Apparel Merchandising

APPAREL MERCHANDISING
APPAREL MERCHANDISING
R. Rathinamoorthy
and
R. Surjit
WOODHEAD PUBLISHING INDIA PVT LTD

New Delhi
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First published 2018, Woodhead Publishing India Pvt. Ltd.

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Contents
Forewordxi
Prefacexiii
1 Introduction to merchandising 1
1.1 Introduction to apparel industry 1
1.2 Merchandiser in apparel industry 2
1.3 Roles of a fashion merchandiser 4
1.4 Role of a production merchandiser 5
1.5 Role of a retail merchandiser 10
1.6 Samples in apparel industry 12
1.6.1 Sampling process 13
1.6.2 Samples and their importance 15
1.7 Responsibilities of a merchandiser 17
1.8 Quality of a merchandiser 18
1.9 Merchandiser interface with other departments of
apparel industry 18
1.10 Terminologies and abbreviations used in
merchandising process 23
1.11 Summary 27
References 27
2 Forecasting and product development 29
2.1 Introduction 29
2.2 Line planning 30
2.3 Line development 31
2.3.1 Fashion forecasting process 33
2.3.2 Market research 33
2.3.3 Fashion research 34
2.4 Product development 38
2.4.1 Role of merchandiser in product development process 39
2.5 Line adoption 46
2.6 Apparel analysis process 47
2.6.1 Style description 49
2.6.2 Positioning strategy 50
2.6.3 Sizing and fit 50
2.6.4 Material specifications 50
2.6.5 Garment component assembly 51
2.6.6 Final assembly and finishing 51
vi Contents
2.6.7 Style presentation 51

2.6.8 Example of apparel analysis process:
Analysis of a “Polo T-Shirt” 52
2.7 Customer profiling for apparel merchandisers 60
2.7.1 Customer profiling methods 61
2.7.2 Benefits of customer profiling 62
2.8 Summary 64
References 64
Appendix I 65
3 Merchandising planning and order execution 71
3.1 Introduction 71
3.2 Time and action plan for merchandisers 72
3.3 Development of time and action plan 76
3.3.1 Gantt chart 77
3.3.2 Network charts 80
3.4 Raw material consumption estimations 98
3.4.1 Fabric and yarn weight calculations 98
3.4.2 Size wise – Colour wise order quantity breakup
identification 103
3.4.3 Yarn or fabric consumption calculations 106
3.4.4 Sewing threads – consumption calculation 116
3.4.5 Other raw material consumptions 126
3.5 Factory capacity planning 127
3.5.1 Sewing department capacity calculation – Line
efficiency and capacity 128
3.5.2 Capacity calculation for other departments 132
3.6 Summary 142
References 143
4 Sourcing for merchandiser 145
4.1 Introduction 145
4.2 Classifications of sourcing process 147
4.3 Sourcing strategies for decision-making 148
4.4 Sourcing process in an apparel industry 150
4.5 Role of merchandiser in sourcing process 151
4.6 Factors affecting sourcing process 152
4.6.1 Lead time 152
4.6.2 Minimum order quantity (MOQ) 154
4.6.3 Logistics facilities 154
4.6.4 Quality parameters 156
4.6.5 Sourcing costs 156
4.7 Supplier or vendor management 156
Contents vii
4.7.1 Supplier / vendor selection criteria 157

4.7.2 Supplier selection process 158
4.8 Types of supplier for apparel industry 159
4.9 Vendor / supplier evaluation 160
4.10 Vendor evaluation methods 165
4.11 Summary 172
References 172
5 Apparel costing for merchandiser 175
5.1 Introduction 175
5.2 Elements of cost 176
5.2.1 Material cost 177
5.2.2 Labour cost 177
5.2.3 Expenses 178
5.2.4 Overheads 179
5.3 Factors influencing the costing process 179
5.4 Calculation of fabric cost 180
5.4.1 Yarn cost calculation 181
5.4.2 Process cost calculation 184
5.5 Fabric cost calculation 197
5.6 Cost calculation inapparel production departments 203
5.6.1 Cutting department costs 203
5.6.2 Sewing department costs 208
5.6.3 Trimming and checking department cost 217
5.6.4 Packing department costs 220
5.6.5 Calculation of shipping and forwarding cost 228
5.7 Calculation of overall apparel manufacturing cost
(Cut – Make – Trim/Pack and Shipping) 232
5.8 Summary 251
References 251
6 Export procedure and documentation 253
6.1 Export procedure 253
6.2 Terms of payment 255
6.2.1 Advance payment 255
6.2.2 Letter of credit (L/C) 256
6.2.3 Documents against acceptance 261
6.2.4 Documents against payment 263
6.3 Delivery terms 263
6.3.1 INCOTERMS 2010 264
6.3.2 INCOTERMS 2000 267
6.4 Export finance 268
6.4.1 Pre- and post-shipment finance 269
viii Contents
6.4.2 Other initiatives 273

6.5 Pre-shipment inspection 274
6.5.1 Pre-shipment inspection agencies 276
6.6 Shipment modes 276
6.6.1 Types of load 276
6.6.2 Types of containers 277
6.6.3 Selection of freight forwarder 279
6.7 Export customs clearance procedure 279
6.8 Export documentation 280
6.8.1 Need for export documentation 281
6.8.2 Types of export documents 282
6.8.3 Commercial documents 283
6.8.4 Regulatory documents 299
6.9 Internal documents for merchandiser 302
6.9.1 Customer information 302
6.9.2 List of customer 302
6.9.3 Sample / pattern request form 303
6.9.4 Order review form 303
6.9.5 Order register (OCN) 303
6.9.6 Accessories indent form 304
6.9.7 Fabric indents cum cut planner 304
6.9.8 Yarn requisition form 304
6.9.9 Lap dip approval report 304
6.9.10 Photo sample / fit sample / size set report 304
6.9.11 Work order 305
6.9.12 Pre-production meeting form 305
6.9.13 Bulk fabric approval and trim card approval 305
6.9.14 Amendment form 306
6.9.15 Order status report 306
6.9.16 Customer feedback form 306
6.10 Summary 306
References 307
Annexure I 309
7 Communication skills for merchandiser 329
7.1 Communication 329
7.2 Process and elements of communication 330
7.3 Business communication 332
7.4 Objectives of business communication 333
7.5 Importance of business communication 333
7.6 Types of business communication 336
7.6.1 Formal communication 336
Contents ix
7.6.2 Informal communication 340

7.6.3 Communication in internal environment 342
7.6.4 Communication in external environment 342
7.7 Principles of good communication 342
7.7.1 7 C’s of communication 343
7.7.2 4 S’s of communication 345
7.8 Barriers in communication 346
7.8.1 Overcoming barriers in communication 348
7.9 Merchandiser and communication 349
7.10 Communication skills for a merchandiser 349
7.11 Improving communication skills of a merchandiser 352
7.11.1 Improving listening skills 353
7.11.2 Improving body language in communication 353
7.11.3 Improving writing skills 354
7.11.4 Improving presentation skills 360
7.11.5 Improving negotiation skills 361
7.11.6 Improving intercultural communication skills 362
7.11.7 Improving skills to conduct meetings effectively 363
7.11.8 Improving speaking skills 364
7.12 Cases to understand importance of communication for a
merchandiser365
7.13 Summary 368
References 368
Index371
Foreword
This volume on the subject of ‘Apparel Merchandising’ is a valuable

reference book for those interested in any phase of Apparel manufacturing
and business.
The authors Dr. R. Rathinamoorthy and Mr. R. Surjit have done a
commendable job in bringing out this book which gives a complete insight on
the subject of merchandising for anybody right from an aspiring merchandiser
to personnel involved in the apparel supply chain. The Global Apparel and
Textile business is valued at around $3000 billion which is 2% of the world’s
gross GDP and as of 2014 approximately 57.8 million people are employed
in the Apparel and Textile industries.
There is a requirement of a systematic approach in the subject of
Merchandising, as it requires creativity, fashion sense, business acumen,
commercial knowledge, trouble-shooting abilities, logistics knowledge, in-
depth understanding of a brand/customer and great communication skills.
There are 3 key important points which play a very important role in the
supply chain which are Quality, Price and Service. A merchandiser plays a
very important role in which he connects all the dots in the organisation for a
successful product delivery with right price, right quality and at the right time.
This book covers all the key points needed for the making of a good
merchandiser.
I would like to appreciate both the authors for bringing out this book on a
very important subject of Merchandising and I am sure this will enhance the
development of the readers and in turn produce a quality approach towards
merchandising.
Wishing good luck.
Suresh Balram.
Senior Manager – Ralph Lauren Corporation, India.
Preface
“Apparel Merchandising” book has been written keeping in mind the

requirements of students, academicians and industry personnel with respect
to the merchandising activities in an apparel company. Merchandising is one
of the major contributing departments in the apparel industry. Merchandiser
is the one who communicates and connects the apparel manufacturing
units with the buyers. The main role of merchandiser in the industry is to
co-ordinate, communicate and complete any particular job inside and outside
the manufacturing unit. The merchandising department also performs
few important cost related activities in the manufacturing firm along with
marketing department. Hence, the merchandiser should also have knowledge
on product pricing and costing of apparel products. This book gives
wholesome knowledge on the above aspects of merchandiser.
When we initially handled this subject for undergraduate students, we
found many hurdles in collecting information for the students. Despite the
availability of few academic books in the market, we found lot of practical
aspects in merchandising process missing which are particularly followed in
Asian countries. They remained unexplored or were not explained clearly.
In the perspective of educating undergraduate level students, we have been
a part of several industrial trainings and industrial collaborative work to
understand the real time industrial responsibilities of merchandiser. The main
intention of the book is to provide detailed real time job responsibilities of
an apparel industry merchandiser from communicating and receiving order
to dispatching the goods from the export house leading to maintenance of a
healthy relationship with the buyer.
In this context, the book discusses about the different job responsibilities
of the merchandiser at the varied stages of order execution from the buyer
contact to dispatch. Further, the chapters also detail the different sampling
procedures followed in industry to get product approval. The activities of the
merchandiser starting from design to product development and then product
development through apparel analysis is explained in depth. The raw material
consumption calculations at different stages of the product development
like, yarn, fabric, sewing thread, trims, accessories and packaging material
are provided with illustrative examples for better understanding. The order
planning activity by analysing the factory or individual department capacity
planning process is explained. The sourcing activity of the merchandising
process is discussed with details about the various sourcing hubs in the
apparel world.
xiv Preface
The costing process of the apparel product is explained in depth for the
better understanding with lot of worked out problems. The costing activity
at different departmental levels are explained along with the overall cost
sheet preparation for an order. The internal and external documents required
for export and import activity is described with sample documents. The
importances, requirements of those documents along with their content
details are illustrated. Last but not the least, the communication skillsrequired
for a merchandiserare elaborated. We believe that this book will be a useful
tool for all the budding technocrats, academicians and industry personnel to
carry out the merchandising activities in an apparel company
Dr. R. Rathinamoorthy
Mr. R.Surjit
1
Introduction to merchandising
This chapter deals with the various processes in apparel industry along with
their importance in the apparel manufacturing. This particular chapter ex-
plains the various roles and responsibilities of the apparel merchandising
process in different aspects, as a fashion merchandiser or as a production
merchandiser or as a retail merchandiser. This chapter also enlightens the in-
teraction of merchandiser with other departmental activities of an apparel in-
dustry to idealise the job profile of the merchandiser over other positions. The
final part of the chapter details various terminologies and abbreviations used
in the merchandising process in detail.
1.1 Introduction to apparel industry

The Indian apparel industry is one of the leading industrial sectors in the
world. Primarily it was quite unorganised but the scenario has been changed
with time. It was mainly started after the economic liberalisation of Indian
economy in 1991. The opening up of the economy gave the much-needed
thrust to the Indian apparel industry, which has now successfully become
one of the largest in the world. It has made a major contribution to the econ-
omy of the country in terms of direct and indirect employment generation
and net foreign exchange earnings. The sector contributes about 14% to
industrial production, 4% to the gross domestic product (GDP) and 17% of
the country’s export earnings. It also provides direct employment to over
35 million people.
Nowadays, the increasing technical demand and requirements from
apparel industry attracts a lot of engineering students and technologists
towards the industry. This increases the requirements of standardised job
responsibilities in industries. Previously while the industry functioned as
an unorganised sector, the situation was like everyone performed all the
jobs. This lead to improper follow-up and chaos in the process. After 1991,
more international buyers stepped into Indian apparel industry than before.
This improved the basic requirements of the industry like becoming more
organised than before. The industry started focusing more on the customer
needs and wants. Currently, the apparel sector has improved a lot with
organised roles and responsibility.
2 Apparel Merchandising
Typically, the apparel industry process flow starts from the process of
getting an order from the buyer by the merchandiser. The process from fab-
ric sourcing to dispatch of the goods to the customer is handled by different
people with different responsibilities. Figure 1.1 represents the operational
hierarchy of an apparel industry and Figure 1.2 represents the process flow of
apparel industry.
Figure 1.1 Operational hierarchy of an apparel industry
1.2 Merchandiser in apparel industry

Merchandiser in an apparel industry is the person who is involved in man-
aging the buyers and their orders by taking care of the garment business in
his/her concern. He oversees the manufacturing activities of the company to
ensure timely delivery of right quality and quantity. The term was derived
from the word “Merchandise”. With specific reference to the Indian indus-
try, a garment merchandiser is a person who buys raw materials, accessories
for producing required garments and exports them to the buyers in differ-
ent countries within the stipulated time period. Since this particular job deals
with the two extremes of the apparel hierarchy, merchandiser always plays
a vital role in the performance of apparel industry. Merchandising forms an
effective liaison with the buyers. Merchandiser identifies and develops po-
tential new buyers and buying houses. The term merchandising means sim-
ply to buy and sell commodities for a profit. The role of merchandiser varies
depending upon whether that particular company is performing in retail or
manufacturing context. Merchandising involves the conceptualisation, devel-
opment, procurement of raw materials, sourcing of production and delivery
of product to buyers. The merchandiser must combine logical and analytical
thinking with initiative and expressive creativity.
A merchandiser must be a part designer, part engineer, part computer ex-
pert, part marketer, and part business management guru and part entrepre-
neur. According to theory on merchandising, Myer defines merchandising as
“Careful planning, capable styling and production or selecting and buying,
Introduction to merchandising 3
Figure 1.2 Process flow of an apparel industry

and effective selling”. By this definition, the primary mission of today’s mer-
chandisers seems unchanged. In other words, merchandiser must be able to
involve in all company functions that result in creation, development, exe-
cution, and delivery of product line such as materials management, planning
and control, market knowledge, product development, production authorisa-
tion, interface with sales, sourcing and interface with manufacturing global
textile industry. Overall a merchandiser must possess a rare blend of traits,
skills and experience.
In general, the merchandisers or the merchandising activity in an apparel
industry can be classified into three broad categories as shown in Figure 1.3.
Figure 1.3 Types of merchandising process / merchandisers
1.3 Roles of a fashion merchandiser

Fashion merchandising process involves in the design creation and product
development process. This fashion merchandising process starts from differ-
ent origins.
i) The buyer might have visited different countries and various fashion
shows across the globe and brought his inspirations in terms of pic-
tures and garments.
ii) The buyer might have given a broad trend or theme to the merchan-
diser and designer to develop a garment.
In both the cases, at a given situation the designer can work on de-
veloping different aspects of forecasting process, developing mood
board, silhouettes, colour board and requirement. But it is merchan-
diser’s role to coordinate with the designer about the needs and re-
quirements of the buyer based on his previous experience. Hence, the
influence of the merchandiser in the apparel designing plays a vital
role in the acceptance of the developed design.
iii) In the third category, the manufacturing company itself may own
some brand. So, for their market, while designer develops products,
the merchandiser’s role is essential in exploiting the firms target
sector and marketing region. This will help them in developing pro-
totypes at the design development stage. The typical process flow of
a fashion merchandiser is given in Figure 1.4.
Figure 1.4 Work flow of a fashion merchandiser
1.4 Role of a production merchandiser

Production merchandiser is a person who communicates with the buyer and
the primary occupation is to accomplish the work according to the necessity
of the customer and dispatch the completed products to the buyer’s destina-
tion on time. He/she interacts and coordinates different jobs which are dis-
cussed in Table 1.1.
Table 1.1 Roles of apparel merchandiser in an apparel industry

Process Role of the merchandiser
Proto sample This is the first stage in which the buyer will enquire with the
order enquiry merchant about the new order
Forwarding tech When the order enquiry has been done, then the buyer will send a
pack “Tech Pack” or technical specification sheet to the merchant. Tech
pack includes all the details of a style and which includes the items
as follows:
• Product style design
• Measurements
• Fabric
• Style code
• Surface ornamentation details, etc.
Product • It is one of the important jobs of the merchandiser. Once the
development ‘Tech Pack’ is received, the merchandiser will arrange the tech
pack details in a format by dividing various styles and its de-
tails of the garment
• He advises the junior merchandisers regarding the specifica-
tion details and requirements of the buyer
• This will help the junior merchandisers to assist the sampling
department manager / coordinator
• The sample is developed based on the requirements of the
customer. The effective communication between the different
levels of people plays a vital role in sample development
Approval of the • After the sample development, 2–3 samples are sent to the buyer
developed sample for approval of the style
• The main objective of the development sample is, the buyer will
understand how the garment style looks with the specific details /
they will estimate the manufacturer’s capacity and ability to pro-
duce the sample for their line
• The samples are prepared with the available fabric in store which
closely resembles the exact requirement. This will help the buyer
to understand the manufacturer’s ability. Sometimes, to receive
the order, the merchandiser also develops the sample with original
fabric
• In sample development, surface ornamentations and fit are fol-
lowed as per the tech pack. If some correction is to be done then
the buyer will send the correction details and again the samples
are reworked / developed again and sent to the buyer. This process
will be continued till the sample gets approved
Costing • Once the sample approval is received from the buyer, then the
merchandiser will perform the garment costing
• It is done by calculating various costs incurred to make a gar-
ment style. It consists of various factors like:
• Fabric cost
• Trims and accessories cost
• CMT
• Washing or finishing cost
• Bank charges
• Buffer value
• Miscellaneous costs like rejection cost, wastage, etc.
Order placement • Based on the finalised pricing value, the costing “quote” will
be sent to buyer. The price quote provided by the company is
not necessary to be accepted by the buyers and there will be a
negotiation between both the parties
• Once final costing or re-costing is done and the same is accept-
ed by the buyer, the buyer will place the order with the required
order quantity and other main details to the merchant
Fabric and trims • Once the order is accepted by the buyer, the order will be
ordering placed officially to the particular manufacturing firm
• Immediately merchandiser will place the order for required
raw materials like fabric, trims, accessories, etc. as per the co-
lour, GSM, weave, quantity, quality, etc. which is required for
the style
• The merchandiser will also forward the requirement sheet to
the purchase department by advising them to place orders with
the suppliers
Lab dip • The first process after the order acceptance is lab dip where the
merchandiser will send the samples of dyed fabric to the buyer
for colour analysis
• The submission of fabric/ lab dip includes many shades of the
colour which the buyer has asked for the garment
• The lab dip approval is the critical process, this process will
be continued till the shades get approved from the buyer. This
approved shade will be used for the bulk dyeing of fabric for
final garment production
Fit sample • After the approval of lab dip from the buyer, the first sample
for the provided specification is developed by the company
which is known as FIT sample
• This sample generally developed with the actual fabric or
available fabric close to the buyer requirement will be used.
The sample generally will be developed for a medium size.
The main objective of this sample is to check the fitOnce the
sample is submitted, the buyer evaluates the sample measure-
ments, fit aspects and they will give feedback to the merchan-
diser for revision
• The buyer returns fit approvals sheet which contains all the ac-
tual measurements and required measurements and how much
deviation has occurred for the purpose of correction
• Totally three pieces are made, all of which are sent to the buyer
and sent back to merchandiser after approval. Once this is ap-
proved, the order is confirmed
Pre-production • Once the fit samples are approved, then the pre-production
samples (PP) samples or the red seal samples are made. PP sample will
have all the specific details of the style with the exact fabric,
colour, trims, surface, ornamentations, etc.
• The sample developed plays a vital role in the order confirma-
tion process because this is the main step where the sample
has to look exactly as per the buyer’s requirement. Around 2–3
samples (in four sizes each) are sent to buyer for the approval
and buyer can advise any corrections if required
Size set samples • Till the pre-production sample, the sample may be prepared
in the sample department of the company. But after this stage
for the size set sample, mostly the buyer recommends the mer-
chandiser to produce in the actual manufacturing unit
• Size set samples are made for the purpose of checking the dif-
ferent sizes of the same style in terms of fit, measurements,
styling, etc.
• It is also made to check whether the assigned unit is able to
produce that style as per the specs. Three sets are made for all
sizes. It is done in original fabric
Pre-production • Once all the samples are approved and all raw materials are
meeting (PPM) ready in the store to start the bulk production, the pre-produc-
tion meeting will be arranged by the merchandiser
• Pre-production meeting will be conducted with all the depart-
ment heads and important personnel of the company to plan the
process, so that delay can be avoided
• Here the merchants will discuss with the production heads
on how the production can be scheduled and done within
the required time. So this meeting is important and inevi-
table
Forwarding of Production file is a document which includes all the details
production file of a particular style. This document is prepared by the
to production merchandiser. Production file is forwarded to PPC (production
planning and planning and control) once the PP sample is approved, along
control with the file, merchandiser will forward the approved PP
sample also. Some of the details in the production file include
the following items:
• Measurements
• Export order sheet
• Colour details
• Style description
• Packing type
• Print/embroidery instructions, material requirement sheet
category, item, position, colour, size, consumption, unit in
kilograms, quantity, total quantity
• Job details for computer aided patter making (lectra) and
fabric order
• Marker plan
• TNA order sheet
• 2D style diagram and trims
• Packing information
Checking the Once the file is received by the PPC, they will check and study each
availability of and every detail in the file and they will also check the availability
fabrics and trims status of the fabric and trims in the store. They will follow-up on the
same if it’s not yet reached in the house
Checking Surface ornamentation may include embroidery, printing or appli-
the surface qué and these are done as per the buyer’s requirement, so PPC will
ornamentation of check the ornamentation details and plans according to that and in
the particular style parallel arrange all the required things for the same
Checking the Stitching materials are those which are used for sewing like threads
status of stitching and accessories which assist production so in parallel they will do
materials in-house the arrangement for the stitching materials in-house
Checking the • Production file includes all the details about the patterns and
patterns with merchants will forward the original patterns along with the
master production file to the PPC
• Once they receive the patterns, they will forward the patterns
to the pattern master and master will cross check the pattern
with the actual and confirm
Grading and final • Once everything is checked and confirmed by the master then,
cross check the pattern is forwarded to the CAD (computer aid design) de-
partment for grading. Grading is a process of making different
sizes from a basic size
• When the file is forwarded to PPC, only one size pattern will
be provided and grading is done for other sizes. Finally, the
graded pattern will be cross checked and confirmed with the
master
Laying and cutting • Laying is a process in which a huge lot of fabric lots are laid
flat in several plies as per the marker plan’s length
• In this process, based on the order quantity, the length
of the lay, the number of lays and the type of the lay to
be spread will be instructed by the production planning
department. After laying the pattern, the developed pattern
lay-out obtained from the marker plan is used to cut the
materials
Wash • After cutting, the cut fabrics are sent to washing if the program
requires or else it can be directly passed to next stage like print-
ing or embroidery
• During the washing, the merchandiser should monitor the
quality requirements and ensure proper delivery requirements
in terms of both quantity and time
Bit printing/ • When the garment wash is finished, then the bundles will
appliqué/ be sent for printing/applique/embroidery if the style de-
embroidery mands
• Surface ornamentation is done on cut pieces rather than in
full garment. This is because it reduces the risk of spoiling the
whole garment if some defects occurred during printing or so.
If defect happens in cut pieces that can be replaced, then less
fabric wastage happens
Loading in line • Once the surface ornamentation process is over on cut piec-
es, the pieces will be bundled and passed to sewing depart-
ment. Here the merchandiser needs to follow-up on the correct
schedule of the loading
• If any delay occurs, it is merchandiser’s responsibility to
get the targets on the date. He should take remedial mea-
sures to overcome the shortfall on the production in differ-
ent means
Finishing • Once the whole garment is stitched and collected in the end
of the line, then the same will be forwarded to the finishing
section
• In finishing section, the garments will be checked for defects,
loose threads are trimmed and pressed with steam and then
packed as per the requirement
• In each point, the merchandiser should coordinate with the pro-
duction in charge and he should make sure that the customer’s
requirements were obtained without any deviations
Dispatch • Dispatch is the end process in which the garments are packed
in the cartons and shipped
• It is merchandiser’s responsibility to check the availability of
required documents for logistics and shipping process
1.1 Primary Roles of the Merchandiser
1.5 Role of a retail merchandiser

Retail merchandising is another type of merchandising activity, which
happens at the end of the hierarchy. Here the retail merchandiser sells
products in less quantities and he/she act as an intermediary between the
ultimate consumers and wholesalers. A retailer merchandiser is both a
marketer and a customer handler. He creates the place, time and facilities
to sell the goods. The generalised responsibilities of the retail merchandis-
ers are as follows:
i) Customer analysis
The retail merchandiser use to perform the customer analysis with re-
spect to the stores location and analyse the potential for the brand
in their sector. The general analysis in terms of following factors is

performed.
• The geographical location of the store
• The population content of the area
• The social activities that the area offers
• The economical conditions and level of the local population
• The fashion influences of the particular population.
ii) Image of the retail store
The retail merchandiser will understand their target customers and
try to work for developing some reputed image of the retail outlet in
the consumers mind.
iii) Merchandise transaction
T he merchandisers’ another responsibility is to buy the mer-
chandise and stock merchandise for different seasons. It re-
quires a lot of planning for budget, selection of merchandise
and selection of suppliers. Also, it is important to decide on the
quality of the goods to be ordered. After the goods are received
and checked, then it should be marked or tagged and kept in
stock for sales.
iv) Display
Based on the research work and understanding about the customer
and their buying capacity, the retail merchandiser will decide the ef-
fective ways to display and attract the customers. Good display al-
ways enhances the sales of the store and a poor display may slow the
sale of good merchandise. The store’s image is based on the princi-
ple of use of space for display.
v) Promotion activities
Sales promotion is very much important to the successful sale of
merchandise. Sales promotion refers to the promotion of the sale of
merchandise, services or ideas. It includes activities like advertising,
publicity, visual displays, fashion shows, special events, personal
selling, etc.
vi) Sales evaluation
The retail merchandiser evaluates the sales rate of the product after
every selling season. This includes analysing the sales by product
wise, style wise, size and colour wise, unsold items, fast sold goods,
price line wise, etc.
The general process flow of the retail merchandising process is pro-
vided in Figure 1.5.
Figure 1.5 Work flow of a retail merchandiser
1.6 Samples in apparel industry

Sampling process in the apparel industry is an important activity for the order
acceptance. The main purpose of the sampling process is
• To allow the buyer to judge the production capabilities of the manufacturer.
• To provide a means for making revisions in the bulk production process.
• To let the manufacturer estimate the thread and fabric consumption,
and develop cost quotations.
Since the buyer generally places the order after getting satisfied with the qual-
ity of the samples, this process is considered to be a vital one. The sampling process
is generally performed in the apparel industry by a separate department with skilled
labours since the process decides the order acceptance factor. The merchandiser is
the person who coordinates with buyer and sampling department. Hence, all his
communications need to be understood clearly in the sample development process.
In general, the buyer will place the order based on the manufacturer’s performance
in the sampling process. The sampling process is a milestone activity in order con-
firmations. It acts as a decision-making process in apparel industry, there will not be
any compromise in the sample development process and the company will spend a
quantum of the amount to develop the sample.
1.2 Bit Loom vs Lab Dip

• Bit loom is a kind of fabric development sample. Normally yarn dyed
fabric swatches (samples) are called as Bit loom.Solid coloured or solid
dyed fabric swatches (samples) are called as Lab dips.
• To develop fabric design that is made with dyed yarns (checks or stripes)
a sample development loom is used (electronic or manual loom). In this
loom the fabric is not made in full width (regular). Only required width
and sufficient length is produced to represent fabric look. The purpose of
using bit loom is to show the fabric design to the buyer for final look of
the fabric without spending much time in fabric preparatory processes and
with minimum cost for fabric development.
The process of sample department varies continuously, and the development

process will cover a wide range of unique products. There are three distinctive
phases of sampling process; the first phase covers the development of the initial
concept or design idea and getting the approval by the customer or to undertake
the buyers’ requirement and their target segments to develop the theme and prod-
uct. The second phase covers the process of prototyping of sample and carry out
the functions of sourcing and ordering component, testing the product and carry
out trials based on the finalised sample specifications. The third and final phase
includes a range of activities that are carried out before large scale or bulk pro-
duction capacity outside the producer/developers if needed.
1.6.1 Sampling process

The process of developing sample varies from industry to industry based on
the buyer’s requirement and the style / type of the garment they are dealing
with. However, most of the sampling terminologies and process are commonly
requested by all the buyers. The typical process flow of sampling department
activity is provided below in Figure 1.6. It is essential to understand that there
is no necessity to perform all these processes for any single order. Based on the
needs and requirements of the customer, the steps can be selected.
Figure 1.6 Sampling process in an apparel industry

1.3 Knit Down – Sample

• A Knit down sample is used to demonstrate or present the specific
color combos, yarns, stitches and/or pattern in a design. The knit-down
is often used for approval purposes.
• Knit-downs are required when ordering a new yarn for sampling. The
design team will use the knit downs as a sample for their fabric selec-
tion process during the prototyping process. Knit-downs are generally
requested in 12 x 12 inch size.
1.4 Mock-up Sample

• Mock-ups are partial garments or detail panel to show construction
parameters or factory production capability. They are used by design
team for reference during initial design stages or at buyer meeting.
1.6.2 Samples and their importance

As mentioned in the previous section, samples plays a vital role in the ac-
ceptance of production orders, hence, it is essential to understand their im-
portance and requirements. This helps a merchandiser to think advance and
plan the subsequent activities. Table 1.2 represents the various samples used
in apparel industry and their importance.
Table 1.2 Samples and their importance

Samples Descriptions
Developed sample • The first sample developed by the company based on the buyers requirement
• The sample generally used to assess the look and take a decision on the
sample whether to proceed or decline the particular style out of the line
• The developed sample needs to be submitted within 45 days from the
first communication
Proto sample • Based on the comments from the development sample, the proto
sample is developed
• The proto sample is the sample where the company submits the
requirement using exactly the same fabric and trims or available fabric
with accessories
• The buyer evaluates the capacity and quality of the factory based on
this sample
• To develop proto sample, the buyer needs to specify the following
details like the technical specification for the garment, paper pattern
(sometimes), development sample (optional), detailed instructions
about print/embroidery or appliqués
• This sample needs to be submitted by merchandiser within 7–10
days. The merchandiser needs to submit at least 4–6 samples based
on the buyer requirement. If corrections received, they need to
resubmit the proto sample
Fit sample • A fit sample is used to evaluate the garment fit against a dummy or live
model. This sample helps the buyer to understand the company and
merchandiser and the clarity of their understanding about their requirements
• The sample is developed in original fabric required for that particular
order. Most of the time all the sizes are sent to the buyer to measure the fit
Size set sample • To check the fitness of the sample, size wise size set samples are
asked. Hence, 2–3 garments in all the size are prepared with original
or proximate fabric to send to the buyer
• It is merchandiser’s responsibility to make sure that the samples match
the customer requirements
• If sizes are more in number, then the buyer may ask to skip some
sizes, called jump size set sample. The samples can be made in the
sampling room or in actual production floor, as required by the buyer.
Bulk cutting of fabric for production should start only after size-set
sample gets approved
• Once the buyer is satisfied with every aspect of it, they seal the sample
and send it to the garment manufacturer as a symbol of understanding
between them that they are satisfied with the product and want the
manufacturer to make this product only in the bulk. These samples
are called “Red sealed sample” and they are often used at the final
inspection stages by the quality checkers representing the buyer
Strike-off sample Generally, buyer places an order of any style in different shades of
fabrics. Size set is made in any one colour. But if the garment has
embroidery and printing over it, then garment manufacturer must take
approval of print colours and sizes/ embroidery colours, appearance,
thread and sizes on each shade of the fabric. These print and embroidery
approvals are known as strike-offs
Counter sample • After the size set and fit sample approval, the counter sample is
submitted for the buyer. The confirmation of this particular sample
decides whether the company gets the order or not
• So, this sample is developed in all original fabric, trims accessories,
sewing threads, care labels, etc.
• Based on the counter sample approval, the buyer will raise purchase
order (PO) to the company
Ad or photo shoot • These samples are requested only if buyer is in need of samples to
sample promote their styles in media like TV ads, promotional clippings,
catalogues, etc.
• These samples are sent based on the size requests from the buyer
Sales man / • The main purpose is to display the next season styles in the current
Marketing / season to get the feedback from the customers
Showroom sample • These samples are also used to get orders from the retailers
Garment • This sample is requested only if the technical parameters of the
performance test garments need to be checked where the garment performance is
(GPT) sample measured in terms of shrinkage, colour fastness, seam performance,
etc.
• Normally GPT process will be done parallel to the size set sample
but most of the buyers ask for this sample only with the acceptance
of order
• These tests are generally performed by the third party inspection
agencies like SGS, Intertek and other private testing services
Pre-production • Pre-production samples are the pilot run sample, before starting the
(PP) sample production; the sample is prepared with the original fabric and all
actual requirements
• Acceptance of this sample encourages the factory to start the bulk
manufacturing of the goods
Wash sample • Wash sample is made and submitted to the buyer for assessment of
feel and handle of fabric after washing (if it is needed)
• Either at size set stage or PP stage, washing sample is sent to the buyer
for approval. Based on the buyer comments, the merchandiser needs
to continue the production
Top of production • The top of production is sent to the buyer as soon as initial pieces
(TOP) sample come out of sewing line with suggestions of quality audit department.
In TOP sample, buyer tries to evaluate the actual manufacturing of
the style
• Buyer checks whether bulk production is as per submitted sample or
not. TOP sample is also checked by the buyer for the packaging also
Shipment sample • Few buyers may ask for the shipment samples which factory needs
to pull from the actual shipment and sent to them. The main purpose
of this sample is to assure buyer about the actual shipment dispatch
• Sometimes the buyer also asks these samples for their future
reference, hence, all the shipped samples are directly dispatched to the
warehouse in the different / same country. This sample will be with
complete packing details like tags, poly bag, hangers, etc.
1.7 Responsibilities of a merchandiser

Over the years of the growth of merchandising as a discipline in the apparel
export industry, there have been many changes in the job profile of the ap-
parel merchandiser to perform these functions. It has changed from a sim-
ple to a much more complex job transcending almost all departments and
functions in an apparel export house. This has led to a change in the skills
required for the job and evolution of the discipline of export merchandis-
ing. Merchandising has been to a large extent, a function which was neither
clearly defined nor distinctly performed in the apparel export industry. On
one hand, the merchandiser had the job of getting orders and executing them;
doing the role of production coordinator in the same breadth. However, the
general essential responsibilities of a merchandiser are as follows:
• Identify and analyse the requirements of the customers and materi-
alise the product as they expect by proper communication with each
and individual department of the apparel industry.
• It is the sole responsibility of the merchandiser to ensure the exact
quality and timely delivery of the product to the customer.
• Merchandiser should understand the existing infrastructure, quality
norms and capabilities of the plant. This will help the merchandiser
to cost the product compatible.
• After accepting an order, it is essential for the customer to review the

capacity of the company, hence they ask for samples and prototype.
It is the job of merchandiser to convince the customer and get the
order.
• Creating a TNA (Time and Action) calendar for fixing schedules for
various activities like cutting, sewing, dispatch, etc. and each and
every small action need to be carried out as his/her special roles.
• The delivery at the right time, at the right place and a right cost is the
mantra of the merchandiser. So he or she needs to update the order
status regularly to view at any point in time daily to have a better
hold on the schedule.
• Coordinates and tracks the sourcing activities and make sure that all
the raw materials are delivered on time.
• The communication and effective delivery of each and every order
help the company and merchandiser to have a healthy relationship
with the buyer/customer for a long-term business.
• Identifying the problems and helping the production facility by aid-
ing suitable information whenever they require.
1.8 Quality of a merchandiser

