Merchandising Business in Ready Made Garments

Background of the Study:

The garments industry of Bangladesh has been the key export division and a main source of foreign exchange for the last 35 years. At present, the country generates about $6 billion worth of products each year by exporting garment. The industry provides employment to about 3 million workers of whom 90% are women. Two non-market elements have performed a vital function in confirming the garment industry’s continual success; these elements are (a) quotas under Multi- Fibred Arrangement1 (MFA) in the North American market and (b) special market entry to European markets. The whole procedure is strongly related with the trend of relocation of production. It has been reveals that the tendency of low labor charges is the key reason for the transfer of garment manufacturing in Bangladesh. Bangladesh Garment Sector and Global Chain The cause of this transfer can be clarified by the salary structure in the garment industry, all over the world. Apparel labor charge per hour (wages and fringe benefits, US$) in USA is 10.12 but it is only 0.30 in Bangladesh. This difference accelerated the world apparel exports from $3 billion in 1965, with developing nations making up just 14 percent of the total, to $119 billion in 2001, with developing nations contributing 59 percent. In 1991 the number of workers in the ready-made garment industry of Bangladesh was 582,000 and it grew up to 1,404,000 in 1998. In USA, however, 1991-figure showed 1,106.0 thousand workers in the apparel sector and in 2008 it turned down to 765.8 thousand.

Objective of the Study:

The objective of the case study is to develop the concept about the various aspects of the organizational structure, success & marketing process of the garments industry. This case study will help me to analyze the various concept of marketing, formal hierarchy, standardized export policies & rules, organizational network, various types of approaches to make profit, decision making in stable & unstable situation, how to improve the quality of products & the production process which will enrich my experience for my future career.

 Scope of the Study:

During my internee period I have got chances to visit many buying house, factory, supervise much production process, & completed many sample program. And Inshallah, I will get a job in LE as asst. merchandiser & as an assistant merchandiser; I will try to elaborate the merchandising profession and the production and marketing process of a garments factory.

 Methodology:

Data instrument:

As the raw data is being collected by personal interview with various employee & buyer of different company and buying house, it was analyzed by the Microsoft office. This program was also used for the table a graphical presentation.

Beside those, the universal report writing software MS WORD was used to process all necessary research writing, charts graphs and tables.

To formulate the research problem I have constitute the following steps:

 Data collection procedure:

The source of data or information we divided into two parts that are primary and secondary source.

Primary data

In the primary source data are collected directly from Shelltex International

Secondary data

Secondary data are collected through different website journal and textbook and other data also collect by going various buying house.

 The Primary sources are follows:

Primary data are measurements observed and recorded as part of an original study. When the data required for a particular study can be found neither in the internal records of the enterprise, nor in published sources, may it become necessary to collect original data. For the completion of this report, the primary sources of data are-

*          Face-to-face conversation with the respective officers and staffs

*          Informal conversation with the clients.

*          Practical work exposures from the different desks of the departments .

*          Study of the relevant files as instructed as instructed by the officers concerned

 *         Experts’ opinion and comments,

The Secondary sources and data are follows:

The data which has already been collected by others, such data are called Secondary data. For this internship report, the secondary data are collected from the below sources-

*          Training materials available at the garments,

*          Various books articles, compilations etc. regarding marketing of financial products are informed below:

*         Published of different products,

*        Office circular and other published papers,

 Methodology used

There are various methodology that I have used to analyze performance are

Ratio Analysis

BCG Matrix

SWOT Analysis

Limitations of the Study

     It’s very hard to find necessary information because there are no fixed place such as library where data is kept.

  Foreign buyers English are not that much clear.

  The answer of certain questions I had go through people’s opinion. While doing the survey lots of people did not want to respond to many questions. Sometimes they even did not fill out the questionnaire properly for the busy schedule.

  Time was one of the major constraints. As our internship program is only three-month long, it was difficult to cover and collect all the necessary materials for completion of such a large report within this time boundary.

  The people of Merchandising Incorporation are under tremendous workload. Although, they wanted to cooperate with me in writing my report, their busy schedules sometimes did not allow them to do so. On the other hand, due to secrecy of official information, sometimes they showed unwillingness to provide me information.

  There are many code names in garments industry that is very important for production process, and I have memorized those codes.

  In garments factory most of the employee doesn’t have any educational background they do their job only with experiences.

