by Engr Kh Mashiur Rahman | Mar 25, 2021 | Blog
Garment Industry
Garment Industry – Among the basic elements of industrial production–man, machine and materials–managing human beings is the most complicated one. It is at the core of the matter. Unfortunately, in most of the cases, this core element does not get proper attention from the top rank in the hierarchy of a management. Like any other organisations, the activities of readymade garment factories can be divided into two key functions:
Line – those are directly involved with production, the key function of the industry and Staff – those who provide assistance to production. Read more about RMG in Bangladesh- A Study on Social Compliance
According to the wage grade (Bangladesh Gazettes in 2006, 2010, 2013 on Minimum Wage Board) employees of the readymade garments (RMG) industry are divided into two categories, a) workers – those are differentiated into seven grades (1-7) according to their skills and experiences and b) employees – who are not directly involved in production but they help in production, delivering their services, divided into four different grades (1-4). There are many other important functions which have been skipped in the wage grade.
Readymade garment is a labour-intensive industry. Proper labour management is very important for the industry as cost of wages and salaries is the single highest cost in the manufacturing process.
The aim of human resource department (HRD) in an organisation is to improve performance of the employees as well as the organisation. The main focuses of human resource department are the following:
l Selection of the right person in the right place at the right time. The HRD is to prepare job description and specification against each position and to identify the required number of employees in any particular job to avoid over staffing.
l Training and development – To provide the employees with knowledge and skills needed to do a particular task or job and to make them ready for future challenges, adapting attitude with changes.
l Organisational development – To increase effectiveness and efficiency of an organisation and well-being of its members through planned interventions applying behavioural science concepts.
l Career management – To help the individuals to make their career plans according to their skills, ability and potential.
In any discussion or in an article on the Bangladesh RMG industry without mentioning the Desh Garments Ltd (DGL), the very first factory designed for 100 per cent export, would be incomplete. The state of HRD during the last decades in our RMG industry and its status at the DGL back in 1979 can be reviewed to set a present-time benchmark for the HRD in the RMG industry. An organisation is known by its management and it performs as its members do. Organisational culture is the culture of its owners. The man behind the initiatives at the DGL then had a clear vision about the industry. Mr Noorul Quader (Khan), a valiant freedom fighter, who discarded his title ‘Khan’ in protest against the role of the Pakistani rulers during the liberation war of Bangladesh, started with a single garment factory which ultimately produced hundreds of future entrepreneurs in the industry. The standard that he engraved in the HRD in his factory back in 1979 can still be the cornerstone of the present RMG industry.
Through an advertisement in the national dailies, Mr. Quader then recruited a group of meritorious students from different disciplines from across the country. Some of the engineers whom he had recruited had overseas degrees and a few of them had overseas job experiences. A handsome remuneration package was offered at that time to attract the future entrepreneurs in the industries. Mr Quader arranged training for all his recruited staff in South Korea for six months under joint collaboration with the Daewoo Corporation. An orientation course was conducted at the ‘Institute of Business Administration’ (IBA), the University of Dhaka, the most prestigious academic institute in the country. This single example is more than enough to justify his HR approach. The DGL produced a number of successful RMG business leaders. Unfortunately many of them did not take any lesson from Mr Quader’s HR approach.
There were many favourable conditions, both national and international, behind the ‘hockey-stick growth’ of the industry. In 1984, the number of export-oriented readymade garments factories was 384 and within a decade in 1994, that number shot up to 2,182.
The dramatic decline of jute’s share in Bangladesh’s export earnings had a huge impact on the livelihoods of poor jute growers in the country. Uncertainty of regular works for the day labourers in agriculture sector had pushed them to urban areas where many alternative sources of employments were available. At the same time, growth of the RMG sector had pulled workers from rural areas to urban centres with a strong possibility for employment there. The supply of surplus workers from villages helped in the rapid growth of the RMG factories. All these had happened when ‘human side’ of the workers was hardly in consideration.
A chronological diagram can be drawn to explain the past and present status of the HRDs in readymade garments industry in the country.
The period from the beginning until 2000, was a heaven for the production manager and hell for the workers.
Though garment business is always positive in terms of profit, the perception of the society about the sector still remains negative on account of working environment, workers’ wage etc. Once the term ‘garment factory’ was perceived as a place where anything was possible in terms of mismanagement. Breaking all the norms, values and principles of labour rights, maximum utilisation of labour with minimum expenses/benefits was given top priority to ensure highest possible profit. Qualified and adequate number of staff used to be considered as a waste of money by the businesses. A tendency continued to run the business with minimum possible number of staffs offering them lower package, never considering their quality and hard work. It was accepted to the management if any staff engaged himself/herself in line function contributed directly to the production and helped earn some extra profits to the owner.
