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Costing in Textile and Apparel Industryin Garment Manufacturing

By: Vijaya Shanbhag

Introduction

Costing is a very complex procedure with set patterns and guidelines followed by theindustry and it is difficult to find out costs for every process as there are some inbuiltcosts while costing. The yarn is made and fabric is weaved and thus generates Greycloth.The general sequence of processes carried out on Grey cotton cloth to the final garmentis as follows:

bout 65-70% cost of the garment is the cost of the fabric and hence it is very crucial to

large variety of fabrics are used in the export/domestic market for different end uses.

sting

he Different costs to consider are

Direct Cost

Aget the right cost of the fabric from fabric manufacturers and suppliers.

ACosting depends a lot on quantity and order received. Buyers send specifications andthe fabric has to be developed as per the design trend. Garment manufacturers sourcefabrics with specific construction and characteristics in different quantities for differentend uses. Garment manufacturers struggle to get the best possible cost of the fabric. Itwould be interesting to know the important points to consider for getting acomprehensive understanding of costing. Costing seems to be a complex exercise as itdepends on a number of variables. Costs are calculated taking into consideration thecomplete production process and machinery involved.

CoTi)

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Cost of raw material 66%, cost of size and chemicals 4%, Production cost comprising ofrunning the machine, maintenance, power fuel, humidification, and other utilities-8%,andworkers wages and salaries 8% losses incurred due to shrinkage, wastage, grading,and also selling commissions.

ii) Indirect Cost

Interest on investment, loan, working capital, depreciation etc. above 7%, overheads andadministrative expenses like travelling, telephone, couriers, legal issues, taxescomprising of 7%.

iii) Profit10-20% depending on the order size. In some companies, 70%of the fabric cost willcompromise of direct cost, but in corporate selling only 40%cost of the fabric is directcost and 60% is overheads.

What are the factors which affect the cost?

Raw material cost

a) Type of raw material

This includes cost of fibre or yarn .The cost of this fibre will largely depend on its generictypecotton, linen, wool, silk, nylon, rayon, polyester, polyester cotton blend, etc andalso its quality. The yarn cost will depend on the count of the yarnfiner the yarn ,moreexpensive it will be. The cost of man-made spun yarns will depend on the fineness- finerthe yarn, more expensive it is. Number of fine filaments used in making the yarn will alsoaffect the cost. Bright yarns are more expensive than dull ones. Textured yarns are moreexpensive than flat because of additional process cost.

b) Amount of raw material or GSM of the fabric.

Amount of raw material is reflected by the weight or GSM (Gms per square metre) of thefabric. GSM is directly dependent on the EPI (ends per inch) and PPI (picks per inch) orconstruction of the fabric and is inversely proportional to the count of the yarn. Relationbetween GSM and cost is a little complex. For the same variety of the fabric as the GSMincreases the cost increases. But when the yarn becomes very fine and there is avariation in picks per inch in the fabric, then the cost of spinning and weaving plays amore important role than the GSM and even when the GSM is similar, the cost of voilefabric with finer yarns and more picks per inch is more.

Weight of fabric is the weight of warp and weft which can be calculated by the formulabelow:

Weight of the warp in grams /sq mt of fabric= EPI x0.6--------------- = Acount of warp

Weight of the weft in gms /sq mt of fabric = PPI x 0.6-------------- = B

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count of weftGSM = A+ B

Sizing and chemicals cost

The sizing cost depends upon the count of yarns.The count becomes finer the size andchemical cost increases. As a rich solution, better quality of size and chemicals isrequired for better strength.

One needs to add Rs 35/per kg as additional cost which includes steam, power orwages.For two plied yarn no sizing is needed.

Production cost or Cost of weaving processor Wet Processing

It includes machine running cost, maintainence, labour cost, power and fuel etc. Theweaving cost is affected by the beam size- if the beam is small in length ,the cost will bemore as beam gaiting and knotting will add to the cost.

