Introduction This paper is prepared based on a case study of garments industry. Mr. Khan started a garments industry. After running for 5 years, he reached at the breakeven point that is – no profit and no loss. At the same time, he faced some problems regarding the sustainability of the garments. Here we tried to identify the problems that faced by Mr. Khan based on the on going garment sectors’ condition of Bangladesh.
According to us, he did not face any budget problem but he faced performance problem and time problem. After identifying the problems, we tried to give some recommendations regarding the sustainability of his garments industry which are discussed here. 18 Flowchart of problems: 18 Problems identification: 18 The problems we have identified so far, are of mainly three types. The problems are as follows: 1. Performance problems: 1. 1 Poor communication Mr.
Khan has poor communication with employees, customers(foreign & local) and suppliers appears for several reasons – lack of skills or lack of understanding of the importance of strong communication, employees don’t get information in a timely manner, employees are given too much information that isn’t relevant etc. 1. 2 Poor infrastructural design Now a days, the most garments has poor transportation and communication system and building structure, entrance and exit system is bad in case of fire and other accident. 1. Low product quality Sewing defects, Color defects, Sizing defects and Garment defects are quality related problems faced by Mr. Khan which make the product quality low. It creates very bad impression and results in loss of business and reputation. 1. 4 Lack of management policy Today’s garments sector has huge problem with management like- lack of proper instruction, , lack of proper training, workers dissatisfaction with their facilities and payment. 1. 5 Lack of research Although a garment is a thrust sector, lack of proper research and development work remains a major inadequacy for long.
The garments do not research about product, buyers and their competitors. 1. 6 Export import barriers 18 Garments are facing export and import barriers. In exporting, garments facing high duty and cota problems. In importing, garments are facing port and customs problems. 1. 7 Limited Export Market Mr. Khan is highly concentrated in two major markets- EU and USA. concentration in a few markets is risky. 1. 8 Excessive labor union Labor union raises their voice for wage increases, set working hours, bonus, on time payment and safety conditions. and productivity. 1. 9 Low productivity of workers The labor productivity of Mr.
Khan is much lower. The majority of the workers come from slum dwellers with little or no education. This is one of the reasons of low productivity. Lack of training, motivation and low labor cost are also responsible for lower productivity. 1. 10 Failed to apply TQM (Total quality management) Mr. khan has failed to apply TQM (total Quality Management) in his production process. 1. 11 Lack of high technology Lack of standard machinery results in poor quality and defected garment products. In most of the factories there is theft cases of parts of machines and these are replaced with low quality parts to keep the machine operational. . 12 Limited knowledge in international marketing information Mr. Khan has limited access to current market intelligence and international trade information. Foreign buying houses have been dominating the marketing part of the business. But if these buying houses shift their bases to other countries, Bangladeshi exporters may face serious problems in finding their ultimate buyers. For that reason they strike which reflects on profit Limited exported in Germany, UK, France, Netherland, Italy and Canada. The high 18 1. 3 Inefficiency in port management The Chittagong Port is the most important entry and exit point for trade and commerce of the country. It is one of the most inefficient and corrupt ports which seriously hamper the competitiveness of Bangladeshi garment in the world market. The corruptions are- Frequent work stoppage by different service providers, transport workers, Excessive dock labor unionism, Politicization of Collective Bargaining Agents, Direct involvement of powerful local politicians, elite and musclemen, illegal gratification practices. 1. 14 High competition Mr.
Khan is facing high competition for other local garments industries and efficient producers like Hong Kong, China, India, Thailand, and Sri Lanka, Vietnam and Caribbean countries. 2. Time problems: 2. 1 Global Recession The garment exporters are suffering badly due to the ongoing global economic crisis. For the worldwide recession, Mr. Khan is realizing low unit value from the overseas market and paying higher unit value for importing raw materials. 2. 2 Lack of resource when needed Resource like electricity, gas and water are not adequate. The raw materials are not also available in our country. Mr.
