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Upstream Focus: Shahi Exports’ Raghavan Ramanujam on Vertical Integration, Tech Investments & Social Impact

Upstream Focus is Sourcing Journal’s series of conversations with suppliers, associations and sourcing professionals to get their insights on the state of sourcing, innovations in manufacturing and how to improve operations. In this Q&A, Raghavan Ramanujam, CEO, men and bottoms division at Indian-based garment manufacturer Shahi Exports, discusses his company’s moves to control more of the production process and the importance of worker well-being.

Raghavan Ramanujam
Raghavan Ramanujam, CEO, men and bottoms division, Shahi Exports Courtesy

Name: Raghavan Ramanujam

Title: CEO, men and bottoms division

Company: Shahi Exports

What’s the number one question you get from your clients now that was never really a consideration before?

Historically, the fashion industry has been characterized by transactional relationships between brands and their suppliers. However, the global temperament of brands is slowly moving towards building long-term relationships with their suppliers, especially post-Covid. The pandemic seems to have driven them to re-evaluate and look closely at their supply chains. Shipping routes were clogged, moving freight across international waters took longer than before, and the global cost of materials is rising. It therefore becomes even more imperative to develop and maintain a resilient and sustainable supply chain. While cost-effectiveness has always been a critical ask of brands and retailers, what we see now is a highly competitive retail landscape trickling down to suppliers. We need to balance cost, cater to evolving consumer preferences and build more sustainable products to deliver the best value to brands and retailers. Our clients expect their supply chain partners to align with more holistic goals over and above “business as usual.”

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Which processes have you put in place due to Covid that you’d like to see continue even after the health crisis is behind us?

Shahi has adopted technology really well. The time, money and effort that went into processes have significantly reduced. Merchandizing, presentations, approvals and industrial conversations have become more efficient since switching to virtual mediums. We are spending less time traveling and offering better lead times. We would definitely want to build more on this.

How are you evaluating potential brand and retail partners differently now compared to before the pandemic?

We value all our relationships irrespective of the volume or scale of business we do with them. We try to deeply understand the client and what they want to develop with us. We want more and more brands to establish a long-term partnership with us, as that gives us a clear line of sight to invest in capacity building and vertical integration.

This feeds into our larger objective of becoming the preferred partner in the industry for business, innovation and social impact—a holistic effort we have been engaged in long before it became a requirement or “the need of the hour.” We offer sustainable, multi-product capabilities and vertical integration.

What is the main thing brands and retailers could do (or stop doing) right now that would immediately improve product development?

There is nothing, really, that they should stop doing. India is looked at as a manufacturing hub but not a design hub. Shahi has an extensive design team with over 90 designers. We can imagine a future where brands and suppliers like Shahi could co-create products and invest in product development.

How are you adapting your operations to support quick-turn, small-run orders?

Investing in vertical integration and scale gives us a huge advantage. We have our own spinning, knitting and weaving facilities, and over 50 cut-to-pack garment factories. This gives us more control over our raw material in terms of quality, responsible and fair sourcing, better lead times and cost-effectiveness. Continuous expansion of our fiber-to-fashion capacities helps us improve efficiency and drive down lead times and costs.

In this challenging retail environment, how are you working with clients to balance sustainability needs with cost efficiency?

Everything else falls into place when you embed sustainability from the very beginning. Coupled with vertical integration, it makes it that much easier to align with our clients’ targets.

We don’t want to be the cheapest but rather the most sustainable solution. Being sustainable is what makes us cost-effective, because it is significantly more efficient. We are insulating ourselves from fluctuations by making our processes and operations sustainable. For instance, in 2018, we invested in an 84 MW solar plant, which now meets 70 percent of our electricity requirements. Not only has this reduced our carbon footprint, but it also protected us from some of the worst coal shortages in 2021.

When it comes to quality and compliance, what are the biggest challenges?

The market is indeed competitive. In India, compliance with social and environmental guidelines is taken very seriously, and our competitors in other countries can often offer competitive costs because of less stringent compliance requirements.

I think there is a massive human element to quality and compliance. We can invest as much as possible in automation and infrastructure, but nothing can replace creating a happy workplace. A happy employee creates the best product. It is like cooking. When you are happy and cooking, the food always tastes better. Over the years, Shahi has invested significantly in workers’ well-being. For example, we’ve trained over 60,000 women in Gap Inc. P.A.C.E., a holistic soft skills training. We’re committed to keep doing so, and are humble in our admission that with a workforce of over 100,000 people, there is always room to improve and innovate to become the best employer. It is about finding the sweet spot between employee satisfaction and production capacity to improve quality and compliance.

What is the best decision your company has made in the last year?

It has to be the investment in vertical integration and sustainability. We are now looking at increasing our solar and wind capacity to meet our needs and have a surplus. Similarly, we hope to achieve the maximum level of vertical integration possible to be able to meet as much of our fabric requirements as possible ourselves.

What makes you most optimistic?

I would like to rephrase the question to “What brings us back to work every day?” It is the sense of unfinished business, the sense of doing something better and something new. We would like to become the most preferred employer, not just a preferred manufacturer. For the lack of better words, we hold more emotion and character than, let’s say, a technology or engineering company.

Rising unemployment amidst the pandemic and declining female labor force participation in India makes me more and more confident every day that Shahi is continuing to create quality jobs for those from less privileged backgrounds. That’s what keeps me going. I also see a young workforce with a passion for innovating and developing more robust sustainability and social fairness practices at Shahi. This makes me optimistic that we are headed toward a more compassionate and healthier world.

What’s in store for Shahi Exports in 2022?

We tend to plan more in the long term. It is really all about supply chains, materials and sustainability. When you think about the changes the world is going through, these are the main areas that have our attention. When planning for the future, we remain fluid and take action on situations with high cognizance of pain points. You could say that we are a large ship, but we have the agility of a cabin cruiser.

At least in the next five years, we want to become more meaningful in what we do. Personally, my wish is to see how we can give more meaning, purpose and fulfillment to the lives of our employees and encourage them to create value for the community. The investment we make can be an influencer of employment in India. We want to build lives that are fulfilled—being able to empower our employees to empower their future generations and fly high to achieve their potential.