23 Apparel Industry – Structure and Management Practices, Personnel Management

R. Sunitha

Learning Objectives

To impart knowledge about management practices in apparel industry To impart knowledge about structure of apparel industry

1. Introduction

The apparel industry is a broad system in the world consisting of merchandising, producing, marketing, and distributing.

• The apparel industry is highly competitive global business.
• Both the manufacturers and retailers should serve their consumer markets, for the industry to be successful.
• The management of this industry is a challenging task.

2.   Structure of apparel industry

The organizational structure of the apparel industry is divided into four levels starting from production & distribution of materials at the mill level, to the level of sending it to the consumers.

2.1 Level 1: Mill Level

• At mill level, materials like fabrics, threads, trims & buttons are manufactured & sold to apparel firms.
• The apparel manufacturers buy, from vendors also.
• American Textile Manufacturers Institute (ATMI) is the primary degree trade association that serves the textile material manufacturers funding at the level 1.

2.2 Level 2: Apparel manufacturing level.

• At this level the apparel firms are responsible for production, merchandising and the marketing of the products.
• There are two types of organizational structures for apparel manufacturers namely the one who does almost all the manufacturing process within the available facilities & by their own employees and another one who assigns the manufacturing functions to other firms.
• Traditionally, the manufacturers designed, developed and produced the apparel products with their own facilities.
• American Apparel and Footwear Association (AAFA) is the primary trade association which serve apparel manufacturers at this second level.
• Contractors are firms that make a profit by providing product development, sewing and services to one or more manufacturers, retailers or government agencies.
• The contractors are of 3 types namely Cut – make- trim contractors, Full – package program contractors and Speciality contractors.

2.2 a. Cut – make- trim contractors

The apparel manufacturer hires the cut-make-trim contractors and provides fabrics and does product development. They supply operators, machines & thread to make garments.

2.2 b. Full – package program contractors

They source materials, and develop patterns for the manufacturing firm, and also provide operators machines & thread. They bear greater financial responsibility than others.

2.2 c. Speciality contractors

They have job shops which provide services like pattern grading, cutting, embroidery and printing. American Apparel Producers Networks (AAPN) is the primary trade association, which serve contractors in the second level.

2.2 d. Level 3 Retail Level

At this level the production and distribution system for consumer goods have evolved. Here, the forward vertical integration gives the manufacturer a direct contact with the consumer which helps in decision making for the product development.

Manufacturers and retailers may be competitors at both the manufacturing and retailing levels. When the manufacturers and retailers are not vertically integrated merchandise is sold by apparel & manufacturers at wholesale rates through apparel markets or sales representatives to the retailers.

Retailing is a process of selling goods to the ultimate consumers. The retailers are categorised into seven types based on the nature of their assortments. They are as follows.

1. Catalogue retailers: present their merchandise assortment in a printed form which is also sent to customer’s mail. Orders are placed through mail, telephone or internet and the merchandise reaches the customers doors in a couple of days.

2. Department store retailers: this includes quite bigger stores with multiple categories, and the merchandise included are apparels for women, men, and children.

3.  Internet retailers: This type of merchandise is done through computer network. The customers place their orders through computer, telephone or mail and the products arrive the customer’s door in a few days.

4. Mass retailers: offer consumer goods at a discount rate with broad appeal across income ranges, occupation and lifestyles.

5. Speciality retailers: They refer a large selection of a limited line of consumer goods defined by demographics and life styles.

6. Warehouse: are self-service type in which the customers pay annual membership fee.

7. Retailer outlet: are operated as clearance centre of the previous year’s stocks. The National Retail Federation (NRF) and the International Mass Retailing Association (IMRA) are trade associations which primarily serve the retail sector at this level.

2.2 e Level 4 Consumer Level:

The level 4, focuses on the ultimate consumer which is said to be the target of textiles & apparel industry. Apparel manufacturing and retailing use a complex, global trade matrix to combine material suppliers with manufacturers and retailers to provide finished goods to the customers. At each level decisions are made based on the forecasts of consumer demands.

The forecasts are based on demographics and psychographics of the consumers, statistical analysis of the sales and evaluation of the fashion trends.

The success and failure of an apparel industry depends on the consumers.

