Project and industrial place Overview On Beximco Group

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Project and industrial place Overview On Beximco Group2.1 Beximco Group   Bangladesh has come a long way since its independence. It has improved key social indicators and the well being of its people. The Beximco Group of Companies has been an integral part of this progress. BEXIMCO’s philosophy is simple: In identifying opportunities, it has targeted those industries, which the country needs most in order to progress and to improve living standards. Beximco is also focused on those industries, which make the most of Bangladesh’s competitive advantages in the international market. As a result of this philosophy, the Beximco Group is today Bangladesh’s largest private sector industrial conglomerate. In the course of its growth, it has created industrial and management capabilities that will serve the country for generations to come. BEXIMCO’s industrial businesses include jute, textiles, basic chemicals and pharmaceuticals and marine foods. BEXIMCO’s non-industrial undertakings are focused on real estate and construction, engineering, media, information technology, trading and financial services. It is the creation and expansion of businesses critical to Bangladesh’s development, businesses, which are developed and run by Bangladeshis, businesses that develop technologies and practices specific to the needs of the country, which is the defining characteristic of the BEXIMCO story 2.1.1 THE BEXIMCO GROUP: Established in 1965 the Beximco group has expanded dramatically over the past 40 years and is today the largest and most diversified industrial conglomerate in Bangladesh, representing nearly 17% of the entire market capitalization of the Dhaka Stock Exchange. Employing 25,000 people including 2,600 qualified professionals and dealing in a wide of consumer and industrial products for domestics and global markets, Beximco has fast become one of the leading foreign exchange earners in the country’s private sector. Textiles & Garments is the largest and fastest growing division of the Beximco Group and presently accounts for half the Group’s business turnover and profit. The Group’s major investment continues to be concentrated in this Division. Other major areas are Pharmaceuticals, a Ceramics Division manufacturing Bone China and Porcelain tableware for prestigious buyers such as Royal Doulton and Libbey in Europe and USA, and, a Real Estate development and IT division among others. 2.1.2 THE TEXTILES DIVISION: Comprising 2 ring spinning mills with 120,000 spindles, an open end spinning unit, a 24 tons/day polyester filament unit and 3 state-of-the-art fabric mills with 300 Toyoda airjet and 50 Tsudakoma airjet looms, Beximco Textiles Division products 35 million yards of processed woven fabrics both solid and yarn dyed, 5000 tons of knit fabric and 10 million yards of Denim in a wide range of weights, constructions and finishes. Besides superfine qualities such as US Pima and Egyptian Giza, cotton fiber is also sourced from other locations such as Central Asia, Australia, and Peru in keeping with the specified yarn quality and standard. In keeping with the vision and philosophy to be a truly strategic business partner to customers Beximco has made every effort to be involved at all levels of the business process. The in-house Design & Product Development team is backed with a dedicated sampling facility for fabrics and garments allowing Beximco to assist customers in their product development process and ensure a relevant and timely product for the market. Marketing offices established in the US, China and Hong Kong, soon to be followed by one in Europe ensure Quick Response to customer needs. Beximco 100% export oriented garment factories have a current annual production capacity of 15 million garments with a projected target of 45 million high quality garments. These combine the best of the indigenous features of Bangladesh such as easy availability of low cost skilled labour with focused investment in modern technology and qualified professionals. The latest investment through a joint venture with Freshtex (Germany), the international market leader in apparel washing and finishing, has culminated in cutting edge technology and new product development capabilities in this critical area. Housed in the Beximco Textiles Park, the washing facility has an annual capacity of over 10 million garments including garment over dyeing and, fashion finishes such as whiskers and sandblasting. Systems such as an enterprise wide resource planning (ERP) system allowing online integration of the whole manufacturing process and, GSD for time study and control of the apparel manufacturing process are also used to improve efficiency. This use of relevant and up to date technology in a completely vertical operation allows Beximco to offer extremely short lead times for competitively priced world class products to business partners including Phillips Van Heusen and Oxford Industries. Beximco currently sells to retailers such as Zara, GAP, JC Penney, Federated Stores, NEXT, H&M brands including DKNY, Hugo Boss, Polo, Ralph Lauren, Tommy Hilfiger, Levi’s Dockers, Geoffrey Beene and Arrow among others. ONE STOP SHOPPING Beximco offers partners a one-stop shop for fabric and apparel. This means shorter lead times, no port congestion, in-house delivery of fabric to own garment factories, and partial fabric deliveries to begin immediate production for short lead times. This allows for quick response to changing fashion cycles and rigorous attention to quality throughout the complete production process. With the entire supply channel vertically integrated from research, design & product development, fiber through spinning, weaving, knitting, processing, garment production and washing, Beximco offers the most technically advanced and efficient resource in the country for textile and apparel buyers the world over. 2.1.3 THE FAMILY OF TEXTILE DIVISION: The textiles division of-Beximco incorporates the following companies. Beximco Textiles Ltd. Beximco Knitting Ltd. Beximco Apparels Ltd. Beximco Denims Ltd. Beximco Fashion Ltd. Beximco Synthetics Ltd. Padma Textile Mills Ltd. Asses Fashion Ltd. 2.1.4 BEXIMCO TEXTILES LIMITED: The flagship of the Textiles Division is amongst the most modern and technologically advances mills in South Asia. Using state-of- the-art equipment coupled with the highest caliber of technical support, the mill is equipped to produce over 100,000 yards a day of a wide range of high quality woven processed fabric. The capability includes yarn dyed and piece dyed fabrics, dobby, seersucker, oxford, sateen, poplin, light twills and special double counts in 100% cotton and also cotton blends including polyester, Lycra and Tencel. Fabrics are available in a variety of finishes such as peach, wet peach, water repellant Teflon, chintz, easy care, aero finish and wrinkle free. New finishes are constantly being researched and developed in keeping with identified market needs. 