Bangladesh’s apparel industry has made a significant contribution to the country’s economy, accounting for over 80% of export earnings. The journey from sourcing raw materials to the production and distribution of finished garments involves many steps. Central to these steps are the manufacturers, who play an integral role in the supply chain.
Over the past decades, manufacturers have been instrumental in transforming Bangladesh’s apparel industry from a small export earner in the 1980s to a multi-billion-dollar industry by the 2000s. This transformation has elevated the status of Bangladesh to one of the world’s leading apparel exporters.
Role of Manufacturers in the Supply Chain
Manufacturers in Bangladesh shoulder a multitude of responsibilities in the supply chain:
- Sourcing and Procurement: They coordinate the sourcing of raw materials like cotton, yarn, fabrics, etc., from domestic and international suppliers. This includes long-term partnership building and price negotiations based on order volumes and quantity discounts.
- Inventory Management: Manufacturers are responsible for inventory planning and maintaining optimal stock levels for efficient production scheduling. They leverage ERP systems for efficient inventory management and stock keeping.
- Manufacturing Process: The entire process of production planning, machining, cutting, sewing, finishing, and packaging of garments is managed by manufacturers. They ensure that operations are optimized to maximize factory output.
- Lean Manufacturing and Just-in-Time Production: Manufacturers implement strategies like lean manufacturing and just-in-time production to meet orders and ensure quick turnarounds.
- Working with Buyers: Manufacturers negotiate with buyers on various aspects, including order volumes, prices, and delivery timelines. They also collaborate on product development, pricing, order forecasting, and capacity planning.
- Compliance: Ensuring compliance with quality, social, and environmental standards demanded by international buyers is a crucial part of their role. Manufacturers regularly undergo social and environmental audits and take corrective actions for any non-compliance or violations.
- Shipment and Logistics: Coordination of outbound shipment and logistics of finished garments falls under their purview.
- Employment Generation: Manufacturers provide employment to millions of workers in factories and production units, contributing significantly to the economy.
In the next part, we will explore the challenges faced by manufacturers, compliance challenges, industry-wide compliance certifications, and initiatives by manufacturers.
Challenges Faced by Manufacturers
Even as they power the apparel industry, manufacturers in Bangladesh are not without their share of challenges:
- Fluctuating Raw Material Costs: The reliance on imports for sourcing raw materials can lead to increased risks due to fluctuating costs.
- Demands from Buyers: Buyers often demand low prices and quick delivery, putting a squeeze on profit margins.
- Compliance with Regulations: Adherence to ever-changing regulations and standards can add to operational costs.
- Labor Issues: A lack of skilled labor and high attrition rates can have an adverse impact on productivity.
- Infrastructure Bottlenecks: Issues like port congestion can cause significant shipment delays.
- Natural Disasters and Political Instability: These factors can disrupt production schedules and the overall supply chain.
- COVID-19 Fallout: The pandemic has led to issues like order cancellations and deferred payments, adding to the challenges faced by manufacturers.
Compliance with quality, social, and environmental standards presents its own set of challenges:
- Multiple Standards: Manufacturers have to comply with a multitude of standards and codes of conduct from different buyers. This includes ensuring product quality, factory safety, workers’ rights, and more.
- High Compliance Costs: The costs associated with compliance, such as installing fire safety equipment, ensuring building integrity, and improving worker amenities, can significantly impact profit margins.
- Evolving Standards: There’s a lack of clarity around evolving compliance standards and how to accurately audit and measure performance.
- Insufficient Technical Knowledge: Manufacturers often lack the technical knowledge and training needed to implement compliant production processes.
- Government Oversight: There’s inadequate oversight and enforcement of standards by the government.
- Poor Coordination: There’s often poor coordination among suppliers, manufacturers, and buyers when it comes to sharing audit reports.
- Corruption and Transparency: High corruption levels and a lack of transparency hinder effective monitoring.
- Unauthorized Sub-contractors: Non-compliance by unauthorized sub-contractors often escapes audit scrutiny.