3.    MANAGEMENT PRACTICES

• The resources are the input for the production process to achieve the output.
• This relationship between the inputs and outputs determines the productivity.
• An apparel industry is responsible for managing its resources namely people, inventory, equipment and technology to fulfil the needs of the customers.

3.1 Human resource management/ Personnel Management

• Personnel management is an important branch in management of any business enterprise.
• It holds a key to all actions and successful management.
• It is also concerned with human and social implications of change in internal organization and methods of working and of economic and social changes in the community.
• Personnel management is concerned with people at work and their relationships with each other.
• It is a part of management which is concerned with the people at work and their relationship with an enterprise.
• This motivation is closely related to job satisfaction. When job satisfaction is high, motivation is high and when the level of satisfaction is lower, motivation becomes more difficult.
• The steps for man power planning involves anticipating man power needs, analysing skills to decide about the nature of man power required, planning job requisites and descriptions and securing adequate resources of recruitment.

3.1.1 Need of Personnel Management

Personnel Management is needed to observe working staff to select the eligible and best persons, to provide training for increasing the efficiency of the staff members, to remove problems of staff members, to address employee situations in respectful manner and to develop work efficiency of human power.

3.1.2 Dimensions of Personnel management

It deals with the aspects relating to the people working in the organisation, Job analysis and job description, Wages and salary administration, Recruitment, Placement and promotion transfers, training and professional growth, performance assessment and report, discipline trade union relation and welfare.

3.1.3 Characteristics of Personnel management

a.  It is related with behavioural, emotional and social aspects of the personnel

b. It is related to the development of human resources. It optimises knowledge, capability, skill and potentialities towards attaining both employee and organisational goals.

c.  Personnel management covers all levels and categories such as skilled, unskilled, technical, professional, clerical and managerial positions of employees. It covers both organised and un organised employees.

d. It applies to all the employees of organisations in the world whether it is industry, trade service, commerce, economic, social, religious, political and government departments.

e.  Personnel management requires constant reviewing, up gradation and integration.

f.  It focuses on achieving organisational goals namely survival, growth and development in addition to profitability, productivity, innovation and excellence.

Individual employee goals includes job satisfaction, job security, high salary, attractive fringe benefits, challenging work, pride, status, recognition and opportunity for development.

Societal goals include equal employment opportunity, protecting the disadvantaged and physically handicapped, minimising wage differentials and undertaking departmental activities.

g.  Personnel management is a responsibility of all line managers and a function performed by staff managers across the organisation.

h. Personnel management permeates all types of functional managements namely production management, marketing management and financial management.

i.  It aims at securing unreserved cooperation from all employees in order to attain predetermined goals.

3.1.4 Personnel Management Functions

The functions of personnel management are follows.

3.1.4.1 Managerial Functions of Personnel Management

The basic function comprise of planning, organising, directing and controlling.

a.  Planning

• Planning of personnel today prevents crises tomorrow.
• Planning helps in determining the future course of action to achieve desired results.
• The personnel manager should determine the personnel programme regarding recruitment, selection and training of employees.
• Forecasting is one of the important elements in the planning process. All other functions of managers depend on this planning function.

   b.  Organising

• Organising is concerned with perfect grouping of personnel activities, assigning of different groups of activities to different individuals and delegation of authority.
• A proper structural frame work is formed here.
• Organising is considered to be the most essential function of the entire management.

   c.   Staffing

This is a process by which managers select, train, promote and retire their subordinates. This involves the decision making about the selection of employees, setting performance standard, compensating employees, and evaluating performance, counselling employees, training and developing employees.

   d. Directing/Leading

• To execute the plans in right direction is an important function.
• This involves supervising and guiding the personnel.
• The success of the organisation depends on the direction of things rather than their design.
• Direction also consists of motivation and leadership.
• The personnel manager must be an effective leader who can create winning teams.

   e.  Controlling

Controlling function of personnel management comprises Setting standards for performance, measuring employee’s performance, correcting negative deviations and industrial assurance and efficient accomplishment of plans.

It makes individuals aware of their performance through review reports, records and personnel audit programmes.

It ensures that the activities are being carried out in accordance with stated plans.

