Complete Training Cost-Benefit Analysis

Complete Training Cost-Benefit Analysis of Workers

This article will provide your complete training cost benefit analysis of garment workers. Suppose 5000 workers are working in your factory. You are not able to reach the target productivity level. After critical evaluation of the productivity of every worker, you have identified that 500 workers are performing below the expected level. The actual productivity is 50% for these 500 workers, which was estimated to be 65% on an average. And you also come to know that they have lower productivity because of lack of skills and experience. You cannot just replace this large number of workers with skilled one because getting skilled workers is hard to find and time-consuming process.

Complete Training Cost-Benefit Analysis

So it will be a better choice for you to provide the training, that will improve their skills, which results in increased productivity and lower in cost. But before that, you must do a cost-benefit analysis of investment for the training program and also calculate the return on investment. If you get a positive result, then you must go for the investment of the required training program.

A proper training plan and materials must be prepared by export from the related field, otherwise, your investment will become a loss project.

Training Plan of Garment Workers

To provide training you have to be ready with the following things

  • How many people will receive training?
  • Training for how many Days (Whole day training or few hours of a day)
  • Workshop training will be provided with a practical opportunity of learning
  • Course materials will be provided by the company (if it is required)
  • Company will arrange this training program at its own cost
  • Food allowance will provide by the company for the training days

Training Cost May Includes

  • Consultant/Trainer Fees
  • Training Facilities arrangement
  • Recreation/Food Allowance
  • Course Materials (Book containing visual images of the required processes)
  • Opportunity Cost of Reduced Productivity of the training days

Calculation of Training Cost Benefit

Following parameters are required:

  • Total number of worker will receive training = 500 person
  • The training program will be for = 3 Days for each batch
  • Number of hours of training = 8 Hours/Day
  • The total training program will be for = 3 Days x 8 Hours = 24 Hours
  • Total 50 people will receive training for 3 Days in a Batch
  • Number of batch required = 500 Person/50 Person a day = 10 Batches
  • Total Days Required for this training program is = 10 Batch x 3 days = 30 working days
  • Number of Trainer = 2 Person
  • Average Salary of Workers Per Month = 9,000 BDT/Month
  • Total Working Hours in a Month = (8 Hours x 26 Days) = 208 Hours
  • Average Salary of Workers Per Hour = (9,000 BDT/208 Hours) = 43.27 BDT/Hour

Cost Estimation of Training Program

  • Total Consultancy/Trainer Fee = (30 Days x 20000 BDT) = 600,000 BDT
  • Food Allowance = (500 Person x 3 Days x 100 BDT) = 150,000 BDT
  • The cost of training facility arrangement = 300,000 BDT
  • The cost of Training materials = 400,000 BDT
  • Opportunity Cost of Losing Productive Hours = (500 Person x 3 Days x 8 Hours) = 12,000 Hours
  • Total cost of Productive Hours = (12,000 Hours x 43.27 Average Hourly Salary) = 519,240 BDT

After summing up all these expenses, you will get the total cost of the above training program.

Total Cost of Training = (600,000 BDT + 150,000 BDT + 400,000 BDT + 519,240 BDT) = 1,669,240 BDT

Note:

  • The training cost can vary industry to industry, training method to method.
  • The training cost is highly depending on the scope of the training program.
  • It is not necessary to provide food allowance and training course materials for the garments workers. But if you provide, then it will be beneficial for them. Although it is costly for most of the garments.

Calculation of Existing Productivity

Suppose if a factory can maintain 100% efficiency then a worker production capacity should be 1000 piece a day. You are expecting that your factory worker’s productivity should have 65%, which is 650 piece a day. But your factory running at 50% capacity, based on the production of 500 pieces a day.

