A system dynamics approach to supply chain performance analysis of the ready-made-garment industry in Bangladesh

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Asystemdynamicsapproachtosupplychainperformance
analysisoftheready-made-garmentindustryinBangladesh


BehroozAsgari
1,2
andMdAynulHoque
1


Abstract
Theready-madegarment(RMG)
industryhas recentlyoccupiedthelargestpartofexportsandforeign
currency in Bangladesh and has been for more than a decade the second largest contributor to gross
domestic product (GDP).Millions of poor women and men are employed in this industry. However, a
supportingimportquotasystemintheUSAwasstoppedin2005whichhaslefttheRMGsectorstruggling
against new challenges thatneed to be properly addressed. As the end consumersof the apparel fashion
marketarebecomingincreasinglytime-sensitive,adecreaseinleadtime,besidesqualityandcostcriteria,is
neededtowinmoreordersfrombuyers.Wehaveexaminedtheopportunitythatliesinanintegratedsupply
chaintoprovideacompetitiveadvantagetotheBangladeshRMGsector.Asystemdynamicsapproachhas
beenusedtoidentifythedominantvariablesofsupplychainperformance(suchasenablers,performanceor
results,andinhibitors)intheRMGsector.Asurveyandindividualinterviewswereconductedwithsenior
managementpersonnel,supplychainprofessionals,andmerchandisersoftheRMGindustry.Basedon the
findings, a causal loop diagram is proposed to help understand the dynamic behavior among the said
variables so that the top management may take effective decisions in order to enhance the supply chain
performanceinthelongrun.

Keywords: Bangladesh,
Causal loop diagram, Integrated supply chain, Lead time, Ready-made
garmentindustry,Systemdynamicsanalysis


Introduction
Theexportofready-madegarments(RMG)fromBangladeshhasbeenincreasingsorapidlyforthelasttwo
decadesthatithascometooccupythelion’sshareofitstotalexports.BangladeshstartedexportingRMGat
an annual value of about US$32 million in 1983-84 but experienced a continuous massive growth which
resulted in an almost US$18,000 million of export value of RMG in 2011-12 (Export Promotion Bureau,
Bangladesh,2012).Onceheavilydependentonexportingjuteproducts,theeconomyofBangladeshisnow
experiencingmorethanthreefourthsofitsexportcontributionsfromtheRMGsectoralone.InBangladesh,
theexportvalueof RMGoutoftotalexportswasalmost76%in2008and79%in2012(ExportPromotion
Bureau,Bangladesh,2012).Thisnewlybornindustryhasbecomeimmenselysignificantintheeconomyof
Bangladeshduetoits high contributions to the totalexportvalue,GrossDomesticProduct(GDP)andjob
creation,especiallyforwomen,aswellashelpingthebackward-forwardsupplychainindustriestogrow.
Among developing economies such as Cambodia, Sri-Lanka, China, etc, Bangladesh has achieved a
strongpositionasoneoftheglobalsuppliersofRMG,mainlyduetohavingoneofthecheapestlaborcosts
among the apparel manufacturing countries. The globalization of industries created pressure for location-
based manufacturing economies which were also supported by the US and European Union(EU) import
policies.The‘multi-fiberarrangement’(MFA),aquotasystemimposedbytheUSfederalgovernmentforced
USimporterstosourcefromlessdevelopedcountries with the aim of fosteringtheir manufacturingability
andsupportingthegrowthoftheapparelindustryincountriesfromSouthAsia,Chinaandotherdeveloping
nations. After the MFA system became defunct in 2005, Bangladesh started to countermore rivalry, both

1
GraduateSchoolofManagement,RitsumeikanAsianPacificUniversity(APU),BeppuCity,Oita,Japan
2
Correspondingauthor,e-mail:behrooz@apu.ac.jp

