Business operations

(Individual Assignment)

∂ Student Name : Hajara Saleeth

(CB003287)
∂ Intake : DF08A2BA
∂ Module Code : ABUS005-3-2-BOP
∂ Lecturer : Mr. S.C. Kaluarachchi
∂ Submission Date : September 22, 2009

Asia Pacific Institute of Information Technology,

Sri Lanka
BUSINESS OPERATIONS INDIVIDUAL ASSIGNMENT

Table of Contents

Acknowledgement...........................................................................................................................3

Introduction......................................................................................................................................4

Process Strategy…...……………………...…….…………………………………………………5

Location Strategy……………………….…………………………………………………….…...7

Operational Technology………………..………………………………………………………….9

References…….………………………….………………………………………………………11

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Acknowledgement

I would like to thank my Business Operations lecturer Mr. S. C. Kaluarachchi for the guidance
and assistance provided. Without his guidance, all my efforts could have been useless. I would
like to thank the non-academic staff of Asia Pacific Institute of Information Technology for
helping me with various issues during the project. I would like to thank the CEO of Koggala
Garments Private Limited Mr. Leroy Fonseka, HR Manager Mr. Jayasena, Production Manager
Mr.Nilantha Gunasekara and other employees for their valuable support rendered towards me in
gathering information. I like to thank my dear family for their valuable advice and as help given
to me at all times. Last but not least we thank my friends at APIIT for always giving me a
helping hand.

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Introduction

I was given the task to analyze certain aspects of a manufacturing firm for the Business
Operations Individual Assignment and I chose Koggala Garments Private Limited (KGL) which
is located in Koggala Export Processing Zone in down south.
KGL is a member of Hoodvian group which is owned by Mr. Mallik Samarawickrama who is a
leading political figure in the country. Hoodvian Group has many other subsidiaries such as
Continental Apparels (PVT) Ltd, Galle and Kaduwela and so on.
KGL produces garments and exports to USA and European countries such as UK and France.
KGL is a BOI (Board of Investment) approved organization which receive many benefits related
to BIO status. Currently KGL is managed by Mr. Leroy Fonseka who is the CEO and his
subordinates.
I visited the organization and analyzed the facts based on 03 main topics,
1. Process strategy
2. Location Strategy
3. Operations Technology

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Process Strategy of KGL

Process strategy refers to “An organization’s approach to transforming resources into goods and
service” (Kaluarachchi S C, 2009) There are 04 types of process strategies adopted by
organizations.
1. Process focus
2. Repetitive focus/ Assembly lines
3. Product focus
4. Mass customization

According to my observations KGL operations are taking place based on a repetitive focus.
Repetitive focus of production means “a type of industrial production in which
prefabricated, interchangeable parts are used to assemble a finished product” (Wise Greek,
2009). What this means is that assemblies made previously and modules are combined to a many
output options and few new modules can be added in the assembly line. Assembly production
involves moderate variety of product and moderate level of production volume when compared
to high and low volumes.

When a garment is produced at KGL, the parts of the garment is made separately and assembled
at the end. As an example if a shirt has to be produced, the collars, hands, pocket, front side of
the shirt and the back side of shirt are produced separately and assembled at the end. Meanwhile
buttons will be attached.

Due to this assembly line production strategy they enjoy economies of scale. The machine
operators get specialized by producing the same component over and again and the time they
take to produce a certain component gets reduced. This will lead to higher efficiency and cost
benefits by reduced reworks and wastes.

In the production process they use different types of product design technologies. They use
computer software called PRO PLAN to design their products according to customer

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requirements. This can be identified as a use of Computer Aided Designing (CAD). This
software has the ability to design the product, view the product in 3D model and assign their cost
of material, labor and overhead cost to the product and calculate the total product cost. And this
also gives the opportunity to alter designs and generate their costs and compare those new
product designs with previously made designs.

The cutting fabric is done using a computer controlled machine. This computer has software
named PRO CUT which controls the cutting process and it is considered as a more effective way
of cutting fabric than using manual labor and cutting machines. This process can be identified as
a part of Computer Aided Manufacturing (CAM) and also the software called PRO MAN
generates necessary reports and identifies loopholes in the production process by calculating
efficiency of production. PRO PLAN, PRO MAN and PRO CUT are the sub components of the
software PRO SUITE which is commonly used by manufacturing organizations.

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Location Strategy of KGL

Objective of the location strategy of the KGL is to maximize the benefit to the firm by its
location and they have adopted a cost focus strategy. The cost focus strategy was adopted as
there will be no huge variation of revenue due to changes in location as they have fixed
customers with fixed demand. So that they try to achieve cost advantages over the location
There 03 major aspects of deciding the location for a production plant such as:
1. Country decision
2. Region decision
3. Site decision

• Country decision
Since KGL is a Sri Lanka based firm which was found by Hoodvian group they did not have to
consider about choosing a country for establishing production plants and it was decided as Sri
Lanka.

• Region decision
When comes to region selection it was mainly affected by the corporate desire to locate the
production part in a southern part of the country as the founder Mr. Mallik Samarawicrama
deserved to develop his home town which is Galle. Another reason for choosing Galle was the
availability of labor which is critical success factor in garments manufacturing. There is access to
labor at a lower cost as there are females who have given up their higher education and seek for
job to back their poor families.

