American International University-Bangladesh (AIUB)

Prepared For: Md. Anwarul Kabir Faculty of Computer Science Subject: Management Information System Report topic: Garments sector & use of Information System Prepared By: Name
Tujjahan Fatima Rajmi Rakshan Nath Nandita
ID sIGNATURE

08-11635-2 08-11348-2 08-11619-2 08-11410-2

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Abdur Rahim

LETTER OF TRANSMITTAL 1st August, 2010 Anwarul Kabir Associate Professor Department of Computer science American International University-Bangladesh, Dhaka- 1212 Sub - Permission for submitting the Group Project Report Dear Sir, We are pleased to submit our Group project report on use of information system in garments sector. Our report focused on how information system can help & use the garments industry. We have gathered information as much as possible. This report is mainly based on secondary data. Much of our secondary data came from some different books and different websites. We enjoyed working on this report and hope you will find it innovative. Sincerely yours, Md. Abdur Rahim 08-11410-2

Acknowledgement
The study on the use of information system in garments sector is one of our assignments given as integral part of study. The main aim of this study was to assess how information system can help & use the garments industry. This study is carried out all over the world. Information System is the main part of our study. I could hardly finish the job unless there were some other fellows to assist me in formulating collecting data, processing of data, tabulation and compilation of data. There were some other scholars assisted by editing the report. I should thank all of them.

I am thankful to my friends who have assisted me in designing the research and formulation of questionnaire, data collection and processing.

Finally I express my heart-felt thanks to my teacher for giving me such a good topics to carry out study. It has helped me a lot to acquire knowledge in the Information System & Garments Sector. I hope this report shall of use to many researchers in future. We are very thanking full to our Course Facilitator, Anwarul Kabir for Increasing to this research report of garments sector. We like to thanks to the authority of the M/S Garments. Ltd. We are very happy that our group members work very hard to make this report.

Table of contents

Page Number

Title of the topic 1 Acknowledgement..3 Letter of the transmittal..2 Analysis (findings)5 Recommendations19 Conclusion20 References20 Appendices...21

Analysis (findings) History of garments sector in Bangladesh

Since the late 1970s, the RMG industry started developing in Bangladesh primarily as an exportoriented industry although; the domestic market for RMG has been increasing fast due to increase in personal disposable income and change in life style. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP. In 1999, the industry employed directly more than 1.4 million workers, about 80% of whom were female. With the growth of RMG industry, linkage industries supplying fabrics, yarns, accessories, packaging materials, etc. have also expanded. In addition, demand for services like transportation, banking, shipping and insurance has increased. All these have created additional employment. The total indirect employment created by the RMG industry in Bangladesh is estimated to be some 200,000 workers. The hundred percent export-oriented RMG industry experienced phenomenal growth during the last 15 or so years. Till the end of 1982, there were only 47 garment manufacturing units. The breakthrough occurred in 1984-85, when the number of garment factories increased to 587. Although Bangladesh exports garments to some 30 countries, its exports are highly concentrated in two major markets, the USA and EU. The USA as the largest importer country imported 43.24% of total garments exported from Bangladesh in 1998-99.

Present Garments sector in Bangladesh

Garments industry in Bangladesh has come a long way over the last few decades. It has been quite some time since this sector has emerged as a national level industry. Particularly in last five to ten years a good number of energetic & innovative entrepreneurs and talented professionals have come on board to make the industry more dynamic and more vibrant. The recent trends indicate that the industry has certainly reached a take-off stage and in the coming years poised for high growth The RMG industry is the only multi-billion-dollar manufacturing and export .industry in Bangladesh. Whereas the industry contributed only 0.001 per cent to the countrys total export earnings in 1976, its share increased to about 75 per cent of those earnings in 2005. Bangladesh exported garments worth the equivalent of $6.9 billion in 2005, which was about 2.5
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per cent of the global total value ($276 billion) of garment exports. The countrys RMG industry grew by more than 15 per cent per annum on average during the last 15 years. The foreign exchange earnings and employment generation of the RMG sector have been increasing at double-digit rates from year to year. Some important issues related to the RMG industry of Bangladesh are noted in table-