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RitsumeikanJournalofAsiaPacificStudiesVolume32,2013
anticipatedandunanticipated,frommanyproducersandsuppliersbecauseitturnedintoanopenmarketfor
all. Now, the RMG industry of Bangladesh is struggling with many global competitors in terms of cost,
quality,customerservice,andleadtime.
In recent years many reputable organizations are purchasing products, and sourcing, distributing and
selling simultaneously from different corners of the world. This globalization of operations has become
inevitablebecausecheaplaborisavailableinsomecountrieswhilerawmaterialisreadilyavailableinothers.
Moreover,thetime,costandqualitysensitivenessarealsosignificantlyvariedamongcustomersindifferent
regionsoftheworld.Throughanefficientimplementationofintegratedsupplychainmanagement,theRMG
industry in Bangladeshcould stay competitive by maintaining the required efficiencyand responsiveness.
Thiswasthetraditionalview of all companiesthattheyexistedassingle and complete units and operated
theirbusinessesseparately.
However, the business environment has changed in the 21
st
 century such that working alone is less
competitive while collaborative working among upward and downward supply chain partners is more
profitable. Through managing the supply chain, the ultimate objective of companies is offering maximum
valuetocustomersforthedeliveredproductsorservicesbyachievingeitherresponsivenessorefficiency.To
adddynamiccapabilitytotheRMGsectorandenhancesupplychainperformance,manufacturersshouldplan
andworkcollaborativelywiththeupwardsuppliersoffabricandaccessoriesaswellasthedownwardbuyers
andpartnersofthesupplychain.
ScottandWestbrook(1991)andNewandPayne(1995)describethesupplychainas“thechainlinking
eachelementof the manufacturingandsupplyprocessesfromrawmaterialstotheend user, encompassing
several organizational boundaries”. According to this broad definition, supply chain management (SCM)
“encompassestheentirevaluechainandaddressesmaterialsandsupplymanagementfromtheextractionof
rawmaterialstoitsendofusefullife”.Farleyexplains(1997)thatSCM“focusesonhowfirmsutilizetheir
suppliers’'processes,technology,andcapabilitytoenhancecompetitiveadvantage”.
Houlihan (1987, 1988)defined SCM as the technique ofcombining various key departmentss uchas
production, finance, marketing and human resourceof a c ompany so that this unified chain links tier-one
suppliersanddistributorstoenhanceperformancebyreachingthefinalcustomersontime.Thereisalready
some scholarly work thatshows focal companies can utilize vendors’ manufacturing expertise and other
R&Dassetstodesignnewproductsatlowercoststhroughcollaborationamongtradingpartners.
SCMintheRMGSector:
Someofthekeycharacteristicsofthefashionindustryarethatthelifecycleofanynewstylesofapparelsis
continuously decreasing, end demand for any garments is highly fluctuating and changing over time,
various kinds of designsand styles are evolving everyday worldwide, and the total chain from yarn and
cotton supplies to final garments through a lot of suppliers from many countries is very dynamic and
difficulttomanage(Sen, 2008). So, apparel manufacturingcompanies of anycountryshouldmanagethe
supplychaininawaythatmeetsthetotalneedsoftheendconsumers(Gunasekaranetal.,2008).Thishas
caused the fashion industry to become increasingly complex and dynamic, and this sector has attracted
manynewmarketentrantsandthushastriggeredintensecompetitions(Gunasekaranetal.,2008).
The business of the fashion industry is so volatile and competitive that the driver for successful
entrepreneurship is capitalizing on opportunities and scopes by integrated efforts among supply chain
partners(Sen,2008);apparelmanufacturersandtradersareengagingthemselvestoutilizeintegratedsupply
chainmanagementas a source for improvingtheirbusinessperformance(Gunasekaranetal.,2008).Lam

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Asystemdynamicsapproachtosupplychainperformanceanalysisoftheready-made-garmentindustryinBangladesh
andPostle(2006)foundintheirstudythatsupplychainmanagementconsciousnesswasstillcomparatively
lowamongtheapparelmanufacturersandtradersinHongKong.LeeandKincade(2003)mentionedsome
of the key dimensions they found in the US apparel supply chain including “partnership, information
technology,operationalflexibility,performancemeasurement,commitmentoftopmanagementanddemand
characterization”.
ThecurrentRMGmanufacturersofBangladeshareimportingmostoftherequiredwovenfabricsfrom
China,India,PakistanandIndonesia.Asaresult,thetotalleadtimeisbecominglonger,puttinganegative
edgeoncompetitiveness.Itispossibletoreducethetotalleadtimethroughsupplychainintegrationamong
upstream and downstream partners to make RMG manufacturers more competitive (Nuruzzaman and
Haque,2009).Supplychainintegrationmakesitpossibletomanufacturefabricsbeforetakingordersfrom
buyers but requires more collaboration among buyers, fabric suppliers and garment manufacturers in
Bangladesh.
Nuruzzamanet al.(2010)realizedthatalongleadtimewas oneofthegreatestproblemsoftheRMG
sectorinBangladeshandthatitstopfivecausesconstitutedtheissuesofintegratedsupplychainmanagement
(SCM). They emphasizet hatSCM is basically a complex process for countries,a nd a newin the apparel
sectorespeciallyintheleastdevelopedcountrieslikeBangladesh.Nuruzzamanetal.,(2010)concludedthat
acountrylikeBangladeshmaycreatearemarkablepositionintheworld’stotalapparelexportbymanaging
thepartnersofsupplychaintoreducetheleadtime.
However,there are onlyafewin-depthstudiesaboutSCMfortheRMGsectorin Bangladeshandno
study offers indicationson how factories can increase productivity, reduce costs,and respond to changing
customerneedsusingeffectiveandefficientintegrationamongsupplychainpartners.Theprimarypurposeof
the study is to identify the interdependence and dynamic behavior that exists among supply chain
performancevariables.

