by Denver Brian Coorey
The SARS-COV-2 or the novel Coronavirus Crisis has pushed economies into recession or even depression by triggering economic downturns caused by long-orchestrated lockdowns that brought down International trade to a near standstill.
The Pandemic has changed the business environment for many organizations around the globe. As the acute restrictions and lockdowns created many urgent situations that required immediate attention in the early days of the pandemic, many companies now have begun to move to a “recovery mode” having started not only short and medium term, even long-term planning strategies. It is clear that companies have been faced with substantial business and operational disruptions which include mitigating the effects of reduced supply and stocks in hand, managing disruptions to logistical providers, reviewing contractual obligation and many more.
As a result of the closure of export customer facilities due to disruptions and lock down situations in the target markets overseas, revenues of our exporters/manufacturers reduced during the pandemic affecting cash flows and overhead absorption. However industries adapted fairly well by minimizing overhead costs and diversifying products and delivery channels to mitigate the adverse effects on the revenue, profitability and cash flows. Further, assistance by means of new working capital loans and extensions for existing loans were provided by banking sector as per regulator guidelines.
It is seen that the importance of supply chain resilience and risk management has become more apparent than ever before.
Nevertheless, badly affected companies need a vibrant revival strategy with a positive approach.
The Supply Chain and its current strained state
The movement of goods and services from the point of origin- POO ( Raw material/product supplier) to the point of consumption-POC ( consumer) involving various stages or phases is known as a Supply Chain. Further, it includes the flow of products, information and funds.
The objective of the Supply Chain is to fulfill the requirements of the customer by a smooth flow without disruptions and bottlenecks. As we are aware, during the pandemic most of the global supply chains have been disintegrated and disrupted. It can be a problem mainly related to product, information and most crucially funds.
Let me highlight some of the key areas with bottlenecks observed in the supply chain.
Demand Planning- it is hard to establish forecasts of demand as the future is unknown and unpredictable. Forecasts can generally deviate from the original projections as per its characteristics, but during this pandemic it will be further inaccurate. Historical data will not help establish demand forecasts during crisis such as a global pandemic.
Sourcing- Numerous tier 1 and 2 suppliers have gone out of business and supplier selection process has become a difficult operation. Availability of raw materials /products is lower than before.
Procurement- Decisions on what to buy, when to buy and how much to buy is somewhat questionable and risky as the organizations do not properly foresee the market future .We may use Material Requirement Planning (MRP ) software programmes to establish e buying decisions but inputs such as future demands, safety / buffer stock and the lead time will vary greatly and more rapidly due to the unfurling Covid 19 pandemic situation, hence the output from such systems too will not give the required authentic results.
Lead time- This has exploded due to overwhelming demands on one hand and the demand fluctuations on the other. It is observed that disruptions and delays in production, internal transport (haulage), booking of vessels, stevedoring, sailing times and also congestion in ports add to severe delays in lead times. As we all know currently there is a huge delay in shipping due to disruptions and restrictions in logistics all over the world.
Distribution to the final user/consumer – during the pandemic the objective of the distribution is not fulfilled. That is to deliver to the right place at the right time has somewhat not achieved during the pandemic.
Rebuilding the strained Supply Chain
We have identified some of the key areas of bottlenecks observed in a strained Supply Chain. Now let us see how the debottlenecking should progress in order to have a resilient supply chain.
Planning and Procurement- In a restricted supply chain operation, the organization should identify, carefully analyze and ascertain the “real” need of the raw material /products etc. Short and medium term planning is advisable as long term strategic planning should only be done if the Supply Chain Managers properly foresee the future of markets. What to order, when to order and How much to order should be determined by MRP using the basic principles of procurement such as future demand, stock in hand with safety stock, on way stocks, lead times prevailing during pandemic, production delays if any, port congestion and possible delays, transport availability etc.
