A report on strategies to improve profitability in garment manufacturing

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Prepared by – Abhishek Raj
Strategies to Improve Profitability in Garment
Industry

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 Factors affecting the cost at Material Level –
• Improve Material Consumption (Fabric & Trims).
• Proper Fabric Segregation.
• Proper Purchasing of Material.
• On Time Arrival of Material.
• Energy Saving.
Cost Reduction - Material

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Improve Material Consumption (Fabric & Trims)
66%
12%
12%
10%
Cost Distribution
Raw Material
Production Cost
Worker Wages &
Salaries
Overheads &
Adminstrative Expense

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 Fabric Consumption:
 Fabric represents around 60-65% of the total garment cost.
 It is the most important component in costing.
 Trims Consumption:
 Thread consumption will affect the garment cost significantly.
 Wrong calculations of thread consumption will lead to excess ordering of the thread.
 Less ordering will lead to interruption in production.
Improve Material Consumption (Fabric & Trims)

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 Parameters need to consider for fabric consumption:
• GSM
• Width of the fabric
• Grain Line Orientation
• Length of the fabric roll
• Shrinkage of the fabric
• Type of fabric
Improve Material Consumption (Fabric & Trims)

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 Trims consumption:
• Thread consumption
‐ The factors that affect the thread consumption are –
 Seam and fabric thickness
 Stitch and seam class
 Seam strength requirements
 SPI
 Thread count
 Machine used for stitching
 Production system followed
 Operation break-down of the garment
• Thread Consumption Ratios
‐ The easier method is to use the generally applicable Thread Consumption Ratios for the various
stitch types. By relating these ratios to the length of seams using each stitch type, total thread
consumption can be easily calculated.
Improve Material Consumption (Fabric & Trims)

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 Just like a group of persons is more likely to achieve a common goal rather than individuals working
independently; Grouping of fabric is more likely to prevent wastage thus achieving the goal of optimum
fabric utilisation.
 There are 3 major parameters of grouping:
• Shade
• Width
• Shrinkage
Proper Fabric Segregation

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 Width – Markers in production are made to fit the cuttable width of the fabric. Cuttable width can be
defined as the usable area width of the fabric excluding selvedge.
• Marker width = Fabric width – Selvedge width
• Width grouping ensures a potential rise in fabric utilization, and complete use of available fabric area.
Proper Fabric Width Segregation

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 What happens when you don’t segregate your fabric rolls width-wise?
 This action would result in a heavy loss of fabric. How? Let us take a simple example to illustrate this:
• Before grouping:
‐ Cutting width = least width = 1.43m
‐ Total Cutting Area = 572 sq m
• After grouping:
‐ Group A – Roll #1, Roll #2, Roll #4
‐ Cutting width = 1.47 m
‐ Group B – Roll #3
‐ Cutting width = 1.43 m
‐ Total Cutting Area = 584 sq m
• Thus, in one go width grouping gives you 2.09% fabric saving.
Proper Fabric Segregation

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 Sourcing fabric is one the most important and challenging jobs in the apparel industry. Even a little mistake
can cost thousands of dollars.
 It is a difficult job as the planner has to calculate accurate consumptions with inaccurate numbers or
estimates. He end up buying too much or too little. You either have yards of dead stock or huge losses in
short shipment.
 Major problems facing while buying fabric/materials –
• No Size Breakup
• No Information of Incoming Fabric
• Arriving at Consumption per Garment
• Addition of Process Loss
• Too Many Orders
Proper Oredering of Material

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 No Size Breakup –
• Buying of fabric happens much prior to actual execution of order on the floor owing to the large lead
times. More than often, fabric is bought even before actual size breakup is given by buyer. An order
with more requirement of the larger sizes is bound to require more fabric than an order with more
requirement of smaller sizes despite having the same total order quantity. This makes ordering fabric
buying a tricky task.
 No Information of Incoming Fabric –
• A manufacturer has very little control over the fabric incoming from the mills. Despite guidelines for
the fabric to vendor, variations are inevitable. There is no knowledge of the accurate widths and
shrinkages of the fabric.1000 m of fabric in 155cm width will be more than 1000 m in 145cm width.
This leads to hidden wastages and inaccurate buying.
Proper Purchasing of Material