Methodology
A questionnaire was designed as a survey instrument. The questionnaire includedboth closed ended and
open ended questions. We asked respondents to indicate the importance of supply chain performance
variablesusingafive-pointLikertscale.Wealsocarriedoutseparatedepth-interviewswithonemanaging
director and owner, one general manager, one merchandising manager and one factory manager from
differentgarmentfactoriestoconstructthecausalloopdiagramamongsupplychainperformancevariables.
ModelingusingSystemDynamics:
SystemDynamicshasevolvedmainlyfromindustrialdynamicswhichwasfirstwrittenbyJayW.Forrester
in1961.Forrester(IndustrialDynamics,1961:13)explainedindustrialdynamicsasacomplexsystemof
inter-dependentindustrial organizations;thisinterdependencechangesover timeasinformationfeed-back
changes and that’s why it is called a dynamic system. Sterman (2000) used industrial dynamics for
analyzingbusinesssystemsdependinguponchanginginformationandtime.Thussystemdynamicsisvery
usefultocraftfuturepoliciesforrunningbusinessesinacomplexenvironmentastimechanges.Inaddition
totangiblefactors,itcanalsobeusedtomodelintangiblefactorswhicharenoteasilymeasureablesuchas
humanbehavior,customersatisfaction,andemployeeskills.Simulationofintangiblefactorsissometimes
calledstrategicsimulationbecauseitdoesn’tactuallyquantifytheexactnumericalvaluebutshowsapattern

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of the likely outcome for intangible factors when they are acting in various feedback loops with inter-
relations,changeovertime,ordemonstrateadynamicbehavior.
There are two structural ways to analyze any dynamic systems: ‘causal loop diagram’ (CLD) and
‘stockandflowdiagram’.CLDdiagramscanbeusedtoshowthegoverninginter-relationsamonganumber
ofdifferentvariablesusingfeedbackloops.Apositivefeedbackloopmeansthedependentvariablemoves
inthesamedirectionas that oftheindependentvariable;as such,the polaritiesareassignedasaplus(+)
signonthearrowheadoffeedbackloops.Inthecaseofnegativefeedbackloops,iftheindependentvariable
increases, the dependent variable decreases and vice versa. Thus a minus (–) sign is assigned to the
arrowheadofthefeedbackloop.
The other structure of system dynamics is a stock and flow diagram which is used to explainboth
variables,i.e.thestocksandflows. Stocksrefertothe statusofvariablesat apoint/momentof timewhile
flowsexistduringaperiodoftime.Stocksareaccumulatedovertimethroughinflowsandoutflows.Apart
fromstockandflow variables,another kind of variable called an ‘auxiliaryvariable’ has beenusedhere.
Auxiliaryvariablesareusedtoconnectbetweenstocksandflowsaswellasamongthemselves.Byusingall
thesethree kindsofvariables,wecanexplaindynamicsystemsmoreappropriately.Manyresearchersand
authors have used stock and flow diagrams to model and describe supply chain performance variables
(AgarwalandShankar2005,CampuzanoandMula2011).

