MGT 314, Section 11

Group 1

Project Report

Submitted to:

Shah Iftekhar Hossain

Lecturer, Department of Management

Assessment Coordinator, School of Business and Economics

Submitted by:

Kazi Morsalin Rahman (Project Manager) ID# 133 0693 030

Omar Sharif Omi ID# 131 1287 030

Sattar Md. Emon ID# 131 0525 030

Nabilah Raisa ID# 141 0515 030

Tarannum Azim Baigh ID# 141 0341 030

Safwan Habib Ababil ID# 131 0569 030

Shahriar Nizam Shishir ID# 131 0204 030

Jawwad Jahangir ID# 111 0303 030

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Contents Executive Summary ........................................................................................................................ 3

Description of the Business ............................................................................................................ 4

Analysis of the existing Production and Operations strategies ....................................................... 5

Strategies used in Production ...................................................................................................... 5

Strategies used in Inventory Management .................................................................................. 5

Strategies used in operations ....................................................................................................... 6

Analysis of the facility layout ..................................................................................................... 6

Application of Production and Operations management concepts ................................................. 7

Process Map .................................................................................................................................. 11

Analysis of the Quality Control Issues ......................................................................................... 12

Analysis of Demand Forecasting .................................................................................................. 13

Operational Problems.................................................................................................................... 14

Recommendations ......................................................................................................................... 15

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Executive Summary This report involves the study of Patabon by reflecting the applications of the concepts of

Productions and Operations Management learned in class. Patabon, an exclusive fashion brand,

specializes in manufacturing traditional Kameez and Sarees for women through its factory. In

addition, Patabon also sells Panjabi, T-Shirts and other wears by taking supplies from other

wholesalers through its retail outlets. After a site visit of the factory and retail outlets, and

interviewing the business owner and the manager, we determined that Patabon has established its

strategies around the current consumer trend of Bangladesh. Both its production and operations

strategies are designed to be highly responsive to consumer needs. For its production, Patabon

applies a combination of make-to-stock and make-to-order strategies. To maintain its inventory,

Patabon applies fixed-order-interval model and for forecasting a time-series model is used. For the

facility layout, product layout is used while the workflow of the factory represents batch

production because the flexibility and variety of products requires a standardized production

method. Patabon tries to achieve economies of scale by producing large number of finished goods

using standardized production process reducing cost per unit of product and uses a value-based

pricing approach. Patabon applies quality assurance and conformance by employing two quality

inspectors for each of its production departments, a) Dying & Cleansing, b) Embroidery/ Skin

printing, c) Sewing, d) Ironing and e) Packaging. The process map shown in the report also shows

the significance of the quality inspectors at the different stages of production. Several operational

problems of Patabon are machines breakdowns, defects, lack of enthusiasm of sales employees,

using only time-series forecasting and fixed-order-interval model, and not using quality control

tools. However, these problems can be minimized for which we have determined

recommendations which are presented at the end of this report.

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Description of the Business Patabon is an exclusive fashion brand that is distinguished by its stylistic originality combined

with the superior sartorial content of its creations. The strong identity of the Patabon brand has

evolved over the years while always remaining faithful to its inherent standards. An unmistakable

style, the expression of unconventional luxury which, season after season, combines strong

innovation with the vision of rich Bangladeshi heritage and cultural influences.

The brand Patabon strives to advocate a design philosophy that encompasses the finery of intricate

Bangladeshi craftsmanship with the modern design concepts of the West. In essence, Patabon

encapsulates a rich Bangladeshi heritage using the knowledge of intricate craftsmanship with an

awareness of contemporary design influences from everyday walk of life.

Patabon specializes in manufacturing traditional Kameez and Sarees for women through its

factory. In addition, Patabon also sells Panjabi, T-Shirts and other wears by taking supplies from

other wholesalers. For retailing and distribution, Patabon have two showrooms located in prime

locations of Dhaka City and one showroom in Bogura.

The following table highlights the magnitude of Patabon:

Number Of

Employees

Area Number of

Machineries

Factory 55 5250 Square Feet 42

Retail Stores in Dhaka:

1. Mohammadpur

2. Orchard Point

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2

750 Square feet

160 Square feet

Nil

Nil

Retail Store in Bogura 4 1600 Square feet Nil

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Analysis of the existing Production and Operations strategies “Patabon” has established its strategies around the current consumer trend of Bangladesh. Both its

production and operations strategies are designed to be highly responsive to consumer needs.