  • Expected Productivity = (650 Piece of Work /1,000 Piece of Work) = 65%
  • Actual Productivity (Before Training) = (500 Piece of Work /1000 Piece of Work) = 50%
  • Actual Productivity (After Training) = (550 Piece of Work /1000 Piece of Work) = 55%

Cost Benefit Analysis of Training Program

  • Daily Production Will Increase for each worker = (550 Piece of Work – 500 Piece of Work) = 50 Piece of Work a Day
  • Total Daily Increased Production = (50 Piece of Work x 500 Workers) = 25,000 Piece
  • Total Monthly Increased Production = (25,000 Piece of Work x 26) = 650,000 Piece of Work in a Month
  • Suppose a piece of work has a value of 0.070 BDT then total Benefit your factory will get = (650,000 Piece of Work x 0.70 BDT) = 455,000 BDT
  • Total Yearly Benefit = (455,000 BDT x 12 Months) = 5,460,000 BDT
  • Wages and Salary Expenses = (500 Worker x 9000 BDT) = 4,500,000 BDT
  • Cost Per Operation (Before Training) = (4,500,000 BDT/ (500 Workers x 500 Piece a Day x 26 Days) = .692 BDT per Piece of Work
  • Cost Per Operation (After Training) = (4,500,000 BDT/ (500 Workers x 550 Piece a Day x 26 Days) = .629 BDT Per Piece of Work
  • Total Reduction of Cost per Piece of Work = (.692 BDT – .577 BDT) = .063 BDT
  • Cost Reduction Percent = 9.10% because of increased productivity

Calculation of Return on Investment of Training Program

  • Return on Investment of Training Program = (Yearly Total Benefit/Total Investment) x 100 = (5,460,000 BDT/1,669,240 BDT) x 100 = 327.09%

Calculation of Cost Benefit Ratio of Training

  • Cost Benefit Ratio = (Yearly Total Benefit/Total Cost) = (5,460,000 BDT/1,669,240 BDT) = 3.27:1

That is, if you invest 1 BDT then you will receive benefit of 3.27 BDT which is more than three times of the investment amount.

Note:

  • All numbers are taken assumption basis, so these numeric results are not 100% accurate to the apparel industry.
  • BDT is used as a currency; you can use of your own currency.

Written by
Md. Nahian Mahmud Shaikat

Email: [email protected]

GSM of Fabric: Meaning and Calculation

You will not find anybody who is working in different processing of apparel manufacturing but didn’t have any idea about GSM. Simply, GSM is the unit for the weighing of fabric. Actually not only fabric but GSM is also used specifying the weight of paper, lather or any sheet-like materials.

Meaning and Calculation of GSM

GSM of Fabric: Meaning and Calculation

What GSM Stands for?

GSM is the abbreviation Grams per Square Meter. It says the weight of one square meter of fabric. That means if we make a piece of fabric whose area is just 1 square meter and weighted in a balance what the reading shows will be the GSM of that fabric.

Calculation of Fabric Gram Per Square Meter (GSM)

If we need to check/calculate the weight of any fabric, what we do? We cut a circular shaped piece of fabric by GSM cutter and put it on an electronic balance. Balance shows the reading 1.80gram, we proclaim that the fabric has Gram Per Square Meter (GSM) 180 moving the decimal for two digits from the balance reading. Why we do this? Though GSM is the weight of one-meter fabric why we measure such circular piece fabric?

There is very silly but interesting math in it. Let’s have look.

Measurement of GSM

It is much difficult to measure fabric weight by making a piece of fabric of 1 square meter and it will be a wastage of fabric as we have to check the weight for several times of the same fabric. Then what can we do? If we make the specimen 1/100 of 1sqm i.e., 100 square centimeters, now weigh the piece of fabric of 100square centimeter and multiply the reading by 100, we will find the GSM of the fabric.

That means it is more convenient to measure the weight with a piece of 100square centimeter, rather than 1square meter.

Now the problem is that our GSM cutter is circular shaped, not square. Let us think if the GSM cutter is square-shaped, will that be possible to cut the piece by screwing the cutter?

That’s why GSM cutter is circular shaped. Now we need to find out a circle whose area is 100cm2. It is pretty easy, just back to the High School Geometry. We know, area of a circle is πr2.

Now if we summarized it then comes, the radius of our GSM cutter is 5.64cm and the area of the circular piece of fabric that we found by the GSM cutter is 100cm2. We will find GSM of that fabric by multiplying the weight reading of 100cm2 fabric by 100.

GSM Calculator

Written by

Galib Hossain

Senior Merchandiser at Centro Tex Ltd.

