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Establishing research and development department in RMG manufacturing units

Abstract

Research – ‘Re-to do again’, ‘search-to look for–and Development–growth, progress and positive change in RMG– work directed towards the novelty, presenting new styles and improvement of garment styles. Readymade Garments (RMG) industry in Bangladesh was glowing competent with exceptional growth since 1995. It contributes 84% to the country’s net exports, which is more than 20% of GDP growth. But it gets declined to the contribution of GDP from 14.17% to 11.17% for the past five years. Between 2011 and 2016, the overall prices of Bangladeshi garment items declined 7.79 percent. A couple of hypothesizes of this study are, Self-developed products will have value addition and gain high profit and Innovated fashion will attract more customers and increase sales and marketing. The significant objectives of the study are, to analyze importance of R&D, to understand micro season, to meet consumers smartness as fast food taste, to develop innovators and own brand, to increase Profit Margin Ratio, to adapt product mix, to increase global market share and to change label from low cost to value-added products.

Establishing-R&D-in-BD-RMG
Figure 1: Research and Development must be a significant division like merchandising, production, quality, finishing and packing in RMG factories.

Keywords

Research and Development (R&D), Readymade Garments (RMG), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Product Mix, Innovation, R&D Model, Investment, High Profit.

Introduction

In apparel exports, the global market share of Bangladesh is USD 34.13 billion from RMG export, which is 6.4%, followed by China USD 158 billion, which is 34%. But, the Vietnam market share in the world is rising to USD 27 billion, which is 6.2%. Bangladesh had got 5876 export-oriented factories in 2012-2013 and employing 4.4 million unskilled, semi-skilled and skilled workers. But 133 units were shut down in 2019 and the number is increasing further every month due to various causes. As many as 39 percent of the Bangladeshi garment exporters accept prices below their production costs for the sake of business relations with international retailers, according to a study by the Fair Wear Foundation (FWF). Between 2011 and 2016, the overall prices of Bangladeshi garment items declined 7.79 percent.

Many customers are procuring apparel from Bangladesh with an advertisement for cheap labor costs and basic requirements of fashion, just replicating the design and similar products, which are being designed and provided by buyers. Our RMG factories are accepting basic fashion styles with the motivation of mass production with the lowest possible FOB prices, which is almost without any profit margin, consuming nation’s resources likely gas, water, electricity, manpower, environment and etc. Still, customers keep on pushing and reducing prices. Every factory is carrying customers with a burden without any brightness and we just replicate against the styles and programs provided by buyers. Every time the international retailers put pressure on the manufacturers to comply with their rules. RMG units are focusing on mass volume production with compromising on the net profit and they are not ready to change and adapt for product mix.

Anti-globalization is one of the major causes, trade is getting re-shoring from offshoring. The fashion world is spinning rapidly. We are going through and living with researchers and developers of brand names and applications, hotel brands don’t own any hotels, still, they rule the hotel and hospitality industry, few brand names don’t own any cab, still, they do control transportation and taxi service, neither got manufacturing unit, nor production, still some brands are the main platform for selling all the products from needle to satellite products throughout the world. The first industrial revolution instigated with the Textile industry, 4IR – Fourth Industrial Revolution is approaching the whole world, and it will replace unskilled and semi-skilled workers in the Bangladesh RMG industry. Customers and consumers are looking for apparel as the fast-food menu, prompt changes and instant delivery with value-added products, while visiting stores, window or online shopping. They do anticipate paying less and gaining fashionable products. Bangladesh RMG industry should trend and adapt the changes at the earliest possible period to secure future business.

Research and Development must be a significant division like merchandising, production, quality, finishing and packing in RMG factories, in order to be a successful industrialist. It develops and plans much ahead of other functions and processes. It performs a vigorous role to overall innovation, marketing, production, quality, costing and pricing. Textile fashion is the second most polluting industry in the world, global warming is increased by 2-degree Celsius. When we do our own research and develop the products with our design and input few values added materials, minimum required quantity which will help to reduce the wastage, the value of products goes up and manufacturing units are able to obtain high-profit margin. Through our own Research and Development, we shall generate our brand, market and opportunities will be contiguous with us.

The hypothesis is usually considered as the principal instrument in research. The following hypothesizes are set (i) there is a positive correlation between exporters of RMG of Dhaka and global importers and buyers, (ii) self-developed product will have value addition and gain high profit and (iii) innovated fashion will attract more customers and increase sales and marketing.

Research and Development must be a significant division like merchandising, production, quality, finishing and packing in RMG factories, in order to be a successful industrialist. It develops and plans much ahead of other functions and processes. It performs a vigorous role to overall innovation, marketing, production, quality, costing and pricing.

The specific objectives are (i) to analyze importance of R&D in RMG manufacturing units of Dhaka; (ii) to understand micro season; (iii) to meet consumers smartness as fast food taste; (iv) to develop innovators, own brand; (v) to increase profit margin ratio; (vi) to adapt product mix; (vii) to increase global market share; (viii) to change label from low cost to value-added products; (ix) to improve efficiency and productivity and (x) to get ready for 4IR – 4th Industrial Revolution.

