Mohsin RP-PART4

8/6/2019 Mohsin RP-PART4

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Compliance Management of Section Seven Limited

Chapter-1

Introduction

1.0 Preface

Ready Made Garments (RMG) sector is the key manufacturing institutions that play a vital role

in the countrys economy. Globalization in the garments sector has thrown up opportunities as

well as challenges. Competition is getting edge day by day. It paces with the continuous

development occurring in the tremendous competitive environment.

Bangladesh has emerged as a key player in RMG (Ready Made Garment) sector since 1978.

Textiles and clothing account for about 85% of total export earnings of Bangladesh. Out of

which, 76% comes from the apparel sector which covers the major products of knit and woven

shirts, blouses, trousers, skirts, shorts, jackets, sweaters, sports wears and many more casual and

fashion items. The sector currently employs approximately 1.5 million workers, mostly females

from underprivileged social classes.

In order to export readymade garments, it is not only the quality parameters which are important

towards acceptance of the product as per the intended end use, but also the working environment

in which the garments are to be produced, is equally important so that sweatshop concept is

totally taken care of and the code of conduct must be stretched towards achieving the objectives

of social compliance issues. The core areas of social accountability are, basically, based on the

principles of international human rights and local culture and tradition. The prime objective of

the system is to protect the human rights in ready made garment industries. Thus, Bangladesh

has a stiff challenge ahead to meet the demand of world market.

1.1 Report of the Study

This report is prepared as the partial requirement of MBA program of School of Business,

University of Information Technology & Science, Chittagong. After completing two years

cumulative study, it is very important to conduct with practical study for having a strong idea

about real happening.

This program actually makes a relationship between theoretical and practical knowledge. By the

help of the program we can build ourselves confident that we can handle the practical job life.

Since it is true that by having only theoretical knowledge it is little bit difficult to adjust with the

practical life. This program breaks our hesitation regarding job environment.

Mohammad Mohsin, Student ID : 09335116 Page 1 of 15


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The focus of the report is Compliance Management of Section Seven Limited. Actually this

is a feedback which department accepts from the students who join in an organization after the

completion of theoretical part of the MBA program. The report will definitely increase the

knowledge of students to know the international trading system of the world and will teach to

apply theoretical knowledge in the practical life.

1.2 Objective of the study

General Objective:

The research was conducted for a two-fold purpose. First to analyze various aspects of

Compliance Management and second to have a practical knowledge of the professional life

and to relate the two year theoretical learning to business. More importantly, it was required

for the partial fulfillment of the MBA program.

Specific Objectives:

To find out the factors considered in the management of compliance in RMG sector.

To assess significant aspects of compliance which distinguish it from the non-compliant

factories in Bangladesh.

To identify the most important prime compliant clients of Section Seven Limited with their

respective ranking positions on that particular sector.

To identify strengths and weaknesses along with threats and opportunities of Compliance

Management of Section Seven Limited.

1.3 Scope of the study

The scope of the study on a privately owned garments is vast and it is hardly possible to become

familiarized with the total compliance system as new concept is emerging day by day.

Therefore, the scope of the report encompasses the areas covered by the theoretical discussion

and the project part (i.e. analysis of strategies and challenges of compliance. Maximum

endeavor has been carried out to focus on the management of compliance. This part will also

provide evidence of the garments activities and nature of compliance in garments sector. The

project work done by me to get the factual data of import and export of the country as a whole,

which is:

1. Policies that is adopted to manage or comply with Local Labour Law.

2. Rules & regulatory system that is applied for complying with buyers Code of Conduct



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(CoC).

3. Challenges and strategy of compliances.

4. Problems identified by analysis of complying with Local Labor Law and CoC as well.

1.4 Methodology of the study

The study is based on theoretical and practical analysis of the compliance and related issues.Toprepare this report I havecollected information mainlyfrom different resource persons who areengaged in this sector and form my own experience. The books of Bangladesh Labour Law

(BLL) 2006, BEPZA Instruction 1 & 2, International Compliance Standards maintained at

Section Seven Ltd like as WRAP (Worldwide Responsible Accredited Production) standard etc.

The collected data and information have been processed manually and the report has been

prepared in the present form in order to make the study informative and useful. It is verydifficult to conduct an exclusive analytical work within limited time bound. Furthermore, finally

I conducted the analysis within the systems of the Section Seven Ltd. and BLL 2006.