From the very initial stage of the industry until the compulsion of compliance, as a precondition of business, there was nothing about human resource development (HRD). To maintain the payroll, a job of time-keeper was created to record workers’ ‘in-and-out’ time and to keep record of over time (OT) work. This core activity, associated with payment, was being controlled by the production manager (PM) concerned, the then most powerful and unchallenged authority. In most of the cases, the PM and the FM (Factory Manager) was the same. Keeping behavioural approach, human psychology, legal rational demand etc aside, most of the owners were dependent on so-called managers. When dependency and authority go to the persons of less capability and capacity, abuse of power and position could appear as a regular phenomenon. Unfortunately, those incidents in our readymade garment industry gave a negative message on work environment of the industry. No restriction on workers’ age, no control of working hours, disregarding of norms and values on working condition etc took the upper hand in the industry till the year 2000. Sexual harassment, deduction of workers’ hard-earned over-time (OT) hours, marking them absent even for a five-minute late arrival as a punishment and using them as personal workers were the managers’ common weapons to control the factory administration. In many cases, workers were asked to pay a percentage of their earnings from extra overtime (EOT) duty to their bosses. Both management and workers thought that the EOT was the privilege for the workers to earn more, so those workers who maintained a good relation with their bosses only were allowed in the extra earning net. For the workers it was difficult, even three decades back, to meet very basic needs without OT work. From the selection process to duty assignment to wages determination, all the activities related to personnel management were the functions of the production manager. In the first decade of the industry, in most of the cases, the production manager himself or his trusted one was assigned to keep the record of workers’ daily attendance and working hours. So, the production manager, apart from production duties, used to control the personnel issues as well.
Mohammad Hasan
[email protected]
by Engr Kh Mashiur Rahman | Mar 25, 2021 | Compliance
Trade Unions
Trade Unions – Mohammad Hasan In its long journey, readymade garment (RMG) sector in Bangladesh has been making a headway quietly but steadily. The industry has always enjoyed a silent support from all the sections of the society as the sector has ensured the highest job opportunities, specially for the least privileged women in this country. As a foreign currency-earner, the industry ranks number one and has been maintaining this status for years. The RMG sector nowadays has become the focal point of economists, intellectuals, journalists and bureaucrats for discussing its current affairs and future prospects. Obviously the recent incidents and anarchy in the industry have triggered this interest among these quarters. Expert opinions are filling the columns of almost all daily newspapers and late- night TV talk shows galore on various channels.
We guess many of these commentators have not ever stepped into a garment factory themselves Here this writer would like to refer to a fairly recent comment of a cabinet minister who said that labour unions would be allowed to operate in the garment factories in order to get the industry out of labour unrest. This writer has been serving the garment sector for the last 18 years as an employee. From his own experience this scribe wants to humbly oppose it. Implementation of such a decision in our RMG industry would be suicidal. Immediately after the independence almost all of our industries, banks, and financial institutions were nationalised as the government of that time was more or less influenced by the practices in the USSR (now Russia and its neighbouring countries) and in India.
Trade unions with political affiliations are hardly bound by logic and reason. Union leaders compel the organisations recruit more workers/employees than actually required and thus make the industries/organisations less profitable or losing concerns. Trade union leaders become the supreme authority and they try to become boss of their bosses. They arrange job transfers, promotions etc. among the workers/employees not on their merit or skill but their loyalty to the union. Thus the organisation gradually becomes sick of the union leaders who become rich and richer. In the mid-seventies, we entered a total capitalistic economy and the government started privatising the nationalised industries. But character of the trade unions of those organisations remained unchanged. So privatisation really could not save those industries. We all know what the trade unions are doing in our nationalised commercial banks.
Everybody knows how the trade union leaders bade farewell to the immediate past governor of the Bangladesh Bank, our central bank. With this kind of reality in hand, our precious RMG sector can hardly afford the traditional model of trade unions in its factories. We think Workers’ Participatory Committees (WPC) can be the best substitute for traditional trade unions. These WPCs in the RMG units can make a very good bridge between the management and the workers. Elected WPCs are already in action in many of the factories in the country and they are encouraging examples for those who are yet to introduce WPC in their factories. The presence of a genuine bargaining agency can always help the industry to grow. A bargaining agent without any political affiliation and delinked from any foreign or local NGOs can actually help any industry operate successfully and profitably by ensuring a win-win situation for both the employees and the employers.
One would observe that our politicians, intellectuals and journalists have now found another topic of interest from the industry to rave about: minimum wages for the garment workers. While commenting on the matter, many remain unaware of some of the facts about the RMG industry in the country. To comply with the buyers’ code of conduct and laws of land, the workers get some benefits which they did not get at the beginning of the industry in the country. Nowadays all compliant factories ensure and practise health and safety standards, primary medical facilities, drinkable water, refreshments, transport, free or discounted lunch, group insurance etc. for the workers. Some factories provide additional props for their workers which incur a lot of money, time and effort from the part of the owners.
These include running fair price shops for essential commodities, arrangements of annual feasts/picnics, cultural functions with the participation of the workers, offering free education and medical treatment to the workers and their children etc. Your can read more about Child Labour in RMG Sector – an Alternative View
When we talk about minimum wages of the garment workers, we usually refer to the entry level apprentices with no experiences and little or no education. These inexperienced and unproductive apprentices get training on operation, local laws, health and safety etc. free of charge and get paid by the factories during the training and apprenticeship period. These apprentices are absorbed as permanent workforces at the expiry of their three-month probation period and get entitled for higher wages. Apprentices/trainee workforces constitute not more than 10 per cent of the total workforce in a garment manufacturing unit. Rest of the workers (who are the vast majority) usually get wages much higher than the workers in any other similar industry. These facts often escape attention of most of us who seem to take immense interest in RMG affairs and pass sweeping comments from time to time. Workers are paid their wages, benefits, increments, bonuses, all legal and extra benefits from the factories they work for.