Break Even Analysis of Apparel Industry

Break Even Analysis of Apparel Industry

Break Even Analysis is one of the most popular and effective tools of cost volume and profit analysis. By using this we can calculate production quantity/sales quantity and their values whether there is a situation of neither profit nor loss. Apparel Industry is growing in India, Bangladesh, Vietnam, and the future of the apparel industry is very much competitive and challenging. Every year new modern garments factories are establishing to produce different garments to meet the worldwide increased demand for apparel. Here in this article, you will learn why break even analysis of apparel industry is required. Break-even point can be calculated for your whole factory, individual machine, equipment, production floor or any other investment opportunities. You can identify both forecasted BEP and actual BEP as required.

As an investor, you must be careful about making an investment decision. The main concern should be the minimization of the production cost of garments and increasing the production of garments. Different project appraisal techniques like; cost-benefit analysis, break-even analysis, capital budgeting, etc. are used by the entrepreneur or manager to make the right financial decision. Normally the company is not aware of the break-even point if it is running a profit. But in the case of losing concern, the company must try to avoid loss situation to ensure the survival of the company. Break-even point analysis is also known as BEP analysis.

Calculation Break Even Point and Analysis of Apparel Industry

To calculate breakeven quantity or value, you will be required to have the following information:

  1. Sales Price Per Unit
  2. Total Sales Quantity/ Expected Sales Quantity
  3. Variable Cost Per Unit
  4. Total Fixed Cost

If you have a total sales amount and quantity of sales, then you can easily get the average per-unit sales price by dividing the sales amount with the sales quantity. Another thing is if your company produce many varieties of products and there is a far difference in price then it will be good for you to choose a weighted average sales price instead of calculating average sales price.

On the other hand, the variable cost per unit is the amount of cost which remains fixed for any level of production or sourcing.

For your better understanding, I am giving a simple example of break-even analysis in details.

Break-Even Analysis Equation or Formula

Break Even Formula

Two basic formulas of break-even analysis are most popular, one is used for calculating the break-even quantity and another one is for break-even values.

Break Even (Quantity) = (Total Fixed Expense)/(Sales Price Per Unit-Variable Cost Per Unit)

Contribution Margin Per Unit = Sales Price Per Unit – Variable Cost Per Unit

Total Contribution Margin = Total Value of Sales – Total Variable Cost

Break Even (Dollar) = (Total Fixed Expense)/(Contribution Margin Ratio)

Contribution Margin Ratio (CM Ratio) = (Total Contribution Margin)/(Total Sales)

Break Even Analysis Example

break even analysis graph

In this break-even graph, you can see that with the increase in sales volume fixed cost remains the same for a particular period but the total cost is increasing. Total cost includes fixed cost and variable cost. Only increase of variable cost is there with the increased in production or sales. Here the thing is when you increase the sales, per unit fixed cost, will be reduced but total fixed cost remains the same. Fixed cost is shown by the straight horizontal line in the graph. On the other hand per unit variable cost will remain unchanged but the total variable cost will increase. So there is a relationship between cost, sales quantity, break-even unit, and profitability.

Calculation of Break-Even Point

Suppose you are the manufacturer of T-shirt. You want to calculate break-even quantity and value (USD) for a particular year. So that you can determine your minimum requirement of production to run your factory at profit. Based on the following information when you put the values in the above formulas you will get the value of break-even point.

  • Sales Price Per Piece: 1.6 USD
  • Variable Cost Per Piece: 1.01 USD
  • Total Fixed Cost: 500,000 USD
  • Sales (Quantity): 1,000,000 Piece
  • Total Sales: 1,600,000 USD
  • Contribution Margin Per Unit: 0.59 USD
  • Total Contribution Margin: 590,000 USD
  • Contribution Margin Ratio: 0.37
  1. Break Even (Quantity): 847,458 Piece
  2. Break Even (Value): 1,355,932 USD

Here, the break-even quantity is 847,458 piece, this means you have to produce this number of the T-shirt to remain a situation where there is no profit and loss. On the other hand, you need to sale total of 1,355,932 USD. If you can sell more than this then you will get profit. That is in addition to your break-even there will be an addition to your profit amount. So this is an easy way to set the target of your factory.

Break-Even Analysis Excel Template

I have developed a simple break-even analysis excel template for your better understanding and which is available for free use. You can use the excel template as a break-even calculator. All you need to input the values of cost and sales. If you want to get this then please comment with your email.