Materials and methods

Area: RMG manufacturing units in Dhaka, Bangladesh. Population:  Operation, Administration and Strategic decision-makers and consultants. Content: Analysis of establishing R&D in RMG units of Dhaka, Bangladesh.

The following tools such as, (1) Questionnaire, (2) Interview, (3) Observation, (4) Discussion on case studies and (5) Library, published and unpublished reports were used for this study.

Randomly more than 27 respondents from 25 different organizations in readymade garments (RMG) manufacturing units, buying offices, Liaison office representatives, Supply Chain, Logistics, Forwarding and shipping companies in Dhaka have been selected for this study. This study has been followed as descriptive statistics. A structured questionnaire which contains 27question was prepared. Primary data has been collected from informal interviews, questionnaire from respondents with their own opinion and liberty, and discussion on case studies with the operation, administration and strategic decision-makers, consultants and management and secondary data have been composed of published books, journals, newspapers and reports.

Limitations make the general topic to a workable size; establish limits of the delineated topic that are to be investigated for the specific research (Sharma and Soti, 2002).  Though research studies are unlimited it has certain boundaries.

The following limitations are identified in the present study, such as, (a) the study is dealing only with RMG units of Dhaka, Bangladesh, (b) the study is not been discussed with Bangladesh RMG and Fashion based universities, institutes and foreign buyers and designers, (c) external factors like economy, politics were not taken into consideration for the present study and (d) year of establishment was not been restricted for this study.

Results and discussions

Research and Development department: Out of 27 respondents, 67% of organizations have not got the R&D department, they replicate and produce the consignments based on imports and buyers design and 33% organizations have R&D department.

Mandatory and significate influence: Whether R&D is mandatory for the RMG sector, for which, 52% strongly agree and 44% agree. Also, 63% of respondents agree and 37% strongly agree that R&D is a significant influence for the RMG sector.

Traditional season and micro season orders: Whether traditional season business orders will get disappeared, for which, 52% disagree and 22% agree and 19% strongly agree that traditional season orders will get disappeared. Additionally, micro season one season per week i.e. 52 seasons per year will be followed, for which, 60% total agree and strongly agree, but, 22% of respondents disagree and 19% is neither agreed nor disagreed.

Consumers taste as fast food: the Whole global is on taste of fast food, similarly, consumers are changing their taste on apparel quite rapidly and look for an instant fashion, 44% respondents agree and 11% strongly agree that consumers’ behavior is changed like fast food style and 26% disagree and 15% neither agree nor disagree.

Innovation on styles, fabrics and accessories: Next-generation fashion innovators such as biodegradable glitter to fabrics made from seaweed or orange fibers, but we are missing such innovation on RMG in Dhaka. Respondents prefer and wish on Innovation on styles, fabrics and accessories, for which, 56% of respondents strongly agree and 44% agree. Also, fabric and accessories must be developed through the R&D department, for which 56% agree and 44% strongly agree.

BD-garments-design-studio
Figure 2: Garment factories should develop fabric and accessories through the R&D department.

Replicate and produce basic styles: RMG units are accumulating the yarn, fabric, accessories as per buyers’ basic fashion pattern and export. Respondents disagree to produce basic styles 48%, strongly disagree for 37%, also they disagree to replicate styles for every season 48%, strongly disagree 22% and 19% agree to upkeep.

Profit margin ratio: At present situation claims, many garment factory managements are accepting Purchase Orders from buyers without any profit, sometimes, they execute with loss, in order to avoid facing challenges by banks and manage basic overheads of the manufacturing units. They accept FOB prices below Break-Even Point (BEP), whereas Research and Development reduce the cost of production and increase Profit Margin Ration, for which, 52% agree and 22% disagree, 19% strongly agree.

Product mix: It is important that we should not rely on only one product category such as a knit garment factory is focusing only on crew neck-based tee shirts. Many crew neck-based factories do not produce polo neck tee shirt or knit bottoms. Woven shirt-based garment factories do not execute woven trousers or jackets. Woven based factories do not prefer to execute knit items and vice-versa. They should understand to diversify the products and expanding business with product mix and diversification beyond modifications or complementary products. Research and Development will encourage Product Mix, for which, 59% agree and 26% strongly agree.

Efficiency and time management: Garment manufacturing contains a lot of processes like procuring yarn, fabric, accessories, pattern making, sample development and approvals, also need to consume a huge amount of money and timing. All manufacturing units are procuring materials for more than 10% of the required quantity and producing garments more than 5% than ordered quantity, still, we face shortage during shipment. There is no prior planning and arithmetical researches has been followed. When we have our own Research and Development, our efficiency will be increased, time and product wastage and communication cap can be reduced, for which, 48% of respondents agree and 41% strongly agree.

