SL. No.

: To Be Assigned by ISCEA

Team:Team Potter (IBAD- 0109-15)

Team Member -1
Name :

Team Member - 2
Name :

Tanzir Islam

Signature :

Rakib Ibnay Hossain

Signature :

Team Member - 3
Name :

Muhtasim Sarowat Rayed

Signature :

Team Member - 4
Name :

Md. Abrar Nakib

Signature :

Last Date of Submission: May 15, 2015

Executive Summary
This report has been written to analyze, evaluate and recommend solutions in order
to increase the efficiency and accountability in Supply Chain Management practices
of apparel industry in Bangladesh. Apparel industry of Bangladesh aims to achieve
US$ 50 billion by the year 2021. Despite maintaining high growth, apparel in
Bangladesh is challenged by lack of infrastructure and professional practices.
Efficiency in supply chain means reduction of time and cost without compromising in
quality of work. Thus the beginning part of the report focuses on the current mean lead
time in Bangladesh. Analyzing the breakdown of lead time along with detailed
production process, reveals scope of growth in port management, infrastructure and
sample quality checking.
Since the association from other bodies of government is not controllable by the
industry, the recommendation part focuses on the activities that can be achieved by
business practices. It is discussed that localizing the sample quality checking process
will reduce the lead time by thirty days. Moreover, benchmarking by recognizing
professional practices and implementing trickle-down educating method coupled with
apparel export ranking will quickly expand supply chain professional practices in the
industry.
The recommendation is followed by an action plan discussing what specific activities
will be needed to be implemented and what development partners and stakeholder
can perform what role. A continual action plan of 5 consecutive year is charted to
organize the course of action.
All these plans are justified with specific focus on efficiency, accountability and
feasibility. At the end, the report discusses what governmental macro projects can
significantly contribute to efficiency and help to achieve sustainable competitive
advantage.
Five years is not much time to drastically change the scenario. Thus this report focuses
on building sustainable initiatives that can achieve both short term benefit and long
term competitive edge in global market.

CONTENTS
1.0 Introduction

2.0 Terms of reference

3.0 Objectives

3.1 Objective of the apparel industry

3.2 Objective of the supply chain management

4.0 Analyzing the current scenario of supply chain management

4.1 Supply chain of apparel industry in Bangladesh

4.2 Process of production

4.3 Time distribution at each step

4.4 Possibility of upstream expansion

5.0 Discussion of potential solution

5.1 Scope of improvement
6.0 Recommendations
6.1 Proposed ventures

8
8
9
9

6.1.1 Local quality control office

6.1.2 Development of Supply chain professional practices

6.2 Implementation

11

6.2.1 Vision 2021

11

6.2.2 Key partners and their roles

11

6.2.3 Year by year planning

13

7.0 Projected budget

14

8.0 Evaluation of the proposal

16

8.1 Justification of the proposals

16

8.2 Efficiency improvement

16

8.3 Accountability improvement

16

8.4 Feasibility

17

9.0 Supporting venture by the government

18

9.1 Efficiency in port management

18

9.2 Enhancement of labor efficiency

18

9.3 Improvement of road transportation

19

10.0 Conclusion

20

11.0 References

21

To: Bangladesh government through ISCEA Bangladesh

From: Team Potter Consultancy
Date: 15th May 2015
1.0

Introduction

Apparel industry is big source of economic growth in Bangladesh's rapidly developing

economy. Exports of textiles and garments are the principal source of foreign
exchange earnings. By 2002 exports of textiles, clothing, and ready-made garments
(RMG) accounted for 77% of Bangladeshs total merchandise exports. By 2013, about
4 million people, mostly women, worked in Bangladesh's over $24.49bn of exports in
the last financial year (from July 2013 to June 2014) export-oriented ready-made
garment (RMG) industry.
Bangladesh is second only to China, the world's second-largest apparel exporter of
western brands. Sixty percent of the export contracts of western brands are with
European buyers and about forty percent with American buyers. Only 5% of textile
factories are owned by foreign investors, with most of the production being controlled
by local investors.

2.0

Terms of Reference

We are a management consultant team appointed to write a report to the Bangladesh

government which focuses to develop the supply chain management practices in the
apparel industry and make appropriate recommendations.

