INNOVATION OF

TEXTILES
" Neutralizes the Effect of its Production. Improving the Wearer's environment. Producing
about the same amount of O2 as an oak tree”,
Overview of Pakistan Textile

In 2020 textiles were the world’s 7th most traded product, with a total trade of $774B.
Trade in Textiles represent 4.62% of total world trade. Even in the age of slow world
economic growth export market has always been area of opportunities and textile is one
of the well-established industries in the competitive market place. Textile and apparel
exports are crucial to boost market competitiveness and diversification, to strengthen
local and national economy and to gain global market dominance.
Pakistan exports for 2021 was $31.55B, a 12.93% increase from 2020.

As the rest of the world is moving steadily towards more systematic, innovative,
inclusive and sustainable growth we as a country have decided to continue to ignore
world bank’s advice altogether and somehow managed to make our economic
environment more hostile for businesses than ever before. We have pushed our exporters
in the deep waters with their hands tied and without a lifeboat or life jacket in sight.

The textile and clothing industry is the backbone of Pakistan’s economy and Pakistan’s
role as one of the world’s leading cotton producers has provided the basis for the textile
and clothing industry’s development. The textiles and clothing industry has grown to be
the single largest manufacturing sector in Pakistan. The sector employs over 38% of the
manufacturing labor force. More than US$5 billion of textile and garment machinery has
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been imported in Pakistan in the last few years. The textile industry is today based almost
entirely in the private sector.

Pakistan has exported textile products worth $19.33 billion during the fiscal year 2021
making a record high on annual basis. The country exported textile products worth
$19.33 billion during fiscal year 2021 showing an increase of 25.53 per cent when
compared with $15.4 billion in the preceding fiscal year, according to data released by
Pakistan Bureau of Statistics (PBS). Rebound in exports of textile since last year was the
outcome of a series of incentives to support exporters to meet the challenges in the wake
of COVID-19 and disruption in supplies. Moreover, the government’s decision to keep
businesses open during lockdown provided an opportunity to secure orders diverted from
economies under strict lockdown. The textile export data for the last five years showed
that volumetric textile exports are the primary driver with a double-digit increase value
added items.

For a country like Pakistan, going through energy crises, with high costs and scare
resources in only makes sense that in order to increase productivity and ensure
sustainable supply, the resource allocation should be such that the priority of gas supplied
to different sectors of the economy should be such that productive sectors of the economy
that add more value to GDP should be given preferential priority as such policy measures
enhance exports, boost competitiveness, encourage job creation and have multiplier
effect on value chains. However, Pakistan’s favoring of domestic over industrial
consumption is a classic case of prioritizing short term consumer satisfaction over long
term economic stability. There is a dire need of pricing policy reforms for the inputs such
as fertilizer, gas electricity.

Due to the high prices of raw materials, the industry has already purchased raw materials
at higher prices, while banks are not clearing import documents due to the lack of dollars
in the country, and many factories have imported goods that are unfinished at various
stages. As a result of the delays, companies are not only incurring excessive demurrage
and detention charges, which customs refuse to waive, but are also making textile exports
uncompetitive in the process. A large number of textile factories have also started to
close down due to lack of maintenance, caused by shortage of spare parts.

The issue of raw material clearance from the ports remains unresolved owing to
unavailability of forex and therefore mills are currently unable to obtain cash against
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documentation and are closing down owing to the shortage of raw materials. Many mills
are waiting for Technology up gradation funds refunds for almost a decade as result their
bank guarantees and liquidity are tied up as a result.

Role Of Sustainability

Sustainability standards are an important mechanism used in the textile industry to ensure
that the environmental impacts of textile manufacturing and production are reduced.
These standards aim to priorities the health and safety of workers, uphold human rights
and protect the environment.

Production and processing of sustainable textiles which come from renewable or recycled
sources not only help to reduce the negative impacts to the environment but also supports
millions of workers to earn fair and ensure proper working conditions.

Achievement in Sustainability by Pakistani Mills

CO2 Garment

Azgard9 has turned a sci-fi fashion dream into reality by producing a sustainable garment
that produces oxygen. It was produced with their latest motto in mind - "Future Before
Fashion", which focuses on developing products and solutions with low impact on the
environment. It was developed with the award-winning transdisciplinary design research
studio Post Carbon Lab in London and then sent to key people at all the major fashion
retailers, where it simulated a piece from their autumn/winter 2043 collection. The aim
was to show the major fashion brands that a truly green future like this is possible now.

