Amazon is about to disrupt the apparel industry through automated manufacturing. How long before Amazon puts the Bangladeshi RMG sector out of business?
The RMG industry of Bangladesh accounted for more than 80 percent of the country’s USD34.65 billion total exports in the 2016-17 fiscal year. But to remain relevant, the nation must strive further to gain market share from the global leader China, out-do providers such as Vietnam and India, as well as tackle emerging competitors like Myanmar and Ethiopia. Although overall apparel exports have been growing, exports to USA and Canada have shown negative growth in the 2016-17 fiscal year.
As a way forward, many have suggested adopting a two-pronged strategy: move up the value chain ladder and/or search for product diversification opportunities. On one hand, while there are brands like Mavi from Turkey and Peter England from India, the high cost of global branding makes it less feasible for Asian entrepreneurs to gain traction in the international fashion scene. On the other hand, instead of seeking product diversity, many of our manufacturers have limited themselves to products that come with quota facilities or low-to-medium-end products that are just more profitable to make.
One emerging trend is the advent of automation among advanced players in the apparel industry. Automation is the use of machines and technology to make processes run on their own without manpower. In the Bangladeshi RMG sector, latest technology is being used to streamline various processes: resource management, digital wage payments (see the article titled Payment Ecosystem in Bangladesh) and certain dimensions of manufacturing. Big names like Pacific Jeans and Beximco have also begun implementing AI-based ERP systems to help cut down fabric wastage as well as reduce production time and effort. Robi has recently signed an agreement with a Singapore based start-up for introducing Internet of Things (IoT) based smart-factory solutions for agility and real-time visibility in quality management, in addition to automation of repetitive tasks.
But perhaps the most intriguing part of automation is the transition from human workers to a tireless workforce of programmable robots. Yarn and fabric manufacturer Envoy Textiles Limited (ETL) has recently installed 14 robotic yarn-spinning machines in order to produce 55 tons of high quality denim yarn per day. Manufacturers could potentially exploit this unprecedented speed and flexibility in supply chains to successfully meet the increasingly volatile consumption trends. Innovative products such as the SoftWear Automation’s Sewbots and Sewbo Inc’s robotic seamstresses promise much more in the future.
The other sideof automation is the resultant jobless growth. At ETL every robotic yarn-spinner needs just one operator while the machines employed previously required more than 10 workers. However, a more imminent threat is the risk of sewbots enabling big brands or suppliers like Tianyuan Garments Company to set up fully automated factories close to the destination markets, thus eliminating the need for sources of cheap labor such as Bangladesh. To prevent this, suppliers should seek to enter strategic partnerships with long-term clients while adopting collaborative frameworks for end-to-end process management and capacity planning.
Adoption of robotics also makes sense for suppliers from Bangladesh, since the element of human involvement does not add much to the brand value of low-end products. According to the McKinsey Apparel CPO Survey 2017, a ‘multi-speed’ model is expected to emerge in the medium term. High-tech facilities like Under Armour’s UA Lighthouse will produce high-end, quickturn products while low-cost countries like Bangladesh will produce slowermoving commodity products. Even in developing countries, as automation costs fall and wage rates rise, low-end clothing production is likely to become less labor-intensive with time. Starting from popular service providers such as Netflix, to machines of everyday use such as smartphones and ATMs, AI is becoming increasingly more integral to our lifestyles. It won’t be long before industrial robots become commonplace in Bangladesh. With large apparel sellers like Amazon leading the charge, it is time our RMG suppliers started thinking about how technological adoptions could complement the workforce rather than displace it.
This article was written in 2018.
pi STRATEGY 