ASSIGNMENT ON

Merchandising activities of Readymade garments (RMG) executing an

order of 10000 pcs T-Shirt

Table of Contents
Sl.
No

Page 1 of 16

Topics

Page
Number
s

Chapter -1

1.0
1.1
1.2

Introduction
Objective of the assignment
Merchandising Department & its Activities

3-5

Chapter -2
2.0
2.1
2.1
2.2
2.3
2.4
2.5

Price negotiation and order confirmation

How to prepare garment price
Fabrics price
Trimming price
CM calculation
Other embellishment calculation
Commercial cost

3.0
3.1
3.2

Fabrics and accessories booking

Fabrics booking
Accessories booking.

5-7

Chapter -3
7-8

Chapter -4
4.0
4.1
4.2
4.3
4.4

Merchandising activities on Product development

Style sample development
Size set sample development
Pre production sample development
Production sample

8-10

Chapter -5

5.0
5.1
5.2
5.3
5.4
5.5

Merchandising activities on production follow up

Production plan
Trial/Test cutting
Cutting
Sewing
Packing

6.0
6.1
6.2
6.4

Merchandising activities on Quality control

Quality control during inline
Quality control during production
Final inspection

7.0
7.1
7.2
7.3

Merchandising activities on goods delivery to

buyers destination
Booking to forwarder
Documentation
Payment release

10-11

Chapter -6

Page 2 of 16

11-13

Chapter -7

13-14

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Executive Summary
The textile and apparel industry in Bangladesh occupies a prominent position
within the countrys industrial structure. It is the largest manufacturing
sector, providing jobs for some 50% of the total industrial workforce and
contributing 9.5% of the countrys GDP. Also, it accounts for almost 77% of
total exports, making it Bangladeshs leading foreign exchange earner. In the
early 1980s exports were dominated by jute while garment sales were
insignificant. But today garment exports are by far the leading export
category. In 2004/05 the clothing sector generated as much as US$5.58
billion in foreign exchange.
The industry benefits from special access to markets in the EU, Canada,
Norway and Japan. Because Bangladesh is a least developed country, its
textile and clothing exports enter these countries quota free and duty-free.
This concession, together with low labor costs, provides the garment sector
with a strong competitive advantage. But in order to produce garments for
export, the sector has to purchase a large share of its yarn and fabric needs
from abroad, especially woven fabrics. Few local textile firms are able to
produce materials of the required quality or in adequate quantities. The
Bangladeshi government is attempting to remedy this situation. To reduce
the countrys import bill, it is offering tax concessions and incentives aimed
at encouraging 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 export
sectors. The government is rallying the RMG sector as the area with the
largest potential for growth, and a key step the government must take is the
development of backward linkages for the sector to be truly competitive
In RMG sector there are many department like knitting, dyeing, finishing,
cutting, sewing, packing, production planning, quality control, Merchandising
and marketing, Store, HR & compliance, information technology, etc. Among
all the department merchandising & marketing is one of the most important
department in RMG sectors, In my assignment I tried to discus about the
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 buyers
destination

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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 a
comprehensive 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
garments trade. The term has been derived from the merchandise.
Merchandise means goods that are bought & sold.
The term Merchandising may be defined as: Person who merchandises
the goods, specifically for export purpose. Garments merchandises means
buying raw materials & accessories, producing garments, maintaining
required quality level and exporting the garments within schedule time. From
the above definitions, we can say that a person involved in garments
merchandising needs a wide range of knowledge & skill to perform his job
successfully. 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 terms

for 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

garments manufacturing.

Good knowledge of the usual raw material inspection systems &

garments inspection systems.

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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.
2. To establish contact with the buyers sending formal letters/profile.
3. Receiving buyers response and providing price quotation along with
making of sample as counter/approval.
4. Receiving samples comments from the buyer.
5. To furnish the pro-forma 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 technical
and 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.

Pushing the factory taking initial procurement to open the back-

to-back L/C by bank.

11.

Searching reliable fabric and accessories sources and finalize

supplying of the required materials relevant tot the order.

12.

To monitor the shipment of raw materials and arrival in the

factory.
13.

To monitor of the supplying materials while receiving factory.

14.

To order the test cutting with quality.

15.

To check/inspect/advise for the bulk production.

16.

To monitor production, quality and delivery.

17.

To advise factory if buyer change any instruction both in

technical/commercial point of view to the order.

18.

Collecting order from the buyers.

19.

Sending Samples to the buyer for approval.

20.

Collecting accessories form different Suppliers.

