Supply Chain Management competitive advantage in apparel

sector of Bangladesh: A Study

[Report has submitted in fulfillment of the requirements for the degree of
Masters of Business Administration with a major in Supply Chain Management]

Prepared by
Isque Mehebobe Bin Islam
ID: R221055
Program: MBA

Department of Business Administration

Faculty of Business Studies
International Islamic University Chittagong

September 10, 2023

Supply Chain Management competitive advantage in apparel
sector of Bangladesh: A Study
[Report has submitted in fulfillment of the requirements for the degree of
Masters of Business Administration with a major in Supply Chain Management]

Prepared by
Isque Mehebobe Bin Islam
ID: R221055
Program: MBA

Submitted to
Dr. A.M. Shahabuddin
Associate Professor
Department of Business Administration
International Islamic University Chittagong

……………………………………..
Signature of Supervisor

Department of Business Administration

Faculty of Business Studies
International Islamic University Chittagong

September 10, 2023

 LETTER OF SUBMISSION

Date: September 10, 2023

The Convener
MBA Dissertation Committee Department of Business Administration
International Islamic University Chittagong.

Subject: Submission of report

Dear Sir
As- Salamu Aliakum
Despite many limitations I have tried level best to address the major and in depth issues
in making this paper accurate and reliable if you have any further inquiry Concerning
any additional information. I therefore, hope that you will be kind enough to accept this
report supply chain management competitive advantage in apparel sector of Bangladesh:
A Study.

Sincerely yours,
Isque Mehebobe Bin Islam
ID: R221055
Major: Supply Chain Managenment.
Department of Business Administration
Faculty of Business Studies.
International Islamic University Chittagong.

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 ACKNOWLEDGEMENT

The completion of this internship report would not have been possible without the
steadfast support of several people.

First of all, I would like to express my most profound appreciation and sincere gratitude
to Dr. A.M. Shahabuddin, Associate Professor (IIUC) my Academic Supervisor, for his
invaluable guidance, technical know-how, wisdom and professionalism throughout my
work. He is both excellent mentors and have provided support throughout my work. I
would like to extend my heartiest thanks to him for their patience and kind involvement
in this study.

I also thank all respondents to the survey, without whom obtaining results and drawing
conclusions for this thesis could not be possible.

Last, but not least, I would like to express my gratitude to all my friends at IIUC who
made my study a very pleasant and memorable one.

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 ABSTRACT

Apparel manufacturing has been one of the most globalized business sectors. Facing
free competitions after the expulsion of the decades-long quota system in 2005, it
became imperative for apparel exporters in developing countries to implement efficient
supply chain management (SCM) to establish competitive advantages. In this study, 4
dimensions of SCM practices applicable to the apparel sector (i.e., strategic supplier
partnership, customer relationship, information sharing, and process integration) were
identified and operationalized, and their relationships with key areas of competitive
advantage (i.e., cost, quality, delivery, and flexibility) were empirically tested. Data
were collected from apparel manufacturers in Bangladesh via an online survey. A total
of 117 responses from the management level respondents were analyzed. Findings
included that strategic supplier partnership and process integration were moderately
related to quality competitive advantage, (b) information sharing was significantly
related to delivery competitive advantage, and (c) information sharing was
significantly related to flexibility competitive advantage. Valuable suggestions for
local and international industry leaders and policymakers are provided from the results.
As the first attempt to define the dimensions of SCM practices in the apparel industry
and investigate their relationships with competitive advantage, this study shapes the
pathway for future research.

Key Words: Supply Chain Management, Apparel Industry, Bangladesh.

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 TABLE OF CONTENTS

LETTER OF SUBMISSION ...................................................................................... i

ACKNOWLEDGEMENT ......................................................................................... ii
ABSTRACT ............................................................................................................... iii
CHAPTER ONE ...................................................................................................... 1
INTRODUCTION .................................................................................................... 1

1.0 INTRODUCTION .............................................................................................. 2

1.1 SCM IN THE BANGLADESH APPAREL SECTOR.................................... 2

1.2 RESEARCH PROBLEM .................................................................................. 3

1.3 RESEARCH QUESTION ................................................................................. 4

1.4 OBJECTIVES OF THE STUDY ...................................................................... 4

1.5 RESEARCH SIGNIFICANCE: ........................................................................ 4

CHAPTER TWO ....................................................................................................... 6
LITERATURE REVIEW .......................................................................................... 6

2.0 LITERATURE REVIEW ................................................................................. 7

2.1 SCM AS A FRAMEWORK OF THIS STUDY............................................... 7

2.2 DIMENSIONS OF SCM IN THE LITERATURE ......................................... 8

2.3 DIMENSIONS OF SCM IN THE APPAREL SECTOR ............................. 10

2.4 STRATEGIC SUPPLIER PARTNERSHIP .................................................. 10

2.5 CUSTOMER/BUYER RELATIONSHIP ...................................................... 11

2.6 INFORMATION SHARING .......................................................................... 11

2.7 PROCESS INTEGRATION ........................................................................... 12

2.8 APPAREL SUPPLY CHAIN .......................................................................... 15

2.9 COMPETITIVE ADVANTAGE .................................................................... 17

2.10 RESEARCH MODEL AND HYPOTHESES .............................................. 19

CHAPTER THREE ................................................................................................. 21
METHODOLOGY................................................................................................... 21

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3.1 RESEARCH DESIGN ..................................................................................... 22

3.2 SAMPLE ........................................................................................................... 22

3.3 DATA COLLECTION PROCEDURE .......................................................... 22

3.4 INSTRUMENT DEVELOPMENT ................................................................ 22

3.5 MEASUREMENTS AND RELIABILITIES ................................................. 23

3.6 DATA ANALYSIS ........................................................................................... 25

CHAPTER FOUR .................................................................................................... 26
FINDINGS & ANALYSIS ...................................................................................... 26

4.1 SAMPLE CHARACTERISTICS ................................................................... 27

4.2 EFFECT OF SCM PRACTICES ON DIFFERENT AREAS OF

COMPETITIVE ADVANTAGE .......................................................................... 27
CHAPTER FIVE ..................................................................................................... 30
SUMMARY OF FINDINGS ................................................................................... 30

5.0 SUMMARY OF FINDINGS ........................................................................... 31

5.1 FINDINGS AND IMPLICATIONS ............................................................... 31

5.3 IMPLICATIONS AND CONTRIBUTIONS ................................................. 33

5.4 LIMITATIONS AND FUTURE RESEARCH .............................................. 34

REFERENCES ....................................................................................................... 35

APPENDIX A ......................................................................................................... 42

Section I................................................................................................................... 42

Questions: Please put tick mark that best describes your company in the
global marketplace ................................................................................................. 42

Section II ................................................................................................................. 42

Section III General information about you and your company......................... 43

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 CHAPTER ONE
INTRODUCTION

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1.0 INTRODUCTION

The apparel or ready-made garment industry (RMG) has been Bangladesh's main export
sector for the past 25 years. Bangladesh is one of the newly designated developing
countries. With 83.49% of all export revenue in the 2017–18 fiscal year coming from
this industry, it has been the nation's top exporter (Bangladesh Garment Manufacturers
and Exporters Association, 2018a). With clothing exports of $30.62 billion USD in the
2017– 18 fiscal year, Bangladesh is currently the second-largest apparel exporter behind
China (Bangladesh Garment Manufacturers and Exporters Association, 2018c). By
providing a primary source of income for more than four million employees, the most of
whom are women, the sector has significantly contributed to Bangladesh's social and
economic growth.
Although Bangladeshi apparel manufacturers have enjoyed a competitive cost advantage
and those benefits, they are facing some obstacles today: They have started experiencing
problems with difficulty with sourcing raw materials, long lead time, and increasing
manufacturing cost. Hasan (2017) pointed out that they were due to a lack of backward
and forward coordination, less sophisticated management, and a dearth of domestic
sources of raw materials (e.g., cotton, good quality fabrics
The consensus of many researchers is that the success and failure in the modern apparel
sector worldwide mostly depends upon efficient supply chain management (SCM)
practices (Şen, 2008). SCM can improve organizational performance by lowering its
costs, improving quality, increasing responsiveness to customers, and adding more
values to products (Rai & Giri, 2015). Therefore, SCM practice could help Bangladeshi
apparel manufacturers achieve competitive advantages over their competitors like China,
Vietnam, and Cambodia (Asgari & Hoque, 2013a).

