Costing technique in clothing industry In order to achieve perfect garment costing, one must know about all the

activities including purchase of fabrics, sewing, packing, transport, overheads, etc and also about their costs, procedures, advantages and risk factors, advocates C Vigneswaran. The Indian textile and apparel industry is very large and diverse, employing 35 million people and accounting for 27 per cent of the country's exports. The apparel industry plays a pivotal role as a key driver of the national economy and has grown to be the most significant contributor to the country's economy over nearly three decades of its existence. However, during last 10 years, the industry's actions, government policies as well as market events have begun to converge, providing several growth opportunities for the sector domestically as well as in the global market. As the MFA quota-regime ended, India presented many opportunities for buyers, suppliers and investors to collaborate with its textile industry, and to profit from the partnership. While the industry recorded a remarkable growth in a protected market environment, it faces a series of challenges that have come to the fore in the post-quota situation, notably in areas such as:

Price competitiveness. Faster lead times. High raw material base. Full service offering. Access to market. "A Cost is the value of economic resources used as a result of producing or doing the things costed".

Garments costing There are two types of garments, namely woven and knitted garments. Shirt, trouser, sarees, bed spreads, blankets, towels and made ups are woven. T-shirts, sweaters, undergarments, pyjamas and socks are knits. Costing is the deciding factor for fixing of prices and the important thing to follow in all stages like purchase, production, marketing, sales, etc. Also update knowledge about everything related to garments, is essential to make perfect costing. Costing includes all the activities like purchase of fabrics and accessories, processing and finishing of fabrics, sewing and packing of garments, transport and conveyance, shipping, over heads, banking charges and commissions, etc. We must be aware that there are always fluctuations in the costs of raw materials and accessories, charges of knitting, processing, finishing, sewing and packing, charges of transport and conveyance. The method of making costing will vary from style to style. As there are many different styles in

garments. Hence let us take men's basic T-shirt style as example which is in regular in use. To find out the costing of a garment, the following things should things be calcuated: Fabric consumption. Gross weight of other components of garment. Fabric cost per kg. Fabric cost per garment. Other charges (print, embroidery, etc). Cost of trims (labels, tags, badges, twill tapes, buttons, bows, etc). CMT charges. Cost of accessories (hangers, inner boards, polybags, cartons, etc). Cost of a garment. Price of a garment.

Fabric consumption The garments manufactured in many sizes to fit for everybody. Generally they are in sizes Small (S), Medium (M), Large (L), Extra large (XL) and Double Extra Large (XXL). The quantity ratio or assortment can be any one of the following approximate ratio. S: M: L: XL: XXL - 1:2:2:2:1 S: M: L: XL: XXL - 1:2:1:2:1 S: M: L: XL: XXL - 1:2:3:2:2 As the price is the same for all these sizes of garments, the author have taken the centre size large(L) for average calculation. Generally, the quantity of L size will be higher or equal to the quantity of each of other sizes. Men's Basic T-shirt Description: Men's Basic T-shirt-short sleeves- 100% Cotton 140 GSM Single jersey - 1 x 1 ribs at neck - solid dyed - light, medium and dark colours in equal ratio. Sizes: S, M, L, XL, XXL Ratio: 1: 2: 2: 2: 1 Export carton: 7 ply -120 GSM virgin corrugated - sea worthy. Cartons are to be strapped with 2 nylon straps. Measurements in cm: (Finished garment)

Size: L Chest - 60 cm Length - 78 cm Sleeve length - 24 cm Neck rib width - 3 cm Hem - 3 cm Patterns are generally made with the seam allowance and cutting allowance. Generally, 12 cm is added with the total of body length and sleeve length. That is, Fabric consumption =(Body length + Sleeve length + allowance) * (Chest + allowance) * 2 * GSM 10000 = (70 + 24 + 12) * (60 + 3) * 2 * 140 10000 = 187 grams Body & Sleeves : 187 grams Neck rib : 10 grams (approximately) Gross weight : 197 grams Therefore, the fabric consumption per garment is 197 grams. Gross weight & net weight The above weight is the gross weight of fabric. It means the weight of the fabric bits cut in tubular form without taking shapes is called gross weight. This is the consumed fabric for the particular garment. Hence costing is to be made as per this gross weight. The weight of the cut pieces after taking the shape according to the pattern is called net weight of fabric. Fabric cost per kg (in Rs) (all charges approximately) Cost of fabric per kg is calculated and given in Light colours Medium colours Dark colours Rs.135.00 Rs.135.00 Rs.135.00 Rs.8.00 Rs.8.00 Rs.8.00 Rs.35.00 Rs.45.00 Rs.55.00

