Journal of Applied Economic Research
ISSN 2712-7435
Assessment of Economic Efficiency, Effects and Risks of Digitalization Projects of Garment Industry in Russia
Tatiana Yu. Kudryavtseva 1, Ksenia S. Kozhina 1, Gunnar K. Prause 2, Eunice O. Olaniyi 3
1 Peter the Great St. Petersburg Polytechnic University, Saint-Petersburg, Russia,
2 Tallinn University of Technology, Wismar University, Tallinn, Estonia,
3 University of Turku, Turku, Finland
Abstract
To increase production efficiency at industrial enterprises, various digital technologies have recently been used, which have various effects: reduction of time, money, material costs, reduction of the production cycle, productivity growth. This study aims to analyze and evaluate the efficiency of the digitalization of garment production, determine the effects and risks of a digitalization project. The digitalization project was carried out using the radio-frequency identification technology to monitor the sequential processes of garment making.This study tests a hypothesis that the use of digital technologies leads to a reduction in time losses and an increase in labor productivity. During the study, the time of the production process was measured. Further on, the possible reduction of time losses due to the introduction of digital technology under the conditions of existing production capacities is calculated. Time losses were used for additional production, which leads to a change in the company's cash flows. As a result, the performance indicators of the investment project were calculated, and its risks were assessed using sensitivity analysis.The theoretical significance is in determining the economic indicators that are affected by the introduction of digital technology in the garment industry. The introduction of the radio-frequency identification technology makes it possible to monitor the parameters of the production process, which helped to reduce time loss by 50%, decrease the labor intensity of the product and increase the productivity of the enterprise's personnel by 30%. The implementation of digitalization projects has risks for companies. To minimize possible risks that could arise, sustainable mitigating solutions were proffered.
Keywords
garment industry; digital technologies; smart production; Industry 4.0; risk assessment; sustainable development; economic efficiency; investment impact analysis.
JEL classification
L67References
1. Kagermann, H., Helbig, J., Hellinger, A., Wahlster, W. (2013). Securing the future of German manufacturing industry. Recommendations for implementing the strategic initiative INDUSTRIE 4.0. Final Report of the INDUSTRIE 4.0: Working Group. Berlin, Frankfurt.
2. Prause, G. (2015). Sustainable business models and structures for industry 4.0. Journal of Security and Sustainability Issues, Vol. 5, Issue 2, 159–169. doi.org/10.9770/jssi.2015.5.2(3)
3. Tjahjono, B., Esplugues, C., Ares, E., Pelaez, G. (2017). What does industry 4.0 mean to supply chain? Procedia manufacturing, Vol. 13, 1175–1182. doi.org/10.1016/j.promfg.2017.09.191
4. Vrana J., Singh R. (2021). Digitization, digitalization, and digital transformation. In: Handbook of Nondestructive Evaluation 4.0, 1–17. Springer, Cham. doi.org/10.1007/978-3-030-48200-8_39-1
5. Denuwara, N., Maijala, J., Hakovirta, M. (2019). Sustainability benefits of RFID technology in the apparel industry. Sustainability, Vol. 11, Issue 22, 6477. doi.org/10.3390/su11226477
6. Ali, A., Haseeb, M. (2019). Radio frequency identification (RFID) technology as a strategic tool towards higher performance of supply chain operations in textile and apparel industry of Malaysia. Uncertain Supply Chain Management, Vol. 7, Issue2, 215–226. doi.org/10.5267/j.uscm.2018.10.004
7. Choi, T.M., Yeung, W., Cheng, T.C., Yue, X. (2017). Optimal scheduling, coordination, and the value of RFID technology in garment manufacturing supply chains. IEEE Transactions on Engineering Management, Vol. 65, Issue 1, 72–84. doi.org/10.1109/TEM.2017.2739799
8. Chanchaichujit, J., Balasubramanian, S., Charmaine, N.S.M. (2020). A systematic literature review on the benefit-drivers of RFID implementation in supply chains and its impact on organizational competitive advantage. Cogent Business & Management, Vol. 7, Issue 1, 1818408. doi.org/10.1080/23311975.2020.1818408
9. Stepanova, D.I. (2018). Digital technologies of business management in the garment and textile industry of Russia [Cifrovye tekhnologii upravleniya biznesom v proizvodstve i tekstilnoi promyshlennosti Rossii]. Design, technologies and innovations in textile and garment industry (Innovations-2018) [Dizain, tekhnologii i innovacii v tekstilnoi i massovoj promyshlennosti (Innovacii-2018)], Part 3. Moscow, 263–266. Available at: elibrary.ru/item.asp (In Russ.).