• Good command of English and adequate knowledge of technical
terms for accurate and efficient communication.
• Good knowledge of yarn, fabric, dyeing, printing, finishing, dyeing
colour fastness, garments production, etc.
• A clear conception of the usual potential quality problems in the gar-
ments manufacturing.
• Good knowledge of the usual raw materials inspection systems and
garments inspection systems.
• Knowledge of the quota system used in each of the producing coun-
tries, duty rate, customs regulation, shipping and banking documen-
tation, etc.
1.9 Merchandiser interface with other departments

of apparel industry
The merchandiser’s job with other departments of apparel industry is more
complicated than the other workers in industry. Hence, he is the only per-
son communicating with buyers, his role extends each departments activity
in one or another way. For most of the manufacturing oriented department,

he or she needs to provide adequate information regarding the production
requirements.
i) Industrial Engineering or Production Planning department
• Once the order confirmed, the merchandiser instructs either PPC or
IE (Industrial Engineering) department regarding the requirements
of the order like order quantity, garment work content, lead time and
delivery date, etc.
• The merchandiser mentions the milestone dates like sourcing, cut-
ting initiation, etc. This will help the planning department to work
on the calculations like capacity available, line scheduling date, etc.
• The garment technical specification details like seams required, spe-
cial finishes required will be provided to these departments. This will
help them to calculate the expected time delays in the different pro-
cess and plan accordingly.
• After providing necessary information to the PPC and IE depart-
ment, the merchandiser receives the following information from the
PPC / IE department.
i) Capacity plan for the next order
ii) Factory availability
iii) Raw material availability
iv) Consumption details of various raw materials like sewing
thread, fabric, trims, etc.
v) Line planning details like operation bulletin, line layout, etc.
vi) They also inform the technical issues which can be faced dur-
ing the order processing like critical point, bottleneck situation,
etc.
The planning department also provides details like the expected produc-
tion quantity per day in each department based on their previous knowledge.
This will help the merchandiser to prepare his / revise his time and action
plan accordingly to achieve the exact delivery date.
ii) Sourcing / Purchase department
• Based on the information received from the planning department,
the merchandiser will advise the purchase department to purchase
the required raw materials and their quantity.
• The merchandiser instructs the quality details required for each
items strictly and in some cases he/she also specifies the place to be
purchased either based on their own experience or by the buyers’
requirements.
• He/she advices the department in charge about the earliest and latest
target dates and details to source that raw material.
In return, merchandiser receive details from sourcing department,
a. The changes in the stock materials
b. Possible expected delivery date of that raw material and availability
c. Expected quality problems in any material
d. Issues related to transportation and logistics.
iii) Quality audit department
• The merchandiser issues the garment measurement specification
sheets to the quality department, which carries the measurement
specification of those specific styles for every size.
• The merchandiser also handovers all the garment requirements like
shade requirement, quality of trims and accessories, artwork or print
or embroidery details, placement, print strike-off, wash details, care
label details and packing instructions.
• This helps the quality audit department to educate their quality con-
trollers to monitor the production process.
• The merchandiser also advices the departments regarding the other
specifications mentioned by the customer. For example Matching
Stripes, Closing raw edges in the inner seams, etc.
• Merchandiser also decides the quality audit inspection level (AQL)
in consultation with the quality manager.
1.5 Colour Matching - Labdips

Colour matching is one of the most crucial quality check, where the
company loses a lot of money. To evaluate the colour shades of the
developed fabric with the standard sample, different buyers / customers
use different light sources, based on their requirements. The common
visual colour evaluation process, the following light sources are used,
• Artificial Daylight (D-65)
• Incandescent Light (Tungsten Filament)
• Fluorescent Lamps, Point of sale light (TL-84).
• Ultraviolet Black Lamp (UV)
• Cool White Fluorescent, Office lighting (CWF)
In return from quality department

A Merchandiser receives comments and feedback about the processing
methods. This feedback will inform about the effect of quality of the prod-
ucts or the effect on the production quantity due to the processing methods.
Hence, the merchandiser communicates this kind of feedback to the buyer

and decides possible alternative method of performing that process without
or with minimal changes for the products aesthetic and quality appeal.
iv) Production department
• After order confirmation with the tentative production start date,
merchandiser informs the production department about the forth-
coming order and requirements.
• This information includes details like order quantity, style numbers,
colour wise, size wise quantity requirements, expected output along
with the delivery dates to be achieved.
• The delivery date details will be issued for each section of the pro-
duction department like cutting, sewing, washing, finishing and
packing. These details will help the concerned section managers to
work for their target dates.
The merchandiser collects the following details from the production
department:
a Current order status
b Approximate completion date
c Delay in the process and possible delivery date for the current order
d Details on delays influencing the forthcoming orders
e Technical / Machine related requirements from the department
v) Finance / Accounts department
Once the planning and scheduling activities are completed, the merchandiser
consults with the finance manager before instructing the purchase department.
Based on the received order, he informs the finance section about
a Raw material quality required and the cost factors
b The possible source of availability and the cost factor involved like
whether local or import
c The available time for sourcing that material
d The least possible dates to get each and every raw material
Based on his/her request, the finance department advices the merchan-
diser about the fund allocation for purchase and fund availability at the cur-
rent state. This information will be passed to the purchase department.
vi) Marketing department
This department will play an active role only if the company develops the
product. In that case, the merchandiser communicates the information like
a line concept
b product range
c colours
d other product details in the line
Based on this information, the marketing department conducts surveys,
collects data using other data collection tools and performs researches and
informs the merchandiser with the details on
a Exact target group
b Target region – demography based or geography based, etc.
c Estimated season of sale
d Market potential
e Competitor
f Average price preferred, etc.
This information is so subjective and can be collected based on the re-
quirements. This will help the merchandiser to get the confidence and choose
selected products from the line and launch into the market.
vii) Designing department
• The merchandiser closely works with the design department in both
the cases where the company develops the product or the company
performs the requirement asked from the buyer.
• In the first case, the merchandiser will be aware of the market status
and research report from the marketing department. Hence, he can
guide the designer regarding the research results.
• In the second case, due to his prolonged communication with the
buyer, the understanding about the buyer is high for the merchan-
diser. Hence during the design development, his feedback or com-
ments are valuable to the company and the designer.
viii) Human resource (HR) department
Once the order scheduling and time and action plans are completed, the mer-
chandiser informs the following requirements to HR department:
a Labour requirement
b Approximate schedule
The merchandiser will receive following data from HR department:
a Labour availability
b Company related issues
c National and local holidays
d Working hours – timing details
e Other requirements if any
All these information are very important for an order to be processed
successfully and delivered with the expected quality and on time. Hence, the
merchandiser/ merchandising department plays a vital role by communicating

and coordinating with other departments of the apparel industry (Figure 1.7).
Figure 1.7 Merchandiser interface with other departments of apparel industry
1.10 Terminologies and abbreviations used in

merchandising process
It is essential to understand and know the meaning of few terminologies and
abbreviations used in merchandising process. This will help the beginners to
understand the process quickly. The important terminologies are as follows:
Accessories: A range of products that are designed to accompany items of
clothing to complete an overall look. They are usually intended to be decora-
tive. Common examples include ties, belts, bags, scarves, hats and jewellery.
Base fabric: All fabric, woven and knitted, needs to be approved for quality
before it is used in garment construction. Fashion buyers give approval at two
different stages referred to as “base” and “bulk” fabric approval. Base fabric
is approved for stability and suitability for end used before the fabric is com-
mitted for further development.
Bulk fabric: Refers to the completed fabric that is used in the make-up of
garments. The fabric dyed to a specific colour, will often contain printed
designs and possess certain “finishes” which provide it with specific
benefits.
Buyer: A buyer for a fashion retail brand will be involved in a more complex
buying process involving design, sourcing and production.
Buying team: The team of individuals that is responsible for planning and
buying a specific range of merchandise within a fashion company. Usually, it
consists of a buyer and merchandiser, together with their individual support
staff. Normally a buying team will be product- or garment-specific although
sometimes a team may be responsible for a range of products.
1.6 Buying House
Buying house work as intermediateries between the buyer and the ven-
dor. 60-70% worldwide buying routes through the buying house. Buying
office may be buyer’s regional office. These are situated predominantly
at the vendor’s location Work on profit percentages/commissions. It is
also an independent company that works with multiple buyers. Their
major tasks are as follows:
Category: Sometimes called as “product group”, it is used to group together

garments or similar lines into one group. It ensures that a fashion retailer is
able to quickly see how one type of group of lines is performing as a whole.
It helps in the monitoring of sales performance and for overall stock control.
CIF – Carriage, Insurance and Freight: The term refers to the agreement
on the delivery of foreign goods that is included within the cost price. The
cost price paid by the buyer includes transport of merchandise by vessel to a
country specified by the buyer. It is up to the seller to arrange insurance and
delivery of the merchandise within the price they agree.
CMT: “Cut, Make and Trim”. Generally used in the production of more
complex or tailored garments, where a clothing manufacturer receives fabric
owned by the retailer or another party to make up into a finished garment.
The price paid for the process is only for the cutting, making up and provi-
sion of items used to trim the garment.
Colour way: A colour option of a product style.
COO – Country of Origin: Most products have the country in which they were
manufactured recorded on a label attached to the garment. This is not, however, a
legal requirement in the United Kingdom and most European countries.
Cost price: The price paid for a product before a mark-up is added to achieve
a selling price. Generally, the cost price of a fashion product bought for resale
by a retailer includes all tickets, hangers, protective covers and packaging.
Transport to the retailer will be included according to different cost terms.
Couture: Derived from the French word for “dress-making”, it generally re-
fers to extremely individual and unique hand-made garments made in the stu-
dios and workrooms of international high fashion designers.
Designer: A person who is involved in a creative process, turning customer
needs into value outcomes. Outcomes may range widely according to the
specific role of the designer, but could include manufactured products, corpo-
rate logos or packaging.
Distribution centre (DC): A facility which redistributes products to retail
outlets having received them as deliveries from suppliers.
Fit: Refers to the suitability of the shape and size of a garment to a person.
Principally concerned with comfort and appearance, although the latter can
be very much influenced by styling trends.
Fit model: A model, usually a size 12 in women’s wear, who tries on fit sam-
ples in order that garment technologists and buyers can make appropriate ad-
justments to prototype garments as part of the quality control process.
FOB – Free on Board: This is a cost-price term which does not include com-
plete delivery to the buyer in the cost price. The cost price includes delivery
onto a vessel at a port in the country of manufacture. Subsequent insurance
and transportation of the merchandise from the port to the final destination is
the buyer’s responsibility. Many fashion retailers prefer to use FOB as they
can control the cost and lead-times associated with shipping to their country.
Forecast: A view of where the business will be in the future based on the
best known historic and current information. It can be applied to subjective
issues such as fashion trends, but is more usually applied to the forward view
of likely sales or stock levels. Forecasting is a regular merchandising task
that helps to ensure that the business has the right balance and level of stock
delivered in readiness for anticipated sales.
Forward buying: Relates to the process of buying ahead to meet anticipated future
sales and stock levels. The degree to which a buyer forward buys depends very
much upon the length of the manufacturing process from conception to delivery.
Hanging stock: Most garments delivered to a fashion business arrive from
the manufacturer on hangers. This enables them to be immediately put out on
the sales floor. This eases handling when delivering into the distribution cen-
tre and then on to the shop. It has the advantage of reducing garment creasing
prevalent with boxed deliveries.
Inventory: A detailed list of stock or goods held. Inventory is sometimes
used instead of the word “stock”.
Lead-time: The period of time from design conception to delivery into re-
tail stores. The definition of a lead-time may vary according to the particular
stage in the supply chain which is being considered. For example, some buy-
ers may refer to a manufacturing to store delivery lead-time, while another
may refer to the shipping lead-time.
Mark-down/Mark-up: Indicates a price movement either downwards or up-
wards. Prices are reduced to make slow-selling merchandise sell more quickly,
while price increases tend to reduce the rate of sale. Fashion businesses alter
prices regularly to ensure that stock sells out at the planned rate. Fashion busi-
nesses keep an on-going record of all mark-downs/make-ups taken throughout
the course of the season/year. It is normally expressed as a percentage.
Silhouette: The outline shape of a garment.
Visual merchandising: The creative display of goods in-store and in win-
dows. Historically, the term was specifically associated with window display.
Atmospherics and visual marketing using sound and interactive technology
have increased the overall sophistication of visual merchandising.
UPC: Universal Product Code – Standard for encoding a set of lines and
spaces that can be scanned and interpreted into numbers to identify a product.
A sequence of numbers and bar code on the back of each product.
OOS: Abbreviation for Out of Stock; item not available for sale at this time.
SKU: Abbreviation for stock keeping unit. Some SKU’s have more than
one facing. Each SKU is associated with a different product on a planogram
(POG) and is a number assigned by the retailer to keep track of the type, col-
our and size of a product.
UOM: Abbreviation for unit of measurement.
Reserve stock: Merchandise that is stored in an area inaccessible by customers.
Teck pack: Commonly known as technical specification sheet or order infor-
mation sheet or spec. sheet. It is the collected data of a particular order with
a full detailed description of that order. These details are either received from
the buyer or developed by the merchandiser.
1.11 Summary
This chapter enlightens a detailed over views about who an apparel mer-
chandiser is with his/her roles. And further it also mentions the other similar
profiles that co-exists in the apparel industry like fashion and retail merchan-
diser. The chapter also details the basic sampling procedures and various
samples used in the apparel industries in detail. The merchandiser’s involve-
ment and coordination with other departmental activities are also detailed in
are chapter.
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2
Forecasting and product development
The main objective of this chapter is to depict the role of merchandiser in the product
development process that is involved in the apparel product development. This chap-
ter details the various steps involved in the apparel product development with respect
to merchandisers’ view. Detailed examples provided in each step of the process will
improve the ease of understanding. The apparel analysis and customer profiling pro-
cess and their importance in merchandiser’s day-to-day activities are also described
with examples.
Keywords: Merchandiser role, Forecasting, Product development, Apparel analysis,
Customer profiling process.
2.1 Introduction
The merchandising process differs for individual firms according to their
product type, technology used in manufacturing and business strategies. In
large firms, each requirement is given to specialised departments and experts
to perform the act. So the role of merchandiser is more focused with respect
to buyer communication and coordinating with each department of the firm.
But in the case of small firms, the merchandiser has diverse roles and respon-
sibilities to perform. The merchandisers in a small firm will be in a situation
to perform line planning process, product development, position the product
and finally presenting it to the customer or buyer. Hence this chapter is de-
veloped by keeping these factors and problems faced by a small firm mer-
chandiser in mind. The primary components of merchandising activity are
depicted in Figure 2.1.
Figure 2.1 Primary components of merchandising activity

2.2 Line planning

The line planning is a process that guides line development and presenta-
tion activity. This line planning process influences the sourcing and produc-
tion process. In general, the line plan process defines the limits of the line.
This line plan provides initial guideline to the design development team in
a synopsis. The line plan focuses the efforts of design team in one cohesive
direction by providing the details like number of styles, fabrics colours and
sizes that should be developed for each product group. Rather than designers
creating a new style in a vacuum, the line plan outlines the rules that point
designers in the right course based upon the organisation’s marketing and
merchandising objectives. Every season’s line plan meeting includes inputs
from marketing, sales, manufacturing and finance department. The summary
of line planning process is critical to get desired results from the line devel-
opment process. The basic elements of line planning process summary were
provided in Figure 2.2.
Figure 2.2 Basic elements of line planning process
• The number of fabrics in the line by product group details the mer-
chandise mix. The statistical data from the company’s history (for
same selling period) can be used to decide the minimum order quan-
tity for each fabric. This helps the merchandiser to use the raw ma-
terials usefully. This statistical analysis helps them to understand the
previous season’s sales rate of individual merchandise group, brand,
style, colour and size.
Forecasting and product development 31
• The number of styles in the line by product group mentions the mer-
chandise budget for merchandising plan. i.e., merchandisers base the
number of styles upon estimated minimum sales per style. This af-
fects the product development time, sampling and design cost.
• The number of construction in the line by product group represents
the fabric wise, style wise, colour wise details of the product. Funda-
mentally known as assortment. A balanced assortment plan matches
the customer demands. Number of stock keeping units (SKU) de-
cides the assortment varieties. This helps the merchandiser to evalu-
ate the minimum number of colours, that affects the manufacturing
and hence the overall production cost.
• The number of SKUs per product group includes the different size
ratios i.e., it represents the fabric, style, colour along with the size
details. This helps the merchandiser to base the SKUs for expected
sales.
2.1 Fashion Terminologies
Apparel line: An apparel line consists of one large group or styles, devel-
oped based on a theme such as colour, fabric and design details to meet a
function such as cricket, golf or tennis that links the items together.
Apparel collection: Apparel presented in each fall and spring by the high
fashion designers in Paris, Milan, New York, and London. The designer
collections include using range of apparel, including swimwear, suits,
dresses, sportswear, evening wear, bridal wear, etc., it may include 100–
150 apparel items. Collections are highly expensive.
Group: It might use 3–5 fabrics in varying combinations and include a
dozen of apparel items, all carefully coordinated, collections / lines are di-
vided into groups of garments. Six to eight groups in each line releases in
each division. Each group has specific theme or concept.
Style: A particular design, shape, or type of apparel item, defined by the
distinct features that create its overall appearance.
Design: An element or a component in a decorative composition.
2.3 Line development

Irrespective of the size of the company, the basic line development process
consists of same elements at different levels. Figure 2.3 represents the basic
steps involved in the line development process. Based on the product offering
frequency, the company may work simultaneously on two or more lines at
a time. However, the most difficult portion of this process is the skills and
ability of the designers and merchandisers to transform from one style/ con-
cept to other more frequently. The merchandising department’s primary job
is to translating the marketing needs into a saleable product and deliver to the
consumers at the right place, at right time and at right price. As companies
change their brand positioning, the merchandisers should perform their own
research on different areas to accommodate the needs of their changing target
markets.
In the preliminary stages of line development process, the merchandiser
can determine the characteristics of a market through various research, stud-
ies or collection of data. This process is generally termed as forecasting. This
forecasting process can be done in different sectors based on the needs. The
success of forecasting relies on analysing the trends and developing these for
individual markets at the right time and right place. Trends may be affected
by social, cultural, political, and economic factors as well as evolutions in life
style, technological developments, media and retailing.
Figure 2.3 Process flow of a line development process

2.3.1 Fashion forecasting process

The fashion forecasting process is involved in the following research alto-
gether or based on the needs of a selected sector can also be performed. The
different types of research involved in the forecasting process are given in
Figure 2.4.
Figure 2.4 Classification of research involved in the forecasting process
2.3.2 Market research

Marketing research is defined as the “systematic and objective approach to
the development and provision of information for the marketing manage-
ment decision making process”. Consumer demand is the dynamic power in
apparel industry. Hence, the industry expression “you can make it only if it
sells” relates to the concept of the consumer driven market. Thus, the suc-
cess of any apparel or textile company depends on determining the needs and
wants of the consumer. This market research includes:
Consumer research
This research concentrates on giving data about customer state of mind and
behaviour. Clothing purchase plans depend on the number of variables like
psychological, social and economical considerations of which customers are
not deliberately mindful. Some of the techniques used to know the purchasers
are, survey i.e., addressing customers formally or casually, gatherings sorted
out between typical target buyers. Buyer responses are arranged and clas-
sified to discover inclinations for specific garments or accessories, colours,
sizes and so on or preferences for particular retailers. This data can be utilised
to make new product to fit particular buyer tastes.
Product research
This gives data about preferred product designs and attributes. This research
helps us to break down the acceptance of any new item being presented in
the business sector or any current item is re-presented with a couple of alter-
ations. Couple of techniques that could be used to comprehend the status of
product among the target buyers are:
• Survey: Conducting surveys orally to their regular consumers or
send a questionnaire
• Free trial: Product can be offered free of cost in exchange for feed-
back of the product
• Style testing techniques: It is possible to predict how apparel con-
sumers will react to a style
• This technique is used to find out what consumers would like to buy
• Rating: Survey the subjects by asking them to rate preferences after
seeing a garment, a photo or a swatch of a fabric in various patterns
and colours.
Market segment analysis

It gives data about general market trends. This analysis deals with long and
short range analysis.
Long range forecasting: It incorporates inquiring about monetary patterns
identified with customer’s spending patterns and the business atmosphere; it
likewise incorporates sociological, psychological, political and worldwide
patterns. For instance, increase in interest rate, corporate duty, ascends in av-
erage cost for basic items costs because of inflation. These patterns can influ-
ence the organisation’s plans and the customer’s future purchase behaviour,
changes in international trade policies will influence long range forecasting.
Political variances among nations can influence sourcing alternatives when
arranging offshore production.
2.3.3 Fashion research

This research focuses on the fashion elements that includes the silhouette,
colour, fabric, texture, trimmings and accessories.
Trend research
Trend research activities include reading or scanning appropriate trade pub-
lications, fashion or general magazines. Fashion trend research is focused
on general garment outline, more particular lengths, (e.g., shirt lengths, skirt
lengths, trouser length), widths, (e.g., trouser leg width, lapel and bow tie
width), and configuration of pattern elements, (e.g., basic yoke, level/shawl
collars, roundabout unsettled collars).
2.2 Trade Publications
TEXTILE FASHION
• The Indian textile journal • Apparel views
• Asian textile journal • Fiber 2 fashion
• Home textile today • Knitting views
• Nonwoven technical textile • Apparel online
• Textile world • Stitch world
• Journal of textile association • Colourage
• Asian dyer • View
• Journal of textile engineering • Sportswear International
• Textile industry trade journal • Trends Magazine
• Textile Asia • The sourcing journal
Trade publications: Trade publications are the newspapers and magazines

that are specifically published for the industry personnel or professionals.
Those publications will not be available in the general stores; it has to be sub-
scribed formally from the prescribed publishers. These publications declares
the latest developments in the industry in technical side, it provides latest
business review reports, fashion shows, expo’s, trade shows and latest fash-
ion trends from raw material to final product. This helps the fashion / apparel
industry professionals to update their databank and knowledge to compete
with changing market and competitors.
Fashion magazines: Fashion magazines encase generous data about the most
recent trends in silhouettes, colour, fabric, accessories, brands, etc. Based on
their target market, designers and merchandisers follow-up suitable publica-
tions and update their knowledge. The magazines are effectively accessible in
common magazine stores.
Trade shows: Specialised trade shows are held in various locations. Design-
ers and merchandisers may attend these trade shows for fashion trend infor-
mation as well.
Fashion forecasting services: Some designers and retailers subscribe to
fashion trend forecasting services that provide fashion trend reports. These
reports help designers to analyse the upcoming fashion trends. These organ-
isations update their database as per the current trend and they forecast the
future fashion market based different criteria. Designers can log in and select
the required forecasting reports based on their target customer and market
requirements. This information is more reliable for designers since the cus-
tomers also follow-up with the same services. There are several forecasting
agencies in the market: WGSN, Promostyl, WWD, Trend watching, cotton
Inc, stylesite are to name a few.
Observing the high fashion: The more imperative and fascinating part of
trend research includes seeing the high fashion couture and ready to wear
collections in Paris, Milan, London and New York. Many apparel companies
frequently depute their designers and merchandisers twice in a year to visit
such international fashion shows. This gives an improved idea to the profes-
sional to understand the following: What is going on in latest trend? What
technologies are adapted? What kind of materials, trends, surface finishes are
in trend? High fashion collections are mostly of Avant Garde (new explora-
tory) styles. This high fashion styles and patterns or inspirations or motiva-
tion can be extracted from the collections and can be changed for a tolerably
estimated line suitable to their target market and customers.
2.3 Knock-offs or high street fashion

Lower priced copies of garments. They are produced in high quantity with
lower priced materials. Copies of Haute Couture garments are made in
quantity by high prices manufacturer they look like the original, but the
price had been reduced.
Street fashion: Some designers and merchandisers also study consumers “on
the street”. If their line is an active sportswear, they watch potential consum-
ers on the ski scopes or at the beach for a resort wear.
Shopping the market: Designers and merchandisers look for new trends that
may influence the direction of upcoming line. One aspect of shopping the
market involves visiting retail stores that carry the company’s line.
2.4 Haute Couture
“Finest Dress Making” in French. It refers to a group of firms or “Fashion
house”, each with a designer who creates original, individually designed
fashions. Haute couture fashions originate in Paris, New York, or other
fashion centres. They are very expensive. They are constructed with expen-
sive fabric, and include a great deal of hand work. They are sometimes; a.
Custom designed made for a specific person. “Couture” means dress-mak-
ing, sewing, or needlework and is also used as a common abbreviation of
haute couture and refers to the same thing in spirit. “Haute” means elegant
or high. An haute couture garment is made specifically for the wearer’s
measurements and body stance.
Colour research
Colour research helps in determining the season’s colour. Websites like
WGSN come up with seasonal barometer and colour matrix for the season
which helps the designers to decipher the colours that will be suitable for
the season. Colour forecasting is usually done for 18–24 months in advance.
Companies like Pantone come up with their colour report by engaging a
group of colour forecasters and designers to discuss and select the colour
trend report for the upcoming seasons. Colour becomes one of the most im-
portant criteria as consumers get attracted to colours at the first sight and then
concentrate on the material aspects. Based on the colour forecasting, colour
palettes are created and they act as the base for designers and merchandisers
to transfer them on the fabrics to create latest fashion garments. Colour fore-
casting in USA is done by “The Colour Association of the United States” and
“Pat Tunsky”. European colour trend service is International Colour Trend
Authority, based in Amsterdam. Promostyle is based in Paris, with subsidi-
ary offices in New York, London and Tokyo. The colour in association with
mood forms the base for creating novel products. The colour research process
provides the outcome for the designer to develop a theme and concept to de-
sign garments for the upcoming season.
2.5 Forecasting Sites
Fashion forecasting service Colour forecasting service
www.sachapacha.com www.pantone.com
www.fashionsnoops.com www.promostyl.com
www.fashiontrendsetter.com www.colorassociation.com
www.trendstop.com www.thecolorbox.com
www.fashioninformation.com www.colorportfolio.com
www.fashioncapital.co.uk www.internationalcolourauthority.org
www.wgsn.com www.globalcolor.co.uk
www.peclersparis.com design-options.com
www.promostylamericas.com www.fashionforecastservices.com.au
www.sachapacha.com www.doneger.com
Fabric and trimming research

In general, the designer or merchandiser performs the fabric or trimming re-
search for new product development. For example, if the designers are work-
ing for a sportswear, then they will search for information regarding the latest
trends and fibres or structures used in the sports application. The required
data can be extracted from the same trade publications as mentioned earlier.
More specific trends can be noticed from the local and national wide trade
shows and exhibitions held in various place where, the fibre, yarn and fabric
manufacturers display their latest inventions or developments. This will help
the apparel professional to achieve their requirement in a suitable way.
2.6 Garment Trade Fairs

• Magic Las Vegas – USA
• Mido – Italy
• Premiere Vision-France – France
• So Ethic – France
• East China Fair – China
• Stylemax – USA
• Intertextile Beijing Apparel Fabrics – China
• Modatex Fashion Fair – Germany
• Global Indian Festival – Malasia
• India International Garment Fair – India
2.4 Product development

To create the next product in a company’s product line, a design team goes
through product development process steps. Starting with a product idea, the
team moves through several stages to generate all the details and documents
needed to get the product built. A new product development process goes
through the same steps, however, as this product has not been developed by
the team before, new risks and uncertainties are introduced and often addi-
tional information is documented and shared with manufacturing. The flow
of typical product development process in apparel industry is provided in fig-
ure, this remains common for all categories of product development. In ap-
parel industry, once, the market potential, customer requirements like, colour,
silhouette, fabric and design aspects are evaluated by the fashion forecasting
process, the conceptual design is developed by the designer in paper as a 2D
form. Once the designs are finalised, the designers and merchandiser will sit
together to finalise the specifications and technical aspects of the garment.
Here, they will use their knowledge from their previous experience with their
market and product.
The product development process in apparel industry generally happens
in three different levels,
i) New product by buyer – Once the forecasting process is completed in
all sectors like, customer, product design, market requirement, etc., the
first steps of silhouette development and fabric selection are approached

in different ways by different designers and companies. Many compa-
nies base their lines around fabric and print designs. Their designers
start by selecting fabrics and then create silhouettes for those fabrics.
These designers are fabric driven. Other designers are silhouette-driven
designs and product specifications are developed by the buyer and all
the necessary information will be provided to the manufacturing mer-
chandiser to develop the product prototype.
ii) New product by manufacturer – The manufacturing organisation’s
design team along with merchandiser use to develop new products
for their buyer. The product development is the business policy of the
organisation which includes the development of the new designs and
styles within the organisation. This process provides more business to
the organisation, by showing pro-activeness in design development pro-
cess by knowing the needs and wants of the customers/buyers and it
helps in impressing the clients. Production merchandiser must update
the buyer time to time about the product development done by organi-
sation. The buyer visiting the factory is one of the key activities, where
merchandiser can develop some positive opinion on the company by
showing their facility and designer teams. This motivates the buyer to
give the design development to the organisation instead of doing them-
selves. Whenever buyer visits the organisation, new colour, prints, em-
broidery patterns and desk loom developments need to be presented to
them by production merchandiser. Merchandiser should influence the
buyer to select the designs from presentation presented. A very good
presentation and convincing ability of production merchandiser bring
more business to the organisation.
iii)
Product development by external agencies / Studios – In this case,
the external agencies perform the product development process based
on their expertise and research data they have. Buyers or manufacturers
will source the designs concepts and specifications from these agencies
with respect to the season and needs.
2.4.1 Role of merchandiser in product development

process
(i) Fabric selection

The fabric selection process is the important process in the product develop-
ment stage. Fabric selection is a crucial step in designing a project because
fabrics are designed for specific applications, a fabric manufactured for one
purpose, may not be adaptable for another use. Therefore selecting the appro-
priate fabric is only the first step in providing serviceable fabrics for apparel
manufacturing. Designers specify the fabric as part of their design concept.
Designers may develop new styles for fabrics that have been successful.
Fabrics used in garment manufacturing can be based on their properties
and characteristics. Property is a static physical dimension such as yards per
pound; whereas, characteristic is the reaction of the fabrics when a force is
imposed upon it. In general, the selection of fabric is performed by three dif-
ferent views:
i. The consumer’s viewpoint
ii. The fabric producer’s viewpoint
iii. The garment producer’s viewpoint
In consumer point of view, the fabric for apparel is selected solely based
on the appearance and wearability characteristics of the fabric – the durabil-
ity, utility and style values. The fabric producers are mainly focused on the
fabric characteristics than the properties. A fabric property is of no interest
to the apparel/fabric manufacturer unless it controls a fabric characteristic
or cost factor vital to him, or unless the property itself such as thickness or
weight, has definite utility or style value. The same concept applies for the
garment producer also.
The fabric selection process involves designers and merchandisers going
to major fabric markets to collect ideas, check trends, examine few products
and get samples. The designer and merchandiser may visit fabric shows in and
out of the country and fabric manufacturer’s showrooms. They attend fashion
shows and also attend meetings with the representatives of textile fabric man-
ufacturer to present their product line. The fabric selection is done based on
aesthetics as well as technical demand of the garment. Following things need
to be considered while selecting the fabric for product development.
• Fibre content
• Fabric construction—basic structure
• Texture and engineered effects created by weave configurations
• Yarn selections
• Prints
• Colour range
• Performance characteristics—wear factors, care requirements,
sewing
• Compatibility and drape
• Versatility for use in multiple styles
• Price and terms
• Availability
• Minimum order quantities
During the selection process, the designer and merchandiser mainly think
about the intended use of that particular apparel product. This will help them
to identify the needs of that garment and aid them to focus either on techni-
cal aspects like abrasion, UV protection, elasticity, colour fastness, tensile
strength, etc. or aesthetic aspects like texture, structure, etc.
2.7 Textile, Fabric and Yarn Trade Fairs

• Heimtextil – Germany
• Texworld – USA
• Premiere Vision – France
• Texworld Paris – France
• China Clothing & Textiles Expo – Australia
• Texprocess Americas – USA
• Intertextile Shanghai Home Textiles – China
• HKTDC Hong Kong Fashion Week for Fall/Winter – Hong Kong
• Printsource New York – USA
• Shanghaitex – China
(ii) Silhouettes
Silhouette development involves transforming garment ideas into final gar-
ment Sketches or technical drawings, which are hand or CAD renderings of
the front and back of a garment, including stitching details. Technical draw-
ings usually do not include body silhouettes and are used where construction
and styling details are critical to the design. Other than this there is computer
graphics software available to create sketches. Designers use this software
because, these types of software allows them to store a database of body sil-
houettes, also called croquis, in many different poses.
Since the software has great potential to reuse the old croquis, designers
prefer theses kind of graphics related software regularly. In addition to that
these software also have a provision to transform that croquis into garment
styles by using fabric images. This additional feature has a database of fabric
details and scanned images of fabric for most of the specifications. Once, the
user selects a particular fabric type, this software bring the fabric images and
allow the user to view the 3D appearance of the garment in all angles. These
kinds of software are the future of designing industry. They serve the design
and apparel industry people in two very essential requirements like reducing
time consumption and less requirements of highly skilled persons. Instead of
spending hours together to see the final appearance of the garment, the de-
signer can view his/her imagination in a matter of few seconds.
In this process, either by manual or by software the croquis will be de-
veloped, then the designers and merchandiser will sit together to evaluate the
designs (Figure 2.16). The developed designs will be assessed by merchan-

diser and other representatives from buyers (rarely) for their market suita-
bility. The merchandiser will input the market requirements or the customer
requirements with technical feasibility. Out of this process, few designs may
get rejected and few will get selected for the next stage of the product devel-
opment process.
(ii) Proto type development

The proto typing process is the very next to silhouette development (Fig-
ure 2.5). After the silhouettes have been approved, the process of develop-
ing proto sample will be initiated. However, before making the proto sample
there is an important step to be performed known as “Spec (specification)
development” / Line sheet development / spec (specification) sheet develop-
ment. Refer Figure 2.16, 2.17 and 2.18 for example.
Figure 2.5 Process step involved in proto sample development
In this process of specification development, the line sheets or spec

sheets are developed for each style of the chosen silhouette (for different
line). Here, the designer develops neat line sketches of every style in that
particular line along with the fabric swatches he or she selected for that style.
The designer decides the technical parameters of the garment along with the
merchandiser and develops the specification sheet with all relevant informa-
tion required for the prototyping process. Sometimes designers also use style
boards for reviewing the line development groups. Style board shows the
sketches of styles within the group or line.
After the specification development, the proto sample development pro-

cess will be initiated in the sampling department. The prototype is the first
opportunity for the product development team including the designers, to see
an actual garment style visually and also to ensure the fit of the product in a
fit model. There are two basic methods to develop a prototype.
1. Draping method
It is a process of cutting, shaping and draping the fabric on a dress form or man-
nequin. This process is generally used by the ready to wear sector designers
and high fashion designers (client specific or fashionable clothes). This process
allows the designer and product development team to evaluate the way a fabric
performs for the selected style, while it is shaped to conform the 3D shape.
2. Flat pattern method
In this method, the company creates basic blocks of patterns for the required
designs at first. After making basic patterns/slopers, the desired silhouette is
achieved by altering the basic blocks. This method is most widely used in
apparel industries to create prototypes. The basic blocks are refined by the
company for every season to ensure the better fit to the target market group.
The apparel manufacturing companies are majorly located in India, Sri-
lanka, Bangladesh, Pakistan and other Asian pacific countries. In all these
countries, most of the apparel industries receive orders from America- or
Europe-based customers, who have a dedicated design team to develop the
design requirements. During this prototyping process, the information from
customers to manufacturers and from manufacturer to customers’ needs to be
transferred effectively. The time and cost involved in making and delivering
the prototype samples from global sourcing partners complicate this process.
Hence, it requires that the merchandiser needs to monitor the initial phase of
product development process keenly in order to exclude styles, which does
not fulfil the requirements of the line plane. These issues can be eliminated
only by the proper communication between the buyer and manufacturer.
The following are the essential requirements of proto sample request process:
• Buyer name
• Season
• Style description / code
• Detailed description of the garment
• Garment technical drawing
• Sample pattern
• Size measurements with tolerance
• Fabric description
• Bill of material
• Cutting instruction
• Sewing instruction
• Label details
• Finishing instructions
• Packing instruction
• Target price
(iv) Pre-costing
• The proto sample development process makes the manufacturer and
merchandiser to understand the various raw materials, accessories
and trims used for the product. This gives them a broad idea to esti-
mate the manufacturing cost of the product.
• It is important for the merchandiser to understand the nature of the
each raw material and their availability before making the pre-costing.
• The merchandiser should have a comprehensive database of product cost
and effective cost accounting support for making this process success.
• This pre-costing must cover all the cost incurred in the manufactur-
ing of that particular garment including the material, labour, over-
head, design and distribution, general, administrative costs along
with the profit percentage.
• For this process, merchandiser should be aware of the fabric con-
sumption details and other cost factors like factory overhead, av-
erage labour cost. He should update his database or knowledge
periodically to avoid major loss in the process.
• Too low cost for a style may put the company at risk or the too high cost-
ing of a garment will lead to loss of order in the competitive scenario.
• Finally, if it is found that the estimated cost of the product is too high
for any particular company to get the order or the facilities to develop
the products are seldom available in industry, it is recommended to
leave the order instead of wasting time in product development.
(v) Development of technical specification sheet (Tech Pack)