3.0

Objectives
Objective of the apparel industry

3.1

Bangladesh apparel industry is expected to reach US$ 50 billion by 2021. It is an

achievable target that is predicted by reputed global organizations and key
stakeholders. To achieve this goal industry has to:
-

Increase the number of orders from the existing customers

Retain the existing customers

Attract new customers

Consistently provide superior quality products at competitive prices and low

lead time

2.2

Produce high end fast moving fashion garments which earn more revenue
Objective of the supply chain management

Supply Chain Management (SCM) has a pivotal role to play to achieve the 2021 goal.
Bangladesh significantly lacks behind in SCM practices and that is worrying for the
future. Certain approaches that should be considered are:
-

Increasing supply chain efficiency and transparency

Building closer and long term relationship with supply chain partners

Improving operational performance

Developing skilled workforce (particularly middle management)

4.0
4.1

Analyzing the current scenario of supply chain management

Supply chain of apparel industry in Bangladesh

A simple representation of supply chain is as following:

Supplier Manufacturer Distributor Customer
In case of Apparel Industry the chain is mostly divided into five parts: cotton producer, yarn
producer, fabric producer, garment manufacturer, retailer, and customer. In the context of
Bangladesh the entire process can be summed up in the following figure:

Figure 1: Summarized Supply Chain of Apparel Industry Bangladesh

60% of the knit fabric and 90% of the woven fabric are imported in Bangladesh. Even though
a portion of fabric demand is supplied by domestic suppliers, this portion have little chance of
growth and provides inferior quality product. So, Bangladesh can control only the Garment
step of the entire chain.
4.2

Process of production

The cotton and yarn stage are not controllable from manufacturers perspective and so they
are not included in the discussion.

Figure 2: Process of production of Apparel product in Bangladesh

4.3

Time distribution at each step

In Bangladesh the average lead time (time taken from placement of the order to delivery of
the order) of apparel industry is 90 to 120 days. This is far inferior compared to high end
apparel producers like China and India.
Serial No

Activities

Duration (days)

Information lead time

Manufacture of fabric

15

Shipment of fabric

25

Unload fabrics and customs at port

14

Fabric transport from port to manufacturing

Sample approval and Production

23

Export final product

30

Total lead time

120

Table 1: Distribution of lead time

4.4

Possibility of upstream expansion

Table 1 shows that significant portion of the lead time goes with the manufacturing and
shipping of fabric. It is calculated that domestic supplier will reduce information lead time by 3
days and shipment time by 20 to 23 days. So, choosing domestic supplier will reduce the lead
time by 27 days (considering the elimination of shipping process, this difference will be even
bigger).

Lead time compariosn (domestic vs.

external supplier of fabric)
140
120
100

47
20

80
60
40

73

73

Foreign supplier based

production

Domestic supplier based

production

20
0

Garment time

Fabric time

Figure 3: Lead time reduced by choosing domestic supplier

6

But fabric producers of Bangladesh face comparative disadvantage. The reason is that yarn
and fabric manufacturing must be close to cotton production facility for reducing cost and
avoiding transportation hazard. And geographically a small fragment of Bangladesh can
produce cotton which is minimal for meeting the demand.
As a result Bangladesh is solely depended on external supplier of fabric.

5.0
5.1

Discussion of potential solution

Scope of improvement

Scope for efficiency which are controllable by internal force are identified and
categorized here.
Activity

Time needed
(days)

Information lead time

Unload fabric and customs at port
Fabric transport from port to manufacturing
Sample sending and approval
Loading and shipping for export

7
14 to 20
6
15
12

Controlled by
Business
Government
Government
Business
Government

Table 2: Scope of improvement

It is evident that government initiative through infrastructure development can play

major role for increasing efficiency in supply chain of apparel industry. Through
efficient management in business supply chain practice a. Information lead time can be reduced to 1 day.
b. Sample checking time can be reduced to 5 days.
c. Unloading and road transport can be reduced to 4 days.
d. Transport and loading time for export can be reduced to 4 days.

6.0

Recommendations

The recommendation part will focus on how supply chain management practices
within the industry can achieve higher efficiency.
6.1

Proposed Ventures

6.1.1 Local quality control office

Evaluating figure 2 we see, four times during the process samples are physically
moved to retailers location after fabric selection, after cutting and sewing, after
washing and finishing, and after packaging. This tangible transfer of product
significantly increases lead time. It is recommended that in the long term all the key
stakeholders

unitedly develop

central

sample

quality checking

and

authenticating body. This is not enforceable overnight. Therefore, the big buyers
have to be encouraged to establish localized quality check office in Bangladesh.
A supply chain management board will be needed to implement and monitor all the
ventures under one umbrella.
6.1.2 Development of Supply chain professional practices
Lets first look within the existing infrastructure on how to reduce the lead time.
Some suppliers can reduce it considerably. These suppliers are implementing certain
practices that is boosting the efficiency of the supply chain. Some of these practices
are outlined below:

Corona, an Italian brand, at first makes their fabrics ready then contacts the
manufacturer for order placement and takes just one or two days for sample
approval. They are able to minimize the lead time within 60 to 65 days.

