Pandemic came and went, but its after-effects on businesses are still there.
- Russia-Ukraine war is still disrupting the businesses.
- Bangladesh’s Government has made it mandatory to increase workers’ salaries by at least 5 per cent every year, which is making garment production costlier.
Collectively, these three challenges, along with many other cost-hitting factors, have proved to be problematic for the apparel and textile industry to operate in a ruptured supply chain. However, progressive companies in the fashion industry, not just garment manufacturers but the accessory manufacturers also, have already moved on and are opening up new growth horizons for themselves. And they are achieving it by focusing on productivity, efficiency, periodic expansions and flexibility in manufacturing to accommodate almost all sizes of orders.
Dhaka-based Neo Zipper is one such name that turned crisis into opportunity in last two years – all thanks to its resilience and the Government’s support. No compromise on quality, service and delivery even in the toughest times has worked wonders for Neo Zipper. Team Apparel Resources (AR) recently sat with Md. Shabbir Ahmed, Director, Neo Zipper Co., Ltd. to understand different facets of its business in current times, future planning, growth strategy and ways to tackle market challenges.
- Moving towards value-addition, making even smaller order business profitable
Bangladesh RMG sector has been facing severe issues of workers’ unavailability since Covid-19 time. At the same time, order quantities are getting reduced drastically which leaves many small and mid-scale factories clueless about increasing productivity and that’s where they lose already suppressed profitability! A zipper company like Neo is also affected by this scenario as the zipper’s orders are also getting smaller. But the company believes it’s just a phase and the gritty Bangladesh industry will become flexible to cater to smaller order sizes soon.
“Prices are getting tighter and the sudden influx of small orders is not allowing factories to be agile quickly. However, factories have started finding a way now. They are going for vertical integration and are now extensively working on to create skilled manpower to increase productivity, opting for modern factories, going for maximum compliance and reducing human intervention to mitigate the risks that took place due to worker crisis. The most important change is the inclusion of value-added garments which gives better profitability even in smaller size orders. A high-fashion garment demands high-end accessories, so it’s a win-win situation for all including us,” commented Shabbir.
- Bangladesh’s expansion in jackets opening up new growth avenues for Neo Zipper
Neo has been catering to basic commodity products effectively since years but now it is including newer product categories in its portfolio – all thanks to market demand. As per experts, global buyers’ are moving away from China and one category that Bangladesh has been successfully able to grab is jacket. So when jackets’ production increases, zipper’s demand will also boost and that’s where Neo is focusing strongly.
Currently standing at US $ 10 million turnover, Neo Zipper is expecting greater revenues by tapping significant chunk in the Bangladesh’s jacket manufacturing industry in the coming months.
“This is commendable effort by Bangladesh’s RMG industry. Since jacket, especially the outerwear jacket orders are coming to the country, we are planning to increase our production capacity of nylon zippers to match the demand in the coming time,” mentioned Shabbir.
- Nomination business vs. non-branded business – Neo Zipper capitalises opportunities in both
Neo Zipper competes with a lot of international and local zipper brands in Bangladesh. Shabbir said all these brands have a core business model under which they fetch significant business from direct nomination from brands and the same business approach works for Neo Zipper, which reports over 60 per cent of its business comes from nomination. The combination of American quality standards and Korean technology gives the company a distinct edge over other zipper manufacturers/suppliers in Bangladesh.
“In nomination buyers, advantages we get – better price compared to non-brands. It’s sometimes challenging but always exciting. It is healthy competition as brands have several nominations and the one who gets more orders through nomination’ business is superior on these aspects – commitment, quality, service and delivery. This is what we always believe in. Concentrating on every aspect of quality, the technical team at Neo provides extensive service to our customers, standing strongly behind our product,” asserted Shabbir.
However, prices in nomination business are also getting tighter which is an obvious reason to worry for! Shabbir said there is a difference of maximum 10 per cent in prices that Neo Zipper gets more from nomination as compared to direct business from non-branded buyers. But the cost of compliance offsets this profit margin.
“If there are set parameters of compliances, then it is good for both buyers and vendors but if there are frequent changes in these parameters, then it becomes problem for us. For a leading Swedish fast-fashion brand, we have spent over Taka 5 crore, so just imagine how much we are spending on collective compliance cost without getting any tangible ROI,” shared Shabbir, adding, “Therefore, now we are trying to increase the share in non-branded but a very potential market. Because this segment is becoming huge and we do not want to leave this out. Another benefit is that there are limited compliance requirements in the non-branded business segment,” averred Shabbir.
- Increased ‘speed to market’ is Neo Zipper’s supremacy
It’s a known fact that accessories like zippers are amongst the last products that the garment manufacturers order, so a zipper company gets the minimum lead time to supply the orders. This creates more trouble when order size is bigger. On the other hand, lead time of apparel orders is getting shorter and now fashion brands are asking factories to ship their orders in around 60 days or even less than that because fashion trends are changing quickly. But, Neo Zipper has unmatched expertise in shipping zippers in the required time!
“We normally ship all the zippers in between 15-20 days but some brands such as Inditex require zippers and other accessories in just 7 days! However, we have created such a working model that we are able to ship any amount of zippers in the required time. The quick response time, door-to-door service, shorter lead times and the after-sales service of the company provides an extra competitive edge to Neo in the market,” concluded Shabbir saying that increasing speed to market is a prime target for the company and that’s what the global industry requires from their vendors.