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 trademarks for trade requirements such as standards and connect in to the market; and (iii) integrate from product to a market.
UNIDO and Sri Lanka
No stranger to Sri Lanka, UNIDO’s most recent experience in food safety and compliance include Indexpo 2013 – a project to establish a non-profit organisation to support food safety and quality compliance working with local partners.
Currently a UNIDO-WTO-Spice Council project which in short is known as the Cinnamon Project is on play, offering support across the cinnamon value chain to improve and enhance food safety and quality compliance. This focuses mainly on competence based development under the National Vocational Qualification Framework, and strengthening good manufacturing practices in the process producer level. It also supports the industry to achieve GI to differentiate the unique value chain of cinnamon.
Food safety and the world
Food safety in the global context has been receiving increasing awareness due to reasons such as globalisation, consumer demand, means of transportation development, etc. “In general the economic behaviour is such that industrial countries are the consumers mainly and the developing nations are the suppliers of food,” Dharmapala said.
With increasing transactions, Sanitary and Phytosanitary (SPS) related issues i.e. harming humans, plants and animals in territories of the country’s which are important for food or agro products are also under the spotlight. Lack of food safety is a national affair and is costly as well with the possibility of facing liabilities, law suites; consumer dissatisfaction and unpopularity leading to companies importing such items to lose their stock prices.
According to reported information, annually in USA, US$ 152 billion is lost due to food related issues – hospitalisation, etc, he said.
Cost to trading nations and private sector
Cost to the trading nations, especially the exporting economies come as reduction of trade, barriers to trade, harming the competitiveness, shrinking supply chain which will adversely affect the primary producers and reducing the contribution to GDP especially for developing economies.
At the same time when businesses/producers lose their business employment related issues increase. Especially in developing countries producer level is primarily made up of vulnerable communities. “It is a cost to all – public, businesses, producers and particularly small holders.”
Dharmapala added: “Therefore in international trade when it comes to food and agro products food safety and quality is a must.”
“Private sector is motivated on food safety and its assurance by high consumer demand. Consumers are willing to pay a premium price for guaranteed foods.” The goodwill of consumers, consumer trust is incentives/motives for private sector to adapt food safety measures.
He pointed out that one food scare due to an irresponsible action of a company can cause the country its economic transactions.
Measures to improve food safety
Several measures have been taken to upgrade infrastructure which is important in food safety compliance. Enterprises need to successfully adopt the likes of ISO 22000, HACCT, etc.
“Enhanced competitiveness and business growth arises mainly due to assured supply orders that gives them a stronger bargaining power and negotiating price in the local trade. There were eternally higher output and turnover due to motivated workforce, year round production with scientific application of agri practices and high output and input ratio,” Dharmapala said explaining the outcome of successful adaptations.
It may be intangible, but the management develops correct knowledge as compliance also entails specific practices in the adaptability within the management and gives a good understanding about market requirement.
How this will help cinnamon
In cinnamon one of the highest issues is high absenteeism in the workforce. Reasons are varied.
However enterprises that adapted food safety compliance standards enjoy worker satisfaction, resulting in high competence and high presence as they get a better pay as well as incentive per output.
Terms of payment and incentives are also clear and communicated to the staff.
“This, and giving uniforms to workers, clearly gives dignity and adds to better performance. Structured and clear process of instructions to the internal management also motivates the worker further. This also provides better working conditions which are attractive, safe and favourable.”
Work sanitation and other essential requirements are also fulfilled. Worker welfare also gives better outlook for the occupation and creates opportunity to attract more. Streamlined processers add to higher worker efficiency and reduce fatigue. Physical environment of the workforce itself is improved to have higher economics.
“Zero tolerance contamination and assets are a must in compliance, and is hence assured in the system. The environment is conducive for worker performance improvement,” Dharmapala said. |
 Merill J. Fernando was 58 years of age when he started the company that has today taken Sri Lanka’s golden cup of tea to the world. After 30 years of bulk trading, Fernando finally decided to enter the other side of the business in the year 1988, at 58 years, an age many would consider closer to retirement.
“It is never too late,” MJF Group Director Malik Fernando said. “People often raise the question of how long the cinnamon industry has been existing, what have you done, have you value added – but it’s never too late to start branding.”
Creating a ‘personality’ for the brand
There are also multiple facets to a brand, and it is not only about product quality, he commented. A brand has a ‘real personality’ in terms of what it does for the community, environment – a quality which Ceylon Cinnamon definitely has. This makes consumers remain loyal to the brand. “Consumers want to consume a brand they empathise with, identify with and feel good consuming – not only for its taste and package but also for the value the brand stands for.”
Learning from setbacks of tea
Like Ceylon Tea, Ceylon Cinnamon has similar properties that set it apart from others. However, the industries are still in trading mode, Fernando said. “Despite the advancers we have done in branding, tea industry is still at trading mode. I hope that cinnamon, with this initiative will really drive hard to add value and create its identity as true cinnamon.”
