Tahiya Nuzhat Peata
In this era of competitive market, the world is striving for achieving higher productivity. The biggest challenge and burning issue for the companies is how to get value for the money invested in workforce and infrastructure in terms of productivity. Productivity is the simultaneous implementation and application of efficiency and effectiveness. In textile manufacturing units, this is of special concern as skilled workforce and advanced machinery exist side by side and plays a synergistic role in production. For potential business growth and holding sustainable position in market, productivity and efficiency are the important and core part of apparel Industry now.
With the introduction and development of Industry 4.0 at high pace and uses of advanced technology, competitive markets increased, the value of CM (Cost of Manufacturing) and FOB (Free on Board) decreased. In this situation, the brands and the retailers are very much aware now about the CM, calculation of wastage percentage, all cost associated to produce a garment by garment factories before placing orders to a readymade garment (RMG) for the best bargain price. In this situation, most of the Bangladeshi apparel industries are still with around 40% worker productivity, which can be considered not up to the mark compared to the neighboring RMG industries, who have flourished at a great extent in this mean time.
There comes the question, how can we exactly change our year- long traditional mind-set to remove all these current obstacles? What are the general and important steps to take to increase productivity, keeping the efficiency level on track and make sustainable business profit to establish good position in the world market place? This article tries to put a light on the current scenario and all these questions’ possible answer to give an outlook about productivity of garments industry in Bangladesh.
Back to Basics- Productivity Calculation Methods
There are so many formulas and calculation process that is used in the production floor of any apparel industry. Productivity is concerned with efficient uses of resources (input) in producing goods or product (output). The ratio of these two is said as productivity.
Productivity = Output / Input
There is another term called ‘Partial Productivity’. Internationally this is a popular method to calculate productivity of a production floor. It is because the data needed for the partial productivity measurement is easily available and the results of productivity calculation can be used by the department or the section in-charge to analyze and evaluate its performance, efficiency or to plan improvement. Also, in our country generally 3 types of partial productivity formula are used:
- Labor Productivity (the ratio of output to labor input)
- Material Productivity (the ratio of output to material input)
- Machine Productivity (the ratio of output to machine input)
The inputs can be measured in terms of time (minutes, hour, days or months) and also in financial terms. ‘Total productivity’ is the ratio of total output to the sum of all input factors. It is a type of higher level of productivity measurement combining several or many partial productivity measures of a factory.
There are some other ways of calculating efficiency level, waste reduction which is in great relation with the productivity to keep on check. Some RMG industries in our country and their IE department has already started using these calculation methods (SMV, WIP, Man to machine ratio, lean, six sigma, 5S etc.) and other software.
Current Scenario in Bangladesh
At the beginning of the revolution of apparel industry in Bangladesh, productivity percentage was very relaxed and flexible. The labor cost was low and CM value was high, for which companies didn’t focus on the productivity and worker’s efficiency levels. Now when scenario is different in the other parts of the world, Bangladesh is still in a slow pace to grab the high-speed advancement with the huge development of the world apparel market. Skilled labor is becoming more important as production operations are demanding better and improved performances. As from Manufacturers perspective, the profitability is very low, and many are suffering from cash flow issues also. The investments that the factories had to make in building and fire safety has created an additional pressure for some companies. Though a number of manufacturers are making change in their infrastructure, workers skill enhancement etc., still most of the companies are lagging behind and the steps taken are not in the right way to achieve high productivity.
Recent data by Dhaka Chamber of Commerce and Industry (DCCI) revealed the statistics, quoting the Asian Productivity Organization (APO) Database 2018. Per hour labor productivity is calculated as the value of GDP produced per hour at constant price, it said. Garment labor productivity per hour is still lower in Bangladesh than its competitors except Cambodia in average output. Bangladesh, is the second lowest in terms of labor productivity per hour which, according to the data, is valued at $3.4. The largest garment exporter China’s per hour productivity level is calculated at $11.1. Based on per hour work, the labor productivity is recorded in Sri Lanka at $15.9, followed by Indonesia $12.3 and the Philippines $8.7. Labor productivity of other major garment exporters India, Vietnam and Myanmar are also the higher which are $7.5, $4.7 and $4.1 respectively. Bangladesh stays behind all seven garment producing competitor countries except Cambodia and has a 77 per cent gap with China. The government claims that the country’s overall labor productivity increased to 3.8% between 1995 and 2016, by the help of necessary efforts taken by the National Productivity Organization (NPO). Also the government has set a target of increasing productivity per work hour by 5.6% on average per annum between 2021 and 2030. Most of the apparel factory’s efficiency is level hopelessly below average 40% – 45% in Bangladesh, compared to the global benchmark of 75-85%
From different sources and research, various reasons and problems can be identified behind the lower productivity of Bangladesh RMG Industry. In general, Company authority or management and infrastructure, workers can be identified as the key stakeholders for influencing the productivity level of any apparel industry in our country. The reasons and problems regarding lower productivity can be stated under these stakeholders.
- Worker Problem:
- Lack of technical skill and training
- Migration and absenteeism
- Health complexities and Malnutrition
- Management and Infrastructure Problem:
- Lack of strategic decision and planning
- Lack of proper supervisory
- Not being concerned about investing for machine or technological upgradation
- Improper working environment
- Inadequate training facilities for the workers
- Lack of strong communication and negotiation skill
- Improper waste management and use of resources
- Non-productive time (NPT) and Defects per hundred units (DHU)
- Supply Chain issues
Productivity leads to Profitability- how to remove the barriers
Understanding the necessity of both productivity and profitability is the key to running a business successfully, as it is tough to have one without the other. Research has shown that the most successful work environments are those that maintain a high level of worker engagement through continuous support, safety and making them valued, which inspires the worker to feel a vested interest for success and motivated to perform at high rate of productivity. Proper use of the resources and waste management is also a vital sign of productive environment of a company. In our apparel industry, there are different solutions that can be done to improve the productivity and efficiency. We can also observe our neighboring countries and their productivity development process.
Some steps that can be taken are:
- Modern technological implementation in the factories, from unloading from vehicle to works of the production floor (Handling, cutting, sewing etc.) will help to save time, reduce the Man-machine ratio (MMR) and minimize the cost.
- Optimum utilization of resources and waste management procedures is must to enhance the productivity, some factories are already applying different types of method (Lean, Six sigma etc.)
- Proper planning, scheduling and strategic supervisory should be done in the production floor, non- productive time (i.e. Machine break down time, fabric difficulties, style change etc.) needed to be reduced. It is also said the Defects per unit (DHU%), that expresses the number of goods a factory produced with better quality, should be less than 2-3% cause by that, the job of correcting anything over and over again will be less.
- Technical training should be taken for the workers to learn about the modern machinery and technology. Workshops for mid-level management should also be done to remove the communication gap and making proper directional flow from top to low level. All these will help everyone to be engaged, motivated and stay in positive working environment.
- Productivity measurement system should be introduced and needs to be checked, right operators should be assigned to the right task according to their skill and expertise.
- Worker’s safety and good food should be an important concern for the company authority. For removing absenteeism and disinterest in work, incentive and motivational schemes should be introduced.
In a nut shell, the key factors that is affecting productivity and quality are mainly related to people, infrastructure, system and not investing in technology. It is high time that the manufacturers and company owner in our country should avoid only considering cheap labor as trump card to sustain in competitive market, they need to focus to upgrade and applying necessary steps to increase their productivity level. Raising hourly target in production floor can create pressure among the workers, so production officers should be careful about that. To forge long term partnership with the customers and sustainable growth, productive worker and company authority should join hands together to build up bright future for a profitable and successful business.