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The hoodie is treated with microbial pigments and behaves like a plant. It absorbs carbon
dioxide and converts it into glucose and oxygen with the help of photosynthetic
microorganisms. During its life cycle, the poncho neutralizes the effect of its production,
improving the wearer's immediate environment and producing about the same amount of
O2 as an oak tree.

REVIVE

AZ9 developed a technology that used all industrials and post-consumer waste and turns
it back into fibers which can then use in making yarn, fabrics and garments.

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Less Paper Consumption System
New online systems have been introduced which make it unnecessary to have
documented files, and all information can be viewed online and data is continuously
updated for changes. It's useful to avoid extra paperwork and everyone in their office has
easy access.

Overview of Bangladesh Textile

Readymade garment (RMG) exports from Bangladesh increased by 15.56 per cent to
$22.996 billion in the first six months of fiscal 2022-23 (July-June) compared to exports
of $19.900 billion in July-December 2021, as per provisional data released by the Export
Promotion Bureau (EPB). Woven RMG exports grew at faster pace than knitwear.
RMG exports from Bangladesh were 4.81 per cent higher than the target of $21.940
billion for July-December 2022, as per EPB data.
Exports of knitwear increased by 13.42 per cent to $12.659 billion in July- December
2022, as against exports of $11.161 billion during the same months of the previous fiscal.
Exports of woven apparel increased by 18.29 per cent to $10.337 billion during the
period under review, compared to exports of $8.739 billion during July-December 2021,
as per the data.
Home textile exports decreased by 16.02 per cent to $601.26 million during the period
under review, compared to exports of $715.95 million during July- December 2021.
Woven and knitted apparel, clothing accessories and home textile exports together
accounted for 86.84 per cent of Bangladesh’s total exports of $27.311 billion during July-
December 2022.
Bangladesh had achieved an all-time high in terms of value of RMG exports in 2021-22,
at $42.613 billion, registering an increase of 35.47 per cent compared to exports of
$31.456 billion in fiscal 2020-21.
However, the growth in RMG exports has slowed down during the recent months due to
global economic challenges.
Bangladesh has shown how the right policy framework and its execution can
transform an industry and help contribute significantly to the overall economy. The
Bangladesh government has been quite proactive in putting up favorable policies
and resolving the issues arising from time to time
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While Bangladesh will celebrate its 52th year of Independence on 26 March 2023, the
country, despite all sorts of challenges and adversities, has shown a great deal of
resilience and grit, emerging as the second largest exporter of ready-made garments
(RMG) to the world, after China. Bangladesh’s market share in global RMG trading is
6.5 per cent.
The last couple of decades have been quite eventful for this country, as it has
significantly ramped up its capacity and capability in RMG manufacturing. Bangladesh
has also positioned itself as a reliable supplier in the global market. Over the last two
decades or so, RMG exports from the country have grown at a CAGR of 14.8 per cent,
reaching $34.2 billion in 2018-19 (July 2018-June 2019) and contributing over 84 per
cent to the country’s total exports. In 2019-20, however, due to the Covid-related market
slowdown, exports were hit badly, declining to around $28 billion.
The Bangladesh economy remains highly dependent on the RMG industry for
manufacturing, employment, foreign reserves and women empowerment. The industry
contributes 11.2 per cent to the country’s GDP. The 4,600-plus RMG units constitute the
largest industrial sector in the country, contributing 36 per cent of manufacturing
employment and engaging 4.1 million workers.

Private sector's big role

“The Bangladesh government has been quite proactive in supporting the RMG industry
in the country,” says Rubana Huq, president, Bangladesh Garment Manufacturers &
Exporters Association (BGMEA). “Backed by progressive policy initiatives, we have
created a favorable environment for the RMG sector, where private entrepreneurs have
played a big role in building up a strong ecosystem. Currently, we are looking to
consolidate our position further and add more value to our offering by getting into high-
value garments.”

Recently, during the initial months of Covid restrictions, when the country’s RMG
exports were hit badly due to the closure of garment units, as also the cancellation of
orders by buyers in the global market, the Bangladeshi government promptly announced
a stimulus package of about Tk105 billion for reviving the economy, of which about
Tk50 billion was allocated to bail out the export-oriented RMG industry. As the garment
units struggled to pay wages to their workers during the recent challenging period, the
package ensured that workers would get wages and allowances and stay afloat.

