Scm Case Study of Rmg of Bd
One way to decrease the supply time required for producing ARM is to increase mommies linkage expansion way we can have deep level improvements in the RMI too. Supply time refers to the time required for supplying ordered garment products after the export order has received.
Using modern fast and effective machinery can reduce time taken to deliver the order. The implementation of SCM had been beneficial as this helped In improving the communication channels, production and services of the companies.
Considering the Important role of apparel manufacturers within the global chain, we conducted a research on the Bangladesh garments Industry and focus on several Important supply chain operational Issues. The objectives are to analyze apparel supply chain matters such as new orders, raw materials supply, production processes and logistics related to finished goods delivery. We collect data for trade statistics, conducted structured interviews and send survey questionnaires to garment manufacturers.
Analysis shows apparel manufacturers are striving for sustainable business growth.
We identify related supply chain practices influencing the industry, set guidelines for improvement and offer recommendations for sustainability Keywords: ARM- Reader Made Garment, SCM: Supply Chain Management, RMI- Ready Made Garment Industry, BAD- Bangladesh, INTRODUCTION The garment Industry is an Important business sector In Bangladesh. For this reason, companies operating within this Industry must then be able to apply business strategies that would help sustain the growth of the clothing sector.
This means that by modifying some of the existing business procedures of the apparel companies, such as their supply chain management systems, continuous progress and development in the industry may be observed. By means of identifying the current supply chain management practices of some Bangladesh garment companies, business areas for improvement can be identified. This in turn may enable the formulation of better supply chain management practices that would contribute to the continuous progress of the apparel industry.
The development of the supply chain management in this Bangladesh business sector can also likely strengthen its connection with the international market. Supply chain management, the information between business partners are optimized and collaborated; most importantly, supply chain management systems help In reducing Inventories, which In turn can lessen operational costs, compress order cycle time, enhance Society for Business Research Promotion www. Jab’s. Org SINS: 2047-2528 asset productivity as well as increase the companies’ responsiveness to the market (1997).
Aside from these benefits, the apparel industry is able to achieve quick response through efficient supply chain management practices (1998). Quick response is a concept pertaining to the collaboration and sharing or information among manufacturers, suppliers and distributors, allowing them to respond more rapidly to the needs of the customers.
Previous studies have noted that CAR concept brought about by supply chain management is advantageous to the apparel industry s well as to fashion-oriented businesses (1995; 1998).
Another factor that relates the apparel industry to SCM is the companies’ connection with the retailers. While some apparel companies distribute their products directly to consumers, most manufacturers utilize the services of the retailers. The application of an SCM system on the other hand helps in strengthening the relationship between both parties as well as in achieving positive business outcomes. Considering that the apparel sector encounters the problem of demand uncertainty, SCM allows the companies to monomaniac with their retailers; this feature of the SCM enables them to forecast product demand Jointly.
The participation of the retailers with the SCM system of the company helps the apparel companies to obtain valuable consumer data such as end-customer demand levels; this will then help in reducing the manufacturers’ errors in determining raw material and production volume. Order time management is one of the big issues for Bangladesh readmes garment industry. Foreign buyer is likely to need short leading time for manufacturer the apparel. Because of apparels is seasonal demand. Buyers give the orders for their customer demands.
If the production make delay buyer can’t caught up the season.
In the beginning of sass, the lead time was 120-150 days (Cad, 2004) but in 2007, it was reduced to 30-50 days, I. E. At present it is 90-100 days (Khan, 2007). China requires only 30 days due to their textile and other backward linkage facilities as well as export friendly management and Supporting, policy.
It is 45-60 days in India and Pakistan (Nurseryman, 2008). Therefore it appears that in the present situation Bangladesh ARM industry will not be able to compete successfully in the international market for he existence of unusually long lead time.
This is specifically the main problem area of present research. Object of study The study on Bangladesh garment industry is the main source for economic development of Bangladesh demands examination and evaluation of multidimensional aspect of garment sector and its impact on the economic condition of Bangladesh. In such a context, the main objective of the study is to examine, evaluate and analyze Business process and buyers order time, supply chain management garment industry and identify the techniques used by some apparel business operators in Bangladesh.
