How to reduce production costs in a factory (production manager’s guide)

This article is written by Shobhit Jindal.

Production manager's guide to reduce production cost

As a production manager, you will be given a target to increase daily garment production.  

Garment factories normally work constantly to achieve the given target by taking various measures like deploying more manpower, doing overtime work, increasing WIP, etc. When we are successful in increasing production we forget the amount of input we have taken to achieve the desired target.

Many of us end up taking more input than the required one. Thus, we increase the cost of production.

As a production manager ask these questions to yourself:

  1. What benefit it does to the organization if more resources are used to increase production than required?
  2. How to increase production and at the same time reduce/ maintain production costs?

As a production manager, you need to focus on reducing production costs and motivates your team to do the same.

You should daily monitor the profit and loss report and figure out ways to reduce costs.

In this article I have discussed few ways that will not only increase production but will also reduce production costs:

1. Multiskilling operators - Introduce floater concept

The most important factor of cost is labor wages. If we can reduce manpower in the production area then the overall cost can be reduced by a good margin.

To reduce manpower focus, one should be on employing multiskilling operators. Emphasis should be given on training for operators on those operations which cause bottlenecks.

For example, if there is a higher absenteeism rate or if the company struggles to retain a specific operator then operators from other operations should be trained for that operation. You can identify the top 5 operations which cause production loss or balancing issues on daily basis. 

2. Introduce floater operators

Floaters are those operators who can do two or more operations (except their primary operation) with at least 50% efficiency. There should be at least 10% (of total manpower) floaters on any given day.

These floaters can be trained on those operations where manpower or skill is usually less. This will help to balance a line and achieve the target on daily basis even some operators are absent.

To motivate operators to become floaters, you can introduce an incentive scheme. The incentive could be fixed or efficiency-based depending on the factory.

In this way more and more operators will come forward to become floaters. Skill matrix can be used to monitor their skills and efficiency level. Utilizing floaters will help to reduce manpower and achieve targeted production.

3. Deskilling operations - use of folders and machine attachments

Deskilling operator will help to increase production capacity of operator for that operation. For deskilling operations, industrial engineers (IE) need to work on finding innovative ways. Like the use of folders, attachments, profiles, pressure foot, template, etc where applicable. Customized folders can be developed with the help maintenance team. 

Deskilling also eliminates the need for extensive training for any operation. 

This initiative and the right application of folders and attachments will reduce the training cycle and retain operators for a long time. It also helps to reduce SAM which in turn will reduce cost.

4. Reduce helpers and upgrade them to sewing operators

Helpers are those who help in product transformation indirectly. For example, activities like marking on garment panels before stitching operation, ironing parts, folding, trimming threads, matching components are performed by helpers. 

You should focus on reducing the use of helpers in a sewing line. Look for alternative ways.

This can be done by adopting better practices like drill marking in cutting instead of manual marking in sewing, thread trimming by the operators themselves, etc.

You can train them on machine operations and improve their skill level. By reducing helper from a sewing line productivity can be increased with no increase in manpower. 

Reducing the number of helpers does not mean that you need to remove helpers from the factory. Instead, upgrade your helpers into sewing operators or pressmen or a quality checker based on their skill and interest through the training program. They will be your asset in the long run.

5. Reduce rework and number of quality checkers- Concept of self-checking

Wonder how much cost it takes to do all the rework in a day?

This is one of the primary objectives of a production manager to maintain product quality. But somehow it becomes the responsibility of the quality team only. If one has to reduce production costs they should focus on reducing rework and rejection rate on the production floor. This can be done with the help of the quality department.

Regular monitoring, adequate training, the concept of self-checking among stitching operators will help to reduce rework and rejection rates. If there are fewer quality issues then you can work on reducing and eliminating the need for quality checkers.

Self-checking concept among sewing operators is a tough task but if sustained then benefits are unimaginable.

So, as a production manager, you should work in this area to improve production cost by reducing rework/ rejection and if possible reducing manpower.


Related article: Cost of quality in garment manufacturing


6. Reduce overtime working

Ask a production person the value of overtime in achieving daily production targets. They will never say no to overtime. It has become a habit now and much difficult to eliminate. A production manager should see the possibility to reduce overtime hours.

More importantly, overtime should not be used to complete targets but it should be used to built WIP in those operations which are bottlenecks. This should be well planned in advance and fully utilized. Reducing overtime will help in reducing production costs.


Related article: Overtime work in the garment industry – is it cost-effective for factories?

7. Reduce material wastage- trims, fabric

Raw material holds the highest portion of a garment cost. Fabric alone accounts for almost 60-70% of the total cost of garment manufacturing. The utilization of fabric is the most important with respect to cost-saving.

Almost all the factories use CAD software for marker planning. They spend huge money on the software. But what happens after cutting. Do we really care to utilize the fabrics the right way?

After cutting when the cuttings enter in sewing a lot of fabrics get wasted in re-cutting, parts replacement, remaking lost garments, etc.

A record needs to be prepared to monitor these fabric wastages. The same goes for trims. When we enter on a production floor, the most common fact we see - trims are lying on the floor like thread, buttons, laces, and tapes. And once the order is closed these trims are thrown away without realizing the value of same.

This ends up consuming a lot of trims than required in completing an order.

For example, a thread holds its value till the time order is running. After that, we can see thread cones lying here and there. Since it is not returned in stores and taken into account in OCR (order completion report), no one knows actual thread consumption. So we end up ordering extra thread again and again taking higher wastages during costing.

But this cost can be reduced easily. You need to monitor leftover fabrics and trims at the end of each order so as to analyze reasons and how to reduce wastages in the future. This will surely help to reduce production costs.


Related article: 'Cost optimisation’ – the need of the hour for factory owners (Apparel Resources)

8. Increase line efficiency

Increasing efficiency leads to reduced wastages and helps to produce maximum output in minimum input required. 

Improving the utilization of sewing machines, sewing operators, and other resources by following all the above-mentioned ways can increase production efficiencies.

Conclusion

Nowadays, competition in the apparel manufacturing business is high, and staying in the business is challenging. One needs to work different way from everyone else. 

Achieving cost competitiveness will benefit organizations to get an edge over others. This can be possible by reducing production costs. Production cost control and cost reduction are the most important roles of a production manager.


About the author

Shobhit Jindal is a graduate from NIFT with a degree in apparel production. He has done his MBA from Amity University in Operations. He has a total experience of 6 years in the apparel industry in the field of Industrial engineering, Quality control and audit, Production, and Product Development.