OM Assigment_Hemas PLC

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ACKNOWLEDGEMENT

This page was reserved to gratitude for various individuals who; supported

and provided the valuable information to success my study area. I wish

convey my special thanks to all lecture, who gave me conceptual knowledge

at the class room regarding research methods. Secondary, I am thankfully to

ICBT campus for the coordination of this assignment.

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EXECUTIVE SUMMARY

Hemas Holding PLC, serving the Sri Lankan nation with its wide range of

products and services, this giant took a strategic move which report describes

how the Group moves to the next phase by development, through the

acquisition J.L. Morison Son & Jones (Ceylon) PLC and as a part of a

managed succession plan, welcoming new Chief Executive Officer Mr Steven

Ender by to the Board (Hemas Annual Report, 2014).

It is evident that Hemas Holdings PLC has made it global foot print with its

existing product and service portfolio and currently experience the challenges

made by its competitor such as John Keels Holdings Ltd, Unilever Sir Lanka,

Nature's Beauty Creations (NBC), Aitken Spence hotel holdings plc etc in the

domestic market.

With its leading flag ship products such as “Baby Cheramy” the branded

which has win the Sri Lankan mothers’ trust for over 50 years Hemas

Holdings PLC, has now entered in to a new era of services with its existing

shared services solution branded as “Vishwa BPO” has shown the diversity of

the group via its investment in all main five business sectors. Hemas Holdings

PLC is succeeding the operation and becoming more and stronger than ever

via its Operations Management tactics.

The operation management aspect of the Hemas Holdings PLC is visible

through its operation strategy which would be discussed in detail in this report.

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Table of Contents

ACKNOWLEDGEMENT................................................................................... ii

EXECUTIVE SUMMARY................................................................................. iii

INTRODUCTION..............................................................................................1

Hemas Holdings as it stands now....................................................................2

TASK 01: Importance of a strong operation strategy and how it has impacted

Hemas to capitalize global opportunities..........................................................3

Task 2: Identification of major business processes in Hemas Holdings and

elaborate them using standard process management tools and diagrams......8

2.1 Quality Management...............................................................................9

2.2 Inventory Management.........................................................................10

2.3 Customer Management.........................................................................12

2.4 Supplier Management...........................................................................13

Task 3: Analysis and proposing the improvements/changes to business

processes of Hemas.......................................................................................14

Task 4: “New Product/Service Development” process in Hemas...................17

CONCLUSIONS.............................................................................................19

RECOMMENDATIONS..................................................................................19

REFERENCES...............................................................................................23

APPENDIX.....................................................................................................26

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INTRODUCTION

Operations Management is expressed as the activities which produces and

delivers products and services to the end user (Appendix 01). Operation

management is also defined as “The Management of the conversion of

process, which converts Land, Labour, Capital and Management inputs into

desired outputs or goods and services (Adam el al., 1996: p. 06). Considering

the emerging Sri Lankan Economy after the war ceased in 2009, currently the

growth rate in GDP terms is at 8.2 (Appendix 02) and it is evident that rise in

Sri Lankan GDP had been impacted by the efficiency of Operation

Management aspects as it emphasis on utilising core economic factors in

delivering product and services to the market.

Operation management has made it presence in the modern era as a

management concept which enriches technologies to increase productivity

while reducing costs, enhancing flexibility to meet rapidly changing needs and

wants of the customer base, in catering quality product and services. The

author explains the concept of Operation Management in this report

segregating the report in to four main sections of in the context of Hemas

Holdings PLC:

Importance of a strong operation strategy to capitalize global

opportunities.

Identification of major business processes in Hemas Holdings and

elaborate them using standard process management tools and diagrams.

Major business processes can be identified from the areas such as

“Quality Management”, “Inventory Management”, “Customer

Management”, “Supplier Management”, etc.

Critical analysis of and proposing the improvements/changes to the

processes mentioned above in Hemas Holdings PLC, in the view of

“Process innovation and improvement”.

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Description about the “New Product/Service Development” process in

Hemas Holdings PLC while benchmarking the current practices with

leading practices in the industry and recommending required changes.

Hemas Holdings as it stands now

Since 1948 for over sixty five years Hemas Holdings PLC has been one of the

Sri Lankan nation’s fastest growing blue-chip conglomerates with a Market

Capitalisation of Rs 19,426 Million (Appendix 03), Hemas Holding PLC has

diversified its business in to sectors such as FMCG, Healthcare, Leisure,

Transportation, and Power which

would enable the organisation to

face the global down turns while

converting threats in to

opportunities.

