Costing of Garments using Line Efficiency

### Author Topic: Costing of Garments using Line Efficiency  (Read 2360 times)

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##### Costing of Garments using Line Efficiency
« on: September 08, 2013, 05:24:31 PM »
Industrial Engineers normally calculate direct labor cost (sewing) of the product. Labor cost per unit directly related on the line efficiency (performance). When line efficiency increases, production of the line increases. See the graph on bottom right. So, the cost per garment goes down when line efficiency increases.

Normally engineers calculate per minute labor cost at 100% line efficiency based on operatorsâ€™ monthly salary. Labor cost per minute increased as line efficiency goes down. Many engineers make a matrix of line efficiency Vs. labor cost per minute ( See the following table for an example of such matrix).

Once they have labor cost per minute against line efficiency as shown in right table, minute cost is multiplied by garment SAM value to calculate garment cost. Using the simple formula you can also calculate labor cost per minute of your factory.

Example: Suppose you have a line of 30 operators and all are salaried workers. So, you pay fixed amount to your workers instead of their performance level. Right? At present line perform at 30% and daily output is 300 pieces and if daily salary of the operator is USD 5.0, per piece labor cost becomes (30*5/300 ) or USD 0.5 per unit.

Suppose efficiency increased upto 60%, at this efficiency level line will make double garments i.e. 600 pieces per day. In this case operator's daily salary remains same. So per garment labor cost now become = USD (30*5/600) = USD 0.125

Here I have shown you straight method. Average line efficiency of a product varies depending on the following factors.

Order quantity per style
Product construction difficulty level

So, the cost of the garment varies accordingly.

#### shimo

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##### Re: Costing of Garments using Line Efficiency
« Reply #1 on: September 08, 2013, 05:43:42 PM »
Line Efficiency is called a magical measurement for garments manufacturers by which we can minimize labor cost, garments making costs as well as increasing production rate.