A study on
“SS ACCESSORIES LTD”
Garments sector is the biggest and fastest growing sector in Bangladesh. It is also the highest foreign currency earning sector in our country. As we know, our country is a developing country. The development and progress of our country largely depends on the export and import performance of garment products.
The future of garments industry of our country in the era of globalization depends largely on the performance of the component and support industries. The accessories industry is one of them. There are a large number of people involved in the garment accessories sector in our country. In this sector, SS Accessories Ltd is growing very rapidly due to smaller investment requirement, greater backward linkage facility & higher profit.
The report will mainly focus on the function of “Export-import department” in SS Accessories Limited. The proposed study will cover the function, practice, procedures and techniques followed by the Export-import department in generating and executing orders to and from abroad.
Background of the Study:
As we know, the accessories industry is a very crucial part of the garments industry. Now-a- day’s new strategy, processes, techniques and technologies are being used in this sector abroad which makes it even more important for us to do well in the accessories industry. To survive in the free market economy, we have to bring in new ideas and techniques to improve our export-import function of garment accessories .But for that one would require a clear understanding of how the accessories industry works in our country. A case study on such a representative company can serve the purpose and that is why I have selected SS Accessories Limited.
Rationale of the Study:
As we all know, garments sector is the most flourishing sector in the business of our country. On the back of a boom in apparel exports from Bangladesh, the garments accessory industry too has followed in its footsteps and taken off and flourishing like never before. Clothing accessories like zippers, buttons, labels, plastic bands, collar stays, and interlining, sewing threads, gum tapes and cartons are as important item, as the fabric itself in manufacturing a garment. Accessories sector contributes more than $2 billion yearly to the our national income and is expected to double within the next three years since the growth of accessories sector is related to garments exports, the surge in RMG exports in turn, will benefit the accessories industry to grow in the same manner. However, the dependence of this industry on the nominations of the foreign retailers leaves it in much vulnerability in the upcoming days. For the betterment of our garments industry, we must achieve self-dependence and self-sufficiency in the accessories sector. This will not only expand a $2 billion industry; but will successfully meet competition from countries like China, Hong Kong, Indonesia and India. If the accessories sector can keep up with the pace at which the RMG sector is growing, only then we can hope to establish a firm position in the international garments market. That is why it is very important to nurture the accessories industry very carefully so that once it becomes the most decisive factor in the RMG sector, we should not lag behind. That is why it is important that the upcoming business students learn about the basics and functioning of this industry, especially for those who are interested to build their career in this sector. That is why I have chosen to do this study.
Objectives of the Study:
The objective of this study or report is to present to the reader a picture of how a typical garments accessory company functions in the garments industry of our country. Acurious reader will find useful insights on the trends, business etiquettes, business methodology, marketing & promotional aspects, supply chain aspects and such other aspects of the garments accessories sector in this report which will enable him to understand the mechanism and functioning of this sector better. Since garment products are our main export items, anyone who wants to engage in this business needs to learn the basics of this sector. This report will also fulfill this need to some extent and lay the foundation for understanding the basics of operating an accessories company. However, the objective of this report is not to provide an overall scenario of the garments accessories sector in our country because that would be beyond the scope of this study.
Scope of the Study:
Some departments of the company which have been explored for this study are as follows:
§ Export-Import Department
§ Order Processing Department
§ Production Department
§ Accounts Department
§ Labor Department
Limitations of the Study:
A comprehensives study on any organization requires considerable amount of time and resource. due to lack of time and restrain on access to top level management, some important aspects of the company such as: company’s future capital requirement ,sources of funding, its bond facilities, tax holiday privileges, decision making process of the top level, company’s debt if any could not be covered. Due to limited access to company’s database all the information on company’s current financial status, future expansion plan, special deals with particular buyers and suppliers could not be included in this report. Some models and graphs have been presented which may appear as a crude attempt to draw the real scenario of the company. However, I have tried to the best of my ability within my positional boundaries to provide all relevant data and information that will help to draw a true picture of the company’s functioning.
Methodology and Research design Research design:
The research design followed for this study is basically exploratory or qualitative in nature. The objective is to provide insights and understanding of how a garments accessories manufacturer and seller usually functions in our country. Since the objective is not to test specific hypothesis and examine relationships, minimal or negligible amount of conclusive research is used. It does not mean to present a numerical picture of the garments accessories sector of Bangladesh, rather show how it functions.