10. Wong, W.K., Guo, Z.X. (2014). Fashion Supply Chain Management Using Radio Frequency Identification (RFID) Technologies. Woodhead Publishing. doi.org/10.1016/B978-0-85709-805-4.50012-2
11. Veugelers, R. (Eds) (2013). Manufacturing Europe’s Future. Bruegel Blueprint Series, Vol. XXI. Brussels. Available at: www.bruegel.org/sites/default/files/wp-content/uploads/imported/publications/Blueprint_XXI_web_181113a.pdf
12. Prause, G., Atari, S. (2017). On sustainable production networks for Industry 4.0. Journal of Entrepreneurship and Sustaibility Issues, Vol. 4, Issue 4, 421−431. doi.org/10.9770/jesi.2017.4.4(2)
13. Fritzsche, A., Gölzer, P. (2021). Indutrial Applications of Artificial Intelligence: From Grand Stories of Digital Disruption to Actual Progress. Procedia CIRP, Vol. 104, 683–688. doi.org/10.1016/j.procir.2021.11.115
14. Shan, S., Wen, X., Wei, Y., Wang, Z., Chen, Y. (2020). Intelligent manufacturing in industry 4.0: A case study of Sany heavy industry. Systems Research and Behavioral Science, Vol. 37, Issue 4, 679−690. doi.org/10.1002/sres.2709
15. Jones, E.C., Riley, M.W., Franca, R., Reigle, S. (2007). Case study: the engineering economics of RFID in specialized manufacturing. The Engineering Economist, Vol. 52, Issue 3, 285–303. doi.org/10.1080/00137910701503951
16. Iluore, O.E., Mamudu Onose, A., Emetere, M. (2020). Development of asset management model using real-time equipment monitoring (RTEM): case study of an industrial company. Cogent Business & Management, Vol. 7, Issue 1, 1763649. doi.org/10.1080/23311975.2020.1763649
17. Barosz, P., Gołda, G., Kampa, A. (2020). Efficiency analysis of manufacturing line with industrial robots and human operators. Applied Sciences, Vol. 10, Issue 8, 2862. doi.org/10.3390/app10082862
18. Fu, M., Hao, Y., Gao, Z., Chen, X., Liu, X. (2022). User-Driven: A Product Innovation Design Method for a Digital Twin Combined with Flow Function Analysis. Processes, Vol. 10, Issue 11, 2353. doi.org/10.3390/pr10112353
19. Khan, A.R., Yasin, A., Usman, S.M., Hussain, S., Khalid, S., Ullah, S.S. (2022). Exploring Lightweight Deep Learning Solution for Malware Detection in IoT Constraint Environment. Electronics, Vol. 11, Issue 24, 4147. doi.org/10.3390/electronics11244147
20. Tsyokhla, S.Yu., Simchenko, N.A., Moiseenko, V.A. (2020). Network design of introduction of digital twins in industry [Setevoe proektirovanie vnedreniya cifrovyh dvojnikov v promyshlennosti]. Bulletin of the north caucasian federal university [Vestnik Severo-Kavkazskogo federalnogo universiteta], No. 3, 106–112. doi.org/10.37493/2307-907X.2020.3.12 (In Russ.).