As and when a crisis breaks out in the industry, the apex business bodies of RMG like the Bangladesh Garment Manufacturers and Exporters (BGMEA)/Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) point their fingers to some of the NGOs and ask for government help. These problems can be easily managed by the apex bodies themselves without any external intervention. Only thing is that they need to be more associated with the wellbeing of the workers. Obviously a gap exists between the workers and the management and this gap has been filled up by the so-called NGOs. A strong communication bridge has been made between the workers of RMG and NGOs. In no way NGOs can be a representative of the workers but unfortunately they are at the negotiating table with the owners and the government.
But there are some factories which are still behind to implement minimum wages and benefits. These types of factories and apex trade bodies must take immediate steps to remove the shortcomings. At the same time, we should also keep in mind that the vested groups are always searching for leaks and gaps. The government and apex trade bodies should take steps to prevent anarchy by plugging these holes. The NGOs are taking the opportunity where BGMEA/BKMEA fails. For any arbitration, most of the workers send letters to their employers using letterhead pad and address of the NGOs they belong to as members. As a result, concerned factories get themselves engaged with those NGOs or external labour unions to settle the issues bypassing BGMEA/BKMEA or the Labour Court.
It is needless to say that these parlays usually leave out the NGOs or unions, the beneficiaries. The apex bodies of RMG industry can manage/handle these issues easily. These two associations of the owners need to come closer to their workers, the main driver of the industry. Supposedly these two associations are financially solvent ones. So money should not be a problem if a strong will and proper management are there to set up arbitration cum recreation centers across areas like Mirpur, Savar, Ashulia, Gazipur, Narayanganj and other places where most of the RMG workers reside. Proper management and sincerity of these centres can divert the workers from seeing the NGOs and alike who are not part of the sorrows and cheers of the industry. Activists claim that more widespread trade unionism will bring many benefits to the RMG workers.
They say that unions will give workers an effective voice against unsafe working conditions, unacceptably low wages and exploitation by unscrupulous factory workers. Unions will, the claim goes, solve the problems of exploitation and workplace safety that were supposed to be solved by the mechanisms of social compliance guidelines and inspections but were not. According to them, the social compliance mechanism proved ineffective because it was driven by external actors; the trade union mechanism will be more effective because it is internal – the workers will be given effective tools to demand and obtain benefits for themselves. Unfortunately, these activists are ignoring some inconvenient facts. While unions can act as a countervailing force against employer oppression, these unions are rarely conducive to improved productivity and economic growth.
As a result, union membership number, influence and popularity have been declining worldwide. Union density in the United States is only 11 per cent and declining from 35 per cent in the 1950s. By contrast union density in Bangladesh is 35 per cent. So it is somewhat strange that many US activists and stakeholders are urging Bangladesh to adopt measures to increase union density: they should probably first try to increase it in the United States where unions are about to disappear. Already unions there are confined mostly to the public sector and to declining industries such as autos and steel. Many economists feel that powerful unions were instrumental and destroying the profitability and economic viability of these industries in the US, leading to falling investment, growth and the eventual relocation of these industries to other countries.
Today, the US auto industry exists only after two of the three major firms went bankrupt in 2009 and had to be bailed out by the US government. In addition, employment in the auto industry within the US has be relocated from strong union states such as Michigan to southern non-union states such as Tennessee which historically had no involvement in the car industry. Unemployment in Michigan has risen sharply and the city of Detroit has lost employment and population in a catastrophic manner. Any student of labour relations in South Asia knows that unions have a troubled history in this region.
For instance, strikes are one of the most effective tools that unions have to wrest concessions from employers. Unfortunately in South Asia, unions have a history of enforcing strikes with muscle power and bringing businesses to a halt whenever they want to demonstrate their clout and influence. In the late nineties, persistent industrial unrest crippled the state-owned banking sector in Bangladesh, adding up to a costly half a billion dollars annually in lost hours of work. A report submitted by a government task force at that time said 30 per cent of the nearly 40,000 bank employees were sitting idle. “In the name of trade unions, union leaders are virtually running a parallel administration, controlling postings, promotions and transfers of bank employees,” the report said. “The huge amount of outstanding bank loans was the result of the influence of the trade unionists in the banks’ lending activities,” the report said. Both the task force as well as the World Bank advised the government to temporarily suspend trade unions in banks.
There is a long tradition of ties between political parties and labour unions in South Asia, and fragmented, highly politicised unions appear to be a characteristic of industrial relations in most of the region. Most disruptions in large public enterprises in Bangladesh over the last few years have been caused by inter-union rivalries. Disruptions in the workplaces due to unions’ political activities are hardly conducive to investment and growth. Politicised unions can also be obstructionists that wield their political power against socially important reforms that may hurt their members. India’s unions continue to criticise the government’s recent liberalisation efforts, despite the apparent successes since 1991.
The unions have organised nationwide general strikes to oppose the commercialisation of state enterprises which are aimed at making India’s economy more open and increasing economic growth which brings benefits to all. India’s unions are propping up that part of the economy that is most in need of reform.
by Engr Kh Mashiur Rahman | Mar 25, 2021 | Compliance
Child Labour
Child Labour – Although child labour is a global and fundamental ‘human rights issue’, its form and nature vary according to regions and countries. International conventions, universal declarations, laws of the land, social awareness — nothing can keep the child labour at bay.
It is poverty which decides a child’s destination, whether it takes the shape of school, a sweatshop or the street. Poet Sukanto has rightly narrated the pangs of hunger in one of his poems in which the full moon appears to him like a round, freshly-baked bread. In the realm of hunger, it is all prose. There is no place for poetry, the poet observes. You can read about The Safety initiatives of Accord Alliance and Can Trade Unions Really Improve RMG Workers’ Lot?