2.1.5 BEXIMCO KNITTING LIMITED: Beximco Knitting Ltd. is equipped with modern machinery from leading manufacturers such as Camber, Thies, Ruckh, Dornier and Santex among others. With capabilities such as computer controlled colour kitchens and facilities for singeing, mercerization, and reactive, vat and pigment dyeing, the mill has a daily production capacity of 20 tons of processed knit fabric. Beximco can offer a whole range of fine quality cotton and cotton blends including Lycra and Tencel in wide variety of textures and finishes. Current production of knit fabric is in weights ranging from 120gsm to over 300gsm and includes jersey, 1×1 rib, interlock, pique, needle out textures, ottomans, waffle knit, flat back ribs, single and double jacquards and engineered stripes. With capabilities for specialized finishes such as soil resistant, UV protection, water resistant and antistatic, Beximco Knitting offers a complete range of high performance knit fabrics. 2.1.6 BEXIMCO DENIMS LIMITED: Beximco Denims Ltd. is a composite fabric mill with yarn dyeing, weaving and finishing facilities. A modern garment washing and dyeing plant enables fully integrated production capability for denim fabric and apparel. The daily production capacity of over 30,000 yards of denim fabric ranges from 3.5oz. light weight denim for tops to heavy bottom weights up to 15 oz. Denim is produced using open, end/open end, ring/open end, and ring/ring yarns for different qualities. In addition to standard indigo denims, black, coloured dobby, overdyed, bull denims and slab and cross hatch denims are also produced. The product range includes Denim blends with polyester, lurex, Lycra and Tencel besides 100% cotton fabrications. The partnership with Freshtex Germany gives Beximco the capability to offer world-class levels of innovation and cutting edge washing and finishing capabilities such as tinting, scraping and sandblasting for denims. 2.1.7 BEXIMCO FASHIONS LIMITED: Beximco Fashions Limited -an unit of Beximco Textile Division is a 100% Export Oriented Garment Industry. Beximco Fashion Limited is located at Dhaka Export Processing Zone at Savar Dhaka and it has started its commercial production during the July 1997. The company is a vertically integrated garment producer using in house fabrics Beximco Fashions Limited comprises of. Beximco Fashions Limited produces over 6 million pcs of high quality dress shirts for some ladies brands and retails in USA and Europe. The Company is managed by a group of professionals including expatriates & aims at producing high quality garments through an effective quality control system right from sourcing of fabric to end product. The number of employees at the end of 2005 is 2,355. 2.1.8 BEXIMCO SYNTHETICS LIMITED: Beximco Synthetics Limited (the “Company”), a member of the BEXIMCO Group, was incorporated in Bangladesh as a public limited company. It commenced commercial operation in July 1994 and went for public issue of shares and debentures in 1993. The shares of the Company are listed in the Dhaka and Chittagong stock exchanges of Bangladesh and the debentures of the Company are listed in the Dhaka Stock Exchange of Bangladesh. The registered office of the Company is located at House No.17, Road No.2, Dhanmondi Residential Area, Dhaka-1205. The industrial units are located at Kashaimpur, Savar, Dhaka. 2.1.9 PADMA TEXTILE MILLS LIMITED: Padma Textile Mills Limited was the first Yarn producing company in the division and started off in 1989 with 27000 spindles setting unparalleled standards in yarn quality and growing to 70000 spindles in the span of just five years. With 119520 spindles, Padma Textile mills ltd., yarn-spinning capacity is the largest in Bangladesh. 2.2 Corporate office Information: 2.2.1 It’s Mission:The mission of Beximco Apparels Ltd. is to earn foreign exchange for the country through manufacturing and export of high quality apparel. Besides this, each of the company’s activities must benefit and add value to the common wealth of the society. The company firmly believes that in the final analysis it should be accountable to each of the constituents with whom it interacts, namely: the company’s employees, its business associates, its fellow citizens and its shareholders. 2.2.2 It’s Vision: The company has established itself as a fabric & garments manufacturer off repute with a customer profile that includes some of the best names in business. The company sees itself not merely as a supplier of fabric and garments but as an integral business partner in the value chain of eminent buyers and retailers worldwide. It is well known to the company that in the volatile world of quote free access, winners would be decided based on their international competitiveness. This company would continue to innovate with new and better varieties of fabrics and garments, upgrade the quality of its product and thereby widen its potential range of end users and customers, offer goods within the lowest lead time for enhanced customer satisfaction. To ceaselessly pursue manufacturing efficiency and rationalization of costs and nature as well as develop talent of its people. To establish its own brand “Yellow” & “Cotton by Beximco” as a world class standard brand. 2.2.4 Board of Directors:   A S F Rahman Salman F Rahman Chairman Vice Chairman Iqbal Ahmed : Director M A Qasem : Director K Chowdhury : Director Dr. Abdul Alim Khan : Director A B S Rahman : Director Md. Asad Ullah : Company Secretary

