ASSIGNMENT ON

Merchandising activities of Readymade garments (RMG) executing an order of 10000 pcs T-Shirt

Submitted to: Submitted by: GKM Towfique Hassan Razeeb Lecturer 027-067 School of Business Studies MBA (Executive) Primeasia University Banani, Dhaka-1213 & Apparel marketing Wahidul islam ID # 102Program # Batch # 19th Major Textile

Page 1 of 17

Table of Contents
Sl. No Topics Chapter -1 Page Number s
3-5

1.0 1.1 1.2 2.0 2.1 2.1 2.2 2.3 2.4 2.5 3.0 3.1 3.2 4.0 4.1 4.2 4.3 4.4 5.0 5.1 5.2 5.3 5.4 5.5 6.0 6.1 6.2

Introduction Objective of the assignment Merchandising Department & its Activities

Price negotiation and order confirmation How to prepare garment price Fabrics price Trimming price CM calculation Other embellishment calculation Commercial cost Fabrics and accessories booking Fabrics booking Accessories booking.

Chapter -2

5-7

Chapter -3
7-8

Merchandising activities on Product development Style sample development Size set sample development Pre production sample development Production sample Merchandising activities on production follow up Production plan Trial/Test cutting Cutting Sewing Packing Merchandising activities on Quality control Quality control during inline Quality control during production

Chapter -4

8-10

Chapter -5

10-11

Chapter -6

11-13

Page 2 of 17

-2-

6.4 7.0 7.1 7.2 7.3

Final inspection

Chapter -7
13-14

Merchandising activities on goods delivery to buyers destination Booking to forwarder Documentation Payment release

Page 3 of 17

-3-

Executive Summary
The textile and apparel industry in Bangladesh occupies a prominent position within the countrys industrial structure. It is the largest manufacturing sector, providing jobs for some 50% of the total industrial workforce and contributing 9.5% of the countrys GDP. Also, it accounts for almost 77% of total exports, making it Bangladeshs leading foreign exchange earner. In the early 1980s exports were dominated by jute while garment sales were insignificant. But today garment exports are by far the leading export category. In 2004/05 the clothing sector generated as much as US$5.58 billion in foreign exchange. The industry benefits from special access to markets in the EU, Canada, Norway and Japan. Because Bangladesh is a least developed country, its textile and clothing exports enter these countries quota free and duty-free. This concession, together with low labor costs, provides the garment sector with a strong competitive advantage. But in order to produce garments for export, the sector has to purchase a large share of its yarn and fabric needs from abroad, especially woven fabrics. Few local textile firms are able to produce materials of the required quality or in adequate quantities. The Bangladeshi government is attempting to remedy this situation. To reduce the countrys import bill, it is offering tax concessions and incentives aimed at encouraging investors to develop the necessary backward linkages. Bangladesh's most important exports are comprised of readymade garments (RMG), with jute, leather, and frozen fish products also being major export sectors. The government is rallying the RMG sector as the area with the largest potential for growth, and a key step the government must take is the development of backward linkages for the sector to be truly competitive In RMG sector there are many department like knitting, dyeing, finishing, cutting, sewing, packing, production planning, quality control, Merchandising and marketing, Store, HR & compliance, information technology, etc. Among all the department merchandising & marketing is one of the most important department in RMG sectors, In my assignment I tried to discus about the merchandising activities to execute an order of 10000pcs T-Shirt. The report will represent the following points as under: * Price negotiates and order confirmation * Fabrics and accessories booking * Merchandising activities on Sample development * Merchandising activities on production follow up * Merchandising activities on Quality control * Merchandising activities on goods delivery to buyers destination

Page 4 of 17

-4-

Chapter -1

(1.0) Introduction
1.1 Objectives of the assignment
The primary objective of this assignment is to fill partial requirement of MBA degree. Besides fulfilling the degree requirement, this report intends to cover a comprehensive analysis on merchandising activities in RMG sector. Report also studies how important merchandising activities on RMG sector.