  Political unrest of our country such as strike or hartal was major problem in this regard as it is difficult to go out and work during that time and to maintain the work schedule.

The concept of merchandising in general terms:

Merchandising is the methods, practices, and operations used to promote and sustain certain categories of commercial activity

There are:

1) Promotional merchandising

2) Trading industry

3) Retail supply chain

4 Licensing

a) Children

b) Adults

 Promotional merchandising:

In retail commerce, visual display merchandising means maximizing merchandise sales using product design, selection, packaging, pricing, and display that stimulate consumers to spend more. This includes disciplines in pricing and discounting, physical presentation of products and displays, and the decisions about which products should be presented to which customers at what time.

 This annual cycle of merchandising differs between countries and even within them, particularly relating to cultural customs like holidays, and seasonal issues like climate and local sporting and recreation.

 In the United States for example, the basic retail cycle begins in early January with merchandise for Valentine’s Day, which is not until mid-February. Following this, Easter is the major holiday, while springtime clothing and garden-related merchandise is already arriving at stores, often as early as mid-winter. Mothers Day and Fathers Day are next, with graduation gifts (typically small consumer electronics like digital cameras) often being marketed as “dads and grads” in June (though most semesters end in May). Summer merchandise is next, including patriotic-themed products with the American flag, out by Memorial Day in preparation for Independence Day (with Flag Day in between).

 By July, back-to-school is on the shelves and autumn merchandise is already arriving, and at some arts and crafts stores, Christmas decorations. By September, the summer merchandise is on final closeout and overstock of school supplies is marked-down some as well, and Halloween (and often even more of the Christmas) merchandise is appearing. As the Halloween decorations and costumes dwindle in October, Christmas is already being pushed on consumers, and by the day afterward retailers are going full-force with advertising, although the “official” season does not start until the day after Thanksgiving. Christmas clearance sales now begin even before Christmas at most retailers, and continue on to as little as New Year’s Day or as long as February.

 Merchandising also varies within retail chains, where stores in places like Denver, Minneapolis, or Buffalo might carry snow blowers, while stores in Florida and southern California might instead carry beach clothing and barbecue grills all year. Coastal-area stores might carry water skiing equipment, while ones near mountain ranges would likely have snow skiing and snowboarding gear if there are ski areas nearby.

 Trading industry:

In Eastern Europe, particularly in Russia, the term “merchandising” is commonly used within the trading industry and denotes all marketing and sales stimulation activities around PoS (point of sale): design, creation, promotion, care and training of the sales staff. Basically a merchandiser is someone who is continuously involved in business promotion by buying and selling of goods.

  Retail supply chain:

In the supply chain, merchandising is the practice of making products in retail outlets available to consumers, primarily by stocking shelves and displays. While this used to be done exclusively by the stores’ employees, many retailers have found substantial savings in requiring it to be done by the manufacturer, vendor, or wholesaler that provides the products to the retail store. In the United Kingdom there are a number of organizations that supply merchandising services to support retail outlets with general stock replenishment and merchandising support in new stores. By doing this, retail stores have been able to substantially reduce the number of employees needed to run the store.

 While stocking shelves and building displays is often done when the product is delivered, it is increasingly a separate activity from delivering the product. In grocery stores, for example, almost all products delivered directly to the store from a manufacturer or wholesaler will be stocked by the manufacturer’s/wholesaler’s employee who is a full time merchandiser. Product categories where this is common are Beverage (all types, alcoholic and non-alcoholic), packaged baked goods (bread and pastries), magazines and books, and health and beauty products. For major food manufacturers in the beverage and baked goods industries, their merchandisers are often the single largest employee group within the company. For nationwide branded goods manufacturers such as The Coca-Cola Company and PepsiCo, their respective merchandiser work forces number in the thousands.

 Licensing:

In marketing, one of the definitions of merchandising is the practice in which the brand or image from one product or service is used to sell another. Trademarked brand names, logos, or character images are licensed to manufacturers of products such as toys or clothing, which then make items in or emblazoned with the image of the license, hoping they’ll sell better than the same item with no such image. For the owners of the intellectual property in question, merchandising is a very popular source of revenue, due to the low cost of letting a third party manufacture the merchandise, while the IP owners simply sit back and collect the merchandising fees.

 Children:

Merchandising for children is most prominently seen in connection with films and games, usually those in current release and with television shows oriented towards children.

