Have adapted to "hold and flow" system for customers
Ghimli is a global textile and apparel supply chain manager of casual lifestyle knitwear apparel to major US retailers. It offers a total solution package with an integrated one-stop service approach, from in-house product design and development, commercialisation of orders, material management, production planning and control, to comprehensive post manufacturing logistics solutions. In a chat with Fibre2Fashion, Felicia Gan, Deputy CEO of Ghimli Global Pte ltd, shares Ghimli's journey till now, how it is managing the current Covid crisis and future plans.
Where does Singapore stand with respect to the global textile market? Which major markets is it competing with?
Singapore is a traditional manufacturing hub of the 80s due to its quota free status. After WTO quote free in 2005, most Singaporean manufacturers have moved out to low cost countries of SEA, some even to Latin America for duty free and also as far as Africa.
Singaporean companies have evolved to provide R&D, product development, design and our finance continues to be centered in Singapore with most manufacturing functions being pushed outside of Singapore. With trusted Singapore branding of integrity and reliability, we have fostered long lasting relationships with our customers over the years. With more and more bilateral FTA opening up in the region, this will open up new markets and customers bases for us.
As a councilor for TAFF (Textile Apparel Fashion Federation), we are nurturing new generation of designers and assisting them to market locally and overseas. With the success of a few incubator projects, we now have a Cocoon Space in the heart of orchard road for designers to showcase their products. With rapid globalisation, more and more people are looking at local designers and we are very excited to be able to groom local designers or brands and then in future internationally.
How has customer behavior changed post Covid?
We are adopting safe distancing; staff communications are happening via virtual meeting with customers, suppliers and fellow workers. We are not conducting design and order placement meetings via video conferences. We foresee that there will be lesser contact and less frequent trips to US to maintain social distancing.
The virus is here to stay. What steps have you taken to mitigate its impact - be it at the supply chain level or sourcing of raw material etc?
Ghim Li is a vertically integrated global supply chain manufacturer which was established in Singapore more than 45 years ago. Our fabric mill and production facilities are located across countries in Southeast Asia. The proximity of the production facilities and the direct control of the fabric mill enables us to mobilise the production team and shorten the response time according to the demand of the masks. With country flexibility and diversified yarn sources, we are adequately protected from the adversities of any supply chain disruption. We are also working closely with our customers to ensure that they continue to maintain healthy levels of inventories and offering flexibility for changes in style or quantity so that we can remain resilient to changes in the global retail market.
What is the story behind Ghimli Global? What are your major achievements till date?
Ghim Li Group is a vertically integrated cut/sew knits manufacturer for over 43 years established since 1977. We are Singapore based and founded by Estina Ang who started the company with just six sewing machines as a sub-contractor. Our garment factories are located in Indonesia, Malaysia, Cambodia, with 9,000 staff and annually producing more than 62 million pieces of garments a year. On the fabric side, we own and operate Maxim Textiles Technology in Malaysia with a manufacturing capacity of 2.5 million lbs of knitted fabric monthly.
As result of our one-stop shop services, Ghim Li Group has been awarded 5 Star Vendor for over 28 years consecutively and work with over 10 Macys' private labels. For Walmart Canada, we have also been award Vendor of the Year (Apparel) for over 3 years in 2013, 2015, 2016. More recently, Estina Ang was named "The Emergent 25 Asia's Latest Star Businesswomen" by Forbes Asia in 2018. Ghim Li was certified as a "Women Owned Business" in 2019 by an international certification body WBENC which validates businesses that are owned, controlled, operated or managed by women.
What are the products you manufacturer under casual knitwear category?
Ghim Li Group is able to manufacture multi product types ranging from ladieswear, menswear, kidswear and sleepwear. Our current customers include a range of US and Europe specialty store retailers, major department stores and supermarket chains. We are able to provide seasonal product design services to our customers and travel to US frequently for design projects. We ship our garments on FOB and LDP basis and are able to import products directly to US with warehousing support services. We constantly drive to innovate to provide customised solutions to individual customers' demands. Further as part of vendor accreditation, we have specialised teams who are trained for self-fit, self-colour approvals and are able to conduct self-inspections.
