ASSIGNMENT ON Merchandising activities of Ready-made garments (RMG) executing an order of 10000 pcs T-Shirt Executive Summary The textile

and apparel industry in Bangladesh occupies a prominent positionwithin the countrys industrial structure. It is the largest manufacturing sector,providing jobs for some 50% of the total industrial workforce and contributing9.5% of the countrys GDP. Also, it accounts for almost 77% of total exports,making it Bangladeshs leading foreign exchange earner. In the early 1980sexports were dominated by jute while garment sales were insignificant. Buttoday garment exports are by far the leading export category. In 2004/05 theclothing sector generated as much as US$5.58 billion in foreign exchange.T he i nd us tr y be ne fi ts fr om s p ec ia l a cc es s to m ar k e ts i n th e EU , C a na da ,N or w a y an d J ap an . B e ca us e B an gl ad es h is a l ea s t d ev el op ed c ou nt ry , i ts textile and clothing exports enter these countries quota free and duty-free.This concession, together with low labor costs, provides the garment sectorwith a strong competitive advantage. But in order to produce garments forexport, the sector has to purchase a large share of its yarn and fabric needsfr om ab ro ad , e s p ec ia ll y w o ve n f ab ri cs . F ew lo ca l t ex ti l e f ir ms a re ab le t op ro du ce m at er ia l s of t he re qu ir ed q ua li ty or i n a d e q u at e qu an ti ti es . Th e Bangladeshi government is attempting to remedy this situation. To reduce thecountrys import bill, it is offering tax concessions and incentives aimed atencouraging investors to develop the necessary backward linkages. Bangladesh's most important exports are comprised of readymade garments(RMG), with jute, leather, and frozen fish products also being major exports ec to rs . T h e g o ve rn me nt is r al ly in g th e R M G s e ct or as t he ar ea w i th th e largest potential for growth, and a key step the government must take is thedevelopment of backward linkages for the sector to be truly competitiveIn R M G s e ct or t he re a r e m an y de pa rt me n t li ke kn it ti ng , d ye in g, f in is hi ng , cutting, sewing, packing, production planning, quality control, Merchandisingand marketing, Store, HR & compliance, information technology, etc. Amongall the department merchandising & marketing is one of the most importantd ep ar tm en t in R M G s e ct or s , I n my a s s i g n me nt I t ri ed t o d is cus a bo ut t he merchandising activities to execute an order of 10000pcs T-Shirt. The report will represent the following points as under: * Price negotiates and order confirmation* Fabrics and accessories booking* Merchandising activities on Sample development* Merchandising activities on production follow up* Merchandising activities on Quality control* Merchandising activities on goods delivery to buyersdestination

Chapter -1 (1.0) Introduction 1.1 Objectives of the assignment The primary objective of this assignment is to fill partial requirement of MBA degree. Besides fulfilling the degree requirement, this report intends to cover acomprehensive analysis on merchandising activities in RMG sector. Report also studies how important merchandising activities on RMG sector. 1.2 Merchandising department and its activities The Merchandising is known to the persons specially involved in garmentstrade. The term has been derived from the merchandise. Merchandise meansgoods that are bought & sold. The term Merchandising may be defined as: Person who merchandisesthe goods, specifically for export purpose. Garments merchandises meansbuying raw materials & accessories, producing garments, maintaining requiredquality level and exporting the garments within schedule time. From theabove definitions, we can say that a person involved in garmentsmerchandising needs a wide range of knowledge & skill to perform his jobsuccessfully. The job itself is technical and general as well.Merchandisers should have the following basic qualifications: Good Command in English and adequate knowledge of technical termsfor accurate and efficient communication. Good knowledge of fiber, yarn, fabric, dyeing, printing, finishing, dyes,color fastness, garments production. Etc. Clear conception of the usual potential quality problems in the garmentsmanufacturing. Good knowledge of the usual raw material inspection systems &garments inspection systems. Knowledge of the quota system used in each of the producing countries,duty rates, customers regulations, shipping and banking documents etc. Highlights of Merchandising works 1. To collect buyers addresses.