 Merchandising, especially in connection with child-oriented films and TV shows, often consists of toys made in the likeness of the show’s characters (action figures) or items which they use. However, sometimes it can be the other way around, with the show written to include the toys, as advertising for the merchandise. The first major example of this was the TV show “He-man and the Masters of the Universe,” in the early 1980s, but this practice has been common in children’s broadcasting ever since.

 Sometimes merchandising from a television show can grow far beyond the original show, even lasting decades after the show has largely disappeared from popularity. In other cases, large amounts of merchandise can be generated from a pitifully small amount of source material (Mashimaro).

 Adults:

Example of professional sports merchandising – A Boston Celtics cap manufactured by Adidas

The most common adult-oriented merchandising is that related to professional sports teams (and their players).

 A smaller niche in merchandising is the marketing of more adult-oriented products in connection with similarly adult-oriented films and TV shows. This is common especially with the science fiction and horror genres. (Examples: Star Trek, McFarlane Toys) Occasionally shows which were intended more for children find a following among adults, and you can see a bit of a crossover, with products from that show oriented towards both adults and children. (Gundam model kits)

 Sometimes a brand of non-media products can achieve enough recognition and respect that simply putting its name or images on a completely unrelated item can sell that item. (An example would be Harley-Davidson branded clothing.)

 A Glimpse of The Growth & Status of Ready-Made Garment Export of Bangladesh:

 Apparel-The Highest Export Earning Sector:

  Share of RMG In Country’s 1998-99 Total Export:

History:

The ready-made garment (RMG) industry of Bangladesh started in the late 1970s and became a prominent player in the economy within a short period of time. The industry has contributed to export earnings, foreign exchange earnings, employment creation, poverty alleviation and the empowerment of women. The export-quota system and the availability of cheap labour are the two main reasons behind the success of the industry. In the 1980s, the RMG industry of Bangladesh was concentrated mainly in manufacturing and exporting woven products. Since the early 1990s, the knit section of the industry has started to expand. Shirts, T-shirts, trousers, sweaters and jackets are the main products manufactured and exported by the industry. Bangladesh exports its RMG products mainly to the United States of America and the European Union. These two destinations account for more than a 90 per cent share of the country’s total earnings from garment exports. The country has achieved some product diversification in both the United States and the European Union. Recently, the country has achieved some level of product upgrading in the European Union, but not to a significant extent in the United States. Bangladesh is less competitive compared with China or India in the United States and it is somewhat competitive in the European Union.

The phase-out of the export-quota system from the beginning of 2005 has raised the competitiveness issue of the Bangladesh RMG industry as a top priority topic. The most important task for the industry is to reduce the lead time of garment manufacturing. The improvement of deep-level competitiveness through a reduction in total “production and distribution” time will improve surface-level competitiveness by reducing lead time. Such a strategy is important for long-term stable development of the industry, but its implementation will take time. In contrast, the establishment of a central or common bonded warehouse will improve surface-level competitiveness by reducing lead time, but deep-level competitiveness will not be improved and long-term industry development will be delayed. Therefore, granting permission to establish in the private sector such warehouses with special incentives, such as the duty-free import of raw materials usable in the export-oriented garment industry for reducing the lead time in garment manufacturing is a critical issue for Bangladesh. Second, Bangladesh needs to improve the factory working environment and various social issues related to the RMG industry. International buyers are very particular about compliance with codes of conduct. Third, issues related to product and market diversification as well as upgrading products needs to be addressed with special care. Moreover, the Government of Bangladesh needs to strengthen its support. The development of the port and other physical infrastructure, the smooth supply of utilities, a corruption-free business environment and political stability are some priority concerns for the Government to consider in its efforts to attract international buyers and investors.