Mill made or powerloom made:

The quality of the mill-made fabrics is better than powerloom made fabrics in terms ofyarn quality; therefore cost of fabric is higher. At times it can be as high as 25% eg. Thecost of 40s poplin 92x88 can vary between Rs. 22/mt and Rs. 34/mt.It depends on thetype of loom whether powerloom, rapier, air jet, dobby, or jacquard and the weave andconstruction.

Cost of fabric varies from place to place. The fabrics produced in different textile centreslike Bhiwandi, Surat, Benaras, Meerut, Panipat, varies and hence cost varies due tovariation in quality.

For yarn dyed stripes and checks in handlooms the efficiency is affected by the numberof colours in the weft but mill-made stripes and checks are made on Sulzer loom inwhich the production is not affected by the number of colours in the warp or weft.

Wastage and shrinkage

Wastage of 2-3% in warping and weaving and shrinkage of 1-1.5% from loom to greyfolding stage is included in the weaving cost. About 92% of fabric produced is sold asfresh. The value loss is about 7% while running cotton material but is only 3% in usingpolyester yarn.

Processing Cost

The processing cost includes bleaching and whitening if white fabric is sold; includesdyeing cost if dyed cloth is sold; includes printing cost if fabric is dyed and printed; andgarment cost included if fabric is sold as Garment.

Generally in composite textile mills fabric is sold as garment in Retailers shops. In smallweaving houses fabric is sold as cloth to process houses. In Process houses Processingis carried out as per the above flow diagram right from grey cloth to dyed or printedfabric and this dyed/printed fabric is sold to Garment houses where garment is prepared

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and displayed in Shops or Retailers shops. When people buy the Garments (dresses)the garment cost is inclusive of all above parameters. When people buy bedsheets orsarees, curtain cloth ,furnishings etc. after it is well processed it will not include garmentmake-up cost as the fabric is sold in cloth form without making the garment.

Bleaching costs/ Dyeing Costs/ Printing Costs

These costs depend on whether the fabric as white is sold, or dyed cloth is sold; orprinted cloth is sold; or garment is sold. We in this case shall consider that dyed clothand dyed and printed cloth is sold. So costs incurred will be dyeing and dyeing andprinting cost.

Cost of Dyeing

Cost of dyeing depends upon:

Length: A minimum of 2,000 mts of fabric is accepted, if the quantity of fabric is moresay 15,000 mts or 20,000 mts then the processing charges will be lowered by about

Rs 1 - 2/mt.

Width of the fabric:

If the width of the fabric is doubled ,the cost of processing is not doubled. So it isbeneficial to go for wider width fabrics rather than fabrics with more length. This isbecause the overheads and cost of running the material are dependent on the lengthand not the width.

Shade %:

Lighter the shade lowers the cost. The amount of dye required is less as well as time

required for dyeing is less. e.g. for dyeing pastel shades if it takes 24 hours, it takes 36hours for dyeing black shades and dark shades.

Class of dye and quality:

Some dyes are more expensive than the other. e.g. Vat dyes are more expensive thanthe reactive dyes and better expertise is required for dyeing,so for the same shade thecost of a fabric with vat dyes is more than a fabric dyed in reactive dyes.The choice ofthe dye depends on the buyer,the fastness properties and also on the shade selected.

Colour:

Within the same dye class some colours are more expensive than the others.For e.g.Turquoise colours are more expensive than others.

Metamerism:

Some colours change their shade in different lights .If shades are matched in two orthree lights only then the cost is less but when the matching is required in all the sixlights, natural daylight( D-65) ,Tube light ( TL -83 ),Horizon ( yellow light as producedduring sunset) ,Incandescent, ( Inca A), Fluorescent ( CWF or cool white fluorescent),

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Ultraviolet light (uv, UL -30 or ultra lume),or no metamerism is required then betterquality dyes are required and the cost is more.

