Developing Fact-based Yield Estimates and Costing Partnershipsby Robert Broadhead
In this article I address the process of estimating fabric yields, the complications involved in offshore contracting, and how to be as accurate as possible in predicting/negotiating fabric costs.
Fabric is 25-40% of the cost of manufacturing a garment in the US and 50-70% in package programs overseas, so accuracy here is worthy of attention. (We've heard this a lot over the years, but it's worth repeating. No other single refinement in production can provide substantial cost savings as easily as fabric control.) Controlling or negotiating fabric costs has become more complicated as overseas manufacturing and cut-make-trim (CMT) / package programs have grown. Before work went offshore, in-house fabric yield estimates and final production consumption reflected cutting department work (either the manufacturers or a local contractors) that was readily known and monitored. However, 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.
CMT Programs
With CMT programs, contractors are essentially being paid for their labor while the Retailer or Manufacturer (R/M) supplies the fabric; therefore, tracking fabric yield often does not get the attention it warrants from the contractor. Cutting department procedures may vary in other countries and problems of time, distance, and culture may also effect results. However, the R/M still controls the patterning and yield estimating process and should have a good idea of expected usage.
Regardless of who does the production markers it is important to reach an agreement in advance of production about how variances in consumption will be handled.Package Programs
Package programs further complicate estimating and negotiating accurate fabric yields. Retailers and Manufacturers are asking Contractors to bid on package programs based on limited information (e.g., a spec sheet, sample garment, and, perhaps, a "block" pattern) with a short period of time to return a bid. Both parties understand that all the information needed to establish an accurate fabric yield is not available at the time of the price negotiation and everyone wants to avoid up charges and renegotiating costs after their final pricing and margins are set.
Given this climate the Contractor is in a bind. They don't want to bid too low and lose profit margin but also don't want to bid too high and lose the business. The result is often a moderately high bid from the contractor to allow for changes in the final patterning and other unsettled aspects of final production.
The R/M also has limited ways to evaluate the accuracy of the yield since they no longer create a finished pattern. An important question for the R/M is whether it is worth it to create a pattern and develop it sufficiently to provided an accurate estimate for negotiating fabric costs.
In an environment of faster turn times and less information to work with, we'll look at the possible ways to estimate fabric usage and the pros and cons of using each in Local / CMT / Package programs. But first, let's look at the main factors effecting final production consumption, which is what we want to estimate.What Happens in the Cutting Department
Graded patterns are marked to produce the quantities ordered in each size. These markers reflect the final fit patterning, proper grading of sizes, fabric cuttable width, and the percentage of production being produced in each size. In spreading fabric, the marker sections are overlapped at the ends by a small amount and this also adds to fabric consumption. Fabric quality effects how much damaged material is going to be lost in the spreading process, so there is a "damage cut out percentage" that can be quantified at the end of production. Other impacts on material utilization are allowances for fabric quality testing, bias, and re-cutting garment parts.
Fabric consumption at the end of production, then, is dependent on these components
- Final fit pattern
- Pattern grade
- Fabric cuttable width
- Distribution of units in the size range
- Marker section overlaps
- Damages cut out in spreading
- If applicable, fabric quality testing, bias, and re-cuts
- Estimating Production Yield
continue in part 2
No comments:
Post a Comment