Technology is in a sense leading the fightback. What steps has Ghimli taken or is taking to move into a more digitalised work culture?
Tech is the way forward and with rising costs of labour everywhere, we do need to embrace tech to try to automate manufacturing processes. One note of caution on automation is to focus on the value which your customer will appreciate. Some tech may be too expensive and not suitable for implementation until your customers can see that value. Someone has to pay for the tech.
3D design and prototyping is another way which our industry can use to reduce the amount of samples and lead time in prototyping. Many industry leaders are embracing 3D and this is a good way forward for our industry to upgrade the way we design and sample.
Automation of the garment manufacturing and digitalisation of the ordering process is what we are working at.
Staff communication is happening via virtual meeting with customers, suppliers and fellow workers. With Covid-19, we can see our staff embracing video conferencing as they have the flexibility to work from home.
By when are you expecting the revival process to commence?
The revival process is commencing now with the resumption of our customers' orders in US and Europe. We can see positive signs of returning back to normalcy but this are still shaky due to the risk of 2nd wave of Covid during the colder months. We will have to continue to stay vigilant and prepare for any impact should there be a 2nd wave.
Which markets do you cater to? Which major brands and retailers are you associated with?
Ghim Li started in 1997. We are a garment manufacturer - we moved from being an Original Equipment Manufacturer (OEM) to being an Original Design Manufacturer (ODM). We work directly with international customers like department stores and our business mainly focuses on the US market. Not able to name our customers but there are mostly major retailers, department stores and specialty stores in the US.
What is the sourcing strategy at Ghimli? Where do you source the raw materials from?
Ghim Li is a vertical global supply chain manufacturer, which was established in Singapore for more than 45 years. Our fabric mill and production facilities are located across countries in Southeast Asia. Ghim Li is also a key apparel supplier to major US/ European and designer brands / retailers. We diversified our sourcing from several countries from china, Taiwan, Vietnam, Korea, Indonesia and Malaysia.
How have budgets been impacted in this Covid phase?
We have to work very closely with our customers on sales plan and also on our factory capacity plan, maintain some buffer and fluidity to cushion any impact of Covid19
Implication on financial statement
GLG Corp has advised that the postponement of the existing orders and transition to manufacturing of fabric face covers have impacted the company's cash flow in the short run. This is because the company had to incur additional financial costs in extending the credit lines arising from the postponement of receivables from the customers and the collections from the new face cover sales will only be recognised after delivery of the products. But the payments for the factories' overheads, raw materials and workers' wages were still incurred.
GLG Corp is working with several financial institutions to increase the cCompany's existing revolving credit lines to mitigate its short term financial burden. The company is collaborating with customers to make payment for those goods that were delivered or arranging with the banks to finance receivables from the customers in transit. Moreover, the company has proactively reached out to the suppliers and landlords to discuss additional mitigating measures during this difficult time. Other preventive measures to conserve cash and reduce costs will be taken. For example, general recruitment freeze will be implemented for all ground positions, and non-essential travels will also be suspended. Selected capital expenditure has been deferred and Ghimli will be tightening discretionary operating expenditure.
The overseas factories are also reviewing the support from the local governments which is featured in the regional news:
- The Malaysian government announced the RM250 billion (US$58 billion) stimulus package on March 27, 2020 and additional SME stimulus package to help the economy.
- Cambodia has the budget $8.2 billion in which US$2 billion was earmarked to save the economy in case of the outbreak of the acute respiratory disease caused by Covid-19, according to Prime Minister Samdech Techo Hun Sen's statement on March 10, 2020.
- Indonesia will issue a government regulation in lieu of law (Perppu) that will boost state spending by up to Rp 405.1 trillion (US$24.6 billion) as the budget to fight against Covid-19, according to President Joko "Jokowi" Widodo's statement on March 31, 2020.
In the local context, the company is obtaining financial assistance from the Singapore government to alleviate its financial burden with relief packages amounting to S$160 billion (US$113 billion), namely (a) Unity Budget, (b) Resilience Budget and (c) Solidarity Budget which have been rolled out on April 6, 2020.