Hence, identifying the correct order quantity is vital since it will reflect on the future stocks, production and distribution. During a pandemic, a robust plan may not be activated or fully implemented. It is desirous to evaluate real time data as far as possible. However, no ad hoc or haphazard planning should be encouraged. Further, it is important to formulate a contingency plan for emergency situations.
Sourcing- Supplier network to be updated to consider new sources if Tier 1 and 2 suppliers are not performing or if the prices have gone up tremendously due to the pandemic. Availability of the required quantities with supplier must be known prior to ordering.
Lead time- this is key as it has a lot of concerns from the raw material stage, production, transport to final destination. Estimated Time of Delivery / Estimated Time of Arrival (ETD/ETA) to be known and properly followed up with the supplier/ shipping agents.
Distribution- delivering to end user should also be planned as per the identified priorities. Distribution resource planning/Distribution requirement planning (DRP) through the system network will provide what to deliver, when to deliver and how much to deliver to the correct locations. Most importantly the inputs to the system must be accurate, specific and timely.
In addition to above identified areas for de-bottlenecking, as Steve Jobs said the way to de-bottleneck a problem is to simplify, simplify and simplify the process. Reducing non-moving inventory as it releases more warehouse space and release locked up capitals, is one such area. Simplifying the supply chain and having a separate supply chain for different types of demand profiles can significantly reduce the clutter. It is noted that many top companies simplified their planning, ordering and distributing (delivery) using modern technology and further, outsourcing of certain activities are encouraged specially during the pandemic and beyond. In general simplifying means reducing the phases in the supply chain to fewer steps from supplier to customer.
Let me briefly touch upon the current most important and much talked, distribution of vaccines in Sri Lanka.
As I mentioned under the above demand planning, the “real” need should be identified, analyzed and ascertained considering most vulnerable groups, high risk groups/ areas, age groups districtwise, as per MOH areas , GN divisions, etc. It is needed to carefully follow the above procedure till the consignment is cleared for product release and distribution to identified locations. It is also important to formulate a contingency (alternate) plan if the existing plans fail.
The top management of organizations should take control of the Supply Chain during the pandemic and needs to manage and control the supply chain at every stage or phase ensuring the smooth flow towards the end customer. Supply Chain Management is key to the success and increased performance of a supply chain. Companies looking to change their supply chains should consider how to integrate elements and practices around environmental protection, product sustainability and ethical business practices.
Radically changing an existing supply chain is not as easy as it may sound as creating a robust and secure supply chain will need to balance the demands for cost efficiency. At the same time, new logistics considerations may also have an impact on supply chains and the changes thereto. In the short and medium term, it is expected that companies will begin to search for more diversified supplier base while looking to develop a flexible and a resilient but cost efficient supply chain.
In conclusion, may I suggest that companies appoint a facilitator/a senior manager, preferably a position in the board room that has the responsibility and authority to rebuild the supply chain and coordinate with planning, procurement, quality, production, marketing, sales and distribution or hire an external Supply Chain Advisor to inject best-in-class competencies into your Supply Chain team.
Companies that are faster in rebuilding their Supply Chains will have a competitive edge and will conquer a major market share.
(The writer Denver Brian Coorey is a Consultant /Lecturer on Supply Chain Management and can be contacted on firstname.lastname@example.org)
Eravur Fabric Park could transform sustainable textile manufacture in Sri Lanka
Since the first announcement in June 2020, expectations have been high on the potential of the Eravur Fabric Processing Park to catalyze a new era for Sri Lankan textile and apparel manufacture.
Supported through the Ministry of Industry and Commerce and the Board of Investment (BOI) of Sri Lanka, working in close collaboration with the Joint Apparel Association Forum (JAAF), the apex body of the apparel industry in Sri Lanka, the vision for Eravur is beginning to take shape.
Of the allocated approx 300 acres of land, fifty have been allocated for the Park’s maiden investment of US$ 35 million to establish a state-of-the-art fabric mill. Negotiations are also underway with two international companies to infuse mega investments for the remainder. The Park is estimated to attract a cumulative investment of US$ 300 million. The zone is also seeking further investments towards Dyeing, Washing, Knitting, Weaving, and other associated and ancillary activities.
