Production Planning in RMG Industry and Its Impact on Operations

Analysis of Production Planning Procedure in RMG Industry and Its Impact on Operations

Mohammad Arif Billah
B. Sc. in Textile Engineering, University of Chittagong
PGD in Garment Business, Institute of Business Administration (IBA), University of Dhaka
Deputy Manager, Production Planning & Control, Bitopi Group
Email: arif.billah2707@gmail.com

Executive Summary:
Ready-made garment industries were going through a critical time during post COVID era. Current Russia-Ukraine war is like wounds on die for the garment entrepreneurs. It became more than difficult for the RMG industries to survive in this highly competitive market while each and every key factors of a business going against the manufacturers. Business is reducing significantly due to ongoing inflation throughout the word. Raw materials and making cost increasing drastically while buyers are doing everything to curtail the product pricing.

At the same time with their back to the wall manufacturers always have to respect buyer shipment date of their purchase orders while most of lead time of an entire order cycle (75%-85%) elapsed during development and sourcing raw materials. In this entire process, acceleration mostly depends on the buyers. On an average, manufacturers are getting only 15%-25% lead time (18-30 days) to execute an order from raw material in house to shipment. So, it’s time for the manufacturers to think holistically in their manufacturing process where every single thing matters in terms of cost, quality and production lead-time.

To meet above challenges effectively production planning & control can play the leading role which is one of the most important and unavoidable process of an operations and we selected this topic based on this background. Planning is an operations and time management techniques which shows path to achieve a specific goal with minimum cost, maximum benefit. It’s like bringing the future into the present which helps to avoid uncertainties in the operations. Planning helps to utilize organizational resources i.e., man, machine, materials more wisely to maximize profitability. Production planning helps to maximize capacity utilization, to increase efficiency and to eliminate wastage in production which leads to reduce making cost within stipulated lead time.

So, for the successful deployment of production planning activities in an RMG industry we need a clear understanding of its activities and impacts. In this respect, throughout the study we’ll try to understand and discuss the overall production planning steps of a garment industry i.e., demand forecasting, capacity planning, and process planning at the same time will try to understand their impacts by analyzing the Bitopi Group’s internal data bank where it is applicable. We also surveyed the impacts of production planning on RMG operations among the garment professionals which will give us a strong basement of our findings and recommendations.

List of Abbreviations:

RMG: Ready-Made Garment
EPZ: Export Processing Zone
AEPZ: Adamjee Export Processing Zone
USGBC: U.S. Green Building Council
LEED: Leadership in Energy and Environmental Design
MIS: Management Information System
UOM: Unit of Measurement
BGL: Baridhi Garment Limited
TAL: Tarasima Apparels Limited
RHL: Remi Holdings Limited
CKDL: Croydon Kowloon Designs Limited
SAM: Standard Allowed Minutes
Qty: Quantity
MS Excel: Microsoft Excel
ERP: Enterprise Resource Planning
PP: Pre-Production
T&A: Time and Action

1.0 Introduction

1.1 About Bitopi Group
Bitopi Group’s journey started with advertising, in 1968. Bitopi Advertising Limited was the first full-service advertising agency that began its foray into this country under the resolute leadership and vision of Mr. Reza Ali. Being a visionary, Mr. Reza saw the opportunity in the Apparel manufacturing sector and diversified his business into the RMG sector. In 1984, MISAMI Garments Limited started its journey, as one of the earliest factories in the country. The Company gradually expanded into factories in Manikganj, Comilla EPZ, DEPZ, and Narayangonj AEPZ while the original building in Shewrapara, Mirpur stands to this day. The founder has an amazing ability to forecast trends and needs.

After 2004, Mr. Reza’s two sons Miran Ali and Mishal Ali came into the business and gave Bitopi group a completely different dimension in the RMG business. Producing the best quality products through continuous innovation that benefits society and the environment is the core vision of this company. In this regard, the company built its first green factory named Remi Holdings Limited which is recognized by the USGBC (US Green Building Council) as the highest-scored LEED platinum-certified factory in the RMG category. The record was unbroken till 2022. Tarasima Apparels Limited is another flagship factory of Bitopi group which is also certified by USGBC in the LEED platinum category. Croydon Kowloon Designs Limited established in the year 2017 was the last addition in apparel division of this group which is also a LEED certified factory.

