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Esquel group

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by

Sheena Fong

on 1 November 2016

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Transcript of Esquel group

Esquel's Supply Chain
Case Study:
Integrating Business Strategy and CSR

MS4306: Best Practices of OM
Background Information
1978
1988
1994
2000
Present
1978- 1988
China-- Economic Reforms
Quota System
Private companies-- not allowed to produce for the U.S. market
Difficult to capitalize business opportunities
Grew towards other Asian countries
Invested in garment factories and joint ventures
Contracted finished goods like yarn, fabric and garment
Expanded and operated more steps in SC
→ 1984--Set up own knit factories
→ Improved its quality of output
→ Entrenched company’s position in China

1989- 1994: Development in Gaoming
Extensive land supply
Legal-residence registration for migrant workers
Located in the heart of the Pearl River Delta
Promising economic future
Invested in the woven, knit and weaving mills
Provided standard living conditions for labors
→ Gym facilities, libraries
→ Attract talents
Built low-emission coal-fired power station

1995- 2000
1995: Margie became the Chairperson
Focus on CSR
Emphasize on quality product
Deliver value-added products, sell premium-priced, quality goods
→Still can gain an impressive profit under quota system
Improved productivity by
1. Invested in technology
RFID system
Modern industrial engineering and management technology
2. Adjusted piece-rate response
3. Improved working conditions

Vertical integration
→ Flexibility to move production, stable quality and better cost control

Started cotton farming in Xinjiang
→ Produce high-quality ELS cotton
→ Ensure stability and lower costs

Emphasized on CSR
→ Philanthropic and social programs
Time Line
Shirtstop
2008
8 shops
Casual and urban style
Started Esquel Accessories & Packaging Division in 2003
Different projects to benefit the society


HIV/AIDS education programs, micro finance projects
2000–Present: Developing a Business Strategy and Making a Difference
Expand Its Business and Benefit the Society
Largest yarn-dyed woven cotton fabric manufacturers

Mission: To be the best cotton shirt partner

Family-owned garment business

Current Chairperson-- Marjorie Yang

Established in 1978, founded by Yuan-loong Yang

In the beginning: Small office in HK, 1 garment factory in Malaysia

Now: Produce 110 million shirts per year

Major Customers
Background of 1978- 1988
Esquel's Actions
Favorable Conditions in Gaoming
Esquel's Actions in Gaoming
Background & Esquel's Core Values
Esquel's Actions
Current Retail Stores
Esquel's Supply Chain
In-house production

Shorter order cycle time
+ Greater degree of independence in operations
= Improve response time

Favor Research & Development
Strengths
Vertical supply chain integration
enables quality production
Quality & Profitability
Geographical Advantage
Strengths
Strengths
Factories in Gaoming & offices in Hong Kong
Logistics network in Inner Pearl River Delta
Facilities in coastal areas favor export
Positive Image
Labor cost:
Bangladesh $1.52
China $2.28
Total costs:
Bangladesh ~$12
China $11.15
Corporate Social Responsibility Department

"5 e-Culture": Ethics, Environment, Exploration, Excellence, Education

Suppliers are required to meet environment standards

Investment in human resources &
infrastructure in areas where Esquel operates
Weaknesses
Vertical supply integration as a double-edged sword
Strengths
Sustainability
Business:
Provide staff with
dormitories, equipped with gyms, libraries, internet access
Migrant workers may obtain legal-residence rights
Environment:
Gaoming: low emission coal fired power plant; waste water treatment facilities
Xinjiang: fewer pesticides used; drip-irrigation technology
Geographically dispersed supply chain

Greater financial burden

Higher operating costs

Inflexible capacity

Political threat: anti-Chinese riot in Vietnam (May, 2015)
Weaknesses
Weaken flexibility in development
Esquel is well-known in CSR

A major employer & supplier of a portion of local electricity

Image will be damaged if support funding reduces

People and Government may feel disappointed

Lower flexibility in decision making

Work with the Chinese Government
Margie entered the Chinese Government
Proposed mutually beneficial business and social policies
Helped achieve a harmonious society
Reduce class and regional differences
PYE
1990
6 shops
Premium cotton apparel line
King Duck
Chan Ying Lam 54029115
Fong Wan Ting 54028432
Sin Kwan Lok 54029385
Kwok Ho Yeung Henry 54031786
Lam Chung Yeung 53909655

Thank You
Full transcript