Actual Garment Production Cost of a Garments Company

July 11, 2017 | Author: SOUMANLALA | Category: Labour Economics, Sewing, Salary, Incentive, Clothing
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Actual Garment Production Cost – The way factory calculates it Home > Industrial Engineering by OCS Team In the daily production report factory includes actual garment cost from the day of loading a style. In this article production cost represents sewing room cost. Factories consider all direct and indirect personnel who are involved in garment sewing and managing sewing lines in calculating garment production cost. In case, a production manager handles 10 lines then one tenth of his daily salary is considered as cost incurred per style per day. If a floor-in-charge runs 3 lines (considering each line run single style) then one third of his daily salary is considered as cost incurred in production of a style. Following cost sharing method, daily salary of all personnel is calculated for a style. If operators work overtime and others stay to assist them then overtime salary is also added to total daily wages. Overtime salary (hourly rate) may differ from normal hours of work. “Actual Garment production cost” is a component of daily production report (DPR). Actual garment cost is represented in two ways –  Actual garment cost for the day and  Till date average cost per unit Formula used for the cost calculation = Total salary for the day/ Total production (in pieces). In the following table an example of cost calculation has been shown that is normally used by garment manufacturing factories.

(Note: All salaries and manpowers used in the above costing sheet are only for example.)

In the above example – Production manager handles 5 lines and Floor-in-charge handles 4 lines. So, their salary is divided by 5 and 4 respectively as a contribution to each line. If you want to use this sheet for your factory, add manpower in the list and their actual daily wages (salary per day) according to your factory. During learning curve, production cost per piece will be high and as learning curve ends daily production cost goes down. At this time, actual production cost is being checked with target cost. It helps company to assess factory performance in term of meeting garment cost.


CM = Cost of Manufacturing In apparel industry it is mainly used when costing is done to identify a product cost. Suppose you have gotten a T shirt order from your buyer so how you will identify its cost? You have to find out how many machine need to complete this T shirt How many man power will engage to complete this product Then what will be the output q'ty per day per line How much money will spend per day per line Suppose per line output q'ty 1,200 pcs and per day line cost is $375 so CM will be $375/1200 = $0.312/pc

ROLE OF COST OF MARKETING IN APPAREL INDUSTRY: Cost of Making of a garment normally includes direct labor costs of garment making such as cutting labor cost, sewing labor cost, pressing and garment finishing labor cost etc. This is mostly as CM (Cut and Make) cost. Knowing correct making cost is important because at time of order booking or meeting with buyers suppliers need to quote product price to buyer. and Making Cost is a part of total garment cost. if supplier estimate wrong CM and quote buyer a final price, supplier may loss money or a buyer. In case, CM is low, supplier will earn low margin from an order and on the hand if CM is very high buyer may reject the deal.

Costing and Negotiation Skills for Merchandisers It’s that time of the year again. The beginning of a new season, proto sampling deadlines, endless coordination with fabric suppliers and garment vendors to stick to the dates to make sure the samples reach in time for the ‘ oh so important meeting’, and above all costings, costings, costings..If you are a merchandiser in the apparel arena, you can relate to the above. A period of crazily hectic activity, and pressures mounting from all sides...buyers, suppliers, bosses...But there is some excitement in all this mayhem. The thrill of working on new styles, designs, fabrics... the excitement and anticipation of booking new orders... the fun in negotiation and haggling for best prices...Ask any merchant on what they like most about their jobs..And they will tell you it’s these aspects which give them an adrenalin rush in their jobs... Otherwise life would be pretty mundane... Given the crazy workload that hits a merchant at this time, it is little wonder that some details, often with important implications, get overlooked. If you had more than 100-150 cost sheets to populate, prepare and quote prices on, being a supplier’s merchant... to err in some costings would be human indeed. But wait a minute... let’s just understand the implications before brushing it aside as a simple as that scenario. I came across a cost sheet in my career as a merchant, where instead of typing $ 0.59 for a certain leather patch in the garment, the supplier merchant had typed $ 0.059. Price was sealed and order was confirmed for 25,000 pcs for a pant. It’s only later that I noticed this error. Now imagine the amount of money left on the table ... $ 13,275! Wow, I could do the Europe holiday that I often dream of in that kind of money!! It’s just criminal to me, irrespective of which side you are on, supplier or buyer, to leave that kind of money lost in human errors, and there are countless such instances which remain unnoticed... lost forever. The key to eliminate or at least reduce these kinds of errors during costings is to ‘become a marwari’. Now that you have become a marwari, who is quoting price for your own business, every cent will count to you! Now costing will take a totally different dimension, and there is no room for any errors... it’s your money at stake! Micro Detailing is crucial in preparing cost sheets. At times all the items are not listed on the bill of material provided by the buyer, but you are going to need them eventually in making the garments. Examples are packing trims, interlinings, buttons, threads etc. So it’s important to not only include the items on the BOM of a tech pack, but also include all the items that will go on the garment.

