How MIS is transforming efficiency at Fatullah Apparels
Information is power – and that is what Fatullah Apparels, a manufacturer in Bangladesh, has put to practical use by reaping the benefits of Management Information System (MIS) to take the efficiency of production and value addition in its supply chain to the next level.
Establishing his knitwear production factory in Narayanganj’s Fatullah in 1998 and currently working with a small staff of about 360 workers, Fatullah Apparels’ Proprietor and CEO Fazlee Shamim Ehsan is using management information tools as a competitive advantage is now spearheading a major drive to spread the benefit of managerial tools among the industry and gradually transform it.
Using Enterprise Resource Planning (ERP) to the advanced level and basic internet-based systems, he has taken an approach of quality control in production and production process, production planning, he has cut down on inefficiency factors like bureaucracy, time consumption in coordination and communication, inter-company analysis, and can now make assessments down to the fine levels of ultimate sophistication.
Fazlee Shamim Ehsan says that the set management tools he has been using allows him to track all the necessary activities and developments of his company from wherever he wishes. And this allows him to keep notice of planning, purchasing, inventory, sales, marketing, finance and human resources down to the niche details as to which production line in his factory is under-performing.
The approach, though requires an initial phase of investment, grants the output of some tangible and remarkable benefits – that Ehsan considers is a competitive advantage over other factories. However, he says the fruit is out there for anyone to grab if they are willing to make a sustainable system.
The ERP Fazlee Shamim is using is manufactured by Logic Software. The software has different modules set up for different departments throughout his factory, like human resource, marketing, inventory, sales, finance and others. All of these modules take input manually, separately, but also reflects on a central database that all the modules the software has. This essentially rules out any duplication of data.
Though, for now, some of the modules involve manual input of data entry, for example the number of products produced in one production line, the output per day, the amount of cloth used to produce per unit of product and etc., Ehsan says it is a far better method of keeping track than the old-fashioned system that used a lot of memory-based calculations and involved a bigger human-error coefficient.
Fazlee Shamim has installed the ERP software in his laptop and an app onto his smartphone. The system has been designed to inform him of the daily activities at the reach of his fingertip. By logging in, Ehsan is informed about the daily production, the amount of cloth gone wasted, the functionality of his production line, the competency of his machines, the quality inspections of his produce, and, most importantly, if the entire daily process keeps up with his target for profit margin.
By the end of the month, or when he is done delivering an order, the ERP provides him a summary of the entire project revealing to him the areas where improvements can be done. Or sometimes, as he says, the ERP opens his eyes to profitability.
“Sometimes because a buyer orders in large quantities, you tend to think that you are making more profit. But, at the end of the day, the ERP can show if the project had a high profit margin or low. One or two times, this happened to me that I found smaller orders to have a high profitability. On those occasions, I reduced taking large orders with low profitability and focused on increasing those smaller orders with high profit margin,” he says.
The ERP keeps track of the daily production of a production line. With the help of it, Ehsan knows what is the optimum production capacity of a working line. “For example, one of my production line produced 512 units a day, and the others varied from 420 units to 500 units. Then, I would know that 490 units a day is achievable. I can set it as benchmark and set it a standard to find out which of my production line is under-performing and where the problem lies,” Ehsan says.
The benchmarking also helps Fazlee Shamim Ehsan to calculate the time to deliver an order, the resource that needs to be allotted to it and in overall, project an estimate as to what variable cost he would have to incur to deliver an order. “This is a lot helpful, you see… being specific. I calculate the time needed to deliver an order and take some more days to actually deliver the product in case something goes wrong. It helps me optimise all the cost,” he says.
“It incurs some amount of investment at first. But believe me, for what it’s worth, the control it gives you can drive efficiency to increase by up to 8 percent – and that is a big margin. Also, for whatever cost it takes to use MIS tools, it is possible to recover all of the cost within 1 to 1.5 years. Now, that is a good bargain since the recovery time is so low and what you are getting in return stays with you,” Ehsan says.
ERP gives your Ehsan and his managers the tools they need to create more accurate forecasts. Since the information within ERP is as accurate as possible, he can make realistic estimates and more effective forecasts. This enables Ehsan, as an entrepreneur and businessman, to undertake more calculated risks and venture into new projects with a sense of security.
“The software gives me real-time information about my entire factory. It tells me if I am secured enough to undertake risks, or if I should be more engaged in defensive and cost-cutting policies. It helps me formulate the kinds of business strategies for my industry. Without the ERP though, this would not have been so easy,” he says.
To boost the coordination among the supply chain, he uses simpler internet tools like Viber. He says, these simpler means to inter-facility communication and reporting, and eliminates the tedious time and bureaucracy that would have taken place for inter-personal interactions. Also, according to him, it facilitates inter-departmental transparency and quality control.
“I have created a group in Viber where all the managers report their daily activities and problems. I just keep track of their reports and even need not answer. My presence in the group is enough to keep everyone aware that I am noticing all the activities. The departmental managers communicate among themselves and solve problems,” he says.
He drew an example of a primary power generator failure at his production facility a few days ago. “My manager reported a problem with the generator. Within moments he reported in Viber that the generator has failed. But then, another departmental manager reminded him almost immediately that there’s a secondary generator and the issue was solved within 20 minutes. They reported back when power was back and production resumed. In the old-fashioned reporting way, it would have taken at least about two hours, or at most a day. There’s no need for one person to go to another and report the problem – thus this process any sort of bureaucracy and saves the communication time.”
Now, Fazlee Shamim Ehsan, despite running a small production facility, sits at the chair of second vice president at Bangladesh Knitwear Manufacturers and Exporters’ Association (BKMEA) for such remarkable progress using the information technology system, where he is drilling the need for replicating his processes for greater profitability of the knitwear industry, and ultimately contributing to the economic expansion of Bangladesh.
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