3.5.

MERCHANDISING PRACTICE IN APPAREL INDUSTRY

3.5.1.Definition Of Business Development
Business development is such a process to develop the business by following couple of roles. In
a garments industry business is developing in two ways one is business development with old
customer and the other is business development with a new customer. The development of
business starts from email correspondence. To develop business garments needs to follow or
fulfill buyer requirements by giving creative high quality and cheap rate product.
3.5.2Importance of Business Development:
The importance of business development in garments industry is tremendously required. Such as:
To Detail analysis of export L/C.
To Preparation of a time Schedule for the export L/C.
To Collection/Procurement of fabric And Accessories for the garment to be export L/C.
(Source, quality of items, cost of the items, receiving data of the items, quality and
quantity, inspection of the items, etc.)
To Distribution of responsibilities for the job and duties.
To Production plan.
To Inspection of the produced garments for quality, quantity, packing and other
requirements of the buyer.
To Preparation of Banking and shipment formalities.

3.5.3Procedures of Business Development:

Yet starting a business anywhere is notoriously risky. More than half fail within the first four
years. Significant hurdles, in particular, confront small businesses in inner cities:

It can be hard to attract capital.

Successfully managing a growing business requires a special set of skills that
relatively few people possess.

Businesses in these communities may have a hard time reaching mainstream markets.
Even when businesses get off the ground, they sometimes do not hire many individuals
from the immediate neighborhood, or they may not pay enough to support a family.

Because of the risks, organizations interested in increasing the income and assets of low-income
people sometimes take a different approach, which might be called connecting to mainstream
employment. Here, community groups help residents acquire marketable skills, take advantage

86

of supportive services, and find transportation to jobs. But this approach can encounter
challenges as well. When there are significant barriers to connecting to mainstream employment,
small business development can be an attractive option.
3.5.4Market Analysis
With this exercise, the participants get what may be their first contact with a market research.
They elaborate and apply a questionnaire twice: first, they prepare a questionnaire to be tested by
applying it to their own colleagues in class. The participants tabulate the data gathered and make
their own conclusions on this research. This stage will be processed to give the participants
feedback. Then they will be asked to repeat this procedure, making the necessary adjustments in
order to interview the target group of a specific product. Once again, the data gathered will be
tabulated in order to generate valuable information about the product/market. The trainer
determines the subject of both researches.

3.5.5Business Management Skills

Much of what has been said up to now has dealt with the change process, how to stimulate it and
reinforce it. Not much attention has been given to the technical aspects of business management.
This is because our understanding of these skills is better and we have seen significant steps
made in the development of programmed learning materials that are suitable for entrepreneurs.
Rather than treating business skill development in a dry way situations are structured to combine
activity and learning with a certain amount of fun in order for participants to acquire the skills
needed to analyses their businesses. Hours are spent in planning exercises, costing problems,
information collection, financial analysis, and the preparation of business plans. Most of the
business management training is conducted in a way which simulates the activity of blending
personal motivation and competence with opportunity identification and implementation. When
participants are competent and confident about their own technical expertise in business they are
more able to convince investors, bankers, customers and suppliers, i.e. they are more likely to
succeed upon completion of the course.
3.5.6Procurement of Garment Export Order
The most critical work is the procurement of garment export order. Normally garments export
order is found fro, the potential garment importers called Garment Buyer. Anybody wants to
collect garments export order, Should be able to convince The Buyer. When The Buyer is
convinced about garment production, Garment quality, garment costing and garment delivery
/shipment ability of a garment export order. To convince the buyer it is better if u can visit his/her
office in aboard with your produced some sample garments and company profile. Even it will be
more helpful, If u can invite and arrange the visit of your prospective buyer to your office,
Factory to see production facility, Product quality, So that the buyer gets confidence about your
garments export ability.

86

Without clear confidence among buyer and exporter from both sides may be a risky business
deal. If a garment exporter can continuously deal with only two or three buyer with buyer
Satisfaction, it will be sufficient enough to run garment production and garment export business
smoothly round the year.
3.5.7Execution of Garment Export Order:
After receiving the garment export, without wasting any time. It is essential to prepare a time a
schedule for the jobs to be done for safe execution of the export order. The main jobs for the
execution of an export order as follows:

Detail analysis of export L/C.

Preparation of a time Schedule for the export L/C.
Collection/Procurement of fabric And Accessories for the garment to be export L/C.
(Source, quality of items, cost of the items, receiving data of the items, quality and
quantity, inspection of the items, etc.)
Distribution of responsibilities for the job and duties.
Production plan.
Inspection of the produced garments for quality, quantity, packing and other requirements
of the buyer.
Preparation of Banking and shipment formalities.
Continuous follow-up of progress
Others.

Normally one person called garments merchandiser is engaged and given responsibility for a
particular garment export order L/C.A garment merchandiser should monitor all the jobs related
to execution of an export order. He/She should also maintain continuous liaison with the garment
exporter and garment export order.
Process of garment production quality with required quality level with in schedule time is the
most important and critical job of the garment merchandiser, Hence, through Knowledge is
essential for a garment merchandiser for successful execution of the export order. With the
change of time. Nowadays, Garments quality became very important. To maintain the produced
garments with required quality level. It is essential to start from fiber, yarn, fabric, dyeing,
printing, finishing, garment production, garment inspection and quality control, testing. Garment
washing/dyeing, garment finishing, packing etc .technical affairs. A brief discussion on that
technical area is discussed systematically. To understand the discussion of the subsequent chapter
.Theoretical and practical cooperation of others may be helpful for easy understanding.
3.5.7Negotiation Skills:
One of the most important skills a buyer and a seller must muster is the ability to negotiate. As
most high street fashion selling prices are very competitive. The greatest scope for improving
profit in a product is the reduction of cost price. There are many factors that influence the final

86

cost price of a product including fabric. Garment construction, order volume, lead time, and
delivery terms. These particular issues are discussed in more detail throughout the book.
Negotiation is a process of communication and exchange through which the interested parties
make a series of demands and compromises; it involves the trading of benefits between parties.
The basic principal is to trade what is of low value to you but of greater value of the other party,
thereby reducing the cost of success to you. However the aim of a negotiation should be to
ensure that both parties are happy with the final outcome or agreement .otherwise one or the
other will not continue to participate.
The old scenario of the retailer always winning and supplier always losing result in both parties
effectively losing. Traditionally, the dominant fashion retail groups have seen the availability of
large number of supplies as a means of trading one off against another to achieve a cheaper cost
price consequently many of the suppliers who lost out ceased to do business with those retailers
again. Short-time cost price gains resulted in short term relationships with many suppliers. With
the end result being a large unwieldy and diverse supplier base operating as efficiently as it
should.
3.5.8The Process of Negotiation:
A Successful negotiation outcome does not generally occur through luck. by following a clear
process. The Process reflects the different levels of knowledge of the subject of Negotiation,
Various parties and the way they communicate at various stages in the Negotiation. The
following is an outline of steps essential to effective negotiation.
3.5.9Researching the needs of both parties:
The Greater the knowledge a buyer has of their own and the suppliers requirements. The better
able they are to construct an acceptable solution. The buyer must be clear about both the
department mark-up to be placed on the product cost price and the intended retail selling price so
that she or he can judge the viability of the suppliersproducts. She or He should also have
sufficient product construction knowledge to understand how changes can be made to achieve
better value in the product.
Frequently the supplier will make suggestion to try to bring the cost price closer to the buyer
target. However an experienced buyer can speed up the process by making suggestion which will
be acceptable to her. Lead-time is another lever for negotiation with differing operational issues
for both parties. If the buyer starts the sourcing process early enough she may have enough time
in hand to use ended lead-time as a bargaining tool.
The process of researching needs does not stop once the negotiation is underway as the body
language and facial expression of both parties will signal their reactions of the ongoing
discussion. Successful buyers will listen to and watch suppliers carefully, making judgments
about how to proceed when meeting a supplier. Closed questions can be used to generate specific
responses.

86

3.5.10Preparation:
Effective preparation is also vital to successful communication. The Particular preparation
required will vary according to the nature of meeting. But some factors are always important.
Meeting should begin on time and follow a clear agenda with a realistic amount of time to
accommodate the work. Where there is an existing relationship with a supplier, a file containing
the relevant notes and documentation relating to the orders should be read prior to the meeting
and taken in for reference. Suppliers meeting are usually held in uncluttered or empty rooms or
offices to avoid any distraction from the business of the meeting. It is also usual there to be two
people from buying in the meeting. So that buyer can have an objective view point available
while personally involved in negotiation. It is essential that the buyer also has identified the
maximum and minimum positions that she will accept foe a range of factors including..
1.
Product Price
2.
Order Size
3.
Lead-time
Offer:
Having identified where the respective positions lie between them. The buyer and Supplier Can
make specific proposals to set the boundaries of the negotiation. It is unlikely that many of the
offers initially made will end up being accepted. So both parties allow for some manoeuvre. This
is the opportunity for the buyer to being trading what is of relatively low value for her but of
more value to the supplier.

Discussion:

The likely framework of a final settlement will emerge in the discussion as each side probes the
other and makes suggestions. Answers to suggestions can be revealing. With choice of words and
tone signaling interest of reluctance and should be noted as potential bargaining material. There
will be areas on which one side can move than more then the other and vice versa. It is important
for the buyer to make a note of which ones provide the greatest and least opportunities for
flexibility, for the trade off later on in the negotiation.

3.5.11Counter And Revised Offers:

This is the real bargaining where elements of the order, Such as numbers of Units, product
details, lead-time and so on, are being decided in the context of an overall cost price. The Buyer
should make firm proposals and be cautions of offering concessions unless she is getting one in
return. The final elements that will pull the other entire variable together will be the cost price.
3.5.12Summaries:

86

It is vital to summaries at key stages throughout the negotiation when significant points are
agreed, to avoid losing early gains as to ensure that both parties understand each other. With-so
many potential variables included in the negotiation, small but significant points can be easily
forgotten unless there is a record of agreement throughout. Records will also provide both sides
with an explanation of how the deal was constructed should a particular variable become
contentious at a later date.
3.5.13Agree and Commit:
Once the parties have agreed an order, they have no communicated the details to other functions.
The supplier may need to book production space, order fabric/trimmings and source
labels/tickets. The buyer will need to inform the merchandiser of the retail selling value of the
order so that a track can be kept on spending.

3.5.14Definition Of Outsourcing:
In simple sense of view it means, to source something. But in apparel sense of view it means, the
process of selecting suppliers for manufacturing and delivering products and their components.
3.5.16Importance of outsourcing:
The importance of outsourcing in the apparel industry is beggar description. Successful sourcing
in a fast moving apparel industry requires excellent planning and co-ordination. The importance
are given below:

To complete a garment based on buyer requirements.

To compare different supplier price list.
To review the past export order list & capacity.
To visualize all orders and status of suppliers for availability of information.
Improved communication and coordination with suppliers, to improved 'on time'
delivery performance.
To reduce lead times through improved control.

3.5.17Types Of Outsourcing:
Normally there are two types of outsourcing. Such as:
1. Local outsourcing
2. International outsourcing

86

1. Local outsourcing: When the sourcing comes from local area called local outsourcing.
Which is also two types:
I. Vendor Nominated
II. Buyer Nominated
Vendor Nominated: But if sourcing information is not restricted by buyer than garments needs
to find the supplier to source the materials based on buyer requirements. In that case after
collecting samples of materials he needs to take approved from buyer. If fails to take approved 1 st
time than he needs to recollect that samples from supplier by developing based on buyer
requirements.

Fabric:
When fabric needs to buy garments representative should be approved from buyer. Before
buying raw material some analysis should be done from supplier and their company profile,
past export order, present export order process, capacity and main important part of price and
some data. Before buying fabric garment should judge also couple of things like fabric
characteristics, lab dip sample test.

Yarn:
When yarn needs to buy garments representative should be approved from buyer. Before
buying raw material some analysis also should be done from supplier and collect their
company profile, past export order, present export order process, capacity and main
important part of price and some data. To select the quality full yarn like: 1. Comb yarn 2.
Carded yarn.

