The new minimum wage for the garment workers is emerging as a big challenge for the readymade garment sector of Bangladesh, regardless of big or small players. However, in this changing milieu, the experienced and innovative players are already chalking out strategies that could minimise the impact of the wage hike if not negate it completely. One such company is Bangladesh’s Standard Group.
“Given the increase in wages which will make production at least 5 per cent more expensive, our primary focus is now on increasing efficiency and productivity without which business profitability and survival would be difficult,” maintains Engineer Atiqur Rahman-Chairman of Standard Group, which employs around 45,000 workforce in its production units spread across 10 different locations, speaking to Apparel Resources.
Established in 1984, Standard Group is one of the longest-running garment manufacturing companies in Bangladesh, which has grown substantially in both size and customer base over the years. It houses one of the largest woven garment manufacturing facilities in Bangladesh including sweater production facility. In addition, the company has its own in-house garment washing, printing, embroidery, apparel design, garment testing and various accessories production facilities. It also boasts of comprehensive and technically-advanced manufacturing units in the country.
Standard Group’s major strength is in woven garments. The company possesses most modern and comprehensive production technology to cut, sew, dye, wash, and finish woven products. Of the total production, menswear accounts for 45 per cent, kidswear 30 per cent and womenswear the remaining 25 per cent.
Notwithstanding size, the existing scenario has now emerged as a major issue for Standard Group to tackle which the senior management is earnestly working towards innovating production procedures to increase efficiencies while also mulling other areas of improvisation to remain viable.
“After the wage increase some retailers may increase the CM but that would not be a lasting affair because of the unfair competition within the manufacturers, some of who would offer prices without even considering the profit margins just to bag the orders, which in turn will drag the CM down again,” says Hasnat Mosharraf-Director of Standard Group.
Talking of efficiency increase, Hasnat is in favour of employing a two-pronged approach that would involve manpower as well as technology. “We may get in the best of technology but if the workers are not able to handle such interventions successfully, they are of no use. Given this fact, we are training the workers accordingly. Whenever we bring in any new machines, we provide exhaustive in-house hands on practical training to the worker,” underlines Hasnat, adding workers’ motivation and minimising wastage playing a key role towards enhancing efficiency, the company is also working in both these fronts.
If the wage hike was not all, the changing pattern of orders from buyers/retailers in the age of fast fashion is further adding to the woes. But Standard Group is up for this challenge!
“With retailers moving towards smaller orders —most of the manufacturers in Bangladesh prefer bigger volumes — we are now ready even for smaller runs. But mostly such small orders that we take are part of relation building. Even though we usually do not prefer orders less than 10,000 pieces, we are game for 3000 pieces order for our regular customers,” explains Hasnat. He also underlined that lead time being a major hurdle towards successfully catering to the current trend of fast fashion, it all boils down to the efficiency of one’s suppliers.
“Lead time is a big challenge if your supply chain is not fast and efficient enough as in cutting and sewing there’s hardly much scope to substantially cut the production time. So, it all depends on how soon one receives the raw materials, order shipment time, logistics, etc,” elaborates Hasnat.
Churning out 5.5 million pieces combined per month to cater predominantly US-based buyers including names such as GAP, Abercrombie & Fitch, Tommy Hilfiger, etc, Atiqur Rahman has put on hold any expansion plans for now.
“We would wait till end of 2019 to see how things pan out depending on which we would take a call on further expansion the next year, which could either be in terms of adding new products or fabric manufacturing but as of now we are not looking at expanding our product basket…Socks, however, interest us all,” adds the Chairman of the US$ 400 million plus turnover company to end the conversation.