Protect your cost sheet in every way. You don’t want to base your final price on a fabric consumption only to find out during production that you ended up ordering more fabric than was estimated at costing stage. It’s your money being lost. Fabric is the biggest component of any garment costing. Make sure you take accurate yields based on ratio markers, make sure you take formal commitments from fabric suppliers while taking price quotes, regarding finished width of fabric, shrinkage, defect percentages etc. This is important because later on it will be possible for you to hold them accountable to cover for your losses, in case the fabric shrinkage exceeded the expectations and you ended up ordering extra fabric, or if more than expected fabric got wasted due to defects etc. So often due to time constraints, merchants end up taking fabric price quotes on phone, rather than through a proper professional quotation sheet from fabric supplier. Now if you were a Marwari running your own business, you will not do that, and will take care to have a proper record in place for all raw material prices, before quoting the final price for the garment to the buyers. Knowing your competition is the secret for becoming an astute negotiator. All businessmen make it their business to know the competitors they are dealing with. This knowledge gives you that extra edge while quoting the prices to the buyers. Are you competing with suppliers within your own geographical location, or are there players from other parts of the globe vying for the same orders? What is your competitive edge Vis a Vis competition and vice versa. Especially when speed to market is so crucial in a tough business environment, buyers do not have much time to haggle back and forth and bring down the prices to acceptable levels. You need to quote the right price in one shot, and you have to be accurate. If you over quote, you run the risk of losing the business to another supplier, and if you under quote, you lose money. An understanding of the buyer margins can help you to hit the buyer targets more accurately in one go. More often than not, you may end up getting a higher price than you aimed for in the first place, and still make customer happy by meeting their targeted margin goals. What level of market your customer operates in e.g. luxury segment, middle segment or mass market? What profit margins do they need to make to run profitable business at their end? This keen business sense is similar to astute shop keepers in flea markets who quote the price by looking at the customer and estimating his ability to pay and purchase. You would have seen many sari shop owners, who will willingly open and show as many sarees to a customer whom they think will make the purchase and are reluctant to open even a few when they feel the customer is not going to make the purchase. This simply comes from knowing the customers well. Last but not the least; great negotiation power belongs to a person who can think win win. Armed with the knowledge above and even after being as accurate and detailed as possible, if your price quote is still not satisfactory enough from buyer target price, by all means make an alternate proposal to buyer. Give options with suggestions to may be delete a trim or change the fabric source or

whatever it may be... but give alternative suggestions to meet and service the customer requirement in way which is win win for both parties. Like Marlin Brando in Godfather when he says – I will make him an offer he can’t refuse.

GUIDE TO GARMETNS MERCHANDISERS: In today’s extremely competitive apparel industry, CFM – customer focused merchandising is the single most important factor that can differentiate you from others in the field, whichever side you may be on, be it retailing or sourcing as in buying offices or in manufacturing. We cannot afford to be satisfied with just being ‘nice’ to customer anymore. We must aim to offer them an unforgettable experience. This requires not just training, skills and knowledge, but creating an environment where people take pride in serving others. Buyers/Customers are not just buying the product or service from you, they purchase ‘how they feel doing business with you’. It’s the memory they retain of how it was to work with you...and that’s what keeps them coming back to you again. 1. Be the Expert. You must know your job thoroughly so that your customer can trust you. An understanding about fabrics, fit/pattern issues, costing, lead times, etc is a must have for a CFM merchant. For example, if you get a request from the buyer for making a certain complex garment at a very sharp price, you as a CFM merchant should be able to act as a consultant to the buyer by giving them options of what modifications can be made to make the garment fit in the target price, as well as warn them of any potential lead time or production feasibility issues to allow the customer to make an informed decision right at the outset of development stage. 2. Professionalism counts. Professionalism in every job that they do is what makes a CFM merchant shine above the rest. It’s a reflection of who you are as a person and as a professional. Whether it’s a swatch card you make or whether it’s a lab dip submit you prepare or whether it’s a cost sheet you send to buyer, in every job that you do, you can make a tremendous difference to the experience the customer will go through, just by being a thorough professional. I have witnessed a million frustrating moments which buyers face, when a job is not professionally done. Trying to figure out a badly hand written tag, scratched /rewritten information on swatch cards, incomplete information on submit cards etc are just a few examples. A professionally done job is what makes the customer go ‘wow’! 3. Make it easy for the customer. CFM merchants will ensure to make life easy for customer. Simple. Let me give you some examples. If you are offering different fabric options to the customer, as a CFM, you will make sure to include complete fabric details in terms of count, construction, weight, width, lead-time, price etc...And you will even go a step further to give an estimated garment fob for each fabric option being offered. There! , you made life easy for buyer, by anticipating and proactively addressing all their needs, without being asked to! Wow! I am reminded of a situation I came across in my life as a merchant. A particular submit was rejected for quality by buyer with almost panic sounding remarks, when it was intended for colour approval! Now if you were a CFM merchant, the situation would never have arisen, because you would have simply made sure to write complete details on the submit including the purpose – ONLY FOR COLOR APPROVAL, NOT FOR QUALITY. 4. Speed to customer. CFM merchants realise the importance of the need to respond quickly to the needs of the customers, especially critical in the fast paced dynamic world of fashion and apparel. You have to be able to get back with your price