Khan depended on others countries for outsourcing of raw materials which charged higher prices and increased the production cost. 2. 3 Lead time The buyers want the product within a limited time with a best possible price that Mr. khan could not meet up. 3. Money Problems: 18 3. 1 Fluctuation of international prices International price fluctuate heavily. As a result, cost of raw materials increases which ultimately increase the total price. 3. 2 High corporate tax rate In garments industry has to pay high tax on their production as well as VAT. 1. Performance problems: 18 Performance problems and solutions Effective Communication Wonderful nfrastructural design Poor infrastructural design Poor communication Low product quality Improving product quality Effective management policies Lack of management policy Conduct more research Lack of research Effective export import system Export import barriers Limited Export Market Markets exploration Mutual understanding Labor union Low productivity of workers Increasing productivity of workers Effective use of TQM F ile toa p T M a d p ly Q (T ta q a mn g mn o l u lity a a e e t) Lack of high technology Limited knowledge in international marketing information Use of high technology Buying agent
Ensuring efficient management of ports Inefficiency in port management Increasing Competitiveness High competition Recommendation of performance problem: 18 For the performance problems showing above, we are giving the following suggestions: 1. 1 Effective Communication Clearly communication appears to be the key to project success. Effective communication skills can create a more positive outcome. Stay focused on the present employee’s feelings, understanding one another bring solution to communication problem. Effective communication goes both ways- thinking and listening. At first Mr.
Khan has to listen what employees and suppliers are saying, customers or buyers want. Don’t interrupt and get defensive. Just hear them and reflect back what they’re saying so they know they are heard. Then Mr. Khan will understand them better and they’ll be more willing to listen to him. Foreign Buyer Local raw material Suppliers Manufacturer (Mr. Khan) Figure of Business Structure Foreign raw material Suppliers Try to see from the view point of employees, customer sand suppliers. Communicate directly with customer and suppliers. Mr. Khan Director Director Line Agent Line Agent Line Agent Line Agent
Line Agent Line Agent Figure of Team Communication 18 As messages are passed up or down through the layers of the organization, they pass through a number of different people who can add, take from, qualify or totally twist the original message. Mr. Khan has to begin communication with the directors who receive instruction directly from him. They are then asked to share this information with their group of front line agents. One way to make sure the directives or communication that directors pass down actually get to the front-lines the way he intended is to randomly conduct “round table” discussions.
Pull 3-5 front line agents in for a discussion that is very informal and ask specific questions to get a feel for the messages Mr. Khan has passed down and to make sure the director is doing their job. To overcome fear Mr. Khan must work to develop trust among the employees. Trust develops when Mr. Khan will do what he says he is going to do – and by doing his part to help the team succeed. Mr. Khan has to build trust and not violate the confidentiality of the employees who are openly and honestly sharing. Again, the key to honest feedback is to create a trustworthy relationship that employees believe will not come back to hurt them later. . 2 Wonderful infrastructural design To remove this problem Mr. Khan should establish in such type of area where transportation system is well. Mr. Khan’s garment should have large entrance and exit way and alternative way to exit in any kind accidents. For fire accident Mr. Khan’s garment should have enough fire distinguisher. If the garment has large entrance and exit and enough fire distinguisher then every employee will feel safe and will do their job with full attention. Governments can also impose some rule regulation on garments building stricter. 1. Improving product quality Before entering into international market, garment exporters have to carefully frame out the quality standards. There are a number of factors on which quality fitness of garment industry is based on such as – performance, reliability, durability, visual and perceived quality of the garment. 18 The broad quality parameters (ISO 9000 series) have to follow for maintaining the export quality. Quality has to be taken care by Mr. Khan, because excuses are not entertained in international market for negligence for low quality garment products. So, Mr.
Khan has to produce high quality product, use latest design and technological know- how. Apart from superior quality of the garment, its pricing, packaging, delivery, etc has to be also taken care of. Quality needs to be defined in terms of a particular frame work of cost. So, Mr. Khan needs to follow focus strategy. It means Mr. Khan has to focus on cost and quality at a time. Mr. Khan should know to negotiate a premium price after quality assurance is done. The garment shown in the catalogue should match with the final garment delivered and the garment quality should match the samples shown during taking the orders.
