Pros and Cons of Setting up Garment SAM Higher than Standard Time

In the previous post, we have discussed estimating garment SAM [1] based on IE’s experience. In the experience-based SAM calculation method, you know that there is a possibility of getting low/high garment SAM than the actual standard time.

But what happens when the factory sets up garment SAM higher than Standard time intentionally?

Read this post to learn the Pros and Cons of setting up garment SAM higher than the standard time.

You might be thinking why should one use to show increased SAM? If you don’t aware of this fact, this is for your information that such practice exists in the garment industry. I learned this two years ago. In one of my factory visit, I had questioned the IE manager of the company on the SAM which seems higher for the specific product. IE Manager disclosed that the SAM figure on the OB sheet is set higher for buyers.

Pros of Higher Garment SAM

There is only one benefit of setting up garment SAM higher than actual SAM. And that is quoting a higher labour cost in costing sheet. Now many apparel buyers are aware that labour requirement for making a garment is measured by SAM. There is a direct relation between garment SAM and direct labour cost.

So, even if buyers ask for open garment costing [2], and when buyers negotiate for FOB, garment factory can justify their production cost.

Cons Higher Garment SAM

On the other side, there are many cons to setting up garment SAM higher.

1. Suppose that the factory considers the increased SAM for calculating factory performance and other SAM based calculation. The outcome will be as following
  • Factory will get a totally wrong figure of the line efficiency and individual operator efficiency. 
  • The calculated salary for operators will be higher than the actual salary (if calculated based on earned SAH).
  • Performance-based incentives are calculated based on produce SAH. With higher garment SAH, operators will be producing higher SAH. 
  • All calculation, those are derived from garment standard minute, will be affected. Like, production capacity calculation, production scheduling. 
2. To measure actual performance and getting the right calculated results, the factory needs to maintain two sets of records – one for buyers and another for internal usage. An adjustment can be done for calculations but such practice would complicate the IE’s activity.

3. Standard time is used for improving the working method. Standard time (SAM) is used to compare the existing performance of the operators and standard time. If the Standard Time is not correct (as said it is intentionally set up higher), you can't measure operator performance correctly.

4. Also while you prepare initial line balancing and line layout, you are setting the production target at a lower level. In turn, the calculated manpower and machine requirement will be higher than the actual requirement.

Share your opinion by adding your comments on the following comment box.
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[1] SAM – SAM stands for Standard allowed minute. Read more
[2] Open garment costing: In open costing, suppliers need to show their customer how the total garment pricing is made. They need to show break up of material cost, labour cost, overhead cost and profit margin percentage considered in the garment FOB. In open costing, the buyer can ask the supplier to justify cost figures.

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