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Besides, the size of the Export Development Fund was increased from $3.5 billion to $5
billion, which provided short-term facilities for importing raw materials for export-
oriented industries. Out of this package, the central bank of Bangladesh instituted a $600-
million pre-shipment credit refinance scheme for RMG and other export-oriented
industries.

“Our government’s timely interventions have paid rich dividends in the past,” adds Huq.
“This time round also, the stimulus package was a major support to the RMG industry
during Covid, helping it tide over challenges on the macro and micro fronts. In the short
term, as we have been able to overcome the difficult situation, in the medium term, we as
an industry are also closely observing the developments happening in our primary
market, the EU, in this Covid scenario. In the long run, we want to not only sustain the
growth achieved by the industry, but also look forward to graduate to become a supplier,
which will enable us to have a much better say in the market.”

“No doubt, Bangladesh has scripted an inspiring story for itself in the garment sector,”
acknowledges Rahul Mehta, chief mentor & past president, Clothing Manufacturers’
Association of India (CMAI). “Today it has emerged as the second largest supplier of
RMG to the global market. Despite its duty-free access to countries in the EU and its
LDC status, the industry over there has done remarkably well to convert these benefits to
its favor and build up a strong manufacturing base for garments. The local government
has also been quite proactive and supportive in offering a favorable environment that has
gone a long way in nurturing the local industry. In fact, Bangladesh has set a good
precedent to be emulated by others.”

One of the major reasons for Bangladesh’s sharp competitiveness is that it is

cheaper to produce goods in Bangladesh than in India. According to a case study,
the unit labor cost of producing a cotton shirt in the US is about $7, while the unit
labor cost of producing the same shirt in India comes to about 50 cents. But in
Bangladesh, the unit labor cost is only 22 cents. This gives Bangladesh a competitive
advantage over countries, including India. Experts are of the view that Bangladeshi
RMG exports have the potential to achieve the $100 billion mark in the next decade
or so.
While the Bangladesh RMG sector has always been under scrutiny, workplace safety in
the industry has improved in recent years. Following the fire incident at Tazreen Fashions
in 2012 and the Rana Plaza Building collapse in 2013, the government, with the
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assistance of the European and North American retailers’ initiatives (known as Accord
and Alliance respectively), have implemented massive remediation programme. Overall,
the remediation efforts have enhanced workplace safety significantly in RMG factories.

The local industry has also worked on creating a favorable carbon footprint for itself. As
per BGMEA, Bangladesh has 91 Leadership in Energy and Environmental Design
(LEED) certified green garment factories, which is the highest in the world. The country
is also home to the highest number of platinum-rated garment factories globally. As many
as 25 Bangladeshi factories have achieved the highest certificate provided by the US
Green Building Council (USGBC) with six out of the top 10 LEED certified factories
worldwide situated there. About 500 more RMG factories have been registered with the
USGBC for LEED certification.

FINANCING OF TEXTILE INDUSTRY IN PAKISTAN

Liquidity Crisis
Pakistan is facing a liquidity Crisis as banks have stopped financing and facilitating
payments for imports due to depleting foreign exchange reserves. In October 2022,
the All Pakistan Textile Mills Association (APTMA) announced that 1,600 garment mills
were closed across the country due to withdrawal of power subsidies and, as a result, five
million people lost their jobs. In December 2022, APTMA stated that mills across the
country were running at less than 50% capacity utilization and "textile exports could fall
below $1 billion a month from 2023"
Higher Interest Rate(17%)
In line with market expectations, the State Bank of
Pakistan on Saturday jacked up key policy rate by 100
basis points to over 25-year high at 17% to ensure high
inflation does not get entrenched. The announcement
came as the government had invited the International
Monetary Fund (IMF) to sit on the negotiation table to
sort out all ‘thorny’ issues, including implementing a
market-based exchange rate and power tariff hike, in
an effort to resume the ninth review of $7 billion Extended Fund Facility. The pricing
adjustments would bound to cause high inflation. Investors cannot borrow and take funds
at such higher rate as they cannot make profits with such high interest rate. So they are
bound to shut down the factories

