Introduction

Spinning business in the 90’s was less challenging than it is now and enjoyed enough margins to recover the investment within 3-5 years quite easily. Now, spinning mills are having a difficult time even in managing a moderate net profit of 5%. So, it has brought big concern as to how to manage it well and make it sustainable in the long run. In this article we would like to identify the key issues those need to be focused to make spinning sustainable in the long run.

Power

Spinning is a power hungry industry. In 2000 power cost was around BDT 1.50 per KWH while it is now bellow BDT 4.50 per KWH, if it is produced with captive gas generator. But now gas supply has become inadequate with the capacity of captive generators. Therefore, in many areas like; Tongi, Gazipur, Saradagang, Savar, Narayanganj, etc. due to unavailability of gas mills are running bellow the capacity and thereby cost of production per unit has gone up. It does not end here. To ensure full production mills are looking for expensive alternative sources of power that is driving cost even higher.

Table-1: Comparative cost of power, based on fuel or source.; Source: Alhaj Karim Textile.

This has introduced a new challenge to the industry which is quite difficult to fight within short time. Industry can expect assurance of power as spinning is a capital intensive industry though becoming less labor intensive with the changes of time by utilizing modern machinery and transportation system.

And added to it is the different cost for different mills. Mills should be given a level playing ground and it can be done in the form of subsidy or adjustment of fuel cost so that power cost becomes same for all mills.

Also, mills should be given appropriate policy and regulatory guidance to source power that would sustain in the long run and ensure a level playing ground.

Raw material management and risk minimization

Bangladesh is more focused in cotton based value chain than non-cotton. And managing the raw material well is very critical to success as more than 50% cost is material cost. To manage raw material well, the following are important:

1. Choose of right material



2. Cotton/raw material flow chart, followed by a comprehensive and dynamic cotton management plan.



3. Addressing unexpected situations and



4. Price fixation and risk management of raw material/cotton.

(This part has been described in details in an article, “Managing Cotton: An inevitable challenge to cotton spinning mills” in November’17 issue of Textile Today).

Strategic Planning

Strategic planning is very crucial for ensuring sustainable spinning business as it has reached to the matured stage for Bangladesh. This can give a road map to ensure sustainable business and all the activity can be attuned with the strategy.

Balanced Score Card (BSC) is a modern strategic management tool that can be used. Also, other modern technics and tools like Lean and others can also be sort for.

Bottom line is to make a comprehensive plan to assure long term sustainability of the business taking into account of market, products, process and technology, people, material, quality, finance, skill up gradation and training, information management and system.

Conclusion

The future of spinning sustainability is dependent on how well the issue of power, raw material and strategic planning is exercised effectively and professionally at macro and micro level.