Accessories:
When accessories needs to buy garments representative should be approved from buyer.
Before buying accessories some analysis also should be done from supplier and collect their
company profile, past export order, present export order process, capacity and main
important part of price and some data.

Buyer Nominated: If sourcing process restricted by buyer called buyer nominated sourcing. In
that case garments need not recheck or developed or approved his materials from buyer. In this
case, it is buyer who takes the responsibility to develop or approved.
International outsourcing:

To collect different countries export order.

To increase the business of new item with new buyer.

86

To find new export oriented country.

To get some facility from E.U, U.S.A & Canada.

3.5.18Market Analysis:
With this exercise, the participants get what may be their first contact with a market research.
They elaborate and apply a questionnaire twice: first, they prepare a questionnaire to be tested by
applying it to their own colleagues in class. The participants tabulate the data gathered and make
their own conclusions on this research. This stage will be processed to give the participants
feedback. Then they will be asked to repeat this procedure, making the necessary adjustments in
order to interview the target group of a specific product. Once again, the data gathered will be
tabulated in order to generate valuable information about the product/market. The trainer
determines the subject of both researches.
Selection & Compare: After collecting data from varieties supplier then we should select couple
of supplier & compare those supplier. Then we should call for meeting in office to negotiate
successfully.
Price conformation: After completing meeting then both parties agree with win win situation.
The Process of Negotiation:
A Successful negotiation outcome does not generally occur through luck. by following a clear
process. The Process reflects the different levels of knowledge of the subject of Negotiation,
Various parties and the way they communicate at various stages in the Negotiation. The
following is an outline of steps essential to effective negotiation.
Researching the needs of both parties:
The Greater the knowledge a buyer has of their own and the suppliers requirements. The better
able they are to construct an acceptable solution. The buyer must be clear about both the
department mark-up to be placed on the product cost price and the intended retail selling price so
that she or he can judge the viability of the suppliersproducts. She or He should also have
sufficient product construction knowledge to understand how changes can be made to achieve
better value in the product.
Frequently the supplier will make suggestion to try to bring the cost price closer to the buyer
target. However an experienced buyer can speed up the process by making suggestion which will
be acceptable to her. Lead-time is another lever for negotiation with differing operational issues
for both parties. If the buyer starts the sourcing process early enough she may have enough time
in hand to use ended lead-time as a bargaining tool.
The process of researching needs does not stop once the negotiation is underway as the body
language and facial expression of both parties will signal their reactions of the ongoing
discussion. Successful buyers will listen to and watch suppliers carefully, making judgments

86

about how to proceed when meeting a supplier. Closed questions can be used to generate specific
responses.
3.5.19Definition Of Pre-Planning:
It is the procedure followed in developing and designing a work or production of a developing
and installing a proper layout or tools. It may be involved many functions of the organization
and draws upon forecasting, product design, jigs and tool design, machine selection and
estimating to enable proper design to be made. In short, preplanning decides what shall be made
and how it shall be made.
In respective manufacture a large uneconomic output could be produced if preplanning
is omitted. It is also important in one of the operations such as setting up a new plant as
preplanning can identify and avoid probable costly errors.

Definition of Planning:
This stage decides where and when the product shall be made. It includes the sequencing
of operations viz outing and the time schedule for manufacturing viz scheduling. It also states
procedures for material planning and supplies, machine loading and deliveries. To perform as
functions properly it will need past records of performance and to control statistic which may
be obtained from pre-planning, cost control or progress.

Definition of Control:
This refers to the stage of ensuring that the planned action is in tact carried out. Control
initiates the plan at the right time using dispatching and there after control makes appropriate
adjustments through progressing to take care of any unforeseen circumstances
3.5.20Definition of Production Plan:
Production planning means planning how production work against an export order (or an order)
will progress from starting at cutting section to finishing section. Making realistic production
plan is very important because production work must be conducted in such a way that delivery
and shipment of the goods may be effected with in the specified delivery date. So, total
production work must be completed before the date of delivery of shipment.
So a Schedule or a time table must be made for each section in respect of starting and finishing
the related job against a consignment. There should be a general time frame showing dates on
which production will be commence and finish in each section.

86

In making schedule for completion of a work order, a production manger must taken in to
account standard time, production target, learning time, in between process time, lot coefficients
etc. He must have the skills necessary to prepare a production plan or schedules.
Example:
3.5.21The Main Objective Of Production Plan
1. To determine capacity of all manufacturing departments and to plan systematically
coordinated and related production activities within the scope of the enterprise to meet sales
requirements.
2. To translate orders received from sales department into orders on the works department and
to ensure steady plans of production activities.
3. To find ways and means through which product manufacturing requirements such as
materials and their necessary constituents such may be available in right quality and quantity at
the right time.
4. To coordinate a number of different department groups so that a fine balance of activities may
be maintained.
5. To promote fuller utilization of plants.
6. To assist labor towards right and greater earnings.
7. To train staff in the effective performance of their duties
Types of Production Planning:
There are many types of production plan in apparel industry
Daily Production plan
Weekly Production plan
Monthly production plan
Detailed Or Factory Production Plan
Yearly Production plan
Factory Production PlanBased on the order plan of the factory, the factory manager arranges to chalk out a month- wise
production plan. Some production plan may very comprehensive. They show weekly production,
daily production, inspection & shipment dates so that production & delivery of goods may be
effected just on time. So production plans are very important.
Yearly Production Plan:

86

A company generally makes a projection of work that may be available throughout the whole
year. This Projection is made based on previous business experience, preliminary negotiation
with the customer. This projection is necessary to make yearly business forecast
Generally, the basic of production plan is monthly production plan by each product. The monthly
means one month for the next. Usually we do establish the monthly plan two or three month
ahead. This plan is only recognised as schedule one and not confirmed one. The reason why the
monthly plan is popular is that the reports of the result of sale and inventory of products are
generally reported in monthly base. The production plan is not necessary making it by monthly
basis. Sometime, it is making three or two month interval. It depends on the purpose of the plan.
If the purchase plan is not clear for a month and it is clear to envisage three-month interval, then
the plan is made by three months basis.
In case of project, which means establishing production plan with assumption of sales,
modifying original plan is to be a fewer time, if the planning cycle is shorter. Then weekly
production plan is necessary to consider. However, if monthly plan is undertaking well, we do
not need to establish a weekly plan. The duration of the production plan depends on whether we
can produce the products according the original plan without much modification.
When we have discrepancy between sales forecast and production results, we need to correct the
plan in the middle of the month or to make a confirmed weekly plan for the next week.
Establishing a weekly plan is easy thinking about production plan in weekend. However, the
weekly plan is not convenient, when we compare with the monthly plan. Daily production plan is
correct, which can be applied to any interval plan, such as, weekly, monthly, and quarterly.
In any case, the important factors for establishing production plan are planning cycle, duration of
the plan, kind of and unit of the plan. All of these factors are decided according to type of
industry, type of operation, order entry performance, and type of production. We must remember
that production plan indicates us what action is necessary for proper production.
Other important factor to consider about production plan is that the most important persons of
production plan are people working in operation site. People making production plan are
supporting staff for production. It is a tendency that planning staff are apt to consider that they
are main players. Then they are apt to compel to operation site to observe their made original
plan. This idea is very wrong.
The other problem for production plan is modification. The condition of operation is varied
according to operational and market condition. Then planning section staffs are busy to correct
their original plan to be fit for the actual working condition. Once they have corrected the plan,
then they request operation site to observe the modified plan. The operation site people should
observe the production plan. However, if they must receive modified plan so frequently, they are
fed up to receive the modification. This problem is caused by planning staff. They recognise that
they are directing operation. This idea is also wrong; the main actor for production is people
working in operation site. Planning staffs should correct all relevant information and analysis the
reason of present discrepancy against original plan, through dialogue with staff and workers in
operation site. Planning staff should consider that they must serve their work to all people
working in operation site.
3.5.22Procedure of production Plan

86

When an order has received, we must check the stock of products. If we have the stock, we can
deliver it to the customer. If we do not have a stock or stock level shows below standard, we
need to direct to produce the product. The manager should give instruction for production. This
procedure is carried out in a case of big component. However, parts consist of the component
usually produced a few months ago before assemble work of the component. Accordingly,
usually instruction of production is made by demand forecast or sales plan, which was made by
sales department or agents of the enterprise. For sales plan, we must remember that generally,
sales plan is far from actual sales. People in sales department are apt to make their sales plan
optimistically. It is often happened that their forecast in their sales plan is not correct, thus makes
result obliging a modification of production plan. Therefore, stock plan of parts indicates much
accurate forecast. As such, parts stock plan represents in substance as production plan.
In case of producing spare parts, which is carrying out by stock production with forecast of
orders from market, the numbering system is adopted. The parts with being put on number are
placed by order or are issued production order according to where the parts are to be produced.
Once, the production instruction comes to the production line, the line manager or supervisor
delivers the instruction to all concerned people for production in the working place.
Production:
Production System
Machine lay-out
Apparel Production System
Finishing room Management
3.5.23Production System:
Production system is the design process by which elements are transformed into useful products.
Examples of Production systemThere are different types of goods required by people and society. One type in the consumer
goods, such as, rice, wheat, tea, bread, pulse, clothings shoes, etc. They have a continuous
demand and are continuously required. A bread factory may make a survey as to the demand of
bread in a certain locality and start production of bread in that area based on potential market of
bread that the survey discovered. This is an example of production based on forecasting.
There may be another example. A mechanical workshop has the potential to produce different
types of mechanical spears. There is a railway head quarter in the vicinity and it has demand for
spears from the railway office. In such case, the workshop may start production of nuts for the
railway. Such production may be called order-based production.
The other option is that the bakery may launch production of different types of bread, biscuits
and candy in limited quantity, because, its survey may have indicated that the people in the area
have diverse taste and they have a tendency to purchase different types of bakery and biscuits.
Thus it appears that a factory may produce one or limited types of products on large scale or a
variety of products in limited scale. Thus a company may start production of goods based on
survey of market and forecasting or based on order receive from some vendors or customers.

86

Individual Production systemThis system dictates small quantity of production of a large range of products. As an example, a
workshop may produce a variety of products like nuts, bolts, screws, shafts, gears, etc but each
item in a limited quantity. A bakery may start production of bread in a limited or an individual
scale in manual method of production to cater to the needs of a small number of customers.
Lot production systemIn this system products are produced in medium quantity in a medium range of items. This
system may use universal as well as semi-automatic type of machines to cater to the needs of
production. Lot production systems are found to use electro-mechanical type of traditional
machines.
Continuous or mass scale production systemIn this system, one or a limited range of products are produced on mass scale. For example, a
workshop may engage its machinery for production of screw or nut& bolts only. In such system
specialized& special purpose machinery are generally used. A bakery may use automatic bread
making production line, which can produce only half-pound & one-pound bread only.
Objective of Fabric Cutting1. To separate the parts of garments from the lays of fabric which are laid as per dimension
of the marker.
2. To get the accurate shape of the components of a garment.
3. To make the garments parts ready for sewing.
Work sequence or flow in a cutting room1.
2.
3.
4.
5.
6.
7.
8.

Design pattern of all parts of garments.

Grade pattern of other sizes.
Make marker for the best cutting efficiency.
Spread fabric on the cutting table.
Make a right lay.
Make an economic cut order plan.
Cut fabric as per lay plan & waste control.
Number cut parts & bundle the

3.5.25Project Planning And Preplanning:

Before starting every project its planning is done.

Planning a project is a very important

task and should be taken up with great care as the efficiency of the whole project largely depends
upon its planning. While planning a project each and every detail should be worked out in
anticipation and should be considered carefully considering all the relevant provisions in
advance. Project planning consists of the following important steps.

86

Market Survey :

Market survey in a broad sense, is a commercial survey for the suitability of business it
provides necessary statistics helpful for forecasting planning project.

Project Capacity :

Capacity of the project must be decided considering the amount of money which can be invested
for particular type of product and how the money which can be invested for a particular type of
product and how the money can be arranged.

While deciding the capacity of the project,

following factors must be considered.

i) Demand of the product in the market.
ii) Quantity of power, water, land and raw material available.
iii) Nature of product.
iv) Investment capacity.