1.2 Merchandising department and its activities

The Merchandising is known to the persons specially involved in garments trade. The term has been derived from the merchandise. Merchandise means goods that are bought & sold. The term Merchandising may be defined as: Person who merchandises the goods, specifically for export purpose. Garments merchandises means buying raw materials & accessories, producing garments, maintaining required quality level and exporting the garments within schedule time. From the above definitions, we can say that a person involved in garments merchandising needs a wide range of knowledge & skill to perform his job successfully. The job itself is technical and general as well. Merchandisers should have the following basic qualifications: Good Command in English and adequate knowledge of technical terms for accurate and efficient communication. Good knowledge of fiber, yarn, fabric, dyeing, printing, finishing, dyes, color fastness, garments production. Etc. Clear conception of the usual potential quality problems in the garments manufacturing. Good knowledge of the usual raw material inspection systems & garments inspection systems. Knowledge of the quota system used in each of the producing countries, duty rates, customers regulations, shipping and banking documents etc. Highlights of Merchandising works 1. To collect buyers addresses.

Page 5 of 17

-5-

2. To establish contact with the buyers sending formal letters/profile. 3. Receiving buyers response and providing price quotation along with making of sample as counter/approval. 4. Receiving samples comments from the buyer. 5. To furnish the pro-forma invoice and sending the buyer. 6. Taking necessary steps to develop lab-dips of the materials (FAB & ACC) 7. Receiving the master L/C & verify clauses of the L/C both in technical and commercial point of view. 8. To confirm floor booking of the order with factory. 9. To confirm transfer authentication of the L/C in favor of fact. 10. 11. 12. 13. 14. 15. 16. 17. To 18. 19. 20. 21. 22. 23. Pushing the factory taking initial procurement to open the back-toSearching reliable fabric and accessories sources and finalize To monitor the shipment of raw materials and arrival in the To monitor of the supplying materials while receiving factory. To order the test cutting with quality. To check/inspect/advise for the bulk production. To monitor production, quality and delivery. advise factory if buyer change any instruction both in back L/C by bank. supplying of the required materials relevant tot the order. factory.

technical/commercial point of view to the order. Collecting order from the buyers. Sending Samples to the buyer for approval. Collecting accessories form different Suppliers. Giving order to the specified garment factory. Communicate with all the respective parties. Coordinating the whole process at a regular manner

This report is based on the merchandising activities of one of the fast growing ready made knit composite garment factory named FAKIR KNITWEARS LTD established in 1989. It has more than 80000pcs T-Shirt production capacity per day.

Page 6 of 17

-6-

Chapter -2

(2.0) Price negotiation & Order confirmation

Price negotiation is the most important part of merchandising and marketing. Order confirmation depends on how cleverly and logically one can negotiate price with buyer. Competitive price is the key element of price negotiation. To make competitive price first of we have to know about the product that buyer want to buy from us. Then we will calculate the raw material price, manufacturing cost & shipping terms of the product.

2.1 How to prepare garment price

There are processes for fixation of export prices which are as under: 1. FOB (Free On Board). 2. C & F (Cost & Freight). 3. CIF (Cost, Insurance & Freight). FOB means free on board i.e. exporter doesnt bear the cost of freight of ship or air. It is buyer (Importer) who himself bears the freight of ship or air. C & F means Cost of Freight i.e. FOB (Cost) + Freight of Ship = C & F. In the case ship or air freight is carried by the exporter while quoting price, the exporter quotes price a bit higher than FOB. The whole responsibility including the sending of goods to the selected port of the importer is shouldered by the exporter ship or air. Freight may very from place to place and shippers to shippers. CIF means cost insurance & Freight. In this case in addition to the bearing of freight the cost of insurance is also borne by the exporter. The exporter, while quoting CIF price, quotes much higher than C&F value i. e; C & F + Insurance =CIF. Normally we can add 1-2% insurance charge with CIF price.

