"Cotton Disaster" Caused By "Oxtail Effect"

Almost any industry has the "oxtail effect", and the textile industry is no exception.

The more effective measures to reduce this phenomenon are: to improve the accuracy of demand forecasting, to realize the sharing of sales information, and to establish a strategic cooperative relationship.

There are always striking similarities in history. Let's start with one case:

During the outbreak of SARS, people bought masks in large quantities.

This sudden demand is reflected in the retailer.

For a long time, retailers bought masks from wholesalers, and wholesalers increased the number of orders to manufacturers.

The information coming from the terminal demand is pmitted along the supply chain to the upper end, and is enlarged by every link enterprise. The mask manufacturers also buy a lot of masks and raw materials such as cotton yarn and cloth, buy new machines and recruit workers to expand their production capacity.

In the end, the state quickly controlled the epidemic and quickly ended the spread of the SARS epidemic.

But when the SARS epidemic is coming to an end, demand is not that big, or suddenly disappeared.

But the mask factory is still producing a lot, and a large quantity of cotton yarn and masks and finished products are backlog in the factory, leading to factories.

The cotton yarn and cotton market in 2010~2011 is similar to this case.

The real demand of a commodity in the terminal market often changes slightly. This slight fluctuation will follow the supply chain from retailers, wholesalers and distributors.

This phenomenon can never be eliminated because it is the embodiment of insecurity in human hearts.

Almost any industry has the "oxtail effect".

The textile industry is no exception. There is also the "oxtail effect" in the supply chain.

For example, in the second half of 2010,

The existence of "oxtail effect" has serious consequences for cotton, spinning and weaving enterprises. Because blindly optimistic or snapping up raw materials, it is necessary to maintain a much larger inventory than actual demand, resulting in increased business risks, rising inventory costs, declining profits, product accumulation and occupation of funds, thereby weakening the competitiveness of enterprises.

At the same time, it also led to a decline in the efficiency of the entire supply chain of a textile printing and dyeing joint group mentioned above.

For example, in 2011, the macroeconomic tightening policy of the state controlled inflation, the downturn of the international textile market, the sharp decline in export orders, and the appreciation of the Renminbi made the demand for the downstream market substantially reduced.

What is more serious is that there is a large amount of cotton that has been overloaded for nearly a year in the hands of farmers. In October, it was the traditional season for new cotton to go public.

As a result, the cotton and cotton yarn Market in 2011 will be the result of "cotton disaster" that we see today?

How to reduce the frequency of the phenomenon of the "bull tail effect" by the vast spinning mills, weaving mills and printing and dyeing factories?

Or how can we minimize the negative effects of this phenomenon?

The more successful companies in this respect are the international buyers represented by WAL-MART.

The former Hongkong company, which has worked for many years, supplies WAL-MART and other large international buyers. Many of their practices are worthy of reference from our textile and dyeing enterprises.

For many years,

First, improve the accuracy of demand forecasting.

The salesperson should have extensive contact with the customer purchasing manager, regard the client company as the place where he works, understand the situation of customer order execution in detail, and even take part in the new product development stage of the customer. According to the order of the downstream terminal customers, the variety selection is accurate, the selling price is reasonable, and the inventory quantity is moderate.

Second, realize the sharing of sales information.

Suppose that during the SARS epidemic, retailers sell every mask to the wholesalers and producers' computer system through the information on the POSE machine. The upstream enterprises get the information that is real information, rather than the data that the suppliers themselves are making behind closed doors.

The salesman of the spinning mill must always know how many thousands of cloth sold by the client company, and how much the raw material is stored, and the salesman must have a clear idea of the data.

Or ask the salesperson to try to enter the customer's raw material warehouse and look at the office of the customer again, so as to make one listen, two look, three negotiation.

Third, establish strategic alliances and alliances.

International buyers such as WAL-MART have a very scientific VENDOR management system. All the information on price and delivery date can be shared.

It is suggested that the boss of the spinning mill should often go to the cotton producing area, and even to neighboring countries such as Pakistan and India to understand first-hand information and establish a strategic partner supply system.