Particulars 34's combed yarn Knitting charge Dyeing charge

Compacting charge Fabric wastage @ 5% Fabric cost per kg Fabric consumption per garment Fabric cost per garment

Rs.6.00 Rs.9.20 Rs.193.20 197 gms Rs.38.06 Cost of trims

Rs.6.00 Rs.9.70 Rs.203.70 197 gms Rs.40.13

Rs.6.00 Rs.10.70 Rs.224.70 197 gms Rs.44.27

The accessories which are attached to the garments are called Trims. Now the author have taken Men's Basic T-shirts, as example. Let us see what are the trims required for this style. Labels: Woven main label (2.5 cm width x 7 cm length): Rs 0.35 Polyester printed wash care label: Single colour print: Rs 0.10 Hang tag: Rs 0.40 So the total cost of trims is Rs 0.85 per garment. Cost of accessories: Polybags: Normal - Rs 0.30 per garment Master Polybag: Rs 2 per master polybags to contain 8 garments - Rs 0.25 per garment. Export carton: Normal: Rs 40 per carton to contain 48 garments - Rs 0.80 per garment. So the total cost of accessories is Rs 1.35 per garment. Garment costing Now we at last have to take the step to find out the freight charges for the Men's Basic T-shirt. Price of garment estimation is given in Table 2. Table 2: The freight charges for the Men's Basic T-shirt. Price of garment estimation is given Particulars Light colours Medium colours Dark colours 34's combed yarn Rs.135.00 Rs.135.00 Rs.135.00 Fabric cost per garment Rs.38.06 Rs.40.13 Rs.44.27 Cost of Trims Rs.0.85 Rs.0.85 Rs.0.85 CMT Charges Rs.11.00 Rs.11.00 Rs.11.00

Cost of accessories Rejection of garments (commonly 3%) Cost of Garment Local Transport Profit@15% appro. Commission/ pc Price of Garment Shipping charges

Rs.1.35 Rs.1.50 Rs.52.76 Rs.1.00 Rs.7.90 Rs.2.00 Rs.63.66

Rs.1.35 Rs.1.50 Rs.54.83 Rs.1.00 Rs.8.20 Rs.2.00 Rs.66.03

Rs.1.35 Rs.1.50 Rs.58.97 Rs.1.00 Rs.8.90 Rs.2.00 Rs.70.87

For men's basic T-shirt, the delivery terms in the buyer enquiry as 'FOB'. So sea freight charges is not added. But the local transport with the cost of garment has to be added. Finally, we have to convert the Indian rupee value to USD or Euro. Acknowledgement The author expresses his thanks to Dr R Rudramoorthy, Principal and Dr K Ramachandralu, Professor & Head-Fashion Technology, PSG College of Technology, Coimbatore for their continuous encouragement. He also extends his thanks to Mr M Ravi, Costing Manager, Stallion Garment, Tirupur and Mr Jagadeesh, Production Manager, Apple Clothing Limited, Coimbatore for their help towards the practical approach in bringing out this paper. Note: For detailed version of this article please refer the print version of The Indian Textile Journal May 2009 issue. C Vigneswaran. Lecturer, Daprtment of Textile of Fashion Technology, PSG College of Technology, Coimbatore 641 004. Email : vignes_waran@rediffmail.com. Fabric usage & various fabric losses in cutting room