Data provided in this report is mainly secondary and has been gathered from sources such as:
Primary Data Source
1. Face to face conversation with the respective officers and staffs of the branch.
2. Informal conversation with the clients.
3. Practical work experience with different departments of the organization.
Secondary Data Source:
Relevant files and documents as provided by the concerned officers:
1. Company’s computerized database files
2. Customer profiles
3. Supplier profiles
4. Transaction files
5. Purchase order or p/o files
6. Delivery files
7. Bill collection files
8. Bill payment files
9. Different types of commercial and regulatory documents related to import and export like:
§ Performa invoice,
§ Commercial invoice
§ Letter of credit to L/C
§ Bill of lading
§ Bill of entry
§ Bill of exchanged, etc.
10. Annual report of the organization.
Personal observation and depth interview are two data collection methods that have been used frequently for this study. Personal observation and access to company database as an employee has helped in collecting both qualitative and quantitative data. On the other hand, to reveal information on company’s internal decision making and managerial process depth interview has been conducted with the head of different departments along with the Managing Director. Simple statistical and accounting techniques have been used to present whatever little amount of numerical data available for the study. No structured questionnaire has been used, neither any complicated measurement nor scaling procedures since the aim of the study was to describe the functional process of a typical garments accessories company of our country, rather than prove some hypothesis or examine any relationship.
Information usually acquired about an order:
2. Factory Capacity
3. Factory History
4. Factory Setup Details
5. Market Reputation
6. Type of Buyers Dealing
Profile of SS Accessories Limited Introduction to the company:
SS Accessories Limited is a private limited company which deals in the import and export of garments accessories. It mainly focuses on importing accessories items from different countries. Overall, it is an importer, wholesaler and exporter of different kinds of garments accessories.
2713, Dobadia, Uttarkhan, Uttara, Dhaka-1230
Mission of the company:
The organization is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work-force.
Vision of the company:
They strive to provide the best quality garments accessories to their buyers. They practice advanced technology in all aspects of their operation to attain excellence concerning quality, dependability and commitment for apparel industry and society.
Business Ideology of the company:
Alongside providing best service to the clients, patronizing and taking part in social development activities as well as making due contribution to growth of the national economy.
SS Accessories ltd was founded in 2004.Initially the head office was situated at Shadarghat and the factory at Dobadia, Uttara. Later on the head office was shifted to Dobadia,Uttara. SS Accessories used to import only sewing thread and interlining in the beginning. Later on, as it grew larger,it added gum tape ,silicon oil ,dying materials to its product line .Md. Shahjahan is the founder and Managing Director of the company. He along with his cousin Md .Nazrul Islam started this company with a capital of only 20lac taka .Mr. Nazrul Islam owned only 5% of the company’s assets which was about 50lacks taka at the beginning .As the company became established in the industry, both the capital and assets of the company grew at a rapid pace and now it has assets worth 20 crore taka including the factory machinery and other current assets. Recently the company has bought its former sister concern J.P .accessories ltd and now Mr. Shahjahan owns and manages two companies simultaneously.
To ensure high level of quality, the organization is equipped with modern machineries and highly qualified employers and experts. A team of well-groomed technical and non-technical personnel’s are working round the clock to ensure the high level of quality timeliness and cost effective export and import. Thus ensuring the best possible quality price. To keep up with the customer’ sever changing choice of accessories; there are qualified technicians in the Research and Development department, who are working meticulously to comply with the choice of customers all the time.
S.S. Accessory ltd is an importer, exporter and wholesaler of garments accessories. It imports garment materials from countries like China, Thailand, Taiwan, Malaysia and India and sells them mainly at the local accessories market. Its export operation is not regular and it is done only when there is excess production at the factory. Then these items are sold on contractual basis to foreign buyer sat minimum profit. The company imports mainly raw accessory materials which are fabricated and modified at the factory to convert them into finished goods. For example, once the raw material for thread that is polyester yarn is brought into the factory, it is transformed into usable sewing thread which is the main ingredient of readymade garments. So, from this point of view, the company serves as a middleman in the supply chain or flow of product to the market.
