The role of vertical integration in the Textile Industry

 19 January 2023, Mumbai

The vertically integrated manufacturing model of textile production as a bit of nuance is essentially a combination of forward and backward integration of various process/production units of textiles, which we typically use mostly for textile apparel (T&A) / fashion textile (F&T) as there is a lot at stake.

Therefore, vertical integration is similar to a 'One-Stop-Shop' for large customers/groups who need to fulfill their product demands from the same manufacturing center or source.

Prologue

This manufacturing center or cycle can maintain the customer's supply chain from their production or process of every stage, from raw materials to the finished goods they need. Most enterprises in the natural fibers sector grow their cotton, jute, hemp, wool, and silk, which are then processed through ginning, spinning, weaving, knitting, bleaching, dyeing, printing, coating, bonding, and laminating before being cut, stitched, labeled, washed, and packaged.

From synthetic (petrochemical) polymerization to extrusion, molding, spinning, or wet spinning to weaving, knitting, own ward cutting, stitching, labeling, washing, and packing apparel/clothing.

Demerits; The drawback of vertical integration is that it increases the pressure to optimize supply chain efficiencies by lowering inventory while at the same time maintaining ultra-responsiveness to fluctuating market needs.

The supply chain in the clothing industry

Traditionally, a supply chain for clothing is vertically integrated. A single market organization handles acquiring raw materials, spinning, weaving, dyeing, processing, designing, manufacturing, and selling to branded retail stores and concessions.

Vertical integration of the apparel/garment supply chain gives businesses the innate capacity & predictability to control every step of their workflow. 

However, the main advantage is the capacity to spot trends and develop collections faster than manufacturers or merchants with a more dispersed supply chain.

There is a fundamental relationship between the many fashion product categories that shops manufacture (basic, basic-fashion, and high-fashion) and their relative demand uncertainty, which may worry businesses operating in more than one demand grid sector.

The correlation between the volatility of the three major product categories and the necessity for an apparel supply chain adaptation at the top and within the product portfolio is highlighted.

Successful supply chains will be built on assessing vast amounts of heterogeneous data and making wise decisions. Optimized processes and controlled costs represent the Holy Grail for clothing manufacturers and retailers.

Trends and new operations in the industry

The main trends affecting supply chain management for vertically integrated garment manufacturers and retailers are examined in this white paper, emphasizing the necessity of reevaluating systems and procedures to enable retailers to fully satisfy today's empowered consumers.

Vertical integration is a tactic that allows a business to streamline operations by directly controlling different stages of the production process instead of depending on outside suppliers or contractors.

Instead of outsourcing these operations, a company might achieve vertical integration by acquiring or forming its manufacturers, distributors, and retail outlets. However, due to the significant initial capital expenditure needed, vertical integration may be risky with potential drawbacks.

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