Hemas Holding PLC started its long and continuing business in the heal care

industry which now delivers an award-winning range of diversified products

and services to all Sri Lankan consumers expanding its growth which is not

restricted to this paradise but also to the dynamic global market embarking its

global presence despite the challenges it has face. Through its business

sector of Healthcare, Leisure, Transportation, Power generation and a broad

portfolio of reputed FMCG products, Hemas Holdings PLC proudly serves its

wide span customer base not only via products but also services over a

million loyal customers daily. In the present day Hemas Holdings PLC is

evolving in numerous exciting ways empowering the immerging Sri Lankan

economy.

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TASK 01: Importance of a strong operation strategy and how

it has impacted Hemas to capitalize global opportunities

Operation Strategy is the direction and scope of the organisation over the long

term (Johnson et al., 2008). Reid and Sanders (2010: p. 22) define operation

strategy as “a long-range plan for the operations function that specifies the

design and use of resources to support the business strategy”. Accordingly, it

is clear that operation strategy is important in Implementing, supporting, and

driving business strategy. Operation Strategy would engage in action taken in

Operation Management in order to succeed in the operation for the

organisation. Operations Management is the idiom used to explain the

concept consisting of activities which produce and delivers products and

services to the customers.

It has become a “MUST” to all types of organisations to focus on operations

management since all organisations produce some mixture of products and

services. Though that in many organisations the term ‘operations

management’ will not be used the efficiency and the productivity which would

become their strength in the eventuality due to an optimum level of operation

management. In many smaller organisations operations management may be

done by people who perform many other types of task such as marketing and

accounting.

Operations management is important. The decisions it makes have a major

impact on both the cost of producing products or services and how well the

products and services are produced and delivered which has a major impact

on the revenue coming into the organisation. So, operations management has

an important impact on both revenue and cost and therefore profits. This also

applies to not-for-profit organisations. In a local government service, for

example, good operations management can produce services which satisfy

the community and are produced efficiently. So the community are getting

value for money from their local services.

The strategic importance of operations strategy and its impact on Hemans

capitalising global opportunities can be analysed as follows:

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Health care sector: As a part of operation strategy, Hemas Holdings PLC

recently acquired J.L. Morison Son & Jones (Ceylon) PLC referred as

JLM, which is an iconic organisation in Sri Lankan Healthcare industry.

This is evident that Hemas Holdings PLC has taken strategic move in

growing the Healthcare industry via this global famous brand (Hemas

Annual Report, 2014). This would also shows the progress of Hemas

Holdings PLC as Healthcare sector has become its “Cash Cow”, earning

revenue of 34.4% of its total revenue for the financial year ended for

2013/14 (Figure 01).

Figure 01: Revenue Mix

As a part of Hemas’s operation strategy, it is looking forward to utilise its

core strength of island wide market leading pharmaceutical distribution

Knowledge in distributing JLM’s brands. Hemas Holdings PLC would

enjoy the synergistic effect in the Healthcare Industry via this acquisition.

Hemas acquisition of a 90% stake in JLM in May 2013 for a consideration

of Rs 2.3 Bn is vital in a strategic point of view as they are planning to

open third Hospital at Thalawathugoda, which is embedded in its operation

strategy that support the overall business strategy.

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Pharmaceutical and Over the Counter (OTC) manufacturing of JLM is well-

recognized in the market. Products such as Morisons Gripe Water,

Valmelix cough syrup and Lacto Calamine lotion are well known brands in

that category. Following a smooth transfer of control (barring the loss of

two Consumer agencies), the company is in the process of modernizing its

operations, and planning for growth (Hemas Annual Report, 2014).

FMCG Sector: In terms of FMCG, Hemas Holding PLC Exports is

Kumarika, Baby Cheramy, Clogard, Nimex, Goya and Pro Sport to twelve

destinations covering four continents (Figure 02) by which global

opportunities relating FMCG products are capitalised. The major part of

the foreign dealings is dealt with US Dollars and Euros. Hemas Group has

a natural hedging by way of its operational transactions as the inflow of

foreign currency through export sale revenue off sets the import cost

(Hemas Annual Report, 2014).

The world, and is growing at an increasing exponential rate. FMCG is one

of the sectors which directly grow with the population and the number of

users. Currently Hemas Holding PLC exports FMCG products to only 12

countries (Figure 02) but there are the enormous opportunities with the

growth of world population for the FMCG product as population is currently

at 7.04 billion people according to the statistics provided by According to

the United States Census Bureau (Appendix 05).