ESSES FASHIONS LIMITED

Factory Profile

Parent Company	Beximco Group
Head Office	Beximco Industrial ParkSarabo, Kashimpur, Gazipur Bangladesh
Group Chairman(BEXIMCO Group)	Mr. A S F RahmanTel: (880-2) 8611891-5 Fax: (880-2) 8613470, 8617647
Chief Executive Officer (CEO)	Mr. Syed Naved HusainTel: (880-2) 8619185-6 Fax: (880-2) 8619187, 8613470 E-mail: snh@beximtex.com , naved@beximtex.com
Chief Operating Officer (COO)	Mr. Sardar Ahmed KhanChief Operating Officer Tel: (880-2) 8618220-7, 8611891-5, 7701165-6 Ext. 5024 Fax: (880-2) 8619187, 8610672, 7701164 E-mail: sardar@beximtex.com
Factory In-charge	Mr. Sorder Mominul Haque RoniGeneral Manager (Knit) Tel: (880-2) 9862022 Mobile: 0167 8086812 Fax: (880-2) 8819315 E-mail: roni@beximtex.com
Factory Address	Esses Fashions LimitedBeximco Industrial Park Sarabo, Kashimpur, Gazipur Bangladesh Tel: (880-2) 8618220-7, 7701186, 7701165-6 Fax: (880-2) 7701164
Date of Incorporation	November, 2004
Number of Years in Business	About 6 Years
Total Number of Floor	1 Floor
Total Area Per Floor	19,305sq. ft
Total Area of Factory	36,538 sq. ft
Office Timing	8: 00 am to 5: 00 pm (1 hour lunch break)
Total Number of Exit	10 (Ten)
Lunch Time	1 hour1:00 pm to 2:00 pm 1:30 pm to 2:30 pm)
Canteen Accommodation	680 People at a time
Total Manpower	880 (Male 359=41%, Female 521=59%)
Key Contacts
Marketing	Mr. Sardar Ahmed KhanChief Operating Officer Tel: (880-2) 8618220-7, 8611891-5, 7701165-6 Ext. 5024 Fax: (880-2) 8619187, 8610672, 7701164 E-mail: sardar@beximtex.com
Head of PAGD	Major Arif Momen Chowdhury (Retd.)General Manager Head of Garments Manufacturing & PAGD Tel: (880-2) 9862021-2, 8819315 Ext. 5022 Fax: (880-2) 8619187, 8610672, 7701164 E-mail: arif@beximtex.com
Human Resources & Compliance	Mr. Md. Raziur Rahman KhanHead of Human Resources & Compliance Tel: (880-2) 8618220-7, 8611891-5, 7701165-6 Ext.5044 Fax: (880-2) 8619187,8613470 E-mail: raz@beximtex.com

Products and Customers

Primary Products: Polo shirts, Rugby Shirts, Golf Shirt, Tank Top, T Shirts, Dress, Long Pant, Jacket.

