Buyers are also asking to reduce the lead time for shipping goods, putting extra pressure on manufacturers
- Factories have orders till October
- Lead time has been reduced to 35-40 days from 90 days
- Entrepreneurs must invest more to ensure raw materials are available
- Buyers are cautious about placing orders
- Most buyers have restored part of their cancelled orders
Apparel manufacturers are receiving a good number of purchase orders with a shortened lead time to ship the goods.
Buyers are placing orders for smaller quantities as lockdowns in most western cities have been relaxed, despite many countries facing the threat of a second wave of the Covid-19 pandemic.
Industry insiders say a shorter lead time – the period between the initiation and completion of a production process – is forcing them to invest more to attain new orders and recover the losses caused by the pandemic.
Between March and May, almost all buyers cancelled their orders, except for a few well-reputed retailers, because of the pandemic.
Later, most of them restored a part of those orders, which was reflected in the apparel sector's export performance in June and July.
While talking to The Business Standard, a dozen apparel exporters expressed optimism that the order placement trend marked the sector's eventual recovery in the coming days.
"Each factory has a number of orders to operate its units although no one can say they have orders for the next two or three months like they had in the pre-Covid-19 period," said Kutubuddin Ahmed, chairman of Envoy Textiles Ltd, the greenest denim textile mill in the world.
Now, apparel makers receive smaller quantities of orders instead of orders in bulk as buyers are very cautious. Most of them experienced difficulties in handling the huge stock of ready goods during the pandemic, he added.
"Ready-made garment makers should take any kind of orders to continue their units till December," Kutubuddin said, adding that he hoped business would return to the pre-Covid-19 situation from December onwards.
In spite of having some work in hand, a so far unseen factor is also making the apparel makers nervous--shorter lead time.
"We have enough orders to run our factories in the coming days, maybe up to October, but every buyer is putting pressure on us to reduce the lead time," said Fazlee Shamim Ehsan, chief executive officer of Fatullah Apparels Ltd.
He explained that apparel makers usually take up to 90 days as lead time but now it has been reduced to 35-40 days.
Slashing lead time means additional investments for factories to ensure the availability of a huge stock of yarn, fabrics and other accessories, said Ehsan, who is also a director of the Bangladesh Knitwear Manufacturers and Exporters Association.
The business grew to some extent last month compared to that of the previous month, although the gap was still huge compared to the growth in the corresponding period last year, said David Hasnat, chairman and CEO of Viyellatex Group.
At least 50% of export markets need to regain the previous business momentum, he explained while talking about the recovery of exports to the markets of the European Union and the United States.
"We have been booked to about 70% of our capacity for September, although it is not enough to recover from the effects of the pandemic," said Md Abdus Salam, acting president of Bangladesh Garment Manufacturers and Exporters' Association.
He also expressed his concerns over the possible second wave scene in the export market as most of the countries involved are under the threat and the threat of inflation in those markets if business for basic items is hit hard.
However, Md Fazlul Hoque, managing director of Plummy Fashions Ltd – the greenest knitwear factory in the world – hopes in terms of mass scale and basic items, producers gain more opportunities when the market returns to its previous stage.