Selection of Site :

While selecting the site, technical, commercial and financial aspects should thoroughly be
considered. Site should be selected in two states; in first stage general location for factory
should be selected in this location. Important factors to be considered for the selection of site.
i)

General

location

of

the

factory.

ii) Selection of exact site.

Plant Layout :

One of the most important aspects of production system design is layout of facilities primary
object of these is to optimize the arrangements 4 ms and supporting services.
Design and Drawing:
After deciding the product its detailed drawing are prepared so that no doubt is left for future.
Detailed specifications for raw materials and finished product should be decided carefully along
with the specification of the machines required for their manufacture.

Material requirement :

The list of materials required for manufacture is prepared from the engineering drawings.
This list is known as Bill of materials part list.

Operation Planning:

Work of this is to select the best method of manufacturing, so that the wastage of material,
labor, machine and time can be eliminated, to have more production with less fatigue. This
work is done in two phases, namely. Method study is conducted to eliminate the wastage due to
ill directed and inefficient motions. Time study is the exact estimation of time and is very essential
for correct pricing.

86

Machine loading :

Number of machines to be installed in a plant should be decided very carefully while planning,
proper care should be taken to find out the machining time for each operation as correct as
possible, so that arrangement for full utilization of machines can be made and machines
loading program is prepared accordingly.

Sub-contract consideration :

With the development of technology and specialization, it is difficult to manufacture all the
components in the same factory, due to fact that specialized machines plants and workers.
The decision about particular item, whether to purchase or to manufacture, is taken by planning
department after making a through study of the relative merits and demerits.

Equipment Requirement:

After knowing the number of equipments, their accessories and tools required, cost data can be
collected to give and idea of capital requirement.

Organizational Layout and staff Requirement:

Layout of organization is decided by considering the nature of work, type of industry size of
industry, etc and in line of above the stalls are appointed.

Material Handling:

The material handling problems must be studied before the erection of the factory building and
plant layout.

Budgeting :

Budgeting is forecasting and preplanning for a particular future period using past experience
and market trends.
3.5.26Principles Of Japanese Production Management
Japanese management is shop floor-oriented management. Specifically, it has eight underlying
principles. They are as follows:
Customer oriented
The management of Japanese companies believes that customers are royalty, and keeps in mind
that companies serve customers. In that sense, the company's objective is to provide their
products and services for customers. The idea of "product out" no longer exists. With the
information age, the idea of "market in" is the key for companies to survive.

Top management commitment

86

Work improvement through various activities such as TQC, JIT and any new working system
developed in Japan require total participation by all management and employees in the company.
Top management cannot leave the activity to his/her subordinates. Management should take the
initiative in leading the activity. Emotional commitment by top management is the key for the
success of any kind of activity requiring total participation.
Total approach
Considering the above, any activities for work improvement require total participation. If there is
a problem, it must be analysed from all angles by all people concerned with the problem.
Thinking about the situation by all concerned personnel is another key for successful work
improvement.

Shop floor (work front) oriented

Japanese management thinks that the shop floors themselves are the source of work
improvement. All management in Japanese companies believe that the shop floor is a rich source
for work improvement. They understand that profit can be created only from shop floors and not
from their own offices. Who know the shop floor best? Are they the directors or engineers? No,
they only know shop floors superficially. The best persons to know the shop floors in depth are
the people working there. They are the key personnel to solve the problems found in the
workplace. We must remember that shop floors are the ideal places to accomplish work
improvement.
Ideal targets
For work improvement, setting a target is crucial. We are apt to seek a breakthrough in work
improvement. However, if the target is a very ambitious one, it will be difficult to reach this goal.
We need to set our target to be more readily achieved. In that sense, the president of the company
should give his/her ideal target to his/her direct subordinates, normally directors, expressing the
target in a broad sense. In responding to top management's target, all directors set their own
targets and show them to their subordinates, normally managers, by expressing also these targets
broadly, but including some figures. In responding to the directors' targets, all managers should
make their own targets using figures concerning their own work. This procedure of setting
targets continues until all supervisors set their own targets with detailed figures of their work, so
that the target set by the president should be clarified thoroughly in all areas. Each target should
be readily achieved. We should not seek a miraculous breakthrough. We should remember that
achieving modest work improvement would bring a remarkable tangible result for management
improvement. We should keep in our mind that, Today is better than yesterday and tomorrow will
be better than today.

PDCA cycle
For successful work improvement and good maintenance to continue the result of this work
improvement, we need to follow work improvement techniques systematically. In that sense, the
PDCA cycle is useful. The cycle was invented by Dr. W. E. Deming, and is called the Deming
cycle, a positive for management. Therefore, it is also called a management cycle. The cycle

86

consists of four stages: (1) plan, (2) do, (3) check, and (4) action. When we wish to have work
improvement, we should set a plan concerning how to solve the problem for this work
improvement. Then we need to carry out the plan as a countermeasure for work improvement.
Once we have started to carry out the plan, we should check to see whether the countermeasure
is effective for work improvement or not. If the result is satisfactory, then we adopt the
countermeasure as a formal work standard. To solve the problems perfectly, we need to set
permanent countermeasures. Japanese companies rotate the PDCA cycle every day at every
workplace. This is the basic process for work improvement.

Making use of simple tools

Since any work improvement requires total participation by all employees in the company, all
employees should understand the basic idea of work improvement. This is why we need a work
improvement project. Once employees understand the philosophy of work improvement, they
can implement work improvement by themselves. To carry out a work improvement project, they
need to use statistical methods. The methods should be simple and easy to apply to the actual
work. The Japanese invented seven QC tools, which are easily understood and can be applied for
practical work improvement. These seven simple QC tools can solve more than 95% of the
problems that exist in workplaces. They are so simple and easy that everybody can use them for
their work, thus achieving remarkable results. In that sense, simple is both beautiful and
powerful.
Human aspects
One of the characteristics of Japanese management is human oriented management. Japanese top
management believes that human resources are the most important asset for the company. They
believe that if they have enough capital, they can buy any number of sophisticated machines but
not human resources. Human resource development requires very patient application. We must
consume much time and money to develop human resources. Nevertheless, the key for
successful work improvement depends entirely on the capability of all employees in the
company. In that sense, the human aspect is the most important element for work improvement.
The Broad Job Description & Flexible Assignment
The Broad Job Description & Flexible Assignment is probably the most essential factor of
Japanese working practices. Therefore, it is not surprising, that most Japanese companies
operating overseas persist in the introduction of this idea as a basic of their operation. Without
the basic of Broad Job Description, Japanese companies simply cannot operate efficiently and
effectively.
With the Western concept of management, the basic unit of an organisation is a job, which in turn
involves several tasks. A job is evidently defined in the form of job description and it should not
overlap other jobs. The job then requires a person who can perform it satisfactorily and it
determines how much a person should be paid. The job defines what is to be done and what must
not be done.

86

The theoretical job distribution within a unit or a division under the Western concept can be
illustrated as "A" in Fig. 1-3 in the next page. The actual coverage of the assigned jobs, however,
may leave some responsibility gap as shown in "B," mainly because job requirements do not
necessarily match the capabilities of the jobholders.
In Japanese companies, the concept of a job is different. First, a job description is not as clear-cut
as with the Western concept, although each job specifies individual responsibility. Second, a job
in Japanese companies includes both relatively narrow individual responsibility and considerably
broad common responsibility as is illustrated in "C" of Fig 1-3.
A

THEORETICAL JOB ASSIGNMENT

WITH THE WESTERN CONCEPT

ACTUAL COVERAGE OF
ASSIGNED JOB
WITH THE WESTERN CONCEPT

INDIVIDUAL RESPONSIBILITY

RESPONSIBILITY GAP

JOB ASSIGNMENT
WITH THE JAPANESE CONCEPT

INDIVIDUAL RESPONSIBILITY
COMMON RESPONSIBILITY

DIFFERENCES IN JOB ASSIGNMENT

An idea behind this loose job description in Japanese companies is the Japanese perception of the
relationship between jobs and employees. In the Western companies, jobs determine the types of
personnel they need, then the company recruits a suitable person, while Japanese companies
normally recruit without specific assignments. This means that recruited employees do not know
exactly what jobs they will get. When they join the company, they take it for granted that they
will be transferred between jobs when the need arises. In other words, Japanese companies fit
jobs and organisation with existing personnel in these companies. In the Western companies,
jobs come first and people come second, but in Japanese companies, people come first and jobs
come second.
In addition, Japanese companies consider that the overall performance of a unit or a division is
better if people (employees) work as a group having both individual and common duties rather
than working as individuals with specific assignments. The Japanese organisations operate on the
assumption that employees are not necessarily matched to the jobs they perform. Instead,
competent and experienced employees have to support their colleagues, who are less competent
and experienced, in order to achieve the group's goal.
As a result, there is no clear border between jobs, over which people cannot cross. On the
contrary, management encourages employees to cover as much responsibility as possible, thus
resulting in improved productivity through practices of group work. Under such conditions, the
assessment of work results for each employee is as follows. When an employee's job consists of

86

both specified core duties and unspecified common duties, the employee can or has to do these
duties. Whatever can be achieved within working hours is regarded as his or her job, regardless
of core or common duties.
This has an important implication for job enlargement and enrichment. It is, however, not easy to
undertake job enlargement in the Western countries. If a company tries to set up job enlargement,
it often meets resistance from employees and requests for an increase in pay, because a new
assignment is added to a clear-cut job description, while an additional assignment does not make
much difference for Japanese employees as long as the whole assignment can be achieved within
eight hours.
Another distinct difference observed in an organisation resulting from these different perceptions
of a job is that Japanese companies tend to have fewer types of jobs compared with Western
companies where more types of jobs are required due to a high level of specialisation. This
difference is important to understand Japanese management. Japanese companies do not need
much coordination of their performance. Fewer types of jobs require less coordination to get
work done while a large number of highly specialised jobs need a high level of coordination,
sometimes difficult to attain.

2-2-3 Teamwork
Broad job description and flexible job assignment within organisations automatically requires
powerful teamwork among the members to carry out the tasks assigned to a unit. When a group
task is divided into individual jobs without overlapping among them as in the Western
organisations, individual employees are solely responsible for accomplishing their tasks and
there is little room for cooperative work. On the other hand, in Japanese companies a group task
is divided into individual duties as well as common duties where group efforts are required.
The Japanese way of working together is almost an instinct and part of Japanese culture that can
be traced back to a feudalistic agricultural society. Japan was originally an agricultural country.
Rice has a long history as the main product of agriculture in Japan. Rice had its origin in semitropical areas. Growing rice in a tropical area is easy, and it does not need any effort to produce
good results. Growing rice in Japan, however, is not easy because most parts of Japan are located
in temperate zones and some areas are located even in sub-arctic zones in the northern
hemisphere. It is too cold to grow rice under natural conditions without great care.
Growing rice in Japan demands that farmers set a very critical time schedule from sowing rice
seeds in the nursery, then planting, weeding, supplying water without interruption, protecting
against insects' attacks, and harvesting before typhoons rage in the rice fields. If this sequence
were delayed for a few days in the feudal age, the harvest for the year would be affected, a fact
that might lead to starvation. To keep the rice growing on schedule, Japanese farmers understood
that teamwork was crucial. Accordingly, for the Japanese, from ancient times, the co-operate
efforts to complete tasks within a short period have been the basic attitude for survival. Taking
into account this Japanese heritage, the direct transfer of the Japanese way of thinking may not
be either possible or appropriate for Western countries.
However, this does not mean teamwork cannot be transferred to Armenia. In Armenia, the
Western way of working together on a team exists in sporting activities. For instance, let us think
about an example from the game of football. It is easy to understand what benefits we have from
teamwork. Football is played by a team of 11 players. To win a game, we need to use good
teamwork. Each player has a position, such as goalkeeper, forward, and defence, which can be
86