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Figure 02: Hemas Holdings Exports (Hemas Annual Report, 2014)

Hospitality sector: This has great potential to growth in the context of

global opportunities as Sri Lanka is considered as a tourist destination with

its latest promotional campaign “Sri Lanka- The Wonder of Asia” by which

the Sri Lanka tourism development authority (SLTDA) works toward to

attract 2.6 Mn tourist by 2016 (SLTDA, 2014). Having being named the

“Best Travel Destination for 2013” by Lonely Planet, the world’s largest

and most respected travel guidebook Sri Lanka’s potential in developing in

the Hospitality sector can be highlighted (Lonely Planet, 2013). According

to United Nations World Tourism Organization (UNWTO) , tourism is one

of the world fastest growing economic sector and in 2013 the increase in

international tourist arrivals had grew by 5% which is in numbers, 1.087

billion (UNWTO, 2014).

Hence Hemas Leisure and Hospitality sector has been encouraged in term

of its operation strategies to utilise this global opportunity which is growing

for the fore sable future. The sector resources such as “Hotel Sigiriya,

Avani Bentota Resort & Spa, Club Hotel Dolphin and Avani Kalutara

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Resort” could utilise the potential of the global opportunity towards the

leisure and hospitality, which would strength the Hemas Holding PLC‘s

stability and hosting the band name to the global level.

Vishwa BPO: the latest addition to the Hemas Holdings seems to have

more potential as Sri Lanka has been identified as the location among the

top 20 global outsourcing destinations for IT/BPO. The survey done by

A.T. Kerney’s Global Services Location Index (GSLI) index in 2009 which

is soon after the 30 years war in Sri Lanka had taken the country’s’ rank

up of the country form 26th place to 16th. This analyzes and ranks top 50

countries worldwide as the best destinations which could provide

outsourcing services, including IT services and support, contact canters

and back-office support. The (GSLI) index evaluates each countries score

which is serene of a weighted combination of relative scores which covers

43 dimensions which finally categories in to aspect of financial

attractiveness, skills and ability of the population and business

environment.

Sri Lanka is ranked number 16 in the index in 2009 contrast to the rank 29

held in 2007 which could be obvious. This is a significant jump of 13

positions and only one or two other countries that this level of upgrade of

the ranking. The report was complied with 2008 data prior to the war

ending. With war situation behind Sri Lanka the actual ranking would be

even higher now. The report positively stated that Sri Lanka has been

promoted the ranks assisted by low costs compared to the rest of the

destinations. The combination of high people skills, favourable business

environment and low cost enable the countries such as India, China and

Malaysia to be first few ranks (SLASSCOM, 2014). Accordingly, Hemas’

operations strategy of accessing to BPO business segment will certainly

benefit from increasing global demand for BPO services.

Logistic Sector: Government's strategy of making Sri Lanka a logistics

hub in the South Asian region which opens the window to reach the

opportunity of growth in logistic sector business portfolio Hemas

comprising aviation services, maritime and logistics. The important

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characteristic is that it is well positioned within the Sri Lankan

Government's economic strategy of making Sri Lanka a logistics hub in

the South Asian region (Hemas Annual Report, 2014). Also the country’s

infrastructure positively impacted the Sector’s outlook as latest addition of

sea and air port in Hambantota which is another strategic location in the

Indian Ocean.

In contrast, the global opportunities would threaten the operations of the

company due to global economy crisis as currently witness the Economic

crisis in the European region (BBC 2014). Hence the operations are

connected to each aspect and the global operation are carried out via

import, exports as well as investment etc. could jeopardise the operations

strategy of Hemas Holding as the only solution would be to become a

diversified business organisation as it is visible from the latest action of

Hemas Holding which had taken via its new approach of moving in to the

BPO industry through “Vishwa BOP” launched by them in recent years

(About Hemas, 2014) enabling the group to reach the global

opportunities.

Task 2: Identification of major business processes in Hemas

Holdings and elaborate them using standard process

management tools and diagrams.

In managing the Operations within the Hemas Holding PLC, Group Operating

Committee has been established and it provides a forum for senior

management to evaluate Group performance, share business information,

suggest strategic action points and best practices in the industry. Ultimately

implement decisions delegated by the Board in operating the business

focusing on operating management perspective (About Hemas, 2014). The

below chart would show who the Operation Management involved in an

organisation in general terms (Figure 03).

