Project and industrial place Overview On Beximco Group

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ESSES FASHIONS LIMITED

Factory Profile

Products and Customers

Primary Products: Polo shirts, Rugby Shirts, Golf Shirt, Tank Top, T Shirts, Dress, Long Pant, Jacket.

List of Machinery

CUTTING SECTION

SEWING SECTION

FINISHING SECTION

Production Capacity

Delivery Schedule

Average Work-In- Process Time ( From Approval to Ready to Ship)

Delivery Methods & Average Lead- times to Any Port to USA/ Europe

Strength of Workers & Staff Date: 05.05.2010

Categories wise Manpower Strength for Workers & Staff

Gender wise Manpower Strength (Mgt. & Staff)

Line wise set up

Production Department Set up

Manpower Strength of Management Staff

Department wise Manpower Strength (Management Staff)

MERCHANDISING DEPARTMENT:

3.1.1 Business Development:

In merchandising departments Merchandiser teams work for business development. They communicate with buyer in mail, telephone, participating in international fair in Own and other country is Major factor of business development. This stage company present their previous items, reputation, strengths of capability, Quality etc.

3.1.1.1 Analyzing the International Buyer

In every marketing situation it is important to understand potential buyers and the process they use to select one product over another. Most of the elements of a mar­keting program are designed to influence the buyer to choose your product versus a competitor’s product. In the case of each type of buyer-consumer, business, or government-the marketer must be able to identify who the buyers are, what is the size of the potential market, and how do they make a purchase decision. For example, in purchasing automobiles in Italy, who usually makes the decision, the husband or wife? When a Japanese company purchases a computer system, what type of people are involved? Is price more important than the reputation of the computer manufacturer? When young man in Germany decides to open a savings account, what information sources does he use to select a bank? Having set a framework for understanding international buyers, we will exam­ine each type of buyer-consumers, businesses, and governments

3.1.1.2 International Buyer Analysis Process

Identification of Potential Buyers

Estimate of Total Potential Market Size

Identification of Members of the Buying Group

Determination and Weighting of Selection Criteria Used

Identification and Weighting of Information Sources

3.1.1.3 Mailing corresponding with Buyers:

For every update, Merchandisers need to update Buyers corresponding with new buyer and as well as on daily basis either by mail or sometimes calling them. When the fabric & trims are in housing, when the materials will be approved by them, when we are expecting to start the production etc. Alana updates on every issue related to manufacture and other activities so that they can proceed smoothly without facing any problem. Sometime they talk over phone with USA, European countries, Hong Kong, China, Korea, Pakistan, India to finalize the problems if arises for any issue.

3.1.2Consumption, Pricing &Costing :

After communicate Buyer merchandiser give a initial costing and consumption for make understanding their range of capability of buying and selling .If both satisfied costing and consumption than business will started next level.

3.1.2.1 Consumption

Fabric consumption for woven fabric:

The quality of fabric which is required to produce a garment is called consumption.

10.2 System of fabric consumption

There are two type of fabric consumption:

Marker planning system (actual)

Mathematical system / estimation

3.1.2.2 Basic principle of marker planning

Pattern set (small, medium, large & XL)

Place it on marker paper

With regards to fabric inspection the factory generally inspects 10% of the fabric, in case there is a problem the factory goes on to inspect 100% of the fabric.

For fabric shrinkage test – different procedures have to be adopted for ascertaining the shrinkages for a washed and a non-washed style.

In case of a non-wash garment testing 10% of the fabric is sufficient to determine the shrinkage that needs to be included in the pattern. The fabric is washed based on the recommended wash care instructions in the FPT.

In case of a washed garment, 100% fabric should be tested for shrinkage. The test is done as per the wash recipe. Once all rolls are tested, the rolls are segregated as per the shrinkages and different patterns are made to incorporate the shrinkages.

Factory then also checks the fabric for shade banding, compares the same with the once sent by the mill and if found acceptable sends one sent out to log the same with customer. ‘3¹nce the buyer confirms that the shade bands are ok, the fabric is ready to be cut.