Table1:Definitionsofvariables
Variables Remarksandmeaning Types References
Supplychain
performance/
orders/sales
Includesallvariableslistedbelow.Leadtimereduction,
costminimizationandqualityimprovementsare
achievedthroughallotheractivitiesaslistedbelow.
Supplychain
performance
index
Agarwal&Shankar
(2005)
Leadtime
reduction
Oneofthekeyorderwinningcriteriafrombuyers.
Leadtimeisthedurationoftimefromorderplacement
toordershipmentdate.Leadtimereductionsignifies
agilityoftheparticularcompany’ssupplychain.
Result Towill(1996)
Cost
minimization
Anotherkeyorderwinningcriteriaalongwithleadtime
reduction.Itcanbeachievedthroughlean
manufacturing,collaborativeplanning,andintegrated
supplychain
Result Mason-Jones,Naylor&
Towill(2000)

Quality
improvement
Sophisticatedproductsatareasonablylowprice.It’s
veryimportantforEUbuyers.
Result Christopher&Towill
(2001)
Process
integration
Workingtogetherofsuppliers&buyers,ajointeffort
tosolveproblemsordevelopproductsorqualityor
system
Enabler Christopher(2000)
Collaborative
planning
Usepartnersfacilitiesandopportunitiestomaximize
efficiency,capturemarketpotential
Enabler Christopher&Towill
(2001)
Deliveryspeed Prepareforshort-termandlongtermchangesbasedon
markettrends/changesandbuyersexpectations
Enabler Christopher&Towill
(2001)
UseofIT Usingsoftwareandhardwaretoshareinformation
effectivelyandtoimprovequalityandproductionspeed
Enabler Yuetal,(2001),
Fasangharietal.(2008)
Uncertainty Effectofchangingmarketsituations,andsupplychain
unpredictability,bullwhipeffect
Inhibitor Agarwal&Shankar
(2005),Mason-Jones&
Towill(2000)
Market
sensitiveness
Achievequickresponsivenesstothechangingmarket
environmentintermsofdemandpatternandqualityso
thatsupplychainbecomesagile.
Enabler Christopher(2000)



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Asystemdynamicsapproachtosupplychainperformanceanalysisoftheready-made-garmentindustryinBangladesh
VariablesofthesystemdynamicsmodelforRMGinBangladesh:
After the ‘multi fiber arrangement’ (MFA) phased out in 2005, the Bangladesh RMG industry had to
competewithallotherapparel manufacturersandsuppliersaroundtheworld.Asaresult,itwasforcedto
reducecostswhilemaintainingreasonablygoodquality.Accordingtoexpertsintheindustry,goodquality
meanssophisticatedproductsthataresomewhatdifficulttosewandconformtobuyers’requirements.They
alsocommentthatbuyersfromUSAfocusmoreonreducedcostswhilebuyersfromEuropeemphasizeon
highqualityand fashionableproducts,butalsoreasonablecosts.Astheproductlifecyclesare decreasing
continuously,theleadtimeisalsodecreasingandputtingextrapressuretotheBangladeshRMGindustry.
So,RMGmanufacturershavetosupplyhighqualityproductsat areasonablylowercostandshorterlead
timesthanbeforetoattractcustomersfromUSAandEurope.Somekeyvariableshavebeenidentifiedfrom
the literature review andopinion of experts in the RMG sector.T hese variables are classified as results,
enablersandinhibitors(Table1).
Componentsofeachvariable:
Anumberoffactorswereidentifiedtorepresenteachenabler,resultandinhibitorvariable,throughasearch
in the literature including published articles and supply chain management textbooks. After listing these
factors, questionnaires were distributed among respondents of the sampled factories to collect their
opinions.FactorsassociatedwitheachvariablehavebeenlistedintheTable2.