quotes, sample turnarounds, approval submits and the like within the limited time available. In fact, the best is to be chasing the buyers instead of being chased by them. 5. Manage their deadlines. A CFM merchant will go one step further in not only keeping track of deadlines for various activities that they need to do, but also act as a consultant and advise the buyer of the deadlines that the buyers need to keep for activities owned by them to ensure on time delivery of goods. For example if your order involves an accessory which the buyer is going to develop directly with the trim supplier, as a CFM merchant, you will remind the buyer of the timelines they have for developing this trim and the latest by which they should approve the accessory with the trim supplier, so you get it in time for the order. 6. Communication! Communication! Communication! One cannot stress enough about the essential communication skills which are a must have for CFM merchandisers. You have to be comprehensive, precise and crystal clear in your communication with the customer. Since majority of business communication happens via email today, some of the crucial things to remember while composing emails are –  Write self explanatory subject line  Use simple active sentences, instead of ‘jalebi’ paragraphs  Write in points  Answer all questions and then anticipate any further questions that might come up and answer those as well at one go.  Make specific date commitments, instead of ‘asap’, ‘next week’ kind of open ended commitments, and of course you keep them as well.  Consolidate all issues in one email instead of doing back and forth via several emails  Avoid using ‘urgent’ and ‘important’ for every email you write and use it sparingly for it to have any meaning.  Be careful whom you put in ‘to’ box and who in ‘cc’ box instead of doing a blind ‘reply all’  When angry with a customer, by all means express it in email with all your might to get it out of your system, BUT DO NOT SEND IT, instead keep it in your drafts folder. Redraft it an hour later with a cool and rational mind.  Do not write in bold fonts. It’s simply rude and loud.  Do not go overboard with inserts in your email with multiple colours! Stick to the two insert rule and then draft a new email to avoid confusion.  Think before you press the send button! Because once that’s done, you have no control over where your written email might land up. So be careful. Other than written communication skills, oral and non verbal communication is another important skill to develop. You cannot go wrong with a ‘thank you’ and an ‘apology’ so use these magic words as often as you can. Understand the subtle nuances of body language and the tone of voice while communicating. Sometimes, it’s not what you say, but how you say it that matters. A good thing to know with customers is you cannot win an argument with them. Do not even attempt it. Instead approach the issues with an agreement frame of mind and look for win-win resolutions. Put your point across, but before that make the customer know that you have understood their point of view. A simple trick like, replacing the use of ‘but’ with an ‘and’ in your sentences can do the magic in terms of how you can resolve conflicts faster. Try it. 7. Do not forget the internal customers. My dad taught me this early in life- ‘clever is one who gets his work done’. A CFM merchant will apply all the skills

that he uses with the external customer on the ‘all important’ internal customers as well. These are the people within your own organisation across the departments, your own vendors etc. Building rapport and good relationship with people around you, helps in getting your work done faster. In the cross functional environment, you cannot survive without this skill. Appreciate good work done by others in public, and criticise in private. Be clear in communicating your expectations and above all be transparent and honest in your dealings. 8. Cosmic force of Habit. Habit is a powerful force to break. A CFM merchant knows to use this force. By the sheer delight that they are to work with, they soon get their customers habituated to working with them. Once the customer is spoilt by your high level of service, it will be difficult for them to break that habit and switch to another supplier. 9. Build trust based relationships. Anybody wants to do business with a person or organisation they can trust. You must develop trust based relationships and win your buyer’s confidence. Reliability in keeping your commitments goes a long way in building your credibility. Sharing information in a transparent manner builds trust. Once you create a reputation for yourself, it goes along with you wherever you might be. People might change organisations and move on in life, but they will remember the credibility and trust you built with them in your past dealings. 10. Take pride in making a difference. Nothing is more satisfying to a CFM merchant than a happy customer. They take pride in making a difference to other people’s lives. Go ahead and make the day of your customers by doing that ‘extra’ bit in everything you do. They will love you more and you will love yourself more too ! About the Author Anjuli Gopalakrishna has spent more than a decade in the apparel industry, having worked with leading companies including J C Penney Purchasing Corporation, Tommy Hilfiger India Limited and Li & Fung. Her experience includes apparel marketing and merchandising, sourcing of home products, apparel, accessories and leather goods. She has extensive experience sourcing for US and Europe from sourcing destinations including India, Bangladesh, Sri Lanka, Vietnam, Madagascar, Pakistan, Taiwan and China. She is a Post Graduate in Fashion Management Studies from the National Institute of Fashion Technology Delhi (NIFT). Presently she is working as an independent consultant and trainer in supply chain merchandising to buying offices and garment exporters and also a guest lecturer at NIFT Bangalore

About the Author Anjuli Gopalakrishna has spent more than a decade in the apparel industry, having worked with leading companies including J C Penney Purchasing Corporation, Tommy Hilfiger India Limited and Li & Fung. Her experience includes apparel marketing and merchandising, sourcing of home products, apparel, accessories and leather goods. She has extensive experience sourcing for US and Europe from sourcing destinations including India, Bangladesh, Sri Lanka, Vietnam, Madagascar, Pakistan, Taiwan and China. She is a Post Graduate in Fashion Management Studies from the National Institute of Fashion Technology Delhi (NIFT). Presently she is working as an independent consultant and trainer in

supply chain merchandising to buying offices and garment exporters and also a guest lecturer at NIFT Bangalore

GARMENTS COSTING SHEET: A cost sheet makes the job of garment sample costing easier and faster. If you use a cost sheet there is a less chance to miss any particular costing heads when you are in hurry. Many times it is needed to know how we reach to the final FOB. A well designed cost sheet will help you trace all details of costing. Cost sheet will also gives cost break up for future reference. Following one is a sample cost sheet. This sheet is filled with indicative numbers. COST SHEET Product Women T-Shirt Yarn dyed feeder stripes Style no: XYZ Country USA Viscose Buyer: ABC Fabric jersey GSM/width 150/34-31" Amount Particulars Details (INR) Fabric Costing Yarn Price as per supplier list Per Kg 250.00 Knitting charges Per Kg 25.00 Greige Fabric Cost Per Kg 275.00 Average dyeing cost 20.00 Weight loss on dyed fabric: 9.00% 26.55 Fleece brushing /Peaching Loss Due To Printing Sub total 321.55 Interest on yarn prices:/margin 10.00% 32.16 Dyed Fabric Cost: 353.71 Garment costing