Page 7 of 17

-7-

During the fixation of FOB price of a T-Shirt following notes are to be followed carefully: 1. 2. 3. 4. 5. 6. Cost of fabrics/Dzn. garments. Cost of Accessories/Dzn. garments. C.M (Cost of Manufacturing) /Dzn. Garments. Cost of embellishment (if any) like print, embroidery, etc Commercial cost. Commission (if any)

2.2 Fabrcis Price

Knit fabric price is the sum of the below factors1. yarn price per kg (approx $6.40) 2. Knitting price per kg (approx $0.15) 3. Dyeing price per kg (approx $1.5) 4. finishing price per kg (approx $0.50) Thus the fabric price per kg comes ($6.40+$0.15+$1.5+$0.50)= $8.55 Fabrics consumption for a European T-Shirt is 3.00 kgs per dozon. So fabrics price per dozon is (3.00 * 8.55) = $25.65

2.3 Trimming Price

Trims cover all the trims used in the garments except the basic fabric. There are hundreds of items used to manufacture the garments, proper selection of trims and its quality are very important for styling, otherwise the garment may be rejected or returned by the customers. As our assignment is based on basic T-Shirt, normally care label, main label, size label, sewing thread, poly bag, price ticket, carton, tag pin, gum tape, etc trim are used in a basic T-Shirt. Normally the trim cost per dozon comes approx. $2.00 for basic T-Shirt.

2.4 CM calculation
CM means cost of cutting to making. It includes the cost of cutting, cost of sewing and the cost of packing. It also includes the overhead cost of the plant and the profit margin. Generally CM per dozon of a basic T-Shirt is $5.00

2.5 Other embellishment calculation

Other embellishment means print, embroidery, patch etc that makes any garment more attractive for customer. Page 8 of 17

-8-

As our assignment is based on basic T-Shirt we are not calculating any embellishment cost.

2.6 Commercial cost.

Commercial cost includes LC commission, UD commission, EXP commission, Documentation cost, Goods send to forwarder cost, etc. For basic T-Shirt it will safe if we calculate commercial cost $1.00 per dozon.

2.7 Final garments cost & order confirmation.

Now the final garments cost per dozon is the sum of fabrics cost, trimming cost, CM cost, other embellishment cost & commercial cost. So the garments price per dozon comes ($25.65+$2.00+$5.00+$1.00)= $33.65 T-Shirt per piece is ($33.65/12)= $2.81 Thus we make manufacturing price & negotiate this price with Buyer. After negotiate price with buyer we receive order confirmation & L/C from buyer to execute the order.

Chapter -3

(3.0) Fabrcis & Accessories booking

3.1 Fabric booking
After receive order confirmation from buyer we chase buyer to provide us PO sheet (purchase order) which includes color & size wise break down of the total quantity. Then we will go for knit fabrics booking. Yarn is the first element of knit fabric. So to make fabric we have to book suitable yarn from home or abroad. To import yarn from abroad it need approx 44/45 days and to buyer yarn from Bangladesh it need approx 20/30 days. After receive yarn we go for fabrics knitting and then coloring of the fabrics. After dyed fabrics is ready to make garments.

3.2 Trim booking

Page 9 of 17

-9-

Various kinds of trims are used in Basic T-Shirt. To buy or make booking for trim firstly we have to know from buyer what kind of trims they required for their T-Shirt. After collection trimming information from buyer we have to develop the same and need to get approval. Then we will book trim from respective trim manufacturing house. It is very important to buy all the necessary trims before start garment production.

Chapter -4

(4.0) Merchandising activities on Product development

Product development is another important responsibility for RMG merchandisers. Before go to bulk production various stage of sampling has to pass in order to develop a product for end user.

