Interviews

Interview with Mr. Riad Mahmud, MD Shoeniverse Footwear Ltd, only LEED Certified (Gold) factory in Bangladesh

SHOENIVERSE FOOTWEAR LTD (SFL) started its journey in the year 2017 as an export oriented “GREEN” production facility. Located in Mymensingh of Dhaka division, SFL is the first & till now the only LEED Certified (GOLD) factory in the footwear industry of Bangladesh.It is an affiliate of the National Polymer Group (NPOLY).

Headed by Managing Director Engr. Riad Mahmud, SFL is capable of producing 100 thousand pairs of shoes per month.Their product range includes Leather & Synthetic Footwear. From its inception, SFL has ensured an ethical, safe & friendly workplace for its employees which is its main impetus for going forward with inhouse training facility to develop workforce. With 800 worker strong workforce they have in-house Medical facility, Child Care, Training center and Canteen facility for the benefits and development of workers and management staff. With own capacity & with the assistance of parent organization LFMEAB’s training program SEIP they are continuously trying to improve skills to satisfy clients needs.

They create own innovative designs to clients besides facilitating clients to develop their own designs as well. Production Facilities include machinery from Italy, Taiwan and China with Cutting Lines: 02, Sewing Lines: 04, Lasting Lines: 02 Rubber Sole unit: 01, Bonded Warehouse: 01 with in-house capacity for Product development, Screen printing, Lamination & Back-up power supply of 785 KVA. .Compliance requirements applicable in Bangladesh are met. Also apart from LEED (GOLD) certificate, they are on-course for BSCI and ISO 14001:2015 certification. Factory has latest fire-detection and protection systems with regular drills on fire fighting and first aid. With the help of association (LFMEAB) they have enrolled to “Risk Assessment Training Program” to implement and ensure Occupational health and Safety management system.

In a wide ranging interview with www.leatherbangladesh.org Mr. Riad Mahmud, Managing Director of Shoeniverse Footwear Ltd spoke on entry into footwear sector, their strategy going forward. Here’s an Except :

Q : How did you choose the footwear sector as a diversification option ?
A : National Polymer (NPoly) Group is a publicly traded group and we mainly operate in the local market for the plastic sector,but we were looking to diversify into the export sector. The largest export sector in our country is RMG sector but has become so mature that even if you enter now, the existing players have significant learning curve ahead of them. In the last one and half to two years what we have observed is that there is lot of exodus from China into Bangladesh. So we investigated and found out that the wages in China are rising and there is scope for manufacturing labour intensive shoe assembly in Bangladesh.

We looked at the sector and checked whether this sector matches the constraints of our country or can overcome it. One of the constraints of our country is energy and we found out that footwear sector is not energy hungry sector. Second reason is because we saw exodus from China to either Vietnam, Cambodia, Myanmar or ours we can definitely get a share. Now, footwear sector is in a nascent stage, there are one or two larger players which cannot be defined as the definition of the sector. So my thought was that the wave at this point of time is very small, so if we enter the sector now we can be on top of the wave when it raises if we can handle the game we can rise with the wave. Hence the decision of coming into the footwear sector.

Q: Having identified Footwear as the entry sector how did you further decide about the strategy?
A : Having decided the sector, now the question was how and where are we going to position ourselves in the footwear sector. We scanned the environment and saw that the market rather the buyer community of footwear has steadily moved into looking at compliant factories and issues related to it, which existed in the garment sector. So it is only a natural progression that all the compliant issues will apply to footwear sector as well for the larger buyers. That is why from the very beginning we made sure to make investment into compliant building leading into the idea of LEED Gold Certified Factory.

