Introduction to Bangladesh’s Apparel Industry
Bangladesh’s clothing industry, specifically the Ready-made garment (RMG) sector, is a cornerstone of the country’s economy. Accounting for a staggering 83% of the country’s total exports and around 80% of Bangladesh’s total merchandise exports, the industry’s impact is far-reaching. Furthermore, it contributes to over 11% of Bangladesh’s GDP and provides employment to around 4.4 million workers, the majority of whom are women.
The industry’s growth has been nothing short of remarkable. Starting in the late 1970s as a small non-traditional sector, the RMG manufacturing industry has emerged as the biggest manufacturing industry in Bangladesh over the past 4 decades. This growth has been rapid, with the industry growing at an annual average rate of over 15% between 1991 and 2005. This growth has seen export earnings from RMG increase from a modest $0.12 billion in 1984-85 to an impressive $34.13 billion in 2018-19.
Today, Bangladesh stands as the 2nd largest apparel exporter globally, trailing only behind China. In 2019 alone, the country exported $34.13 billion worth of apparel, a testament to the industry’s strength and resilience.
Overview of the Supply Chain and Logistics
The supply chain and logistics of the apparel industry in Bangladesh is a complex network involving numerous players and stakeholders. At its core, the supply chain involves sourcing raw materials such as fabrics, yarns, and buttons, manufacturing garments through processes like cutting, sewing, washing, and finishing, and finally, distributing these products to export markets via sea, air, or land routes.
Key players in this ecosystem include suppliers, manufacturers, buying houses, freight forwarders, customs agents, and retailers. Additionally, trade bodies, regulators, warehouses, carriers, and retailers also play significant roles in the functioning of the supply chain. Over the years, the RMG supply chains have evolved from small factories in the 1980s to become globally integrated today.
Raw Material Sourcing
Sourcing raw materials for the apparel industry is a mix of local and international efforts. Around 40% of fabrics are sourced locally, while the remaining 60% is imported. For cotton, Bangladesh imports around $1.5 billion worth annually. Denim fabrics are also imported in large quantities.
The sourcing process is not without its challenges. Reliance on imports, lead time, quality control, and compliance issues are some of the obstacles faced. However, local sourcing provides advantages like proximity and lower lead times. Despite these challenges, Bangladesh imports billions worth of raw materials annually, including cotton, wool, silk fibers, man-made fibers, dyes, chemicals, and accessories.
On the other hand, the country also has a growing domestic base for producing cotton, fabrics, and yarns. There are over 700 spinning mills producing yarns and fabrics locally, contributing to the industry’s robustness.
Manufacturing Process
The manufacturing process in the apparel industry is a multi-step operation that involves pattern-making, spreading, cutting, sewing, finishing, pressing, and packaging. The industry in Bangladesh has been quick to adopt technologies like CAD, CAM, PLM systems, and factory automation to streamline these processes and improve efficiency.
The growth of the industry in Bangladesh has been fueled by large capacities, the availability of low-cost labor, and expertise in basic garment construction. In particular, large pools of low-cost laborers, especially women, have been instrumental in the growth of Bangladesh’s export-oriented RMG manufacturing. However, the industry still faces challenges in terms of productivity, which lags behind competitors like Vietnam. A lack of mid-level technical skills also affects quality and innovation.
Distribution and Retail
Once the garments are manufactured, they are transported to markets via sea, air, or land routes. The Chittagong port handles around 90% of the country’s RMG export-import, making it a crucial part of the distribution process. The products mainly reach overseas markets like the EU, US, and Canada due to trade privileges like GSP. However, domestic retail is also on the rise, providing additional growth opportunities.
While efficiency has improved over the years, challenges like port congestion, customs inefficiency, and infrastructure deficits remain. The absence of direct shipping connectivity with major markets leads to longer lead times and higher costs. However, the expansion of domestic modern retail and e-commerce enables wider reach, providing a silver lining to these challenges.
Role of Technology
Technology plays a pivotal role in enhancing the efficiency and productivity of the apparel industry in Bangladesh. Enterprise resource planning (ERP) systems and radio frequency identification (RFID) are commonly used for inventory management, while building information modeling (BIM), IoT, blockchain, and cloud computing are being adopted to improve supply chain transparency and traceability.
