Changing Trade Competitiveness: The ITC Approach 6 Technical Assistance Needs 6 ITC responses 1. 1st Need: A Sector Strategy (Action Plan) Develop overall country response Build critical country mass Build PPP based on strong sector associations Make a sector value chain analysis 2. 1st Response: The SHAPE 3. 1st Response: The SHAPE A Structured Thinking Process: Analyse Brainstorm Action Plan Strategy 4. The SHAPE – Ten Step Approach 1. Analyse Domestic Supply/Exports/Imports 2. Analyse the Value Chain (VC) 3. Identify problems in the VC and define the Actions 4. Identify export and sourcing Opportunities and define the Actions 5. Group Similar Actions together 6. Prioritize Actions and assign Time Frames 7. Working Group 8. Finalize Strategy 9. Official Launch 10. Implement and Monitor the Strategy 5. BORDER BORDER CUSTOMS PROCEDURES AGENTS/BUYING HOUSE Sales (+Marketing, and Services) TEXTILE INSTITUTE DESIGN INSTITUTE DOMESTIC SUPPORT SERVICES DOMESTIC RAW MATERIALS DESIGN Outbound Logistics Customs-GSP/Quota Export Clearance Business Inbound Logistics Customs, Import Clearance TESTING YARNS TEXTILE RMG Mnf. & Exporter Mnf. & Exporter ACCESSORIES & PACKAGING MARKET RESEARCH Other Associations DONOR ACTIVITIES Sourcing BORDER MACHINERY Clothing Associations Textiles Associations LARGELY KNITWEAR FABRIC SUPPLIED AGENTS CUSTOMS PROCEDURES TPO BORDER 6. 2st Need: Know your Competitors Quotas stifle competition Now competitors are everywhere 7. 2st Response: THE FiT 8. THE FiT: Benchmarks performance It is divided into 4 broad areas Management & Organization Sales & Marketing Financial Planning Production, Sourcing & Operations 9. 10. 3rd Need: Information on Sourcing and Supply Chain Management Skills Cost-structure of a woven shirt up to the FOB point 75% of cost = sourcing 10% 8% 7% 59% 16% Fabric Trimmings Cut& make Labour Other overhead Profit 11. Profit $0.10 WOVEN SHIRT: For every 1 Dollar earned approximately 60cts is spent on inputs Overheads $0.08 Labour $0.07 Fabrics: $0,59 Trimmings:$0.16 Profit now $0.16 ! Overheads $0.08 Labour $0.07 Input supplies & Logistics $0.75 $0.69 A 10 % reduction in the supply cost of fabric and A 60 % increase in its Gross profits without increasing sales trimmings = … Any reduction in purchasing and logistics costs has a direct and large impact on export competitiveness 12. 3rd Response: “Source-it” ITC textbook 1.- New ITC textbook on fabric sourcing, training and supply information 1.Introduction 2.Material Sourcing Process 3.The Buyer/Designer Side 4.The Factory Side 5.Salesmen Samples 6.Ordering Stock Materials 7.Fabric Inspection 8.Final Checks 9.Trim 10.Production Schedule 11.Things Go Wrong The Art of Sourcing 12.Where to Source What 13.Satisfying the Buyers’ Needs 2.- Training 3.- Sourcing Data Base (SAARC and ASEAN countries) 13. 4th Need: Understand changing markets and adapt products accordingly Numerous competitors and complex trade structure; Opportunities in higher-end and niche markets with value-added products; Exploit market potential in other developing countries, especially in a regional context. 14. 4th Response: Providing Information A new T&C website http://www.intracen.org/textilesandclothing T&C workshops on the business implications and how to prepare for increased competition Development and implementation of tailormade projects 15. 16. Providing Business Information 17. Providing Data Analyis 18. Providing Technical Assistance 19. 5th Need: E-Trade to attract larger buyers The use of «e» in light of the quota phase-out Overview of technology developments e-requirements imposed by buyers in the US and EU The role of HGK & Singapore trading houses Case studies of e-successful manufacturers Dissemination and training 20. 5th Response: Business Guide A Business Guide on e-Applications in the T&C Sector 21. 5th Response: Business Guide A Business Guide on e-Applications in the T&C Sector Overview of technology developments e-requirements imposed by western buyers The role of HGK & Singapore trading houses Case studies of e-successful manufacturers Dissemination and training 22. Market Pressure on Clothing Manufacturers after the quota phase-out Rivalry between manufacturers 10 9 8 7 6 5 4 New Market Entrants Supplier Power 3 2 1 0 Threat of Substitutes Retail Power e-influence e-influence 23. Likely evolution of the T&C Industry Today Producer Conflicts Response Customer Retailer Producer Demand Retailer Competition Conflicts Producer Retailer Competition Competition Producer Conflicts Future Customer Retailer Response Demand 24. The Global T&C Value Chain and the use of e-Applications E-Linking of the Value Chain Sales Info + Direct Order Fabrics Delivery Status Info Clothing Agent Retailer MARKET Physical Delivery Clothing Value Chain R&D Inbound Logistics Production Outbound Logistics Marketing to Retailers 25. 6th Need: Develop a Regional Approach Strategic Response: Critical (country/regional) mass Rules of Origin require regional cooperation Regional/Sub-regional Partnership Regionally integrated industry Link foreign investors to local business 26. 6th Response: Strengthen regional trade cooperation South-South Trade Development Regional trade development along the regional value chain 27. ITC’s TA to the Clothing Sector Need 1: Sector Strategy Development Clothing Sector Strategy Development «the Shape» Need 2: Know your competitors Benchmarking tool The « FiT » Need 3: Sourcing Information and SCM skills Skills development & regional supply information Need 4: Understanding changing markets New website; workshops; tailor-made projects Need 5: E-Applications in T&C A Business Guide Need 6: Intra-regional trade along the value chain South South Trade Development Approach 28. 1.- Sectror Strategy Develpment 2.- Undersatnding it’s own and competitors’ performance Sales (+Marketing, and Services) Sales (+Marketing, Outbound Logistics and Services) Customs-GSP/Quota “The SHAPE” “The FiT” Export Clearance 3.- Developing fabric sourcing skills to become “full-package”suppliers 4.- Understanding changing markets 5.- Applying Outbound Logistics Customs-GSP/Quota Export Clearance Manufacturing Inbound Logistics Customs, Import Clearance Manufacturing Inbound Logistics Customs, Import Clearance Implementing tailor made market penetration approaches in line with buyer requirements Garment-Maps and ITC T&C website Sourcing e-applications in the T&C sector Sourcing Guide and database Business Guide in e-commerce for T&C Sourcing ITC Tailored Consultation 29.