Fabric is the single biggest cost driver for the garment industry. It ranges from 50% to 80% of the garment cost. Thus, even a small fabric saving of 2% can add millions of dollars to a garment manufacturer’s pocket. In the last article of the series on Fabric Utilization, Mausmi Ambastha, an entrepreneur providing IT solutions for the apparel industry and the Founder & CEO of IntelloCut, with years of experience as a consultant and a former faculty at NIFT discusses various concepts and tools used in the industry to improve fabric utilization at various stages of production. These concepts help to make informed decisions and save fabric, labour and time by following the principles of “Buy what you need” and “Use what you have”.
In the previous three articles in this series we discussed about the three major concepts that affect fabric utilization and if used properly can further help achieve savings. The first article talks about cut order planning – the step-by-step plan of execution of marker making, spreading and cutting of an order; the second article talks about roll allocation – another important but ignored step in scientifically allocating fabric rolls for spreading for predetermined usage and minimizing wastage; while the third article discusses a very topical issue of fabric segregation based on shrinkage, width and/or shade variation. This fourth and the last article discusses about variance control between estimated and actual fabric consumption, tying a thread around the whole concept, giving a path to use the concept in its best possible way.
Robert Broadhead, a veteran in a garment manufacturing, in his article “Accurate Fabric Costs – Improving Fabric Yield Estimates”, states that “No other single refinement in production can provide substantial cost savings as easily as fabric control… It is surprising that many businesses do not track the variance between the actual cost of fabric at the end of production and the estimated cost of fabric on the bill of materials. This can significantly impact the bottom line.”
How true…!
The idea is first to track the variance between estimation of fabric and actual production usage and then try to minimize it by using the tools discussed in the earlier three articles published in StitchWorld.
Where do you stand?
Every factory should monitor the variance between fabric purchase estimation, production requirement as per markers and achieved consumption.
This would clearly highlight the variance between BOM (Bill of Material) estimation and actual requirement and variance between actual and achieved consumption.
Let’s understand this with an example:
Order XYZ has the following details:
Order Quantity | 1859 pcs. | |
Required cut quantity | 1915 pcs. | adding 3% |
Consumption stated by CAD | 1.43 metres | |
BOM consutmption | 1.5 metres | adding 5% for all wastages |
Ordered fabric quantity | 2873 metres | 1915 X 1.5 metres |
The order was run in the factory:
Fabric received | 2860 metres | 13 metres short |
Cut quantity | 1916 pcs. | 1 pc more |
Fabric used by cutting | 2860 metres | No rolls returned to store |
Achieved consumption | 1.49 metres | 2860/1916 metres |
Looking at this scenario, it seems everything is good as the fabric was bought for 1915 pieces and despite a shortage of 13 metres, the factory has cut 1916 pieces. Achieved consumption (1.49 metres) is also less than BOM (1.5 metres). The variance percentage between estimation and actual production consumption in the factory in fabric cutting can also be termed as production wastage percentage which is almost non-existent.
Now let us analyze this case closely:
Weighted marker consumption | 1.41 metres | (actual production markers) |
BOM consumption | 1.5 metres | |
Variance/Wastage % | 6.4% | Estimation vs Actual production requirement |
Achieved consumption | 1.49 metres | |
Variance/Wastage % | 5.7% | Actual production requirement vs Achieved consumption |
Fabric required for the order | 2621 metres | 1859 X 1.41 metres |
Fabric ordered | 2873 metres | 9.6% extra ordered |
Fabric received | 2860 metres | |
Extra fabric received/used | 9.1% |
If the factory ends up shipping only 1859 pieces with cut to ship ratio of 97%, then the factory actually ends up wasting 9.1% fabric in the whole process.
Assuming that the factory makes 1,00,000 pieces per month with average consumption of 1.5 metres and average fabric cost of Rs.100: Money spent annually on fabric = Rs. 18 crore. With 9.1% wastage, the factory is losing Rs. 1.63 crore every year.
Using better estimation techniques and cutting production planning concepts, it is possible to save a large percentage of this and a number of factories have been able to achieve it.
Buy what you need
The standard process of estimation of fabric purchase requirement involves three basic steps which are discussed in detail:
Decision of quantity for which fabric is to be ordered
Generally, fabric is ordered on the basis of actual consumption added to it is x% extra quantity and this x% depends on following factors.
1. x% over production can be allowed for shipment.
This x% may vary from 0 to 5% or more, and every factory has its own policy regarding this. One School of Thought says that they should order only as per ordered quantity and if they happen to produce any extra quantity, they would ship it to the buyer. This vacates their capacity by a small percentage and also provides much better control on fabric. They believe that any extra fabric will only result in more wastages or a poor cut to ship ratio. Another School of Thought is that they would want to order for entire order quantity +x% as every additional garment sent to the buyer is additional revenue.
Both have their own merits and demerits and the decision depends on the organization, its production capability and control on the processes. An ideal way would be to find a middle path where a small extra quantity (say x/2%) is cut to earn some revenue but at the same time not to end up with additional fabric or garments in dead stock. This would require a strict control of cut to ship ratio.
2. Percentage rejection in the production processes.
A heavy embroidery work may result in higher rejections so the factory may want to add some extra quantity to ensure they meet order quantity in the end. In this case one should be very careful about adding extra quantity for rejections as certain percentages will be in anyway added to the overall consumption for cutting room process losses. It is best to add all allowances at one go so that it gives a clear picture to the factory of overall extra buying and complete allowance for rejections and process losses.
