Dear shareholders, customers, board members, employees and stakeholders,
We are living in a world of change in our retail industry, which is now characterized by disruptive transformation that leads to things made possible by technology. Our customers have seen the power of technology create new ways of serving the consumers through online e-commerce platforms, besides using their existing brick-and-mortar stores model. Also, we see such disruptions creating compelling ways for our customers to focus on saving time and gaining easy access to products and services to serve consumers. Our customers are time-sensitive where there is an imperative need to optimize the supply chain process to achieve speed, meaning sharp reduction in lead times. We are also seeing shifts in our customers’ preferences, from reduction in order quantities to requesting more design/styling and greater flexibility in their procurement practices.
Against this backdrop, in this year’s letter, I want to share with you our strategic focus to drive our company to the next level of excellence, specifically in three areas: SPEED, PRODUCTIVITY & VERTICAL INTEGRATION.
The changes in the industry especially emphasizing on speed have changed the way we work, making us focus on using more digital tools, becoming more productive with efficient internal processes and have more real-time information, supported by advanced analytics. In response, we will employ new technology in creating a digitalized supply chain that will help us to anticipate future requirements. With the use of digital tools that can offer predictive data analytics, we can help our customers to make better decisions and allow us to act with speed to help our customers increase their speed effectiveness and productivity.
In our business, one key area is the design, product development and sampling process for our customers, which consumes a lot of time, but with the use of digital tools like 3D, we will be able to reduce the cycle time and improve the adoption rate much faster, besides eliminating the need for physical samples, wastage and saving costs
In our quest to achieve efficiency improvements, we have ambitious plans to improve our factory productivity, via streamlining of internal processes and restructuring. We have started our efforts to restructure our pre-order processes in Singapore Headquarters (HQ), eliminating duplication of activities between HQ and factories which will help us to be more customer-centric, besides improving cycle time. In the area of post-order activities, we plan to expand our factories’ involvement, correspondingly reduce HQ processes, to achieve higher efficiencies and reduce costs.
Our journey to improve garment production processes has taken us to strategic investment in RFID technology, using smart labels to provide track and trace information to achieve benefits like QC improvement, real-time production capacity planning, waste elimination, etc. At the end of the fiscal year, we added more in-house apparel production capacity by acquiring from our outsourced partner, a factory in Malaysia, which is another landmark in our strategic journey.
This acquisition will enhance our manufacturing presence in the region as we continue to transform ourselves from a “Trading Agent” model to become a “One-Stop Solutions Provider”
In December 2016, we completed our acquisition of fabric mill (called Maxim) in Malaysia as another milestone in our vertical integration journey, to improve time-to-market and value proposition for our customers. We are delighted with the progress we are making in Maxim, most notably the increase in volume production of the factory to support our in-house needs, resulting in less reliance on external fabric suppliers. As a next step, we are targeting the fabric mill to improve its lead time in production, in addition to stocking up yarn inventory to support shorter lead time demand.
We have allocated more investment capital in the fabric mill, not only for enhancing manufacturing capacity but also to build R&D lab for material innovation in products like “tough cotton” to enhance market penetration. We will continue to invest in this core business with technology, ultimately allowing us to expand our product portfolio which will then include fabric material as one of our end-products besides knitted garments.
We believe that the road ahead is still going to be tough, as we will continue to face the trend of lowering prices. We will strive to become better at what we do best and constantly innovate to save time and money. Throughout our history, we operate from a strong foundation built with actions aimed at strengthening our core competencies and delivering business results. We will treat our challenges as opportunities for us to change and adapt whilst we continue to implement our strategy to achieve sustainable growth, strong balance sheet and shareholder returns. In this new era of retail, we know that changes of rapid growth in e-commerce and digital capabilities for the consumer, will continue to accelerate further but our efforts will stay focus on emerging as a strong supplier of our products and services to our customers.
Let me conclude by extending my thanks to you all. I am honoured to serve you and confident that we will serve customers more effectively and continue to deliver value through price, quality and speed-to-market.