To establish contact with the buyers sending formal letters/profile.3. Receiving buyers response and providing price quotation along withmaking of sample as counter/approval.4. Receiving samples comments from the buyer.5. To furnish the proforma invoice and sending the buyer.6. Taking necessary steps to develop lab-dips of the materials (FAB & ACC)7. Receiving the master L/C & verify clauses of the L/C both in technicaland commercial point of view.8. To confirm floor booking of the order with factory.9. To confirm transfer authentication of the L/C in favor of fact.10 . P u s h in g t he fa ct or y t ak in g in it ia l pr oc ur em en t t o o pe n th e b ac k- t o- back L/C by bank.1 1 . S e a r c h i n g r e l i a b l e f a b r i c a n d a c c e s s o r i e s s o u r c e s a n d f i n a l i z e supplying of the required materials relevant tot the order.1 2 . T o m o n i t o r t h e s h i p m e n t o f r a w m a t e r i a l s a n d a r r i v a l i n t h e factory.1 3. T o m on it or o f th e s u pp ly in g ma te ri a ls w h il e r ec ei v i ng fa ct or y. 1 4 . T o o r d e r t h e t e s t c u t t i n g w i t h q u a l i t y . 1 5. T o c h e ck /i ns pe c t /a dv i s e fo r th e b ul k pr od uc ti on .1 6. T o m on it or p r o d u ct io n, q ua li ty a nd de li ve ry . 17. To advise factory if buyer change any instruction both intechnical/commercial point of view to the order.1 8 . C o l l e c t i n g o r d e r f r o m t h e b u y e r s . 1 9 . S e n d i n g S a m p l e s t o t h e b u y e r f o r a p p r o v a l . 20 . C o l le ct i ng ac ce s s or ie s f or m d if fe re nt S u pp li er s . 21 . G i vi ng o rd er to t he s p ec if ie d g ar me nt fa ct or y. 22 . C om mu ni ca t e w it h a ll t he re s p ec ti ve p ar ti es .2 3. C oo rd in at in g th e w ho le pr oc es s at a re gu la r ma nn er This report is based on the merchandising activities of one of the fast growingready made knit composite garment factory named FAKIR KNITWEARSLTD e s t ab li s h ed i n 1 98 9. I t h as mo re t ha n 8 00 00 pc s T- S h ir t p r o d u ct io n capacity per day. Chapter -2 (2.0) Price negotiation & Order confirmation Price negotiation is the most important part of merchandising and marketing.Order confirmation depends on how cleverly and logically one can negotiateprice with buyer. Competitive price is the key element of price negotiation. Tomake competitive price first of we have to know about the product that buyerwant to buy from us. Then we will calculate the raw material price,manufacturing cost & shipping terms of the product. 2.1 How to prepare garment price There are processes for fixation of export prices which are as under: 1. FOB (Free On Board).2. C & F (Cost & Freight).3. CIF (Cost, Insurance & Freight). FOB means free on board i.e. exporter doesnt bear the cost of freight of shipor air. It is buyer (Importer) who himself bears the freight of ship or air.C & F means Cost of Freight i.e.FOB (Cost) + Freight of Ship = C & F.In the case ship or air freight is carried by the exporter while quoting price, theexporter quotes price a bit higher than FOB. The whole responsibility includingthe sending of goods to the selected port of the importer is shouldered by thee xp or te r s hi p o r ai r. F re ig ht m ay ve ry fr om pl ac e to p la ce a nd s hi pp er s t o shippers.CIF means cost insurance & Freight. In this