The annual turnover of the company is more than 220 million USD with an average 13% growth rate after 2012. The company runs its operations with more than 15000 workers and 10000 machines. The total capacity of the company is around 4.5 million pcs per month. The main product of the company is woven tops and bottoms. Bitopi Group currently working with many renowned customers like H&M, Zara, Best seller, Tommy Hilfiger, Ralph Lauren, Target USA, and Decathlon and contributing immensely to the country’s economy.

Bitopi Group always cares for its worker’s health and safety which made them different compared to other RMG industries. As a recognition, in the years 2018 and 2020, the company won the prestigious “The Occupational Health and Safety Day” awards from the Bangladesh government for its unconditional support of workers’ health and safety. The company was also awarded the national export trophy by the Bangladesh government twice in the fiscal year 2019-20 and 2020-21.

1.2 Scope
In RMG industries production departments usually get insufficient lead time while executing an order which is the most challenging phase of the operations. It is very difficult for the production to meet the customer’s required order delivery deadline and maintain the optimum quality if the orders are not been planned properly within a specific production lead-time. Each part of the production operation is important here and all the activities have to be completed as per schedule. In the factory, the planning team is coordinating among the department to ensure the completion of activities as per plan. Regret to say that, most of the factories in Bangladesh do not have efficient planning departments, and they are facing many difficulties in maintaining customer delivery requirements which lead to financial losses and uncertainty in business. It is also observed that factories with efficient and vigilant production planning activities are overcoming those challenges much more easily. So, for smooth operations of the business depth knowledge of production planning is inevitable. In this note, the topic has been selected and throughout the study, the key activities, procedure, and impacts of effective production planning of an RMG industry will be observed and discussed.

1.3 Objectives:
The objectives of this report can be classified as two major groups which are discussed below –

1.3.1 Broad Objective:
The broad or major objective of the study is to understand the procedure of production planning in a garment industry and its impact on operations

1.3.2 Specific Objectives:

To understand the procedure, importance of demand forecast in RMG industry
To understand the principles of capacity planning and its impacts.
To explore process wise planning and its impacts on different functional departments of RMG.
To conduct a survey among the RMG professionals on the overall impact of production planning in the industry operations

1.4 Methodology:
This report is mainly based on our observation in the production planning department during the internship period. Throughout the period each and every activity of planning department are observed and at the time tried to find out the purpose and the impact those activities on operations. After understanding the total workflow of the planning department, tried to analyze some previous data of the company with help of MIS team to understand how the planning department can play a positive impact on an organization’s operational success.

To give our findings and recommendations a strong basement a survey has been conducted among the different garment professionals of the different organization through the help of Google Forms.

2.0 Findings

2.1 Overall production planning procedure
In a garment manufacturing industry, the overall activities of production planning department can be divided in two following functions. Effective completion of each task is essential for a successful operation.

2.1.1 Overall production planning steps

2.2 Demand forecast
By analyzing the customer-wise previous order placement quantity with the organization, planning department make a forecast of orders for upcoming months. Usually, a forecast is prepared for the upcoming 6 to 18th month. Relationship with the customers plays a vital role here which always needs to take into consideration. A forecast has always been prepared with the alignment of marketing heads and their inputs are always taken into consideration. Sometimes new customers are added on board and in that case marketing concern’s opinion is considered to make a forecast. Forecast is not 100% perfect but by following different forecast methods, by understanding the buyer characteristics and finally aligning with marketing concerns a good forecast result can be achieved.

2.2.1 Steps in a demand forecast preparation:

Select the purpose of forecasting
Select a time frame (6 months, 12 months, 18 months etc.)
Gather and analyze the previous data and correlate it with customer relation
Select a forecasting method by understanding customer characteristics (trend analysis, seasonality, sample average, cycle etc.)
Prepare the forecast
Monitor the forecast

2.2.2 Factors to consider during forecasting:

Need to understand customer characteristics and business relations before selecting a forecasting method. In RMG industries trend analysis and seasonality method is widely used.
Before forecasting needs to ensure the validity of historic data as forecasting accuracy depends on this.
Planning department always needs to align demand forecast with factory capacity. If the demand forecast is more than the factory capacity planners has to decide collectively with marketing concerns on which customers to give priority keeping overall profit in mind. Similarly, if demand is less than capacity planners need to raise concerns to the marketing team to fill up the required capacity.
Forecasts never will be 100% perfect. So always need to keep some buffer (5-20%) considering all the uncertainties.
Continuous monitoring of the forecast is very important. The planning department always needs to monitor the marketing team on a weekly basis for the upcoming 3-12 months forecast to keep the forecast updated based on the current status.

