ERP & BANGLADESH READYMADE

GARMENTS SECTOR: PROPOSAL FOR

MARKET STUDY

2

Submitted to:

Techmedian

Date: 3nd April 2013

Submitted By:

RUPAM IT LIMITED

Table of Contents Background: .................................................................................................................................................. 4

Bangladesh: The Next RMG Destination ....................................................................................................... 5

Macroeconomic Impact of RMG: .................................................................................................................. 6

Contribution in National Export ................................................................................................................ 6

Growth of the Industry ............................................................................................................................. 7

Labor market ................................................................................................................................................. 9

The need for ERP in the sector.................................................................................................................... 10

Importance for manufacturing: .............................................................................................................. 10

Increase in Productivity: ......................................................................................................................... 11

Competitive Advantage .......................................................................................................................... 12

External factors ....................................................................................................................................... 13

Potential target and affordability ........................................................................................................... 14

Suitability for Indian service providers ................................................................................................... 15

The Need for Survey Conduction: ............................................................................................................... 16

ERP Status Quo in RMG Sector ............................................................................................................... 16

Key Market players: ................................................................................................................................ 17

Underlying Problems: ............................................................................................................................. 21

Need for the Survey conduction: ............................................................................................................ 22

Specific Outcomes of the Survey: ........................................................................................................... 23

Other Important factors about the Survey: ............................................................................................ 23

Conclusion: .................................................................................................................................................. 24

Project Team: .............................................................................................................................................. 25

Conclusion

4

Background:

Although currently ranked as the 60th country in terms of nominal GDP figure, Bangladesh

is one of the most promising lands for development in the near future. Goldman Sachs has

included the country in their Next 11 to watch following BRIC (Brazil, Russia, India,

China). Price and capacity being its major competitive advantages, the country provides

satisfactory quality levels for entry-level mid-market products in general. The stable GDP

growth rate (near around 6%) even during the global recession only proves the countrys

competency. Beginning from almost nothing in the 1970s, the apparel industry has

experienced very rapid growth in employment, production, and exports so far. It has been a

journey of capacity building in response to growing demand and competition, and we are

already the second largest clothing exporting country in the world.Garments exports,

totaling $19.1 billion in 2012, accounted for almost 16% of national GDP, while the

manufacturing industry had a 17.89% share in GDP.Also, the sector employs around 5

million people directly and indirectly and 80% of them are female. The contribution of the

sector in the national income is increasing with the years piling up and according to the

Mckinsey report 2012, The story of Bangladesh has just begun.

Bangladesh: The Next RMG Destination

Generally, an industry initially develops in response to domestic demand, and then

subsequently turns to export once it becomes mature. The evolution of the garment

industry in Bangladesh, as opposed to many other countries, has not followed this pattern.

Instead of growth being spurred by

domestic demand, the rise of the

RMG industry in Bangladesh can be

ascribed to growing demand in

developed countries for cheap

apparel. Even now, cheap production

process has given an edge over China

to the country. In 2010 China

dominated the RMG export to USA and

Europe accounting for approximately

40% of the total market share in each region.Bangladesh needs 5 years at most to

restore that gap with China.According to Mckinsey report 2012, owing to wage increase

and capacity pressure in China,

54% of Chief Purchase officers of

USA & Euro companies shared

their plan to decrease sourcing

activities from China more than

10%. 80% CPOs preferred

Bangladesh as the next

sourcing hot spot after China. According to the most of the CPOs price attractiveness of

Bangladesh Market is the driving force behind such success.

6

Macroeconomic Impact of RMG:

Contribution in National Export

Figure :Growth of export income (1986-2012)

Ever since its inception, the sector has experienced very fast moving growth in terms of

export, labor and in numbers as well. At present, 5800 firms of both large and small scale

compete in the market with a huge cumulative labor force. 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 79 per cent of those earnings in 2012.The industry experienced a

whooping 18.5% growth over the last 28 years. And if we can main this growth rate for

another 10 years, our RMG export will stand at $125 billion, enough to transform

Bangladesh into a middle income country.The foreign exchange earnings and employment

generation of the RMG sector have been increasing at double-digit rates from year to year.