Automation and digital tools are enhancing productivity and quality control, and investments in enterprise resource planning (ERP), manufacturing execution systems (MES), and tracking technologies are on the rise. Cutting-edge technologies like IoT-enabled sensors, automated material handling, AI-powered quality control, 3D sampling, and drone monitoring are also making their way into factories. However, barriers such as lack of technical skills, financing, and reluctance to change remain challenges to large-scale adoption.
Challenges and Solutions
The apparel industry in Bangladesh faces several challenges, including lack of backward linkages, port congestion, lead time delays, skills gap, and compliance issues. However, solutions are being implemented to address these challenges. Infrastructure development, increased local sourcing, public-private partnerships, vocational training programs, and stringer monitoring systems are some of the measures being taken.
Industry academia linkages, vocational training programs, green financing, public-private partnerships, and consolidated cargo handling can help overcome these challenges and further strengthen the industry.
Impact of COVID-19
The COVID-19 pandemic has had a significant impact on the global supply chains and demand, and Bangladesh’s apparel industry was no exception. The country’s apparel exports fell by 17% in 2020 due to disruptions caused by the pandemic. Order cancellations, production halts, reduced consumer demand, shipping delays, and liquidity crunches severely impacted the industry.
However, the industry showed resilience and adaptability in the face of these challenges. Virtual sampling, digital payments, health safety protocols, and production agility helped the industry adapt to the new normal. Digital showrooms, virtual sampling techniques, contactless transactions, and data-driven demand planning enabled firms to partly mitigate disruptions. Furthermore, strong public support like stimulus packages and increased health safety measures also helped firms stay afloat during the pandemic disruptions.
Sustainability
Sustainability is becoming a key focus area in the apparel industry. There is a rising focus on sustainably sourced materials, cleaner production systems, ethical labor practices, and transparency. Government and industry bodies are emphasizing resource optimization, waste management, water recycling, and energy efficiency.
Growing consumer demand for responsibly produced clothing is making sustainability an imperative for the industry. Initiatives are underway to use recycled materials, optimize resource consumption, ensure worker safety, and enable traceability across supply chains. Partnerships with brands, international alliances, and internal governance structures are institutionalizing sustainable practices.
Future Outlook
The future of Bangladesh’s clothing industry looks promising. The industry aims to reach $50 billion in exports by 2025. This ambitious goal will be shaped by new technologies, factory safety, diversification into man-made fibers, and process optimization. However, competition, automation, digital disruption, ecological impact, and shocks like pandemics remain threats. Public-private coordination will be key in navigating these challenges.
Boosting competitiveness through new technologies, diversification into technical textiles, and market expansion will shape the future of the industry. Navigating digital disruptions, emerging fast fashion trends, automation, and ecological sustainability will require long-term planning and strategic initiatives.
Fostering supportive policies, new skill development, better port infrastructure, and supply chain transparency will be crucial in the coming years. With the right strategies and initiatives, Bangladesh’s clothing industry can continue to thrive and maintain its position as a global leader in apparel exports.
Conclusion
We hope this comprehensive exploration of Bangladesh’s thriving apparel industry has provided you with valuable insights. The industry’s robust supply chain, intricate logistics, innovative use of technology, and unwavering commitment to sustainability underline its resilience and adaptability. Overcoming challenges and continuously growing, Bangladesh’s clothing industry remains an exemplary model in global apparel manufacturing.
As we delve into the future, the industry is poised for remarkable growth, aspiring to reach $50 billion in exports by 2025. This ambitious objective will be steered by the adoption of new technologies, enhanced factory safety, diversification into synthetic fibers, and continued process optimization.
However, the road ahead is not without its obstacles. Confronting issues such as competitive pressures, digital disruption, ecological impact, and unforeseen crises like pandemics will require strategic planning and coordinated effort. Ensuring the development of supportive policies, fostering new skill sets, improving port infrastructure, and enhancing supply chain transparency will be critical for maintaining and further strengthening the industry’s global standing.
If you are in search of a dependable, ethical, and efficient partner in this promising industry, look no further. At Brandex Sourcing, we are committed to delivering high-quality, affordable apparel products, all the while ensuring timely deliveries and respecting the environment and our workers’ health and safety.
We invite you to reach out to us for a quote and experience the exceptional services that we provide first-hand. If you’re interested in learning more about why you should source from Bangladesh’s apparel industry, we highly recommend you read our related article, “Why You Should Source from Bangladesh’s Apparel Industry”.
We look forward to forging a successful partnership with you and contributing to the bright future of Bangladesh’s apparel industry.