Merchandising Business in Ready Made Garments (Part 3)

Dyeing program:

After receiving the order of program merchandiser at first prepare the color and size ratio of the program and after that they prepare the knitting and ratio program. There some law for fabric consumption that is important to identify the required quantity of fabrics.

LAW:

BODY LENGTH+SLEEVE LENGTH X CHEST X 2PART X .GSM % 1000= FABRIC FOR 1 PCS+ 15% FABRIC

 Here I present a copy of dyeing program

After knitting program we send 1x1m fabric to the buyer for the approval of color and shade of the fabric. If the fabric matched with the requirement than we use the fabric for production purpose.

 Cutting:

After the fabric arrive in the factory then we send the fabric along with the measurement sheet to the cutting section. In cutting section cutting master cut the fabric according the measurement & sends it to printing section or embroidery section if necessary.

 Printing:

In printing section print master at first develop the design of the print and make frame according the print. Before printing print master send a printing sample to the merchandiser. Merchandiser mach the print with the requirement and color Pantone if matched than he give permission to print the fabric. Here I present a copy of printing requirement.

Embroidery:

When printing finished then print master send the fabric to th embroidery section if necessary. In embroidery section embroidery designer make the design of embroidery and set stitches for that design here I present some copy of embroidery design.

Embroidery design:

 Sewing Thread:

Thread may be contrast or in same color it must be matched with requirement. Store manages the sewing thread and the merchandiser approves the color and quality.

 Sewing:

After embroidery of fabric   in charge of the section send the Fabric to the sewing section in sewing section we send some of the accessories which need to be attached with the garment. Sewing section in charge and production manager observes the sewing process and keep them update with comments from the measurement. (Here by comments I mean the correction of order sheet and approval from buyers

 Finishing:

 After sewing the RMG goes to finishing sector for attachment of other accessories, folding, packing, here we aid them with folding and packing approval from buyers. Here I present some list of accessories

PRODUCTION ACCESSORIES

After attachment of all accessories and packing the finishing section pack the garments in required carton in proper ratio and put the level of buyer address and the factory address on the carton. After Buying Quality Controller come in inspection to if the product meet their requirement. Then they send theses carton in our store house before shipment date

 Cargo booking:

Cargo booking is another impotent responsibility of merchandiser there is a law of cargo booking.

After booking of cargo we send RMG to port and there Buyer runs an inspection where the product is ok or not if products ok then the commercial merchandiser take the shipment document after customer clearance and submit the document to exporter bank and receive the LC money

 Learning through my tasks (Job Responsibility):

As Business Promotional Officer I face the following responsibility:

– Communicate with new and existing buyers to expand the business even farther in national and in international areana.

– From an inquiry, all information is gathered (measurement, Which fabric, color, what type of print, quantity, packaging, FOB or CIF etc) to provide a good price.

– If price is o.k.; Then making & sending of sample to buyer for approval of style, print (if any), GSM, fabric, measurement & if there is any rectification to be made, I must done it accordingly.

– After approval + fixing a delivery date, order is placed to the nominated factory. Fabric conjunction information

– Forwarding master sample + accessories + PO to factory.

– With the help of QC, whole production status is being send to buyer through mail + phone.

 -Daily production discussion with QC + keeping in touch with factory production in charge.

-Prepare weekly reports, monthly reports, master summary; incoming accessories inventory report to be sent to buyer for a better follow up of production in here + for a good understanding & correspondence system.

-Always being a source of information for a prompt reply for buyer queries through phone or by mail. During buyer visit in Bangladesh, all discussion, claims (if any) queries concerning production inspection or any production problem should be solved here itself.

– Maintain liaison with the shipping Lines & forwarder.

-For delivery, vessel is booked from the nominated shipping line.

-Preparing I/C based on inspected garments for shipment. Scrutinizing Export & Import documents. After delivery, buyer is provided the original documents through courier.

Comparison between textual work in school and in internship:

The text books that I have learn trough out my education life had helped me a lot in the practical work life of internship. This has created a base for me, depending on which I have worked and learned various job related problems and managed to find solutions for those problems.

–          When I worked in accounting department the accounting related knowledge that I have learn in various courses has helped me such as Financial Accounting, Accounting Theory, Advanced Accounting, Auditing etc.