regarded as core duties assigned to each player. What is important during the game is that they
do not stick to their core duties and they are flexible enough to move into other areas of the field
and play additional roles according to the progress of the game. Each player is aware of this need
and trained to do so whenever necessary. A similar sense and attitudes in carrying out jobs as a
team is definitely needed to make for a successful broad job description and flexible job
assignment in the working process.
Initiative and Creativeness
With a broad job description, individual employees can expand their coverage by their own
initiative since there is no clear demarcation among the group members and initiative is strongly
encouraged. The encouragement of initiatives from individual employees is based on the idea
that every employee has great potential and these potentials can be realised by showing initiative.
To show initiative, creativeness is needed from employees. Even when an employee is willing to
show his initiative and perform more duties or perform duties better, he may not be able to do so
unless he improves work methods or work systems since he normally has sufficient duties
originally. Creativeness discussed here is not a great invention, but something that can be a
minor improvement. The accumulation of these minor improvements by every individual counts
in a business operation.
Both initiative and creativeness is representative of positive work attitudes by employees. In
order to encourage employees to show initiative and be more creative, organisations need to
create an atmosphere and environment where employees feel like doing this. For example, can
leaders and organisations allow mistakes and errors, which sometimes occur because of initiative
and creativeness?
Whether employees show their initiative in improving their method of working, and performance
or they just do whatever they are told, to do may appear to be a minor difference in itself;
however, it has a great bearing on the corporate culture, which in turn greatly influences the total
performance of the company.
Information Sharing
Successful information sharing is important for good teamwork. Group members help each other
effectively only when they have necessary information about the activities of the group and other
group members. Because the industrial countries are entering an information-oriented society,
the Western countries seem to show interest and concern for the sharing of business information
within their organisation.
For good information sharing, superiors in workplaces have a great responsibility to keep all
employees well informed. They have to organise regular meetings, however brief they may be, in
which they should inform employees about policies and decisions made by the management to
their members. When a meeting is held, they should also discuss any present issues, as progress
of the group achievement and problems discovered, with subordinates. He or she also needs to
create an atmosphere in which open communication is encouraged and maintained within the
group.
Visual displays are also important to allow good information sharing in workplaces. We see
many displays hanging on the walls or dangling from the top of the building. All these displays
should be easy to read. When we see the displays, we can understand what is important for the
present operation or how the factory is operating as compared with their original action plan.
Attentiveness and Alertness

86

Attentiveness is a mental attitude, which cares about others. Company operation is the joint
effort of various departments, divisions, sections, and individual employees. When every group
member shares both individual and common responsibilities, completing individual
responsibility alone is not sufficient.
Attentiveness has to be practiced to enable other group members and associated employees and
sections to perform efficiently and effectively. For instance, a production operator can and should
do his job in a manner, which will help operators in the next process accomplish better work.
The following worker's attitude stems from attentiveness. In the factor of automobiles assembly,
a worker is engaging in making parts for cars. He reminds himself that he must produce the right
amount of good quality of parts, now when the workers in the next process really need them. He
also keeps in mind that he places his products where it is most convenient for the workers in the
next process. This example shows an origin of the KANBAN system, which was not born
without an attitude of attentiveness and alertness on the part of the workers.
The managements seeks for increase productivity, as a result, they force workers to produce
maximum amount of products. This idea should be eradicated and the management should
consider they should produce products with enough amount of market. In other words, system of
production should be changed from pushing products to pulling out products. This idea is
important to keep good process control for production. The management should declare the
maximum amount of products in each day. They when the workers completed the production
with this amount, then the production of the day are completed. The workers should not product
more amount of products.
Attentiveness too is directed, not only to group members and other sections in the company, but
also to customers. Paying sufficient attention to customers is a basic positive work attitude in any
business. This is why attentiveness is linked to "Basic." To be attentive, we have to be always
alert in learning what we find necessary to do. Again, minor examples of attentiveness and
alertness count in improving a company's operation if they become part of every employee's
daily work. For better quality work, attentiveness and alertness are essential. We must enhance
this way of thinking in employees to create an atmosphere in which employees are encouraged to
generate and maintain attentiveness and alertness.
Work Ethics
Good Japanese management requires every employee to have a strong sense of self-discipline.
The discipline in companies starts from observing the company's regulations, in particular
"punctuality." Punctuality is the basis of all disciplines since most business activities are
measured by time, including production, sales, service, etc. As the saying goes, time is money in
business.
Another aspect of work ethics is a sense of responsibility among employees, which may be onestep higher than mere work discipline. Do you try to finish your current work, even after working
hours? Do you try to catch up with your colleagues, even with overtime, if your delay causes
delay for the group work? Each aspect produces rather similar results in work goals. However, it
makes a great difference whether all the employees share a strong sense of responsibility or they
just do not care.
Each action involved in both Basics and Work Ethics, is a simple detail or a single action, and it
is certainly does not make an enormous difference for the company's overall performance.
Nevertheless, Japanese companies attend to these details with much zest, believing that the
accumulation of these details puts a company on top, well above the competition.

86

 Mutual Trust
Mutual trust can and should be established slowly but steadily by showing trustworthiness in
daily actions. Management has to treat labour unions as partners by regularly consulting unions
on matters, which affect the well-being of union members, and sharing information on the
company's operational performance. Managers have to display their commitment to work before
they require the same of their subordinates.

Long term view

Japanese industries are often complimented on the fact that they normally have a longer-term
view than their western counterparts, which are after short-term profits. This may refer to the
willingness of Japanese companies to invest massively in automation as well as research and
development activities, which at least for a short while, often has a negative impact on financial
performance.
One possible reason is that the Japanese industries are characterised by manufacturing which
necessarily requires a certain time to establish production facilities, improve and stabilise quality
and earn profits -- all quite different when compared with service-oriented operations. Another
reason may be that Japanese industries are based on the closed labour market and their growth
and expansion can only be achieved by growth of employees, a type of progress, which is
extremely time-consuming.
3.5.27.Orientation Towards Workplace, Quality, Details And People
In an earlier section of lesson 2, we examined Japanese management from its fundamental
characteristics, which in turn form the basis of Japanese working practices. In concluding
Japanese management characteristics, it may be appropriate to point out that the companies
necessarily share a strong orientation towards workplace, quality, details, and people when they
successfully introduce the essential characteristics mentioned above. They are the same
characteristics for Japanese management. Let us look at it from a different angle.
Orientation towards quality
A majority of the successful Japanese companies have recognised in the process of improving
quality and improving their performance, that quality is the real key to success. Improving
quality will result in accurate delivery and eventually lead to lower costs, the essence of basic
improvement in business. They have almost been obsessed by quality improvement and their
total effort has been directed towards this goal.
Orientation towards workplace
The quality of products and services is produced in workplaces or shop floors; in other words,
the level of quality is determined in the operation process. This implies that the companies,
which are concerned about quality improvement, have to pay utmost attention to the
improvement of operations, i.e. the workshop.

86

 Orientation towards details

The surest way to improve operations is to accumulate the improvement of minor details rather
than relying on possible large breakthroughs. This is why successful Japanese companies do not
fail to acknowledge the importance of minor improvements, the accumulation of which will lead
to a great difference in the long term.
Orientation towards people
In the business organisation, there are things, which the system can better take care of and there
are others. This can only be handled by employees. Improved quality requires a change in
employees' minds that they are all responsible for higher quality. Details of operation, which
often escape the system, can be well-taken care of by attentive and alert employees. Japanese
management definitely requires conscious efforts by all employees.
3.5.28.Real Meaning Of Productivity Improvement
We human beings are very conservative. We do not want to change our present circumstance,
even if we understand that we should change certain things or rules. The industrial revolution
brought many changes for society. As production increased, the social system changed.
Improvement of the transportation system is an example of change resulting from the industrial
revolution. Before the revolution, the most common long distance vehicle was the sailing ship.
Because of the increasing cargo of manufactured products, steamships took the place of sailing
ships. At that time, if we insisted on sailing ships, we might fail in our business. For the survival
of our business, we need to see how things are going to change and be aware of these changes
almost by intuition, and then change our working system to fit contemporary conditions.
Considering productivity, coping with market economy
We are now entering an information-oriented society from our previous industrial society. To
cope with such a change, what is the most important element to consider? Is it information
technology? Surely, this technology is important, and information technology is developing
rapidly. However, we should not thinks about that is the most important element, even if it is
very significant. The most important element is human beings. As technology is developed by
human beings, not by machines or computers, information itself is of deep concern to the
concept of human beings. If we do not have any interest in a particular issue, information about
this issue will disappear shortly and not remain information.
We can create a healthy and prosperous society through productivity improvement. This fact is of
universal application whatever the society is. With the information-oriented society, productivity
is still the key element for an affluent society. As we learned, enhancing proper understanding
about productivity is important for our progress. In our modern age, the information-oriented era,
human beings have within themselves the power for productivity improvement. In that sense, if
we wish to maintain good management in this information-oriented society, we must first think
in terms of human beings for productivity improvement.
Productivity, at present in Armenia, seems to be recognised as having two different meanings.
One is that it contributes to increase a company's profit, and the other is connected to hard work.

86

Because entrepreneurs expect to increase their own profit by increasing productivity, and, on the
other hand, workers are opposed to having any extra hard work without incentives, we cannot
expect any productivity improvement Armenia left from Soviet Union and became independent
country. At the same time, system of economy had been changed from socialism to market
economy. Under market economy, customers are the most precious element of management.
Without customers, we cannot manage enterprise. We need to understand the difference of
socialism and market economy from the following formula.
PRICE = COST + PROFIT Formula 1
PROFIT = PRICE COST . Formula 2
Under socialism economy, Armenian people might be accustomed to consider that price could be
determined by the governmental authority including cost and profit. Under such condition, what
management must do for their management was to submit a well-written planning paper of new
production to the governmental authority to obtain approval of new products. Under such
circumstance, once they could obtain the approval for production from the government authority,
they could produce products without considering customers request. This idea shows the
formula 1 above. Price can be set with cost and profit.
Under market economy, the above idea cannot be obtained consent from customers, which
means new products cannot sell well even though the management have written marvellous wellwritten planning paper for the new product. For obtaining profit, we need to consider a suitable
price for the product. Then we need to consider reducing cost of production. In order to reduce
cost of production, productivity improvement is indispensable.
History of the productivity movement
When the Japan Productivity Centre, (JPC) was established in 1955 as a core institution to
enhance the productivity movement nation-wide, circumstances in Japan were very similar to
those described above. Many Japanese believe that during the transitional period of entering an
information- oriented society, JPC had and has a large role in the success of Japanese economics.
Accordingly, from the point of modern management, it is worth learning the real meaning of
productivity.
JPC is an institution for promoting the productivity movement in Japan. Its board members
consist of representatives from three areas: management group, labour unions, and academic
circles. After JPC declared its intention of promoting productivity, they disclosed "Three Guiding
Principals of Productivity. The idea was received diversely. Workers recognised it
was a bad excuse for hard work, while management understood it was a good excuse to increase
their profits. However, both perceptions were far different from the real meaning of productivity
improvement.
We have learned already about gain sharing in productivity improvement. However, from the
point of view of modern management, let us consider it again. We usually understand that
productivity is the relationship between input of materials and output of products. This idea is
an extremely narrow technical definition of productivity. Think about this technical aspect,
productivity can be measured quantitatively by size, length, and numbers of units or in amount
of monetary unit produced (dram, dollar, or yen). We call this idea physical productivity and
value productivity.

86

We quote this from a report of the Rome Conference "On the Purpose and Program of the
Productivity Movement" organised by the European Productivity Association. "Productivity is
above all, an attitude of mind that seeks the improvement or continuous betterment of what
exists. It is a conviction that one can do better today than one did yesterday. Further, it is the
constant adaptation of our economic activities to changing conditions, and constant efforts to
apply new techniques and methods. It is a firm belief, in human progress."
Basic meaning of production
1-1 Essential function of factory
The following are an explanation of the essential function in factory. To understand the
function easily, let us think about the comparison with water supplying system is attached.
Factory in which material is converted into goods
(1) Natural Water Water purification plant Tap Water
(2) Raw material Factory, Mill or Plant Products or Goods
(3) Input raw material Control system for production Output (Products)
(4) Converting process (Production: Value added)
(5) Control system for conversion (Productive management)
The above explanation emphasises the following three points, those that are essential of
operation in factory. These guiding principles are as follows.
(1) Input, raw materials are converted into output as final products through converting process
(factory), which is a course of system by combining machines and equipments such as
machines, devices, apparatus, and instruments.
(2) Converting process requires a control system in which all facilities for conversion are
running normally.
(3) Converting activities require a control system in which all converted materials are processed
into final products.
In conclusion, the factory is a kind of theatre in which a producer (actor) handles (play)
converting process (drama). We need to remember the converting work is value up process of
raw material. Therefore, converting raw material into products means that factory is doing valueadded activity.