3.1.2.3Consumption calculation for Basic Shirt

Example:

For a long sleeve shirt:­

Spec. sheet:­

Collar= 16″ Chest = 48″

Center back length = 31″ Sleeve length = 34.5″ Drop shoulder= 21 “(yoke) Arm hole depth (1/2) = 10.5″ Cuff = 9″

Pocket= 6″ x 5.5″ Yoke is all time = 4″ [Area means – L x W]

Back part

Formula:­

(Center back length + allowance) x (1/2 chest + allowance)

36 x 44

= (31″ + 2″) x (24″ + 2″)

36 x 44

= 0.541yds

Yoke

Formula:­

(Yoke length + allowance) x (yoke width + a(allowance)

36 x 44

= (21’+4″) x (4″+ 1”)

36 x 44

= 0.079 ydz

Front part

Formula:­

(Body length + allowance) x (‘/a chest + allowance) x 2

36 x 44

= [131¹¹-1 %4″+1″}X{12″+2%z”}]2″

36 x 44

= 0.562 yds

Sleeve

Formula:­

(Sleeve length + allowance) x (arm hole depth full + allowance) x2

36 x 44

= {sleeve length -(1/2 drop shoulder +1/2″) x (arm hole depth + allowance)) x2

36 x 44

= {34 ‘/z” -11 “} +1⁴1 x 121″ +1⁰) x 2

36 x 44

= 0.68yds

Cuff

Formula:­

(Cuff length + allowance) x (cuff width + allowance) x2

36 x 44

= (9″+3″)X(2%z”+%2″)X2

36 x 44

= 0.05yds

Collar

Formula:­

(Collar length + allowance)x (collar width + allowance) x 2

36 x 44

(collar length + allowance) x (collar width + allowance) x4

36 x 44

= (16″ + 5″) x (2″ +1 “) x 4

36 x 44

= 0.159yds

Pocket

Formula:­

(Pocket length + allowance) x (pocket width +allowance)

36 x 44

= (6″ +2″) (5%Z” +1″)

36 x 44

= 0.032yds

Total consumption for one garment = 0.541+0.079+0.562+0.68+0.05+0.159+0.032

= 2.100yds per garment

Per dz = 2.100 x12

= 25.20/dz (ypd) + 5%

= {25.20 x5 / 1001 + 25.20

= 1. 26 + 25.20

= 26.46

3.1.2.4 Consumption calculation for trouser

Measurements:­

Out seam = 42″

In seam = 32″

Waist = 36″

Hip = 40″

Bottom = 20″

Find out fabric consumption / dz if fabric width = 58″

Formula:­

Out seam x thigh x 4

36″ x 57″

= (42″ + 2″ + 2″) X (Hipl4 + 1.5″ + 1.5″ ) x 4

36″x 57″

= 46″ x(40″l4 + 3″) x 4

36″x 57″

= 46″ X 13″ X 4

36″ x 57″

= 1.165 yd /per trouser

yd l per trouser + zipper fly (2) + pocket facing (4) + back pocket bone + belt loop

= 1.165 x 5% (for regular trouser)

{= 0.058}

= 1.165 + 0.058 = 1.21

= 1.21 +5%

= 1.21 +0.060 = 1.270 x 12 (per dz) =15.24 ypd

3.1.2.5 Consumption calculation for Knit Fabric

For, T-shirt {(s/j) 30/1 combed yarn}

Measurement:­

Length = 70 cm

1/2 chest = 60 cm / dia . Sleeve length = 25 cm,

Arm hole width = 40 cm, GSM = 145

Find out consumption / dz in kg?

Formula:­

(Back length + sleeve length) x1/2 chest x 2 x GSM x12

10000 x 1000

= {B.L +S.L x chest x GSM x12}

10000000

= {(70 +5) +(25 +5)} x 60 x 2 x145 x12

10000000

= 2.28 kg + 7%

= 2.28 kg +0.159

= 2.439 kg [neck and sleeve are made rib so add 0.10] All time collar in rib = (350-400)

3.1.2.6 Pricing

Pricing is a creative marketing exercise done by the marketing manager. Pricing is taking a decision about the price to be quoted in the market. It is the marketing manager who will decide whether he can sell (or wants to sell) a product at a very high price, or that he will quote a price which is 5% lower than the price of the main competitor. He may even have good reasons to sell below cost price and accept a loss.