Strategies used in Production

Patabon uses, Level production Strategy (throughout the year except during Festivals) to

continuously produce goods equal to the average demand throughout the year. The average

demand is forecasted by keeping the different seasons as well as the different cultural festivals in

mind. Scheduling consistently arranges the same quantity of goods for production based on the

total demand. This Strategy ensures the availability of the products to consumers at all times. In

contrast to that, to meet the high customer demand during the major festivals of Bangladesh (Eid,

Puja, Bengali New Year, etc) the company follows the Make-to-stock Strategy (only during

Festivals). Here, the goods are produced before customers place orders. This acts not only as a

safeguard against Stock outs but also allows the company to take advantage of production

efficiencies. Lastly, the company uses Make-to-order Strategy (throughout the year) cater to

the needs of those customers who prefer customized clothing. Here, goods are produced after

receiving an order from the customer. It ensures that Patabon does not lose out potential customers

who prefer tailored clothes over readymade clothes.

Strategies used in Inventory Management

Patabon continuously produces goods to meet the average demand throughout the year. At its

factory, it follows a Fixed-Order-Interval Model to reduce the risk of stock outs of raw materials

during production. Similarly, the three different production strategies that the company follows

help it to maintain a moderate level of finished goods inventory. To monitor the inventories better

a periodic physical count of inventory is conducted and a guard is on duty at all times to prevent

theft. In contrast to that, when it comes to managing inventories in retail outlets, the company

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implements Inventory optimization strategy. Here, a trend is determined based on previous sales

and the salespersons experiences to decide on the quantity that should be delivered to every retail

outlet every week. To ensure that each retail outlet only receives that they need and to avoid

excessive buildup of stocks, the stock delivered is strictly limited. Moreover, to prevent theft and

accidental loss of inventory, electronic loss-prevention tags are attached to individual inventory

items.

Strategies used in operations

The company uses value pricing strategy to strike a balance between cost and quality. It ensures

that the quality of the products is not sacrificed for extremely low prices neither are the customers

charged too high for the products. To maintain this reputation, the company tries to reduce the

price of its products by effective time management strategy. The operations at Patabon are

closely aligned with forecast prepared. The workers at all departments are properly instructed

about the target they need to achieve in a particular period. To reduce per unit cost of production

even further, each worker is responsible for a specific task, this makes the workers extremely

specialized in that particular task. Similarly, Patabon uses specialization strategy to achieve the

primary goal of Patabon which is to maximize customer’s perceived value towards its products. It

gets a competitive advantage of specialization by focusing on the production of two products only,

(Salwar Kameez and Saree). The rest of the products sold at the retail outlets are outsourced from

various wholesalers. This in a way diversifies the product offerings at the retail outlets. For

instance, for customers who like to match their footwear with their clothes, all the retails outlets

have a small corner for shoes.

Analysis of the facility layout

The factory of Patabon is a two-storied building. The facility is divided into different departments,

namely: Raw materials dyeing and Cleansing, Embroidering, Sewing, Ironing, and Packaging. All

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the activities related to production are carried out in the 2nd floor and the 1st floor consists of the

Warehouse and Administration office. To ensure maximum utilization of floor space, the machines

and equipment are arranged in one line. Each line consists of 10 sewing machines. Individual

workers are given a disposal basket to store the output they have produced. The materials move

from one workstation to another sequentially without any interruptions. This type of layout can be

termed as product layout. Since, the products produced requires moderate variation in design,

they are produced in batches. Even though, the workflow of the factory represents Batch

production the flexibility and variety of products requires a standardized production method. In

additional to that, to reduce cost and produce large volume homogeneous products, some

production steps like Embroidering are automated. To ensure high specialization of labor, each

worker is assigned to a specific task at every workstation.

To keep the workers comfortable and motivated at work, hygiene factors like proper lighting and

ventilation are incorporated in the facility. There is enough space between workstations to facilitate

worker’s ease of movement. In addition to that, to keep the workers entertained throughout the

day, a well-designed music system is integrated in the facility. In contrast to all the facilities

Patabon provides, the workers are kept under strict supervision. CCTV cameras are installed at

every department and two quality control inspectors are dedicated to every department.