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1980 1985 1990 1995 2000 2005 2010 2015

Export in Millions of USD

Growth Of Export

Growth of the Industry

Figure: Growth of the industry

As we can infer from the graph that increase in factories and labor force, which increase in

capital investment (both capital goods and human capital in this case) has a direct and

positive co-relation with export volume. In 2011,export growth reached more than 40%.

This boom got deflated again in2012 owing to sudden labor unrest. But proving strong

resilience, this sector has gotten back defying all odds.

As of now, In January 2013, export value surged nearly 23 percent year-on-year, as some

overseas orders shifted from China to the country.According to the countrys Export

Promotion Bureau, during January 2013, the export value of RMG reached $2.09

billion, compared with $1.7 billion in January 2012. In the first seven months of the

current fiscal year (July 2012 to January 2013) in Bangladesh, the total export value of RMG

amounted to $12.04 billion, up 9.9 percent over the same period last year, among which

that of woven garments was up 13.57 percent to $6.11 billion, while that of knitted ones

was up 6.39 percent to $5.92 billion. Table below shows the growth pattern in recent

timeline:

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1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Growth of factories

Growth of Worker

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BANGLADESH'S RMG EXPORTS TO WORLD, FY 2011-12 & 2012-13

Value in Million US$

Month ALL COUNTRIES

Woven Growth Knit Growth

Total (Woven+Knit)

Growth

Year Rate Year Rate Rate

2011/12

2012/13

2011/12

2012/13

2011/12

2012/13

July 888 993.84 11.92 1007.88

1001.07 -0.68 1895.88 1994.91

5.22

August 870.63 997.72 14.6 1052.43

1004.24 -4.58 1923.06 2001.96

4.1

September 475.93 465.3 -2.23 519.21 534.52 2.95 995.14 999.82 0.47

October 704.7 761.48 8.06 796.05 873.16 9.69 1500.75 1634.64

8.92

November 626.91 710.04 13.26 621.73 653.96 5.18 1248.64 1364 9.24

December 890.8 1042.68

17.05 794.23 908.94 14.44 1685.03 1951.62

15.8

Although the sector is adopting automated technologies for production and other business

functions, the process remains, to date, extremely labor intensive. We can draw a bar graph

showing the sectors contribution to national labor market.Explosive growth of RMG

exports is of course not unique to Bangladesh. Moreover the growth cycles have seen boom

on a continuous manner because of RMG. Quota rents associated with MFA quotas had

aided Bangladeshs RMG entrepreneurs to absorb, at least partly, the higher costs of

production resulting from bureaucratic inefficiency and corruption in the highly regulated

economic environment prevailing in the country during the late 1970s and 1980s when the

industry was in its growing phase. At the same time, low labor costs in Bangladesh had

attracted quota-restrained foreign garment producers to come to this country and act as a

catalyst in the rise of the garment industry in Bangladesh.

Labor market

Figure: Contribution in national labor market

50% of available work force of Bangladesh still remains associated with agro-based

services. As we analyze the industry scenario of the country, we can actually understand

how important the RMG sector actually is for the labor market:

RMG sector alone is responsible for 90% of the production workers involved in

different industries. With its high volume, and higher share of female workers (who are

willing to accept less wage than their male counterparts), the industry can afford to pay

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30

40

50

60

2003 2006 2010

No. of total labor force available

No. of labor employed

No. of workers in RMG factories

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60

70

80

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1980 1985 1990 1995 2000 2005 2010 2015

Total Number of Workers in Millions

Percentage Change in growth

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fewer wages to its workers compared to other industries in the country. However,

changing economy demands changes in wage-structure as well. This is where the minimum

wage policy comes in. According to a survey conducted by Fair Wear Foundation in 2012,

Before the 2010 law, the monthly average pay of surveyed workers was 3 371 BDT.

Under the new minimum wage scheme, the average increased to 4 027 BDT.

80% of the workers stated that pay slips are given to them.

Most of the workers said that they were paid within the first and second week of the

month; only 4% said that they were paid in the last week of the month.

However, even with the rise in cost and increasing pressure for labor-safety compliance, as

McKinsey report would predict, the pricing will remain competitive and Bangladesh will

remain a hot spot for foreign investment in the years to come.