When it comes to the issue of ‘child labour eradication’, it is said that Bangladesh ready-made garments (RMG) sector has achieved a remarkable success; and its rate of progress is far better than any of its competitor countries. In view of the core issue of social compliance, none of the worker-friendly factories in the country is burdened with the NC (non-compliant) grading. Does this success mean we do not have other critical issues in the context of child labour? The bitter fact is the rate of success in the RMG sector has also resulted in the worst form of child labour in many factories, especially in the non-compliant ones. In cases, it assumes the form of even bonded labour. This situation facilitates exploitative and the worst forms of child labour that violates the basic fundamental human rights of a child.
In today’s globalised world, competitiveness is a vital factor in the context of the consumer-market. Everyone wants to lower production cost and maximise profit by increasing sales. Lower cost has always been equated with cheap labour — in our case child labour. Children do not bargain, argue or complain. On the other hand, they spend long hours in work without asking for any compensation. They are constantly in fear of losing job. This situation favours the employers. In many RMG factories in the country, which are out of the social compliance net, or run mostly on sub-contract basis, adolescent workers are being exploited almost systematically.
In the year 1993, the RMG sector had already reached a level worth $1.4 billion with around 750,000 workers at 1500 factories. Around 10 per cent of the total workforce was below the legal minimum working age i.e. below 14. Seventy per cent of the total under-aged workers were girls. Almost 50 per cent of the total business came from the US market. The single-country dependence compelled BGMEA (Bangladesh Garment Manufacturers and Exporters Association) to initiate, following the Harkin’s bill (first proposed in the US Congress in 1992), a child removal programme from the workplace in conformity with the Bangladesh Factory Act 1965. The Act says that any employment of workers under 14 is illegal.
BGMEA announced a unilateral deadline to make the industry free from child labour by 31 October, 1994. On July 04, 1995, a tripartite agreement was signed among BGMEA, ILO and UNICEF, endorsed by the GoB (Government of Bangladesh). The US embassy in the country played the role of an observer in the job of removal, and rehabilitation of the under-aged workers with basic and technical education and stipend. UNICEF took the lead in the area of education, while ILO engaged in monitoring and verification. The mechanism had been fully functioning by late 1996.
Out of eight fundamental conventions of International Labour Organisation (ILO) Bangladesh ratified six until 2000. The ratified conventions covere ending forced labour, freedom of association, right to organise and collective bargaining, equal remuneration, end to discrimination. In 2001, Bangladesh ratified one more fundamental convention i.e. worst form of child labour, and set the target of eliminating the “worst forms of child labour” by 2015. The country has also ratified the UN convention on the rights of children. The country, however, is yet to ratify a fundamental convention (C 138) on Minimum Age for Employment, which states: “The minimum age. . . should not be less than the age of compulsory schooling and, in any case, shall not be less than 15 years.”
According to Bangladesh Labour Law 2006, “A child means a person who has not completed his fourteen years of age”. No child is allowed to perform any form of work in any industry. On the other hand, “An adolescent means a person who has completed his fourteen years, but has not completed eighteenth years of age”. An adolescent can work in the industries or establishments under certain terms and conditions.
To eliminate child labour from our RMG sector, the factory management bodies have gone one step ahead. They have eliminated adolescent workers as well. The RMG sector has extended the age-limit of a child to 18 on its own definition. In front of garment factories nowadays, a common notice is seen hanging. It reads: “No child labour is allowed here. Workers under 18 years old are not recruited to the factory.” When an established industry like RMG products does not allow a ‘person’ living below poverty line and having no access to education to work, he or she has to choose an unrecognised industry for employment, where the working condition and the form of work are below-standard with low wages or, sometimes, with no wages at all. Only food is provided in this case. When children lose their jobs in garment factories, they get involved in highly hazardous sources of income just to make a living.
Child labour is a fundamental human rights issue. But in the subcontinent, child labour is culturally and traditionally recognised. In the region, the children of farmers help their parents in the field, and household works. The professionals like blacksmiths, potters, weavers and fishermen get assistance from their children in their respective fields. Thus from the very childhood they help generate family income. On the other hand, they gather technical knowledge of many local professions.
When a child helps his/her family without disrupting school education, it is socially appreciated by tradition; because the employment in this case is informal. When a child has to survive by himself/herself who cares about physical fitness, mental growth or educational rights? If the sharply monitored formal sectors, like the RMG, do not allow children to be employed there, those extremely poor or orphaned will rush to non-formal sectors like workshops, garages etc. There, most of them will get caught in the trap of forced and bonded labour. When scopes for job in the non-formal sector even are not available, children opt for begging in the streets, or get involved in trafficking narcotics or sex trade. If the RMG sector is not a safe place for an adolescent girl, then where would she go?
To make our factories compliant, we are throwing thousands of child workers into a complex life. An adolescent girl, who is denied a space by a RMG factory, will find it difficult to lead a life with secure growth and sound health. To get an ever-elusive job at a RMG factory, adolescent boys/girls take recourse to falsehood, hide their actual age and collect fake national identity cards, and thus prove their ‘adulthood’.
According to the latest National Child Labour Survey (NCLS), the total number of child labour in the country is 7.4 million in the bracket of 5-17 age-group. Out of total child employment, 3.1 million are considered risk-prone. According to an ILO survey, about 93 per cent of child workers toil almost 13 hours a day, where their daily ‘income’ comprises only food two times a day or Tk 30.00 a day to Tk 1500 a month. The workers have to undergo physical torture, work in a stifling condition, unhygienic atmosphere without Personal Protective Equipment (PPE).