It is important to perform according to the promises given to the buyer. Because in international market, quality reassurance is required at every point. Proper documentation and high standard labels on the garment are also important aspects as these things also create good impression. Quality is ultimately a question of customer satisfaction. Good Quality increases the value of a product or service, establishes brand name, and builds up good reputation, which in turn results into consumer satisfaction, high sales and foreign exchange. The perceived quality of a garment is the result of a number of aspects, hich together help achieve the desired level of satisfaction for the local customers and foreign buyers. Therefore quality control in terms of garment, pre-sales service, posts -sales service, delivery, pricing, etc are essentials. 1. 4 Effective management policies 18 For overcome this type of problem Mr. Khan should hire higher educated persons by providing high salary. Because they have the ability to give proper instruction to their workers like- what the buyers want, what quality of work he expect, how the work should do etc. Secondly, the workers are uneducated.
For that they can not adopt with the new technology. For such kind of problem Mr. Khan needed educated workers so that they can easily adopt with new technology. On the other hand it is easy to provide higher training to the educated workers. Mr. Khan should setting a minimum wages and salary level and pays the salary and wages on time. And workers should give large space so that they can move easily. It will make the employee more motivated to their work and more devoted to the management policies. 1. 5 Conduct more research Research is needed for every company to sustain in the market. Mr. han should conduct more research also because of changing of time and demand of customers and buyers. The Mr. khan can hire research people to forecast the demand and quality of product. To forecast the buyers demand the research people can talk with the customers and buyers what kind of product and which quality of product they want. The Mr. khan should research about his competitors and their strategy also. It can possible by observing the competitors very carefully. 1. 6 Effective export import system The governments increase the facility for exporting garments product with a low export duty and should give high dock facility.
For cota system government should negotiate with that countries imposes cota on our garments product and can do an exchange deed with those countries. As the garments industry has a big contribution in our economy and we earn a huge amount of foreign currency so government should give extra emphasize on garments raw material by reducing customs formalities. 1. 7 Markets exploration 18 Efforts should be made to develop new markets, at least in large Asian countries such as Japan, China and India. This may help Mr.
Khan to sustain his garments growth in the increasingly competitive global market. 1. 8 Mutual understanding Mutual understandings remove the labor union problem. While taking a break from the discussion is sometimes a good idea, always come back to it. If come up to the situation with a constructive attitude, mutual respect, and a willingness to see the other’s point of view or at least find a solution, then Mr. Khan will be able to make progress toward the goal of a resolution to the conflict. Instead of trying to ‘win’ the argument, look for solutions that meet everybody’s needs.
Either through compromise or a new solution that gives both what they want most, this focus is much more effective than one person getting what they want at the other’s expense. 1. 9 Increasing productivity of workers Operations are more efficient when employees perform just one task or only certain aspects of a task in order for that job to be conducted at its highest level. Continuous efforts should be exerted to reduce the cost of doing business by increasing productivity. To enhance the productivity of labor, intensive training, worker satisfaction and proper motivation is essential. So, Mr.
Khan has to provide on the job training for increase skill of production. He also has to meet the workers demand to satisfy them. Then the worker should be self motivated. Better working conditions with reasonable pay may improve the situation to attract mid to upper-mid level well-educated citizens of the society, which may help improve the productivity of labor significantly. 1. 10 Effective use of TQM Total Quality Management is a management concept . The basis of TQM is to reduce the errors produced during the manufacturing or service process, increase customer satisfaction, streamline supply chain management, aim for modernization of 8 equipment and ensure workers have the highest level of training. Mr. khan should use TQM not only achieve the objectives set out in its policy and strategy, but also, and equally importantly, sustain and build quality. Mr. khan should use TQM focuses on encouraging a continuous flow of incremental improvements from the bottom of the organization’s hierarchy. It will make production smooth, increase production quality as well as management quality. 1. 11 Use of high technology Mr. Khan has to provide flawless machineries to achieve better output. Mr.