After the pre-costing process, the styles which are estimated to meet the
acceptable price points are approved by the review committee, which
consists of all department heads, company’s chief officers. Initially, as a
first process, the preliminary manufacturing specifications are developed.
Based on the measurements and details provided, the final production pat-
terns are developed. The developed patterns are then graded and sent to
the production.
The developed specification sheets are more detailed in order to educate
the individual department people. The specification sheet may differ fac-
tory to factory based on their production method and technology used. This
company oriented specification details provides the merchandiser a detailed
operation break-up with machine and man power requirement. This helps the
merchandiser to calculate the cost of the product. After this initial costing, a
meeting with industrial engineering and production planning department will
help the merchandiser to bring down the cost of the product by changing the
operation sequence or machine or type of process without compromising the
product quality. This will finalise the cost of the product for companies who
perform the product development process.
During the specification sheet development, the details of other param-
eters like, fabric, sewing thread, print or artwork designs, placement de-
tails of design, care label instruction, etc. are mentioned in detail for better
understanding.
2.8 Fashion Magazines
MEN’S
• GQ • Grind
• Vogue Hommes International • Another Man
• Esquire • 10 Men
• VMAN • Hercules
• Arena Homme + • Fashion for Men
• Numéro Homme • Men’s Fitness
• Best Life • The Rake
• Details • Café Magazine
• 7th Man Magazine • Da Man
• Fantastic Man • Hero
WOMEN’S
• Elle • Cosmopolitan
• Bazaar • Mademoiselle
• Vogue • Self
• Marie claire • More
• Glamour • Nylon
• People stylewatch • Fucsia
• Allure • Grazia
• Instyle • Look
• Redbook • Purple
• Teen vogue • Femina
CHILDREN’S
• Milk • My child
• Junior • Golden magazine
• Bella child • Lo belle
• Moda bombini • Cwb (Childrens wear buyer)
• Gossip • Childhood business
• Babie kins • Young Fashion Kids Magazine
• Born • Miami Fashion Kids Magazine
• Vogue Bambini • Hudsons’s childrens wear review
• Papier Mache. • Parenting
• La petite • Bc – baby couture magazine
(vi) Final costing

The very important and most crucial step in the product development process
is finalising the cost of the developed product. This process verifies the detailed
cost of the product at each manufacturing stage along with the initial costing de-
veloped by the merchandiser. In this process, there may be changes in the initial
amount quoted. Since, the product prototyping process provided better informa-
tion about the required raw materials and their cost factors in detail, based on
that, the cost sheet will be revised. It is important that, the cost fixed at this stage
must be as accurate as possible because style adoption and selling prices of the
garment will be based on the results of the final costing process (Figure 2.19).
Note: The designing process following the fashion research process, starting
from storyboard and theme board to final garment development is provided
as an example in appendix I, from Figure 2.9 to 2.20.
2.5 Line adoption

The final step in a merchandising process is line adoption. During the product
development phase, several reviews on garment style, design and silhouette
are performed by a review committee with merchandiser and members of
design team. Sometimes this committee consists of sales person, marketing
and key retail buyers to evaluate the garment in different aspect. The main
objective of the frequent line review process is to keep a track on design de-
velopment team and to check their performance on merchandisers intended
styling direction. In this line adoption process, the company decides the final
designs or garments that can be taken further for production and which can
be dropped. The selected designs will become a part of the line. During this
process, each style will be evaluated for the overall line plan requirements.
The line adoption process is the first opportunity for the company exec-
utives to view the line completely. This will give them idea to evaluate each
style separately. The experts will look at the line and decide, whether each
styles in the group have been fully developed to make good sales presenta-
tion, whether each group presented maximum number of styles, colours and
fabrics and whether the line stayed within the line plan guideline of maxi-
mum number of SKUs. In most of the cases, the merchandiser will allow the
design team to create approximately 10% extra styles for line to avoid final
minute scarcity in the line adoption process.
2.6 Apparel analysis process

In apparel industry, the merchandisers deal with two different situations
based on the type, size of the firm they are working, country and policies of
companies. They are as follows:
(i) For the first case, the merchandiser will analyse the market and de-
velop product based on the market needs and customer requirements with
the help of design team within the company or with the help of the external
design agencies. In both the cases, the company takes risk in launching the
product to the market. The apparel manufacturing firms in developed coun-
tries mostly performs this process. During this process, the merchandiser
input to the line development is highly important.
(ii) In the second case, the merchandiser performs a coordination process
with the customer and receives the order in its final stage after line adop-
tion process. In this category, the merchandiser or company is provided with
all data (developed in line planning process) called as “Technical specifica-
tion sheet” of the garment. This is generally known as “tech-pack” or “spec-
sheet” and it may be provided with a sample garment itself. With this, the
merchandiser performs product re-engineering and carries outs only the man-
ufacturing aspects of the product and ships the garment back to the customer.
This category reduces the kind of forecasting risks to the company. Most of
the time, the companies from developing nations like India, Pakistan, Sril-
anka, Bangladesh are following this kind of process. As they receive orders
from European Nations and United States of America.
The earlier processes discussed in this chapter from line planning process
to the line adoption process are generally adopted from the apparel indus-
tries in the developed western countries. In India, lots of domestic and India
based international brands like Arvind and Aditya Birla are performing the
line planning and adoption process. But the percentage of the companies in
overall numbers is less. Hence, this “Apparel Analysis” process discussed in
this chapter will help the readers to understand the role of merchandisers in
small scale industry aspect. The apparel analysis process generally performed
with seven basic steps as provided in figure. The apparel analysis process dif-
fers depending upon who performs the analysis, the purpose of the analysis
and the methods used for the analysis.
In merchandising point of view, the apparel analysis process is performed
to satisfy the needs and wants of the buyers/consumers. In this point of view, the
apparel analysis can be performed in three different methods as detailed below:
(i) Visual inspection

This method is simple and involves least complicated procedure in inspect-
ing and analysing a garment. It is useful for evaluating the overall garment
appearance, aesthetics, estimating fabric quality, identifying stitch and seam
type and also to estimate number of stitches per inch. However, the accuracy
of the process and results depend upon the skill of the individual who per-
forms the analysis. Consumers and buyers, while sourcing products often use
to perform this analysis. Merchandisers in industry perform this analysis in
the initial stage of the product development.
(ii) Augmented visual inspection

This method is basically a visual inspection aided by simple test meth-
ods and measuring instruments. This method provides comparatively more
detailed information than the simple visual inspection. Less experienced an-
alyst or the consistency requirement in the result forces this method to usage
for analysing the garment.
• Fibre identification by chemical and burning test
• GSM calculation using GSM Cutter
• EPI and PPI calculation using counting glass
• Microscopes to check weave, twist, etc.
• Colour measurement using instrument and so on.
(iii) Laboratory analysis with standard test methods

This method provides most scientific and strong repeatable results with respect
to the analysis. The standard test method from AATCC (American association
for Textile Chemist and Colourist), ASTM (American Society for Testing and
Material), BS (British Standard), ISO (International Standard Organisation) are
used. Examples of fabric properties where standard testing methods are used
are given below:
• Fabric strength
• Fabric shrinkage
• Air permeability
• Abrasion resistant
• Colour fastness
• Water vapour permeability and etc.
These results will help the analyst to take decision on, whether the garment
or fabric can be used for the expected end use. Most of the time, the tests are de-
structive. The information discussed in this part of the chapter provides necessary
details which can be used or interpreted by the apparel industry merchandiser to
analyse his /her product. However, the detailed information about garment anal-
ysis and specification development for day-to-day life interpretation can be ob-
tained from Ruth and Grace. The simple steps involved in the apparel / garment
analysis process as given by Ruth and Grace are given in Figure 2.6.
Figure 2.6 Steps involved in apparel analysis
2.6.1 Style description

The style description process is the first and foremost basic step in the ap-
parel analysis process. In this process, the detailed information regarding the
style description of the garment will be developed by the merchandiser and
provided to other departments for the better understanding of the garment.
This description contains the details like
• Brand
• Style number
• Merchandise group
• Selling period
• Body types and size ranges
• Verbal description of garment and fabric used
• Detailed drawing of the front and back appearance of the garment
• Special instruction related to the production execution of the garment
2.6.2 Positioning strategy

In this step, merchandiser categorises the garment based on their application,
usage, structural look and silhouette. After inspection, the garment will be rated
on a five-point scale based on its group. The criteria’s used are provided below:
Here, the intrinsic cues represent the tangible intrinsic characteristics of a
garment including materials, method of assembly, styling features, fit and fin-
ishing. Whereas, the extrinsic cues represents the image of the product like,
price, brand, reputation of the manufacturer or retailer, visual merchandising
techniques and advertising are most common extrinsic cues to quality and
value. If the merchandiser rates 4 that is near to functional, then it implies that
the garment is more functional in nature and if he selects 4 or 5 that is near to
aesthetic, then it can be said that the garment is more aesthetic in nature.
2.6.3 Sizing and fit

This section of the apparel analysis process analyses the size and fit details of
the garment. The various details analysed are given below:
• Size range
• Gender
• Body type
• Size indicator (Dimensional size of parts like collar, shoulder, etc.)
• Fit level
• Silhouette and circumference
2.6.4 Material specifications

In this section, the detailed information about various materials used in the gar-
ment/apparel is provided with samples or pictures to get a better understanding.
The common specification details contain the following information:
• Number of materials used
• Material list
• Material name
• Material description
• Fibre and yarn details
• Fabrication methods
• Structural design
• Colours
• Finishes used
• Care information
2.6.5 Garment component assembly

The preliminary task of this portion is to break-up the individual operation in
the garment and identify the different parts of the garment. After identifying
the parts, the possible simplest way of assembling the components will be
detailed. The activities are given below:
• Identify and list the garment components
• Materials of the components
• Number of parts per components
• Operation breakdown
• Types of stitches and seams used
• Number of parts to be assembled
• In-process pressing information
2.6.6 Final assembly and finishing

It is a process of detailing the garment final assembly process, where, the
prepared components are sewn together to get a completed garment. In this
stage, the merchandiser will inform the operation sequence that needs to be
followed during the manufacturing process. It will be a strict guideline to be
followed for achieving expected garment quality specification details. The in-
formation developed at this stage of analysis are as follows:
• Total number of components and material
• Final assembly operations
• Types of seams and stitches to be used
• Finishing operations
• Colour matching procedures
• Over all instructions and requirements
2.6.7 Style presentation

The final part of the analysis explains the packing and display information to
be taken care with respect to the garment final presentation to the customer.
This process gives details regarding the following aspects:
• Labelling
• Accessories
• Packing method
• Hanger / self-appeal
• Accuracy of information
• Placement of the information (readability)
• Product appeal
The information obtained through this apparel/garment analysis process
will help the merchandiser to develop the specification sheet or “Tech Pack”
which was mentioned in the earlier part of the chapter. This second way of
developing technical specification detail is generally adopted in small scale
industries where they will receive the sample garment directly. Since they
didn’t have a separate design department; the merchandiser will interpret the
garment and develop the technical information in black and white and make
them available for all the concerned department personnel.
2.6.8 Example of apparel analysis process: Analysis of

a “Polo T-Shirt”
The Table 2.1 explains a details example of apparel analysis process to give a
general idea and better understanding. The garment used here is a basic polo
T-shirt, shown in Figure 2.7
Figure 2.7 Picture of a basic Polo T Shirt
Table 2.1 Apparel analysis process: Analysis of a “Polo T-Shirt”

GARMENT ANALYSIS REPORT FOR STYLE NO: AS#6423
Merchandiser in charge: Mr. XYXY
STEP 1: Style Description
Brand Name: XXXXX
Merchandise group: Casual Wear
Style Number: AS#6423

Theme: Go Strips
Selling period: Summer 2015
Body Type: Kids wear Male
Size range: 2–12
Sample size: 4
Verbal description of A full sleeve, polo T-shirt with yarn dyed strips. Convertible collar,
garment: front open by tailors placket, Chest printed, Embroidery patch at left
chest, Slits at the bottom, finished with woven twill tape.
Date Approved: Approved By:
Fabric: Yarn dyed – Single Jersey – Stripes
Trims used: Size label, Buttons, Woven Twill tape
Detailed Picture of the Garment:
Measurement details (in Cm): 8. Upper arm Width (H) 14

1. Full length (A) 44 9. Sleeve Open (I) 9
2. Chest width (B) 33 10. Slit Length (J) 6
3. Shoulder Width (C) 28 11. Placket Length (K) 12
4. Neck Width (D) 16 12. Placket Width (L) 3
5. Front Neck Depth (E) 8 13. Collar Width (M) 6
6. Sleeve Length (F) 40 14. Bottom width (N) 33
7. Armscye depth (G) 17
STEP 2: Positioning Strategy

Functional 5 4 3 2 1 0 1 2 3 4 5 Aesthetic
Durable 5 4 3 2 1 0 1 2 3 4 5 Disposable
Intrinsic cues 5 4 3 2 1 0 1 2 3 4 5 Extrinsic cues
Basic styling 5 4 3 2 1 0 1 2 3 4 5 Fashionable
Budget price 5 4 3 2 1 0 1 2 3 4 5 Better price
STEP 3: FIT Indicators
Gender: Male
Height: 45 cm
Circumference: 66 cm
Weight range: 20–25 kg
Size indicator: Medium
Collar length: 38 cm
Sleeve length: 40 cm
Chest circumference: 66 cm
Placket length: 12 cm
Silhouette: Closeness to the body: Moderate
Amount of fabric stretch: Moderate
Fit level: Height: Medium Circumference: Slim
STEP 4: Material FABRIC*
Specifications
Number of fabric: 2
List of material:
Material Name: Cotton, Single jersey, Striped Cotton, Single jersey, Solid
Vendor: ASK Corp. JUST Corp.
Vendor location: Tirupur Ludhiana
Material Description: Garment body parts Collar portion
Colours: 2 ( Beige , Orange) 1 (Beige)
Fiber content: 100% Cotton 100% Cotton
Yarn Type / Count: Beige melange yarn / 2 ply / 60 Ne Beige melange yarn / 2 ply /
Orange yarn / 2 ply / 6o Ne 60 Ne
Fabrication type: Knitted / Single jersey Knitted / Single jersey
Weight: 200 GSM 200 GSM
Applied design: Chest Print and Patch None
Finishes: Compacting Compacting
Care instruction: None None
Other details: Three buttons per garment, two buttons in placket and one in collar
neck closing.
*Detailed information like fiber identification, yarn information, fabric properties like tensile strength,
abrasion resistance, colour fastness can be obtained using lab test methods for all the fabrics.
TRIMS#
Material
picture:
Material Name: Size lable Twill tape

Vendor: PEST Inc. LAST Corp.
Vendor location: Delhi Surat
Material Satin ribbon Plain Tape
Description:
Colours: Navy Blue Grieg
Content: Polyester Cotton
Size: 1 cm width × 2.5 cm Length / 0.75 cm width × 5.5 cm / slit
garment
Structural / Applied Satin weave with size number Twill weave

design:
Finishes: None None
Care instruction: NA NA
Other details: 1 Size label per garment 2 Slits / garment on side seam
# Detailed information on the trims and accessories properties like durability, quality, etc.,
can be obtained using lab test reports
STEP 5: Garment Component Assembly

Components Pictures:
Collar:
Sleeve:
Number of pieces to be cut: 2 Number of pcs to be cut: 2

Fabric to be used: 2 Fabric to be used: 1
Placket: Front body:
Number of pcs to be cut: 2 Number of pieces to be cut: 1

Back Body: Slits:
Number of pieces to be cut: 1 Number of pieces to be cut: 2

Operation Sequence:
Operation 1: Placket preparation
SPI / Stitch Type: 12 / Lock Stitch (301)
Machine type: Single needle Lock stitch machine
Special Instruction:
Operation 2: Placket Attaching

Operation3: Patch attach at front panel

Operation 4: Sleeve Hem

SPI / Stitch Type: 18 / Top stitch (605)
Machine type: Flat lock machine
Special Instruction: Should be in line with Stripes
Operation 5: Bottom Hem

Special Instruction: Should be in line with Stripes
Operation 6: Twill Tape preparation

SPI / Stitch Type: 12 / Chain stitch (503)
Machine type: Overlock machine
STEP 6: Final Assembly and Finishing

Operation 1: Shoulder attach
SPI / Stitch Type: 16 / Cover Stitch (504)
Operation 2: Collar preparation

Operation 3: Shoulder top stitch
Operation 4: Collar Attach

Operation 5: Collar finishing and Top Stitch
Operation 6: Sleeve attach
Special Instruction: Stripes should match
Operation 7: Top Stitch on Armhole

Operation 8: Side seam
Special Instruction: Stripes should match
Operation 9: Twill tape attach at Slit
Operation 10: Sleeve tack

Operation 11: Bar tack at Slit

SPI / Stitch Type: As per requirement / Bar Tack
Machine type: Bar tack machine
Operation 12: Size label attach at neck

Analysis of Finished Garment:

Colour Shading: Matched
Consistency in stitches and seams: Uniform
Strips matching at side seam: Matched
Overall appearance: Excellent
STEP 7: Garment Packaging Information

Brand Label : None
Size Label: Type: Woven Location: Neck Wording: Size No
Fibre content Label: None
Country of origin Label: None
Care Instruction Label: None
Hangers / Display device: Folded and Packed in poly bag individually

Size: NA
Bag: Self-adhesive poly bag
Hang tag information: None
Others:
• The apparel analysis process performed in this manner is totally

visual analysis based and sometime augmented visual analysis by
the merchandiser is performed. This can be used for the initial sam-
ple development process.
• The detailed lab reports will give correct and reproducible data about
various raw materials.
• During this stage, either developing tech pack from a theme (in-
spired by fashion research) with the help of design team and get-
ting potential garment or directly getting sample from the buyer
to perform job order, the merchandiser must work hard to develop
these information and hence he / she can make these details ready
to the public. This will help the managers and workers from all the
departments to understand the actual and exact requirement of the
order correctly.
2.7 Customer profiling for apparel merchandisers

Customer profiling is defined as “a description of a business’s typical cus-
tomers” or “Detailed information about a particular customer” by Cambridge
Dictionaries. Customer profiling is a way to generate a description of par-
ticular group of customers to help the company make decisions concerning
particular service. Target customers are broken down into groups of custom-
ers sharing similar goals and characteristics and each group is given a repre-
sentative with a photo, a name, and a description. A small group of customer
profiles or “personas” are then used to make key decisions.
In simple words,
• Customer profiling is, using data about customers to better under-
stand their needs and wants.
• Applying this understanding to help and design the services offered
by company. It is not just a process of collecting data and deriving
the information regarding particular customer.
Customer profiling is a research basically undertaking demographic seg-
mentation – it takes a broader range of data, tools and techniques to generate
a rich understanding of the customer. It is a kind of an ongoing journey in the
life of merchandiser. Effective use of customer profiling can help to:
• Deliver efficient and effective tailored services
• Target resources according to priorities
• Develop responsive services that encourage and reflect customer
engagement
• Enhance customer service and improve satisfaction
Specifically with respect to the apparel industries, the service offered is

generally very customer focused and specific. The industry understands very
well that a “one-size-fits-all” approach does not work for either the service
provider or the consumer. Hence to provide tailored services for the customer
and for ensuring that the workforce is representative of the communities that
is served, the effective customer profiling process is required. Most of the
time in an apparel industry, merchandiser is the person who deals with the
customers. So, it is recommended that the merchandiser should know the ba-
sics of profiling process so that he or she can profile his/her customers to
provide better and quality service. Because most of the time, companies from
countries like India, Bangladesh, Pakistan and Srilanka receive orders from
different parts of western countries. Hence, while developing the own de-
sign and product, it is essential for a designer team and merchandisers group
to understand their requirements on several aspects related to demographic
requirements, geographic needs, their economical level, fashion status, etc.
This process will help the merchandiser to identify the suitable customer for
the company to sell their own designed product or will help them to provide
required or expected level of service if they are developing products for cus-
tomers’ designs. In both ways, the customer profiling process helps the mer-
chandiser to improve his / her business with their customer and helps to build
a long run relationship.
2.7.1 Customer profiling methods

i) Demographic / Geo-demographic profiling: It is the profiling
process in which we target and profile individuals by aggregat-
ing data and location-based information from online and offline
records. It is useful for broadly targeted categories.
ii) Transaction data profiling: In this method, the customers are
profiled and targeted based on their recent purchase behaviour.
iii) Explicit profiling: In this profiling, new customers are identified
based on their explicitly declared profile.
iv) Contextual profiling: Contextual profiling involves targeting ads
and messages to users based on the most relevant context.
v) Behavioural profiling: Behaviour profiling is targeting users by
interest, based on their previous tracked activity.
vi) Look-alikes profiling: Identifying new customers by modelling
the browsing behaviours of actual brand converters.
Gathering and maintaining consumer data is not a new practice; it has

just become more elaborate. A profile once built is only reflective of that
point in time when the data was collected, so to be useful longer term, the
profile needs to be actively updated. Figure 2.8 shows the basics steps in the
process of customer profiling.
Figure 2.8 Process of customer profiling
2.7.2 Benefits of customer profiling

• By understanding the customer effectively about who uses the ser-
vices and products, Service can be delivered more specifically to that
particular customer with more effective process.
• Through this understanding, we can tailor the channels and commu-
nications to users’ needs for most efficient and effective targeting
process.
• Better understanding of the customer helps to provide better service;
it ultimately leads to the soul requirement of the business “satisfied
customers”.
• By looking into the profiling, we can understand who isn’t a cus-
tomer and why. This will help the company to expand their market.
• Understanding the geo-demographics of the customer can help and
tailor marketing to change the behavioural pattern.
• Profiling can help measure service use for continuous learning and
performance management.
2.9 Company Profile Template

1. Vendor Name
2. General Information
Primary contact for
sales/client services
Address
Postal Code:
Country:
Telephone: Fax:
E-mail: Website:
Parent company, If any
Subsidiaries, Associates,
and/or Overseas Rep(s), if any
Year established
Type of organisation Public enterprise ( )
Private company( )
Organisation sponsored (assisted by
Government) ( )
Other (please specify): …..( )
Type of Business Manufacturer( )
Retailer ( )
Authorised Agent( )
Consulting Company( )
Other (please specify): …..( )
Summary of main business activities
List of Products /Services /Work offered*
Staff turnover rate
In-house working language(s)
3. Financial Information
Gross annual sales for last 3 years*
4. Prior experience with the international organisations*
5. Does your company have a written statement of its environmental policy?
YES ( ) Please attach copy NO ( )
6. Any disputes that the customer has been involved in previous business*
7. Reference projects and contacts.*
8. Recent experience of working with Customers.*
9. Are there any likely circumstances or contracts in place that may introduce a conflict of
interest with the parties to this contract? If so, describe the conflict of interest and explain
how this will be mitigated.*
Evaluated by: Verified by:
*Attach necessary documents if required.
2.8 Summary
This chapter enlightened the basic aspects of line planning process and line
development process. These processes are the essential responsibilities of
the fashion merchandiser. This chapter also summarised the other aspects in
which the merchandiser must familiar like design knowledge, market knowl-
edge and customer requirements. The second part of the chapter details the
apparel analysis process for merchandiser. Where, the process is detailed
with an example garment for the better understanding. The importance of
customer profiling process and the role of the merchandiser in the profiling
part also discussed.
References
1. Grace I. Kunz, Ruth E. Glock, (2004), Apparel Manufacturing: Sewn Product Analysis,
4th Edition. Prentice Hall.
2. Jeremy A. Rosenau, David L. Wilson, (2007), Apparel Merchandising – The line
starts here. Fairchild publications, New York.
3. Vijayalakshmi D, Ramachandran T, (2012), An Exploratory Study on the Techniques
of Fashion Forecasting. Journal of textile association. September–October, 163–170.
4. Kathryn Mc Kelvey, Janine Munslow, (2003), Fashion Design Process Innovation
and Practise. Blackwell Science Publishing, New Jersey, 20–22.
5. Gini Stephens Frings, (1999), Fashion: From Concept to Consumer, 7th Edition,
Prentice Hall Inc. Publishers, New Jersey. 123:178–180, 261.
6. Leslie Davis Burns, Nancy O Bryant, (2002), Business of Fashion: Designing
Manufacturing and Marketing. 3rd edition, Fairchild Publications, New York.
134–145.
7. Vasant R. Kothari, Sanket Joshi, (2013), Product development and role of merchan-
diser. Bangladesh Textile Today. December 2013, http://www.textiletoday.com.bd/
oldsite/magazine/778.
8. Prashant G. Khandalkar, Role of merchandiser in garment industry, http://tex-
tilelearner.blogspot.com/2013/10/role-of-merchandiser-in-apparel-industry.html
#ixzz3mwnK17YR.
9. http://www.experienceux.co.uk/faqs/what-is-customer-profiling/.
10. Chris Neuner, (2012), The Future of Consumer Profiling is Here! DTC Perspectives,
Fall 18–22.
11. McKinsey Global Survey, “Minding your digital business”, Brad Brown and Johnson
Sikes. Business Technology, No 27, Fall 2012.
Appendix I
A sample portfolio developed by design team as an outcome of Fashion
forecasting research
THEME: “PEACHES AND CREAMS”
Figure 2.9 Story board – Inspired by the appearance and sweetness of peaches

and creams
Figure 2.10 Mood board – Inspired by the appearance and sweetness of peaches

and creams
Figure 2.11 Colour Board – Colours inspired from mood board
Figure 2.12 Client board for target customer group

Figure 2.13 Fabric board – fabric type and textures inspired by the designer
Figure 2.14 Doodles – shapes inspired from the mood board

Figure 2.15 Accessory and silhouette board
Figure 2.16 Flat sketch and silhouette development for kids wear, Theme: “Peaches
and Creams”
Figure 2.16 (Continued.)
Figure 2.17 Pattern Board – Patterns for the selected design

Figure 2.18 Specification Sheet – Garment specification development by the

designer
Figure 2.19 Final garment appearance

3
Merchandising planning and order execution
This chapter details the various execution activities carried out by the
merchandiser to produce the order quantity at the stipulated time. Here,
the information regarding order scheduling process, various consumption
calculation need to be performed by the merchandisers like yarn, fab-
ric, sewing thread and other raw material consumption were elucidated
with detailed examples. Further, the other execution details like capac-
ity estimation, approximate manpower estimation and line requirement
and efficiency calculation to execute an order also detailed with suitable
examples.
Keywords: Time and action plan, order scheduling, raw material consumption, line
efficiency, factory capacity.
3.1 Introduction
Order execution process is one of the crucial parts of the merchandis-
er’s day-to-day activity. Once the merchandiser received the order details
from the buyer or customer, he will perform all the sampling process to
get approval of the order. As discussed in the previous chapters, he will
perform the work from sampling to line development / product develop-
ment process along with other departments of the apparel industry like
designing, sampling, etc. After order confirmation, the next job for the
merchandiser is to execute the order in the bulk format, means, perform
the product development process for the total order quantity with stipu-
lated time frame. During this process, he / she have to undergo various
technical issues and problems regarding the production. This chapter de-
tails the various activities performed by a merchandiser during an order
execution process.
In general, during an order execution process, the merchandiser need to
perform the following operations (not mandatorily but) based on the organi-
sation structure and policies.
i) Preparation of time and action plan for each order
ii) Development of order scheduling plan
iii) Analysis of factory capacity and line efficiency
iv) Estimate the approximate consumptions for various raw materials used
in the production of that particular order for order quantity
v) Estimation of details regarding approximate output in each
department
vi) Estimation of number of operator required for each department
vii) Proper follow-up and coordination with each department to complete
the order in predetermined date to successfully complete the shipment
process.
However, based on the size of the organisation and structure of the
firm, a merchandiser will get support from some of other departments
like production planning department and industrial engineering depart-
ment (if the company has), regarding the production scheduling and
capacity and consumption calculation, respectively. But, in small and
medium size industries, for sure all these works are all in the merchan-
dising department. Hence, it is necessary for the merchandiser to get
to know the basics of these processes to complete the order execution
independently without any last minute issues in every department from
cutting to shipment. The successful shipment as per the buyer instruc-
tion without any delay in the delivery date is the first and foremost re-
sponsibility of the merchandiser.
3.2 Time and action plan for merchandisers

The time and action plan (TNA or T&A Plan) is an important tool for a
merchandiser to enlist his day-to-day activities or to enlist the different
operations involved in the process of completing an order. This process
involved various department and different people in the manufacturing.
Hence, this T&A calendar / plan helps the merchandiser to analyse every
individual operation with the aspect of, when to start? when to end? Is the
process according to the plan? Or is there any deviation with the activity?
In short, a time and action calendar defines the ideal date/time period within
which the major activities of an order should occur against a scheduled de-
livery. In general, the merchandisers will develop list of activities need to
be performed for an order in a spreadsheet in a column, the expected date
of completion on next column and the actual completion date on the very
next column.
However, this time, and action plan is not simply a data entering pro-
cess, it is also about scientifically working out the activity duration, log-
ically determining the preceding and succeeding activities. The main
Merchandising planning and order execution 73
purpose of time and action plan is to cross check the each activity related
to a particular order in frequent interval. The main advantage of the time
and action plan is its graphical representation (Gantt chart). Hence, anyone
can understand the information out of it without any technical background.
After the preparation of TNA calendar, merchandiser can list down their
daily “to-do-list” and taking it one by one. As per TNA schedule processes
can be executed on timely basis to track whether an order is on track or it
will get delayed. To prepare a time and action plan, the merchandiser re-
quires the following details:
• Extensive process flow of an order from the sampling to dispatch
with tasks to be performed on each activity
• Detailed production capacity of various departments of their unit. In
some cases, the merchandiser needs to know their vendor’s produc-
tion capacity also
• Tentative lead time details of various raw material and buffer time
required for each department
• Style complication in each department level, both in techni-
cal aspects and also in terms of throughput time of different
departments
• Duration of transportation, shipment and logistic facility for the par-
ticular customer and exact delivery date to the customer
• Availability of the special machines / technology and their possible
influences
• Details regarding the local and national level holidays – in his/ her
company and also holiday information about customers / vendors,
from where the raw material imported or to whom the products need
to be delivered
• Complication associated with the trims and accessories sourcing and
manufacturing
• Government and political policies of concerned countries
• Response time of customer / buyer at various stages.
3.1 Factors to be considered while making Time and action

plan
• Production capacity of plant

• Style type of merchandise
• Festivals of manufacturing country
• Holidays
• Shipment details
• Festivals of country from where raw material is imported
• Logistics facilities
• Lead time estimated by buyer
• Style complications
• Fabric and trims manufacturing complications
• Buffer required from each department
• Political stability of the country
• Flexibility of freight forwarder
• Response time from buyer at different stages
• Lead times of various activities like L/C payment, custom
clearance, etc.
• Cut-off dates for shipments
A successful time and action plan helps to streamline the preproduction

activities at different level. The chart also clarifies informations about delays
in day to day basis. This activity chart helps the merchandiser to monitor
the sub or minor activities under each task. Out of this preparation work, the
complications come along with the sampling department. Since, the approval
from buyer or from the higher management of his / her own company is nec-
essary after each of the sampling stage, the unexpected delays in sampling
process makes the merchandiser uncomfortable. Hence, during the TNA
preparation, sufficient buffer time need to be provided between the processes,
based on individuals experience. The Figure 3.1 details the various key ac-
tivities which need to be performed by a merchandiser at various levels of
sample development.
Sampling process
Proto Sample 15 Days from the order approval
• 45 Days from the Proto sample

Fit Sample • Buyer will comment the sample within 7 days
• Within 3 weeks Fit approval will be received
• Mostly Performed parallel to fit sample

Photo shoot /Salesman • 21 day – from Fit approval
Sample • Sometimes Quantity will be huge (100-300 pcs)
• Acceptance of size set confirms the bulk production

Size set Sample • Maximum of 15 days for approval
• Submit it within 3 day s of bulk fabric in house
• Maximum of 20 days for approval

• Completed before Pre Production meeting
GPT Sample
• Sometimes it is performed parallel to size set to avoid
delay
• With bulk production raw material

• Before bulk production start
Pilot run samples • One day will be allotted
• After PP meeting
• 10 days from GPT sample

• After PP meeting
Pre Production sample
• Approval Within 6 days
• First day of bulk production

• One day for submission –Acceptance will be as soon as
TOP sample possible
• If TOP sample is rejected – Bulk production will be
stopped
Figure 3.1 Influencing key activities from the sample department

From the production point of view, there are few other critical process
which has direct influence on the time and action chart preparation. The oper-
ations and their influencing factors were listed in following Table 3.1.
Table 3.1 Tentative lead time for different key activities

S. No. Process name Lead time details
1 Fabric approval • For lab dip – 15 days for a single time (based on the
quality expectations and facility available Merchandiser
can plan 10–30 days)
2 Prints, trims and • 15–25 days for the approval is must. If complicated
accessories styles / special materials used lead time can be extended
up to 30 days
3 FPT • Most of the time performed by the third party (Buyer
recommended internationally accredited testing
organisations)
• 5 days to 1 week time can be provided as lead time
4 Fabric and trim • Very time consuming process which includes desk loom
sourcing and lab dip approvals, trim and art work approval, FPT
approval
• For sourcing solid dyed – 30 days
• yarn dyed – 45 days
Fabric dyed – 55–60 days
• Can be given as a lead time in T&A plan
• For sourcing of Trims – Based on availability and place
of sourcing 30–45 days can be given
5 Production • Sourcing department delays will be considered
department • Based on the complexity in the sourcing process, the
buffer time can be allotted for cutting department
• Production department start date from the very next day
(or 1 or 2 days) from the cutting department (based on
production capacity)
• Based on factory efficiency and capacity the lead time
for each department can be allotted by considering the
shipment date
Other than these key activities, a merchandiser should always remember

the style complication of the particular labour, the operator efficiency of the
factory, skill level, technology available with the facility and initial lag of pro-
duction during the manufacturing. By considering these factors, a merchan-
diser can allocate buffer time / lead time for each activity and sub-activity.
3.3 Development of time and action plan

The time and action plan can be developed using different methods based on
the requirements. The commonly used methods were discussed below.
1. Gantt charts
2. Network charts
3.3.1 Gantt chart

Gantt charts are a project planning tool that can be used to represent the tim-
ing of tasks required to complete a project. The Gantt chart was developed
by Henry Gantt as a way to visually see a project’s schedule. Since 1910,
these bar charts have been an integral part of managing projects. Gantt charts
allow us to visualise a project’s start and end date along with each element or
task that needs to be completed. Because many project tasks are dependent
on previous tasks, these charts also allow us to see these dependencies and
schedule around them. Because Gantt charts are simple to understand and
easy to construct, they are used by most project managers for all, but the most
complex projects.
• In a Gantt chart, each task takes up one row
• Dates run along the top in increments of days, weeks or months, de-
pending on the total length of the project
• The expected time for each task is represented by a horizontal bar
whose left end marks the expected beginning of the task and whose
right end marks the expected completion date
• Tasks may run sequentially, in parallel or overlapping
• As the project progresses, the chart is updated by filling in the bars
to a length proportional to the fraction of work that has been ac-
complished on the task. This way, you can get a quick reading of
project progress by drawing a vertical line through the chart at the
current date
• Completed tasks lie to the left of the line and are completely filled in
• Current tasks cross the line and are behind schedule if their filled-in
section is to the left of the line and ahead of schedule if the filled-in
section stops to the right of the line
• Future tasks lie completely to the right of the line.
With respect to apparel industry, for merchandiser, every order is merely
a project. Every order has a set of activities that ends with specific accom-
plishment and that has,
i) Non-routine tasks,
ii) Distinct start/finish dates, and
iii) Resource constraints (time/money/people/equipment).
For a merchandiser, each “Tasks” are activities that must be completed
to achieve the order target. His / her foremost job is to break the project
into tasks and sub-tasks. It is good to use verb–noun form for naming tasks
(e.g., “create drawings” or “build prototype”). The use of action verbs such
as “create”, “define”, and “gather”, rather than “will be made” will provide
better understanding. It is very difficult to estimate durations of each task
accurately. A merchandiser needs to spend a lot of time on it. Mostly, their
previous experience will help them to put the time with exact buffer. “Mile-
stones” are another important checkpoints or interim goals for a project.
Milestones can be used to catch scheduling problems early. Name mile-
stones by noun–verb form, (e.g., “report due”, “parts ordered” “prototype
complete”).
It is important for a merchandiser to be flexible and update, with respect
to time and action chart on a regular basis. It also helps to identify risk areas
for project, for example, things he / she don’t know how to do but will have
to learn. These are risky because merchandiser may not have a good sense
of how long the task will take. Or he / she may not know how long it will
take to receive components you purchased for a project. Figure 3.2 represents
various elements of a fundamental Gantt chart and Figure 3.3 represents a
sample time and action plan of an apparel industry developed using Gantt
chart method.
Figure 3.2 Basic elements of a gantt chart