Basic Function of factory

Factory is a place, in which a profit control is undertaken. Production control is a
technique to keep a good balance between producers and customers. In business world, they are
confronted each other as buyer and seller. Usually, as customer, buyer requests various matters.
To comply with customers demand, management in the enterprise requires producing their
quality products within a limited cost of production, which is not exceeding the selling price in
general. Quality and cost are the two important factors for good production management. The
management also observe the delivery time of the products. Once customers have placed an
order, they are expecting to receive the ordered good as soon as possible. In responding the
customers order, the enterprise should deliver the product without any delay. Therefore,
delivering goods on time is also important factor for good production management.
As we have learned, production control is a kind of adjustment vehicle to eliminate conflict of

86

interest between buyers and sellers and then making satisfaction both customers and produces. In
fact, the factory is the place where adjustment of advantages is undertaken. In order to avoid any
misunderstanding, we must understand clearly that the factory management does not request
equal responsibility for both producers and consumers. Suppose both sides are happy, the
enterprise can manage its operation satisfactory.
Structure of factory
If you visit a factory, you may feel that the factory seems to have no particular system at a
glance. However, the factory is actually controlled by production control system properly. Both
those who have never visited factory before as well as those who have been working in a factory
for a long time, will receive the same impression on their first factory visit. For example:
The factory is dark and noisy
Location of machines seems to be in distorted
Goods in process are piled up
Operators work have hard working
Forklifts are running busy
We have such impressions always when we visit a factory at first time. It is however, impossible
to understand the factory, even if we gather such impression as many as possible. In fact, the
more enterprise visit gives us the more vague impressions for the factory operation. As we visit
the more number of factories, we have more confusion for the factory operation. The reason why
we have such confusion is that we do not analysis systematically of our impression for the
factory. As we list our impression at random, this gives us such impression in general that the
factory is like a jungle, where we cannot see far distance. The factory is far different from a
jungle. There is no maze or labyrinth in the factory. If it was the same as a jungle, raw materials
brought into the factory, could not be converted into final products according to schedule. On the
contrary, a factory runs in a systematic manner. Under such conditions, raw materials will not be
buried in a wrong place and unexpected products will not appear.
For that reason, we cannot shout, the factory is the same as a jungle. The factory is arranged by
using production control systems. Any operation, even if it seems to be running without any
order, it is carried out by systematic control. Otherwise, the factory cannot deliver suitable
products for sale into the market. Any factories whether it is big scale enterprise or a cottage
industry, they run their management according to the procedure we have learned from the case
study; PT. Slamet rattan. We need to learn again about the business procedure what Mr. Slamet
received an order and made a chair. This procedure is the basic of production management.
Reviewing the total output manufacturing factories, we can see that a few big enterprises can
produce more than half of the National output of industrial products. This tendency is seen in any
developed country like Japan. However, it is important to note that small enterprises contribute
to the national economy by supporting big enterprises as subcontractors. This relationship is very
important for a systematic industrial development. Fostering supporting industry is the key of
industrial development in any countries.
In Japan, big enterprises like Toyota, Matsushita, Sony, Panasonic, Bridgestone are well
known. They have their management in overseas business with very helpful support of various
types of subcontractor. These subcontractors are referred to as supporting industries. Without cooperation from supporting industries, Japanese big enterprises could never have success stories.
The role of small and medium sized industry is very important in every country. Developing a

86

healthy small and medium size industry (SME) in this nation is your responsibility, as young
engineer. For the prosperity of the nation, promoting manufacturing industries especially in the
area of supporting industry is much important than developing the tertiary (third) industry.
Because, the tertiary industries like service industry or the distribution industry, they can only
exist in a healthy economic condition, which is maintained by the second (manufacturing)
industry. Taking into account the above-mentioned fact, we can understand that the industrial
production is one of the most important key of our human life. In that sense, production
management is important.
As young engineers should remember that, the second industry including agro-industry is the
essential vehicle for economic success in this nation. We should contribute these areas since
many sophisticated electronic instruments are utilised in this field. On the other hand, once the
second industry has settled in a stable condition, the tertiary industry can be developed. In this
field, telecommunication will display an important role, as we have entered into the information
age.
Three vital points in studying factory
If we compare a factory with a symphony orchestra, a building of the factory building is like a
music hall. This equipped with machines with systematic arrangement, which can be compared
with representing instruments in the music hall. The workers in the factory are like players of
orchestra. Thus, a music hall consists of a building, instruments, and players, which are
recognised as hardware, but symphony itself is an integrated use of music and the orchestra. The
following are three vital points to understanding a factory
(1) Final products
Depending on its main final product, a factory has different building and machines. We can
see the difference between cement factories and sawmills. We can examine the property of
factory to determine its management purpose of the factory.
(2) Facilities and their layout
The factory consists of various machines and facilities. Layout means arranging of
machines and facilities for effective production. In case of an orchestra, instruments are
located with regard to sound effect, whereas in the factory, the location of machines is
arranged to minimise the distance of transportation of production in process. We should
remember that transportation of production could not make any profit but only generate the
cost of production. The activity of value added is only carried out inside the machines.
(3) Operator skill and work attitude
A good factory should have skilful employees whose work attitudes are positive. Through
their rhythmical working manner, we can identify an active factory. The of workers' moral
can be identified by their attitudes which is very important factor in evaluating the factory.
In conclusion, for easy understanding of a factory visiting, we should study at the final products,
product variety and quality, facilities and their layout as well as maintenance condition and
workers' moral and skill.
Apart from these vital points in studying a factory, for the evaluating of a factory, we must also
study correlation between output and number of workers and newly introduced machines, since
we are apt to be overwhelmed by big production and new sophisticated machines. Even persons
who have a rich experience in factory assessment with a good understanding of new machines,
sometimes they have difficulties of understanding financial and engineering issues. In that sense,

86

engineers, who wish to be good management staff, should learn the basic knowledge of
administrative matters of the enterprise, including financing, accounting, and industrial relations.

Plant management (Plant engineering)

Plant management is a part of the management in the enterprise, especially in an area of plant
works. As we have learned the outline of plant management, this lesson will look at the contents
of plant management in much depth.
Purpose of plant management
The following five (5) items are the list of the functions of PE; Plant Engineering Code set in
1959 by AIPE (American Institute of Plant Engineers). Functions of Plant engineering as defined
by AIPE
(1)
Plant layout and design
(2)
Construction and installation
(3)
Maintenance, repairs and replacement
(4)
Operation of utilities
(5)
Plant protection
Some people regard that Plant Management only indicates Plant Maintenance Management. This
interpretation is too limited. The Plant Management should be a synonym for P.E or P.E
Management in the U.S. Strictly speaking; Plant Engineering Management should be called as
Plant Management.
A human being has two natures, which acquired before and after birth. In other words, human
being is equipped with these natures, which will decide our ability and character. The same as
our human beings, plant equipped with two natures, before the plant was born and after. To make
full use of equipment in order to improve the enterprise's productivity, it is essential that we do
not merely have a practice of Plant Management after the equipment was born. Rather, we need
to have a more over-all method for our practice of Plant Management, such as PE used in the
United States, which considers both before and after birth of operation. It is important to have
this over-all view of plant management,
Budget planning for maintenance cost
To estimate the cost of maintenance based up on the past result and to adjust the over estimated
cost with reviewing the yearly production plan. The budget is estimate and calculates the
following procedure.

Process item
A
A1

Action to be taken
Material cost

Remarks
Adjustment
index

86

with

price

A2
A total
B
C

Wage cost including payment to sub- ---Ditto--contractors if any

Cost for A1+A2
Sub-total 1
Fund of cost for long period plant shut Sub-total 2
down for maintenance
Purchasing cost for consumable goods; Sub-total 3
this can be calculated as follows;
Estimate yearly-required quantity as per
each item, then multiple unit price
(adjustment with a price index) for each
item respectively.
We can calculate purchasing cost of
consumable goods.
Required quantity is calculated by life
of each consumable goods (days) and
divided by yearly working days.
Maintenance cost for big machines Sub-total 4
recovery work and normal repair cost

Total maintenance cost = Sub total cost 1+2+3+4

The general manager of the factory will authorise the budget of maintenance cost through
maintenance manager.

2-4-2 Maintenance control

For good maintenance work, the following procedure is effective to keep a good maintenance.
(1) Planning of maintenance working schedule
(A) List up the yearly periodical repair works: Calculate the budget of the work by adjusting
the cost according to consumers price index. Make working schedule for repair based
on the past actual results.
(B) Recheck and adjust the schedule to avoid imbalance of work and try to adjust the
volume of the works as much flat as possible. Then make monthly work schedule for
repair.
(C) Authorise the above schedule together with budget plan. The divisional manager
authorizes it with consent by director in charge. The decision will transmit to all
operators concern through the head of maintenance section.
(2) Inventory control for maintenance work
(A) Spare parts: Manufacture necessary machinery parts for repair the big machines. It is
necessary to estimate the timing of delivery to minimise the cost of spare parts.
(B) Standard parts:
(B-1) The inventory of parts for repair should be kept with reasonable level. The items
of these parts are included as follows; Common use bearing, drive chain, Vshape belt, oil seal and coupling. These spare parts, which are consumed
constantly, should be checked.

86

(B-2) Parts require long time for delivery should place an order with enough periods
until the repair work starts.
(B-3) Ordinary parts, which are available to purchase any time immediately, should set
a standard minimum quantity of inventory. Check the minimum. If the
minimum line exceeds to low level and then the order will take place.
(C) Articles of consumption:
Normally, if the factory is located in industrial area, most of the articles of consumption are easy
to buy. Those items are steel wire, sand paper, adhesive agent, waste cloth for cleaning
the machines. Do not keep a stock of these articles as inventory, and place an order
whenever it is necessary. This measure is resulted much low cost maintenance.
(D) Replacement parts:
(D-1)
Store the necessary quantity of parts. The quantity is set by the yearly working
plan.
(D-2) Kinds of stocking parts are as follows: Control by production section (Daily consumable parts) Wire cloth and cloth for machine
cleaning, felt, canvas, and carrier rope. Control by maintenance section (Periodical
changing parts)
Conveyor-belt, kiln brick doctor blade, drive chain, conveyor chain, and special type of
bearing for particular machine. Strict inventory control gives us a remarkable result of
good maintenance work, together with reducing maintenance cost and improving
productivity of maintenance work. Because of good inventory control, operators
concerning maintenance work can understand the quantity of stock and they do
understand where the spare parts are stocking. Thus, lead them to take necessary stock
within a few minutes from the warehouse to the site, where the parts are necessary to
exchange.
How to keep the good maintenance work
The maintenance is to keep systems, devices, and equipment in good order and adjustment so
that they can perform their function fully and completely at any time required. It is necessary to
achieve these objectives most efficiently. What we say efficiently means to achieve the
objectives at a cost as low as possible, In other words, we should improve productivity, The
purpose of the maintenance of machines, equipments it to keep the function of plant work well at
a reasonable maintenance const with adjusting the capability of the equipment to meet the
production purpose. Therefore, maintenance engineering must attend on fully lives on
machineries as following five (5) items.
(1) Plan layout and design
(2) Construction and installation
(3) Maintenance, repairs and replacement
(4) Operation of utilities
(5) Plant protection
The more detail explanation on these five items will appear in the lesson of maintenance in this
text.
Relation between maintenance and production is as following illustration shown as follows:Maintenance section

86

Staff Field Maintenance

Every body participate maintenance work
Success
Contractor

Success
of
Maintenance

Production
Section

However, the idea above-mentioned is wrong, anyone working in the factory is concern in plant
maintenance. Since the work efficiency, is closely connected with productivity improvement, an
idea of integrating plant maintenance into plant operation or vis--vis become popular in the
enterprise. The idea has been recently fostered and it becomes in popular among engineers, those
who are working engineering part in the plant. The productivity maintenance was born in
accordance with such original idea. We must remember that good efficient work is closely
connected with good maintenance. Therefore, it emphasis on greatly that keeping an efficient
working condition through good maintenance is the key of productivity improvement. Every
body should work for good maintenance in the plant. In that sense, plant engineers including
electronic engineers should have knowledge of accountant that is the source of information
regarding the factory operation. We can only achieve good management of productive
maintenance if we establish a well-arranged productive maintenance plan with focusing on
economical efficiency about factory operate.
Plant management 2
We have learned the basic of plant management. Now, we will learn the plant management much
in depth in this lesson. We must remember that it is indispensable to learn plant management in
depth, as trainers of the production management in Armenia, if they wish to be a good trainer for
production management.
Importance of plant engineering
In the past, maintenance work existed as independent section for keeping facilities as good
condition. This work is, needless to say, important. However, the role of maintenance becomes
much complicated in the modern industry. Then the maintenance becomes a management skill as
plant engineering. Let us look at the plant engineering precisely in this section.

