A guide for SME garment manufactures to achieve greater profitability

18 August 2022
ITC News

A step-by-step manual for small garment manufacturers to make informed decisions and become preferred suppliers, based accurate costing and valuing of their services.

Determining the cost and value of garment manufacturing operations is a challenge faced by all textile and clothing companies, particularly those in developing countries where many small and medium-sized manufacturers remain focused on simple cut and sew operations, providing low value services and producing very basic commodity-type garments.

The garment industry is changing fast, accelerated by the Coronavirus pandemic, leaving many manufacturers behind. How do factories keep up with an increasingly competitive marketplace and ever more demanding customers, while also evolving to become more sophisticated service providers?

The new ITC publication, The Garment Costing Guide: for small firms in value chains, helps manufactures, and those that support them, understand the true costs and value of producing clothing beyond simply sewing operations. Manufacturers that provide additional services will be more competitive and take an important step towards becoming a preferred supplier to customers.

Pamela Coke-Hamilton, Executive Director of the International Trade Centre (ITC) explains: “Garment manufacturing has evolved from a simple manufacturing operation into a complex service industry where the actual cut and sewing operations are the simplest and least remunerated tasks. The guide not only explains how to capture and calculate all costs of making a garment, but also offers solutions on how to reduce costs along the full supply chain to increase profit margins for garment manufacturers as well as their customers".

Matthias Knappe, Programme Officer and Head of Fibres, Textiles and Clothing at ITC adds, “Understanding the full cost and value of garment making from a factory and client perspective is essential to achieving overall supply chain profitability. If brands, retailers and manufacturers are better off, there is more equal distribution, and balancing of risks and rewards. We also address some of the causes of disruptions experienced during the pandemic.”

The guide also provides an overview of how technology and engineering is shaping the future of the garment industry. This includes innovative ideas on how smaller factories could become strategic suppliers to e-commerce businesses and product garments that have already been sold to the end-customer (known as purchase-triggered manufacturing).