Key Factors Oct2019

9 Key Success Factors for a Garment Factory (Part 1)

India has been an integral part of the global textile and apparel industry throughout history. India’s textile & apparel exports stood at US$ 37 billion in 2018 and are expected to reach US$ 80 billion by 2025. The domestic apparel market is also projected to grow from US$ 100 billion in 2018 to US$ 220 billion by 2025. The growing market presents immense opportunities for investing in garment manufacturing. One of the most attractive reasons for investing in garment manufacturing is that it is less capital intensive with high investment to turnover ratio.

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However, investing in garment manufacturing business alone does not guarantee success. With growing global competition, it is important that the garment factory is both compliant and competitive. Wastra, an initiative by Wazir Advisors offers turnkey solutions for establishing an engineered apparel factory. As per Wastra, some of the key factors that are important for success of any garment manufacturing business are as follows:

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1. Efficiency

Buyer’s demand for higher value at lower price is driving the need for maintaining optimum efficiency levels. Efficiency in garment manufacturing is a function of 4 M; Manpower (trained staff at all levels), Machinery (technology level of industrial sewing machines), Material (availability at right time and quality) and Methods (standard systems and processes). For example, a high-tech factory alone cannot guarantee higher efficiency and needs trained manpower to operate those machines.

In current times, operating at optimum efficiency level is no more optional and has become inevitable to succeed and takes a toll on profitability, if not maintained. As per Wastra, an improvement of 10 - 15% in efficiency can result in 3-5% improvement of EBITDA, even after paying higher wages to workers in form of production incentives. Also, at a country level, the presence of efficient garment manufacturing set-ups increases its overall attractiveness in the global market, fetching larger orders and enhancing wage-earning opportunities for the workforce.

2. Compliance

Compliance refers to meeting legal obligations, for safeguarding the health, safety, and welfare of workers in an organization. Buyers globally are focusing on sourcing from compliant garment factories with buyers such as H&M, C&A, ZARA, etc. insisting on traceability to ensure that the goods are ethically manufactured. The Government of India has also introduced multiple compliance norms such as labour compliance, social compliance, environmental compliance, etc. Hence, conforming to the recognized standards of production has become one of the key success factors for any garment manufacturing business that aims to cater to global buyers.

While compliance has become very important, it might be confusing for a new investor given varied requirements by global brands. In such cases, a garment manufacturing consultant can help investors build a compliant garment factory suiting the different requirements right at the time of factory planning, thus incorporating the nitty-gritty of these systems in a garment business plan.

3. Factory Layout

Factory layout refers to the physical arrangement of the industrial facilities such as machines including industrial sewing machines, storage systems, supporting fixed assets, etc. An effective layout should not only represent optimal physical arrangement for space-saving but should also be well designed for reducing material movement, labour movement, etc. The development of an efficient plant layout results in smooth work flow across the production process, improved production efficiency and ensures 10-12% space-saving.

An efficient layout also incorporates the varied compliance requirements such as Safety, Health and Environment (SHE) norms and is a visually appealing factory. Thus, preparing an efficient factory layout is critical and as such the expertise of a garment industry consultant always proves to be beneficial. At Wastra, our garment factory experts undertake a scientific approach to design factory layouts that are complaint and productive at the same time.

4. Technology

In this developing world, technology has become an essential part of running any business. It is crucial that garment manufacturing companies introduce timely technological advancements in order to ensure product quality and sustainable growth. In most of the cases, an automated machine reduces manual intervention thus resulting in direct cost savings because of reduction in labour cost. In addition to reduction in manual labour, some additional benefits of automation include better quality, energy-saving, reduced breakdown and inventory control.

Generally, technology is often associated with high-tech machines with robotic systems. However, in garment manufacturing, even simple use of folders and guides can help in automation to some extent. Also, technology is not just limited to industrial sewing machines but also entails application of software, which find applications in real-time data analysis, visual fits, transparency in supply chain, etc. However, technology adoption may not be the same for all garment manufacturing set-ups. A highly automated machine might not prove to be advantageous for all product categories and set-ups and hence, level and type of automation should be chosen very wisely. It has a direct impact on capital investment as well as operating expenses and should be evaluated in detail.

No industry is easy to break into and it remains true for garment manufacturing. For any garment manufacturing unit, the aforementioned points are pivotal for an undying success. As per Wazir’s estimates, a 250 sewing machines factory can lose approx. 2.5 lakh pieces in production and Rs. 2.5 crores in profits every year due to basic underlying faults in manufacturing systems. Wastra’s garment factory consultants help the investors to set-up a garment manufacturing unit that conforms to the industry standards and addresses the challenges faced with optimized results.

Click here to read about the 5 other success factors for a garment factory.

This article has been authored by Akshita Mishra, Associate Consultant and Aditya Rajyan, Research Analyst.