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Shortage of Working Capital
Electricity, being the most important resource for any organization has substantial impact
on working capital. So, it is substantial to analyze the impact of acute power shortage on
firm’s liquidity and profitability. As acute power shortages in the country adversely
affects the performance of firms by reducing profits and enhancing working capital
investment cycle, it is noteworthy to analyze the effect of electricity crisis on firm’s need
for liquidity. The results revealed that acute power shortage significantly impact working
capital management in textile firms of Pakistan. So, firms must go for alternative energy
sources for long-run resulting into huge savings from losses for these firms.
No more Energy Tariffs
Government of Pakistan is no longer giving energy tariffs to textile mills. Even
Electricity and gas are not enough provided to the Industry. Punjab is taking 9 Rs per unit
Gas and Sindh is taking Rs 4 per unit. So there is a big energy crisis in Pakistan at the
moment.
Conclusion
It is not feasible to set Textile mills in Pakistan as there is no more cotton production will
be available in coming years due to non- cultivation of cotton crop this year. As there are
not funds available in the country and interest rates are so high and there is a shortage of
Gas and Electricity

FINANCING OF TEXTILE INDUSTRY IN BANGLADESH

Largest Contributor
Bangladesh is a large contributor to the global textile industry, with the RMG (ready-made garment) sector
accounting for 84 percent of Bangladesh’s exports. This comes on the back of the sector’s rapid growth and
modernization over the past decade as well as the strides it has made in improving conditions for the
country’s approximately four million garment workers. Bangladesh has surprised the market by consistently
showing profits.

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Increase in Revenue
According to the International Finance Corporation (IFC), the annual revenue of the
country’s garment industry has risen from $19 billion to $34 billion (79 percent) in the
last seven years. The World Bank’s data shows that Bangladesh is among the fastest-
growing economies worldwide over the past decade, supported by the ready-made
garment (RMG) exports, demographic dividend, and stable macroeconomic
conditions. Poverty decreased to 14.3 percent from 43.5 percent in two
decades. Bangladesh started with a low income per capita but today the per capita income
is $2000 with a GDP of almost $355 billion. Bangladesh has made progress in every
sector whether it is economics or business or social to the health sector.
Textile Businesses Shifting from Pakistan to Bangladesh
Not only does it share a common culture and history with Pakistan, it has more investor-
friendly policies, cheaper skilled labour and, crucially, tax-free access to 37 countries,
including the European Union, Canada and Australia. Investers are trying to go
Bangladesh because investment in Pakistan is too risky.
Low Labour Cost
Bangladesh last year nearly doubled the minimum monthly wage for millions of workers
in the garment industry to 3,000 taka (25 pounds). Where as Pakistan’s minimum wage is
much higher, at a government-set 7,000 rupees (49 pounds).

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Duty Free Imports
Bangladesh is also offering tax holidays of up to 10 years to foreign investors, as well as
duty-free import of raw materials and repatriation of capital and profits.
Classified as a least-developed country, it enjoys duty-free export facility to 27 European
Union countries, and 10 other developed countries, including Japan, Canada and
Australia, under bilateral agreements

Conclusion
Pakistan should learn from Bangladesh. The latter became independent in 1971, and in 51
years it became well flourished and well established both in economic and social terms.
While Pakistan is far behind in every sector and could not stand strong in the
international arena.

How to Work PD/Marketing, MMC, Procurement, Fabric

Sourcing Department & PPC in Textile Sector.

PD/Marketing Department
MMC (Material Management Control Department)
Procure Department
Fabric Sourcing Department
PPC (Production Planning Control Department)

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 BUYER

FABRIC
MMC
SOURCING

PD/MARKETING
DEPARTMENT

PROCUREMENT PPC

PD/Marketing Department
The Marketing Department plays a vital role in promoting the business and mission of an
organization. It serves as the face of your company, coordinating and producing all
materials representing the business. It is the Marketing Department's job to reach out to
prospects, customers, investors and/or the community, while creating an overarching
image that represents your company in a positive light.

Depending on your company, the duties of the Marketing Department may include one or
more of the following:
 Managing Your Brands
 Creating Contents Providing
 Monitoring and Managing
 Producing Internal Communication
 Conducting Customers and Marketing Research

MMC (Material Management Control)

Materials management is a core function of supply chain management, involving the
planning and execution of supply chains to meet the material requirements of a company
or organization. These requirements include controlling and regulating the flow of
Page# 12
material while simultaneously assessing variables like demand, price, availability,
quality, and delivery schedules.