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Figure 03: Import ants of Operation Management

2.1 Quality Management

Quantity management is an essential element of Operation Management

where as it would lead to loyalty of the customer while improving the market

share of the organisation (Figure 04). When the principle of the quality

management is applied throughout all aspects as well as all levels of the

organisation it is referred as Total Quality Management (TQM) which is an

utmost level of Quality Management (Hill, 2005).

Figure 04: Quality Management cycle

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Hemas Holding PLC’s passion is to provide their consumers with high quality

products necessitated a state of the art manufacturing facility with a fully

automated production process in order to produce the highest quality sanitary

napkins in the market. “Fems”, is the brand which Hemas Holdings PLC,

produces as sanitary napkin brand uses high quality materials sourced from

reputed global suppliers and adheres to world class manufacturing standards

in its production processes. It has enabled the napkin to be rated as one of

the best in the domestic market. Eventually the output has been tested before

it goes to the consumer, locally and internationally. “Fems” is endorsed by

Industrial Technology Institute (ITI) and by the Sri Lankan Quality Standards

Institute (SLS). In fact as a testament to the highest quality standards adopted

by Fems, it is the only sanitary napkin brand to carry the coveted SLS

certification in Sri Lanka (Hemas Annual Report, 2014).

Since Hemas Holding PLC is more in to the Health Care industry and they

ensure that Hospital operations are in line with the international accreditation

as well as occupational (work related) health and safety certification in Sri

Lanka (Ceylon Today, 2013).

Hemas Manufacturing still secures Silver and Gold awards at the annual Taiki

Akimoto 5S Awards in 2010. The group wan the Taiki Akimoto Gold Award for

the Best 5S Implementation in the Manufacturing Sector and the Taiki

Akimoto Silver Award for the Best 5S implementation Overall beating several

other local manufacturing companies (Daily Mirror, 2010)

2.2 Inventory Management

Inventory management is considered as another major business process

which is defined as, “The stock level of items kept by an organisation to meet

internal or external customer demand (Russell et al, 2009). Type of the

Inventory Management system utilised by the organisation could be vary and

this should be determined by the nature of the goods or the service of the

entity. Generally the Inventory/stock management is done while observing the

levels of the inventory. Mainly the Buffer, Minimum, Re-order and Maximum

level of the inventory is monitored closely in order to minimise the ordering

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and holding cost and to arrive on the Economic Order Quantity (EOQ) to

utilise the fund of the operation in an optimum manner. The diagram show

how the stock level operates in a business organisation.

Figure 05: Inventory Management - Levels

In Hemas Holdings PLC, it is monitored as primarily responsible of the

Manager-Inventory Control is to achieve Inventory KPIs, planning, forecasting

and procurement of products to ensure optimum stock level as per the

Company Stock Policy. It is also the duty to initiate system development and

where necessary re-engineering action to the inventory management

processes (About Hemas, 2014).

The specialized departments are headed by professional managers in Hemas

Holdings PLC who have logistics down to a science. Their exceptional work

methods combined with our efficient protocols ensure that all aspects of the

supply chain flow right into the fast track, including registration, inventory

management, importation and clearing, warehousing and also tendering

(About Hemas, 2014).

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2.3 Customer Management

On the other hand, customer management is another aspect highlighted in

Operational Management as it enables the organisation to win the hearts of

the customer as any product or service is designed to deliver to the customer

in order to earn profits in the shore run and to secure the survival of the

organisation in the long run. Also it should be noted that even the entire

organisation is driven to meet the customer needs and wants that all the

employees in the organisation should have direct interaction with the

customers. Hence the tasks that employees are processing are regarded as

“Back office tasks” and “Front office tasks”. Back office staff would process

valued added operation to the product or to the service while the front office

task would deal and interact with the customer both as input and output of the

operation management process (James, 2011: p. 9).

Hemas Holdings PLC has made its’ purpose “To passionately deliver

outstanding products and services thus enriching the lives of our customers

and creating superior value to our shareholders”, while same is mentioned

under values of Hemas Holdings PLC (About Hemas, 2014).

In order to satisfy customer Hemas Holding had taken action on the below

angles and they have achieved certain mile stones in the mentioned areas as

follows:

- Partnership with the Kerala Institute of Medical Sciences for their nurse-

training programme has enabled Hemas Hospitals to deliver the promise

to its customers. Hemas Hospitals continues to invite external specialists

to demonstrate and instruct to the current trained work force consists of

nearly 1200 nurses, medical staff and lab technicians. Hence it is implicit

that the Customer Management aspect of Hemas Hospitals places great

emphasis on training the staff which is important in catering the

customers/ patients (Hemas Annual Report, 2014).