3.1.4.2 Operative Functions of Personnel Management

3.1.4.2a. Procurement Function – This involves right kind of people in appropriate number to be placed in the organisation.

It consists of activities such as Job analysis, man power planning, recruitment, selection, placement, internal mobility, induction and orientation.

3..1.4.2b.Development – This function involves the activities meant to improve the knowledge, skills, aptitudes and values of the employees so as to enable them to perform the job in a better way in future.

These functions may comprise of training, Executive development, career planning and development and human resource development.

Training is the process of imparting job related knowledge to the employees.

Orientation is the process of integrating a new employee into the firm. Orientation helps new employees adapt to company culture. All the policies and information should be given to them in manual or in some written format for better understanding.

Training programs are done to prepare the employees for the specific job they are expected to do. This develops the involvement of employees with the firm and provides opportunities for professional growth.

Deep training is given to the employees to help them to develop the basic knowledge about the operation of the firm.

Vestibule training: it is one in which the similar equipment is available whereas the trainers and trainees function without disturbing the other workers.

Job skills: Skill based training programs help the employees to prepare for the specific job. Operators are taught about the procedures until required level of competency is attained. The employees should be viewed as valuable resources and every effort made by the firm should integrate the individuals into the firm to encourage their personal and professional growth.

3..1.4.2 c. Motivation and compensation –

This function involves determination of wages and salaries matching with contribution made by the employees to organisational goals.

This is a type of Operative Function includes Job design, work scheduling, motivation, job evaluation, performance appraisal, compensation administration, incentives and benefit.

3..1.4.2 d. Maintenance – It is concerned with protecting and promoting employees while at work.

It involves the benefits such as housing, medical, educational, transport facilities which are provided to the employees.

Several social security measures such as Provident fund, pension, gratuity and group insurance come under maintenance.

 3..1.4.2e. Integration function – Grievance redress, discipline, teams and teamwork, collective bargaining, employee participation and empowerment, trade unions and employees association and industrial relations.

3..1.4.2f Emerging Issues include Personnel records, human resource audit, human resources research, human resources accounting, human resource information system, stress and counselling and international human resource management.

3.1.5 Incentives and Employee Benefits

• Incentives: This is the most common system in apparel industry.
• It is referred as piece rate wage system.
• Workers are paid for each unit they complete.
• Piece rates are based on production standards which are compared to an hourly base rate to determine the value of each completion.
• This method is advantageous as this would make the operators know exactly how much they earn after each completion and the management is also able to cost the product more exactly.
• Variable base rates are also provided by some firms which allows the operators who perform more difficult tasks to earn more.
• This change with increase at specific levels of productivity.
• Hourly wage system: This is used in the plants which have limited production but produce a variety of products.
• This is used in firms which use a team-based production system. The features of system wage payment are as follows.

     a.  Individual incentives – include piece rate, standard hour plans, bonuses, merit pay, commissions for sales people and combination plan.

Bonuses are offered for exceeding production and good attendance of the worker.

This system encourages the employees to focus on productivity goals of the firm and to take ownership in the firm’s success.

Team bonuses are used with team based on production system.

b. Group incentives – Organisational wide incentive plans – Profit sharing, gain sharing, employees stock ownership plans. Profit sharing: It is an incentive system that shares a percentage of the firms profit with employees.

3.1.6 Employee Benefits and Services

• The term fringe benefits refer to the extra benefits provided to employees in addition to the normal compensation paid in the form of wage or salary.
• The factors that influence benefits and services for the employees are employee demands, trade union demands, employer’s preference, as a social security and to improve human relation. Fringe benefits: are provided in addition to the wages.
• Firms provide additional benefits such as coverage of insurance, retirement packages and more vacation.
• Special on site benefits like facilities in the dining area, cafeteria, fitness centre, day care & special educational privileges.
• The important objectives of fringe benefits are:
• To create and improve sound industrial relations.
• To motivate the employees by identifying and satisfying their unsatisfied needs.
• To provide security to the employees against social risks like old age benefits and maternity benefits.
• To protect the health of the employees and to provide safety to the employees against accidents. To promote employees welfare
• To create a sense of belongingness among employees and to retain them. Hence, fringe benefits are called golden handcuffs.
• To meet the requirements of various legislations relating to fringe benefits.