The need for ERP in the sector

Importance for manufacturing:

For every manufacturing concern, simpler costing methods such as average cost and

FIFO are generally of limited usefulness. This is because purchase of raw materials is

only one of the elements of the cost of the manufactured product. Other cost elements also

need to be monitored, such as labor, power, spare parts used and depreciation expense

incurred. The price and quantity of each of these required for a unit of production can vary

depending on how efficiently the production process is managed. Implementing standard

costs accordingly requires estimation of target costs for each individual input. As each item

of production is actually completed, the ERP system will capture actual data of those

costs. These are then compared with the standard (budgeted) costs by means of variance

accounts. For example, an inefficient production process, which wastes raw materials, will

show positive variance on raw materials; an efficient production process, which used less

than the budgeted raw materials, will show negative variance. By examining variance

accounts, more efficient production processes, workers and managers can be identified.

This can result in cutting costs and a better bottom line, which is the efficiency, which ERP

promises. Also, in a linked supply chain business, like the one any typical RMG business

has, daily monitoring is crucial for avoiding losses.

Increase in Productivity:

Bangladesh lags behind many of the

exporter countries in the RMG

domain worldwide. Reason being

less technology acceptance of grass

root level workers who ultimately

burdens the industry with lower

output in comparison with

technologically advanced workers of

key exporting countries. Off late

BKMEA and BGMEA have started

Productivity Improvement Program in association with GIZ .The objective of the program

is to enhance workers output ratio by implementing lean Manufacturing method. Under

this umbrella project, Productivity improvement cells of various stakeholders (Export

associations, EPZs,BJMEA, FBCCI, BKMEA) all are rigorously working with manufacturers,

Labor force, trainers etc. And all of the aforementioned bodies have identified ERP as the

probable primary catalyst in future, behind productivity increase in every possible way.

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1980 1985 1990 1995 2000 2005 2010 2015

Re

ven

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Pe

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ear

In U

SD

YEAR

Revenue Per Worker in USD

Productivity Change in %

12

And the result is encouraging. Yet in comparison with our biggest competitors i.e.

Pakistan,India and China, we have substantial lacking in this regard, as the figure above

suggests. So, definitely many of the companies will try to adopt ERP and such software

even incurring huge cost as to continue the market share via a productive workforce.

Competitive Advantage

Before considering this issue, a view of the rapid growth in RMG should be provided:

Figure 5:

Exponential

growth curve

of RMG

factories

In a growing

industry like

RMG in

Bangladesh, it is imperative to gain a competitive advantage over numerous new entrants

for ensuring business sustainability. Despite the ex-post entry barrier caused by high

pricing of technological options, it is in fact the most ideal source for sustainable advantage

in a developing country. As most of its businesses are yet to be automated, in this part of

the world, investing in IS (Information Systems) is considered as a differentiation strategy

for the adopters. ERP facilitates all 3 sources of organizational competency: input-

transformation-output. Viyellatex group has already initiated the trend in 2008. A large

number of major RMGs are in line to adopt their unique, customized ERP solutions to stay

in the game.

0

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6000

7000

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

NUMBER OF FACTORIES

External factors

Followed by catastrophic fire accident in Tazreen garments in 2012, The European

Parliament (EP) is planning to adopt a harsh resolution soon on the labor and safety

standards in the garment sector in Bangladesh. The development in the European region

have caused further worries to both policy-makers of the government and the leaders of

the apparel sector as it comes in tandem with the move of the United States Trade

Representative (USTR) to debar the country from getting any facility under the generalized

system of preferences (GSP) for what it considered, its failure to implement labor standard,

ensure workers' union right and improve safety standard. The EU is the largest export

destination for the country's RMG, as export earnings in the sector from the EU region

aggregated at $11.37 billion in the last fiscal year (FY) 2011-2012. It is nearly 60 per cent of

the total export earnings worth $ 20.13 billion in the RMG sector. The business reputation

is all that matters and now, in order to keep up the demands of the international

organizations, Bangladesh has to comply with the labor-safety issues. These initiatives will

cost a fortune and hence the need for a more controlled cost monitoring than ever. The

benefits of ERP to these issues can be categorized into three:

Increased management productivity:

The analytics ERP systems can provide good visibility into manufacturing performance and

quality, enabling production to stay on track and maintain the highest quality output.

