Academic journal article The South East Asian Journal of Management

Is Bangladeshi RMG Sector Fit in the Global Apparel Business? Analyses the Supply Chain Management

Academic journal article The South East Asian Journal of Management

Is Bangladeshi RMG Sector Fit in the Global Apparel Business? Analyses the Supply Chain Management

Article excerpt

Introduction

Starting in the late seventies, the garment sector of Bangladesh (BD) came into prominence in the middle of the eighties (International Business & Technical Consultants, Inc. 2000) It has been observed that in spite of presence of so many internal constraints (Nuruzzaman, 2001; Nuruzzaman, 2007; Siddiqi, 2007) this sector developed surprisingly from the 1985 due to some special external factors like MFA, GSP and Quota facilities etc. (Kabir, 2007; Ahmed, 2004; Karim, 2003; Rahman, 2007).

However, the first challenge came in 1984, when US imposed quotas and later European countries (Siddiqi, 2007; Rahman and Anwar, 2006; Rashi, 2006). The Multi- Fiber arrangement (MFA) and global quotas on trade in textile and apparel under the World Trade Organization (WTO) has ended on 31st December, 2004 (USAID, 2005; Nuruzzaman, 2008). So the second challenges came in the apparel sector in 1st January 2005 (Kabir, 2007) when all the member country of WTO including BD entered in the quota free market. With the phasing out of MFA, developing countries like BD would no more be provided any special trade concession. The US, Canada and EU members' states could import any amount from any member states (Nuruzzaman, 2008). Besides rapid and massive economic integration in the western world, different types of trade block, region, rim etc has appeared as another concern to the RMG sector of BD (DCCI report, 2003; Rashid, 2006). Therefore the apparel exporting countries like BD are in the crossroad.

In recent years some reputed organizations purchased products, move and sell goods and services on a global basis in order to meet customers' needs on a timely basis, with relevant and high quality products produced and delivered in a cost effective manner. To achieve this goal, the concept of supply chain management has proven to be of vital importance especially for the Bangladeshi textile and garment industries. It was the traditional view of all companies that they will exist as a single and complete unit and compete against each other in order to survive. However, such mindset cannot be sustained as no companies or organization can operate alone in complete independence. It is true for all firms that they can no longer compete effectively in isolation of their suppliers or other entities in the supply chain and are realizing the benefits of collaborative relationships within and beyond their own organization (Lam et al., 2006 and Cox et al., 1995). Through managing supply chain the ultimate objective is to deliver products to market with variety, responsiveness, timeliness and efficiency. Corporate strategy must include organizing, coordinating and executing the process of product flow as a competitive necessity and as a source of potential competitive advantage.

Literature Review

In the apparel sector, all the Bangladeshi garment companies are subcontractor and producing at the low end of the market. Basically they are performing cutting, making and trimming (CMT) activities (Kabir, 2007; Siddiqi, 2007; Rashid, 2006; Abdullah and Yusuf, 2008) The RMG industry is highly dependent on imported raw materials. About 90% of woven fabrics and 60% of knit fabrics are imported to make garments for export (Rashid, 2006; Rahman and Anwar, 2006). That's why this sector needs to maintain a long supply chain (backward and forward). Besides rudimentary application of ICT and inefficient port management limits its ability to respond quickly to market change, which is very essential in the fashion market (Abdullah, 2008). Therefore this industry takes maximum lead time to process an order (Hege, 2004; Nuruzzaman, 2008; Kabir, 2007; Siddiqi, 2007). In BD the lead time for apparel export varies between 90- 120 days, whereas the time for Sri Lanka is about 19-45 days, China 40-50 days and for India 50-70 days for similar products (Rahman and Anwar, 2006; Kabir, 2007).

Supply Chain Management (SCM) is a complicated field in all industry today. …

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