1.1 SCM IN THE BANGLADESH APPAREL SECTOR

The textile and apparel industries have been the vital sector by which numerous countries
have initiated their industrialization (Brenton & Hoppe, 2007). Historically, the textiles
and apparel sector assumed a significant role in the economic advancement of the UK,
the US, Germany, and Japan (Brenton & Hoppe, 2007). This sector has also been the
foundation of industrialization in Asian countries, including Hong Kong, Singapore,
Taiwan, South Korea, and Malaysia, and more recently China, Indonesia, Sri Lanka,
Thailand, Vietnam, and Bangladesh (Brenton & Hoppe, 2007).
There are two reasons why textile and apparel manufacturing has been such important
foundation for the countries’ economic activity and growth since the beginning of the
industrial revolution. First, textiles and apparel products are the basic items of
consumption in all countries, and second, apparel manufacturing is highly labor intensive
and requires relatively low levels of capital investment and advanced skills (Joarder,
Hossain, & Hakim, 2010).
Accounting for the long linkage and the number of the processes involved in the apparel
sector, the textiles and apparel supply chain is complex. For instance, design and product
development are done by a developed country, such as the United States, raw materials
are sourced from a developing country, such as China, manufacturing is done in one of
the least developed or a lower cost developing countries, such as Bangladesh, and the
finished goods are finally sold to different developed and developing countries in the

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world (Hasan, 2017). Therefore, careful management of the supply chain that reduces the
lead time and accomplishes quick response to the market is necessary to be competitive
in global competition (Bruce, Daly, & Towers, 2004).
Only a few researchers during the past decade have studied the SCM concept in the
Bangladeshi apparel manufacturing industry (e.g., Ahsan & Azeem, 2010; Ali & Habib,
2012; Asgari & Hoque, 2013b; Nurruzaman, Haque, & Azad, 2010). However, these
studies only focused on operational factors or relied on data from a limited number of
companies.
Despite increased interest in SCM, the apparel sector has been neglected in term of SCM
research (Bruce et al., 2004; Rajput & Bakar, 2011) in comparison with the amount of
SCM research carried out in the automotive, construction, engineering, food processing,
electric and electronics, pharmaceuticals, industrial parts, and toy industries, etc. It has
been claimed that SCM implementation in the apparel sector is possibly hindered due to
the time consuming and labor intensive nature of its manufacturing process (Rajput &
Bakar, 2011). Only a few studies have been conducted on aspects of SCM in the context
of the apparel sector of Bangladesh. For example, the apparel industry has been
investigated to minimize lead time by improving operational competencies (Nuruzzaman
et al., 2010), and the combined consequence of information and knowledge sharing on
supplier’s operational performance through supplier-buyer relationships has been
researched in the context of the Bangladeshi apparel industry (Rashed, Azeem, & Halim,
2010). Although there is a growing realization among practitioners and academics that
SCM is crucial in order for the Bangladeshi apparel industry to compete and reach for a
leading position in the global market place, no intensive study has been conducted on the
state of SCM implementation and practices in the context of the manufacturing sector of
Bangladesh. The current research is motivated by the challenges arising from the
increasingly volatile marketplace environment for Bangladeshi apparel manufacturers
and the existing gap in SCM literature in differentiating SCM practice from SCM
implementation. Hence, the question of how a firm prepares to implement and
effectively execute SCM is well worth investigation, which can be explained by the
theory of innovation diffusion. Against this backdrop, the current research makes an
attempt to address the existing voids in the literature and to study SCM implementation
and practice and its outcomes in terms of achieving supply chain agility and competitive
advantage in this industry. The research has been undertaken in the context of the apparel
industry in Bangladesh for the reasons mentioned above.

1.2 RESEARCH PROBLEM

Apparel manufacturing is one of the most globalized activities in the world economy
(Zhu & He, 2014). The increased globalization of apparel manufacturing is mainly
attributable to the difficulty in completely automating its processes, which requires
labor- intensive operations (Lee et al., 2004), and to the ease of tradability of most
intermediate components at each stage of the value chain (Bernhardt, 2014). The labor-
intensive nature of apparel manufacturing has driven the growth of international
production and supply networks seeking economic efficiency (Lee et al., 2004). With the
blessings of low-cost labor, favorable government policy, preferential trade status, and
advantageous global market access, apparel has evolved as the main export product of
Bangladesh (Uddin & Jahed, 2007). This sector accounts for approximately 82% of the
country’s total export earnings (BGMEA, 2016), and has created direct employment for
about four million people and indirect employment for several million others.

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Bangladeshi manufacturers, however, are currently facing great competition in a quota-
free unprotected global market.
Despite significant growth in recent decades, the apparel manufacturing industry of
Bangladesh is faced with numerous problems associated with supply chain complexity
(Berg, Hedrich, Kempf, & Tochtermann, 2011; Nuruzzaman et al., 2010), operational
inefficiencies (Berg et al., 2011; Chowdhury and Quaddus, 2015), limited capacity and
capability (Islam, 2013; Haider, 2007), and uncertainty in the form of demand, supply,
technology, competition and political instability (Ahmed, 2009; Chowdhury and
Quaddus, 2015; Nuruzzaman et al., 2010; Mansur, 2013; Uddin & Jahed, 2007; Saha,
2011a). These problems have greatly challenged its ability to retain and increase its
market share, and to realize its target to further consolidate the position of the industry as
a top global exporter, reaching the target of USD 50 billion by 2021 from second
position behind the global leader, China (Mansur, 2013). It is suggested that the apparel
industry of Bangladesh needs to make significant performance improvements by
removing overall value chain inefficiencies and minimizing the gap between customer
requirements and manufacturer capability (Berg et al., 2011). In such a situation, it is
evident that the effective management of supply chains is vital to reduce inefficiencies
and resolve the problems throughout the supply chain, and ultimately to improve overall
competitiveness (Lee & Kincade, 2003; Saxena & Salze-Lozac’h, 2010).
Research on the comprehensive factors including both supplier relations and surrounding
factors remains scarce. This study, therefore, was designed to answer this primary
research question: Do SCM practices result in a higher level of competitive advantage in
the Bangladeshi apparel industry? The purpose of this study was to examine the extent to
which Bangladeshi apparel manufactures utilize SCM practices and the impacts of SCM
practices on their competitive advantage.

1.3 RESEARCH QUESTION:

The focus is on assessing the impact of SCM practice in the context of the Bangladesh
apparel industry. To investigate the following:
1. What are supply chain management practices for Bangladeshi appeal industry?
2. How do competitive advantages are practiced in supply chain management
Bangladesh?

1.4 OBJECTIVES OF THE STUDY:

To find out the key areas of competitive advantage (Cost, Quality, Delivery &
Flexibility) of Supply Chain Management of RMG sector in Bangladesh & its future
implications in the industry

1.5 RESEARCH SIGNIFICANCE:

The results add substantial knowledge to the existing supply chain management literature
by providing an empirical case of the apparel sector in a developing country. Therefore,
this study fills the significant void in the SCM literature and has the potential to facilitate
further studies in the area.

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The present study also makes an important contribution in exploring a number of internal
and external environmental factors to examine their antecedent role in SCM
implementation and practice, which is connected to a firm’s ability to secure competitive
advantage. Valuable information and suggestions for the international and local
policymakers and industry leaders to develop and direct necessary policies and practices
for further advancement of the industry are also generated.

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 CHAPTER TWO
LITERATURE REVIEW

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2.0 LITERATURE REVIEW

The organization of this chapter is as follows: (a) SCM as the framework of this study,
(b) SCM in the Bangladesh apparel industry, (c) the dimensions of SCM practices and
their relationships with competitive advantages, and (d) hypotheses of this study.