- In the Leisure sector the “Hotel Sigiriya” which is a magnificent creation of

modern architecture was shut for a period of 3 months. And that is mainly

due to the renovation and it was improved and reopened in August 2013.

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Hotel is with an average occupancy of 70% it had recorded a profit Rs.

28Mn (Hemas Annual Report, 2014).

- Transportation sector managing customer via the value through the

expertise in operations and marketing Forbes Air Services, the GSA for

Emirates Airline was ranked the No 1 passenger contact centre within the

Emirates network worldwide in the year 2013/14. This has become a

great achievement for the team who have demonstrated the capability of

delivering superior service on a global scale (Hemas Annual Report,

2014).

- Hemas Logistics sector the terminal provides repair and rigging facilities

for containers and plug-in points for reefer containers. It commenced

operations in their modern container terminal with an annual throughput

capacity of over 200,000 TEU. During the first six months of the terminal’s

operations, the yard has received very optimistic feedback from all its

customers. Also should not that the terminal has been operating at full

capacity during the last quarter of the year (Hemas Annual Report, 2014).

- The Transportation Sector has made improvements over the last three

years which has grown in size and scope and is a focus area for future

growth within the group. The team, working under the motto “What we

do… we do best” has committed to provide superior service solutions to

its principals and customers.

2.4 Supplier Management

Supplier management is crucial as the materials are obtained for the

production to produce products to meet the market demand. Since in present

the substitutes are ready available and the switching cost is at a low level if

the market demand in not met it could lead to diminishing of the Market

Share. A robust relationship with Supplier is essential in an operation

management perspective. The Supplier Management specify broadly

discussed under Supply Chain Management. Supply Chain Management is

defined as “The interaction of the organisation that relates to each other

activity in the process through upstream and downstream linkages between

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processes that produce value to the definitive consumer in the form of product

and service (Slack et al., 2010). In terms of Operations Management

perspective this would affect the Quality aspect and in the eventuality towards

the output which customers are attracted to. Identifying, engaging and

proceeding with strong and reliable suppliers always eliminate hazard

situation in operations.

Activities in Supply Chain Management are:

- Sourcing material and components;

- Manufacturing products;

- Storing products in warehouse;

- Distributing the products.

Hemas Holdings PLC stated in the annual report for 2013/2014, that their

Future plans involve strengthening the supply chain. Also the organisation

had analysed the risk of Supply chain management which arising due to

physical disruptions, environmental and industrial accidents or bankruptcy of

key suppliers. Hence they had come up with a mitigation plan for the risk

relates to the Supply chain management as below:

- Assessing product quality control for effectiveness

- Re-evaluate key suppliers episodically to certify they the materials meet the

rigorous quality standards

- Intensifying the supplier assortment and developing a robust relationships

with the suppliers

Task 3: Analysis and proposing the improvements/changes to

business processes of Hemas

How does an organisation create and deliver products at lower cost and gain

higher revenue? This question is the secret of the success of any business.

Any organisation meets the challenges facade by changes in customer

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preferences. The modern day customer is different than the pastas

technology has impacted the life style of human. Hence the organisation has

to promote creativity, manage knowledge and innovation, and encourage

social responsibility in finding solutions to those challenges. The answer for all

the questions would be “via effective operations management”. Process

innovation had become the key in succession planning in the facing the

challenges and increasing the market share in the long turn in the modern era

of business which reduces the cost of operation in the eventuality.

At present the improvement and the changes occurred within Hemas Holding

PLC could be analysed as follows:

- In term of Quality Management aspect of the business, Hemas acts as a

contract manufacturing partner in the process of development and

manufacture of FMCG products. This facility is managed by cross-

functional teams in the ISO and GMP certified manufacturing facility at

Dankotuwa. The facility offers Japanese 5-S system and the Kaisen

systems (continuous improvement) which are highly discussed in TQM

perspective. Also Hemas Holdings PLC ensures steady training &

development which would helps the factory maintain constant & high

standard in quality of production. This would improve cost effective

solutions for international clients. This has leaded the organisation to

deliver manpower planning system with an effective employee relations

management.