In our RMG industry, the age of a child has been extended up to “not completed 18 years of age” due to the conditions set for the employment of adolescent workers. To materialise the government’s policy to eradicate the worst form of child labour by 2015, the government, BGMEA and labour leaders should work together. A feasibility study comprising doctors, psychologists and nutritionists can be initiated to measure the physical and mental stress on the adolescents working in RMG factories. If the result of the study is found favourable, then an adolescent can work for eight hours in a decent environment. We can apply this eight-hour work for the persons in the 15 to 18 age-group.
The ILO Convention 138 defines “light work” as work that is not likely to harm the child’s health or development, or prejudice his/her attendance at school. Work in RMG sewing floors is always considered light work. BGMEA/BKMEA can open evening schooling in different industrial zones and can provide training to adolescent boys and girls in different areas.
In a least developed country like Bangladesh where overpopulation, illiteracy and poverty are the major hurdles to achieve sustainable development, it is quite difficult to implement the ‘policy’ mentioned, as it relates to child labour. When the minimum wages of workers in different countries vary according to the countries’ socio-economic realities, one single standard on child labour cannot be justified. When we address the issue of child labour eradication, we need to consider socio-economic conditions of the country concerned.
On the other hand, the forms of labour will not be the same in different industries. Child labour in the ready-made garment industry is different from that in the mines or automobile workshops.
The official acceptance of adolescent RMG workers will surely help us minimise this form of deprivation in the country
by Engr Kh Mashiur Rahman | Mar 25, 2021 | Sewing & Production
Abstract – Supply Chain
Supply Chain – The export-oriented readymade garment (RMG) industry has some distinctive features, which differentiate it from other businesses. Wage, Supply Chain , Time-frame, and Compliance are among the most important features of this business. Each of four features is interrelated and interdependent. Among the features, effective Supply & Chain Management (SCM) is the core. Whatever the wage level or lead time (the period from order confirmation to shipment) without proper management of supply chain business is not viable and sustainable. Supply & chain can categories into two phases – Macro level, part of global supply & chain and Micro level, the supply & chain system within the manufacturing unit. In supply & chain system, it can be materials, it can be information, and even it can be a supply of business (continuation of business). One single and very simple issue like mismatching thread count or wrong button line, incorrect or delayed information can make the whole process jeopardies. Considering the importance, present study has been carried out on supply & chain system in Bangladesh RMG industry. The study revealed the difficulties in supply & chain system and also tried to set some guidelines to improve the system for the sustainable development of the sector.
Supply Chain Management
Supply Chain Management – The export-oriented readymade garment (RMG) sector has some distinctive features, which differentiate it from other businesses. Wage, supply chain, timeframe & compliances are among the most important features of this business. Each of the four features is interrelated & interdependent. Among the features, an effective Supply Chain Management (SCM) is the core one. Whatever the wage level or lead time (the period from order confirmation to shipment) is, without proper supply chain management no business is viable. We can categories the supply chain into two phases – macro level that accounts for part of the global supply chain & the micro level that is the supply chain system within the manufacturing unit.
In the system, it can be materials, information or it can even be supply of business (volume of business). One single & very simple issue like mismatching thread count or wrong button line, a piece of incorrect or delayed information can put the whole process into jeopardy.
In RMG business, there is a very strong correlation between the business value chain & the supply chain. The supply chain is mostly controlled by the buyers who control the business. Only lowest wage cannot ensure the business. Without proper management in the supply chain, it is not possible to comply with the lead time given by a buyer. RMG manufacturing is one of the suitable examples of the SCM.
Apart from the ultimate consumer & manufacturer, there are many other parties involved in the RMG business. In many cases a work order comes to a manufacturer through four to five different h&s or phases. For example, a buyer in the USA (ultimate customer or br& owner) confirms the business with an agent of that country. That agent has another agent in Hong Kong. Now many agents have their offices in India. An agent in India has another agent in Bangladesh. It is called the ‘local agent.’ That local agent communicates with the manufacturer.
Due to multiplicity of the stakeholders or middlemen, it takes a lengthy process for any decision. Pending approval kills the lead time. In the whole supply chain, Bangladesh does the manufacturing job but does not manufacture basic raw materials. Our competitors like China & India have their own sources of materials. Countries like Vietnam & Cambodia need only one week to receive the materials from Shanghai. So, the lead time is another important issue in the RMG business.
One small material missing or delayed just puts the whole order at stake. Schedule failure for one single order delivery jeopardises the whole production plan. Unplanned & earlier importation of materials increases the inventory level. Supply of materials, when delayed in-house, creates a line gap. Both the situations have a negative impact on finance. On the other h&, if the finished goods are not shipped on time due to not getting the approval, the factory has to pay the bills of back-to-back (BTB) L/Cs (letters of credit) against its bank loan at a high interest. So the factory always tries to avoid delayed shipment, even by covering that delay with overtime work, which leads to double production cost. When this overtime work does not help, then they take the recourse to un-authorised sub-contracts. Excessive overtime work & un-authorised subcontracts both amount to violation of compliance, another inevitable feature of the sector.