The company is also working with the banks to tap on the S$5 million temporary bridging loan which the Singapore government co-shared amounting to 90 per cent default risk.
Globally, there is more focus on sustainability today, more so after the Covid-19 episode. What are your commitments towards sustainability and reducing carbon footprints?
As part of fabric innovation, we are always looking at sustainable methods to produce fabric. For example, we are exploring innovations like using organic yarn, recycled cotton / polyester and even bamboo fibres yarn. Ghim Li as a fabric mill is continuously doing research and development in its labs to look for new sustainable fabrications and fabric innovations.
Our masks are designed with a focus on ensuring that it is a sustainable innovation. The mask is made of organic cotton - it is biodegradable and fully disintegrates. The naturally occurring anti-bacterial fluid is extracted from discarded seeds (natural agri-waste) and applied on the mask, which is a non-toxic, bio-organic chemical.
There continues to be a change of mindset not only with our production team but also with rewriting our fabric manufacturing process. For example, we are learning how to deal with the bio-organic fluid to apply on textiles. The process is relatively arduous, but we have very well-trained technicians and staff that work together in making things work.
You started with your factory in Vietnam few years back. How is that going to improve your business prospects and manufacturing capability?
Vietnam is an outsource partner and we continue to partner them on products suitable for their production lines. Other than Vietnam, we do also have facilities in Cambodia, Indonesia and Malaysia and we allocate production based on the product types and efficiency.
What is your production capacity for knitwear products annually?
70 million pieces per year.
What are your future plans?
We do have a 3 years plan and are currently revising it due to some disruption as a result of Covid-19. (PC)
Do you want to add in more manufacturing units in future? Will they be outsourced again?
Yes we have considered adding more manufacturing units and some may be under outsourced arrangement. As a group we are also exploring other countries of production. But for now we are holding any expansion plans to continue monitoring Covid- 19's global impact.
What kind of innovations are you trying to bring into your garment business?
Automation of the garment manufacturing and digitalisation of the ordering process is what we are working at.
What kind of market study do you do to understand current trends and consumer tastes?
Not applicable at this juncture as the Covid-19 pandemic has disrupted the trends. However, we have very close connection with our customers to understand their needs and try to change our operations to adapt to the changing environment.
How has the worldwide Covid crisis hit the Singaporean garments industry? Which are the immediate concerns?
Due to the unprecedented Covid-19 pandemic, some of our customers have requested to postpone the orders and to hold the shipments. This has resulted in suspension of some of the production in our factories. As some buyers have stopped or halted developments and order placements, it has impacted our sales revenue.
Diversification of product risk and having country flexibility are the key concerns to ensure that the supply chain is not disrupted. We can see a great shift of production bases outside of China and leveraging on lower cost countries with abundancy of labour.
Have you quantified your projected losses?
Currently we do not foresee any significant loss as a result of Covid-19. US orders are slowly resuming due to promising retail sales as stores open gradually.
What steps are you taking or have taken to face the challenges like order cancellations?
Thankfully, we did not have to deal with order cancellations and have not felt any impact in terms of ordering and delivering of goods yet. Some of our customers have asked for flexibility with their orders. As long-term partners we understand their needs and have chosen to weather the storm together with them. What we have done for our customers is to hold the shipment of goods. We have adapted to a "hold and flow" system - this means that if an order is meant to be shipped in March, but our customers do not want to receive the goods in March, we can hold on to their goods till April or May. So instead of having to face order cancellations, we have had to move delivery schedules to accommodate our customers.
Ghim Li has offered our empathy and solidarity to the fight through against Covid-19 pandemic with our customers as partners and will continue to be their long-term partners. We believe in offering our assistance and flexibility to our customers during this unprecedented global pandemic. Within our financial means, we will have to, with good reasoning of our risk management protocols, offer assistance to our customers to support the amount of merchandise they will need in their stores when retail eventually opens especially in US.
This will help to build lasting partnerships and secure long-term relationships with our key customers amidst this crisis. It is of upmost importance that we understand the difficulties of our customers and why they need to make such difficult decisions in order to survive in the long run. Ghim Li is an old vendor for most of our key customers and this makes it even more imperative that we support them fully when they need us the most.
