By introducing a programme of efficiencies, George at Asda is transforming its Bangladesh suppliers.
Bangladesh is becoming ever more popular with international retailers for the supply of textiles. As costs in China - the biggest textiles supplier for many fashion retailers - continue to rise and the country moves away from garment manufacturing to automotive, IT and electrical industries, retailers are beginning to look elsewhere.
Yet for George at Asda, Bangladesh has been a key country for some time. George was among the first international retailers to source from Bangladesh, despite the challenges the country throws up. It is one of the world’s poorest countries and suffers periodic flooding and drought. The lack of stability in power and gas supplies has frustrated foreign investors, as have the slow pace of reform and high level of corruption. Infrastructure is also poor.
But George is investing in Bangladesh for the long term and has set out a pilot programme designed to improve productivity and efficiency across its factories.
Called Lean, the programme is run in partnership with the Dhaka-based arm of GTZ - the German government’s overseas development agency - to increase productivity, improve worker skills, drive social improvements and pay, improve quality, and reduce labour turnover and absenteeism.
The programme launched with a pilot in four factories in 2008 and has now been rolled out across 17, which between them contribute US$152m export
value to the retailer. It wants to roll out the scheme across its 85 factories in the country, then to its factories in other countries including India, Sri Lanka and China.
Lean forms part of George managing director Andrew Moore’s pledge that by 2013, all its global suppliers working on its core lines will share open costings on labour, meaning full transparency on worker pay, incorporating workers rights. George hopes to achieve this through the implementation of Lean, establishing a standard minute value - a way of measuring how factory owners can show accurate labour costs when quoting the cost of a garment - and engaging with local NGOs and unions on workers’ rights.
Moore says while the country can be “challenging”, Asda is confident of investing in Bangladesh for the future. “The pace is much slower here and there is a lot of explaining to be done, but there is no shortage of workers and with China’s output decreasing we are committed to making it work.”
Drapers visited Bangladesh for an exclusive look inside the textile factories George is working with to find out how the programme is progressing.
The three factories visited are at different stages of implementing Lean - Toyo, a small first generation factory, was one of the pilots and is two years into the programme; Lenny was also a pilot, but is a larger factory with 4,500 workers; while DBL, an ultra-modern factory with its own cotton-spinning facility, testing lab and screen-printing operation, is in the initial stages of implementing Lean.
Getting Lean off the ground wasn’t easy. George ethical and quality manager Paul Wright - who started his career at men’s trouser factory Dunsford Wesley in Castleford, West Yorkshire, as a sewing machine mechanic - says educating the factories was key.
“The biggest challenge was making sure all the workers were fully briefed and were reassured that it was not about reducing jobs but about making the factory more productive, and therefore able to take on more work,” he says.
George also struggled to persuade some factory owners that improvements could be made. “When we asked how efficient their operations were they would answer anything from 70% upwards, and believed they couldn’t be taught anything,” says Wright. “Then when we conducted our research, we found efficiencies were between 20% and 50%.”
One of the factory owners at Toyo, Mohammed Zahir, who also oversees the factory’s Lean programme, says the top management and the workers grasped the programme but “we had some problems with the middle management”. When Lean was implemented, middle managers were often found to be occupying unnecessary roles. Some middle managers were axed as a result.
Toyo, which makes licensed T-shirts for George and also deals with other retailers such as Tesco and Sainsbury’s, had fallen into Asda’s ethically red category, the highest warning rating, before the Lean programme. “There was a problem with the underpayment of workers and it had been flagged up to us, so we had to do something about it,” says Wright.
Zahir says that before getting involved in Lean, the factory was losing money and faced closure. Rather than pull production from the factory, Asda gave it the chance to turn itself around. Now Toyo is one of Lean’s leading lights.
The Lean programme covers the whole factory operation, from the sewing line to the cutting room and finishing section, and enables the factory to reduce waste while increasing productivity and quality, and upskilling workers to create a more fulfilling work environment.
Changes at Toyo, and at the Lenny factory, have included training workers in more than one job so most can now do three operations as opposed to one previously, making sure the materials are ready and waiting in neat, easy to manage piles, and changing the bonus structure from individuals to teams.
One of the biggest changes was taking out the role of the helper and quality controller from the production lines. A helper had no specific skills and usually stood around waiting for a sewer to finish part of a garment, before cutting off a loose thread. These workers have been retrained for other jobs. And the quality controller role has been axed - workers now check garments themselves.
At Lenny, one of the workers, Lipi, told Drapers that while she had worked at the factory for five years, it is only in the past 12 months that she’s started to enjoy her work. Her wages have risen 24% and she’s had the opportunity to learn several new skills to allow her to vary her work, plus the chance to increase her bonuses.
The results have given George strong reason to invest further. At Toyo productivity has increased 150%, wages are up 29% and the absenteeism rate has fallen from between 10% and 15% to between 3% and 5%. The ‘right first time’ measurement on product now runs at 99% while the defect rate is down from 16% to between 0% and 5%.
At Lenny - which supplies Walmart and other US retailers such as JC Penney - the results are similar. Wages are up 24%, productivity up 42%, and absenteeism has fallen from 3.7% to 2.5%.
Wright says: “The programme has taken out waste and given the workers responsibility for their garments, so it has empowered them to take control, check their own garments and help others as they all have the same incentives.
“This has led not only to workers enjoying a more varied worklife as they can do different roles, but also created a better working atmosphere. Also, previously if one worker on the line had a problem or stopped for any reason, then the whole line would be held up because nobody else was trained to do that job.”
At DBL - the modern factory only at the start of the programme - the differences to Toyo and Lenny are stark. In the sewing room there are more than 45 workers on one production line, when the optimum number is just 16. And many workers are just standing around waiting to pass material or cut threads.
Yet DBL, which supplies George with jersey garments, is full of promise. Wright says: “If you could take the Toyo model and transplant it into DBL, it would be a world-class operation. DBL is only five weeks into Lean and with its other facilities such as its dye factory and cotton spinning operation it has huge potential.”
The results are encouraging for George, and Moore is keen to share the learnings with other retailers and campaigning organisations such as anti-poverty agency Action Aid in a bid to get the idea standardised across the industry.
The Lean programme is pioneering, and if it improves the lives of workers as well as the business of retailers, it is a win-win operation.