21.

Giving order to the specified garment factory.

22.

Communicate with all the respective parties.

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23.

Coordinating the whole process at a regular manner

This report is based on the merchandising activities of one of the fast

growing ready made knit composite garment factory
named FAKIR
KNITWEARS LTD established in 1989. It has more than 80000pcs T-Shirt
production 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 negotiate
price with buyer. Competitive price is the key element of price negotiation. To
make competitive price first of we have to know about the product that buyer
want 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
ship or 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,
the exporter quotes price a bit higher than FOB. The whole responsibility
including the sending of goods to the selected port of the importer is

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shouldered by the exporter ship or air. Freight may very from place to place
and shippers to 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, while
quoting 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.
During the fixation of FOB price of a T-Shirt following notes are to be
followed carefully:
1.
2.
3.
4.
5.
6.

Cost of fabrics/Dzn. garments.

Cost of Accessories/Dzn. garments.
C.M (Cost of Manufacturing) /Dzn. Garments.
Cost of embellishment (if any) like print, embroidery, etc
Commercial cost.
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)= $8.55
Fabrics 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. There
are hundreds of items used to manufacture the garments, proper selection of
trims and its quality are very important for styling, otherwise the garment
may be 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, etc
trim 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
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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 plant
and 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 any
garment more attractive for customer.
As our assignment is based on basic T-Shirt we are not calculating any
embellishment 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, trimming
cost, CM cost, other embellishment cost & commercial cost.
So the garments price per dozon comes ($25.65+$2.00+$5.00+$1.00)=
$33.65
T-Shirt per piece is ($33.65/12)= $2.81
Thus we make manufacturing price & negotiate this price with Buyer.
After negotiate price with buyer we receive order confirmation & L/C from
buyer to execute the order.

Chapter -3

(3.0) Fabrcis & Accessories booking

3.1 Fabric booking
After receive order confirmation from buyer we chase buyer to provide us PO
sheet (purchase order) which includes color & size wise break down of the
total quantity. Then we will go for knit fabrics booking. Yarn is the first

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element of knit fabric. So to make fabric we have to book suitable yarn from
home or abroad. To import yarn from abroad it need approx 44/45 days and
to buyer yarn from Bangladesh it need approx 20/30 days. After receive yarn
we go for fabrics knitting and then coloring of the fabrics.
After dyed fabrics is ready to make garments.

3.2 Trim booking

Various kinds of trims are used in Basic T-Shirt. To buy or make booking for
trim firstly we have to know from buyer what kind of trims they required for
their T-Shirt. After collection trimming information from buyer we have to
develop the same and need to get approval. Then we will book trim from
respective trim manufacturing house.
It is very important to buy all the necessary trims before start garment
production.

Chapter -4

(4.0) Merchandising activities on

Product development
Product

development

is

another

important

responsibility

for

RMG

merchandisers. Before go to bulk production various stage of sampling has to

pass 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

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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)

Fabrics Selection
Approval Fabrics (for hand feel & Approval)
Test done from official Testing House
1st Bulk Fabrics in each Color
Test report in each color

Lap dip
Each Color Options for Dry Recipe
Confirmation with "Spectro Readings"
Re- Sub Needed Until Approval.

Swatch
Swatch is a presentation of all the materials is (Fabrics & Accessories) used
foe any specific style/order. Usually small piece of fabrics and each piece of
accessories are attached in board paper in a systematical manner. Swatch is
very important for production line to make the correct construction of a
garment and QC departments ensure it. Concerned merchandiser should
confirm/approve the swatch.

Trims

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Trims cover all the trims used in the garments except the basic fabric. There
are hundreds of items used to manufacture the garments, proper selection of
trims and its quality are very important for styling, otherwise the garment
may be 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 product
that a designer imagine first. This sample is usually made by available color
but actual design, construction and weight. But some time buyer ask sample
to make by actual color.

(4.2) Size set sample development

The main object to develop size sample is to confirm the measurement, body
fitting etc. This sample is also made by available color but actual construction
and weight.

(4.3) Pre production sample development

The main object to develop Pre production sample is to confirm the final
product from buyer. After receive pre production sample we can start
final/bulk production.

(4.4) Production sample development

The main object to develop Production sample is to confirm altimate buyer
that what we produced and ship to sell for end user.

Chapter -5

(5.0) Merchandising activities on

production follow up
5.1 Production plan
After receive a purchase order from buyer merchandiser have to sit with
production planner to make a production plan. Production plan contain below
things:
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 air
forwarder.