Calculate Garments Break-Even Production

There is no such difference among the BEP calculation and analysis of the different industry. The same methodology is applicable to the apparel industry and others. So to calculate garments break-even unit or value, same formula mentioned above you can use. All you need to gather information on your garments annual fixed cost, weighted average sales price and per unit variable cost. If you do not know how to calculate the weighted average cost then please let me know. I will write a detailed article on it.

Garments Break-Even Analysis

Analysis of Garments BEP is obvious for new garments industry or running company which is finding it hard to make a profit or incurring losses. Whatever result you will get from the calculation to find out the BEP unit or the amount you can decide what should be your target. Moreover, this will help to make the right economic decision for your factory. If you have any question regarding break-even point analysis of apparel industry then please contact with me. I can help you to calculate break-even for your whole factory, parts of the factory, machine or a production floor.

Written by
Md. Nahian Mahmud Shaikat

Necessary IE Terms of Apparel Industry

Industrial Engineering – IE is one of the popular term used in the apparel industry, where this work for optimization of complex process within the industry. Optimization is applicable to men, machine, materials, methods, and monetary resources. Here in this article you will have details of necessary IE terms of apparel industry with examples.

Necessary IE Terms of Apparel Industry

Necessary IE Terms of Apparel Industry

Needed Industrial Engineering (IE) Terms Mostly Used in Apparel Industry

Very basic apparel industrial engineering terms discussed with example for clear understanding. List of terms are:

  1. Standard minute value (SMV)
  2. Efficiency
  3. Line target
  4. CPM & CM
  5. CM/COM/MC
  6. Broad calculation of garments cm
  7. Conventional vs modern profit theory
  8. Cost of making (CM) rule
  9. Work study
  10. Time & motion study
  11. Line balancing

1. Standard Minute Value (SMV)

  • SMV defined as the term Standard Minute Value, is mostly used in the garments industry and it is a common measurement calculated by the Industrial Engineer. Generally, SMV indicates the time taken to make garments by the workers using the right types of machinery.
  • SMV = BASIC TIME + (BASIC TIME × ALLOWANCE)
  • Suppose to complete an operation, a standard operator takes 1 minute.
  • We put 15% allowance (Men, M/c & Time)
  • SMV=1+(1×.15) Min
    =(1+.15) Min
    =1.15 Min
  • GMT SMV is the sum of SMV for all M/c & Manual operation to complete an item

Related Terms of SMV

  • Standard Operator: For a specific item & style, the potential operator who can give maximum output with the best quality & can improve productivity.
  • Let’s see an Example for better understanding,
  • Batsman faces 10 balls to score 5 Runs
  • Batsman faces 10 balls to score 12 runs
  • Batsman faces 10 balls to score 10 runs.
  • Obviously 2nd one is the potential batsman who uses his
  • Inputs (balls) to get maximum output (Runs)
Related Terms of SMV Standard Operator
  • Pre-defined Conditions: On time input arrival, single piece flow, running m/c conditions, defined quality status, etc. are called pre-defined conditions.
  • Basic Time: Actual time to complete an operation. In another word, basic time is the pick & drop time including an operation for quality output.

                        Basic Time= Pick time + Operation + Drop time;

                        Result , Input=Output with required quality

  • In a broad sense , a GMT SMV=Sum of all operation SMV, not SMV of GMT + allowance.

2. Efficiency

  • Efficiency defined as ’The comparison of what is actually produced or performed with what can be achieved with the same consumption of resources (Men, M/c, Material, etc. )’’
  • Efficiency = Earned Minute/Available Minute
  • Earned Minute = Production (Pcs) x SMV
  • Available Minute = Manpower (Helper + Operator) x Working Time (Minute)

Calculation of Efficiency Percent

  • Suppose any GMT item SMV is 5.5 (For any fixed style SMV always fixed)
  • We use 22 Manpower(Operator & Helper) to achieve 1500 Pcs for 10 hours working shift
  • Earned Minute = 1500× 5.5 or 8250 Min
  • Available Minute = 22× (10×60) or 13200 Min
  • Efficiency = 8250 Min/13200 Minute or 0.625
  • Efficiency is expressed as % ,Then Efficiency =(0.625 ×100)% or 62.50%
  • Efficiency is a ratio, not a number.
  • Efficiency varies with Lead Time and Quantity. More Lead time & Quantity Increase Efficiency, on the other hand, less lead time tends us to use more MP or time to get the required output, so efficiency reduces.

