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Future of retail- paradigm shift in RMG business

Maintaining a Continuous lean situation in RMG orders and regular shut down of RMG Industries became the talk of the town. Also, factories are facing a severe cost-benefit crisis while wages and utility costs are increased in many folds. In one word, everybody is focusing on immediate efficiency improvements in factories.

Future-of-retail
Figure: A little smart move towards the rapid change in the retail business may lead to the number one manufacturing hub for the apparel business.

Eventually, entrepreneurs are looking forward to several tech adoptions in MIS control, manufacturing control and machines. Consequently, we vastly are talking about sustainability, productivity waste minimization, etc but getting no big changes in negative financial statements.

The root cause is not the inefficiency of operational processes, rather it is the transformation of the business model due to the disruptive changes happening in a retail business.

What are the disruptive changes in the retail fashion market and why can not we avoid it?

Other than prominent existing brands, new brands have been entering into the market with a new trend called online retailing for 5-6 years and disruptively this trend became no.

1 choice for the end customers. These e-commerce platforms could reach the end customers in a massive way by adopting Artificial intelligence and Augmented realities in their platform to search, sort and offer fashion trends required by the customers.

Thus the market research became easy globally to understand demand trends of fashion by the community across the globe.

The online players were able to reach the end customer precisely according to their demands in the fastest possible way. Their business trend was following pull rather than modified push marketing (Previous model).

Finally, it created a massive impact on the entire supply chain and manufacturing processes of existing brands leaving them far behind in fashion trends, innovation, information and technology.  For example-

Impact on the existing fashion brands

Existing prominent brands are dependent on their store business where customers has to visit physically and choose their product from available stock.

Brands do their survey and demand planning according to sales and physical marketing which is much slower than the new trend. Eventually, many of them lost their business share to the new brands/retailers within a short time.

And they had to close thousands of stores, shrinking business, destroy stock garments, etc. 81 brands became bankrupt in the last 5 years and many other brands closed a good number of stores.

This impact is felt most in Bangladesh because the country does fast fashion brands and they produce based on projections and implant stock garments analysis which comes from the forecasts made by the physical stores.

So, Nowadays every fashion brand is transforming business to online marketing and selling, virtual designing and even rental business in some cases too.

Impact to supply chain and manufacturing hub

Consequently, a couple of changes became a priority to the entire supply chain processes. Few of them are-

  1. Adaptability to change fashion faster and flexibility to produce multiple product ranges
  2. Ability to deliver 2/3 times fastest than before
  3. Consistent quality to comply with the market competition

Impact on the manufacturing factories in Bangladesh As the entire BD RMG manufacturing hub is developed based on fast fashion and mass production with price-sensitive brands, the manufacturing model is a bigger production line. The development team are smaller and are used to develop samples with 7-14 days of lead time. They literally have no centralized R&D center which includes making garments/washing etc. The existing production model requires higher product volume and lower style mixes to get maximum efficiency. Consequently, the majority of the factories had to face an extreme lean situation continuously for these few years. The impact of this lean has led the big groups to reduce prices nakedly to survive their big factories and consequently small/medium factories remain lean. Thousands of sub-contract dependent factories became empty. And thus hundreds of factories already closed and few are in pipeline. To survive the existing millions of garments in pipelines, fast fashions became rigid with quality and it is also imposing additional pressure on the factories who were not used to with such tight quality requirements from fast fashions. Other than adapting the retail changes, suppliers mostly jumped into improving efficiency by adapting high tech machines, data automation in manufacturing, etc. which will really not help anyway.