Material managers determine the amount of material required and held in stock, plan for
the replenishment of these stocks, create inventory levels for each type of item (raw
material, work in progress or finished goods), and communicate information and
requirements to procurement operations and the extended supply chain. Materials
management also involves assessing material quality to make sure it meets customer
demands in line with a production schedule and at the lowest cost.

The objectives of material management are sometimes referred to as the ‘Five Rs of

Materials Management:
 Right Material
 At the right time
 In the right amount/price
And the quality that is:
 At the right price
 From right source

Procurement Department
For professionals, procurement means the process of identifying, shortlisting, selecting,
and acquiring needed goods or services from a third-party vendor.

It can be done through direct purchase, competitive bidding, or tendering process while
making sure that the delivery of the supplies is done in a timely manner.

Components of Procurement
 People
 Process
 Paper work

The 8 Key Procurement Department Roles

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o Chief of Procurement
 Leading a strong procurement team
 Manage Annual Organizational Budgets
 Manage Supplier Relationships
 Develop an organization’s purchasing policies
 Source, Negotiate, and Review Supplier Contracts
 Manage Supplier Relationships

o Director of Procurement
 Maintaining Knowledge of the market, citing current prices and fair rates for
supplies.
 Monitoring, reviewing, and analyzing bids and quotes with potential suppliers.
 Monitoring, reviewing, and analyzing service agreements and contracts
 Overseeing sources for purchasing supplies
 Maintaining company budget and streamlining costs

o Procurement Manager
 Identifying potential supplier sources
 Conducting interviews with potential vendors
 Negotiating good supplier agreements
 Managing supplier and vendor contracts

o Procurement Analyst
 Meeting with vendors
 Testing products
 Negotiating supply contracts
 Creating cost reports

o Procurement Specialist
 Supervise budget estimation and sourcing operations

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  Maintain excellent communication with all business stakeholders
 Analyze offer and purchase bids and negotiate accordingly
 Assist in asset management procedures when required

o Contract Specialist
 Manage contract development through all lifecycle stages
 Provide ongoing assistance to staff on contract development and compliance
issues.
 Evaluate records for retention in compliance with Board-approved policies

o Legal Counselor
 Provide Legal Guidance
 Conduct Legal Research
 Draft Legal Correspondence
 Ensure compliance with the law

o Business Controller
 Analyzing and controlling the development of purchase prices
 Analyzing and controlling the impact from cost down projects and R&D projects
 Monthly reports and KPIs regarding procurement
 Forecasting the impact with procurement activities and development in purchase
prices
 Prepare presentations for meetings

Fabric Sourcing Department

The fabric is the primary raw material of a garment that cost 60-80% of total garment
cost. So, it is very important to handle fabric souring carefully in garment export house to
meet the target cost. To handle fabric development, procurement and inventory
management export houses set a department for fabric sourcing.
Job responsibilities of the fabric sourcing department may vary widely depending on
factors such as, type of products (woven, knits, high fashion), company profile (a
composite factory, small garment manufacturing house) etc.

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The responsibility of a fabric sourcing department or fabric sourcing personnel includes
followings but not limited to these.

 Development of fabric suppliers for different types of fabrics (domestic and

international level)
 Product (fabric and/or yarn) development as per buyer requirement
 Fabric price negotiation with suppliers
 Study market trends, latest finishes and fabric developments
 Research on yarn price and market trend
 Fabric costing
 Sourcing yarn and get knitting done from knitting subcontractors (In case factories
are not sourcing finished fabric)
 Dealing with fabric sourcing - sourcing of greige fabric or finished fabric from
suppliers
 Wet processing (specially dyeing) gets done from dyeing mills
 Printing and embroidery getting done (in case printing and embroidery process is
done on fabric)
 Dealing with fabric supplier for quality related issues, fabric to be reprocessed and
rejected fabrics
 Fabric inventory management
 Coordination with buyers/buying house for fabric quality parameters, fabric
development
 Dealing all documentation works like PO raising, making suppliers' Payments,
follow-up with the transporter and getting material in-house
 Developing fabric reference library

PPC (Production Planning Control Department)