Import and Export items:
1. Polyester yarn
2. Sewing thread
4. Gum tape
5. Silicon oil
Business Affiliates of the Company:
In modern marketing term buyers are considered as business affiliates. Here are the most important business affiliates for S.S Accessories Ltd:
1. Associated Garments Ltd
2. B.P Garments Ltd.
3. Bari Apparels Ltd.
4. Basic Shirts Ltd.
5. Vision Garments Ltd.
6. Dell Fashion Ltd.
7. Comfit Composite Knit Ltd.
8. Fashion Support Ltd.
9. Friends Knit Ltd.
10. MIM Fashion Ltd.
Most of the trading of garment accessory items is done on contractual basis in the market. This has been the trend of this industry from the very beginning. Relationship with buyers and suppliers are the single most significant factor in keeping the company functional. As long as the company is in the good terms with its buyers and suppliers, it can hope to survive in this very challenging environment of competition. S.S .Accessories ltd has strong relationship with some large local buyers of sewing thread, gum tape, interlining, silicon oil which generate almost 75% of the orders for the company year round .Goodwill, trust and good working relationship serve as the foundation for business in this industry. Most of the contracts for orders are oral in nature which is a surprising fact. Only when the LC is opened for the foreign supplier, the local buyer makes some reimbursement to the company. And the rest of the payment is made only at the delivery of the ordered items. However, it all starts with sampling.
Sequence of Sampling:
The first physical version of any garments accessories is developed as per the artwork done by designer.
Usually the buyer asks for some changes to the first pattern. Second pattern is made as per comments.
Where first pattern is made on designers artwork, counter sample is to make not on designer’s artwork, has to follow another sample given by the merchandiser.
Sample is made when price is confirmed and orders are on speculation, usually in size and color combinations of as per the expected order. Buyer arranges a meeting with its customer, and records their response on order quantity per color and size etc. and finally place order to their vendor.
In any discrete period of time, whenever it required any revision in the sample, a new sample is made (sometimes mock-up is workable too) as per new specification. It is sent to buyer for his approval of the conformity that- the revision is done correctly.
When material for bulk production arrived, factory makes a sample with the actual material and sends to buyer.
It is a reference to the buyer that the bulk is being produced as per specification. Buyer wants to be assured that correct material is sourced and line workmanship confirm to the quality.
A sample is kept from every pre shipping inspection to be referred, if required, after the order has been delivered. Usually for any disputes (e.g. Claim)shipping sample is important.
Company Organ gram:
Top management of the company;
|Mohammad Shahjahan||Managing Director|
|DelwarHossain||Chief Accounts Officer & Advisor|
|Mohammad Ahsan||Production Manager & Advisor|
Different Departments of the company
Dealings with foreign suppliers on the basis of local purchase orders are executed in this department. The performance of this department largely depends on the marketing department and the order processing department. Mr.Shahjahan is the head of the department.
This department monitors all the functions related with exporting product outside the country. It ensures quality of the export product..Mr. Baizid is the head of the department.
Order Processing Department;
All the related procedures of executing import, export and wholesale orders are executed physically in this department. It is the busiest department of the company. It mainly works in tandem with the import, export and production department. It also maintains the necessary paperwork for these respective departments also. Mr. Harun is the head of this department.
SS Accessories Limited has an experienced team in this department headed by senior cost and management accounting professionals. Md.Delwar Hossain is the Chief Accounts Officer (C.A.O) of the company.
Logistical services include repair maintenance facilities such as plumbing and prompt troubleshooting. Permanent maintenance personnel ensure that the products are in good condition. Mr. Ruhul Amin is the head of the department.
Marketing and Merchandising Department;
One of the company’s strongest points is its efficient Marketing Department. This department is very important for every garments company and garments buying houses. This department gives personal attention to each client and is known for its prompt, effective action. A merchandiser serves a Data Bus between buyers and sellers. A warm, friendly atmosphere is created for the client who can make purchase decisions at his/her pace without feeling pressurized. Mr.SaifulHasan is the head of the department.
The factory is under the direct control of this department. All the modification, fabrication and processing of raw materials takes place under the supervision of this department. Mr.Ahsanis the head of the department.
