Meaning of SAM in Garment Industry

What is the Meaning of SAM in Garment Industry?

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As defined in the book Introduction to Work Study, ILO,

SAM is the time value arrived at for a task based on the average rate of output which qualified workers will naturally achieve without over exertion provided that they know and adhere to the specified method and provided that they are motivated to apply themselves to their work. 

Here SAM stands for Standard Allowed Minute.


In garment industry, specifically in production SAM is used for measuring work. In the factory work study department (also know as Industrial Engineering department) measure and calculate SAM for sewing operation using standard calculation method. Read 'How to calculate SAM of the garment' 

SAM is used many ways directly and indirectly. Some of those are

• Factory as well as individual operator performance is measured by means of SAM
• Labor cost and associated cost ratios are measured by SAM 
• Operators payroll and incentive amount is calculated based on earned SAM
• Latest production scheduling systems like line balancing system and performance measuring systems use SAM as one of the primary parameters. 

An organised garment manufacturing company can not think about managing and controlling shop floor without using SAM of the garment and  individual operations. Even apparel buyers do negotiation of garment manufacturing price based on garment SAM. 

To derive most appropriate SAM value of a garment, factories use PTS based systems. Standard Time is also derived from time study method. 

Calculate Cost of Manufacturing Apparel Products

How to Calculate Cost of Manufacturing Apparel Products

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Estimating correct manufacturing cost is essential for a successful business. You might be preparing garment cost sheet and need to find manufacturing cost per garment. But don't know exactly how to do it and don't have full confidence calculating the same. Don't worry. Read this post and learn the basic method of determining Cost of Manufacturing (CM) of apparel products.

Cost of manufacturing can be defined as the cost incurred by the factory to run the factory making garments. Factory running cost includes direct labor cost and manufacturing overhead. Here manufacturing overheads are indirect workers wages, staff salary, power and fuel cost, repair and maintenance cost, factory rent, administration cost etc. This cost is also known as operating cost. Cost of Manufacturing is determined for per unit garment.

There are two ways to find Cost of Manufacturing (CM) for a particular style/order. 

1.  Based on Standard Time (SAM) of the product
2.  Based on Daily Production Average

1. CM Calculation Based on Standard Time (SAM) of Product Making

To get better accuracy in cost estimation one should prefer this procedure. But to many small size companies no such resources available to measure product SAM and data for the following parameters. Following parameters are essential for cost calculation in this method.

1. Product SAM: Standard time of the garment. Standard time of a garment is measured by using Time Study and using synthetic data. 
2. Target Efficiency:  Target efficiency percentage is at what % you are expecting running a specific product and order quantity. 
3. Operating Cost per day/machine - Operating cost is factory running cost. Operating costs are all cost incurred to run the business other than material cost. Calculate monthly operating cost and then calculate daily operating cost. Calculate per machine operating cost.

Formula:
Cost of Manufacturing = (Operating cost per day per machine* SAM)/(Target Efficiency% * Working hours * 60)

In the following table an example is shown for calculating manufacturing cost using SAM and Daily Production figure. 

In the  above example, garment SAM is 21 minute, target efficiency 60%. So, actual time would be 35 minute to make a garment. Factory works 8 hours in a day and operating cost per day per machine is Rs. 1022.

Cost of manufacturing is Rs. 74.52

Also Read: How Factory Overheads is Calculated in a Garment Export Business

2. CM Calculation Based on Daily Production Figure

This method is widely used by garment manufacturing factories. Cost of Manufacturing  calculation is done based on historical production data. This is an easier method compared to above one.

Information needed to find Cost of Manufacturing

1. Daily production: Find average daily production of a particular style (garment) based on earlier (historical) production figures. Calculate daily average production of the factory. 
2. Manpower involved in production: How many sewing machines or sewing operators are utilized to produce above quantity. 
3. Operating cost per day/machine: As explained above.

Formula
Cost of Manufacturing = (Operating cost per Day / Total garments to be produced per day)

See the example method -2 in the above table. In the example, daily product is 550 pieces. 40 operators worked to produce these pieces. Operating cost per machine is Rs. 1022 per day. 

So cost of manufacturing is Rs. 74.33

P.S. Data used in the above examples are hypothetical.


Also read: Actual Garment Production Cost -the way factory calculates it.