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Now-a-days many individuals are starting small scale garment manufacturing business. You might be one of them. While setting up a factory is comparatively easier, it is quite difficult running the factory with budgeted cost. Secondly for a small set up controlling the production cost is very important to manage the cash flow.
You may be aware that there is always a price pressure for the final product while raw material cost and labor cost is increasing day by day. In such situation how to keep your production cost under control?
You must find ways to keep your production cost (product cost) as low as possible. This way you can earn more profit and see the expected growth in the business.
In this post I have shared few tips to minimize production cost in your factory.
Electricity: Dont run power units until all necessary items are not ready .Dont attempt to run them f there is no work . Turn off fans and lights during tea time and lunch times .Teach your staffs about the need of power consuming.
Conservation of water :Teach your staffs about the need of power consuming.Turn off water taps while they are not in use and replace the taps if they are leaky
Improve fabric utilization: Fabric cost is the major part in total cost of making a garment. Control unnecessary wastage of fabrics in cutting. Fabric utilization is the percentage of total purchased fabric consumed in making you order. Correct estimation of fabric consumption saves excess inventory stock and cost of raw material. You can go for IT tools to improve fabric utilization in cutting room.
Buy most economical fabric width: Fabric is available in various widths (and various diameters for knits). Select right fabric width based on the product specification (measurement). If your garment patterns don’t consume full width of a fabric, wastage will increase. So while purchasing fabrics for an order, check how much fabric width is required for your garments with mini marker/sample marker.
Go for piece rate production system: For a small set-up, it is better to start with piece rate operators. It is called piece rate production system. In piece rate you will pay tailors based on the quantity produced by them. Secondly your tailors will be motivated to produce more if they earn piece rate basis. This way you can control direct labour cost.
Improve housekeeping: Keep floors and working areas neat and clean. You can prevent getting your goods dirty and stains by good housekeeping. This is the first step to improve your product quality.
Produce Right first time quality: Develop a culture of right first time production. This way you can reduce cost of poor quality and at the same time can improve productivity and lead time. You can save in alteration and repair work.
Reduce overhead cost as much as possible: Frequently analyze your factory overheads. Reduce overheads as much as possible. Don’t hire unnecessary manpower.
Keep you fabric and trim store organized: By keeping things organized you can save time for your employees. This would help you to reduce unnecessary wastage of trims (threads, elastic, packing material etc). Also maintain inventory record – this will help you sourcing raw materials in advance and prevent unnecessary purchasing of items.
Improve labour productivity: By improving labour productivity you can reduce per piece production cost and overhead cost. Labour productivity means number pieces (garments) produced per tailor per day. Monthly factory overhead cost remains almost same. So if you produce more piece than existing production, overhead cost will be reduced proportionately. Refer this article on production improvement tips.
Personnel management: Develop a good relationship with/between your staff and workers as they are your main resources to take your business ahead. Build a productive team and improve their skills by conducting workshop and training if needed.
I would suggest you reading this book to improve your managerial skills – The One Minute Entrepreneur: The Secret to Creating and Sustaining a Successful Business (One Minute Manager)
Conclusion: The above tips are not only for small scale garment manufacturers. Even if you are running a larger factory, these simple tips can make a big difference in your business and bringing down total production cost.
If you are practicing something else to control production cost in your factory, share it with us.