But it is questionable how effective the Quality management tasks are as

how well the staffs in Hemas Holdings PLC are trained the supervision

should also required indeed. Cost of Internal failure can be justified but

the coat of external failure is a tedious task to measure as by that time the

product is arrive to the customer. Hence concept such as “Quality

Circles” which an employee participation method by brain storming

sessions to identify the failure in quality and come up with suggestion to

improve the quality in-house (Figure 06).

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Figure 06: Quality Circle

- In order to answer the Customer Management aspect while building

customer loyalty and awareness via Marketing and advertising campaigns

the re-launching of Hemas brand is one aspect which was highlighted

news in the industry. The year gone by was a hectic one for Hemas

Holdings PLC where an energized team was successful in re-launching all

major brands with significant improvements in product quality and

packaging (About Hemas, 2014). Packaging would is the main component

which secure the quality of the product and also which attract the

customer among the other products in the market. The re-launching of its’

products Hemas amuses a competitive advantage in a challenging market

circumstance.

- Leisure sector of Hemas Holding PLC, “Hotel Sigiriya” provides additional

services to its customer nowadays. That is to arranging visits to the

Sigiriya Rock Fortress. Also Hemas Leisure sector have looked at

improving customer experience and increasing the length of stay by

offering additional experiences such as the Minneriya safari, hot-air

ballooning, elephant rides. The latest experience which gained more

demand was the ayurvedic spa treatments (Hemas Annual Report, 2014).

- Additionally the Human Resource Information System (HRIS) is carried

out by “hSenid” which is a leading software development company in Sri

Lanka. Hemas Holdings PLC seizes the decision as hSenid’s proposed a

system of HRIS to Hemas which covers their complete HR operations.

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This HRIS includes maintaining electronic copies of personnel files,

tracking their history from recruitment till retirement. Also the other HR

related tasks such as online leave application and employee attendance

tracking, automation of the entire recruitment process and salary

processing for all employees in done through this HRIS which has

enhance the operation aspect across the Hemas Holdings PLC . The

solution will fine tuning and streamlining the HR processes and make it

more efficient by making life easy for HR staff as well as employees

(About HSenid, 2014).

- The Transportation sector of Hemas Holdings PLC are confident of the

growth opportunities arising out of Sri Lanka’s development and will

continue to invest and grow its potential as a logistics hub in the region

(Hemas Annual Report, 2014).

Task 4: “New Product/Service Development” process in

Hemas

Hemas Holdings PLC’s Research and Development Costs are expensed

as incurred. Understanding the necessity of the new product development

the group has taken Intangible assets arising from development

expenditure on an individual project, is recognised only when the Hemas

Group could only exhibit the technical viability of completing the intangible

assets. Operations Management concerns about the element of product

development which is ensure by the “Kaisen” concept practised by the

Hemas Holding PLC.

Baby Cheramy, which is the flagship brand with over 50 years of trusted

quality continues to be market leader and has been the preference of Sri

Lankan mothers. The brand’s portfolio was significantly re-vamped and

enhanced with the introduction of a range of new superior product

offerings strengthening our position as the Baby Care expert. The products

also underwent extensive clinical research and have been certified as

being “Dermatologically tested for proven mildness”. This would further

enhance the confidence and trust that mothers place in Hemas products.

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The brand was awarded the prominent award for its “Baby Cheramy Big

Heart Project”, which was the CSR campaign launched for the Baby

Cheramy 50th Anniversary.

The “Vishwa” BPO of Hemas Holdings PLC is considered as the new

venture of the group which is One of the twenty companies in Sri Lanka to

hold ISO 27001 certification on Information Security,. Vishwa BPO has

best practice controls and a superior Information Security Management

System (ISMS) in place to address all characteristics of information

security. The business owing to its excellent data mining and analytical

competence. Vishwa BPO Company has now been malformed into a

Knowledge Process Outsourcing Centre (KPO). This can be identified as a

benchmark practice in the modern era as most of Sri Lankan business

giant has their own shared service while providing the services to the

global market with the use of skill and the ability of Sri Lankan

professional.

The renovation of the “Hotel Sigiriya” and “Club Hotel Dolphin” carried out

during the summer. This effected the Hemas Holdings PLC’s Leisure

sector revenues negatively which declined by 4.9%. The refurbishment

cost the group Rs 563Mn. It is a vital action taken by the management as

in a situation where as lots of Hotels are renovating while some other

world famous Hotel chains are launching their operations in 2015. The

proactive actions such as these are impressive as understanding the

competition rising in the future (Hemas Annual Report, 2014).