case in addition to the bearing of freight the cost of insurance is also borne by the exporter. The exporter, whilequoting CIF price, quotes much higher than C&F value i. e; C & F + Insurance=CIF. Normally we can add 1-2% insurance charge with CIF price. Page 7 of 17 -7During the fixation of FOB price of a T-Shirt following notes are to befollowed carefully: 1. Cost of fabrics/Dzn. garments.2. Cost of Accessories/Dzn. garments.3. C.M (Cost of Manufacturing) /Dzn. Garments.4. Cost of embellishment (if any) like print, embroidery, etc 5. Commercial cost.6. Commission (if any) 2.2 Fabrcis Price Knit fabric price is the sum of the below factors1. yarn price per kg (approx $6.40) 2. Knitting price per kg (approx $0.15) 3. Dyeing price per kg (approx $1.5) 4. finishing price per kg (approx $0.50)Thus the fabric price per kg comes ($6.40+$0.15+ $1.5+$0.50)= $8.55Fabrics consumption for a European T-Shirt is 3.00 kgs per dozon.So fabrics price per dozon is (3.00 * 8.55) = $25.65 2.3 Trimming Price Trims cover all the trims used in the garments except the basic fabric. Thereare hundreds of items used to manufacture the garments, proper selection of trims and its quality are very important for styling, otherwise the garment maybe rejected or returned by the customers.As our assignment is based on basic T-Shirt, normally care label, main label,size label, sewing thread, poly bag, price ticket, carton, tag pin, gum tape, etctrim are used in a basic T-Shirt.Normally the trim cost per dozon comes approx. $2.00 for basic T-Shirt. 2.4 CM calculation CM means cost of cutting to making. It includes the cost of cutting, cost of sewing and the cost of packing. It also includes the overhead cost of the plantand the profit margin.Generally CM per dozon of a basic T-Shirt is $5.00 2.5 Other embellishment calculation Other embellishment means print, embroidery, patch etc that makes anygarment more attractive for customer. Page 8 of 17 -8As our assignment is based on basic T-Shirt we are not calculating anyembellishment cost. 2.6 Commercial cost.

Commercial cost includes LC commission, UD commission, EXP commission,Documentation cost, Goods send to forwarder cost, etc.For basic T-Shirt it will safe if we calculate commercial cost $1.00 per dozon. 2.7 Final garments cost & order confirmation. Now the final garments cost per dozon is the sum of fabrics cost, trimmingcost, CM cost, other embellishment cost & commercial cost.So the garments price per dozon comes ($25.65+$2.00+$5.00+$1.00)=$33.65T-Shirt per piece is ($33.65/12)= $2.81Thus we make manufacturing price & negotiate this price with Buyer.After negotiate price with buyer we receive order confirmation & L/C frombuyer to execute the order. Chapter -3 (3.0) Fabrcis & Accessoriesbooking 3.1 Fabric booking After receive order confirmation from buyer we chase buyer to provide us POsheet (purchase order) which includes color & size wise break down of thet o t a l quantity. Then we will go for knit fabrics booking. Yarn is the f i r s t element of knit fabric. So to make fabric we have to book suitable yarn fromhome or abroad. To import yarn from abroad it need approx 44/45 days and tobuyer yarn from Bangladesh it need approx 20/30 days. After receive yarn wego for fabrics knitting and then coloring of the fabrics.After dyed fabrics is ready to make garments. 3.2 Trim booking Page 9 of 17 Various kinds of trims are used in Basic T-Shirt. To buy or make booking fortrim firstly we have to know from buyer what kind of trims they required forth ei r T- S h ir t. A f te r c ol le ct i on tr im mi ng in fo rm at i on fr om b uy er w e h av e t od ev el op t he s a me a nd n ee d t o g et ap pr ov al . Th en w e w il l b oo k t r i m f r om respective trim manufacturing house.I t i s v e r y i m p o r t a n t t o b u y a l l t h e n e c e s s a r y t r i m s b e f o r e s t a r t g a r m e n t production. Chapter -4 (4.0) Merchandising activities onProduct development Product development is another important responsibility for RMGmerchandisers. Before go to bulk production various stage of sampling has topass in order to develop a product for end user. Sequence of Sampling Counter sample/Style sample/Salesmen sample Fitting sample/ Size set sample Pre-Production. Production Sample. Shipping Sample. Photo/ Advertisement/ Catalog Sample Steps of Garment Sample Approval

Step-1 Style sample (Closest available fabrics) Step-2 Size Set sample (Closest available fabrics) Step-3 Pre- production sample (In Actual) Step-4 Production sample (In Actual) Page 10 of 17 - 10 -