In this study, exploratory research was undertaken to gain insights and understanding of the

overall compliance of garments industry and also to determine some of the attributes of service

quality in Garments. Along with it, a more comprehensive conclusive research is also

undertaken to fulfill the main purpose of the study.

Sources of Information:

Primary data

Informal discussions with employees, respective Unit Heads of Section Seven Ltd.

Secondary data

I have elaborated different types of secondary data in my research. Sources of secondary

information can be defined as follows:

Various books of Labour Law, articles, policies regarding HR operations.

Buyers or third party social compliance audit report

Profile of the Section Seven Ltd.

Group Instruction Manual & Business Instruction Manual

Social Responsible Management (SRM) Policy.

Websites of Section Seven Ltd.

After collection of data the statistical tools are applied to interpret the collected data.



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1.5 Limitations of the study

Time frame for the research was very limited. This was a bigger problem because

toward the end as my report.

Large-scale research was not possible due to constraints and restrictions posed by the

organization.

Part of organizational culture was written from individuals perception and may vary

from person to person.

In many cases, up to date information is not published.

To protect the organizational loss in regard of maintaining confidentiality, some parts

of the report are not in depth. Getting Relevant papers and documents were strictly prohibited. Ad furthermore

documents that are given access were not allowed for coping. I had to write the in

formations that I found useful for my report by hand.

The study is confined to only Section Seven Limited, CEPZ.



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Chapter-2Organization Overview

2.0 Section Seven Limited at a glance

Section Seven Limited, a member of Shirt Makers Group, is one of the largest garmentsmanufacturing and exporting organizations in Bangladesh. It began operations in EPZ more than

4 years ago. The Shirt Makers Group, head office in Dhaka, comprises some 7 (seven) factories

in Bangladesh. It has office also in Belgium, Thailand, China, Hong Kong & Europe.

Through a global network linked by advanced technology, including a rapidly growing e-

commerce capability, Section Seven Limited provides a comprehensive range of quality

services. It starts its journey from 2005 with 231000 sft area that manufactures woven shirts and

pants. And at present around five thousand (5000) employee is working over here. It

manufactures garments for the reputed buyers like Wal*Mart, Yamaki, AEON, MGB, Tema,

CMT, Lloyd, Tesco, Charles Voegele and so on.

Assets US $ 36 million at 30 June 2005.

Staff 5000 employees.

Technology Section Seven Limited maintains private data communication

networks and is reconfiguring its business for the e-age. Its

rapidly growing e-commerce capability includes the use of the

Internet, PC banking over a private network, interactive CCTV,

and fixed and mobile telephones.

Product range Woven Tops and Bottaoms for men, women and kids.

Production Capacity 30000 pcs per day

Production Unit 15

Major Fabrication T/C, CVC, 100% Cotton, Plain Dyed, Printed Yarn Dyed,

Solids, Stripes, Checks of Mill Made, Power Loom, Hand Loom.



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Sampling Capacity 120 Pcs / Day

Engaged People 100

Fully Equipped Sample Room

Specialized Section Embroidery

Printing

Research & Development Section ( R & D)

Pattern & Designing

CAD Section

Quality Control System Highly Skilled Quality Control Team

Ensuring 2.5 Standard Quality Level

Minimum Order 1000 Dzn

Production Lead Time 75 - 120 Days

Mix Market Shares

Men 80% Europe 50%

Ladies 10% Japan/Yamaki 40%

Children 10% USA 10%

Main Buyers Yamaki, Aeon, Tesco, MGB,

CMT,Charles Vogele, C & A,

WalMart, New Man,Tema, Lloyd,

Tchibo, American Classic, George etc



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Liaison Offices

Thailand Office Shirt Makers Limited

S. B. Tower, 7th Floor

Silom, Bangrak

Bankok 10500, Thailand.

Tel: +662-6377-406

Fax: 662-6377-405

E-mail: [email protected]

ATTN: Ms. Koong

China Office Shirt Makers Limited

Flat-13f, Kings Tower, No-12, Shishan Road

Suzhou 215011, New District Area,

Jiangsu, China

Fax: +86-512-8093707


ATTN: Mr. Mahbubul Haque Talukder

Hong Kong Office MAAS Traders (HK) Ltd.

Unit- 901, 9/F, Celebrity Commercial Centre

64 Castle Peak Road, Sham Shui PO

Kowloon, Hong Kong

Tel: +852-2199-7636

Fax: +852-2368-2474

E-mail: [email protected]: Mr. Sheikh Razif Ahmed (Raju)

Europe office CMT International nv.sa

Watertorenstraat 2

B-3590 Diepenbeek, Belgium

Tel: +32-(0)11-270077

Fax: +32-(0)11-270080




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ATTN: Mr. Maarten Hoofs

Japan Contact Office Osaka Office

Yamaki Company Ltd.