Identifying issues early helps ensure efficient use of production and employee assets.

Supply chain visibility shrinks the time people spend on busywork and the cost of

expediting materials. ERP automates communication and eliminate much of the overhead

of paperwork and messages. With access to key demand and schedule data, partners can

often answer questions themselves, freeing the employees for other tasks.

Supply chain management:

The geographical distance that Bangladesh has with its major buyers in EU, is a matter of

concern for timely delivery and relations management. With the common database and

integrated module, constant communication with the buyers and suppliers can be

14

maintained. Ultimately this will facilitate the establishment of an efficient supply chain

system for the organization.

Indirect effect on work-condition:

With management having to spend less time for information procurement, the time and

resources can be better utilized for improved line-balancing, work-flow design. Also this

can bring in transparency in the payroll system that will ensure decreasing discrepancies in

the long run.

Potential target and affordability

A survey conducted by World Bank in 2005, among all the member textiles and apparels

companies registered in BGMEA listing-showed relatively higher degree of export

concentration at the firm level. Of 2387 exporting RMG units in 2004, the top 500 firms

exported 74 percent of total garments export, while 81 percent of total RMG exports was

made by the top 650 firms. These firms belong to the large (production capacity of 5,000 to

10,000 dozens per month) manufacturer category. The remaining 19 percent of garments

export was made by 1737 firms, which can be considered as small (production capacity of

less than 5,000 dozens per month). Another report published in RMG Exporters Conference

2010 organized jointly by BGMEA and BKMEA highlightedthat 70-80% of the export

volumes every year- are being processed by on an average 500-600 firms; who enjoy larger

capacity leading to economies of scale. Moreover they maintain a bigger supply chain

owing to their extent of product variability, which usually covers all possible

manufacturing components i.e. knitting, dyeing, apparels, fabrics etc. This means that out

of the total number of 5000+ firms in the RMG industry, at least 500-600 firms can

afford the huge installation cost of ERPs, not to mention their complex supply chain will

propel the adoption of ERP as to integrate the multi-functional business domain into one

center.

Year Total Export Value from RMG

Shared revenue of Top 600 companies (75% on an average)

Revenue per factory/Indication of Affordability (Shared Total/600)

2005 6417.67 million USD 4888.2525 7.5 million

2007 9350.33 million USD 7012.5 11.6875 million 2010 14854.80 million USD 11141.1 18.5685 million

2011 19212.98 million USD 14409.73 24.0 Million

Suitability for Indian service providers

Due to the communication difficulties inherent in a big organization, large and even

medium sized companies will see the need for ERP software sooner or later. However, this

creates a difficult decision; which ERP system the choice is quite bewildering. On the high

end of the market there are the established multinational ERP providers such as SAP,

Oracle and Microsoft, which have comprehensive functionality proven over thousands of

client installations. However, they come at a steep price, invariably costing thousands of

dollars per user in up-front software license costs, as well as hefty customization costs by

foreign experts who stay in five-star hotels. At the low end of the market there are local

Bangladeshi software companies offering much cheaper solutions, usually costing in the

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Revenue Per factory in Millions of USD

16

region of tens of lakhs of Takas; however, these can be a risky proposition, having usually

been developed for and deployed by only a handful of customers in a limited range of

industries. With all due respect to the Bangladeshi software industry, these local solutions

cannot really be considered to be proven, general-purpose ERP software, since they simply

havent been tested in enough varied business contexts. Relying on an unproven, untested

ERP system is indeed dangerous, since once an ERP is implemented, every department in a

company is dependent on it; major bugs in the system could throw the entire company into

chaos.

The Need for Survey Conduction:

ERP Status Quo in RMG Sector

Currently, Considering all the business sectors of Bangladesh, ERP penetration within

medium businesses (Companies having 100 to 999 employees) is somewhat embryonic

(11%) though it is much healthier in terms of large businesses (Companies having 1000+

employees) i.e. 26% penetration. When it comes to RMG sector, many of the middle and

large apparel and textile companies are caught in a situation where new requirements for

compliance, control and accountability are being introduced daily by a wide spectrum of

international clients. Hence the penetration rate should have been higher here, than any

other sector with regards to emphasis on exports and the need to be in constant touch with

international customers via a streamlined business process. Unfortunately this is not the

scenario, defying the conventional wisdom as to say that- adoption of ERP in manufacture

intensive RMG sector should be a common phenomenon; only a few market players have

integrated it into their business system.

