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PROLOGUE & THE TASK
Bangladesh Apparel industry is expected to reach US $50 billion by 2021. While such
predictions have b...
Team Member -1
Name : Ahamed Najeeb Rahman
Signature :
Team Member - 2
Name : Noushin Wadud Khan
Signature :
Team Member -...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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INTEGRATED ERP: DISRUPTIVE INNOVATION IN THE
APPAREL INDUS...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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Table: Current and Target Figures for the Apparel Sector
Y...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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Problems in the supply chain are multifaceted and intertwi...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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as one, adopt a fact based approach upon thoroughly unders...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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Phase 1 Phase 2
Process improvement and
standardization
ER...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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proposal to a RMG producer). E-learning platform’s cost ha...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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References
Bangladesh Garment Manufacturer and Exporters A...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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Saha, S. (2011, May 10). The hidden lever to success. Retr...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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EXHIBIT 1: CHALLENGES & REALITIES IDENTIFIED BY MD. ATIQUL...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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EXHIBIT 2: COMPARATIVE STATEMENT ON READYMADE GARMENT (RM...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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EXHIBIT 3: INDUSTRY OVERVIEW OF ERP SOLUTION PROVIDER
Dom...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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EXHIBIT 4: BGMEA PORTAL - USER INTERFACE
Simple mock-ups ...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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Image: Search results for sub-contracting showing only ma...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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Image: Homepage of an enrolled student or mid-level manag...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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EXHIBIT 5: FUNCTIONALITY FEATURES AND SAMPLE E-LEARNING C...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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Garments Quality Management , Industrial
Engineering, Lea...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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EXHIBIT 6: MAJOR CONTENDERS IN PROVIDING THE BGMEA INTEGR...
Integrated ERP: Disruptive Innovation in the Apparel Industry
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EXHIBIT 7: POSITIVE SIGNS ACROSS THE RMG SECTOR
It’s diff...
Submission for ISCEA PTAK Prize Global Case Competition
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Submission for ISCEA PTAK Prize Global Case Competition

Earned 100% on this case in the ISCEA PTAK Prize Global Case Competition 2015. An in-depth case written on the apparel industry of Bangladesh. Case is titled "Integrated ERP: Disruptive Innovation in the Apparel Industry".

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Submission for ISCEA PTAK Prize Global Case Competition

  1. 1. PROLOGUE & THE TASK Bangladesh Apparel industry is expected to reach US $50 billion by 2021. While such predictions have been made by several reputed global organizations, different stakeholders of this industry must work together with clear agenda for realizing this potential fully.  Few of the major approaches that should be considered include:  Increasing supply chain efficiency and transparency  Building closer and long term relationship with supply chain partners  Improving operational performance and  Developing skilled workforce (particularly in middle management) On the above context, Sketch a 5 years plan on developing professional Supply Chain Management practices in the industry. Today, your organization has US $10 million in its possession to get started with the project. PROBABLE JUDGMENT CRITERIA  Knowledge of Supply Chain Management  Innovativeness  Wise use of money  Feasibility of the plan  Rationale for the project  Impact of such proposal  Case Presentation Style THE CASE SOLUTION GUIDELINES  Study the Apparel Industry of Bangladesh  Find the contribution of Supply Chain in the industry  Find the talent crisis in the mid management particularly  Find the flaws/ problems in Supply Chain due to talent crisis  Find probable solutions to it  Indicate clearly how to develop proper Supply Chain Professionals  Come up with one BIG IDEA that will boost the growth of Apparel Industry in next 5 years  Show rationale & use of money REMEMBER  Your organization is a consultation firm, given an amount to work on, no profit has to be made out of the given money for your own organization, rather the entire amount should be used for the development of the Apparel Industry.
