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Changing Trade Competitiveness: The ITC Approach

Changing Trade Competitiveness: The ITC Approach. 6 Technical Assistance Needs 6 ITC responses. 1 st Need: A Sector Strategy (Action Plan). Develop overall country response Build critical country mass Build PPP based on strong sector associations

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Changing Trade Competitiveness: The ITC Approach

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  1. Changing Trade Competitiveness: The ITC Approach • 6 Technical Assistance Needs • 6 ITC responses

  2. 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

  3. 1st Response: The SHAPE

  4. 1st Response: The SHAPE A Structured Thinking Process: Analyse Brainstorm Action Plan Strategy

  5. The SHAPE – Ten Step Approach 1. Analyse Domestic Supply/Exports/Imports 2. Analyse the Value Chain (VC) Analyse 3. Identify problems in the VC and define the Actions 4. Identify export and sourcing Opportunities and define the Actions Brainstorm 5. Group Similar Actions together 6. Prioritize Actions and assign Time Frames Action Plan 7. Working Group 8. Finalize Strategy 9. Official Launch 10. Implement and Monitor the Strategy Strategy

  6. BORDER BORDER CUSTOMS PROCEDURES AGENTS/BUYING HOUSE TEXTILE INSTITUTE DESIGN INSTITUTE DOMESTIC SUPPORT SERVICES DOMESTIC RAW MATERIALS DESIGN YARNS TEXTILE Mnf. & Exporter RMG Mnf. & Exporter TESTING ACCESSORIES & PACKAGING MARKET RESEARCH MACHINERY Clothing Associations Other Associations Textiles Associations TPO DONOR ACTIVITIES AGENTS LARGELY KNITWEAR FABRIC SUPPLIED BORDER BORDER CUSTOMS PROCEDURES Sales (+Marketing, and Services) Outbound Logistics Customs-GSP/Quota Export Clearance Business Inbound Logistics Customs, Import Clearance Sourcing

  7. 2st Need: Know your Competitors • Quotas stifle competition • Now competitors are everywhere

  8. 2st Response: THE FiT

  9. THE FiT: Benchmarks performance It is divided into 4 broad areas Management & Organization Sales & Marketing Financial Planning Production, Sourcing & Operations

  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

  11. Profit $0.10 Profit now $0.16 ! Overheads $0.08 Overheads Labour $0.08 $0.07 Labour $0.07 Fabrics: $0,59 Trimmings:$0.16 Input supplies & Logistics $0.69 $0.75 WOVEN SHIRT: For every 1 Dollar earned approximately 60cts is spent on inputs A 60 % increase in its Gross profits without increasing sales A 10 % reduction in the supply cost of fabric and 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 tailor-made projects

  15. Providing Business Information

  16. Providing Data Analyis

  17. Providing Technical Assistance

  18. 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

  19. 5th Response: Business Guide A Business Guide on e-Applications in the T&C Sector

  20. 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

  21. Market Pressure on Clothing Manufacturers after the quota phase-out e-influence e-influence

  22. Today Future Producer Retailer Producer Retailer Conflicts Competition Competition Competition Conflicts Customer Customer Retailer Conflicts Producer Producer Retailer Demand Response Demand Response Likely evolution of the T&C Industry

  23. The Global T&C Value Chain and the use of e-Applications E-Linking of the Value Chain Sales Info + Direct Order Delivery Status Info Fabrics Clothing Agent Retailer MARKET Physical Delivery Clothing Value Chain Inbound Logistics Outbound Logistics R&D Marketing to Retailers Production

  24. 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

  25. 6th Response: Strengthen regional trade cooperation • South-South Trade Development • Regional trade development along the regional value chain

  26. 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

  27. Sales (+Marketing, and Services) Sales (+Marketing, and Services) Outbound Logistics Customs-GSP/Quota Export Clearance Outbound Logistics Customs-GSP/Quota Export Clearance Manufacturing Manufacturing Inbound Logistics Customs, Import Clearance Inbound Logistics Customs, Import Clearance Sourcing Sourcing 1.- Sectror Strategy Develpment “The SHAPE” 2.- Undersatnding it’s own and competitors’ performance “The FiT” 3.- Developing fabric sourcing skills to become “full-package”suppliers Sourcing Guide and database 4.- Understanding changing markets Garment-Maps and ITC T&C website 5.- Applying e-applications in the T&C sector Business Guide in e-commerce for T&C Implementing tailor made market penetration approaches in line with buyer requirements ITC Tailored Consultation

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