The percentages of various costs which add up to give the garment cost are as follows: raw material cost 50 %, direct labour cost 20%, indirect labour charges and factory overheads 30%. The relative cost of raw material is the point of discussion here. The raw materials include fabrics, sewing thread, trims and accessories (button, zipper, fusible interlining, embroidery, bidding, labels, narrow fabrics, motifs, etc) used in the garment. The raw material cost ranges from 40% for hosiery to 60% for lingerie. The cost of fabrics is 80% of the cost of raw material. Though all materials are important for the garment, the fabric being the dominant among the cost factors should be managed properly. It can save many dollars if properly managed. Mostly all the papers and research works are based on improving the marker efficiency. But very few work or research has been done to reduce the fabric losses outside the marker. For proper costing of a garment, and cost reduction, it is necessary to have good understanding of the fabric utilisation and various fabric losses that occur during garment production. In this article, the fabric utilisation and the various fabric losses that occur in garment production are being discussed. Fabric utilisation Before discussing about the fabric utilisation, one should have knowledge about various widths of fabric used in garment production. The fabrics can be broadly divided into the following three categories: 1.Tubular Knitted Fabric: These fabrics are produced by circular knitting machines and may or may not be slit after production. If a slit is made, then it falls in the category of 2 or 3 discussed below, otherwise it is spread and cut in tubular form. Mainly the underwear and leisurewear falls under this category and the fabric width corresponds to the dimensions of the body panels as shown in Figure 1. Figure 1. Tubular Knitted Fabric 2. Narrow Open-width Fabric: The fabrics having a width of one metre fall under this category. The fabric width can accommodate two body pieces during marker planning as shown in Figure 2. In this type of fabric, during the pattern making process all the patterns for the medium size is done and it is

then graded to sizes above and below it. Then in the marker the patterns are paired in such a way that the additional space occupied by the larger pieces is compensated by the corresponding lesser space occupied by smaller pieces. Maximum marker efficiency can be achieved if the numbers of smaller pattern pieces in the garment are relatively more (eg, mens shirt, ladies blouses etc.). Figure 2. Narrow Open-width Fabric 3.Wide Open-width Fabric: This type of fabric is having a width of 1.5 metre and three body pieces can be placed in the width of the fabric as shown in Figure 3. In this type of fabric there is very wide room to achieve maximum marker efficiency, as there is no constraint of fabric width. The highest marker efficiency can be achieved for the garments having large number of smaller parts as well as for the garments having relatively larger patterns. Figure 3. Wide Open-width Fabric Requirement of fabric in relation to garment style Among the various processes of garment production cutting is the major area where fabric waste is generated. In the cutting room much attention should be given to reduce the fabric wastage. One of the methods to minimise the fabric wastage is to prepare the most efficient marker by the CAD system. A marker is a diagram of a precise arrangement of pattern pieces for all the sizes of a specific style that are to be cut from a single spread. Marker planning or marker making is the process of judicious arrangement of pattern pieces according to the fabric width for various sizes so that there is maximum fabric utilisation. The process of getting the most efficient marker requires time, skill, mathematical ability and concentration. Nowadays, the CAD systems support in pattern digitizing, grading and marker making. The number of markers required, the number of complete patterns of each size in a marker, and the number of ply that will be cut from each marker is decided according to cut order planning. The most efficient size ratio is 1:2:2:1 (ie, a marker may contain one small, two medium, two large and one extra large). Additional markers may include only small and medium depending on the number of pieces for which the order is received. Markers are made according to the fabric width and the quantities of sizes. If the marker is wider than the fabric width the patterns at the edge of the fabric will be incomplete and if the marker is narrower than the fabric width, there is fabric wastage. When the fabric width is highly inconsistent, the fabrics in a lot may be grouped according to the width and different markers are made for each group. Marker efficiency

Accurate Fabric Costs - Improving Fabric Yield Estimates

by Robert Broadhead In this article I address the process of estimating fabric yields, the complications involved in offshore contracting, and how to be as accurate as possible in predicting/negotiating fabric costs. Fabric is 25-40% of the cost of manufacturing a garment, so accuracy here is worthy of attention. (We've heard this a lot over the years, but it's worth repeating. No other single refinement in production can provide substantial cost savings as easily as fabric control.) Controlling or negotiating fabric costs has become more complicated as overseas manufacturing and cut-make-trim (CMT) / package programs have grown. Before work went offshore, in-house fabric yield estimates and final production consumption reflected cutting department work (either the manufacturers or a local contractors) that was readily known and monitored. However, it is surprising that many businesses do not track the variance between the actual cost of fabric at the end of production and the estimated cost of fabric on the bill of materials. This can significantly impact the bottom line. CMT Programs With CMT programs, contractors are essentially being paid for their labor while the Retailer or Manufacturer (R/M) supplies the fabric; therefore, tracking fabric yield often does not get the attention it warrants from the contractor. Cutting department procedures may vary in other countries and problems of time, distance, and culture may also affect results. However, the R/M still controls the patterning and yield estimating process and should have a good idea of expected usage. Regardless of who does the production markers it is important to reach an agreement in advance of production about how variances in consumption will be handled. Package Programs Package programs further complicate estimating and negotiating accurate fabric yields. Retailers and Manufacturers are asking Contractors to bid on package programs based on limited information (e.g., a spec sheet, sample garment, and, perhaps, a "block" pattern) with a short period of time to return a bid. Both parties understand that all the information needed to establish an accurate fabric yield is not available at the time of the price negotiation and everyone wants to avoid up charges and renegotiating costs after their final pricing and margins are set. Given this climate the Contractor is in a bind. They don't want to bid too low and lose profit margin but also don't want to bid too high and lose the business. The result is often a moderately high bid from the contractor to allow