Fabrics Selection Approval Fabrics (for hand feel & Approval)Test done from official Testing House1 st Bulk Fabrics in each ColorTest report in each color Lap dip Each Color Options for Dry RecipeConfirmation with "Spectro Readings"Re- Sub Needed Until Approval. Swatch

Swatch is a presentation of all the materials is (Fabrics & Accessories) usedfoe any specific style/order. Usually small piece of fabrics and each piece of accessories are attached in board paper in a systematical manner. Swatch isvery important for production line to make the correct construction of agarment and QC departments ensure it. Concerned merchandiser shouldconfirm/approve the swatch. Trims Trims cover all the trims used in the garments except the basic fabric. Thereare hundreds of items used to manufacture the garments, proper selection of trims and its quality are very important for styling, otherwise the garment maybe rejected or returned by the customers. (4.1) Style sample development The main object to develop style sample is to approve the styling of a productthat a designer imagine first. This sample is usually made by available colorbut actual design, construction and weight. But some time buyer ask sampleto make by actual color. Page 11 of 17 - 11 (4.2) Size set sample development The main object to develop size sample is to confirm the measurement, bodyfitting etc. This sample is also made by available color but actual constructionand weight. (4.3) Pre production sample development The main object to develop Pre production sample is to confirm the finalproduct from buyer. After receive pre production sample we can startfinal/bulk production. (4.4) Production sample development The main object to develop Production sample is to confirm altimate buyerthat what we produced and ship to sell for end user. Chapter -5 (5.0) Merchandising activities onproduction follow up 5.1 Production plan After receive a purchase order from buyer merchandiser have to sit withproduction planner to make a production plan. Production plan contain belowthings: 1) Planned date to start knitting to make the required fabrics. 2) Planned date to start dyeing to color the fabrics. 3) Planned date to start cutting fabrics.4) Planned date to start sewing the required garments.5) Planned date to start packing the required garments. 6) Planned date to hand over finished goods to buyer nominated sea or airforwarder. 5.2 Trail/ Test cutting Before start bulk cutting to adjust pattern we cut each size and each color10/15 pcs. This is called trail or test cutting. After approved trail or test cuttingwe can go for bulk cutting. Page 12 of 17 - 12 5.3 Sewing

Sewing section is the section where cutting part are joined to make agarments. In sewing section sewing machines are set up according to the kindof final product. 5.4 Packing After sewing garments is packed into packing section. Here we put iron ongarments, add various kinds of hangtags, polybags and make garments readyto ship to the buyer. Chapter -6 (6.0) Merchandising activities on Quality control The main objective of quality control is to ensure that goods are produced tothe first customer (Direct Order) and hopefully to the second customer(Recorder/Alter order/ new order) as well. If both customers can be satisfiedthen the manufacturer products are more likely to continue to be in demand.Satisfactory quality can only be ensured through (from the manufacturer pintof view) Knowing the customers needs. Designing to meet them Faultless construction- manufacture. Certified performance and safety. Clear instruction manuals. Suitable packing. Prompt delivery. Feed back of field experience.Satisfaction quality can be ensured from the customer from the customerspoint of view by providing: Right Product. Right Quality. Right Time. Undamaged Condition. How can quality be achieved? Page 13 of 17 - 13 Goods must be designed to meet customers needs and makemanufacturing process and maintenance easily. They must be made exactly and consistently to the specified design.

