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CEO at Top Nike Supplier on Keeping an Eye on ‘What’s Around the Corner’

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

Suren Fernando is no stranger to uncertainty.

When he became CEO of MAS Holdings Ltd. in January 2020 as the first non-family member to take up the mantle, Fernando very quickly had to figure out how to steer one of Asia’s biggest garment manufacturing powerhouses through the Covid-19 sourcing shakeup.

As the situation started improving in 2021, the island nation of Sri Lanka where MAS is based then faced escalating confusion from one of the worst economic crises in its history, fueled by a steep drop in foreign exchange reserves, and an energy meltdown as petrol and gas reserves are running on fumes. Political chaos and growing resentment have added fresh layers of uncertainty in recent weeks.

Meanwhile, an industry that exported $5.4 billion worth of garments and textiles last year is grappling with the power shortages and increasing raw materials prices but continues to play an important role, bringing in business and much-needed foreign exchange. Over the past three decades, MAS Holdings—founded by the Amalean brothers Mahesh, Ajay and Sharad—carved out a niche producing high-quality lingerie for brands like Victoria’s Secret, Triumph and Marks & Spencer.

Driven by the global shift toward casual attire post-pandemic, the company too has been leaning toward athleisure, swimwear and sportswear.

MAS now operates more than 40 manufacturing facilities in 16 countries, with more than 115,000 employees.

Fernando, who holds the $2.4 billion conglomerate together with a quiet confidence, was previously chief transformation officer, and CEO of MAS Intimates, the company’s largest division. He spoke to Sourcing Journal about how the manufacturer continues to manage through an increasingly unpredictable climate. This interview has been lightly edited for clarity.

Sourcing Journal: With all the global uncertainty and volatility, compounded by the present situation in Sri Lanka, how much is business being impacted?

Suren Fernando: Thankfully, up to now it has not been a major factor because we have been able to carry out our operations with minimum disruptions. With exports being a crucial pillar of the country’s economy, the government has extended their support to ensure that the apparel and textile exports are now categorized as an essential service, faces minimum disruption.

We have been able to continue our operations and live up to our customer commitments—while staying very open and transparent in keeping them updated. They have confidence in us and we have worked diligently to ensure that we maintain the same.

We continue to monitor the situation very carefully. If we continue to have challenges in interrupted power or even in securing coal—if there is some form of civil unrest—it could impact our businesses and the industry.

SJ: Does being one of the largest textile and apparel suppliers in Asia actually mitigate the challenges for you in the short term?

SF: If we look at the current context, one of the biggest challenges we are facing is that with so much going on around the globe, and also the situation in Sri Lanka at the same time, we have to remember to take a longer-term view and consider the potential situations that might impact the business in the next three, five or 10 years.

At the same time, we have to be very mindful about what’s around the corner.

Balancing both views becomes a key challenge–there is so much that goes into the here and now, that if you’re not mindful of it you can get pulled into spending more time in resolving the immediate issues. It is important not to get blindsided to what might happen in the medium to longer term.

SJ: How about in terms of the energy and power: how hard is it to manage?

SF: It is becoming extremely challenging even though we have been able to secure fuel for our generators and secure fuel for our transport providers to transport raw materials and finished goods without much disruption. We have been able to buy fuel directly from certain parties and secure some storage capacity that we can pull from and utilize for our generators. However, if the shortages get more acute or things take a turn for the worse then our operations will be impacted.

Suren Fernando has CEO of top Nike apparel supplier MAS Holdings since the start of the pandemic. Here's what he's learned in two years.

Suren Fernando

SJ: How do you see the shift in business in the past two years? Has the focus on innerwear declined?

SF: There was a dip in our turnover in 2020, but in 2021 we were able to bounce back and get back to pre-pandemic levels, and this year we are looking at a further 20 percent growth from where we ended last year. The majority of the growth is coming from the apparel and sportswear sectors.

Lingerie counts for approximately 40 percent of our business now, with sports/athleisure and swimwear about 50 percent. During the pandemic we saw very healthy growth in certain product categories, including sportswear and leisure wear since most people were working from home and going more casual so these sectors grew quite significantly.

SJ: MAS has a global footprint. Does that make it easier to avoid sourcing bottlenecks?

SF: MAS has manufacturing locations that cover the globe from East to West to mitigate risk. They have varying levels of capability and duty benefits to specific locations—both traditional Western markets and to growing Eastern markets.

We are very clear what value we can offer from the specific locations in our global manufacturing footprint. These locations are strategic due to proximity to customer markets or due to the trade agreements especially with U.S. and Europe.

We are very clear about the unique value we can offer our customers from each country.

SJ: You’ve been working on building in-country verticality…?

SF: Over the past 18 months, sourcing post-pandemic raw material from different locations has been seen as a challenge due to global logistics demand outweighing supply, causing our lead time to extend and costs to increase. We are very keen to develop a robust and sustainable supply chain ecosystem, to be able to source raw material closer to where the garment is being manufactured. This has been a major factor to consider as we build more in-country verticality.

SJ:  What have been some of the other challenges?

SF: We have also seen a considerable increase in freight costs as well as in lead-time in the recent past which affect cost competitiveness. The factories are forced to cope with the considerable delays in shipments which are mostly known only at the last moment.

We also see challenges as more and more of our customers are shifting to sustainability and ethical sourcing. The imperative to rapidly build sourcing bases that are aligned to these priorities is needed more than ever.

SJ: The expiration of the Multifiber Arrangement in 2005 raised fears that countries like Sri Lanka would lose out to cheaper manufacturers like China. Are manufacturers in Sri Lanka/Asia working together for more strength?

SF: There are cheaper manufacturing locations than China, however, the value proposition that each location offers is different. Sri Lanka is one of these locations that offers a differentiated value proposition and is still more cost competitive than parts of China.

Asian manufacturers are actively collaborating now to solve specific problems unique to the industry’s expansion. MAS is a prime example of this—exploring partnered capacity options in both apparel manufacturing and even sourcing, to leverage on the benefits of in-country verticality.

SJ: MAS Kreeda, your company’s exclusive partner for Nike, has more than a dozen manufacturing facilities. How is this business transforming?

SF: Kreeda is one of  Nike’s largest suppliers with approximately 11 percent of Nike’s apparel share and considered a strategic partner to them. It is the only one in Nike’s supplier base to do apparel, bra and engineered knits and the sole supplier for engineered knit. In terms of duty free we have Jordan for the U.S. market, Sri Lanka for Europe and Indonesia for China. Through this we are serving Nike’s biggest markets and our target is to provide 50 percent of the product duty free by 2025/2026.

SJ: When you took over the role of CEO, it was said to be a new era for MAS. With all the challenges of these past years, has it led to a faster burnout for you?

S.F: The biggest learning for me was having to navigate what was yet to come. I had no clue when I took over that three months down the line we were going to face the biggest crisis that the world was ever going to face. Despite that, I do believe that as an organization, we have been able to navigate through these challenges successfully.

Even though MAS is a family-owned company it has always been run by professionals, so in essence we are a professional outfit which happens to be family owned.

I took over as CEO of  MAS Holdings in the beginning of 2020. It was a smooth transition into this role. I have worked with the organization for 23 years, and it was a well-thought through move. One of the prerequisites when you have taken a job as the CEO is that you do not have fixed working hours, sometimes it is 24/7. You may have to check with my wife…but I feel I have managed my time quite well. Work-life balance is important to me, and I try to take time off over the weekends and spend time with family. This goes a long way in avoiding burnout, which doesn’t help one’s self or the organization.

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