Figure 3.3 Sample time and action plan of apparel production process

using Gantt chart
Advantages of Gantt chart

• It creates a picture of complexity
• It organises the thoughts in a picture format
• It demonstrates that whoever doing that particular task, know what
they are doing
• It (should) helps the merchandiser to set realistic time frames
• It can be highly visible. Gantt charts are visual and give you an
excellent way to instantly see and comprehend all of the different
elements in once place, thus bringing thoughts and ideas together.
Beyond that the visuals provide users with an easy to see chart of
what needs to be done next.
Disadvantages of Gantt chart

• They can become extraordinarily complex
• The length of the bar does not indicate the amount of work
• They need to be constantly updated
• Difficult to see on one sheet of paper
• Estimates must be completed before the chart can be drawn
• A Gantt chart does not effectively address the dependencies between
jobs (although constraints can be added as vertical lines)
• It is difficult to show two sets of dates when using techniques such as
earliest start date and latest start
• It is difficult to show slack and critical path without additional
notation
• Changes to the schedule require a redrawing of the chart
• Several scheduling possibilities cannot be shown in the same chart
• Resource assignments are not easy to illustrate.
3.3.2 Network charts

The network charts are generally used for the project scheduling purpose, this
scientific methods also can be adapted for the apparel order planning process.
In general there are two methods used in the network charts,
i) Critical Path Method (CPM) – Can be used for the projects in which
activity times can be estimated with sufficient certainty – Building
house, Erecting a machine, etc.
ii) PERT (Program Evaluation and Review Technique) – Can be used
for projects in which there is high degree of uncertainty about the ac-
tivity times – Launching a space vehicle, developing a new product.
i)
Critical path method (CPM)
• One of the major requirements of the project management is a feasi-
ble time scheduling of the various activities, with the objective that
project is completed at the earliest possible time
• For preparation of such a schedule, information will be needed about
the duration in which the various activities can be completed
• First step in network representation is to understand the interrela-
tionship between various activities which constitute the project
• The input required to draw network is the list of activities and their
precedence requirements as provided in Table 3.2. In this method
(CPM), the network diagram made off symbols like nodes and arrows
• Where a completion of an activity is represented by a node and an
arrow represents a task and the order of events as in Figure 3.4
• This method will compute the earliest possible start time and the lat-
est possible start time of each activity
• In addition, it will identify the critical activities, which can be de-
fined as “The activities if they delayed even a short time, the whole
project will be delayed”.
Table 3.2 Activity and their immediate predecessor

Activity Immediate predecessor
A -
B A
C B
Figure 3.4 Components of simple network diagram

Steps in constructing a network diagram

• Determine activities that need to be accomplished
• Determine precedence relationships and completion times
• Construct network diagram
• Determine the critical path
• Determine early start and late start schedules.A simple workflow
from apparel industry was provided in Figure 3.5 from raw material
sourcing to packing of an order. The development of CPM network
can be done with following steps.
Step 1: Activity specification – Identify the activities in the work
Figure 3.5 Process flow of an apparel project
Step 2: Identify the sequence of activities involved in the project (Table 3.3)
Table 3.3 Activity and predecessor chart

Activity Predecessor
A -
B -
C A
D B
E C, D
F E
G F
H G
Step 3: Estimate the approximate time for each activity and develop a
network diagram as shown in Figure 3.6.
Figure 3.6 Network diagram for the project with activity name and duration in days
Network approach helps calculate the maximum duration or critical ac-

tivity of a project. Where,
• A “path” is a sequence of activities that begins at the start of the pro-
ject and goes to the end of the project
• The “critical path” is the path that takes the longest to complete and
thus determines the minimum duration of the project. The critical
path can be identified by determining the following four parameters
for each activity.
•• ES – Earliest Start time, the earliest time at which the activity
can start given that its precedent activities must be completed
first.
•• EF – Earliest Finish time, equal to the earliest start time for
the activity plus the time required to complete the activity.
•• LF – Latest Finish time, the latest time at which the activity
can be completed without delaying the project.
•• LS – Latest Start time, equal to the latest finish time minus
the time required to complete the activity.
Step 4: Identify the critical path and slack / buffer time by calculation
(Figure 3.7)
Figure 3.7 Critical path analysis

In this project, there are two paths,

Path 1: A – C – E – F – G – H = 33 days to complete
Path 2: A – B – D – E – F – G – H = 32 days complete
Here, path 1 takes long time and hence, a small delay in path 1 can cause total
delay in the project. This path is known as “Critical path”.
Calculation of buffer or slack time
The total slack time for the project is = Duration of path 1–duration of
path 2
Which is, 33–32 = 1 day
To calculate Earliest Start time, ES = Earliest time an activity can be
started. For example, consider the above-mentioned example, where activity
A is the first process without any predecessor. Hence it can be started at very
first so the earliest start time is “0”. But in the case of activity C, the prede-
cessor is “A”, meaning that activity “C” can be started only after the comple-
tion of the activity “A”. Hence the earliest start time is the duration of activity
A, that is 2 days.
To calculate Earliest Finish time, EF = ES+ activity duration. For
example, the Earliest finish time of activity C is = 2 (Earliest start time) + 3
(duration) = 5 days.
To calculate Latest Finish time, LF = The latest time an activity can
finish without delaying the project. For example, in Figure 3.7, activity
B, D and A, C are parallel process. In this case, the total time duration
of A, C (2 + 3) is 5 days and time duration of B, D (3 + 1) is 4 days. It
can be clearly seen there is 1 day of buffer available for operation B and
D together. So it can be used in any one place either for B or D as 1 day
buffer or it can be used as 0.5 day buffer at both the places. In that case,
the latest finish time of activity “B” is 4 (3 days activity and 1 day buffer)
and this will not delay the project duration. Or else it can be used for ac-
tivity D where the latest finish time is 5 (earliest start time is 3 + activity
duration 1 + buffer 1 day).
To calculate Latest Start time, LS = LF–activity duration. For exam-
ple, for activity B latest finish time is 4 and the activity duration is 3. Hence,
4–3 = 1 day is the Latest start time.
To calculate slack time – The slack time for an activity is the time
between its earliest and latest start time, or between its earliest and lat-
est finish time. Slack is the amount of time that an activity can be de-
layed past its earliest start or earliest finish without delaying the project
(Table 3.4).
Table 3.4 Calculation to identify the critical path, time and slack time
Time
S. No. Activity ES EF LS LF Slack
(days)
1 A 2.0 0.0 2.0 0.0 2.0 0.0
2 B 3.0 0.0 3.0 1.0 4.0 1.0
3 C 3.0 2.0 5.0 2.0 5.0 0.0
4 D 1.0 3.0 4.0 4.0 5.0 1.0
5 E 2.0 5.0 7.0 5.0 7.0 0.0
6 F 2.0 7.0 9.0 7.0 9.0 0.0
7 G 14.0 9.0 23.0 9.0 23.0 0.0
8 H 10.0 23.0 33.0 23.0 33.0 0.0
• Project completion period = LF and EF = 33.0 days – It can be noted

that the latest possible finishing time will not alter the overall project
completion time
• With respect to the resource allocation process, the first preference
must be given for the operations / activities with “0” slacks / buffer
time and to the minimum slacks later. From the critical path analysis,
the Gantt chart can be developed as given below in Figure 3.8.
Figure 3.8 Gantt chart developed using critical path method
Few examples of “Critical Path Method” were provided here for the bet-
ter understanding of the concept.
Example 1: Develop a scheduling chart for the activities in “Order ACD”
and identify the critical path of the process along with the slack time availa-
ble for each operation. Details are in Table 3.5.
Table 3.5 Activity and duration of order ACD

Activity Time duration in days Predecessor
A 2 -
B 3 -
C 2 A
D 4 A,B
E 4 C
F 3 C
G 5 D,E
H 2 F,G
Solution:
Network diagram (Figure 3.9):
Figure 3.9 Critical path identification
Path 1: A-C-F-H = 9 Days

Path 2: A-C-E-G-H =15 Days  Critical Path
Path 3: A-D-G-H = 13 Days
Path 3: B –D –G –H = 14 Days
Slack calculations (Table 3.6):
Time
S. No. Activity ES EF LS LF Slack
(days)
1 A 2 0.0 2.0 0.0 2.0 0.0
2 B 3 0.0 3.0 1.0 4.0 1.0
3 C 2 2.0 4.0 2.0 4.0 0.0
4 D 4 3.0 7.0 4.0 8.0 1.0
5 E 4 4.0 8.0 4.0 8.0 0.0
6 F 3 4.0 7.0 10.0 13.0 6.0
7 G 5 8.0 13.0 8.0 13.0 0.0
8 H 2 13.0 15.0 13.0 15.0 0.0
Figure 3.10 Gantt chart for the order ACD with slack / buffer time
• Operations with slack can be given with least importance in resource

allocation
• The critical path of the project is 15 days
• The scheduling chart is presented in Figure 3.10.
Example 2: Develop a scheduling chart using critical path method for the
activities in “Order 12345” and identify the critical path of the process along
with the slack time available for each operation. The details of order 12345,
is provided in Table 3.7.
Table 3.7 Activity and duration details of order 12345

Activity Time duration in days Predecessor
A 4 -
B 10 A
C 2 B
D 4 B
E 3 C
F 16 D,E
G 4 F
H 1 G
Solution:
Network diagram (Figure 3.11):
Path 1: A-B-D-F-G-H = 39 Days

Path 2: A-B-C-E-F-G-H =40 days  Critical Path
Slack calculations (Table 3.8):
S. No. Activity Time (days) ES EF LS LF Slack
1 A 4 0 4 0 4 0
2 B 10 4 14 4 14 0
3 C 2 14 16 14 16 0
4 D 4 14 18 15 19 1
5 E 3 16 19 16 19 0
6 F 16 19 35 19 35 0
7 G 4 35 39 35 39 0
8 H 1 39 40 39 40 0
• Operations with slack can be given with least importance in resource

allocation
• The critical path of the project is 40 days
• The Scheduling Chart is presented in Figure 3.12.
Figure 3.12 Gantt chart for the order 12345 with slack / buffer time
Advantages of critical path method
• Makes dependencies visible between the project activities

• Enables the calculation of the float (slack) of each activity. The float tells
you exactly how long an activity can come in late without it impacting
the project schedule
• Organises large and complex projects
• Encourages the merchandiser to reduce the order duration by optimising
the critical path
• Provides opportunities to respond to the negative risk of going
over-schedule by identifying the activities that are most critical.
Disadvantages of critical path method
• For large and complex projects, there’ll be thousands of activities

and dependency relationships. Without software, it can be mighty
difficult managing
• Activity durations must be fixed and well known. Unfortunately,
there is uncertainty associated with certain activities
• Activities in partial completions not accounted
• Successive activities can be considered into action (start work) only
after the completion of predecessor activity. In some situations, on
the partial completion, we can start work. For example, after the
first day of cutting production the bundling process can be started,
there is no necessity to wait until the whole production completion
in cutting.
ii) PERT (Program Evaluation and Review Technique)

In critical path method (CPM), it was assumed that the activity duration esti-
mates, and the derived values for the earliest start, latest start, earliest finish and
latest finish were all deterministic. In reality, this is seldom true and durations
are often not known in advance. PERT has extended this deterministic approach
in the face of uncertainty about activity times and employs a special formula for
estimating activity durations. The approach of PERT assumes that the activity
duration estimates are done by someone who is familiar with the activity, and
has enough insight into the characteristics of the activity. Hence, the technique
requires three duration estimates for each individual activity, as follows:
•• Optimistic time estimate (To): This is the shortest possible time in
which the activity can be completed, and assumes that everything
has to go perfect
•• Realistic time estimate (Tm): This is the most likely time in which
the activity can be completed under normal circumstances
•• Pessimistic time estimate (Tp): This is the longest possible time the
activity might need, and assumes a worst-case scenario.
Consider the following example, calculate the possibilities to complete
the order “XYZ” within 39 weeks. The project details are given in Table 3.9.
Also calculate the number of days required to complete the project with 90%
confidence.
Table 3.9 Activity and time durations of order XYZ

Time
Operation Predecessor
Optimistic (To) Most likely (Tm) Pessimistic (Tp)
1 - 3 4 5
2 1 8 10 12
3 2 1 2 4
4 2 3 4 6
5 3 2 3 4
6 4, 5 13 16 20
7 6 3 4 6
8 7 1 1 2
Solution:
The solve the PERT estimations the following steps can be performed,
Step 1: Calculate the “expected time” for the activity,
o + 4m + p
Te =
6
Where:
Te = Expected time
o = Optimistic estimate
m = Most likely estimate
p = Worst-case (pessimistic) estimate
For this example,
3 + 4(4) + 5
Activity 1=
= Te = 4.00
6
8 + 4(10) + 12
Activity=
2= Te = 10.00
6
1 + 4(2) + 4
Activity 3 =
= Te = 2.17
6
Step 2: Calculate the variance of the activity’s duration estimate
2
2 p−o
To calculate the variance = σ =  – formula can be used.
For this example,  6 
2
2  5−3
Activity 1=
= σ  =  0.11 weeks
 6 
2
2  12 − 8 
Activity =
2= σ  =  0.44 weeks
 6 
2
2  4 −1
Activity 3=
= σ  =  0.25 weeks,
 6 
likewise for all other activities it need to be calculated. The results were
given in Table 3.10.
Table 3.10 Calculations and estimations of expected time and variance
Time (weeks) Expected Variance
Most time (weeks) (σ2) (week)
Operation Predecessor Optimistic Pessimistic
likely (Te)
(To) (Tp)
(Tm)
1 - 3 4 5 4 0.11
2 1 8 10 12 10 0.44
3 2 1 2 4 2.1 0.25
4 2 3 4 6 4.1 0.25
5 3 2 3 4 3 0.11
6 4, 5 13 16 20 13.13 1.35
7 6 3 4 6 4.16 0.25
8 7 1 1 2 1.16 0.026
Sum of variance 2.786
Step 3: Identify the critical path (Figure 3.13)
Figure 3.13 Identification of critical path for order XYZ
The critical path is = Critical path = 40.68 weeks

Sum of variances = 2.786 weeks
Step 4: Calculate the probability of finishing the order XYZ in 39 weeks

or less
Using variation in time estimates to assess duration probabilities, the follow-
ing formula can be used to estimate project duration probabilities
D − Te
Z=
σ
Where:
Z = Number of standard deviations D is from Te
Te = Expected time
D = Activity duration I am thinking about
For this example, to complete the order in 39 weeks, by using this formula,
39 − 40.68
Z= = −1.05
1.6
Where 1.6 is the square root of 2.78 (sum of variance) and –1.05 is standard
deviation difference between “most likely” and desired duration. A value
of Z = –1.05 indicates that the scheduled time, D, is –1.05 standard devi-
ations lesser than the expected time, Te = 40.68. Reference to Table 3.14,
this value of Z corresponds to a probability of 0.1469, or approximately
0.15. Thus, assuming that “time now” is zero, one may expect this pro-
ject to end at time 39, and the probability that it will end on or before the
scheduled time of 40.68, without expediting the profect, is approximately
0.15. It should be pointed out that if D had been 1.68 days greater than EG
instead of being lesser, i.e., Te = 40.68 + 1.68 = 42.360, then Z = 1.05, and
the corresponding probability would be 0. 8531. Hence, it is essential that
the correct sign is placed on the Z.
Step 5: Use Z chart to know the percentage of probability

• So, after this estimation of “Z” value, look up the cumulative prob-
ability [G(z)] of the activity being completed before –1.05 standard
deviations from the “most likely” estimate using Z chart provided in
Figure 3.14.
• From the chart, it can be found out that only 14.69% chance of fin-
ishing the order XYZ within 39 weeks or less.
Standard Normal Probabilities
Table entry
Table entry for z is the area under the standard normal curve
to the left of z.
z
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
–3.4 .0003 .0003 .0003 .0003 .0003 .0003 .0003 .0003 .0003 .0002
–3.3 .0005 .0005 .0005 .0004 .0004 .0004 .0004 .0004 .0004 .0003
–3.2 .0007 .0007 .0006 .0006 .0006 .0006 .0006 .0005 .0005 .0005
–3.1 .0010 .0009 .0009 .0009 .0008 .0008 .0008 .0008 .0007 .0007
–3.0 .0013 .0013 .0013 .0012 .0012 .0011 .0011 .0011 .0010 .0010
–2.9 .0019 .0018 .0018 .0017 .0016 .0016 .0015 .0015 .0014 .0014
–2.8 .0026 .0025 .0024 .0023 .0023 .0022 .0021 .0021 .0020 .0019
–2.7 .0035 .0034 .0033 .0032 .0031 .0030 .0029 .0028 .0027 .0026
–2.6 .0047 .0045 .0044 .0043 .0041 .0040 .0039 .0038 .0037 .0036
–2.5 .0062 .0060 .0059 .0057 .0055 .0054 .0052 .0051 .0049 .0048
–2.4 .0082 .0080 .0078 .0075 .0073 .0071 .0069 .0068 .0066 .0064
–2.3 .0107 .0104 .0102 .0099 .0096 .0094 .0091 .0089 .0087 .0084
–2.2 .0139 .0136 .0132 .0129 .0125 .0122 .0119 .0116 .0113 .0110
–2.1 .0179 .0174 .0170 .0166 .0162 .0158 .0154 .0150 .0146 .0143
–2.0 .0228 .0222 .0217 .0212 .0207 .0202 .0197 .0192 .0188 .0183
–1.9 .0287 .0281 .0274 .0268 .0262 .0256 .0250 .0244 .0239 .0233
–1.8 .0359 .0351 .0344 .0336 .0329 .0322 .0314 .0307 .0301 .0294
–1.7 .0446 .0436 .0427 .0418 .0409 .0401 .0392 .0384 .0375 .0367
–1.6 .0548 .0537 .0526 .0516 .0505 .0495 .0485 .0475 .0465 .0455
–1.5 .0668 .0655 .0643 .0630 .0618 .0606 .0594 .0582 .0571 .0559
–1.4 .0808 .0793 .0778 .0764 .0749 .0735 .0721 .0708 .0694 .0681
–1.3 .0968 .0951 .0934 .0918 .0901 .0885 .0869 .0853 .0838 .0823
–1.2 .1151 .1131 .1112 .1093 .1075 .1056 .1038 .1020 .1003 .0985
–1.1 .1357 .1335 .1314 .1292 .1271 .1251 .1230 .1210 .1190 .1170
–1.0 .1587 .1562 .1539 .1515 .1492 .1469 .1446 .1423 .1401 .1379
–0.9 .1841 .1814 .1788 .1762 .1736 .1711 .1685 .1660 .1635 .1611
–0.8 .2119 .2090 .2061 .2033 .2005 .1977 .1949 .1922 .1894 .1867
–0.7 .2420 .2389 .2358 .2327 .2296 .2266 .2236 .2206 .2177 .2148
–0.6 .2743 .2709 .2676 .2643 .2611 .2578 .2546 .2514 .2483 .2451
–0.5 .3085 .3050 .3015 .2981 .2946 .2912 .2877 .2843 .2810 .2776
–0.4 .3446 .3409 .3372 .3336 .3300 .3264 .3228 .3192 .3156 .3121
–0.3 .3821 .3783 .3745 .3707 .3669 .3632 .3594 .3557 .3520 .3483
–0.2 .4207 .4168 .4129 .4090 .4052 .4013 .3974 .3936 .3897 .3859
–0.1 .4602 .4562 .4522 .4483 .4443 .4404 .4364 .4325 .4286 .4247
–0.0 .5000 .4960 .4920 .4880 .4840 .4801 .4761 .4721 .4681 .4641
Standard Normal Probabilities
Table entry
Table entry for z is the area under the standard normal curve
to the left of z.
z
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
0.0 .5000 .5040 .5080 .5120 .5160 .5199 .5239 .5279 .5319 .5359
0.1 .5398 .5438 .5478 .5517 .5557 .5596 .5636 .5675 .5714 .5753
0.2 .5793 .5832 .5871 .5910 .5948 .5987 .6026 .6064 .6103 .6141
0.3 .6179 .6217 .6255 .6293 .6331 .6368 .6406 .6443 .6480 .6517
0.4 .6554 .6591 .6628 .6664 .6700 .6736 .6772 .6808 .6844 .6879
0.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224
0.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549
0.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852
0.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133
0.9 .8159 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389
1.0 .8413 .8438 .8461 .8485 .8508 .8531 .8554 .8577 .8599 .8621
1.1 .8643 .8665 .8686 .8708 .8729 .8749 .8770 .8790 .8810 .8830
1.2 .8849 .8869 .8888 .8907 .8925 .8944 .8962 .8980 .8997 .9015
1.3 .9032 .9049 .9066 .9082 .9099 .9115 .9131 .9147 .9162 .9177
1.4 .9192 .9207 .9222 .9236 .9251 .9265 .9279 .9292 .9306 .9319
1.5 .9332 .9345 .9357 .9370 .9382 .9394 .9406 .9418 .9429 .9441
1.6 .9452 .9463 .9474 .9484 .9495 .9505 .9515 .9525 .9535 .9545
1.7 .9554 .9564 .9573 .9582 .9591 .9599 .9608 .9616 .9625 .9633
1.8 .9641 .9649 .9656 .9664 .9671 .9678 .9686 .9693 .9699 .9706
1.9 .9713 .9719 .9726 .9732 .9738 .9744 .9750 .9756 .9761 .9767
2.0 .9772 .9778 .9783 .9788 .9793 .9798 .9803 .9808 .9812 .9817
2.1 .9821 .9826 .9830 .9834 .9838 .9842 .9846 .9850 .9854 .9857
2.2 .9861 .9864 .9868 .9871 .9875 .9878 .9881 .9884 .9887 .9890
2.3 .9893 .9896 .9898 .9901 .9904 .9906 .9909 .9911 .9913 .9916
2.4 .9918 .9920 .9922 .9925 .9927 .9929 .9931 .9932 .9934 .9936
2.5 .9938 .9940 .9941 .9943 .9945 .9946 .9948 .9949 .9951 .9952
2.6 .9953 .9955 .9956 .9957 .9959 .9960 .9961 .9962 .9963 .9964
2.7 .9965 .9966 .9967 .9968 .9969 .9970 .9971 .9972 .9973 .9974
2.8 .9974 .9975 .9976 .9977 .9977 .9978 .9979 .9979 .9980 .9981
2.9 .9981 .9982 .9982 .9983 .9984 .9984 .9985 .9985 .9986 .9986
3.0 .9987 .9987 .9987 .9988 .9988 .9989 .9989 .9989 .9990 .9990
3.1 .9990 .9991 .9991 .9991 .9992 .9992 .9992 .9992 .9993 .9993
3.2 .9993 .9993 .9994 .9994 .9994 .9994 .9994 .9995 .9995 .9995
3.3 .9995 .9995 .9995 .9996 .9996 .9996 .9996 .9996 .9996 .9997
3.4 .9997 .9997 .9997 .9997 .9997 .9997 .9997 .9997 .9997 .9998
Figure 3.14 Z chart a) for negative values and b) for positive values
Step 6: Estimation of possible completion time with higher probability

The second half of the question is to estimate the possible number of weeks,
in that the order can be finished with 90% of possibilities. For the calculation
of this, the previous formula can be silghtly modified as follows,
D= Te + σ ( Z )
And for this example, D = 40.68 +1.6 * 1.3 = 42.76 weeks.
Where 1.3 has arrived from Z chart. The required probability, lets say
90% in this case, look for it under G(z) in Table 3.14 and translate to number
of standard deviations.
So, the project can be completed with 90% of possibilities in 42.76 week.
To understand the PERT format in better few other examples were pro-
vided here with.
Example 1: Calculate the time required to complete critical path and iden-
tify the efficiency required to complete the order in 35 hours (Table 3.11).
Also, calculate the number of hours required to complete the project with
95% efficiency.
Table 3.11 Activity and time durations for given order

Time in hours
Operation Predecessor
Optimistic (To) Most likely (Tm) Pessimistic (Tp)
A - 4 5 9
B A 3 6 15
C A 3 4 5
D B 2 7 9
E C 3 5 7
F D,E 6 8 13
G F 1 3 11
Solution:
o + 4m + p
Te =
6
Step 2: Calculate the variance of the activity’s duration estimate
(Table 3.12)
2
 p − o
To calculate the variance = σ 2 = 
 6 

Time Expected Variance
Predecessor time (σ2)
Operation or Most Pessimistic
Optimistic (Te)
likely (Tp)
(To)
(Tm)
A - 4 5 9 5.5 0.69
B A 3 6 15 7 4
C A 3 4 5 4 0.111
D B 2 7 9 6.5 1.36
E C 3 5 7 5 0.44
F D,E 6 8 13 8.5 1.36
G F 1 3 11 4 2.77

Path 1: A – B – D – F –G = 31.5 hours  Critical Path
Path 2: A – C – E – F –G = 27 hours
Sum of variances = 10.73 hours
Step 4: Calculate the probability of finishing the order XYZ in 35 hours
or less
Using variation in time estimates to assess duration probabilities, the fol-
lowing formula can be used to estimate project duration probabilities.
D − Te
Z=
σ
35 − 31.5
=
3.27
3.5
= = 1.07
3.27

ability [G(z)] of the activity being completed before 1.07 standard
Table 3.14.
• From the chart, it can be found (0.8577) out that only 85.77%
chance of finishing the order within 35 hours or less.
Step 6: Estimation of possible completion time with higher probability

• The second half of the question is to estimate the possible number of
hours that order can be finished with 90% of possibilities. For the calcu-
lation of this, the previous formula can be silghtly modified as follows,
D= Te + σ ( Z )
D = 31.5 + 3.27 * 1.64 = 36.8 hours
• Where, 1.64 has arrived from Z chart. The required probability, lets
say 95% in this case, look for it under G(z) in Table 3.14 and trans-
late to number of standard deviations
• So, the project can be completed with 95% of possibilities in 36.8 hours.
Example 2: Calculate the time required to complete critical path (Table 3.13)
and also identify the efficiency required to complete the order in 43 days.
Table 3.13 Activity and time durations for given order

Preceding Completion time in days
Activity
activity Optimistic Most likely Pessimistic
Order fabric (A) - 5 6 7
Order trims (B) - 4 5 18
Dyeing (C) A 4 15 20
Production (D) B, C 3 4 5
Packing (E) D 16 17 18
Solution:
o + 4m + p
Te =
6
Step 2: Calculate the variance of the activity’s duration estimate (Table 3.14)
2
 p − o
To calculate the variance = σ = 
2
 6 
Time in days Expected Variance

Predece- time (σ2)
Operation Most
ssor Optimistic Pessimistic (Te)
likely
(To) (Tp)
(Tm)
Order fabric (A) - 5 6 7 6 0.11
Order Trims (B) - 4 5 18 7 5.44
Dyeing (C) A 4 15 20 14 7.11
Production (D) B, C 3 4 5 4 0.11
Packing (E) D 16 17 18 17 0.11
Path 1: A – C – D – E = 41 days  Critical Path

Path 2: B – D – E = 28 Days
Sum of variances = 12.88 days
Step 4: Calculate the probability of finishing the order in 43 days or less
Using variation in time estimates to assess duration probabilities, the follow-
ing formula can be used to estimate project duration probabilities.
D − Te
Z=
σ
43 − 41
=
12.88
2
= = 0.55
3.588

ability [G(z)] of the activity being completed before 0.55 standard
Figure 3.14.
• From the chart, it can be found (0.7088) out that only 70.88%
chance of finishing the order within 43 days or less.
3.4 Raw material consumption estimations

Once, the order scheduling process is completed, the very next important job
for the merchandiser is to estimate the average consumption of various raw
materials for that particular style and also for the order quantity. In this pro-
cess, he / she need to calculate various consumption details like,
1. Weight of the yarn or fabric per garment (grams per square metre)
2. Yarn or fabric consumption per garment and for order quantity
3. Sewing thread consumption
4. Other raw materials consumption.
Based on the size of the industry, theses consumptions for the bulk quan-
tity may be sometimes calculated by the Industrial Engineering department or
Production planning department. However, as a merchandiser, it is essential
to him / her to know the methods, because, during the order acceptance stage,
while pre-costing, he / she need to estimate the approximate consumption.
But in the case of medium and small size industries, all these works were per-
formed exclusively by the merchandiser. Since the consumption calculations
are more important for a merchandiser in the order execution state.
3.4.1 Fabric and yarn weight calculations

The method of estimating the GSM of woven fabric is provided here.
(i) GSM of woven fabric
Warp weight =
(
EPI × 39.384 × 453.4 × crimp +100 )
Warp count × 0.914 *840 *100
PPI × 39.384 × 453.4 × ( crimp +100)
Weft weight =
Weft count × 0.9140 × 840 × 100
GSM of woven fabric = Warp weight + Weft weight
For example, if a company received a woven fabric with following spec-

ifications, find out the GSM of the fabric. The fabric is made up of 100%
cotton in warp yarn and 100% polyester in weft. The Ends per Inch (EPI) is
80, Picks per Inch (PPI) is 60, warp count is 2/100 Ne and weft count is 80
Denier. Also consider the warp and weft crimp as 6% and 8% and the shrink-
age at dyeing and finishing as 3% and 8%.
Solution:
EPI × 39.384 × 453.4 × ( crimp% +100)
Warp weight per Sq.m =
Warp count × 0.914 × 840 ×100
80 × 39.384 × 453.4 × ( 6 +100)
=
0.914 × 840 ×100 × 50
Warp weight = 39.45 grams
PPI × 39.384 × 453.4 × ( crimp% +100)

Weft weight per Sq.m =
Weft count × 0.914 × 840 ×100
60 × 39.384 × 453.4 × ( 8 +100)
=
66.43× 0.914 × 840 ×100
Weft weight = 22.68 grams
Overall GSM of the fabric = Warp weight + Weft weight
= 39.45 + 22.68
Woven fabric GSM = 62.135 grams / Sq.m
GSM after finishing and dyeing = Total Fabric GSM × Dyeing Shrinkage ×
Finishing shrinkage
100 + dyeing shrinkage  100 + Finishing shrinkage 
= 62.135 ×  × 
 100   100 
 100 + 3  100 + 8 
= 62.135 ×  × 
 100   100 
= 62.135 × 1.03 × 1.08
Final weight of the woven fabric = 69.11 grams / Sq.m
Few other examples are provided here for better understanding.
3.2 Alternate Method to identify fabric GSM

To identify the GSM of any fabric, where we don’t have the GSM cutter or
insufficient amount of fabric to cut under GSM cutter,
Sample weight in gram × 10, 000
Weight per square meter (grams) =
Area of the sample in square cm
1 Woven fabric with 80 EPI and 68 PPI was purchased. During the test-
ing it is noted that the yarn count is 2/30s for warp and 40s for weft.
Calculate the GSM of the fabric by considering the warp and weft
yarn crimp are 6% and 8%, respectively.
EPI × 39.384 × 453.4 × ( crimp + 100)
Warp weight per sq.m =
Warp count × 0.914 × 840 × 100
80 × 39.384 × 453.4 × 106
=
0.914 × 840 × 15 × 100
15,14, 24,863.488
=
11,51, 640

Warp weight per sq.m = 131.4862 grams / sq.m
PPI × 39.384 × 453.4 × ( crimp +100)
Weft weight per sq.m =
Weft count × 0.9140 × 840 ×100
68 × 39.384 × 453.4 × 108
=
0.914 × 84 × 40 × 100
131139645.9264
=
3071040
Weft weight per sq.m = 42.7020 grams / sq.m
Overall GSM of the fabric = Warp weight + Weft weight
= 131.4862+42.7020
Woven fabric GSM = 174.1882 grams / Sq.m
2 Woven fabric with 80 EPI and 68 PPI was purchased. During the test-
ing it was noted that the yarn count is 2/80s for warp and 60s for weft.
Calculate the GSM of the fabric by considering the warp and weft
yarn crimp was 4 % each.
EPI × 39.384 × 453.4 × ( crimp + 100)
Warp yarn weight per sq.m =
Warp count × 0.914 × 840 × 100
80 × 39.384 × 453.4 × ( 4 + 100)

=
40 × 0.914 × 840 × 100
Warp yarn weight per sq.m = 48.37 grams / sq.m
PPI × 39.384 × 453.4 × ( crimp + 100)
Weft yarn weight sq.m =
Weft count × 0.914 × 840 × 100
68 × 39.384 × 453.4 × ( 4 + 100)
= 60 × 0.914 × 840 × 100
Weft yarn weight sq.m = 27.41 grams / sq.m

GSM = Warp yarn weight + Weft yarn weight
= 48.37 + 27.41
Overall weight of the woven fabric = 75.78 grams / sq.m
(ii) GSM of knitted fabric

The method to estimate the GSM of knitted fabric is provided here.
0.59 × Length in m
Count in Ne =
Weight in Grams
loop density × ( 39.384) × ( 39.384) × loop length in mm

Yarn length in m =
1000
0.59 × yarn length in m × (100 + shrinkage)
GSM =
Count ( Ne) × 100
For example, if a knitted fabric Course per Inch (CPI) is 72, Wales per Inch
(WPI) is 60, loop length is 0.55 mm and yarn count is 40s Ne, the GSM of the
fabric can be calculated as follows:
Solution:
Yarn length in metres =
1000
60 × 72 × ( 39.384) × ( 39.384) × 0.55
=
1000
Yarn length = 3685.4 metres
0.59 × yarn length in metres × (100 + shrinkage)
GSM =
Count ( Ne) × 100
0.59 × 3685.4 × 100
=
40 × 100
Knitted fabric weight = 54.35 grams / sq.m
Few other examples are provided here for better understanding,
1. A knitted fabric with 30s combed yarn with 80 CPI and 60 WPI with
0.65 mm loop length is sourced for production process. Calculate the
GSM of the fabric, if the dimensional shrinkage after knitting is 8%
and 3% after dying. Mention the GSM after knitting and dyeing
Yarn length in metre = loop density × ( 39.384) × ( 39.384) × loop length in mm

1000
( 60 × 80) × ( 39.384) × ( 39.384) × 0.65

Yarn length in metre =
1000
4800 ×1551.0994 × 0.65

=
1000
4839430.30272
=
1000
Yarn length = 4839.4303 metre
GSM of the knitted fabric =
Count ( Ne) × 100
0.59 × 4839.4303 × 108

=
30 × 100
= 102.7895 grams / sq.m
GSM of the fabric after dyeing= Total fabric GSM × Dyeing shrinkage
100 + dyeing shrinkage 
= 102.7895 ×  
 100 
100 + 3 
= 102.7895 ×  
 100 
Fabric weight after dyeing = 105.8731 grams / sq.m
2 A knitted fabric with 80s count combed yarn with 80 CPI and 70 WPI
with 1.05 mm loop length is sourced for the cutting process. Calculate
the GSM if the dimensional shrinkage after knitting is 5% and 5%
after dying.
1000
( CPI × WPI) × 39.3842 × loop length in mm

=
1000
(80 × 70) × 39.3842 × 1.05

=
1000
Yarn length = 9120.46 metres
 100 + shrinkage %  
0.59 × yarn length ×  100

  
Count
 100 + 5%  
0.59 × 9120.46 ×  100  
  
=
80
Weight of the fabric after knitting = 70.62 grams / sq.m

Weight of the fabric after dyeing = 70.62 ×  100

 
100 + 5 
= 70.62 ×  
 100 
= 70.62 × 1.05
Weight of the fabric after dyeing = 74.15 grams / sq.m
3.4.2 Size wise – Colour wise order quantity breakup

identification
In practical situations, while receiving the order the merchandiser sometimes
will get the exact details of colour wise and size wise quantities but most of
the time he will receive only the,
• Order quantity and
• Size and colour wise ratio or percentage
So, it is important for a merchandiser to know the calculation method for
these quantity breakup. Hence, this section details the calculation formula
related to this identification.
Step 1: Calculate the sum of all ratios (may be size or colour)
Step 2: Always remember to add the wastage percentage with order quantity
(based on experience / companies previous records)
Step 3: Divide the order quantity by the summation value
Step 4: Multiply the result by the ratio of particular size or colour, this will
give the exact quantity of that particular ratio (either size or colour)
Example 1: Calculate the size wise quantity for the order with 10,000 pcs
order quantity and the size ratio is S:M:L:XL = 1:2:2:1.
Solution:
Step 1: Sum of all ratios = 1+2+2+1 = 6
Step 2: No wastage percentage provided so this step can be ignored
Order Qunatity 10000
Step 3: =
Sum of ratios 6
10000
Step 4: For size S- × 1 = 1666.66 = 1667 garments
6
10000
For size M- × 2 = 3333.33 = 3333 garments
6
10000
For size L- × 2 = 3333.33 = 3333 garments
6
10, 000
For size XL- × 1 = 1666.66 = 1667 garments
6
Example 2: Calculate the colour wise order quantity for the following order
details. Order quantity with four colour is 1,75,000 pcs, size breakup ratio for
each colour is 1:2:1:2:1 and the colours are blue, yellow, magenta and olive
green.
Solution:
Order quantity with four colours = 1,75,000 pcs
Size breakup ratio = 1:2:1:2:1
• For blue colour= 17,5,000/4=43,750
• For yellow colour=1,75,000/4=43,750
• For magenta colour=1,75,000/4=43,750
• For olive green colour=1,75,000/4=43,750
Since, all the colours having same quantity, the size wise breakup for the
colours are same as follows,
Size 1: (1/7) × 43,750 = 6250 pieces
Size 2: (2/7) × 43,750 = 12,499.99 pieces
Size 3: (1/7) × 43,750 = 6250 pieces
Size 4: (2/7) × 43,750 = 12,499.99 pieces
Size 5: (1/7) × 43,750 = 6250 pieces
The size wise, colour wise breakups are in Table 3.15.
Table 3.15 Colour wise, size wise breakup for example 2