  2. 2. Team Member -1 Name : Ahamed Najeeb Rahman Signature : Team Member - 2 Name : Noushin Wadud Khan Signature : Team Member - 3 Name : Sayem Faruk Signature : Team Member - 4 Name : Wais Al Karim Signature : Last Date of Submission: May 15, 2015 Team: IBAD- 0105-15 SL. No.: To Be Assigned by ISCEA
  3. 3. Integrated ERP: Disruptive Innovation in the Apparel Industry 1 INTEGRATED ERP: DISRUPTIVE INNOVATION IN THE APPAREL INDUSTRY In December 2014, when the Bangladesh Government and garment’s exporters set a target of exporting $50 billion worth of garment items in 2021, skepticism and optimism alike filled the air (UNB, 2015). The Bangladeshi apparel industry started in the late 1970s, expanded heavily in the 1980s and boomed in the 1990s. The quick expansion of the industry was possible because of the use of less complicated technology, cheap and easy to operate sewing machines, and relatively inexpensive and abundant female workforce. But, apparel firms in the county have moved into a challenging position in the new millennium. The challenge is now to offer high-quality, low- cost products within a short lead time; and to meet health, social and environmental compliances in the face of increasingly stiff competition (Saha, The hidden lever to success, 2011). Of the many challenges that have been identified for Bangladesh, only a few offer a realistic, achievable solutions [see Exhibit 1 for specific challenges identified by the Bangladesh Garment Manufacturers and Exporters Association’s (BGMEA) President]. Supply chain management, along with rigorous talent management, is a potential avenue that experts agree can lift the performance of the entire industry. (Saha, The hidden lever to success, 2011) (Saha, RMG sector faces talent crunch, 2011). Could it be possible that an integrated industry-wide Enterprise Resource Planning (ERP), under the supervision of BGMEA, is the way forward towards a sustainable RMG sector? How will such a high-tech solution be implemented in a technologically-challenged environment? How can factory owners be educated on the importance of supply chain management when they don’t even understand it? Brief History – From Bottomless Basket to a Global Export Powerhouse Shift from Primary to Secondary When Henry Kissinger, the former US Secretary of State, dubbed Bangladesh as an international bottomless basket case, it was in economic sense by which he wanted to mean that the country would remain an economic cripple in the years to come (Bayes, 2013). But Bangladesh is a resilient country. The country bounced back with exceptional determination focusing on the Three R’s of its economy – Rice, Remittance, and RMG – as quoted by Mohammed Farashuddin, a leading economist in Bangladesh. Over the past decades, the share of RMG as a percentage of exports have steadily risen catapulting Bangladesh to become the second largest RMG exporting country - cashing in over $25 billion in exports a year [see Exhibit 2 for a detailed breakdown of the sectorial growth]. The industry has now established itself as a global player. Despite numerous challenges in the growth process, growth rate averaged about 15%+ per year (Islam, 2014). The Dhaka Apparel Summit held in December 2014 did set some very ambitious goals – Vision 2021.
  4. 4. Integrated ERP: Disruptive Innovation in the Apparel Industry 2 Table: Current and Target Figures for the Apparel Sector Year 2014 Vision 2021 Export Value $25 billion $50 billion Total Market Size $450+ billion $650+ billion Bangladesh’s Market Share ~5% ~7.7% A research paper by Mc. Kinsey & Company suggests that unit demand growth for RMG in Bangladesh is expected to be 2x to 2.5x through 2020. But to reach those levels bottlenecks in productivity have be addressed (McKinsey & Company, 2011). Bangladesh German Chamber of Commerce & Industry (BGCCI) President Sakhawat Abu Khair said the production efficiency in Bangladesh is as low as 20% to a ceiling of 40% at a few factories and efficiency can easily be increased to 50% through some fundamental training sessions (Rahman, 2014). Bottlenecks in the Current Supply Chain A quick glance over the value chain analysis will show us where to bet the money: Table: Value Chain Analysis of a $1.28 T-shirt Produced in Bangladesh Component Share of Total Value Monetary Value Raw materials, port charges, accessories 77.96% $ 1.00 Administration (including entrepreneur’s profits) 12.00% $ 0.15 Labor 4.70% $ 0.06 Miscellaneous 5.34% $ 0.07 Using the figures above, it can be calculated then, keeping all other things constant, a doubling of labor productivity (i.e. a 100 per cent improvement in labor productivity) would result in the reduction of cost by just $0.03, which is likely to have not much effect on the competitive position of Bangladesh in the world market (Razzaue & Eusuf, 2007). Focus should rather be on simplifying and streamlining the sourcing and logistics. A simplified model of the current apparel supply chain is depicted below. Image: Configuration of Apparel Supply Chain