The RMG sector is now passing through many difficulties it never faced before. A devastating fire at the Tazreen Fashions & the Rana Plaza collapse have raised the question about its capability in terms of compliance, fire safety & building integrity. Only minimum wage competitiveness does not guarantee any international business of this kind. Hundreds of factories are closed, thous&s of workers have lost their jobs, many factories are running under-capacity even after accepting the business at the cost price. For the first time growth in our RMG export has fallen mainly on the compliance ground. So, to ensure compliance there is no way to enforce an effective SCM.
Of the four important features of the sector the proper supply chain management is the key to others. All the factors are interrelated & interdependent. All of our competitors have an advantage in the lead time. They are in a better position in the area of supply chain & compliance. Our main competitiveness is the low wage. Only wage alone cannot guarantee business growth & sustainability.
At the macro level the SCM system involves parties of different companies in different countries like suppliers, manufacturers & br&s. In the global or macro-level links, relationship & commitment of different suppliers, services of banks, ports, customs along with transportation & documentation are interconnected. It is a difficult job to ensure an effective coordination among all the parties. Common interest & business relationship can make a strong bondage in the macro-level SCM. If the parties involved work jointly, then it is possible to render an effective management system. This is a team work. Non-performance by any member of the team is enough to lose the game. Among the factors, beyond the factory control, are –
1. Delayed & wrong supply of materials
2. Delayed approval
3. Style changes after confirmation or even after the start of production
4. Fabrics failing to the test requirement
5. Pilferage of goods or finding them missing during transportation or at ports, especially at airports
There are basically two types of functions at the micro level: a) at the head office where the persons deal with buyers & suppliers involved in documentation etc., & b) at the factory where production operation activities are performed. Even within the production operation there are many departments involved. The links between factories & the head office or among the departments of the factories can be classified as the micro level.
The RMG business involves a buyer-dominated supply system where garment makers have a very limited role. Unfortunately, even with a limited role in the supply chain, a factory has to face tremendous pressure to meet the lead time. In this particular business, suppliers are not static & a large number of suppliers are involved in the process of making a single shirt of a particular style. For the same buyer it is not necessary that the suppliers’ list & items will be the same. The number of suppliers varies depending on style specifications. There are almost 20 items required for a single shirt. A factory dealing with 15 buyers has to h&le at least 100 suppliers. Most of the factories run their operation in the traditional system i.e. not having any modern information system.
To cut the lead time the sector needs to improve the SCM system. A buyer wants everything ready & instantly. Instead of the traditional system, now online costing & orders are now common. In the traditional system it required 120 days in case of solid fabrics & 150 days for yarn dyed. Now a factory is having 60-75 days & 90-120 days respectively. In the case of composite knit garment, a factory keeps the fabrics ready in the grey condition. After having the style details they go for dyeing & thus they can manage to keep the lead time limited to 30-45 days for repeat orders. For any fresh order a buyer does not allow even 60-75 days, though earlier it took 90-120 days.
It is important to mention here that in the category of knit & denim fabrics, Bangladesh is almost self-reliant. It is a positive sign. The skill & productivity of our workers have increased significantly.
Evidence shows that in 70 per cent cases it is buyer’s responsibility & 30 per cent is of the manufacturers. Direct marketing & elimination of middle men can help establish an effective supply chain system. It is very difficult to make a combined & coordinated system among the interest groups involved at present. Miscommunication & misinformation at any point hamper the whole process. Moreover, the impact of political instability & workers’ unrest destabilising the SCM are another concern. Adaptation with changing technologies, undisrupted utility supplies, minimising corruption, elimination of bureaucratic tangles in customs, port management & other concerned government agencies can play a vital role in overcoming the challenges. Without combined efforts & firm commitment from all concerned, a performance-based supply chain system is not possible.
A chain is as strong as all of its rings are. Similarly, a chain is as weak as one of its rings is, i.e. one single ring is more than enough to make the whole chain dysfunctional. The RMG sector in our country has so far been witnessing very clear price competitiveness. The minimum wage in our country is still the lowest among our competitors. But our lead time is under pressure. Cheap labour does not help, if the workers are not efficient. The supply of a small quantity with many styles within a short time is not possible without a functional supply chain system. Reducing the dependence for materials on other countries & elimination of middle men are vital to make the chain strong. Without proper management of the supply chain, only wage competitiveness cannot ensure sustainable business. So, for the sake of the sector, we have no alternative but to make the SCM effective
Sustainable RMG Growth: Improving Supply Chain Management
The export-oriented readymade garment (RMG) sector has some distinctive features, which differentiate it from other businesses. Wage, supply chain, timeframe and compliances are among the most important features of this business. Each of the four features is interrelated and interdependent. Among the features, an effective Supply Chain Management (SCM) is the core one. Whatever the wage level or lead time (the period from order confirmation to shipment) is, without proper supply chain management no business is viable. We can categories the supply chain into two phases – macro level that accounts for part of the global supply chain and the micro level that is the supply chain system within the manufacturing unit.
In the supply chain system, it can be materials, information or it can even be supply of business (volume of business). One single and very simple issue like mismatching thread count or wrong button line, a piece of incorrect or delayed information can put the whole process into jeopardy.
In RMG business, there is a very strong correlation between the business value chain and the supply chain. The supply chain is mostly controlled by the buyers who control the business. Only lowest wage cannot ensure the business. Without proper management in the supply chain, it is not possible to comply with the lead time given by a buyer. RMG manufacturing is one of the suitable examples of the SCM.