Automation has taken place in almost all of the departments related to manufacturing

process, most of the leading companies are shifting to automated production systems

(involving knitting, dyeing, cutting, packaging etc.) from the traditional ones to be more

competitive in global apparel business. Though such adoption of fresh technology in the

apparel industry is paying dividends to owners, as it helps improve management, quality

and delivery systems; ERP integration has not become a popular part of automation

process yet now- owing to its huge installation cost added with expensive after sales

servicing cost.Viyellatex Group is countrys first garments factory that has implemented the

expensive Enterprise Resource Planning (ERP) solution from SAP Germany.The group

implemented the ERP in its Gazipur based factory in December 2008 at a cost of $2million.

Following the footstep, Dekko group, SQ group, Base textiles (located in kalurghat,

Chittagong) have adopted ERP, mostly from local software developers. In November 2009

Envoy textiles bought its first ERP from an India Bangladesh venture (Royal Datamatics

Pvt. Ltd, India & CIBL Bangladesh).

Off late, the requirement for real time information and centralized decision making have

gradually increased need for ERP installment among RMGs. According to BASIS, due to the

growing demand from apparel and textile players, Bangladeshs Software Application

market is enjoying 20-30% growth. Significant numbers of local garments are purchasing

ERP software now a day.

But, Local ERP brands no longer meet their enhanced needs; they are looking for

standardized best of breed end-to-end solutions, and are turning to global vendors they

perceive as having an edge in meeting compliance requirements and international

standards. Significant footprints of global brands like SAP, Oracle, and IFS have been

observed within the Bangladesh market in the last 2-3 years. They have now collectively

captured the largest chunk of the Bangladesh ERP segment, edging out local brands. Global

brands offer a large portfolio of products for multiple verticals compared to local vendors

focus on a few specific ones.

Key Market players:

In Bangladesh, we can categorize the ERP software producer/supplier in 3 primary

categories:

1. Local Producers: These are run by local administration, they sell softwareusually in

the local market, software developed by them.

Example: ERP 9 (Tally), Prism ERP (Divine group)

18

2. Local Partners with International Brands: Run by local administrations, software

developed by famous brands. Sometimes the local companies itself develop

software. In Bangladesh such partnerships have been being created

betweenBangladesh+USA and India+Bangladesh frequently. After sales service is

provided by local team.

Example: Oracle partners with IBCS-Primax, RDPL partnered with CIBL to

produce apparel specific software

3. International Seller: A mere distributor just gets recruited as to penetrate into the

market.

Example: SAP Germany.

Variables that make the market complex

ERP software- producing diverse and specific solutions

Product type - which generates complex buying behavior

Industry business model discrepancy

Assorted Perspectives on developing and highlighting own product

Target Companies- which differs because of size, goal, culture etc

Divisions of ERP software solution provider

1. Local producers

2. International Companies

3. Local Company with foreign partnership

Perspective (benefits and highlights)

Classification of Market Players Target

Local Producers

Local with Foreign Partnership

International SECTOR

Onsite and off-shore development

Component Development

ATI Limited with Oracle -ATI ERP Features- MIS,

SME of any sector

Security, Asset management etc.

For Multiple-businesses, multi- level and multi profile user

Windows desktop based, can be controlled from anywhere without effect on global position

QSR Limited headquarter in Singapore, branch in Malaysia -Business Talker ERP 3.1 Features- LC management, purchase, inventory management etc.

