Key Performance Indicators (KPIs) are measured to assess where the factory currently stands and to find key focus areas that management needs to look into. The top 9 KPIs have been listed and explained below that are measured by garment manufacturers (export houses) in the apparel industry.
Normally, in a garment production unit, production team and industrial engineers prepare the KPI report on monthly basis.
1. Factory Efficiency Percentage
Factory efficiency indicates how efficiently sewing lines are run in a factory. This indicator is important because the capacity planning of the factory and projected garment-making cost is done based on factory efficiency. Factory efficiency includes all line minutes produced and total hours attended by direct labor on the sewing floor. Target factory efficiency varies based on the order quantity.
For a detailed calculation of efficiency refer to ‘How to calculate the efficiency of a production line or batch?”
For factory efficiency – calculate the total minutes produced by all lines and the total minutes attended by all lines.
Factory efficiency(%) = (Total minutes produced X 100)/Total minutes attended.
2. Man-to-Machine Ratio (MMR):
When it is the factory’s Man to Machine ratio (MMR), every employee of the factory is considered under manpower.
So, Man: Machine= Total manpower: Total sewing machines available in the factory (machines in use).
For example, if a factory has 500 sewing machines and the total manpower of the factory is 1100 then man to machine ratio = (1100:500) OR 2.2. This ratio varies from product to product and on organization structure.
3. Cut to ship ratio:
This is a ratio of the total cut quantity and the total shipped quantity of the order.
This indicator is measured order-wise and monthly shipped orders. To keep buffer (for damaged, defective garments) factory cuts extra pieces than the order quantity.
For example, the factory received an order of 20000 pieces, cut quantity of 20200 pieces (1% extra cutting), and a total shipped quantity of 20000 pieces.
Cut : Ship = 20200:20000 = 1.01.
This indicator is measured to control surplus quantity after shipment, and reduction in extra cutting, and damaged garments.
Target Cut to ship ratio is 1.
4. Order to ship ratio
The buyer expects to receive full quantity from the supplier that has been ordered. This is the most important factor that buyer uses for vendor evaluation. This indicator is calculated as = Total order quality/ Total shipped quantity. The target of Order to Ship ratio is always 1. It is good if the factory can ship higher than order quantity (only if the buyer accepts extra quantity).
5. On-time delivery rate
How many shipments that did not meet the target shipment date are analyzed at the end of each month?
The target on-time delivery of each style is to meet the shipment delivery date. If not met, what are the reasons for failing the delivery dates are analyzed.
It is calculated as = (Total orders shipped on time/Total orders shipped in the month).
For example, if a factory shipped 18 styles on time out of 20 styles shipped in a month then on-time delivery of that month is =(18/20)*100% = 90%
6. Average style change over time
The time gap between the previous style (the last piece out from the line) and the first piece output of the current style is known as style change over time (COT). A shorter changeover time is considered a better performance level. It varies from style to style and production systems. The time of Change over time of each style is recorded the average changeover time of the factory is measured.
7. Right First Time (RFT) quality
This indicator is represented in percentages. Total audits passed for the first time out of total audits conducted by auditors. Right first-time quality is measured in various stages of garment processing and analysis is done audit-wise. Higher values (percentage) of right-first-time quality are considered as better performance of the factory.
8. Quality of production:
The quality level of each department is measured in DHU and the Percentage of defective units. Higher the value of DHU higher alteration time and higher cost incurred in quality.
9. Downtime percentage:
Downtime is one of the topmost reasons for less factory efficiency. Factory analyses major downtimes to control and improve machine and operator utilization. The top 5 reasons for downtime (also known as non-productive time and off-standard time) are line setting, operation sitting idle, no feeding, machine breakdown, and no planning for a line.
The garment manufacturing business more specifically the garment export business is a profitable business if factory performance is measured and management works to improve performance level step by step. Each of the above KPIs plays a role in production cost, the factory’s reputation, and profit margin.
To learn more about KPIs, measuring KPIs, and KPI dashboard templates read my eBook "Garment Maker's KPI"
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To learn more about KPIs, measuring KPIs, and KPI dashboard templates read my eBook "Garment Maker's KPI"
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This article is updated on: 19th Dec 2022.