Production planning and control department is one of the important departments for the
apparel manufacturing company.
In the context of the apparel manufacturing, primary roles of the Production Planning and
Control (PPC) department has been listed below. Each function has been explained
briefly just overview of the task.

o Job or Task Scheduling

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Preparation of time and action calendar for each order from order receiving to shipment.
The job schedule contains list of tasks to be processed for the styles. Against each tasks
planner mentions when to start a task and what is dead line for that task. Name of
responsible person (department) for the job is being listed. For example, scheduling
planned cut date (PCD), line loading date etc.

o Material Resource Planning (Inventory)

Preparation of Material requirement sheet according to sample product and buyer
specification sheet. Consumption of material (fabric, thread, button, and twill tape) is
calculated and estimated cost of each material.

o Loading Production
Planner defines which style to be loaded to the production line and how much quantity to
be loaded.

o Process selection & planning

Processes needed to complete an order vary style to style. According to the order
(customer) requirement PPC department select processes for the orders. Sometimes extra
processes are eliminated to reduce the cost of production.

o Facility location
Where a company has multiple factories (facilities) for production and factories are set
for a specific product, planner needs to identify which facility will be most suitable for
new orders. Sometimes there may be a capacity shortage in a factory, in that case, planner
need to decide which facility will be selected for those orders.
o Estimating Quantity & Costs of Production
Planner estimate daily production (units) according to the styles work content. With the
estimated production figure, production runs and manpower involvement planner also
estimate production cost per pieces.

o Capacity Planning
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PPC department plays a major role during order booking. They decide (suggest) how
much order they should accept according to their production capacity. Allocating of total
capacity or deciding how much capacity to be used for an order out of total factory
capacity. Regularly updating factories current capacity (production capacity).

o Line planning
Preparing detailed line planning with daily production target for the production line. Most
cases line planning is made after discussing with the production team and Industrial
engineers.

o Follow up and execution

Whatever plan is made is executed by PPC department. PPC department keeps close look
whether everything is progressing according the plan. Chasing other department heads on
a daily basis to keep plan on track. They update order wise completed tasks on the Time
& action Calendar. When they found something is going to be late, they expedite and
create an alarm about the delay.

IMPORT DEPARTMENT

They are responsible for preparing and processing all documents and permits,
maintaining records of all transactions, assessing the products' qualities for import and
tracking shipments to ensure that they arrive at their destinations in a precise and timely
manner. Import trade refers to the purchase of goods from a foreign country. The
procedure for import trade differs from country to country depending upon the import
policy, statutory requirements and customs policies of different countries. In almost all
countries of the world import trade is controlled by the government. The objectives of
these controls are proper use of foreign exchange restrictions, protection of indigenous
industries etc.

Procedure and Steps Involved in Import of Goods

Import Procedure
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  The steps taken in import procedure are discussed as follows ...
 Trade Enquiry ...
 Procurement of Import License and Quota ...
For the purpose of issuing license, the importers are divided into three categories.
 Obtaining Foreign Exchange
 Placing orders
 Dispatching a Letter of Credit
 Obtaining Necessary Documents
 Closing the Transactions

EXPORT DEPARTMENT

The main purpose of export management is to secure export orders and to make certain
for timely delivery of goods as per agreed norms of quality and other specifications
including terms and conditions agreed to between the exporter and the importer. They are
responsible for the logistics of getting the goods to the purchaser in another country and
for ensuring the goods meet the required standards of the importing country. They are in
charge of the export of products and services. The export department is responsible for
monitoring the overseas markets and arranging items based on their orders. They also
Page# 19
have the required facilities and export employees on hand to properly conduct export
marketing efforts.

Functions of an Export department

 Participate in Trade Shows
 Participate in Trade missions
 Answer Foreign Inquiries and follow up with customers
 Send price quotes and (Proforma Invoices)
 Communicate with foreign buyers on orders and shipments
 Prepare and send commercial documents to importers of company goods (i.e.
commercial invoice, bill of lading, certificate of origin)
 Study market trends and customers preferences.
 Protect the brand of the company

LOGISTICS DEPARTMENT

Logistics is the process of planning and executing the efficient transportation and storage
of goods from the point of origin to the point of consumption. The goal of logistics is to
meet customer requirements in a timely, cost-effective manner. Logistics services are all
the elements of your supply chain, from the factory to the end customer. They include
transportation from manufacturer to warehouse, warehousing and order fulfillment, and
delivery to the end customer. Logistics services include: Transport from the factory to the
fulfillment warehouse. It is the most important component of logistics management as it