Weight of the fabric:

Lighter the fabric quicker is the dye pick-up so lesser is the dyeing time required.

Capacity of the machine is expressed in weight of the material, for lighter weight fabricsmore length of the material can be processed at one time,so dyeing cost is reduced.

All the above prices are for a minimum quantity of 1,500 to 2000mts and if the quantity isless the price will go up.This principle applies for all yarn dyed fabrics also.Pastel shadesare dyed in procion cold brand dyes and medium and dark shades are dyed in hotreactive dyes.

Cost of Printing

Depending on the class of dyestuff used and style of printing employed, suitablecomponents are selected in making print paste in Printing process. Variety of chemicals

is available in each group of components and a particular compound used for one classof dye may not be suitable for use with another class of dye. Thus print paste comprisesof dyestuff, chemicals and thickeners and costing in printing industry is done on basis ofPrint /metre depending on type of print.

Higher the depth of printing higher is the cost similar to dyeing. Here also dark shadesrequire more of dyes, chemicals and thickeners and hence become more expensive. Vatprinting is expensive to reactive printing. Here too choice of the dye and type of printdepends on buyers specifications, shade and fastness properties of print.

Finishing Cost

If softeners are added in the jigger after dyeing ,then the cost is Rs.10/kg whereas if it isdone on a separate machine and later on stentering is done then the cost is Rs 20/kg.The quality of fabric is better in second case as the cover is better and there is noshrinkage later.

Shrinkage and wastage

It is important to note that wastage and shrinkage are integral part of the costing.Generally a minimum shrinkage of 5- 7% is acceptable.Thus Cost of Fabric = Cost of fabric+ dyeing charges + Printing charges + finishingcharges + shrinkage + wastage.

Costing depends a lot on quantity and orders received. Indirect cost is about 15-20%.Ontop of the cost a profit of about 15-20% is added. It is not only the cost of final productthat matters.

For an export product (here product can be fabric or garment) cost is given as FAS (Freealongside), FOB (Free on board), CIF (Cost insurance and freight), LDP (Landed andduty paid.)

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FAS-It is the cost of finished goods plus it includes delivery of the goods to the port, docketc. This cost does not include the shipping, loading on to ship or any other costsincurred.

FOB It is the cost of finished goods, cost of delivery of the goods to port and loadingonto the ship, plane etc.The cost does not include the shipping or any other costs

incurred from that point.

CIF - It includes the cost of finished goods plus it includes the delivery of the goods tothe port, loading on the ship, shipping charges, all applicable insurance fees along theway. The price does not include going through customs or any duties or other costsincurred from that point.

LDP It is the cost of the finished goods, plus it includes the delivery of the goods toport, loading on the ship, shipping charges and the goods brought through the customswith all applicable duties and taxes paid.

Lead time plays an important part in domestic and export market. Generally for

production of greige fabric the lead time is 30 days. Processing time for grey fabric is 15 20 days but when the buyer needs urgency then the above costing parameterssometimes are not significant. It depends on the demand and supply. If you can deliveron time you can ask for the price.

Cost of Garment

This cost will be stitching cost. i.e. Garment manufacturing cost. Also in some cases thegarment processing cost comes into picture as some garments are given chemicaltreatments for some fashion outlook. But in our case we will consider only garmentmanufacturing cost. i.e. stitching cost.

Thus Cost of Garment = Cost of fabric+ dyeing charges + Printing charges + finishingcharges + shrinkage + wastage + stitching cost.

Conclusion:

Thus from the above it is seen that costing is a very complex procedure. There are setpatterns and guidelines followed by the companies in their very own format. It is difficultto find out costs for every process as there are some inbuilt costs while costing. Costing

depends a lot on quantity of orders received.

Following proper norms and guidelines keeping all the above factors in mind and properplanning one can carry out costing and reduce or increase the price of final garment as

one desire.

Thus by trying to keep the wastage to a minimum one can increase profits to a greaterextent.