Colours XS S M L XL Total colour wise quantity
Blue 6250 12500 6250 12500 6250 43750
Yellow 6250 12500 6250 12500 6250 43750
Magenta 6250 12500 6250 12500 6250 43750
Olive 6250 12500 6250 12500 6250 43750
green
Total order quantity 1,75,000
Example 3: An apparel export industry produces 100% cotton men’s full

sleeve shirt with the order quantity of 10,000 garments with total number
of six colours. The size breakup for each colour is 1:2:2:1= S:M:L:XL. The
colour wise quantities are: white – 2000 pcs; navy blue – 4000 pcs; yellow
1000 pcs; blue 1500 pcs; green – 500 pcs; sea green – 1000 pcs. Calculate the
colour wise, size wise breakup quantity with 10% wastage.
Solution:
Order quantity: 10,000 garments
Size breakup for each colour = 1:2:2:1 = S: M: L: XL = 6
Waste percentage = 10%
For white colour

Size S: (1/6) × 2000= 333 × 1.10 (Wastage) = 367 garments
Size M: (2/6) × 2000 = 667 × 1.10 (Wastage) = 734 garments
Size L: (2/6) × 2000 = 667 × 1.10 (Wastage) = 734 garments
Size XL: (1/6) × 2000 = 333 × 1.10 (Wastage) =367 garments
For navy blue colour

For yellow colour

Size S: (1/6) × 1000 = 167 × 1.10 (Wastage) = 183 garments
For blue colour

Size S: (1/6) × 1500 = 250 × 1.10 (Wastage) = 275 garments
For green colour

Size L: (2/6) × 500 =167 × 1.10 (Wastage) = 183 garments
Size XL: (1/6) × 500 = 83 × 1.10 (Wastage) = 91garments
For sea green

Size XL: (1/6) × 1000 = 167 × 1.10 (Wastage) = 183 garments
The total quantity details are provided in Table 3.16

Total colour wise quantity
S M L XL
Colours (with 10% wastage)
White 367 734 734 367 2000 (2202)
Navy blue 734 1467 1467 734 4000 (4402)
Yellow 183 367 367 183 1000 (1100)
Blue 275 550 550 275 1500 (1650)
Green 91 183 183 91 500 (548)
Sea green 183 367 367 183 1000 (1100)
Total order quantity 10,000 (11002)
3.4.3 Yarn or fabric consumption calculations

The basic formula for the calculation of fabric consumption per garment is
provided here,
Knitted fabric consumption =
( length × width × number of components ) + 
  × GSM
( length × width × number of components ) 
10, 000 × 1000
Woven fabric consumption =

{( length × width × number of components ) + (length ×
width × number of components}
Fabric width × Unit conversion
Here, to convert inch to metre use, 39.37 as conversion factor in case of

woven fabric
(1 inch = 0.0254 metre = 1/39.37)
To calculate the fabric consumption, the following details are necessary,
• Measurement details of the garment
• Fabric width in case of woven fabric
• Fabric GSM in case of knit fabric
• Shrinkage %
• Fabric description
• Style description of the garment
• In case of woven fabric, the total usable fabric width = Original
width – selvedge
• This usable width only needs to be used for the calculations
• In case of multiple fabric roll with different widths are used, con-
sider the lowest or least width for the calculation, if they are laid
together during cutting
• All the allowances should be considered before making consumption
calculations.
(i) For knitted fabric

The following example shows the basic steps involved in the fabric consump-
tion calculations for knitted garments.
Example 1: For the order “FLoom”, consider the following garment style
and measurements provided in Figure 3.17. Calculate the fabric consumption
per garment if the GSM of the fabric is 180 and also estimate the total fabric
consumption for the order quantity of 7550 garments with 3% wastage.
Solution:
Note: Always consider the middle size for the consumption calculation. For
example, if there are sizes as S, M, L, XL and XXL consider the size L. If the
sizes are like S, M, L, and XL consider the size L. In this case, consider the
Size 140/146 for consumption.
( length × width × number of components ) + 
  *GSM
( length × width × number of components ) 
10, 000 × 1000
• In this example, in Figure 3.17, the full length of the front panel is
provided in measurement “PS”, and the maximum width of the front
panel was given as “A”. In same way the back panel length is pro-
vided as “PS2”.
• With respect to the sleeve, the length of the sleeve is marked as “F”
and the sleeve with provided as “G”. The value of G is half of actual
sleeve width. Hence, for original sleeve width multiply the “G” by 2.
This will give the actual sleeve area of one sleeve. Since, we got two
sleeves per garment, the total area need to be multiplied by 2 to get
total fabric consumption of sleeves.
=
{ ( Area of Front ) + ( Area of Back ) + ( Area of sleeve × 2)  *180}
10, 000*1000
=
{ (56 × 39 × 1) + (59 × 39 × 1) + ( 51 × (14 × 2) × 2)  × 180}
10, 000 × 1000
{
 2184 + ( 2301) + ( 2856)  × 180
= 
}
10, 000 × 1000
1321380
Main body fabric consumption = = 0.132138 kg
10, 000 × 1000
ote: For neck rib separate GSM not provided, hence, it can be con-
N
sidered as same GSM of body fabric. However, in real time situation
these informations were provided specifically, it should not be assumed
bluntly. In worst case, need to be communicated with buyer to get more
data.
Neck rib consumption =
{ ( Neck rib width ) × ( Rib length ( i.e., Neck circumference) )  × 180 }
10, 000 × 1000
Figure 3.17 Garment style and measurement chart for order “FLoom”

In Figure 3.17, the measurement J represents “Neck Width”, Neck circum-

ference is approximately double the time of measurement “J”. The height or
width of the neck rib is provided as 1 inch.

{ (18× 2) × (1)  ×180} = 6480
= 0.000648 kg
10, 000 ×1000 10, 000 *1000
Hence, the total fabric consumption / garment is
= Body fabric weight + Neck fabric weight
= 0.132138 + 0.000648
=0.132786 kg / garment
(ii) Total fabric consumption for order quantity:

Order quantity = 7550 garments
Wastage = 3%
Hence, order quantity with waste percentage = 7776.5 or 7777 garments.
• Body fabric consumption / garment = 0.132138 kg
For 7777 garments = 1027.637 kg of body fabrics
• Rib fabric consumption / garment = 0.000648 kg
For 7777 garments = 5.039 kg
Hence, to complete the order including rejection, 1027.637 kg body fabric
and 5.039 kg of rib fabric is required.
Example 2: Calculate the amount of knitted fabric required to produce the
following order with the order quantity of 8990 Pcs, fabric GSM is 160 and
the factory rejection rate is 7%. Figure 3.18 represents the garment style fea-
ture of the order XYZ.
Solution:
Note: For the fabric consumption consider size 12 and note all the measure-
ments were in inches
• In this example, the full length of the front and back panel is differ-
ent. The full length of the back panel is given as “I”. The difference
between front and back panel is “J”, hence reduce J from I, will give
the back panel length.
• The width of the garment is larger in the bottom than the chest
area, hence, consider the maximum width “H” as the width of the
garment.
Figure 3.18 Garment description and measurements for order XYZ
{[( Max Length of front × Max Width of front × number of panel)

+ ( Area of Back × number of panel) +
( Ruffle length × width × number of times) +
( Piping cloth width × Piping length × number of times)]
×GSM}
=
10, 000 × 1000
{[( (15.5 - 3.125) ×15×1) + (15×15.5×1) + (15× 2 × 2) +
=
( ( )
(0.5× 6.875 ( A ) + ( 2 × 4.25 ( C) ) × 2 × 2.522 ×160}
10, 000 ×1000
Where in the case of piping, the total length of the piping used in the
front panel is A+C+C, and the total piping fabric used is summation of front
and back consumption. Hence, the width 0.5 is multiplied by length (i.e., A +
(2*C)) and again by 2.
The total area calculated will be in inch square, hence, to convert it to
centimetres multiply the total area by 2.522.
=
( )
{[(12.375×15) + ( 232.5) + ( 60) + ( 0.5× ( 6.875 + 8.5) × 2 × 2.522 ×160}
10, 000 ×1000
=
{ (185.6) + ( 232.5) + ( 60) + (15.375)  × ( 2.52 ) ×160}
2
10, 000 ×1000
=
{[ 493.475] × ( 2.52 ) ×160} = {5, 01, 402.182} = 0.05014 kg / garment
2
10, 000 ×1000 10, 000 ×1000

The total order quantity is 8990 garments.
The rejection percentage is 7. Hence, the order quantity with rejection
allowance,
= 8990 × 7% = 9619.3 garments
Total consumption for 9619 garments = 9619.3 × 0.05014
= 482.311 kg
Hence, 482.311 kg fabric required to complete the order including rejec-
tion percentage.
(iii) For woven fabric

Example 3: Calculate the fabric consumption for the given specification of a
woven trouser. The measurements are provided in Table 3.17.
Table 3.17 Measurement details of woven trouser

Description Measurements in inch
Inseam length 34″
Half of thigh 13″
Back rise 15″
Waist band width 1.5″

Pocket length 7″
Pocket width 6.5″
Belt loop (l*w) – 5 numbers 1.5″ * 0.5″
Waist band circumference 38″
Pocket back (l*w) 7.5″ * 6.5″
Fabric width (1″ selvedge) 58″
Non-woven fabric width 58″
Waste % 5%
Solution:
From the provided data, the components of this garment are,
Front – 2 panel, Back – 2 panel, Waist band – 1, Pocket – 2 set, Belt loop –
5 numbers and Pocket bag – 2 set.
From the measurement, the full length is = (inseam + back raise)
= 34 + 15 = 49”
The main fabric consumption =
(
[ Max body length × Max body width × number of panel )
(
+ Pocket length × Width × number of pockets + )
( frint wait length × width × 2) +
=
( Belt loop width × length × number of loops)] + waste %
( Fabric width − selvedge) × 39.37
{ ( 49 × 13 × 4) + ( 7 × 6.5 × 2) + ( 38 × 1.5) + (1.5 × 0.5 × 5)}
= + 5%
( 58 − 1) × 39.37
=
{ ( 2548) + ( 91) + ( 57) + ( 3.75)} =
+ 5%
{ 2699.75} + 5%
( 57) × 39.37 2244.09
= 1.2030 + 5% of 1.2030 = 1.2632
Fabric consumption = 1.2632 metre / trouser.
The pocket bag fabric consumption
If the pocket fabric used in different fabric, that particular fabrics width need
to be considered in this calculation. In this case, there is no information about
separate fabric. Hence, it is assumed that the pocket bag produced from the
body fabric. So the same fabric width is used.
{ Pocket bag length × width × 2}

=
( 58 − 1) × 39.37
{ 7.5 × 6.5 × 2} + 5% =
{ 97.5} + 5%
=
( 57) × 39.37 2244.09
= 0.0434 + 5% of 0.0434 =0.0456 metre / trouser
The non-woven fabric consumption

The non-woven fabric is used as interlining material in the waist band.
If informations regarding the width of the non-woven is provided it can
be used. If not it is better to enquire the availability in the stores. Based
on the available width it can be used, in this case the same width is
provided.
{ Waist band circumference *width}
=
( 58 − 1) *39.37
{ 38 × 1.5} + 5%
=
{ 57} + 5%
=
( 57) × 39.37 2244.09
= 0.0254 + 5% of 0.0254 =0.02667 metre / trouser
The consumption details of the woven trouser are as follows:

• Main fabric = 1.2632 metre / trouser.
• Pocket fabric = 0.0456 metre / trouser
• Non-woven material = 0.02667 metre / trouser
3.3 Embroidery Thread consumption

Generally measure based on,
1. Stitch quantity in the embroidery design
2. Stitch length in the embroidery design (which depends on design and
types of stitch)
3. Length of thread in the cones.
The consumption (in Number of cones) is =
(
Sitich Quantity in Embroidery designxTotal stitch length in Design in mm )
(
Lenght of Thread in cone in meter x1000 )
Example 4: Calculate the amount of fabric required to produce 2750 num-

bers of plain woven full sleeve formal shirt in metre. The company averagely
wastes 3% of the fabric during the manufacturing and the different fab-
ric used in the garment were off with the width of 58 inch fabric roll. The
garment specifications were provided in Table 3.18 with ease allowance.
Table 3.18 Measurement details of woven full sleeve formal shirt

Description Measurements in inch
Body length @ C.B. neck 33″
Chest circumference 50″
Across shoulder width seam to seam 21″
Back Yoke height FM HPS 4½″
Sleeve length 23″
Armhole (Straight, point to point) depth 10″
Sleeve bottom opening circumference @ centre 10″
Cuff height 3½″
Neck circumference closed 18″
Collar height at CB (without neck band) 5″
Chest Pkt width @ top 5″
Chest Pkt length @ centre 5¾″
Solution:
The main fabric consumption =
[( Max body length × Max body width × number of panel)

+ ( Sleeve length × Width × number of sleeve ) +
( Cuff length ( circumference of sleeve bottom open )) × width × 2) +
( Collar width × length ) +
= ( Pocket width × Pocket length × number of pockets)] + waste %
( Fabric width − selvedge) × 39.37
=
{ ( 33 × 25 × 2) + ( 23 × 20 × 2) + (10 × 3.5 × 2) + (18 × 5 × 1) + ( 5 × 3.75 × 1)}
( 58 − 1) × 39.37
Where, the chest circumference value of 50” is taken as half 25” for the
front alone. In the case of sleeve, the total sleeve width is the double the
value of armscyle depth. Hence the 10” multiplied by 2 and taken for
calculation.
{ (1650) + ( 920) + ( 70) + ( 90) + (18.75)}
=
( 58 − 1) × 39.37
{ 2748.75}
= +5% = 1.22488 metres / Shirt
( 58 − 1) × 39.37
The total order quantity is = 2770
Expected waste % = 3
If we include the waste % with order quantity then, the total quantity is
2853 shirts.
Hence, the fabric required to produce the order quantity with waste % is
= Order quantity × Consumption of a single garment
= 2853 × 1.22488
Total fabric required =3494.70 metres.
Example 5: Calculate the fabric consumption per garment in gram. Short
sleeve Men’s Basic round neck T-shirt made-off 100% Cotton and 140 GSM
Single jersey fabric. The neck covered with 1 × 1 ribs fabric with GSM of
200. The measurements are as follows, Chest width – 60 cm. Length – 70 cm,
Sleeve length – 24 cm, Armscyle depth 20 cm, Neck rib width – 3 cm and
Neck width 18 cm.
Solution:
( length × width × number of components ) + 
  × GSM
( length × width × number of components ) 
10, 000 × 1000
 ( Area offront ) + ( Area ofback ) +  
  * GSM 
 ( Area of sleeve × 2)  
= 
10, 000 ×1000
=
{ ( 70 × 60 × 2) + ( 24 × 40 × 2)  × 140}
10, 000 × 1000
{[8400 + 1920] × 140}
=
10, 000 × 1000
14, 44,800
10, 000 × 1000
Fabric consumption for 1 × 1 rib,
{[ Length of neck rib × width ] × GSM}
10, 000 × 1000
=
{ 3 × (18 × 2)  × 200}
10, 000 × 1000
=
{[108] × 200}
10, 000 × 1000
21, 600
10, 000 × 1000
The body fabric weight in gram / garment = 0.14448 × 1000 = 144.48 gram
The neck fabric weight in gram / garment = 0.00216 × 1000 = 2.16 gram
3.4.4 Sewing threads – consumption calculation

Several factors determine the extent of thread consumption in any sewn
product, such as stitch type, seam type, material thickness; number of layers,
construction and SPI (stitches per inch). However, these factors are not con-
stant with the different style preferences. Hence, thread consumption is never
standard for sewn product categories such as shirts, trousers and footwear.
There are two methods generally used to calculate the amount of thread in a
seam and hence the thread consumption in the sewn product:
1. By measuring the actual amount of thread consumed
2. By calculation using thread consumption ratios
Method 1: Measuring actual thread consumed

A specified length of a given seam is measured and then the thread is pulled
out of this length. We can use the amount pulled out of this specified length
to calculate the ratio of thread consumed in the entire seam. By dividing the
amount of thread by the seam length, we get the ratio of thread consumed. If
we multiply this factor times the total length of seam, we can determine the
total thread consumed for that seam.
Example: 1 Calculate the sewing thread consumption in a 15 cm length 2
thread chain stitch (402).
Solution:
• Length of seam for which thread is removed = 15 cm
• If we assume the needle thread removed is of 19.5 cm length, then
the needle thread factor can be calculated as follows:
Needle thread length
Needle thread factor = = 19.5/15 = 1.3
Original stitch length
If we assume the looper thread removed is of 62 cm length, then the

looper thread factor can be calculated as follows:
Needle thread length
Looper thread factor = = 62.0/15 = 4.1
Original stitch length
Hence, from this to calculate the thread consumed for any unit length of
seam, for example, the thread consumption for 1 metre (100 cm) of stitch is,
Actual thread consumption = Length of the seam × Thread
factor ratio
For 100 cm stitch the total needle thread = 100 cm × 1.3 = 130 cm
For 100 cm stitch the total looper thread = 100 cm × 4.1 = 410 cm
Total thread consumed = 130 + 410 = 540 cm
Add 5% wastage* = 540 cm × 1.05 = 567 cm
*Note: Generally, 5%–15% wastage of thread is added to the consumption
derived. This wastage occurs due to shop-floor conditions like machine run-
ning, thread breakage, repairs, etc. The above example shows the total thread
consumed for one type of stitch class in a garment. By following a similar
procedure, you can calculate the thread consumed for different stitching op-
erations in a garment.
Method 2: Thread consumption ratios

The easier method is to use the generally applicable thread consumption ratios for
the various stitch types that are listed in Table 3.19. By relating these ratios to the
length of seams using each stitch type, total thread consumption can be calculated.
Table 3.19 Thread consumption ratio for different stitch types and machines
Total thread
Looper / under
Stitch usage (cm per No. of Needle
Description (incl. cover)
Class cm of seam) / needles thread %
threads %
thread ratio
301 Lock stitch 2.5 1 50 50
101 Chain stitch 4.0 1 100 0
Two thread chain
401 5.5 1 25 75
stitch (over lock)
304 Zigzag lock stitch 7.0 1 50 50
Two thread over edge
503 12.0 1 55 45
stitch (over lock)
Three thread over
504 14.0 1 20 80
edge stitch (over lock)
Four thread mock
512 18.0 2 25 75
safety stitch (over lock)
Table continued...
Five thread safety

516 20.0 2 20 80
stitch (over lock)
Three thread covering
406 18.0 2 30 70
stitch (flat lock)
Four thread covering
602 25.0 2 20 80
stitch (flat lock)
Five thread covering
605 28.0 3 30 70
stitch (flat lock)
Here, the above ratios are arrived at with a stitch density of 7 stitches per
cm (18 stitches per inch). These ratios are the prescribed minimum in regular
conditions and marginally vary with the factors affecting thread consump-
tion. A certain percentage of wastage is to be added to the above ratios as per
shop floor conditions. It may vary from 5% to 15%.
3.4 Sewing Thread Numbering System

Thread sizes are communicated through various numbers and numbering
systems which are derived by relating its unit length and weight.
Fixed Weight Systems
In this system, unit weight is taken as fixed and its length is measured
Systems under fixed weight:
• English Count (Ne) = Number of hanks of 840 yards/lb
• Metric Count (Nm) = Number of hanks of 1,000 meters/kg
In fixed weight systems, the yarn becomes finer as the count number
increases.
Fixed Length Systems
In this system, unit length is taken as fixed and its weight is measured
Systems under fixed length:
• Denier = Weight in grams of 9,000 meters
• Tex = Weight in grams of 1,000 meters
• Decitex = Weight in grams of 10,000 meters
In fixed length systems, the yarn becomes coarser / heavier as the count
number increases.
Generally, Metric count is used to describe synthetic, spun and core
spun thread while English count is used to specify cotton thread. Filament
threads are normally expressed with Decitex or Denier.
Note: Even, the buyer / customer didn’t provide any information about the
sewing machine details, most of the time the merchandiser need to aware of
the garment operation breakup and the suitable machinery for that particular
operation by so the merchandiser need to assume based on the previous expe-

rience with same or similar styles in the past time.
Example 1: The following “Girls’ night pant” with the order quantity of
8550 pcs were received by AXN Pvt Ltd. The average rejection rate of the
company is 7%. All the sewing process are needs to be done with 3 thread
over lock and top stitch at waist band, ankle rib and side seam are with 5
thread flat lock. Consider that all the needle threads are in red colour and
looper threads are in white colour. Calculate the total sewing thread quantity
required to complete the order, also mention the colour wise requirement.
Measurements in Figure 3.19 are in cm.
Figure 3.19 Style and measurement details of girls’ night pant
Solution:
The provided order quantity = 8550 pcs
The average rejection rate 7%, hence total quantity needs to be produced,
= 8550 + (8550 × 7%)
= 9149 garments
Note: Since 4 sizes are there, the consumptions need to be calculated for
the size 68.
Calculation of total stitch length:

The summation of following measurements will give the total seam length,
= (waist length (BB) × 2 + (Side seam length (MF-LHU) × 2 sides) + (In-
seam length (MF-R) × 2 sides) + Front rise (R-LHU) + back rise (RB-
LHU) + (Bottom rib attach (DWO) × 4 sides)
From figure, following details regarding the measurements can be
obtained,
• For waist measurement – BB should be used – It is half of waist
circumference. Hence, BB × 2 will provide the exact waist
circumference
• Fore side seam, the full length of the garment MF is given, if we
reduce the waist band width from MF, the side seam length can be
obtained (MF-LHU)
• In case of front and back rise, reduce the waist band width (LHU)
from provided measurement and can be used
• In bottom rib attachment, the measurement DWO is half of the full
circumference, hence for both the leg, DWO can be multiplied by 4.
= (27 × 2) + ((36-3) × 2) + ((33-15) × 2) + (18-3) + (21-3) + (11.5 × 4)
= 54+66+36+15+18+46 = 235 cm
Hence, the total seam length = 235 cm.
For 3 thread over lock machine thread consumption

In general, 1 cm 3 thread over lock stitch consists of 14 cm sewing thread, in
that 20% needle thread and 80% looper thread.
Hence, for 235 cm stitch, the consumption is,
= 235 × 14 = 3290 cm.
Needle thread consumption per garment is 20% of 3290 cm.
20 
= 3290 ×  = 658 cm / garment
 100 
Total needle thread for order quantity,
= 658 × 9149 = 60,20,042 cm or 60,200.42 metres
Looper thread consumption per garment is 80% of 3290 cm
 80 
= 3290 ×  = 2632 cm / garment
 100 
Total looper thread for order quantity,
= 2632 × 9149 = 2,40,80,168 cm or 2,40,801.68 metres
For 5 thread flat lock machine thread consumption

The flat lock machine is used in three places, namely waist band, ankles rib
and side seam top stitch. Hence, those stitch lengths must be added for the
total seam length.
= (Waist band total length + Side seam total length + Ankle total length)
= 54+66+46 = 166 cm
In general, 1 cm 5 thread flat lock stitch consists of 28 cm sewing thread,
in that 30% needle thread and 70% looper thread.
= 166 × 28 = 4648 cm.
Needle thread consumption per garment is 30% of 4648 cm
 20 
= 4648 ×  = 929.6 cm / garment
 100 
Total needle thread for order quantity,
= 398.4 × 9149 = 8504910.4 cm or 85049.1 metres
Looper thread consumption per garment is 70% of 1328 cm
 70 
= 4648 ×  = 3253.6 cm / garment
 100 
Total looper thread for order quantity,
= 3253.6 × 9149 = 29767186.4 cm or 297671.86 metres
• It is mentioned that, all the needle threads are in red colour. Hence
sum up all the needle thread lengths,
= (Over lock machine needle thread length) + (Flat lock machine needle
thread length)
= 60,200.42 + 85049.1 = 145249.52 metres
• Industrial sewing threads are generally available in 5000 metre cones.
Hence, the number of cones required for the order quantity,
145249.52
= = 29.04 cones.
5000
Approximately 30 red cones needed to complete the order.
•• It is mentioned that, all the looper threads are in white colour, hence
sum up all the needle thread lengths
= (Over lock machine looper thread length) + (Flat lock machine looper
thread length)
= 2,40,801.68 + 297671.86 = 538473.54 metres
• Industrial sewing threads are generally available in 5000 metre cones.
Hence, the number of cones required for the order quantity,
538473.54
= = 107.69 cones.
5000
Approximat 108 white cones needed to complete the order.
Example 2: Calculate the sewing thread consumption for the hooded

T-shirt and mention the total thread consumption per garment by consider-
ing needle thread and looper threads are of same colour. Figure 3.20 repre-
sents the style and measurements of garment. Other quality specifications
were as follows:
• Consider all the stitches were performed by 3 thread over lock
machine
• Front pocket attachment performed using Single needle lock stitch
(SNLS) machine
• Five thread flat lock machines were used in the following areas,
Sleeve cuff attachment, bottom rib attachment, Tops stitch on shoul-
der and armscyle, Hood front hem and hood centre joint.
Figure 3.20 Style and measurements of hooded T-shirt
Solution:
Note: Since 8 sizes are there, the consumptions need to be calculated for the
size 128/134, the 5th size.
Calculation of total stitch length for over lock machine

From Figure 3.20 the summation of following measurements will give the
total seam length,
= {(Shoulder length (E) × 2 sides)+ (Armscyle depth (G) × 4 sides) +

(Sleeve length (F) × 2 sides) + (Sleeve open (GAB) × 4 sides) + (Side
seam (PS - G) × 2) + (Bottom rib attach (DB) × 2 sides) + (Hood at-
tach at Neck (JB) × 2) + (Hood attach at centre (KPH+KPB)) + pocket
preparation (A+B)}
From figure, following details regarding the measurements can be
obtained,
= (9 × 2) + (16 × 4) + (46 × 2) + (13 × 4) + ((51-16) × 2) + (40 × 2) + (28
× 2) + (23+29) + 17+23
= 524 cm of over lock stitch.
For 3 thread over lock machine thread consumption,

In general, 1 cm 3 thread over lock stitch consists of 14 cm sewing thread, in
that 20% needle thread and 80% looper thread.
= 524 × 14 = 7336 cm.
For 5 thread flat lock machine thread consumption,
Five thread flat lock machines were used in the following areas, Sleeve cuff
attachment, bottom rib attachment, Tops stitch on shoulder and armscyle,
Hood front hem and hood centre joint. Hence, those stitch lengths must be
added for the total seam length.
= {(Shoulder length (E) × 2 sides) + (Armscyle depth (G) × 4 sides) +
(Sleeve open (GAB) × 4 sides) + (Bottom rib attach (DB) × 2 sides) +
(Hood attach at centre (KPH+KPB)) + (hood front hem (KPF) × 2)}
= (9 × 2) + (16 × 4) + (13 × 4) + (40 × 2) + (23+29) + (32.5 × 2)
= 331 cm of stitch – 5 thread flat lock machine stitches user per garment
= 331 × 28 = 9268 cm.
For single needle lock stitch machine thread consumption
The single needle machine is used in the pocket preparation and attaching
operation. The pocket hem at both the sides (C–D) considered as preparation.
Pocket attaching with front panel for the top (A) and bottom (D+B+D) side
considered as attaching operation.
Hence, the total stitch length is,
= (Pocket Hem × 2) + (Attaching 3 sides (A+B + (D × 2)))
= (18-6) × 2 + (17 +23 + (6 × 2)) = 76 cm / garment
In general, 1 cm single needle lock stitch consists of 2.5 cm sewing
thread, in that 50% needle thread and 50% bobbin thread.

= 76 × 2.5 = 190 cm.
The total consumption of sewing thread for a single garment,
= Over lock thread length + Flat lock thread length + Single needle lock
stitch length
= 7336 cm + 9268 cm +190 cm
= 16794 cm or 167.94 metres of sewing thread required.
Note: Since, all the sewing threads used in the garment are same colour, ir-
respective of whether needle thread and looper thread, there is no need to
identify the separate consumption for needle and looper.
3.5 Factors affecting sewing thread consumption

• Thickness of fabrics
• Plies of fabrics to be sewn
• Stitch typeStitch density
• Width of seam
• Garment size
• Design of the apparel
• Automatic thread trimmer of that machine
• Skill of the operator
• Quality of thread
Example 3: Calculate the sewing thread consumption for order “AQC 5554”
with 10750 garments and the measurements are provided in Table 3.20. For
sewing purpose, 4 thread over lock and 3 thread flat lock machines were
used. All the sewing threads are same colour. Assume the necessary other
details and calculate the consumption.
Table 3.20 Measurements of order “AQC5554”

Symbol Description Measurements in inch
A Shoulder width 17.5″
B Neck width 7.25″
C Sleeve length 8.5″
D Armscye depth 9″
E Full length 29″
F Sleeve hem opening 6.25″
G Chest circumference 29″
H Bottom hem opening 29″
I Sleeve side seam 3.25″
Solution:
Since, the application area of flat lock and over lock machines were not
provided, for the given measurement first draw a rough picture of the gar-
ment and mention the application area for better understanding. Figure 3.21
shows the diagram of T-shirt with given measurements.
Figure 3.21 T-shirt picture with measurements marked for order “AQC 5554”
Consumption for over lock thread: = Shoulder length (A -B) + (Armscyle

depth (D) × 4) + Side seam (E-D) + (Sleeve seam (I) × 2)
= 10.25 + (9 × 4) + (20 × 2) + (3.25 × 2)
= 92.75 inches, to convert into centimetres, multiply by 2.54
= 235.58 cm.
In general, 1 cm 4 thread over lock stitch consists of 18 cm sewing
thread, in that 25% needle thread and 75% looper thread.
Hence, for 235.58 cm stitch, the consumption is,
= 235.58 × 18 = 4240.44 cm.
Consumption for flat lock thread: = (Sleeve Hem (F) × 4) + (Bottom hem (H) × 2)
= (6.25 × 4) + (29 × 2) = 83 inches = 210.82 cm
= 210.82 × 18 = 3794.76 cm
Since, all the threads are of same colour, no need for needle thread and
looper thread calculations. Hence, the total consumption per garment is,
= Over lock thread length + Flat lock thread length
= 4240.44 cm + 3794.76 cm
= 8035.2 cm / garment.
The consumption for total order quantity is,

= 8035.2 × 10750
= 8,63,78,400 cm or 8,63,784 metres.
Number of cones required to complete the order,
8, 63, 784
= = 172.756 or 173 cones
5000
3.4.5 Other raw material consumptions

The other raw material represents the materials used during garment prepara-
tion either directly on the garment or along with the garments. Generally the
following raw materials used in the garment manufacturing, for which the
merchandiser needs to calculate the total requirement for a single garment or
for an order.
1. Buttons
2. Labels
3. Inter lining materials like nonwoven, canvas, etc.
4. Hooks
5. Zippers
6. Tapes
7. Elastics
8. Tags, Poly bags, stickers and other packing materials
9. Cartoon boxes, etc.
For all this raw materials, the merchandiser will receive informations
from buyer regarding the quality and requirement specification. With the
sample he or she can understand how many numbers of particular (but-
tons, labels, hooks, zippers, etc.) raw materials or how many centimetres
(length) of (Twill tape, elastics, etc.) particular product is required per
garment and so he or she can estimate the total numbers for the order
quantity.
In this case, the important note is, the merchandiser should aware of the
company efficiency either from previous history or from similar order situa-
tions in past. Based on that merchandiser should include certain amount of
waste percentage to the particular raw material. However, based on the cost
of the raw material, the merchandiser can seek for special attention on that
particular raw material usage / attachment area in the production floor, where
he / she cannot offer extra percentage of quantity.
3.6 Difference between Trims and Accessories

Trimmings Accessories
Technical The materials which are attached The materials which are not attached
Definition with the body of garments by with the body of garments by
sewing are termed as trimmings sewing, only used for garments
finishing and packing are termed as
accessories
Non-Technical Trimmings are the ultimate Accessories are the ultimate
Definition materials that are attached with materials that are not attached with
the garments while using by the the garments while using by the end
end users. users
Key Point Trimmings are used as functional Accessories are used as decorative
purposes purposes
Example Sewing Thread, Button, Carton, Gum Tape, Poly bag, etc.
Interlining, etc.
An another important information which merchandiser needs to know re-

garding this kind of other raw materials is the “Unit of Measurement” (UoM).
This one the influencing factor for merchandiser during sourcing of material.
He or she should be aware of the individual items correct UoM, this will help
merchandiser in cost control and also avoid usage waste. Table 3.21 repre-
sents the different raw materials and their unit of measurements.
Table 3.21 Raw material and their unit of measurements

S. No. Materials UoM
1 Label, Zipper, Hang Tag, Per unit
Carton box, Rivets, Hanger
2 Laces, Elastics In meters (50 meter or 100 meter roll)
3 Tape, Velcro In meters (roll) or m/Kg
4 Buttons Gross (12 Dozens – 144 units )
5 Shanks Gross
6 Polybag Unit (Based on GSM)
7 Sewing thread Cone (2000 or 5000 meter)
3.5 Factory capacity planning

For merchandiser, at the initial stage while he communicate with the buyer,
he should have some knowledge about the factory available capacity, labour
skill level and machine capacity along with factories technology up grada-
tion details. This will help the merchandiser to solve the queries in the “order
communication” stage, queries related to machine availability, technology
facility with the factory. However, based on the factory size and capacity,
there might be a production planning department with professional people to
perform this analysis and provide the necessary data to the merchandiser. In
the case of medium and small size industries, the whole process needs to be
performed by merchandiser. In general, to handle hard situations it is good
for a merchandiser to have sound basic knowledge about the capacity cal-
culations. The general formula used for the calculations are provided below.
Operator efficiency =
No of pieces produced by an operatorxSMV of particular jobx100
Total number of hours worked
Total minutes produced in the line x100
Line efficiency =
Total minutes allocated by all operation
Total output in the line × SMV of the garment ×100
= Workinghour × 60 × Number of operators

No of machine in line × working hours × 60 × line efficiency
Line capacity =
GarmentSMV
60
Expected number of pieces / hour = × Line or factory effeciency
GarmentSMV
Total operator required
=
(SMV × Production per hour ) ×  1   1 
60  Line efficiency  ×  Attendance % 
Line planning is another important task for merchandiser and production

planning department. It is a process of scheduling and allocating of orders to
production lines according due dates of production completion. A line plan-
ning process tells “when a style is going to be loaded to the line? “how many
pieces to be expected (target) from the line and when order to be completed”.
So in order to allocate the line properly to meet the due date it is mandatory
to know the capacity details and skill level of the line or factory or plant. This
will help the merchandiser during booking orders or allocating orders to the
production line. The following examples will help to understand the capacity
calculations in a better way.
3.5.1 Sewing department capacity calculation – Line ef-

ficiency and capacity
Once, the order confirmed, merchandiser will receive particulars about
order quantity details and target delivery dates. Based on the target date,
merchandiser need to work and prepare the time and action plan. In that ac-
tivity he/she needs to identify the number lines, operators required in each
production department to reach the target.
Example 1: Consider that a company has received an order with target date
as 20 days from today the order quantity is 25,000, total garment SMV is
6.74. Consider the following data as input, factory line efficiency – 65%, each
line works with 15 operators. Calculate number of lines required to complete
the order within the target date.
Solution:
The order quantity = 25,000 garments
Target day = 20 days
Hence, first identify the hourly target of this order
Order Quantity
(i) Target / day =
Target days
25, 000
= = 1250 garments / day
20
Target per day 1250
(ii) Hourly target = = = 156.25 gar-
Total workinghours 8
ments / hour
No of machine in line × working hours × 60 ×
(iii) Line capacity = line efficiency
GarmentSMV
15 × 8 × 60 × 0.65
6.74
Hence, a line can produce 694 garments / day, in 20 days the line can
produce,
= 694 × 20 = 13,880 garments.
But the actual order quantity is = 25,000. So, to complete that,
25, 000
= = 1.801 ~ 2 lines required to complete the order in 20 days
13,880
Example 2: A factory producing girls top at the standard minute value of

5.75 with the order quantity of 85,000 pieces. The average production of
the factory is, 800 garment / 8 hour shift with 10 operators in individual
line. There is only one line left free during this period. Hence, calculate
the number of operators required to complete the order in 38 days using
single line.
Solution:
The line efficiency was not provided in this data; hence, to calculate the num-
ber of operators, we should identify the line efficiency first. So,
Total output in the line × SMV of the garment × 100
Line efficiency =
Workinghour × Number of operators
800 × 5.75 × 100 4, 60, 000