Adoption of lean management techniques, such as continuous process

improvement (Kaizen), the 5 Whys and mistake proofing (Poka-yoke), the 5S
and Just in Time (JIT), have led to significant boosts in production efficiency.

Through web based supplier, manufacturer and retailer integration, the demand
of components can be shared in real time to all the stakeholders. This
drastically reduces the information lead time.

There are many good practices and in future there will be many more. But it is
impossible to educate the entire industry at once. Moreover, the companies will
be interested to learn from leading companies.
Currently there is no framework for recognition of leading practices. For this purpose
we propose to develop a benchmarking and recognition culture.

The proposed Supply Chain Board should identify such well-performing

manufacturers, reinforce their supply chain practices and set them as
benchmarks for the industry.

Furthermore, it should provide Exporters Supply Chain Award on an annual

basis that recognizes such efforts and spreads awareness about them to key
stakeholders.

Award winning companies will be noted as Best Apparel Exporters

Journals and documentaries can be published detailing such practices.

An Apparel Exporters Ranking will be published and updated which will

include registered garments of Bangladesh.

The expected method of expanding these practices is trickle-down method. When

such practices are recognized, other business entities will be willing to follow the same
path. Certain facilities and norms can be developed to boost the interest.

Middle managers will get opportunity to shift workplace for two months to work
under Best Apparel Exporter company.

Best Apparel Exporters can outsource their order to another company to

closely monitor and guide the process.

Interested companies can send representatives to participate in tours into

selected Best apparel exporters

Why companies will be interested

The Apparel Exporters Ranking is a way to build reputation which is not present
today. By improving position in the ranking, a company can get new customers and
better deal. At the same time, the buyers can understand the performance of potential
manufacturers.

10

6.2

Implementation

6.2.1 Vision 2021

The vision of our project is to provide a comprehensive agenda that outlines the supply
chain practices required to reach the Vision 2021 goal of having a US$50 billion
apparel industry by 2021.
All the relevant stakeholders will be engaged and made aware of this vision so that
they can build readiness for the implementation of our action plan.
6.2.2 Key partners and their roles

Buyers
Fire and Safety
Accord

Buyers
Regional
Body

Supply Chain
Practices in the
Apparel Industry

Buying
House

Government
Bodies

Banks

BGMEA
BKMEA

Buyers
The buyers have a vested interest in ensuring that proper supply chain practices are
applied in order to ensure the quality of the final product. If buyers approve of and are
involved with stringent supply chain guidelines, the manufacturers will be much more
obliged to follow such guidelines.
In this regard, they can set up a similar infrastructure to the one big buyers have set
up with the Fire and Safety Accord, where over 190 buyer brands have allied with 1600
factories to ensure a fire-safe environment for over 2 million garments workers.

11

Buying House
Buying houses provide the sourced fabric to be used by the manufacturers, and they
are also the intermediaries in the various sampling stages undertaken throughout the
production process. Buying houses are usually well-trusted by both the manufacturers
and buyers.
By supporting and working to establish stringent supply chain practices in the apparel
industry, buying houses can fast-track the sourcing and sampling processes and thus
invite a smoother, greater flow of orders.
Government Bodies
There are many smaller firms in the apparel industry who have not coordinated with
multiple stakeholders on such a scale before. Thus it is important that government
bodies such as BGMEA and BKMEA play a key role in setting up benchmarks for the
supply chain and ensures that proper monitoring and evaluation procedures are in
place.
Banks
Several banks, especially those of foreign origin, provide letter of credit services to
exporters.
Banks can play important roles in monitoring and authenticating financial transparency
of the transactions involved with the letter of credit. As they are trusted by both the
manufacturers and buyers, their involvement will lend more accountability to the
overall effort to improve supply chain practices in the sector.
Buyers Regional Bodies

Initially, we need the involvement of influential buyers in setting up local offices in

Bangladesh. This will go a long way in strengthening long-term relationships between
the buyers and manufacturers, and also quicken the order placement and sampling
processes considerably.

12

6.2.3 Year by Year Planning

Year

Actions
a. Sharing Vision 2021
b. Setting up Supply Chain Management board
c. Convincing at least 5 big buyers to set up regional sample checking

2016

office
d. Introducing Apparel Exporters Ranking
e. Initiating Best Apparel Exporter award.
a. Convincing 10 additional companies to set up regional sample quality
checking office

2017

b. Communicating Apparel Exporter Ranking and its significance

a. Convincing 20 additional companies to set regional sample quality
checking office

2018

b. Training of local textile engineers in these regional offices

c. Inclusion of local engineers in regional offices
d. Tours and training through Best Apparel Exporters
a. Promoting success stories of new supply chain management practices
b. Introducing employee shifting program
c. Including tours and programs as a criteria of ranking.

