Opportunity can be born from disaster. A business failure by one entrepreneur can become another’s success story.
Often, all that is needed to turn the corner is a shared belief in success, trust and pooling of entrepreneurial flair.
Affordable innovation that gets results
“Although broad thinking and innovative actions are regarded as the new standards for business, it is essential that all parties involved embrace it and commit to it, in order for innovation to work. Most importantly, innovation must be affordable and provide tangible benefits almost immediately, so that its impact can be measured against productivity,” says Ethel Nyembe, Head of Small Enterprise at Standard Bank.
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“Entrepreneurial ability is not dictated by a company’s size. Talent exists in small and large businesses. Some big businesses, however, often look for solutions from companies of a similar size to themselves, rather than consider approaching a much smaller business for advice and expertise. The truth is that SMEs can often assist large corporations with their needs. The additional benefits they can bring to the table are entrenched, specialised niche knowledge and the ability to move faster and implement plans quicker than bigger competitors.”
Combining insight and talents
This was explored in a recent episode of The Growth Engines series, sponsored by Standard Bank and aired on Business Day TV. This episode highlighted what can be achieved when two entrepreneurs - a large manufacturing company and an SME supplier – combine insights and talents to solve a pressing business problem.
“Herman Pillay, CEO of TCI Apparel, contrary to ruling opinion at the time, decided that an ailing 47-year old mainstay of the clothing sector could be restored to its position of leadership. This was despite the fact that the company had almost floundered under the assault of Asian led textile businesses on the South African apparel market,” says Nyembe.
The South African Clothing and Textiles Workers Union (SACTWU), together with Herman, intervened when the livelihoods of 2,260 workers were on the block, when the ailing Seardel Apparel, announced closure in August 2013. Believing that the company had the potential to re-enter the market as a competitive force despite Asian domination, they took the plunge into the sector.
Pillay’s engagements with staff and retailers centred on what had gone wrong and what needed to be corrected to stabilise the business. Tough conversations about what retailers wanted followed. Once he had sufficient buy-in, the hard work began.
“In the end, it all boiled down to a strategic business plan. When the retailers read the proposal, it sparked their interest. They saw how the business was planning to make the necessary changes and the direction it was envisioning to take to bring about stability within the sector. This resulted in the birth of TCI Apparel”, Pillay recalls.
Rebuilding supplier support
It was in the third phase of rebuilding the company that suppliers’ abilities and support came to the fore. All supplier relationships, regardless of their duration, came under the microscope with costs, reliability and supply logistics being critically examined.
“The deciding factor in continuing with these partnerships was the innovative approach of each supplier and their willingness to meet our demands. You can claim to have all the innovation in the world. But, if your customer can’t afford it, it will lead to further losses and you just don’t have a sustainable model,” says Pillay.
Professional industrial advice
Enter Judy Chen, CEO of UNO Sewing, a family business which was instrumental in assisting TCI Appareltoachieve this objective.
“What we have found is that many large businesses need professional industrial advice. Herman, like many of our clients, needed somebody to come in to identify problems so that they could be faced head-on and quick solutions could be found.”
“We are often asked how staff outputs can be optimised, skills upgraded and production increased. For TCI Apparel, we looked at the existing machines and their capabilities and then matched them to the tasks required in the factory so that profits could be maximised,” says Ms Chen.
One of the processes that came under review was the practice of ‘nipping’- in which operators manually cut off surplus material on a garment. One slip and garments have to be consigned to the waste bin. Time, fabric and an otherwise acceptable garment are lost.
At TCI Apparel, a change of technology was recommended to automate the nipping process. This also meant that TCI, like many clothing manufacturers before it, had to consider these innovated workstations to boost production efficiencies.
UNO Sewing is further geared to assist, as they are developing trade-accredited training courses that will be on offer through a training college, where aspiring technicians will be trained on the latest automated and innovated machinery. This will assist in closing the industry gap, and TCI is exploring this offering with UNO.
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Forming alliances with SMEs
“The lessons that SMEs can take from this example in the apparel industry are that even if they operate in a niche market, growth can be achieved by ensuring that their products are up-to-date and backed with consulting skills,” says Nyembe.
“When larger corporations see that they are being offered an innovative integrated package that can be measured by increased production, they will be willing to form alliances with the owners of SMEs. This was the case with TCI Apparel and UNO Sewing, with both companies reaping the rewards of their alliance,” says Ms Nyembe.
The Growth Engines can be viewed on Business Day TV (DSTV channel 412) on Tuesdays at 9:30pm, with repeats on Wednesdays at 10:00am and Thursdays at 2:00pm. For more information and to view in-depth articles on the key themes explored on the programme, log on at bizconnect.standardbank.co.za or bdlive.co.za/indepth/growthengines.