Forecast, replenishment and supply chain: R&D will assist us forecasting demand, for which, 48% strongly agree and 52% agree, will help to move forward to understand and accomplish replenishment and also, 63% believe and 37% strongly believe and that R&D will improve on the supply chain.

Cost of product: RMG units are spending huge input and raw material costs. The cost of products can be reduced, when we do produce through Research and Development process, for which, 52% agree and 37% strongly agree.

Government and BGMEA on R&D: Whether the Government should implement that Research and Development is a mandatory for RMG, for which, 67% agree and 15% strongly agree. Employers and management need awareness and understand the benefits of establishing Research and Development, whether BGMEA should provide necessary training, for which, 70% of respondents agree and 26% of respondents strongly agree.

Conclusion

The effective R&D will lead us in advancing sustainability in manufacturing, sales and marketing in RMG products. It assists us to produce the products which are environment-friendly and improve the lifetime of the product. RMG unit owners are unaware of global marketing and customers’ interest and taste, they don’t have frequent traveling at the end sales market. Top management and employees are unable to follow their commitments due to the lack of awareness of season and product. RMG units are unable to meet the customer’s demand for the due date and revising payment term from FOB (Free on Board) to C&F (Cost and Freight) pre-paid and switch-mode of shipment from sea to air, failure, stock inventory level goes up and investment on stock lots.

This study analyses, when we do research and develop any products and sell them to customers, we are able to fix our price with our own profit margin and henceforth, the value of the product goes up. Though Bangladesh is earning USD 34 billion from RMG exports, we remit 35% payment for imported fabrics and accessories, the remaining amount is very less for value-added products. This study helps RMG units to understand and accept to diversify the products and expanding business with product mix and broadening beyond reforms or complementary products.

R&D model

This study suggests an appropriate R&D model for RMG industry (Fig 1):

BD-RMG-R&D-model
Figure 3: R&D model.

Idea generation: Idea can be generated from vacuum or complications, disputes and difficulties. It can be intellectual, a combination of modules, theory of something exists or conceptual. It can be created by suppliers, competitors, customers, consumers, colleagues and designers.

Designing: Designing is a process of constructing ideas and information into the model and bringing it to reality with upgrading and development. While designing, understand customers’ requirements, our capacity and impact of the designs.

Selection: Design is an integration of all the elements including color, feel, touch, shape, pattern, ratio, balance, measure and comfortability. While selecting designs, we should consider the physiological comfort of fabric, accessories and garments.

Product development: It is a process of intangible idea and designing into a tangible product. It covers planning, sourcing materials, costing and production. It must be a new value for customers. It should consider the significance of society and environment harm free.

SWOT analysis: We all may know SWOT stands for strengths, weaknesses, opportunities and threats. It is quietly used to understand and analyze the position of a company. This study refers to assess each and every product must be SWOT evaluated. It will ensure to produce standardized fashion products in the global market.

Production: It is a dependable of a serial and progressive process of converting and assembling ram materials like yarn, fabric and accessories into final and finished garments.  It includes sampling, finished fabric cutting, sewing, washing, finishing, quality checking and packing.

Sales and marketing: Sales lead to the selling of garments and marketing is the process of getting customers and wearers interested in our garments, which are getting sold. Again, marketing involves researching, promoting, selling and distributing. It is an important element for supply chain and replenishment. We should develop products, once we have learned about marketing strategy.

Feedback: Based on feedback from customers, suppliers, we are able to update and upgrade the product with better quality. It is an essential process for RMG factories, as we need to operate the production units in the long run. Dissatisfaction in the initial stages will hit the people, which can be retrieved easily. More dissatisfaction will hit the customer. But, in the final stage, RMG factories get hit, profit goes down and factories will be in deep trouble (Suganthi and Samuel, 2010). We should modify and improve the product based on feedback. It forms a loop and circuit, it helps to generate an idea. It is a continuous process.

This study encourages, invest in R&D, it will be turned into knowledge and knowledge gets converted as innovation and innovation creates value-added products and investment will get multiplied with a huge profit margin (Fig 2). The value-added product gets performed for long-term growth and benefit.

R&D-Investment
Figure 4: Investment – high profit.

Recommendations

Government and BGMEA

Details study to be conducted to make the Research and Development department is a part of RMG manufacturing units. The government should consider providing high incentives for own branded garments selling abroad. Government and BGMEA to establish separate departments in universities and institutes for Research and Development training. Government and BGMEA should honor award with a prize for innovators and organize global window display for RMG units.

RMG owners

RMG factory owners and strategic decision-makers should visit the global market quite frequently. They should seek knowledge of sales and marketing, understand consumers and wearers’ requirements, needs and tastes. They must search for market opportunities and understand the market. They encourage developing their own brand. They have to advertise and develop the brand and branding. They ought to establish an R&D department. They need to study to measure the customers’ feedback and promote E-Commence.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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