Brandix’s Rock Star

Udena Wickremesooriya’s passion for disruption explains why a seemingly ordinary business can be so pulsating below the surface

By Echelon.

Published on March 17, 2014 with No Comments


Fashion is fickle as it is glamorous. To succeed, designers have to win over the fashion press and more crucially customers, with their twice a year presentations of new fashion. Customers rejecting collections over a few seasons or getting panned by the fashion media can, for a brand, turn a glamorous disposition in to a nightmare. This is all a fickle business because designers have to be visionary enough to get the fashion media spotlight but also not get too far ahead of their customers’ tastes.
Couture clothes although unaffordable to most people are the beating heart of high street retail. Saner, more modest and utilitarian versions of outfits that entertained audiences on the ramps at Milan, Paris and New York soon appear at local retailers. These brands have to then appease regular middle class and rich people, many of whom don’t have the physical figure idealized in fashion magazines.

The couture world of fashion is a rather closeted affair. Amateur fashionistas depend on glossy magazine commentary to keep them abreast of goings on at the top designer houses. In the real world, fashion has to appeal to a wide audience of high street shoppers who have varying body shapes and tastes and demand a range of sizes, cuts and colours.
Successful high street fashion faces a number of dilemmas. Firstly, it’s the fickle nature of what is considered fashionable; tulip shaped skirts can be replaced by tunics the next year as the must-have item of fashion clothing. Restocking what’s popular, high street retailers have found, helps them meet targets. However, establishing a supply chain that can respond to sourcing, sewing and delivering popular designs, in the sizes and colours that are seeing the most demand is a demanding science.
Secondly, in a wider perspective, the construct of everyday clothes hasn’t changed in a significant way. A shirt or a skirt from half a century ago isn’t any different to what’s available today. The potential for disruption in materials, manufacturing, supply chain and retail is significant.
B1Fashion by definition is unique and it shouldn’t become a commodity, says Udena Wickremesooriya who heads the apparel business of one of Sri Lanka’s largest firms, Brandix. However, in the last few decades mass market fashion has become alarmingly commoditised. Apparel is not perishable so it shouldn’t have to be discounted like fruits, vegetables and meats are at super markets. A new collection can be heralded by the fashion media in a blaze of superlatives but six months later when it’s dated, the brand has no choice but to deep discount the old stock to have any hope of selling it. “When an item or the fashion industry becomes a commodity, to some extent, the product becomes perishable,” Udena, who has previous work experience in consumer goods marketing and banking, muses.
At Brandix’s apparel business – which supplies some of the world’s largest clothing brands like Victoria’s Secret, Marks & Spencer and H&M –Wickremesooriya is in charge of delivering growth, profitability and sustainable customer relationships. He is also a director of the firm. However it’s his role leading innovation that excites him the most. “There is no hope without innovation, because this industry has grown doing more of the same thing locally and globally and somewhere it is going to crack and we believe it will crack sooner than later,” he argues. “When it does crack we want to be within that pack leading the industry globally.”
Clothes haven’t evolved or improved much. There has also been little innovation in the clothes made in Sri Lanka for export with the exception of sportswear and bras. While a shirt or a pair of pants hasn’t changed disruptively in their construction, supply chains have. Most of the supply chain induced innovation has been incremental but some of it disruptive., an online retailer of clothes, has sales topping $700 million and a valuation over $3.4 billion despite never having made a profit. A Swiss-based luxury conglomerate, Richemont, which now owns the firm, sees its retail model as a reflection of future fashion retail. Over 6 million unique monthly visitors browse its magazine-like website to select off its catalogue. Fashion retail disruptors look forward to a time when online they are able to offer reliably accurate sizing for clients who have a personalised digital clothing size profile on a smart device. This would make it possible for shoppers to buy for themselves and for friends and family whose digital size profiles they may have access to. Since the retail store is virtual, efficient distribution may require the clothing manufacturer to deliver worldwide.
Since most garments are sourced from developing nations, a supply chain requiring manufacturers to deliver to customers directly will be hugely disruptive, and for those able to meet the challenge, a tremendous opportunity.

Brandix is a family-controlled group but with corporate governance standards similar to those at listed companies. The Omar family, which controls it, also has a plastics business and a significant investment portfolio. When Wickremesooriya joined Brandix eight years ago, apparel retail businesses were in the midsts of massive consolidation. This also got Brandix thinking about their response. So we asked, ‘would these large retailers want to deal with a large number of small companies or a few big companies?’.” Clearly, behemoths, they concluded, would prefer to work with substantial suppliers.
Away from the spotlight industry-wide consolidation over more than a decade has considerably altered the landscape.
B2Sri Lanka, Brandix’s main manufacturing base, had limited potential for the scale the firm thought they needed when they started planning their response to industry consolidation around a decade ago. “So therefore we said ‘ok’, which country can give us scale? India and China. The China bus was gone and if you look at India and this region, it has huge potential in terms of labor, it has cotton and spinning,” recalls Udena, who was a key member of the team that then rolled out the India strategy.
The result was Brandix India Apparel City (BIAC), “a revolutionary development in the apparel industry; a unique, integrated apparel supply chain city, managed by Brandix Lanka Ltd,” according to the group. It’s spread over 1,000 acres in the port city of Visakhapatnam in the Eastern Indian state of Andhra Pradesh. Up to 30% of Brandix’s production now happens in India where there was none before 2006. “It’s not that we stopped investing in Sri Lanka. We continue to invest here as a knowledge hub.”
Brandix’s Indian apparel supply chain city investment is the first such by a Sri Lankan firm that took technology and know-how developed here, overseas to benefit from the scale on offer. It’s a model that Western firms have used for decades by locating their manufacturing overseas. Because of the know-how everything works from the start and industrialization can zoom ahead and Brandix’s customers are now being serviced from India and Sri Lanka.
For economically backward Andhra Pradesh, the apparel park provides jobs that are immediately plugged in to a world class supply chain. As wages for Sri Lankan factory workers rise and large industrial parks are not practical (due to land, labour and water shortages) other successful manufacturers here may also find similar motivation to integrate foreign workers in India or even Africa in to Sri Lankan-built supply chains.