The RMG industry of Bangladesh has expanded dramatically over the last three decades. Traditionally, the jute industry dominated the industrial sector of the country until the 1970s. Since the early 1980s, the RMG industry has emerged as an important player in the economy of the country and has gradually replaced the jute industry. The “export-quotasystem”1 in trading garment products played a significant role in the success of the industry. However, that quota system came to an end in 2004. Therefore, the competitiveness issue needs to be addressed, with special attention given to the long-term sustainability of the industry. The term “competitiveness” itself is a broad concept. Its meaning, implications, adaptation and achievement vary from firm to firm, industry to industry, or country to country. Michael E. Porter is a pioneer of the “competitiveness theory” (Porter, 1990)at the national or macro level (Cho and Moon, 2000). Firm/industry-level (micro level) competitiveness depends on various parameters. However, the literature provides no universal agreement on the definition of competitiveness. For example, some researchers consider the labor cost, unit cost, exchange rate, interest rate, prices of material inputs other price- or cost-related quantitative factors for measuring the competitiveness of a manufacturing firm/industry (Edwards and Golub , 2004; Fukunishi, 2004; Cockburn another’s, 1998; and Edwards and Schoer, 2002). Some other researchers consider product quality, innovativeness, design, distribution networks, after-sales service, transaction costs, institutional factors relating to the bureaucracy of export procedures and other non-price factors for measuring the competitiveness of a manufacturing firm/industry (Abdel-Latif,1993; Chen and others, 1999; and Sachwald, 1994). The influences of both price and on-price factors on the competitiveness of a firm/industry are reflected by market share and profit  ( 2006). This study attempts to incorporate price, non-price and result(for example, market share) factors in order to address the international competitiveness of the Bangladesh RMG industry. The majority of the competitiveness-related research studies focus on the “competitive performance” or on the “factors influencing competitive performance”. The studies consider product price, market share and other indicators to measure competitive performance, while considering wages, costs, productivity and other issues as factors influencing competitive performance. However, Fujimoto (2001) puts special emphasis on the “capability” factor that influences the competitive performance of a firm. According to him, improvement in the “capability” of a firm enhances its “competitive performance”. This improvement takes time, but it ensures the long-term sustainability of a firm. In contrast, improving only “competitive performance” and not “capability” may not be sufficient to ensure the long-term development of the firm.

This study addresses the competitiveness issue from two broader dimensions: surface-level and deep-level competitiveness.3 Surface-level competitiveness reflects the “competitive performance” of a firm or industry that is directly observable to consumers. Deep-level competitiveness reflects the “capability” of a firm or industry that is not directly observable to consumers. An improvement in the deep-level performance enhances the performance at the surface level. The severe competition under the quota-free trading environment pressures the RMG industry of Bangladesh to enhance its surface-level competitiveness at the earliest convenient time. However, the long-term sustainability of the industry demands enhancement of deep-level competitiveness. Therefore, the future development of the industry will depend on how much importance will be given to which factors/dimensions, and how the individual firms will respond and how government policies will influence the industry. Hence, the discussion of the competitiveness of the Bangladesh RMG industry requires simultaneous consideration of both the surface and deep dimensions. In particular, this study uses (a) export value, product price, market share and lead time as surface-level indicators, and (b) linkage expansion, factory environment, product/market composition, and “production and distribution” time as deep-level indicators for measuring the international competitiveness of the Bangladesh RMG industry. The paper is structured as follows.

 AN OVERVIEW OF THE BANGLADESH READYMADE GARMENT INDUSTRY:

The RMG industry is the only multi-billion-dollar manufacturing and export industry in Bangladesh. Whereas the industry contributed only 0.001 per cent to the country’s total export earnings in 1976, its share increased to about 75 per cent of those earnings in 2005. Bangladesh exported garments worth the equivalent of $6.9 billion in2005, which was about 2.5 per cent of the global total value ($276 billion) of garment exports. The country’s RMG industry grew by more than 15 per cent per annum on average during the last 15 years. The foreign exchange earnings and employment generation of the RMG sector have been increasing at double-digit rates from year to year. Some important issues related to the RMG industry of Bangladesh are noted in table