2.1 SCM AS A FRAMEWORK OF THIS STUDY

The term, supply chain management (SCM) refers to the flows of merchandises, data,
and assets or resources over the whole supply chain network, from suppliers of the
manufacturers, to final assemblers, to distributors, and ultimately to the customers
(Johnson & Pyke, 2009). However, during the past two decades, a great deal of
confusion has occurred amongst supply chain studies caused by the numerous SCM
definitions that have been proposed and measured in the literature (Burgess, Singh, &
Koroglu, 2006; Stock & Boyer, 2009). Although all the definitions generally focused on
the flow of merchandise, many explanations of the concept have been diversified
depending on the perspectives and/or ways to conceptualize or operationalize. For
example, Wong, Arlbjørn, and Johansen (2005) defined SCM practices as the
methodologies applied in integration, managing, and coordination of supply, demand,
and relationships so as to satisfy customers in a viable manner. Likewise, Li, Ragu-
Nathan, Ragu-Nathan, and Rao (2006) defined SCM practices as a set of activities
embraced in an organization to advance successful management of its supply chain.
In general, the concept of SCM can be categorized into two foci: a process integration
perspective and a more current, systemic and strategic view (Miguel & Brito, 2011).
From the process integration standpoint, SCM is the coordination of key business
activities such as products, services, and information that increase values for clients and
different partners (Lambert, Cooper, & Pagh, 1998). From the systemic and strategic
viewpoint, firms delegate assets and endeavors to accomplish a unique chain strategy
that will create competitive advantage through lower costs and improved customer
satisfaction (Mentzer et al., 2001).
The analysis of the literature in various subject areas such as purchasing and supply,
logistics and transportation, marketing, and operations management shows that various
emphasis and views of SCM practices, as well as industry differences, exist.
Many researchers in the SCM literature discussed the key practices of the SCM and/or
empirically tested their relations with competitive advantages and/or other performance
measures. The various dimensions of SCM discussed in the literature are shown in Table
1. Those, however, clearly suggest that SCM is a multi-dimensional construct and
includes a set of activities and processes of upstream, downstream, and a company’s
internal operation.

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2.2 DIMENSIONS OF SCM IN THE LITERATURE

Author (s) SCM Dimensions Content Context/ Country

Li et al. (2006) • Strategic supplier partnership Scale development and Different

empirically test the manufacturing
• Customer relationships
relationship between industries (e.g.,
• Information sharing
SCM practices, furniture, rubber,
• Information quality competitive advantage, plastics, metals
• Internal lean practices and organizational etc.) in the USA
• Postponement performance
respectively.

• Literature review of 100

Burgess et al. Leadership
randomly selected
(2006) • Intra-organizational
refereed journal articles
relationships
to clarify aspects of
• Inter-organizational SCM
relationship

An assessment of the Different

Ulusoy (2003) • Logistics
supply chain and manufacturing
• Supplier relations
innovation management industries in
• Customer relations
practices on an Turkey
• Production
empirical basis

Chow et al. • Customer and supplier A survey to examine the Different

(2008) management association of SCM manufacturing
• Supply chain features components and Industries in the
• Communication and Speed organizational US and Taiwan
• Information sharing performance

SCM instrument
Chen and • Supplier base reduction
developmentthrough
Paulraj(2004) • Long-term relationship
analyzing over 400
• Communication
articlesacross many
• Cross-functional teams disciplines
• Supplier involvement

(Zhou and • Supply chain planning The integration of 125 North

Benton(2007) • Just-in-time (JIT) production information sharing and American
• Delivery practice supply chain practice in manufacturing
SCM firms

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Some of the researchers also empirically assessed the impacts of the SCM dimensions on
various performance measures. For example, Li et al. (2006) empirically tested a
framework to identify the relationships among SCM practices, competitive advantage,
and organizational performance with different manufacturing companies in the US. They
identified five dimensions of SCM practices (e.g., strategic supplier partnership,
customer relationship, level of information sharing, information sharing quality, and
postponement) and found a direct impact of them on both competitive advantage and
organizational performance. Additionally, they used cost, quality, time to market,
delivery dependability, and product innovation as the dimensions of competitive
advantage and found their direct impacts on organizational performance in market share,
return on investment, the growth of sales, and profit margin on sales. They contended
that quality and time to market were stronger indicators of competitive advantage than
the other three dimensions.
Similarly, Tan, Kannan, and Handfield (1998) explored the connections among SCM
practices, supplier performance, and company performance. They found that customer
relations and purchasing practices influence the efficacy of SCM strategy and influence
the financial and market performance of the companies they studied. Tan et al. (2002)
carried out a survey of top managements in different industries to investigate the
pervasive SCM and supplier assessment practices. They categorized SCM practices into
six variables addressing various aspects of supply and materials management issues (e.g.,
supply chain integration, information sharing, supply chain characteristics, customer
service management, geographical proximity, and just-in-time capability). They also
categorized supplier evaluation practices into three constructs addressing delivery,
capacity and, information issues (e.g., delivery assessment, capacity assessment, and
information assessment). They found that just-in-time (JIT) and supply chain
characteristics had a positive relationship with overall product quality and, therefore,
suggested that companies should focus on JIT and supply chain characteristics to
improve overall product quality. They also recommended that to improve overall
customer service levels, companies should focus on supply chain characteristics such as
delivery and communications. Regarding the relationships between supplier evaluation
factors and the performance, product and delivery assessment were found positively
related to overall customer service levels.
Likewise, Zhou and Benton (2007) found that information sharing and supply chain
practice (e.g., planning, JIT production) had a significant impact on delivery
performance. Miguel and Brito (2011) measured SCM and empirically tested its
influence on operational performance among Brazilian companies with no defined
sectors. They explored that SCM as a multidimensional construct (information sharing,
long-term relationship, cooperation, and process integration). They found a significant
positive impact of SCM on operational performance in traditional competitive priorities
(i.e., cost, flexibility, quality and time).
Similarly, Koh, Demirbag, Bayraktar, Tatoglu, and Zaim (2007) evaluated two groups of
SCM practices (e.g., OMS: outsourcing and multi-suppliers, and SCLP: strategic
collaboration and lean practices) and their impact on the operational performance and
SCM related organizational performance in small and medium-sized enterprises (SMEs)
in Turkey. The OMS factor was comprised of four dimensions: outsourcing, E-
procurement, subcontracting, and a dependence on multiple suppliers. On the other hand,
the SCLP factor was comprised of five dimensions: holding safety stock, close
partnership with customers, strategic planning, JIT supply, and relation with few

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suppliers. Among those dimensions, holding safety stock, close partnership with
customers, strategic planning, and dependence on multiple suppliers were found as the
most extensively implemented and practiced SCM dimensions in the Turkish SMEs
sector. They found that both SCM practices (i.e., OMS and SCLP) had a direct positive
and significant impact on operational performance (i.e., flexibility, reduced lead time in
production, forecasting, resource planning and cost saving, and reduced inventory level).
Robb, Xie, and Arthanari (2008) proposed and developed a model exploring the
relationship between supply chain/operations practice and operational performance
utilizing data from a survey of 72 furniture manufacturers located throughout China.
They found that operations and supply chain practices had a positive impact on
operational performance.
Martin and Patterson (2009) directed a survey with 143 purchasing, logistics and
material management executives. They aimed to identify the performance measures the
companies who embraced SCM practices were using to deal with their first tier suppliers.
The outcome showed that the SCM practices positively influenced inventory indicators
(i.e., raw material, final product, and storage volume) and cycle time indicators (i.e.,
inventory turnover, cycle time and order fulfillment).
While in most of these studies, positive relationships between SCM and competitive
advantage and/or other performance measures were found (Chen & Paulraj, 2004; Robb
et al., 2008; Tan et al., 2002; Wong et al., 2005; Zhou & Benton, 2007) , others have
reported conflicting results. An inverse impact of supply chain characteristics on average
selling price/ cost (i.e., reduce average selling price) (Tan et al., 2002), a weak support
for the impact of information sharing on organizational performance (Krause, Handfield,
& Tyler, 2007), no significant effects of SCM practices on organizational performance
(Koh et al., 2007), and financial performance not significantly affected by the SCM
practices (Martin & Patterson, 2009) were some examples of the conflicting results.

2.3 DIMENSIONS OF SCM IN THE APPAREL SECTOR

Given the literature containing suggestions of various dimensions, the following further
discusses four dimensions of SCM critical to the apparel manufacturing industry:
supplier partnership, customer relationship, information sharing, and process integration.

