A buyer offers a rate for stitching a style, so much a garment, and asks for a yes. Behind that
number is an assumption about how efficiently your line will run, and nobody says it aloud. If
the line runs worse than the assumption, the rate loses money on every garment, however busy
the floor looks.
What a cut-and-make rate has to cover
A cut-and-make (CM) rate pays for the making of the garment and nothing else: the wages, the
running cost of the line, and the unit's margin. It does not include the cloth or the trims.
The cost of a garment's making is:
The sum
SAM × cost of one available line-minute ÷ efficiency.
The SAM is the standard minutes in the garment. The
cost of an available minute is what the line costs for a day divided by the
minutes it is paid for. Efficiency, from the
line efficiency article, is the share of those
minutes that turn into earned work. Divide by it, and a poor day makes the garment dearer.
A worked example
These figures are made up to show the sum. They are not a benchmark, not a rate anybody should
quote and not a claim about any unit. The line is the one in the efficiency article: 12
operators, 8 hours, an 18-minute SAM, 81.25% efficiency, which makes 260 garments a day.
- Wages: 12 × 8 hours × ₹400 = ₹38,400 a day.
- Running cost of the line: an assumption, ₹15,000 a day for power,
rent, supervision, repairs and the rest that this line is charged.
- Together: ₹53,400 a day.
The line is paid for 12 × 8 × 60 = 5,760 minutes, so one available minute costs
₹53,400 ÷ 5,760 = ₹9.27.
At the line's 81.25%, the making costs 18 × ₹9.27 ÷ 0.8125 =
₹205.38 a garment. As a check, ₹53,400 ÷ 260 garments is
the same ₹205.38.
What efficiency does to the cost
The same line, the same style, only the efficiency changed:
- 65%: ₹256.73 a garment.
- 70%: ₹238.39.
- 75%: ₹222.50.
- 81.25%: ₹205.38.
- 90%: ₹185.42.
- 100%: ₹166.88, the cost at the standard with nothing lost.
Around where this line runs, each point of efficiency is worth about ₹2.50 a garment.
A line that loses ten points between a good day and a bad one has a rate that moves by
twenty-five rupees.
Reading a buyer's offer
Turn the offer around and ask what efficiency it needs. The cost at 100% is
18 × ₹9.27 = ₹166.88, so the efficiency at which a rate just breaks even is
that figure divided by the rate:
- An offer of ₹190: 166.88 ÷ 190 = 87.8%. This
line runs at 81.25%, so each garment loses ₹15.38 — ₹4,000 on a day's 260.
- An offer of ₹220: 166.88 ÷ 220 = 75.9%. The
line has about five points to spare before it stops earning.
And a rate that carries a 10% mark-up over the line's own cost is ₹205.38 × 1.10 =
₹225.92.
Every rate has an efficiency inside it
Work out the efficiency a rate needs before you accept it, then ask whether you have ever run
that style at that efficiency. If you have not, the rate is a hope.
What to do with it
- Quote from measured efficiency, for a style like this one, not from the
line's best week. The figure for a new style may be lower than the one for the style the
line knows.
- Keep the break-even efficiency next to every quote. It tells the owner,
in one number, how much room there is.
- Check the line before the order. The
line balancing and the
absent operator articles show two ways a line falls
below its usual efficiency without anyone changing a thing.
What the sums leave out
- Made-up wage and running cost. ₹400 an hour and ₹15,000 a day
are assumptions. Use your own.
- Overtime. Hours beyond the standard day cost more per minute; the
overtime article counts how much.
- Cloth and trims. Not part of a CM rate. If you buy them, the
trims article and the
costing article add them.
- Waiting for payment. A rate paid in sixty days is worth less than one paid
in ten; see the payment terms article.
The efficiency calculator gives the efficiency to put into the sum.
The calculation after that is three numbers and a division.