mcp 1604 - assignment - answer.pdf

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Contents

Introduction 2

1. Answer to Question 1 3



4. Bibliography 10

5. Marking Scheme and Comments 11

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Introduction

Sri Lanka is a country whose economy relies heavily on the apparel market’s export sector. With

the Sri Lankan apparel exports topping USD 4.3 billion in 2013 (JAYASURIYA, 2014), an all-

time record, it’s important to understand the apparel sector’s contribution to the Sri Lankan

economy and how it achieves this. Studying its business strategies, particularly how it utilizes its

expertise of operations management, will be of special importance to identify its importance.

This collection of writings consists of answers to the Case-Analysis Assignment of the module

MCP1604 – Operations Management of the CEMBA course. Specifically, this case analysis

revolves around the narrative of the success of Brandix as a dominant business entity in the Sri

Lankan apparel market sector.

This is a part of assignments for Cohort No. 10.

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1. Answer to Question 1

The case study in question deals with the business story of Brandix from the time of its inception

up to 2006. Being a giant in the apparel and textile industry of Sri Lanka, it is a key player in Sri

Lanka’s economy itself – all the more reason why we should gain a finer and a deeper

appreciation of its evolution to the “superbrand” it is now.

The key trait that defined Brandix in the wake of the abolition of the Multi-Fibre Agreement

(MFA) around the year 2005 was its ‘customer-base’. Brandix implemented a strategy that

complemented strengthening the relationships with its existing customers. Hence, they also

focused their production on newer technologies enabling the production of intimate-wear, lingerie

and under-wear for which their main customers’ demands required. This focus on a niche market-

area as which Brandix adopted was a smart move. To understand this, we have to look at the post-

MFA era where the abolition of the quota scheme meant an unrestrained flow of apparel. It also

meant that high-end brands like Victoria’s Secret, GAP and Marks & Spencer had to choose their

outsourcing partners wisely. So the quality driven and innovative focus of Brandix proved to be a

much sought after combination which these brands desired.

Brandix has also been honored with numerous accolades and awards for its contribution to the Sri

Lankan economy and its achievements that have set standards in the local apparel sector. Of these

the prominent were Highest Net Foreign-Exchange Earner in 2005, Outstanding Exporter of the

Year award in the Apparel Category in 2005 and the Most Outstanding Exporter of the Year

award at the National Awards for Export Excellence in 2003. It has been recognized for its

continuous pursuit of quality with such awards as the Nagasaki Yamamoto Kaizen Award and the

Taiki Akimoto 5S Awards in 2004. There continuous implementation of ISO, SA8000 and

WRAP certification programs at their various facilities are proof of their commitment to

upholding and refining their responsible business practices. Not stopping at just in implementing

quality and productivity improving practices, Brandix has also been actively engaged in giving

back to the community with responsible social practices. For that, they have been honored with

the President’s Environmental Excellence Award in 2005 and was recognized by CIMA as a

community leader, to name a few.

The history of Brandix actually spans back to 1972 with Lux Shirts Limited entering the then

unexplored industry of apparel-manufacturing. From then on, they continued with numerous

acquisitions, some key mergers and joint-ventures with other companies and new investments in

cutting-edge production facilities to expand its repertoire of technical skills, know-how and

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facilities for production. Of particular importance and veritable milestones for Brandix in this

journey were the investment in Textured Jersey Lanka, the establishment of the Brandix Centre of

Inspiration and the signing of a Memorandum of Understanding (MoU) with the Government of

India for the Brandix Apparel City. At the same time, it is interesting to note that it was only after

2002 that the name Brandix emerged for this group of companies in an attempt re-brand itself in

the modern yet constantly changing market environment.

Even though Brandix has a somewhat niche clientele, it has a diversified product portfolio. Its

core product is apparel and its product portfolio includes Brandix Casualwear, Brandix Intimate

Apparel, Brandix Activewear and Comfortwear. Its many subsidiaries add value to these main

core product portfolios by manufacturing varied types of textiles, accessories, finishing and

trimmings. Of particular significance is the fact that Brandix paves the way for over 50% of value

addition to its products to happen locally via operations in textiles, thread, buttons and hangers.

After the abolishment of the MFA, that is, after 2005, Brandix has implemented an aggressive

growth strategy in terms of investments in cutting-edge technology, Research and Development

(R & D), manufacturing infrastructure and expanding its operations both locally and overseas.

The Brandix Centre of Inspiration (BCI) exemplifies its dedication to the pursuit of the latest

technology, research and development, facilitating innovation through design and in the

integration of manufacturing processes and design (in a geographical sense) using the concept of

design-to-delivery. Furthermore, it should be noted that the group uninhibitedly promoted growth

by setting a precedent in building an apparel-manufacturing park in India, a one-of-a-kind venture

for any Sri Lanka business.

