It is worldwide certified that the Readymade Garments (RMG) industry of Bangladesh can create the next quality item at a lower cost than the other clothing fabricating nations. Already Bangladesh has achieved a strong position in the world’s apparel showcase, where the contribution made by the buying house (BH) is undoubtedly remarkable.
The Buying Houses/Liaison office has become an integral part of the apparel business in Bangladesh. The BH owners have to face different types of problems while dealing with a factory. So, before placing an order in a factory BH needs to keep some issues in their mind those may help them not to lose the game. These issues are also important to understand by factory owners.
Buying commission delay
Marketing requires investment. BH always invests in marketing to get buyers. When an order comes in a mature stage, BH places the order in any factory. Factory gets the order just like ‘ready to eat. Maximum factory owners show an approach that they are ready to do anything to have the order.
In this regard, they do all types of commitment, which is a wrong approach. They promise to transfer the percentage of commission at a time. However, when they receive the payment, maximum factory owners delay to handover the amount of commission showing lots of reasons like they are in trouble and promise again to adjust the commission in next order.
Their main intention is to get the next order from the buying house. If the factory transfers the commission according to their commitment, it would be enough to ensure long-term business relations.
Difficulty to get extra margin
It is a normal practice to take a 5% buying commission for an order, but sometimes BH may have more margin, the reality is that extra margin is taken by B2B LC or sometimes by cash after shipment. Do factory owners always think why BH would take more margin? What about their cost whereas they are doing nothing?
But the reality is that BH always expenses a huge amount of money for marketing, new market opening, sometime they have to pay Barbary to get the order, which is an open secret now a day. A factory has many ways to earn money like wastages, accessories, extra fabrics and stocks, but a BH is only working based on commission or service charge.
Avoid the factory have a strong marketing team
BH always prefers to place the order such a factory who has no strong marketing department. There are lots of factories in Bangladesh that have very strong marketing teams. When a BH place any order, after executing the order they try to approach the buyer directly, which is so much irritating for a BH.
BH thinks it’s an unethical approach, but the thinking is not correct as the buyer didn’t make any agreement with the BH to place all orders through them.
Small to medium factory
BH always prefers small and medium-range factories than bigger one. The big factory always remains hungry for order and normally they didn’t take small orders like 1000 pieces to 3000 pieces per color. But the BH gets maximum order of small quantity per color. So that it’s a big challenge for BH to place the order in a big factory, whereas the big factory always offers better prices than the smaller factories.
Also, some of the big factories don’t work with BH, because they are handling direct buyers. But to give one’s full capacity for the same buyers is not a wise strategy. One of the successful BH owners Saiful Khan said in the TexTIMe Episode-02 “A factory should not give more than 30% capacity to one buyer.”
Strong management team
A successful business can always be attributed to the team behind it. We cannot deny the fact that revolutionary products or higher productivity offered by the biggest companies in the world are a result of excellent teamwork. A strong management team in charge of a business is composed of a team of highly trained individuals who meet regularly and strategize how the business can move forward.
Having a strong management team can ensure several advantages like sustainable growth, longevity, credibility, production creativity, excellent organization behavior, quality control, diversification of products and services.
Not good, better quality
The quality of apparel in the fashion realm is a combination of the design and materials of the products which are needed for the intended use and target market it will be sold in. But is that enough? Here’s why that is NOT good enough and why it is crucial to go the extra mile to excel and stand out from your competitors.
The apparel industry critically depends on the factories, the complex supply chain, and if the best practices are being implemented regarding their quality control systems nobody will buy a product that is of poor quality or has any visual defects.
In the fashion world, particularly in Bangladesh, there are so many fast-fashion products being mass-produced, which will maybe be worn a season then thrown out.
This is how the world of manufacturing works, no way around it. However, with the ability to connect to people all over the world via social media from anywhere, you can fine-tune the design and composition of a product to their needs. This is why it is important to research which fabrics and materials are not just trending but also sustainable to produce and of high quality.
Committed about lead time
Lead time is an important factor for customer satisfaction. Every single style has a specific time to sell. Before sales, lots of brands are doing advertisements on the premises of their upcoming products. So, if the product will not reach in the right time, it will bring huge sales loss, spoil brand images and customer loyalty.
It’s a common practice in the Bangladesh market that many factories take more orders than their capacities and after that they do sub-contact. And maximum sub-contract factories are not able to maintain the customer required quality maintaining the given lead time. So that lead time commitment is a major issue while placing any order.
Close to BH
There are lots of BH are playing a vital role in the Bangladesh RMG industry, however, most of them are Dhaka-based. So that they always try to do work any suitable factory which is near to Dhaka as they can manage, control and monitor the production very closely.
Whereas many factories which are outside of Dhaka like Chittagong, Khulna, Rajshahi are offering the best price, quality and lead time. To have some branch of a buying house in apparel manufacturing hot spot can be a good idea.
Crossmatch buyer’s requirement
BH always crossmatch the buyer requirement with multiple vendors. Maximum time BH can offer better prices than direct sourcing because BH maintains two or more strategic vendor’s strategies.
Garments buying agent is playing a significant role in the fashion industry and the factory is our prime mover. So, both parties should have a good combination and cooperation.
Factory owners have to leave bad practices and adopt only best practices so that the BH can trust every single supplier and BH also has to take responsibility for the potential loss in the production. Then the factory and buying house relation will reach a ‘win-win’ situation.
The writer, a business analyst is Executive Director, Skyros Trading Ltd.