2019

d. Introducing central sample quality checking and authenticating body

(CSQCAB) with help of buying houses, buyers, buyers accords and
banks.
a. Inclusion of high end apparel as a criteria of Best Apparel Exporter
award.
b. Encouraging all the buyers to practice sampling check via CSQCAB or

2020

independent regional office.

c. Organizing an IT for Apparel festival to promote software development
focused on Apparel Industries need.

2021

Monitoring of Evaluation of the achievement of Vision 2021.

13

7.0

Projected budget

The total budget for 5 year is 214,000,000 BDT equivalent to approximately 2.8 million
USD. This value is understated as this includes only activities related to the campaign,
no infrastructure development cost is calculated.
Many of the proposed activities are sponsored. These are not included in the budget.
Action

Vision 2021

Supply
Chain
Manageme
nt Board

Activities

CSQAB

Yearl
y
unit
10

Total

50,000

Billboards

30,000

2000
0
80

Video

10,000

50

Media

50,000

30

Seminars

20,000

10

500

40

100,000

12

Remunerations
(A)
Remunerations
(B)
Maintenance

50,000

120

20,000

1020

Website
development

10,000,
000

Supporting
website
Maintenance

1,500,0
00

Remuneration

300,000

15

Publishing

10,000

13

Remuneration

15,000

6,000
,000
1,500
,000
4,500
,000
130,0
00
0

Transport

50,000

Miscellaneous

Office fare

Organizing
for training

2016

Press
conference
Vision Book

Press release

Apparel
Exporter
Ranking

Cost
per
unit

Seminars
Press briefing
Office fare

300

500,0
00
6,000
,000
2,400
,000
500,0
00
1,500
,000
200,0
00

20,00
0
1,200
,000
6,000
,000
20,40
0,000
50,00
0
10,00
0,000

2017

Yearl
y
unit
6
1000
0
20

5
8

20
12
60
180

Total

300,0
00
3,000
,000
600,0
00
0

2018

Yearl
y
unit
6
1000
0
20
3

250,0
00
160,0
00

10,00
0
1,200
,000
3,000
,000
3,600
,000
50,00
0
10,00
0,000

20

12
60
180

6,000
,000
1,500
,000
4,500
,000
130,0
00
0

15

30,000

100,000

10

40,000

40

100,000

12

15
13

12
50

Total

300,0
00
3,000
,000
600,0
00
30,00
0
250,0
00
80,00
0

10,00
0
1,200
,000
3,000
,000
3,600
,000
50,00
0
10,00
0,000
6,000
,000
1,500
,000
4,500
,000
120,0
00
750,0
00
50,00
0
30,00
0
1,000
,000
1,600
,000
1,200
,000

2019

Yearl
y
unit
5
5000
20
3
5
3

20
12
60
180

15
12
50
1
1
10
40
12

Total

250,0
00
1,500
,000
600,0
00
30,00
0
250,0
00
60,00
0

10,00
0
1,200
,000
3,000
,000
3,600
,000
50,00
0
10,00
0,000
6,000
,000
1,500
,000
4,500
,000
120,0
00
750,0
00
50,00
0
30,00
0
1,000
,000
1,600
,000
1,200
,000

2020

Yearl
y
unit
10
1500
0
50
5
5
3

20
12
60
180

15
13
50
1
1
10
40
12

Total

500,0
00
4,500
,000
1,500
,000
50,00
0
250,0
00
60,00
0

10,00
0
1,200
,000
3,000
,000
3,600
,000
50,00
0
10,00
0,000
6,000
,000
1,500
,000
4,500
,000
130,0
00
750,0
00
50,00
0
30,00
0
1,000
,000
1,600
,000
1,200
,000

14

Maintenance

IT for
apparel fare
Total
Grand total

Partial Funding

1,000,0
00

0
0

50,00
0
0

50,00
0
0

0
60,900,000

34,300,000

38,920,000

37,350,000

100,0
00
1,000
,000

42,580,000
214,050,000

15

8.0

Evaluation of the proposal

8.1 Justification of the proposals

The analysis of current scenario revealed two key issues
a.

Lengthy sample quality checking procedure increasing lead time

b.

Lack of professional knowledge regarding supply chain tools and techniques

The two proposed solutions are

a.

Establishing regional quality checking body

b.