2.2.3 Impact of demand forecast in operations:

It prevents the uncertainties in operations
It helps to understand the gaps well in advance between factory capacity and demand for upcoming months/seasons.
It shows the organizational opportunities and challenges for upcoming months/seasons.
It helps the marketing team where customer relations should be improved to get more orders.
It helps to make key business decisions such as separating long-term, short-term, potential customers and loss customers
Order forecast gives an overall idea of upcoming requirements, goals, and challenges to all related departments and make everyone aware of what they need to do in the coming months.

For the above reasons order forecasting is also termed as business planning in garment industries.

2.3 Capacity Planning
Capacity can be termed as the maximum limit or ceiling on the load that an operating unit can handle while capacity planning refers to the optimum utilization of those resources. The capacity calculation includes the number of machines or equipment, the number of workers, space and efficiency level.

2.3.1 Steps in capacity planning:

2.3.2 Factors to consider during capacity planning:

A clear understanding of organization’s business goals and objectives is essential to determine the level of capacity required to meet customer demands.
Based on market trends and customer demand a growth projection is needed which enables to identify of future required resources
Need to check the organization’s budget availability before going into implementation.
Need to consider potential risks and uncertainties such as changes in market demand, production failure and other unexpected events.
Prerequisite to consider worker’s skills, efficiency, required raw materials, order lead time and factory storage capacity.

2.3.3 Impact of capacity planning in operations:

Capacity planning secures the right amount of production capacity to meet the demand which reduces the bottlenecks, delays and uncertainties in operations.
By allocating the resources more effectively capacity planning increases the utilization of resources and reduces wastage.
It helps to identify and eliminate surplus capacity or underutilized resources which leads to cost savings. It also helps to plan effectively while investing in new capacity and minimize the risk.
Finally, by ensuring the optimum utilization of resources to meet customer demand capacity planning improved the organizational profitability.

Table 2.3: Capacity Utilization scenario of Bitopi Group

2.4 Process Planning or Micro Planning
The process planning or micro planning involves a complete process-wise plan to execute all confirmed orders as per buyer-given lead time and quality most cost-effectively. This is the most important phase of production management as 50% of production success depends on a successful process plan. In the RMG industry, sewing planning is the heart of process planning as other’s production activities such as pre-production, cutting, washing, and finishing are designed and scheduled based on the sewing plan while the sewing plan is prepared by securing shipment date.

Steps in Process Planning or Micro Planning:

For Washed Garment:

Table 2.4: Process Planning Steps (Washed Garments)

For Non-Wash Garment:

Table 2.5: Process Planning Steps (Non-Wash Garments)

2.4.1 Sewing Plan:
Sewing plan is the fundamental of planning process as all the activities of the entire production run as per the sewing plan. So, the sewing plan has to be accurate, just, and cost-effective to meet shipment date and customer satisfaction.

Figure 2.3: Sewing Planning Flow Chart — Figure 2.4: Sewing Planning in MS Excel (click on image for large size)

Figure 2.5: Sewing Planning in ERP Software (click on image for large size)

2.4.1.1 Factors to consider during the sewing plan:

Always consider shipment date as the primary fundamental during planning. The planner first goal is to meet the shipment date.
Before planning planners need understanding on the product, its challenges and how much qty it can be produced per day in his factory considering current effective efficiency.
Maintaining the delivery within the production lead time is very challenging for a planner as most cases production is getting insufficient lead time to execute an order securely. Sewing planning is considered as the basement of planning for all other departments. So, while planning an order planners need a clear understanding of the process wise tentative production lead time and need to allocate accordingly.