Quality Control Department;
This department ensures quality of the import and export items. This department is controlled by the Q.C. Managers. They verify the quality as the buyer indicates in their order. They audit all the process, pre-production to packing & final audit. Mr. Ahsan is the head of the department.
Numbers of Employees;
The number of employees has gradually increased over the years because of rapid expansion of the company business. As of 2010, there are 35 employees at the managerial level,15 employees at the supervisory level and 300 employees at the operator level. There are other support staffs who work at part time basis.
A Review of the Supply chain of the company
The raw materials that are used in the factory to produce finished goods are imported from abroad. Once an order is gained from the local market for any item it is passed onto the order processing department. Here takes place the tasks that are involved in completing an order. As per the order, the requirement for raw materials is figured out and then price quotations are asked from foreign suppliers. All these communication takes place on the internet and over the phone. As the price quotations arrive, they are considered and compared very carefully and a comparison chart is prepared that includes price, quantity and quality. Then it is submitted to the MD for his consideration .Generally, an informal discussion takes place between the head of the order processing department and the MD on the selection of the supplier. In the discussion the present market condition, the exchange rate, quoted price, selling price, probable delivery date, reputation of the supplier and other related aspects are included. Then primary talks with suppliers take place. Then further discussion with the MD on issues like rebate, price concession or other offers follow. Once a supplier is decided upon, it is informed about the terms and conditions of the company and invited for further discussion. At this stage of the order cycle, both the parties try to reach agreements on some points such as price, quality, quantity, delivery date, shipping arrangement and so and so. Once both the parties come to common terms, the supplier is asked to send a preformed invoice or PI. Once the PI is sent by the supplier, it is inspected very carefully, so that any correction can be made if necessary. Then it is submitted to the MD. If he finds it okay, he signs it and asks the head of the order processing department to complete rest of the formalities. Then Mr. Hamid who is in charge of bank related functions is given the PI and asked to open the L/C. Once the L/C is opened, the supplier takes necessary steps to fulfill the order. Time to time update on the progress of production is taken from the suppliers. Normally, it takes 30to 45 days for a supplier to complete production. Then it takes another 15 to 20 days for the shipment to reach the destined port. Once the goods are loaded on the ship at the point of departure, BIL(bill of lading is prepared) is prepared and a copy of that is sent to the company.
On the basis of this document and other related ones, the shipment is collected from the port and transported back to the factory. All the necessary papers are processed by the order processing department. After the shipment reaches the factory, it is divided into lots and then they are sent to the factory where the raw materials are fabricated and modified into finished items under the supervision of the production department, Mr.Ahsan is the head of the production department who takes care of aspects like quality control, production scheduling, batch processing, finishing and so on. Scheduling and processing orders is a very lengthy and complicated process. It takes careful calculation, speculation and forecasting to ensure delivery of quality products at the right place at the right time. So the order processing department and the production department has to maintain frequent contact to coordinate the order cycle, production cycle and delivery cycle.
Once the production is complete the finished goods are moved to the store where Mr. Khaled who is in charge of the store, arranges them according to purchase orders and prepares list of delivery item. Then he submits it to the order processing department which prepares invoice and other related documents based on the product list. Then the local buyer is informed about the delivery into follow and asked to take necessary steps to accept order and pay rest of the bill. Though at times when the demand is high, the buyer is asked to make full payment in advance, but usually the local buyers makes partial payment to the company about 25%to 30% of the consignment value at the time of opening the L/C. Since the company is very cautious about its reputation, someone from the production department is always sent with the delivery van to the buyer’s place so that any misunderstanding and miscommunication does not occur at the time of accepting the delivery. That’s how an order is executed usually by the company.
Financial scenario of the company
S.S ACCESSORIES LTD.
2713, Dobadia, Uttarkhan, Dhaka.
As at 30 June, 2010
Capital & Liabilities :
Authorized capital: Amount (tk.)
2, 00,000 ordinary shares of tk. 100/-each 20,000,000
Issued, subscribed, Called, & Paid up Capital:
25,000 ordinary shares of tk. 100/-each 2500000.00
Lease finance (Uttara Bank)
Less: Payment 2,310,000
Current Liabilities 1,196,326
Property & Assets
Fixed Assets (As per sch-1) 2,835,024.30
Preliminary Expenses 25,000.00
Security Deposit to DESCO 12,000.00
Profit & Loss App. A/C1, 410,618.00
Closing Stock 822,520.00
Bills Receivable 342.574.00
Case at Bank 25620.00
Cash in Hand 532,969.70
S.S ACCESSORIES LTD
2713, Dobadia, Uttarkhan,Dhaka
Profit & Loss and Profit & Loss Appropriation Account
For the year ended 30 June, 2010
Particulars Amount (tk,) Particulars Amount (tk.)
