BACKWARD AND FORWARD LINKAGES IN GARMENT INDUSTRY

What is backward linkage?

Backward linkage in the RMG industry refers to local, intermediate suppliers providing essential raw materials such as yarn, fabric, and accessories directly to manufacturers, rather than relying on imports. It strengthens the supply chain by reducing lead times and costs. Though Bangladesh has achieved huge success to upgrade their backward linkage industry over the decade, they still have to depend on the overseas market. Over 90% of knit fabric and 40% of woven fabric demand is met locally, but the sector still relies on imports for specialized raw materials.

The backward linkages of the RMG sector are spinning mill, weaving mill, knitting mill, Fabric dyeing mill, printing mill, interlining and lining manufacturer, poly bag manufacturer, sewing thread manufacturer, zipper manufacturer, button manufacturer, label manufacturer, embroidery factory, washing factory, elastic manufacturer, carton manufacturer, hanger manufacturer, etc.

Steps of backward linkage of the garment Industry:

The finished garment relies on three steps: from route level fibers /cotton to yarn (thread, wool), second stage from yarn to grey fabric, and final stage from grey fabric to dyeing, printing of finished fabrics. The combination of 3 steps is an integrated link to each other.

Cotton: Cotton production in Bangladesh is very limited. Spinning mills depend on imported cotton from international markets like India, Pakistan, Turkey, China, Uzbekistan, USA. Bangladesh is a small country with very limited land. Cotton needs vast amounts of land to produce. Farmar finds agriculture more profitable than cotton. Bangladesh Cotton Development Board (BCDB) has undertaken the initiative to develop cotton production, but the result is unsatisfactory. So, in the context of cotton production, Bangladesh is dreadful and has to rely on imports. That causes a significant amount of foreign exchange. Nowadays, buyers prefer organic cotton for yarn and fabric, which increases product value and its end use. Bangladesh is not even in a position to move forward to synthetic fibre production as it is a huge investment and intensive technology.

Spinning Mills: Spinning mills are where the yarn is created from fiber. The main products of spinning are cotton yarn, polyester yarn, synthetic yarn, and mixed yarn of cotton and polyester of different counts. This is the process by which natural or synthetic fibers are cleaned and twisted into yarn.

The raw materials first move through the blow room, where all impurities are removed, for natural fibers only, and the fibers are rolled into laps. The laps then go through a carding machine, where they are cleaned further and formed into slivers, thick and loosely spun yarn. In order to produce combed yarn, the fibers need to undergo further processing in the comber machine, where the short strands are removed, and the remaining processed into sliver.

There are almost 500 yarn spinning mills in the country. From which 90% demand for knitwear and 40% for woven can be met. These mills have a significant capacity to process approximately 13.43 million cotton bales annually.

Weaving: Weaving is the process of making woven fabric. Before weaving, the yarn is wrapped around beams and dipped in a size, an adhesive, which, when it dries, gives the yarn a rigid and uniform structure. This yarn is then fed into the looms and called the warp. A thread of yarn, called the weft, passes between alternating warp yarn with the aid of a shuttle, air jet, or rapier.

According to the BTMA, the number of weaving mills in Bangladesh is 302, where registered woven factories are almost 4300. It is because setting up a weaving mills need huge investment. To complete woven products order Bangladesh needs to import almost 60% of fabric from China and Vietnam. Fabric cost is 75% of the total cost of the products. That’s how Bangladesh is losing a huge amount of money to its suppliers.

Knitting: Knitting is the process of making knit fabric by interlooping yarn. Instead of looms, circular knitting machines are used for knitting. These machines use needles fed with yarn that move in an up and down motion and knit interlocking arrangements of yarn. Knit fabric is much softer and more flexible than that produced on looms, and is commonly used for producing articles of casual wear such as T-shirts and undergarments.

Because of low-cost knitting machineries and available upgradation, this industry became lead contributor to the market of the country. There has been a lot of growth in the composite knit garment industry in Bangladesh in the last decade. Some industries like Square, Beximco, Pallmall, Viyellatex, and many more have been examples of true market leaders. Bangladesh’s knitwear industry provides some extremely value-added quality products that are in demand in Europe and America.