86

 Plant engineering scheme

From the chart shown on the above, we can learn the relations between economical and technical
phase. For good plant engineering, engineers in charge of maintenance should establish the most
economical maintenance plan and undertake it. Frequent check of the cost of the maintenance as
compare with the budget is one of the most important task for managerial engineers.
The process of Introducing PM in the enterprise
Upon introducing productive maintenance, the engineers should understand its historical
background as well as its significance. They should know the usefulness of productive
engineering together with the actual procedure what they should do for better productive
maintenance effectively. This process is important to make clear the preparatory action to be
taken by the top management in order to introduce the action of productive maintenance as a
company-wide activity.
When introducing PM management, it is necessary to offer appropriate programmes of
orientation to all the staff involved in productive maintenance in the enterprise. These
management staffs and employee include from the president, directors in charge of engineering
at head office, clerical staff, and operators (workers) in the factory. Neither progress of PM nor
improvement in productivity can be expected, if some of the workers, who are carrying out the
maintenance work, cannot understand the importance of the plant engineering. The engineers
should understand that the plant engineering should do their job having in their mind that they
are undertaking company-wide activity. In that sense, the engineer should teach any workers who
are working without understanding proper meaning of maintenance work. The engineer should
understand that maintenance work is undertaken by a limited number of operators (workers). The
operators understanding is one of the keys of successful implementation of plant engineering.
If quality control develops into TQC (Total Quality Control), PM is to be a subject for everybody
in the enterprise as TQC means the company-wide activity. Accordingly, anyone in the enterprise
can suggest his /her idea for the actual operation, including maintenance work. In other words,
on the introduction of "Productive Maintenance" (PM), all people from top management,
directors to operators (workers) should learn the concepts of productive maintenance as well as
philosophy of PM in order to let then thoroughly understand what is PM.
3.5.29Concept Of Maintenance
From the word of maintenance, we feel it looks like a steady and monotonous work and play as
supporting role in factory. This work does not include any production. In that sense, the
maintenance is never become a main actor in factory. However, their role is important; the
maintenance has a key of success of factory operation. Japanese economic success owes much to
the maintenance work. In other words, the good maintenance brought the economic success to
Japan.
The real objectives of maintenance
The maintenance is to keep system, devices, and equipments in good order and adjustment so
that they can perform their functions fully and completely to respond any request at any time for
the operation. It is necessary to achieve this objective most efficiently. What we say "efficiently"
means to achieve these objectives at a reasonable cost. In other words, the purpose of the
equipment maintenance is to keep the function in good shape at a reasonably low cost adjusting

86

the capability of the equipment to meet the production purposes.

To keep the equipment
available of full
function at any rime
required

Target should be
highest possible

Objective of PM =
Lowest maintenance costMeasures should be taken with
minimum cost

(2)

CM (Corrective maintenance).1957S
With a view of improving the reliability, the need for maintenance, safety features of the
equipment and any defective parts of the existing equipments should be modified or
remodelled (change in materials, forms, etc,) under a certain plan and in the most aggressive
manner, so that the deterioration or break-down of the equipment can be minimised. The
ideal will be of making the equipment, which is no need for maintenance. This way of
approach is called as corrective maintenance.
(4) BM (Break-down Maintenance)1958/9s
When an equipment or device becomes to show a lowering of its function or comes to stop
its functions (stoppage in operation due to breakdown) then repairs or replacement will have
to be made. This sort of post-maintenance should be applied for an equipment or device,
which can be renovated or replacement at a lower cost. This measure is much economical
rather than to make preventive maintenance. The old style of post-maintenance was carried
out without seeking the cost of maintenance and under no exact plan or in an easygoing way.
Breakdown maintenance mentioned under this paragraph entirely differs from the old style
post-maintenance.

Types of plant maintenance

Facilities in the plant have their own life cycle, starting from investigation as boring,
grow up to make, to install and to run them for operation and finally to scrap as death.
Therefore, maintenance activity in factory is to be called as integrates activities of engineering
and management concerning in all aspect of plant, facilities from designing the maintenance. The
following table shows, what type of plant maintenance are required from the point of work
improvement in the area of reliability, maintenance ability and economic engineering. Plant
system for life cycle of the equipment shows the following table.

86

Life cycle
1st stage:
Establishing concept of
system and determining
the specification of the
equipment.
2nd stage:
Design and development
of system of the
equipment
3rd stage:
Manufacturing and installation of the equipment
4th stage:
Actual use for operation
Maintenance

Method of system

Whole life of the equipment

Analysis of system
(Programming of plant
investment)

Investigation
Study
Design

Engineering for system

(construction)

Manufacturing
Installation
Operation

Management system
(Operation)

Maintenance
Disposal

4-3-1 Identification and difference of MP, PM and CM

The idea of the new technique of maintenance stems from that maintenance was no longer
existed as maintenance work only. Rather the maintenance work was deeply concern in the
management of the enterprise. To increase work efficiency of machines, to minimize the machine
break down, to decrease the maintenance cost, all of these activities are closely connected
increase productivity for the enterprise. To understand these concepts well, the following table
shows the significance of each maintenance method.

MP
Maintenance
prevention
Invented at
1960
Starting
its Upon planning
activity
and installing
facilities
Objective:
Selecting
of
Improvement
facilities:

PM
CM
Productive
Corrective
maintenance
maintenance
1954
1957
In operation of Upon analyzing
facilities
causes of troubles
Eliminating of Improving
The result of
operational
facilities in order the activity:

86

reliability

Objective:
Improvement
of
maintainability

Low
High
Reliability
MP
(Maintenance
prevention)

to
lessen Reliability
deterioration
of engineering
equipments and was established
extend the life of
facilities,
equipments and
machines

Preventive
maintenance,
planned
engineering
work

Improving
facilities in order
to
simplify
procedures needed
for
daily
maintenance,
inspection,
and
repair.

Total
c

Low
High
Extent
of
Maintenance
PM
(Preventive
maintenance)

Total
a
c
Cost

mistakes and
mishandlings
Daily
maintenance to
prevent
deterioration;
Lubrication,
Cleaning,
Adjustment,
and
Replacement

Cost

Total
a
c

Cost

Improvement in
view
of
economic work
efficiency
(Improvement
in economy)

Encouragement
of tests and
acceptance of
inspections in
order to reduce
the troubles, to
attain
minimum
operational
mistake and to
prevent
deterioration of
the facilities
Selection
of
facilities
to
make
easy
repair can be
done,
easily,
effectively,
rapid
and
minimum cost

Extent
of
Improvement
CM
(Corrective
maintenance)

TPM (Total productive maintenance)

a: Maintenance Cost
b: Equipment manufacturing cost

86

The result of
the activities:
Maintainability
engineering

Engineering
with economic
mind
(Engineering
economy)

c: Loss by Deterioration
d: Cost for improvemen
3.5.30Management Of Job Repair
The poor productivity caused by equipment is called as loss. Repair jobs are important to recover
the loss. However, a cost is required for repair job. The balance between such cost and an
advantage factor to improve productivity should always be considered in advance. Any
equipment will get to be deteriorated as far as it is used for production and finally, it will have to
be stopped. Any equipment, which cannot be operated, should be repaired as soon as possible.
However, it should be studied how much cost it will be to repair the equipment and we should
check whether the equipment could be repaired before the final breakdown. If we find out that
prior repair is necessary, accomplished it by setting a maintenance-working standard.
Any repair jobs beyond allowable repair cost is, needless to say, not economical. It is
important to find out the right time of repairing equipment so that we can keep our maintenance
cost as low as possible.
Hence, the following procedure is important.
(1) Confirming that equipments have reached its limit of repairing
(2) Forecasting the time, when equipment will reach its limit of repairing
The forecasting mentioned above are based on the degree of deterioration, which can be
examined through measurement of wear and tear of various parts of equipment. In other words,
forecasting is made based on the record indicated on the history records of the machine. Careful
attention should be directed to daily and periodical inspection lists. The criteria of responsibility
of small scale repairing are to be given to operation work field, in which operators will repair
machines, if they can do it within their ability. If the operators fail to repair machines, because
the work is beyond their ability, they will request the repair to the maintenance section by issuing
a job order request to undertake the repair job. To classify the repair job into two categories are
very important. If we establish such rules, People who are working at operation field will use
machines carefully in order to make avoid any kinds of damages. Thus, result to decrease
number of repair jobs for maintenance. We must consider the following fact, which can be seen
in many working shop floors in factory. The fact is that people working in operation site
recognise repair workers as poor repair men because they have too many small-scale machine
stoppages. On the other hand, maintenance people recognise operators as people of breaking
machine all the time. Under such situation, any cooperation for work improvement cannot be
promoted. We must avoid such condition. To solve the problem, best measure is to set rotation
between operators and repairmen from time to time. Through this measure, both sides of workers
can understand the other side people and the mind of respect each other can be generated.
3.5.31Banking And Shipping Procedure In A Garment Industry:
After negotiate each other about price than both parties go to follow couple of banking and
shipping procedure to make ensure for both merchandise for buyer and money for garments. The
gradual banking and shipping procedure are given below:

86

 Banking Procedure:

Master L/C from Buyer

Document
Submission to
Bank

Procurement BB L/C to
Supplier

Payment

Shipping

Production Monitoring to
Supplier

Finishing

In time Delivery to Factory

Sewing

All approved from Buyer

Cutting

Opening Master L/C:

In that case at first buyer go to his nominated bank to open a master L/C based on order
which both parties selected in their negotiation.
Opening BB L/C:
In that case based on buyer Master L/C garments representative go for opening BB L/C
against master L/C towards his supplier.
After completing sending BB L/C here both parties that is between supplier and garments
representative start their process by following couple of papers work which are given below:
1. commercial Invoice
2. Packing List
3. PI given by supplier
These are the key documents are transferred between each other to make this effective and
proved. After following this rules supplier goes for fulfilling buyer requirements.

86

In that case garments representative go for monitoring each matter which are doing by his
nominated supplier as well as ton get confirmation to take those delivery on time.
After that garments go for doing all his required jobs based on his buyer wish like cutting,
sewing, finishing and shipping.
Documents submission to Bank:
After completing those regular jobs up to shipping buyer send garments some confirmation
documents which are required to collect his money. Then garments representative submit
those required documents towards his nominated bank.

Payment:

After checking all the relevant documents bank are become ready to pay garments required
money.
Based on above steps banking procedure are completing between buyer and supplier.
3.5.32shipping Procedure:
Shipping is a part of Operations Management (OM) is systematic design, direction and control of
process that transform inputs into service and product for internal and external customers. Our
garments sector is running without proper practice of Shipping Procedures. Management of
garments industry is not clearly aware of Shipping Procedures. But, proper practice of Shipping
Procedures can reduce the cost to ensure sustainable growth of the company.
TQM of shipping is defined as an integrated approach of management by which quality services
can be ensured to the customers. Shipping companies are service oriented and satisfaction of
customers by providing excellent services is the prerequisite of shipping business. Shipping
Procedure is required for ensuring customers satisfaction started from exporter door ended to
importer door and cost reduction from suppliers as well as buyers account.
Objectives:
Clear understanding of Shipping Procedures like documentations, operations, communications,
negotiations and marketing of shipping and its modern tools techniques required for garments,
export and import companies so that participants can use in their working place to ensure
sustainable smooth growth of the company.
Process:
When shipping a product overseas, the exporter must be aware of packing, labeling,
documentation, and insurance requirements. It is important that exporters ensure that the
merchandise is:
Packed correctly so that it arrives in good condition;
Labeled correctly to ensure that the goods are handled properly and arrive on time at the
right place;

86

Documented correctly to meet U.S. and foreign government requirements, as well as

proper collection standards; and
Insured against damage, loss, pilferage and delay.