- Inconsistent Messaging from Buyers: Buyers often demand both low prices and high compliance, sending mixed messages to manufacturers.
- Absence of Unified Certification: There’s an absence of unified industry-wide compliance certification accepted by all buyers.
- Reluctance to Invest in Compliance: Some manufacturers are reluctant to invest in compliance without price incentives from buyers.
- International Brands’ Liabilities: There’s a lack of liability for international brands who fail to ensure their supplier factories are compliant.
Industry-Wide Compliance Certifications and Standards
In order to meet the wide-ranging compliance requirements, manufacturers often seek certifications from globally recognized institutions. Here are some of the key certifications and standards in the apparel industry:
- Worldwide Responsible Accredited Production (WRAP): This certification ensures factories meet standards for manufacturing, worker rights, safety, and environmental responsibility. Over 3,000 facilities are WRAP certified.
- Business Social Compliance Initiative (BSCI): A European initiative that audits and certifies social compliance in supplier factories against key ILO principles. Over 3,500 facilities are BSCI certified.
- SA8000: An auditable certification standard based on international workplace norms in areas like child labor, forced labor, health and safety, freedom of association, and more.
- Fair Trade Certified: This certification is given to products meeting fair wage, safe working conditions, environmental protection, and community development standards.
- OEKO-TEX: This certification ensures textile products have been tested for harmful substances and are produced in environmentally friendly facilities.
- ISO 9001: An international standard for quality management systems focused on consistency, customer satisfaction, and continuous improvement.
- ISO 14001: An international standard for environmental management systems, aimed at reducing environmental impact and increasing efficiency.
- LEED Certification: A rating system focused on green building design and construction, including sustainable site selection, water efficiency, and the materials used.
- Organic Cotton Certification: This verifies the use of organic cotton, which is grown without synthetic chemicals while maintaining soil health and conserving biodiversity.
These certifications are widely accepted by buyers in the apparel industry, and many buyers now require one or more of these certifications as a prerequisite for placing orders.
Initiatives by Manufacturers
To overcome the challenges they face and to ensure compliance with international standards, manufacturers in Bangladesh are taking several initiatives:
- Technology and Machinery Upgrades: Manufacturers are investing in the upgrade of machinery and technologies for improved productivity.
- Adoption of Lean Manufacturing Principles: Manufacturers are increasingly adopting lean manufacturing principles and efficient factory layouts.
- Employee Training and Welfare: Investments are being made in worker training and welfare to increase retention.
- Use of IT Systems: Manufacturers are adopting IT systems for production planning, inventory management, and compliance.
- Formation of Industry Associations: Manufacturers are forming industry associations for shared compliance audits and training.
- Exploration of Near-shoring Production: Manufacturers are exploring the possibility of near-shoring production to be closer to US buyers.
Bangladesh’s apparel industry, led by its robust manufacturing sector, has positioned itself as a vital contributor to the nation’s economy and as a formidable competitor on the global stage. The manufacturers, navigating through intricate supply chain processes, have showcased not only their capability to deliver quality products but also their commitment to ethical practices, labor welfare, and environmental responsibility. Despite confronting a myriad of challenges, their continuous pursuit of innovation, adoption of advanced technologies, and emphasis on lean manufacturing principles stand testament to their resilience and adaptability.
But it’s not just about recognizing their efforts; it’s about collaborating with them. By partnering with committed manufacturers, businesses can achieve unparalleled quality, affordability, and assurance of fair and ethical practices. If you’re looking for a trusted partner in apparel manufacturing, look no further than Brandex Sourcing. We pride ourselves on quality control, affordability, punctuality, and a deep-rooted commitment to environmental and worker welfare. For a customized quote or to understand how we can add value to your supply chain, reach out to us here.
For a deeper dive into the intricacies of the supply chain, don’t forget to read our main article, “Supply Chain Management in Bangladesh’s Apparel Manufacturing”. Through informed collaborations, we can together shape a more sustainable, efficient, and ethical future for the global apparel industry.