21. Ilyina, T.A., Kirina, D.N. (2020). Digitalization of logistics processes of Russian enterprises based on the introduction of RFID technology [Cifrovizaciya logisticheskih processov rossijskih predpriyatij na osnove vnedreniya tekhnologii RFID]. St. Petersburg State Polytechnical University Journal. Economics [Nauchno-tekhnicheskie vedomosti SPbGPU. Ekonomicheskie nauki], Vol. 13, No. 4, 36–45. doi.org/10.18721/JE.13403 (In Russ.).
22. Sterman, J.D. (2000). Business Dynamics: Systems Thinking and Modeling for a Complex World. Boston, Irwin McGraw-Hill.
23. Bencsik, A., Hargitai D.M., Kulachinskaya A. (2022). Trust in and Risk of Technology in Organizational Digitalization. Risks, Vol. 10, Issue 5, 90. doi.org/10.3390/risks10050090
24. Ragulina, J.V., Ukolov, V.F., Shabunevich, O.V. (2021). Adaptation to the Risks of Digitalization: New Survival Trends for States in a Multipolar World. Risks, Vol. 9, Issue 12, 218. doi.org/10.3390/risks9120218
25. Kazakov, S., Jordanova, J. (2017). Typology of risks in RFID. Journal Scientific and Applied Research, Vol. 12, 40–52.
26. McGrane, V., McDermott, O., Trubetskaya, A., Rosa, A., Sony, M. (2022). The Effect of Medical Device Regulations on Deploying a Lean Six Sigma Project. Processes, Vol. 10, Issue 11, 2303. doi.org/10.3390/pr10112303
27. Maware, C., Parsley, D.M. (2022). The Challenges of Lean Transformation and Implementation in the Manufacturing Sector. Sustainability, Vol. 14, Issue 10, 6287. doi.org/10.3390/su14106287
28. Baptista, A., Abreu, L., Brito, E. (2021). Application of lean tools: Case study in a textile company. Proceedings on Engineering, Vol. 3, Issue 1, 93–102. doi.org/10.24874/PES03.01.009
29. Tripathi, V., Chattopadhyaya, S., Mukhopadhyay, A.K., Sharma, S., Li, C., Singh, S., Saleem, W., Salah, B., Mohamed, A. (2022). Recent Progression Developments on Process Optimization Approach for Inherent Issues in Production Shop Floor Management for Industry 4.0. Processes, Vol. 10, Issue 8, 1587. doi.org/10.3390/pr10081587
30. Akhtar, W.H., Watanabe, C., Tou, Y., Neittaanmäki, P.A. (2022). A New Perspective on the Textile and Apparel Industry in the Digital Transformation Era. Textiles, Vol. 2, Issue 4, 633–656. doi.org/10.3390/textiles2040037
31. Lapshin, V.V., Smirnova, N.A. (2019). Avtomatizirovannyi izmeritelnyi kompleks kak realizatsiia izmerenii tsifrovizatsii v legkoi promyshlennosti (Automated Measuring Complex as a Realization of the Concept of Digitalization in Garment Industry), Kostroma, Kostroma State University. Available at: www.elibrary.ru/item.asp (In Russ.).
32. Küsters, D., Praß, N., Gloy, Y.S. (2017). Textile learning factory 4.0 –preparing Germany’s textile industry for the digital future. Procedia Manufacturing, Vol. 9, 214–221. doi.org/10.1016/j.promfg.2017.04.035
33. Darechkin, V.M. (2019). Vnedrenie iskusstvennogo intellekta v proizvodstvennyi tsikl ego predpriiatii legkoi promyshlennosti i sotsialno-ekonomicheskikh posledstvii [Implementation of artificial intelligence in the production cycle of garment industry enterprises and its socio-economic consequences]. Upravlenie kommertsiei ekonomiki: elektronnyi nauchnyi zhurnal [Management of Economic Systems: Electronic Scientific Journal], No. 4, 1–41. (In Russ.).