Sequence of Sampling
Counter sample/Style sample/Salesmen sample Fitting sample/ Size set sample Pre-Production. Production Sample. Shipping Sample. Photo/ Advertisement/ Catalog Sample

Steps of Garment Sample Approval

Step-1 Style sample (Closest available fabrics) Step-2 Size Set sample (Closest available fabrics) Step-3 Pre- production sample (In Actual) Step-4 Production sample (In Actual) Page 10 of 17

- 10 -

Fabrics Selection
Approval Fabrics (for hand feel & Approval) Test done from official Testing House 1st Bulk Fabrics in each Color Test report in each color

Lap dip
Each Color Options for Dry Recipe Confirmation with "Spectro Readings" Re- Sub Needed Until Approval.

Swatch
Swatch is a presentation of all the materials is (Fabrics & Accessories) used foe any specific style/order. Usually small piece of fabrics and each piece of accessories are attached in board paper in a systematical manner. Swatch is very important for production line to make the correct construction of a garment and QC departments ensure it. Concerned merchandiser should confirm/approve the swatch.

Trims
Trims cover all the trims used in the garments except the basic fabric. There are hundreds of items used to manufacture the garments, proper selection of trims and its quality are very important for styling, otherwise the garment may be rejected or returned by the customers.

(4.1) Style sample development

The main object to develop style sample is to approve the styling of a product that a designer imagine first. This sample is usually made by available color but actual design, construction and weight. But some time buyer ask sample to make by actual color.

Page 11 of 17

- 11 -

(4.2) Size set sample development

The main object to develop size sample is to confirm the measurement, body fitting etc. This sample is also made by available color but actual construction and weight.

(4.3) Pre production sample development

The main object to develop Pre production sample is to confirm the final product from buyer. After receive pre production sample we can start final/bulk production.

(4.4) Production sample development

The main object to develop Production sample is to confirm altimate buyer that what we produced and ship to sell for end user.

Chapter -5

(5.0) Merchandising activities on production follow up

5.1 Production plan
After receive a purchase order from buyer merchandiser have to sit with production planner to make a production plan. Production plan contain below things: 1) Planned date to start knitting to make the required fabrics. 2) Planned date to start dyeing to color the fabrics. 3) Planned date to start cutting fabrics. 4) Planned date to start sewing the required garments. 5) Planned date to start packing the required garments. 6) Planned date to hand over finished goods to buyer nominated sea or air forwarder.

5.2 Trail/ Test cutting

Before start bulk cutting to adjust pattern we cut each size and each color 10/15 pcs. This is called trail or test cutting. After approved trail or test cutting we can go for bulk cutting.

Page 12 of 17

- 12 -

5.3 Sewing
Sewing section is the section where cutting part are joined to make a garments. In sewing section sewing machines are set up according to the kind of final product.

5.4 Packing
After sewing garments is packed into packing section. Here we put iron on garments, add various kinds of hangtags, polybags and make garments ready to ship to the buyer.

Chapter -6

(6.0) Merchandising activities on Quality control

The main objective of quality control is to ensure that goods are produced to the first customer (Direct Order) and hopefully to the second customer (Recorder/Alter order/ new order) as well. If both customers can be satisfied then the manufacturer products are more likely to continue to be in demand. Satisfactory quality can only be ensured through (from the manufacturer pint of view) Knowing the customers needs. Designing to meet them Faultless construction- manufacture. Certified performance and safety. Clear instruction manuals. Suitable packing. Prompt delivery. Feed back of field experience. Satisfaction quality can be ensured from the customer from the customers point of view by providing: Right Product. Right Quality. Right Time. Undamaged Condition.

How can quality be achieved?

Page 13 of 17

- 13 -

Goods must be designed to meet customers needs and make manufacturing process and maintenance easily. They must be made exactly and consistently to the specified design. Marketing must ensure accurate advertising, trade description with constant feed back for improved design. Total commitment to organized design.