Avg. Fabric Consumption (gram) 210.00


CMTP Charges Stitching: Cutting: Finishing: Packaging: Embellishment Trims


Sub Total Overhead cost Margin (after overhead) Ratio/Rejection Charges for On Board Total price of a apparel Fob prices: US$

20.00 2.50 6.00 4.50 2.50 4.00

12.00% 20.00% 4.00%

Rate: 49.00

Internal Price FOB

113.78 13.65 25.49 5.10 1.00 159.02 $ 3.25 $


Further details of Packing, Trims and Embellishment costing have been shown in the following table. The following checklist indicative one, you can add more on particulars according to your style requirement. Trims Particulars M/label W/care Tag Thread Fusing Twill tape Mobilon tape Zipper Patch label Button Packing materials

Amount Consumption Rate (INR) 1 1.00 1 0.50 N/a 0.00 10 mtr 2.00 N/a 0.00 N/a 0.00 30 cm 0.50 N/a 0.00 N/a 0.00 N/a 0.00 Total 4.00

Tissue Board Hanger H/tag Poly bag Blister Carton Other Label logo

N/a N/a N/a 1 1 N/1 1/10


0.00 0.00 0.00 1.50 1.50 0.00 1.50 0.00 0.00 4.50

Embellishment Embroidery/appliqué N/a Printing N/a Rhin stud N/a

0.00 0.00 0.00

Lace Rib Collar Crochet lace

N/a N/a N/a N/a

0.00 0.00 0.00 0.00

Enzyme wash Dori


0.00 2.50 2.50


20 Ways to Improve Productivity in Garment Production Higher productivity brings higher margin in a business. And increment in Productivity level reduces garment manufacturing cost. Hence factory can make more profit through productivity improvement. In this article top 20 ways have been discussed that will certainly help factories to boost up current labor productivity. All the means that had been explained here can be implemented as because most of these are at your reach. Machine productivity as well as labor productivity increases when a factory produces more pieces by the existing resources (Manpower, time and machinery). When I look into the processes and operations during my visit to factories, I find improvement potential is there in every area. Initially, you may not be able to find and measure potential areas. Still you can improve productivity by applying some of the following steps. I have mentioned 20 ways where you can focus and start working on improving productivity. To provide you knowledge in details few links have been given for your further reading in some of the steps. Most of the tips mentioned in this article are mainly on time saving tips, discipline and proper planning. To get excellent result you may need external recommendation and support but without the external help you can surely get measurable improvement once you start your journey. One thing you need to understand that application of the following steps will vary based on production systems. I have written this article focusing on progressive bundle system. If you are new in the productivity discussion, before stepping into following steps, I will suggest you readHow to measure labor productivity that will help you to understand following discussions.

1. Conducting motion study and correcting faulty motions: There is a saying “Even best can be improved”. So go to Gemba (sewing floor) and look for operator’s working method and movements. Prepare a check list for good methods and movements. At time of motion study observe operator’s movement and compare with you checklist. If you found wrong movements is used by operator or unnecessarily extra movement is present in the operation cycle correct it. If needed deskill operator. By doing this you can reduce operation cycle time and can improve labor productivity up to 100%* in individual operations (*in 20% of the total operations as per Pareto’s 80-20 Principle). 2. Hourly operator capacity check: Employ work study personnel (if you don’t have) and start checking operator capacity hourly or bi-hourly. Compare actual operator’s hourly production with their capacity. If production is less then question them why? It helps in two ways – first, when operator’s capacity is checked at regular interval they will be under pressure. Secondly, work study personnel start thinking on methods how cycle time can be reduced. Using the capacity data, you can move ahead in balancing the line. 3. Conduct R&D for the garment: A non-value added (NVA) process but having a strong Research and Development (R&D) team in the factory brings lot of benefits. R&D can be taken as preparation stage for the bulk production. This department does sample production and look into potentially critical operations, plan for requirement of special equipment, advice changes in terms of construction without changing styling. E.g. if an operation contains some raw stitches, which doesn’t affect the final look of the garment, then that operation can be avoided if possible to save time. They plan for skill requirement for the operations. As a result production runs without any break or with less no. of breaks. As it reduces the chance of break in production for unnecessary reasons, line productivity doesn’t come down. 4. Use best possible line layout: Line layout means placing of machines and centre table (trolley with wheel) as per style requirement. The main purpose of choosing a better layout is to reduce transportation time in the line as much as possible. A stable line is not a good idea if you produce multiple products in a same line. A straight assembly line with centre table at left side is good for a product that has no preparatory work and individual operation SAM is nearby the pitch time. When a style includes lot of preparatory work (for garment parts), it is better to make garment parts in sections and assemble them later. If possible use overhead transportation system. 5. Scientific work station layout: The workstation layout defines from where an operator will pick up work (garment components) and where she will dispose stitched garment. A scientific layout is defined as minimum reach for picking up and dispose of components. Every components and tools (trimmer) must be kept within operator reach. During workstation designing, engineering must follow key principles.

Components to be worked on should be positioned as near to the needle as possible.  Direction of the components where it positioned on the table or track should be such way that during moving component to the needle point does not need to turn it.  Placing of work at the same plane of the machine table so that operator can easily slide it to needle point. The purpose of designing a good workstation layout is to minimize the material handling time as much as possible. Thus you can reduce operation cycle time. Secondary benefit of good workstation is operators can work at same pace without fatigue. When designing a workstation layout don’t forget to consider ergonomics. 

