Even after 14 months of global pandemic, the apparel industry is not getting hold on its nerves. And, there are obvious reasons for these fluctuations – be it the 3rd or 4th wave of COVID-19 in western countries, posing a threat to the fashion retail industry or high raw material prices, causing a negative disruption within the manufacturing supply chain. Bangladesh is facing heat due to both challenges which are collectively making the business operations more cumbersome. Amidst this, the manufacturers are not just continuously in search of the orders but also worried about the future investments they have to plan to cater to these orders; hence they are choosing to remain cautious as of now.
Team Apparel Resources got in touch with Rakibul Islam Khan, Managing Director, Pakiza Knit Group, Bangladesh and touched upon the key issues that need to be discussed in the current apparel manufacturing landscape. Here are the excerpts of the conversation.
AR: It’s been around a few months since the industry has resumed operations, how has been the business since re-opening?
Rakibul: After initial setback due to COVID-19, the business has picked up especially in the last quarter of Jan.-Mar. ’21. However, as things seemed to be settling down a bit, other challenges have created bottlenecks and the most crucial challenge of all has been the high yarn prices. Due to sudden and continuous escalation in yarn prices, apparel manufacturers, including us,are having difficulties to meet the buyers’ target prices. Along with this, the Coronavirus situation is getting worse again both in Bangladesh and the countries where we dominantly ship our apparels, making things quite uncertain from business perspective.
AR: Can you please take us through the changes in terms of business strategy/approach, production procedures and operational aspects that you’ve brought in the organisation in post-COVID era?
Rakibul: Due to the ‘social distancing’ measures, we are now working at low capacity than the usual times. We have reduced 30 per cent capacity, which means we are running at 70 per cent capacity, to meet our targets. Just because of lower capacity mandate, we tried running two shifts but that proved to be an unsuccessful idea as we got much lower productivity in night shift than the day shift. Therefore, to increase efficiency, we have worked with our machine suppliers to add attachments to our machines in order to increase productivity.
In order to reduce the fabric cost and production time, we have brought changes to our dyeing system by introducing new machines. We have also requested our buyers to change the styling to make the products more production-friendly so that we can sustain in this tough time. Some of our buyers took it positively and gave us support. OTTO is one of the brands that has helped us a lot in changing styles or doing small amendments so that we don’t face technical challenges in production.
AR: Going forward, what you see as major challenges/opportunities from the industry’s perspective?
Rakibul: Going forward our main challenge is to keep our production cost to minimum and thus to see better profitability. The buyers have been reducing their prices not just due to COVID-19 but this has been a phenomenon since long. What pandemic has added as an extra burden on us is the shortage of raw material and the cost of raw materials is also high. So, we are extensively focused now to keep less raw material stock with us, while we are working on our fabric optimisation and this way we have reduced our investments.
So now the main challenge is to modify our processes within every zone to ensure that our cost of production remains low amidst the difficulties.
AR: Before COVID-19 hit Bangladesh, manufacturers were investing a lot on machinery/automation/business expansion, etc., all of which had to take a backseat till the 3rd/4th quarters of 2020. What is the current scenario of investments in machinery from manufacturers?
Rakibul: I believe that the investors are still cautious. Only a few of the manufacturers are making large investments as they have enough orders in their hands. Apart from bigwigs, any investment that is being done is in modifications of machinery and improvements in processes. One sector which is seeing large investment is spinning. As the spinning mills are making profit due to high prices, thespinners are investing in newer technologies to increase the production. As of now, the apparel manufacturers in the country won’t invest too much to reserve cash-flow.
AR: As far as Pakiza Group is concerned, you have not stopped you expansion plans even in pandemic and are continuing to install machinery/technology in various areas of your factories. Let us know what all machinery you have installed in last 6 months or so.
Rakibul: In the last few months, we have increased 26 sewing lines to make a total of 52 sewing lines now in our Pakiza Knit Composite factory and expanded our fabric dyeing capacity by 15 tonnes to make it to 70 tonnes fabric per day.