Promotional wise, it is well to note that Brandix never used any unwarranted marketing activities

to promote its brands. Instead, it relied on its reputation preceding anything else. Its dedication to

its core values of continuously building ever stronger customer and vendor relationships and its

commitment to socially responsible practices have made overt promotional activities a non-

requisite for Brandix – its customers and suppliers inherently know the group’s values through its

effective, efficient and productive business activities which are at the same time ethical, socially

responsible and transparent.

Brandix holds its values in committed outlook. The group is known for its values of being

dynamic, optimistic, pro-active, striving for excellence and maintaining transparency in all its

business processes. The slated launch of its Green Plan is a testament to its commitment to

protecting the environment and its belief in sustainable consumption and production.

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The success of Brandix as a leader in the apparel industry sector can be attributed to many key

factors. In the following paragraphs, we will analyze how these key factors affected this group’s

path to success.

When Brandix first started, then only known as Lux Shirts Limited, their initial key factor in

success was the many acquisitions of companies it carried out and also the many merges and

joint-ventures with its partners. This growth strategy, which continued for well over 3 decades

was instrumental in acquiring new knowledge and personnel from diversified talent pool. It also

helped them widen their product portfolio to establish themselves as a one-stop or go-to-all

business entity in the apparel sector.

Moreover, when the export sector was widening its horizons to the Sri Lankan apparel sector in

the 1990’s, Brandix accelerated the implementation of their growth strategy by directly investing

in new infrastructure and pro-active “production planning”. This was seen in the setting up of Lux

Shirts Kahawatte in 1992, the Kuruwita Textile Plant in 1993 and the setting up of Eden Fashions

in Maldives. This was a key for expanding its production capacity in expectation of the new

market that was rapidly getting bigger in North America and Europe. The Operational

Management practices of proper and timely design of products, processes and facilities are

veritably illustrated in this example.

We can also see the practice of excellent market forecasting in Brandix pre-empting the emerging

trends in the market, particularly the demand for intimate wear, lingerie and underwear. In the

apparel industry, which has such a varied portfolio worldwide, focusing one’s product portfolio

on a niche area as this is somewhat risqué, so to speak. However, Brandix was able to properly

forecast their demand to grow and implement their growth strategies so that they would be able to

cope with the growing demand from their existing customer base for these products. In other

words, Brandix had a vantage point in the apparel market by being highly pro-active.

After the turn of the new millennium, Brandix started being recognized for its achievements in

productivity. This was because of another key factor in their success, which was their

commitment for excellence. They achieved this through continuously productivity practices by

implementing such programmes as ISO, SA8000 and WRAP certification programmes in their

many production facilities. Furthermore, they benchmarked the world’s top businesses in the

apparel sector and continuously strived to achieve or even surpass that benchmark.

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It is indeed worthy to mention that Brandix was never hesitant in investing in Research and

Development and academic studies. The Brandix Centre of Inspiration (BCI) exemplifies this

worthy trait of Brandix. In fact, investment in Research and Development and fostering academic

studies is a key factor to gain the competitive edge in their respective market for any company

engaged in the production of goods or even in the service sector. We can see that Brandix has

yielded the results of such an investment and will continue to do so.

We saw earlier that Brandix opted to go for a niche portfolio in its products and also in its

customer base. Similarly, its visionary nature can be seen in its investments in exclusive

production facilities. For example, the establishment of Stevensons Lanka with joint venture

partners Quantum Clothing and Lanka Equities in 2006 was indeed a visionary endeavor for it

gave them a competitive advantage in the Sri Lankan apparel sector by having the only exclusive

dyeing plant in the country which was equipped with advanced art machines for dyeing cotton

garments as well as other softer garments. Even the establishment of the Brandix Apparel City in

India gave Brandix a competitive advantage in being able to recruit the low cost labor of India for

their productions.

One key factor in the success that Brandix has seen over the years is their commitment to building

stronger customer and vendor relationships. In today’s diversified market environment, it is all

too easy change the customer base for a business which is in fact what most other businesses do;

i.e., the majority of today’s businesses are product centric rather than being customer-centric.

However, Brandix went the other way in striving to maintain the existing customer base while at

the same time solidifying those relationships. This has reaped a lot of benefits to Brandix in that

the manufacture for the bulk of the specific products in the intimate-wear and lingerie brands that

Brandix has as customers is still awarded to them. This is another reason why Brandix does not

need to spend too much time or resources on marketing or promotional activities.