6. Reduce line setting time: It have been observed that a line reaches at its pick productivity level on day 6-7 after loading of an order. The time lost in the initial days (learning curve) brings down the average labor productivity for whole style. Reason - lot of time is lost during setting of the line for a new style. This reduces overall machine productivity and line efficiency. So to maintain line productivity level you have to work on minimising line setting time or throughput time. To reduce the line setting time, engineers have to study the garment thoroughly, prepare operation bulletin with machine requirement and machine layout plan prior to feeding cuttings to the line. Read another article to know how to reduce line setting time. Engineers need to coordinate with line supervisors and maintenance department with their plans and requirements. This will help supervisors and maintenance department to be pro-active in arranging required resources. 7. Improve line balancing: Purpose of balancing a line is to reduce operator’s idle time or maximize operator utilization. In a balanced line work will flow smoothly and no time will be lost in waiting for work. At time of line setting select operators for the operation matching operator skill history and skill required. Following this method you will select highly skilled operators for higher work content operations. Once line is set conduct capacity study at a regular interval. Use pitch diagram method to find bottlenecks inside the line. You have to think how you will minimize WIP level at bottleneck operations. Read another article on line balancing for guidelines. Once you start increasing operator utilization through line balancing you will get extra pieces from the same resources in defined time. Even a well managed factory can improve productivity by 22% thorough line balancing reported by Md. Rezaul Hasan Shumon, Kazi Ar if-Uz-Zaman, and Azizur Rahman in a Research Study “Productivity Improvement through Line Balancing in Apparel Industries”. 8. Use work aids, attachments, guides, correct pressure foots and folders: These are some kinds of time saving devises that facilitate operator to perform their work effectively with less effort. If work aids are used effectively operation cycle time can be reduced many fold than existing cycle time. In new and small factories where there is no experienced technical person

(maintenance, IE personnel or production manager) generally not aware about the usage and availability of work aids. So their operators sew garment free hand. Labor productivity is comparably higher for the factories that widely use work aids than those who do not use work aids for the similar products. Folders and attachments are also very helpful in producing consistent stitching quality. On the other hand work aids, guides and fixtures reduce operator’s movement and weight lifting. During my research study I college I had improved labor productivity up to 18.03% using work aids in various operations. 9. Continuous feeding to the sewing line: It is not a fault of production department if they did not get cuttings to sew. All plans and efforts towards productivity will fail if line is not been fed continuously. “No feeding or irregular feeding” is one of the top reasons for lower productivity in poorly managed factory. Poor production plan, wrong selection product mix in seasons and ineffective cutting department are the reasons that stop continuous feeding. Once operators get the rhythm, they should be given non-stop feeding until style changeover to keep up the productivity. If you know there is unavailability of cutting in near future then plan accordingly and don’t call all operators for that duration. 10. Feed fault free and precise cutting to line: Stop cutting and trimming of extra fabric from cut components by operators. If your cutter does not able to provide precise cutting s/he should be trained. But faulty cutting don’t be fed. When operators cut fabric he performs additional task in the operation cycle time. If in some cases trimming is intended then that task must be included in total work content. Otherwise you will get wrong (less) efficiency for the operator. Secondly, cuttings with fabric defects, pattern problem are issued to sewing line. As a result line produces defective garments. Alteration and repair work for defective garments reduces labor productivity. 11. Training for Line supervisors: Line supervisors are shop floor managers. So each supervisor must be trained with fundamental management skills and communication skill. Still in most of the supervisors in Indian factories are raised from tailors. They don’t acquire technical qualification in supervising. But their main job is providing instruction, transferring information. For which communication skill training is required for supervisors. Secondly, supervisor should understand the fundamental of industrial engineering like operation bulletin, skill matrix, workstation layout, movement, capacity study and theoretical line balancing etc. If they understood these, they can help engineers or work study boys to improve line performance. The above training will bring changes in managing and controlling the lines and will improve labor productivity. 12. Training to sewing operators: Operators are main resources in the apparel manufacturing. They are most valuable resource to the company. So, factory must work on developing operator skill where required. “Training is not cost but an investment” said by many experts.

Production from an operator depends on his skill level to the task. A low skilled operator will consume higher resources (time) and give less output. You will find quality related issues with low skilled and untrained operators. As the skill level of the operators is increased through training lines output will improve. Training does mean lot of time and money. Training should be given only on specific tasks that will be performed by the operator. Paul’s article “systematic training for apparel industry operators – an introduction” is very helpful in this regard. 13. Setting individual operator target: Instead of giving equal target to all operators working in a line, give individual target as per operators skill level and capacity. Set an achievable target for each operator so that they would try to reach the target. This will help improving operator’s individual efficiency. Use tricks for increasing target step by step. Take care of the operators who are under target. They may need skill training. Go back to point#12. Training for sewing operators. 14. Eliminate loss time and off-standard time: Utilize operator’s time as much as you can. There is no better alternative than just stopping operators sitting idle to improve operator productivity. Non productive time such as waiting for work, machine breakdown, power failure and repair work kill your productivity. Start eliminating non-productive time as much as possible. To start work on this point you have to track off-standard or non-productive time data according to different categories. Once you have the analysis and Pareto of non-productive time you can think and plan on reducing it. 15. Real time shop floor data tracking system: For the continuous improvement and prompt action on failure you need information from the shop floor as fast as possible. Important information needed such as hourly production, line balancing, WIP, tracking bundles and quality performance of the line. If corrective action is not been taken early problem may increase as time goes. So RFID based real time systems are helping in providing shop floor information within second. With Leadtec system Joshep Abboud increased its total productivity more than 40% (refer to the following case study link). This system is quite costlier at this time. But as per published case studies ROI (12-18 months) of this RFID based real time system is not bad. 16. Using auto trimmer sewing machine (UBT): Just think how many pieces an operator is producing in a day? Each time an operator trims thread using a trimmer or scissors consume time minimum 50 TMU or 2 Seconds (approx). A rough estimate, in a day operator will lose about 20 minutes just in thread cutting. In an operation of 0.5 SAM, operator can make 40 extra pieces. Even machine without auto trimmer consumes more sewing thread. Those who use heavy (half kilogram weight) scissor may start using hand trimmer.