Aim of the Research The overall aim of the research is to consider the Bangladesh garment management approaches used companies at different points of the apparel chain, ranging from fiber producers downstream in the chain to manufacturers and foreigners. Research Methodology The data have been collected on primary as well as on secondary basis. The secondary data were used in the study. Those were collected from various publications, books, Bangladesh Economic review and the annual reports, audit reports , Interview of key person of the garments factory , foreign buyers.
In this research qualitative method has been used. In the qualitative method we can find out how people feel or what they think about a particular problem, which are very relevant in this research.
Mainly the descriptive research approach | 61 has been used. But in the exploratory phase of the research, in-depth interviews have been conducted with the suppliers [manufacturers (Owners) and the relevant bodies and association.
Literature Review The apparel industry stands out as one of the most globalizes industries in the world and it is a supply driven commodity chain led by a combination of retailers, contractors, subcontractors, merchandisers, buyers, ND suppliers; each plays an important role in a network of supply chains which spans from fibers to yarn, to fabrics, to accessories, to garments, to trading and to marketing. The peculiar characteristics of apparel supply chain are short product life cycle, high volatility, low predictability and high impulsive purchasing. These factors bring high pressure to apparel retailers to manage their supply chains.
Moreover in today’s competitive environment, markets are becoming more international, dynamic, and customer-driven and customers are demanding more variety, better quality and reverie, including both reliability and faster delivery. In the apparel sector, all the Bangladesh garment companies are subcontractor and producing at the low end of the market. Basically they are performing cutting, making and trimming (CM) activities (Kabuki, 2007; Siding, 2007; Rash, 2006; Abdullah and Hussy, 2008) The ARM industry is highly dependent on imported raw material.
About 90% of woven fabrics and 60% of knit fabrics are imported to make garments for export (Rash, 2006; Raman and Inward, 2006). That’s why this sector needs to maintain a long supply chain (backward and forward). Besides rudimentary application of CIT and inefficient port management limits its ability to respond quickly to market change, which is very essential in the fashion market (Abdullah, 2008).
Therefore this industry takes maximum lead time to process an order (Huge, 2004; Nurseryman, 2008; Kabuki, 2007; Siding, 2007).
In BAD the lead time for apparel export varies between 90-120 days, whereas the time for Sir Lankan is about 19-45 days, China 40-50 days and for India 50-70 days for similar products (Raman and Inward, 2006; Kabuki, 2007). Lam and apparel supply chain management in Bangladesh. They discussed the strengths and problems faced by the Bangladesh textile apparel supply chains. They argued that Bangladesh apparel industry is generally not aware of the concept of supply chain management and industrial benchmark for both manufacturing and retailing industries in Bangladesh and the supply chain performance is below the world average.
Due to the growing intensity of competition in both local and global business sectors, several companies and service providers have realized the need to develop more strategic approaches for managing supply chains.
These affective actors and realization then led to the development of tradition SCM systems up to the advanced systems companies apply at present. The evolution of supply chain management occurred during the sass; at this time, collaboration between manufacturers and suppliers had been established in order to enhance traditional approaches in supply management functions.
At the same time, retailers as well as wholesalers had integrated their logistics operations as well so as to achieve greater competitive advantages (2002). In general there are five major elements in the apparels supply chain comprised of the processing raw materials into fiber , shipping hared and weaving fabric assembling finished products ( often far away from point of sales ) to goods to destination ( often through in the traders and retail sales ( in departments stores chains shops or boutique ) ( comment 2006).
Harrison (2007) state that there are six processes in the simple apparels supplying china, design, raw materials purchases, manufacturing distribution retails sales. Many world class apparel companies emphasize lead time reduction.
Short lead time are the major enabler in achieving a responsive and flexible apparel supply chain as the time deduction contribution greatly to the improvement of demand forecast accuracy . There are | 62 three critical times in the fashion and apparel industry: Time -to Market, Time -to – Serve and Time -to- React (Christopher & Peck 1997).
Overview of Bangladesh Garment Industry 1. 1 Multi-fiber Agreement (MFC) Starting in the late ass’s as a negligible non-traditional sector with narrow export base, the readmes garment (ARM) sector, by the year 1983, emerged as a promising export earning sector of the country. Within a short period of time, it has attained high importance in terms of its contribution to GAP (Dry. M.
M. Muhammad et al. 991). Bangladesh Garment Manufacturers and Exporters Association (BAGMEN) is the apex trade body of 4637 apparel-manufacturing companies of Bangladesh.