  5. 5. Integrated ERP: Disruptive Innovation in the Apparel Industry 3 Problems in the supply chain are multifaceted and intertwined: 1. Supply of raw materials like cotton and chemicals come from countries like Uzbekistan, India, China etc.. It takes around 20 to 30 days to get cotton from Uzbekistan (Hossain, 2014). High lead times, information asymmetry, and communication gaps often leads to lack of availability of raw materials to the right place at the right time at the right price. 2. Manufacturers, merchandisers often delegate their production process to smaller sub- contractors who at times don’t meet the safety, and quality standards. Sometimes, a large order gets sub-contracted several times, which makes it difficult for the original manufacturer to track the order. Foreign buyers are often grieved at the lack of compliance in smaller factories (Munni, 2014). 3. Inaccurate product costing and dysfunctional inventory management in RMG due to lack of production planning systems and continuous productivity monitoring still makes a manager’s job a tedious task (McKinsey & Company, 2011). As a result manufacturers are sometimes victims of inaccurate costing leading to large losses. 4. Due to the lack of an extensive rail network, much of the transportation is carried out by trucks. Extortion, arson, life-threaten attacks are just few of the snags disrupting the transportation of exports and imports to and from the ports. Tracking valuable merchandise becomes a necessity in situations like these. Existing challenges will multiply if suppliers aren’t able to fill higher-skill middle management position. (McKinsey & Company, 2011). The RMG sector will require around 800,000 skilled professionals in mid-level positions by 2021 to lead the organizations,” said Anwar-Ul-Alam Chowdhury Parvez, former president of BGMEA. Currently, the sector suffers a shortfall of nearly 200,000 professionals and unfortunately, experienced and qualified employees from Bangladesh’s neighboring countries are filling the current shortage. They are around 15 percent of the mid- and senior-level professionals in the entire industry remitting Taka 4 billion out of the country every year. The main deterrents to talent development are outlined below (Saha, RMG sector faces talent crunch, 2011): i. Entrepreneurs' lack the eagerness to spend money to train and develop local talents for fear of losing trained employees. Only 5% of profits are now being spent of training and development. ii. Technical and vocational institutions are inadequate and have back-dated curricula. iii. Garment jobs lack social recognition. iv. Managers have poor compensation packages, unfavorable working conditions, and undefined career path. Integrated Supply Chain – The Way Forward To face the challenges ahead, the apparel makers should focus on effective supply chain management as it will ensure delivering the right product to the right place at the right time at the right price, according to supply chain experts. “Effective supply chain management is the way to offer high-quality, low-cost products within the shortest possible lead time as it integrates the whole apparel supply chain as one,” said Mr. Ejazur Rahman, Managing Director of Mind Mapper Ltd, a leading management consulting firm. Mr. Rahman also said, “Supply chain management is the hidden lever that can magically lift the total business performance of any company.” Bangladesh should consider the whole apparel supply chain
  6. 6. Integrated ERP: Disruptive Innovation in the Apparel Industry 4 as one, adopt a fact based approach upon thoroughly understanding current realities, invest in the appropriate skills and constantly monitor and adjust to optimize results in an ever-changing world (Saha, The hidden lever to success, 2011). ERP: A High-Tech Solution The Growing Use of ERP The ever-erratic political situation of the country poses a major hindrance towards achieving Vision 2021. The series of blockades and strikes over the past few years has prompted RMG manufacturers to turn to technology to bring some certainty in an uncertain environment. Most of the ERP solutions are purchased by RMG manufacturers and large corporations in Bangladesh (Mirdha, 2009) [see Exhibit 3 for an industry overview of ERP solutions]. BGMEA Integrated ERP We recommend integrating all the supply chain actors into a common portal. The portal will connect the ERP modules at different factories and relay capacity information to the relevant stakeholders when they search for it. Only the contact details of manufacturers with excess capacity will be shown in the search results. No other confidential information will be disclosed. Only BGMEA-certified manufacturer, buyers, merchandisers, suppliers and their managers can access the system. If the system is enforced by BGMEA, then it should solve the issue of nonchalant manufacturers as non-compliance won’t be a choice. Even unenforced, few will want to be left out of the bandwagon. Hence, existing manufacturers using ERP will just need to connect their module to the BGMEA ERP portal and new ERP users will be supported by BGMEA in their implementation. The goal is to integrate the supply chain to one. In order to solve the mid-level management crisis, we suggest incorporating a common learning platform for all the mid-level managers and interested students in the integrated-ERP system. Pilot testing of an independent learning platform has already been done by a company called GreenGrade Solutions which is backed up by UKaid (E-learning software launched for Bangladesh RMG workers, managers, 2014). Online videos will teach managers basics of management and hands-on training can be provided on a weekly basis at any of the 23 RMG training providers (GIZ, BGCCI, BGMEA, BKMEA, 2008) under the Promotion of Social and Environmental Standards (PSES) by BGCCI and Gesellschaft für internationale Zusammenarbeit (GIZ) (Rahman, 2014) [see Exhibit 4 for a mockup of the user interface and Exhibit 5 for functionality features and sample e-learning course outline]. Plan of Action The implementation for such a system is done in two phases - business process reengineering (BPR) leading to an ERP implementation. The BPR will make sure that an expensive ERP is not configured to existing broken processes [see Exhibit 6 for potential contenders in providing the BGMEA Integrated ERP Portal].