Khan instead of going harsh against the workers must try to find out the real causes of low quality products and time wastage factors if they really want to bring qualitative changes in their products. 1. 12. Buying agent Mr. Khan should use a buying agent who can do all sort of job on behalf of the company and this will be very much handy, once company has enough experience doing foreign trade then it can do all the procedures itself. 1. 13 Ensuring efficient management of ports • • • • Operate the port for 24 hours a day Stop all toll collections that takes place at the entry and as well as within the port.
Encourage the establishment of more off dock container freight stations (cfs) (both for exported and imported containers) Permit private sector to take over some of the functions of handling containers. This will reduce the space pressure on the port and minimize delays in handling raw materials. • Simplify the administration of vessels entering the port and reduce the number of forms to be completed — from 40 (now) to 7 (as in most ports). 18 • Activate the proposed Asian Development Bank loan project and modernize Chittagong Port.
The approach of the loan is to allow privatization of some port operations • • • Revise the antiquated Shipping Act, procure more equipment, and construct the proposed new container port Banning all kinds of strikes within it Special export processing zones have been set up to ensure smooth functioning of factories for export processing. 1. 14 Increasing Competitiveness For increasing competitiveness Mr. Khan has to keep the cost of production lower than that of competitors, bring continuous innovation in technology, offering high quality product at reasonable and take different promotional activates . Time problems Time problems and solutions Global Recession Overcoming global recession Make Resource available Lack of resource when needed Lead time Manage lead time soundly 18 Recommendation of time problem: For the time problems showing above, we are giving the following suggestions: 2. 1 Overcoming global recession The BGMEA must look into it thoroughly and start thinking from now on without wasting time regarding how to tackle the situation and keep our products export on track which accounts for our foreign exchange. 2. 2 Make Resource vailable In garments factory electricity, gas and water are the most important. For this, Mr. Khan should make own bio-gas plant and own electricity plant for their garments and also can use big jars for sustain water. Government should also adequately distribute these. Mr. khan should store sufficient amount of raw material in warehouse to make the supply of raw material smooth and easy when needed. Mr. khan should also find out alternative way to sourcing raw material to buy raw 18 material in low cost when others price is high.
Company should keep in mind the following factors to select a supplier whether to home or abroad: • • • • • • Purchase price Technological capacity Distribution costs Reliability regarding just-in-time deliveries Service by the raw materials producer Quick response 2. 3 Manage lead time soundly Lead time is one of the main competitive factors among companies. The ability to deliver quickly influences export, sales and thereby revenue. It normally includes all activities from start to end. Lead time begins with the first receipt of a customer order and ends with customer receipt of the product or service. Mr. han should always make available raw material, use high technology, skillful workers and management team to finish the total process properly and meet the lead time. Customer lead time = [{Information lead time} + {Order lead time}] Total lead time = [{Information lead time} + {(manufacturing lead time) + (shipping time for import fabrics) + (Shipping time for export final product)} Mr. khan should reduce time in the following processes: 18 The proposed structure is: 3. Money problems Money problems and solutions Fluctuation of international prices Adopt with international prices High corporate tax rate Negotiation for reduce tax rate 8 Recommendation of money problem: For the money problems showing above, we are giving the following suggestions: 3. 1 Adopt with international prices When product price will fall in international market, then he should produce fewer products and minimize the import. If in this moment he produces more products and maximizes import, then for fluctuation in international market his product price will be fall. For this reason, he can not success his business and sustain will be impossible. To overcome this problem he should produce and import minimize product. Price Demand Production 3. 2 Negotiation for reduce tax rate 18
When any business organization firstly starts a business, then government do not charge any tax on that business for first five years. After five years government charge high corporate tax. To overcome high corporate tax rate Mr. Khan should maximize the profit because from profit government do not charge any tax. He can maximize the profit to develop his product quality. Conclusion Mr. Khan should continue the project for sustain his business and earn profit. We think he will overcome all of his problems if he follows our suggested way. 18 Appendix The own part done by each group members are given in the next page with name and id. 18