Apart from the ultimate consumer and manufacturer, there are many other parties involved in the RMG business. In many cases a work order comes to a manufacturer through four to five different hands or phases. For example, a buyer in the USA (ultimate customer or brand owner) confirms the business with an agent of that country. That agent has another agent in Hong Kong. Now many agents have their offices in India. An agent in India has another agent in Bangladesh. It is called the ‘local agent.’ That local agent communicates with the manufacturer.
Due to multiplicity of the stakeholders or middlemen, it takes a lengthy process for any decision. Pending approval kills the lead time. In the whole supply chain, Bangladesh does the manufacturing job but does not manufacture basic raw materials. Our competitors like China and India have their own sources of materials. Countries like Vietnam and Cambodia need only one week to receive the materials from Shanghai. So, the lead time is another important issue in the RMG business.
One small material missing or delayed just puts the whole order at stake. Schedule failure for one single order delivery jeopardises the whole production plan. Unplanned and earlier importation of materials increases the inventory level. Supply of materials, when delayed in-house, creates a line gap. Both the situations have a negative impact on finance. On the other hand, if the finished goods are not shipped on time due to not getting the approval, the factory has to pay the bills of back-to-back (BTB) L/Cs (letters of credit) against its bank loan at a high interest. So the factory always tries to avoid delayed shipment, even by covering that delay with overtime work, which leads to double production cost. When this overtime work does not help, then they take the recourse to un-authorised sub-contracts. Excessive overtime work and un-authorised subcontracts both amount to violation of compliance, another inevitable feature of the sector.
The RMG sector is now passing through many difficulties it never faced before. A devastating fire at the Tazreen Fashions and the Rana Plaza collapse have raised the question about its capability in terms of compliance, fire safety and building integrity. Only minimum wage competitiveness does not guarantee any international business of this kind. Hundreds of factories are closed, thousands of workers have lost their jobs, many factories are running under-capacity even after accepting the business at the cost price. For the first time growth in our RMG export has fallen mainly on the compliance ground. So, to ensure compliance there is no way to enforce an effective SCM.
Of the four important features of the sector the proper supply chain management is the key to others. All the factors are interrelated and interdependent. All of our competitors have an advantage in the lead time. They are in a better position in the area of supply chain and compliance. Our main competitiveness is the low wage. Only wage alone cannot guarantee business growth and sustainability.
At the macro level the SCM system involves parties of different companies in different countries like suppliers, manufacturers and brands. In the global or macro-level links, relationship and commitment of different suppliers, services of banks, ports, customs along with transportation and documentation are interconnected. It is a difficult job to ensure an effective coordination among all the parties. Common interest and business relationship can make a strong bondage in the macro-level SCM. If the parties involved work jointly, then it is possible to render an effective management system. This is a team work. Non-performance by any member of the team is enough to lose the game. Among the factors, beyond the factory control, are –
1. Delayed and wrong supply of materials
2. Delayed approval
3. Style changes after confirmation or even after the start of production
4. Fabrics failing to the test requirement
5. Pilferage of goods or finding them missing during transportation or at ports, especially at airports
There are basically two types of functions at the micro level: a) at the head office where the persons deal with buyers and suppliers involved in documentation etc., and b) at the factory where production operation activities are performed. Even within the production operation there are many departments involved. The links between factories and the head office or among the departments of the factories can be classified as the micro level.
The RMG business involves a buyer-dominated supply system where garment makers have a very limited role. Unfortunately, even with a limited role in the supply chain, a factory has to face tremendous pressure to meet the lead time. In this particular business, suppliers are not static and a large number of suppliers are involved in the process of making a single shirt of a particular style. For the same buyer it is not necessary that the suppliers’ list and items will be the same. The number of suppliers varies depending on style specifications. There are almost 20 items required for a single shirt. A factory dealing with 15 buyers has to handle at least 100 suppliers. Most of the factories run their operation in the traditional system i.e. not having any modern information system.
To cut the lead time the sector needs to improve the SCM system. A buyer wants everything ready and instantly. Instead of the traditional system, now online costing and orders are now common. In the traditional system it required 120 days in case of solid fabrics and 150 days for yarn dyed. Now a factory is having 60-75 days and 90-120 days respectively. In the case of composite knit garment, a factory keeps the fabrics ready in the grey condition. After having the style details they go for dyeing and thus they can manage to keep the lead time limited to 30-45 days for repeat orders. For any fresh order a buyer does not allow even 60-75 days, though earlier it took 90-120 days.
It is important to mention here that in the category of knit and denim fabrics, Bangladesh is almost self-reliant. It is a positive sign. The skill and productivity of our workers have increased significantly.
Evidence shows that in 70 per cent cases it is buyer’s responsibility and 30 per cent is of the manufacturers. Direct marketing and elimination of middle men can help establish an effective supply chain system. It is very difficult to make a combined and coordinated system among the interest groups involved at present. Miscommunication and misinformation at any point hamper the whole process. Moreover, the impact of political instability and workers’ unrest destabilising the SCM are another concern. Adaptation with changing technologies, undisrupted utility supplies, minimising corruption, elimination of bureaucratic tangles in customs, port management and other concerned government agencies can play a vital role in overcoming the challenges. Without combined efforts and firm commitment from all concerned, a performance-based supply chain system is not possible.