Cabinet approval for the Zone’s classification under the Strategic Development Projects Act was also secured, enabling the extension of tax and other relief and incentives to investors.
Rapid progress towards vertical integration
“We would like to see the first company commence commercial operations in the next 6 months to 1 year,” stated BOI Chairman Sanjaya Mohottala. “We have been very aggressive on timelines because of the clear consensus on the nationally significant value that the Park can generate. At present, all land has been demarcated, and water and electricity supply are being finalized. In excess of half the commercial land has been allocated or reserved, and we are seeing great demand. There is clear recognition locally and internationally as to the immediate potential. If necessary, we are able to expand the zone even further.”
Leveraged in support of Sri Lanka’s highly developed apparel manufacturing sector, which has steadily benchmarked itself on global standards for ethical, sustainable production and high levels of technical and technological expertise, Eravur’s promoters also see the project as an opportunity for Sri Lankan-made apparel to take global leadership on sustainability in its most holistic sense.
Mohottala explained further that the most immediate benefit from the Park’s establishment will be in the cost advantages and enhanced economies of scale gained through capacity expansion and vertical integration of domestic supply chains.
Currently, Sri Lanka has approximately 300 apparel manufacturing facilities across the country. By contrast, it has only 7 textile and raw material factories capable of producing fabric for export, and for conversion into garments for export. At its peak, Sri Lanka imported over 250,000 MT of fabric both for export-oriented apparel manufacturing and for local consumption in 2019, at a cost of US $ 2.2 billion.
In the context of unprecedented disruptions across global supply chains in particular and persistent commodity and currency volatility, increased availability of high quality raw materials will enable an immediate and drastic reduction in raw material costs, while also conserving foreign currency.
Increased domestic production of textiles also translates to a higher percentage of domestic value. If that threshold increases from its current 52% to 65%, it qualifies for a larger proportion of Sri Lankan exports for zero-duty benefits under GSP Plus1.
The culmination of a pioneering national journey in sustainability
The economic argument in favour of investing in Eravur is bolstered by its potential to also be the most sustainable venture of its kind in the entire Asian region, with local stakeholders having already committed to establishing extensive renewable energy facilities, water recycling facilities, science-based targets, and circular business models.
At a macro-level, increased local production capacity will contribute significantly to all these targets by reducing the end-to-end length of Sri Lanka’s apparel supply chains. This in turn enables tighter backward integration and lower carbon emissions.
Taking a cue from the Sri Lankan textile and apparel’s industry’s outstanding achievements on environmental sustainability to date, the Zone is being designed from the ground-up to facilitate and incentivize sustainability in every facet of its operations. In terms of fabric processing, the main focus is on wastewater treatment.
Mohottala continues: “Sri Lanka’s environmental standards for industries are quite stringent, especially compared with regional competitors. A key feature of the Zone will be its central wastewater treatment facility with a sea outfall, which will require a high standard of treatment. Fortunately, we already have strong expertise available locally, with many of Sri Lanka’s textile producers having established facilities on par with global best practices on wastewater treatment. We have used this to our advantage by calling in the local industry’s technical experts and drawing on their pioneering experiences to optimize wastewater treatment protocols at Eravur.”
Adding that this will be one of many positive attributes all stakeholders downstream of the textiles produced at the Zone can lay claim to, Mohottala says, “With the greater localization of production, we also gain improved oversight and control over environmental standards within the Zone. This also enables greater transparency, traceability, and accountability across the supply chain, which in turn will confer preferable competitive advantages to Sri Lankan apparel exporters. In addition, this will empower brands and retailers to make clear and credible claims to genuine sustainable sourcing.”
An end-to-end opportunity
Another significant advantage for Eravur is that it is purpose-built with the most advanced environmentally friendly technology available. This will also promote efficiency in energy and water consumption, as well as additional infrastructure for recycling and recovery of water used in production, for which the BOI aims to provide investors with additional incentives.