Office Stuff Salary 372,500.00 Gross Profit 1,190,695.00
Bank Interest 315,250.00 Net sale 720,017.00
License Fees 85,500.00
Stationary Purchase 105,455.00
Medical Expenses 44,032.00
Free Sample 26,322.00
Audit Fee 85,663.00
BusinessPromotion Exp. 50,250.00
Delivery Service 15,800.00
Total 1,910,712.00 1,910,712.00
Balance B/F 690,601.00 Balance Transfer to B/S 1,410,618.00
Net Loss during the year 720,017.00
S.S ACCESSORIES LTD
Manufacturing & Trading Account
For the year ended 30 june, 2010
Particulars Amount(tk.) Particulars Amount(tk.)
Opening Stock 499,164.00 Cost of Production 5,813,392.00
Purchases 4,783,411.00 Closing Stock 822,520.00
Packing Materials 420,511.00
Loading Exp. 177,520.00
Factory Rent 120,000.00
Electric Bill 95,375.00
Customs Exp. 84,720.00
Cost of Production 5,813,392.00 Export sales 7,004,087.00
Gross Profit 1,190,695.00
Marketing &Promotional strategies in Import & Export functions:
Import department plays a vital role in generating desired profit for the company .The success of the company largely depends on how the organization imports products. So the import department of the company must accompany the financial goals of improving sales and margins, reducing importing costs, inventory carrying costs and the need for mark downs.
This would encompass three broad areas of consulting:
- Vendor Management
S.S. Accessories Ltd follows the following importing strategy to ensure their financial optimization and to provide better service to their clients.
|Product Import Strategy|
Though SS. Accessories Ltd is not directly involved in selling readymade garments but we it has some business partners such as Ornob Fashion Wear Ltd, B.P garments Ltd who actually uses its imported accessories to produce readymade garments. They focus on long term business relationship principles and sales policies. So SS. Accessories also has to adjust some of its business strategies to maintain profitable relationship with them in the long term.
SS. Accessories Ltd comprehensively pursues the concept of the primacy of the business front line and quickly responds to the changes in the market by incorporating the concept that cannot be obtained from using only POS data, into our business decision-making procedure.
Proposed Scheme for Large Sales:
SS. Accessories Ltd has been promoting the Scheme for Large Sales. The Scheme for Large Sales is a system that supports strategies for collecting accessories order from different clients, forecasting orders, sales promotions and merchandise supply. The system is designed to achieve the five pillars of success, namely “the right time, the right products, the right quantity, the right place, and the right price” by organically combining three dynamics, stores, products and sales based on the concept of the primacy of the business front line. It attempts to strengthen the foundation of company business and grow business simultaneously with its partners by promoting the structure of the Scheme for Large Sales.
Company’s Export business:
S.S. Accessories Ltd is not a 100% export oriented company. There are some contractual buyers in the local market who maintain regular contact with the company’s general manager and managing director to learn whether there is any overproduction .At times, the managing director or general manager call up these contractual buyers and enters a deal or contract with them to sell the overproduction to any foreign buyer at some commission. Obviously, the margin of profit in these cases is very slim and most of the times the bargaining power resides with middlemen as the company is in no direct contact with foreign buyers. Despite the margin being slim in these deals, it helps the company to earn added revenue, prevent spoilage of valuable goods and keep the production running in time of low demand in local market .This is a very important ploy for the company because demand in local market is very unstable these days due to rising international prices of raw materials.
Current Marketing Strategy
S.S. Accessories Ltd believes that it is important to establish extensive information contact points with customers. For that purpose, it carries out mass marketing extensively, with such measures as sending information on accessory products and events using flyers and company website, list of merchandise in simultaneously. It also carries out one-to-one marketing sending mails, catalogs and direct mail.
