Merchandising of Men’s Shirt in Bangladesh – A Case Study

Costing

For, the Production Process Merchandisers need to collect the cost of all the fabric and trims. They need to calculate the consumption of fabric here and also the pattern size. The complicacy of the style and the trim price is also included to count the cost of any garment. Accessories like the label, hangtag price is also included with the costing sheet. Here, for completing the costing part merchandise needs the pattern file first for assuming the consumption of fabric and then, they need to count the trim’s price attached in the garment. In this case, they also need the spec sheet.

Then, the production team needs the labor cost. There is an Industrial Engineer who calculates the time that every part of samples needs to sew and the cost of the labor for these hours. The price of trims is very important in case of measurement of the garment. In some cases, it captures a very big part of the cost. Here, in the case of Harriet shirt, polyester fabric and fusing are used in the design of this shirt both of these are very special items, and these are not very easily available to the source. So, the cost of this type of item is a bit high, and adding the profit margin it reaches the crossline buyer wants to agree. So, this is the moment of challenge a supplier faces to ship its clothes.

Garment Specifications

 

Table 13: Harriet Style Shirt Specifications

Fabric Consumption of a single garment

Marker Planning

 

 

The marker shown above has width = 1.55 yds and length = 11.54 yds, so the area of the marker = 17.887 yds² and has accommodated all the panels of 20 complete Formal Shirts in it.

Also, from the picture we see that the efficiency = 85.75% Now, to find the fabric required for 1 pc of Formal shirt,

Marker efficiency of the above marker = (Area of all the patterns / Area of the marker) x 100% 85.75% = [(Fabric reqd for 1 Shirt x 20) /17.887] x 100%

Fabric reqd for 1 Shirt = 0.766 yds²

Since the width of the marker is 56 inches = 1.55 yds and we will leave 4 inches of allowance at the time of cutting, so we will fabric of 60 inches = 1.66 yds

We found that the area of the fabric required to make 1 Shirt = 0.766 yds So, length of fabric required to make 1 Shirt = 0.766/1.66

= 0.461 yds

Cost of georgette fabric = $2.253/yds.

Total Fabric consumption of 1 Shirt = 0.461 yds

Cost of Fabric required to make 1 Formal Shirt = $2.253 x 0.461 = $1.0386

 

Cost of Fusible Polyester Interfacing = $0.9/yds. Total Fusing consumption of 1 Shirt = 0.03 yds

Cost of Fusing required to make 1 formal shirt = $0.9 x 0.03 = $0.0270

 

Cut-Trim Make

 

CUTTING

Cutting cost = (Cutting of the garment x Minute cost of the labor)/Line efficiency (%)

= (0.5 x 0.6)/0.6

= $0.5

 

STITCHING

Total SAM of the Shirt = 11.46

Total Stitching Cost to stitch 1 Shirt = $1.205

 

THREAD

0.25yds of thread is consumed to construct one Shirt and $0.250/yd is the price. So, $0.062 is the cost of thread required.

 

FINISHING

The average finishing cost per Shirt is approximately about $1.

 

BUTTONS

Table 14: Buttons Specifications

These specific buttons are used in Shirt which cost $0.036/pcs. 10 buttons are used in the So, to produce 1 Shirt, cost of buttons is $0.360.

 

LABEL

This H&M Shirt contains the following 3 labels attached to it.

• Main Label (CONSCIOUS 18001) which costs $0.1 per piece
• Care Label (HM30012) which costs $0.01 per piece
• Size Label (Conscious22000) which costs $0.005 per piece

 

PACKAGING MATERIAL

The following packaging materials are used in 1 Shirt Sleeve Binding = $0.025/pc

Hang Tag = $0.020/pc Poly Bag = $0.002/pc

Carton = $0.05/pc

 

OVERHEAD

Factory overhead includes both variable and non-variable indirect manufacturing costs. Factory overhead costs are exclusive to each industry; however, they are normally subdivided into:

• Indirect labor
• Factory occupancy costs
• Other overhead

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Total Material Cost = Total Fabric Cost + Total Trims Cost + Total Packaging Material Cost

= 1.0386 + 0.0270 + 0.624

=$1.6896

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Total Labor Cost = Cutting Cost + Production Cost + Finishing Cost

= 0.5 + 1.205 + 1

= $2.705

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Total CMT = Total Material Cost + Total Labor Cost

=$1.69 + $2.705

=$4.395

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Even though the Overhead Cost Percentage varies for every manufacturing unit, we have taken an average overhead percentage for Bangladesh Garment Industry i.e. 12%.

So, Overhead Cost of Shirt is:

= 12% of CMT

= 0.12 x $4.395

= $0.5274

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OVERALL COST

The Manufacturing cost of the making of a Shirt is:

= CMT + Overhead cost

= $0.5274 + $4.395

= $4.9

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Upon adding the Profit Margin of 15% of Mohammadi Group Ltd, we get:

=$4.9 + (0.15 x $4.9)

=$4.9 + $0.753

=$5.653

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By applying a multiplier of 4 for H&M’s Brand value, we get the selling price of the H&M Shirt

= $22.612