MajorMarkets	Main Customer	Products by Customer
Europe	Present Customers:¨ Garage ¨ S-Oliver ¨ Asmara ¨ Charter House ¨ Tom Tailor ¨ Echo Sourcing	Children’s wearsKids’ wear, T – Shirts Polo Shirt/V-Neck Shirts T-Shirts Kids’ wear/ T-Shirts Polo Shirts T- /Polo Shirts Knitted Shirts / Rugby Shirts
USA / Canada	Present Customers:¨ Henbury Wall-mart JC Penny PVH	Polo Shirts / Golf Shirts / Kids’ Wear / T-Shirt / Long Pant /Jacket / Dress

List of Machinery

CUTTING SECTION

SL No	M/C Name	Brand / Model No	Total M/CQty
1	Cloth Cutting Machine	Eastman-629	4 Sets
2	Rib Cutting Machine	Hashima HW-40	3 Sets
3	Cutting Table		4 Sets
Total			11 Sets

SEWING SECTION

SL No	M/C Name	Brand / Model No	Description	Total M/CQty
1	Plain Machine	Sun Star	KM-250	157 Sets
2	Over Lock	Siruba	747F-514M2-24	87 Sets
3	F/L-Machine	Siruba	C007JW-122	43 Sets
4	F/L-Machine	Siruba	C007JW-822
5	F/L-Machine	Siruba	C007JW-222
6	B/H-Machine	Juki	LBH781	3 Sets
7	B/H-Machine	Brother	BEF4438	4 Sets
8	B/S-Machine	Brother	BE4438	4 Sets
9	B/T-Machine	Brother	KE430C-07	5 Sets
10	R/C-Machine	Idea	SM-601	3 Sets
11	K/S-Machine	Kansai	DFB-1404 PWD	1 Sets
12	P/Q-Machine	Kansai	PX-30204W	4 Sets
13	B/KT	Kansai	BLR 1502L	3 Sets
14	P/G	Hashima	EP1000ED	1 Set
15	C/T	KM-MAck	KS-AUV	4 Sets
16	M/TD	Oshima	OM-688C	1 Sets
17	Thread Recone	Oshima	OW20	2 Sets
18	Iron	Jackput		7 Sets
Total				329 Sets

FINISHING SECTION

SL No	M/C Name	Brand / Model No	Description	Total M/CQty
1	Compressor		20 HP	Nill
2	Vacuum Table	VT 760		Nill
3	Steam Iron	NAMOTO		17 Sets
4	Gas Boiler			Nill
5	Steam Iron Table	OSHIMA		17 Sets
6	Needle Detector	OShima-688C		1 Set
Total				35 Sets

Production Capacity

Number of Production Lines	12 (Twelve)
Production per Day	Around 13752Pcs
Production Per line per Day	Around 1146 Pcs
Production Per Month	Around 34679 Pcs
Production Per Annum	Around 4124148 Pcs

Delivery Schedule

Average Work-In- Process Time ( From Approval to Ready to Ship)

Products	Timing
Polo Shirts	60 –90 Days

Delivery Methods & Average Lead- times to Any Port to USA/ Europe

	Country
	USA		EUROPE
Method	Sea	Air	Sea	Air
Days	30-35	3-7	30-37	2-5

Strength of Workers & Staff Date: 05.05.2010

Categories wise Manpower Strength for Workers & Staff

Designation	Department								Total
	Planning	Sewing		Cutting		Finishing	Quality	Sample
In-charge		2		1		0	0	0	3
Line Chief		11		0		0	2	0	13
Supervisor /Patt.master		15		3		4	5	9	36
Q.I		0		0		0	96	2	98
Iron man		16		0		17	0	0	33
Packing man/Jr.Paking		0		0		11	0	0	11
Polly/ Assort man		0		0		18	0	0	18
Folding man		0		0		12	0	0	12
Operator		326		0		0	0	6	332
Input Man/Fusingman		14		0		0	0	0	14
Helper		213		53		19	0	1	286
Cutter man		0		4		0	0	1	5
Marker man/Sr.Marker		0		3		0	0	0	3
Production Recorder	2	0		0		0	0	0	2
Spot Remover		0		0		0	0	0	0
Sub Total	2	597		64		81	103	19	866
Maintenance Incharge	59Common for all Departments						0	59
Supervisor/Sr.MechanicMechanic/Electrician/Jr.Electrician /Mec. Asst.							9
Admin. Staff							3
Medical Asst.							2
H.K. Supervisor							1
Driver/Peon/ Checker /Cleaner/Sweeper							21
Store In-Chare							0
Store Keeper/Store Asst. / Loader							12
Planning Assistant							6
IE Asst							5
Management Staff	General Manager-01		Factory Manager-01		Deputy Manager-02		59	15
	Assistant Manager-03		Executive-02		Jr.Executive-06
Grand Total								940

Gender wise Manpower Strength (Mgt. & Staff)

