annual report 2009
Selwyn Eagle
TFG Apparel Supply Company
POSITIONING
TFG Apparel Supply Company (TFGA) performs a number of essential services for the trading divisions. They can be summarised as:
- facilitating and managing the processes by which apparel and certain other types of merchandise are, to the extent possible, manufactured locally;
- sourcing imported merchandise and managing relationships between the group and its offshore suppliers;
- managing the shipping of all imported and exported merchandise;
- operating a fashion design studio for apparel to be sold in the group’s stores, together with an in-house sample room and pre-production and production units; and
- operating a quality assurance unit which monitors the merchandise purchased by the group.
As matters stand, the weak state of the textile and clothing industries in South Africa imposes severe limitations on building up local manufacturers. However, TFGA has a solid foundation with the clothing industry which will be strengthened over a number of years.
The foundation has been built by cultivating strong relationships over a long period with a number of local clothing cut, make and trim manufacturers (CMTs) who are now closely aligned to the group in their understanding of its needs and of their own capabilities and limitations, and who have demonstrated their capacities and their interest in being long-term partners in the supply process. In several ways these relationships go far beyond those which apply to simple contract supply arrangements, as is demonstrated by the fact that TFGA procures all of the textiles and trims to be used by the CMT manufacturers and by the intensive co-ordination that exists between TFGA and these manufacturers to ensure the delivery of products on time and in good order.
The group quality assurance unit continues to serve the needs of the group’s trading companies by introducing quality requirements at the onset to ensure high standards in all merchandise supplied to the group’s stores.
REVIEW OF THE YEAR
The effects of the quota system applied by the Department of Trade and Industry for imports of textiles and clothing in the calendar years 2007 and 2008 were negative for the industry as a whole. While the quota system was intended to provide a period of grace for the local textile and clothing industries to undergo reconstruction, the overall result was that certain required fabric became unavailable, limiting the scope of the work which could be passed on to local clothing manufacturers.
The outcome was greater weakness of the local industries. The local textile industry has now dwindled, and there are fewer clothing manufacturers of significance, even in the limited field of CMT.
TFGA’s pro-active approach to these problems has, however, contributed to the survival of some local clothing manufacturers, and among the survivors there are efficient and adequately resourced companies which are fully capable of providing the group with products which meet its standards in all respects. In the past year some of these relationships have been further cemented and advanced, to the point where the supply line is working satisfactorily.
The volatility in currency exchange rates experienced in the past year again demonstrated the wisdom of retaining a large local base for the supply of merchandise. Building a shield against this volatility has been one of the governing considerations in TFGA’s long-term policy.
TFGA’s prediction that China would no longer be able to retain its position as the overwhelmingly dominant source of high-quality but low-cost imports was largely realised in the past year. As a consequence, it has been necessary to extend the range of suppliers to other countries. TFGA now has a more diversified base of suppliers and the process of building long-term relationships with them is underway.
Notable steps were taken in the 2009 year to advance the group’s supply chain initiative and positive results are now being felt in terms of the speed with which orders can be supplied and the consistency with which merchandise arrives at the group’s stores. Processes to measure all significant features of the supply process have been put in place, removing all subjective elements and all guess-work and so enhancing efficiency.
TFGA’s shipping department maintained a highly effective performance in the past year and its participation in the supply chain initiative has played a useful part in shortening the supply pipeline. With the assistance of TFGA’s clearing and forwarding agencies the reliability of supplies reaching the group’s distribution centres was further improved and in recent times has improved considerably.
The group’s quality assurance unit has kept in line with advances in the overall supply chain initiative and is playing an important role in building in quality checks and audits of processes before goods reach our distribution centre. This results in faster throughput when merchandise arrives in the group’s distribution centres and faster dispatches to the stores.
The unit is now implementing practices which were devised and developed by intensive work over a period of some years.
STRATEGY
The steps envisaged for the 2010 year in the implementation of the group’s supply chain initiative include the introduction in TFGA of improved processes and controls throughout the division and the bedding down of the measurement tools mentioned above.
The processes of building partnerships with local manufacturers will be taken further with a strong focus in the next year on improving co-ordination and efficiency in all steps where TFGA’s actions overlap with those of external suppliers.
TFGA will again be active in identifying training needs for its staff members and implementing effective succession plans throughout the division to ensure continuity of operations.
There will again be initiatives to drive and support broad-based black economic empowerment (BBBEE) through processes of continuous supplier evaluation and communication.
pROSpeCTS
The momentum achieved with the group’s supply chain initiative will be maintained in the next year by further steps to improve efficiencies and to ensure that relationships with local and offshore suppliers are built and cemented to the point where a sustainable world-class chain management model is in place.
In addition, the quality assurance unit has mapped out further work for the year in order to be fully aligned with all the processes underway in the group to achieve supply efficiencies.