Page# 20
plans and supports the distribution of goods to their final destination. It can be delivered
via freight trains, road vehicles, shipping, and so on

The main elements of logistics

Storage, Warehousing & Materials Handling.
 Packaging and unitization
 Inventory
 Transport
 Information and control
 Minimize Manufacturing Costs
 Efficient Flow of Operations
 Better Communication Flow
 Provides Competitive Edge
 Better Inventory Management
 Logistics Management Solution

History of ERP
Started by a team of former IBM
engineers in Germany, Systems,
Applications and Products in Data
Processing (SAP for short) was
founded in 1970 to provide
business software for enterprise-
level manufacturers. They
released their first ERP system,
R/2, in 1992.
Page# 21
The history of ERP goes back more than 100 years. In 1913, engineer Ford Whitman
Harris developed MRP remained the manufacturing standard until manufacturing
resource planning (called MRP II) was developed in 1983. MRP II featured “modules” as
a key software architectural component, and integrated core manufacturing components
including purchasing, bills of materials, scheduling, and contract management. RP's
past: 1990s to the new millennium
From the 1990s until the beginning of the twenty-first century, ERP adoption grew
rapidly. At the same time, the costs of implementing an ERP system began to climb. The
hardware required to run the software was typically on company premises, with big
machines in a server room.

Features
The purpose of ERP software is to be an
all-in-one solution for your business
needs. But with that said, not all of the
feature sets from software to software
will be identical. It’s important to
understand what your company needs the
most and target an ERP solution that
offers those features out of the box.
Common ERP software features include
sales tools, CRM, accounting tools, and
human resources. But some of you might
need features for things like supply chain
management, operational. Using ERP
software standardizes departments like
finance, HR, and sales and inventories with the help of ERP software in any industry.
Consequently, more than 50% of the manual activities and other spreadsheet-based tasks
become easier to manage. Moreover, human error can largely reduce.

SAP

SAP stands for Systems

Applications and Products in Data

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Processing. SAP, by definition, is also the name of the ERP (Enterprise Resource
Planning) software as well as the name of the company. SAP Software is a European
multinational, founded in 1972.

Before we actually see in detail, what

ERP is and how ERP can help in your
business process, we will understand
how different departments are
involved in the whole business
process, right from the ordering of the
raw material – to manufacturing
goods – to delivering final products to
the customer. A lot of users are using
Office 365 in their daily work. But
they also need information from SAP
systems.

TEC's discrete ERP assessment

of SAP ERP consists of 1,416
features categorized into Seven
core modules and a wide range of
submodules. For example, the
Financials module of SAP ERP
comprises general ledger, fixed
assets, cost accounting, and chart
of accounts structure submodules,
among others.

Markets
Australia Austria Belgium Canada
China Denmark Europe Germany
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India Israel Italy Japan
Mexico Netherlands New Zealand South Africa
South America South Korea Spain Switzerland
United Kingdom United States

Languages
Chinese (simplified) Chinese (traditional) Dutch
English French German
Italian Japanese Korean
Polish Portuguese Spanish

Trade
Long ago before the advent of money, do you wonder how people got their things. Well,
they had a system in place called the barter system where if a person wants something but
has another thing to give, he would find a person who has the item desired while
requiring the item being offered.
Thus, this collective need is what leads a person to swap their items in hand to fulfill both
of their requirements. This is considered an act of trade.
What is Trade?
In simple terms, trade is basically an exchange, voluntary in nature between two parties
in requirement of each other’s resources i.e. goods and services.

This system is based purely on the concept of need, having a sort of symbiotic
relationship in which both benefit each other. In financial terms, trade basically refers to
the sale and purchase of assets and securities between two consensual sides.

Trade Definition
The definition of trade can be simplified in a single sentence, the fulfillment of desires by
two individuals or groups via the swapping of their respective material goods and
services.

Trade Importance

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Trade is a practice going on for centuries with its own variations and techniques. With the
old barter system as mentioned earlier, the trade saw the problem that not everyone had
something of desire to give in place of obtaining something, so the solution to this
problem was the creation of money, in other words, a common desirable item which can
be traded in place of anything for a mutually decided monetary value.