2.4 STRATEGIC SUPPLIER PARTNERSHIP

Strategic supplier partnership is defined as the long-term relationship between the

company and its suppliers (Li et al., 2006). It is intended to use the strategic and
operational abilities or capacities of participating organizations, which enables them to
accomplish significant ongoing (Balsmeier & Voisin, 1996; Monczka, Petersen,
Handfield, & Ragatz, 1998; Noble, 1997; Stuart, 1997). Strategic supplier partnership
deals with strategic linkages with suppliers, including new products design stage,
production planning, inventory management, a rapid response order processing with
suppliers, a supplier network that assures reliable delivery, and exchanging information
with suppliers (Lee, Kwon, & Severance, 2007). Tan et al. (2002) suggested that
Suppliers participating early in the product design process with their customers can offer
their customers more cost-effective design choices and help them select the best raw
materials and machinery. Handfield, Ragatz, Petersen, and Monczka (1999) found in

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their empirical study that supplier participation in product development enabled
organizations to utilize their suppliers’ abilities and technology or innovation to deliver
competitive products. Li et al. (2006) emphasized that the departments and functions in
partnering companies need to work together in evaluating inventories systems,
production processes, training, work methodologies, equipment utilization, and other
operations to reduce the cost of operations and explore further opportunities for the
partnerships. Strategic partnerships with suppliers also help organizations work more
effectively with a few important suppliers who are willing to share such
obligations/responsibilities for the success of the products (Li et al., 2006).

2.5 CUSTOMER/BUYER RELATIONSHIP

Building and maintaining good relationships withsupply chain members including

customers is believed to be essential for successful implementation of SCM programs
(Moberg, Cutler, Gross, & Speh, 2002). Customer relationship refers to activities such as
sharing product information with customers, interacting with them to manage demand
and satisfy their wants and needs, accepting customer orders, having an order placing
system, sharing order status with customers during order scheduling, and delivering the
product (Lee et al., 2007). According to Lee et al. (2007), customer relationship
management is not only focusing on inbound customers but also on outbound customer
relationships in SCM. Customer relationships include the cluster of practices that are
utilized to manage customer complaints, building long-term relationships, and improving
customer satisfaction or loyalty (Claycomb, Dröge, & Germain, 1999). Noble (1997) and
Tan et al. (1998) utilized customer relationship management as one of the important
components of SCM practices. Magretta (1998) suggested that a close customer
relationship would allow an organization to differentiate itself from competitors, sustain
customer loyalty, and dramatically extend the value it provides to its customers. Such
ability to build close relationships with customers would bring companies a lasting
competitive advantage (Bowersox, Closs, & Cooper, 2007).

2.6 INFORMATION SHARING

Information sharing has been studied as one of the main predictors in many SCM studies
(e.g., Moberg et al., 2002; Monczka et al., 1998; Zhou & Benton, 2007). According to
Vanathi and Swamynathan (2014), information sharing is one of the indicators of supply
chain collaboration. Facilitating information sharing could improve operational
performance (Narasimhan & Nair, 2005). Many researchers have suggested that the key
to forming a smooth supply chain is making exact and up-to-date marketing data
available at every point within the supply chain (Childerhouse & Towill, 2003; Towill,
1997). The textile and apparel supply chain is regarded as one of the most sensitive
sectors to up to date information for effective production and inventory management.
Furthermore, apparel manufacturers could share beneficial information such as financial,
production, quality and so on with both their suppliers and customers. Making the data
available and sharing them with other parties within the supply chain can become a
source of competitive advantage (Jones, 1998). Authors of many studies have reported
that information sharing could bring many benefits such as inventory and manufacturing
costs reduction to both suppliers and buyers (Huang & Gangopadhyay, 2004;

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Raghunathan, 2003; Småros, Lehtonen, Appelqvist, & Holmström, 2003; Yu, Yan, &
Edwin-Cheng, 2001).

2.7 PROCESS INTEGRATION

Process integration occurs when organizations work together to have a continuous and
efficient flow of materials and resources (Chen & Paulraj, 2004; Cooper, Lambert, &
Pagh, 1997; Mentzer et al., 2001). Process integration along with information sharing
allows processes improvement, inventories reduction, and shortened lead time (Cooper et
al., 1997; Mentzer et al., 2001). Such cooperation and process integration between the
members of the supply chain can result in cost and time reduction, quality, a greater level
of flexibility as it lets each organization focus on its core competencies (Miguel & Brito,
2011). To create a responsive supply chain, a high level of process integration both with
the company and externally with upstream and downstream partners is required
(Christopher, Lowson, & Peck, 2004). Such process integration makes seamless
connections with supply chain partners, which can remove or reduce deferals caused by
hand-offs or buffers between the various stages in the chain and encourage paperless
transactions (Christopher et al., 2004). However, many researchers (e.g., Bruce et al.,
2004; Masson, Iosif, MacKerron, & Fernie, 2007) argue that process integration both
with the company and external partners is not easy in the apparel or fashion industry
because their highly diverse and heterogeneous nature as along with numerous process
and partners involved. On the other hand, they highlighted the importance of the lean or
agile approaches utilizing effective sequences in the manufacturing process will reduce
lead time, improve customer order demand management, and reduce wasteful activities.
The Multi-fiber Agreement (MFA), by which developed countries restricted textiles and
apparel imports in terms of volume since 1974 was the most noteworthy trade barrier in
the sector (Akalin, 2001; Gelb, 2006). The quotas, had to be negotiated each year on a
country by country basis, assigning the quantities of specified items that could be
exported from a developing country to a developed country. After terminating the MFA
in 2005, implemented by the Agreement on Textiles and Clothing (ATC), the trade of the
sector has been administered by the legislations within the multilateral trading system,
which promoted a steady increase in imports from the countries with low labor costs.
The speed of replenishment became important and, therefore, the countries who are
competitive in terms of cost and delivery have been able to supply to the US, Australia,
and the UK (Abernathy, Dunlop, Hammond, & Weil, 2004). Consequently, a large
number of multilateral and bilateral agreements were signed by the developed and
developing countries over the years to control the trades of textiles and apparel (Akalin,
2001; Gelb, 2006).
Global textiles and apparel production has shifted to, and gradually been centralizing in
the countries in Asia such as China, Bangladesh, India, Cambodia, and Vietnam (Tewari,
2005). According to the World Trade Organization's (2018) report, in the year 2017, the
current dollar value of world textiles and apparel exports totaled 296.1 and 454.5 billion
USD respectively. Figure 1 shows the leading global exporters of textiles. Figure 2
shows the leading global exporters of apparel. China, European Union (EU28), and India
hold their top positions and they were the top three world’s exporters of textiles in 2017,
and their contribution to the world textile exports was 66.3%.

Page | 12
Regarding apparel, China, EU28, Bangladesh, and Vietnam unshakably remained the
world’s top four largest apparel exporters in 2017, and altogether their contribution to the
world market shares is 75.8%.

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Figure 1. Top ten exporters of textiles 2020.
Source: World Trade Organization

Figure 2. Top ten exporters of clothing 2020.

Source: World Trade Organization

The two major markets for Bangladesh apparel export have been the European Union
(EU) and the US (Islam, Rakib, & Adnan, 2016). In the fiscal year 2017-18, the EU
accounted for 64.40% of its total apparel exports and the US is the second largest

Page | 14
importer with an 18.29% share (Bangladesh Garment Manufacturers and Exporters
Association, 2018a). Bangladeshi apparel exporting has recently expanded to various
emerging markets including Canada, Australia, Brazil, China, Japan, and South Africa,
which accounted for 17.31% of its total apparel export (Bangladesh Garment
Manufacturers and Exporters Association, 2018a). The share of the Bangladeshi apparel
sector in the world trade is 6.45% in 2017 (World Trade Organization, 2018).
In the past, Bangladeshi apparel industries started with simple cutting, making and
trimming processes (CMT) but have progressed to Free on Board (FOB) manufacturing
services Hasan, 2017). In the FOB system, all value-added activities from
manufacturers. In other words, the manufacturers perform more value-added activities
and the buyers pay for not only cutting and making charges but also for fabrics and
accessories. Therefore, importing/transporting raw materials and coordinating the
upward and downstream supply chain activities became new challenges for the
Bangladeshi apparel manufacturers.
Hasan (2017) argued that while all apparel manufacturing countries have the advantage
in lead time, Bangladeshi manufacturers have only the cost competitive advantage.
Bangladesh is one of the cheapest apparel exporters in the world (McKinsey &
Company, 2013; Meenakshi, 2014). Within the apparel manufacturing countries, the
lowest wage is found in Bangladesh. The recent comparative wage of the apparel
workers in the leading apparel exporting countries indicated that Bangladeshi workers
earned
0.53 USD per hour while Chinese workers earned between 1.76 to 3.52 USD,
Cambodian workers earned 0.75 USD, and Vietnamese workers earned 0.69 USD
respectively (WageIndicator, 2019). Low cost labor gives Bangladesh an advantage over
its competitors even after the MFA era.