Manufacturing, Distribution house, merchandising, , Telecom, SME sector

Flexibility of desired report

Central Database

IBCS-Primax Software Bangladesh Limited Partnered with- oracle, Redhat ,Zend -REERP -Features - Advance multi-level security, easy to use

Real-Estate Industry of Bangladesh

Low-cost of ownership

Easy to customize Easy to find qualified

personnel

STM Vision Infotech Ltd- -Tally .ERP 9 Features Payroll management, accounting, inventory

Governement bodies, NGO , Cement industries, Real-estate industry, SME industry

Sustainability Profitability Reduces operating

cost Return on

investment

BITS solutions Ltd-.net ERP Integrated business solutions, features-Fixed asset management , customer care and target achievement

Trading, non trading , manufacturing concern, Universities ,Poultry projects

One stop IT solution for Apparel Industry

Royal DatamaticsPvt.LTd, INDIA with CIBL, BD -APPS- complete ERP solution- commercial and shipping documentation, HR payroll, financial accounting, production

Apparel Industry

20

The products of ERP from local and foreign firms are highly dependent on the industry they

are targeting. In this ICT solutions, every operating model from of specific industry is

different, which encompasses their own tiers and specialized ways of inventory, HR,

production planning, financial accounting,security, MIS. So the IT companies with software

solution have to cater the need of the industry with a customized solution. These business

models vary even within the industry because company size, culture etc. For more

certainty,IT firms perform multi-level surveys and a thorough analysis of the players in

every dimension. This is the first step to matching one IT firms resources,software to the

need of the market they want to be in.

The varieties of the companies in existing market are also diverse in there underlying goals.

Their solution in long term depends on the perspective they fixed to think and work from.

The focus area should be on the viewpoint of their R and D goals but not on the existing

common sections of every business models such finance, HR, security etc. These even

helps the market leader like SAP to keep them updated and energized to innovate and

develop. On the other hand, local companies such as STM vision info-tech Ltd., has been

more prone to focusing on low-cost solution with convenience for users and businesses.

Also, the product type induces complex buying behavior and needs after sales service and

support to maintain the product. Other variables such as company culture also important

planning etc

Providing innovative business solutions that can be delivered quickly and cost-effectively in complex environments.

RAMCO SERVICES, INDIA distributed by Computer source bd- Ramco on demand

SME

Industry specific solutions

Competitiveness through customer insight

SAP- From Germany

Manufacturing, Import Export Industries, Apparel etc.

determinant of the need. So, any firms should have a thorough study and gather market

intelligence before entering the market or fixing on any strategy to enter.

Underlying Problems:

ERP installation cost is extremely high. Not only the initial cost but also even the

subsequent maintenance and upgrading cost is higher than average maintenance

expenditure for any capital good. Moreover the company has to undergo several

hardware upgrades as a result of ERP implementation. Bangladeshi entrepreneurs

with traditional myopic mindset tend to take decisions on the basis of profit margins

instead of future sustainability. So, even though many RMG companies (Around 500

companies with yearly profit more than $5 million) have the affordability to invest

for ERP, They rather continue to extract the cheap labor and increase the profit

margin

Bangladesh has a centralized labor-intensive system of management where

managers rely on various types of paper-based reports, unstructured decision

making, changing roles, and manual authorization procedures etc. By contrast, ERP

systems inscribe modern management concepts and values using online services

and highly structured processes, data, and roles. Hence the entire workforce who

are used to working in isolation will be required to work in an integrated working

environment which is some times non-adjustable as perceived my

mangers/administrators.

Most of the companies inhibit a hierarchical organizational culture having

seniors/top management as the ultimate decision maker. Decision-making is low

between junior and middle management. However, ERP demands decision making

at all levels of operations. Hence some companies dont want to adopt ERP, which

might go against a senior managers consent in future.

Most of the management level employees in Bangladeshi RMG sector are

accustomed to being employed by one organization for a long period of time, and

often to working within a particular function within that organization. With

experience, they become managers and owners of departments, not team players.

Again, this goes against ERP culture, which promotes shared environments.

22

Bangladeshi Garment industry has a low-wage work force. Savings achieved through

staff reductions are negligible compared to the cost of purchasing and implementing

the ERP software.

Though many local companies are providing ERPs at a lower cost, low quality after

sales service and point of parity while purchasing from among them ultimately leads

to dissatisfaction from the company perspective.

Need for the Survey conduction:

Thought the industry is growing at a much faster rate, adoption of ERP is not as fast

as the optimum level should be. Anecdotal evidence suggests that some large

organizations in this sector have successfully implemented full functional ERP

modules, some have customized it only to one portion only i.e. Financial functions

such as financials, assets planning and budgeting (usually without integrating the

main business functions, such as purchasing, inventory and sales) excluding the

overall functional activities. Some accumulate only the pay role and Supply chain

continuum in the ERP. Such examples focus on neither the fact that though the

industry is same, industry competitors needs are not identical nor their business

philosophies. Hence, as to operate profitably by targeting the right market with the

right level of software features; we have to conduct an exploratory survey.

