E-Transformation Strategy for the Sri Lankan Garment Industry

The paper highlights the current status of the Garment Industry and the threat it is facing in the emerging nonquota era and proposes an effective e-transformation strategy for the industry to gain competitive advantage in the global market. The E-transformation roadmap developed by the University of Western Sydney, Australia, is applied to the Garment Industry to deal with it’s requirement to carry out B2B and B2C Ebusiness with the suppliers, buyers and other external entities. The business processes of a Garment company are also analysed in order to improve it’s effectiveness to face the restriction-free world trade, which means the survival of the smartest’. THE EMERGING GLOBAL E-ECONOMY Information and Communication Technology provides a strong foundation for any organisation in handling its strategic level decision making, management level planning and control of operational level activities. With the evolution of the Internet, E-business opens up new possibilit ies for businesses to carry out the business activities more effectively. The methods of operations of organisations are changing rapidly with paradigm shifts and new IT/business strategies for B2C and B2B being introduced everyday. Enterprises operate in a global scale today with operations occurring in many countries simultaneously. The global village concept has introduced a whole new way of doing business in an ever increasing competitive world. Therefore, the need to introduce and use IT as an effective strategic business tool is very important to beat the competition and successfully achieve the company‟s business goals. THE S RI LANKAN GARMENT INDUS TRY We selected the Garment and Apparel industry of Sri Lanka to carry out the study due to it‟s significant contribution to the Sri Lankan economy [1]. Figure 1. Central Bank Annual Report, 2001 The Garment and Apparel Industry, with regard to output and employment, is the largest manufacturing industry in Sri Lanka. Towards the end of 1980s, American, British and German garment manufacturers discovered Sri Lanka as a suitable country for apparel manufacturing, the main criteria being cheap labour in abundance and the favourable investment climate for foreign investors with incentives. According to a study carried out by UNIDO (United Nations Industrial Development Organisation) in 1999, 328,000 were employed in the Garment Industry giving an output of Rs. 167,000 Million. By end of year 1998, out of the total manufacturing sector work-force, approximately 32% were engaged in the garment industry alone. The quota system introduced by General Agreement of Trade and Tariff (GATT) in 1994 will phase off in the end of 2004 [3] introducing a restriction-free world trade, which would mean „the survival of the smartest‟. The non-quota era will defin itely bring new challenges to Sri Lankan Garment manufactures forcing them to achieve high quality, high productivity, fast response time for large range of orders where number of items per order will be much less than at present. Therefore, an effective e-transformation strategy is necessary and crucial for the garment industry at this stage to compete successfully in the international market. RESPONDING TO CHANGE For the Garment Industry to be globally competitive, they need to achieve high productivity and on-time delivery while maintaining high quality of finished products and competitive pricing. To achieve this, the Garment Industry needs to invest not only in State-ofthe-art technology but, also in developing effective and efficient business processes. Figure 2. Critical Success Factors for a Garment Company Effective Business Processes State-of-the-Art Technology