The Bangladeshi readymade garment (RMG) industry has faced many global challenges over the years. Our factories have learned to adjust to changing buyer needs, new rules and shifting fashion trends.
But one problem keeps coming back— raw material price swings. The cost of key materials like cotton and polyester often changes because of global events that we cannot control.
When prices rise sharply, the first impact is felt in factories. But the effect spreads across the entire chain, from yarn spinners to the global brands selling clothes. For factories, handling this uncertainty is no longer just about survival; it’s about staying competitive.
Global Problems, Local Effects
In the last five years, Bangladesh’s RMG industry has faced several raw material shocks, showing how dependent we are on imported cotton and synthetic fibres:
Cotton supply changes: In 2023, Brazil overtook the US as the third-largest cotton producer. Despite such increased supply, it also created instability. Price movements forced factories to quickly adjust their sourcing plans.
Energy cost rise: The Russia–Ukraine war caused energy prices to jump worldwide, raising costs for polyester and other synthetic fibres. Since Bangladesh imports these materials, factories saw sudden cost spikes that cut into profits. At the same time, local gas prices in Bangladesh also went up, further increasing production costs and pressure on factories.
Logistics bottlenecks: Container shortages during Covid and, more recently, Red Sea shipping disruptions turned predictable 20-day transit times into 40–50 days. This uncertainty left factories waiting for yarn, forcing production delays and rescheduling across the sewing floor.
Policy shifts: In 2025, the US instituted ‘reciprocal’ tariffs, lowering Bangladesh’s apparel tariff from a forecasted 37% to 20%, offering some relief. Meanwhile Indian exporters faced harsher terms (up to 50%), leading to temporary order diversion to Bangladesh—but only if factories can manage raw material cost volatility effectively.
The Manufacturer’s Challenge and Strategic Responses
Fabric accounts for roughly 60-70% of the total garment cost. A sudden spike in yarn prices can therefore erode profitability overnight. Factories working under fixed-price contracts, common in our industry, find themselves absorbing the loss when raw material costs soar after deals are signed.
Beyond margins, volatility disrupts delivery. Suppliers may delay shipments or renegotiate terms when market prices surge, leaving factories scrambling to meet buyer timelines. In a fast-fashion world where speed-to-market is everything, even a few weeks’ delay can strain buyer relationships and trigger financial penalties.
Despite these risks, there are several strategies manufacturers can adopt to turn volatility into an opportunity:
- Long-Term Contracts and Source Diversification
Factories can negotiate medium-to-long-term yarn contracts with spinning mills to stabilise pricing. While this requires volume commitments from the buyers, it ensures predictability and shields manufacturers from sudden spikes. At the same time, diversifying sourcing, from multiple geographies or supplier bases, reduces exposure to a single disruption, whether it’s a US drought or Indian export restriction.
- Forward Buying and Smart Inventory Buffers
Strategically building buffer stocks before peak seasons (pre-Eid, Christmas, back-to-school) cushions factories from short-term shocks like shipping delays in the Red Sea. But here lies the critical point: buyer support is essential. If end buyers commit to orders early enough and share forecast visibility, factories can justify holding inventory without bearing all the risk. This partnership mindset transforms forward buying from a dangerous gamble into a resilience tool with shared responsibility.
- Strategic Domestic Partnerships
Closer collaboration with Bangladeshi spinning mills, through shared forecasts or co-planning, ensures priority allocation during crises. But lasting value comes from consistent quality and service integrity. When mills deliver reliable yarn standards and on-time supply, factories can plan confidently and invest in long-term product lines. In return, manufacturers must commit steady orders and transparent communication. Such mutual trust turns transactions into partnerships that will reduce import dependency and strengthen Bangladesh’s supply chain resilience.
- Smarter Commercial Negotiations
Buyers must also recognise the volatility challenge. Cost-escalation clauses in contracts, while not yet common, should be part of forward-looking partnerships. Transparent communication about market realities allows for partial cost-sharing rather than factories silently absorbing every shock. In some recent cases, progressive buyers have allowed upward price revisions tied to commodity indices, helping factories remain solvent while ensuring supply continuity.
- Lean Operations and Data-Driven Decisions
When raw material costs rise, efficiency becomes the first line of defense. Factories that adopt lean manufacturing practices, reducing wastage in cutting, improving line balancing and optimising fabric utilisation, can protect margins without compromising product integrity. But lean alone is not enough. Data-driven decision-making allows management to anticipate risks instead of reacting late. Tracking real-time production data, monitoring supplier performance and integrating cost-forecast dashboards provide early warning signs of disruption. This combination of lean discipline and analytical foresight helps factories do more with less meaning delivering higher quality while building a culture of continuous improvement that buyers increasingly value.
Looking ahead, volatility in cotton, polyester and other inputs will remain as climate change disrupts harvests, global politics reshape trade and energy markets stay unstable, but this does not mean defeat. Every part of the supply chain has a role to play: suppliers must ensure quality and reliability, manufacturers must stay efficient and transparent and buyers must act as long-term partners rather than short-term customers.
When all three work together and share responsibility, volatility becomes an opportunity rather than a threat.