A chain is as strong as all of its rings are. Similarly, a chain is as weak as one of its rings is, i.e. one single ring is more than enough to make the whole chain dysfunctional. The RMG sector in our country has so far been witnessing very clear price competitiveness. The minimum wage in our country is still the lowest among our competitors. But our lead time is under pressure. Cheap labour does not help, if the workers are not efficient. The supply of a small quantity with many styles within a short time is not possible without a functional supply chain system. Reducing the dependence for materials on other countries and elimination of middle men are vital to make the chain strong. Without proper management of the supply chain, only wage competitiveness cannot ensure sustainable business. So, for the sake of the sector, we have no alternative but to make the SCM effective.
Keywords
Supply Chain Management, RMG, FOB, sustainable development, Least Developed Country, Free of Charge, Bangladesh
References
Koprulu, A. & Albayrakoglu, M.M. (2007). Supply & Chain Management in the Textile Industry: A Supplier Selection Model with the Analytical Hierarchy Process, ISAHP, Viña Del Mar, Chile.
Nadeem, K., & Siddiqui, D. (2017). The Effect of Strategic Orientation on Green Supply Chain Practices and Performance: A Case of Manufacturing Companies in Pakistan. Asian Business Review, 7(2), 59-70.
Tanvir, S.I. & Muqaddim, N. (2013). “Supply Chain Management”- Offering the New Paradigm for Bangladesh Garment Industry, Journal of Economics and Sustainable Development, 4(20), 158-167.
RMG in Bangladesh- A Study on Social Compliance
Titus, S., Mburu, T., Koror, J., & Muathe, S. (2012). Environmental Factors that influence Supply & Chain Management Implementation in the Manufacturing Industries in Kenya: A Case of Manufacturing Industries in Nairobi, Kenya. ABC Journal of Advanced Research, 1(2), 42 – 49.
by Engr Kh Mashiur Rahman | Mar 25, 2021 | Sewing & Production
Abstract – Wage Digitization
Wage Digitization – Bangladesh has succeeded in achieving Millennium Development Goal (MDG) set by United Nations Development Program (UNDP), where Readymade Garment (RMG) sector has played an active role. As the highest contributor in export and formal sector employment RMG sector can claim its position at the top in, out of eight goals of millennium development, eradicating extreme poverty, achieving universal primary education, ensuring gender equality and women empowerment. Bangladesh is moving from least developed country to middle-income country. Bangladesh is on its way to achieving Sustainable Development Goal (SDG) set UNDP, where 17 areas have been targeted to fulfill. The government of Bangladesh has declared its vision 2021 and BGMEA, (Bangladesh Garment Manufacturers and Exporters Association) apex body of the industry has set a target of $ 50 ml export within that timeframe. To fulfillment all those targets RMG has to play an important role. Though Bangladesh is in the second position regarding value, after China, in global apparel export, yet the difference between first and second is huge. Bangladesh’s RMG is far behind in efficiency and productivity levels compared to its competing countries. Bangladesh’s RMG is still highly dependent on low waged machine operators mainly females. The government has been working toward digitalization, and the sector is accommodating technology as without enhancement of a comparative and competitive advantage of this very sector, RMG, it is not possible to achieve the dreams of the apex body as well as of the government. Digitization of wage can help to ensure transparency, loss of working hours, implement compliance and women empowerment.
Keywords
Wage digitization, RMG, Women Empowerment, Bangladesh, Social Compliance, Social Competitiveness
References
RMG in Bangladesh- A Study on Social Compliance
Ahmed, N., Nasima, M., & Alam, N. (2013). Socio-Business Consideration of Garment Workers in Bangladesh: A Statistical Review. Wage Digitization ABC Journal of Advanced Research, 2(2), 83-92.
Aktar, M. (2014). Green Insights of Textile Industry in Bangladesh: A Case Study on Wage Digitization Mozart Knitting Ltd.. Global Disclosure of Economics and Business, 3(1), 93-108.
BKMEA (2014).Knit Barta: A three monthly publication of BKMEA. vol02, Description of Bangladesh Apparel Export pp 52-53, Bangladesh Knitwear Manufacturers and Exporters Association: Dhaka.
Chowdhury, M., Begum, M., Reza, M., & Jannath, T. (2013). Micro Credit and Women Empowerment: A Study on Grameen Bank’s Strategy of Poverty Alleviation. Global Disclosure of Economics and Business, 2(2), 209-224.
Chowdhury, S. (2015). The Necessities of HR practices in RMG Sector of Bangladesh. Global Disclosure of Wage Digitization Economics and Business, 4(1), 7-20.
Chowdhury, S., & Rahman, M. (2014). The Potentiality of Women Entrepreneurs in Bangladesh with Special Reference to Sylhet Region. Global Disclosure of Economics and Business, 3(2), 121-130.
Dhaka Tribune, 02 July 2017, over 30m mobile banking accounts inactive, Business Desk. Shariful Islam, Dhaka.
Dhaka Tribune, 25 January 2017, Mobile bank users now over 40m, Tribune Business Desk. Dhaka.
Hossain, T., & Shirazi, H. (2018). Quality of Work Life among Women Employees Working in RMG Sector of Bangladesh. Global Disclosure of Economics and Business, 7(1), 27-40.
Masoom, M. (2017). The Control of Externality among the Street Children and Marginalized People of Dhaka City: A Key Indicator to Ensure Sustainable Livelihood. Asian Journal of Humanity, Wage Digitization Art and Literature, 4(1), 17-24.
Tania, F., & Sultana, N. (2014). Health Hazards of Garments Sector in Bangladesh: The Case Studies of Rana Plaza. Wage Digitization Malaysian Journal of Medical and Biological Research, 1(3), 113-120.