1-3-1, Uemachi, Chou-ku,

Osaka 540-0005

Japan

Tel: +816-6764-2255

Fax: +816-6764-2394

Tokyo Office Yamaki Company Ltd.

2-22-1, Midori, Sumida-ku

Tokyo 130-0021

Japan

Tel: +816-3633-1277

Fax: +816-3632-5292

2.1 Growth of the company

Section Seven Limited is named after a space started its journey in 1995. Firstly it commenced

its production with three floors and around twelve hundred (1200) manpower. With the passage

of time, its production volume was increasing by its qualitative production and its manpower

also increasing. At present it owns around four thousand two hundred (4200) workforce in six

(06) production floors and two hundred fifty (250) employees. Daily production capacities is

now thirty thousands (30000) pieces. It started its journey accompanied by three buyers whereby

now about twenty reputed buyers is working with Section seven Limited satisfactorily.



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2.2 SSL Principal Business Entities

SSL brand & corporate identity represents what SSL wants its brand to mean to its customer. It

is derived from the groups- SSL is a prudent, quality conscious, ethically grounded, trustworthy

international builder of long-term customer relationships.

Corporate Character

A prudent, quality conscious, ethically

grounded, trustworthy international

builder of long-term customer

relationships.

Basic Drives

Higher productivity, Team Orientation,

achieving Customer Satisfaction &

Customer Orientation.

Vision

To be the worlds leading apparel

manufacturing company.

The essence of SSL is integrity, trust and excellent customer service. It gives confidence to

customers, value to investors & comfort to colleagues.



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2.3 Vision, values, and governing objective of SSL

2.4 SSL is committed to five Business Principles

Provide our valued customers with Quality Products

Comply with all rules, regulations and applicable laws to the business

Provide employees with better Environmental, Health and Safety Standards in the

workplace.

Develop more than adequate safety measures

Create growth opportunities through training, periodic evaluation and feedback

Actively support continuous improvement activities to raise the standard of

operations in all areas of the Company.

Ensure Safety and Security of all man, material and information.


SSL Vision ToBecome the worlds leading apparel

manufacturing company.

SSL Values

Long term ethical client service;

High productivity through team work;

International character, conservative orientation;

Confident and ambitious sense of excellence;


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Chapter-3

Compliance Management of SSL

In order to ensure our products are produced under lawful, humane and ethical conditions

Section Seven Limited introduced Compliance Principles to guide our human rights practices in

addition to the local regulatory laws of the land.

3.1 Principle of Compliance : The Principle by which compliance is sustained are as

follows:

Compliance with Laws and workplace regulations

Prohibition of Forced Labor

Prohibition of child labor

Prohibition of Harassment or Abuse

Compensation and Benefits

Hours of Work

Prohibition of Discrimination

Health & Safety

Freedom of Association and collective Bargaining

Environment

Custom compliance

Security



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Chapter-4

Compliance with Laws and Workplace Regulations

4.1 Policy4.1.1 Section Seven Limited Continuously updates itself and complies with local and

national laws and regulations including workers & buyers requirements related to

all workplace regulations and social laws including environmental regulations,

customs laws and security.

4.1.2 Procedure

4.1.3 General

4.1.3.1 Updates the Policies and Procedures Manual for all changes in laws and

regulations related to labor practices, factory conditions, and

environmental and customs compliance.

4.1.3.2 Assigns a qualified person with responsibility for informing the facility

management of changes to laws and regulations related to labor practices,

factory conditions, and environmental and customs compliance.

4.1.3.3 Designates an employee with responsibility for incorporating changes to

laws and regulations in Facility procedures.

4.1.4 Responsibility, authority and communication:

4.1.4.1 For Labor Law requirements Sr. Manager - HR seeks updates from Local

Labor Organization.

4.1.4.2 For environmental requirements Sr. Manager - HR updates from

Environmental Ministry.

4.1.4.3 For Customs related requirements General Manager Commercialupdates

from Customs.

4.1.4.4 HR & Compliance Department are responsible to communicate with other

management regarding the rules and regulation change.

