Why do garment manufacturers plan efficiency at 75 and not 100 percent?

Why do garment manufacturers plan efficiency at 75 and not 100 percent? Would like to read your views on this matter. 
-- This question was asked by Narainsamy Govindasamy in the comment box. 
Why plan efficiency at less than 100 percent

Updated on 25 Feb 2022 (Original date: 21st August 2021)

What you have observed is true. Some factories plan efficiency at 60%, some use 80% as target efficiency. The question is why not plan efficiency at 100 percent.

I have shared my views on this. I have also collected views from engineers working in garment factories and posted them here. Keep the full post to know what makes us plan efficiency at less than 100 percent.

View shared by Aditya Mahapatra (IE Specialist in a Denim manufacturing factory)
Labor-intensive manufacturing industries are highly dependent on individual performance what eventually leads to the overall factory capacity. So, to talk about factory efficiency we essentially need to understand the individual contribution towards the productivity of manufacturing lines as well.

Studies often show that the individual work rate what is academic parlance known as the Rate of Performance can transcend beyond 100%. So, we can say that the efficiency of an operator based on an established work measurement unit can practically be more than 100%.

Now can the overall efficiency of a line/factory be 100% or more than that? The answer simply is no. Not even in a utopian world.

If we look at the individual level, we will see often that the standard times of operations are generally derived from method-study of the qualified operators as the standard while the normal distribution of the available workers would comprise the mean values that would suggest the average performance rates of them are well below 100%.

When these workers are set up through the material flow chain in a traditional assembly line contributing directly to product making- the productivity of the different operations based on their SAM Value and the different Performance rate in their respective operations would definitely cause different Utilization rates of the operators. And thus, nothing termed like a perfect Line Balance can exist in the world- only we can rate them between two degrees- good and better.

This is the individual hindrance that will never make 100% efficiency happen.

On other hand, the global reasons of less than 100% efficiency of a factory or an entire manufacturing line can be attributed to absenteeism, poor workmanship which leads to rework, accidental or occupational hazards- factors which are often ignored in work measurement of the operations comprising the finished product making activities.

Traditionally, industries define the overall efficiency as a single parameter for the sake of easy calculation which actually engulfs factors like absenteeism percentage, utilization factor, rework-rate etc. under its bigger umbrella- which are still subjects to study, explore and define.

So, in my opinion, a 100% efficient factory line would never exist even in an utopian society, until it’s not fully automated or the lines are run by robots with near 0% technical glitches/break-down possibility.

People might ask what should be the standard efficiency of the factory then- 65% or 75% or 85%?

Honestly, it’s a paradoxical question as it’s imprudent to plan beforehand what can’t be executed. Without just determine a percentage as a flat verdict, the standard target efficiency should be set from both commercial and technical perspectives. The target productivity should be set accordingly that might help the plant go beyond the break-even point resulting in meaningful profit for the continuous growth of the business. And then considering the above discussed individual & global factors, a factory should define plausible overall efficiency to set their target capacity. So, it would vary definitely depending on - product range, the price, skill-set of available workforce, infrastructure, human resource and certainly region along with other commercials, technical, human and even political factors.

View shared by Ram Chandra Das (Management consultant, Apparel industry)
In an industrial production system, garment manufacturers mostly work on an assembly production system. It means a group of operators (team) make a complete garment. When we plan factory performance of efficiency it is a group performance. 75 % is team performance. When we move with a team always the slowest person decides how fast you are.

My views (Prasanta Sarkar)
The reason for planning line efficiency at less than 100% (in this question it is 75%) is to give an achievable target to the line. The production planning, manpower, and machine requirement calculation are done based on the line efficiency (75%). There are a few factors why a production line can’t achieve 100 percent efficiency. We can improve those factor but can’t eliminate completely from the garment production system.

When the standard time of a style is calculated, engineers consider the normal working speed of the worker. We get different SAMs for different operations in a line. When we balance the line (line layout) there we see some drop in efficiency due to balancing loss.

There is a learning curve for every new order loading to a production line. This eats up some amount of productive time. In a production line employees work at different skill levels. There are certain idle times, and loss times that are obvious in the production environment. 

The factory manager, planners, and engineers know these factors. They know their line's average performance on daily basis. So for planing an achievable goal and preparing achievable production schedules, they prefer to use the factory's average line efficiency.

Update added 20 Oct 2021
To add value to this discussion, I am adding comments from experts posted on the LinkedIn post.  Thanks to all who read this article and shared their views on this question.