Being a blue chip company in the Sri Lankan economy’s context Hemas

Holdings PLC could have introduced world class Inventory Management

techniques such as JIT (Just In Time). This would reduce the Inventory

holding cost of the group which would lead to reduce the price of the

products in a context where the best practice for pricing has become cost

base pricing.

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CONCLUSIONS

In conclusion it is understood that Hemas Holdings PLC gained its’ success

via the effective use of Operations Management aspects which enable the

organisation do control its diversified business in a successful manner while

facing the immense competition. If Hemas Holding PLC could follow the

recommendation given under the Recommendation section after a proper

consideration of its resource and vision, I do believe that those would help the

conglomerate to gain competitive advantage and to succeed in the long run.

RECOMMENDATIONS

It is recommended that Hemas Holding should take below actions in terms of

Operations Management which ensure the stability in all its sectors

empowering the Sri Lankan economy and fulfilling its customers in the

eventuality.

Research in finding new drugs: This would enhance the Hemas

Holdings product portfolio in the Health Care sector. The recent

acquisition of JML would also enable the organisation to research and

development of these types of products which gain synergistic effects.

The drugs could be introduces via the Hospital chain which Hemas

Holding has and it would win the hearts of the customer easily in that

manner. With these research and development project the quality level

would also rises in the products which is another vita aspect of operations

management.

Manufacturing in own company in diverse trade names, rather

importing: This would save lot of foreign currency to Hemas Holdings

PLC. After the acquisition 90% stake JLM in May 2013 the manufacturing

capability of Hemas had increased and since the strength of the

manufacturing had augmented the opportunity to reduce import cost is

visible. This would enable the group to eliminate their Foreign currency

risk in operations.

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Discharge garments to the domestic market: Currently Hemas does

the service for the world famous brand “Nike” and it had become a major

success in the sector (Hemas Annual Report, 2014). The element of

Economies of Scale would increase and the cost reduction would also

witnessed b y the group in the eventuality. Operations Management

emphasise on efficiency and productivity which can be obtained via high

level of production.

Expanding the hotel network all over the country: Currently the group

holds 5 locations and being thoughtful of the Sri Lanka Tourism

Development Authority (SLTDA) strategic target to attract 2.5 Mn tourists

by 2016 (Appendix 06), the group should amplify the room inventory to

facilitate the boost in tourist arrival (SLTDA, 2014). There is a potential

threat in terms of competition towards the Hotel industry as the world

renowned hotel chains are about to start their operation in Colombo by

2015. Since the hotels group owns the Hotel in other areas the

competition which the Hemas Hotel chain faces would be minimised.

Carry out “Lucky drawing” programs once a year ( for personal care

sector): Focusing on the Customer Management task the group could do

promotion activities to attract more customers with the current loyalty

gained for last Sixty Five years. This would enable Hemas Holdings PLC

to secure the competiveness in the market.

High quality and eye-catching television advertising in personal

care: Since Unilever , Nature Secrets’ are also in the same FMCG and

Healthcare sector who does aggressive advertising, the group should also

conduct advertising without misleading the customer securing the moral of

advertising and winning the hearts’ of the Sri Lankan consumers. Also the

same should be carried out in the interventional leave as Hemas Holding

PLC’s products researches 12 destinations in the world. The

advertisement which targets the global market should be in international

standards as it would alarm the global customer base the strength of the

group and the confidence on the products which are exported.

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Targeting immerging international markets: Even though Hemas

Holding exports its FMCG products, the group haven’t reached the most

debated and highlighted two Asian economies such as China and India.

These two countries hold almost 40% of the world population out of total 7

Billion world population. Hence there is huge potential in acquiring growth

by connecting to these two economies. The volume of import would

expand while deriving economies of scale.

Introducing new personal cares within reasonable time: The health

aspect has become a most concerned issue in the present, where as the

individuals becoming more conscious about their own personal care.

Resent market trend in the domestic level such as hand wash has

become popular and customer tends to attract to those king of products

with the high level of advertising campaigns done by the market players. #

Donation to the child words in hospital on behalf of Baby cheramy:

Baby Cheramy which is the flag ship product which built the confidences

of domestic consumers for more than 50 year has still continues to

maintain the loyalty towards the product and it has become the success of

enhancing the confidences of the customers of Hemas Holdings PLC. The

product is developed targeting the newly born babies and donations such

to the “Child Wards” would enrich the brand loyalty in the hearts of

Mothers’.

