In 2021, Turkey was ranked as the fifth largest exporter of textile and apparel in the world with exports reaching $12.9 billion by the end of the year. About one-third of Turkish textile companies produce final goods or components for global markets, including for the top clothing brands popular all over the globe.Despite the ramifications of the Covid-19 pandemic and overall economic instability, the country’s textile industry is still rapidly growing. Ahmet Oksuz, head of the Istanbul Textile and Raw Materials Exporters' Association, has stated recently that textile exports are expected to increase to $15 billion in 2022.
When it comes to digital innovations in this rather conservative sector, Turkey still has a long way to go—but the groundwork has been laid. With the help of government support and increased competition rates, the attitude toward automation and digital transformation is gradually changing. Recent industry research shows that over the past two years, there was a 6% growth in IT solutions usage for manufacturing companies.The pandemic and e-government hack a way to innovations
In Turkey, a large part of textile manufacturers is presented by small and family enterprises. Traditionally, heads of such companies would be more focused on sales and consider technology as something of minimal importance and unclear value. So it’s not easy for them to shift from the established way of running a business to innovative approaches.
There’s also an issue of distrust toward certain software providers in Turkey, some of which might engage with customers in untransparent ways. For example, they might set different prices for one and the same product depending on the size and profitability of the customer. This makes it harder for customers to trust them, especially for small and medium businesses.
Another reason for the relatively slow digitalization rate is the reluctance of manufacturers to move to new platforms or solutions once they have picked one even if the solution no longer meets their business needs. That’s why many textile producers in Turkey are still using outdated technology which is often presented by simple Windows-based desktop applications with no web or mobile versions.
During the Covid pandemic, plenty of businesses around the world underwent the lockdown period. Turkish businesses were not an exception. Due to the government’s regulations, this period was relatively short, and some smaller manufacturers won’t even stop production.
However, the unreadiness of remote operations due to low digitalization and outdated software posed serious challenges for many businesses. For example, because the IT infrastructure of most local manufacturers is Windows-based, they had to use remote desktop licenses. These are costly, and many could afford just 2 or 3 licenses, so only 2 or 3 employees could work from home. And those companies that were able to provide employees with remote access faced such issues as reduced productivity and ineffective management.
The pandemic, however, wasn’t a good enough reason for many to introduce innovations and adopt new software. But here’s where the governmental efforts to bring the country’s economy on digital footing played its role. Various requirements such as e-invoices (e-Fatura and e-Arşivs) and digital declarations have been enforced for local businesses and thus boosted the process of digital transformation in Turkey.
The government also supports production companies that are willing to implement some new software or technology. For example, companies can receive funds from the government covering the part of the project cost of the software. This is another good reason to update technology.
All these factors combined stimulate many textile producers to rethink their approach to technology and start looking for modern solutions.
How ERP solutions can benefit textile companies
In the past few years, the Turkish government and international investors have been steadily increasing investments in the innovative sectors of the economy. In terms of business digitalization, innovations often imply adopting ERP software to automate the production process. For example, by implementing an ERP platform, it’s possible to integrate the system with various equipment such as RFID, robots, machinery, terminals and so on, depending on the textile sector and type of output.
When choosing an ERP solution, companies usually consider their specific business needs and requirements. For the textile industry, these include automating procurement, warehousing and production processes, managing subcontractors, ensuring compliance with the e-government regulations and so on.
Company size is another crucial factor to consider when going for digitalization. Small and mid-sized manufacturers often specialize in subcontracting work. They don’t have much machinery and mostly use manual labor or simple equipment for production. For such businesses, the main issues are monitoring processes, managing orders, planning raw materials purchasing and communicating with customers and subcontractors.
For example, small subcontractors often have 6-10 employees and specialize in one particular textile production operation, such as cutting. They receive raw materials and cut them according to the requirements and templates. The main difficulty for these companies is managing multiple orders since improper management can result in a large waste of material. With Excel or manual order accounting, it’s possible to manage 2-3 orders, but not 10-15 orders a day.
Bad communication with the purchaser might also be troublesome. There are often cases when subcontractors forget or are late to notify the customer that the work is completed. ERP solutions can help tackle communication problems and many other issues. For example, as soon as the job is done, the customer is notified via email or mobile application. Reminders can also be sent out, for instance, that a job must be completed in 3 hours. All these notifications can be customized depending on the client’s needs.
Large enterprises often use ERP solutions for integrating all the machinery and equipment, estimating and planning mass production, monitoring the production line, streamlining sales and accounting processes, etc. Such companies often use sophisticated and more expensive ERP solutions, while SMBs tend to choose affordable options with rich functionality like 1C:Drive Turkish Edition, which is as well tailored to the local legal requirements.
Although the price is often the main factor when choosing between several options, other things also matter, especially when it comes to communication with the vendor. If the customer isn’t getting enough support from their vendor, they would likely not choose them or make a decision to change them if they are already partners.
A number of factors such as increasing competition, the covid pandemic and state legislation changes encourage textile and apparel manufacturers in Turkey to optimize their business processes and increase investment in technology. The Turkish authorities’ requirements for financial reporting and invoicing as well as investment programs also pose a strong incentive for local businesses to implement digital solutions that enable process automation and compliance with the legislation.