Sourcing Strategy For Textile And Apparel Industry in Bangladesh

To compete in a highly competitive economic climate, Bangladeshi apparel brands must develop strategies to remain competitive in the global apparel sector. Since the apparel sector is always changing and evolving, as has been seen in recent years.

Financial instability in the global economy frequently results in quick changes in Apparel factories, as was the case during the pandemic and the Russia-Ukraine war. Trends in social life, culture, the environment, and fashion are a few examples of these shifts.

However, it is still being determined how prepared they will be and whether they can compete in international trade, as Bangladesh’s apparel manufacturers aim to reach $100 billion by 2030.

Bangladesh’s garment sector needs an apparel sourcing destination to develop specific methods to ensure future sales if it wants to be the only and most formidable rival in the international market.

Since the 19th century, apparel manufactures tactics have seen a substantial change. To cut costs, some shops have been importing goods from other countries. 

Several variables, the supply chain and consumer demand, influence a company’s sourcing tactics. The two main considerations for sourcing strategies are often the options among potential supplier markets and supply routes.

Businesses nowadays are shifting their sourcing strategies to focus on their destination markets. Due to shifting trade patterns and tax laws, the world of apparel sourcing is changing continuously. Therefore, understanding how to make your strategy effective is crucial.

Finding a suitable market for an organization’s goods and services is the focus of sourcing, a procurement division. The apparel sourcing industry spans national boundaries to locate the ideal locations for their products worldwide.

Apparel Supply chains manager must consider at least ten aspects, ranging from cost to speed to apparel import markets, to make the best judgments on where to produce their clothing. This is where a balanced scorecard method comes in. 

 To increase the visibility of their products and maximize their earnings, apparel firms and retailers are giving sourcing top priority.  In my article, I cover how to develop a balanced sourcing strategy in this section. Let’s start!

They take the following factors into account while selecting sourcing locations:

Sourcing Strategy For the Textile And Apparel Industry

The clothing merchandiser must determine the ideal balance between the cost invested and the expected level of quality.

Labor costs, production costs, shipping costs, and INCO term negotiations for overseas sourcing are other factors influencing these two key variables. But to make your sourcing successful, you must have a sound strategy.

Below are the nine stages to boosting your business with the best sourcing strategy.

Looking at the source of the need

Knowing the requirement for sourcing would enable you to understand the current business environment better.

Having the information is essential for creating a solid management team. Additionally, the business must evaluate point-of-sale data and make decisions regarding the replenishment of requirements.

Gather as much information as possible to examine your organization’s present needs through market research or face-to-face conversations.

Perform market research

Once you’ve determined why your company requires sourcing, do as much market research as possible to learn as much as possible about the markets you are in and the ones you intend to penetrate.

Gather data from several nations and analyze it to determine which markets are best for your goods and services.

Comparing global apparel production is a challenging exercise that clarifies business. This will assist you in learning about potential markets for your products and how well your company might do there.

Check out the market for the supplier

When choosing a fashion industry, use caution. Frequently, businesses pay the price for a supplier’s shortcomings. Because of this, suppliers in the apparel industry must be assessed according to their past performance.

Consider any provider’s financial documents, credit reports, and references before making a final decision. Know your supplier’s work schedule and how well it fits with yours.

Ask your providers as many questions as possible to gain a clearer picture. Visit their websites, engage in conversation with their clients, and inquire about their general experience in your sector.

Do everything within your power to learn as much as you can about your potential suppliers. The outcomes you get will improve as you get to know the vendors better.

Create a sourcing plan

Before devising a sourcing garment production, many elements must be considered. Analyze your needs, analyze the market, and obtain supplier data to assess your position and make informed decisions accurately.

It is important to determine your sourcing needs and create a plan that can be evaluated against the supplier’s potential.

Receive information about suppliers

Before dealing with the largest Apparel exporters, getting their information is crucial. A major challenge for many apparel garment production is keeping a list of suppliers that includes the following details:

• Details for getting in touch

• Quotations

• Arrangements

• Potential geographies

• Product details

• Performance information

Keep as much personal and professional information as possible about the vendors you work with. Additionally, continually update the data to track performance and foster consistency.

Discuss terms with suppliers:

To get the best deal when negotiating, stores need to understand their counterpart’s feelings and react accordingly.

The best method is to hold lengthy discussions about all factors. Before talking to your suppliers, arm yourself with as much knowledge as possible.

Most apparel exports strive to get the most out of a limited budget and Raw materials. So search every possible surface.

Negotiating terms regarding price, delivery timeline, production capacity, product quality, and other necessary conditions is recommended.

The following issues also need discussion:

• Structure of prices

• Work’s range

• Delivery time

• Teams and environment

Negotiate using the plan you developed as though it were your only option. However, maintain a backup plan prepared for apparel exports.

Come up with a sourcing plan

Make a foolproof plan now to achieve your sourcing objectives. You must know where and how to source products for your company.

Create a sourcing plan while considering your company’s objective and possible apparel production. Think about the market you want to reach with your goods and services. Consider all the possibilities for making the most of your sourcing efforts.

Formulate the sourcing strategy while considering both internal and external considerations.