Table 2. Important issues related to the ready-made garment industry

 Year(s)                                     Issue

1977-1980                     Early period of growth

1982-1985                     Boom days

1985                              Imposition of quota restrictions

1990s                             Knitwear sector developed significantly

1993-1995                     Child labor issue and its solution

2003                              Withdrawal of Canadian quota restriction

2005                              Phase-out of export-quota system

Currently, there are more than 4,000 RMG firms in Bangladesh. More than 95 percent of those firms are locally owned with the exception of a few foreign firms located inexpert processing zones (Gonzales, 2002). The RMG firms are located mainly in three main cities: the capital city Dhaka, the port city Chittagong and the industrial city Narayangonj. Bangladesh RMG firms vary in size. Based on Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, (2000) found that in1997 more than 75 per cent of the firms employed a maximum of 400 employees each. Garment companies in Bangladesh form formal or informal groups. The grouping helps to share manufacturing activities, to diversify risks; horizontal as well as vertical coordination can be easily found in such group activities. Ready-made garments manufactured in Bangladesh are divided mainly into two broad categories: woven and knit products. Shirts, T-shirts and trousers are the main woven products and undergarments, socks, stockings, T-shirts, sweaters and other casual and soft garments are the main knit products. Woven garment products still dominate the garment export earnings of the country. The share of knit garment products has been increasing since the early 1990s; such products currently account for more than 40 per cent of the country’s total RMG export earnings (BGMEA website). Although various types of garments are manufactured in the country, only a few categories, such as shirts, T-shirts, trousers, jackets and sweaters, constitute the major production-share (BGMEA website). Economies of scale for large-scale production and export-quota holdings in the corresponding categories are the principal reasons for such a narrow product concentration.

  COMPETITIVENESS OF THE BANGLADESH READY-MADEGARMENT INDUSTRY:

 The United States was the main export destination for Bangladeshi RMG products in the early 1990s followed by the European Union, but the European Union has surpassed the United States over time. These two destinations generate more than 90 per cent of the total RMG export earnings of Bangladesh (BGMEA and the Export Promotion Bureau websites; and Quddus and Rashid, 2000). The shares of other importers, such as Australia, Canada, China, Japan and the Russian Federation as well as countries in the Middle East, in the total RMG export earnings of Bangladesh are minimal. This section of the paper focuses on surface-level competitive performance of the Bangladesh RMG industry in the United States and the European Union markets only. In addition, the performance of China and India along with Bangladesh as RMG suppliers to international markets is also considered for comparative analysis. (a) Export competitiveness in the United States market5 Bangladesh has experienced some product diversification in its export of garments to the United States market in recent years compared with the early 1990s.6 However, the country’s performance in upgrading its products is not significant with regard to the United States market (Haider, 2006). The country experienced a sharp increase in the export of garment products to the United States market in the 1990s, but faced declines in export earnings from that country in 2002 and 2003, followed by slow increases since 2004. The exports of India also increased rapidly in the 1990s, although that country experienced comparatively slow progress in the last few years. However, the RMG exports of China to the United States have increased at a startling rate over the years. For example, the textile and garment export earnings of China, India and Bangladesh from the United States were $3.6 billion, $0.8 billion and $0.4 billion respectively in 1990, and increased to$22.4 billion, $4.6 billion and $2.5 billion respectively in 2005. Such rapid expansion in the exports of China represents a major challenge to other exporters.

Cotton non-knit shirts, man and boy was the highest contributor to the export earnings of Bangladesh from the United States, amounting to $332 million in2005. The export earnings of only eight categories8 crossed the $100 million export benchmark in the same year for the country. A total of 16 categories of exports crossed the$50 million benchmark and 31 categories crossed the $10 million export benchmark.

 Export competitiveness in the European Union market:

 Bangladesh has experienced both quantitative and qualitative changes in exporting garment products to the European Union market during the period 1996-2005. The textile and garment export earnings of Bangladesh from the European Union increased from1.2 billion Euros in 1996 to 3.7 billion Euros in 2005. For India and China, the corresponding earnings increased from 3 billion and 5.3 billion Euros in 1996 to 5.3 billion and 21.1 billion Euros in 2005 respectively. Garment products generate the major share of Bangladesh’s export earnings from the European Union. However, both textile and garment products in China and India contribute to the export earnings from the European Union. For example, garment products on average generated more than a 95 per cent share of the total textile and garment exports to the European Union from Bangladesh during the period1996-2005. The corresponding shares for India and China stand at below 75 per cent and80-90 per cent respectively. The top five product groups contributed 76 per cent of the total garment export earnings of Bangladesh from the European Union in 1996, and that share increased to82 per cent in 2005. The corresponding changes for India and China were from shares of62 per cent and 34 per cent in 1996 to 54 per cent and 45 per cent in 2005 respectively. This trend demonstrates that product diversification in Bangladesh is lower than that of India and China in exporting garments products to the European Union market. Knit garments from Bangladesh have gained remarkable access to the European Union market during the period 1996-2005 (see table 2).Duty- and quota-free access of garment products manufactured under “two-stage local transformation” (yarn to fabrics, and fabrics to garment) have accelerated the exports of knit garment products from Bangladesh to the European Union. As the knit textile subsector is relatively less capital intensive and requires relatively simple technologies, it managed to undergo rapid expansion, benefiting from the European Union Generalized System of Preferences. The woven part of the category has failed to utilize that facility owing to a lack of sufficient backward linkages. In contrast to the European Union, both knit and non-knit products have entered the United States market simultaneously, as no special tariff or tax reduction incentive was available there for the import of garment products from Bangladesh. The product-mix of garment products exported from Bangladesh to the European Union has changed significantly during the period 1996-2005. The share of shirts in total garment exports from Bangladesh to the European Union has decreased, whereas the shares for overcoats, jackets, sweaters, suits and some other garment products have increased indecent years. These changes demonstrate that Bangladesh is achieving some level of product diversification in exporting garment products to the European Union. In addition, a gender analysis indicates that Bangladesh has achieved some upgrading of its products recently in terms of exporting garment products to the European Union. Garments for females are treated as upgraded products compared with garments for males, since they add more value on average. The earnings of Bangladesh from the export of garments for females to the European Union has increased during the period 1996-200.