3. Line Target

  • Target= (total MP X WH X 60)/SMV
  • Suppose We have 22 MP for 10 hr .GMT SMV is 5.5
  • Target =(22 X10 X60)/5.5 =2400 PCs/Hr (That is 100% TGT)
  • For expected efficiency this 100% Target is multiplied by efficiency to fix Line Target
  • Line Target =(2400X.625) ; (Lets , we have expected efficiency of 62.5%)
    =1500 PCs or 150PCs/Hr

4. CPM and CM                   

CPM Stands for Cost Per Minute which means Cost of every minute of garments sewing operations. To offer the best competitive price to the buyer and make maximum profit on garments selling CPM cost need to be kept at a minimum level.

For Calculating of CPM you need to sum all direct labor cost and any other operational cost for a particular order or for a particular period.

5. CM/COM/MC

  • Cost of Making (CM/COM)/Manufacturing cost(MC) have to calculate after calculating factory CPM.
  • CM = (SMV × CPM)/ Expected Efficiency%
  • Suppose , any GMT item SMV is 4.7, Expected efficiency = 65.8 % , CPM[let] = $0.0267
  • CM = (4.7 × .0267)/ .658
    = $0.19/PCs
    = ($0.19 ×12)/Dzn
    =$2.28 /Dzn

6. Broad Calculation of Garments CM

To calculate the Cost of Making of a garment you have to collect the following information:

  • First of all, you need to get the monthly information of factory rental expense, commercial expense, utility expenses (Electricity, Steam, Compressed Air, Water), transportation cost, repair & maintenance expenses, salary, and wages expense, etc. suppose for all these expenses the total cost is 70000 USD.
  • Secondly, the number of functioning machine for a particular month. Suppose the number of machines is 120. Cost associate in the first section is for this 120 machine.
  • You also need the number of machinery to do the layout for the particular item for which we are calculating the cost of making. Suppose the number of machines is 30.
  • By using the existing layout, the amount of target production per hour (excluding the alteration and rejection of garments). Suppose 250 pcs per hour production will be there.
  • The total number of working days for a particular month. This can be 26 days (30 days a month, 4 days of holiday in a month)

Cost of Making (CM) Rule

= {(Monthly total expenditure of the garments factory/ 26 days) / (Number of Functioning Machine of your factory for a particular month) X (Number of machine to complete the layout)} / [{(Production capacity per hour by using existing layout, excluding alteration and rejected quantity) X 8 working hours a day}] X 12 piece

= [{($70,000 / 26) / (120) X (30)} / {(250) X 8}] X 12

= [{2692.30 / (120) X (30)} / 2000] X 12

= (673.08 /2000) X 12

= .33654 X 12

= $4.04/dozen

7. Conventional VS Modern Profit Theory

  • Conventional : COST + PROFIT = PRICE
  • Modern : PRICE – COST = PROFIT
  • Price should be moderate to get maximum order!
  • Cost should be minimized to get maximum profit!

 9. Work Study                                   

  • A systematic study of methods of work to improve effectiveness & set standards
  • 2 stages:

1. Method study: study of current method & find out to implement the improved method

2. Work measurement: determine the standard time required to complete improved method

Benefits of Work Study

  • Productivity improvement
  • Efficiency increase
  • Improved workflow
  • Improved work layout
  • Improved standards

10. Time and Motion Study

  • Time study: a work measuring technique to calculate basic time by finding cycle time & adding allowance
  • Motion study: a technique to analyze operators motion & set a standard by eliminating unnecessary motion
  • Two different theory but need parallel running to improve system known as ‘method engineering’
  • Time & motion study is a conjugal technique to process control, improve dissimilar work performance & set standard goals
  • IE is a combined package to improve by time study, work study & motion study

11. Line Balancing

  • Line balancing is a manufacturing engineering function in which the whole collection of production-line tasks are divided into equal portions.
  • Well balanced lines avoid labor idleness & improve productivity
  • Line balancing is for keeping workload (theoretical mp/actual mp) as 1 or less than 1 by balancing work as per capacity & target
Line Balancing in Apparel Industry