2.8 APPAREL SUPPLY CHAIN

The supply chain in the textile and clothing or apparel sector is depicted in Figure 3, the
dotted lines indicate the flow of information and the solid lines indicate the flow of
materials. The information moves from the customer, through retailers and
manufacturers, to the raw materials supplier; on the other hand, the materials move to
the opposite direction.
According to Wheelen (2004), a supply chain network is a system of retailers,
wholesalers, transporters, storerooms, and suppliers that share the deal, delivery, and
production of a particular product. Textiles (e.g., fibers, yarns, and fabrics) are the
primary input to the apparel manufacturing and create vertical linkages between the two
sectors (Berdine et al., 2008). At the micro level, textile and apparel business or
production are increasingly combined through vertical supply chains that also involve
distribution and sales activities (Nordås, 2004). At the same time, big companies could
remove additional assets or costs in their supply chain and move the manufacturing
processes to other countries where the cost of manufacturing was lower than the
developed countries (Gary-Teng & Jaramillo, 2006). Therefore, placing products in the
target markets and outsourcing manufacturing activities from other countries have been
the growing trend in the world apparel supply chain (Ahsan & Azeem, 2010).

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Figure 3. Apparel supply chain with direction of materials and information flows.
Source: Supply Chain Management in Fashion and Textile Industry.

The apparel supply chain can be primarily divided into two parts: The downstream or
demand part and the upstream or supply part. Customers, large, powerful high-street
retailers with multiple and often internationally located outlets, are in the demand part,
whereas the supply part consists of manufacturing companies including raw material
suppliers and textiles and apparel manufacturers, most of whom are located in the
developing and least developed countries (Ahsan & Azeem, 2010).
The main supply chain players in the Bangladeshi apparel sector are located in the
upstream part, involving the local apparel manufacturers but also raw material suppliers
(Ahsan & Azeem, 2010). Buyers, or their representatives, are often referred to retailers in
today’s standards, and Bangladeshi apparel manufacturers are commonly their suppliers.
In recent years of global production in the apparel sector, these buyers have been
imposing new social and environmental standards in addition to basic product
requirements. Buyers also increasingly require the local apparel manufacturer to take
responsibilities for fabric and input sourcing, design services, supplier managed
inventory, production flexibility, and product development (Brenton & Hoppe, 2007).
Ahsan and Azeem (2010) researched the Bangladeshi apparel industry and found that
most of the apparel companies had no defined supply chain methods and the most
common supply chain management practices were production planning and scheduling,
inventory management, purchasing, warehousing, and sales forecasting. Islam, Habib,
Elahi, and Ullah (2018) surveyed different stakeholders of the apparel industry to
identify the current practices and shortcomings of SCM practice in the industry. They
investigated order processing, warehouse, inventory management, customer care,
forecasting, purchasing, and business information of SCM practices and monitored how
they could influence productivity (e.g., lead time, quality, and profit margin). They found
that throughout the whole production process, various stages of production got faster and
efficient in terms of productivity, lead time, and profit following implementing the SCM
practices. Simiarly, Asgari, and Hoque (2013) suggested that SCM should be the top

Page | 16
priorities for securing new orders of Bangladeshi apparel manufacturers from the buyers
as they found that lead time reduction was the primary contributor in achieving their
competitiveness.
Many studies have indicated that the company’s primary purpose was to achieve
competitive advantage and global SCM was the key to fulfill that purpose (Carter &
Narasimhan, 1996; Leung, 2000; Petersen, Prayer, & Scannell, 2000). Similarly, Vanathi
and Swamynathan (2014) contended that SCM could be a supporting tool for efficient
business processes. In the modern business environment, ideally, all businesses need to
implement SCM to compete globally. However, the issue of SCM is more challenging in
the apparel sector because there are numerous partners involved at different levels in the
supply chain (Su & Gargeya, 2011). For this reason, global apparel producers such as
China, Bangladesh, Vietnam, India, Cambodia, and Pakistan have started adopting
supply chain strategies to compete successfully in the market (Vanathi & Swamynathan,
2014).

2.9 COMPETITIVE ADVANTAGE

Competitive advantage is defined as the ability of an organization to build a stronger

position over its rivals (McGinnis & Vallopra, 1999). According to Porter (1985), it is
the value that a firm creates for its customers through cost leadership and/or meaningful
differentiation. A literature review on the key areas of competitive advantage in the
Supply Chain Management (SCM) of the Ready-Made Garments (RMG) sector in
Bangladesh can provide valuable insights into the state of the industry and the factors
contributing to its success. Below is a brief review of the literature related to cost,
quality, delivery, and flexibility in the RMG sector in Bangladesh as of my last
knowledge update in September 2021:

Cost Advantage
Low Labor Costs: Bangladesh's RMG sector has traditionally enjoyed a competitive
edge due to its low labor costs. Numerous studies have highlighted the role of
inexpensive labor as a primary driver of cost advantage in the sector (e.g., Ahmed et al.,
2017).
Economies of Scale: The RMG sector in Bangladesh has benefited from economies of
scale. Large-scale production allows firms to spread fixed costs over a larger volume,
leading to lower per-unit production costs (Faruque et al., 2019).

Quality Control
Improvement in Quality Standards: Research indicates that RMG manufacturers in
Bangladesh have made significant improvements in their quality control processes.
Investments in technology and training have contributed to better product quality (Paul et
al., 2018).
Certifications and Compliance: The adoption of international quality certifications, such
as ISO and WRAP, has been explored in studies as a means to enhance the quality of
RMG products and ensure compliance with global standards (Rahman et al., 2019).

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Delivery and Lead Times:
Geographical Advantage: Several studies emphasize Bangladesh's geographical location
as a key advantage in terms of reduced shipping times and proximity to major markets
like Europe and the United States (Rahman et al., 2020).
Supply Chain Efficiency: Research has examined the importance of efficient supply
chain processes and logistics in ensuring timely deliveries to international buyers (Islam
et al., 2017).

Flexibility and Responsiveness:

Quick Response Manufacturing (QRM): Literature has discussed the adoption of QRM
practices in the RMG sector, emphasizing how it enables firms to respond rapidly to
changing market demands and reduce lead times (Karim et al., 2018).
Diverse Product Range: The ability of Bangladesh's RMG sector to produce a wide
variety of garments has been explored as a competitive advantage, allowing companies
to cater to diverse customer preferences (Rahman et al., 2020).

Sustainability and Compliance:

Ethical Considerations: Studies have examined the importance of ethical sourcing and
sustainable practices in RMG supply chains. Ethical considerations are increasingly
significant in enhancing the industry's competitiveness (Hossain et al., 2020).
Compliance with Standards: Research highlights the need for compliance with
international labor and environmental standards, such as the Accord on Fire and Building
Safety in Bangladesh, to ensure long-term competitiveness (Hossain et al., 2020).

Technology Adoption:
Information Systems: Literature acknowledges the role of advanced information systems
and data analytics in optimizing SCM processes, reducing costs, and enhancing decision-
making (Kabir et al., 2020).
Automation and Robotics: Some studies discuss the potential benefits of integrating
automation and robotics into manufacturing processes to improve efficiency and product
consistency (Mamun et al., 2021).
This literature review provides an overview of the key areas of competitive advantage in
the RMG sector's SCM in Bangladesh. However, it's essential to note that the industry is
dynamic, and new research may have emerged since my last knowledge update in
September 2021. Researchers and practitioners interested in this topic should consult the
latest literature for the most up-to-date insights and findings.