17. Installing better equipment: A low performing machine is not acceptable where some of your good machines are idle in the same building. Use the best of your resources. If machines or equipment don’t perform well operator motivation goes down. Repetitive breakdown of machines increase the loss time and bring down overall line efficiency and labor productivity. I have seen lines where UBT machine is used in long seam operations and comparably lower work content. On the other hand where shorter seams are being stitched, most of the time spent in thread trimming for taking out work from the needle, normal lock stitch sewing machine are used. 18. Inline quality inspection at regular interval: Traffic light system is the most effective inspection tool to reduce defect generation at source. Less number of defective seam is made less the time will be lost in repairing it. Inline checking system will alert operators in concentrating their job. It also helps in other way. May be at the start of the style an operator not understood the specification, an interaction with quality inspector will make an operator clear about the quality requirement. Poorly managed factory loses productivity up to 10% due to repair and reject as mentioned by Dr. Bheda in his article“Productivity in Apparel Manufacturing”. 19. Operator motivation: Operator’s will is the most crucial part in productivity improvement. If they are motivated, they will put enough efforts on the work. Employee motivation generally depends on various factors like work culture, HR policies, bonus on extra effort or achieving target. In garment manufacturing operator’s motivation come through extra money. Operator motivation can be improve by sharing certain percentage of you profit made from operator’s extra effort. 20. Plan for operator’s Incentive scheme: Paul Collyer, British expert says “In British factories, in a non incentive environment factory can reach up to 80% efficiency level and if manager expect more than that they had to provide incentive to operators as well as to the supporting team”. If we look into Asian factories, in a non incentive environment factories find it is very difficult to reach up to 40% efficiency. You can see the potential efficiency that can be converted in money. You need to understand that employees come for work in your organization for money. Initially you may think that an incentive scheme may reduce your profit. But in real it works in opposite direction, provided that incentive system is fair for the workers and has been implemented intelligently. I have seen factories where operator efficiency reaches up to 76% from 45% after implementation of incentive scheme. An incentive scheme will give lot of other benefits in return as a byproduct. An incentive scheme designed with multiple parameters may bring discipline on the shop floor. As operators give extra effort to the work, efficiency as well as productivity of the operator increases.

How to calculate efficiency of a production batch or line?

Like individual operator efficiency, efficiency of a production line or batch or section is important for a factory. Daily line efficiency shows the line performance. To calculate efficiency of a line for a day, you will need following data (information) from the line supervisor or line recorder. 1. Number of operators – how many operators worked in the line in a day 2. Working hours (Regular and overtime hours) – how many hours each of the operators worked or how many hours the line run in a day 3. Production in pieces – How many pieces are produced or total line output at the end of the day 4. Garment SAM – What is exact standard minute of the style (garment) Once you have above data you have to calculate following using above information a. Total minutes produced by the line: To get total produced minutes multiply production pieces by SAM b. Total minutes attended by the all operators in the line: Multiply number of operators by daily working hours. Now, calculate line efficiency using following formula: Line efficiency (in percentage) = Total minutes produced by the line *100 /total minutes attended by all operators For example, refer following table. Data calculation formula has been given on the header row of the table.

Total No. of Working line output Garment minutes Operator hours (production) SAM attended (A) (B) (C) (D) (E=A*B) 48 8 160 44.25 23040 48 11 240 44.25 31680 34 8 300 25 16320 35 11 400 25 23100 35 11 329 25 23100

Total Minute produced (F=C*D) 7080 10620 7500 10000 8225

Line Efficiency (%) (F/E*100) 30.73 33.52 45.96 43.29 35.61

34 34 35 34

8 8 11 11

230 200 311 340

25 35 35 35

16320 16320 23100 22440

5750 7000 10885 11900

35.23 42.89 47.12 53.03

Garment Production Cost: Actual Cost Vs Cost Per SAM One of the most important KPIs for garment manufacturing is comparison between Actual costs Vs Cost per SAM. Factories calculate these costs and compare on daily basis. The actual cost figure shows that how much money factory is paying as make up to the operators. But exactly how these measures are calculated? The different methods of calculating actual cost and garment cost per SAM has been explained in this article. Actual Cost per Garment 1. Actual cost -1: Formula of the actual labor cost of a garmentActual cost = Total Salary to be paid/Total Units Produced. For a line, Calculate Total salary (W) to be paid on the day including direct manpower. Find total units produced (U) in shift time (output of the line). 2. Actual cost -2: Second formula is Total salary to be paid /(Total minutes produced/SAM) Though first method is used by most of factories, it is not true actual cost. Because, only output quantity is considered in this cost calculation, where lot of works is produced in the line as WIP. There is two main reasons why engineers prefers 1st method. i) It is very difficult to find how many units have been produced by individuals in a line and calculate total minutes produced in a day. ii) To the factory management it does not matter how much work is laid (partially stitched) in the line. How many units are completed is considered as production.