Table2:Factorsassociatedwiththevariablesunderstudy
Variable Components(associatedfactors)
Marketsensitivity Startingtimeofrawmaterialsourcingandprocurement.Trainingmanagers,technicians,
workerstomanufacturingabilityofsophisticatedandfashionablegarments.Procuring
sophisticatedmachinerytoincreasethesewingabilityofsophisticatedgarmentsandimprove
quality
Deliveryspeed Assigningimportance/priorityonspecialtaskstomeetfuturerequirementsofmarketdemand
suchastrainingofhumanresources,usageofIT,workingtogetherwithbuyers&suppliers,
exchangeofnecessaryinformationamongsupplychainpartners,enhancecollaborationwith
suppliersandbuyers,havingstableworkforce
Processintegration Strategicallyfixedandfewernumbersofsuppliersandbuyers.Jointworkteamwithbuyers
andsupplierstosolveproblems.Providingfeedbackinformationtobuyersandsuppliersto
keepthemupdated.
Collaborative
planning
Usingcentralizedcollaborationteamsamongfactoriesorproductionfacilities.Informing
suppliersandbuyersaboutchangesofproductdesign/specificationwellinadvancesothat
necessarypreparationcanbetakentoreducewaste.Maintainandshareup-to-dateproduction
andinventorystatuswithbuyersandsuppliers
UseofIT Usingbothhardwareandsoftwareatleastinthreeaspectssuchasinternaloperations,
purchasingandvendormanagement,andonbuyerrelationship.Differentkindsofhardware
andsoftwarecanbeusedformanagingalltheseaspectslikeERPsoftware,markerandpattern
makingsoftware,inventorymanagementsoftware,etc.
Uncertainty Howmanytimesdidthebuyerschangetheirorderquantitiesandproductspecifications?What
istherateofshipmentsof100%quantityoforiginalordersorwithoutshortagebythe
factories?Howmanytimesfactoriescouldnotshipoutwithintheoriginalleadtime?How
frequentlydidtheoverseasanddomesticsuppliersfailtodeliverfabricsandaccessorieswithin
leadtime,withoutquantityshortageandwithappropriatequality?


FindingsandDiscussion
Thereareseveralloops among supplychainperformancevariablesinthecasualloop diagram(Figure1),
whilethevariableshavebeengroupedinto threecategoriesofenablers,resultsandinhibitors.Thesupply

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RitsumeikanJournalofAsiaPacificStudiesVolume32,2013
chainperformanceisthesumtotalofallthesethreekindsofvariables.Wehaveusedsalesastheproxyfor
supply chain performance under the assumption that if the total number of orders increases then it
proportionatelyincreasesthesalesvalueandsignifiesthelevelofsupplychainperformancevariablesatany
particulartime.So,thehigherthesalesvalueis,thehigherthetotalsupplychainperformanceindexis.
The Vensim software can show all the loops among the variables at different nodes. At the supply
chainperformancenode,therearefiveloopsamongthevariablesinvolvingdifferentnumbersofvariables.
Forexample,ifthetargetcostminimizationincreasesthenthedifferencebetweentargetcostminimization
andactualcostminimizationincreasesandthefeedbackloopbetweenthemispositive.Asthedifferencein
cost minimization increases, the company obtains fewer numbers of orders from the buyers. Thus the
feedback loop between target cost minimization, actual cost minimization andsupply chain performance
variablesbecomesnegative(thefirstloopatthenodeofsupplychainperformance).


Figure1.CausalloopdiagramamongvariablesintheRMGsupplychain(seetextforexplanation)

In the second loop, when companies plan to obtain more orders from buyers they increase market
sensitivenesswhichalsohelpstoincreasethedeliveryspeed.Whenthedeliveryspeedincreasesitreduces
the lead time of theorders for production and shipping.Reduced lead time has become the secondmost
importantfactorforUSAbuyersandthemostimportantorderwinningcriteriaforEuropeanordersaswell
asforanyfashionableitemsorordersirrespectiveofmarkets(USAorEuropeoranypartoftheworld).As
the product life cycle is decreasing continuously, the reduced lead time is playing an important role for
securingordersfrombuyers.Thusincreasedmarketsensitiveness,increasedspeedofdeliveryandreduced
lead time increase the sales or supply chain performance index and the feedback loops among these
variablesarepositive(Figure1).
marketsensitiveness
deliverysp eed
processintegration
actualleadti me
reduction
targetleadt ime
reduction
differencein lead
tim ereduction
actualcost
minim ization
targetcost
minimization
differencein cost
minim ization
collaborative
planning
useofIT
uncertainty
targetquality
improvement
achievedquality
improvement
differencein quality
qualityimprovement
Supplychain
performance/orders
+
+
+
+
-
-
-
+
+
+
+
+
+
+
+
+
+
+
+
-
+-
-