Road map for BD RMG to adapt and survive with positive growth

Despite many arguments and analyses on the action roadmaps, a couple of strategies we can consider based on the demand from the supply chain process as mentioned above. Let us try to co-relate and find a way to satisfy each need from above three:

1. Adaptability to change fashion faster and flexibility to produce multiple product ranges: There are not many privileges of getting different lead times for fast fashion/low volume high-end products etc. We are in an Era where Speed is the first thing to adopt. Thus, we need a couple of adjustments in the upstream process in Operations which are:

Marketing and merchandising: A strong marketing and merchandising/development team is needed separating from supply chain/production follow-up which is a regular BD trend. If merchants doing supply chain and production, follow up then they will be kicked out from today’s disruptive market without fail. They should be equipped with Software to track their tinny activities daily in marketing and merchandising both. Smart analysis of market data and regular merchandising data will help them as well as management to track the effectiveness of efforts and efficiency of peoples either. Merchandisers should be able to see the future and they should be trained to do so by giving them an exposure of the root where fashion is created. The French fashion show are the places where creation is done. Suppliers should do their innovative presentations there. If not the fashion creator, but BD suppliers can be the first followers- in this way they can take the cream of selling in the implantation stage. Also, buyers come to factories and visits industry who make the fastest fashion brands because- they can sense a feel of what is going to be launched in the retail after 3-4 months – so these footsteps can be followed by our designers as well.

Sampling and R&D: Sampling and R&D should be stand-alone with all facilities in closer places (Making, washing, testing) with 5 times capacity than existing as order sizes have reduced up to 10 times lower and style variance has increased up to 10-15 times higher than before. These sections must be equipped with synchronized software, augmented reality to track the progress and activities in real-time as multiple cross matrix functions are included in these areas. These combined activities will reduce re-processing. Chances of mistakes and improve the FPY yield in sample submissions. The sampling and R&D section should be facilitated with the number of good industrial engineers to add values to the products which are most critical to the production effectiveness and efficiency.

Design studio: Factories having design studio will get further preferences to enter to the market with unique footsteps.

PCD analysis

PCD-real-time-tracker

Central Planning: It is the most important segment in the RMG supply chain which is underutilized generally in BD yet. Most successful factories in the world are planning driven and this is proven since the starting of the RMG retailing. A couple of good software is vital to do enormous data analysis and planning in different complex SKU and matrix.

Strategic planning team: This is the most important segment in Operations strategy and execution. The central planning team is the heart of the organizations who analyze the optimum capacity of individual factories into the group and guide for an optimum best mix of product ranges for individual factories to achieve the best possible revenue from each. There should be a product mix with some percentage of the basic product, some percentage of value-added products and at least 10% new innovative product. Basic products will run the factory and carry their overhead costs, Value-added product will make the profit because it will be price-driven and the innovative products will keep the factory moving into the new era. The planning team will combine all and guide merchants to set their marketing strategy and continuously work closely with the marketing and merchandising team.

Operational planning team: This team works with the merchandised orders and work closely with supply chain and finance team to prepare a course of actions related to feeding to individual factories and set optimum order allocations and pre-production support systems to the factories.


RMG-Operational-planning-team

Ability to deliver 2/3 times fastest than before: Manufacturing facilities are designed for bulk productions with lower product mixes and higher volume. This model will not sustain anymore and need to break it down TODAY itself! Modular layout and process design are mandatory in each of the production segments as below as examples:

i. Weaving/knitting/dying/print/embroidery: Need to increase the number of machines in different variations which may increase establish cost but if proper marketing is done the ROI will be less than two years of establishment. It will help uninterrupted fabric flow from marketing to till bulk productions. A number of sample machines need to increase up to 3 / 4 times than existing.

ii. Garment manufacturing factory: Garment making factories need to adopt the most effective changes as everything is stuck here which plays a vital role ultimately. Few of them are described below:

Factory warehouse: A factory warehouse is the key of all problems in factory operations and the processes here are most critical which is literally invisible in B They should be equipped with the proper software to track daily entry exit of materials, inventories, stocks, movements of materials inside the factory, etc. Still in many big groups Warehouse is maintained either manually or ineffective amateur software. The optimistic and pessimistic approach in lead times management should be avoided and stock age should be calculated and held accountable in order to turn it to cash.