The industry should also look for sophisticated markets. “Tea industry, sad to say we are only supplying less than 10% of global purchasing power. From the amazing industry the British left us, where they supplied Ceylon tea to all empire markets such as North America, South Africa, New Zealand, Australia and UK, we are now left with five or six countries in the Middle East where 8% is being consumed.”
With cinnamon, the Government has taken the same angle it took with Garments without Guilt, Fernando said.
Playing the ‘ethical card’ right
Working conditions are such that labour unions are encouraged, working conditions are good, making it an ideal environment to supply ethical products that are packaged and sourced here.
This is one of the strengths behind Dilmah, he asserted noting that cinnamon should do the same. “If you say your product is processed, packaged, there is no middle man, all the value addition is in the country and is fed back to the local communities – that is the ideal model. Allied with the unique property attributes Ceylon cinnamon has, I think it is an unbeatable combination. What it needs is the drive and actual passion to get to that stage.”
Educating the masses
The origin of Dilmah brand was about single origin Ceylon tea. “What my father did was take the product to the consumer and explain the benefits. Consumers were not able to get their hands on the product before; which maybe the case for Ceylon cinnamon also – where they don’t know the difference.”
The name ‘Ceylon’ itself is a very powerful name, due to its promotions since 1920’s of Ceylon tea. It has a huge amount of value, in the food industry in particular which could be utilised for the benefit of the industry.
Local orthodox teas had CTC as its competitor, just as cinnamon has cassia.
“When we first started Dilmah, my father designed and put in every pack a leaflet that explained the difference between Ceylon tea and teas of other origins. When you get in to value addition it is very important to clearly deliver to consumer what the point of difference is. Education is very important when you have a unique product.”
The local feel
“Our cinnamon industry is a labour of love, lot of passion, hard work, just as Ceylon tea is,” Fernando said. “It is an artisanal process, not industrial by any means which is something that can be converted to consumer equity.”
Dilmah is the only international tea brand owned by tea growers, similarly if you want to grow and have your own brand, create significant value composition for consumers who should see it as a genuine product that they feel like giving back to origins by their purchase, he advised.
“Like tea, cinnamon is fully integrated from the production side to the processing – truly traditional, authentic packed at origin worlds only ethically produced tea.”Dilmah promotes their teas as ‘picked, packed and perfected in our own estate in the home of world’s finest tea.’ If the word ‘tea’ is switched with cinnamon, the same description fits the industry.
Consumers are now looking at products which have been minimally processed, processed soon after harvesting, and ideally at source – this has a lot of value.
The family commitment producers have for cinnamon also plays an important role in the world market. Fernando added that consumers in the west would like to identify with a face when they email or write. “My father spends a third of his working day responding to consumers who write to him or email him. They like the linkage.”
The industry must also give back to the community – this would work well for the country, brand and for consumers who respects values.
“Cinnamon and tea have so many similarities,” Fernando said. “We wish this industry the best and will offer our support through its growth and development.” |
 Speaking at the launch of ‘Cinnamon to the World’ was Brandix Director Udena Wickramasooriya who shared the story of Brandix, illustrating its journey with the hope of encouraging the stakeholders gathered as to how an industry was born with almost no raw resources while cinnamon has its natural advantages.
From the trading platform to conquer the world
Majority of the companies in the apparel industry started off from a trading platform and moved on to what Wickramasooriya noted as a ‘tailoring platform’.
With retailers in the global industry chasing cheap labour and quota, most of the companies made a lot of cash, expanded very quickly, he acknowledged. There was a growth of free trade zones, and the industry was flourishing and growth rate, substantial. There were some 1000 manufacturing entities in the country. “It was the decision taken by the entrepreneurs in this era that differentiated the industry.”
The turning point of the industry was when some of these companies that were making money, began to invest in the future.
“Brandix’s graduation from this tailoring mindset came by investing in to joint ventures.” The first joint venture was with the famous Godfather of intimate apparel Martin Trust which taught the company many things they had no clue about. “It also brought manufacturing technology in to the country, market access, process capability in to entrepreneurs. From there on, Brandix continued its evolutions by investing in to supply chain.”
Building a supply chain
“While cinnamon has so much natural capabilities in the country, in our industry we had no cotton, no spinning, no synthetic yarn, no industry to create synthetic yarn, no petroleum industry for that and we had to rely on here and there,” Wickramasooriya said. “Therefore to build this industry one has to build supply chain capability in the country.”
At one point every bit of raw material was imported in to the country. One of the first attempts towards creating the supply chain in apparel was a joint venture with a famous Chinese company with Brandix, and Hirdaramani. Another big investment was Textured Jersey with yet another Chinese company and MAS Holdings.