for changes in the final patterning and other unsettled aspects of final production. The R/M also has limited ways to evaluate the accuracy of the yield since they no longer create a finished pattern. An important question for the R/M is whether it is worth it to create a pattern and develop it sufficiently to provide an accurate estimate for negotiating fabric costs. In an environment of faster turn times and less information to work with, we'll look at the possible ways to estimate fabric usage and the pros and cons of using each in Local / CMT / Package programs. But first, let's look at the main factors affecting final production consumption, which is what we want to estimate. What Happens in the Cutting Department Graded patterns are marked to produce the quantities ordered in each size. These markers reflect the final fit patterning, proper grading of sizes, fabric cuttable width, and the percentage of production being produced in each size. In spreading fabric, the marker sections are overlapped at the ends by a small amount and this also adds to fabric consumption. Fabric quality affects how much damaged material is going to be lost in the spreading process, so there is a "damage cut out percentage" that can be quantified at the end of production. Other impacts on material utilization are allowances for fabric quality testing, bias, and re-cutting garment parts. Fabric consumption at the end of production, then, is dependent on these components: 1. Final fit pattern 2. Pattern grade 3. Fabric cuttable width 4. Distribution of units in the size range 5. Marker section overlaps 6. Damages cut out in spreading 7. If applicable, fabric quality testing, bias, and re-cuts Estimating Production Yield Fabric yield estimates are an attempt to account for these components of material utilization. More detailed and accurate itemization of production processes in the estimate gives more accuracy. Less detail and more averaging leads to less reliable estimates (a common approach, for example, is making a sample size estimate marker and adding an average percentage to the yield to account for all the other components). Estimates are often done at three stages in the style development process. A design estimate may be made early in the design phase to determine if the style can be produced profitably. This is the least accurate "ballpark" estimate because the final determination of patterning, fit, and fabric cuttable width and quality may still be in development. Once a style has been adopted as part of a line a fabric purchase estimate is needed. Accuracy here is very important since 25-40% of the cost of manufacturing will be spent using this "yards per garment" number. Most of the components of production yield are

nearly in their final form, so good estimate numbers are possible. That is, the pattern is close to final fit approval and the fabric source/cuttable width/quality are available. The fabric quality, in the form of an inspection report from the mill, can be converted into an anticipated damage percentage that will be cut out in spreading (more on this later). While a significant percentage of sales numbers are still missing, if any at all are available, past season's sales percentages by size are available for a similar style and are a sound basis for yield estimate calculations. The final estimated yield is made going into production in the form of a cut plan. The cut plan can be made for a single order or for the entire season's production on the style. Production markers are made to cut the quantities sold in each size. They reflect the verified cuttable width of the fabric. The historic or calculated damage cut out percentage is added to the marker yield, as is the historic or standardized marker section overlap allowance. When final production units and yardage used are recorded, this actual yield is compared to the design, fabric purchase, and cut plan estimates to calculate the percent error at each stage. Tracking estimate error allows gain/loss calculations and the opportunity to identify improvements in the process. Let's examine the methods available to estimate fabric yield and which are best applied to each type of program. 1. Duplicate the production process. I worked for a children's wear screen printing firm that sold only a few basic styles, in a fixed ratio, in a limited number of fabrics, year after year. Nearly all the components of production yield were known and only the screen printing varied. We made full sets of ratio production markers for fabric purchase estimates and were very accurate in our estimates of final production usage. Due to the simplicity of the patterns this was cost effective and could be done within our design and production time schedule. Design estimates were not needed as our production history provided the ballpark yields needed. Cut plans were made on an order by order basis but not for the season, since the fabric purchase estimates were very accurate. This was an unusual situation as most companies cannot afford the time or cost of fitting, grading, or production marking early in the production cycle. 2. Use Graded patterns for estimate markers. Graded patterns usually offer a more accurate way to estimate yield than using the sample size pattern. For example, look at an 8-18 size range with a sample size 10. size 8 10 12 14 16 18 % of Production 8% 17% 25% 25% 17% 8% = 100% Sales Ratio 1 2 3 3 2 1 Using a size 12-14 combination in the estimate marker has two advantages: 1) these sizes represent 50% of production, and 2) they fall in the middle of the size range and so they more accurately represent the yield of the 10-16 and 8-18 size combination production