Table- 3 Exports of knit, non-knit and made-up products to the European Union

(Millions of Euros and percentage)

 Price competitiveness:

China and some other competitors of Bangladesh have implemented sharp price-cutting policies in exporting garment products over the last few years, but Bangladesh has failed to respond effectively to such policies. China was able to drop the export price of29 garment categories10 by 46 per cent11 on average in the United States within a year, from $6.23 per sq meter in December 2001 to $3.37 per sq meter in December 2002.However, all other suppliers were able to drop the price by only 2 per cent, from $3.50 per sq meter to $3.41 per sq meter during the same period. By the end of 2002, China had underpriced all other exporters to the United States in 22 out of 29 garment categories and it had underpriced others in 26 out of 29 categories by March 2003 (American Textile Manufacturers Institute, 2003). Moreover, China rapidly managed to be price competitive in the European Union and other major international markets. For example, the average unit export price of garment products integrated in the third stage of the Multi fiber Arrangement phase-out decreased from 11,600 Euros per ton in 2001 to 9,500 Euros in 2002 for Bangladesh in the European Union, whereas the corresponding decrease for China in that market was from 13,500 Euros to 8,800 Euros per ton (European Commission, 2003). Bangladesh needs to respond to such price-cutting policies of its rivals in order to remain competitive in the quota-free global market. (d) Lead time Lead time refers to the time required for supplying the ordered garment products after the export order has been received. In the 1980s, the usual lead time in the garment industry was 120-150 days for the main garment supplier countries of the world; it has been reduced to 30-40 days in the current decade.12 However, in this regard the Bangladesh RMG industry has improved little; for example, the average lead time is 90-120 days for woven garment firms and 60-80 days for knit garment firms. In China, the average lead time is 40-60 days and 50-60 days for woven and knit products respectively; in India, it is 50-70 days and 60-70 days for the same products respectively.13Shortening the lead time is the most urgent priority task for Bangladesh. The best way is to develop domestic backward linkages with the aim of reducing “production and distribution” time.14 Such a strategy would contribute to enhancing the deep-level performance of the industry and would have a positive impact on surface-level performance. An alternative solution would be to establish a central or common bonded warehouse in the private sector for storing raw materials usable in the export-oriented garment industry, with special incentives such as duty-free import. While such a solution is the fastest way to improve surface-level competitiveness by reducing lead time, it carries the risk of delaying deep-level competitive performance-enhancing initiatives and the long-term development of the industry.

Letter of Credit (LC):

• Letter of credit (LC) is a financial instrument opened by importer.
• LC can be opened in favor of exporter. It gives assurance that the importer is solvent.
• Most of the LC is irrevocable. An irrevocable LC means that once the  exporter has  accepted the credit, the buyer cannot alter it without any permission of exporter.

1. Buyer requests the bank for open a letter of credit.
2. Issuing bank open an irrevocable LC and send it to exporter bank.
3. Advising bank prepare  letter of conformation of LC and send it to exporter
4. Exporter review the LC. IF acceptable, exporter arranges with freight forwarder to delivery the goods.
5. Exporter present delivery documents to advising bank for payment.
6. Advising bank forward the entire document to issuing bank to authorize payment.
7. At the same time, advising bank pays necessary payment to exporter.
8. 8 buyers account in the issuing bank is debited

Terms of LC:

C.I.F (Cost, Insurance and freight):

• Charge by the exporter- the goods, transportation, insurance, miscellaneous etc.
• Must mention a delivery point up to where the exporter will bear the cost of freight.

