Cost of Quality in Apparel Industry


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Cost of Quality in Apparel Industry

  1. 1. Cost of Quality in a Garment IndustryThe price of nonconformance (Philip Crosby) or the cost of poor quality (Joseph Juran), the term Cost ofQuality, refers to the costs associated with providing poor quality product or service.Quality is one of the least understood subjects in the apparel industry. The problem is that most of theapparel manufacturers, barring exceptions, do not realize the real cost they pay for ignoring quality. Theamount of money going down the drain could be as high as 20 to 25% of the total manufacturing costs.This cost incurred due to poor quality is called Cost of Quality. A greater understanding of cost of qualitycan surely help reduce these costs and improve profitability of the operations. Prevention Cost Appraisal Costs Internal failure costs- External Failure Costs •The costs associated with •The costs associated with •The costs associated with •The costs generated when personnel engaged in measuring, evaluating, or defective defective products are designing, implementing auditing, of products, components and shipped to customers. and maintaining quality products, components and materials that fail to meet system. purchased materials to quality requirements and •This also includes auditing assure conformance with result in manufacturing the system. quality standards and losses. performance requirements.In many cases prevention cost and appraisal costs are clubbed together and called as Cost ofConformance, where as internal failure and external failure costs together are called Cost of NonConformance or Price of Non- Conformance. The objective of any organization should be to totallyeliminate the cost of failure by investing in Cost of Prevention and rationalized Appraisal Cost.It is important that apparel manufacturers understand the true cost of ignoring quality. If the factoriescould use the large workforce employed to inspect and repair the garments for actually producing theright quality garments in the first place itself, not only the rejection and repairs will go down but theproductivity will also be improved substantially.A first of its kind study ‘Cost of Quality in the Indian Apparel industry’, supported by Ministry ofCommerce, Govt. of India, carried out by Dr Rajesh Bheda brought out some startling revelations. Thestudy that covered 61 apparel manufacturers from important manufacturing hubs of the country,established that:• Average Cost of quality among the participating factories was 14.05% of their sales turnover. In somefactories the cost of quality was as high as 30% of sales.• The study also revealed that on average the companies spent only 0.26% of sales towards thePrevention cost. The Appraisal cost was 3.31% of sales where as the Internal Failure Cost was thehighest at 9.86% of sales.
  2. 2. The study further concluded that reducing the Cost of Quality from 14% to 6% of sales can improve theprofitability of Indian apparel manufacturers by almost 50%.Distribution of cost of Quality in Indian Apparel Industry
  3. 3. Quality Control AspectsThere are a number of factors on which quality fitness of garment industry is based such as -performance, reliability, durability, visual and perceived quality of the garment. Quality needs to bedefined in terms of a particular framework of cost. The national regulatory quality certification andinternational quality programmes like ISO 9000 series lay down the broad quality parameters based onwhich companies maintain the export quality in the garment and apparel industry. Here some of mainfabric properties that are taken into consideration for garment manufacturing for export basis: Overall look of the garment. Right formation of the garment. Feel and fall of the garment. Physical properties. Color fastness of the garment. Finishing properties Presentation of the final produced garment.Sourcing of FabricsThere are certain problems that could be faced by garment manufacturers when sourcing for certainfabrics, so precautions should be taken for it beforehand to minimize the problems. The garmentexporters source cotton fabrics mainly from handloom sectors, powerlooms and mills. Each of thesesectors presents their own unique set of problems to the garment exporters. Sourcing cotton fromhandloom sectors might present some set of problems like colour variation, missing ends and picks,irregular weaves and unreliable supplies. However, the handloom sector is significant source of heaviercotton. Common problems faced in powerloom cotton sourcing are broken ends and reed marks, thickand thin places, difference in width and massive variation in costing. The major problem in mill-madefabric sourcing is to meet huge demands from the mills. Fabrics have to be ordered well in advance inmills and the long time taken for producing the fabric is a matter of concern for garment exporters. Millsgenerally hesitate to take small orders which pose a problem for small scale exporters.Basic Thumb Rules for Garment ExportersFor a garment exporter there are many strategies and rules that are required to be followed to achievegood business. The fabric quality, product quality, delivery, price, packaging and presentation are someof the many aspects that need to be taken care of in garment export business. Some rules that areadvisable for garment exporters are listed below: Quality has to be taken care by the exporter, excuses are not entertained in international market for negligence for low quality garments, new or existing exporters for both it is mandatory to use design, technology and quality as major upgradation tools. Apart from superior quality of the garment, its pricing, packaging, delivery, etc has to be also taken care of. The garment shown in the catalogue should match with the final garment delivered. It is important to perform according to the promises given to the buyer, or else it creates very bad impression and results in loss of business and reputation. In international market, quality reassurance is required at every point.
  4. 4. Proper documentation and high standard labels on the garment are also important aspects as these things also create good impression. Timely delivery of garments is as important as its quality. If your competitor has the better quality of garment in same pricing, it is better to also enhance your garment quality. Before entering into international market, garment exporters have to carefully frame out the quality standards, or else if anything goes wrong it could harm the organization. And after that strictly follow it. The garment quality should match the samples shown during taking the orders.ConclusionIdentifying COQ can have several benefits in general. It provides a standard measure across the organization and also inter-organization It builds awareness of the importance of quality It identifies improvement opportunities Being a cost measure, it is useful at shop floor as well as at management level.In the current environment when there is a high pressure for reducing the selling price of exportapparel, reduction in COQ could play a significant role in retaining price competitiveness whilemaintaining profitably of the organization. There is an urgent need for the apparel industry to initiateCost of Quality Assessment in its member factories and develop strategy for reduction of thisunjustified waste.