How to Change SAM to Dollars in Apparel Production?

Question: How can I change SAM to Dollars? There must be a formula. Can you please give me step by step on how to change SAMs to Dollars, and how to change dollars back to SAM? Please help. 

Answer

The standard time (SAM) of an operation has equivalent monetary value. So, you can convert SAMs of a product into Dollar value when needed. Remember one thing – SAM of an operation will remain the same for any circumstances but the monetary value for a minute produced (SAM produced) can vary depending on certain variables. 

First, let me explain the SAM and Hourly Rate for operators and the hourly rate for doing an operation

The SAM of an operation and total SAMs of a garment is estimated using a PMTS system (like TimeSSD software) or using Time Study method. I am assuming that you already have SAMs of your styles. 

Hourly rate is normally derived from the minimum wages of the demographic location of the manufacturing factory. 

The hourly rate of an operation is calculated as operation SAM x Rate per minute.

In piece rate production environment earning of the employees depends on the number of units they produced/total SAM they produced.

Factories calculate total earning in SAH (hours earned) from the production volume and garment SAH (standard time in hours) which is calculated as (production quantity x SAM per garment)/60


Related Article: How to Calculate CM Produced by a Line in Dollar?

How to change SAM to Dollar?

Step-1: Find the base rate
To convert the SAM in Dollars, you need to find the Base Rate of your factory. The base rate is the hourly salary of your employees. This rate can be derived from the employees' daily wages in your country (State). From the daily wages, you need to calculate hourly wages.

Let's say Base rate = $16 per day =$2 per hour (based on the monthly wages of $400 in Latin America)

Step-2: Calculate the SAM
You may need to calculate total SAMs produced by an employee or total SAM produced by a line which you need to convert into a dollar value. Or you can take SAM of an apparel item and calculate its labor value in the dollar.

Let’s say SAM of a basic t-shirt is 5 minutes.

Step-3: Use this formula for the conversion

Earning in Dollar = (SAMs Earned x Base Rate)/60

Example:
Here, 60 minutes equivalent to $2. Therefore, 1 minute=$0.033

T-shirt SAM is 5 minutes, in dollar it would be = (5/60x$2) = $0.1667

Another example is shown here based on salary in Indian Rupees.  
Let's say SAM of a shirt is 20 minutes, the Base rate is Rs. 40.00 
Here, Dollar value for making this shirt =((20 x 40.00)/60)/70 =$0.190

(1 Dollar = Rs. 70 for calculation)

Things you need to remember

The Base rate per hour can be different for different employees (based on the employee's skill level).

The Base rate can be different for different operations based on the difficulty level of the sewing operations/manual operations.

When you calculate the payment - in some cases you need to pay based on an operation-based rate but sometimes you need to pay based on the minimum hourly rate.

Factories normally pay to their operators which one is a higher amount.

Changing dollar back to SAM:

In real, deriving SAM of a garment from the Dollar value is not done. But if you want to calculate SAM earned by an employee or by a production line, you can do that by reversing the formula

SAM Earned= (Dollar Earned *60)/Base Rate

I hope the conversion method of SAM to Dollar is clear to you.
Change SAM to dollar

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