Since the inception, the association has been working to promote and protect the greater interest of ARM interest of the sector and as a promoter of trade negotiation in international market, global trade bodies like WTFO, concerned UN agencies like ILL, UNCLAD etc.
The conclusion of the Uruguay Round of General Agreement for Trade and Tariff (GAIT), on April 15, 1994 delivered the most significant decisions in the recent history of the international, pervasive regime.
The scope of multinational trade was expanded to cover three major areas that were previously not under the Jurisdiction of GAIT, namely the General Agreement on Trade in Services (GETS), Trade-Related Intellectual Property Rights (TRIPS) and Trade-Related Investment Measures (TRIMS). GAIT also addressed the other two major sectors outside of its control, agriculture and textiles. The other significant event at the Uruguay Round was the advent of the World Trade Organization (WTFO). The WTFO promised to provide a framework for the conduct of trade between its members on matters related to the Uruguay Round
Agreements. The WTFO pushes "liberalizing” of trade in goods, services and related areas.
This has had a big impact upon the economies of both "developed” and "developing” nations. Although it was only supposed to be a temporary agreement, the MFC was extended four times, the last time being in 1986. Then the WTFO wants textiles to be under its control, the abolition of the MFC over a ten-year period commenced from January 1, 1995. As a result, the quota system that has provided some security (albeit with associated difficulties) for those in the industry in Bangladesh may be abolished by the beginning of 2005.
The abolition of quotas has come about as a result of decisions made by the WTFO, of which Bangladesh is a member.
The decision affects not only Bangladesh but also some other countries in South Asia, such as India and Sir Lankan, and the entire textile industry that has been enjoying the quota facility since 1974 until the end of the Uruguay Round were governed by the Multi-fiber Agreement (S. Papal, 2003). 1. 2 Impact of Imposition of SSP & Quota 1. 2. 1 Short term impact: The first stages of the withdrawal of MFC benefits were completed in January 1995.
The steps taken by the ASSAI, the biggest importing country of readmes garments from Bangladesh, did not affect any fixed quota or category. Despite the concern and fear of negative impact on in the aftermath of quota removal, the whole scenario of ARM sector in Bangladesh appears with positive trends. Bangladesh mainly exports garment, knit and woven goods including shorts, trousers, shirts, sweaters, blouses, skirts, tea-shirts, Jackets, sports attire and many more casual and fashion items with the changing times. Despite removing privileged quota system, the number of ARM industries rose up over the periods (Raman et. L.
2008). As per the statistics of BAGMEN (Bangladesh | 63 country, that the ARM export was 31. 57 million US$ in 1983-84 and goes up to 12347. 77 million US$ in 2008-09. ARM export of Bangladesh was 3.
89% of total export in 1983-84 while in 2008-09 it was about 80%. After quota removal in 2004 average more than 16% growth were observed from 2004-05 to 2008-09 and during this period total export growth rate be also more than 15%. 1. 2. 3 Long Term Impact: The success of readmes garments industry of Bangladesh after 2005 depends on how fast she can prepare herself for producing fabrics and yam at home to meet the demand.
Bangladesh produces 8% and 45% of the total demand of woven fabrics and knit fabrics respectively. Bangladesh is expected to be self-sufficient in production of fabrics by 2005. But even at the end of MFC, interim period readmes garments sectors will continue to be dependent on import of cotton cloths. 1. 2. 4 Role of Preferential Treatment under MFC and SSP: Multi-Fiber Agreement (MFC) and Generalized System of Preference (SSP) mostly facilitated the rapid growth and expansion of the industry.
Bangladesh entrepreneurs took advantage of MFC and SSP facilities to successfully enter into the US, Canada, and EX. market. The World Bank country study show that during sass importers actively pursued import from Bangladesh (world bank 1995) while quota restriction on giant competition provided a guaranteed market for Bangladesh garments in USA and Canada , preferential treatment under SSP allowed Bangladesh apparels a zero tariff access to markets of the European community. Quota and SSP therefore played a significant role in rapid growth and development of ARM industry in Bangladesh.
Theoretical Analysis of Bangladesh Garment Industry 2.