Dyeing, Printing, and Finishing: This is the final stage where the fabric can be used for the domestic market or the RMG sector for export purposes. Dyeing, printing, and finishing units in Bangladesh are currently able to process all of the locally produced grey fabric. After the gray fabric is inspected, it goes through a process called the batch method, which involves scouring, bleaching, and dyeing. Scouring is the treatment of gray in chemical solutions in order to remove the size, natural fats, waxes, proteins, and other impurities, and to make the fabric hydrophilic, which means it no longer repels water. The bleaching process is next. It is essential to give the cloth a clean, white color. The scoured cloth is then dyed and printed on. Printing is done using perforated rollers that allow certain chemicals and colors to diffuse through the holes. After the printing has been completed, the fabric is washed, soaked in chemicals under elevated temperatures for color fixation, and then washed again.

Existing knitting, dyeing, and finishing sub-sectors cover demand for local and a major portion of the export RMG sector in Bangladesh. To develop the dyeing, printing, and finishing sub-sectors, it is mandatory to build up modern units with appropriate technology, set up bonded warehouses that can fulfill the demand for fabric until local grey production can meet the quality and quantity, and stock dyes and chemicals that must fulfill the demand of the dyeing, printing, and finishing sub-sectors. This sub-sector can contribute significantly to reducing lead time and price. It is suggested that the dyeing, printing, and finishing sub-sector has relatively better advantages than other backward integration sub-sector compare with the spinning and weaving sectors.

Trims & Accessories: Only in case of accessories Bangladeshi garment industry is in quite a good position, and 80% of those items, which generally are known as accessories, zippers, buttons, thread, stiffeners, inter-linings, packaging materials, etc., are available locally and meet the requirements of the international buyers. A considerable amount of backward linkage has therefore already taken place in this export support sector, and this sector maintains its success in the local and RMG sectors.

What is forward linkage:

Forward linkages in the garment industry refer to the downstream economic relationships where finished garments are supplied to retailers, distributors, or international markets. These linkages strengthen ties with marketing, logistics, and export sectors, enhancing value addition and market reach.

The elements of forward linkages: Government support, marketing, research and demand analysis, education, research and development, training, product quality, individual design, and to create demand, mutual relations, after-sales service, etc. 

Government Support:

The tax-free agreement with another country would be a great support for the RMG industry. To build a relationship with other countries, government investments are necessary for this sector. The transportation system is also a main problem for convening product to the seaport. By working together with the government, employers, workers’ organizations, international organizations, brands, and retailers, the sector will expand. In the majority of the factories, structural fire and building safety are expected by the Accord, Alliance, and Government effort to precede trained workers, occupational safety, and health. Government should facilitate industry through the duty-free importing of raw materials, cash incentives, Government investments, transportation system, electricity, natural gas, duty drawbacks, back-to-back credit, bonded warehouses, etc. 

Education:

Education in Apparel Manufacturing, Merchandising, Textile, Fashion, and Industrial Engineering, Human Resource Management, etc., plays a vital role in improving manpower skill, enhancing industrial productivity, improve the product quality. Government support and public universities and research centers will improve the sector, such as design, innovation, and fashion research.

Research and Development:

Research and Development is the only process by which a company works to obtain new knowledge that might be used to create new technologies, products, or services in the marketplace. The R&D section plays a very important role in the RMG industry for the overall production, quality, fashion, and style. The task of the R&D section starts from the fabrication and ends it at finish product.

Training:

Training is a program that helps people to learn specific knowledge and skills to improve performance in their current job. Good training and development always help to retain the right people and make a profit. 

Quality:

Quality is a very important thing for any kind of product. The importance of product quality will expand the business. In the whole country, there is a huge demand for Japanese products, due to their quality. Same as in the world market, we have value for garment products, and that is “MADE IN BANGLADESH”. If we want to reach the top of the competition, we will have to produce more qualitative products.  

The business success depends on after-sales service and customer relationship management. The new cycle of production for a new product, before ending the previous cycle of production, would be a great opportunity to run the cycle with the same buyer. Only good relations and after-sales service will provide the opportunities.

Conclusion:

The RMG sector is the strongest economic sector of Bangladesh. If we wish to expand our RMG business and earn additional revenue, we must always minimize the weakness of backward and forward linkages. So, it’s very important that the responsible personnel, business leaders, and the government should associate with each other to reach the top and lead the world RMG market.