“We have about three per cent rejects.” It is said as one number, and it hides two
different losses. A garment that is rejected is lost whole. A garment that is reworked costs
only the minutes it takes to put right. Treat them as the same thing and you will mis-cost
both.
Two different losses
- A reject cannot be sold or cannot be mended. Everything spent on it is
gone: the fabric, the trims, the cutting, the stitching.
- A rework can be fixed. What is lost is the extra time, and the
capacity that time took from other garments.
Costing sheets usually carry one allowance for both. That is a sensible shortcut for a price,
and a poor basis for deciding what to improve, because the two have different causes and
very different sizes.
What an allowance does to a price
These figures are made up to show the sum. They are not a benchmark and not a claim about any
unit. They are the values the
garment costing calculator opens with, so you can check them there.
Direct cost is ₹640. With a 3% allowance for rejects and rework and 12% overhead on
top, the total cost is ₹738.30. A 35% mark-up gives a price of
₹996.71, a profit of ₹258.41 and a margin of 25.9% (the
mark-up and margin article walks through
why those last two differ).
When the price is already agreed
Suppose that price is agreed with a buyer and the real rejects turn out to be 6%, not 3%. The
price does not move. The cost does: ₹640 × 1.06 × 1.12 =
₹759.81, which is ₹21.50 more on every garment.
- Profit falls from ₹258.41 to ₹236.90.
- Margin falls from 25.9% to 23.8%.
- On a thousand garments, ₹21,504 is gone.
- Three points of rejects took 8.3% of the profit.
Each extra one per cent of rejects costs ₹7.17 a garment — ₹7,168 on a
thousand — at these figures. That is the number to hold against any proposal to inspect
more or to retrain.
What a rework costs
A rework costs time, so the sum starts with what a minute of sewing costs. Here is an
assumption, stated so it can be changed: say the ₹120 stitching cost in the example is
for a garment with a standard time of 18 minutes. That is ₹120 ÷ 18 =
₹6.67 a minute.
If putting one garment right takes 6 minutes, a rework costs 6 × ₹6.67 =
₹40. A reject, by comparison, loses the ₹640 of direct cost
— sixteen reworks' worth. That ratio is why the two must be counted
apart: a unit that sends back many easily-fixed garments is in a different position from one
that scraps a few.
Now suppose 5% of a thousand garments need that 6-minute fix. That is 50 garments and
₹2,000 of stitching cost. In time it is 300 minutes, five hours of sewing. Against the
5,760 minutes a twelve-operator line has in an eight-hour day (the
line efficiency article works that out), that is
5.2% of a day's available time, and none of it earns anything.
Rework hides in the efficiency figure
Time spent putting a garment right is not an earned minute. A line with a lot of rework shows
lower efficiency and no obvious reason, because nobody wrote the rework down.
Measure it yourself
None of the percentages above is a reading from your unit. To get yours, for one month:
- Count garments cut and good garments out. The gap,
divided by garments cut, is the reject rate.
- Count rework separately, and time a sample of the fixes so the minutes are
real.
- Write down where each one came from — cutting, stitching or
finishing. That is what tells you which fix is worth paying for.
What these sums leave out
- A flat allowance. One percentage over every style hides any difference
between styles. If you can measure rejects by style, do.
- Customer returns and discounts. The costing sheet does not include them;
they come off the margin later.
- A made-up minute rate. The ₹6.67 comes from an assumed pairing of
cost and time. Use your own.
Put your own figures into the costing calculator and the
efficiency calculator. The first shows what a rejection allowance
does to a price, the second what lost minutes do to a line.