Notably, Eravur also enjoys a high level of solar irradiance and consistent high-wind conditions, making any manufacturing facility established in the area, ideally suited for solar and potentially, wind turbine power generation.
“Augmentation of the Zone’s energy requirements with plentiful renewable energy will enable cost savings on the energy-intensive aspects of wastewater recycling. Given the consistent annual reduction in the cost of solar and wind energy, the conditions at Eravur are another unique attraction for investment into the Zone, and potentially enables the entire supply chain to utilize global incentivizes around responsible and sustainable production,” Mohottala said.
In addition to the wastewater treatment protocols, the Zone will also include a sludge treatment facility, with further trials already underway for responsible disposal. These include tests using micro-algae to breakdown sludge, as well as utilizing sludge to fuel furnaces and as bricks with a bio-mat mask.
The final and potentially most vital contribution which the Eravur Fabric Processing Zone is the empowering impact it will have on the lives of Sri Lankans in Batticaloa. At present, the district has an estimated population of 621,887, of which, an estimated 60,912 individuals are below the poverty line. As at 2019 – prior to the pandemic – unemployment in the region stood at 6.4%
“With the development of the Zone, we will be able to create thousands of stable, well-paying direct and in-direct jobs. This could prove to be one of the most transformative developments to take place in the Eastern Province in recent history,” Mohottala concluded.
‘The insurance industry continues to drive the message of safety and optimism’
The Insurance Association of Sri Lanka has been working overtime to ensure the smooth operation of the insurance industry with the objective of spreading awareness and inculcating knowledge on the importance of insurance. Similar to multiple other industries, in global and local contexts, the insurance industry has experienced its share of fluctuations with the onset of the pandemic and displayed its resilience to the resultant challenges.
Dinesh Yogaratnam, the Chairman of the Marketing and Sales Forum (MSF) of the Insurance Association of Sri Lanka (IASL), shared his perspectives on the marketing of insurance during these tumultuous times. He expounded on the ways in which the MSF of the IASL adapted to overcome the hurdles of the circumstances that arose during 2021, while promoting insurance penetration.
“The Insurance Association of Sri Lanka (IASL) is the industry body comprised of all the Life and General Insurance companies that operate in the market. The Marketing and Sales Forum (MSF) is a subcommittee thereof and as the name implies, addresses matters pertaining to the sales and marketing of insurance products and services. Further, the MSF also carries out various initiatives to increase insurance penetration in the country via education and knowledge-sharing. One of the major efforts of the MSF this year is to help the public better appreciate what insurance is. In addition, helping them understand how, when, and why they should purchase a policy, so that they may provide themselves, their loved ones, their assets, as well as their enterprises with the financial protection required, are key objectives.
“The MSF has resorted to using mainly digital and print media for its insurance promotion activities. Employing a two-pronged approach, whereby, the MSF under the IASL banner is carrying various pieces of communications on social media channels and is working with the country’s print houses and their digital arms to disseminate information and educate the public, the individual companies too have been encouraged to promote their products and services, as well as to carry knowledge building pieces of communication on their own platforms. Through this, we are witnessing a heightened level of activity and dialogue across social media channels.”
Giving further insight into the current insurance marketing landscape prevalent in the country, Dinesh Yogaratnam stated, “The insurance industry has grown in 2021 by approximately 14% in terms of Gross Written Premium as of the end of the 1st quarter; while long term insurance has seen significant growth, general insurance has contacted very marginally. As an industry, we are confident that the growth trajectory we have witnessed in the first half will continue to the end of the year.
“With the pandemic impeding movement, insurers had to very quickly realign themselves to front the customer both for new business acquisition as well as for premium collection, equipping themselves with various digital assets and recalibrating their sales teams to embrace a new hybrid model of interacting with and engaging the customer. From a servicing perspective; industry players have infused many digital interventions as part of their customer touchpoint strategy so that customers are able to seamlessly interact with them and obtain whatever services they require, regarding their policies. On the customer’s side, the pandemic has made people appreciate the need for a meaningful health insurance plan and they have also begun to appreciate the need for long-term insurance. The Sri Lankan insurance industry has always stood by society not only during times of normalcy but more so during times of widespread calamity and dire need. In this respect, the industry has come forward to pay COVID-related claims, irrespective of the fact that pandemics are excluded as part of insurance contracts.”