–          When I worked in production department and worked on production of various products the knowledge I gained from Cost Accounting, Strategic Management Accounting helped me.

–          When I worked as Business promotional officer my main job responsibility was to communicate with new and existing buyers from both inside and outside national boundaries.

–          To understand the nature and complication of government regulations on the business and the law by which it is controlled the course Business Law helped me a lot.

Findings

Readymade garments market of Bangladesh

Bangladesh now exports garments to about 25 countries around the world, the USA is the single largest importer of its RMG products, amounting to 43 percent of total garment exports. Bangladesh is the sixth-largest supplier of apparel in the US market. Considering the European Union as a single market, the USA then becomes the second largest. Over the past few years, Bangladesh’s RMG exports to the EU have expanded rapidly, with the EU currently importing about 52 percent of Bangladesh’s total garment products. The inter-temporal evidence of the narrow market base of Bangladesh RMG exports in the 1990s is provided by the concentration of exports to the US and EU market. While the export share to the USA has witnessed an annual average rate of decline of 1.5 percentage points, however, the corresponding share to the EU has experienced an annual growth rate of 1.6 percentage points. Thus, the increment in the EU share has simply replaced the declining share in the USA market, which suggests that, instead of diversification, Bangladesh’s export market has remained concentrated over the past decade. The combined market share of the USA and the EU has thus increased from 95.5 percent to 95.6 percent between 1991-92 and 1998-99. Bangladesh so far has been unable to gain access to ASEAN or Indian markets, although it imports a huge quantity of fabrics and yarn from these countries. Similarly, although it imports about 95 percent of its total garment machinery from Japan, its market share of apparel export to Japan is a mere 0.1 percent.16 Bangladesh’s inability to gain access to these large markets in turn suggests that the country has yet to establish its claims, as advocated by the WTO, to the principles of reciprocity and market access. The North American quota system and GSP facilities afforded by the EU have contributed to the undiversified RMG export market in Bangladesh; in that entrepreneurs have focused on taking advantage of these special opportunities. Thus, the entire national clothing export business will be endangered by the year 2008, when the MFA is eliminated and GSP schemes may cease to operate. The country must thus make immediate and vigorous attempts to diversify its export markets.

Why buyers come here:

The principal static comparative advantage that Bangladesh enjoys over potential competitors is

its cheap labour force. The wage level in the RMG industry is low both for males and females,

compared with workers in a similar category in other sectors. For instance, a comparison on the

basis of wage data provided by Bangladesh Bureau of Statistics8 shows that the average monthly

wage of skilled RMG factory workers is 1.4 to 2 times lower than that of similar factory workers

in the textile and other sectors.

Table : Labor costs in selected countries (in US $/hour)

Countries                                 1991                                        1993

Bangladesh                             NA                                          0.16

India                                        0.25                                        0.27

Pakistan                                   0.24                                         0.27

Sri Lanka                                 0.39                                         0.35

China                                       0.24                                        0.25

Indonesia                                0.18                                         0.28

Thailand                                  0.59                                         0.71

Italy                                         13.5                                        NA

UK                                          7.99                                        NA

US                                           6.77                                         NA

Sources: Moore 1997, Table 2; Ramaswamy and Gereffi 1998, 123 as quoted in M. Vijayabaskar,

“Productivity, Competitiveness and Job Quality in Garment Industry in India,” a discussion

paper prepared for the Sub-regional Meeting on Productivity, Competitiveness and Job Quality

in Garment Industry in South Asia, Kathmandu 25-26 September 2001.

Table : Unit price realization of selected garment exports (in US $/piece)

SITC    Product Bangladesh    India    Pakistan         Sri Lanka         China              Thailand

description

Men’s woven wear

8414 Trousers              4.21                 3.91     3.67                 6.44                 5.74                 6.35

84151 Cotton shirts    4.82                 5.59     3.74                 6.15                 4.02                 7.51

84159 Shirts (others) 4.17                   6.16     2.89                 5.72                5.28                 4.85

Men’s knit wear

84324 Trousers            3.17                 2.80     3.21                 3.90                 2.04                 3.29