= = = 95.83 %
8 × 60 × 10 4800
Orderquantity
Target / day =
Target days
85000
= 2236.8 garments / day
38
Target per day 2236.8
Hourly target = = = 279.6 ~ 280 garments / hour
Total workinghours 8
Total operator required
=
(SMV × Production per hour ) ×  1   1 
60  Line efficiency  ×  Attendance % 
5.75*280  1 
= *
 0.9583 
= 27.95 ~ 28 operators / line
60
Hence, to complete the order in 38 days with one single line, 28 opera-
tors required.
Example 3: A company received an order with the following yarn dyed la-
dies top in Figure 3.22 and calculate the number of machines, operators and
lines required to run the order with following details. The order consist a total
quantity of 73,000, factory works 480 minutes per day, target days 45. Cal-
culate the average SMV @ 100% efficiency for each operation and calculate
number of lines required to complete the order within the target date by con-
sidering the line efficiency of 65%.
Solution:
Order quantity = 73,000 garments
Working hours= 480 minutes = 8 hours
Target days = 45
73000
Hence, the target per day is = = 1622.22 garments per day
45
1622.22
Target / hour = =202.7 ~ 203 garments per hour
8
Figure 3.22 The yarn dyed ladies top
Since, the garment picture was received from the buyer, merchandiser
need to identify the detailed operation breakups to know the correct SMV of
the whole garment. The detail breakup is provided in Table 3.22.
Table 3.22 Operation breakup and SMV allocation for yarn dyed ladies top
S. No. Operations M/C used SMV Output/hour No. of operators
One shoulder 203 0.6 ~ 1
1 O/L 0.2 300 =
attachment 300
203
2 Neck binding SNLS 0.6 100 = 2.20 ~2
100
Other shoulder
3 O/L 0.2 300 0.6 = 1
attachment
4 Pocket preparation SNLS 0.4 150 1.34 = 1
5 Pocket attachment SNLS 0.3 200 1.01 = 1
6 Sleeve hem F/L 0.4 150 1.34 = 1
7 Sleeve attachment O/L 0.3 200 1.01 = 1
8 Side seam O/L 0.45 133 1.51 =2
9 Bottom hem F/L 0.3 200 1.01 =1
Total
Total SMV 3.15 11
operators
Note:
i) To calculate expected number of pieces / hour
60
= × Line or factory effeciency
Garment SMV
Target ( Production perhour )
ii) Expected number of operators =
Capacity ( Actual production per hour )
To calculate the line capacity,


Line capacity =
GarmentSMV
11 × 8 × 60 × 0.65
=
3.15
= 1089.52 garments / day for 65%
efficiency
Hence, a line can produce 1090 garments / day, in 45 days the line can
produce,
= 1090 × 45 = 49050 garments.
73000
= = 1.48 ~ 1.5 lines required to complete the order in 45 days.
49050
Which means, with the available efficiency to achieve the target, the ex-
isting line with 11 operators need to be extended by adding extra operators at
critical operations like side seam, pocket preparation and neck binding, where
the SMV slightly high. This will help the line to achieve the target in time.
Hence, the number of machine required:
Over lock machine = 4
Flat lock machine = 2
SNLS machine = 3
No. of operators required = 11
Total SMV of garment = 3.15
With existing operator and efficiency, to complete the target quantity in
45 days company required 1.5 lines to run the order.
3.5.2 Capacity calculation for other departments

In other department of apparel industry like cutting, checking, finishing and
packing, also the actual capacity of any operation can be computed based on
the SMV of that particular operation. For calculating capacities for different
operations in the other departments, the identification SMV for those opera-
tions will be critical. Most of the time the SMV values of these department
activities will be provided to the merchandiser. The production planning de-
partment will be taking care of these calculations.
(i) Cutting department
In cutting department, the operations involved are spreading, marking, cut-
ting, fusing, re-laying, re-cutting, sorting, enumeration and bundling. The
critical issue in this process is calculation of Standard Allowable Minutes
(SAM) for one piece of garment or component. Because, once the cutter cuts
components of multiple garments at a time. The cutter may cut ten plies or
one hundred plies using a cutting machine, the cutting time can largely stay
same. Primary variables influences the calculation of cutting SMV are layer
number during a lay, range of markers during a lay.
The general steps involved in the calculation of SMV for cutting, check-
ing, finishing and packing operations,
• Do cycle time of jobs (time study for five – ten cycles)
• Do performance rating ( Assess how fast or slow the operator doing
the task in 1–100 scale)
• Calculate basic time (Basic time = cycle time × performance rating)
• Add allowances (machine allowance + personal fatigue)
• Calculate standard minutes (SAM = Basic time + Allowance
percentages).
For getting exact SAM of cutting department, we need to identify and
calculate the Standard Minute Value (SMV) of different operations like
spreading, marker making, cutting, re cutting, bundling and sorting process.
For all this process the SMV can be calculated as mentioned in previous step.
Finally these SMVs can be added together to get the cutting SMV of single
garment. Table 3.23 provides the units of cutting operation SMV calculations.
Table 3.23 Units for cutting operation SMV calculation

S. No. Operations Units for cutting operation SAM
1 Spreading Calculate the total SMV for a spread and identify the SMV
for a layer
2 Marker making Marking SMV / marker; in case of CAD marker SMV/ lay
3 Cutting Calculate SMV / lay
4 Fusing SMV / garment
5 Re-cutting SMV/ Lay based on number of layers
6 Sorting SMV / lay
7 Number SMV / component and multipy by number of components

stickering to get SMV/ garment
8 Bundling SMV / Marker
(ii) Checking, finishing and packing

Other than cutting process, the garment checking, finishing and packing pro-
cess are performed individually for every garment. Hence, there won’t be
much confusion. Based on the study we can identify the SMV of any opera-
tions directly using the previously mentioned steps.
Example 1: Consider the cutting department of ABC Fashions Pvt Ltd, re-
ceived an order from France based customer. The order details are provided
along with Figure 3.23.
Total order quantity = 25,000 garments,
Style description = Basic round neck T-shirt for girls.
Calculate the number of days required to complete the order.
Figure 3.23 Garment style – Basic round neck T-shirt for girls
Solution:
Step 1: Calculate the available capacity of the cutting room
Assume, the cutting department works with 6 labours, 480 minutes / day with
the efficiency of 75%.
Note: These informations can be obtained from the previous data of the par-
ticular department by considering the similar work time (SMV) of garment
Hence, the actual capacity is = the available minutes in the cutting
department,
=N o. of operators × Working hours / day × 60 × Factory efficiency ×
(100-absenteesm %)
= 6 × 8 × 60 × 0.75
= 2160 minutes / day
Step 2: Calculate the required capacity
To calculate the actual capacity of the cutting room, first we need to identify
the SMV of the cutting operation. As discussed earlier, assume average cut-
ting same for the garment is 1.85.
Then, the required capacity of the cutting room is,

= Order quantity × Cutting SMV of a garment
= 25,000 × 1.85 = 46,250 garments
Hence, the number of days required to complete the cutting process is,
46, 250
= = 21.45 days required to complete the order.
2160
3.7 Fabric utilisation percentage

To calculate utilisation percentage in cutting, the details regarding
• Lay length
• Lay width
• GSM and
• Numbers of plies in a lay are required.
Weight of the cut panels
Fabric utilisation percentage = ×100
Total weight of the Lay
• Here, total lay weight is,
• = Lay length × lay width × GSM × Number of plies used
• To calculate the weight of the cut panes, measure the weight of the
waste from the lay and minus the waste weight from the total lay
weight.
Example 2: A company received an order of polo T-shirt, with order

quantity of 10,000 garments. After sewing process, the finishing depart-
ment need to checked and pack the garments for shipment. The company
works 8 hours per day with 12 checkers and 10 packers, checking SMV
per garment is 1.85, the SMV for folding and packing is 1.35 minutes and
the factory efficiency is 80%. Calculate the number of days required to
complete the order.
Solution:
Order quantity = 10,000 garments.
Overall checking and packing SMV = 0.85 + 1.35= 2.2 minutes
The actual capacity of the checking department is,
No of operators in line × working hours × 60 × line efficiency
=
GarmentSMV
12 × 8 × 60 × 0.80
1.85
Order quantity
Hence, days required to complete the order is =
Per day production
10, 000
= = 4 days.
2491
The actual capacity of the packing department is,

No of operators in line × working hours × 60 × line efficiency
=
GarmentSMV
10 × 8 × 60 × 0.80
1.35
Order quantity
Hence, days required to complete the order is =
Per day production
10, 000
= = 3.5 days.
2844
These calculations are some of the examples for the need of the merchan-
diser to know these capacity related details. With this he or she can plan the
forthcoming order with respect to any department. However in large scale in-
dustries these capacity details will be directly provided to merchandiser from
the planning or Industrial Engineering department in a weekly basis. It is also
important that a merchandiser should have the skills to breakup and develop
the operation bulletin of the garment and knowledge on Standard Minute val-
ues of the garment. So that it will help merchandiser on spot to decide the
approximate time required and production expected. He or she should be ex-
pertise in breaking up any garment from simple to complicated styles. Once,
the order is accepted into the factory, then only the planning department and
Industrial Engineering departments can do that job for bulk. At the initial
stage most of the time its merchandisers solo responsibility. That decision
whatever he or she makes based on her / his knowledge going to decide few
things like,
• Is this order can be performed in our factory? – By considering style
complications and technical or technological facility requirement
• Can we able to deliver the product quantity on time? – Capacity of
the department and factory
• Will the company get the expected level of profit out of the order? –
considering style complication and cost factors.
Ultimately these questions will lead the merchandiser to a situation
whether to accept the order or to reject the order. Obviously it is a huge de-
cision for the company and for himself. But this decision most of the time
based on merchandisers own assessment of the garments requirements and
their companies skill set. Hence, it is advisable for a merchandiser to get
to know these details. The following examples are provided to improve the
understanding of the calculations in various situations. In here, the details are

pooled together and presented as expected in the real time situation of mer-
chandiser’s responsibility.
3.8 GSD – GENERAL SEWING DATA

General Sewing Data (GSD) is a PTS (Pre-determined Time Standards)
based time measuring system. GSD provides a scientific, ethical and au-
ditable approach to quantifying manufacturing methods, times and costs
and accurately and consistently establishes International Standard Time for
complete products (styles), or individual product components (features).
GSD provides the ability to establish and quantify each step or operation in
the manufacturing process.
GSD provides fast, accurate rates in a fraction of the time compared
with other systems. For every facility and style change option, GSD allows
pre-costing of various stages of manufacturing. The system provides relia-
ble, measurable information on:
• Optimum Standard Allowed Minute values
• Production-run efficiency (overall & component)
• Costing per style
• Performance related indices
Example 1: A knitted fabric fabricated with 30s combed yarn with 80 CPI,
60 WPI, 0.95 mm loop length. Knitting shrinkage is 7%, dyeing add on is
5%, by using the developed fabric, round neck T-shirt with 65 cm length,
90 cm chest circumference, 22.5 armscye, 30 cm sleeve length was manu-
factured neck width of 14 cm, rib width = 2 cm with same GSM. The order
quantity of this style is 73,000 garments. Delivery due date is 45 days from
today, the factory works 480 min/day. The company works with 15 operators/
line and the line efficiency is 75%. Calculate
i. GSM of the fabric
ii. Average consumption per garment
iii. SMV for the style
iv. Number of lines required to meet the target.
Solution:
(i) GSM of the fabric
1000
( 60 × 80) × ( 39.384) × ( 39.384) × 0.95

1000
4800 × 1551.0994 × 0.95
=
1000
Count ( Ne) × 100
0.59 × 7073.01 × 107

=
30 × 100
= 148.84 grams / sq.m
GSM of the fabric after dyeing= Total fabric GSM × Dyeing shrinkage
= 148.84 ×  
 100 
100 + 5 
= 148.84 ×  
 100 
Fabric weight after dyeing = 156.281 grams / sq.m
(ii) Fabric consumption
 ( Length × width × number of panels ) +  

  × GSM 
 ( Length × width × number of panels )  
= 
10, 000 × 1000
   ( 22.5 × 2) ×  
 ( 65 × 45 × 2) +   + ( 2 × (14 × 2) )  × 156.28
   30 × 2   
= 10, 000 × 1000
{[5850 + 2700 + 56] × 156.28}

=
10000 × 1000
1344945.68
Main body fabric consumption = = 13449 kg fabric
10000*1000
Fabric consumption – 134.48 gram / garment
For 73,000 garment, the fabric required is = 9818.10 kg
(iii) Development of operation bulletin

The detailed operation breakup of the basic round neck T-shirt as per the
given measurement is provided in Table 3.24.
The order quantity is = 73,000
Target duration = 45 days
73, 000
Hence, the required output is = = 1623 garments / day
45
Since, the company works 8 hour per day,
1623
Target / hour = = 203 pcs per hour
8
Table 3.24 Operation breakup and SMV allocation for basic round neck T-shirt
Output/
S. No. of operators (to
Operations M/C used SMV hour
No. get target)
@75% eff
Two shoulder 203 1.57 ~ 2
1 O/L 0.35 129 =
attachment 300
203
2 Neck rib attach O/L 0.6 75 = 2.70 ~3
75
3 Neck rib finish F/L 0.35 129 1.57 ~ 2

4 Sleeve hem F/L 0.45 100 2.03 ~ 2
5 Sleeve attachment O/L 0.45 100 2.03 ~2
6 Side seam O/L 0.55 82 2.47 ~ 2
7 Bottom hem F/L 0.35 129 1.57 ~ 2
8 Sleeve tacking SNLS 0.25 180 1.12 ~ 1
Total Total
3.35 16
SMV operators
Total garment SMV =3.35

Number of operators required to achieve the target = 16
iv) Number of lines required to meet the target
To calculate the line capacity,

Line capacity =
GarmentSMV
15 × 8 × 60 × 0.75
= = 1612 garments / day for 75% efficiency
3.35
Hence, a line can produce 1612 garments / day, in 45 days the line can produce,
= 1612 × 45 = 72,537 garments.

73, 000
= = 1.0063 ~ 1 line required to complete the order in 45 days.
72,537
The result can interpreted as follows,
By actual calculation from the operation bulletin, the line required 16
operators to meet the exact target per hour so that the order quantity can be
completed within 45 days. However, since, the factory works with 15 opera-
tors in a line, the number of line required in 1.006. If we work with 15 opera-
tors the line will be in shortage of approximately 500 garments. Hence, based
on this the merchandiser can decide, whether to go with the existing set up or
to add up one more operator.
Example 2: Company XYZ received an order with a measurement sheet and
photo graph of a garment. The customer want to develop 10,000 pieces with
size ratio of 1:2:2:1 (S, M, L, XL) with two colour with sizes green, yellow.
The fabric parameters are 72 CPI, 60 WPI, 40s Ne, 1.25 mm length knitting,
processing compacting shrinkage percentage are 5%, 8%, 5%. The average
rejection rate of company is 3%. Calculate the following,
a) GSM of the garment
b) Fabric consumption
c) Size wise colour wise breakup quantity with 3% waste
d) The amount of sewing thread required at 8% waste assume all opera-
tion are done at 5 thread over lock machine and the sleeve and bottom
hem performed with 3 thread flat lock machine. Given measurements
in inches as follows,
Shoulder width=17.5; Neck width=7.25; Sleeve length=8.5; Arms-
cye depth=9; Full length =29; Sleeve hem opening =5.5; Chest circumfer-
ence=21; Sleeve side seam=3.25, Bottom width 21.
Solution:
1. GSM calculation:

1000
( 72 × 60) × ( 39.384) × ( 39.384) × 0.85
1000
5695637.202
= 1000
0.59 × yarn length in m × (100 + shrinkage )

Count ( Ne) × 100
0.59 × 5695.63 × 105
=
40 × 100
= 88.211 grams / sq.m
2. Fabric consumption,
 ( Length × width × number of panels ) +  
  × GSM 
 ( Length × width × number of panels )  
= 
10, 000 × 1000
 ( 29 × 10.5 × 2 ) + ( ( 9 × 2 ) × 29 × 2 )  
 
 
× ( 2.54 × 2.54 ) × 88.211 
=
10, 000 × 1000
=
{[ 609 + 1044] × ( 2.54 × 2.54) × 129.72}
10, 000 × 1000
940725.75
Main body fabric consumption = = 0.0940 kg fabric.
10000 × 1000
Fabric consumption – 0.0940 gram / garment.
For 10,000 garment, the fabric required is = 940.72 kg.
3. Size wise colour wise breakup quantity
The order quantity is = 10,000 garments
Size ratio: 1:2:2:1
Totally two colour, hence for each colour 5000 garments.
For both the colour, the size wise breakups are (Table 3.25),
Size S: (1/6) × 5000= 833.33 × 1.03 (Wastage) = 858 garments
Size M: (2/6) × 5000 = 1666.66 × 1.03 (Wastage) = 1717 garments
Size L: (2/6) × 2000 = 1666.66 × 1.03 (Wastage) = 1717 garments
Size XL: (1/6) × 2000 = 833.33 × 1.03 (Wastage) = 858 garments

Total colour wise quantity
Colours S M L XL
(with 3% wastage)
Yellow 858 1717 1717 858 5150
Green 858 1717 1717 858 5150
Total order quantity 10,300
4. Sewing thread consumption

(i) Consumption for over lock thread:
= (Shoulder width – Neck width = shoulder length) + (Armscyle depth ×
4) + (Full length – Armscyle depth =Side seam × 2) + (Sleeve seam ×
2) + (Neck width × 2)
= (17.5–7.25 = 10.25) + (9 × 4) + (20 × 2) + (3.25 × 2) + (7.25 × 2)
= 107.25 inches, to convert into centimetres, multiply by 2.54
= 272.4 cm.
In general, 1 cm 5 thread over lock stitch consists of 20 cm sewing
thread, in that 20% needle thread and 80% looper thread.
= 272.4 × 20 = 5448.3 cm.
Consumption for flat lock thread: = (Sleeve hem × 4) + (Bottom hem × 2)
= (5.5 × 4) + (21 × 2) = 64 inches = 162.56 cm
= 162.56 × 18 = 2926.08 cm
Since, all the threads are of same colour, no need for needle thread and
looper thread calculations. Hence, the total consumption per garment is,
= Over lock thread length + Flat lock thread length
= 5448.3 cm + 2926.08 cm
= 8374.3 cm / garment.
Since, the order made of two different colours, the consumption for
yellow / green colour thread for order quantity is,
= 8374.3 × 5150
= 4,31,28,057 cm or 4,31,280.57 metres / colour
It is mentioned that, averagely 8% sewing threads are wasted in factory,
hence add up that 8% with original consumption.
4,31,280.57 metres / colour × 1.08 = 4,65,783.01 metres
Number of cones required to complete the order,
4, 65, 783.01
= = 93.15 or 94 cones / colour
5000
Hence, to complete the order quantity with two colours, 94 yellow and
94 green colour cones are required.
3.6 Summary
This chapter provides detailed information regarding the merchandising
order execution process. From the order planning process to the various es-
sential calculations required for the merchandiser to plan and estimate the
requirement for sourcing process were detailed. This chapter will help the
students, industry personal and beginners in the merchandising / apparel area
to learn the fundamental details and information in the apparel order execu-
tion process.
References
1. M. Vanhoucke, 2012, Project Management with Dynamic Scheduling, DOI
10.1007/978-3-642-25175-7 2, Springer-Verlag Berlin Heidelberg.
2. http://textilegarment-study.wix.com/textilegarment-study#!How-to-calculate-the-cut-
ting-SAM-for-fabrics/c1kod/AA7A2F4E-667A-4336-9224-429088A2103E (Ac-
cessed on Nov 2015).
3. http://www.coatsindustrial.com/en/information-hub/apparel-expertise/thread-con-
sumption (Accessed on Nov 2015).
4. Vasant R. Kothari, Fashion Merchandising: Time and Action calendar, http://www.
textiletoday.com.bd/oldsite/magazine/690 (Accessed on Nov 2015).
4
Sourcing for merchandiser
This chapter details the information regarding sourcing process. The detailed
information about sourcing process, different types of sourcing methods and
the factors affecting sourcing are discussed. The responsibility of an apparel
merchandiser in the sourcing process is explained elaborately. Along with
this information, the vendor selection criterion, vendor selection process and
vendor evaluation methods commonly used in the industry are also described
for the better understanding of the sourcing process.
Keywords: Sourcing, process, types, vendor selection criteria, vendor selection pro-
cess, Vendor evaluation.
4.1 Introduction
Sourcing is defined as the process of determining how and from where manu-
factured goods / components / raw materials will be procured. The main moti-
vation of the sourcing process is to obtain high satisfaction with the low-cost.
Materials essentially incorporate piece products that will be cut and converted
into the garments. In the case of raw material, it is also important that the raw
material is available (both in quality wise and quantity wise) when it is needed
along with the suitability of the material for garment design and end use. Sourc-
ing essentially decides the most cost-effective merchant of materials, finds out
where the material can be generated from and from where the completed prod-
ucts at the pre-determined quality be bought. It is one of the integral part of
merchandiser’s responsibility. Sourcing department along with merchandiser
assumes the fundamental part of executing the order and shipment of them at
lowest price. Merchandiser must ensure that all approvals related to the fabric
and trims ought to be composed of the sourcing division in allotted time. Lead
time, fabric and trim approval process, logistics expense and international com-
mercial (INCO) terms are the essential parameters that need to be considered
while choosing the sourcing strategies for a specific order.
In order to source any material, the steps illustrated in Figure 4.1 must
be followed. Once, the purchase requisition (the request raised by a division
for a material or a service) is given, the sourcing process starts. Based on the
request, the merchandiser and sourcing manager start the process of supplier
selection. After identifying the potential suppliers / vendors, the company
creates a Request for Quote (RFQ) and sends it to the suppliers for getting
quotation which is a document prepared by the supplier stating the descrip-
tion of the goods or services they are providing and the price along with the
terms and conditions.
Once the quotations are received from various suppliers, merchandiser
or sourcing manager compare the quotations received from various suppli-
ers and select any one supplier based on varying factors such as quality of
good or service, price, negotiations, etc. If the order quantity is high and time
for getting the material for production is less, then two or more suppliers
may also be selected depending upon the need. After the selection process,
the manufacturing firm raises a purchase order to the service or raw material
offering supplier. Based on the purchase order, the supplier sends the ma-
terial after accepting the terms and conditions of both the parties. Once the
goods are received at the receiving dock or warehouse by the buyer, the buyer
creates a goods received note (GRN) after checking the quality of materials
as per the specification. If materials don’t meet the standards, they are re-
jected and sent to the supplier. If materials meet the quality specifications,
then they are updated in stock and a receipt copy is provided to the supplier
as a proof of supplying the goods. The supplier also sends invoice request-
ing payment for the goods provided. The buyer makes the payment based on
the invoice and supplier gives the receipt for receiving funds and the process
gets completed. After all these formalities are completed, the buyer evaluates
the suppliers’ services based on various factors such as quality of goods pro-
vided, timeliness of supply and adherence to terms and conditions, etc. The
above-mentioned steps are followed in every sourcing process.
Figure 4.1 Sourcing cycle in apparel industry

Sourcing for merchandiser 147
4.2 Classifications of sourcing process

Different strategies are adopted for the procurement of raw material for the
apparel industry. The following are the various types of sourcing process
based on the requirements.
• Local manufacturer - F
abric is manufactured locally, with local infra-
structure
• Traditional export - L
ocal fabric is exported to garment manufacturing
countries
• International sourcing - F
abric is made locally, but raw yarn or fibre is
sourced from other countries
• Global sourcing - F
abrics are made with parts sourced from abroad
as part of global sourcing strategy
• Off-shoring - R
aw material is exported first i.e., yarn or fibre,
then fabric is re-imported to meet the demand
• Global manufacturing - Fabric is manufactured in other country.
Out of the above-mentioned methods, the local manufacturing process

is most commonly used by all the manufacturers. In case where there is no
adequate infrastructure available in local market, the manufacturers shift to
off-shoring or global manufacturing methods, especially for fabrics. These
decisions of sourcing must be performed by merchandiser along with higher
authority consultation. However, the role of the merchandiser in this deci-
sion-making process is very vital. Because the merchandiser is the only person
in the company who will be aware of the status from the vendor or manufactur-
ing side and also about the exact needs and requirements of the customer
4.1 Top Apparel Sourcing LCC (Low-Cost Countries)

• China
• Vietnam
• Honk Kong
• Thailand
• Srilanka
• Bangladesh
• Ethiopia
• Combodia
• Mexico
• India
4.3 Sourcing strategies for decision-making

A basic decision in sourcing is to decide whether to make or to buy the de-
sired product.
(i) Make or buy decisions
This decision arises when there is a need for the development of new prod-
ucts, desire to reduce cost, need for specialised types of equipment and skills,
unsatisfactory supplier or contractor performance and increase or decrease in
demand for established product.
Other than these factors, the make or buy decision will be taken based on
the following situations as detailed.
a) Manufacturing / raw material cost
The first factor which has a significant influence on the sourcing decision is
cost. The direct cost estimate for the sourcing process includes the cost of ma-
terials, direct labour cost and variable costs of factory such as training, pack-
aging, etc. The cost estimate for making the product is compared with a price
quote from the prospective supplier. The supplier uses the product specifica-
tions to determine the price quote for the product. Based on this comparison,
the make or buy decision will be made. To get the realistic picture of the buying
cost, during this process, the items total cost must be included with broker or
agent cost, tariffs, insurances, transportation and quality management costs.
b) Production capacity
While making sourcing decision, there are two details which we need to con-
sider with respect to the production capacity of the factory.
• Required capacity – The output required for that order
• Demonstrated capacity – It is the volume of the output that the plant can
actually produce. The production capacity of any manufacturing plant de-
pends on the availability of the machines, technical skills of the workers
and quality control procedures followed in the unit. The make or buy deci-
sion also arises when the required capacity of the plant does not meet with
the production capacity while approving new styles.
c) Quality
Quality standards and quality requirements of products are often the major influ-
encing factor in sourcing decision. Most of the time, based on the availability and
capacity of the factory, one can estimate the mode of sourcing. Selecting a source
that normally produces goods at a quality and desired cost level is more conven-
ient than attempting to change the mode of operation or capacity of the plant.
d) Timing
In apparel and fashion industry, timing is critical to both manufacturers
and retailers. Timing affects the placement and volume of orders as well as
production deadlines. When the proportion and importance of fashion aspects

increase in the apparel, it results in lesser expected response time. Basically,
retailers prefer less investment in inventory, so they place small orders close
to the time of sale on the retail floor and get faster replenishment of latest
products. Hence, even though the manufacturing firms have the capacity, if
they are not able to produce the products on time, they may lose the order. In
that case, the company will decide to buy from outside vendors and outsource
the merchandise in any level, as per their requirements.
(ii) Make to stock or make to order
The fundamental business policy reflected in a sourcing plan is the decision to
make to stock or make to order. Basic goods have traditionally been made to
stock, while fashion goods have been made to order. But a company can choose
one or both the strategies based on their product line and target market.
a) Make to stock
Make to stock literally means to manufacture products for stock based on de-
mand forecasts. This method is used to prevent opportunity loss due to stock
out. Excess inventory resulting from using this method can be avoided by
following accurate forecasts. The process of make to stock relates the sales
forecast and inventory levels.
• The sourcing plan for make to stock is based on forecast and the difference be-
tween the initial finished inventory and desired final finished goods inventory
• The firm using this method must invest lots of money in inventory
• This method motivates to achieve maximum production capacity in terms of
labour and machine in any firm
• The important factor which decides the effectiveness of the method is the ac-
curacy of the forecasting process and their result.
b) Make to order
Make to order strategy is generally a process of demand management. By this
strategy, a product is specifically manufactured for a sale order or customer
order. There is no forecasting involved. Sale order or customer order will be
the trigger point for production. The fundamental aim of this strategy is not to
maintain any inventory in the firm. The factory should have zero inventories
at the beginning and end of any order. This make to order strategy reduces the
risk of creating unwanted inventory. This strategy is useful when applied in
the following situations in the industries.
1. The product is a very slow moving one in the market.
2. One cannot anticipate the future forecast of the product
3. Product is newly launched in the market
4. The product is very costly and one cannot afford to keep the inven-
tory or stock in the plant.
4.4 Sourcing process in an apparel industry

The stages in sourcing process are very subjective and dynamic; they differ for
each and every order based on specific requirements. Hence, the merchandiser
cannot have pre-determined standard operating procedure. In the same way, the
lead time for each process will also vary depending upon the raw material even
though the vendor remains same. The typical sourcing process of fabric / trims
/ other raw material sourcing in an apparel industry can be described as:
Stage 1: Proto sample approval
Stage 2: Approval process for material
• Trim card – for trims
• Artwork – for prints and embroidery
• Lab dips – for dyed fabric
• Desk loom – for fabric
• Print strike-off – for print colour and quality.
Stage 3: Approval / rework / correction of material and results from buyer
Stage 4: Purchase order development
Stage 5: Sample fabric / trims / lab dips for testing as per requirements
Stage 6: Approval from the customer / buyer
Stage 7: Bulk production and in-house.
In this process, the material refers to fibre, yarn, fabric interlinings, but-
tons, zippers and other required items. The main objective of the sourcing
process is to search and identify the target material anywhere in the world,
negotiate for product quality and price and source the material at required
time and quantity. Strong and supportive relationship with the vendor is es-
sential for the successful execution of any merchandising process. The de-
velopment, selection and sourcing are the responsibility of the creative and
technical designer of the factory along with the merchandiser.
This material sourcing process must be initiated well ahead as per the
forecasting and line development process. In most of the cases, since the cus-
tomer requires the samples in the original fabric, the fabric orders are the one
which will be initiated very first in the line development process. Since the
availability at the right time and right quantity is the vital factor in the case
of fabric along with design and end use requirements, it is ordered at very
initial stage. In the same way, the accessories and findings are also sourced
little earlier in the production process, however, the risk associated with the
product requirements remain same like, in terms of cost, quality requirements
and also the matching and suitability.
4.2 Top Sourcing Places in india

1. Mumbai
2. Delhi
3. Surath, Ahemedabad
4. Gujarath
5. Luthiyana
6. Tirupur
7. Jaipur
8. Varanasi
9. Masolipattinam, Hyderabad
10. Kolkatta
4.5 Role of merchandiser in sourcing process

The sourcing and merchandising departments have the same objective
to meet i.e., to get right fabric / trims at the right place at the right time
with right cost. During the order execution process, merchandiser han-
dles whole order from the initial stage and thus he is a key individual
in the sourcing process compared to the sourcing department. Since the
merchandiser knows all details about a particular order, he/she is the
decision-making authority in sourcing process, whenever a critical sit-
uation is faced. The responsibilities of merchandiser in sourcing can be
depicted (Figure 4.2) as follows:
• In small scale industry, merchandiser bares the maximum responsi-
bility of sourcing process throughout the order processing
• In large scale industry, sourcing team coordinates with merchandiser
to source the fabric and trims in all aspects
• Merchandiser’s major responsibility is to calculate the requirement
of fabric and trim per garment and coordinate with the sourcing
department
• To get the approvals related to fabric (lab dips, desk loom, print
strike-off, dye lot, thread run) from buyer within the time frame
• The artwork, trim card needs to get approved from the buyer. It is the
responsibility of a merchandiser
• Maintaining the proper buffer time for every stage of sourc-
ing process in time and action calendar is the responsibility of a
merchandiser.
Figure 4.2 Merchandiser responsibilities in sourcing process
Even though the merchandiser along with the sourcing manager sources
the material for any particular order, the decision should be taken with the
production, marketing manager’s consultation in association with the merchandis-
ing manager. The sourcing decisions are mainly based on the following factors like
• Lead time of the delivery
• Quality of the product
• Cost of the product.
Once the order is received, then it is the merchandiser’s duty to fol-
low-up with the manufacturer and ensure that the product is at the factory
at the correct time of requirement. Another important issue associated
with the sourcing process is vendor nomination. In some cases, the buyer
or customer nominates different vendors for different raw materials. In
that situation, the merchandiser loses the flexibility in choosing vendors.
In other cases, the merchandiser will choose the appropriate vendor and
the flexibility is more compared to the buyer nominated supplier, from
the point of a manufacturing firm. Ultimately as an end result of the pro-
cess, the high quality products are purchased with minimum cost, from
the manufacturers.
4.6 Factors affecting sourcing process

4.6.1 Lead time
Lead time of the products varies with respect to different points like
• Point of origin
• Mode of transportation
• Open stock material or specifically made items
• Performance test requirements
• Imported or domestic.
In case of the imported product, the goods may require 6–9 months’ time
based on the location. Moreover, this also depends on the shipping methods
used for transportation. In the same way, open stock materials are often avail-
able and delivered within few days due to its availability. Open stock are the
materials which the producer / vendors make and stock based on the anticipa-
tion of demand. Fabric, trims and other materials sourcing is a very time-con-
suming process which includes desk loom and lab dip approvals, trim and
artwork approval, FPT approval. The approximate lead time for different pro-
cesses are provided here:
• For fabric sourcing – 1–2 months
• Yarn dyed fabric – 1.5 months
• Fibre dyed material – 2 months
Based on the order requirement, the merchandiser needs to choose the
particular vendor from the huge list of vendors, where he has to mind the
quality and cost factors along with the lead time. Among the vendors, there
are differences in lead time based on their manufacturing facility and capac-
ity. Merchandiser should be aware of all those factors and should choose the
correct supplier for the product.
4.3 Trade Fairs in india

• India International garment fair – New Delhi – July
• TexIndia – Tirupur – September
• Fabrics & Accessories Trade Show (F & A Trade Show) – Banglore
– March
• India International Handwoven Fair Chennai (IIHF) – Chennai – March
• IAF world fashion convention – Mumbai – September
• Yarnex – New Delhi – July
• Knitshow – Tirupur – August
• India International Knit fair – Tirupur – May
• India ITME – International Textile Machinery Exhibition – Mumbai
– December
• InDIGO (Denim trade event in South Asia) – Noida – February
• IITF India International Trade Fair – New Delhi – March
• GTE Garment Technology Expo – New Delhi – February
• Techtextile India – Mumbai – September
• IFF – India Fashion Forum – Mumbai
• Vastra – Jaipur – October
• India International Fashion Connect / Homtex – Banglore – July
• India International Yarn Expo – September
• Fashionista – Rajpur – October
• Knit world international – Ludihiyana – January
• Textrend India –New Delhi – January
4.6.2 Minimum order quantity (MOQ)

Minimum order quantity or order minimum is the smallest quantity a vendor
will sell on a single purchase order. This is one of the important factors that
affect the sourcing process. Every supplier requires a certain minimum order
quantity to produce the fabric and trim economically; otherwise, the cost of
production will be higher if production is below minimum order quantity. If
garment exporter places the order of raw material below minimum order quan-
tity, then generally, cost will be more for that. Hence throughout the supply
chain minimum order quantity is maintained in order to achieve the appropriate
cost of production.
However, with respect to the apparel and fashion industry, the minimum
order quantity or reasonable minimum quantity cannot be optimised. The
firms often receive order with bare minimum quantity which may be due to
several reasons like limited editions (designers clothing), technical difficul-
ties, focused on a particular group of customers, etc. In that case, the con-
cept of order minimum is a serious issue in case of apparel manufacturing. In
those situations, merchandisers will use open stock materials, which is very
widely available.
4.6.3 Logistics facilities

Logistics is one of the main factors which affect the fabric sourcing lead time
drastically. There are several aspects with respect to it which are given below:
1. Time required for transportation
2. Infrastructure for logistics
3. The cost of logistics.
A merchandiser needs to evaluate the logistic facilities and create an as-
sociation with logistics firms also. After manufacturing the required quan-
tity of the product on time, delays in shipping due to logistics would lead to
losses in effort and money involved in the manufacturing process. The cost
of logistics will directly affect the cost of a garment; hence, merchandiser
should be well aware of these aspects of logistics and then place the order for
fabric and trims.
4.4 List of Commonly Used Trims and Accessories

Trims Accessories
Label (S) Poly bag
Button Elastic bag
Zipper Mini poly bag
Padding Master carton
Interlining Inner carton
Down Size clip
Elastic P. P. band
Thread Tag pin
Twill Tape Brass pin
Stopper Collar stand
String / Draw cord Safety pin
Piping cord Gum tape
Emblem Arrow sticker
Logo print Scotch tape
D-Ring Barcode sticker
Swivel hook Defect indicator
Eyelet / Grommet Tissue paper
Collar stay Back board
Cord bell Neck board
Buckle Butterfly
Rivet Numbering stickers
Weaving belt Hanger
Hook & Eye Size sticker
Velcro tape Carton pad
Seam sealing tape Both side tape
Shoulder pad Plastic staple
Cable (Steel ware) Iron seal
Adjuster Clip
Recco Ball chain
Elastic threads Size tag
Shoulder tape Carton sticker
Safety sticker
Plastic clip
4.6.4 Quality parameters