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 Arriving at Consumption per Garment –
• Varying methods are used in various factories in order to calculate the consumption per garment for an
order. Some factories use historical data while others create estimated markers to arrive at this
consumption which are far from the final production plans. However, none of these give an accurate
consumption for buying resulting in variation between floor requirement and actual fabric ordered.
 Addition of Process Loss –
• An additional buffer is added to the final consumption to accommodate the process losses faced in the
factory. This is an umbrella percentage. Several times this process loss percentage leads to excess or
short buying as the merchandiser does not know what is the exact wastage percentage for a particular
fabric, fir or style.
 Too Many Orders –
• In most factories, buying happens in bulk. Fabric for thousands of orders is required to be ordered
simultaneously. This is a long, tedious and time consuming process prone to mistakes owing the
manual calculations.
Proper Purchasing of Material

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 The concept of supply chain in a manufacturing organization can be defined as the interrelation of
activities involved in the delivery of products or services to the customer.
 It is a chain because it links together the activities that are needed in order to accomplish the final goal,
which is the final delivery of the goods or services.
 If a supplier that does not deliver goods to the company exactly on time and in the correct amounts could
seriously impact the production process.
 On time delivery can also help to reduce the Lead Time.
On Time Arrival of Material

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 Delivery Schedule Achievement (DSA) –
• DSA analyses how well a supplier delivers what the customer wants and when they want it. The goal is
to achieve 100% on-time delivery without any special deliveries or overtime payments, which only
increase the delivery cost. DSA measures the actual delivery performance against the planned delivery
schedule. Failed deliveries include:
 "Not on time" deliveries - both late and early.
 "Incorrect quantity deliveries".
 Both "not on time" and "incorrect quantity deliveries".
On Time Arrival of Material

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 Rising energy costs and environmental concerns put factory managers under constant pressure to optimise their
facility’s energy performance. This doesn’t need to be a daunting task.
 Following methods can help in Energy Saving –
• Install energy efficient lighting
• Optimize air compressors and fix leaks
• Overhaul or replace aging HVAC systems
• Create an energy management team
• Reschedule usage of high powered electric machinery
• Continuous improvement strategy
• Conduct an energy assessment
• Use Energy Star equipment
• Embrace natural lighting
• Unplug computers over the weekend
• Invest in good insulation
Energy Saving

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 When analysing how the factory works to find ideas to save electricity, there are three main directions you
can take:
 Optimise the use of resources - The lighting system offers great opportunities for savings: adopting the
latest high efficiency fluorescent tubes and installing occupancy detection and variable output systems,
will ensure that only occupied areas are lit and light levels exactly match what is required by the activities
in each specific area. No energy is wasted lighting empty areas or providing more light than is necessary.
 Eliminate waste - Small inefficiencies can result in energy waste that can build up unnoticed. A weekly
audit at the end of the day can allow you to find them and fix them quickly, minimising energy waste. As
you analyse the workings of your facility, you can further improve its energy performance by identifying
and fixing similar inefficiencies that at first sight appear insignificant but can result in a build-up of
unnecessary electricity use.
 Reuse waste - Is there any waste that you could use to reduce your facility’s energy requirements? For
example, in winter you could reclaim excess heat at high levels and recirculate it at ground level, reducing
load on space heaters, so you would need fewer. This can be achieved with destratification fans or by
fitting recirculation modules on roof mounted air inlet systems.
Energy Saving

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 Textile Today, Jan-2014
 Stitch Diary, Oct-2015
 Stitch Diary, Dec-2015
 Colt Blog, Nov-2012
 https://en.wikipedia.org/wiki/Quality,_cost,_delivery
References