Value Chain Analysis in a readymade garment manufacturing unit

The following is quoted verbatim from this source:

Value Chain analysis

As there are a number of items and different types of raw material i.e. cotton, polyester blends, viscose, etc. used by the RMG industry, it is not possible to give value chain analysis for all the products. After discussing with the units, the value chain analysis has been done on percentage basis as given here under –

1. Basic raw materials i.e. Grey Fabric - 50 to 60% (of sale price of products)
2. Processing charges
 (i.e. Bleach or dyeing or printing) - 10 to 15%
3. Cutting and fabrication - 10 to 15%
4. Fittings and Accessories - 10%
5. Finishing and Packaging - 5 to 6%
Embroidery and Handwork (if needed) - 25% (extra on nominal sale price)

For example, if we take the garment of costing Rs.100/- without embroidery) the value chain analysis will be as under –
1. Grey fabric - 50.00
2. Processing charges - 15.00
3. Cutting and fabrication - 10.00
4. Fittings and accessories
 including buttons - 05.00
5. Finishing and packaging - 6.00
 --------
 Total 86.00
 --------
 Market Price - Rs.100.00
 Gross Margin - Rs. 14.00
Net profit is much lower after adjusting the expenses for establishment, electricity, transportation, depreciation etc.
 Cost with embroidery will be - Rs.108.00
 Market price with embroidery - Rs.125.00

Powerloom Clusters in India- A case of Tamil Nadu

The following are some of the observations:

1. The average production of grey fabric per loom per day is 30 meters.

2. For grey varieties, the beam length is observed to be of 1000 meters and max of 4750 meters.

3. For Sarees, the beam length is of 400 meters to 1000 meters.

4. 50% of the powerlooms operate in one shift and 50% in two shifts. As the powerlooms are working on jobwork basis, and they switch over to two shifts only if the jobwork is available. Also there is a restriction on the working of powerloom in the nights. The number of working hours for the units with one shift is 10 to 12 per day. Those which are working in two shifts work from 8 to 10 hours per day.

5. In case of sarees the powerlooms work in one shift only due to the design restrictions.

6. 95% of the units work in the range of 20-25 days in a month. In a year, 90% of the units work for 10 months and above.

7. In grey fabric production one weaver attend to normally 6 looms, if there are no dobby or jaquard deign. For all yarn dyed fabric, one weaver attends to about 2 looms. For sarees, it is one loom pere weaver.

There are two types of Production Activities followed:

1. Job work Units producing Greige Fabric

2. Entrepreneurial Units carrying out own production

In 1. The warp beam and the weft yarn is provided by the master weaver. The fabric is converted and supplied back to the master weaver.

In this case there are several disadvantages: As the job work unit supply the grey fabric without inspection, the quality of the fabric may not be best and depends upon the available infrastructure and resources.

As there are no inspection facilities so feedback is not scientific. Absence of stop motions - warp and weft as well as untrained weavers create a lot of defects. The product may have stains due to incorrect handling by weavers. Improper ventilation and housekeeping leads to lot of foreign matter in the end product.

In 2. The yarn is procured, dyed and converted.

The flow chart of the various production models are as given below:

source

Orissa Ikat Saris- Commercials and Value Chain

This is as per diagnostic study conducted by the Government:

The following types of Saris are studied:

1. Double Ikat Cotton (of 2/120s cotton) or "Sakta" or "Passa Palli" saris
2. Sambalpuri Cotton Single Ikat Saris ( of 2/120s to 2/80s)
3. Tussar silk/Bafta (Cotton+ Tussar) saris

Mostly, pit looms of up to 52” – 56” inches are being used in the cluster in which Dobbys of
4 to 12 hooks are used for borders. Nearly 70 – 80% of the looms of the cluster have a
dobby attachment

Value Chain Analysis

· Raw material accounts for 28.6% in single Ikat Sambalpuri sari and 47.2% in Cotton / Silk ‘Bafta’ sari with respect to Cost Price
· For single Ikat Sambalpuri sari, app 18% of value (with respect to cost price) is added in tying and dying stage
· Value addition is mainly at the weaving stage (47.2% both in Single Ikat Sambalpuri Sari and 47.1% in Cotton / Silk ‘Bafta’ Sari) with respect to cost price
-Dyeing & Sizing provide nearly 5.5% value to the cost of the sari.
· Marketing mark ups add up to 10% and 22% respectively on the cost price of sari.

Loom Productivity

1. In 5 days 11 metres of kurta fabric  is produced in 1 loom.
2.  In 2 days 10 metre of Salwar is produced in 1 loom.
3. In 3 days 10 metre of dupattas is produced in 1 loom.
4. Silk Sari: In 5 days 1 sari is produced in 1 loom
5. Cotton Single Ikat Sari: In 8 days 2 saris are produced in 1 loom
6. Cotton Double Ikat Sari: In 10 days 2 saris are produced in 1 loom.

Source

Why Fabrics Shrink after Soaking and Washing

In an earlier article regarding the shrinkage of cotton ( Why Cotton Shrinks), the general causes were discussed. There is an excellent study done by Veena Verma of BMN College which looks in depth across the various factors related to yarn that leads to shrinkage. She tested 24 samples from very light weight to heavy weight for dimensional stability after soaking and 25 washings  and the following are some very useful insights from the studies:

1. Basic reason for shrinkage is the relaxation which is the tendency of the yarn to revert to its normal and un stretched dimensions this is called relaxation shrinkage. Most fabrics are produced under tension which leave strains in the fabric. Usually several cleanings are required to relax it completely. 

2. When the yarns are wet, they swell, and consequently the warp thread has a longer bending path to take round a swollen weft thread. The warp length must either increase in length or alternatively, the weft threads must move close together. 

3. Fabrics shrinks after soaking and percentage significantly increases after repeated washing. 

4. The ends per inch and shrinkage are inversely related. As the number of ends increase, shrinkage percentage decreases. There is no clear trend between shrinkage and picks per inch. This is true for both soaking and washing. 

5. Higher the number of Ends per inch than picks per inch, shrinkage values are reduced. 

6. More the cloth cover, less is the warp way and weft way shrinkage on soaking, this is not true for washing. 

7. The fabric with coarse yarn count has more shrinkage and fabrics with finest count have the lowest shrinkage. 

8. More the twist multiplier, higher is the shrinkage on washing. 

9. There is no correlation in cloth weight and thickness on shrinkage.