Q : What has been the learning so far?
A : Now that we have made it, our experience has been that in the first 3-4 days of our commercial production some of the larger buyers through their market intelligence already knew that a large plant with such capability has come online. So within 3-4 days we did a jobwork for CCC four months ago and their technical experts were in the factory to monitor quality and related aspects. We executed that order successfully. When that production was going on Deichmann came over saw the production facility in action. We had a conversation with them and we have started with they synthetic shoes. We started with two lines and found out that the kind of quality they were looking from us initially is not going to cover in two lines so we immediately expanded with additional 4 lines. So all our four lines are booked for Deichmann.

Q : What is the productline you are focusing?
A : We offer the complete range.At this point our strategy is to go for high volume low margin. The reason for that is to build up the productivity capability, to make the workers fingers get used to the pace and to them to get used to fast production, because if we go for higher margin and lower volume there will be a comfort factor built into the worker from the beginning. It is very difficult to go from lower productivity mindset to higher productivity, but if we have higher productivity then we can be flexible. To sum it up we have 4 lines currently and 4 more lines will be ready by mid February.

Q : How was the response at maiden edition of BLLISS 2017?
A : My expectations were exceeded and what I found out was that the volume players, the bigger players who look at compliance issue as a non-negotiable factor, they did their market research and they all came and had serious discussion. So far three to four large volume buyers we are talking about capacity issues and when it is going to be set up, short to medium term capacity enhancement issues. We are talking upto that specifics where they are showing us their season how much they have, for example a particular company has season 8 and season 9 and we are talking about how much samples we can do for season 8 and when our new capacities will come up how much of season 9 we will be able to absorb etc.,.

Q : How was the response at maiden edition of BLLISS 2017?
A : My expectations were exceeded and what I found out was that the volume players, the bigger players who look at compliance issue as a non-negotiable factor, they did their market research and they all came and had serious discussion. So far three to four large volume buyers we are talking about capacity issues and when it is going to be set up, short to medium term capacity enhancement issues. We are talking upto that specifics where they are showing us their season how much they have, for example a particular company has season 8 and season 9 and we are talking about how much samples we can do for season 8 and when our new capacities will come up how much of season 9 we will be able to absorb etc.,.

We had a long talk with H&M and Timberland and a fruitful talk with Sears. Each of them spent long time looking at particularly couple of things, compliance issues which they were statisfied and the capacity issues. I knew that this issue will come up even before the fair, because our current building can accommodate only 4 lines. So if they wanted to give us trial quantity, it will be very hard for us to accommodate that. So before even coming to fair we already put on our an expansion plan looking at the market mood. Our second building is designed in such a way that it can house 12 lasting lines. To start with all 12 lines will not be installed and it can be built in modules. So our next phase of expansion which we have already started is one single module of steel structure building which can house 4 lasting lines and couple of lines we will give to H&M and in the meantime there are two lines empty things will fill up. Once those lines come up and things are going smooth if we get good intake of workers and feedback is good, we will add four more lines.

Q : Apart from volume buyers were there any other kind of buyers who visit your booth?
A : Yes, of course, I had french buyers who were looking for both high end and low end shoes but there was a pricing issue with them. I have told them that after the fair we will work something out because I want to keep the Channel open.

Q : Any other suggestions on BLLISS?
A : I think as a first effort it is a success. Going forward we would like to have more market intelligence on what is the trend in the market so that we are better prepared to cater to the needs of the market.

Q : Going ahead, what is your marketing strategy?
A : Our strategy as i said and i am sure it is not going to be easy as there will be a learning curve effect. Our target is to go for 16 lasting lines using the high volume low margin strategy.Once we get to that critical mass we believe that we will have a set of workers who will be highly quality conscious and fingers will be very much accustomed to other issues. Of course in this fair we have met other customers who are willing to give higher margin but high quality. We will dedicate couple of lines for such products.

 

Q : What is the ratio between leather and non-leather?
A : In the first two years it will be difficult to predict.It will be a mix based on demand. To be precise based on the capacity utilisation of the machine. I dont want to keep a single lasting line empty even for an hour. If a leather order comes up and I see one of our lines is vacant will put it in there.