3.1.2.7 Some cost price calculation considerations

Even today some smaller companies in the industrialized countries get away successfully by setting their (domestic) sales prices by simply undercutting the prices of large scale competitors with 5% or more, without even trying to make a serious calculation. This may work in cases where there is limited competition and if that competition comes from a few large companies since

the high overhead costs of the large corporations nullify the advantage of the economics of scale at the purchasing level of raw materials.

marketing costs are with the large corporati­ons normally much higher than with smaller companies.

a low profile operation of the smaller companies works in their advantage.

This pricing policy does not work for exports however. Before attaching an export price label to a product we have to take a number of details in to consideration among which

the market segment

the promotional activities needed to penetrate that segment

price levels of comparable competing products

anticipation of a strike back from the competition

the considerations of high price/maximum profits or lower price/growing market share

total strategy

actual cost price

3.1.2.8 Components of a cost price

A cost price comprises a number of components:

I). Fixed production cost:

All production costs not directly related to the size of the production such as depreciation of machinery, energy consumption for heating in the factory, maintenance, factory management and workers that cannot be laid off even if there is no work for them, etc.)

II). Variable production cost:

Cost directly related to the production of a certain quantity of products: Raw materials, accessories, packing materials, direct production labor cost, energy to operate the machines, etc.

III). Overhead expenses

Non-production related fixed cost such as administration, maintenance of office buildings, non-production personnel, cars, representation, interest on general overdraft facilities or mortgages, etc.

IV). Logistic expenses:

Transport from factory to the harbor, sea (air) transport, special packing materials, insurance, bank expenses, etc.

V). Marketing and distribution

Agent´s commissions, ware housing, Promotion, service, trade fair participation, travelling, brochures, etc.

VI). Hidden profits

Overhead expenses can contain sometimes a hidden profit. Let us presume that a company sold last year 200´000 pieces and the overhead expenses were $ 150´000. The overhead expense can be calculated at $ 0.75 per unit (150´000/200´000). If the company takes this $ 0.75 for today´s calculation as well, but the expected sales volume for this year is 300´000 the actual overhead per piece drops to $ 0.50.

Exporting at a lower profit margin than obtainable in the local market can very well be a wise decision. The more or less hidden advantages are:

the Economics of scale (lower prices for larger quantities of raw materials) this has a positive effect on the cost price for the locally sold products as well

full utilization of producti­on capacity. This results in lower fixed production cost per product unit.

larger sales volume per year let the fixed general cost drop per unit.

3.1.2.9 Systems of Costing

Cost information is one basis of a firm’s decision making. Decision making is usu­ally related to a time span of activity that may be short range (days or weeks) or long range (months or years). When viewed in the context of a time span, costs that are variable and non variable change. For example, labor costs and factory costs, when viewed long range, are variable costs that increase or decrease as the demand for product fluctuates. Plants can be opened or closed and employees hired or laid off. The same costs when viewed for short-range decisions become non variable costs as the investment has been made in the factory and the labor force employed. The type of plant, skill level of the workers,’ and the type of equipment that is avail­able limit short-range decisions. Decisions impacting the short range should deter­mine how to achieve the most output with the investment that has been made.

When viewed long range, labor, materials, and factory overhead are variable costs. When these same costs are reviewed for immediate decisions they are non­ variable. Long range, priorities change and variable costs can be changed with ap­propriate decisions.

There are several different types of cost systems that firms use, and each has its benefits and drawbacks. Managers must determine the cost information needed and how the information will be used. Some of the systems generate good product cost data for external reporting but are not relevant for internal man agreement decisions needed by the firm. Others provide incomplete information for accurately differentiating the costs or various products.

The costing process includes assembling data on (1) variable & non variable costs of materials and labor required to produce a product, (2) overhead necessary to operate the factory, and (3) general operating expenses required to run the firm. To be effective, cost data must be specific, accurate, and timely. The more accurate the costing, the better the business decisions and the greater the potential for business success.

Product costing requires in-depth understanding of product development, ma­terials, production processes, and plant and business operations. Three product costing systems commonly used in the apparel industry are direct, costing, ab­sorption costing, and activity-based costing.