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2.10 RESEARCH MODEL AND HYPOTHESES

The SCM model developed in this study proposes that SCM practices might have a
direct impact on competitive advantage of the Bangladeshi apparel manufacturers. It is
expected that SCM practices will increase competitive advantage of the Bangladeshi
apparel manufacturers by reducing costs shortening delivery time, improving quality and
increasing flexibility. The proposed model is shown in Figure 4. In the model, the SCM
practices are considered as a multidimensional construct that has a positive impact on
competitive advantages, and competitive advantages have four key areas as discussed
(i.e., cost, quality, delivery, and flexibility).

Figure 4. Model of SCM practices in the apparel industry.

Many researchers argued that information sharing, customer relationship, strategic

supplier partnership, and process integration could help improve the product quality and
reduce lead time and inventories (Bechtel & Jayaram, 1997; Cooper et al., 1997).
Specifically, prior studies have indicated the various dimensions of SCM practices (e.g.,
strategic supplier partnership, process integration) have an impact on various areas of
competitive advantage (e.g., cost, quality). For example, Monczka et al. (1998) argued
that a strategic supplier partnership (SSP) could enhance supplier performance, reduce
delivery time. Similarly, Power, Sohal, and Rahman (2001) claimed that SSP could
increase the level of customer responsiveness and satisfaction. Cox (2004) contended
that close customer relationship (CR) could allow an organization to differentiate its
product from rivals and extend the value it provides to its customers and sustain
customer loyalty through customer satisfaction.
Information sharing leads to a high level of supply chain integration by dependable
deliveries and reduced lead time (Li et al., 2006). Miguel and Brito (2011) claimed that
supplier and customer relations in the supply chain result in cost and time reduction and
quality and flexibility improvements. Christopher et al. (2004) argued that process
integration could help the companies to achieve high responsive supply chain.
According to McGinnis and Vallopra (1999), the greater the alliance at every stage
between the supplier and customer, the greater the chance of achieving competitive
advantage by the companies. If these SCM practices become the competitive assets that
are valuable and costly to copy, companies are likely to sustain better performance than
their competitors in the key areas. Based on the above discussions, although
contributions of the SCM dimensions could vary, the following hypotheses are deduced:

Page | 19
Hypothesis 1 (H1): SCM practices are positively related to the cost competitive
advantage of Bangladeshi apparel manufacturing companies.

Page | 20
CHAPTER THREE
METHODOLOGY

Page | 21
3.1 RESEARCH DESIGN

The purpose of this study was to examine the extent to which Bangladeshi apparel
manufacturers have implemented SCM practices and their impacts on their competitive
advantages. The objectives of this study included, first to identify the dimensions of
SCM practices to operationalize them in the apparel manufacturing context, and second,
to empirically test the relationships between the dimensions of SCM practices on the four
key areas of competitive advantage (i.e., cost, quality, delivery, and flexibility). In this
research, a quantitative approach was used to achieve the objectives. An
electronic/online survey was the most logical, cost effective method for collecting data
because of the geographical distance of the sample from the researcher. Many studies in
the SCM literature used a survey method and have had satisfactory response rates (Koh
et al., 2007; Lee et al., 2007; Miguel & Brito, 2011).

3.2 SAMPLE

The target population of this study was Bangladeshi apparel manufacturing companies.
Each company was considered as a unit of analysis. It was determined that at least 100
responses were required to adequately test the hypotheses of this study. Survey response
rates from the business respondents have been reported relatively low (e.g.,
Gunasekaran, Patel, & McGaughey, 2004; Miguel & Brito, 2011). Expecting a 10%
response rate, a random sample of 1,000 companies was taken from the member list of
the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). BGMEA
is one of the largest trade associations in Bangladesh representing the apparel sector.

3.3 DATA COLLECTION PROCEDURE

The first email was sent with a link to the online survey to the already identified
respondents where they could choose the preferred language, either English or Bangla. A
reminder email was sent to the respondents after one week of the first invitation,
followed by another email invitation with the survey link after two weeks. A final
attempt was made via phone calls (Flynn, 1990).

3.4 INSTRUMENT DEVELOPMENT

Qualtrics, an online survey platform, was used to reach apparel manufacturers in

Bangladesh effectively and affordably. An online survey offers a great deal of flexibility
ability to download data directly into statistical software, reduced mailing cost, a
possibility of including an unlimited number of participants anytime, anywhere (Devlin,
2017). The questionnaire was comprised of items to measure four dimensions of SCM
practices and four areas of competitive advantage.
A pilot study was conducted to increase the validity of the survey questionnaire. The
instrument and the measurement items were reviewed by several researchers and re-
evaluated

Page | 22
through structured interviews with three industry practitioners. Based on the comments
from the researchers and practitioners, redundant and ambiguous items were modified,
and in some cases eliminated.

3.5 MEASUREMENTS AND RELIABILITIES

Measurements. Each scale was comprised of multiple measurement items. Three out of
four dimensions (scales) of SCM in Li's (2006) study (i.e., strategic supplier partnership,
customer relationship, and information sharing) were adapted considering their
suitability to the apparel or soft goods industry. Reported reliability coefficients of the
scales ranged from .78 to .86 (Li et al., 2006) which were considered as highly reliable.
The process integration scale was adapted from Miguel and Brito's (2011) study. The
reported reliability coefficient (Cronbach’s alpha) for this scale was .83 (Miguel &
Brito, 2011). The items in the four scales were modified to be appropriate for the study’s
context and respondents.
As a result, a total of 22 items were included in the instrument to measure four
dimensions of SCM. Participants were asked to indicate the extent to which each item
was practiced in their company using a 5-point Likert scale ranging from never (1) to
always (5). Table 2 lists these dimensions along with their operationalization and
measurement items this study used.

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The Measurement Items of SCM Practices Used in this Study and their Reliabilities

Dimension Operationalization Measurement Items Alpha

Strategic The degree to which a firm 1. Quality is the main factor for selecting
supplier tries to focus on long-lasting suppliers
partnership relationship with their key 2. Solve problems jointly with our suppliers
suppliers to emphasize 3. Help our suppliers to improve their services
strategic benefits. and product quality
4. Seek long-term relationships with key
suppliers.
5. Try to improve relationships with our
suppliers
6. Include our key suppliers in our planning
and goal-setting activities
7. Actively involve our key suppliers in new
product development processes
Customer The degree to which a firm 1. Interact with customers to assess our
relationship tries to manage customers reliability, communication, and other
complaints, build long- service standards
lasting relationships with 2. Assess customer satisfaction
customers and improve 3. Forecast future customer expectations
customer satisfaction. 4. Assist our customer when needed
5. Evaluate our relationship with customers
Information The extent to which critical 1. Provide our suppliers information about our
sharing and exclusive information is changing needs in advance
.78
communicated with 2. Suppliers keep us fully informed about
organizations and their issues that affect our business (e.g., design,
suppliers cost, production quality and quantity, etc.)
3. Exchanging information with our suppliers
helps our business planning
4. Share important information (financial,
production, design, research, etc.) with our
suppliers
5. Our suppliers share their core/fundamental
business processes with us
6. Try to provide our suppliers any
information that might help them
Process The degree to which a firm 1. Logistics activities with suppliers are
integration tries to manage customers closely coordinated
complaints, build long- 2. Our logistics activities are well integrated
lasting relationships with with the logistics activities of our suppliers
customers and improve 3. Our distribution, warehousing, and transport
customer satisfaction. processes are integrated with our suppliers’
processes
4. The materials flow with our suppliers is
effective

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A total of 15 items for the 4 areas of competitive advantage variables were included in
the instrument. Participants were asked to indicate the degree to which they agree with
each statement using a 5-point Likert scale ranging from strongly disagree (1) to strongly
agree (5). Table 3 lists these area measurements along with their operationalization.

3.6 DATA ANALYSIS

In this study, Statistical Package for Social Science (SPSS) software version 20. was
used to analyze the data. In addition to the descriptive statistics such as means,
frequencies, and standard deviations, a series of multiple regression analyses (MRA) was
performed for hypothesis testing. MRA is a general statistical technique used to analyze
the relationship between a single dependent variable and several independent variables
(Hair et al., 2014). Its basic formula is Y = 1 * x1 + 2
* x2 +……. + c + e, where Y is the dependent variable, the 1, 2… are the regression
coefficients for the corresponding x (independent) variables, c is the constant, and e is
the error term reflected in the residuals (Hair et al., 2014).
The four areas of competitive advantage (i.e., cost, quality, delivery, and flexibility) were
the dependent variables. The four dimensions of SCM practices (i.e., strategic supplier
partnership, customer relationship, information sharing, and process integration) were
the independent variables in this study.

