Throughput Vs Output in Garment manufacturing
All garment manufacturers will agree how agonizing is it to execute small orders lesser than 1000 pieces per style. They argue that pre and post production costs and processes are similar for an order whether it is 100 pieces or 10000 pieces or 100000 pieces. Moreover, the effort to set a new style on the floor coupled with absolute rejections for every style demand a minimum run per style. Hence factories avoid small runs citing the pretext of economies of scale.
Let us first enumerate various traditional production systems and then try and co relate economies of scale.
Garment production systems are classified based on parameters like utilization of number of machines, layout of the machines and material flow, number of operators, quantum of Work In Porgress(WIP) etc.
1)Make Through system or Tailoring system
In this system a single operator performs all the sewing operations on a garment to compete it from start to finish and then starts making another garment. This system is easy to supervise but high in cost, low in productivity and calls for highly skilled operators referred to as tailors. This system is generally used for sample making or styles where quantities are bare minimum.
The sewing floor has several areas, each section containing multi-talented operators capable of performing all the operations required for a specific component. For example in case of a shirt, the making sections consist of collar, sleeve, front, back which are assembled in the assembly section and finished in the finishing section. Reasonable quantities can be easily manufactured with this system as the cost of manufacture is lower than the Make Through system. High level of skill is required plus monitoring of quality is important since all levels of operators are used. The WIP is high in this case. This system is used in cases where order quantities are not high enough for an assembly line but large enough to be made using tailoring system.
3)Assembly Line system
This system breaks each part of the garment into various operations. Each operation is performed by an operator. Since this is to be performed daily, the skill level required is low and consistency is very high. This system is suitable for mass production. The making cost per piece is much lower as compared to the Group System. But order quantity required is higher to avail economies of scale. This system is typically used for large orders produced for mass consumption.
The main features of the modular system are groups of workers with multiple skills in one module, group piece rate or hourly rate compensation, U-shaped module, and single piece hand offs; this system is called Group Technology or cellular manufacturing.
Flexibility is high but the operator skill set required is also high. Quality is improved but investment is high. It is very good for small runs despite higher costs involved. It is a good system for bridge to luxury brands.
Let us now review what entails ‘economies of scale’.
Larger the production runs, the more economically efficient does production become. In case of assembly line system, once the line is set, it takes a few days for production to optimise and then the line gives out throughput on a daily basis with simple monitoring. The effectiveness of the factory improves.
It is important to note that a production unit is just a part of the fashion value chain. We need to holistically look at the entire value chain in its entirety. In today’s market scenario, the customer has become discerning, opinionated and individualistic. Brands are getting commoditised. Consumers seek variety. Retailers need freshness on the shelves every week, but the space these shelves can dedicate to one brand is reducing with brands scurrying to occupy visibility amidst an overcrowded market. Brands are thus compelled to reduce the depth and increase width of styles. In this case, there is a tug of war between the brand managers and the sourcing managers. Factories need larger runs for economies of scale but marketing department of brands demand lower depth. I have experienced several brands giving in to the insistence of the manufacturing units to place higher MoQs notwithstanding the meagre capacity of the sales team to place the goods in the market. This leads to higher unsold inventories in the long run. Ultimately, it chokes the cash flow of the brand leading to closure of many brands.
We thus need to understand that efficiency of the entire value chain is more important than the solitary efficiency of the production units. Secondly, it is also imperative to note that there are ways and means to improve the efficiency of the production unit with smaller runs by effective use of resources and systematic training of manpower.
It is high time that production managers learn to adapt to methodologies where:
a)Operators are trained to work on more than one operation
b)Down time between 2 styles on the production floor is reduced by careful planning and use of industrial engineering techniques & tools
c)Wastages for shorter runs are reduced adopting Lean Manufacturing principles
d)Simultaneous management of several styles is made possible by using ERP systems
Factory managers must change the way they corelate larger runs with higher efficiencies. It is high time they realize that Throughput is more important than Output. The factory doesn’t have to produce higher quantities; the factory needs to produce those products in quantities that are demanded by the market.
Depending on the product and its positioning, factories should blend group system advantages with the merits of assembly line to obtain a balanced production system that can cater to mass market with reduced scale. Gradually, factories that shall be obstinate about only accepting orders with huge quantities will be out of business. Factories that understand that changing their mindset to suit the varying market demands will thrive.