C.F (Cost and Freight)

• The exporter quotes a price including the cost of goods and transportation.
• The insurance cost by importer.
• Importer knows such insurance company who offer lower insurance price.

F.O.B (Free on Board)

• F.O.B means exporter will take the responsibility up to the goods are loaded on the ship
• Importer has own transportation
• Ship company is well known to importer

Commercial invoice:

Commercial invoice is the final bill that allows the importer about how to pay to exporter. Commercial invoice is needed customs to impose tax.

Bill of lading:

A bill of lading is a documents issued by the ship-owner or by the master or captain of the ship or other agent in exchange of mate’s Receipt after the goods have been placed on the board the ship for being carried to a specific destination. It is used when the goods shipped from only a part of the cargo of a ‘general ship’

A bills of lading must be stamped and signed by the ship-owner or his agent, the master or captain of the ship

Backward Integration:

Customers are another potential source of competition.  For reducing the production cost manufacturer make linkage or own the source of raw materials. Those linkages are called backward linkage or backward integration.

Labor-Capital relationship:

In countries where there is little capital available for investment and where the amount of investment per worker is low, manager might expect to find cheap labor rate and export competitiveness in product that require  large amount of labor relative to capital.

Organizational Profile:

Company Profile 

Legal Identity:           Private Limited Company.

Established:               2000

Production Unit:       30 (Includes Knitting, Dyeing, Printed label, label. Hang tag).

Production Item:       Printed label, label. Hang tag etc.

Yearly Turnover:      US $ 1 Million.

Total Employee:        52 Persons

Bank:                          NCC bank.

Comments:                 Our buyers are steady and satisfied and we are also doing business in European Union.

 Organogram of Shelltex International:

Professional service:

Our policies and services have been built to fulfill customer satisfaction with finest quality products and services as well as ethical responsibilities based on strong time management, teamwork and modern communication.

 Global sourcing solution for our customer: We source for supply chains for major brands and retailers worldwide. Our sourcing network 13 plus countries and territories across North America, Europe and Asia. In addition to the wide range and variety of consumer products available through its sourcing network, JAK also provides its strength in custom product design and development to provide complete global sourcing solutions for its customers.

 Quality Service: Quality leads flavor in our business existence as quality control is the first preference of job conduct. Our QC teams who are highly trained and experienced follow up following issues:

• On site production monitoring
• Multiple Midterm inspection
• Spot check

During production pick the product and match with buyer recent production comments.

Maintain standard quality in every step of manufacturing from the selection of right and best materials to the packaging and shipping.

Communication & Coordination: Communication & Coordination are the important role in our service. We always communicate with our buyer and coordinate with production department, sourcing department time to time we inform to our overseas customer updated status for all of issue. We always follow our buyer comments

 Development and Sampling: This is an important sector in our service. Our professional team always review buyers development package and communicate with buyer to meet their requirements by providing Fit sample, PP sample, Salesman sample etc.

 Effective and Strong Management: On time delivery is very important to us. We manage our entire professional as follows:

• Merchandising work instruction
• Production Plan
• Sourcing for all of accessories and Fabrics
• Shipping work instruction
• Compliance
• Quality maintain
• Sampling

 All team members, top management to bottom are aware of shipment date. Also, an off-line database is used to track all the process of the production, so buyers can be updated.

 Mission and Vision of Shelltex International

Since the establishment, Shelltex International has always been dedicated to its customer service. The success of the company is based on its management’s devotee and innovative attitude and firm commitment to its ultimate goal.

 Our Vision:

Our vision is to provide services which directly belong to international trade in commodities and services, by safeguarding its customers’ interests, protecting their integrity and to make business by capturing major shares in the market through quality products and services which would be most trusted anywhere in the world.

 Our Mission:

Our Mission is realization of Vision through maximum delivery of quality product and services strictly on ethical and moral standards at competitive costs ensuring optimum benefits to the clients and ……….

1. To ensure the best and ultimate solution to the customers in meeting their ongoing needs with the best quality of products and services.

2. Within the stipulated period of time.

3. To be the market leader of the trade.

4. To handle the requirement of the customers both profitably to them and to ourselves.

5. Factory visiting service is available when necessary.

6.  A perfect solution will be efficiently presented by the Shelltex International trained staffs when technical problems occur or on customer’s request. Orders are continuously monitored by the Shelltex International’s most efficient staffs and improved thereof till shipment.