84371 Cotton shirts    2.97                4.53     4.06                 7.44                 5.49                 7.48

84379 Shirts (others)   3.45                 4.62     3.81                6.08                 8.14                 3.34

Women’s woven wear

8425 Trousers, breeches

                                     3.47                4.77    4.04                5.39                7.53                6.05

8426 Blouses, shirt-blouse

4.55                   4.22     3.67               5.87                 5.85                 7.13

8427 Skirts                  3.28                  3.94     3.14               5.69                 6.77                7.04

Women’s knit wear

8425 Skirts                  0.00                  2.92     5.68               4.85                3.13                 4.41

8426 Trousers, breeches

 2.59                  3.74      2.90              4.82                6.78                 4.54

Source: “Globalization and the Apparel Industry of Pakistan,” a discussion paper prepared by Asir Manjur for SMEDA

(Small and Medium enterprise Development Authority) for the Sub-regional Meeting on Productivity, Competitiveness and

Job Quality in Garment Industry in South Asia, Katmandu 25-26 September 2001.

 Merchandising in garments factory in Bangladesh:

There is two type of merchandising in Garment Company:

• Commercial
• Official

Commercial

They manage the export related document and ensure that the buyer LC is accurate. After production they also manage the document of shipment.

Official

They manage the production process and see whether the product is produced regarding the requirement of the buyer and delivery the produced good within the shipment date. I am an official business promotional officer of Shelltex International.

 Problems and Barriers of RMG merchandising – supplier Industry of Bangladesh:

The problems and barriers that are hindering the growth of export­ oriented Buying House industry are classified under the following major functional areas:

  Human resource development

  Infrastructure.

  Marketing

Human Resource Problems of Buying House:

Unskilled Employee:

Most of the employees are not enough skilled to perform their job. In the there are some post such as quality controller, design maker, merchandiser that require technical skill to be performed but as the employees do not have any institutional training they lack such technical skill. On1y way they can learn is through on the job training. Convincing foreign buyers and establishing long term relationship with them is one of the most important tasks. To perform this job employees need proper language and communication skill. 13ut in our country as the education medium is Bengali and there is less opportunity to learn other foreign languages therefore employees lack communication skill to convince and establish long-term relationship with foreign Buyer.

No training Institution:

There are no such courses designed in any of the public or private educational institutions of our country which can give employees training specifically to perform their job. As a result people usually coming to this field are from different background. They are usually unskilled and inexperienced. Fleeting tendency of Employees has a very high tendency to switch their jobs. This may be because of their poor salary structure and no service benefit. As a result whenever they find any better offer they try to switch they exist one.

 Lack of career development:

Employees involved with this industry have fewer chances for career development because of small structure of the industry. As a result less people are interested to come to this field.

 Dictatorship of employer:

Employers are usually autocratic with their subordinate employees as a result of which employees are often demotivated to work. They feline they are always under pressure.

 No Trade Union:

As the employees of this industry do not have any union to support their claims, the employers always neglect their demands.

 Infrastructural problem:

No vision:

RMG industry is in its growth industry but this growth is a result of so caned blessing of quota system but not the achievement of their efficiency. Even the constituents of this industry buying houses have never been shown any vision of prospect, both in their attitude and actions. This is the warming of undesired maturity for this industry. Even though they are aware about the guillotine of year 2008, but it seems that they are ready to dye out.

 Insufficient and Poor Backward linkage:

Threat, button, cartoon, backboard these are treated as accessory of garments product. Industries of these products are treated as backward linkage industry of garment exports. Most of the times supply these accessories to garment manufacturers. But due to insufficient number of factories, they face diff1culties to supply these accessories on time. The quality of these accessory most of the time do not matches, as it demanded due to their inefficiency and ineffectiveness in production. Majority people involved in this sector are illiterate. As a result of which they are not concerned of the consequence of the late delivery as well as poor quality.

 Rules and Regulations:

There are also no written rules and regulation for operating this industry. As a result, people involved in this industry operating their business according to their willingness.

 Marketing problem of Buying House Industry:

Short Shipment:

This means delivering goods with inappropriate quantity. This is a very common problem for all working in this sector. Garment manufacturers of our country are the victim of many natural contingences including strike, hartal or political instability: So a result they often fail to finish their on time which result short shipment. Due to this short shipment respective buyer become dissatisfied with the Buying House and as a result all parties involved suffer loss.

