{"id":988,"date":"2021-01-13T11:28:12","date_gmt":"2021-01-13T05:28:12","guid":{"rendered":"https:\/\/beta.footwearexchange.com\/wp\/?p=988"},"modified":"2026-01-31T10:49:00","modified_gmt":"2026-01-31T04:49:00","slug":"footwear-price-race-an-impossible-competition-for-bangladesh","status":"publish","type":"post","link":"https:\/\/beta.footwearexchange.com\/wp\/footwear-price-race-an-impossible-competition-for-bangladesh\/","title":{"rendered":"Footwear Price race – An (im)possible competition for Bangladesh"},"content":{"rendered":"

[vc_row][vc_column width=”1\/6″][\/vc_column][vc_column width=”2\/3″]

<\/span>(The whole article is prepared based on a $10 sports shoes (Factory Price) retailed $50)<\/span><\/div><\/div>[vc_column_text]This time, let\u2019s start with some quick practical case from the perspective of price,
<\/div>\n

CASE1:<\/h4>\n

If a purchaser is asking you to be competitive by 10% from his existing source, that means he is asking you to reduce the LOH by 80% at least.<\/p>\n

–Is that even practically possible?> Yes, you have to give up your margin (Don’t you do that today?)<\/u>.

<\/div>\n

CASE2:<\/h4>\n

Factory Y is paying 3 times more average LABOR wage compared to Factory X. Yet, Factory Y is competitive by 2% in FOB.<\/p>\n

–Is that even practically possible?> Yes. factory Y has to be efficient by +30% than factory X <\/u><\/p>\n

(same as Bangladesh (X= 45% overall efficiency) and China (Y=75% overall efficiency) today).<\/u><\/p>\n

\u201cThe price competitiveness is defined only on \u2248<\/b>15% of FOB.<\/h4>\n

Any factory barely have any control over rest \u2248<\/b>85%.\u201d<\/h4>\n

Means, >85% of the price is already fixed (measurable and comparable with competition),<\/span><\/p>\n

\"\"<\/p>\n

and only part to make a difference is 15% of the total; i. e, Labor and overhead cost (competitive advantage). Surprising? Well let\u2019s have a look into the full story.

<\/div><\/span><\/p>\n

Retailers price breakdown: $50<\/strong><\/h2>\n

\"\"<\/p>\n

\"\"[\/vc_column_text][vc_column_text]

<\/div>\n

So, now let\u2019s start with LOH; To calculate LOH, we need 3 information,<\/strong>

<\/div>\n

a. Cost of a minute in the factory<\/b><\/span><\/h3>\n

Total cost of the factory for a month (fixed + variable)\/ number of working minutes in a month* = Cost of a minute<\/p>\n

*timeline can be chosen as per the need (you can consider month or year or even a day)<\/p>\n

<\/div>EXAMPLE: <\/b><\/p>\n

If there are 270 direct and 30 indirect worker (manager\/ supervisor..) in the factory; the total working minutes of the factory is 270 direct workers X 25 working days in a month X 8 working hours every day X 60 minutes in a hour = 3,240,000 minute.[\/vc_column_text][vc_raw_html]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[\/vc_raw_html][vc_column_text]<\/p>\n

b. SAM of a model<\/span><\/b><\/h3>\n

Number of working minutes needed to produce a pair of shoe or, the time a single worker will take to make the pair.

<\/div>\n

EXAMPLE<\/b> (I will use the simplified version to keep the \u2018sense\u2019 useful for all):<\/p>\n

Measure the time of each operation by a stop watch,<\/p>\n

operation A+ operation B+ operation C+ . . . . .\u00a0 .+ operation Z= SAM of a specific design \u00a0 (b= 25min)<\/b><\/span>[\/vc_column_text][vc_column_text]<\/p>\n

c. Efficiency of the factory<\/span><\/b><\/h3>\n

The percentage ratio of \u2018useful\u2019 minutes to make the shoe and \u2018used\u2019 minutes.