  7. 7. Integrated ERP: Disruptive Innovation in the Apparel Industry 5 Phase 1 Phase 2 Process improvement and standardization ERP implementation Deliverables Process:  As-Is Process Maturity Assessment  Process Improvement & SOP documentation  Business and operational performance  Dashboard design People:  Organization structure and role matrix Technology:  Technology Requirement and ERP application selection  Assistance with tool selection Modules:  Finance, accounts and costing  Sales and logistics  Procurement management  Production management  Plant maintenance  Quality management  Document management  Business intelligence and analytics The entire process will take 14 months. Assuming the process starts on January 2016, it will end on February 2017 – leaving 3 years and 10 months out of allotted 5 years to evaluate the progress and tweak the system to reach the $50 billion mark. Table: Financial breakdown of the Recommended Plan Process Cost BPR $175,000 ERP Implementation $525,000 ERP Software $2,000,000 E-Learning Platform $1,000,000 Total $3,700,000 Savings $6,300,000 The cost of a full-fledged ERP software costs $2 million (Mirdha, 2009). Whereas a BPR and ERP implementation will cost $700,000 (figure obtained from a KPMG Advisory Services
  8. 8. Integrated ERP: Disruptive Innovation in the Apparel Industry 6 proposal to a RMG producer). E-learning platform’s cost has been overstated since coming up with quality content will require expensive props, equipment, and teachers with vast practical experience. Feasibility and Benefits of the Plan The system will solve many issues relating to the supply chain. 1. Through the seamless interaction of macro supply chain processes – Customer Relationship Management (CRM), Internal Supply Chain Management (ISCM), and Supplier Relationship Management (SRM) - the entire supply chain will become a more efficient one – maximizing the overall value generated and operational performance. 2. Problems pertaining to inaccurate costing and inventory management can now be handled under the newly installed in-house ERPs. 3. Since the system promotes transparency and with BGMEA-certified manufacturers, buyers can rely on and monitor sub-contractors and avoid any potential public relations nightmare. 4. Supply chain partners, through effective communication, can forge long-term relationship with each other. 5. The e-learning platform means manufacturers can share the cost of the training and develop a skilled workforce. The portal will allow managers to sharpen their skills at a time of their convenience, while certifications will motivate them to constantly learn new skills. 6. Overall, the portrayal of a tech-savvy industry will improve the sector’s image and attract new talents. Indeed, certain issues need to be resolved as a part of groundwork before launching such an audacious plan. Problems relating to infrastructure, energy, market access require long-term systematic changes to produce an organic difference (Islam, 2014). Positive signs are already being seen across various frontiers of the sector [see Exhibit 7 for details on the positive signs]. The proposed recommendations have short run application with long term implications. The RMG sector will be benefited in terms of business, communication and transportation efficiency. Given the nature of business - race to the lowest cost - in the RMG sector, an industry-wide integrated solution has been long overdue, it will be needed tomorrow, if not today.