1 ARM Business Structure Readmes garment is a labor intensive industry and relatively simple technology compared to there high-tech industries. The ARM manufacturing units are like tailor’s shop; getting order from the foreign buyers and then import raw materials specially fabrics from the foreign suppliers or sometimes buy from the local market as per order, then manufacture garments and supply those to the buyers (Minor, Q. ND Salami, R. 2000). Foreign Buyers Local raw materials suppliers Garments Company Manufacture Foreign raw materials suppliers Collect raw material Information flow Supply finished product Source: Nurseryman, 2007 Figure 2: Business Structure and raw material suppliers 64 In the ARM sector, the Manufacturer – Raw materials Supplier relationship is different. In this Industry the main raw materials are fabrics (Cloths) and few accessories are like button, collar etc.
About 80% of the suppliers of accessories are local and accessories suppliers are not responsible to Increase I time. Bangladesh garment manufacturer need more time is getting higher due to import of fabrics mainly from China, Indonesia and India, The total average time to import fabrics from abroad is 50-65 days and this is the main reason for long lead time (BAGMEN research cell). In the process of import of fabrics from the foreign suppliers lies the main reason for long lead time. The process is visualized in fig. -2 below.
Buying house Foreign buyers Garment Company Foreign raw material suppliers Problem area Order flow Collect raw materials materialistically Final product supply flow Source: Nurseryman, 2007 Figurer: Business structure and raw materials collection process 2. 2 Analysis of Supply Management of Apparel Orders Apparel buyers around the globe demand product as they want it, when they want it, and the best possible price. In today’s highly competitive global marketplace they are placing rater value on quality and delivery time.
Manufacturers similarly have begun to place more value on quality and delivery time and companies are trying to gain a competitive edge and improve profitability through cutting cost, increasing quality and improving delivery. However it is safe to say that the more competitive the industry, the more shortened lead times will help. In competitive industries, short (Chariest J.
Immuring,CPRM). Lead time is one of the main competitive factors among companies. The ability to deliver quickly influences export, sales and thereby revenue.
The definition of lead-time can vary, depending on what part of the many is focused upon. It normally includes all activities from start to end. Lead- time begins with the first receipt of a customer order and ends with customer receipt of the product or service.
Everything in between is the lead-time (2004, lesser. Com). Leading refers to the time lag between placing an order and receiving it (L’, 2000). In this study lead-time is defined as the time it takes from getting order from a customer and received the delivered product by that customer (Cad, 2004)..
At present, Bangladesh the average lead time is 90-120 days.
It is sometimes 100-130 days. Total lead-time is made up of time devoted to processing orders, to procuring and manufacturing items, and to transporting items between the various stages of the supply chain. However, lead times can often be reduced if items are transported immediately after | 65 they are manufactured or arrive from Suppliers (David Smirch et al. , 2000). Lead-time typically includes two components: Information lead times (I.
E. The time it takes to process an order) and Order lead times (I. E. , the time it takes to produce and ship the item). Information lead time can be reduced by using very sophisticated and modern immunization system while Order lead time can be reduced through efficient supply chain management (Smirch-Levi, David, 2000) A researcher named Marc Smith explained lead time in two ways (wry.
lesser. Com, 2004). First, Customer lead time, which refers to the time span between customer ordering and customer receipt?
Second, manufacturing lead time, which refers to the time span from material availability at the first processing operation to completion at the last operation? In his paper Marc Smith developed theories for the reduction of lead time in the equipment manufacturing company especially in vehicle manufacturing company. It is also applicable to the ARM sector. In the lead time reduction process, Lead Time Management in the Garment Sector of Bangladesh: An Avenues for Survival and Growth.
Identifying the beginning of the process and walking through the process is very important.
In the ARM sector after order confirmation the process begins by sending information to the suppliers for Raw materials (fabrics + accessories) and the process run through shipment of final product Received by the buyers. The whole of this process is comprised of the following steps – order Submission, scheduling & sequencing, manufacturing and distribution. A manufacturer may be able to reduce lead time by taking some strategic measures in all of these four stages.
From the can Write that; Customer Supply time = [{limitation supply time} + {Order lead time}] Total supply time = [{limi[{limitation lead time} + {(manufacturing lead time) + (shipping time for import fabrics) + (Shipping time for export final product)} (Note that, shipping time for import includes shipping time, unloading time and transport time from port to manufacturing point. Shipping time for export includes manufacturing time for final products and shipping time for export) The leading time n delivery issues matters most important in ARM export trade.
In the beginning the leading time was 1201 50 days, but now in 2008 this time has been reduced to 40 to 60 days, thanks to the timely intervention of the Join forces.