Dept./Section	Designation	Break Up		Total Manpower Strength
		Male	Female
Cutting	In-charge	1		1
	Supervisor	3		3
	Cutter man	4		4
	Sr./Marker man	3		3
	Input Man	0		0
	Cutting Assistant	45	8	53
Sub Total		56	8	64
Sewing	In-charge	2	0	2
	Line Chief	10	1	11
	Supervisor	14	1	15
	Operator	50	276	326
	Input Man/Fusing Man	14	0	14
	Sewing Helper	2	211	213
	Iron Man	16	0	16
Sub Total		108	489	597
Finishing	In-charge	0	0	0
	Supervisor	4	0	4
	Iron Man	17	0	17
	Packing Man/Jr.Pac.	11	0	11
	Folding Man	8	4	12
	Poly / Assort Man	11	7	18
	Sport Removing	0	0	0
	Finishing Helper	6	13	19
Sub Total		57	24	81
Quality	In-charge/Controller	2	0	2
	Supervisor	5	0	5
	Q.I (Sewing)	52	13	65
	Q.I (Finishing)	28	0	28
	Q.I. (Cutting)	3	0	3
Sub Total		90	13	103
Sample	In-charge	0	0	0
	Pattern Master	2	0	1
	Supervisor	7	0	7
	Sample Man	6	0	6
	Sample Asst.	2	0	2
	Sample Q.I	2	0	2
Sub Total		17		17
Planning	Planning Assistant	5	1	6
	Production Coordinator	2	0	1
Sub Total		7	1	8
Store	In-Chare	0	0	0
	Store Keeper	1	0	1
	Store Assistant	3	0	4
	Helper/Labour	8	0	7
Sub Total		12	0	12
Maintenance	In-charge	0		0
	Supervisor	1		1
	Sr./Mechanic	3		3
	Electrician	2		2
	Needle Man		1	1
	Maint. Asst.	2		2
Sub Total		8	1	9
I.E Dept.	I.E. Assistant	5		5
Sub Total		5		5
House Keeping	Supervisor	1		1
	Checker		1	1
	Cleaner	1	14	15
	Sweeper	1	1	2
Sub Total		3	16	19
General	Admin/ office Asst.	1	2	3
	Medical Asst.	1	1	2
	Peon	3		3
Sub Total		5	3	8
Management Staff		14	1	15
Grand Total		384	556	940
Male Female Ratio		41	59

Line wise set up

Production Department Set up

Number of Production Lines	12 (Twelve)
Per Line Line-Chief	1 (One)
Per Line Supervisor	2 (Two) Polo
Per Line Operator	38 (Thirty Eight)
Per Line Helper	22 (Twenty Two)
Per Line Quality Inspector	8 (Eight)
Quality Supervisor	1 (One) per Two Line
Per Line Machines	36 (Thirty Six)

Manpower Strength of Management Staff

Department wise Manpower Strength (Management Staff)

Department	Designation							Total
	GM	F M	Deputy Manager	Asst. Manager	Sr. Executive	Executive	Jr. Executive
Factory Operations	1	1						2
Cutting
Finishing				1			1	2
Sewing				1		1		2
Finance & Accounts							1	1
Maintenance							1	1
Personnel & Admin			1				1	2
Production, Planning & Control			1					1
QualityControl				1				1
I.E.							1	1
Maintenance							1	1
Sample						1		1
Total	1	1	2	3		2	6	15

MERCHANDISING DEPARTMENT:

3.1.1 Business Development:

In merchandising departments Merchandiser teams work for business development. They communicate with buyer in mail, telephone, participating in international fair in Own and other country is Major factor of business development. This stage company present their previous items, reputation, strengths of capability, Quality etc.

3.1.1.1 Analyzing the International Buyer

In every marketing situation it is important to understand potential buyers and the process they use to select one product over another. Most of the elements of a mar­keting program are designed to influence the buyer to choose your product versus a competitor’s product. In the case of each type of buyer-consumer, business, or government-the marketer must be able to identify who the buyers are, what is the size of the potential market, and how do they make a purchase decision. For example, in purchasing automobiles in Italy, who usually makes the decision, the husband or wife? When a Japanese company purchases a computer system, what type of people are involved? Is price more important than the reputation of the computer manufacturer? When young man in Germany decides to open a savings account, what information sources does he use to select a bank? Having set a framework for understanding international buyers, we will exam­ine each type of buyer-consumers, businesses, and governments

3.1.1.2 International Buyer Analysis Process

Identification of Potential Buyers

Estimate of Total Potential Market Size

Identification of Members of the Buying Group

Determination and Weighting of Selection Criteria Used

Identification and Weighting of Information Sources

3.1.1.3 Mailing corresponding with Buyers:

For every update, Merchandisers need to update Buyers corresponding with new buyer and as well as on daily basis either by mail or sometimes calling them. When the fabric & trims are in housing, when the materials will be approved by them, when we are expecting to start the production etc. Alana updates on every issue related to manufacture and other activities so that they can proceed smoothly without facing any problem. Sometime they talk over phone with USA, European countries, Hong Kong, China, Korea, Pakistan, India to finalize the problems if arises for any issue.