Actual Quality Level (AQL) International Standard for Garments

Batch Size (Units) 26-50 51-90 91-150 151-280 281-500 501-1200 1201-3200 3201-10000 10001-35000 35001150000 150001500000 500000+

AQL Sam ple Size 13 13 13 50 50 80 125 200 315 500 800 1250

- 1.0 Accep t. Defec ts 0 0 0 1 1 2 3 5 7 10 14 21

AQL- 1.5 Sampl Accep e Size t. Defec ts 8 0 8 0 32 1 32 1 50 2 80 3 125 5 200 7 315 10 500 14 800 800 21 21

AQL- 2.5 Sampl Accep e Size t. Defec ts 5 0 20 1 20 1 32 2 50 3 80 5 125 7 200 10 315 14 500 21 500 500 21 21

AQL-4.0 Samp Accept le . Size Defect s 13 1 13 1 20 2 32 3 50 5 80 7 125 10 200 14 315 21 315 21 315 315 21 21

Maximum buyer of the world follows this above chart for inspecting their garments. When garments will be ready for shipment, an inspector should follow the above acceptance level of quality products. It is applicable for all types of garments. So this chart is very important for Quality Control and Quality Inspection of a Garment. Factory will have to follow and work on the basis of this chart. Factory should have to submit their AQL report to the respective buyers before shipment.

Page 14 of 17

- 14 -

6.1 Principles of Quality Management

The main objectives is to prevent errors by early detection and action The need to make the requirement complete and clear at all levels, from this specification of a large system to the individual work construction and terms of reference. The detection error by monitoring both product and the method by which is produced. The prevention of errors at all earliest The total involvement all concerned of the contribution to the final products quality. Establish a total forward and backward control system, allowing flexibility for change.

6.2 Purpose of Quality Control

It is a long standing trading of any organization to offer the customers first quality merchandise. The purpose of this quality control program is to assist manufacturers in meeting the high standards. In addition, companys quality control program can also help the supplier with their operation. Quality control program not only help spot and reject defective items, but more importantly they pinpoint production operations that need special attention, thereby reducing the number of defects in future production. This type quality control provides basis for management decision in the manufacturers plant. For the purpose of this manual, the defect refers to a condition that renders merchandise of second quality and or unacceptable because the defect is one or more of the following: 1. 2. 3. 4. It It It It is conspicuous. will affect the salability of the product. will affect the serviceability of the product. is significantly different from the specification.

It is understood that all performance and legal requirements be following to the letter (that is L/C or any other contact between the buyer & seller) with no division allowed, including requirements of the following: 1. Flammability. 2. Refurbishing (Cleaning). 3. Labeling.

Page 15 of 17

- 15 -

Chapter -7

(7.0) Merchandising activities on goods delivery to buyers destination

7.1 Booking to forwarder
After making final inspection merchandiser received packing list from packing section which contain the list of carton, how many pieces garments in the carton, weight of the carton, number of pieces of garment to be shipped etc. Refer to this information merchandiser make booking to sea or air forwarder.

7.2 Export Documentation

The documents which to be submitted by a C&F agent for export: An exporter should have to submit the following documents to the customs authority of a station: 1. 2. 3. 4. 5. 6. 7. Shipping bill of entry. Export L/C. Packing List. Commercial Invoice. UD/UP. VBF-9A. From to be supplied by the C&F agent. Export Permission form (EXP).

Bill of Landing (B/L)

It is document issued by an eerier (railroad, steamship, or trucking Company) which serves as a receipt for the goods to be delivered to a designed person or to his order. B/L describes the conditions under which the goods are accepted by the career and details The quantity of the goods. Name of vessel Identified marks and numbers Destination

Page 16 of 17

- 16 -

Invoice: Below point are including in the invoice: Name and address of the buyers and the seller. The Date and term of the sale. A description of the goods, The price of the goods and The mode of transportation.

7.3 Payment release After prepared invoice, bill of landing and other required documentation we send it to buyers nominated bank for payment release.

Page 17 of 17

- 17 -