Information is power – and that is what Fatullah Apparels, a manufacturer in Bangladesh, has put to practical use by reaping the benefits of Management Information System (MIS) to take the efficiency of production and value addition to the next level in its supply chain.
From establishing his knitwear production factory in Narayanganj’s Fatullah in 1998 to currently working with a staff of about 360 workers, Fatullah Apparels’ Proprietor and CEO Fazlee Shamim Ehsan is now using management information tools as a competitive advantage and is spearheading a major drive to spread the benefit of managerial tools among the industry that is aiming for a gradual transformation.
Using Enterprise Resource Planning (ERP) to the advanced level and basic internet-based systems, he has taken an approach of quality control in production and planning process. He has cut down on inefficient factors like bureaucracy, time consumption in coordination and communication, inter-company analysis, and can now make assessments down to the fine levels of ultimate sophistication.
Ehsan tells Apparel Resources that the set of management tools he has been using allows him to track all the necessary activities and developments of his company from wherever he wishes. And this allows him to keep notice of planning, purchasing, inventory, sales, marketing, finance and human resources down to the niche details as to which production line in his factory is under-performing. All of these modules take input manually, separately and also reflect on a central database that all the modules the software has. This essentially rules out any duplication of data.
Although the approach requires an initial phase of investment, it grants the output of some tangible and remarkable benefits that Ehsan considers is a competitive advantage over other factories. He adds that the fruit is out there for anyone to grab if they are willing to make a sustainable system.
Though, for now, some of the modules involve the manual input of data entry; for example, the output of the products in one production line comprising of a single day and the amount of cloth required for producing a single unit of product. Ehsan says it is a far better method of maintaining data compared to the old-fashioned system, which used a lot of memory-based calculations and involved a bigger human-error coefficient.
Ehsan has installed the ERP software on his laptop and an app onto his smartphone. The system has been designed to inform him of the daily activities at the reach of his fingertip. By logging in, Ehsan is informed about the daily production, the amount of cloth gone wasted, the functionality of his production line, the competency of his machines, the quality inspections of his produce, and, most importantly if the entire daily process keeps up with his target for profit margin or not.
By the end of the month, or when he is done delivering an order, the ERP provides him with a summary of the entire project reflecting on the areas of improvement. He also says that the ERP opens up his eyes to profitability.
“Sometimes when a buyer orders in large quantities, you tend to think that you are making more profit. But, at the end of the day, the ERP can show if the project had a high-profit margin or low. One or two times, this happened to me that I found smaller orders to have a high profitability. On those occasions, I reduced taking large orders with low profitability and focused on increasing those smaller orders with high-profit margin,” mentions Ehsan.
The ERP keeps a track of the daily routine of a production line. With the help of it, Ehsan knows what the optimum production capacity of a working line is. “For example, one of my production lines produced 512 units a day and the others varied from 420 to 500 units. Then, I would know that manufacturing 490 units a day is achievable. I can set it as benchmark and use it a standard to find out which of my production line is under-performing and where the problem lies,” Ehsan adds
The benchmarking also helps him in calculating the time for order delivery, the resource that needs to be allotted to it and in overall, project an estimation of the variable cost he would have to incur for order delivery. “This is a lot helpful, you see…, being specific. I calculate the time needed to deliver an order and take some more days to actually deliver the product in case something goes wrong. It helps me optimise all the cost,” he says.
Ehsan, while reflecting on the process, says that there is certainly some amount of investment at first. But also, for what it’s worth, the control this new system of work gives you can drive efficiency to increase by up to 8 per cent, which is quite a huge margin. Also, for whatever cost it takes to use MIS tools, it is possible to recover all of it within a maximum of one and a half years. This sounds like a good bargain since the recovery time is very low and what you get in result will stay with you.
ERP gives Ehsan and his managers the tools they need to create more accurate forecasts.
“The software gives me real-time information about my entire factory. It tells me if I am secured enough to undertake risks, or if I should be more engaged in defensive and cost-cutting policies. It helps me formulate the kinds of business strategies for my industry. Without the ERP though, this would not have been so easy,” he says.
Today, Ehsan, although known for running a small production facility, sits at the chair of second Vice President at Bangladesh Knitwear Manufacturers and Exporters’ Association (BKMEA) because of his remarkable progress through the usage of the information technology system, where he continues to drill the need for replicating his processes for greater profitability of the knitwear industry. This, on a wider scale, ultimately contributes to the economic expansion of Bangladesh.