Saturday, August 23, 2008

Innovation, the key to face “GSP + challenge”

The apparel industry is one of leading export revenue earner and it is employing over 300000 people and majority of them from rural community. The Sri Lankan apparel giant MAS Holdings is itself employing 45000 people. Apparel industry can be considered as one of women empowering mechanism due to high female worker involvement. It is employing over 80 % women in various positions and this can be considered as a good option to empower women. Recently I read a “MAS women go beyond” project magazine and it shows how apparel industry has helped them to go beyond their challenges.

However, the apparel industry is facing a big challenge these days. In the end of this year EU will take a crucial decision over GSP + benefits by referring outstanding human right reports of government of Sri Lanka, report of the international Group of Eminent persons and many human right documentations. These reports will be key parameters of evaluation process of renewing GSP + benefits. The GSP + benefits are crucial for development and continuity of apparel industry. Unfortunately above parameters are not under control of apparel industry.

However in the end of this year we must be in a position to accept the decision of EU on GSP + benefits whatever it will be positive or negative. Increasing strength and identifying opportunities are the best way to over come challenges of corporate sector. Increasing profit margins with innovative steps will reduce the effect of any kind of challenge.

Innovations in production, planning, finance, marketing, enterprise resource handling, sourcing and many more key areas will enhance the strength of industry to face any kind of challenge including GSP plus. As an independent nation we can not except subsidies forever from developed nations because they often use that as a tool to control developing nations.

So it is time optimize our apparel industry in order to face any global challenge. We must develop our industry in every dimension. This kind of multi dimensional approach towards development of industry with dramatically reduces cost of production. Through less cost of production, we can go to international market with more competitive prices. If we can embed unique quality and tag reasonable price on our product; any kind of barriers will not affect the industry.

We do not want to worry about uncontrollable parameters. Apparel industrialists or employees are not responsible or not in a position to control and maintain human rights in Sri Lanka. However, control over apparel process is on their hand. Quality and cost of production is in their control.

A sustainable human resource policy, waste minimization, operational time reductions, eliminating non-value adding functions, new production technologies, improved and in built quality are some of key areas to increase quality and reduce cost of production.

One of leading apparel industry in Sri Lanka, MAS holdings produces 300 million garments products per annum. Can you think about the effect of a cost reduction of one rupee on every product through multi dimensional approach? It will save 300 million rupees for company. It will lead the company into a sustainable and strong business environment. Normally an apparel company consists of various divisions to produce complete garments. So a few cents saving per each unit in each department will finally end up with rupee or more cost reduction per each unit. . Any industry can do such thing and achieve unbelievable cost reduction. We can take Toyota’s Camry 600 $ reduction effort which ended up in 800 $ cost saving per each unit as an example.

To Be continued ...........................

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