SL’s Kithul-based treacle and jaggery for Gulf markets
By Hiran H.Senewiratne
A local company is now in the process of venturing into the lucrative export Gulf market through its flagship product, Kithul based treacle and jaggery. Initially, the company will target the UAE market and afterwards other Arab countries.
“Both our products were introduced to the local market as niche products one year ago and are already exporting to Australia and several other countries, chairman, C-lon Kitchen & Healthy Foods, Rohan Wijeweera told The Island Financial Review.
‘The Gulf region is a lucrative market and there is a big demand for pure Kithul treacle among Arabs, which could be harnessed if we supply quality products, he said.
Wijeweera adds: “Now we have secured an order from a Gulf online sales company to market these products under the tag, ‘Made in Sri Lanka’ under the “Deegayush” brand and initially two containers will be exported to Dubai most probably next month. After that we will be targeting Canada and the UK markets.
“Kithul treacle and jaggery are made from the sap harvested directly by tappers living in border areas of the Sinharaja forest in the Rathnapura district. We have come to a forward buying agreement with around 250 tappers in this region, whom we also support by paying a premium price and also by some other CSR initiatives.
“The sap is then brought to our processing plant in Piliyandala where we process it. Kithul treacle is known to contain polyphenols, which are antioxidants, organic acids which are bioactive, amino acids that have many functions, beta carotenes that produce vitamin A and ascorbic acid or vitamin C that improves immunity.
“Thus, it is known to yield as many health benefits as Kithul jaggery. It prevents arthritis, improves complexion, alleviates constipation, aids weight loss and combats blood sugar. For nearly the same reasons as Kithul jaggery, Kithul treacle or syrup is witnessing massive demand locally as well as internationally.
“Today the demand for pure and natural Kithul products far outstrips the supply and due to lack of sap many local manufactures add sugar and other artificial sweeteners to the products thereby diluting the health benefits of it. However, we ensure not to add artificial ingredients and due to this our products are sold at a premium price from leading super markets under the brand name, “Deegayush”.
“Behind the scarcity of Kithul products there are several reasons, such as the shortage of tappable jaggery palms, fewer people being engaged in this industry due to the inherent risks and the profession not being accepted among the youth.
“Also less numbers are involved in jaggery palm planting since the tree takes around 7 years to mature before being fit for tapping.
“I am also looking at making Kithul treacle and jaggery from sugarcane, once again, targeting the export market as well.
“We are also manufacturing several immune boosters from locally sourced material. We next plan to introduce a curd to the market. More details could be obtained from, email@example.com”
Central Bank urged to save collapsing local industries
Eravur Fabric Park could transform sustainable textile manufacture in Sri Lanka
7-billion-rupee diamond heist; Madush splls the beans before being shot
The Burghers of Ceylon/Sri Lanka- Reminiscences and Anecdotes
Unfit, unprofessional, fat Sri Lankans
Features3 days ago
100% Organic Agriculture: A costly experiment leading to National disaster
Features5 days ago
Reflections on return of Sri Lanka’s multifaceted Manike, Yohani
Sports6 days ago
Basketball Federation signs ‘safe sport’policy
Sports7 days ago
Sri Lanka record come from behind win over Bangladesh
Opinion7 days ago
Reconciliation requires single PC for North and East
Sports7 days ago
Naveed Nawaz compares Junior cricket structure of Bangladesh with Sri Lanka
Features5 days ago
A legend who rewrote Sri Lankan history: Eulogy for Dr. Deraniyagala
Features6 days ago
Proposed Sri Lanka Tourism policy should promote inclusiveness