 Poor product quality of supplier:

Another important problem is the poor quality of its supplier (garment manufacturer). Desired quality is the first condition of the foreign. Garment manufacturers due to their unskilled worker cannot produce the product with expected quality. As a result buyers reject the product.

 Improper document:

At the time of releasing goods from the port, a buyer needs to show

Some documents such as to prove his authentication. These documents are sending to buyer from buying house or the respective supplier. However, sometimes due to lack of experience or knowledge they sometimes fail to send appropriate documents for which the buyer cannot discharge his goods from the port. As a result the buyer becomes dissatisfied.

 Document Delay:

Besides improper document, sometimes the supplier or buying house fails to send documents on time. Without proper document the foreign buyer cannot discharge goods from the ship. This problem is very irritating to buyer as the product has arrived at the port but due to unavailability of proper document he is unable to discharge goods from the port. For this reason sometimes the suppliers has to break relationship with its buyers.

 Commission Recover Problem:

This problem mainly occurs due to unethical practices of few people. Normally, the amount of the commission is specifically written at the back of letter of credit. So, nobody can deny paying the house. However sometimes due to ill intention of the people of bank of the merchandiser faces difficulties to receive its commission.

Ratio Analysis

Profitability ratio (2009)

1. ROA=return on assets= NI /ATA

                                       = net income/ average total assets

                                       =tk.629,767.50/ tk.6,604557.19

                                       =0.9535%

2. PM=profit margin=NI /OI

                                 = net income/ operating income

                                 =tk. 629,767.50/ tk.53,869,537.50

                                 = 0.01169%

Efficiency ratios

      3. OEA=operating expense to assets=OE/AT

                                                         =operating expenses/ average total assets

                                                        =tk.5,253,925/tk. 6,604,557.19

                                                        = 0.7954%

4. OER=operating expenses to revenue

            =OE/OI=operating expenses/ operating income (revenue)

            =tk. 5,253925/tk. 53,869,537.50

            =0.0975%

 Liquidity ratio = Current Assets / current Liabilities

                            =tk.6,144,724.19/tk. 4,450289

                            =1.38%

Profitability ratios (2008)

1. ROA=return on assets= NI /ATA

                                       = net income/ average total assets

                                       =tk.524,500.69/ tk. 2,905200.69

                                       = 0.1808%

2. PM=profit margin=NI /OI

                                 = net income/ operating income

                                 =tk. 524,500.69/ tk.33,869,537.50

                                 =0.0154%

Efficiency ratio

      3. OEA=operating expense to assets=OE/ATA

                                                         =operating expenses/ average total assets

                                                        =tk.3,380,820 /tk. 2,905200.69

                                                        =1.1637  %

4. OER=operating expenses to revenue

=OE/OI=operating expenses/ operating income (revenue)

=tk. 3,380,820 /tk. 33,869,537.50

=0.0998%

Liquidity ratio    = Current Assets / current Liabilities

                                                            =tk.2,454,300.69/tk. 1,130,700

                                                                 =2.17%

Comparison (2008 -2009)

 Graphical Representation of Ratios (2008 -2009)

 Here,

ROA=Return on assets

PM= Profit Margin

OEA=operating expense to assets

OER=operating expenses to revenue

L.R=Liquidity ratio

Production Department

 Although Shelltex International is a merchandising concern but it also have its own production about few of its products, such as Label, Printed label, Hangtag, Care label. The Sales department handles the products that other manufacturers produce on behalf of us according to our customer specification.

 Below I have analyzed data of last five years of production department.

 Units producedঃ

Expensesঃ

Revenueঃ

 The BCG matrix

The BCG matrix (Boston Consulting Group analysis) is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1968 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.

The BCG matrix is used to rank the business units (or products) on the basis of their relative market shares and growth rates.

Cash cowsঃ

Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a “mature” market, and every corporation would be thrilled to own as many as possible. They are to be “milked” continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.

Dogsঃ

Dogs, or more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically “break even”, generating barely enough cash to maintain the business’s market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company’s return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off.

Question marksঃ

Question marks (also known as problem child) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

 Starsঃ

Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit’s market leadership may require extra cash, but this is worthwhile if that’s what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom.