We have added one slitting machine, stenter and compacter recently to strengthen our fabric and dyeing division. We are now also supplying fabrics to other garment manufacturing factories and so needed to increase our dyeing capacity. Out of 70 tonnes of fabric manufacturing capacity, we consume 40 tonnes in-house, while we sell remaining fabric to other factories. We are now able to produce designer jacquard knitted fabric and we cater to the special developments for buyers. Our focus is now to become renowned buyers’ valued fabric supplying partner in the near future.
However, all these expansions have not come without hurdles. As we had already committed to our buyers in 2019 that we would increase our capacities in both garmenting and fabric zone, so they had placed orders accordingly.Then came COVID-19 outbreak and, due to the unprecedented situation, all the orders were held up, resulting in uncertainty of our expansion plans till the start of the 4th quarter of 2020. We could see the revival of the held up orders only in early November ’20 and then we geared up and increased our capacities to meet the buyers’ demands.
AR: Which knitted product category is getting good response from your buyers and do you see any major growth of the same in near future in the global market?
Rakibul: As online sales has increased in the wake of COVID-19, the minimum order quantities have decreased a lot but the number of designs have increased. During the pandemic, we got a lot of orders for nightwear knitted garment and casual homewear products. The trend of these products is not going to slowdown in the near future as well. I believe the factories now need to focus on supplying small quantity orders and so need to design the factory accordingly to accommodate the smaller MOQ.
AR: At a time when there is a panic among factories workers in Bangladesh amidst job insecurities due to COVID-19, you have retained your people in a responsible way. What are the activities you and your team are organising to keep your people motivated?
Rakibul: Our workers and employees are the strength of our company. They are very dedicated to our company and, in this time of need, it was our company’s responsibility to stay beside them. We tried to make sure that everyone in our factory felt financially secured. We did continuous counselling and communicated with them all through the pandemic time and are still doing that. We also ensured the salaries were given to them ontime without any glitch including the festival bonuses. During pandemic, we tried to provide them with the basic necessities like rice, oil, potato, etc.
In fact to help the workers and give them support, we have opened a fair price super-shop named TRIPTI where we provide one month credit to the needy workers and the prices of the food commodities are slashed by 5 per cent to 10 per cent as compared to the market price.In TRIPTI, we provide fresh in-house grown vegetables. We do have basic food items, cosmetics and baby food items in the shop.
All our employees spend majority of the time in our factory and they do not get time for shopping for their basic needs. So, this super-shop not only gives price benefits, but also saves time and energy of our people.
In addition to this, my admin and HR team is continuously educating the workforce to keep the workplace safe by using hand wash facilities, sanitising facilities and maintaining social distancing to the best of their capabilities.
AR: On the production floor, what are the new initiatives your team has taken to increase efficiency, maintain quality and speed up delivery to the clients – especially after COVID-19 when productivity, efficiency and quality hold more relevance than ever?
Rakibul: This year we have brought changes in our techniques of handling orders. We have introduced full ERP system which has reduced redundancy in report keeping,hence we are saving enormous time. Also, as every information is in the ERP system, it reduces time to get information which further results in the reduction in communication gap and decision making has become easier and faster.
Another area of benefit after implementing this ERP is that it has helped us to reduce our lead time. Now we can complete orders in less than 40 days of lead time as compared to 60-90 days before this system was placed. This has helped us to reduce our inventory as now we can only keep 2 months stock in hand and still meet delivery dates.
ERP implementations are quite common nowadays but ours is different. We prepared a team of 5 software developers in 2019 for developing this ERP as per our factory’s requirements and implemented it in early 2021 as a fully functional indigenously developed software.
Besides, we have started implementing the 6-sigma style of production. Now it is at the early stages and our target is to fully implement it by the end of this year. The implementation of 6-sigma will help us to reduce wastage and improve quality of both processes and products.
Furthermore, to ensure the processes are driven by best of the people, we have introduced more experienced people in our management team who make sure that all follow up sare done regularly and properly. Their vast experience has enabled us to do problem solving in short time and keep good production flow. We have also started R&D with their experience in the manufacturing industry and now we are continuously improving our products and production process.
AR: What are your plans in the months coming ahead?
Rakibul: We will wait and see how global retail market takes shape in next few months before going for anything big in terms of further investments and hence will remain cautious. We will observe the results of our recent developments and weare making it a strong approach to follow what we have decided in terms of increasing efficiencies and productivity. Our focus will remain to ensure full utilisation of our capacities.