I will also suggest you, to use first method as because it simple to calculate and easy for understanding. This cost goes down day by day during learning curve. Secondly every day you will get different figures based on line output. Cost per SAM The formula used to calculate cost per SAM is Garment SAM X Cost factor. Where cost factor is per minute labor cost to the factory at factory average efficiency. Or simply instead of cost factor you can multiply Garment SAM by average labor salary per minute (which represent cost factor calculated at 100% efficiency). Whatever method you use must be clear to everyone (persons who see the report) within the factory. Cost per SAM is fixed for a style. Cost Factor: Cost factor = Labor wages per day / (shift minute * Efficiency). E.g. Factory shift time 480 minutes, Daily operator wages INR 200.00 and factory run at 50% efficiency. Then cost factor for the factory will be 0.833. Example: Factory Efficiency 50%, Daily wages INR 200.00 Shift time 480 minutes. See the comparison in the following table where style A and style B's Cost per SAM and actual cost have been shown. Use above formula to calculate figures. Planned Style SAM Manpower Production A 15 20 320 B 12 20 400

Actual Production 150 250

Cost Actual factor Cost/SAM Cost 0.833 12.5 26.67 0.833 10 16.00

How to Calculate Production Capacity of a Factory? by Prasanta Sarkar

In Apparel Manufacturing, “Production capacity” is one of the most important criteria used for vendor selection by the buyers. It is because; the production time of an order is directly proportional to vendor’s production capacity. So it is very important that marketing and planning personnel should aware about the production capacity of their production units. Capacity of a factory is primarily expressed in terms of total machines factory have. Secondly, how much pieces the factory produces on daily for the specific products? In general, total numbers of machines in a factory mostly remains same for a period. But factory may produce various types of product during the season. According to the product (style) category, machine

requirement may change and daily average production in each style may vary. So to be specific during booking orders, planner should know exactly how much capacity he or she needed to procure the order in a given time period. A factory’s capacity is presented in total minutes or hours or in pieces (production per day). The method used to calculate capacity has been explained in the following. To calculate Daily production capacity (in pieces) one needs following information. 1. Factory capacity in hours 2. Product SAM 3. Line efficiency (Average) 1. Calculation of factory capacity (in hours): Check how many machines factory has and how many hours factory runs in a day. For example suppose, Total number of machines = 200 Shift hours per day = 10 hours So total factory capacity (in hours) = 200*10 hours = 2000 hours 2. Calculation of Product SAM (SAM): Make a list of product category that you manufacture and get standard minutes (SAM) of all products you make from work study engineers. If you don’t have product SAM then calculate the SAM. Or you can use average SAM of the products. Suppose you are producing shirt and its SAM is 25 minutes. 3. Factory Average Efficiency: This data is collected from industrial engineer. Or calculate it with historical data. Suppose average line efficiency is 50%. Read the article - How to calculate efficiency of a production line or batch? Calculation of production capacity (in pieces): Once you have above information use following formula to calculate production capacity. Production capacity (in pieces) = (Capacity in hours*60/product SAM)*line efficiency For Example: Suppose a factory has 8 sewing lines and each line has 25 machines. Total 200 machines and working shift is 10 hours per day. Total factory capacity per day is 2000 hours (200 machines * 10 hours). If factory is producing only one style (Shirt) of SAM 25 minutes and used all 200 machines daily production capacity at 50% = (2000*60/25)*50% Pieces = (2000*60*50) / (25*100) Pieces = 2400 Pieces

[Note: Production will vary according to the line efficiency and during learning curve or in the initial days when style is loaded to the line] Production (capacity) planning is normally done based on sewing capacity. Having knowledge of the capacity in other processes (internal or external) is also very important. Otherwise planner may fail and will not be able to meet the dead line. Other departments such as Cutting room capacity, Finishing room capacity, Washing Capacity and capacity of the value added jobs.

How to calculate efficiency of a production batch or line? Like individual operator efficiency, efficiency of a production line or batch or section is important for a factory. Daily line efficiency shows the line performance. To calculate efficiency of a line for a day, you will need following data (information) from the line supervisor or line recorder. 1. Number of operators – how many operators worked in the line in a day 2. Working hours (Regular and overtime hours) – how many hours each of the operators worked or how many hours the line run in a day 3. Production in pieces – How many pieces are produced or total line output at the end of the day 4. Garment SAM – What is exact standard minute of the style (garment) Once you have above data you have to calculate following using above information a. Total minutes produced by the line: To get total produced minutes multiply production pieces by SAM b. Total minutes attended by the all operators in the line: Multiply number of operators by daily working hours. Now, calculate line efficiency using following formula: Line efficiency (in percentage) = Total minutes produced by the line *100 /total minutes attended by all operators For example, refer following table. Data calculation formula has been given on the header row of the table.

Re: calculation of overheads: Hello Over heads are typically used in manufacturing companies to calculate the cost incurred in manufacturing the final product so that the company can fix up the selling price keeping lots of factors in mind. Usually in garment industry the garment costing in done on the following basis. 1] Average fabric consumption in grams x manufacturing cost of the dyed fabric and you need to add the following 2] Processing loss both knitting and dyeing 9% 3] Add 10%interest on yarn charges . 4] If the Garment is yarn dyed add 2% extra allowance to adjust the cost of wastage . 5]Add 15Grams for rib cost with body fabric for men 6] Add 10 grams for kids and for men 30 grams for collar and 15 grams for cuff 7] For boys garments add 25 grams for collar+20 grams for cuff 8] Add rs 1 per piece for testing. 9]Add 3% for garment rejection. 10]Add 5% for buying agent commission 11] Add 1.5 rs for transportation and forwarding and clearing 12] Add 7% overheads. 13] Add your margin Dutta

Garment CM cost estimation using SAM or SMV In the clothing manufacturing, supplier gives final manufacturing cost to buyer prior to order confirmation. For that factory prepares cost sheet estimating costs in different cost heads. Cost heads like Fabric, Trims and Packing materials, Labor cost and Overheads. At costing stage, supplier only get one sample of the garment and specification of fabric and trims for the reference. For raw material cost suppliers directly take price quote from fabric and trim suppliers. For labor cost it is very

important to estimate as near as it will be during actual production. The scientific method for estimating CM (Cut and make) cost of a garment involves following steps 1.