3.1.2Consumption, Pricing &Costing :

After communicate Buyer merchandiser give a initial costing and consumption for make understanding their range of capability of buying and selling .If both satisfied costing and consumption than business will started next level.

3.1.2.1 Consumption

Fabric consumption for woven fabric:

The quality of fabric which is required to produce a garment is called consumption.

10.2 System of fabric consumption

There are two type of fabric consumption:

Marker planning system (actual)

Mathematical system / estimation

3.1.2.2 Basic principle of marker planning

Pattern set (small, medium, large & XL)

Place it on marker paper

With regards to fabric inspection the factory generally inspects 10% of the fabric, in case there is a problem the factory goes on to inspect 100% of the fabric.

For fabric shrinkage test – different procedures have to be adopted for ascertaining the shrinkages for a washed and a non-washed style.

In case of a non-wash garment testing 10% of the fabric is sufficient to determine the shrinkage that needs to be included in the pattern. The fabric is washed based on the recommended wash care instructions in the FPT.

In case of a washed garment, 100% fabric should be tested for shrinkage. The test is done as per the wash recipe. Once all rolls are tested, the rolls are segregated as per the shrinkages and different patterns are made to incorporate the shrinkages.

Factory then also checks the fabric for shade banding, compares the same with the once sent by the mill and if found acceptable sends one sent out to log the same with customer. ‘3¹nce the buyer confirms that the shade bands are ok, the fabric is ready to be cut.

3.1.2.3Consumption calculation for Basic Shirt

Example:

For a long sleeve shirt:­

Spec. sheet:­

Collar= 16″ Chest = 48″

Center back length = 31″ Sleeve length = 34.5″ Drop shoulder= 21 “(yoke) Arm hole depth (1/2) = 10.5″ Cuff = 9″

Pocket= 6″ x 5.5″ Yoke is all time = 4″ [Area means – L x W]

Back part

Formula:­

(Center back length + allowance) x (1/2 chest + allowance)

36 x 44

= (31″ + 2″) x (24″ + 2″)

36 x 44

= 0.541yds

Yoke

Formula:­

(Yoke length + allowance) x (yoke width + a(allowance)

36 x 44

= (21’+4″) x (4″+ 1”)

36 x 44

= 0.079 ydz

Front part

Formula:­

(Body length + allowance) x (‘/a chest + allowance) x 2

36 x 44

= [131¹¹-1 %4″+1″}X{12″+2%z”}]2″

36 x 44

= 0.562 yds

Sleeve

Formula:­

(Sleeve length + allowance) x (arm hole depth full + allowance) x2

36 x 44

= {sleeve length -(1/2 drop shoulder +1/2″) x (arm hole depth + allowance)) x2

36 x 44

= {34 ‘/z” -11 “} +1⁴1 x 121″ +1⁰) x 2

36 x 44

= 0.68yds

Cuff

Formula:­

(Cuff length + allowance) x (cuff width + allowance) x2

36 x 44

= (9″+3″)X(2%z”+%2″)X2

36 x 44

= 0.05yds

Collar

Formula:­

(Collar length + allowance)x (collar width + allowance) x 2

36 x 44

(collar length + allowance) x (collar width + allowance) x4

36 x 44

= (16″ + 5″) x (2″ +1 “) x 4

36 x 44

= 0.159yds

Pocket

Formula:­

(Pocket length + allowance) x (pocket width +allowance)

36 x 44

= (6″ +2″) (5%Z” +1″)

36 x 44

= 0.032yds

Total consumption for one garment = 0.541+0.079+0.562+0.68+0.05+0.159+0.032

= 2.100yds per garment

Per dz = 2.100 x12

= 25.20/dz (ypd) + 5%

= {25.20 x5 / 1001 + 25.20

= 1. 26 + 25.20

= 26.46

3.1.2.4 Consumption calculation for trouser

Measurements:­

Out seam = 42″

In seam = 32″

Waist = 36″

Hip = 40″

Bottom = 20″

Find out fabric consumption / dz if fabric width = 58″

Formula:­

Out seam x thigh x 4

36″ x 57″

= (42″ + 2″ + 2″) X (Hipl4 + 1.5″ + 1.5″ ) x 4

36″x 57″

= 46″ x(40″l4 + 3″) x 4

36″x 57″

= 46″ X 13″ X 4

36″ x 57″

= 1.165 yd /per trouser

yd l per trouser + zipper fly (2) + pocket facing (4) + back pocket bone + belt loop

= 1.165 x 5% (for regular trouser)

{= 0.058}

= 1.165 + 0.058 = 1.21

= 1.21 +5%

= 1.21 +0.060 = 1.270 x 12 (per dz) =15.24 ypd

3.1.2.5 Consumption calculation for Knit Fabric

For, T-shirt {(s/j) 30/1 combed yarn}

Measurement:­

Length = 70 cm

1/2 chest = 60 cm / dia . Sleeve length = 25 cm,

Arm hole width = 40 cm, GSM = 145

Find out consumption / dz in kg?

