‘Assembling, sales vitally important in apparel industry’

Anjana SAMARASINGHE

Today retailers are demanding exceptional value in the global apparel market and industry need to hunt for more innovative products for survival, said Brandix Lanka Ltd Chief Executive Officer, Assroff Omar.

Speaking at the Agility in Supply Chain Management Conference 2008, organised by ETP and Lawson last week, he said that due to global inflation on the rice and major economic failures, achieving of the targets in purchasing has come down in the developed countries.

“In the apparel industry profit margins are shrinking and only a handful can survive,” he said.

In the apparel industry more than 50 per cent of the lead time is spent on sourcing materials globally. Materials need to be authorized by the customer before production process start. Assembling and sales are the most important steps in the apparel value chain, he said.

Group General Manager Prima Group of Companies Tan Beng Chuan said companies need to have a strategy and a set of business objectives that are communicated to everybody in the organisation.

They also need to have a performance measurement system that motivates people to work in the desired direction and that makes it possible to monitor improvements in the operation. But traditional performance measurement mostly financial, too complicated to understand and function oriented rather than enterprise oriented.

“Today financial performance measures are increasingly based on activity based costing principles and several non financial measures are increasingly being added to the performance measurement systems used. However performance measures are less frequently applied solely to functions and departments,” he said.

Ongoing decentralization of organisations, implementation of self-directed work teams business processes and new measurement opportunities enabled by advanced IT and necessity to continuously improve efficiency have increased focus on performance measurement.

Talking about the effective management of logistics and distribution Chuan said economy of scale, avoiding cascading effects in supply chains, reducing non-value-adding activities and increased volatility in the marketplace are main considerations for restructuring distribution network.

According to Harvard Business Review real driving force behind overhead costs comes from transactions.

“Reducing variation and increase stability in the operations, integrating business processes and supporting systems, increasing the degree of automation when performing business processes, utilizing distributors’ consolidating role and analysing transactions are general approaches for reducing transaction costs,” he said.