Even the countries that enjoy duty-free FTAs cannot be complacent, they need to build efficient and productive factories if they wish to be part of the apparel export-preferred destinations. This requires immense hard work not only from its workers to produce efficiently but also to motivate them to produce at certain quality levels. The criterion for success is not a measure of duty-free FTAs only, as it gets washed away if the material is not produced cost-effectively and on time. In order to make the production cost cheaper, and to enjoy its subsequent advantages, the only option is to improve the manufacturing efficiency, argues G. Jayapal Nair, an Electrical and Electronics Engineer, with two decades of expertise in apparel manufacturing and exporting industry. Nair is also a former Assistant Chief Executive Officer at M.R.S. Fashions W.L.L., Bahrain.
Inadequacies to garner top slots in apparel exports
To establish and sustain in this industry, which is worker-oriented, it warrants certain favourable economic and social parameters in the manufacturing country. These broadly entail: free trade agreements between exporting and importing countries to enjoy duty-free advantages, better infrastructure (road/rail/port), cheap resources (energy, water, land, etc.), easy and favourable laws and trade practices (tax, customs, banks), and the availability of trainable active population in abundance at low-cost.
Among these factors, ‘cheap’ labour actually depends on his/her output. For example, if an employee drawing a salary of US $ 100 produces 200 units, it is actually cheaper in comparison to another employee who draws salary of US $ 50, but produces only 50 units of the same item during the same working hours. However, the productivity factor generally doesn’t get its due share in investment decisions.
The efficiency advantage and the utilization factor
Current efficiency in apparel factories, in real time, struggles between 50 per cent and 70 per cent. The lower the efficiency, the more it is attributed to workers’ shortage, absenteeism, high labour turnover, low skills, etc. Bangladesh’s efficiency hovers around 70 per cent due to easy availability of labour, as the people consider the industry as the prime one. To overcome this disadvantage, the solution for the Indian companies lies only in improving efficiencies. Considering an example, if a style of a garment with 20 Standard Minute Value (SMV) is being produced in an assembly line of 60 workers, the number of garments that can be produced at 60 per cent efficiency in 8 hours of working time is 864 units, whereas at 70 per cent efficiency it is 1,008 units. These 144 extra garments per day with an average FOB value of US $ 7 can fetch US $ 25,082 in a month. Even after disbursing a production incentive motivation to workers, the company can still net a handsome amount. This is just from a single assembly line, and that too without any additional capital investments. In other words, this extra production is equivalent to the output of 16.67 per cent of workers at 60 per cent efficiency.
If the country’s 25 million-strong employee population can improve their efficiency by at least 10 per cent, it is equivalent to 4 million additional workers. This can help overcome issue of workers’ shortage to a great extent, faced generally at the main manufacturing centres in India.
In nutshell, a basic salary can get a minimum efficient worker, but a higher salary (with economic incentives) can boost skills to get a highly efficient worker. Besides, the higher efficiencies make room for manufacturers to offer lower cost per unit to the customers, thereby winning more bulk orders. Every ‘readymade’ factory has ‘readymade’ problems and ‘readymade’ solutions! Hence, the reasons for production drop can be easily predicted by the management staff even before the workday starts, which is a routine at apparel units! The real challenges are to rightly assess the shortcomings through a scientific Gap Analysis, formulate long standing solutions and implement them systematically.
Every ‘readymade’ factory has ‘readymade’ problems and ‘readymade’ solutions! Hence, the reasons for production drop can be easily predicted by the management staff even before the workday starts, which is a routine at apparel units! The real challenges are to rightly assess the shortcomings through a scientific gap analysis, formulate long standing solutions and implement them systematically.
Efficiency of a factory is the product of performance and utilization. Performance comes directly from workers and utilization should come from management staff (indirect workers).
This means, the management staff should ensure uninterrupted workflow at each workstation so that direct workers can continuously perform, which also improves their skills and stamina. The general industry hindrances such as absenteeism, low skill, machine breakdown, quality repairs, technical issues, low motivation, material flow interruption, line balancing issues, etc. should be attended timely with effective solutions, wherein lies the smartness of indirect staff. Application of predictive management can further improve the utilization factor, and thereby efficiency. Efficiencies beyond conventional levels are achievable if approached without superstitions! It exhorts a mutually complimenting need of “skilled workers to be managed by skilled managers”. Each factory is a war zone that is engaged in a never-ending fight with time!
Skilled country to efficient country
Improving efficiency should be the prime goal of the apparel manufacturing sector which needs undeterred focus from every corner. The Government may further think about certain initiatives such as:
1. In order to train the investors and managers on the methods to run a manufacturing unit efficiently, ‘Orientation Workshops’ can be planned at manufacturing centres. The manufacturing-related ‘Global Benchmarks’ can be introduced in the classes to cut down negative inhibitions. Experts from the industry can conduct these classes by depicting real-life situations.
2. Modalities to be prepared to scientifically calculate the ‘real production efficiency’ of factories, and implemented to spot ‘efficient factories’, which could be awarded with ‘Efficiency Awards’ in the form of economic incentives, as an encouragement.
3. The Government may think of forming a Gap Analysis team comprising of experts to study inefficient factories, and reason out and propose corrective measures.
It is absolutely evident that the sustenance and competitiveness of apparel manufacturing industry depends on productivity improvement actions as the prime driver.