Internal variables

• Budget Quality Outside influences
• The flexibility of the Supplier
• Location of the supplier

External considerations

• A market participant’s output is another thing to think about
• specifications for suppliers
• standardize your processes
• Relationship management with suppliers

Create an unbeatable plan of action to minimize risk and enhance outcomes. And confidently enter the market.

Check the status of the following:

• prompt delivery

• Process vendors adhere to

• The issue suppliers are having.

List the strategic elements of your product that were successful for you and those that were unsuccessful. Examine the outcome of your sourcing strategy and make improvements.

Execute and assess

After carefully developing your sourcing plan, launch it while keeping a close eye on how things are progressing.

It is always best to have a backup plan because you need to know whether the strategy will be successful. Ensure that your plan includes the suppliers because they also require security.

Create a strategy for effective communication and make plans for a method to gauge consumer reactions.

Modernize the plan

You now know how well your sourcing approach worked. You are aware of the boom-doom regions.

The following action item is to update your sourcing strategy. When revising your plan wide range, take into account the following:

• Consumer demand and market response
• Leading times
• Added expenses
• Increase the strength of both your weak hands and your strong places.

Improve your sourcing strategy’s quality by planning better and using cutting-edge technologies in supply chain management.

After a decade of expansion, what is next for Bangladesh’s clothing industry?

The need for new skills in the apparel business means that workers must be educated

Your apparel manufacturer will reach a better sourcing location by following these methods. The right sourcing might help your company’s supply chain management stand out from the competition.

After all, you devote a team, resources, and money to it. It must be done correctly! It can occasionally be challenging for you.

In terms of academic achievement, the Bangladeshi Labor Force Survey (LFS) in 2016 showed that over 60% of all workers had at least finished their primary education.

Women workers were significantly more likely than men to have no formal education or just have achieved their primary education, at 29.1%. (17.9 percent).

The survey mentioned above only mentions formal education; workers in the garment industry have yet to learn what technical training is available

Mid-level management is occasionally cited as the worst example of a lack of qualifications or technical training from any educational institution.

According to a Research Gate article, Chinese businesses have begun to spend on management and current technology training for their employees on an in-house basis.

An experienced worker receives 70 hours of training annually from Chinese textile companies, compared to 32 hours in Canada and 10 hours in India (Chandra et al., 1998).

This study also discovered that, compared to 1.8% of Chinese companies, 16% of Indian businesses did not offer new hires any training.

Even if the scenario described above pertains to the Indian garment industry, Bangladesh’s condition may be underappreciated compared to India’s.

The Bangladeshi apparel sector must take the initiative to provide skill enhancement programs for workers’ labor costs and mid-level management.

Stopping pricing wars between regional, small-medium, and major firms is necessary

Bangladesh’s small and medium-sized textile and apparel industry frequently fails due to a lack of funding, a poor management team, an inadequate infrastructure, or an unsound business model.

In addition, Composite mills and other large plants frequently have a limited ability to produce a variety of goods or small quantities at low prices, which drives brands to search for new suppliers in global apparel businesses.

As a result, Bangladesh’s clothing industry is becoming less competitive and potential suppliers internationally.

Another issue is that the Bangladeshi clothing sector offers different product pricing depending on the region, such as Narayanganj, Gazipur City, or Port City Chittagong.

Retailers are therefore taking advantage of the pricing advantage by employing strategic techniques based on comparable area costs.

A standard and agreed-upon price range must be established for the Bangladeshi clothing manufacturer to compete in the global market.

The advantage of additional sourcing and manufacturing strategy

Apparel retailer from low-cost nations is finally realizing and recognizing that being inexpensive does not automatically mean that a customer will want to do business with you.

The best illustration is the world’s top sourcing company, Li & Fung. With its headquarters in Hong Kong and the ability to source products internationally, the company realized a substantial amount of time ago that tying in the retail or brand buyer required the provision of added value services.

Pakistan’s GIA, created by a mechanical engineer who studied and worked in Germany, is another lesser-known company that sells additional value services. GIA was among the first to offer supplementary services to its client companies.

In the case of GIA, these include

• Testing for raw materials’ quality control;

• Tests for a fabric’s color fastness;

• Capabilities to produce patterns and markers using computers;

Internal design resources include the acknowledged and currently expected work-in-progress (WIP) process controls, sewing quality control, logistics, and shipping services.

Final Thought

Bangladesh is a growing market for the clothing and textile industries. The garment sector in Bangladesh will use a comprehensive approach. People have realized that tax breaks and other incentives only guarantee sustained growth and only go so far.

To maintain the momentum in the growth of apparel exports, factors. Domestic competitiveness, cost of doing business, workplace safety, product and market diversification, skilled labor force, foreign direct investment, technological advancement, and automation in the production process are also considered important.

Bangladesh’s exporters haven’t tried to ensure that workers get a livable wage, which puts the sector at a competitive disadvantage compared to other Asian nations. While Cambodian garment workers put in roughly 47 hours per week,

Bangladesh has a 60-hour work week. In addition, 54% of workers receive less than the minimum wage.

A plan will increase negotiation skills at the government and entrepreneur levels and enable local exporters to forge relationships with foreign purchasers equally to reap fair prices for export products.