Merchandising business in our country is in stars category compare to most of the countries of the world and it has huge possibility to be the cash cow. The company I have worked in Shelltex International will also fall in stars compare to other merchandising companies of our country.

 SWOT Analysis

SWOT Analysis of Merchandising Business

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable.

Strengths: attributes of the person or company that are helpful to achieving the objective.

Weaknesses: attributes of the person or company that are harmful to achieving the objective.

Opportunities: external conditions that are helpful to achieving the objective.

Threats: external conditions which could do damage to the objective.

The Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis described in the following tables:-

Table: SWOT Analysis Merchendising Business in Bnagladesh

 Table: SWOT Analysis Shelltex International

 Table: SWOT Analysis of Production Department

 Recommendation:

• Due to low labor productivity Bangladesh is competitive, with low value and thus low-priced items, at the lower end of the RMG market. RMG production is concentrated in a relatively limited range of products such as shirts, T-shirts, trousers, and shorts. To be internationally competitive, Bangladesh needs to expand its product range and should begin producing fashion-wear and higher value-added items. Product diversification is essential to meet the challenges of the world.
• Establishment of backward linkages, especially the domestic production of yarn, can reduce the cost of production. The current gap in demand and domestic production, met through imports, is estimated to be 480 million kg for yarn, and 2,300 million meter for fabrics. The country could thus save considerable foreign exchange by increasing domestic production of yarn and fabric. Production costs would also be reduced, since the RMG manufacturers would not have to buy fabrics at international prices that are not necessarily competitive.
• RMG industry in Bangladesh is the slow rate of increase in productivity, and the gap that exists between this country and other competitors in this regard. There is also scope for capacity building in different types of skills and processes
• A considerable gap also exists in knowledge about trade and investment flows. This is understandable, given that most entrepreneur interactions are with buyers who merely specify their product needs, provide the designs, etc. The emerging global environment, however, calls for more strategic action with regard to major competitors.
• Introduction of functional English courses for managerial and supervisory staff and greater attention to on-the-job training, with appropriate incentives such as tax rebates.
• Encouragement for relocation of factories outside main urban areas, with serviced plots being made available and adequate supervision to ensure that factories are functionally designed.
  • After recruitment of employee, they  should provided with three to six month training to learn the technical work to perform the technical job.
  • The company should provide money to its employee to develop’ communication skill in particular language in order to communicate with foreign buyers.
  • Instead of full autocracy or democracy, the employers of buying house should show lenient view in all aspects so that they get motivated to work.
  • Employee pay structure should be consistent with the employee . work pressure, in order to stop their tendency to switch job.
  • Company should introduce service bonus or service benefit in order to encourage and motivate their employee.
  • Having no visions of prospects the garments industry in our country is bound to suffer from the worst deterioration with their withdrawal of quota system. So the only remedy to develop this scenario is to strengthen their infrastructure through combined effort of both government and non-government for proper support and facilities.
  • Encourage people to develop industry such as threat, button, interlining and other packing materials treated as backward linkage industry of garment export by make short term or long term contract of taking goods so that buying house do not have to import those at higher price or the local supply can the fulfill the required demand of the industry.
  • Government of our country should also provide incentives to develop backward linkage industry of RMG export, for the smooth supply of accessories by buying house to garment factories.
  • Company owned accessory supplier can also the developed to maintain quality or on time delivery.
  • Maintaining product quality  is very important. To maintain appropriate quality, buying house should take necessary steps such as training course for their quality controller or inspector etc.
  • For improper document or document delay buyers cannot receive his product from the ship in his country for which relationship between he and buying house may break up. So buying house should be always careful in preparing right documents. They also should send documents at right time.
  • The total industry should keep in mind that they need a truly international outlook for exporting to attract buyers as well as long-term commitment with both of their buyers and suppliers.
  • The total industry must achieve an international reputation for quality to challenge the quota free environment.
  • Company should ensure that they have all the resources.
  • Company should start marketing through trade fair.
  • Company should start marketing through internet.
  • Requirement of obtaining approval from Bangladesh Bank for creating Forced/Demand loan by the lien banks should be withdrawn.
  • The liability of any L/C should also not be considered as default loans.
  • Bangladesh/bank should provide the lien banks with adequate funds for necessary payment of cash incentives to our exporters without delay.
  • Negotiation Bank should be authorized to take into consideration for deciding upon discount unto 20%.
  • Condition for obtaining approval for discount from the Bangladesh Bank should be relaxed.
  • From the date of document negotiation, forty-five days should be allowed for fund remittance. Overdue interest should not be charged in the event if remittance is delayed.
  • All private sector commercial banks should immediately cease charging L/C Acceptance charges like the nationalized Banks of the country.
  • submitting statement by the commercial banks to the NBR should be waived.
  • To strengthen the security in cargo shade of Airport forming and to take necessary steps to exporting through air.
  • To waive the high royalty rates at specific times of the tear so that the emergency import of raw material and export of readymade garment could remain steady­.
  • To reduce Communication gap created by incomplete knowledge of English.
  • Need to right time make decision.
  • Workers should have awareness about the quality of product.