  9. 9. Integrated ERP: Disruptive Innovation in the Apparel Industry 7 References Bangladesh Garment Manufacturer and Exporters Association (BGMEA). (n.d.). Trade Information. Retrieved May 7, 2015, from Bangladesh Garment Manufacturer and Exporters Association (BGMEA): http://www.bgmea.com.bd/home/pages/TradeInformation#.VVQsV_mqqko Bangladesh Textile Today. (2013, February). BIM introduces new diploma course on: productivity and quality management. Retrieved May 14, 2015, from Bangladesh Textile Today: http://www.textiletoday.com.bd/newsite/bim-introduces-new-diploma-course-on- productivity-and-quality-management/ BASIS. (n.d.). List of Members. Retrieved May 10, 2015, from BASIS: http://www.basis.org.bd/index.php/members_area/member_list Bayes, A. (2013, May 11). Bangladesh: A bottomless political basket case? Retrieved May 4, 2015, from The Financial Express: http://www.thefinancialexpress- bd.com/old/index.php?ref=MjBfMDVfMTFfMTNfMV82XzE2OTAxNw== E-learning software launched for Bangladesh RMG workers, managers. (2014, November 13). Retrieved May 12, 2015, from bdnews24.com: http://bdnews24.com/technology/2014/11/13/e-learning-software-launched-for- bangladesh-rmg-workers-managers GIZ, BGCCI, BGMEA, BKMEA. (2008). RMG Service Provider Directory. Dhaka. Hossain, M. (2014, Janurary 5). Warehousing facility for Uzbek cotton. Retrieved May 7, 2015, from The Financial Express: http://www.thefinancialexpress-bd.com/2014/01/05/12197/print Hye, H. A. (2012, November 8). RMG exports at a cross-roads. Retrieved May 14, 2015, from The Financial Express: http://www.thefinancialexpress- bd.com/old/index.php?ref=MjBfMTFfMDhfMTJfMV82XzE0OTIxNw Islam, M. A. (2014, December 7). Vision 2021 for RMG: Celebrating the 50th Anniversary of Independence. Retrieved May 5, 2015, from The Financial Express: http://www.thefinancialexpress-bd.com/2014/12/07/69749/print McKinsey & Company. (2011). Bangladesh's Readymade Garments Landscape: The Challenge of Growth. McKinsey & Company. Mirdha, R. U. (2009, May 7). Key RMG players shift to automated systems. Retrieved from The Daily Star: http://archive.thedailystar.net/newDesign/cache/cached-news-details-87064.html Munni, M. (2014, November 3). RMG subcontractors go unregulated. Retrieved May 7, 2015, from The Financial Express: http://www.thefinancialexpress-bd.com/2014/11/03/64245 Rahman, T. (2014, November 18). MoU inked to train 300 mid-level RMG officials. Retrieved May 05, 2015, from Dhaka Tribune: http://www.dhakatribune.com/regulation/2013/nov/18/mou- inked-train-300-mid-level-rmg-officials Razzaue, A., & Eusuf, A. (2007). Trade, Development and Poverty Linkage: A Case Study of Ready Made Garment Industry in Bangladesh . Dhaka: Unnayan Shamannay . Saha, S. (2011, March 7). RMG sector faces talent crunch. Retrieved May 4, 2015, from The Daily Star: http://archive.thedailystar.net/newDesign/news-details.php?nid=176636
  10. 10. Integrated ERP: Disruptive Innovation in the Apparel Industry 8 Saha, S. (2011, May 10). The hidden lever to success. Retrieved May 4, 2015, from The Daily Star: http://archive.thedailystar.net/newDesign/news-details.php?nid=184963 UNB. (2015, March 6). US to help Bangladesh achieve $ 50b RMG export target: Envoy. Retrieved May 2, 2015, from The Independent: http://www.theindependentbd.com/index.php?option=com_content&view=article&id=250 230:us-to-help-bangladesh-achieve--50b-rmg-export-target-envoy&catid=108:business- finance&Itemid=152
  11. 11. Integrated ERP: Disruptive Innovation in the Apparel Industry 9 EXHIBIT 1: CHALLENGES & REALITIES IDENTIFIED BY MD. ATIQUL ISLAM (BGMEA PRESIDENT) 1. Infrastructure - Industrialization and opportunities to grow need road-rail-port infrastructure, trade financing, etc.. Developing planned Special Industrial Zone is another important option. 2. Power & Energy - We need to ensure adequate supply of electricity, gas and energy as these act as the engine behind running the industry. 3. Access to finance at competitive bank interest rate 4. Human Resources - The RMG industry needs skilled human resource in terms of both skilled workers and mid-level management. The industry is currently employing 4.4 million workers where our productivity is 77%. This is lower than our main competitors (India 92%, Vietnam 90%, Pakistan 88%). Though over the years a good backward linkage has developed we still fall short in forward linkage. The industry for marketing and design depends on agents and source countries respectively. About 19,000 expatriates working in the mid-level and high position at the garment factories of Bangladesh are remitting about Taka 4 billion every year. 5. Environmental Sustainability is also another major challenge for us. 6. Safety & Dignity of Workers - Without ensuring a safe workplace for our workers, we can’t be able to create a safe and sustainable industry. This is one of the issues that has attracted much attention. 7. Politics - Over the years, political instability has posed as a difficult challenges. We need to ensure a stable political situation for the sake of our industry and economy. 8. Market Diversification - Market diversification, exploration of new markets is another major area for us to ensure sustainable growth of the industry. Though our apparel export share to non-traditional markets has increased in recent times we need to further enhance this momentum. 9. Market Access - There are a number of non-tariff barriers to trade with the SAARC and other Asian countries region which includes lack of land connectivity, transit crisis, complex visa system, etc. A regional infrastructure strategy is essential for tapping economic and commercial opportunities among the Asian countries, while safeguarding the growth opportunities for underdeveloped countries such as Bangladesh.
