Introduction

Key Performance Indicators (KPIs) are vital metrics that help garment manufacturers measure, analyse, and improve their operational efficiency, product quality, and financial performance. This guide provides a detailed breakdown of essential KPIs, their calculation formulas, and their significance in garment production.

1. Production Efficiency KPIs

1.1 Factory Efficiency (%)

Definition: Measures how effectively workers utilise their time to produce garments.
Formula:

Where:

Total Minutes Produced = (Number of Pieces Produced × Standard Allowed Minutes (SAM))

Total Minutes Attended = (Number of Workers × Working Hours × 60)

Significance:

Helps identify productivity gaps in sewing lines.

Higher efficiency (typically 70-85%) means better labour utilisation.

1.2 Line Efficiency (%)

Definition: Measures the performance of a specific production line.
Formula:


Significance:

Helps supervisors optimise workforce allocation.

A well-balanced line should achieve 80-90% efficiency.

1.3 Throughput (Units/Hour)

Definition: Measures production speed in terms of units per hour.
Formula:

Significance:

Helps determine machine and labour capacity.

Low throughput may indicate bottlenecks.

1.4 Cycle Time (Minutes)

Definition: Time taken to complete one garment.
Formula:

Significance:

Longer cycle times indicate inefficiencies in workflow.

1.5 Takt Time (Minutes/Unit)

Definition: The maximum allowable time to produce one unit to meet demand.
Formula:

Significance:

Ensures production aligns with customer requirements.

2. Quality Control KPIs

2.1 Defects per Hundred Units (DHU)

Definition: Measures defects found per 100 inspected garments.
Formula:


Significance:

A lower DHU (<5%) indicates better quality control.

2.2 Right First Time (RFT) (%)

Definition: Percentage of garments passing inspection without rework.
Formula:

Significance:

High RFT (≥90%) reduces rework costs.

2.3 Garment Rejection Rate (%)

Definition: Percentage of defective garments rejected before shipment.
Formula:

Significance:

High rejection rates (>3%) indicate quality issues.

3. Inventory & Cost KPIs

3.1 Inventory Turnover Ratio

Definition: Measures how often inventory is sold and replaced.
Formula:

Significance:

A higher ratio (4-6) means better stock management.

3.2 Cut-to-Ship Ratio

Definition: Compares cut fabric to shipped garments.
Formula:

Significance:

Ideal ratio = 1 (no excess cutting).

3.3 Cost per Unit (USD)

Definition: Average production cost per garment.
Formula:

Significance:

Helps in pricing strategy and cost control.

4. Delivery & Logistics KPIs

4.1 On-Time Delivery (%)

Definition: Percentage of orders shipped on schedule.
Formula:

Significance:

Below 95% may lead to customer dissatisfaction.

4.2 Perfect Order Rate (%)

Definition: Measures error-free order fulfilment.
Formula:

Significance:

A high rate (>90%) improves customer trust.

5. Workforce & Maintenance KPIs

5.1 Man-to-Machine Ratio (MMR)

Definition: Evaluates labour allocation efficiency.
Formula:

Significance:

Ideal ratio varies (e.g., 1.5:1 for woven garments).

5.2 Downtime (%)

Definition: Percentage of time machines are idle.
Formula:

Significance:

Should be <5% for optimal efficiency.

6. Financial KPIs

6.1 Gross Margin (%)

Definition: Profitability after production costs.
Formula:

Significance:

Industry benchmark: 20-40%.

6.2 Return on Assets (ROA) (%)

Definition: Measures asset utilisation efficiency.
Formula:


Significance:

Higher ROA indicates better financial health.


Conclusion

Tracking these KPIs helps garment manufacturers optimise production, reduce waste, and improve profitability. Regular monitoring and benchmarking against industry standards ensure continuous improvement.