Table 2.6: Events and lead time details of a 60 days order cycle

Figure 2.6: 30 days production lead time calendar and process wise allocation (click on image for large size)

A style once started in a sewing line production cannot achieve 100% planning target on the very first day as workers are not habituated with this style and their efficiency level remains below actual. Gradually they become habituated to the process and their efficiency level increases. The time elapsed from the sewing start date of a style/order to the date production achieved the planning target of that style/order is termed as a learning curve. Planners need to follow line curve standards carefully while planning an order.

product category wise learning curve duration of Bitopi Group — Table 2.7: Product category wise learning curve duration of Bitopi Group

It is obvious to consider cost-effectiveness while planning. A planner should always need to plan in such a way that the product is been produced with maximum efficiency.
Always need to keep backup plans. As sometimes unexpected exceptions occur such as material inhouse delay, sample approval delay, quality issues, etc. so, and adjustments need to be done in the best way to reduce the losses.
Need acute follow up and involvement to ensure the achievement of plan qty

Figure 2.7: Plan VS achievement follow up chart

2.4.1.2 Factors to consider during pre-production plan:

Pre-production is the process of ensuring all types of approval such as samples, fabrics, accessories, wash, etc. from the customer through a small quantity of trial production before going to bulk cutting production. The quantity of trial production could be 20-100 pcs. The planning department needs to ensure all pre-production activities are completed before the cutting start date.
The goal of pre-production is to meet the cutting start date most effectively. So, this activity is orchestrated as per the cutting plan.
As the activities are dependent on raw material availability and sample approvals, the merchandisers need to ensure to in-house all raw materials and approvals 5-10 days before the cutting start date.
Pre-production is an independent activity. No other work of operations can start until this is successfully done. Around 25% of production lead time spares in this procedure independently.

2.4.2 Cutting Plan:

2.4.2.1 Factors to consider during the cutting plan:

The goal of the cutting plan is to meet the sewing start date which means cutting has to be completed 1-3 days before the sewing start date to ensure smooth sewing operations.
The planner needs to check and ensure all approvals, and raw materials before the cutting start date.
As per day-wise planned sewing qty cutting department needs to keep at least 3 days cut pcs ready in advance.
Planners need to ensure maximum utilization of their cutting capacity keeping the sewing department’s needs in the head.
Need acute follow up and involvement to ensure the achievement of plan qty.

2.4.3 Washing Plan:

2.4.3.1 Factors to consider during washing plan:

Always need to keep shipment date as primary fundamentals during planning
Once shipment requirement is fulfilled planners next target is complete the wash of sewn qty by following the sewing production plan on priority to reduce WIP as much as possible. Uncontrolled WIP leads to planning failure.
Need to ensure maximum utilization of all washing machines follow up thoroughly so that plan qty is achieved.
Need to ensure all types approvals such color, shade, shrinkage approvals and chemicals availability before going to bulk production.
Usually washing department getting less lead time considering its work range. So, acute follow up is essential in this stage.

2.4.4 Finishing Plan:

2.4.4.1 Factors to consider during finishing plan:

The main goal is meet shipment date of the orders. So, shipment date is the primary fundamentals of planning.
Once shipment requirement is fulfilled planners next target is complete the washed garments and sewn qty (for non-wash garment) on priority to reduce WIP as much as possible.
Planners need to ensure all bulk finishing raw materials to in house well in advance before starting finishing activities as this step usually gets the shortest lead time.

2.4.5 Impacts of process planning on operations:

Effective process planning helps to minimize production costs by optimizing resource allocation, reducing waste, and minimizing downtime which leads to better profitability.
Efficient process planning helps to produce a product with maximum efficiency. The planner should know the strength and weaknesses of his resources to get production output. Planning can help to increase productivity and quality by optimizing and efficient uses of resources
By ensuring effective allocation of resources man, machine, and materials process planning can help to reduce the chances of overproduction, underproduction, or underutilization of resources.
Proper and vigilant process planning helps to remove all types of uncertainty during production
By ensuring the production as per customer-required delivery timeline planning helps to increase customer satisfaction and to retain customer loyalty.

Figure 2.8: Efficiency increase % over the years due to proper planning

2.5 Survey on the impact of production planning on operations
During the study through the help of the Google survey form a survey has been carried out among the garment professionals to understand what they think about the impact of production planning in RMG operations. all the selected survey questionnaire was related to production planning’s impact on operational success and shows that in more than 90% of cases participants agreed that production planning has a positive impact on production. The outcomes of the survey gave a strong basement on our above-mentioned findings as all the survey results strongly comply with the key findings of the study.

Figure 2.9: Survey questionnaires and outcomes at a glance

3.0 Recommendations
Based on the objectives and findings of the study following recommendations can be made–

On-time raw materials support: it has been observed that in most cases planning fails due to the unavailability of raw materials as per schedule. The merchandising and supply chain team should work cohesively with the planning team to in-house all types of raw materials as per plan.