  12. 12. Integrated ERP: Disruptive Innovation in the Apparel Industry 10 EXHIBIT 2: COMPARATIVE STATEMENT ON READYMADE GARMENT (RMG) & TOTAL EXPORT OF BANGLADESH YEAR EXPORT OF RMG (IN MILLION US$) TOTAL EXPORT OF BANGLADESH (IN MILLION US$) % OF RMG TO TOTAL EXPORT NUMBER OF GARMENT FACTORIES EMPLOYMENT IN MILLION WORKERS 1989-90 624.16 1923.70 32.45 759 0.34 1994-95 2228.35 3472.56 64.17 2182 1.20 1999-00 4349.41 5752.20 75.61 3200 1.60 2004-05 6417.67 8654.52 74.15 4107 2.00 2009-10 12496.72 16204.65 77.12 5063 3.60 2010-11 17914.95 22924.38 78.15 5150 3.60 2011-12 19089.73 24287.66 78.60 5400 4.00 2012-13 21515.73 27018.26 79.63 5400 4.00 2013-14 24491.88 30186.62 81.13 4536 4.00 Source: (Bangladesh Garment Manufacturer and Exporters Association (BGMEA), n.d.)
  13. 13. Integrated ERP: Disruptive Innovation in the Apparel Industry 11 EXHIBIT 3: INDUSTRY OVERVIEW OF ERP SOLUTION PROVIDER Domestic Production To support rising demands in Bangladesh, there has been a huge upsurge in the number of software companies providing ERP solutions in Bangladesh in recent years – foreign and domestic alike. Of the 734 software companies operating in Bangladesh, 164 of them are currently providing ERP solutions in Bangladesh. All of them provide both “off-the-shelf” and “tailor-made” software to their clients. These clients range from real estate to the banking sector. Software developers in Bangladesh have also started to explore foreign markets with the IT sector and Business Process Outsourcing (BPO) becoming a top contender for a major export industry. Currently, only 56 of the 164 companies are exporting. According the data made available by BASIS, till date a total of approximately 1614 ERP installations have been carried out in Bangladesh. The number of companies providing such solutions has increased over the years as depicted by the chart below (BASIS, n.d.). Chart: Number of Companies Providing ERP Solution Competition Dynamics and Market Structure The market for ERP software is becoming an increasingly competitive one. The mature companies have lost their first-mover advantage to many small companies who are now providing similar support at much more competitive price. In the past five years, a total of 68 companies have started providing ERP software which has dramatically shaped the competitive landscape of the software industry. Foreign competition operates in Bangladesh but under the banner of local companies. A number of foreign companies have partnership with local firms and thus indirectly influence the market as a whole. What was once an oligopolistic market dominated by a few sellers two decades ago, has now transformed into a monopolistic market structure where many sellers are vying for the same customers with their own differentiated products. 0 20 40 60 80 100 120 140 160 180 1989 1990 1992 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
  14. 14. Integrated ERP: Disruptive Innovation in the Apparel Industry 12 EXHIBIT 4: BGMEA PORTAL - USER INTERFACE Simple mock-ups of the Integrated ERP Portal are depicted below. Image: Login page Image: Manufacturer’s homepage
  15. 15. Integrated ERP: Disruptive Innovation in the Apparel Industry 13 Image: Search results for sub-contracting showing only manufacturers with free capacity Image: Sub-contracting requests from merchandisers and other manufacturers.