Steps for Line Balancing

Steps of Line Balancing in Apparel Industry
  • Bottleneck’ (constraint m/c or mp or operation that reduces productivity) have to find out
  • Find same m/c / m/c condition such as gauge/pressure feet/device/thread etc.
  • Find same m/c / m/c condition such as gauge/pressure feet/device/thread etc.
  • Find same m/c / m/c condition such as gauge/pressure feet/device/thread etc.
  • Find same m/c / m/c condition such as gauge/pressure feet/device/thread etc.
  • Find same m/c / m/c condition such as gauge/pressure feet/device/thread etc.
  • Find same m/c / m/c condition such as gauge/pressure feet/device/thread etc.
Example of Line Balancing of T-Shirt

Written by

Sharmin Akther Diba

Industrial & Production Engineer

Rajshahi University of Engineering & Technology

Email: [email protected]

LinkedIn: Sharmin Akther Diba

Costing of Knit Garments

Costing of Knit Garments: During the consumption, it is good practice to use the measurement of middle size for calculation or the size which have most of the quantity. For example, If the style has 6 sizes then better to use size number 04 for consumption. Here we will show you the calculation consumption for the size “L”.

Costing of Knit Garments

  1. Body length of the garments in cm. Say it is – 73 cm
  2. Sleeve length of the garments in cm. Say it is – 19.5 cm
  3. Approximate stitching allowance at body hem, shoulder joint, sleeve hem joint (in cm). Say it is – 10 cm
  4. Chest width (1/2) in cm. Say it is – 52 cm
  5. Approximate stitching allowance at each facet seam (in cm). Say it is – 4 cm
  6. Fabric GSM (finish). Say it is – 160 gsm
  7. Approximate fabric wastage in various stage. Say it is – 10%

In this regard, fabric wastage depends on how many additional elements the garments have, which may change in any time. When there is rotary print in garments or enzyme stone wash than the amount of fabric wastage will be more than the normal level of wastage.

Knit Garments Costing Formula

Costing of Knit Garments, Knit Garments Costing

What need to know or do before start costing

Fabrication: Take clear idea regarding the fabrication before taking the order from the buyer/buying house. After then, you need to ensure that you have a strong a good source of fabric.

Size specification: You also need to ensure that there is a correct size specification with the measurement of all the sizes, which will be ordered. Most of the time we see that PO sheet has come with a new bigger size which was not included during costing.

Fabric color: Try to know that, how many colors the style has & also try to know that, color-wise order quantity ratio.

Quantity: Take information regarding approximate order quantity.

Shipment date: Asked buyer for the shipment date and check with your production department, whether they have enough space for shipped out the followings qty within the require ship date or tell you’re a possible date.
Test requirement: This will allow you to recognize the order need to any test or not.
L/C payments term: Take a copy from the respective party previously and discuss with your commercial people regarding all the terms along with payment terms.

Inspection: Get a confirmation from the buyer that, who will inspect the goods. If there involve third party then who will pay the charge.

GSP: Please confirm with the buyer that they need the GSP or not.

Calculating Fabric Consumption

Body Consumption: 

Calculate the body fabric consumption at first. If possible calculate it after making the pattern. Be confirmed regarding the dia. Calculate the consumption with adding + 5 gsm extra which fabric is sells in kg (s/j, pique, rib etc.). Or reduce 2” (in width) from the both side which are in yards (tricot, taffeta etc.). Moreover, if the garments are wash garments then make sure that, the pattern has the wash allowance.

Moreover, if clothes|the clothes} square measure wash garments then ensure that the pattern has the wash allowance.

Rib: Calculate the rib consumption carefully because sometimes the garments have a rib at cuff opening & bottom hem. Some individuals erroneously do the consumption considering one cuff.

Neck tape: Calculate the consumption of neck tape.

Applique & others fabric: Ensure that, you’re not missing any appliqué cloth.

Estimate the wastage: Normally we add 9% wastage for the knit items. However, it’s may vary depends on how many processes the garments have. If it is with only front chest print then 9% is ok but if with all-over /rotary print, with heavy wash etc. then you must increase the wastage. Moreover, if the garments with pigments dye then add minimum 25 to 30% wastage because in this pigment dye garments reject percentage is very high.

Others Item

Print: If the garments have print then make sure that you have a clear artwork of it. Check the print quality, dimension & placement. Send the artwork to your printers for a better price idea. Many times, we found that the buyer has asked for so many type/kind prints in the same body which is so difficult for production. Such as, if the buyer asked for Flock + discharge & foil print in at the same artwork then it is not possible for production.

