ERP & BANGLADESH READYMADE

GARMENTS SECTOR: PROPOSAL FOR

MARKET STUDY
 Submitted to:

Techmedian

Submitted By:

RUPAM IT LIMITED

Date: 3nd April 2013

2
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
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.

4
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.
 Macroeconomic Impact of RMG:

Contribution in National Export

25000 140

120
20000
100

15000 80

60 Export in Millions of USD

10000 40 Growth Of Export

20
5000
0

0 -20
1980 1985 1990 1995 2000 2005 2010 2015

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.

6
Growth of the Industry

0.7

0.6

0.5

0.4
Growth of factories
0.3 Growth of Worker

0.2

0.1

0
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

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

Value in Million US$

Month ALL COUNTRIES

Woven Growth Knit Growt Total Growt

h (Woven+Knit) h
Year Rate Year Rate Rate

2011/ 2012/ 2011/ 2012/1 2011/1 2012/

12 13 12 3 2 13
July 888 993.84 11.92 1007.8 1001.07 -0.68 1895.88 1994.9 5.22
8 1
August 870.63 997.72 14.6 1052.4 1004.24 -4.58 1923.06 2001.9 4.1
3 6
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 1634.6 8.92
4
November 626.91 710.04 13.26 621.73 653.96 5.18 1248.64 1364 9.24

December 890.8 1042.6 17.05 794.23 908.94 14.44 1685.03 1951.6 15.8
8 2

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.

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Labor market
60

50

40

No. of total labor force available

30
No. of labor employed
20 No. of workers in RMG factories

10

0
2003 2006 2010

Figure: Contribution in national labor market

4.5 80
4 70
3.5 60
3 50
2.5 40
Total Number of Workers in Millions
2 30
Percentage Change in growth
1.5 20
1 10
0.5 0
0 -10
1980 1985 1990 1995 2000 2005 2010 2015

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
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
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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:

6000 70
Revenue Per Worker Per Year In USD

60
5000
50
4000 40
30
3000
20 Revenue Per Worker in USD
2000 10
Productivity Change in %
0
1000
-10
0 -20
1980 1985 1990 1995 2000 2005 2010 2015
YEAR

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.
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:

NUMBER OF FACTORIES
Figure 5:
7000
Exponential
6000
growth curve
5000
of RMG
4000
factories
3000
2000
1000
0 In a growing
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 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.

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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
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.

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 Revenue Per factory in Millions of USD
3.5
Revenue per Factory in Millions

2.5

1.5

0.5

Year Total Export Value Shared revenue of Top Revenue per

from RMG 600 companies (75% factory/Indication of
on an average) 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
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

16
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)
 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 Classification of Market Players Target

highlights)

Local Local with Foreign International SECTOR

Producers Partnership

Onsite and off-shore ATI Limited with SME of any sector

development Oracle
Component -ATI ERP
Development Features- MIS,

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 Security, Asset
management etc.

For Multiple- QSR Limited Manufacturing,

businesses, multi- headquarter in Distribution
level and multi Singapore, branch in house,
profile user Malaysia merchandising,
Windows desktop -Business Talker ERP , Telecom, SME
based, can be 3.1 sector
controlled from Features- LC
anywhere without management,
effect on global purchase, inventory
position management etc.
Flexibility of desired IBCS-Primax Software Real-Estate
report Bangladesh Limited Industry of
Central Database Partnered with- Bangladesh
oracle, Redhat ,Zend
-REERP
-Features -
Advance multi-level
security, easy to use
Low-cost of STM Vision Governement
ownership Infotech Ltd- bodies, NGO ,
Easy to customize -Tally .ERP 9 Cement industries,
Easy to find qualified Features Real-estate
personnel Payroll industry, SME
management, industry
accounting,
inventory
Sustainability BITS solutions Ltd- Trading, non
Profitability .net ERP trading ,
Reduces operating Integrated business manufacturing
cost solutions, features- concern,
Return on Fixed asset Universities
investment management , ,Poultry projects
customer care and
target achievement
One stop Royal Apparel Industry
IT solution for Apparel DatamaticsPvt.LTd,
Industry INDIA with CIBL,
BD
-APPS- complete
ERP solution-
commercial and
shipping
documentation, HR
payroll, financial
accounting,
production
 planning etc

Providing innovative RAMCO SERVICES, SME

business solutions INDIA distributed
that can be delivered by Computer
quickly and cost- source bd- Ramco
effectively in on demand
complex
environments.
Industry specific SAP- From Manufacturing,
solutions Germany Import Export
Competitiveness Industries,
through customer Apparel etc.
insight

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

20
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.
 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

22
 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)
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.

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Project Team:

Name Specialization Designation for Responsibility

the Project

Zamil Rashid Economics, Statistics, Team Leader Overall Coordination of the Project,
Qualitative Research, M&E, Maintain Client Relationship
Quantitative Data
Analysis, Project
Management
Ayesha Sabirna Desk Research, Analysis, Research Facilitator Secondary research, Data Analysis,
Content writing, Intra Content developing
team communication

MuntasirTahmeed Research, Content Research Assistant Coordinating Field Team, FGD &
Chowdhury Writing, FGD KII, Managing Data checking and
Quality

Amitabh Guha Roy Planning, Field Strategic Partner- Project monitoring and Evaluation,
Operation Monitoring, Monitoring and Developing key strategies
Evaluation evaluation

Hisham Uddin Field research, KII, FGD Research Assistant Coordinating Field Team, FGD &
Khan and Content writing KII, Managing Data checking and
Quality

Shawon Azad Education, Field and QA Coordinating between the Research

Desk Research. Team and the team leader. Assure
the quality of data coming from
field. Proofreading.
 THANK YOU

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