Table 1. Important issues related to the Bangladesh ready-made garment industry

Year(s) 1977-1980 1982-1985 1985 1990s 1993-1995 2003 2005 Issue Early period of growth Boom days Imposition of quota restrictions Knitwear sector developed significantly Child labor issue and its solution Withdrawal of Canadian quota restriction Phase-out of export-quota system

Government incentives for this sector

The Government of Bangladesh does not play any direct role in the garment business. However, the Government helps the industry indirectly by providing some basic policy support such as back-to-back letters of credit, the duty drawback scheme, bonded warehouse facility and cash incentives.17 Some other notable initiatives taken by the Government are the adoption of conducive investment and industrial policies, encouragement of foreign direct investment, establishment of export processing zones and organizing trade fairs inside and outside the country. Encouraging export-led industrialization is the main objective behind such government initiatives. The Government provides the advantage of duty-free raw material imports usable in the manufacturing of export products to encourage and accelerate such industrialization.

In last decade the Government to Bangladesh realized that ICT (Information and Communication Technology) could be key element of our financial emancipation and declared it as a thrust sector. The government also created a standing committee on software export and adopted the bold steps like waiver of tax on computer hardware and software but execution of all the recommendations of the committee was not there. The present government created and ICT Task Force headed by the honorable Prime Minister.

The government's roles to allow Internet services, cellular phone, land line phones in private sector deserve high appreciation. This was complimented by setting of an ICT incubator and attempt to build High-tech Park. But some burning issues like deregulation of Voice Over Internet Protocol (Internet Telephony), allowing on line transactions and adequate deployment of funds to ICT development are yet to be in place. The industry associations made all out effort for seven years to make VoIP open but it is regulated till date urging a loss to the Government monopoly telecom operator Bangladesh Telegraph & Telephone Board (BTTB). Later BTTB was allowed to implement VoIP. But private operators were not given such opportunity. The cabinet decided to open VoIP twice. But not a single license was issued as yet. Two ICT policies have been formulated in Bangladesh so far. One of those was by the government under the Ministry of Science and ICT and the other one by the private sector under the flag of Federation of Bangladesh Chamber of Commerce and Industry (FBCCI). Both the policies are almost similar in text but much needed part of the policy is its implementation which is still waiting. The policy formulated by the government is known as the National Policy on ICT (given at Annexure-I) which came into existence in October 2002. This document presents the policy guidelines for the development of the ICT sector in Bangladesh.

GOVERNMENTS SUPPORT FOR THE ICT SECTOR

1) Incentives The ICT Sector in Bangladesh is now enjoying the following incentives :7

(a) No import duty on hardware and software (b) Tax holiday for 5 years (up to 2008) for manufacturing and software development.

2) Equity Entrepreneurship Fund The government has allocated an "Equity Entrepreneurship Fund" of Tk. 300 crore for the ICT sector which is controlled by the Bangladesh Bank. An ICT entrepreneur can apply for maximum 50% equity investment from this fund. About 30 ICT entrepreneurs have utilized this fund so far and further disbursement from this fund is suspended at present.

3) ICT Park

To establish an ICT Park, the government has recently acquired about 600 acres of land in Kaliakoir (about 30 miles north-west of Dhaka City) which will be developed with all infrastructural facilities for allocation of plots among the ICT entrepreneurs in phases and the process might take several years from now.

4) Submarine Cable

Bangladesh missed the opportunity in 1992 to become a member of the SEAMEWE (South East Asia Middle East Western Europe) Submarine Cable Project. But the government finally decided to join the project in 2004 at a much higher cost. It is now expected that the connection with the landing point in Bangladesh will be completed during the 1st quarter of 2006 and this will provide an enormous prospect for development of the ICT sector of this country.

5) Internship Program for the ICT Graduates

The government has introduced the program through BCC (Bangladesh Computer Council) for encouraging the job opportunities for the fresh ICT graduates. Under this program, an employer of a fresh ICT graduate can get the reimbursement of 60% of his/her salary for six months, the maximum reimbursable amount being Tk. 3,000/- per person.
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How IS can improve garments sector

Software industry in Bangladesh has come a long way over the last few decades. It has been quite some time since this sector has emerged as a national level industry. Particularly in last five to ten years a good number of energetic & innovative entrepreneurs and talented professionals have come on board to make the industry more dynamic and more vibrant. The recent trends indicate that the industry has certainly reached a take-off stage and in the coming years poised for high growth.