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5.2 Trail/ Test cutting

Before start bulk cutting to adjust pattern we cut each size and each color
10/15 pcs. This is called trail or test cutting. After approved trail or test
cutting we can go for bulk cutting.

5.3 Sewing
Sewing section is the section where cutting part are joined to make a
garments. In sewing section sewing machines are set up according to the
kind of final product.

5.4 Packing
After sewing garments is packed into packing section. Here we put iron on
garments, add various kinds of hangtags, polybags and make garments ready
to 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 to
the first customer (Direct Order) and hopefully to the second customer
(Recorder/Alter order/ new order) as well. If both customers can be satisfied
then the manufacturer products are more likely to continue to be in demand.
Satisfactory quality can only be ensured through (from the manufacturer pint
of 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 customers
point of view by providing:

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Right Product.
Right Quality.
Right Time.
Undamaged Condition.

How can quality be achieved?

Goods must be designed to meet customers needs and make

manufacturing process and maintenance easily.
They must be made exactly and consistently to the specified design.
Marketing must ensure accurate advertising, trade description with
constant feed back for improved design.
Total commitment to organized design.

Actual Quality Level (AQL) International Standard for

Garments

Batch Size
(Units)
26-50
51-90
91-150
151-280
281-500
501-1200
1201-3200
3201-10000
10001-35000
35001150000
150001500000
500000+

AQL
Sam
ple
Size
13
13
13
50
50
80
125
200
315
500

- 1.0
Accep
t.
Defec
ts
0
0
0
1
1
2
3
5
7
10

AQL- 1.5
Sampl Accep
e Size t.
Defec
ts
8
0
8
0
32
1
32
1
50
2
80
3
125
5
200
7
315
10
500
14

AQL- 2.5
Sampl Accep
e Size t.
Defec
ts
5
0
20
1
20
1
32
2
50
3
80
5
125
7
200
10
315
14
500
21

AQL-4.0
Samp Accept
le
.
Size
Defect
s
13
1
13
1
20
2
32
3
50
5
80
7
125
10
200
14
315
21
315
21

800

14

800

21

500

21

315

21

1250

21

800

21

500

21

315

21

Maximum buyer of the world follows this above chart for inspecting their
garments. When garments will be ready for shipment, an inspector should
follow the above acceptance level of quality products. It is applicable for all
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types of garments. So this chart is very important for Quality Control and
Quality Inspection of a Garment. Factory will have to follow and work on the
basis of this chart. Factory should have to submit their AQL report to the
respective buyers before shipment.

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 work
construction and terms of reference.
The detection error by monitoring both product and the method by
which is produced.
The prevention of errors at all earliest
The total involvement all concerned of the contribution to the final
products quality.
Establish a total forward and backward control system, allowing
flexibility for change.

6.2 Purpose of Quality Control

It is a long standing trading of any organization to offer the customers first
quality merchandise. The purpose of this quality control program is to assist
manufacturers in meeting the high standards.
In addition, companys quality control program can also help the supplier
with their operation. Quality control program not only help spot and reject
defective items, but more importantly they pinpoint production operations
that need special attention, thereby reducing the number of defects in future
production. This type quality control provides basis for management decision
in the manufacturers plant.
For the purpose of this manual, the defect refers to a condition that renders
merchandise of second quality and or unacceptable because the defect is one
or more of the following:
1.
2.
3.
4.

Page 14 of 16

It
It
It
It

is conspicuous.
will affect the salability of the product.
will affect the serviceability of the product.
is significantly different from the specification.

- 14 -

It is understood that all performance and legal requirements be following to

the letter (that is L/C or any other contact between the buyer & seller) with
no division allowed, including requirements of the following:
1. Flammability.
2. Refurbishing (Cleaning).
3. Labeling.

Chapter -7

(7.0) Merchandising activities on goods

delivery to buyers destination
7.1 Booking to forwarder
After making final inspection merchandiser received packing list from
packing section which contain the list of carton, how many pieces garments
in the carton, 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 customs
authority of a station:
1.
2.
3.
4.
5.
6.
7.

Shipping bill of entry.

Export L/C.
Packing List.
Commercial Invoice.
UD/UP.
VBF-9A. From to be supplied by the C&F agent.
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 person
or to his order.

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B/L describes the conditions under which the goods are accepted by the
career and details
The quantity of the goods.
Name of vessel
Identified marks and numbers
Destination
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.

Payment release
After prepared invoice, bill of landing and other required
documentation we send it to buyers nominated bank for payment
release.

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