Dhaka, Sunday, 2015-12-19 http://www.thefinancialexpress-bd.com/2015/12/19/6525
Developing RMG supply chain without buyers' agent M S Siddiqui Bangladesh is one of the leading exporters of Ready-Made Garments (RMG) in the world and earning nearly 76 per cent of its foreign exchange through exporting textiles and ready-made garments. Presently, almost 100 per cent export-oriented knitted fabrics are being produced in the country but more than 60 per cent of the export-oriented woven fabric is imported making our RMG costlier. Apart from woven fabric, we have to import 100 per cent of dyes, chemicals, spare parts and machinery. In RMG, the supplier provides final manufacturing cost to the buyer prior to order confirmation. For that a factory prepares cost sheet estimating costs in different heads like Fabric, Trims and Packing materials, Labour cost and Overheads. In old-paradigm companies, cost reduction efforts are focused primarily on raw materials and materials because that is all that most cost systems are able to quantify, besides labour. We must find out some ways to minimise the cost in order to be competitive in the world market. So it is very clear that, to sustain in the business in the world market on a long-term basis, Bangladesh should improve its export-oriented textile and RMG sector and offer better price than other competitors in Vietnam, Cambodia, etc. Bangladesh should simultaneously try to increase the export price in order to gain further from these sectors. Value addition is one of the best ways to maximise profit. Value addition means increasing sales value. There are various ways by which value can be added to a product. For example, two shirts both of same size and produced from similar raw materials by two different companies, may be sold in the market with substantial difference in prices. The reason could be one of many e.g. brand, quality control, dyeing or finishing processes used, special finishes like moth-proof or fire-proof, attribution of art works like embroidery and attachments etc. While the sector is under pressure from buyers to reduce the price in order to remain competitive in the global market, it needs to increase profit and reduce costs to achieve the target. It is estimated that product sourcing costs can be as high as 60 per cent to 70 per cent of sales; non-product sourcing costs (e.g., factory building, fixtures, professional services, marketing and advertising) can be a significant source of savings as well. Most buyers/retailers have significant savings opportunities in trimming product-and non-productsourcing spending. In non-product spending areas, the focus is twofold. Externally, retailers can aggressively negotiate more favourable terms across companywide spending. Internally, they can reevaluate the selection of the products and product specifications driving overall costs, as well as the selection of vendors meeting those product and service requirements across multiple brands and businesses.