3.1.2.10 Direct Costing

Direct costing is a concept that considers only the variable costs, such as pro­duction labor, material costs, and sales commission, to be product costs. Non vari­able costs, both manufacturing and nonmanufacturing, are treated as time period costs. Because individual product costs are clearly identified, direct costing makes it possible to determine the contribution margin for each product. A contribution margin is the difference between the price of a product an d the cost of goods (vari­able costs). The contribution margin is the amount of revenue available to cover non variable costs and profit. Direct costing makes it possible to compare the cost of production and the contribution each product makes to non variable selling and administrative costs and profit. Direct costing also makes it possible to identify individual styles and their level of contribution. It is useful in determining whether to make or buy a product.

3.1.2.11 Absorption Costing

Absorption costing is a costing system that recovers overhead costs by assign­ing a percentage to some element of direct labor. It considers all manufacturing costs, both variable and non variable, to be product costs that can be allocated to products. An overhead application rate is a percentage determined to be rep­resentative of all the overhead costs. It would be applied to a measurable direct cost driver such as labor hours or machine time. Determination of a realistic over­head application rate is difficult, especially in today’s plants when direct labor may be only 15% of a product’s cost. Firms often project the expected total over­head for the period based on the past year’s costs and expected changes. The over­head application rate may be determined by dividing the total factory overhead by the total direct labor costs for the period.

Absorption costing makes it difficult to focus on the actual variable costs and to analyze specific non variable costs because overhead costs are generally allo­cated from a single cost pool. The profit potential associated with a particular product or product line is often distorted by the overhead application rate. Figure 8-4 shows the factors that can be included in absorption costing and their rela­tionships. In Figure the garment has sewing costs of $3.230 (line 7).’The over­head application rate for management and clerical expenses is 25% (line 18). The overhead costs are $0.8075 per garment ($3.230 X 0.25 _$0.8075).

Several risks are associated with using absorption costing. Are direct labor costs accurate? Is the overhead application rate accurate? Does the overhead ap­plication rate really reflect true product costs? The first risk is the dependency of the costing system on the accuracy of costing direct labor. The second risk is the determination of the overhead application rate, which is arbitrary.

3.1.2.12 Activity-Based Costing

Activity-based costing (ABC) is a costing system that treats all costs as vari­able elements of product cost. “Virtually all of a company’s activities exist to sup­port the production and delivery of today’s goods and services. They should therefore all be considered product costs” (Cooper & Kaplan, 1988). Activities cre­ate costs, and products consume activities. Costs that can be associated with cer­tain products, customers, or suppliers should be allocated accordingly. What would be considered indirect product costs with another accounting system are allocated based on utilization of these activities.

ABC builds realistic product cost data by determining the demands of particu­lar styles on what is regarded, in other costing systems, as indirect resources. The result is a compressive product cost that provides a realistic basis for making long-range business decisions. All factories overhead, administrative overhead, and any other organizational resources used in support of a product line are first as­signed to activity centers such as design, merchandising, MIS, quality assurance, and distribution. Costs of using these resources are then assessed to the styles, customers, or suppliers that create the demand for these resources. Under an ABC

3.1.2.13 The cost-plus method

If an exporter receives an enquiry from an importer, he often takes the cost price as a basis (100), adds an acceptable profit (15% for example) and offers the importer a price of 115. This is the cost-plus method.

The exporter may get the order because the main competitor offered 195. If the exporter had offered 185 or 190 he would have got the order as well. By using the cost-plus method he missed the chance to make a very good price. If the exporter later finds out that his main competitor was quoting prices as high as 195 he will find himself in a very difficult spot. It is not easy to raise a price from 115 to 185. It may take him a long time before he can raise the price in conformity with the market.

The export could have found himself as well in a totally different situation. He does not get the order because the competitor is supplying the market at 114 (which he does not know). If he would have know this, he might have been happy to offer a price of 112 and do a regular business on that level. Companies that do not have any information on the market use the Cost-plus method, but they should make a major effort to change as soon as possible to a different pricing strategy

3.1.2.14 Some alternative pricing