Making more connections with leading air lines: Since the logistic of

the country improves with the infrastructure development project carries

out by the preset government Hemas Holdings PLC should express their

interest of engaging with leading airlines considering this as a strategic

action without waiting other player join hands. Because of that the group

could gain the competitive advantage in operation and to be ready for the

increasing domestic and international tourist travel.

Strategic investments (Invest funds in private coal power plant, more

concentration property development): Such as acquisition of JLM in

MAY 2013 which is one of the renowned brands in pharmaceutical

21

industry, growth by acquisition or via merges would enable the group to

diminish the challenges made by other market leader in the sectors

Hemas operates. Strengthen the Leisure and Hospitality industry via

acquisition and improvement in Cargo and logistics sector would provide

substantial advantage to the group. According to the government plan of

“Electricity to every house” government promotes private sector to engage

in generating more power projects and Cola power would be the cost

effective approach.

Colombo is in the epic of transforming to a world class commercial city

and the real estate would be next sector which Hemas Holding PLC would

be interested in. Investment in real estate property development as

industry is gaining more attraction with more and more foreign investment

while adding more colour to Colombo sky line.

.

22

REFERENCES

About Hemas (2014), Available from: http://www.hemas.com, (Accessed on

02nd September 2014)

About hSenid (2014), Hemas Holdings PLC Selects hSenid as their total

HRIS Solution Provider, Available from: http://www.hsenid.com/news/44-

hemas-holdings-plc-selects-hsenid-as-their-total-hris-solution-provider,

(Accessed on 02nd September 2014)

UNWTO (2014), About World Tourism Organization (UNWTO), Available

from: http://www2.unwto.org/content/why-tourism, (Accessed on 02nd

September 2014)

BBC News (2014), “The next financial crisis?” Available from:

http://www.bbc.com/news/business-28126241, (Accessed on 02nd

September 2014)

Crosby, P.B. (1996), Quality is free: Making Quality Certain in Uncertain

Times, USA: McGraw-Hill

Ceylon Today (2013): “Hemas Hospitals committed to quality healthcare”:

Available from: http://www.ceylontoday.lk/22-35740-news-detail-hemas-

hospitals-committed-to-quality-healthcare.html, (Accessed on 02nd

September 2014)

Adam, E. E. and Ebert, R. J. (1996), Production and Operations Management,

USA: Prentice Hall

Hill, T 2005, Operations Management, 2nd edition, Palgrave Macmillan,

Basingstoke.

Kamauff, J. (2009), Manager's Guide to Operations Management, 1st Edition,

USA: McGraw-Hill

23

Russell, R.S & Taylor, B.W 2009, Operations Management: Along the Supply

Chain, 6th edition, New York: John Wiley & Sons Ltd

Schneider, M., (2003), Operations Management New York: John Wiley &

Sons Ltd

Slack, N., Chambers, S., Robert Johnston, R., 2010, Operations

management, USA: Prentice Hall

SLTDA (2014), Sri Lanka Tourism Development Authority, 2014: “Wonder of

Asia”, Available from: http://www.sltda.gov.lk/index.html, (Accessed on

02nd September 2014)

Daily Mirror (2010), “Hemas bags Silver and Gold at 5S awards”: Available

from: http://www.highbeam.com/doc/1P3-2024842931.html, (Accessed

on 02nd September 2014)

SLASSCOM, 2010 - “Sri Lanka ranked among the Top 20 global outsourcing

destinations for IT/BPO by consulting giant A.T. Kearney”: Available

from: http://www.slasscom.lk/content/sri-lanka-ranked-among-top-20-

global-outsourcing-destinations-itbpo-consulting-giant-kearney,

(Accessed on 02nd September 2014)

United States Census Bureau (2014), Available from:

http://www.census.gov/#, (Accessed on 02nd September 2014)

Hemas Annual report (2014), Available from:

http://www.hemas.com/images/hemas_financial_reports/2013_2014/142

4%20Hemas%20Holdings%20PLC%20AR%2020132014%20CSE.pdf,

(Accessed on 02nd September 2014)

Reid, R. D. and Sanders, N. R. (2010), Operation Management, 4th Edition,

USA: Willey

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APPENDIX

Appendix 1: Operation Management Model

Appendix 2: Economic Growth in Sri Lanka in GDP

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Appendix 3: Hemas Holdings Finance Highlights 2013/2014

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Appendix 4: Process flow chart: Operation Management

27

Appendix 5: Growth in world population

Source: United States Census Bureau, 01 May 2014

Appendix 6: Tourist Arrivals - 2013 and 2014

28