China requires only 30 days due to their textile and others backward linkage facilities as well export friendly policy. Bangladesh need set-up a central bonded warehouse for woven and grey fabrics in order to help the manufactures collect the fabrics within seven days from the issuance of L/C and thus reduce the lead time. 3. 1 Discussion and Result The
ARM industry of Bangladesh still plays the role of tailor in the garments business. The required fabrics and limited accessories till now come from abroad.
The industry is heavily dependent on imports and had to spend about 55-75 days to import fabrics from abroad (Nurseryman, 2007). This backdrop is the main reason for long lead time. Bangladesh garment export in volume is increasing @ 15-20 percent for the last 20 years, whereas Bangladesh ARM are depending only on Chitchatting port (Nurseryman, 2007).
The facilities of Chitchatting port have not increased at the same rate. The containers kept stuck up in the port and Findings and Analysis The ARM industry of Bangladesh still plays the role of tailor in the garments business. The required fabrics and limited accessories till now come from abroad.
The industry is heavily dependent on imports and had to spend about 55-75 days to import fabrics rate. The containers kept stuck up in the port and many containers remain Jammed for 15-20 days, which is required to be released | 66 within three days.
If the raw materials remain idle in the container at Chitchatting port for 10-15 days, the garment industry would definitely face a serious negative impact Studding Aimed, 2002). According to an estimate, it takes about four days for goods to reach Chitchatting from Singapore. But in a very sharp contrast, it takes about 18 to 19 days or nearly three weeks on average for the same goods to travel to the cumbersome customs procedure and port operations also significantly delay the movement or release of goods.
In Chitchatting port it takes about 6 days to unload goods from a ship whereas for the same goods it takes Just few hours in Singapore (M.
Adhering, 2004). About port management Mr.. Unusual Huge, MD of Mohammad’ group and former president of BAGMEN stated, "Unfortunately we are pending 15-20 days to receive our fabrics from sea port to our factory and it is playing the main role to increase lead time”. Again to find out the probable causes of long lead time and for the empirical analysis 50 firms including 5 leading garments units have been chosen to collect primary data.
They mentioned many causes behind this problem when interviews were taken but in the interview 100% I. E. Of the 36 number respondents (Though 50 firms were chosen but 36 firms were interviewed successfully) put their comment on import dependency as a most important cause for increased lead time . Then 91. 66% I.
. 33 respondents on CB, 75% I. E. 27 respondents on inefficient port management, 69. 44% I. E.
25 respondents on poor infrastructure and 41. 66% I. E. 15 respondents on communication system respectively. The same causes were identified in our analysis based on secondary data.
This fact enhances the credibility of our findings.
At the time of interview, the Managing Director of Him Apparel limited divided the lead time into three stages as it is illustrated in fig. -3. First stage, from P-Q (Fabrics suppliers – Sea port) the approximate lead time for the first stage is 40-55 days including the manufacturing mime of fabrics, then from Q-R (Sea port – Manufacturer) the approximate lead time for the second stage is 15-20 days and at last from ARM (Manufacturer – Buyer) the approximate lead time for the last stage is 35-45 days.
P Raw materials supplier Q Sea Port R Manufacturer M Buyers Figure: 3 Basic Supply chains of Bangladesh ARM Industries The present estimated time from point Q to point R is unnecessary. Here the main task is unloading the container and carry it to the manufacturing point. The total procedure can be done by only 2 or 3 days through efficient management in port and good transportation yester.
But due to inefficiency of port management and poor transportation system it takes 15 to 20.
From the above observation it is clear to us that, Just for import of raw materials Bangladesh manufacturers are forced to spend 55-75 days more. So import dependency for fabrics is the main reason of longer lead time. From the above discussion, it appears that the manufacturers of ARM sector mainly face "order lead time” problem and this problem occurred in the supply chain due to inefficient management. Time consumed in the first four steps in the supply chain is the basic reasons for increasing lead time.
It is possible to reduce a major portion of order lead time by improving the other three areas namely, communication, port management and transport management in the supply chain.
We can get a clear idea about lead time in the supply chain by considering the equation of lead time and put average estimated time collected from the interviews for each step. We know that; 3. 2 Manufacturer Lead time Total supply time = [{limitation lead time} + {(order lead time)}] (Information lead time} + {(time to manufacturing fabrics) + (time to shipment of fabrics)+(time to unloading fabrics and customs formalities at port) +