Most exporters rely on an international freight forwarder to perform these services because of the
multitude of considerations involved in physically exporting goods.
3.5.33.Shipping To Bangladesh:
Directory of international shipping and moving companies that provide low cost shipping and
moving to Bangladesh. Use our directory to find the lowest shipping cost to: Chittagong,
Dhaka, Khulna, Sylhet, Sylhet!
Find Shipping Companies:
Careful services from international shipping companies from all over the world offered. Just
specify your interested destination and find local shipping company for the most convenient
shipping and moving worldwide
Shipping to Bangladesh
We guarantee that companies listed in our International Container Shipping Directory provide
safe and timely shipment for your goods in containers and meet
For more individual shipment you can opt personal container services and for more safe
movement you may opt sealed container services. Please make use of our International Container
Shipping Directory to find the Container Shipping company in Bangladesh that best meets your
specific needs.
Haque and son co.Ltd
Company's History
Haque & Sons Ltd. is the largest Crew Management & Shipping Company in Bangladesh
established in the year 1948. Over the past four decades it has risen to become a leading force in
its field by adhering to an unequivocal commitment to quality, reliability, efficient management
and cost effective solutions. We are respected for our pioneering efforts in the promotion and
implementation of safety of life at sea and customer satisfaction.
Our Background
Haque & Sons Ltd. was founded in Chittagong, Bangladesh by the Late Al-Haj Abdul Haque
Chowdhury originally established as an Independent Construction, Oil mill & Shipping Business
but has evolved into a powerful and dynamic organization providing crew management and
shipping related services worldwide. Our international client base boasts the most renowned
companies from the shipping sector based in Hong Kong, Japan, Singapore, Greece, Norway,
United Kingdom, and India among others.
It's Chairman and Managing Director Mr. E.H. Chowdhury, son of the late Al-Haj Abdul Haque
Chowdhury, has been managing the affairs of the company since 1967 and has well over 30 years
of valuable experience in the shipping industry. Mr. Chowdhury has single handedly turned the

86

company into the premier crew management and shipping company in Bangladesh at present
handling over sixty vessels of various types including:

Types Of Vessels Under Our Management

Containers
Chemical Tankers, (Type I & II)
Crude Oil Tankers
Bulk carriers, ( Capsize, Panamex, Handy Max)
General Cargo
Pure Car carriers
Log Carriers

3.5.34an Uparalleled Management System

Our exceptional management and Quality system has been designed to fulfill all of the
requirements of the major companies and national and international bodies and is custom tailored
to cover all crew management and shipping related functions with a goal to achieve:

Safe ship operation and protection of the environment

Unparalleled crew performance through superior in-house training
Uninterrupted ship operations and zero losses
Client satisfaction through open and trusted communication and understanding their
needs and protecting their assets

Our head office is based at Chittagong with two regional operating units respectively in Dhaka &
Khulna Bangladesh. We also have regional representative office in Japan, Canada, Myanmar and
Pakistan as well as mutual agreements with various local agents in North America to act on our
behalf for our North American activities.
Haque & Sons Ltd is dedicated to satisfying needs of customers by providing high quality
services achieved through a team of experienced seafarers and their highly proficient shore based
counterparts. Our shore-based staff consists of ex-seafarers (Masters, Chief Engineers, and Radio
Officers) and experienced managers who have extensive knowledge and perceptive of the
international shipping market.
40' M.G.S.S. Hi-Cube Refrigerated Container
Exterior
Length
Width
40'-0"
8'-0"
12.192 m
2.438 m

Height
9'-6"
2.896
m

Interior

86

Length
37'-11 55/64"
11.585 m

Width
7'-6
15/32"
2.290 m

Height
8'-4
5/32"
2.544
m

Nominal
Cubic Capacity
2,384 cu.ft.
67.5 cu.m.
Cooling capacity
Air exchange rate
w(kcal)/C(F)
CFM
cu.m/hr
11,000(9,460)/1.7(35)
0-106
0-180
6,280(5,400)/-18(0)
10,550(9,073)/2(35)
0-142
0-240
6,150(5,289)/-18(0)

Weight
MGW
74,960 lb
34,000 kg
Type
MHI
CPE16-2BAIIIEV
CARRIER
69NT40-551-501

TARE
10,490 lb
4,760 kg
Temp.
control precision
+-0.25C
+-0.25C

Sourcing Fabric and Accessories

With an access to vast variety of Apparel and Textiles and Accessories, Primal i SOURCING
ensures that the products you import are sourced from reliable companies and are of excellent
quality. The Company has its extensive network and expertise in sourcing from all over the Asia.
As buying agents our expertise help our buyers get excellent quality products in an amazingly
short span of time. We offer you the privilege of choosing from an unbelievable range of latest
and original products, which are made available to the buyers at the most competitive prices to
suit their specific needs. Apart from this, our experienced and competent staff with PRIMAL i
organizes prompt delivery of consignment

86

Quality And Compliance:

Textile professionals with lengthy experience, lead each team thorough organized quality
processes with strict controls at every stage. From raw materials and sampling to bulk production
and packaging. Any potential issues are identified well before shipment by use of risk analysis,
pre-production meetings, pilot runs & wearer trials. Our dedicated teams take corrective action
plan. Quarry batch of fabric is tested before cutting (including stability, colour and light fastness,
pilling, composition, colour matching etc) vigorous garment, accessories & embellishment
testing including any customer specific tests. Testing methods conform to ISO, BSEN, and
AATCC
Each factory is comprehensively evaluated to ensure social compliance product safety policy &
metal control, all goods are tunnel metal detected before packing
We at PRIMAL I believe in maintaining systems and control Measures from yarn weaving fabric
stages in accordance to AQL 2.5 system to deliver flawless garments. Our quality assurance
personnel stationed at all manufacturing sites ensure that all production units are geared to run on
AQL 2.5, thereby eliminating the last minute rejection factor giving you value for your money
Supply on Time:

Time and action plan, a professional well managed and proactive T&A calendar is kept up to
date for each order and style, updating and evaluating those plans endures the foresight of any
potential problems as well as allowance for solutions before any issue becomes unmanageable.

86

Customers receive continuous updates and information.

Primal I dedicated logistics, finance and shipping teams ensure correct and prompt
documentation and that the customer receives documentation on time for speedy clearing,
processing etc. the shipping team ensures locating the quickest and most reliable vassal
connection.
Time is money .As we always know our ability in full, so before taking any order we clearly
state about time that it may take. We're glad to assure you that we have a very good reputation
about time. Customers that place large orders must give us 90 days, from purchase order to
dispatch of order to customer. This insures that the customer gets a quality product that it is on
time

3.5.36Freight Forwarders
An international freight forwarder is an agent for the exporter in moving cargo to an overseas
destination. These agents are familiar with the import rules and regulations of foreign countries,
the export regulations of the U.S. government, the methods of shipping, and the documents
related to foreign trade. Export freight forwarders are licensed by the International Air Transport
Association (IATA) to handle air freight and the Federal Maritime Commission to handle ocean
freight.
Freight forwarders assist exporters in preparing price quotations by advising on freight costs,
port charges, consular fees, costs of special documentation, insurance costs, and their handling
fees. They recommend the packing methods that will protect the merchandise during transit or
can arrange to have the merchandise packed at the port or containerized. If the exporter prefers,
freight forwarders can reserve the necessary space on a vessel, aircraft, train, or truck. The cost
for their services is a legitimate export cost that should be included in the price charged to the
customer.
Once the order is ready for shipment, freight forwarders should be review all documents to
ensure that everything is in order. This is of particular importance with letter of credit payment
terms. They may also prepare the bill of lading and any special required documentation. After
shipment, they can route the documents to the seller, the buyer, or to a paying bank. Freight
forwarders can also make arrangements with customs brokers overseas to ensure that the goods
comply with customs export documentation regulations. A customs broker is an individual or
company that is licensed to transact customs business on behalf of others. Customs business is
limited to those activities involving transactions related to the entry and admissibility of
merchandise; its classification and valuation; the payment of duties, taxes, or other charges
assessed or collected; or the refund, rebate, or drawback thereof.

Packing

86

Exporters should be aware of the demands that international shipping puts on packaged goods.
Exporters should jeep four potential problems in mind when designing an export shipping crate:
breakage, moisture, pilferage and excess weight.
Generally, cargo is carried in containers, but sometimes it is still shipped as break-bulk cargo.
Besides the normal handling encountered in domestic transportation, a break-bulk shipment
transported by ocean freight may be loaded aboard vessels in a net or by a sling, conveyor, or
chute, that puts an added strain on the package. During the voyage, goods may be stacked on top
of or come into violent contact with other goods. Overseas, handling facilities may be less
sophisticated than in the United States and the cargo could be dragged, pushed, rolled, or
dropped during unloading, while moving through customs, or in transit to the final destination.
Moisture is a constant concern because condensation may develop in the hold of a ship even if it
is equipped with air conditioning and a dehumidifier. Another aspect of this problem is that cargo
may also be unloaded in precipitation, or the foreign port may not have covered storage facilities.
Theft and pilferage are added risks.
Buyers are often familiar with the port systems overseas, so they will often specify packaging
requirements. If the buyer does not specify this, be sure the goods are prepared using these
guidelines:

Pack in strong containers, adequately sealed and filled when possible.

To provide proper bracing in the container, regardless of size, make sure the weight is
evenly distributed.
Goods should be palletized and when possible containerized.
Packages and packing filler should be made of moisture-resistant material.
To avoid pilferage, avoid writing contents or brand names on packages. Other safeguards
include using straps, seals, and shrink wrapping.
Observe any product-specific hazardous materials packing requirements.

One popular method of shipment is to use containers obtained from carriers or private leasing
companies. These containers vary in size, material, and construction and accommodate most
cargo, but they are best suited for standard package sizes and shapes. Also, refrigerated and
liquid bulk containers are usually readily available. Some containers are no more than semi-truck
trailers lifted off their wheels, placed on a vessel at the port of export and then transferred to
another set of wheels at the port of import.
Normally, air shipments require less heavy packing than ocean shipments, though they should
still be adequately protected, especially if they are highly preferable. In many instances, standard
domestic packing is acceptable, especially if the product is durable and there is no concern for
display packaging. In other instances, high-test (at least 250 pounds per square inch) cardboard
or tri-wall construction boxes are more than adequate.
Finally, because transportation costs are determined by volume and weight, specially reinforced
and lightweight packing materials have been developed for exporting. Packing goods to
minimize volume and weight while reinforcing them may save money, as well as ensure that the

86

goods are properly packed. It is recommended that a professional firm be hired to pack the
products if the supplier is not equipped to do so. This service is usually provided at a moderate
cost.

Labeling
Specific marking and labeling is used on export shipping cartons and containers to:

Meet shipping regulations;

Ensure proper handling;
Conceal the identity of the contents;
Help receivers identify shipments; and
Insure compliance with environmental and safety standards.

The overseas buyer usually specifies which export marks should appear on the cargo for easy
identification by receivers. Products can require many markings for shipment. For example,
exporters need to put the following markings on cartons to be shipped:

Shipper's mark;
Country of origin (U.S.A.);
Weight marking (in pounds and in kilograms);
Number of packages and size of cases (in inches and centimeters);
Handling marks (international pictorial symbols);
Cautionary markings, such as "This Side Up" or "Use No Hooks" (in English and in the
language of the country of destination);
Port of entry;
Labels for hazardous materials (universal symbols adapted by the International Airi
Transport Association and the International Maritime Organization); and;
Ingredients (if applicable, also included in the language of the destination country).