 Marketing must ensure accurate advertising, trade description withconstant feed back for improved design. Total commitment to organized design. Actual Quality Level (AQL) International Standard for Garments M ax im um b uy er o f th e w or ld fo ll ow s th is a bo ve ch ar t fo r in s p ec ti ng t h e ir garments. When garments will be ready for shipment, an inspector shouldfollow the above acceptance level of quality products. It is applicable for allty pe s o f ga rm en ts . S o th is c ha rt i s ve ry im po rt an t f or Q u al it y C o n tr ol an d Quality Inspection of a Garment. Factory will have to follow and work on theb as is o f th is ch ar t. F a ct or y s ho ul d ha ve to s ub mi t th ei r A Q L r ep o r t t o t he respective buyers before shipment. Page 14 of 17 Batch Size(Units)A Q L 1 . 0 A Q L 1 . 5 A Q L 2 . 5 A Q L 4 . 0 SampleSizeAccept.DefectsSample SizeAccept.DefectsSample SizeAccept.DefectsSampleSizeAccept.Defects 2 6 5 0 1 3 0 8 0 5 0 1 3 1 5 1 9 0 1 3 0 8 0 2 0 1 1 3 1 9 1 1 5 0 1 3 0 3 2 1 2 0 1 2 0 2 1 5 1 2 8 0 5 0 1 3 2 1 3 2 2 3 2 3 2 8 1 5 0 0 5 0 1 5 0 2 5 0 3 5 0 5 5 0 1 1 2 0 0 8 0 2 8 0 3 8 0 5 8 0 7 1 2 0 1 3 2 0 0 1 2 5 3 1 2 5 5 1 2 5 7 1 2 5 1 0 3 2 0 1 1 0 0 0 0 2 0 0 5 2 0 0 7 2 0 0 1 0 2 0 0 1 4 1 0 0 0 1 3 5 0 0 0 3 1 5 7 3 1 5 1 0 3 1 5 1 4 3 1 5 2 1 350011500005 0 0 1 0 5 0 0 1 4 5 0 0 2 1 3 1 5 2 1 150001-5000008 0 0 1 4 8 0 0

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6.1 Principles of Quality Management The main objectives is to prevent errors by early detection and action The need to make the requirement complete and clear at all levels,from this specification of a large system to the individual workconstruction and terms of reference. The detection error by monitoring both product and the method bywhich is produced. The prevention of errors at all earliest The total involvement all concerned of the contribution to the finalproducts quality. Establish a total forward and backward control system, allowingflexibility for change. 6.2 Purpose of Quality Control It is a long standing trading of any organization to offer the customers firstquality merchandise. The purpose of this quality control program is to assistmanufacturers in meeting the high standards.In addition, companys quality control program can also help the supplier withtheir operation. Quality control program not only help spot and rejectdefective items, but more importantly they pinpoint production operationsthat need special attention, thereby reducing the number of defects in futureproduction. This type quality control provides basis for management decisionin the manufacturers plant.For the purpose of this manual, the defect refers to a condition that rendersmerchandise of second quality and or unacceptable because the defect is oneor more of the following: 1. It is conspicuous. 2. It will affect the salability of the product.3. It will affect the serviceability of the product.4. It is significantly different from the specification.It is understood that all performance and legal requirements be following tothe letter (that is L/C or any other contact between the buyer & seller) with nodivision allowed, including requirements of the following:1. Flammability.2. Refurbishing (Cleaning).3. Labeling. Page 15 of 17 - 15 Chapter -7 (7.0) Merchandising activities on goodsdelivery to buyers destination 7.1 Booking to forwarder After making final inspection merchandiser received packing list from packingsection which contain the list of carton, how many pieces garments in thecarton, weight of the carton, number of pieces of garment to be shipped etc.Refer to this information merchandiser make booking to sea or air forwarder.

7.2 Export Documentation The documents which to be submitted by a C&F agent for export:An exporter should have to submit the following documents to the customsauthority of a station:1. Shipping bill of entry.2. Export L/C.3. Packing List.4. Commercial Invoice.5. UD/UP.6. VBF-9A. From to be supplied by the C&F agent.7. Export Permission form (EXP). Bill of Landing (B/L) It is document issued by an eerier (railroad, steamship, or trucking Company)which serves as a receipt for the goods to be delivered to a designed personor to his order.B / L d es cr ib es th e c on di ti on s un de r w h ic h t he go od s ar e a cc ep te d b y th e career and details The quantity of the goods. Name of vessel Identified marks and numbers Destination Page 16 of 17 - 16 Invoice: Below point are including in the invoice: Name and address of the buyers and the seller. The Date and term of the sale. A description of the goods, The price of the goods and The mode of transportation. 7.3 Payment release After prepared invoice, bill of landing and other requireddocumentation we send it to buyers nominated bank for paymentrelease