Fabric inspection: 75% of the FOB value is fabrics usually. Thus this area should be designed precisely to inspect, track and find potential issues through analysis of smart database and dynamic analysis system to continuously give feedback to the production floor as well as to the supply chain. A fabric inspection team should also be equipped with sample washing machines, rubbing, strength, etc. testing equipment either. For example, a factory has consumed 100k yard fabrics in a month which were passed in 4-point inspections but got 1.5% rejected garments due to fabric problems. While this contradictory data occurs then analysis of the defect’s points found in fabric inspections may give an indication to find the root cause. The above fabrics are passed under a 4-point inspection system yet it has higher ranges of three types of particular defects which actually creates fabric holes and rejections after wash. Thus this real-time analysis of daily inspection will help the factory to voice out a daily basis and take necessary actions on the spot, not after a month while disaster has already occurred. Example: –

defect-cntribution-from-suppliers

Pre-production: A strong pre-production set up with a capacity of making 10 different pre-production samples daily and a separate Pilot run team is essential for pre-production production testing. These should be separated from bulk production lines to set all necessary plans, bulletins, machines, folders, needles, threads, patterns, etc. for smooth bulk operations without interruption. This section should be equipped with actual bulk machines with the utmost quality, strong IE and technical team and an extraordinary mechanic team in this section. And obviously daily activities of this section have to be monitored precisely in real-time which is very critical. Usually, this is the weakest link in BD operations.apparel-Pre-production

Cutting and finishing sections: These two sections should be equipped with 20% more capacity than that of sewing production lines to ensure zero interruption of sewing or shipments respectively in these areas with necessary quality control and engineering check points. (CAD efficiency, Risk analysis and Layout design)
reject-style-by-suppliers

 

Sewing production: We have to consider modular sewing lines for quick changeover of styles with small qty per style. Thus, smart automation is must to reduce manpower and machine demand. Some factories are using Co-Bots (Robotic hands for pick up and dispose in some critical automatic machine processes which can be programmed to run 24 hours without any interruptions either. Centralized parts unit (CPU) with small assembly line designed for quick change-over is basic need in today’s demand. U shape layout, group layout, unit synchro layout, Face to face layouts are quite popular modular system. Cut to pack production floor can also ensure reducing back and forth communications in different sections and a straight flow with minimum throughput time until packing.

apparel-Sewing-production

It also helps to reduce man: machine ratio as well as reduces 20%-25% throughput time in productions and reduces the chances of NPT up to 10% either.

Sewing-production-analysis

Industrial Engineering and Planning: A factory has to have their individual PPC and IE team who need to work precisely for every single style allocated for bulk production and shipments. scopes-industrial-engineeringThese two team has to be designed and equipped, same as the Central team and they will have to have a simple real time communication system to track the actual with the previously forecasted plan by central team. Usually top managements in best organizations, manages PPC and IE team of the entire company usually. Based on accurate data and analysis in regular basis, they decide the future course of actions to improve or adopt or change.

Real-time tracking of manufacturing processes: Real time manufacturing tracking is a regular need for today’s volatile business where as not more than 1% of BD factories adopted this old technology. World has gone to Automatic guided vehicles for transferring materials, AI enabled automatic hanger system to reduce manpower dependency for feeding and line balancing, RFID enables tracking system to track every single piece of garments under processing. Washable RFID enables tracking of garments by color, size and destinations outside of the sewing factory too. Real time quality control data can help management to find the potential problem area within a minute and take immediate actions. This is the least developed area in BD RMG operations till now which need to be addressed immediately.
Real-time-tracking-manufacturing-processes
Realtime-track-manufacturing-process

iii. Washing factory: Washing is one of the most critical area of expertise, diversity and innovations towards savings, new fashions and taking market lead. Many of the dry processes can be automated by laser technology, garment dying can be done without water as well as washing innovations with extremely less water is possible in today’s fashion trends. Vast range of sampling and R&D facilities, adequate technicians and ultra-modern machines can give a rapid change towards productive adoption to the new fashion trends. ETP, innovative sludge management, waste water recycling plans, green technologies and least carbon emissions are the tweaking areas where you can added value to the product and as well ask extra price for this, and there is willing ness to pay if it saves the environment. On the other hand, it is reducing prices subsequently, but it requires a massive investment but a well analyzed calculative attempt may give a ROI of 2-3 years on such investments. PLC driven software can track chemical dozing to machine running and control from central point which enables monitoring of actual production progress and controlling quality and efficiency of machines and manpower in washing. Most of the washing facilities couldn’t adopt these latest technologies which is keeping us behind in the fancy fashion demand and from survival as the fittest.