BCS AND ITS ACTIVITIES

Bangladesh Computer Samity (BCS) is a very strong organization having at present 490 member companies comprising mostly hardware vendors. It was established in 1992 and it has been responsible for the introduction and dissemination of the use of computers and its related information technology products in our country. To this end, the BCS undertakes various initiatives and supportive programs to encourage widespread adoption of personal computers to improve productivity in the government departments, corporations, private sector, academia, professional institutions and the general business community.

BASIS AND ITS ACTIVITIES

Bangladesh Association of Software and Information Services (BASIS) is the national association for Software & IT Enabled Services (ITES) companies of Bangladesh. Formed in 1997, the association has been working with a vision of developing a vibrant local software & IT service industry in the country. In persuasion of this vision, BASIS, on the one hand- has been working relentlessly to create IT awareness in the society through projecting the high importance of making the country more IT enabled for a better future of the nation. On the other hand, BASIS has been working hard for creating an enabling environment for the software & ITES industry of the country so that it can flourish by rightly utilizing the huge market potential- both home and abroad. BASIS tries to pursue the following broad goals through its regular programs and activities:
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1) Domestic market development by creating awareness 2) Helping the local software and ITES companies successfully explore / penetrate the international market 3) Providing capacity building of the member firms 4) Persuasion for business friendly government policies for the industry.

The causes of Information System not much using in this sector

The viewpoint of the workers

1. Prices have gone up 40% since 2006 with no adjustment in wages. An individual may be earning more as the workers are promoted from one level (say beginner) to another (say operator) level but the average compensation of all workers has not increased much. The workers real income is only 60% of what it was four years ago.

2. Some owners abuse the workers by not paying wages on time, by short paying on overtime or missing festival bonuses. Workers are terminated without the proper payments as required by law. Low as the wages are, it is even worse if one does not receive what the law requires. Workers become very angry when they are abused by this kind of treatment. Unfortunately BGMEA insists on denying that any such things happen and trumpet a compliance rating of more than 99%. If indeed the reports say that then the compliance auditors and the buyers are committing fraud.

3. There are no real outlets for bringing grievances to the attention of management; often there is no willingness to listen. If someone tries to do so he or she will probably lose their job. Workers are left to face management alone.
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4. The Government is of no use. The labor inspectors are few and far between and usually will happily take the side of the owners for suitable compensation. Everyone knows what is going on. The attitude among many workers is resignation or anger; those who are angry perceive that the leadership of the industry and the nation have abandoned them. Government has tried to make the formation of labor unions in the garment sector illegal. They have a point as the record of unionism is very destructive of the industries where they organize; the purpose of much of the labor organizing is racketeeringtaking bribes and selling out the workers to management. There are NGOs that at least start out as honest and make and attempt to organize the workers to join together to look after themselves. These organizations make only the most modest progress. International do-good organizations enter into the scene and add to the confusions. The foreigners in these organizations see the situation as simple and act as gods prescribing wisdom. Most of the time it is horse manure. There are no simple solutions.

The view point of the owners is focused on costs:

1. Prices of garments have been going down. The Euro has devalued so European buyers are pushing hard to reduce charges to maintain prices in Euros. The buyers have used their greater power during the recession to drive prices down. Further the cost of yarn and fabric has risen with the increase of the world cotton price. Since the cost of the fabrics and yarn is increasing the buyers push even harder on the manufacturers to reduce the cutting and making margins below 25%.

2. Here is the breakdown of the costs for producing garments by percent. These are approximate figures averaged over several different reports and checked with persons working in the industry. Fabric, yearn, accessories Wage labor Non-labor costs 75% 13% 6% [Energy, office overheads, Marketing]
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Return to capital

6% [Return to equity, depreciation, Interest payments, rentals]

If one doubles the wages the costs come to 113 but the price is only 100. The industry cannot operate at a loss! Even if the return to equity is reduced to zero (about half of the 6% return to capital) it saves only 3% nowhere near enough to cover the extra 13% in costs. Perhaps with hard work one can reduce the costs by 1% and accept a reduction of 2% in the return to capital. This permits a 25% increase in wages [3/13 ~.25]. This raises the minimum basic wage to Taka 2000/month. It wages go higher the garments will not be competitive. This is the dilemma that everyone faces. Increase the wages by more than 25% and pitch the industry into low to negative returns on equity. Increase the wages less than 100% and the labor disturbances will be terrible. The owners know that in their present condition a large increase in wages will lead to the destruction of the industry.