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57
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Asystemdynamicsapproachtosupplychainperformanceanalysisoftheready-made-garmentindustryinBangladesh
If we move from the second loop to the third loop, an additional variable involved is actual cost
minimization.Fromthethirdloop,weseethatleadtimeisreducedthroughincreasedmarketsensitiveness
andspeedofdelivery.Whenleadtimedecreases,thethroughputinthesupplychainincreasesrapidly.All
theinventoriesincludingfinishedgarments,fabrics,accessoriesandotherrawmaterialsandanyunfinished
items (work-in-process) will stay in thestore for a shorter length of time than usual. Thust he inventory
turnoverratiowillincreaseandthefinancialratioswillbepositivelyaffected.Asaresult,costminimization
willbeachievedproportionally,minimizingthecostandhelpingsecuremoreordersfrombuyers.
Inthefourthloop,thevariablesinvolvedaresupplychainperformance/orders,marketsensitiveness,
delivery speed, process integration, uncertainty and actual lead time reduction. In this loop, market
sensitiveness and deliveryspeed tend to increase process integration. When process integration increases
amongthecompanies,thenuncertaintyofbuyersand suppliersintheentiresupplychaindecreases.Thus
thefeedbackloopbetweendeliveryspeedandprocessintegrationispositive,asistheonebetweenprocess
integrationand uncertainty.Whenuncertaintyisreducedandprocessintegrationisincreased,leadtime is
againreducedwhichinturnincreasessales or thesupplychainperformance(asdescribedintheprevious
paragraph).
Thefifthloopshowshowincreasedprocessintegrationandreduceduncertaintycanleadtoincreased
actualcostminimizationbyreducingleadtime.Thisloopencompassestwoextravariables,namelyprocess
integrationanduncertainty,andshowsacombinationofonetofourloops.
SomeempiricalevidencefromBangladeshRMG:
Itisverydifficultto exactlyquantifythe valueof marketsensitivenessandprocessintegrationsincethey
have various qualitative and quantitative dimensions. So, we have assumed the number of factories and
domestic supply of fabrics as proxiesfor market sensitiveness and processi ntegration and thesales as a
proxyforsupplychainperformance.Thenumberofgarmentfactoriesisassumedtorepresenttheproactive
marketsensitivenessinrespondingtoanincreaseddemandforBangladeshigarmentsintheglobalmarket.
We have assumed that the present factories (BGMEA, 2013) are fully capable of meeting their present
demands,andthenumbersof factories in previous yearshave been dividedbythenumberoffactoriesin
2010-2011(asbaseyear)togetthemarketsensitivenessforthecorrespondingyears.Thesalesofgarments
haveconstantlyincreasedasmarketsensitivenessincreased(Figure2).

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Figure2.Therelationshipbetweenmarketsensitivenessandsupplychainperformance
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marketsensitivenessinpercentage
performance inbillionUS$

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Since fabrics is the single most important raw material to produce garments, the percentage of its
domesticsupplytototaldemand(BTMAandBangladeshMinistryofTextile,2013)indicatesthestrength
ofprocessintegrationinthebackwardsupplychainofgarmentindustry.Themorefabricssuppliedfromthe
domestic textile industry, the less Bangladesh garments are dependent on imported fabrics, thus an
indicationofimprovementinprocessintegration.Thedomesticsupplyoffabricscanreduceleadtimeand
costandimprovequalityby providing swift feedbacks and joint workwhichisless feasible with foreign
textiles. Figure 3 demonstrates that performance has increased greatly as the supply of fabrics from
domesticsourceshasincreased.

 
Figure3.Therelationshipbetweenprocessintegrationandsupplychainperformance

The results of our survey responses and depth interviews confirm that the lead time has become a
crucialfactortoincreasecompetitiveness.We have divided lead time intotwocomponentsof exportand
importleadtime(WorldDatabank,2013).Thesetwoleadtimesarelargelybeyondthecontrolofgarment
manufacturers,insteadthegovernmentandotherplayersinthebackwardandforwardsupplychainlinkages
arethemainactors;however,theyhavedecreasedovertimeasthegarmentsectorhasplayedakeyrolein
the national GDP andexports. Supply chain performancehas increased as these two variablesdecreased
overtime(Figure4).
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Figure4.Therelationshipamongimportandexportleadtimesandsupplychainperformance
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importleadtimeindays

