10 Essential Formulas for Production Calculation in the Apparel Industry

You might be using the formula to calculate standard time, labor productivity, and labor cost per minute.

There are many such common performance measures we need to calculate every day for preparing daily reports and measuring performance in various parameters. Many use online calculators to find results.

In this article, we will try to understand how the basic performance measures are calculated and the formulas that are used for calculating those measures.

In the apparel industry, industrial engineers, production managers, and production planners measure the factory performance daily by following a standard formula for each measure. You might be already using such formulas for calculating your factory performance. For example, industrial engineers

prepare OB sheet,
measure key performance indicators (KPIs)
prepare daily reports on factory performance, and
line performance in terms of productivity and efficiency.

They also measure line capacity as well as individual operator capacity in the given hours. All these are essential for production management, balancing work, and planning production and manpower.

As these are common measures in apparel production, most of the factories use Excel templates to prepare such reports and calculations where the Excel templates are pre-filled with formulas. We just follow the report template. We don’t need to calculate every time we make a report. So, many times we are not clear about how to calculate a particular measure.

Let’s discuss 10 basic production measures and the formula used to calculate those measures.

1. Hourly production target

Hourly production target calculation is a part of an OB and daily production report. Hourly production target is calculated for individual operators as well as for a line as needed. In an OB production target is calculated for each operation. The following formula is used to calculate the hourly production target.

Hourly production target = (60 / Operation SAM)

Note: This target is calculated at 100% efficiency. If you want to plan an hourly production target at a certain percentage (i.e. at 75% efficiency), multiply the above by line efficiency for line target calculation. Multiplying the value by individual operator efficiency to calculate individual operator target and operation-wise target.

A few examples are shown for calculating hourly production targets at 100% efficiency in the table below.

Table 1: Examples of hourly target calculation

2. Daily Line Target

Like the hourly production target, the daily production target of a line is calculated. This target is given to line supervisors. Based on the daily production target production planning and the total production time needed to complete an order are calculated. The following formula is used to calculate the daily line target.

Daily Line Target = (Shift hours X 60 X No. of operators working in a line X Line efficiency %) /Garment SAM

See the example in the following table.

Table -2: Daily production target calculation

3. Individual operator efficiency

We measure individual operators’ performance (efficiency %) for operator grading, skill matrix, and daily employee performance reporting. In case you are distributing performance-based incentives to individual operators, you need to measure individual operator efficiency too. This is the formula to calculate individual operator efficiency.

Individual operator Efficiency% = (Total minutes produced*100/Total minutes worked)

Where,

Total minutes produced = Total units produced X operation SAM

See the following examples (Table 3) for calculating individual operator efficiency. In case an operator is doing more than one operation, first calculate the total minutes produced in each operation and sum up the total minutes produced in all operations by an employee.

Table 3: Examples of individual operator efficiency calculation

4. Line Efficiency

Line efficiency is the common measure for measuring line performance and factory performance. The performance of a production line varies depending on operators’ skills, product design, line balancing, presence of lost time, style run time, and many other factors. Better efficiency means higher output and reduced production costs. So we aim to improve line efficiency as much as possible. Line efficiency is calculated using the following formula.

Line Efficiency% = (Total minutes produced *100) / (Total hours worked * 60)

Where, Total minutes produced by the line = Line output X Garment SAM

Total hours worked by the line = Number of operators X Shift hours

Table 4: Examples of line efficiency calculation

Note: Include helpers and workers doing manual operations in the manpower, in case SAM of the manual operations are included in garment SAM.

The above formula is used majorly for line efficiency calculation. This is known as output-based line efficiency. Line efficiency can be also measured differently. Instead of line output data, individual operators’ produced minutes and hours worked are calculated first, and later their produced minutes and hours worked are summed up to the calculated line’s produced minutes and total hours worked.

To many factories, this is not easy to calculate individual operators’ output, their total produced minutes, and the actual hours they worked in a day. Following the second method is only practical if a factory is using a real-time production tracking system.

5. Machine Productivity

Machine productivity is measured to know the average production per machine per day or in the defined time frame. A line with 48 machines producing 480 shirts and another line with 36 machines producing 400 shirts (same design). How do you figure out which line doing better? This can be answered simply by measuring machine productivity.

Productivity is the ratio of output and input. The machine productivity of a production line is calculated using the following formula.

Machine Productivity= Line output / No. of machine used

Machine productivity is measured as production per machine per shift day. See the following example (Table 5).

Table 5: Example of machine productivity calculation

6. Labor Productivity

Floor productivity is also measured as labor productivity. Instead of machine input in this case line output is divided by labor input to calculate labor productivity. See the following example of labor productivity calculation in Table 6. Normally, number of manpower utilized in a production will be greater than equal to the machines used in the line. In such cases, labor productivity will be less than machine productivity. In modular lines, line-wise assigned operators can be less than the machine count.

Labour Productivity = (Line Output Quantity / No. of total manpower (operators +helpers))

Table 6: Labor productivity calculation

7. Standard Time Estimation

Standard time is the time allowed to an operator to carry out the specified task under specified conditions and defined level of performance. This is a standard definition for standard time. Some additional time is added to the basic time to arrive standard time of a task. In practice, none can work throughout the day without taking a rest. Operators need time for relaxation from fatigue. Various allowances are relaxation allowance, contingency allowance (like machine breakdown), and bundle allowance (for the PBS system).

Standard Time = (Observed time X observed rating) + Allowances

Allowances include Relaxation allowance, contingency allowance

The basic constituents of standard time are shown in the following chart. This chart shows how standard time is made up of observed time and basic time of a job.

Chart-1: This chart shows how standard time is made up. Source: Introduction to work study by ILO

8. Machine utilization percentage

Machines and equipment are primary resources of garment manufacturing units. These resources must be utilized as much as possible to improve factory performance. But due to work unavailability or less work, some machines (like specialized machines) are partially utilized by the factory. In such cases, the same machine is shared for multiple lines. Machine utilization is calculated using the below formula.

Machine utilization% = (Actual machine running time X 100) / Time available

If you are running one of your special machines for only 4 hours in 8 hours a day, utilization of that particular machine would be 50%.

9. Labor cost per unit

Labor cost is part of garment FOB. For every order, we have a target labor cost. We need to track the actual labor cost and control it. So we measure it after a style is loaded. Here is the formula to calculate labor cost per garment.

Labor cost pet unit = (Total cost incurred in labor wages / No. of garments produced) in a day

10. Production capacity

Production capacity is measured in available minutes as well as in the number of pieces. First, we will see how available minutes in a line are calculated. Then we will calculate capacity in the number of garment units per day.

Line capacity per day= {(No. of machine x daily work hours x 60)*(1 – absenteeism %)} x Efficiency % (capacity in minutes)

Production capacity (in pieces) = (Available minutes / Garment SAM)

Table 7: Example of production capacity calculation

Conclusion:

Like other garment manufacturing units, you may be also measuring key production measures to keep track of production performance and control the production. Whatever measures and formulas you are using must be standardized and approved by the authorized person internally. Also, everyone in an organization should be aware of how the particular measures are calculated.

It is good to have a poster of commonly used formulas and keep the poster in your workstation. A poster would help learn for newcomers.