Other issues:
1. The energy costs are increasing rapidly. The costs are of two kinds: (1) Paying more for electricity and heat as the factory has to generate its own energy from expensive diesel fuel; (2) Disruption from power outages that delay production and force air freight delivery.

2. Port costs are shooting up from increased corruption, labor agitation and reduced productivity. Port delays cause difficulties in meeting schedules and increase use of air freight. Air freight destroys profitability.

3. Delays for air cargo exports arise from insufficient scanning facilities and costs rise from bribes necessary to ship without scanning. Some freighters are going out with far less cargo than capacity permits, even with air cargo back logged. Pilferage in the air cargo shed is increasing.

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4. Long standing under the table fees, connivance in false documentation, and allowing hidden loan defaults raise havoc with industry encouraging low price offers that keep the buyers price down. The inability to drive the weak firms out of the market results in continuous domestic downward pressure on the margins paid by the buyers.

There are some another reason for not using IS in garments sector like as huge amount of money, not experienced in using information technology, and people are not able to use it and most of the worker are not more educated. Thats why they dont know what is the benefit of IS.

Benefit to using IS in garment sector

Merchandising department:

It is a garment-based group and merchandisers are the heart of the organization. So IT is must in this department. Now merchandiser can easily communicate with the buyers and suppliers through the computerized mailing system. They put the data and information about the ordered merchandise relating style details, materials of fabric and accessories. Others department and management can have the information of their requirements for commercial and banking purpose by using computer networking system. For this purpose this company uses E R P (Enterprise R esearch Planning) software. Merchandisers can easily make their consumption of raw materials and accessories through the merchandising module (software). This software provides support and save time for the merchandisers, which was quite imaginative before using IT help. Beside this, a lot of mistakes happened for the result of manual calculation. Merchandisers also know about the required raw materials and accessories whether they are ready for production through networking store receiving system and take necessary action, they need not to ask one. I t saves time & any sorts of mismatch. The textile mill located at Gazipur, can put data of fabric status on
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line and merchandisers in Dhaka office can get the fabric report easily. They can take necessary action if required. They also informed about shipping status by the input data. That's why; merchandiser can play their role easily. Otherwise they had to knock every department several times, which would be time consuming. Merchandisers can get the design sheet within very short time; can inform the buyer any problem or difficulties regarding style details through internet. They need not to wait long for any kind of buyers' decision. They can take approval very quickly. Above all, electronic mail can play a vital role about authentication. This procedure saves time, physical hassle and money, which are the blessings of using IT . The benefits achieved in merchandising department after establishing of IT are given below -

[All (%) are compared to before establishment of IT]

Shipping Department:

In previous shipping department input manual data in their ledger book. But now they input data into buyer's website and company's online software. So buyer, buying house, shipping line and company management knows the same information at the same time. That was not possible before using IT. As a result, buyers and company management get the same shipping information; there is no gap among them. Document submission and payment become easier. Thus with the help of IT, working process of shipping department becomes smooth and efficiency is increased than in previous.

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Commercial and accounting department:

In previous time, commercial and accounts department would have to maintain large volume of books and papers for manual data and ledger posting which was really time consuming and embracing. Establishing IT facilities it becomes simpler than ever before. Just few clicks are enough to get the desired result. So budget and budgetary control become very easy. Time and cost both are saved. So decision-making is sharp. Only by the help of IT, it has become possible to present monthly, quarterly, half yearly and yearly financial statement. Merchandisers input data about consumption of fabrics and accessories of the relevant ordered goods. When the goods arrive, store people input receiving data. The update data everyday, so that the production and management people easily be aware of whole picture of store of the company. Before using IT there was a big gap between production, management and merchandising department. Now it became very smooth with the help of IT . The benefits achieved in this department after establishing of IT are given below

[All (%) are compared to before establishment of IT]

Human Resources Department:

The H.R. Department stores the employee's personal information to computer. So in any kind of emergency and special purpose, H.R. department can take necessary action within short time.
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This was not possible for the company before taking IT help. The benefits achieved in this department after establishing of IT are given below -

[All (%) are compared to before establishment of IT] Audit Department: The audit department is getting much advantages of IT support. I t would be very much difficult to run their work smoothly if there is no IT support. They are much benefited by IT. Actually they have saved on an average more than 50% of their time, labour and cost compared to before establishing of IT. The benefits achieved in this department after establishing of IT are given below-

[All (%) are compared to before establishment of IT]

Information Technology Department:

Above all, there is a strong IT (Information Technology) department who is responsible for maintaining IT all the time perfect. IT people are very much hard working. They have a lot of contribution to create these facilities.

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VISION FOR THE FUTURE:

The nationwide capacity must be created that can enable and sustain the production of world class garments products that are reasonably priced and are responsive to consumer demands. The sustained capability must be systematically developed as part of a new comprehensive vision. The backbone for the vision will be an information infrastructure that interconnects the entire garments industry and contains information that can amplify any one firms efforts. The infrastructure will enable the industry to leverage its collective efforts for its common goods. The essential elements for the vision consist of:

A clear identification of consumer needs The physical network that will connect firms together The internal computerization and networking within each firm On-line information that can benefit each firms activities the integration and technology to make beneficial use of the information available to each firm Automation that will increase productivity Education and training so that the industry can avail itself of the new capabilities created. Sources that will create and continuously add to that information

With these elements in place, both the "bottom-up" approach of demand-activated manufacturing as well as the "top-down" approach of design-driven, multi-enterprise, concurrent engineering can be enabled. The rewards from both worlds can be realized.

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The information infrastructure will enable new business structures to be developed and will allow them to co-exist side-by-side with todays business structures: It is not clear that the most efficient business structure for the garments industry requires life cycle functions from design to production to sales to exist within one company. Small companies that specialize in design only, or in technical services (such as patternmaking) only, or in personal style consultations, etc., might demonstrate their ability to be healthy competitors and enduring entities. In fact, a whole new high-technology, cottage industry that is tied into the information infrastructure could emerge, consisting of many independents operating out of their homes, or out of very small companies.

Standards help create the information infrastructure, and furthermore, tie it together: Agreement for an enterprise framework for the Garments industry, along with consensus for a common terminology, is vital. Once an enterprise framework is recognized as a standard, interfaces among all functions associated with that framework can be identified and standardized as well. Such standards are known as open system standards, because they promote the development of alternative products for each of the functions. Each product may be unique, but they all have the characteristic that they are plug-compatible into the open system. Consequently, the entire system is enhanced, its capability leveraged by the efforts of many organizations, each competing for the customers favor. Multiple market niches can be satisfied.

Information resources that can be accessed by the Garments industry are essential to amplify the industrys capabilities:

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The information will include databases for style data, anthropometric data, consumer profiles, materials data, etc. The material information will include data that describes the raw material, how that material was processed, its cost, and how to acquire that material. A skills database will also be very important. The skills database will be developed along organizational as well as individual lines, so that labor resources can be combined to manufacture products in new types of business structures.

Recommendations

The garments should have updated technology for production

Accounts, Marketing, Management, Sales, every department have to use special software & computer system for clear accounts. The labor force have to literate so that they can use computer system for production Government have to increase invest & care for this sector The raw materials have to be updated for production & its quality have to be measured Law & order system have to clear for this sector To get better technology for the industry all import tax should be free Technology transfer system from one department to other have to faster in the industry
All micro & macro environment should favorable to the industry

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Conclusion

The garment industry has played a pioneering role in the development of industrial sector of Bangladesh. Though it took a rather late start i.e., in 1976 but it soon established its reputation in the world market within a short span of time. Resultantly garment is now one of the main export items of the country. Besides, enriching the country's economy it has played a very important role in alleviating unemployment. Bangladesh government is planning to feasible vision 2021 that digital Bangladesh will be made by that time. As garment sector playing a significant role in the national economy, so it is our concern to use updated & proper technology in this sector to get optimum output from this industry.

References

Online search Own words www.google/garments sector of Bangladesh

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Appendices
Savar EPZ Garments

increase

of factories in fiscal year

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Ready made

garments

Garments labor working

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