Proposed Media Mix Strategy
Company’s basic stance for marketing is to adopt “media mix strategy,” using multiple media efficiently and effectively by capturing the characteristics of each media. In consideration of the features of each product and the location of our factory, it works to generate synergy in our marketing by supplementing the advantages and offsetting the disadvantages of each media, using media suitable for the customer base as the main target, while creating consistency in the key visuals and messages transmitted by the campaign in each season.
Throughout the year, the company strives to construct a trinity of “import raw materials, processing and sales promotion” by making links among import plans, phase plan and mass marketing sales plans at marketing department. It aims to maximize sales by combining sales promotion media and tools with its main products and sales policy in each season.
Proposed Export-Import business methodology;
S.S Accessories Ltd is an emerging garments accessories importer of that is also involved in exporting garments items at irregular basis. So it follows a series of steps that comprises its export -import methodology. It consists of:
1. Organization readiness Assessment
2. Management alignment with business goals
3. Market and format Assessment
4. Assessment of the modalities involved in entering a specific market
5. Retail Globalization Strategy
Locating products is one thing, making the sale is another thing. Problem solving (matching the right products to the customer’s need) increases the chance of closing the sale and boosting volume. Successful matching requires linking product uses to needs.
The following are some problem-solving techniques made possible by product usage attributes:
· Up- and cross-selling
· Customer relationship tools
Up- and Cross-Selling
Sites are beginning to add up-selling and cross-selling capabilities to enhance per-sale revenues. Up-selling offers more capable (and more costly) versions of a product. Cross-selling offers a complementary product to be purchased at the same time to expand the range of problems solved. Up- and cross-selling require links between models with varying levels of capacity and features and links to products with complementary uses.
Some sites focus on providing all items needed for specific uses, problems, or applications. For example, road warriors who want a portable printer may also need specific cable, batteries, power supplies, replacement print cartridges, ink tanks, special types of papers, helper applications, portable scanners, and even online access to clip art—all items that can be classified as “for use with” the portable printer.
Customer Relationship Tools
The customer relationship data, such as product preferences, past purchases, and demographics, can help shape marketing strategies, if the relationship information is recorded in data attributes. The efficient way to employ customer relationship data is to accumulate preferences and purchase history on an ongoing basis in a customer profile—and ensure that this data can be linked with product detail for subsequent promotions. This approach is being adopted by increasing numbers of retailers and direct marketers for their customer loyalty programs.
Or the user can analyze past sales data and classify customers after the fact. This is difficult if product descriptions are the usual haphazard abbreviations shown on invoices.
The following marketing techniques can be based on linkage of customer relationship attributes to product information:
· Customer preferences
· Past purchases
Keeping a record of preferences can enhance company’s relationship with customers in many ways. For example, maintaining the customer’s preferred payment method reduces form fill-in at payment time. Size, color, texture, style, genre, lifestyle, and language preferences can simplify the purchasing process and enhance sales for clothing, house wares, sports gear, music, books, periodicals, and other goods. Customer preferences need to tie back to category or item-level attributes to work effectively.
Records of past customer purchases, especially accessories, can enhance sales opportunities for extended warranties, supplies, maintenance, upgrades, and add-ons. Past purchases of supply items can drive seasonal or customer-specific promotions. Leveraging purchases data is straightforward if the product codes used in recording the original sale are accurate and meaningful.
Much business purchasing is done under supply contracts. Contracts can be administered systematically online if discounted items are explicitly listed in the contract (in other words, a contract-specific version of the catalog is prepared). Tiered discounts are often based on purchase volumes by commodity class, which requires accurate classification of product items.
Meeting customer-specific requirements can cement company’s relationships. Customization requires data fields at the item level, carrying them through the order process. Business-to-consumer examples include storing measurements for make-to-order clothing and custom-fit bicycles in a profile and enabling custom selections of music on CDs. Business-to-business examples include storing specifications for make-to-order servers, routers, lab equipment, and specialty chemicals in a profile, and enabling custom configuration of personal computers and servers
Finally, product locators, problem-solving techniques, selling strategies, and customer relationship tools all rely on attributes to associate products with one another, marketing techniques, and customer groups. Until recently, it has been difficult to rapidly deploy new Export-import and marketing strategies, because of the need to add new attribute fields and update existing field values for catalog entries