Application of Production and Operations management concepts After visiting the factory where they produce their Sarees and Salwar Kameez and one of their

retail outlets we were able to identify some operational and management concepts being applied

Start Dyeing & Cleansing Embroidering Sewing Ironing Packaging

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there. Some of these concepts are discussed in more detail in the other sections which are more

related to them.

Type of process

The clothes which are scheduled to be produced are grouped into batches based on their design

and every single batch follows a standardized production process every unit in each batch goes

through the same equipment and workers in the production line. So, it follows the concept of batch

processing even though it incorporates a standardized production process because the volume that

is produced is not high enough we cannot classify it as a repetitive/assembly line process and there

is also the fact that there are some variations based on the design of the dresses.

Process layout

Since Patabon is using repetitive processing and standardized production process layout resulting

in high rate of output and specialization of labor. Therefore, they are following the product layout

concept.

Demand Forecasting

Patabon uses past trends to forecast future sales but also do different forecasting based on the

seasons. They forecast demand in regular intervals and also factor in the increase in demand based

on seasonality. They assume 2% increased sales from past figures. So they follow both time-series

and seasonality based forecasting methods.

Inventory management

The inventory Patabon keeps is finished goods from their factories or outsourced goods. The

demand for these goods also falls under independent demand. Patabon follows fixed-order-

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interval model to determine orders for supplies of raw materials for their factories. They also keep

track of finished goods using electronic tags which is a type of perpetual inventory system as it

constantly tracks removal of inventory, keeping track of the current level of inventory available.

Economies of Scale

Patabon tries to achieve economies of scale by producing large number of finished goods using

standardized production process reducing cost per unit of product. Specialization of labor also

helps in this regard.

Quality Assurance

All finished goods in the factory are checked for defects or faults throughout the production

process and as well as the end at the end of the production process both manually and through the

use of equipment by quality inspectors. This type of proactive approach of fixing defects before

the product reaches the market falls under the concept of quality assurance.

Quality Conformance

Patabon always tries to create products which conform to the wants and needs of the customer.

For example, if a customer buys clothes from their winter collection, their expectation will be that

the clothes will be made of thick fabric to combat the cold and it is up to Patabon to deliver such

products.

Division of labor

Patabon uses specialization and focuses on producing only Sarees and Salwar Kameez. This allows

them to effectively divide their labor into producing one or the other and over time they become

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highly efficient at their own job. Employees are given set objectives they need to aim for which

also gives them a sense of direction towards their ultimate goal.

Supply chain management

Since Patabon only produces Salwar Kameez and Sarees from their own factories they rely on

other wholesalers to provide other goods for their retail stores. So they have to manage mutually

beneficial partnerships with their suppliers which falls under the concept of supply chain

management.

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Process Map

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Analysis of the Quality Control Issues Patabon Boutique is an old prestigious fashion brand in Dhaka and largely successful in its

industry. We interviewed Mr. Sayeem Hossain (Production & Operations Head) and Ms. Khaleda

Naznin (Business Head) of the company to learn about their quality control and management issues

that they have to face in their daily business activities.

Patabon Boutique House is running their business successfully since the late ‘90s and their

customers are generally happy with their product quality. Although some customers complained

to have experienced some issues regarding the service in their retail outlet. It has been notified that

sometimes the salesmen lack enthusiasm in showing and helping the customers to choose from

their available products i.e., they lack the proper mindset to help the customers sometimes. The

store manager monitors the issue carefully and is responsible the quality of the service by the

salesmen. The customers also feel that the products are a little overpriced but that is a business

management decision, not a quality control issue.

In the factory, there are some quality issues that Patabon has to face before their products reach

the outlet to the customers such as, different types of stitch problems, measurement mistakes and

the finishing and packaging problems. But those problems are resolved before the products leave

the factory. The company does its best to match the perception of quality of the customers and

make order winning products for them.

There are no specific quality monitoring tools used by Patabon in the factory. There are 5 (five)

departments in the factory to run the production processes which are a) Dying & Cleansing, b)

Embroidery/ Skin printing, c) Sewing, d) Ironing and e) Packaging. Each department has 2 (two)

quality control inspectors to monitor that the production process is running smoothly and correctly.