  16. 16. Integrated ERP: Disruptive Innovation in the Apparel Industry 14 Image: Homepage of an enrolled student or mid-level manager
  17. 17. Integrated ERP: Disruptive Innovation in the Apparel Industry 15 EXHIBIT 5: FUNCTIONALITY FEATURES AND SAMPLE E-LEARNING COURSE OUTLINE Table: Functionality According to User Roles Supply Chain Actors Available Functions All Bulletin Board Manufacturers Sub-contract Orders Receive Order Requests Find Suppliers Merchandisers Find Manufacturers View Order Requests Find Suppliers Buyers Find Merchandisers Track Order Sub-contracting Suppliers Send Quotations Receive Quotations Mid-Level Managers Take Courses Receive Certifications Receive Job Offers Explore Job Openings Apply for Job Table: Tentative Outline for a Course on “Productivity and Quality Management” Particulars Details Targeted Towards Production Managers/officers, Industrial Engineers, Method Study Officers, Productivity & Quality-related Managers/ officers Core Focus Production, Productivity, Lean Manufacturing & Quality Needs of RMG Export Sector Modules Covered HRM, OB & Social Compliance, Introduction to Garment Manufacturing, Garment Production Management,
  18. 18. Integrated ERP: Disruptive Innovation in the Apparel Industry 16 Garments Quality Management , Industrial Engineering, Lean Manufacturing, Fire Safety Duration 6 Months (2 classes per week)
  19. 19. Integrated ERP: Disruptive Innovation in the Apparel Industry 17 EXHIBIT 6: MAJOR CONTENDERS IN PROVIDING THE BGMEA INTEGRATED ERP PORTAL With over 700 ERP installations, NaviWorld is the perhaps the most experienced ERP solution provider in Bangladesh. NaviWorld is also leading ERP Consultancy provider in Africa, Asia, Europe & Middle East regions supplying international and local companies with IT & ERP consultancy solutions and products. NaviWorld has an outsourcing centre located in Bangladesh. Following NaviWorld are The Databiz Software Limited and Advanced ERP (BD) Limited, each of whom have installed about 100 ERP solutions. Databiz and Advanced ERP have been operation in Bangladesh for a quite a while – Databiz entered the market in the year 2000 and Advanced ERP entered in 1996. With more than 40 years of experience and nearly 50,000 customers, this SAP’s market-leading ERP software is a proven, trusted foundation – built to support the world’s largest organizations as well as small and midsize companies in 25 different industries. Kandaree is an integrated solution that covers the entire process of an apparel manufacturing unit. From price quote to actual shipment and its proceeds realized, Kandaree manages the entire business process of the company. Kandaree collects data from the actual business process execution and not through any data entry operation. This provides authenticity of the data as well as internal process control at operation point of the process.
  20. 20. Integrated ERP: Disruptive Innovation in the Apparel Industry 18 EXHIBIT 7: POSITIVE SIGNS ACROSS THE RMG SECTOR It’s difficult to say whether Bangladesh will be able to reach its target. Bangladesh will continue to be to the global hotspot for RMG manufacturing that’s for sure. 89% of Chief Purchasing Officers (CPO) from leading apparel players in the EU and US chose Bangladesh as one of their top 3 sourcing countries (McKinsey & Company, 2011). But doubling performance in a span of 7 years requires participation from all stakeholders and extensive institutional support. Currently, Bangladeshi garments exporters pay 15.61% duty to the US, whereas China pays 3.08%, Vietnam 8.38%, India 2.29%, Turkey 3.57%, and Indonesia 6.30% (UNB, 2015). Being subject to a myriad of tariff and non-tariff barrier Bangladesh has diversified away from its once core market, US, to non-traditional markets. Bangladesh has also been under rigorous scrutiny by foreigners but the scenario is improving. According to a recent study out of 3,500 RMG factories over 2,000 are already complying with the international standard. Many of these factories have obtained international standard certificates like ISO-series, GFSI and FSSC (Hye, 2012). The Bangladesh Institute of Management (BIM), in collaboration with the PSES project implemented by GIZ on behalf of the German Government launched a Diploma Course on “Productivity and Quality Management” on January 31, 2013. As a first of its kind course in Bangladesh, the course is designed to meet the technical needs of middle management working in the RMG and textile sector, with focus on lean manufacturing (Bangladesh Textile Today, 2013). Some organizations in the apparel sector, like Viyellatex Group, have introduced their management trainee schemes. It is also mandatory for managers at all levels to attend the management development programs run throughout the year (Saha, RMG sector faces talent crunch, 2011). Stories like these signal that the market forces are catching up and that maybe $50 billion is not that difficult of a goal.

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