Case Study: Slimline - A Unique Apparel Manufacturer with High Standards

Background and History of Slimline

Case Study Read the case study and answer allthe questions that follow.Slimline: Marching to a Different Drummer Globalisation means different things to different people. To the CEO of a multinational enterprise, globalisation reflects the changing business world-access to new customers, opportunities to reduce production costs by locating factories in low-cost areas and the threat of competition from foreign firms. To workers in developed countries, globalisation often implies job insecurities. To human rights activists, globalisation implies exploitation of workers and denial of human rights.Many multinational companies have been confronted with allegations of mistreatment of workers in developing countries. Nike, for example have been the target of accusation that its sub-contractors in China, Indonesia and other Asian countries abuse their workers. One company that has never been subjected to such criticism is Slimline Limited, an apparel manufacturer in Pannala, Sri Lanka. Indeed Slimline?s way of doing business stands in contrast to that of many apparel manufacturers in developed and developing countries alike.The company employees 5000 workers who produce USD50 million worth of apparel annually. Many of the employees have Bachelorsor Masters degrees. Its staffalso includesPhD holders, physicists and even former investment bankers. Slimline goes out of its way to provide its workers with working conditions that exceed industry standards and entry-level wages are set higher than those in the local marketSlimline was founded in 1993 as a joint venture between Mast Industries, CourtauldsTextiles PLCand MAS Holdings Ltd. The plant has a feng shui-influenced layout, tiled walkways, verdant trees and bright purple paint. Slimline even has its own wastewater recycling plant. The factory opened with a ribbon cutting ceremony, and flew the Sri Lankan, UK and US flags to celebrate its multinational partnership....3/-

