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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.
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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
(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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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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
E-mail: [email protected]
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
E-mail: [email protected]
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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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.
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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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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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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Compliance Management of Section Seven Limited
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