“It is interesting to see how so called competitors came together to build a supply chain capability without which, none of the big players could have survived. This industry has had major competitors who collaborated which benefited the industry as a whole.”
After polishing these capabilities, Brandix then entered the Indian market. Today, Brandix is the largest cotton wet knit capability in South Asia; with mastering woven textile dying capability, elastics, finishing capabilities, hangers, buttons etc across the supply chain.
The real major phase in the investment was moving from individual supply chains to invest in to a supply chain city.
Creating a supply chain city
The supply chain city by Brandix is largest special economic zone for apparel in India, in fact the largest in South Asia, build on 43 million sq ft area.
“When we went to India, we looked at the capability which no one else had and designed theme called ‘incomparability’ – that what we build must be built on a platform that none could compare,” he explained.
“We went into virgin territory – no industry, no power, absolute jungle land. From building road networks to infrastructure to building factories, currently we export over some 220 million units and is the largest underwear exporter in India.”
Moving from a trader, to a tailor, to a manufacturer, a supplier, to a supply chain company, to building a supply chain city – Brandix constantly invested, made cash and invested in to the future. “The true differentiator in our story was how we continually invested in to the future.”"
Sustainability
Once you build a supply chain, the next step is to ensure its sustainability. This is where the green story comes in.
In 2008 Brandix set themselves three pledges around Co2 emission. It was that, by 2012 to reduce carbon footprint by 30%, water footprint by 30% and zero waste of land fill. By 2012 they achieved the first two and a year later, the third box was ticked odd as well.
This led the company in through a sustainability journey with better cotton initiative, sourcing organic yarn, bringing the supply chain, manufacturing capability of Brandix to making it possible to know each component, where it is sourced from, etc, thereby building an organic product.
This led them to become the world’s first LEED platinum apparel manufacturing facility and form a number of other lead green certified factories. Brandix was also awarded the first M&S Plan A award globally, was the first ISO Energy Management Certified apparel plant globally and the first private sector company to publish a sustainability report. “Today, we have built a composite eco index that encapsulates all these three variables, enabling us to compare the carbon footprint from location to location and measure the carbon footprint in each product.”
Once you build the supply chain and sustainability in the supply chain, you need to make the communities you work in sustainable as well. Wickramasooriya noted that the company did not look at CSR in an external context, but fitted in to the business strategy. Wanting to make the community sustainable around resources they continuously use, they chose water.
There began ‘Water in life’ assessing how much water we can be saved and how much they can give the communities. Running on its eighth year, in 2013 Brandix formed an independent foundation called ‘Bindu Foundation’ through which they partner other companies such as Coca Cola, John Keells, HSBC, IBM in taking water to communities.
“With this sustainability platform, the obvious next step was to build a sustainable product to the market,” he said."
Optimising sustainability
The next phase in supply chain was optimisation.
To reduce the time gap for better, efficient service taking into account the fickle and ever changing nature of fashion, Brandix looked to rationalise the working of the supply chain through a three tiered platform – instant in-store, instant in product development and instant in decisions.
With the use of simple technology, Brandix developed a simple iPad based solution which enabled the customer without having to directly communicate with the company see and order through this. On a similar platform they also built an ‘instant in decision making in design and development’ project cutting off 45 days of design time.
“We took over the supply chain and leveraged it to deliver solutions to our customers. This helped us retain title as the largest apparel exporter in the country nine years, out of ten and become the second largest exporter of the country for the same period.”
Brandix: the knowledge company
They are now trying to build Brandix as a knowledge company. There are four major initiatives ongoing at the moment.
Brandix i3 tied up with world’s third largest supplier of enterprise applications and services, ‘Infor’ to create computer based solutions. It also partnered with Accenture, first as a BPO service moving their shared services to Accenture and now trying to build a centre of excellence globally on textile and apparel. Further, with Disrupt Unlimited, Brandix trying to build an incubator cum accelerator essentially to disrupt their own business model. “It is an organisation we are building outside of Brandix yet connected to innovate in terms of product, process, materials, etc., so that competition to us essentially comes from within,” he explained.
At the cusp of the next frontier
Wickramasooriya acknowledged that they have blundered many times, from delivery failures, quality failures to missed opportunities to poor investment. “But that is the story of an entrepreneurial spirit.”
He added: “Many believe garment industry is in a sunset mode. We believe we are in a virgin land and this is why we believe that we are at the cusp of the next frontier. It is a US$ 4 billion industry built from nothing. We are however in a region with a large population, have the second largest coffee producing region and the largest labour force so the supply and demand could come essentially from the region 10 years hence.”
“I come from an industry that has few global players competing intensely, but also few global players have come together when it really mattered to bring capability in the industry,” Wickramasooriya reminded. “It is the fear that we will not exist tomorrow that moves the organisation forward. We have to innovate and move forward. It is about investing and innovating for the future and.” |