Given the growth potential and market trend of RMG sector in Bangladesh, it is

pretty evident that the need for ERP will soon turn into substantial demand, but

after tackling several hurdles. Instead of traditional distinct SBUs promoting

standalone working environment, manual integration among functional areas have

started to take place in the garments industry. Initially we need to filter out the

effective target groups from among around 5000 companies; who would be willing

to pursue the expensive software-hardware change and re-skilling of the existing

workforce as to earn long-term profitability. And the entire decision depends more

on the top managements, board members etc. Whether they are ready to welcome

ERP or yet to get IT-matured is a vital question to get answer via organization level

survey conduction.

Several foreign companies are having their local partners successfully operating in

Bangladesh. Even a few Indian IT firms have partnered with Bangladeshi software

developers few years ago as to (RDPL-CIBL venture APPS software) provide middle-

upper quality software for companies with varied portfolios. A properly conducted

survey with companies experienced as such; will definitely provide us some

important data.

Almost 20 local software developers are providing low cost ERP software with a

view to tapping the influential RMG sector. Added to that 10-15 local

distributor/partner based foreign software firms (Microsoft, SAP, Oracle); being

imported on regular basis as to serve the premium clients (big garment companies).

Moreover open source ERP has made its entrance in some of the local industries

(Poultry-Kazi&Kazi firms) having low cost and constant availability as its Unique

selling and proposition. In a nutshell, the market is not an absolute blue ocean; here

price elasticity will be a major decisive; since buyers are involved is Complex buying

behavioral process. So, Survey with all the key market players sampled according to

varied strata, will provide us the proper pricing answer.

Specific Outcomes of the Survey: Specify different market needs (System Requirements)

Identify Gaps in the market.

Suggest different packages that help capture maximum market share with maximum

profitability

Provide a Price Elasticity of Demand Chart

Determine a realistic sales target and sales strategy

Marketing Strategy

Sugging and Networking.

Other Important factors about the Survey: Estimated Workload: 90 Key Informant Interviews with garments owners from Dhaka, Gazipur,

Narayanganj and Chittagong, One/ Two Seminars (Focus Group Discussions) with related

stakeholders

Work Span: Around 2 Calendar Months from the contract sign

Estimated Budget: BDT 160,000/ INR 110,000 (It may vary with the workload, this is just an

estimate)

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Conclusion: Enterprise Resource Planners are no more a need; its a necessity in Readymade

Garments Sector. Currently Entrepreneurial initiative or affordability; none of these

are creating hurdles as to adopt ERP. Rather most of the times, the Socio cultural

environment of top-down hierarchy in any particular organization-is creating the

problem. The market has enough growth potential, but the business process has to

be subtle and strategic. Hence the need of such survey conduction, analysis& finally

penetrating into Bangladesh market with a long-term vision.

Project Team:

Name Specialization Designation for

the Project

Responsibility

Zamil Rashid Economics, Statistics,

Qualitative Research,

Quantitative Data

Analysis, Project

Management

Team Leader Overall Coordination of the Project,

M&E, Maintain Client Relationship

Ayesha Sabirna Desk Research, Analysis,

Content writing, Intra

team communication

Research Facilitator Secondary research, Data Analysis,

Content developing

MuntasirTahmeed

Chowdhury

Research, Content

Writing, FGD

Research Assistant Coordinating Field Team, FGD &

KII, Managing Data checking and

Quality

Amitabh Guha Roy Planning, Field

Operation Monitoring,

Evaluation

Strategic Partner-

Monitoring and

evaluation

Project monitoring and Evaluation,

Developing key strategies

Hisham Uddin

Khan

Field research, KII, FGD

and Content writing

Research Assistant Coordinating Field Team, FGD &

KII, Managing Data checking and

Quality

Shawon Azad Education, Field and Desk Research.

QA Coordinating between the Research Team and the team leader. Assure the quality of data coming from field. Proofreading.

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THANK YOU