Embroidery: Discuss with your embroidery provider concerning the embroidery & take quotation of price.

Wash: Take the washing cost from the washing factory.

Test: Confirm the charges of the test from the testing company.

Accessories and Trims

Sewing thread: Confirm that, which thread you need 100% cotton, spun polyester or filaments. Then you need to ensure the count 50/2 or 40/2 or any other denier. It’s may vary on fabrications. Regarding the pigment dye garments, we normally used cotton grey color cotton thread. Calculate the sewing thread consumption part by part & add require wastage percentage.

Labels: Take the quotation from your supplier for the entire woven & satin/paper label.

Tape: Calculate the consumption of tape if it has, such as Velvet, herringbone or canvas etc.
Elastic: Make sure which denier & width it need. Then take the quotation from supplier.

Zipper: If the garments have zippers then confirm that, from where you will purchase that. Many time the logo zipper need to import the mold from abroad. Make sure the zipper quality, such metal or nylon zipper. Check the zipper measurement from your production department and get prices from your zipper supplier.

Button: Take the button price from your supplier if the garments have it.

Inter lining: Calculate the inter lignin price if the garments need.

Patch or badge: Calculate the patch or badge or others metal item if the garments have.

Finishing item: Tissue paper, silica gel, hang tag, barcode sticker, backboard, h/tag string, scotch tape, security tag calculates the prices of these items.

Hanger: Take the quotation of a hanger.

Poly: Make the measurement of poly. Confirm the quality & with adhesive or not.

Carton: Find out the carton measurement & take the prices from carton supplier along with top, bottom & divider.

PP belt: Take the price quotation of pp belt if the buyer asked it.

Commercial Cost

Normally we add 3% of total purchase (Fabric cost+ other item cost + Accessories cost) as commercial cost if the L/C payments terms are as sight. If the L/C is 60 days deferred then you can add 7.5% additional cost of total price and it will be 15% for 90 days deferred.

CM (Cost of making)

Calculate the CM after finalizing CPM of the factory. It varies depending on Product SMV & Efficiency.

CPM (Cost Per Minutes) = (Direct Labor Cost + Operational Cost) of the month/ Usage Minutes (Available Minutes) of the month.

CM= (SMV × CPM)/ Expected Efficiency%

Price Break Down of Polo Shirt

Description: 100% cotton pique polo shirt with two buttons at front placket w/o any pocket. At first, we will calculate the consumption of body fabric from Size spec which we have got from the buyer.

Suppose,

i) The body fabric consumption is 5.10 kg / dozen

So, total yarn consumption will be = 5.10 + 9%

= 5.10 + 0.459

= 5.559 kg / dozen

ii) The current yarn price is $3.5.00/kg

iii) The current Pique knitting cost is $0.25/kg (Knitted by circular knit S/J M/c)

iv) Average color dyeing cost is $1.23 / kg

v) Normally Collar & cuff consumption is 60 gram/body (1 pc collar & 2 pcs cuff)

So, for 12 pcs it will be -0.06 X 12 + 9% = 0.78 kg / dozen

vi) Collar & cuff Knitting cost is $0.05 (knitted by flat knitting m/c)

Step: 1

Body fabric cost calculation:

Yarn price / kg = $3.50

Knitting cost /kg = $0.25

Dyeing cost / kg = $1.23

Finished fabric cost = $4.98

Step: 2

Collar & cuff cost calculation:

Yarn cost/Doz = 0.78 X $3.50 = $2.73

Knitting cost/Doz = $0.05 X 12 = $0.60

Dyeing cost = 0.78 X $1.23 = $.9594

Collar& Cuff cost / Doz = $4.2894

Step: 3

Total production cost:

Body fabric cost (5.559 kg X $4.98)  

= $27.68 / Doz

Collar & Cuff cost = $4.2894 / Doz

CM = $5.50 / Doz

Accessories Cost = $2.50 / Doz

Total production cost: = $39.97 / doz

Final Step

Fob pricing of per piece polo shirt:

Total production cost: = $39.97 / doz Commercial cost will be (3%) = $1.03 / doz (Except Cost of Making)

Profit will (20% of Cost of Making) = $1.10 / doz

Total FOB price (doz) = $42.1 / doz

Fob price per piece will be = $3.5083 / pc

Final quoted price for buyer = $3.51 / pc (FOB)