7. Value-added service ensures its customers’ high profits and advantage in a fierce competitive climate.

8. To manufacture world-class standard products for our valued customers with on time delivery.

 Organizational Goals of Shelltex International

  To employ resources as incendiary for the growth of RMG sector.

  To provide service for the parties involved and invention of the necessary new service dimension.

  To search for new buyers for investment and help to develop products to suit such needs.\

Principal Objectives:

• Profit maximization
• To provide standard services.

 Strategic View of Shelltex International:

• A truly international outlook for exporting
• A long-term commitment for exporting
• A strategic approach to the development of new export market
• Credibility and close and long-term relationship in export market
• An international reputation for quality
• Resources available for export support

 Functional Departments of Shelltex International

All the functions of Merchandising Inc. are operated under four major departments:

1. Merchandising department.

2. Sampling department.

3. Commercial department.

4. Accessory supply department.

5. Production department.

6. Distribution department.

 Merchandising Department:

This department of merchandising department is responsible for the following activities:

Searching buyers: The task of this department started with the searches of buyers, who want to import garment products from our country, to get the order of the garment product manufacturing.

Introduce letter: After finding suitable buyers this department issues an introducing letter to the respective buyers which describes merchandising department’s total years of experience, its parameter of total activities, efficiency and effectiveness and relationship with existing buyers.

Cost of Making: CM is another important activity that stands for Cost of Making. Here the merchandiser of this dept. determines what are the things are required to make a unit or dozen of an order. Then he makes calculation’ of per unit cost on the basis of accessories consumption, fabric consumption, labor cost and other relevant costs.

 Price negotiation: When this department has the clear idea about the cost involved in the desired transaction they start price negotiation to determine a final price that the buyer agrees to pay.

Select supplier: Merchandising department recognizes the effectiveness, of their commitment to buyers and thereby it shoulders the responsibility of finding out efficient buyers. The bases of efficiency include supplier’s adequate administrative setup to prepare all necessary documents for exports, supplier’s financial status and adequate capacities etc.

  Sampling Department:

It starts its activities after receiving the original sample or sketch sample from the buyer with an, intention to testify the capability of sampling department to meet the desired standard of the products. Two people contribute toward the efficiency of sampling dept. They are sampling man and pattern master of M. Inc.

  Commercial Department:

The commercial department of Shelltex International prepares pro-forma invoice for the respective buyer. The invoice includes the quantity of the buyer’s order, its unit price and total price. The commercial department also transfers master L/C on the name of selected supplier. This department also maintains all clerical activities such as maintaining the accounts of daily transaction, maintaining payroll, keeping the accounts of daily expenditures etc.

  Accessory supply department:

For a smooth manufacturing, the assurance of on time delivery of fabric and accessories is must. The responsibility of supplying accessories to the suppliers landed on the ground of this department. To assure this supply Merchandising Inc. utilizes two sources. One is its sister concern FM. Printing and Packaging Company. Another is the outsourcing from its suppliers of long term relationship. As a result the manufacturer doesn’t need to be worried about the availability of accessories.

 Production Department:

Although named as production department, this service department rather follows up production dividing its activities into following sections of Responsibilities: Quality monitor and control: This dept. supervises the manufacturing process to maintain the quality and scheduled progress of the manufacturing in behalf of merchandising Incorporation.

Final Inspection: For its reputation, buyers usually delegate the responsibility of final inspection on the shoulder of quality. Inspector of Merchandising Incorporation. The efficient inspection is the responsibility of the quality inspector of Merchandising Inc.

 Shipping Department:

As the name mentions the task of shipping department of M. Inc starts from -receipt of final goods from the supplier factory after the final inspection and ends- with loading of the goods bound for supplier. This department also prepares the supporting documents for export such as bill of exchange, bill of lading, commercial invoice, certificate of origin, packing list etc.

 List of Machineries

Our mission is to provide not only the highest possible product quality but also a total service.

 Other logistic Machineries

 We have created world-class facilities to ensure better quality control and faster deliveries, the way the market is demanding today

Our mission is to provide not only the highest possible product quality but also a total service to match.

Some are Parts:

Merchandising Business in Ready Made Garments (part 1)

Merchandising Business in Ready Made Garments (part 2)

Merchandising Business in Ready Made Garments (part 3)