Simplifying approval procedures to improve production lead time: different types of approval delay such as samples, fabrics, wash, and accessories from the customers is another main reason for planning failure. Some buyers are following too many stages for sample approval which leads to a shortening of production lead time and finally failing to meet desired shipment date. The customers need to standardize their approvals procedures so that the planning department gets a flexible production lead time during planning to meet customer satisfaction.

Increase investment in technology: in most of the RMG industries planning is being prepared manually in Excel files which is very complex, time-consuming, and less accurate. Currently, many planning software tools are available in the market such as Evolve by Fast React, Plan-IT by Gemserp, MAE by Parellax, etc. which helps to plan more accurately, and effectively with a much better success rate. The owners should increase their investment in such projects to increase the functionality of the planning department.

Increase communication and cooperation among the peers: for the successful execution of the plan increased communication and cooperation among the departments is inevitable. The planning department shows the path how to achieve organizational goals. So, every department should respect the planning schedule and work rigorously to achieve the plan. The practical exceptions should be communicated among peers so that planners can adjust the best possible alternatives.

Enhancing participation as a department: planning department has the most holistic view of the operation compared to the other departments. Other departments try to fulfill their departmental goals while the planning department tries to move forward with all other departments toward the organizational goal. The owners should involve the planning department in every strategic organizational decision and should consider their outputs.

In summary, by adopting the above recommendations planning activities of an RMG industry can be organized more efficiently and effectively which leads the organization towards better operational success.

4.0 Conclusions
In conclusion, throughout the project the working procedure and the key impacts of production planning department on operations have been observed. Demand forecasting, capacity planning and process planning are the three major steps of production planning, and they have immense positive impact on successful operations. Proper production planning leads the organization towards its goal. Production planning helps to increase productivity, profitability and to maintain timely delivery and customer satisfaction. Planning also ensures the optimum utilization and allocation of resources so that organization gets the maximum benefit while executing an order. Planning also reduce uncertainty in operations and manage the negative situation more efficiently.

During the period, a survey also carried out among the RMG professionals on different queries related to the impact of production planning activities on RMG operations. The outcomes of survey also presented in findings which gives the better and practical understanding on the impact of production planning on operations.

Best on the objectives and finding some recommendations have been made which could boost up planning activities of an RMG industry. On-time raw materials support, simplifying procedures, improving production lead time, increasing technological investment are some are the key recommendations which can improve planning activities in various dimension to achieve operational success.

In a nutshell, in an RMG industry planning department has the most holistic view of the operations. To thrive the key organizational goals such as profitability, productivity, optimum resource utilization, customer satisfaction ensuring proper production planning and execution is prerequisite.

5.0 References

https://essay.utwente.nl/79721/
https://www.researchgate.net/publication/355236086_Production_planning_for_industrial_symbiosis
https://www.researchgate.net/publication/331823947_Production_Planning_and_Control_Strategies_Used_as_a_gear_train_for_the_death_and_birth_of_Manufacturing_Industries
https://textilelearner.net/category/apparel/
https://docs.google.com/forms/d/1F45Ki1yNk4WrmY3WlLh33PYo7vv_7M_cPyPHYQpBa_4/edit

6.0 Appendices

Appendix A: Survey Questionary

Do you think proper production planning is pre-requisite for operational success?
“Proper order forecasting is the primary step of a successful business plan” do you agree with this statement?
Do you agree production planning can increase the profitability of the business?
Do you think for timely delivery of the orders proper production planning is required?
Do you think to manage order delivery within specific production lead time proper planning is required?
“For optimum utilization of resources (Man, Machine, Materials) production planning is essential” –do you agree with the statement?
“Production Planning can reduce the uncertainties in operations” – do you agree with the statement.
Do you think Planning Department has the most holistic view of the operations compared to other departments in RMG?
Do you think proper production planning & Control can increase the productivity?
Do you think use of ERP software can increase the effectiveness of process planning?
Do you think all large and medium sized RMG industries should introduce production planning department?
One unique characteristic of HR department is that they always have a say on the other departments — Do you think planning department should give similar type of freedom for operational success?

Mazharul Islam Kiron

Founder & Editor of Textile Learner. He is a Textile Consultant, Blogger & Entrepreneur. Mr. Kiron is working as a textile consultant in several local and international companies. He is also a contributor of Wikipedia.