Seminar

on
Cut to ship & order
to ship ratio and
WIP & Throughput
Time
Contents:

 What is cut to ship ratio?

 What is order to ship ratio?
 How to calculate cut to ship and order to ship ratio?
 Why need to cut extra garments for an order?
 Reasons for measuring cut to ship ratio and order to ship ratio
of orders.
 How to measure cut to ship and order to ship ratio?
 What is WIP
 What is the technique of Reducing WIP
 Root cause of WIP
 What is throughput time
 Formula for calculating WIP and Throughput Time
 Disadvantage of WIP
 What is cut to ship ratio:

Cut to Ship Ratio’ is one of the Key performance indicators of a

garment manufacturing company.
 Here ‘cut’ means total pieces cut by a factory for an order.
 And ‘ship’ means total pieces sold to the customer (buyer) of
an order.

For example, a factory gets an order of 1000 pieces, factory cuts

fabric for 1020 garments (2% extra) and ship equal to 1000 pieces
or less/higher than 1000 pieces.
What is order to ship ratio:
‘Order to Ship Ratio’ is one of the Key performance
indicators of a garment manufacturing company.

 ‘Order’ means a specified set of garments is

ordered by the customer to be produced by a given
date.
 And ‘ship’ means total pieces sold to the customer
(buyer) of an order.

For example, a factory gets an order of 1000 pieces,

factory ship equal to 1000 pieces or less/higher than
1000 pieces.
Calculation method:

 Cutting quantity = order quantity (1 + extra cutting

percentage).
 Ship quantity = actual pieces shipped to buyer.
 Order quantity=actual pieces of garments is ordered
by customer.

1.Cut to ship ratio = (Cutting quantity / Shipped quantity)

2.Order to ship ratio = (Shipped quantity/ order quantity)

 Why need to cut extra garments than order quantity

1. Normally, factories those make export orders, cut extra garments than the
actual order quantity. In the garment making process, there are possibilities of
garment damage and rejection. So to ensure that 100% order quantity is shipped
to buyer after discarding damaged garment, factories cut extra garments.
Garment exporters generally cut 2-5% extra garment than order quantity. Extra
percentage of cut quantity is planned by merchandiser or other authorized
person.

2.
There are few other reasons for cutting extra garments than order quantity.
Like, few buyers accept extra garments than order quantity up to certain
percentage with same FOB, in such cases factories try to sell more garments to
increase sales turnover. Secondly to utilize maximum fabric that are sourced for
a specific order. Percentage figure of extra garment cutting varies depending on
fabric types and number of processes involved in conversion process from fabric
to finished garment.
Reasons for measuring cut to ship ratio and order to
ship ratio of orders.

Some of reasons for measuring cut to ship ratio and order to ship
ratio are…..

 To check how efficiently a factory processes its orders

 To Benchmark factory performance in cut to ship ratio
 To Benchmark factory performance in order to ship ratio
 How many pieces (in percentage) are kept as surplus garments
and analyze extra cost is incurred in fabrics and labor cost
 Performance of the Factory against material utilization.
How to measure cut to ship ratio and order to ship ratio of an
order?

To measure the this ratio following information are

required

 Order quantity: This information is available in

buyer's purchase order (PO)
 Total cut quantity: This information will be available
cutting department and production report
 Total shipped quantity: This information is available
with shipping department and with merchandiser
Example
Suppose a factory received an export garment order of
10000 pieces of shirts. Factory cuts 2% extra shirts as
buffer and finally they have shipped exactly 10,000
pieces to your buyer. Calculate cut to ship ratio for this
order?

Solution: 2% of 10,000 pieces is 200 pieces. That means

factory cuts total 10200 pieces.

Therefore, Cut : Ship = 10200:10000 =1.02

And Order: ship=10000:10000=1
 WIP can affect various areas in the manufacturing process,
like labor productivity and line efficiency. This is especially
IMBALANCE WIP important for bottlenecks in a manufacturing operation.
 Forecasting and WIP Levels
 Setting production lay out with proper line balance
 Adding Machines and Improving Workforce

 Just in Time Production (JIT)

 Time Saving and Allocating the Right Operator

 Flow small bundle size in production line

 Make solution of bottleneck process by capacity sharing

 Develop methodologies of production line

 What Is Throughput Time?
• Throughput Time means how much time a line takes to make
one garments starting from first operation to the completing
last operation of the style .

What Are The Benefits Of Reducing Throughput Time?

1.Smoth flow of material.

2.Reduce WIP in line.
3.Can develop Kanban with Cutting and Finishing
4. Turn company’s investment into revenue more quickly

How Can We Reduce Throughput Time?

1.By Balancing line properly.

2.Reducing bundle size.
Comparison Between Traditional line &
pilot Line Throughput time.
Pilot line Throughput Time
Traditional line Throughput Time(min)
sewing(min)
481 103
481 107
481 101
481 89
481 101.7
481 93
481 86
481 83
Avg WIP : 2400 pcs Avg WIP : 350 pcs

1.If throughput time is less that means materials are making money
quickly. That means material waiting time are reducing and WIP &
inventory are decreasing .
 Throughput = WIP x Cycle Time

•lead time is the time between the initiation and delivery of a work item.
•cycle time is the time between two successive deliveries
•throughput is the rate at which items are passing through the system.
•WIP – Work in progress; the number of work items in the system. Work
that has been started, but not yet completed
If throughput is more
1.Need more space to cover WIP
2.Increase wastes motion of operator to manage big
bundle
3.Mistake bundle size because of different size of the
line.
4.Unnecessary transportation of bundle back and fro in
the line.
5.Effective combo packing to the next operation or
order(required color matching for packing bundle.
6.Working time increase and excess overtime to finish
WIP(lack of team concept).
7.Operator focus to finish the large WIP not focus on
quality. Quality at the source not focus, It increases
alter%, reject%. its totally waste.