Determination of garment consumption
This is the most important step in the process as accuracy of this step will result in shortage or excess of fabric and affect profit or loss in an order. The fabric purchase generally takes place at the stage when pattern is close to final fit approval and the fabric type, design, width and quality are finalized.
Most factories make representative markers with two or more sizes with one or more markers and average markers to find the consumption. This generally hampers accuracy. The estimation process should be as close to the final production process as possible to mitigate the inaccuracy risks.
With the advent of advanced CAD softwares and automarkers it is possible to easily grade and use graded patterns, actual markers, production cutplans for estimation of fabric consumption. Fabric estimation is highly dependent on the quality of information. There can be two situations here:
1. Order quantity with size break up is available
In this case it is best to create final production cutplans and 80% of the final production markers. This will help estimate the production consumption most accurately. If the pattern and fabric parameters remain same then the same markers can be used during production process. In case the parameters change, it will only require some adjustments.
2. Order quantity is available but size break up is not available
It is advisable to take a ratio distribution of sizes over the quantity. This can be derived from historical orders of the buyer if it is not explicitly provided. It is best to still make cutplan and 80% markers and estimate fabric accordingly. The factory will have to redo the cutplan in case the size wise quantity changes and they may or may not be able to use previously created markers. However, this will still be closer to the actual consumption than a rough one or two size estimate.
A quality cutplan tool should be used in this process to ensure best results. The most optimum way to compare two cutplans is to check how many metres of fabric each is using to cut the same number of garments. This will factor in most parameters and tell you the best cutplan.
A systematic fabric utilization program can help save 3% to 5% of fabric. Let’s say a factory makes 1.2 lakh garments a month with average consumption of 1.5 metres and fabric cost of Rs.100 per metre. At 5% saving, the company can add Rs. 1.02 crore per year directly to its profits along with other benefits of increased capacity and improved control and reduced wastages.
Addition of expected production wastages
This is the trickiest of all the steps which eventually ends up adding a lot of fat to BOM consumption. Most employees are very concerned about not being able to make the order quantity. Therefore, they end up adding safety percentage at every stage which results in additional buying. Roger Thomas, an active consultant working with factories in the Indian subcontinent, in his article “Saving Fabric or Just Increasing Dead Stock” highlighted the result of a survey done in 8 factories in the NCR region where because of addition of wastage percentages at multiple stages the manufacturers end up buying about 17% additional fabric.
The wastage percentage should ideally be added only once and should be regularly reviewed and updated based on production feedback. Once the production processes are controlled via proper processes of automated cutplan, Fabric Grouping and Roll Allocation, these should gradually be reduced to eliminate dead stock and other wastages.
Use what you have
Once the fabric is in-house, the only way to gain profits from the bought fabric is to optimize its usage and make maximum possible garments from the fabric to convert the investment into revenue. The following 10 steps illustrate the process of fabric utilization in the factory.
1. The first step is to have all the information accurately collected. The order quantity, the fabric rolls and their width shade and shrinkage details.
2. The next step is to recalculate the cutplan if required based on actual production order. It is always best to use advanced software which will find the best solution. This has been discussed in detail in the article “Fabric Utilization – Cut Order Planning” published in June 2013 issue of StitchWorld.
3. The fabric needs to be grouped in case there is a variation in shade width and shrinkage. This concept of fabric grouping has been explained in detail in the article “Fabric Utilization – Fabric Grouping” published in August 2013 issue of StitchWorld. An automated system of grouping generally makes the task much easier and more accurate.
4. Once the above is decided, actual production markers are made with finalized patterns in correct widths and shrinkage. If you are using an automated system you can do multiple sets of cutplans and markers and choose the best option.
5. Before the order is sent for production floor processing, the last step is to do roll allocation. It ensures the right combination of rolls to process and create layslips to be followed by the production floor staff. The roll allocation concept was elaborated with examples in the article “Fabric Utilization – Roll Allocation” published in July 2013 issue of StitchWorld.
6. The fabric is issued as per the lay slip sequence to ensure easy follow-up on the floor.
7. Once the lay is laid, each remnant or end bit is accurately measured and noted on the layslip. A good system allows users to make changes in the roll allocation as per the situation on the production floor. The layslip information is fed back in the system and the lays for the next day are updated as per the given plan.
8. The end bits or remnants markers should be planned towards the end of the order or when substantial number of lays have been cut.
a. This ensures that most of the order would have gone through the cut part inspection and probably sewing process as well. Therefore, there will be minimal requirement left for part
changes anyway.
b. The factory will have accurate information on number and length of each remnant left on the cutting room floor.
Remnant markers should be planned such that the number of lays remains small and factory is able to utilize every last inch of fabric. The ‘off cuts’ (pieces too small to make a garment), should be used to replace parts of the garments. There is no point in keeping large amounts of fabric for panel replacement unless there are important reasons to do so. This process becomes easier if an automated system is utilized.
9. Once the order is completed, it is very important to analyze the results and process complete fabric reconciliation.
10. Once fabric reconciliation is completed, the information is used to re-calibrate the fabric buying process for fabric, vendor and buyer to ensure that the variation between estimation and production utilization can be minimized.