Slimline has benefitted from the unique knowledge and expertise of the joint venture partners. Mast Industries is a US based contract manufacturer of apparels with annual sales of USD1.5 billion. Among its major customers are Victoria?s Secret, Marks and Spencer, Liz Clairborne, Ralf Lauren and Tommy Hilfiger. Courtaulds Textiles was the UK?s largest apparel manufacturer. The third partner, MAS Holdings Ltd is a privately owned Sri Lankan company that has rapidly become Sri Lanka?s largest apparel manufacturer and one of the largest employers in Sri Lanka. Slimline later developed the world?s first carbon-neutral textile factory..Like most apparel manufacturers, most of its employees are femalesewing machine operators. Even here Slimline defies the sweatshop stereotypes thatplaguethe industry. Its production workers use advanced pneumatic sewing machines instead of manual models. Work stations are ergonomicallydesigned and the factory is air-conditioned. As a result, Slimline attracts a premier workforce.The job is very demanding but the pay is good. Computers monitor the output of each worker, who must match the factory-wide production standards in order to earn their monthly bonus. But contrary to industry norms, the standards are lowered down for pregnant workers. Why has Slimline adopted this approach? Slimline?s managers have concluded that Slimline cannot compete with China or Bangladesh on the basis of low wages. Instead, they believe that they must focus on producing high qualitygoods for their customers who are brand name retailers such as Victoria?s Secret, Marks and Spencer and H & M.Notes one Slimline official, “In today?s global economy, Sri Lankan manufacturers must tiethemselves to big Western retailers to surviveand the more they do that the more their factory standards have to meet the workplace norms demanded by Western consumers.”In the apparel industry, most outsourced manufacturers are „nameless? but their brand owner customers are becoming more and more selective about where they place their business. In the late 1980s and early 1990s, labour unions, environmentalists, human rights groups and government agencies first sounded the alarm about the use of sweatshop contractors by major brands. In 1996 the United Nations introduced the Global Compact for corporate practices based on human rights, labour, environmental and anti -corruption practices....4/-Slimline believes it is unique and should publicly advertise their compliance and good labour practices, rather than be labeled as just another global sweatshop. Slimline believes it should capitalise on the growing interest in „sustainable consumption?, the trend of buying in a socially responsible way, like organically grown foods or non-sweatshop clothing.Chinese manufacturing plants have a good supply chain and good manufacturing facilities. But much of the work in Chinese apparel plants issubcontracted to other plants. So the customers haveno idea exactly where and how, and by whom and under what conditions, the clothes are actually being manufactured. To make sure that the difference isclear to their customers, Slimline allowscustomersto visit the plants at any time, and have full and transparent access to information.The driving force behind Slimline is Dian Gomes. In 1993, Gomes was 36 years old and employed as the finance director of an apparel factory when he was approached byMahesh Amalean,the chairman of MAS holdings to launch a new business –Slimline. Gomes rose to the challenge and sethimself goals that were very tough.He said: “I had a dream, and I set out to make it a reality at Slimline. To make an ambitious garment project a state-of the art plant, a super –efficient monolith. My aim was to be number one and stay number one.”The first task confronting Gomes and his new management team was to build a state-of-the art garment factory. Coutaulds sent an experienced team of production managers from its British operations to oversee the construction and start-up of the factory. Gomes added Japanese inventory control and production methods that cut costs and raised productivity.He later incorporated a USD4 million computer system into the factory?s operation to monitor quality and production. Thesystem is integrated with the computer systems of its major customers, facilitating distribution and improving service to its customers. The system facilitatescommunication between the factory and its customers and the marketplace, allowing the factory to quickly shift production to the styles most in demand.Companies like H&M and Zara were shortening the traditional fashion cycle from nine months to six weeks. Slimlinewanted to shorten their lead times as much as possible so that their customers could work as close to the season as possible....5/-With the new IT systems customers like Marks & Spencer can send their sales information by the end of the day at Colombotime, on a Friday. On Monday morning, the system can recommended what Marks & Spencer needsto reorder and Marks & Spencer can confirm the order when they start their day, which was 2PM in Colombo. By the end of the day, Slimline can check with the fabricmills and confirm with Marks & Spencer that they would ship the order in two weeks? time. Marks & Spencer could log in to the manufacturing systems, see the production floor, see the status of their style in the factories, how much was cut, produced, packed, ready to ship, what was traveling by sea, by air and how much fabric they had. If a color or size was selling faster in the store, Marks & Spencer could change their order midstream.Although its state-of-the-art facilities and technology have playedacritical role in Slimline?s success, Gomes and his staff have workedhardto instill pride in the company. One way Slimline has bolstered its company?s image and enhanced employee morale is by sponsoring company sports teams such as cricket and boxing. Nor has the company forgotten the community. Slimline has built an auditorium for the local high school and equipped its computer and science labs. It also provided scholarships allowing local high school graduated to attend local universities.AlthoughSlimline is a relatively young company, it has been recognised by numerous groups for its innovative approaches and commitment to its workers and the community. The company has received manyawards and recognition both from local as well as foreign countries. It has also received recognition from the International Labour Organisation for its human resource practices. With such success comes growth. The company now operates four factories that produce 50 million units of women?s sleepwear and intimate apparel.But keeping its old customers will notbe enough. Where would future growth come from? Slimline pushed ahead with developing their own branded intimates, known as Go Beyondfor the Southeast Asian market and focused on entering the Indian retail market while hoping that they would not step on their customers? toes as a result.The key to Slimline?sfuture growth would be turning Go Beyond into a world-class stand-alone brand. On a bulletin board in his office, Slimline?s Director of Marketingpinned up alittle Go Beyond logo clothing label, like the tags with brand name and fabric care information sewn intothe back of a t-shirt. He hopesthat Victoria?s Secret and Gap would let Slimlinesew the Go Beyond tags into the clothes right next to Victoria?s Secretand Gap?s own labels. Perhaps Victoria?s Secretand Gap could attract new customers by advertising their ethically manufactured merchandise, identified by ...6/-the Go Beyond label. Or would price still be the deciding factor for consumers? Would their shopping mall customers, who will never set foot in a factory in Pannala, Sri Lanka, care asmuch as the Slimline does?(Source: Adapted from Griffrin R.W, Pustay M.W (2015) International 8thed Person Education, page 467-468 and INSEAD cases: Mas Holdings. Accessed 8 April 2020)

Question 1Unlike manyapparel manufacturers, Slimline observes globally recognised human resource practices.

Analyse how this has given Slimline a competitive advantage in the global apparel manufacturing market.)Question 2Slimline is a joint venture between a local Sri Lankan company (MAS), a US company (MAST) and a British Company(Courtaulds Textiles PLC).

Examine the rationale behind the joint venture between these three companies.

Question 3International apparel companies like H&M, Marks and Spencer usually pressure their outsourced manufacturers to reduce cost. Determine how Slimline can compete with low cost manufacturers in China and Bangladesh

.Question 4After years of manufacturing for international brands, Slimline is planning to market its own brand of apparel. Discuss if thisgrowthstrategy Slimline hasplanned will be successful