Devadas P M | Director at EFFICIENC'IE
Hi Prasanta, This is the topic which I love the most. I am glad you mentioned 75% as planned efficiency. There are a lot of factories which are struggling at 50 and 60 % even today. The real fact is that we will get what we aim for. That is how we crossed each milestone of 60% then 70%, 80%, and even lines touching 90%. Dedication and seamless working between departments will help factories to cross the barriers. Motivational rewards to the workforce, low-cost automation, and kaizen everywhere can accelerate the journey.

Ed Dominguez | Vice President of Manufacturing at Valley Forge Flag Company, Inc.

When I was at Hanes my knit underwear sewing plants in Thailand and Vietnam were all over 100% Efficiency.

Frank Lomax | A 77-year-old Retired Professional in Garment Technology & Manufacturing Management
To understand the issues behind this oversimplified topic I suggest that everyone Googles ' introduction to work-study by ILO (4th edition) ' buy a copy and read it from cover to cover. As a Non Work Study or GSD Practitioner, ex Coats PLC., who ran factories, planned and implemented productivity improvement projects, and project managed the installation of turnkey garment factories, I worked with many managers and practitioners over that time. The knowledge gained here very much helps sweep away the 'Smoke & Mirrors' one is often presented with that is usually used to exploit the workforce and unjustly line the pockets of the wealthy.

Alan Cannon Jones | Principal Consultant

Following on from Frank's comments. Frank has put this precisely and I add from my experience that humans are not robots so do not work or operate as robotics. Apart from personal working performance, there are so many factors of which some are outside the responsibility of the person. If my factory performance was 90% then this was acceptable.

Peter Atkinson | Retired but still an Industrial Engineer
Alan Cannon Jones thanks for the reply. Be careful of performance-based payments, which tend to be the start of a downward trend.

Gery EMONDS | General Manager ( Bangladesh Liaison Office ) at Triton Textile Ltd ⎮ Global Sourcing & Production of Fashion & Apparel

In a true labor-intensive industry as the apparel mfg sector is, a factory really has a hard time hitting 100% efficiency ( human worker is not the same as machine ), but with the right tools and management and training, something close(r) to 100% could be feasible. However, in Bangladesh, most of the factories run at about 50-60% efficiency level, and this should be improved over the years of operation, so as to be able to serve the buyer(s) better ( better cost control means better prices offered means more orders ).

Stephen Dodgson
That's a great question, Prasanta Sarkar. And you have made several valid points to answer your own question. Here is my explanation; firstly, the acknowledged practice in our industry is we set a target for the number of standard minutes (SMV) for any given style when we design, cost and plan. This should be done using the global standard, GSD from GSD (Corporate) Ltd. This is your baseline and assumes a standard operating environment. However, once we start the mass manufacturing process, we will variably encounter a large number of factors that will impact our ability to match that standard, most of which will impact it in a negative manner i.e. it will take more minutes to produce that garment than it costs. 
These include individual operator performance, incorrect line balancing, shortage of materials, machine breakdown, thread breakage, re-work/repairs, start-up curves, etc. You correctly identified many of those in your note. Finally, once the order is complete we can study the actual time taken versus the planned time, and use that data to calculate our efficiency. This is a high-level explanation, anyone wanting to know more detail can reach out to the many SME on GSD, who reside Coats Digital

Tony Wegner | Director at Imaging First / iCAD UK

75% can actually be the peak utilisation used. A "style change" on a production line can impact heavily until the line is used to handling that style. It all depends on how many machinists are on a line, how long the production run is on a style, and how often there are mishaps....like machine breakdown, re-cut panels for fabric faults, shortage of trims......and.....people aren't robots. I have known lines hit 98 ut.....and also 5 ut.... feed it right and it will flourish.

KS Vicky Kasa Raja | Lean Six Sigma Manager at Jabi

If we plan 75% from the designed capacity, we are losing 15% and this will definitely make the investor worry. Furthermore, the 15% can hide a lot of information the management wants to know.. thoughts?

Peter Atkinson | Retired but still an Industrial Engineer

Plan to fail. Target 100% and work on the gap.

Prasanta Sarkar

Prasanta Sarkar is a textile engineer and a postgraduate in fashion technology from NIFT, New Delhi, India. He has authored 6 books in the field of garment manufacturing technology, garment business setup, and industrial engineering. He loves writing how-to guide articles in the fashion industry niche. He has been working in the apparel manufacturing industry since 2006. He has visited garment factories in many countries and implemented process improvement projects in numerous garment units in different continents including Asia, Europe, and South Africa. He is the founder and editor of the Online Clothing Study Blog.

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