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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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