B3Technology is far more mobile internationally now that it was in the last century. When supply chains operate across borders now, it’s not just parts and components that are traded but increasingly investments, services, people and intellectual property. Brandix’s investment in the Indian apparel park, where its own, joint venture and third party firms are located, uses Sri Lanka as the location from which investment, services, some people and intellectual property is transferred. It’s a partnership of Sri Lankan technology with the relatively poor country labour operating in the poor country. The Indian apparel city “complements the capabilities we have built in Sri Lanka,” according to Udena.
Like firms from the UK exported their resources near the end of its industry’s death, Brandix is exporting people and technical know-how even when the industry is still growing in Sri Lanka. But the key difference in the comparison with the UK scenario is that the South Asian market itself is emerging as a big consumer and therefore there are going to be opportunities in the region.
After a slow start the Indian apparel park is now growing however not without challenges. Although labour was plentiful in the area and formal jobs scarce, the families of factory workers were sometimes sceptical. Since more women were employed in the apparel city, the empowering effect of only women in the family holding a job also caused new tension in many households. In response the factories reached out to the villagers with tours of the area and street plays depicting the day in the life of a factory worker, to defuse tension and ensure their employees continue their work. “If the community is not sustainable you can’t put up a factory there. It was important that the benefits filter back to the community,” says Udena about their decision to subtly intervene to improve community and family harmony.
Brandix makes lingerie, lounge wear, pants and casual wear. Each of these product lines has a centre of excellence where designs are created, ideas tested, solutions are arrived at and the whole business is managed up to production planning. It’s only the manufacturing entities that are decentralized, some in Sri Lanka itself and newer ones in India and Bangladesh.
Besides consolidation, two more trends are sweeping the clothes retail landscape. The first is the no-frills, cut-price clothing retailers who are grabbing market share from mid market firms all over the rich world. The second change is the shorter lead times demanded by customers who now want clothes designed, manufactured and delivered to their stores in two weeks. This helps them to respond to market demands without having to hold large quantities of stock.
The old standard for apparel manufacturers here was 30 days to source fabrics, 30 days for manufacturing and another 30 days for shipping, a total of 90 days or more to fulfil an order. Design changes –when first considered by a customer – could tale six months to implement. “Today we can complete an order in a few days. We have compressed months in to days.” The next breakthrough is to do this in a few hours and it’s possible, according to Udena.
Conceptually fashion isn’t predictable. “However once it does become fashionable it becomes like a monopolistic opportunity. Everyone else also starts copying it and when you copy it is not fashion anymore.” The ability to exploit the brief monopoly a brand may have with a successful design is increasingly determining how profitable it will be.
Incremental innovation has cut a clear industry path, according to Udena. The path has taken the industry from a tailor, to a supplier, to sourcing company, to supply chain company, to supply chain city to supply chain solutions provider. “Customers demanded certain things such as execution excellence, which is the first. And as we were graduating out of the execution excellence the question we still ask is ‘what does a customer really want?’ What is the customer paying for?” contends Udena. “We always used to look at the customers’ main challenge and say how do we deliver that? How do we deliver a solution in a unique way?”

B4Industry consolidation has also pushed apparel manufacturers to changed their relationships with suppliers and customers. The two are tightly integrated in to their supply chains and relationships are often deepened by establishing joint ventures. Brandix’s first joint venture was with the US firm MAST in 1996. Since then it has partnered MAST and a number of other firms in JVs.
The model that allows for firms in the supply chain to hold minimum stock was pioneered by Toyota. At Brandix, years of struggling to keep abreast of customer orders had resulted in investments in resource planning technology that readied the firm for lean manufacturing. Many firms around the world have achieved global success doing seemingly ordinary things like Toyota making cars and Wal-Mart selling groceries proves what organisations do matter less than how they do it. Like these firms Brandix’s superiority lies more in its world-class processes than in the commodity it produces.
That is unless – through innovation – that commodity it produces can turn out to be disruptive.
Disruption in apparels is taking many forms. Already gym clothes that don’t need to be washed are available although they aren’t affordable enough for mass adoption. Disrupt Unlimited is a programme that Brandix launched under Udena’s leadership to encourage entrepreneurs to help the firm disrupt Brandix’s own and established apparel sector business model. Brandix isn’t seeking to own and control any of the firms it’s incubating but it supports them by providing apparel domain expertise.
“Its focus is to foster disruptive innovation and creating an eco-system within and outside the apparel industry,” explains Surendra Karunakaran who manages the program. As part of an overall dive to encourage innovation Brandix engages with universities and entrepreneurs.
An audacious aim would be to build some of the blocks for an innovation fostering industrial cluster, like Silicon Valley, the best known and most imitated place. Concentration of talent and entrepreneurship supporting institutions are available in some emerging economies like Chile for example. Progressive emerging markets no longer attract investment on the basis of having cheap workers and low cost specialists. Instead they are focusing on fostering innovation. Their reimagining of product, innovation and reincarnations to suit the challenging economics and conditions in poor countries is already yielding results.


No Comments

There are currently no comments on Brandix’s Rock Star. Perhaps you would like to add one of your own?

Leave a Comment