Benchmarking and trickle down educating

8.2

Efficiency improvement

Current sampling method is illogical and efficient. Since, the big buyers have
significant portion of their portfolio manufactured in Bangladesh, it is sustainable to
localize their quality checking unit in Bangladesh. As a result the product does not
need to be physically moved across the globe for five times. This will reduce the lead
time up to 30 days.
In future proposed CSQCAB will include communication with fabric suppliers and
supplier market will be better prepared to deliver market need.
Professional education is neither valued nor edible if it is coming from academics. An
organization will learn and will be interested to learn from another organization only.
Thus benchmarking, recognition and scope of learning from best practices is expected
to work. The inclusion of ranking creates a continuous motivation to improve and helps
tracking the overall efficiencies.
It is important to share success stories, what was and what is the companies at a
given time.
8.3

Accountability improvement

Bangladeshi manufacturers are not trusted and therefore they do not get better deals.
As the proposal aims to progress the industry practice unitedly towards a more
sophisticated practice, better technology and management practice increases
accountability.
16

Inclusion of multinational banks, buyers accord and buying houses in the proposed
CSQCAB ensures that the organization is accountable to the buyers and the
government. This will also allow them to take uniform decisions.
8.4

Feasibility

The proposal is enforceable within the budget. The action plans are feasible because

All the actions are implementable without rigorous infrastructural development.

Implementation plan includes existing tools only.

All the included stakeholders are benefited by participation

Abstinence from this plan creates disadvantageous situation for both buyers

and sellers.

17

9.0
9.1

Supporting venture by the government

Efficiency in port management

Of the two main seaports in Bangladesh, Chittagong Port is facilitated for the trade of
apparel industry. Bangladesh government has taken numerous incentives to develop
and modernize the porting system in Chittagong. Problems in Chittagong port are
three fold:
a. Poor management
b. Poor infrastructure
c. Inadequate communication system
d. Obsolete machinery
e. Lack of educated, experienced and efficient manpower
f. Illegal occupation of land
g. Corruption and red-tape
Government needs to take constructive steps to reduce lengthy procedure at the port
and customs for exporting and importing commodities via Chittagong Port.
We recommend construction of one truck terminal within the vicinity of the port area
to quicken the load-unload process. FCL and LCL containers are used to import
garments raw materials, renovation of X-Y shed area for FCL/LCL container stripping
is required.
9.2

Enhancement of labor efficiency

No structured training facility or course provided by the government, but there are
some courses and workshops held under BGMEA and BKMEA, which is for
merchandising and textile engineering, targeted towards mid-level employees. But
no program for the majority of the labor force. Workers get appointed as helpers in
the factory and eventually gain experience to take more responsible roles. But due to
their lack of technical knowledge they cannot operate advanced machinery which are
needed to reduce the lead time.
Government needs to appoint trainers on machineries to the garment factories, so
that these appointed personnel can assist and train workers practically. This will
substantially increase the productivity and efficiency of the factories.

18

9.3 Improvement of road transportation

Major improvement of road transportation is extremely crucial. Fabrics and
accessories cannot reach the factories from the port on time due to heavy traffic and
poor condition of the roads. Traffic police department need to be more cooperative
for smooth and fast transportation. The Roads and Highway Department (RHD) is
stretching the Dhaka Chittagong highway to four lanes from two lanes. Their
attention is required to develop the roads around EPZs and also the industrial areas
where RMG factories are located for example, Ashulia.

19

10.0

Conclusion

Aforementioned recommendation along with action plan mostly focuses on reduction of lead
time. From current lead time of 120 days this can be reduced to 64 days or less within next 5
years.
However, infrastructural development is a must. Some basic step can reduce the lead time to
42 days even if we import fabric as raw material.

REDUCTION IN LEAD TIME

Lead Time
140
120
120
100

90
80

80

64

60
42
40

20
0
Now

Localised
Benchmarking Supplier Linkage
Sample Office and Trickle Down and Technology
(by 2018)
(by 2019)
(by 2021)

Government
Initiative: Port
and Road
Transport
(Depending on
Government)

Furthermore, these actions will increase accountability and so Bangladesh can go into high
end apparel manufacturing with increased number of orders.
Above all, these will create a sustainable practice in apparel industry for the long run.

20

11.0

References

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Logistics, Vertical Integration, Materials Management and Supply Chain Dynamics.
Blackwell Encyclopedic Dictionary of Operations Management.
Islam, M. S., & Liang, G. Q. (n.d.). Supply Chain Management on Apparel Order Process: A
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Jacoby, D. (2009). Guide to Supply Chain Management: How Getting it Right Boosts
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Manrodt, K. B., Visatek, K., & Thompson, R. H. (n.d.). Lean practices in the supply chain.
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21