markers. To this "marker yard per garment" yield can be added allowances for damage, overlap, etc. For Local and CMT programs, the improved accuracy of the fabric purchase estimate usually justifies the time and expense of grading. For Package programs, the main question is how much work is going to be done on patterning, if any, for the sake of evaluating bids and negotiating fabric costs. The simple answer on this is patterning is worth it! More on this later. 3. Use sample size patterns for estimate markers and averaging the other components of production. This is one of the most common procedures but has serious limitations. In the above 8-18 example the sample size 10 represents only 17% of production and the marker layout does not represent the 12-14, 10-16, or 8-18 pattern arrangements. An average percentage can be added to the size 10 estimate marker to compensate for this discrepancy but there will be a significant error in this averaging from fabric to fabric and style to style, even within a body type. An additional source of error is that most sales numbers do not occur in a convenient 1-2-3-3-2-1 ratio, as in this example. For Local/CMT/Package programs, marking a sample size pattern and adding a lumped average percentage (representing grading, damages, etc.) at any stage of estimating yield leads to a high error rate that can be avoided. 4. Estimate yield using a similar style from a previous season that has a known production yield. Without a pattern, the accuracy of the estimate gets even more erratic. Small patterning differences can cause larger than expected yield variances. A review of 17 styles of women's 5-pocket jeans all marked at 61.5" showed final production yields from 1.11 to 1.32 yards per garment - a 19% difference! Trying to mathematically convert the yield of a similar style marked at one width (e.g. 62") to a new style at a different width (e.g. 54") will skew the results further. With Package programs the R/M that chooses not to develop a patterned estimate is vulnerable to overcharges on fabric. A company recently approached me saying that by evaluating bids based on similar styles their average negotiated fabric cost was 15% high. 5. Estmarktm software is a new offering to the apparel industry that accurately estimates fabric yield by itemizing all the components of production into its calculation. The accuracy of the results depends on the quality of the data entered. If the seven components of final production consumption, listed above, are used with a sample size estimate marker the results can be accurate to within one percent of the actual final production consumption. If a "block" or non-final-fit pattern is used and averages are itemized for each of the other components the error can be held to under five percent, on the average. The fabric purchase estimate for Local/CMT/Package programs will fall within a 1-5% error depending on the accuracy of the data input. The software also includes a conversion program in which the damage cut out percentage is calculated by inputting a fabric inspection report; a useful tool since inspection reports are readily available from fabric mills and damage cut out percentages vary widely. Using the infant's wear example below in the size range Small-5XL with a sample size Medium estimate marker, it becomes easier to see how this process is better than the others.

Size % of Production Pattern Grade

S M L XL 2XL 3XL 4XL 5XL 6% 9% 18% 19% 16% 15% 11% 6% 9% 0% 8% 17% 26% 35% 42% 48%

Using any simple combination of graded sizes, much less the sample size, in an estimate marker will not adequately represent the pattern grade or the distribution of production within the size range. With Estmarktm, each percentage of pattern grade and unit distribution within the size range is used in the calculation, so there is no averaging. The resulting estimated yield can only be improved on by making a full set of production markers. Estmarktm is a tool for Retailers/Manufacturers/Import Brokers/Contractors to achieve a fact-based partnership. The calculated yield is as accurate as it can be using the best data available at the time. If any of the items in the calculation change (e.g., fabric width/quality or patterning), the itemized process provides the fact-based recalculation format for any yield adjustment.