As the purpose of sourcing process demands high quality product for low-
cost, the need for the quality products increases in the market. Providing
cheaper products with higher quality will lead to a better relationship with the
buyer and also increases the profit margin of the firm. The profit is another
important driving factor for companies to outsource products in domestic and
also in overseas companies. Though outsourcing is an effective way to do
business, it may sometimes lead to losses when materials supplier like fabric
and trims supplier does not meet the quality parameters thereby creating trou-
ble for apparel merchandiser to execute the export order.
The ability of vendor to produce or manufacture the require quality of
product depends on a number of factors as given below:
• Workforce or skill of the operator
• Worker’s flexibility to work with wide range of products
• The technology used to develop product quality.
• These are the indirect factors which have more influence on the qual-
ity of the product. Merchandiser should also be aware of this infor-
mation of a specific vendor before issuing the order. Additionally,
the accuracy of written communications and instructions received
from the garment manufacturer/ apparel merchandiser is also an-
other important factor to get the required quality in the end product.
4.6.5 Sourcing costs

The cost is the foremost and highly influencing phenomena, in a sourcing deci-
sion. The merchandiser always seeks for low-price manufacturers in the market
without compromising the product’s quality requirements. Generally, the cost
of manufacturing a higher quality product is costlier than the low-quality prod-
uct, due to the cost of raw material and manufacturing technologies implied,
hence, the merchandiser needs to identify an optimum mix between the quality
and the cost. The cost of the sourcing process depends on following factors:
• Labour wages
• Manufacturing cost
• Cost of logistics/transportation
• INCO term negotiated (for international sourcing)
The other factors which indirectly relates to the product price are advertis-
ing cost, certification cost and adjustment for a defective and damaged product.
4.7 Supplier or vendor management

A supplier is a third party who performs functions on a company’s behalf or
provides services to a company. In apparel manufacturing industry, suppliers
are appointed by an export house or by the buyer, for the production of fabric
and trims. Though the apparel industries are capable of producing most of their
requirements by in-house manufacturing, time to time they often prefer outside
sourcing than the in-house manufacturing. The reasons could be the limited time
availability, the quality level expected by the customer, and higher manufacturing
cost of the product. Whenever there is a specific requirement in fabric or trims or
accessories, for which there is a lack of expertise in-house to produce, the manu-
facturer prefers outside sourcing. The main advantage of sourcing the fabric and
trim is to transfer the risk and enables the garment exporter to concentrate on only
garment production and also it helps to get high quality product, due to the higher
experience of the vendor and state of the art technologies used.
However, few other limitations are also associated with this process like
the exporter has less control over the skills and training of suppliers, employ-
ees and so there may be a negative impact on quality.
4.7.1 Supplier / vendor selection criteria

The process of finding an ideal supplier is often not an easy job and requires
dedication and hard work. The process is generally affected by wide range
of factors like value for money, quality, reliability and service. The suppli-
ers who can offer a high quality product may be costlier (sometimes) at the
initial stage, but it will pay-off over time through good image and high qual-
ity. Every company will have their own importance and preferences based
on their firm’s business policies and strategy. However, it is always recom-
mended to choose a strategic approach to select the supplier which will help
the manufacturer to analyse their purchasing decisions. Figure 4.3 details the
various vendor selection criteria’s involved in vendor selection.
Figure 4.3 Vendor selection criteria’s involved in vendor selection

4.7.2 Supplier selection process

Supplier selection process for a particular product or service category should
be defined by a “cross-functional” team of representatives from different sec-
tors of the organisation. In a manufacturing company, for example, members
of the team typically would include representatives from purchasing, quality,
engineering and production. Team members should include personnel with
technical / application knowledge of the product or service. A common pro-
cedure for a supplier selection is listed in Figure 4.4.
1. Identify Suppliers
• Gather the opinions of stakeholders and define the criteria for the selection
process. This list of stakeholders may include members from research and
development, purchasing, marketing, quality assurance and any other area
of your organization that touches the supplier selection process
• Identify a few suppliers to assess their capabilities and compare pricing.
• The supplier selection team should work with the potential suppliers to
establish specifications. For example, they should explain how the supplier’s
materials would be used in your products and within the manufacturing
process.
• A key criterion in selecting the right supplier is value. Cost should not be the
lone driver; you should instead look at the total cost of ownership, which
looks at the supplier’s, Customer service, Delivery commitments, Reliability
and responsiveness and Resource savings.
2. Measure performance
• Conduct an audit before signing in the contract to confirm the supplier.
• The audit will help the manufacturer to understand that the supplier does not
have any significant compliance or quality system failures that could affect
your ability to produce top-quality products. Another reason to conduct the
audit beforehand is to understand the supplier’s strengths and weaknesses
before the relationship becomes official.
• Even after the contract is signed, you should continue auditing, basing the
frequency of the audits on the criticality of the supplier. To determine the
frequency, all suppliers should be categorized into a level of risk or
importance. This prioritization will help you be smarter and more effective
with your resources and place a higher focus on your important, high-risk
suppliers, while continuing to monitor second-tier suppliers
• Best-in-class supplier programs conduct audits throughout multiple stages of
the manufacturer/supplier relationship.
3. Supplier Feedback
• The supplier self-assessment can be used to identify performance gaps, as well
as discover how the supplier understands their own operation.
• In addition to audits and assessments, it also is beneficial to monitor
informative metrics that direct value to the business.
• Examples of these metrics include rejected lots, perfect shipments and
documentation errors. The metrics selected should measure the total cost of
ownership, as well as improve performance toward the maximum finished
product performance.
4. Certification • As supplier relationship grows stronger, and both parties feel they are receiving
positive performances, the supplier may be able to achieve a certified status.
• Certification must be obtained with sustained successful performance and can
be lost with poor performance or a negative compliance outcome from an audit.
• As the relationship continues to grow, the supplier also will become more
integrated into your manufacturing process.
Figure 4.4 Supplier / vendor selection process

4.8 Types of supplier for apparel industry

• Nominated supplier
• Non-nominated supplier
Nominated supplier
Nominated suppliers are the suppliers who are recommended by the buyers of
a particular order. This process was initiated by the buyers to achieve a better
control over their product, throughout the supply chain. This process has become
more common in recent days. The nominated suppliers are mainly recommended
for the products like accessories, fabrics, packaging material and logistics. This
improves the consistency in the product quality and on-time deliveries for the
buyers irrespective of the manufacturing company.
The major reasons behind this process are as follows:
(i) The nominated suppliers can supply the high quality raw materials as
prescribed by the buyer so that the buyer will not have any quality deviation
between different manufacturing firms.
(ii) The nominated supplier can avoid unnecessary delays in the order
processing. Since they are developing raw materials or products for only this
particular buyer, they know the importance very well.
Advantages of nominated supplier
• Time saving for garment manufacturer because they have to only
deal with one supplier to get one or more material
• Quality assurance of the raw materials is ensured and taken care by
buyer
• Nominated supplier can be involved in product development since
they are already having good experience in the area.
Along with these advantages, there are certain disadvantages for nomi-
nated suppliers.
• The nominated suppliers may become overconfident about their
product quality
• There may be a monopoly arising in the market
• Nomination may lead to unethical practices like corruption by agents
and traders
• Loss of price competitiveness as supplier may sometimes overcharge.
Non-nominated supplier
Most of the time, the buyer use to send the technical information sheet of
a particular order and he/she will ask the manufacturers to source the raw
materials, accessories and other materials to develop their product. In this sit-
uation, the manufacturers will access different vendors / suppliers who are in
their company data base as a regular supplier and they choose the particular
one based on their requirements.
Advantages of non-nominated supplier
• The non-nominated supplier works hard and tries his best to fol-
low the instructions given by buyer or garment manufacturer due to
highly competitive market
• Garment exporter may get the chance to explore with the innovative
products offer by a non-nominated supplier
• The manufactures may also get some potential suppliers who can
offer high quality product at low-cost, based on the raw material
availability or technology available.
The disadvantages of these suppliers are as follows:
• There may be flaws in the quality of the raw material due to a com-
munication gap between buyer and supplier
• To get involved with these suppliers in product development process
is a difficult task
• It will be difficult for the buyer to control the areas like social
compliance and ethical business practice norms followed by these
suppliers.
However, for both type of supplier, lead time generally remains same
irrespective of minimum order quantity (MOQ), order quantity and quality
parameters of the raw material.
4.9 Vendor / supplier evaluation

The basic requirement of vendor / supplier evaluation is to develop an ob-
jective way to evaluate vendors for selecting the best within the best. The
evaluation process is done to keep in consideration all the relevant factors
and select the right vendor / supplier. In this process, all the relevant factors
and subjective issues that can influence selection are considered. The supplier
evaluation is based on his / her performance in the areas of quality, quantity,
delivery time adherence, pricing and service. The performance in the above-
said areas is based on many factors like company policy, business strategy
and competitiveness.
The most common benefits expected from a third party vendor are
• Reduction in cost
• Quality / performance improvement
• More flexibility
• Quicker turnaround times and delivery
• Easy access to external expertise
• Aiding easier and increased availability of services.
The important criteria for vendor evaluation are given below:

i) Pricing factors: The various pricing factors are price stability, accuracy
in pricing, competitive pricing, price change notification in advance, price
sensitivity and billing.
• Price stability – The vendors should have stability in prices over
time and should not be increased or decreased frequently.
• Accuracy in pricing – The difference in purchase price and invoice
price should not exist or even if it exists, it should be meagre thereby
providing more accuracy in pricing.
• Competitive pricing – The pricing given in the quotation by the ven-
dor should be competitive and should be more or less equal to other
vendors who have given the quotation. If the pricing is on the higher
side, then they might be excluded from selection. Vendors should
provide pricing based on competition.
• Price change notification in advance – The supplier should keep the
buyer informed well in advance if there is any price change.
• Price sensitivity – The supplier should understand the customer’s
needs and sensitivity towards pricing and should price the product
based on it. He / she should suggest possible cost savings to the
customer.
• Billing – Proper billing should be done by the vendor. Errors should
be avoided in billing and it should be easy to read and understand.
The vendor invoices must be accurate.
ii) Quality factors: The quality factors to be considered are purchase order
compliance, conformity to specifications, reliability, long life, service, after
sales support, latest technology usage.
• Purchase order compliance – The supplier should adhere to the terms
and conditions stated in the purchase order.
• Conformity to specifications – The material delivered should con-
form to the requirements and specifications of the customer as re-
quested by him / her in the purchase order.
• Reliability – It is an important measure of the product quality. The
product failures should be minimal and should be within a reasonable
limit. The service factors should be clearly mentioned in the quotation.
• Long life – The products or services delivered should have a longer
life and should not be less durable.
• After sales support – Any issue in the product or service after sales
should be immediately resolved by the vendor. Warranty details should
be mentioned clearly during quotation issue and delivery of products.
• Latest technology usage – The products and services delivered
should be based on the latest technology.
4.5 Sample Supplier Audit Formate 162
Category Section 1) Fully 2) Partially 3) Does 4) 5) Not

meets meets not meet Critical applicable
failure
1.0 Management Management commitment and
responsibility review
2.0 Fundamentals 2.1 Infrastructure
2.2 Sanitation
2.3 Pest control
Apparel Merchandising
2.4 Chemical control

2.5 Personnel practices
2.6 Training & education
2.7 Handling, storage & delivery
2.8 Vendor approval
2.9 Control of materials
2.10 Traceability and crisis
management
2.11 Calibration, measuring and
test equipment
2.12 Food security
2.13 Maintenance
3.0 Food safety 3.1 HACCP Testing
and HACCP
systems
3.2 Microbiological testing
3.3 Environmental monitoring
3.4 Chemical sensitivities
3.5 Foreign material control
4.0 4.1 Conformance to customer
Manufacturing specifications
quality systems
4.2 Good laboratory practices
4.3 Process control
4.4 Document control & record
keeping
4.5 Continuing guarantee
4.6 Corrective & preventive action
4.7 Continuous improvement
4.8 Customer service
5.0 Regulatory 5.1 Labelling approval
consideration
5.2 Regulatory compliance
Audit score: ____________ Reviewed by: ____________________

Sourcing for merchandiser
Follow-up required? ________
If yes, provide details:

163
4.6 Sample Supplier Score Card
iii) Delivery factors: The delivery factors to be considered are time, quantity,
lead time, packing and documentation.
• Time – The supplier must adhere to the time frame mentioned in the
purchase order for delivery of goods or services. He / she should not
deviate from the date mentioned in the purchase order.
• Quantity – There should not be any deviation in the quantity of the
items to be delivered.
• Lead time – The supplier should maintain lesser lead time than his
competitors in delivering the product or service.
• Packing – Product packing should be as per the requirement of the
customer and also should not be easily damaged. It should be free
from leakage, pilferage, etc.
• Documentation – The supplier should provide all the required doc-
uments during delivery like packing list, delivery challan, warranty
cards, invoices, product manual, etc., correctly.
iv) Service factors
Service is a very important factor that influences vendor evaluation and
selection. Poor service will lead to avoidance of a particular vendor. The
vendor should always have a win–win approach towards the customer and
ensure that the customer gets the best product at the lowest possible price.
He / she should adopt professional approach with more courteousness and
should be ready to handle customer issues and complaints. The vendor
should have technical competence and should be well equipped to solve
customer’s technical issues with the product or service. There should be an

immediate response to any issue that arises from the customer related to a
product or service. The supplier should also provide emergency support for
the customers.
4.10 Vendor evaluation methods

Supplier evaluation is a term used in business and refers to the process of
evaluating and approving potential suppliers by quantitative assessment.
The purpose of supplier evaluation is to ensure a portfolio of best in class
supplier is available for use. There are several techniques that are used by
companies to evaluate suppliers and measure performance. The first step
in implementing any of the techniques being discussed is to determine the
attributes that should be considered. A firm should focus on the attributes
that it finds most important. Some attributes are easy to measure while
others are not. Some models are proficient in considering total costs, but
they are usually very difficult to implement and time-consuming. Thus, the
resources available to the firm’s purchasing function will drive the firm’s
model choice.
The three most common approaches are
• The categorical system,
• Weighted-point average system and
• The cost-based system.
The categorical system is the most subjective technique since it does not
differentiate between the weights of the attributes considered. The weight-
ed-point average system overcomes this drawback by assigning weights to
each attribute. The cost-based system is the most objective of the three meth-
ods because it also considers non-performance costs.
Categorical system
In this method, the customer or buyer selects attributes that are most appro-
priate and ideal for their particular situation. The buyer assigns either a pre-
ferred (+), unsatisfactory (-), or neutral (O) rating for each of the selected
attributes to every vendor. Then the ratings are summed up for each vendor.
For example, ratings resulting in scores of one preferred (+), two unsatis-
factory (--), and one neutral (O) would total one negative (-). A compari-
son of total scores provides the highest rated supplier. The representatives
of the involved departments agree upon the ratings. Categorical supplier
measurement is the easiest method to implement, however, it suffers from
subjectivity. The categorical system does not provide a detailed knowledge

on supplier’s true performance because the attributes being measured are
weighted equally. This method relies on an individual’s perception about
performance and not on quantitative data as it is based on the involved in-
dividual’s ratings.
The Table 4.1 is an example of the categorical system in an apparel
industry. Here, the evaluation factors or attributes differs between factories
based on their company’s policy and requirements. Small firms and firms in
the process of developing an evaluation system are the major users of this
system.
Table 4.1 Supplier evaluation using categorical system

Vendor Cost Quality Speed Total
A Good (+) Unsatisfactory (–) Neutral (0) 0
B Neutral (0) Good (+) Good (+) ++
C Good (+) Good (+) Good (+) +++
D Neutral (0) Unsatisfactory (–) Neutral (0) –
Advantages of categorical system

• Easy to implement
• Requires minimal data
• Different personnel contribution
• Good for firms with limited resources
• Low-cost system.
Disadvantages of categorical system

• Least reliable
• Less frequent generation of evaluation
• Most subjective and it relies on memory, personal judgment, and the
experience/ability of the buyers
• Usually manual.
Weighted point method

The weighted point method considers attributes that are weighted by the
buyer. The weight for each attribute is then multiplied by the performance
score that is assigned. Finally, these products are summed up to determine
final rating for each supplier. Typically this system is designed to utilise
quantitative measurements. The advantages of the weighted point method in-
clude the ability for the organisation to include numerous evaluation factors
and assign them weights according to the organisation’s needs. The subjec-
tive factors on the evaluation are minimised. The major limitation of this ap-
proach is that it is difficult to effectively take qualitative evaluation criteria
into consideration.
The basic steps involved in the weighted point evaluation method are,
• Determine the evaluation criteria
• Estimate the importance of each criterion
• Rate each product against all evaluation criteria
• Compute the average rating for each criterion for each product
• Weight the product rating for each criterion by importance
• Compute the total rating for each product
• Compare product rating.
Assume that there are seven criteria that are being used to evaluate sup-
pliers, quality, price, service, production capacity, engineering capacity, busi-
ness structure and delivery. These attributes are weighted with the relative
importance considered by the buyer on a 10 (less important) to 100 (most
important) scales as shown in Table 4.2.
Table 4.2 Different attributes and their weighted percentages

S. No. Attributes Weight (%)
1 Quality 20
2 Price 25
3 Service 20
4 Production capacity 10
5 Engineering capacity 5
6 Business structure 5
7 Delivery 15
Consider this example where three suppliers namely X, Y and Z are

evaluated for their previous order performances. The results are tabu-
lated in Table 4.3. The performance of the supplier is rated 0 (poor) to 5
(excellent).
168
Table 4.3 Performance rating assessment of the suppliers X, Y and Z
Performance Performance Performance

S. Weight rating of Supplier X rating of rating of
Attributes Supplier Y score Supplier Z score
No. % suppliers score suppliers suppliers
X Y Z
1 Quality 20 3 (3/5) × 20 = 12 4 (4/5) × 20 = 16 3 (3/5) × 20 = 12
2 Price 25 4 (4/5) × 25 = 20 5 (5/5) × 25 = 25 3 (3/5) × 25 = 15

3 Service 20 5 (5/5) × 20 = 20 4 (4/5) × 20 = 16 2 (2/5) × 20 = 8

Production
4 10 4 (4/5) × 10 = 8 3 (3/5) × 10 = 6 4 (4/5) × 10 = 8
capacity
Engineering
5 5 4 (4/5) × 5 = 4 3 (3/5) × 5 = 3 4 (4/5) × 5 = 4
capacity
Business
6 5 3 (3/5) × 5 = 3 2 (2/5) × 5 = 2 2 (2/5) × 5 = 2
structure
7 Delivery 15 4 (4/5) × 15 = 12 2 (2/5) × 15 = 6 5 (5/5) × 15 = 15
Total points by Supplier X 79/100 Supplier Y 74/100 Supplier Z 64/100

Advantages
• Flexible system
• Allows supplier ranking
• Moderate implementation costs
• Combines qualitative and quantitative factors into a single system.
Disadvantages
• Tends to focus on unit price
• Requires computer skills.
4.7 Vendor Performance Evaluation Form

Cost-ratio based system

The cost ratio method evaluates supplier performance by using a standard
cost analysis. In this system a buyer is able to quantify the additional costs
incurred if a supplier fails to perform as expected. The total cost of each pur-
chase is calculated as its selling prices and the buyers internal operating costs
associated with the quality, delivery and service element of the purchase.
Cost ratio is calculated by the following formula:
Cost ratio =
( Non - performance Cost )
( Purchase Price)
As derived from the equation, the closer the value is to 1, the better the
supplier.
Under this method, the most strategic issue is the identification of vari-
ous costs and their allocation among different variables and suppliers. Cer-
tain important heads of quality costs and delivery costs can be listed as under:
Quality costs
1) Visits to vendor’s plant for approval of samples, etc.
2) Inspection costs
3) Cost of defectives
4) Reworking costs
5) Manufacturing losses on rejected items.
Delivery costs
1) Postage and fax
2) Telephones
3) Visit vendor’s plant for expediting the delivery
4) Extra cost for getting quick delivery e.g., costlier means of
transportation.
An example of cost the associated with the quality factors are provided
here for supplier PQR, the various elements and cost associated with quality
are provided in Table 4.4.
Table 4.4 Elements and cost associated to quality for supplier PQR

Elements Cost in INR
Plant visit 2800.00
Sample approval 5000.00
Inspection costs 1500.00
Rejections or losses 3000.00
Rework cost 1800.00
Paper work expenditures 500.00

Total non-performance cost Rs. 14,600
Total value of purchase Rs. 1,00,000

Quality cost-ratio 0.146 or 1.46 %
In this manner, the manufacturing firm will collect the cost ratios of dif-
ferent heads of the single supplier and use it to compare with the other sup-
pliers. The sample for the comparison with the different supplier is provided
in Table 4.5. The fundamental idea is to provide a numerical ratio to the so-
called hidden cost of ownership.
Table 4.5 Identification of true value of the product by cost ratio based method
Quality Delivery Service Quoted Net
Supplier cost-ratio cost-ratio cost-ratio Total (%) price / unit adjusted
(%) (%) (%) (Rs) cost (Rs)
PQR 1.46 2 1.54 5 110 115.5
XXY 2 1 2.2 5.2 115 120.98
ABC 1.85 1.92 2.12 5.89 105 111.18
• The benefits a buyer can achieve by using this approach are, possi-
bility to source requirements based on considering the total cost of
the product or services required. Way to increase supplier accounta-
bility and control
• A consistent and reliable evaluation tool
• A way to communicate the company’s buying priorities to suppliers
• The ability to provide positive supplier reinforcement.
The cost ratio based method is the least subjective of the three because
it quantifies the total cost of doing business by considering non-performance
costs. The method is very complex to use and the other difficulty is its require-
ment that users have a developed cost accounting system. Identifying costs of
supplier non-performance is difficult. However, even with these drawbacks,
the categorical method, the weighted point method and the cost-ratio meth-
ods are the most widely used techniques in supplier evaluation due to their
ease of use and implementation.
Supplier evaluation methods are usually a time consuming activity, so
they are not performed frequently. In real time situation, many companies
do the evaluation on a monthly or quarterly basis. Some companies evaluate
suppliers only once in a year. These assessments, however, are mutually ben-
eficial only if both parties are willing to cooperate and provide the necessary
inputs. Supplier measurement systems are most commonly used for the fol-
lowing purposes:
1) Track performance of supplier
2) Identify supplier improvement opportunities
3) Develop supplier
4) Benchmark suppliers against best practices.
4.11 Summary
In this chapter, the various sourcing methods are discussed. The factors af-
fecting sourcing are elaborately detailed. This chapter talks about the respon-
sibilities of a merchandiser with respect to sourcing. The types of suppliers in
an apparel industry are discussed. The ways to identify make or buy decisions
are explained in this chapter. The vendor evaluation system is explained with
the merits and demerits of the various systems available to select the vendor.
The overall sourcing process and sourcing cycle followed in the apparel in-
dustry are provided precisely for the benefit of merchandisers.
References
1. Grace I. Kunz, Ruth E. Glock, (2004), Apparel Manufacturing: Sewn Product Analy-
sis. 4th Edition. Prentice Hall.
3. Duties of a Procurement Manager, (2012), http://hubpages.com/business/Du-
ties-of-a-Procurement-Manager (Accessed on April 2016).
4. Vasant R. Kothari, Sanket Joshi, (2013), Fashion Merchandising: Sourcing. Bang-
ladesh Textile Today. http://www.textiletoday.com.bd/magazine/727 (Accessed on
April 2016).
5. Supplier management – Focus on the best – Combining strength, RWE, http://www.
rwe.com/web/cms/mediablob/en/89972/data/90084/6/suppliers/supplier-manage-
ment/contact/Broschuere-en.pdf. (Accessed on May 2016).
6. Bradd Eldridge, (2012), Supplier Management: Six Steps to Selecting the Right Supplier.
http://www.foodsafetymagazine.com/magazine-archive1/augustseptember-2012/
supplier-management-six-steps-to-selecting-the-right-supplier/.
7. Graham Smith, Vendor (Supplier) Rating and Management, https://www.linkedin.
com/pulse/20140414042541-3050849-vendor-supplier-rating-and-management.(Ac-
cessed on May 2016).
8. Monczka R., Trent R., Handfield R., (1998), Purchasing and supply chain manage-
ment. Cincinnati, Ohio: South-Western College Publishing.
9. Youssef M., (1996), Supplier selection in an advanced manufacturing technology en-

vironment: an optimization model. Benchmarking for Quality Management & Tech-
nology. 3(4):60.
10. Timmerman E., (1986), An approach to vendor performance evaluation. Journal of
Purchasing and Materials Management. 22(4):1–7.
11. Willis T., Pohlkamp F., Huston C., (1993), Evaluation measures of just-in-time sup-
plier performance. Production and Inventory Management Journal. 34(2):1–5.
12. Carr A., Pearson J., (1999), Strategically managed buyer-supplier relationships and
performance outcomes. Journal of Operations Management. 17(5):497–520.
13. Arcan Arsan, Aimee Shank, (2011), Performance Measurements and Metrics: An
Analysis of Supplier Evaluation. https://scm.ncsu.edu/scm-articles/article/perfor-
mance-measurements-and-metrics-an-analysis-of-supplier-evaluation (Accessed on
May 2016).
14. Sree Rama Rao, (2009), The Cost Ratio Plan. http://www.citeman.com/7382-the-
cost-ratio-plan.html#ixzz4CP9oZhNR. (Accessed on May 2016).
15. Sachin B. Chhabile, Dalu R.S., (2014), Supplier Evaluation and Selection: A Review.
International Journal of Engineering Research & Technology. 3(3).
16. Khaled A.A., Sanjoy Kumar Paul, Ripon Kumar Chakraborty, Md. Salahuddin Ayuby,
(2011), Selection of Suppliers through Different Multi-Criteria Decision Making
Techniques. Global Journal of Management and Business Research. 11(4):Version 1.0
March 2011.
5
Apparel costing for merchandiser
This chapter details the steps used in the apparel costing process. The chapter
describes the calculation methods of yarn and fabric cost at different stages
of fabric manufacturing like knitting or weaving, pre-processing stages like
bleaching, dyeing and finishing process. Further the chapter describes the
costing activities involved in the various departments of apparel manufactur-
ing firm. The cost calculation strategies involved in the cutting department,
sewing, trimming, checking, packing departments and shipment costs calcu-
lations are explained with adequateexamples. To facilitate the better under-
stand of the merchandising costing process, overall cost calculation examples
were provided for fabric cost and apparel cost estimation.
Keywords: Costing elements, types of costs, fabric cost, processing cost, garment
cost.
5.1 Introduction
The process of costing defined as
“The technique and process of ascertaining costs”
– Charted Institute of Management Accountants (CIMA)
“Cost – Price paid for something”

– Oxford Dictionary
“Costing is the technique and process of estimating the cost for a product
or service or process”
– Institute of Cost and Management Accountants, London.
Costing of the apparel and textile product is a complex problem, it in-

volves numerous number of activities associated with each product. The
technique and methods to be used for ascertainment of cost vary from unit to
unit depending upon the nature of the industry, type of the product, method of
production and the meaning or the sense in which the term cost is used.
In apparel industry, the process of costing a product is very dynamic.
Since, the fashion changes every season and sometimes very often, the
product which the manufacturing company receives for manufacturing
from the buyer also differs every season. Most of the time, the products
are manufactured only once. This leads the manufacturing company to

work on accurate costing on every product in order to run the business
profitable. The knowledge on the costing process is very essential for a
merchandiser. Since, he or she is involved from the product development
stage, the knowledge on costing is very essential. From medium size to
small scale and sometimes in large scale industry also, the responsibility
of costing a new product often comes under merchandiser’s responsibil-
ity. He or she needs to develop the cost sheet from the product develop-
ment stage, with all necessary components that go into the cost sheet. The
merchandiser should have a strong understanding about the different ele-
ments of cost and their influence on the products pricing. The major role
of the merchandiser in the costing process is, after the costing process, he
or she should monitor the variables that influence the cost of any product
and to analyse it and to adjust it to maintain the profitability of a company
in all worst case scenario. This chapter details the various aspects of cost-
ing theory and different methods widely adapted in apparel industry to
estimate the cost of each process involved in the manufacturing line of an
apparel product.
5.2 Elements of cost

The material, labour and expensesare the fundamental elements of cost. The
Figure 5.1 explains the elements involved in the basic costing process.
Elements of Cost
Material Labour Exenses
Direct Indirect Direct Indirect Direct Indirect
Production Admin Sales Distribution

overheads overheads overheads overheads
Figure 5.1 Elements of cost

Apparel costing for merchandiser 177
5.2.1 Material cost

It is the cost of commodities supplied to an undertaking. This includes, cost of
procurements, freight inward, taxes and insurances. These activities are included
in material cost because; they are directly attributable for the acquisition of ma-
terial. Here the material can be specified as any substance from which the item
is made. It might be in a crude state as raw material, e.g., fibre for fabric and raw
chemicals for dyeing, and so on. Additionally it may be also be in a made state –
parts, e.g., buttons, zippers, and so on, materials can be direct and indirect.
Direct material
All materials which become an integral part of the finished product, the cost
of which are directly and completely assigned to the specific physical units
and charged to the prime cost, are known as direct material. The following
are some of the materials that fall under this category:
a) Materials which are specifically purchased, acquired or produced for a
particular job, order or process.
b) Primary packing material (e.g., carton, wrapping, cardboard, etc.).
c) Materials passing from one process to another as inputs.
Indirect material
• All materials, which cannot be conveniently assigned to specific physical
units, are termed as “indirect material”. Such commodities do not form part of the
finished products. These items will not be a part of the finished product (physical-
ly). Consumables, lubrication oil, stationery and spare parts for the machinery are
termed as indirect materials.
5.2.2 Labour cost

Human efforts used for conversion of materials into finished products or
doing various jobs in the business are known as labour. Payment made to-
wards the labour is called labour cost. It can also be direct and indirect. The
labour cost is defined as
“The cost of remuneration (wages, salary, bonuses,etc.) of anemployee of an
undertaking” – CIMA
Direct labour
Direct labour cost is the wages, salary, or bonuses, or commission paid to the
workers or employees who directly involved in converting the raw material
into the finished product. The wages paid to skilled and unskilled workers for
manual work or mechanical work for operating machinery, which can be spe-
cifically allocated to a particular unit of production, is known as direct wages
or direct labour cost.
Indirect labour
Labour employed to perform work which is not a part of manufacturing the
end product but only to assist the product or operations are known as indirect
labour or those engaged for office work, selling and distribution activities are
known as “indirect labour”. The wages paid to such workers are known as
“indirect wages”or indirect labour cost.
Example: Salary paid to the driver of the delivery van used for distribu-
tion of the product.
5.2.3 Expenses
All expenditures other than material and labour incurred for manufacturing
a product or rendering service are termed as “expenses”. Expenses may be
direct or indirect.The Expenses may be defined as
“The cost of services provided to an undertaking and notional cost of the use
of owned asset” – CIMA.
Direct expenses
Expenses which are specifically incurred and can be directly and wholly allo-
cated to a particular product, job or service are termed as “direct expenses”.
Examples of such expense are: hire charges of special machinery hired for
the fob, carriage inward, royalty, cost of special and specific drawings, etc.
Indirect expenses
All expenses excluding indirect material and indirect labour, which cannot
be directly and wholly attributed to a particular product, job or service, are
termed as “indirect expenses”. Some examples of such expenses are: repairs
to machinery, insurance, lighting and rent of the buildings.
Prime cost
The direct cost of a commodity in terms of the materials and labour involved
in its production, excluding fixed costs
Prime cost = Direct material + Direct labour + Direct expenses
5.2.4 Overheads
Indirect expenses are called overheads, which include material and labour.
Overheads = Indirect material + Indirect labours + Indirect expenses
Overheads are classified as:
• Production or manufacturing overheads – Connected with factory
production function like indirect material labour,etc.
• Administrative expenses – Indirect expenditures incurred in general ad-
ministrative function, they don’t have any direct connection with produc-
tion or sales activity. For examplestationeries used, sweeping brooms,
salary of a peon, etc.
• Selling expenses – It is the cost of promoting the sales and retaining the
customers. For exampleadvertisement and gifts, etc.
• Distribution expenses – All the expenses incurred from the time of the
production completion to the time it reaches its destination. For exam-
plepacking material, salary of drivers and insurance of the goods.
• Research and development expenses – Any expenses associated with
the research and development of a company’s goods or services.
Here,
• Factory cost = Prime cost + Factory overheads
• Cost of production = Factory cost + Office and administrative
overheads
• Sales cost = Cost of production + Selling and distribution overheads
• Selling price = Cost of sales + Profit
• Cost/ unit = Selling price / Total production.
5.3 Factors influencing the costing process

In continuationto the cost elements, it is essential to know and understand the
fundamental factors which affect the cost of the apparel products. An apparel
product cost or price includes cost of various activities like fabric purchase,
dyeing, cutting, sewing and packing, transportations and other overhead
expenses. Hence, the cost of the product will always fluctuate time to time
based on other factors.
The cost of the apparel product also will vary style to style. Since the style
complexity decides the number of operations in each process, the cost always
changes with styles. The various components of an apparel cost are as follows:
• Type of fabric
• Trims type and numbers
• Cutting, making checking and packing charges
• Value added services–printing, embroidery, washing, appliqué

• Testing of the garment
• Quality parameters expected
• Transportation and logistics cost
• Profit of the manufacturing organisation.
Other than these factors, there are few other things which will affect the
cost of an apparel product directly. They are described below.
i) Fabric cost –Fabric is generally the most significant factor in costing
of garment. Fabric accounts for 60%–70% of the total cost of basic-styled
garments.The cost of fabric depends upon the type of fabric that is going to
be utilised in the garment. Types of fabrics are:
• Woven/knitted fabric
• Power loom/automatic loom fabric
• Fibre/yarn/fabric dyed fabric
• Fibre content of fabric i.e. cotton, wool, polyester, silk, blended fab-
ric, etc.
• Type of dyeing and finish used
• GSM/Weight of fabricType of yarn used i.e. ring spun, open ended,
or carded/combed, etc.
ii) Unit of Measurement (UoM) – The another important information which a
merchandiser should be aware for different raw materials. Sometimes, the cost
associated with the raw material depends upon the unit of availability.
iii) Fabric Minimum Order Quantity (MOQ) – This is the information about the
minimum or smallest quantity of any raw material which can be bought from ven-
dors. The MOQ plays the important role while ordering the fabric as it directly af-
fects the cost of garment. If the order of fabric is below the estimated MOQ then
vendor charges more cost as compared to regular charges. Merchandisers need to
keep the MOQ in mind while doing the costing of small quantity orders.
iv) Order quantity – The cost of the material majorly depends upon the quan-
tity ordered. Higher the order quantity, lesser will be the cost of any material
(comparatively).
v) INCO terms (International commercial terms)–The type of agreement be-
tween the buyer and seller with respect to commercial aspects also a major
criteria which decides the cost of the product.For example, FOB pricing, FAS
pricing, etc.
5.4 Calculation of fabric cost

In apparel manufacturing process, most of the time the responsibility of cal-
culating the required yarn quantity for any particular order will be on the head
of merchandiser where he or she will be provided with the fabric specifica-

tions required or else with a sample swatch. In the second case, with the ex-
isting fabric, merchandiser needs to work back and identify the fabric details
like yarn count, Ends per inch, Picks per inch in woven fabric and Course
per inch, Wales per inch in case of knitted fabric. Based on those details, the
merchandiser needs to arrive for the yarn requirement for the metre square or
unit area of the fabric. This will help themerchandiser to estimate the approx-
imate amount of yarn required for the completion of order. For that the mer-
chandiser must know the consumption requirement of the each garment. As
discussed in Chapter 3, based on the measurement details, the merchandiser
need to estimate the amount of fabric required to produce individual garment
including the waste allowance. With that estimated fabric consumption per
garment, he or she can measure the amount of fabric (for knitted in kilograms
and for woven in metre) required for the order.
Based on this quantity, the company will decide by considering various
factors, whether to produce the fabric or to source the fabric directly. In the
second case, the merchandiser’s job is little easy where he or she can coordi-
nate with different fabric manufacturers and based on the quality requirement
and quantity, cost and availability, merchandiser will decide the sourcing pro-
cess. But in the case of the first situation, the merchandiser’s responsibility
increases multi-fold. Here, merchandiser has to decide,
• The fabric consumption / per garment
• The fabric quantity need to be purchased
• Yarn consumption (in kgs) per square metre
• Estimating the process cost like pre-treatment and dyeing
• Calculating the total fabric cost of the fabric
• Arriving at the fabric cost per garment.
5.4.1 Yarn cost calculation