Conclusion:

Garment industry is controlled by the transfer of production. The globalization of garment production started earlier and has expanded more than that of any other factory. The global economy is now controlled by the transfer of production where firms of developed countries swing their attention to developing countries. The garment industry of Bangladesh has been the key export division and a main source of foreign exchange for the last 35 years. Many people have earned their livelihood through this industry. Their may be gender discrimination, low wage level exist in the garments industry, but still, they supply  employment for all of theses people who come here to live. The Ready Made Garment industry in Bangladesh is made up of 3,486 manufacturers and accounts for 76% of total foreign exchange earnings. It employs about 180,000 managers and 1.5 Million workers, of whom 1.2 Million are women. In Bangladesh, the RMG industry has emerged as a major economic sector and has had its impact on the financial services sector, communications, transportation, and on other related industries. The RMG industry has had a major social impact. It has empowered 1.2 million women with employment and economic independence, which in turn has earned for Bangladesh recognition as a modern and enlightened society. The surface-level competitive performance of the Bangladesh RMG industry is rather good, as indicated by quantitative expansions of its exports to major international markets over the time period. Moreover, the industry has already initiated the process of enhancing its deep-level competitive performance. For example, the Bangladesh RMG industry has achieved some product diversification in both the United States and the European Union as a garment supplier. Recently, the industry has achieved some upgrading of its products in the European Union, but this has not occurred to a significant extent in the United States. Some important areas which require more attention to sustain and enhance deep-level competitiveness of the industry are reduction in “production and distribution “time, expansion of linkages, compliance with code of conduct of buyers and changes in product/market composition. The Government of Bangladesh should also provide more active policy support. Figure 5 illustrates a simple competitiveness enhancement model for the Bangladesh RMG industry. The most urgent and important task for the Bangladesh RMG industry is shortening the lead time; otherwise, international buyers may divert their attention towards other suppliers for the importation of garment products in the current quota-free business environment. The best option for Bangladesh is to improve its deep-level competitiveness by reducing total “production and distribution” time, which will improve surface-level competitiveness by reducing lead time. An important precondition for implementing that strategy is the existence of a strong domestic textile industry. Bangladesh faces significant constraints in this regard and hence it is not possible to establish strong backward linkages overnight. Therefore, to retain competitiveness in the global market, Bangladesh has to think of other alternatives. The establishment of common bonded warehouses in the private sector for storing raw materials for use in export-oriented garment factories under some special incentives, such as duty-free imports, could play a significant role in reducing lead time. Such a policy runs the risk of delaying the initiatives that are necessary in order to strengthen deep-level competitiveness. However, globalization is putting pressure on the country to accept that risk. The establishment of common bonded warehouses and the expansion of backward linkages are two options for the Bangladesh RMG industry. While the establishment of common bonded warehouses will improve only surface-level competitiveness, the latter will improve both surface and deep-level competitiveness. A good balance between these options will sustain and enhance Bangladesh’s position in the world market, and at the same time upgrade the country’s current status of being only an assembler so that it could become a full-package supplier of garment products. Second, Bangladesh needs to concentrate on improving the working environment in factories and address other social issues related to the garment industry. The RMG firms in Bangladesh have been facing immense pressures from international buyers for compliance with their codes of conduct. In contrast, the big buyers are interested in continuing and expanding their business with Bangladesh if shorter lead time and compliance standards can be met. Therefore, Bangladesh should address these two issues very carefully and immediately, which are the least conditions necessary to survive the competition.

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)