34. Maslova, O.P., Ilyina, T.A., Krichmar, V.A., Safronov, E.G. (2021). Implementing Lean Manufacturing and Solving Motivation Problems in Russian Companies. In: Engineering Economics: Decisions and Solutions from Eurasian Perspective. International Scientific and Practical Conference. Lecture Notes in Networks and Systems, Vol. 139, 384–391. doi.org/10.1007/978-3-030-53277-2_46
35. Prasad, M.M., Dhiyaneswari, J.M., Jamaan, J.R., Mythreyan, S., Sutharsan, S.M. (2020). A framework for lean manufac-turing implementation in Indian textile industry. Materials Today: Proceedings. Vol. 33, Part 7, 2986–2995. doi.org/10.1016/j.matpr.2020.02.979
36. Chen, Z., Xing, M (2015). Upgrading of textile manufacturing based on Industry 4.0. 5th International Conference on Advanced Design and Manufacturing Engineering. Atlantis Press, 2143–2146. doi.org/10.2991/icadme-15.2015.400
Acknowledgements
The research is partially funded by the Ministry of Science and Higher Education of the Russian Federation under the strategic academic leadership program 'Priority 2030' (Agreement 075-15-2021-1333 dated 30.09.2021).
About Authors
Tatiana Yurievna Kudryavtseva
Doctor of Economics, Professor, Graduate School of Industrial Economics, Peter the Great St. Petersburg Polytechnic University, Saint-Petersburg, Russia (194064, Saint-Petersburg, Polytechnic street, 29); ORCID 0000-0003-1403-3447; e-mail: kudryavtseva_tyu@spbstu.ru.
Ksenia Sergeevna Kozhina
Assistant, Graduate School of Industrial Economics, Peter the Great St. Petersburg Polytechnic University, Saint-Petersburg, Russia (194064, Saint-Petersburg, Polytechnic street, 29); ORCID 0000-0003-0877-1400; e-mail: kozhina_ks@spbstu.ru.
Gunnar Klaus Prause
Doctor of Economics, Professor for International Business, Tallinn School of Economics and Business Administration (TSEBA), Tallinn University of Technology, Tallinn, Estonia (Ehitajate tee 5, 12616 Tallinn); ORCID 0000-0002-3293-1331; e-mail: gunnar.prause@taltech.ee.
Eunice Omolola Olaniyi
Postdoctoral Research Fellow, Department of Geography and Geology, University of Turku, Turku, Finland (University of Turku, Turku, 20014, Finland); ORCID 0000-0002-2181-9328; e-mail: eoolan@utu.fi.
For citation
Kudryavtseva, T.Yu., Kozhina, K.S., Prause, G.K., Olaniyi, E.O. (2023). Assessment of Economic Efficiency, Effects and Risks of Digitalization Projects of Garment Industry in Russia. Journal of Applied Economic Research, Vol. 22, No. 1, 72-98. DOI: https://doi.org/10.15826/vestnik.2023.22.1.004.
Article info
Received October 13, 2022; Revised November 2, 2022; Accepted January 10, 2023.
DOI: http://dx.doi.org/10.15826/vestnik.2023.22.1.004
Download full text article:
~1 MB, *.pdf
(Uploaded
05.03.2023)
Created / Updated: 2 September 2015 / 20 September 2021
© Federal State Autonomous Educational Institution of Higher Education «Ural Federal University named after the first President of Russia B.N.Yeltsin»
Remarks?
select the text and press:
Ctrl + Enter
Portal design: Artsofte
Contact us
Rector's Office
Rector, Dr. Victor Koksharov
Tel. +7 (343) 375-45-03, e-mail: rector@urfu.ru
Vice-Rector for International Relations, Dr. Maxim Khomyakov
Tel. +7 (343) 375-46-27, e-mail: Maksim.Khomyakov@urfu.ru