And even money has seen its fair share of design changes, from precious metals to
standardized coins to cash and now in form of the new crypto currency or digital
currency. Not only that, trade even provides some important benefits straight off the bat.
The first one is the economic growth as trade leads to an exchange of cultures and
opportunities leading to strives in development. Also, it puts remote locations on the map
with global recognition for each place’s strengths along with its shortcomings leading to
bustling civilizations followed by betterment.
Lastly, it even improves the performance of a country in financial aspects by giving job
opportunities to people and taxes to the government which will drastically improve the
country’s financial standings and incomes.

Import Trade
This type of trade is basically the transportation of goods to one’s home country, in other
words, being on the receiving end of the trade between two countries. These trades
require the home country to pay for the goods.

Export Trade
This type of trade is basically the transportation of goods from one’s home country, in
other words, being on the giving end of the trade between two countries. These trades
require the home country to charge for the goods.

Trade through Banks

It provides an entire range of trade finance services which includes import and export
activities such as issuing of Letters of Credit, purchasing export documents, providing
guarantees and other support services to facilitate your trading business needs.

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Imports of goods into Pakistan generally require a Compulsory Letter of Credit (L/C),
unless a special exemption is obtained in advance. Revolving, transferable, and packing
letters of credit are not permissible. Letters of credit should provide for the negotiation of
documents within a period not exceeding 30 days from the date of shipment.

Payment to the beneficiary (stipulated in the L/C) may be made either in the country of
origin or in the country of shipment of goods. Other payment terms are subject to
approval by the State Bank of Pakistan (SBP). Remittances may be made soon after
goods have been cleared by Customs.

Pakistan Customs authorities require a commercial invoice and a bill of lading (or airway
bill). Exporters should forward documents separately if the shipment is by sea, but should
include them with air shipments. Until recently, “Certificates of origin” were not legally
required but recently there have been cases where the Customs authorities have asked for
it. Also, a statement of country of origin should appear on the invoice. Consular invoices
are not required.

The exporter should also be sure to ascertain from the importer the precise number of
copies of each document that will be required. Importers, depending on the specific
circumstances as insurance certificates and packing lists, also may request other
documents. Customs authorities require special certificates for imports of plants and plant
products and used clothing (e.g., a U.S. Food and Drug Administration certificate for
foods and pharmaceuticals). In order to expedite the process and to avoid potential delays
and penalties, exporters should request detailed instructions from the Pakistani importer
prior to shipping.

What is trade finance?

There are various definitions to be found online as to what trade finance is, and the
choice of words used is interesting. It is described both as a ‘science’ and as ‘an
imprecise term covering a number of different activities. As is the nature of these things,
both are accurate. In one form it is quite a precise science managing the capital required
for international trade to flow. Yet within this science there are a wide range of tools at
the financiers’ disposal, all of which determine how cash, credit, investments and other
assets can be utilized for trade.
In its simplest form, an exporter requires an importer to prepay for goods shipped. The
importer naturally wants to reduce risk by asking the exporter to document that the goods
have been shipped. The importer’s bank assists by providing a letter of credit to the
exporter (or the exporter's bank) providing for payment upon presentation of certain

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documents, such as a bill of lading. The exporter's bank may make a loan to the exporter
on the basis of the export contract. The type of document used in the process depends on
the nature of the transaction and how evidence of performance can be shown (i.e. bill of
lading to show shipment). It is useful to note that banks only deal with documents and not
the actual goods, services or performance to which the documents may be relating to.

Trade finance is used when financing is required by buyers and sellers to assist them with
the trade cycle funding gap. Buyers and sellers also can also choose to use trade finance
as a form of risk mitigation. For this to be effective the financier requires:
 
 Control of the use of funds, control of the goods and the source of repayment
 Visibility and monitoring over the trade cycle through the transaction
 Security over the goods and receivables

Trade finance helps settle the conflicting needs of the exporter and the importer. An
exporter needs to mitigate the payment risk from the importer and it would be in their
benefit to accelerate the receivables. On the other hand, the importer wants to mitigate
the supply risk from the exporter and it would be in their benefit to receive extended
credit on their payment. The function of trade finance is to act as a third-party to
remove the payment risk and the supply risk, whilst providing the exporter with
accelerated receivables and the importer with extended credit.

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