Determine SAM of the garment (refer garment SAM calculation)


Calculate average line efficiency and


Calculate direct labor cost per minute

How to calculate the minute cost of the operator? Formula: #1. Labor cost per minute = (Monthly salary of an operators/Total minutes available in the month) at 100% efficiency. But no line can perform at 100% efficiency, so labor cost per minute increases when line efficiency goes down. So correct way to calculate labor cost per minute is #2. Labor cost per minute = Total salary of the labors in a month / Total SAM produced by those labors in that month. Example: Operator monthly salary is INR 5000.00 Total available capacity per month (in minute) = 26 working days*8 hours/day*60=12,480 minutes So, per minute cost of the direct labor = 5000/12480 = 0.4006 INR at 100% efficiency Formula for the projected labor cost per pieces CM cost = (SAM of the garment * Minute cost of the labor)/Line efficiency(%) (Minute cost determined from above formula#1. If you use second formula then don't divide by line efficiency) If Sewing SAM is 15 minutes and line perform at 50% efficiency then estimated garment make cost = 15*0.40/50% =12 INR And Cutting SAM is 2 minutes and cutting room perform at 50% efficiency then estimated cutting cost = 2*0.40/50%=1.6 INR So, Total estimated CM cost of the garment = (12.00+1.60) = 13.60 INR Following above formula easily one can estimate garment CM cost and use it for the product costing.

Why do you need to consider line efficiency in CM costing? Line output varies depending on the line efficiency. When a line performs at lower efficiency than standard (100%) line will produce less units in a day compared to what line could make at 100% efficiency. But factory spends same amount of money as salary whether line perform at 100% efficiency or less. So, per unit cost will increase when line performs at lower efficiency.

Note: For the calculation of labor cost per minute, instead of average operator salary you can take cumulative of all operators salary (monthly) and divide total amounts by total minute available to the line (total operator * total minutes per operator per month) to have more accurate value.

How to calculate SAM of a garment? SAM or Standard Allowed Minute is used to measure task or work content of a garment. This term is widely used by industrial engineers and production people in the garment manufacturing industry. For the estimation of cost of making a garment SAM value plays a very important role. In past scientists and apparel technicians did research on how much time to be allowed to do a job when one follows standard method during doing the job. According to the research study minute value has been defined for each movement needed to accomplish a job. Synthetic data is available for each movements. General Sewing Data (GSD) has defined set of codes for motion data for SAM calculation. There is also other methods through which one can calculate SAM of a garment with out using synthetic data or GSD. In this article both methods are explained in the following.

Method #1: Calculation of SAM Using Synthetic Data In this method 'Predetermined Time Standard' (PTS) code are used to establish 'Standard Time' of a garment or other sewing products.

Step 1: Select one operation for which you want to calculate SAM. Step 2: Study the motions of that operation. Stand by side of an operator (experienced one) and see the operator how he is doing it. Note all movement used by the operator in doing one complete cycle of work. See carefully again and recheck your note if all movement/motion are captured and correct. (for example motions are like - pick up parts one hand or two hand, align part on table or machine foot, realign plies, etc.) Step 3: List down all motion sequentially. Refer the synthetic data for TMU (Time measuring unit) values. For synthetic data you can refer GSD (without licence use of GSD code prohibited but for personal use and study one can refer GSD code and TMU values) or Sewing Performance Data table (SPD). Now you got TMU value for one operation (for example say it is 400 TMU). Convert total TMU into minutes (1 TMU=0.0006 minute). This is called as Basic Time in minutes. In this example it is 0.24 minutes. Step 4: Standard allowed minutes (SAM) = (Basic minute + Bundle allowances + machine and personal allowances). Add bundle allowances (10%) and machine and personal allowances (20%) to basic time. Now you got Standard Minute value (SMV) or SAM. SAM= (0.24+0.024+0.048) = 0.31 minutes.

I like to refer you an article Secret Behind Calculation of Machine Time in SAM for better understand of SAM calculation.

Method #2: Calculation of SAM Through Time Study Step 1: Select one operation for which you want to calculate SAM. Step 2: Take one stop watch. Stand by side of the operator. Capture cycle time for that operation. (cycle time – total time taken to do all works needed to complete one operation, i.e. time from pick up part of first piece to next pick up of the next piece). Do time study for consecutive five cycles. Discard if found abnormal time in any cycle. Calculate average of the 5 cycles. Time you got from time study is called cycle time. To convert this cycle time into basic time you have to multiply cycle time with operator performance rating. [Basic Time = Cycle Time X performance Rating] Step 3: Performance rating. Now you have to rate the operator at what performance level he was doing the job seeing his movement and work speed. Suppose that operator performance rating is 80%. Suppose cycle time is 0.60 minutes. Basic time = (0.60 X 80%) = 0.48 minutes Step 4: Standard allowed minutes (SAM) = (Basic minute + Bundle allowances + machine and personal allowances). Add bundle allowances (10%) and machine and personal allowances (20%) to basic time. Now you got Standard Minute value (SMV) or SAM. SAM= (0.48+0.048+0.096) = 0.624 minutes.

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