Labour costs in India is rising and so is the production costs; which inevitably leads to certain decisions. Can the industry still compete on the basic orders with huge quantities, low costs and low margins? The obvious answer is no, so there is a shift to high value-added products which ideally brings higher margins, thus stabilising the business. But this also leads to higher production costs to a large extent due to a sudden fall in efficiency. And if this is not controlled properly then the expected results of this shift (from basic products to higher value-added products) are simply never reached.
It is neither easy nor advisable to reduce the labour wages; however, production costs could surely be greatly improved by applying the right methods and mindset. Several countries e.g Mauritius have faced this very situation more than a decade before and few companies have even emerged very successfully despite all the odds.
The whole idea here is reducing the factory cost per minute; which involves increasing manufacturing and production efficiency among others. For this, we need to have a thorough understanding of what the cost leakages are and how they occur. Below are few important aspects which if managed properly can have tremendous improvements within the industry
Lean management has to be practised. All unnecessary labour needs to be trimmed off. Incorrect indirect to direct labour ratio needs to be realigned. Skills and method training is required for maximum efficiency and best time utilisation. Polyvalence training is a must to compensate for changes and absenteeism.
The management must be able to select and acquire the right set of machines and equipment which will support the best level of production efficiency and quality. This is because inadequate machines, poor maintenance, delayed machine tunings and delays of machine preparation for production are responsible for the idle time which is one of the biggest culprits of inefficiency.
Any quality problem results in either indirect loss or rework. Rework reduces the production minutes up three-fold and the production cost in the same proportion for all the steps involved. And each rejected garment involves not only a shortage of profit for one garment but the loss of raw material, labour cost and profit which could be generated by the making of another garment instead of the rejected one. Thus it leads to a massive loss. So quality management and assurance to have right first time is a must.
All in when fabric or yarn in
It is very customary in factories that all items and accessories required to produce one garment are not received in the right sequential manner. Thus, either production cannot even start or has to be stopped halfway in waiting for missing items. This entails idle time, no work, quality problems, cascading shipment delays, missing garments etc. Again, the production efficiency and production minutes are affected two-folds or even more. Here the planning and merchandising department needs to understand the consequences and do their homework as required such that all is in when fabric or yarn is in.
Change over time
This is the time lost during the process of swapping from one order to the next. In cases of high value-added orders, quantity is relatively smaller and so the total monthly or yearly average change sometimes will be high. But in reality, we find that this production time loss is several times more than what it could be if the factories are managed correctly. Wrong planning, bad communication, inefficient mechanics, lack of technical know-how, fewer polyvalent workers, etc are among the culprits over here.
Line Balancing/Intersection balancing
Line balancing has been one of the most talked aspects of the industry and yet a huge percentage of factories can hardly manage the same. It involves several other parameters like a clear understanding of the efficiency of each operator on a range of operations they can perform, polyvalence of operators, timely judgement of the status of the lines, product know-how and where the priority lies. And line managers need a lot of training on these.
Besides line balancing the balancing of the whole factory is essential and this involves management, planning and order taking. Sometimes some sections remain idle while other sections have heavy backloads e.g. embroidery is overloaded and printing has no work. Although at times this is beyond the control of management but if there is a correct relationship between the supplier and customer these circumstances can be minimised. Another example is planning constantly loading orders with high knitting factor and low linking factor or vice versa. And this is responsible for bottlenecks on one side and idle time on the other side, both resulting in losses.
Peak and off-peak times
Even though this is often inevitable, however, it can be minimised to a great extent if there is a mutual understanding and dependence between the customers and the factory. A factory should always organise itself such that it remains important to its customers and vice versa. This can only be achieved by having few but loyal customers rather than having small percentages of the factory working for a multitude of customers. If there is complete support from customers then it is possible to have early orders, fast approvals, off-peak orders, sharing of quality decision makings and sharing of responsibilities etc and these are very helpful to minimise time losses.
Work and method study
Working with high value-added orders are often challenging in itself. This is why a high calibre work and method study department helps enormously. Already at the design stage, all the operations involved need to be meticulously analysed and the simplest route for each step, utilising the strict minimum production time for a reasonable quality, should be adopted. And often the factory can discuss with the customer the different acceptable quality options with different routes (different production times) and have a trade-off. Thus, the excess production minutes assigned per operation can be reduced. I have seen companies making huge savings in this way.
As is said the need is the mother of civilisation, even in the garment industry the need to stay alive in the world market would demand a paradigm shift from production quantity to efficiency and eventually to factory cost per minute reduction.