed.

Capximize Platform

A digital platform launched by Capximize India Pvt. Ltd. has created a global platform for surplus manufacturing capacities through high end cloud-based technology. It will enable corporates to leverage manufacturing capacities of platform members to maximize ROI. The platform uses a recommender system based on its proprietary algorithm to recommend the right manufacturing partner resulting in cost competitiveness for participating entities.

On the Capximize Platform (www.capximize.com), you can be a Capximizer i.e., you have available surplus manufacturing capacity. Alternatively, you can be a Capximizee, located anywhere in the world and are looking for pan-India manufacturing capacities for your business requirement. A significant aspect of this platform is that it ensures complete data confidentiality and data security, thereby making the platform secure and reliable for the users.

To conclude, let’s take a look at the advantages of outsourced manufacturing capacities

1. A 2% increase in capacity utilisation will add approximately 8 billion dollars to India’s GVA (Gross Value Added), which is an important measure to determine the GDP. There will be zero capital investment as the plant and machinery is already available; hence this will create very high incremental ROI for the capacity provider.

2. Also, increased utilization of surplus capacities will help in the conservation of capital expenditure.

3. For the companies looking to utilise these idle capacities, it will give access to pan-India manufacturing options, improved cost of production, conservation of capital and reduced lead time.

4. A technology platform like Capximize enables secure access to up-to-date information on the availability of idle or underutilized manufacturing capacities, providing global visibility to the local manufacturers.

5. It also provides opportunities for potential cross industry use of available machinery.

6. Improved utilisation of manufacturing capacities can provide strong support to the Government in achieving manufacturing sector targets that will shoot up our country’s economy.

7. Also results in reduction of carbon footprints through logistics optimisation

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6 Advanced Tips to Scale Up Production

Capximize Expert

6 Advanced Tips to Scale Up Production

6 Advanced Tips to Scale Up Production

scale up production by optimizing manufacturing capacity

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?

(Or)

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
  • Outsourcing

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.

Capital investment: 

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.

Pros

  • 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.

Cons

  • 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.
 
Outsourcing:

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.

Pros:

  • 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.

Pros

  • 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.

Cons:

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.

Pros

    – 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.

Cons:

    – 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..

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Cost of Capacity – Is your Textile Manufacturing Utilized Optimally?

Capximize-Textile Sector Expert

Is your Textile Manufacturing Capacity Optimally Utilized?

Cost of Capacity - Is your Textile Manufacturing Utilized Optimally?

Are the textile manufacturers and fabric manufacturers in India utilizing their manufacturing capacities optimally? Are they able to cover the cost of capital expenditure in their textile manufacturing units for better profitability? Therefore, how can these textile and cloth manufacturing companies in India utilize their manufacturing capacities optimally? Is outsourcing textile manufacturing the answer? 

Cost of capacity

Every manufacturing unit, irrespective of the sector, will incur a cost of capacity on setting up its manufacturing plant and machinery. As a result, this makes optimal utilization of manufacturing capacities indispensable and textile industry is no exception to this. Before we delve into more details, it is important to know what is meant by cost of capacity?

What is Cost of Capacity?

Cost of Capacity is the cost incurred by a manufacturing unit for its continuing business operations and also for future expansion in its operations. Generally, capacity costs are fixed in nature and do not change even with varying levels of output. Some examples of the cost of capacity are insurance, depreciation on equipment, maintenance and repair, rent payments, property taxes, etc.

This cost remains the same even when there is underutilization of available manufacturing capacities. Hence, if you are a textile or fabric manufacturer having underutilized manufacturing capacities, you can prevent these costs from affecting your business profitability by leveraging your surplus capacities into a profitable opportunity. Any Indian manufacturer can achieve this by outsourcing surplus capacities to other textile companies seeking to set up manufacturing facilities.

How can you utilize your textile manufacturing capacity optimally?

There are several ways by which you can utilize your textile manufacturing capacity optimally. Outsourcing and white-label or private label manufacturing top the list.

Outsource manufacturing capacity 

Outsourcing of manufacturing capacities simply means allocating them to external manufacturers. These external manufacturers may not have the necessary capital or infrastructure but are looking to either expand their operations or outsource parts of their production operations. There is a great demand for outsourcing in the textile industry specially, as textile goods have a short life cycle. In spite of that there is a need to deliver goods on time at an affordable price and still earn profits. This necessitates outsourcing as part of its operations.

White label manufacturing

White label manufacturing involves manufacturing products for different retailers who sell
these products with their own branding and logo. The textile company utilizing this service will benefit it reduces production cost significantly by saving time and cost.

Technology

Indian manufacturers looking to outsource their manufacturing capacities or looking to provide white-label manufacturing services  need access to up-to-date and first-hand information from a reliable centralized platform. Similarly, Indian and global textile companies looking to utilize outsourced manufacturing capacities also needs this information to find right manufacturing partner.

Technology platforms like Capximize helps in online manufacturing by providing in-depth and broad-spectrum information about textile manufacturing companies in India. With its proprietary
algorithm-based recommender system it helps its members to connect with global textile manufacturers looking for manufacturing capacities across India.

What Makes India An Attractive Manufacturing Destination for The Global Textiles Manufacturers ?

  • Variety

India’s textiles industry has the manufacturing capacity to produce a wide variety of products suitable not only for domestic but also for international markets. As per 2001 data, India has the second-largest yarn-spinning capacity in the world only behind China, accounting for roughly 20 percent of the world’s spindle capacity.                                                                                                                            

  • Competitive advantage

India enjoys a competitive advantage in terms of availability of well- developed
infrastructure in this sector. In addition it provides affordable and skilled labour, focus on research and development activities and strong manufacturing capabilities.

  • Policies 

The investment-friendly policies introduced by the Indian Government in the year 2020-21 has led to an increase in foreign direct investment, therefore attracting more global companies to set up their operations in India.

  • Infrastructure 

Advanced infrastructure and manufacturing capabilities in the textile hubs of India. Textile hubs include Tirupur, Madurai, Mumbai, Delhi, Amritsar, Ludhiana, Ahmedabad, Surat and Kanpur. These hubs are great attractions for global textile manufacturers looking to outsource their production operations. Tirupur textile industry has manufacturing capabilities for all aspects of knitwear, starting from spinning, knitting, wet processing, printing, garment manufacturing and exports. 

Maharashtra, especially Mumbai, has the best infrastructure and the state has an installed capacity of 1.66 million spindles. This is equivalent to 17 per cent of the country’s capacity for cotton yarn production. Surat is the hub for synthetic textiles production and has a weaving capacity of 7,20,000 weaving machines. Ahmedabad has excellent manufacturing capabilities for cotton textiles, while Ludhiana has facilities for woolen and acrylic knitwear.

Hope this article threw sufficient light on the optimal utilization of manufacturing
capacities.

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