Written by

Sharmin Akther Diba

Industrial & Production Engineer, RUET

Email: [email protected]

Linkedin: Sharmin Akther Diba

Standard Minute Value: SMV in Garments, Calculation, Importance

Standard Minute Value: SMV in Garments, Calculation, Importance

The term Standard Minute Value – SMV is mostly used in the garments industry and it is a common measurement calculated by the Industrial Engineer. Generally, SMV indicates the time taken to make garments by the workers using the right types of machinery. In garments factory, you may find that many people used to the SAM – Standard Allowed Minute which is same as SMV. SMV varies garments to garments, style to style, factory to factory. Management and buyers ask for SMV and it is the responsibility of the IE department to calculate SMV and give it to the respective parties. Here in this article, I will share details of Standard Minute Value: SMV in Garments, Calculation, Importance with a practical example.

Industrial Engineering is concerned with the design, improvement, and installation of an integrated system of men, machinery, and materials. SMV is one of the most important tools used by IE.

Standard Minute Value - SMV in Garments, Calculation, Importance

The prime objective of industrial engineering is:

  • To Increase Productivity
  • To eliminate waste and non-value added activities
  • To come up with the optimum use of scarce resources that would bring out the best results.

Importance of SMV in the Apparel Industry

The reason Why we use SMV in Garments Factory is given below

  • SMV is calculated for doing a costing of garments
  • It is used for calculation of target and set the right target
  • For Calculating the Efficiency of workers
  • SMV is calculated for making a plan and take effective factory production decision.

For Calculating SMV – Standard Minute Value in Garments you must have a proper idea of machine operating procedure and working process of workers. Close observation of Industrial Engineer is required to calculate the right SMV for a particular product or style in your factory.

Basically, SMV is the sum of the basic time requirement and allowance applicable to it. Normally allowance is given at the rate of 10% based on the efficiency.

Formulas of Calculating SMV

SMV in Garments Formula

Calculation of SMV in Garments

SMV = (Basic Time + Allocated Allowance)

The formula of Basic Time = Observe Time x Rating Factor

Basic Time: Basic time is the most likely time required to make garments considering observe time and applicable rating factors.

Observe Time: Time taken to do a work when an observer is observing closely and record the worker’s work speed.

Calculation of Observe Time = Total Cycle Time is divided by Number of Cycle

Cycle Time: Cycle Time is the time between starting a garments manufacturing and finishing of those garments.

Rating Factor: Rating factor is assigned based on an evaluation of worker performance which is conducted through eye judgment. A worker can be fast, slow and rating is on a scale of 100% to lower.

Costing SMV is calculated for sending SMV information to buyers. Normally 5% additional time is added with the actual SMV.

Costing SMV = Actual SMV + (Actual SMV x 5%)

Example of Calculation of SMV in Garments

Suppose for making a product the following assumption is there

  • Observe Time = 25 Minutes
  • Rating of Operator = 80%
  • Considering Allowance = 10%
  • Basic Time = 25minutes x 80% = 20 minutes
  • Allowance = 20 x 10% = 2 Minute

So, SMV = 20 minutes + 2 minutes = 22 minutes for making a particular garments product

Calculation of Capacity of Single Operator in Garments

  • If an operator works for 10 Hours a day
  • 30 minutes to make a product

Capacity = (1 operator x 10 hours x 60 minutes)/30 Minutes = 20 Pieces of Garments by an operator

If you assign 100 operators then your capacity will be = 100 operators x 20 pieces = 2000 pieces a day

Calculation of Efficiency Percent

  • SMV 22 Minutes
  • Working Hours 10 a Day
  • Number of Operators 100 person
  • Actual Production 2000 pieces

Efficiency (%) = (2000 pieces x 22 minute)/(100 operators x 10 hours x 60 minutes) x 100 = 73.33%

whereas the target was,

Target = (10 hours x 60 minutes x 100 operators)/smv 22 minutes = 2727 Pieces of garments

SMV of Different Types of Garments Manufacturing

Hopefully, you understand what is Standard Minute Value: SMV in Garments, Calculation, Importance of SMV in the apparel industry. If you have any confusion then please let me know. I will try to clarify farther in details.

Written by

Md. Nahian Mahmud Shaikat