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Asystemdynamicsapproachtosupplychainperformanceanalysisoftheready-made-garmentindustryinBangladesh
Limitationsofresearch:
Thereare some other enablervariablessuch as dataaccuracyand introductionof newproducts,and two
other inhibitors, namely, a lack of trust and resistance to change ( Agarwal et al., 2005) that can affect
supply chain performance. These variables arenot considered in our research. Customersatisfaction was
alsoexcludedfromourresearchthoughitcouldbeusedasaresultvariable.Thoughcustomersatisfactionis
themeasureofavailabilityofgarmentstothebuyers’locationwhentheyarerequired,measuringthisindex
seemstobeverydifficultinthecaseofBangladeshRMGindustry.Thuscustomersatisfactionhasnotbeen
consideredinourresearch.Nowadays,greensupplychainmanagementhasasignificantimpactonthesales
performance of garments in developed countries. But green supply chain has also not been taken into
considerationtodevelopthecausalloopdiagrambecauseitsexactimpactonsupplychainperformancewas
difficult to identify. We have considered the cost, quality and delivery (CQD) as the order qualifiers;
flexibilityhasnotbeen considered,though it can haveasignificantimpacton sales or theorderwinning
process.Theresultsofthesupplychainmodelsmightvarywhenmorevariablesareincluded.

Conclusion
Thecost,qualityandleadtimearethemostimportantresultvariablestosellgarmentstothebuyers.While
othercompetitorsfromdifferentcountriesareprovidinggarmentswiththesamequalityand atreasonably
low costs, reduced leadtime becomes the final criterion to secure sales.T hus, both the sales and supply
chainperformancecan beimprovedifapparelmanufacturingcompaniescanfurtherreducetheleadtime.
Whenleadtimeisreduced,ithasagreatimpactonotherkeyvariablessuchascostandquality.Ifleadtime
is reduced, then not only waste in different processes and departments along the garment supply chain
partners can be minimized but also cost may decreasebe cause the inventorycost and capital investment
decrease.Asaresult,acompanycangainmoreordersfromthebuyers.Theuseofinformationtechnology
(IT) among the supply chain partners and within the planning and operations of internal processes like
patternmaking,cutting,sewingand finishing, etc. mayhelp reduce the leadtime.Whenthe use ofITis
increased, collaborative planning and process integration also increase. As a result, it helps to reduce
uncertaintyalongthetotal chain andresultsin increasing supply chain performanceandmeetingbuyers’
orderquantitiesanddeliverydates.
The survey responses and depth interviews show that the competitiveness of Bangladesh garment
industryissuchan importantissue that most respondents in thesurveyrankeditone of top priorities for
securingneworders.Wealsodiscussedthismatterwiththeexpertsintheindustry.Allagreedthatleadtime
reductioncanhelpincreaseindustry’scompetitivenessandsalesaccordingly.To emphasize on the point,
we have included a separate section about lead time reduction strategy in the questionnaire to collect
suggestionsfromtherespondents.
Thismodelhelps to maximizethescopeof attaining optimum solutions inthesupply chain since it
showsthe interdependenceamongvariablesandthe dynamicbehaviorofthevariables.The CLDshowsa
complete or apt picture of how the whole supply chain variables are interlinked and how they can be
affectedbyothervariables.Adepartmentmayobtainitsoptimumobjectivesevenifsub-optimumsolutions
aretakenbyotherdepartmentsorforthewholesupplychain.
The system dynamics model can help achieve local optimum solutions for a global supply chain,
through better understanding and policy making. The system dynamics model helps policy makers to

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understand how to integratesupply chain trading partners in backward and forwardlinkage to maximize
supply chain surplus. Finally it can help the top management to understand and analyze how the
performance variables areinter-related, where to de-couple some performances, and where to emphasize
andde-emphasizetoachievethewholesupplychainobjective.
Asforfutureresearch,itseemsthatcomplianceissueshave becomeanewlyemergingvitalfactorto
attract orders from developed countries after some deadly fires and accidents in Bangladesh garment
factories.So,itshouldbetakenintoconsiderationinthefuturegrowthoftheindustry.Afewmorevariables
such as the effect of research and development (R&D), domestic cotton production, and supply chain
complexitycanbeinvokedtomodeltheperformancemoreaccurately.Moreover,newcomponentscanbe
addedtotheproxyparametersformarketsensitivenessandprocessintegrationaswellasleadtime.

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Asystemdynamicsapproachtosupplychainperformanceanalysisoftheready-made-garmentindustryinBangladesh
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