here, I want to discuss actual “issues” with You. Please feel free to reply (send an e-mail) and let me know, what You think about it.
Which way are You going BANGLADESH?
… years after the Rana Plaza incident the apparel industry in Bangladesh does not come to a rest. Last week the minimum wage for workers was raised to 8000 taka/month which means a raise by 48%. This raise will help the workers and could lead to more expensive RMGs but – as we know – the buyers will not be able to accept.
Not all factories are in the „we can produce for Levi’s“- category where a 5 pocket jeans is produced in less than 13 minutes. That is why the medium and small units will really suffer the most. Big factories are getting better prices because they are often vertical setups with their own mill or the are really big and get better prices for purchasing bigger volumes. The middle and small units need help. After Rana plaza, they invested a lot in safety, they payed higher wages to their workforce and followed the low price strategy of the few big factories who are able to work for the big retailers.
So before any small or medium factory starts any discussion – get better! Start working the industrial way. Check the time consumption for each operation and organise Your production. Train and educate Your workforce. Factories, who need 30 Minutes for a simple 5 pocket jeans should not complain because of the rise of the minimum wages.
The next step should be to get better buying prices for fabrics, yarn, buttons aso. Start a cooperative like the smaller retailers in Europe are doing it. Members of the group are buying together. The buying group gets better volumes and can discuss better prices. A mill or supplier who wants to sell to the group has to offer a certain discount on his prices and at the end of the year there must be a pay back based on the annual purchasing volume of the group. But: this is just working if the group agrees on certain suppliers and a big amount of group members are buying at the same suppliers.
The last step will be to go abroad and present the RMG factories of Bangladesh. The group could rent a booth at European fairs to present their offer and members. There are still a lot of brands or retailers who don’t buy in Asia. They still produce in Europe, Turkey or North Africa where the prices are four to five dollars higher than in Bangladesh. But there are very often just smaller orders. It could be a good strategy to start as well the production of smaller orders. From the second step onward it could even be interesting for bigger RMG producers to join the group.
The initial cost for the first season will be the rent of a room for the presentation of the fabrics. It will be like a little fair for the members. These cost should be covered by an initial membership fee. Discussions with potential members can start immediately, the exhibitors of the Bangladesh Denim Expo must be informed and meetings with the first suppliers can theoretically start right after the Expo. This group of the RMG producers of Bangladesh could represent a much bigger buying volume than the big factories.
Bangladesh must change its image. But to do so, the factories must become more efficient and more professional regarding their costings. Like this, the group could even have consultants who help to brush up the productivity of factories or who help in the laundries.
Unsold jeans – can’t be avoided. Right?
Recently it was reported, that H&M burned surplus merchandise and sure others are destroying unsold jeans without even talking about it. H&M declared that the merchandise was chemical uncontaminated which seem to be a lame explication.
Our consumers have just a certain limited amount of money which they spent on their clothes and every retailer wants to grab a big part of this budget. Vertical retailers created a bermuda triangle where clothes, shoes, jewellery for – more or less – all occasions are available. If a client enters one of their store and starts shopping, the money might be gone. But to keep these shopping temples attractive, there they need new merchandise permanently or at least every two weeks. Can You imagine, that all the merchandise will be sold?
So, thats the situation – but what is the solution?
- to destroy unsold merchandise feels not to be appropriate.
2. if the merchandise is sent to developing countries (often the countries, where the jeans have been produced) and sold there, the local industry will be harmed. On top of it, it is relatively expensive to sent the merchandise to Africa or Asia and the local tax office wants it’s share (VAT) as well.
3. recycling is not jet possible for jeans which are not made of 100% cotton. Theoretically there is a solution to separate cotton, elastane and polyester but – as I know – it’s not jet workable for industrial volumes. To make things easy, we decided to allow 1% of “other materials” in past production waste and like this we are allowed to recycle “stretch jeans” as long as we didn’t use more than 1% of elastane. Tricky ?
4. what about to sell the merchandise in special stores, somewhere in the outskirts of Paris, Berlin, … I have see Inditex stores in touristic areas where they sell left overs for very nice prices.
5. what about producing less? Concentrating on a bigger share of “basic jeans” or having unwashed jeans stocked in the factory which You wash corresponding to the market’s needs. But this will lead to less supply partners.
I know, it is weird for a sourcing site: “There are already too many jeans in the market!”
What is Your opinion? How can we reduce the risk of producing jeans, which might not be sold? What can the producers offer to assist? I get nuts, when jeans, who have been produced (with an investment in water, chemicals, working force and time) must be stocked somewhere because they can’t be sold.