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Innovate and transform

  • Published at 05:53 pm March 9th, 2017
  • Last updated at 06:35 pm March 9th, 2017
Innovate and transform

Over the last couple of decades, the phenomenal growth of ready-made garment exports has repeatedly made our nation proud.

According to BGMEA data, the total RMG exports from Bangladesh at the end of FY2015-16 were valued at $28 billion, and the country has set a target of exports worth $50 billion in 2021.

However, the compounded annual growth rate (CAGR) required to achieve that target is significantly higher than the CAGR of the last three years.

Hence, the RMG sector and its major players have realised that they cannot continue to run their operations in the same manner that they have been until now.

In order to achieve the desired growth, RMG companies must innovate newer ways to transform their businesses today.

They must re-invent themselves to consistently beat the fierce competition posed by some of the other countries which are expanding their RMG exports at a rapid pace.

Technology and innovation are the two major levers which can help the RMG sector in Bangladesh support its growth aspirations.

Technology solutions have provided significant competitive advantages to many manufacturing companies across the globe, including RMG industries.

More and more RMG companies are now trying to create a culture of technology and innovation in their organisations to improve processes, minimise delays in delivery, reduce overall cost, and improve quality so that they can provide maximum value to their customers.

The long-term success of any company depends on its ability to meet and exceed customer expectations consistently, because that is what creates sufficient demand for its products and services in the market.

The RMG sector in Bangladesh is largely an export-oriented sector. A huge segment of its customer base comprises large garment retailers, who often sell these garments through large retail chains in Europe, North America, Asia-Pacific countries, and Latin America.

These customers typically place advance orders for an upcoming season according to chosen styles which need to be manufactured using fabric they have chosen, which in turn would be produced from select yarns.

Since the value chain is large and processes are mostly not automated, the lead time between order placement and delivery is quite high.

The customers expect vendors to provide them with the desired quantities of garments for every specified style, size, and colour at the beginning of the season, as promised.

A late shipment (or incomplete/wrong shipment) creates a huge problem for the retailer because it can lead to a stock-out of some materials which are selling fast in the season and, at the same time, retailers can end up with a huge stock of certain styles which are not selling enough.

This results in losses for RMG customers in terms of low sales, non-moving stock, discounts, penalties, and loss of reputation, which they would pass on to the vendors at source.

One of the tools typically used to deal with these losses is an end-of-season discount. Hence, the simple customer expectation for the RMG sector is “right product, right quality, right quantity, and right time.”

Moreover, there exists an ever-increasing pressure to reduce the manufacturing cost, which makes the situation even more difficult.

Clearly, the expectations of RMG customers are easy to understand, but difficult to deal with.

There are many uncertainties in the operating conditions of RMG players, which often impact the delivery lead time, quality performance, and cost of goods sold for manufacturers.

In order to deal with these problems, RMG players in Bangladesh are now becoming more and more inclined to the time-tested philosophy of operations excellence.

This philosophy has provided significant business benefit to manufacturing companies across the world, and it is now high time for Bangladesh RMG players to utilise this concept to their benefit.

The long-term success of any company depends on its ability to meet and exceed its customers’ expectations consistently, because that is what creates sufficient demand for its products and services in the market

Operations excellence is a comprehensive business improvement framework wherein best-in-class tools and methodologies like Lean, Six Sigma, Total Productive Maintenance (TPM), theory of constraints (TOC), and just-in-time (JIT) are used to support the profitable growth of an organisation.

These tools and methodologies help companies in improving productivity, reducing end-to-end cost, improving quality, eliminating defects from every stage, improving due date compliance, and thus create a whole new level of customer experience.

Technology transformation and innovation can really help an organisation fast-track its journey toward operations excellence.

In today’s business world, technology transformation has led to changes in management practices that can improve customer satisfaction as well as organisational effectiveness and efficiency.

It can create complete visibility across the overall supply chain by ensuring transparency in material flow as well as information flow across the whole value stream -- which is crucial for any successful lean operation.

One of the frequently used concepts in operations excellence is value stream map (VSM), which is an extremely effective tool for cutting down cycle time, reducing waste, visualising the entire production process, and representing both material and information flow.

Once the VSM for any critical process is created, technology solutions can be used extensively to simplify the process complexities significantly, thus eliminating non-value added activities and leading to drastic improvements.

Enterprise resource planning (ERP) solutions can help establish a smooth material flow from yarn to finished good; it can also help in tracking the inventory at every stage, accounting for losses and ensuring that the right quantity of the right stock keeping unit (SKU) is being manufactured and dispatched to the right customer at the right time.

In brief, technology transformation is a great enabler for organisations to support and speed up their operations excellence program.

Tech-tools and techniques are frequently used in the garments industry across the world in order to improve overall manufacturing performance.

RMG players in Bangladesh should follow suit without any further delay.

According to the Export Promotion Bureau (EPB), the RMG sector in Bangladesh accounts for more than 83% of the country’s export revenue, and it is natural to assume that the future economic development of Bangladesh will be significantly dependent on the performance of this sector.

The RMG industry is now at a critical juncture in its growth path.

On the one hand, the sector has immense opportunities to grow, and on the other, it is facing fierce competition from other RMG-exporting countries. Building a competitive edge has become essential for the business to remain successful. Hence, the RMG sector has to quickly overcome all the business challenges that it is presently faced with.

The garment sector, through the implementation of technology transformation and innovation, can address the major expectations of the customers -- right product, right quality, right quantity, and at the right time.

Mamun Rashid is the Managing Partner of PricewaterhouseCoopers Bangladesh Pvt Limited.