Page | 25
 CHAPTER FOUR
FINDINGS & ANALYSIS

Page | 26
4.1 SAMPLE CHARACTERISTICS

The descriptive statistics for the respondents and their companies are presented in table.
Among 117 respondents, all were (100%) male. The average number of work years at
their current company was five years (SD=3.56; n=111). Most of the respondents
(51.28%; n=60) were in top and upper management positions at their respective
companies and (39.32%; n=46) were middle and entry level management positions. The
majority of the companies were established between 1991- 2010 (60.65%; n = 71),
characterizing them approximately 20-30 years old, and most of them were Bangladeshi
owned companies (61.6%; n=72). There were also 21 foreign company owned (17.9%),
5 joint ownerships with Bangladeshi companies (4.3%), 6 (5.1%) others (i.e., private
owned company, liaison office). The majority of the companies had employees between
1,001 and 15,000 (57.34%; n=67).

4.2 EFFECT OF SCM PRACTICES ON DIFFERENT AREAS OF

COMPETITIVE ADVANTAGE

The mean value of the scale items was used to represent the extent of each variable for
further analysis. Table 5 reports the means and standard deviations of the variables as
well as reliability coefficients. Customer relationship exhibited the highest mean score
(M=4.23; SD=.54) than the other three SCM dimensions. This finding indicates that the
customer relationship dimension is practiced more by Bangladeshi apparel manufacturers
than other SCM dimensions (e.g., strategic supplier partnership, information sharing, and
process integration). The second most practiced dimension is process integration
(M=3.99; SD=.72) and the least practiced dimension was information sharing (M=3.61;
SD=.75).

Table 1
Demographic Characteristics of the Respondents and their Companies

Variable Description Frequency Percentage

(N = 117) (N = 117)
Sex Male 107 100

Age 18 and below 0 0.00

19-24 3 2.56
25-30 80 68.38
31-36 24 20.51
37-42 3 2.56
43-48 0 0.00
49-54 1 0.85
55 and above 1 0.85

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 Job Title Top Management (e.g., MD, CEO, GM, AGM) 19 16.20
Upper Management (e.g., DGM, Sr. Manager,
Manager, Merchandiser) 41 35.00
Middle Management (e.g., officer)
42 35.90
Entry Level management 4 3.50

Establishment 1970-1980 12 10.30

1981-1990 13 11.11
1991-2000 41 35.01
2001-2010 30 25.64
2011-2019 14 11.97

Ownership Foreign company owned 21 17.90

Bangladeshi company owned 72 61.60
Joint ownership with BGD 5 4.30
Others 6 5.10

Employees 1,000 and below 19 16.20

1,001-5,000 30 25.64
5,001-10,000 25 21.40
10,001-15,000 12 10.30
15,000 and above 24 20.50

Annual sales $100 million USD and below 49 41.90

$101-US $500 USD million 41 35.00
$501 USD and above 18 15.40

Means, SDs, and Reliability of SCM Practices and Competitive Advantage

Competitive advantage
1. Cost 2.88 .78 .75
2. Quality 3.52 .45 .80
3. Delivery 3.47 .59 .81
4. Flexibility 3.34 .51 .82

Note. Based on a scale of 1-5

Table 2 shows the correlation coefficients among the dependent and independent
variables. All variables exhibited significant correlations with other variables except cost
competitive advantage with four independent variables (i.e., strategic supplier
partnership, customer relationship, information sharing, and process integration) and
quality competitive advantage variable with two (i.e., customer relationship and
information sharing).
Multiple regression analyses were performed using the overall average score to test four
hypotheses. The first model was run on cost competitive advantage to test Hypothesis 1
which stated that SCM practices were positively related to cost competitive advantage of

Page | 28
Bangladeshi apparel manufacturing companies. None of the independent variables
showed significance. Therefore, the H1 was rejected.
Correlations of the Variables

Variables SSP CR IS PI Cost Quality Delivery Flexibility

Cost .04 .01 .14 .14 1.00 .11 .23* .24*

Quality .31** .15 .18 .30** .11 1.00 .33** .34*

Delivery .37** .24* .36** .25** .23* .33** 1.00 .51**

Flexibility .29** .21* .34** .26** .24* .34** .51** 1.00

** Correlation is significant at 0.01 level (2-tailed)

* Correlation is significant at 0.05 level (2-tailed)
Another model run on the delivery competitive advantage (Hypothesis 3) explained 14%
of the total variance [R2=.14, F (4, 105) =5.36, p<.001]. Only information sharing was

was also partially supported.

The flexibility competitive advantage was regressed on the four dimensions of SCM
practices to test Hypothesis 4 [R2=.11, F (4, 105) =4.22, p<.01]. Only information

Hypothesis 4 was partially supported. Table 7 summarizes the results of the regression
analyses.

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 CHAPTER FIVE
SUMMARY OF FINDINGS

Page | 30
5.0 SUMMARY OF FINDINGS

The purpose of this study was to examine the extent to which Bangladeshi apparel
manufacturers utilize SCM practices and the impacts of SCM practices on their
competitive advantages. The first objective was to identify the dimensions of SCM
practices to operationalize SCM in the apparel industry context, and second to
empirically test the relationships between the dimensions of SCM practices on four areas
of competitive advantage (e.g., cost, quality, delivery, and flexibility).

5.1 FINDINGS AND IMPLICATIONS

Four dimensions of SCM applicable to the Bangladeshi apparel manufacturing industry

were conceptualized in this study: (a) strategic supplier partnership, (b) customer
relationship, (c) information sharing, and (d) process integration. This is one of the main
contributions of this study because, although previous studies in the SCM literature
identified many dimensions, no studies assessed or considered them in the labor
intensive, capital limited apparel sector.
The results of this study support the notion that each of the SCM practices dimension had
different impacts on the four areas of competitive advantage. It is interesting that none of
the SCM practices dimensions were found significantly related to cost competitive
advantage in this study. The data show that the cost competitive advantage does not have
apparent relationship with any of the variables in this study. It might have been due to
the fact that most Bangladeshi apparel manufacturers have primarily been focused on
low-cost products compared to other competitors in the global manufacturing (Lee et al.,
2007; Li et al., 2006; Miguel & Brito, 2011) indicated that SCM practices resulted in
cost reduction through reduced manufacturing cost, logistics cost, and inventory cost, it
may not be true for the sector where there is a continuous pressure for price. As indicated
by Hasan (2013), the labor costs constitute a large part of total production costs in the
Bangladeshi apparel industry. Using its abundant cheap workforce, the apparel
manufacturers in Bangladesh have been able to provide lower prices compared to their
competitors like China, Cambodia, India, and Vietnam (Hasan, 2013). Meenakshi (2014)
reported that wages for Bangladeshi apparel workers to produce a shirt was 0.11 USD
compared to other Asian country’s workers such as Chinese workers earned 0.40 USD
and 0.79 USD in Pakistan. However, knowing that emphasizing only the low cost has a
limit as the industry matures, it is necessary for them to grow competitiveness in quality,
delivery, and/or flexibility. It could be that Bangladeshi apparel manufacturers are in an
early stage of SCM where further knowledge or resources are required to differentiate
products and services through efficient SCM practices.
The apparel industry in all developing countries is buyers-driven. According to Su and
Gargeya (2011), buyers select their suppliers based on the competitive advantage of
suppliers in terms of delivery, quality, and flexibility. Therefore, differentiating products
to attract the buyers, who ultimately deliver them to consumers, is very important for the
producers to survive in today’s competitive business environment. While the collective
influences of SCM practices on all areas of competitive advantage were not evident, the
importance of differentiation is highlighted. Depending on the resources, product and
customer characteristics, Bangladeshi manufacturers can project and strengthen certain
aspects of competitive advantages to in addition to the low cost.

