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How selection of right cotton helps to attain cost-effectiveness

Introduction

Cotton is one of the world’s foremost agricultural crops – also a backbone raw material for the textile industry.

Cotton cost comprises of minimum 50-80% cost of a cotton spinning mill. The coarser the count higher the cost. But as the export-oriented backward linkage spinning industry in Bangladesh is predominantly backed by knit and denim garment exporters majority of the mills are producing coarser (Ne 6/s to Ne 16/s) and medium (Ne 20/s-30/s) counts.

right cotton Selection, spinning mill
Figure 1: Cotton is the major cost component that deserves the highest attention of the spinners and to manage it properly.

And cotton cost remains around 70% of the total cost. But of course, spinning mills in Bangladesh are also diversified into weaving, open-end, blends and mélange yarn.

Historically cotton requirement and preference of Bangladeshi spinners have evolved over time. During the 90’s, Uzbekistan (CIS) and Indian cotton was roughly 80% of the total import while the share of Uzbekistan (CIS) cotton lost market share over Indian cotton over time. Indian cotton held the majority (more than 50%) share since 2017.

For the last 10 years West African and Brazilian cotton for the last 5 years, got the attention of the spinners and last year West African cotton became the highest imported cotton, surpassing Indian cotton, first time ever in Bangladesh.

At the same time, the USA cotton is getting popularity. And the market is now evolving towards West African, Indian, Brazilian and USA cotton. And of course, every retailer is insisting on using more sustainable cotton.

In my opinion, in the coming years growth of Brazilian and USA cotton would continue and West African cotton would fall back to around 30% and Indian cotton would retain around 30% of the cotton requirement in Bangladesh.

Not to mention blended and specialty yarn production is increasing to cater to the need of the market and cotton demand would remain around 7 million bales.

Cotton is the major cost component that deserves the highest attention of the spinners and to manage it properly, it needs to be done with proper methodology, analysis and planning.

Also Read: Selection of right cotton for a mill: Selection process (Part 2)

My experience as a cotton consultant since 2016 has given me some opportunity to endeavor the dynamics of spinner’s cotton decision making process in the following four (4) areas that are important to manage cotton efficiently:

  1. Choice of Cotton
  2. Cotton Flow Chart, followed by a comprehensive and dynamic cotton management plan
  3. Price Fixation and
  4. Risk Management

Today I would share some of my experience on the selection process of cotton of a mill.

Selection of the right cotton for the spinning mill:

The starting point is to make a choice for cotton, it saves a lot of costs and minimizes lots of unnecessary wastes or MUDA, called in Lean Management. The choice of inferior specifications would lead to inferior quality and product while the choice of the higher specification would result in excessive material cost reduce profit and sustainability. This is the gateway or starting point and is very important to ensure the sustainability of the spinning business.

cotton bale
Figure 2: First of all, choosing the right cotton for a mill with considering all the factors are essential.

There is no quick-fix to it as each mill is unique and can be largely different in many ways; like:

  • Why in the cotton spinning business?
  • Target Market, product, price and place
  • Count and count range
  • Technology
  • Condition of machine
  • Compact, Slab, core, etc.
  • Condition and availability of support and service machinery
  • Power situation & Humidification System
  • People behind the machine people plan and management
  • Delegation of authority and responsibility
  • Financial leverage and strength
  • Marketing plan

In order to choose the right cotton for a mill, first of all, it needs to be decided through prudent and neutral judgment considering the need of the customer (Price, quality and certification), process machinery, supporting machinery, manpower, financial condition, and an overall strategic or operational plan of the mill.

Since the cotton is bought by supply chain, used by production to produce yarn, quality of cotton and yarn are checked and assured by Quality Assurance department, the final product (Yarn) is sold and sales proceed collected by the sales team, each group has different requirement which needs to be streamlined towards the common goal (Profit maximization and long term value).

As a consultant, I have seen that meeting the needs of each group is a gradual process. As consultants act as a neutral body with a set of suggestions and not involved with the operation, the valid points that are not addressed in one year eventually get accepted as the team see the logic over time and it creates value which is the purpose of a consultant.

Normally, mills should set their cotton procurement plan for a year by August-October. Say cotton procurement plan for Jan’20-Dec’20 can be finalized by October’19. Once the plan is finalized it becomes easy to manage and execute. Then the mill only needs to buy the selected growth and specification as per the shipment schedule.

As cotton index volatility is nowadays very high (+/_10-15), to do well risk minimization is also essential. Overall cotton management is a dynamic decision-making process and needs due diligence and teamwork. Experience, analysis and actively trying to learn to find out ways better management is very important.

Bangladeshi spinners would do better in the future only through developing local professionals, system development, and teamwork to compete internationally.

To be continued…

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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