Brandix also has a focus on sustainable production and consumption. For example, their Green

Plan initiative which was launched in 2008 seeks to achieve such things as carbon neutralisation,

waste and energy management, alternative energy options, cleaner technology initiatives, and

better health and safety practices. A special characteristic of sustainable processes are that they

are naturally cost-effective as re-using and re-cycling are key components of sustainable

production and consumption. What this all means is that in the long run, not only does Brandix

save the environment, but it also reduces the cost of its production processes while at the same

time maximizing their efficiency by reducing wastage and streamlining them.

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Apart from striving to achieve the sustainability of the environment, Brandix has also managed to

empower its employees preserving the integrity of its employees and the confidentiality of its

customers. This has led to build an inherent trust in Brandix with all its stakeholders. In essence,

what this means is that its employees will work with honesty and also make its production

processes more efficient and productive.

Technically, another reason why Brandix is ahead of its competitors is their investment in cutting-

edge technology. For example, during the period of 2005-2006, Brandix developed a fully

automated denim plant. With shrewd capital investment in technology they have reaped massive

benefits in productivity and cost savings. In other words, they have implemented an effective

solution in a timely manner by utilizing the most modern technology for production processes.

Moreover, they had an inspirational vision: ‘to be the inspired solution to branded clothing’. And

Brandix has lived up to that name by being extremely innovative, technologically savvy and at the

same time they have achieved this by being ethical and socially responsible.

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The success story of Brandix is filled with lessons for an aspiring manager to learn.

The first thing that we can learn is that the only way for a business to grow is not only through

increasing of the product portfolio. Business growth can also be achieved by having a narrow

product portfolio but at the same time striving to be the best within that narrow portfolio. If we

can adopt a strong focus on the products that we manufacture and implement continuous

improvement processes such as process analysis, Taguchi Methods and other Statistical Process

Control activities for quality control, we can build our business as a strong competitor in the

market and earn a reputation as being a solid competitor in the products/services field that we

specialize on. In essence, striving to achieve excellence in manufacturing is indeed a laudable

effort that can be practiced by any manager involved with manufacturing, and one which can

payback very favorably.

Brandix anticipated emerging trends in advance. This is a good management skill that has to be

learnt from practice as well as theory. In fact, the proper application of forecasting methods, a

keen appreciation of the market state and its current trends and knowledge in the state and

heading of the local and world economies can empower a manager with the ability to do just this.

Sometimes, when the market environment is favorable for a certain operation, it is well to do with

setting up joint-ventures with your business partners. When a particular organization may not

have the necessary expertise or the infrastructure, it is in fact a wise option to set up joint ventures

as this. However, this depends on the situation and many business environmental factors.

For a business engaged in manufacturing it is imperative that they invest in research and

development (R & D). Sadly, this is something we see very much lacking in local production

businesses. However, the majority of foreign manufacturers have their own R & D facilities and

continuously invest in them. This gives such benefits as in-house suggestions for process

improvements, in-house remedies for common manufacturing pitfalls and innovative solutions to

all processes of manufacturing. Brandix has identified this and implemented this properly. It is

something that local managers should learn and implement promptly.

Stakeholder management is another point that Brandix has developed to almost an art in itself.

We should also understand that the key stakeholders in our business, such as our customers and

suppliers should be closely managed and their expectations need to be satisfied during all the

phases and all the processes of the business activities. In this way, we can get away with spending

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very less on marketing and promote our business by way of our clients from our normal business

transactions themselves.

Today we have such a dynamic market that technology is everywhere we go. In fact, just like

Brandix, we have to embrace the newer manufacturing technologies such as factory automation,

Computer-Aided Manufacturing and Design, Numerically Controlled-Machines, robots, SCADA

(Supervisory Control And Data Acquisition) Systems and Telemetry. If we fail to utilize these

and other emerging technologies in a timely manner our competitors will gain the competitive

edge and gain a momentum in the market that will be very hard to surpass. So we should, as a

manager engaged in manufacturing, be always on the lookout for new and emerging trends in

technology.

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4. Bibliography

JAYASURIYA, D. (2014) Apparel exports top US$ 4.3 bn in 2013. Daily News. [Online] 31st

January. Available from: http:// http://www.dailynews.lk/?q=business/apparel-exports-top-us-43-

bn-2013 [Accessed: 27th May 2014]

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5. Marking Scheme and Comments

Learning Outcome/ Question

Maximum First Marker Second Marker

Weightage

Question 1

Question 2

Question 3

Total Marks 100%

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1st Marker’s comments: _____________________________________________________________

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Moderator’s comments: _____________________________________________________________

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