4.1.4.5 Sr. Manager - HR is responsible to keep copy of

Factory License

Building Approval Certificate

Fire License

Incorporate Certificates



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Chapter - 16

Problems, Recommendations & Conclusion

16.1 Problems : To implement the issues of compliance, there are few problems that we the

management have to face and they are as follows :

16.1.1 What is the main problem to implement the compliance issues is that lacking of

awareness workforce and supervisors about social responsibility and the practical

implementation of health & safety issues. They dont bother for the same. They just

understand the production. To what extent they (workforce) produce garments. And the

main concern of supervisors is to what extent they (supervisors) meet their daily target.

16.1.2 Another major problem that is related to first one is that lacking of education. Managerof production, supervisors and workforce all of them are poorly educated. For which

implementation of all compliance issues fully becomes very difficult for HR &

compliance staffs.

16.1.3 On the other hand, the top management of Section Seven Limited often compels the

workforce to work extra time that is known as overtime. Their management also does not

fully cope with the principles of compliance. Even most often they remain open factory

on Friday that is major violation of compliance.

16.1.4 Another problem in Section Seven Limited the quality of lunch that are provided for

workforce is very poor.

16.2 Recommendations :

16.2.1 The main recommendation for first problem (16.1.1) is to arrange effective training &

awareness program. It many be arranged by the compliance staffs or by BEPZA

counselor and BGMEA staffs as well. Emphasize should be given on in-house training

program that can be arranged during their lunch period by audio-visual medium as it may

be a source of entertainment for them.

16.2.2 As it is a national problem (16.1.2), awareness based on compliance principles &

practical effectiveness can be taught to the workforce, supervisors and production

managers also.

16.2.3 The owner should recruit educated & skilled key employee in top management level by

terminating old & traditional employee. Then this problem (16.1.3) may be solved.

16.2.4 In this regard, supplier of food need to be changed and cost of food should provide more

from management.



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16.3 Conclusion

Basically, overall compliance are managed and implemented based on these i.e. Compliance

with Laws and workplace regulations, Prohibition of Forced Labor, Prohibition of child labor,

Prohibition of Harassment or Abuse, Compensation and Benefits, Hours of Work, Prohibition of

Discrimination, Health & Safety, Freedom of Association and collective Bargaining,

Environment, Custom compliance and Security etc. principles in Section Seven Limited and

also all factories of Shirt Makers Group. These are designed by Management based on mainly

labour law 2006, BEPZA Instruction 1 & 2 and few reputed buyers Code of Conduct as well.

While following the above criteria is compulsory for satisfying COC, local culture and

regulation of Govt. can not be overlooked. For instance, limit of working hours and

compensation for extra work may not be the same for all geographical zones in the globe.

Minimum basic wage also depends on the economic situation of a particular country in question.

The introduction of rights of free association and collective bargaining is guided by the political

environment, the maturity level of workforce and above all the basic training of the management

of the organization.

Basic Training for Mid-level management is very significant as concept in garments sector is

very new. So , training should be provided them first on compliance issues. Otherwise

awareness creating is not possible. Being aware of them is very also very important as they

controlling workforce and workforce is the key term for compliance.



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Bibliography

1. Boiler Rules 1928

2. The Customs Act 1969

3. Memo No. F/ILO/BGMEA/207/88/CIF&E dated April-09/2003

4. Circular No. BGA/CIS/04/49 dated june-09/2004

5. BEPZA Rules and Regulation http ://www.hsbc.com

6. ILO Convention 29, Bangladesh Constitution Article 34

7. Bd Labour Law 2006 : Section 2 (45), 120, Section 121,Section 149,Section 108, Section

123, Section 126, Section 127, 128, Section 25, Section 19, Section 115, Section 116,

Section 117, 117 (3), 117 (4), 117 (5), 117 (7), 117 (8), Section 118, 118 (3),

8. Bd Labour Law 2006 : Section 2 (45), 120, Section 121, Section 149, Section 108,

Section 123, Section 126, Section 127, 128, Section 25, Section 19, Section 115, Section

116, Section 117, 117 (3), 117 (4), 117 (5), 117 (7), 117 (8), Section 118, 118 (3),

Section 28, Section 264 (10), 264 (9), Section 26, 27, Section 23 (1), section 23 (3), 23

(2), Section 23 (4), Section 24, Section 45,

9. ILO Convention 100, ILO Convention 111, Constitution Article 27 & 28, Bangladesh

Labor Law 2006 section 345

10. OSHA standard, Section 53, Section 54, Section 55, Section 56, Section 57, Section 58,

Section 59 & 60

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Mohsin RP-PART4