How to reduce Cost Per Minute in a Factory?
CPM stands for cost-per-minute here. I post this article to answer a reader's question on Ask SL.
To be more accurate we might conclude that CPM is the cost incurred by a production line per standard minute. In a garment factory, the problem is how you can cut costs per minute. First, to grasp the method of reducing CPM, you need to learn how to measure CPM.
How to reduce Cost Per Minute in a Factory?
The formula for calculating CPM is
CPM = (Total amount paid by the employees to the operators /Total standard minutes)
For a day, the direct workers ' total salary will remain the same but produced SAM may vary depending on the number of clothes produced and the SAM product. For a production line, the daily wage sum is fixed. The factory needs to increase production minutes to reduce the cost per minute.
By improving line productivity you can increase the minutes produced As you created more garments, the line productivity increased).
Your main objective would be to increase line productivity which means to increase the SAM generated.
I've written a few articles about how to improve line production.
Here is an example showing how to reduce Cost Per Minute in a Factory? When line efficiency increases, the cost per minute decreases.
By improving line productivity you can increase the minutes produced As you created more garments, the line productivity increased).
Your main objective would be to increase line productivity which means to increase the SAM generated.
I've written a few articles about how to improve line production.
- First Step for Factory Effectiveness Development
- Best 9 ways to increase the efficiency of sewing operators
Here is an example showing how to reduce Cost Per Minute in a Factory? When line efficiency increases, the cost per minute decreases.
Let's say, A garment factory SL Collections, 80 workers produced 1,000 garments in a day. The standard minute of the garment is 25 minutes. The total salary paid to the direct labors ₹28,000 (assuming daily wages ₹ 350 per day). In this case, cost per minute is
= (28,000/(1,000 x 25))
= 1.120
The line efficiency calculated is 65.10%.
Let's assume now that line performance is increased to 75%. Total production and the minutes produced will now increase. When the volume of output increases the cost per garment, and the cost per minute is reduced.
= (28,000/(1152 x 25))
= 0.972
In the above example, you can see the cost per minute reduced from 1.12 to 0.972 by increasing line efficiency from 65.10% to 75%.
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