<\/div>\n

EXAMPLE:<\/b><\/p>\n

270 workers in a line (cut to pack) works for 8 hours a day produced 2,000 prs and SAM of the shoe is 25 minutes.[\/vc_column_text][vc_raw_html]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[\/vc_raw_html][vc_column_text]So, the LOH for this specific model in this Bangladeshi factory will be,

<\/div>\n

LOH= a<\/span> X (b<\/span> \/ c<\/span>) =0.03<\/span> X (25<\/span> \/ 38.58%<\/span>) = $1.944<\/h3>\n

I know this is boring, but it\u2019s going to be interesting from here\u2026.<\/p>\n

<\/div>NOW, let\u2019s do a comparative pricing between Bangladesh and China,<\/p>\n

(considering BOM, tooling cost and profit margin are same for both the countries)

<\/div>\n

Reality of today:<\/strong><\/p>\n

\"\"<\/p>\n

*CPM is based on country economy and labor market; factory has hardly any control over it<\/b>.<\/p>\n

**SAM is based on type of article\/ design of the product; and it\u2019s same for a product in all factories<\/b>.<\/p>\n

***EFFICIENCY, the only factor inside LOH that can be improved with right intention and investment<\/b>.<\/span><\/p>\n

 <\/p>\n

\n

\u201cToday we are saved by the \u2018kindness of God(s)\u2019; GSP (generalized system of preference). A factor we don\u2019t control. A factor depends on the geo-political polarization!\u201d<\/p>\n<\/blockquote>\n

 <\/p>\n

This is my dream of tomorrow:<\/strong><\/p>\n

\"\"<\/p>\n

\n

\u201cEfficiency is our \u2018industrial God\u2019 of future; our saviour for next decades\u201d<\/strong><\/p>\n<\/blockquote>\n

<\/div>An improvement of 5% in efficiency will allow a factory to save more than 2% of FOB; 11% of LOH! A savings of $0.21 in each pair*! How difficult is it? Bad news is, we are bad at efficiency; and the good news is, we have an ocean to improve.[\/vc_column_text][vc_column_text]References:<\/strong><\/p>\n

–https:\/\/solecollector.com\/news\/2014\/12\/how-much-it-costs-nike-to-make-a-100-shoe<\/a><\/u><\/p>\n

–https:\/\/www.sneakerfactory.net\/2019\/05\/cost-to-make-a-sneaker\/<\/a><\/u><\/p>\n

–https:\/\/ordnur.com\/garments-2\/calculate-garments-cost-of-making\/<\/a><\/u><\/p>\n

–https:\/\/www.onlineclothingstudy.com\/2011\/09\/4-how-to-calculate-efficiency-of.html<\/a><\/u><\/p>\n

–https:\/\/www.euractiv.com\/section\/development-policy\/opinion\/are-geopolitics-trade-and-human-rights-compatible-enemies\/<\/a><\/u><\/p>\n

–https:\/\/www.everycrsreport.com\/reports\/RL33663.html<\/a><\/u><\/p>\n

https:\/\/<\/u>www.idc-cdi.com<\/u>\/the-<\/u>eu<\/u>-needs-to-appreciate-<\/u>cambodias<\/u>-role-and-voice\/<\/u>[\/vc_column_text][vc_column_text]

<\/div>\n

(This article is the part of Author\u2019s upcoming e-book \u2018Defining competitive advantage of Bangladesh for Footwear\u2019)<\/strong><\/p>\n

 <\/p>\n

Author<\/p>\n

Hossain Tawhid Imam<\/strong><\/p>\n

A manufacturing industry passionate working as STRATEGIC INDUSTRIAL BUYER with the responsibility to build and deploy worldwide mid and long-term purchasing strategy for Footwear Industrial Division of DECATHLON.[\/vc_column_text][\/vc_column][vc_column width=”1\/6″][\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

[vc_row][vc_column width=”1\/6″][\/vc_column][vc_column width=”2\/3″][vc_column_text]This time, let\u2019s start with some quick practical case from the perspective of price, CASE1: If a purchaser is asking you to be competitive by 10% from his…<\/p>\n","protected":false},"author":1805,"featured_media":998,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"pagelayer_contact_templates":[],"_pagelayer_content":"","footnotes":""},"categories":[16],"tags":[],"class_list":["post-988","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-expert-article","category-16","description-off"],"yoast_head":"\nFootwear Price race - An (im)possible competition for Bangladesh<\/title>\n<meta name=\"description\" content=\"The whole article is prepared based on a $10 sports shoes (Factory Price) retailed $50. 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