Applying the V-Factor to Increase Profitability in a Textile Manufacturing Business

The Challenge

Reducing the working capital, at the same time increasing turnover and profit seems like an oxymoron to many textile manufacturing industries. Anyone managing the marketing or sales function faces the following situations at one point of time or other.

o When you try to increase sales, the debtors outstanding goes up, increasing the working capital requirement.

o When you try to tighten the credit control system, the sales goes down and stock level increases, thereby pressure on working capital goes up.

o If you try to increase profit by increasing price, the sales goes down hence stock level increases.

o If the price is lowered, the sales go up and collections improve but the bottom line is hurt, resulting in pressure on profitability.

As a result almost always the marketing department is chased by the finance department, keeping the former on their toes all the time.

During this tug of war between the marketing and finance departments, all the other departments face the pressure to cut costs, work harder to accept any kind of orders, sacrifice their sleep, happiness, motivation and finally resent their fate.

Added to the issue is the inherent seasonal and global ups and downs of the textile market, often rendering the ‘working capital including stocks’ blocked. Trying to liquidate slow moving stock obviously results in lowered prices.

There is no single panacea available to cope with this turbulent situation because the variables also vary from industry to industry. particle filtration efficiency test

The “V-Factor”

Yet, there is a vulnerable point in the whole system. That issue is often neglected by the manufacturing sector – Velocity of business, which can be called as the “V-Factor”.

The approach is not complicated and often used by the non-manufacturing partners of the textile business, like wholesale distributors and retailers. A manufacturing process is more complicated and involves many segmented departments hence the V-Factor is more than often is neglected and not addressed in an integrated manner. By ‘integrated manner’ it means not just the actions by supply chain management but the involvement of the whole business as a unit that moves together.

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