3.1.7 Employee Security

• Physical and job security to the employee should also be provided with a view to ensure security to the employee and his family members.
• When the employee’s services get confirmed, his job become secure.
• Further, a minimum and continuous wage or salary gives a sense of security to the life. Compensation – It is essential to have good rapport with labours. It is payment given for the time & service provided by the human resource.
• The compensation systems commonly used in apparel production workers are hourly wages, unit time worked, incentives- payment for units produced and bonuses.

These are followed to improve fairness to the employees and in turn the productivity.

1.  Retrenchment compensation: The Industrial Disputes Act,1947, provides for the payment of compensation in case of lay off and retrenchment.

The non-seasonal industrial establishments employing 50 or more workers have to give one month’s notice or one month’s wages to all the workers who are retrenched after one year’s continuous service.

The compensation is paid at the rate of 15 days wage for every completed year of service with a maximum of 45 days wage in a year.

2. Lay of compensation : In case of lay off, employees are entitled to lay off compensation at the rate equal to 50% of the total of the basic wage and dearness allowance for the period of their lay off except for weekly holidays.

Lay off compensation can normally be paid up to 45 days in an year.

3.1.8 Employee Safety and health:

o   Employee’s safety and health should be taken care in order to protect the employees against accidents, unhealthy working conditions and to protect the worker’s productive capacity.

Certain requirements in working condition to provide safe working environment which relate to cleanliness, disposal of waste and effluents, ventilation and temperature, dust and fumes, artificial humidification, over-crowding, lighting, drinking water, latrine, urinals and spittoons.

Provisions relating to safety measures include fencing of machinery, work on or near machinery in motion, employment of young persons on dangerous machines, striking gear and devices for cutting off power, self-acting machines, casing of new machinery, prohibition of employment of women and children near cotton openers, hoists and lifts, lifting machines, chains, ropes and lifting tackles, pressure plant, floors, excessive weight, protection of eyes, precautions against dangerous fumes explosive or inflammable dust, gas.

Health benefits include sickness benefit, maternity benefit, disablement benefit, dependant’s benefit and medical benefit.

Old age and retirement benefits- Provident fund, Pension, Deposit linked insurance, Gratuity and Medical benefits.

3.2 Inventory management

This includes all the items that have been purchased for conversion and sell-through that are in the system at any given time, including the materials waiting to be processed work in process and finished goods.

• One of the items enter the system, they are said to be inventory until they are sold.
• This involves damaged good that are not stable, trims that were not used and that have been carried over for several seasons and finished goods that have been cancelled.
• The success of inventory depends only on its sales.
• Excess inventory occurs when procurement and production exceeds consumption.
• The items lose their market value on prolonged storage. There are 3 factors considered for assessing inventory. They are
• The original cost of the goods.
• Cost of maintaining.
• Value added to the original material.
• Inventory management has to be more sophisticated because of computerization of data.
• Excess inventory of materials or work in process increase the costs but a shortage of inventory curtails production.
• Inventory control is an effort to maintain stock level and costs, within acceptable limits.
• The inventory level should be such that it maintains a steady work flow, keep inventory investment at a minimum and provide good customer service.
• Inventory is a controllable element that has a major impact on productivity and this management is the key for the success of the firm.

3.3 Equipment Management

An industry’s financial base merchandising and sourcing strategies and commitment to modernisation determine the needs and priorities for technology and equipment. The reasons for equipment purchases include the following:

• Replacement of the essential worn out equipment
• To reduce the cost, the replacement of equipment should be done.
• Acquisition of new equipment to expand production and improve quality Acquisition of equipment to produce new product line
• Acquisition of equipment to improve safety and environmental factors
• The need for the equipment and processing methods depend on product characteristics such as the materials used, styling, quality requirements, cost restrictions and delivery deadlines. Even the automated equipment needs quality control.
• An  automated equipment is an effective means of maintaining product consistency and accuracy.
• The expectation of modernisation is a reduction in labour costs and improved consistency by reducing the manual operation and materials handling skills of the operator.

