Wastage Calculation in Apparel Industry

Wastage is inevitable for any manufacturing process. But the standardization of wastage percentage for each and every process is very much necessary for the wastage control. Every apparel industry must give more importance to the study of wastage analysis and standardization of each and every process and raw materials it adopts and uses. Particularly, the small and medium apparel enterprises which are much unorganized must take necessary measures to adopt this study on wastage analysis. This will increase the effectiveness and efficiency of the production planning and inventory control of the organization. The functional approach of wastage calculation will benefit the apparel manufacturer in many ways and will make them cost competitive in the apparel business. In this article I will discuss wastage calculation in apparel industry with details.

Approach to Wastage Calculation in Apparel Industry

Normally, wastage is calculated as the difference between the input and output expressed in percentage (%).

     Input quantity – Output quantity
Wastage = ————————————————— x 100
Input

Now the approach towards wastage calculation involves two things.

1. Estimation of output quantity where the initial quantity and wastage% are known.
2. Estimation of input quantity where the final quantity and wastage percentage are known.

1. Estimation of output quantity:

The output quantity can be estimated when the input quantity and wastage percentage are known.

By using the formula,

Output quantity = Input quantity – wastage%

For example, in knitting, if the yarn input is 1000 kgs and the knitting wastage is 3% then the fabric output quantity is,

Fabric output = 1000 kgs – 3% = 1000 – 30 =970 kgs

2. Estimation of input quantity:

In apparel industry, buyer or customer gives the order quantity which is the final output quantity that the exporter has to deliver. So to produce this order quantity they have estimate the initial quantity by adding wastage percentage to the final output quantity.

A. Single process approach:

Here the input quantity for a single process is to be calculated is considered.

For example, in the above example if a knitting factory has an order of 1000 kgs of greige knitted fabric to be supplied; now the input quantity of the yarn has to be calculated.

Generally, in the industry they calculate the input quantity using the formula,

Input quantity = Output quantity + wastage%

So, as per this formula,

Input quantity = 1000 kgs + 3% = 1000 + 30 = 1030 kgs.

Now they buy 1030 kgs of yarn for knitting. But this is wrong, because if they use 1030 kgs of yarn for knitting, then the output is,

Output quantity = 1030 – 3% = 1030 – 30.9 = 999.1 kgs;

But the required quantity is 1000 kgs, so there is a shortage of 0.900 kgs or 900 gms of fabric. So the initial quantity can be calculated using the formula,

                                  Output quantity

Initial quantity = ——————————

                                    1 – wastage%

Now, as per this formula,

                                    1000 kgs

Initial quantity = ———————————

                                     1 – 3%

1000 kgs
= ——————
1 – 0.03

1000 kgs
= ——————-
0.97

= 1030.930 kgs

So, if we use 1030.930 – 3% = 1030.930 – 30.93 = 1000 kgs

Which is the required order quantity.

B. Multiple process approach:

Here the initial quantity which is to be calculated for the product which involves multiple processes like garment production. For example if a factory has an order of 10,000 pieces of garments, now the initial quantity or input quantity of yarn has to be calculated after adding all wastage percentage for processes like knitting, processing, cutting, rejection and special process. Here the initial or input quantity should be calculated in terms of weight basis in kilograms. For this the total order quantity must be multiplied by the single garment weight. Let us assume the garment weight is 200 gms or 0.200 kgs.

Industry calculation:

Generally in the apparel industry, first they add rejection percentage, 3% to the order quantity as follows,

10,000 pcs + 3% = 10000 + 300 = 10300 pcs.

Now calculate the quantity in weight basis by multiplying this with single garment weight (0.200 kgs)

10000 x 0.200 kgs = 2060 kgs    ——————————– (1)

With this quantity then the wastage percentages are added. In the apparel industry, sometimes they add up all the wastage percentage first and then they add this total wastage percentage to the output quantity.

Total wastage = knitting + processing + cutting = 3 + 8 + 10 = 21%

So, initial quantity = 2060 kgs + 21% = 2060 + 432.6 = 2492.6 kgs    ————– (2)

Or, sometimes they add wastage percentage step by step as follows:

Add knitting wastage: 2060 + 3% = 2060 + 61.8 = 2121.8 kgs
Add process wastage: 2121.8 + 8% = 2121.8 + 169.75 = 2291.54
Add cutting wastage: 2291.54 + 10% = 2291.54 + 229.15 = 2520 kgs

Initial quantity = 2520 kgs   ——————————————- (3)

The difference between (2) & (3) itself it comes (2520 – 2492.6) = 27.4 kgs

Now let us take the quantity of (3) i.e. 2520 kgs as input quantity and the yarn is purchased and sent for production.

So the output quantity in terms of weight is 2023.970 kgs, but whereas the output quantity required in (1) is 2060 kgs. Now the shortage is 2060 – 2023.970 = 36.030 kgs. So the above method of calculation practically leads to fabric shortage.

Also in pieces terms, 2023.970 kgs/0.200 = 10120 pcs

(So piece shortage = 10300 – 10120 = 180 pcs)

If rejection is 3% then, 10120 – 3% = 10120 – 304 = 9816 pcs;

So short shipment = 10000 – 9816 = 184 pcs

C. Function approach:

Now we do calculation using the formula,

Initial quantity = Output quantity /  (1 – wastage%)

Order quantity = 10000 pcs;

Add rejection percentage = 10000 / (1-3%) = 10000/0.97 = 10309 pcs;

Now output quantity required in weight basis = 10309 pcs x 0.200 kgs = 2061.800 kgs

Final or output quantity required = 2061.800 kgs        ———————————– (4)

Now, add

Cutting wastage: 2061.800/(1-10%) = 2061.800/0.9 = 2290.890 kgs;
Process wastage: 2290.890/ (1-8%) = 2290.890/0.92 = 2490.100 kgs
Knitting wastage: 2490.100/(1-3%) = 2490.100/0.97 = 2567.110 kgs

Initial quantity: 2567.110 kgs    ——————————— (5)

Now let us take the quantity of (5) i.e. 2567.110 kgs as input quantity and the yarn is purchased and sent for production.

This output is equal to the output calculated in equal (4)

Also in pieces terms, 2061.800/0.200 = 10309 pcs;

If rejection is 3% then, 10309 – 3% = 10309 – 309 = 10000 pcs;

So, this is the order quantity. So there is no short shipment.

So this method of calculation is right way of wastage calculation.

Importance of function approach:

The functional method of wastage calculation is important because of the following reasons:

1. It facilities the calculation of correct and accurate purchase quantity, work in progress etc.
2. It facilities the correct quantity of shipment
3. It leads to effective and efficient wastage control
4. The quality level increases.

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