Formula:­

(Back length + sleeve length) x1/2 chest x 2 x GSM x12

10000 x 1000

= {B.L +S.L x chest x GSM x12}

10000000

= {(70 +5) +(25 +5)} x 60 x 2 x145 x12

10000000

= 2.28 kg + 7%

= 2.28 kg +0.159

= 2.439 kg [neck and sleeve are made rib so add 0.10] All time collar in rib = (350-400)

3.1.2.6 Pricing

Pricing is a creative marketing exercise done by the marketing manager. Pricing is taking a decision about the price to be quoted in the market. It is the marketing manager who will decide whether he can sell (or wants to sell) a product at a very high price, or that he will quote a price which is 5% lower than the price of the main competitor. He may even have good reasons to sell below cost price and accept a loss.

3.1.2.7 Some cost price calculation considerations

Even today some smaller companies in the industrialized countries get away successfully by setting their (domestic) sales prices by simply undercutting the prices of large scale competitors with 5% or more, without even trying to make a serious calculation. This may work in cases where there is limited competition and if that competition comes from a few large companies since

the high overhead costs of the large corporations nullify the advantage of the economics of scale at the purchasing level of raw materials.

marketing costs are with the large corporati­ons normally much higher than with smaller companies.

a low profile operation of the smaller companies works in their advantage.

This pricing policy does not work for exports however. Before attaching an export price label to a product we have to take a number of details in to consideration among which

the market segment

the promotional activities needed to penetrate that segment

price levels of comparable competing products

anticipation of a strike back from the competition

the considerations of high price/maximum profits or lower price/growing market share

total strategy

actual cost price

3.1.2.8 Components of a cost price

A cost price comprises a number of components:

I). Fixed production cost:

All production costs not directly related to the size of the production such as depreciation of machinery, energy consumption for heating in the factory, maintenance, factory management and workers that cannot be laid off even if there is no work for them, etc.)

II). Variable production cost:

Cost directly related to the production of a certain quantity of products: Raw materials, accessories, packing materials, direct production labor cost, energy to operate the machines, etc.

III). Overhead expenses

Non-production related fixed cost such as administration, maintenance of office buildings, non-production personnel, cars, representation, interest on general overdraft facilities or mortgages, etc.

IV). Logistic expenses:

Transport from factory to the harbor, sea (air) transport, special packing materials, insurance, bank expenses, etc.

V). Marketing and distribution

Agent´s commissions, ware housing, Promotion, service, trade fair participation, travelling, brochures, etc.

VI). Hidden profits

Overhead expenses can contain sometimes a hidden profit. Let us presume that a company sold last year 200´000 pieces and the overhead expenses were $ 150´000. The overhead expense can be calculated at $ 0.75 per unit (150´000/200´000). If the company takes this $ 0.75 for today´s calculation as well, but the expected sales volume for this year is 300´000 the actual overhead per piece drops to $ 0.50.

Exporting at a lower profit margin than obtainable in the local market can very well be a wise decision. The more or less hidden advantages are:

the Economics of scale (lower prices for larger quantities of raw materials) this has a positive effect on the cost price for the locally sold products as well

full utilization of producti­on capacity. This results in lower fixed production cost per product unit.

larger sales volume per year let the fixed general cost drop per unit.

3.1.2.9 Systems of Costing

Cost information is one basis of a firm’s decision making. Decision making is usu­ally related to a time span of activity that may be short range (days or weeks) or long range (months or years). When viewed in the context of a time span, costs that are variable and non variable change. For example, labor costs and factory costs, when viewed long range, are variable costs that increase or decrease as the demand for product fluctuates. Plants can be opened or closed and employees hired or laid off. The same costs when viewed for short-range decisions become non variable costs as the investment has been made in the factory and the labor force employed. The type of plant, skill level of the workers,’ and the type of equipment that is avail­able limit short-range decisions. Decisions impacting the short range should deter­mine how to achieve the most output with the investment that has been made.

When viewed long range, labor, materials, and factory overhead are variable costs. When these same costs are reviewed for immediate decisions they are non­ variable. Long range, priorities change and variable costs can be changed with ap­propriate decisions.