Packages should be clearly marked to prevent misunderstandings and delays in shipping. Letters
are generally stenciled onto packages and containers in waterproof ink. Markings should appear
on three faces of the container, preferably on the top and on the two ends or the two sides. Ant
old markings must be completely removed from previously used packaging.
In addition to the port marks, the customer identification code, and an indication of origin, the
marks should include the package number, gross and net weights, and dimensions. If more than
one package is being shipped, the total number of packages in the shipment should be included

86

in the markings. The exporter should also add any special handling instructions. It is a good idea
to repeat these instructions in the language of the country of destination. And use standard
international shipping and handling symbols.
Customs regulations regarding freight labeling are strictly enforced. For example, many
countries require that the country of origin be clearly labeled on each imported package. Most
freight forwarders and export packing specialists can supply the necessary information regarding
specific regulations.

3.5.37Documentation
Exporters should seriously consider having the freight forwarder handle the formidable amount
of documentation that exporting requires as forwarders are specialists in this process. The
following documents are commonly used in exporting; but which of them are necessary in a
particular transaction depends on the requirements of the U.S. government and the government
of the importing country.

Air freight shipments are handled by air waybills, which can never be made in negotiable
form
A bill of lading is a contract between the owner of the goods and the carrier (as with
domestic shipments). For vessels, there are two types: a straight bill of lading which is
nonnegotiable and a negotiable or shipper's order bill of lading. The latter can be bought,
sold, or traded while the goods are in transit. The customer usually needs an original as
proof of ownership to take possession.

It is a major document if the goods are dispatched by sea.

The document represents:
1. A formal receipt for the goods
2. The evidence of the contact of the title to the goods.
A bill of lading may include the following details:

A description of the goods in general terms not inconsistent with that in the letter of
credit.
Identifying marks and numbers, if any
the name of the carrying vessel
evidence that the goods have been loaded on board
the ports of shipment and discharge
the names of shipper, consignee and name and address of the notifies party, if any
whether freight has been paid in advance or is payable at destination
the number of original bills of lading used
the date of issue

86

the departure date of carrying vessel or aircraft

Commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often
used by governments to determine the true value of goods when assessing customs duties.
Governments that use the commercial invoice to control imports will often specify its form,
content, and number of copies, language to be used, and other characteristics.

A consular invoice is a document that is required in some countries. It describes the

shipment of goods and shows information such as the consignor, consignee, and value of
the shipment. Certified by the consular official of the foreign country stationed here, it is
used by the country's customs officials to verify the value, quantity, and nature of the
shipment.
A certificate of origin is a document that is required in certain nations. It is a signed
statement as to the origin of the export item. Certificate of origin are usually signed
through a semiofficial organization, such as a local chamber of commerce. A certificate
may still be required even if the commercial invoice contains the information
A NAFTA certificate of origin is required for products traded among the NAFTA
countries (Canada, the United States, and Mexico).
Inspection certification is required by some purchasers and countries in order to attest to
the specifications of the goods shipped. This is usually performed by a third party and
often obtained from independent testing organizations.
A dock receipt and a warehouse receipt are used to transfer accountability when the
export item is moved by the domestic carrier to the port of embarkation and left with the
ship line for export.
A destination control statement appears on the commercial invoice, and ocean or air
waybill of lading to notify the carrier and all foreign parties that the item can be exported
only to certain destinations.
A Shipper's Export Declaration (SED) is used to control exports and act as a source
document for official U.S. export statistics. SEDs must be prepared for shipments
through the U.S. Postal Service when the shipment is valued over $500. SEDs are
required for shipments not using the U.S. Postal Service when the value of the
commodities, classified under any single Schedule B number, is over $2,500. SEDs must
be prepared, regardless of value, for all shipments requiring an export license or destined
for countries restricted by the Export Administration Regulations. SEDs are prepared by
the exporter or the exporter's agent and delivered to the exporting carrier (for example,
the post office, airline, or vessel line). The exporting carrier will present the required
number of copies to the U.S. Customs Service at the port of export. Often, the SED is
prepared as a by-product of another document, the Shipper's Letter of Instructions.
An export license is a government document that authorizes the export of specific goods
in specific quantities to a particular destination. This document may be required for most
or all exports to some countries or for other countries only under special circumstances.
An export packing list considerably more detailed and informative than a standard
domestic packing list. It an itemizes the material in each individual package and indicates
the type of package, such as a box, crate, drum, or carton. It also shows the individual
net, legal, tare, and gross weights and measurements for each package (in both U.S. and
metric systems). Package markings should be shown along with the shipper's and buyer's

86

references. The list is used by the shipper or forwarding agent to determine the total
shipment weight and volume and whether the correct cargo is being shipped. In addition,
U.S. and foreign customs officials may use the list to check the cargo
An insurance certificate is used to assure the consignee that insurance will cover the
loss of or damage to the cargo during transit.

Documentation must be precise because slight discrepancies or omissions may prevent

merchandise from being exported, result in nonpayment, or even result in the seizure of the
exporter's goods by U.S. or foreign government customs. Collection documents are subject to
precise time limits and may not be honored by a bank if the time has expired. Most
documentation is routine for freight forwarders and customs brokers, but the exporter is
ultimately responsible for the accuracy of its documents.
The number and kind of documents the exporter must deal with varies depending on the
destination of the shipment. Because each country has different import regulations, the exporter
must be careful to provide all proper documentation. The following sources also provide
information pertaining to foreign import restrictions:

Export Assistance Centers

The Trade Information Center (1-800-USA-TRADE).
Foreign government embassies and consulates in the United States.

Free on Board (FOB): Your responsibility ends the moment the contracted goods are placed on
board the ship, free of cost to the buyer at a port of shipment named in the sales contract. 'On
board' means that a 'Received for Shipment' B/L (Bill of Lading) is not sufficient. Such B/L if
issued must be converted into 'Shipped on Board B/L' by using the stamp 'Shipped on Board' and
must bear signature of the carrier or his authorized representative together with date on which the
goods were 'boarded'.
Cost and Freight (C&F): You must on your own risk and not as an agent of the buyer, contract
for the carriage of the goods to the port of destination named in the sale contract and pay the
freight. This being a shipment contract, the point of delivery is fixed to the ship's rail and the risk
of loss or of damage to the goods is transferred from the seller to the buyer at that very point. As
will be seen though you bear the cost of carriage to the named destination, the risk is already
transferred to the buyer at the port of shipment itself.
Cost Insurance Freight (CIF): The term is basically the same as C&F, but with the addition
that you have to obtain insurance at your cost against the risks of loss or damage to the goods
during the carriage.
Freight or Carriage Paid (DCP): While C&F is used for goods which are to be carried by sea,
the term "DCP" is used for land transport only, including national and international transport by
road, rail and inland waterways. You have to contract for the carriage of the goods to the agreed
destination named in the contract of the sale and pay freight. Your obligations are fulfilled when
the goods are delivered to the first carrier and not beyond. In case the buyer desires you to insure

86

the goods till the destination, he would add 'including insurance' before the word 'Paid in Freight'
or 'Carriage Paid to'.
An application for pre-shipment advance should be made by you to your banker along with the
following documents:
Confirmed export order/contract or L/C etc. in original. Where it is not available, an undertaking
to the effect that the same will be produced to the bank within a reasonable time for verification
and endorsement should be given. An undertaking that the advance will be utilized for the
specific purpose of procuring/manufacturing/shipping etc., of the goods meant for export only, as
stated in the relative confirmed export order or the L/C. If you are a sub-supplier and want to
supply the goods to the Export/Trading/Star Trading House or Merchant Exporter, an
undertaking from the Merchandiser .
Post Shipment Finance
Post-shipment finance is the finance provided against shipping documents. It is also provided
against duty drawback claims. It is provided in the following forms:
Shipping Terms:
Consignee, FCL (Full Container Load), LCL (Less Container Load), Shipper, Shipping
Marks, Garments on Hangers (GOH), Flat Packet container (FPC)
Consignee:
The person whose name appears on the bill of lading or airway bill as the party to whom the
goods are to be delivered by the carrier
FCL (Full Container Load):
A fully loaded container which may be in weight or cubic measurement terms, contracted by one
shipper, and conveyed to one consignee and to one destination
LCL (Less Container Load):
A consignment of cargo which does not fill a full container, grouped with other consignments
for the same destination
Shipper:
This is the person whose name appears on the bill of lading or airway bill as the party who has
contracted the carrier to dispatch the goods.
Shipping Marks:
These are marks essential to identifying the cargo and linking that cargo with specific
documents. Because these marks are important as identifiers, the marks and numbers should be
as simple as possible. Shipping marks include the abbreviated name of buyer, reference number,
destination, package number, and container.

86

3.5.38Consumption & Costing:

Knit Fabric
For, T-shirt {(s/j) 30/1 combed yarn}
Measurement:Length = 70 cm
chest = 60 cm / dia
Sleeve length = 25 cm
Arm hole width = 40 cm
GSM = 145
Find out consumption / dz in kg?
Formula:(Back length + sleeve length) chest 2 GSM 12
10000000
= {(70 +5) + (25 +5)} 60 2 145 12 {B.L + S.L chest GSM 12}
10000000
100
100
1000
= 2.28 kg + 7%
= 2.28 kg +0.159
= 2.439 kg
[neck and sleeve are made rib so add 0.10]
All time collar in rib = (350-400)

Cost Calculation:
Cost is divided in to:1) Pre- cost------- Merchandiser
2) Final costing -------- Merchandiser + import section
Garment for example: - $ 5.00 = cost

86

Garment costing: - $ 5.00 + profit = costing

Pre- cost:1) It is an estimate made before the garment is adopted in to the line
2) Fabric, trim and labour costs for each garment is calculated
3) The merchandiser / designer usually keep a record of all materials costs on a work sheet.
4) Then the costing department can roughly estimate the cost and price structure. (Normally
over head cost is 30-40%)
Final costing:1) It is an exact calculation by the costing or import department
2) Using actual figures for fabric,, accessories and labour cost
3) Costing department usesa. Merchandiser work sheet
b. A proto type garment
c. Production pattern
4) A detailed cost analysis is made for each garment the final cost is plotted
on a cost sheet.
Analysis a cost sheet:
1. Materials:- Total amount of material ($ 1) / yd = Total price
2. Trimming :- Button(BTN), thread(THD), interlining(INT), level & packing
3. Production pattern making, grading, marking, spreading and cutting
4. Assembly and finishing:- Calculated the average time of operations
5. Over head cost: - Salary, rent, utilities > (30- 40%)
6. Freight :- Air freight / sea freight
7. Quota change
Undertaking price quotation for buyers:
There are following process for fixation price:1. FOB ( Free on board)
a. Exporter does not bear the cost of freight of ship or air
b. It is buyer who him self bear the freight

86

2. C & F ( Cost & freight)

a. Free on board + freight = c & f
b. In this case ship or air freight is carried by the exporter while quoting price.
c. This price a bit higher than FOB
3. CIF ( Cost, insurance & freight)
a. C& f + insurance = CIF
b. In this case in addition to the bearing of freight, the cost of insurance is also
borne by the export.
4. CM ( Cost of making / manufacturing)
a. Manufacturing or exporter will get only making charge of that garment
b. Fabric, trimming and other materials is supplied by the buyer.
5. CMT (Cost of manufacturing and trimming)
a. Manufacture or exporter will get the making charge and at the same time will
get the trimming cost
b. Fabric is supplied by the buyer
Costing of garments in (FOB) cost:
Costing of a garment for example in a shirt:
1. Fabric costing
2. Garment accessories:
1. Button
2. Interlining
3. Label
4. Thread
5. Collar bone
6. Hang tag/ price tag
3. Finishing accessories:
1. Poly bag
2. Plastic clip
3. Gum Tape
4. Neck board
5. Tag pin
6. Sticker
7. Butterfly
8. Collar insert
9. Back board
10. Neck insert
11. Scotch Tape
12. PP belt

86

13. Carton
4. Labor charge
5. Washing charge (If it is garment wash)
6. Commercial and transportation cost.
+ 10% profit margin.
(% of profit margins is the distortion of the exporter)

86