Consistent quality to compete with the market competition

Quality control is the most controversial area yet in Bangladesh garment manufacturing. As per best practices, quality control means, ‘reducing process variations’ and adopting ‘precision’ then ‘accuracy’. Consistent-quality-top-4-defectIt starts from the upstream whereas we jump into quality control while bulk production starts which the last stage and we have nothing to do other than troubleshooting and fixing and, in some cases, hiding from customers. Consistent-quality-top-re-check-over-weeks-unit-1Ultimately poor consistency in quality puts an impact in store return, clearance sales and it comes back as boomerang to the factories through order cut down or price reduction to offset the store returns and clearance sales. Often we forget that productivity is just a consequence of consistent quality in processes and to ensure this we have to successfully reduce the variations in processes.
Consistent-quality-defect-type-unit-1 Making 1000 garments with a 20% alteration is worse than making 900 garments with a 1% alteration. The cost of quality is yet untouched in general in the BD RMG arena. We must put our best effort immediately. Otherwise, survival with such a flexible fashion trend will be impossible.

Take outs:

a. If we see above, we can find the necessity of a strong data management system and tactical strategy making ability in each segment. Thus we need to set the right young peoples to the right place. New ideas with new trends are the cup of tea for the young stars. If we can blend the experiences of old generations with their young, fresh mindset the immediate paradigm shift is possible and that is the only way out to survive.

b. We need to have transparent HR policy to attract the best peoples and the right strategy to develop them towards well-derived goals through training coaching and motivations through performance appraisals. Bangladesh RMG needs to do something really urgent in this arena to get the right people in the right place. Otherwise, everything above will be in a dream without the right people.

c. We need to adopt Artificial intelligence, Co-Bots, IoT technologies which is rapidly being adopted in many brands and manufacturing factories over the globe. Top management should focus only on getting real-time authentic data first, second, analyses them well secondly and see them in an effective manner to find the top five areas to improve immediately and take action step by step. Without data it’s impossible to find what is going wrong and thus impossible to find the root cause as well as the actions. Entire retail has entered into Industry 4.0 trend and we have no way out than to accept and learn that.

d. Factory owners should take immediate action on setting up marketing and sample making hub in core business countries like Hong Kong, China and different countries in Europe to get into the market daily basis. Sitting here and expecting to learn actual Retail demand is a daydream only.

e. BGMEA/BKMEA leaders need to find a way to improve currency flexibility, the stability of exchange rates and port flexibility to import and export goods with the shortest possible time.

f. Strive to create a forward and backward linkage by being vertically integrated at all levels from yarn production to containing hanging shipment.

g. Try producing Value-added functional products like lingerie, fire-safe garments, workwear, WR, WF, Seamless WKT, sportswear, etc.

Conclusions

If we analyze the above chart of comparison of Costs and trade facilities to Europe and US for the four main competitor markets, Bangladesh is still in better shape and the most attractive market with a long history of infrastructure and backward linkage facilities with some extraordinary achievements like highest LEED PLATINUM AND GOLD Certified factories over the world.

Apparel-cost-element-major-manufacturing-destination

Thus, a little smart move towards the Rapid change in the retail business may Lead us to the No. 01 manufacturing hub for the Apparel Business.Last but not the least, let us not forget that Nokia has died doing nothing wrong 8/10 years back. RMG retailing is in a similar paradigm shift, which needs to be addressed wisely and adopt to survive first and grow with a long-term sustainability mindset.

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