There are several different types of cost systems that firms use, and each has its benefits and drawbacks. Managers must determine the cost information needed and how the information will be used. Some of the systems generate good product cost data for external reporting but are not relevant for internal man agreement decisions needed by the firm. Others provide incomplete information for accurately differentiating the costs or various products.

The costing process includes assembling data on (1) variable & non variable costs of materials and labor required to produce a product, (2) overhead necessary to operate the factory, and (3) general operating expenses required to run the firm. To be effective, cost data must be specific, accurate, and timely. The more accurate the costing, the better the business decisions and the greater the potential for business success.

Product costing requires in-depth understanding of product development, ma­terials, production processes, and plant and business operations. Three product costing systems commonly used in the apparel industry are direct, costing, ab­sorption costing, and activity-based costing.

3.1.2.10 Direct Costing

Direct costing is a concept that considers only the variable costs, such as pro­duction labor, material costs, and sales commission, to be product costs. Non vari­able costs, both manufacturing and nonmanufacturing, are treated as time period costs. Because individual product costs are clearly identified, direct costing makes it possible to determine the contribution margin for each product. A contribution margin is the difference between the price of a product an d the cost of goods (vari­able costs). The contribution margin is the amount of revenue available to cover non variable costs and profit. Direct costing makes it possible to compare the cost of production and the contribution each product makes to non variable selling and administrative costs and profit. Direct costing also makes it possible to identify individual styles and their level of contribution. It is useful in determining whether to make or buy a product.

3.1.2.11 Absorption Costing

Absorption costing is a costing system that recovers overhead costs by assign­ing a percentage to some element of direct labor. It considers all manufacturing costs, both variable and non variable, to be product costs that can be allocated to products. An overhead application rate is a percentage determined to be rep­resentative of all the overhead costs. It would be applied to a measurable direct cost driver such as labor hours or machine time. Determination of a realistic over­head application rate is difficult, especially in today’s plants when direct labor may be only 15% of a product’s cost. Firms often project the expected total over­head for the period based on the past year’s costs and expected changes. The over­head application rate may be determined by dividing the total factory overhead by the total direct labor costs for the period.

Absorption costing makes it difficult to focus on the actual variable costs and to analyze specific non variable costs because overhead costs are generally allo­cated from a single cost pool. The profit potential associated with a particular product or product line is often distorted by the overhead application rate. Figure 8-4 shows the factors that can be included in absorption costing and their rela­tionships. In Figure the garment has sewing costs of $3.230 (line 7).’The over­head application rate for management and clerical expenses is 25% (line 18). The overhead costs are $0.8075 per garment ($3.230 X 0.25 _$0.8075).

Several risks are associated with using absorption costing. Are direct labor costs accurate? Is the overhead application rate accurate? Does the overhead ap­plication rate really reflect true product costs? The first risk is the dependency of the costing system on the accuracy of costing direct labor. The second risk is the determination of the overhead application rate, which is arbitrary.

3.1.2.12 Activity-Based Costing

Activity-based costing (ABC) is a costing system that treats all costs as vari­able elements of product cost. “Virtually all of a company’s activities exist to sup­port the production and delivery of today’s goods and services. They should therefore all be considered product costs” (Cooper & Kaplan, 1988). Activities cre­ate costs, and products consume activities. Costs that can be associated with cer­tain products, customers, or suppliers should be allocated accordingly. What would be considered indirect product costs with another accounting system are allocated based on utilization of these activities.

ABC builds realistic product cost data by determining the demands of particu­lar styles on what is regarded, in other costing systems, as indirect resources. The result is a compressive product cost that provides a realistic basis for making long-range business decisions. All factories overhead, administrative overhead, and any other organizational resources used in support of a product line are first as­signed to activity centers such as design, merchandising, MIS, quality assurance, and distribution. Costs of using these resources are then assessed to the styles, customers, or suppliers that create the demand for these resources. Under an ABC

3.1.2.13 The cost-plus method

If an exporter receives an enquiry from an importer, he often takes the cost price as a basis (100), adds an acceptable profit (15% for example) and offers the importer a price of 115. This is the cost-plus method.

The exporter may get the order because the main competitor offered 195. If the exporter had offered 185 or 190 he would have got the order as well. By using the cost-plus method he missed the chance to make a very good price. If the exporter later finds out that his main competitor was quoting prices as high as 195 he will find himself in a very difficult spot. It is not easy to raise a price from 115 to 185. It may take him a long time before he can raise the price in conformity with the market.

The export could have found himself as well in a totally different situation. He does not get the order because the competitor is supplying the market at 114 (which he does not know). If he would have know this, he might have been happy to offer a price of 112 and do a regular business on that level. Companies that do not have any information on the market use the Cost-plus method, but they should make a major effort to change as soon as possible to a different pricing strategy

3.1.2.14 Some alternative pricing