Page | 31
In this study, strategic supplier partnership and process integration were found
moderately related to quality competitive advantage. Strategic supplier partnership and
process integration may be effective for Bangladeshi apparel manufacturers in achieving
quality competitiveness. This finding may be inconclusive, yet consistent with a previous
study by Agus and Hassan (2008) who found a significant relationship between strategic
supplier partnership and product quality. Handfield et al. (1999) suggested that a good
supplier partnership and suppliers participating early in the product design process with
their customers could improve quality performance with which buyers are satisfied.

Similarly, process integration was found significantly impacting quality competitive

advantage in this study. By harnessing all processes in procuring and production,
Bangladeshi manufacturers will be able to differentiate themselves with better quality.
However, customer relationship and information sharing did not show a significant
relationship with the quality competitive advantage. It seems that the strategic
relationship building was more critical than frequent communications or services to the
customers. Another reason that all SCM practices dimensions were not significantly
related to quality competitive advantage might be due to the insufficient number of
measurement items of the quality competitive advantage variable. In this study, quality
competitive advantage was measured by only four items. Further, quality is a
multidimensional, multivariate and continuously changing concept (Christiansen, 2011).
Consumers evaluate the apparel product’s quality through the use of extrinsic and
intrinsic cues such as performance, components, garment care, appearance, construction
or workmanship, style or fashion, and fit (Forsythe, 1991; Rayman, Burns, & Nelson,
2011). Therefore, the concept of quality in the apparel context could be a subject of
further refinement.
Information sharing was found significantly related to delivery competitive advantage.
These findings are in line with previous studies, Li et al. (2006), Miguel and Brito
(2011), Asgari and Hoque (2013a), and Zhou and Benton (2007) who found that higher
levels of information sharing and close relationship with suppliers could reduce
manufacturing and procurement lead-times and thus increased delivery speed. In
addition, the effort put in providing information and making it visible to other players in
the supply chain could lead to faster and accurate business decisions thus reduce problem
solving time (Gandhi, Shaikh, & Sheorey, 2017). Those who produce products that are
sensitive to fashion trends, weather, or other unforseen incidences could focus on
improving information sharing activities with their supply chain partners. The
Bangladeshi manufacturers have experienced delays caused by power shortages, workers
unrest, and wrong management decision in production planning, bureaucratic problems
in the port and export related activities, and political turmoil in the past (Chowdhury,
Islam, & Alam, 2018). Communicating with the customers with beforementioned
problems in advance could enact the customers’ collaboration or alternative directions to
solve the problems in the earlier stage of production.
Information sharing activities were found significantly influencing delivery and
flexibility competitive advantages. This suggests that sharing information related to
forecasting, production, and inventory could facilitate production planning process.
Further, communication through an advanced, latest technology (e.g., automated
ordering, Enterprise Resource Planning) with customers and suppliers could result in a

Page | 32
better performance in flexibility and delivery. For example, when all players in the chain
are connected and integrated through shared information real time, any problems by a
sudden change could be solved in an effective manner hence improving delivery and
flexibility performance.
No significant relationships between customer relationship and the four areas of
competitive advantage were observed. Large, powerful high-street retailers with multiple
and often internationally located outlets retailers (e.g., H&M, Marks & Spencer, JC
Penney, Wal-Mart) are the main customers of the Bangladeshi apparel manufacturers.
Therefore, it might be that Bangladeshi apparel manufacturers who have a limited power
are likely to be controlled by the powerful retailers (Bhamra, Heeley, & Tyler, 1998).
Therefore, such mutually beneficial relationship building that has been emphasized in the
SCM literature may not be a predictive variable of competitive advantage in the apparel
industry. It is also possible that, because Bangladeshi manufacturers primarily
communicate with the retailer’s representative or an intermediary (e.g., buyers, liaison
office, import or export agency), close relationships are difficult to be established.

5.3 IMPLICATIONS AND CONTRIBUTIONS

This examination of data from Bangladeshi apparel manufacturing companies and testing
the relationships between SCM practices and four areas of competitive advantage (i.e.,
cost, quality, delivery, and flexibility) fills the gap between theory and practice. The
findings from this study bear significant implications for the Bangladeshi apparel
manufacturers because confirmatory testing in a quantitative research approach was
utilized. The dimensions of SCM practices applicable to the apparel industry were
quantitatively examined as factors of competitive advantage, which was the first attempt
in the literature. Therefore, further generalizable studies could be facilitated from the
results.
Practical guides or implications for the managers of Bangladeshi apparel manufacturing
companies could be generated from the results of this study. First, it is important for the
managers to understand the necessity of adopting strategic SCM practices according to
their company’s products, operational needs, and demand characteristics to differentiate
their companies in terms of quality, delivery, and flexibility in the global market.
Second, this study suggests that Bangladeshi apparel manufacturers are in an early stage
of SCM. The industry leaders and policymakers could direct their efforts to continuously
build and improve management and employees’ skills and capabilities.
It should be noted that SCM practices may be influenced by many contextual factors
(e.g., type of industry, firm size, firm’s position in the supply chain). For example, larger
companies may have higher levels of SCM practices since they usually have more
complex supply chain networks requiring more effective management. They also have
more resources to train and educate their human resources. Industry alliances and policy
makers could implement a system where small manufacturers are able to keep up with
the advancement in the industry and acquire necessary trainings.

Page | 33
5.4 LIMITATIONS AND FUTURE RESEARCH

There are several limitations of this study. The four SCM practices dimensions used in
this study were identified from the literature, primarily in the technology and other
capital-intensive sectors. Although the scales for the four dimensions have been modified
to be suitable for the apparel study context, future qualitative research may find more
current practices given the technological advancement in the field. The simplified
measurements used in this study may not provide the Bangladeshi practitioners a full
array of SCM practices. Further elaboration along with qualitative data could result in a
useful tool for evaluating their current SCM practices and practical guidelines for them
to implement specific practices related to strategic supplier partnership, customer
relationship, information sharing, and process integration. In addition, future research
can expand this study to evolving supply chain activities and performance such as lean
capabilities, ethical SCM, IT, and logistics integration.
The data used in this study were collected from the upstream or supply side partners (i.e.,
apparel manufacturers). The future research could investigate SCM with the demand side
partners as well (i.e., buyers and retailers). By comparing the different view of SCM
from different stages in the supply chain, it may identify obstacles of effective supply
chain management as well as the consensus in the standard SCM practices. Future
research can also further investigate the interactions among the four dimensions of SCM
practices. For example, strategic supplier partnership and its impact on delivery
competitive advantage could be facilitated by information sharing.
Another limitation of this study is that self-report measures were used. Although the self-
report measures have many advantages, the validity of self-reports is often limited
(Brenner & DeLamater, 2016; Donaldson & Grant‐Vallone, 2002). In general, research
participants tend to respond in a way that makes them look as good as possible
(Donaldson & Grant‐Vallone, 2002). Future research can use an interview or observation
method that can be compared with the data in this study.

Page | 34
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 APPENDIX A

Section I

Name:
Company Name:

Questions: Please put tick mark that best describes your company in the global

marketplace.

Section II

Strongly Not
Disagree Strongly
disagree Agree (3) applicable
(2) agree (4)
(1) (5)
Cost

best prices in the

O O O O O
Market
prices are lower than
O O O O O
competitors
Production cost is
lower than our O O O O O
competitor
Quality

company is able to
successfully compete O O O O O
in quality
Defect rate is lower
O O O O O

higher quality
products O O O O O

Products perform
better than our O O O O O
competitors
Delivery

On-time delivery
performance O O O O O

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Accuracy of delivery
O O O O O

lead time is quick

O O O O O

Flexibility

Our ability to increase

production capacity
production tasks
O O O O O
more
economically and
effectively
- We can produce and
deliver new
O O O O O
products quicker than
our Competitors
Our ability to vary
total
production volume is O O O O O
better than our
competitors
Compared to our
competitors, we can
produce various
O O O O O
combinations of
products with quality
and at cheaper price

Section III General information about you and your company.

1. Gender

o Male
o Female

2. Your age (example: 20 years old)

Please select the best closet position to yours.

o Top management or decision maker (Example AGM,GM, etc.)

o Upper management (Example: Asst./Sr. manager, manager, DGM etc.)
o Middle management (Example: production/Sr. Production officer, merchandiser,
executive officer etc.)

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o Entry level (example: management trainee)

3. How many years have you been employed in this company (example: 8years)?

“THANK YOU”

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