• Site decision
Finally they have decided to locate their production in Koggala Export Processing Zone. (EPZ)
This site has provided them unique advantages which are available only to production plans
located inside EPZ such as:

o 15 years income tax release granted to promote the EPZ.

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o 100% duty free on raw material imports granted to promote the EPZ.
o Availability of utilities provided by Board of Investments such as
 Bitumen surfaced road
 Electricity supply of 20MVA through grid sub-station
 Water supply of 1.35 million liters (300,000 gallons) per day generated from wells.
 Communication facilities such as 400 lines stored program control exchange for
local calls, IDD and Fax
 Security services provided by BOI where every person entering the EPZ is
checked and verified (using IDs and Gate Passes)
 Fire equipments
 Administrative services provided by BOI office located inside EPZ

o No Custom checking on imports, instead verification of BOI officers at the production

plant itself and direct shipment to the customer.

o Access to transportation modes such as

 Road ways- situated in the Galle-Matara main road which and there is a bus
terminal built by the National Transportation Commission for the use of the
workers of EPZ.
 Railway- located by the side coastal railway line which runs from Colombo to
Matara
 Sea way- Galle harbor is used for shipments which is located 16km away from the
EPZ.
o Labour disputes are resolved by the Board of Investments (BOI) of Sri Lanka.
o Labour supply from the job bank BOI.

All these facilities are granted by BOI for the use of all apparel manufacturers who located inside
EPZ and this can be identified as Clustering where competitors get together and share resource.

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Operational Technology of KGL

When it comes to the information systems of the KGL it is central server which is run by the
Head office of the Hoodvian Group which is located in Kaduwela. They use remote access
facility of Windows XP to connect with the central server to upload details of day to day
happening at KGL and retrieve any other necessary information. Depending on the level the
authority information needs are fulfilled but there are restrictions on access to sensitive
information and password protections are used. This is a centralized information system where it
is maintained by the Head Quarters of the Hoodvian group and managers and other employees at
branches i.e. production plants and offices get access to the information by entering their use
name and the password.
The total information system is run based on an EPR system. ERP systems is “a system that
integrates (or attempt to integrate) all data and processes of an organization into a unified
system.” (CAMS Three River Systems, 2008)

They currently use Microsoft Navision as their ERP system and they have made an huge
investment to purchase this off the shelf software. “Microsoft Navision is designed specifically
for medium-sized companies seeking one solution to help increase productivity without
disrupting everyday business operations. It delivers integrated functionality to support solutions
for Financial Management, Supply Chain Management, Customer Relationship Management
(CRM), E-Business” (Microsoft Business Solutions, 2004) This software records procurement,
sales, material availability and all other information such as payroll and leave system of KGL.
Data entry operators at KGL enter data into system regarding purchases, material received,
material used, sales and other day to day activities. This will build up the transaction processing
system (TPS) which would then build up DSS (decision support system) and the MIS
(Managerial Information system) for the use if top management and middle level management.
But the main focus installing Microsoft Navision is to control procurement and control
relationships with suppliers.

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Apart from this KGL uses an EDI (Electronic Data Interchange) system to have contacts with
customers.
EDI is defined as "exchange of business data from one organization’s computer application to
the computer application of a trading partner".( Freeway, 2005) KGL uses an application built by
EDI Sri Lanka Limited REDI-to Wear which is a special EDI application developed for garment
manufacturing firms. “Based on principles of EDI this solution allows garments to communicate
with all their entire commercial documents electronically with their Asia Suppliers, effectively,
accurately in a timely manner.” (EDI Sri Lanka, 2009) This is a mandatory requirement when
dealing with buyers from UK and USA as those buyers use availability an EDI system as criteria
for selection in choosing suppliers.

Word Count: 1547 Words

References

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• CAMS Three River Systems, 2008, “Academic ERP Terminology”, [online], Available:
http://www.threerivers-cams.com/Resources/Terminology/tabid/96/Default.aspx,
[Accessed on: 20th of September 2009]

• EDI Sri Lanka, 2009, “http://www.edisrilanka.com/services/profile.pdf”, [online],

Available: http://www.edisrilanka.com/services/profile.pdf, [Accessed on: 20th of
September 2009]

• Freeway, 2005, “A simple Definition of EDI (Electronic Data Interchange) from

Freeway Commerce”, [online], Available:
http://www.freewaycommerce.co.uk/define_electronic_data_interchange.html ,
[Accessed on: 20th of September 2009]

• Kaluarachchi S C, 2009, Business Operations, The lecture notes distributed on the topic
Operational Concern I” at Asia Pacific Institute of Information Technology, Colombo on
August 2009

Microsoft Business Solutions, 2004, “Microsoft Business solutions–Navision”, Microsoft

Corporation, Denmark

• Wise Greek, 2009, “What is an assembly line?”, [online], Available:

http://www.wisegeek.com/what-is-an-assembly-line.htm [Accessed on: 20th of September
2009]

Interviews with:

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Mr. Jayasena, Mr. Leroy Fonseka,

HR Manager, CEO,
Koggala Garments (PVT) Ltd, Koggala Garments (PVT) Ltd,
EPZ, EPZ,
Koggala. Koggala.
091-2283472 091-2283469

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