According to the facility layout; in each stage, before the ongoing materials move to the next stage,

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the materials are inspected for faults and if there is any, are sent back to the respective workstations

to fix the faults. In each workstation under different departments, there are instructions regarding

the processes to follow by the workers. In the process map of the production process, we can see

there are some inspection points, where the inspections occur.

The factory does its best to adhere to “Quality of Conformance” and manufacture products to meet

the requirements specified. Due to strict monitoring and inspections in production process, faulty

products reach the customers very rarely. And even if that occurs, there is a return or exchange

policy to compensate the customers for the inconvenience.

Analysis of Demand Forecasting Demand forecasting is defined as predicting the probable demand for a good or service by

considering events or trends in the past and/or present.

Out of all the forecasting techniques, we discovered that Patabon uses a forecasting technique that

can be most closely described as a sort of Time-series method of forecasting. Patabon believes that

historical data is key to predict the future sales and this is why Patabon uses the sales figures from

the past year and increases that by 2% to get the present year’s total demand. Patabon also tries to

consider the seasonal variations like increases in demand during certain Festivals. Furthermore,

when calculating demand, they also try to consider consumer preferences in terms of clothing

materials and colours. For example, if Eid falls during the summer, Patabon would know that

clothes with brighter colors would be more demanded. Through this, they have a clearer picture of

the types of clothes demanded.

However, one of the problems that arises from this is that since the predictions are made annually

and at the start of the year, sometimes there may be inaccuracies. The forecasts sometimes do not

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match with the actual demand and hence there have been a few occurrences of stock outs or extra

stock which do not sell.

However, from the analysis we do believe that despite a few discrepancies the demand forecasting

technique is quite effective and they try to consider different factors that could affect demand.

Operational Problems

Patabon uses a time-series forecasting on a yearly basis for its production which sometimes

results in lack/excess of finished goods.

Patabon uses fixed-order-interval model to reduce risk of stock out, but risk of stock out is

a disadvantage of this method. In case of uncertainties such as unrest in the political

condition of the country, they might run out of stock of raw materials resulting in

discontinued manufacturing.

There is also the factor of having machine breakdowns in the production line which halts

production of goods until the machine is fixed.

Manufacturing of these garments items also involves defects for Patabon such as different

types of stitch problems, measurement mistakes and the finishing and packaging problems.

Patabon makes physical count of its inventory at the warehouse to keep track of the stock

of finished goods. This is rather an inefficient process and have high chances of error.

Some of the sales person at the retail outlets lacks enthusiasm at times and do not cooperate

well with the customers which can result in reduction of sales and poor customer

relationships.

No quality control tools and relying on 10 quality control inspectors increasing cost.

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Recommendations Patabon Boutique is following Quality Assurance approach which is not cost effective, they should

follow Strategic approach which will lower down their internal failure cost. Also they should

enhance the philosophy of Quality at the source. If Patabon Boutique insure quality at the source,

it will reduce the problem of service related issue of sales person and also lower down the cost of

quality inspector by reducing the number of quality inspector at each steps. By lower down the

cost Patabon Boutique can lower down their price. There are no specific quality monitoring tools

used by Patabon in the factory. So they should follow Control chart or check sheets, in order to

determine their service quality and monitor overall process.

In order to increase the accuracy of forecasting, Patabon Boutique can establish a shorter time

horizon. They can do the forecast quarterly basis. This will increase their forecasting cost but lower

down their inventory cost. As Patabon Boutique is related to service industry, important

information can be gathered through judgmental data. So Patabon Boutique should use judgmental

and time series input for their forecasting, in order to increase the accuracy of forecasting.

To track the products and their inventory in retail store and factory Patabon Boutique can use

Universal Bar Code. In their retail outlet, the information regarding product selling and inventory

is only limited to that store. They should create a communication link between factory and retail

store to decrease the information gap and track the material movement throughout the

organization. This information can also be shared with the third party supplier to anticipate the

future demand or the quantity of next order.

To minimize the risk of stock out or in case of political unrest which is quite common in BD,

Patabon Boutique should store some safety stock at their retails store. Also they should keep some

spare parts of machinery in order to tackle technical breakdown during production process.