3.4 Financial management

It is the effective utilization finance and servicing such as estimation of capital requirement, control of the company for sources, finance and servicing of the capital.

Objectives of financial management:

• To establish total amount of funds that are required for an organisation and to fulfil long and short term desires.
• Ensuring the utilization of the funds in the most effective manner. Disposal of the profits earned in the best advantageous way.

3.5 Sales management

• It covers all marketing activities and functions required for the sale of the products. Marketing is an important feature of sales management.
• Market research is concerned with the study of markets suffering from stress and strain of several competition and methods of marketing.

The sales management has the responsibilities for determining the sales policy, interpreting the sales policy and administrating the sales activities.

Sales promotion techniques and advertising are done to promote the sales.

3.6 Apparel Quality management

• Quality Control is a more limited form of management process.
• It focuses on the production process than the entire firm.
• Quantity is found at any price level.
• The quality details to be taken care in the apparel industry are,
• Fabric is the basic raw material for apparels. Grain of the fabric should be taken care for production of apparel.
• Patterned fabric should be matched properly and it involves more fabric and labour.
• Colour combination is also an indicator of quality.
• Seams with in a garment should be securely sewn.
• Design features in the apparel can also help in judging the quality. Collars should be smooth. Sleeve should be of sufficient width for the arm to move comfortably. Waist lines and waist
• bands should appear smooth and even around the body.
• Hems should be without puckers along the garment.
• Fasteners should function well and be durable.
• Quality is evaluated using two methods.
• One is by comparing the industries intrinsic and extrinsic product characteristics to other similar goods in the market place.
• Another is by comparing the consistency of products’ intrinsic characteristics to the firms standards and specification.
• The terms namely Quality Assurance (QA) and Total Quality Management (TQM) are used in the firms.
• Quality control is a more limited form of quality management process.
• It focuses on the production process than the entire firm responsibilities.
• Quality objectives should be stated in measurable term and that should be specified.

The clarity in the objectives help to unify the quality effort, motivate action and promote harmony among the managers and workers.

This would also contribute to the development of quality consciousness among suppliers, customers, managers, contractors, supervisors and sewing operators. Quality consciousness would in turn develop better workmanship.

Quality standards are set of procedures that provide a basis for resource and production decisions. Report preparation and documentation are imported as it helps in training the quality problems to the source.

Organisational structure for Quality management

a.Production development teams 

b.Independent quality management groups

c. Team of divisional managers

d.Teams of production workers.

3.6 a Production development teams

It is responsible for intrinsic quality of goods produced.

It involves technical designer and quality manager.

Technical designer analyse the designs and materials and identify the possible problems. Issues involved are shrinkage of material colour loss and sewing differences. Production managers analyse sewing and finishing problems to assure that garments produced meet quality standards.

3.6 b Independent quality management groups

This is recommended by many consultants. The Independent quality management group can be effective in setting policy. Here it is difficult fro everyone to assume responsibility for contributing to Quality assurance.

3.6 c Team of divisional managers

It is applicable in small firms with less specialisation.

Special training for quality manager is important for the firms managers.

Educational efforts are essential in order to provide basic underlying of quality.

3.6 d Teams of production workers.

The product development team assures quality of inputs and the production team assures quality of outputs.

The Quality management team establishes a quality policy including quality objective for each firms divisions.

Quality standard measurement criteria method documentation, system for communicating the requirements methods, Testing and assessing the levels of success.

3.6 e Methods of assuring quality

Visual assessment and lab tests are used for evaluating the standards. Based on this the goods are evaluated.

3.7 .Waste management:

Management of the production waste is a major concern in today’s environmental issues. It is our social responsibility.

Though it is time consuming and expensive.

• The non-degradable material waste causes pollution.
• The cost of disposing the waste becomes more expensive than the cost of the fabrics.
• It causes landfill and leads to the stress in the environment.
• All the firms are seeking effective ways to recycle the materials.
• Garment dyeing, washing or chemical treatment requires large amount of water for processing.

4. Conclusion

Thus the management practices should be followed in the apparel industries for effective functioning of the industry.

Web links

• https://en.wikipedia.org/wiki/Management
• https://en.wikipedia.org/wiki/Training
• whatis.techtarget.com/definition/quality-control-QC