To calculate the yarn cost, as discussed in the Chapter 3, it is necessary to
identify the GSM (gram per square metre) of the fabric, for both knitted and
woven material. The formula mentioned in Chapter 3, is provided below. It
can be used for GSM calculation.
i) For woven fabric,
EPI × 39.384 × 453.4 × ( crimp + 100)
Warp weight =
Warp count × 0.914 × 840 × 100
PPI × 39.384 × 453.4 × ( crimp + 100)

Weft weight =
Weft count × 0.9140 × 840 × 100
GSM of woven fabric = Warp weight + Weft weight.

ii) For knitted fabric
0.59 × Length in meters
Count in Ne =
Weight in Grams

Yarn length in m =
1000
0.59x yarn length in m × (100 + shrinkage)
GSM =
Count ( Ne) × 100
The following example explains the cost calculation of yarn (data

provided for cost calculations are approximate values, only for example
purpose).
5.1 Yarn Count Conversion Table
Example 1: An apparel manufacturing company received an order to de-

velop fabric with following description. The fabric is made of 100% linen in
warp and 100% acrylic in the weft. The other fabric particulars are 65 EPI,
60 PPI,warp count is 2/100s and the weft count is 120 Denier, the warp and
weft crimps are 4% and 8%, respectively. Calculate the cost of the yarn per
square metre.Consider the yarn price as follows, linen yarn price per kg = Rs.
450.00, Acrylic yarn price per kg = Rs. 285.00.
Solution:
To calculate the warp weight,
EPI × 39.384 × 453.4 × ( crimp + 100)

Warp weight =
Warp count × 0.914 × 840 × 100
65 × 39.384 × 453.4 × ( 4 + 100)
=
50 × 0.914 × 840 × 100
= 31.44 gram.
To calculate the weft weight,
PPI × 39.384 × 453.4 × ( crimp + 100)
Weft weight =
Weft count × 0.9140 × 840 × 100
60 × 39.384 × 453.4 × ( 8 + 100)
=
Weft count × 0.914 × 840 × 100
To convert the weft count from denier to English count (Ne),
5315
= = 5315 =44.29.
Denier 120
Hence,
60 × 39.384 × 453.4 × ( 8 + 100)
=
44.29 × 0.914 × 840 × 100
= 34.02 grams
Total weight of the fabric = 34.02 + 31.44 = 65.46 gram.
To calculate the cost of the warp yarn,
= Weight in gram × yarn cost / kg
450
= 31.44 × = Rs.14.148.
1000
To calculate the cost of the weft yarn,
285
= 34.02 × = Rs.9.69
1000
Total cost of the yarn per square metre of the fabric = Rs. 14.14 + Rs.
9.69 = Rs. 23.84.
Example 2: A knit garment export company received an order to develop knitted
fabric with following description. The fabric is made of 100% combed cotton and
the other fabric particulars are as follows:85CPI, 80 WPI, warp count 40s Ne and
loop length of 0.95 mm. Calculate the cost of the yarn per square metre.Consider
the cotton yarn price as Rs. 280.00 per kg and knitting shrinkage of 5%.
Solution:
Yarn length in m =
1000
85 × 80 × ( 39.384) × ( 39.384) × 0.95

=
1000

= 10020.1 metres
GSM =
Count ( Ne) × 100
0.59 × 10020.1 × (100 + 5)
=
40 × 100
= 155.19 grams per square metre
To calculate the yarn cost,
= Yarn weight / square metre× Yarn price
280
= 155.19 g × = Rs. 43.45 per square metre.
1000
Based on this cost, we can estimate the total cost of the order.
5.4.2 Process cost calculation

The fabrication process involvesvarious processes like knitting or weav-
ing, scouring, bleaching, dyeing, finishing treatments, etc. When the yarn is
sourced and converted into fabric, during the costing process to estimate fab-
ric cost, we have to add all the cost of processes that the fabric undergoes.
The final fabric cost will be the cost of the yarn along with the summation of
process cost of the fabric.
i) Knitting or weaving cost
For the calculation of knitting or weaving cost, one must know the following
factors to estimate the cost of that process.
• Total number of machines used
• Number of shifts per day
• Production capacity of the plant or individual machine / shift or day
• Yarn quantity used
• Waste percentage
• Number of operators and helpers
• Operator wages
• Other expenditures.
For calculating the cost of any process, the abovementioned data are nec-
essary. The following example details the cost calculation of a knitting process.
Example 3: A company developed single jersey cotton fabric for the kids
wear garment. The company sourced 2000 kg of yarn and the price of the
yarn is Rs. 240 / kg. The knitting industry works with 5 weft knitting ma-
chine with the production capacity of 85 kg / machine. The average waste
percentage expected during the operation is 3%. The company works with
5 operators and 2 helpers with the wage of Rs. 250 and Rs. 150 per shift,
respectively. Calculate the cost of knitting process per kilogram with 20%
profit if the company spendsRs. 5000 / month for rent, Rs. 3000 / month for
electricity and Rs.15,000 / month as other expenses. Assume company works
26 days per month.
Solution:
Step 1: Number of shifts required to complete the order.
Total production per day = Average machine production × Number of
machines
= 85 × 5 = 425 kg / shift
The wastage percentage expected = 3%
Hence, 2000 kg – (3% of 2000 kg) = the original quantity produced
3
= 2000 – (2000 × ) = 1940 kg
100
Total yarn quantity
Total number of shifts required =
Production capacity per shift
2000
= = 4.7 shifts.
425
Step 2: Calculate total labour cost
The labour cost = No. of labours × No. of shifts worked to complete
order×Wages/shift
= Cost of operators + Cost of helpers
= (5 ×4.7× 250) + (2 ×4.7× 150) = Rs. 5875 + Rs.1410 = Rs. 7285
Step 3: Calculation of direct material cost
Yarn purchased = 2000 kg with the price of Rs. 240 / kg
= 2000 × 240 = Rs. 4,80,000
Step 4: Calculation of overheads
Company spends all these overheads per month (26 days). Since, the com-
pany works one shift per day, The 1 day or 1 shift expense as overhead is as
follows,
5000 + 3000 + 15, 000
Overheads = = Rs. 884.61
26
Since, the company works 4.7 shifts for this order,
= 884.61 × 4.7 shifts = Rs. 4157.69
Step 5: The overall cost of the knitting process

Material cost + Labour cost + Overheads
The total knitted fabric cost / kg =
Total production
4,80, 000 + 7285 + 4157.69
Fabric cost / kg = = Rs. 253.32
1940
Labour cost + Overheads 7285 + 4157.69
Knitting cost / kg = = = Rs. 5.89
Total production 1940
20
Knitting rate / kg = 5.89 × 20% profit= 5.89 + (5.89× ) = Rs. 7.07
100
5.2 Loom Production
To calculate the 100% efficient loom production the following formula can
be used,
= Revolution per minute (RPM) × Total working hour × 60 (minute
per hour)
which means, based on the machine RPM the production were calcu-
lated. If the machine works at 575 RPM for a 8-hour shift, then the produc-
tion will be,
= 575 × 8 × 60 = 2,76,000 picks.
The main factors which affects the production of a loom are,
1. Efficiency
2. Picks per inch / centimetres.
Example 4: A weaving unit with auto looms received an order to produce

40,000 metres of plain woven fabric. The loom shed consist of 36 looms with
the capacity of 230 rpm. The company works with 20 weavers, 3 helpers
with the salary of Rs.400 / shift and Rs.300 /shift, respectively. The shed is
maintained by two supervisors with the salary of Rs.20,000 per month. If
the company works with 75% efficiency and produces fabric with averagely
70 picks per inch, calculate the cost of weaving process per metre with 20%
profit. The overhead details are, Rs. 3,00,000 / month for power, Rs. 1,50,000
/ month for other staff salary, oil and other consumables Rs.50,000 / month.
Spares and other parts Rs. 1,00,000/month and Rs. 25,000 / month knotting
cost and Rs. 3,50,000 as other expenses and bank interest due. Assume com-
pany works 26 days per month and three shifts per day.
Solution:
The total production need to be done = 40,000 metres
Hence, the daily production of the shed can be calculated as follows,
RPM
Production per machine = Picks per inch × 39.37 ×60 (minutes in an hour) × 24
(working hours/day)
230
= × 60 × 24 = 120.178 metres / machine / day at 100% efficiency
70 × 39.37
Production at 75% efficiency = 120.178 × 0.75 = 90.133 metres/machine/
day
Total production / day = 36 × 90.133 = 3244.82metres / day.
Hence, to complete the current order,
Order quantity 40, 000
The total number of days required is = = =
Daily production 3244.82 = 12.33 days
As company works 3 shifts / day, total number of shifts are = 12.33× 3 = 36.98shifts
Step 2: Labour cost
The number of labours used are, 20 machine operators/ weavers with the
wage of Rs. 400/shift, 3 machine helper with the wage of Rs. 300/shift and 2
supervisors with the salary of Rs. 20,000 / month.
20, 000
The supervisor wage per day = == Rs.769.23.
26
Hence, the total labour cost is
= ( Number of labours × Total working shifts × Wages per shift )
= (20 ×36.98× 400) + (3 ×36.98× 300) + (2× 769.23 × 12.33)
= 2,95,840+ 33,282+18,969.21 = 3,48,091.21
Labour cost = Rs. 3,48,091.21.
*Note:Here, the supervisor alone works in a monthly salary basis, hence, for
them the number of days is considered for cost calculation instead of shifts.
Step 3: Overhead charges
1. Rs. 3,00,000 / month for power
2. Rs. 1,50,000 / month for other staff salary
3. Rs.50,000 / month for oil and other consumables
4. Rs. 1,00,000/ month for spares and other parts
5. Rs. 25,000 / month as knotting cost
6. Rs.3,50,000 / monthas other expenses
Total expenses = Rs. 9,75,000
9, 75, 000
Since, the factory works 26 days in a month, the daily OH is = = 37,500
26
Total working days = 37,500 × 12.33 = Rs.4,62,375
Step 4: Total weaving cost
Total cost = labour cost + overheads = Rs. 3,48,091.21 + Rs.4,62,375
= Rs. 8,10,466.21
8,10, 466.21
Hence, weaving cost / metre = = Rs. 20.26/ metre.
40, 000
20
Weaving cost with 20% profit = 20.26 + (20.26× ) = Rs. 24.31 / metre fabric.
100
5.3 CALCULATION OF WEAVING COST

The other formula used for calculation of weaving cost are,
(Yarn rate + Sizing cost) × Number of cord
1. Warp cost = --------------------------------------------------------- = Cost / yd
Length of yarn (840 × yarn count)
Yarn rate × Fabric width × Gear number
2. Weft cost = ------------------------------------------------------- = Cost / yd
Length of yarn (840 × yarn count)
3. Wastage %
4. Miscellaneous = Weaving charge + Electricity + Maintenance
Hence, Weaving cost / yd = Cost of warp yarn / yd + Cost of weft yarn / yd +
Wastage + Miscellaneous.
Example 5.5: A weaving unit with auto looms consists of 52 looms with the
capacity of 245 rpm. The company works with 90% efficiency and produces
fabric with averagely 70 picks per inch, calculate the cost of a pick with 20%
profit. Company works with 40 weavers and 10 helpers with the wage of Rs.350
and Rs.250/shift, respectively. The overhead details are, Rs. 5,00,000/month
for power, Rs. 2,75,000/month for other staff salary, oil and other consumables
Rs.1,50,000/month. Spares and other parts Rs. 2,50,000/month, Rs. 50,000/
month as knotting cost and Rs.5,00,000/month as other expenses like bank inter-
est dues and etc. Assume company works 30 days amonth and 3 shifts per day.
Solution:
RPM
Production per machine = × 60 (minutes in an hour) × 24
Picks per inch × 39.37
(working hours/day)
245
= × 60 × 24 = 128.01 metres / machine / day at 100% efficiency
70 × 39.37
Production at 90% efficiency = 128.01 × 0.9 = 115.21 metres / machine / day
Total production / day = 52 × 115.21 = 5991.16 metres /day.
Since company works 30 days in a month, the total production is,
= 5991.16 metres /day × 30 = 1,79,734.82 metres.
Step 2: Labour cost
The number of labours used are, 40 machine operators/ weavers with the
wage of Rs. 350 /shift, 10 machine helper with the wage of Rs. 250/shift.

= (40 × (3 ×30) × 350) + (10 × (30 ×3) × 250)
= 12,60,000 + 2,25,000 = 14,85,000
Labour cost = Rs. 14,85,000.
Step 3: Overhead charges
1. Rs. 5,00,000 / month for power,
2. Rs. 2,75,000 / month for other staff salary,
3. Rs. 1,50,000 / month for oil and other consumables
4. Rs. 2,50,000/ month for spares and other parts
5. Rs. 50,000 / month as noting cost
6. Rs.50,000 / monthas other expenses
Total expenses = Rs. 12,75,000.
Step 4: Total weaving cost
Total cost = labour cost + overheads = Rs. 14,85,000 + Rs.12,75,000
= Rs. 27,60,000
27, 60, 000
Hence, waving cost / metre = = Rs. 15.36 / metre.
17,9734.82
Fabric cost per metre 15.36
So, pick rate = = = Rs. 0.219/ inch
PPI 70
Pick cost with 20% profit = (0.219 + (0.29 × 20/100)) = Rs. 0.26.
If we consider the above-mentioned example, after calculating the cost of a
single pick, from that we can derive the cost of the woven fabric per metre.
The details are as follows:
Solution:
The cost of the fabric per metre = Fabric width × cost of pick
If we assume the fabric (loom) width is 56” then the cost of the fabric is,
= 56 × 0.26= Rs.14.56 / metre.
5.4 Crimp Percentage Calculation

L−S
• Crimp % , C= ( ) x× 100%
S
• where L is warp length, S is cloth length
• Warp length (L), L = (1 + C) × S
where C is crimp %, S is cloth length
L
• Cloth length (S), S=
(1 + C )
• Where L is warp length, C is crimp %
ii) Pre-treatment, dyeing, printing and finishing cost calculations

In the case of pre-treatment, dyeing and printing processes, the cost factor
involved in the process differs based on the several process parameters like
• Types of chemicals and dyes
• Types of fabric used and shade required
• Types of dyeing machines and methods used
• Lab expenditure incurred during shade development
• Effluent treatment cost.
a) Pre-treatment and dyeing cost
The following examples will provide an initiative to estimate the cost of the
pre-treatment and dyeing process. The data provided here are approximate
and they are used only for the understanding purpose.
Example 6: A processing mill received an order from the garment manufacturer
to dye a knitted fabric of 700 kg. The average daily production of the company is
400 kgs.The material and the prices used in the process are listed below in Table
5.1. Calculate the dyeing cost per kg with 15% profit, if the company works one
shift per day. The total overhead incurred for a month is Rs. 1.5 lakhs including
the cost of other staff salary, electricity bill, plant rent and other expenses.
Table 5.1 Raw materials used and their prices

S. No. Items used Quantity used Price in Rs.
1 Reactive dye 4 kg 350 / kg
2 Reactive dye B 8 kg 300 / kg
3 Chemical XYZ 10 kg 75 / kg
4 Chemical ABC 17 kg 120 / kg
5 Machine operators used 5 375 / shift
6 Machine helpers used 3 250 / shift
Solution:
Step 1:The total production need to be done = 700 kg
Daily production of the company = 400 kg / shift (company works a shift in
a day)
Order quantity 700
Hence, the total shifts required = = = 1.75 shifts
Daily production 400
Step 2: Labour cost
The number of labours used are, 5 machine operators with the wage of Rs.
375/shift and 3 machine helper with the wage of Rs. 250/shift.

= (5 × 1.75 ×375) + (3 ×1.75×250) = 3281.25+1312.50 = Rs. 4593.75
Labour cost = Rs. 4593.75.
Step 3: Calculation of raw material cost
1. Reactive dye = 4 × 350 = 1400
2. Reactive dye B = 8 × 300 = 2400
3. Chemical XYZ = 10 × 75 = 750
4. Chemical ABC = 17 × 120 = 2040
Total raw material cost = Rs. 6590.
Step 4: Overhead cost
Total overhead cost = Rs. 1,50,000
Company works for this order only 1.75 shifts. Hence, the Overhead costs for
1.75 shifts are,
1,50, 000
Overhead / day (shift*) = = Rs. 5000
30
Therefore, 5000 × 1.75 = Rs. 8750.
(*Note: Since company works 1 shift per day, here, 1 day = 1 shift.)
Step 5: Total cost of the dyeing

Total cost = Labour cost + Material cost + Overheads
= Rs. 4593.75 + Rs.6590 + Rs. 8750
= Rs. 19,933.75
Add 15% profit = Rs. 22,923.81
22,923.81
Total dyeing cost / kg = = Rs. 32.7.
700
Note: For the cost estimation of the dyeing process, company / merchandiser
must quote the approximate price based on their previous experience. After the
completion of dyeing process, based on the chemicals consumed and dyes utilized,
the exact cost must be calculated. The above said example details the cost based
on the overall consumption of all chemicals for a particular order.
Example 7: A processing unit received an order from the garment manufacturer
to dye 1,28,000 metres of woven fabric. The average production per shift in
the company is 20,000 metres. The material and the prices used in the process
are listed below in Table 5.2.Calculate the dyeing cost per kg with 10% profit,
if the company works 2 shifts per day. The overhead charges incurred are, for
steam – Rs. 75,000; forpower – Rs. 25,000; fortransport –Rs. 8000; for rent –
Rs. 15,000; for other expenses – Rs.85,000 per month (26 days).
Table 5.2 Raw materials used and their price

S. No. Items used Quantity used Price in Rs.
1 Dye A 35 kg 350 / kg
2 Chemical 1 80 kg 250 / kg
5 Machine operators used 17 375 / shift
6 Machine helpers used 10 250 / shift
Solution:
Step 1: The total production need to be done = 1,28,000 metres
Daily production of the company = 20,000 metres / shift
(Company works 2 shifts in a day)
Hence, the total shifts required = Order quantity 1, 28, 000
= = 6.4 shifts.
Daily production 20, 000
Step 2: Labour cost
The number of labours used are, 17 machine operators with the wage of
Rs. 375/shift and 10 machine helper with the wage of Rs. 250/shift.
= (17 × 6.4 × 375) + (10× 6.4 × 250) = 40,800+16,000 = Rs. 56,800.00.
Labour cost = Rs. 56,800.
1. Dye A = 35 × 350 = 12,250
2. Chemical 1 = 80 × 250 = 20,000
3. Chemical 2 = 25 × 175 = 4375
4. Chemical 3 = 65 × 200 = 13,000
Total raw material cost = Rs.49,625.
Total overhead cost = Rs. 75,000 + Rs. 25,000 + Rs. 8000 + Rs. 15,000 + Rs.85,000
= Rs. 2,08,000 / 26 days
Hence, the overhead costs for 6.4 shifts are,
2, 08, 000
Overhead / day (shift*) = = Rs. 8000
26
Therefore, 8000 ×6.4 = Rs. 51,200.
Step 5: Total cost of the dyeing
= Rs. 56,800 + Rs.49,625 + Rs.51,200

= Rs. 1,57,625
Add 10% profit = (1,57,625 + (1,57,625 × 10/100)) = Rs.1,73,387.5
1, 73,387.5
Total dyeing cost = = Rs.1.35/ metre of fabric.
1, 28, 000
b) Printing and other finishing cost

The following examples will provide knowledge on how to estimate the cost
of the printing and finishing process. The data provided here are approximate
and they are used only for the understanding purpose.
In the case of finishing and printing cost estimation,the company /
merchandiser must quote the approximate price based on their previous
experience. After the completion of the process, based on the chemicals
consumed and dyes utilised, the exact cost must be calculated. The following
example details the cost based on the overall consumption of all chemicals for
a particular order. Hence for both finishing and printing process, the following
method can be used. Only in the case of printing, few additional charges may
need to be included. Those are explained in this section.
The process of printing is different from the dyeing process, in this
method the colours are applied in a localised manner based on the
requirement in a patterned way. In this process, the dye materials are mixed
with thickeners and other chemicals to make it as a semi solid. The solution
is called as printing paste. This paste is applied based on the design either
by blocks or screens or rollers, etc,. In this, based on the method used,
the following processes are involved; Design development development,
screen preparation, printing paste preparation, fabric preparation, printing,
drying, curing and washing if needed. The factors affecting the cost of the
printing process are:
• Type of printing process –Pigment, discharge, reactive, resist, block,
foil, etc.
• Size of the design
• Methods used – screen, block, roller or others
• Dyes and chemicals used
• Post treatment – curing or drying
• Number of colours.
To calculate the cost of the screen printing process, the following information
need to be included in the costing process.
i) Designing charges – Once the particular design is received, the manufacturer
needs to reproduce the design in the printing screen. For that purpose, the
designing process is carried out. The amounts charged for designing a square
inch varies from Rs. 1.5 to Rs. 3.50 based on the design complication.
5.5 Print Types

•• Plastisol print – Good colour opacity onto dark garments and clear
graphic detail with, as the name suggests, a more plasticised texture.
•• Non-PVC – Relatively new breed of ink and printing with the benefits
of plastisol but without the main toxic components – soft feeling print.
•• High density print – which gives thick prints on the surface of
garments.
• Achieved by either giving more number of coats or by using thickener.
•• Suedo ink print – Suede is a milky coloured additive that is added
to plastisol. With suede additive you can make any colour of plastisol
have “suede” feel.
•• Discharge print – Used to print lighter colours onto dark background
fabrics, they work by removing the dye already present in the garment.
•• Sticker print – The plastisol print is already printed on paper and will
be transferred on to garment in the fusing process.
•• Pigment print – These penetrate the fabric more than the plastisole
inks and create a much softer feel.
•• Glitter print – Metallic flakes are suspended in the ink base to create
this sparkle effect.
•• Metallic print – Similar to glitter, but smaller particles suspended in
the ink.
• Smooth in texture when compared to glitter.
•• Foil print – This printing method is based on the use of metallic foil
paper of aluminium or copper one.
•• Distressed / khadi print – It is the decorative print and it is the activ-
ity of making a print to appear aged and older, giving it a “weathered
look”.
•• Puff print – An additive to plastisol inks which raises the print off the
garment, creating a 3D feel.
•• Cavier bead print – A glue is printed in the shape of the design, to
which small plastic beads are then applied.
•• Silicone print – To counter inferior wash and weather durability, poor
hand feel of some prints like plastisol printing mills tried silicone inks
because of their good washing durability, hand feel, elongation proper-
ties and environmental friendliness.
•• Flock print – This process involves printing of glue on the fabric first,
applying the fibre flock on the gel printed by keeping the fabric on spe-
cial table (electro statically charged).
•• Organic print – Organic print range covers the natural dyes, and
the other pigment dyes which lies under the specifications made by
G.O.T.S.
ii) Frame charges – For screen printing process, the developed films need
to be fitted on a frame to fix with a material. If the print designs differs from
commercial sizes, then the manufacturer needs to make the frames for that
particular order. In that case, the cost of making frames are also included in the
total cost. The cost varies from Rs.150 – Rs.500 (not limited) based on the size.
iii) Exposing and making charges – After making the designs, to transfer
the designs in a film, the making or exposing process is used. The designs are
transferred to the film based on colour, i.e., separate film for individual colour.
In this example, the design contains six colours. Hence, six films need to be
prepared and to complete a full design, the fabric need to be passed through
all the six screens. For this process, the exposing charges vary approximately
from Rs. 0.50 to Rs. 1.50 for the film size used.
iv) Dye selection – Based on the customer requirement, fabric type and print
design requirement, the dyes are selected. The cost of the dye depends upon
the quality of the product. In general, plastisol, pigments, discharge dyes and
non-PVC dyes are commercially used.
Example 8: A screen printing industry received an order with 25,000 T-shirts, to
print a photo print on T-shirt chest area with six different colours. The colour details
are red, blue, grey, white, yellow and green (Table 5.3). For the designing purpose,
the company spends Rs.3.00 per square inch, the cost of making of a single frame
is Rs. 350, the exposing charges per square inch is Rs. 1.00 and curing charges,
Rs.0.25 / garment. The dye quantity consumed colour wise and their price details
are in Table 5.3. Calculate the cost of the print / garment with 10% profit, if the
company works with 6 labours with a wage of Rs.350 per shift and 2500 garments
as their average production per shift. The other overhead charges are, electricity
charges Rs. 25,000 / month,transport charges Rs. 3000 / month, steam Rs. 50,000/
month and other expenses Rs. 75,000 / month. Assume company works 28 days in
a month.The design size is 17”× 13” and the frame size is 24”× 37”.
Table 5.3 Raw materials used and their prices

S. No. Particulars Consumed quantity in kg Price / kg
1 Red colour 12.5 140
2 Blue colour 15 140
3 Grey colour 17.5 120
4 White colour 250 125
5 Yellow colour 12.5 120
6 Green colour 15 120
7 Binder 25 160
8 Fixing agent 6.25 140
Solution:
Daily production = 2500 garments
No. of shifts required to complete the order = = = 10 shifts
The company works 1 shift per day.No. of days to complete the order is 10.
Step 2: Calculation of labour cost
Total printing personnel used are 6 with a wage of Rs.350 each.
= (6×350 × 10) = Rs. 21,000
i) Designing charges
Total design area = 17 × 13
Total number of colours = 6
Charge per square inch = Rs. 3
Total cost = (17 × 13) × 6 × 3 = Rs. 3978.
ii) Frame charges – Given as Rs. 350.
Since 6 colour required, for this design we need 6 frames. So
total cost is,
= 350 × 6 = Rs. 2100.
Note: Here the design area is totally different from the frame
area.
iii) Making charges – Per square inch Rs.1
Total area is = 24 × 37 = 888 inch2
Since it has 6 colours = 888 × 6 = 5328 inch2 (Total area)
Total making cost = 5328 × 1 = Rs. 5328.
iv) Curing charges = Rs. 0.25 / garment.
Total cost = 25,000 × 0.25 = Rs. 6250.
Dye and chemical costs (Table 5.4)
Table 5.4 Dyes and chemicals used and their total cost

Consumed Total cost in Rs =
S. No. Particulars Price / kg
quantity in kg (quantity used × price)
1 Red colour 12.5 140 1750
2 Blue colour 15 140 2100
3 Grey colour 17.5 120 2100

White
4 250 125
colour 31,250
Yellow
5 12.5 120
colour 1500
Green
6 15 120
colour 1800
7 Binder 25 160 4000
8 Fixing agent 6.25 140 875
Total cost Rs. 45,375
Raw material cost = 3978 + 2100 + 5328 + 6250 +45375 = Rs. 63,031.
a) Electricity charges Rs. 25,000 / month,
b) Transport charges Rs. 3000 / month,
c) Steam Rs. 50,000/ month
d) Other expenses Rs. 75,000 / month.
1, 53, 000
Total cost = = Rs. 5464 / day
28 days per month
For this order company works 10 days hence, the total overhead cost = Rs. 54,643.
Step 5: Total cost
=L abour cost + Raw material cost + Overhead = Rs. 21,000 + Rs.
63,031 + Rs. 54,643
= Rs. 1,38,674
1,38, 674
Cost per garment = = Rs. 5.55
25, 000
10
With 10% profit = 5.55+ {5.55× }= Rs. 6.10.
100
5.5 Fabric cost calculation

The above-mentioned examples will help to understand the estimations of
fabric cost per kilogram or per metre individually at different stages of fabric
manufacturing. With the help of those methods, the merchandiser will derive
the cost of the overall processes and he or she will conclude the cost of the
fabric per kg or for an individual garment or for the order quantity required.
With this value, the merchandiser will seek for the sources to reduce the cost
in every processing stage from the yarn sourcing to the finishing. Since, the
cost of the fabric or raw material is a major driving factor for the cost of
the product, the merchandiser or manufacturer will try to keep it as low as
possible always to compete in the real time environment. This section will
showcase the consolidated estimation of total fabric cost from the yarn to
finishing including all process stages.
Example 9: A woven fabric manufacturing industry received an order to
develop fabric with following description with an order quantity of 25,000
metres. The fabric made of 100% cotton in warp and weft with 75 EPI, 70
PPI, Warp count is 60s Ne and the weft count is 40s Ne and the warp and
weft crimps are 5% and 6%, respectively. Considering the fabric add on
and the other cost details that are provided in Table 5.5, calculate the cost
of the fabric per square metre.The weaving shed produces fabric width of
56 inches.
Table 5.5 Fabric particulars and their costs

S. No. Particulars (add on) Price in Rs./kg
1 60s cotton yarn 310
3 Rate of a pick 0.21
4 Scouring and bleaching 125
5 Dyeing (5%) 85
6 Silicone finishing (8%) 65
Solution:
EPI × 39.384 × 453.4 × ( crimp + 100 )
Warp weight =
Warp count × 0.914 × 840 × 100
=
75 × 39.384 × 453.4 × 5 + 100 ( )
60 × 0.914 × 840 × 100
= 30.52 gram.
PPI × 39.384 × 453.4 × ( crimp + 100 )

Weft weight =
Weft count × 0.9140 × 840 × 100
70 × 39.384 × 453.4 × ( 6 + 100 )

=
40 × 0.914 × 840 × 100
= 43.14 grams.
Total weight of the fabric = 30.52 + 43.14 = 73.66 gram per square metre.
310
= 30.52× = Rs.9.46
1000
285
= 43.14× = Rs.12.29.
1000
i) Total cost of the yarn per square metre of the fabric = Rs. 9.46 + Rs. 12.29
= Rs. 21.75.
ii) Weaving cost of the fabric / sq. metre = Fabric width × Pick rate
= 56 × 0.21 = Rs.11.76.
iii) Cost of the grey fabric = yarn cost + Weaving cost = 21.75 + 11.76
= Rs. 33.51.
iv) Processing cost
Scouring and bleaching cost = Rs. 125 /kg;
73.66 (Total weight )

Cost per square metre = 125 × = Rs. 9.20.
1000
Dyeing add on = 73.66 × 1.05 = 77.34 grams / square metre
77.34
Dyeing cost = Rs.85/ kg; cost per square metre = 85 × = Rs. 6.57
1000
Finishing add on = 77.34 × 1.08 = 83.52
83.52
Finishing cost = Rs.65/ kg; cost per square metre = 65 × = Rs. 5.42
1000
Total processing cost = Rs.21.19
Final fabric cost = Grey fabric cost + Processing cost = 33.51 + 21.19 = Rs. 54.7.
Example 10: A woven fabric manufacturing industry received an order to
develop fabric with following description with an order quantity of 40,000
metres. The fabric is made of 100% mercerised cotton in warp and 100%
polyester in weft with the 80EPI, 66 PPI, Warp count is 50s Ne and the
weft count is 80 Denier and the warp and weft crimps are 6% and 8%,
respectively. Consider that, the fabric consumption per shirt is 1.75 square
metre. The fabric has been processed through souring, bleaching (2%),
dyeing (4%) and finishing (6%).The weaving shed produces fabric width
of 63” (Table 5.6).
Note: The values inside the brackets near processing steps are weight add-on
% for Dyeing and finishing and weight loss percentage for bleaching.
Table 5.6 Fabric particulars and their costs

S. No. Particulars Price in Rs./kg
2 Polyester yarn 285
3 Rate of a pick 0.26
4 Scouring 80
5 Bleaching 70
6 Mercerisation 95
7 Dyeing 70
8 Silicone finishing 105
Solution:
EPI × 39.384 × 453.4 × ( crimp + 100 )

Warp weight =
Warp count × 0.914 × 840 × 100
80 × 39.384 × 453.4 × ( 6 + 100 )
=
50 × 0.914 × 840 × 100
= 39.44 gram.
To convert the weft count from denier to English count (Ne),
5315 5315
= = = 66.43
Denier 80
PPI × 39.384 × 453.4 × ( crimp + 100 )
Weft weight =
Weft count × 0.9140 × 840 × 100
66 × 39.384 × 453.4 × ( 8 + 100 )
=
66.43 × 0.914 × 840 × 100
= 24.95 grams.
Total weight of the fabric = 39.44+ 24.95 = 64.39 gram per square metre.
Weight loss after bleaching = 64.38 × 0.02 =1.28.
Since it is weight loss, the final GSM is = 64.38–1.28 = 63.1
GSM after dyeing = 63.1 × 1.04 = 65.62
GSM after finishing = 65.62 × 1.06 = 69.56.

465
= 39.44× = Rs.18.33.
1000
285
= 24.95× = Rs.7.11.
1000
i) Total cost of the yarn per square metre of the fabric =
Rs. 18.33+ Rs. 7.11
= Rs. 25.44.
ii) Weaving cost of the fabric / sq. m = Fabric width × Pick rate
= 63× 0.26 = Rs.16.38.
iii) Cost of the grey fabric =
yarn cost + Weaving cost = 25.44 + 16.38
= Rs. 41.82.
iv) Processing cost
64.38
Scouring cost = Rs. 80 /kg; cost per square metre = 80× = Rs. 5.15
1000
64.38
Bleaching cost = Rs. 70 /kg; cost per square metre = 70 × = Rs. 4.50
1000
63.1
Mercerisation cost = Rs. 95 /kg; cost per square metre = 95 × = Rs. 5.99
1000
65.62
Dyeing cost = Rs.70/ kg; cost per square metre = 70× = Rs. 4.59
1000
69.56
Finishing cost = Rs.105/ kg; cost per square metre = 105× = Rs. 7.30
1000
Total processing cost = Rs.27.53.
Final fabric cost = Grey fabric cost + Processing cost = 41.82 + 27.53
= Rs. 69.35.
If the fabric consumption per shirt is 1.75 square metre,
The fabric cost per garment is = 1.75 ×69.35 = Rs.121.36.
Example 11: Find out GSM of knitted fabric, cost of yarn, fabric and
quantity of yarn to be procured for executing an order of Men’s Polo
T-shirt made out of 100% mercerised cotton with the following details as
in Table 5.7.
Table 5.7 Order details of Men’s polo T-shirt

Knit structure 1×1 Yarn price (40s Ne) Rs. 365 / kg
interlock
Yarn count 40s Ne Knitting charge Rs. 26 / kg
Courses per inch 62 Scouring charge Rs. 67 / kg
Wales per inch 48 Bleaching charge Rs. 42 / kg
Loop length 0.58 mm Mercerisation Rs. 65 / kg
Fabric dimensional 8% Dyeing charge Rs. 85 / kg
shrinkage (reactive)
Compacting @5% level Wrinkle free finish Rs. 50 / kg
Wrinkle free @8% level Compacting charge Rs. 8/ kg
finish
Solution:
loop density × ( 39.384 ) × ( 39.384 ) × loop length in mm

Yarn length in m =
1000
62 × 48 × ( 39.384 ) × ( 39.384 ) × 0.58
=
1000
= 2677.32 metres
0.59 × yarn length in m × (100 + shrinkage )

GSM =
Count ( Ne ) × 100
0.59 × 2677.32 × (100 + 8 )

=
40 × 100
= 42.65 grams per square metre
GSM after compacting = (42.65 + (42.65× 5/100))= 44.78
GSM after finish = (44.78 + (44.78× 8/100)) = 48.36 grams
To calculate the yarn cost,
= Yarn weight / square metre× Yarn price
365
= 42.65 g × = Rs. 15.57 per square metre.
1000
Process charges:
i) Knitting charge = 42.65× 26/1000 = Rs. 1.11
ii) Scouring charge = 42.65× 67/1000 = Rs. 2.86
iii) Bleaching charge = 42.65× 42/1000 = Rs. 1.79

iv) Mercerisation=42.65× 65/1000 = Rs. 2.77
v) Dyeing charge (reactive)=42.65×85/1000 = Rs. 3.63
vi) Wrinkle free finish =-48.36× 50/1000 = Rs.2.42
vii) Compacting charge = 44.78× 8 /1000 = Rs. 0.36
Total fabric cost = (15.57 + 14.94) = Rs. 30.51 / sq.m.
5.6 Cost calculation in apparel production

departments
The process and yarn cost discussed in the previous sections are basically
considered as fabric cost. So, whenever merchandisers of a company
are into a situation to manufacture the fabric with their own facility, all
those above mentioned criteria are necessary. In some other situation,
the apparel manufacturing industry making woven or knitted garment,
irrespective of the type of industry, sources the required fabric as per the
buyer’s specification from the leading fabric manufacturers in the market.
In that case, these calculations will help the merchandiser to work out
actual cost of the fabric on their own. So, the merchandiser will seek for
the correct fabric price from the available vendors. However, the foremost
and important task for the merchandiser is, to arrive at the cost of various
departmental activities inside an apparel manufacturing firm and to derive
the overall cost of the product. Most of the time it is named as Cut Make
Trim (CMT) cost or Cut Make Packing (CMP) cost. In all cases, the
merchandiser job is to estimate the cost of the all activities involved in the
product manufacturing facility.
This section will detail the simple cost calculation procedures normally
followed in the industry to estimate the departmental cost for any order.
5.6.1 Cutting department costs

In cutting department of an apparel industry, the general process flow will be,
a) Relaxing of the fabric
b) Marker planning
c) Spreading and marker making
d) Cutting
e) Bundling and sticking sticker in the pieces.
In calculation of the cutting cost, one has to consider the various raw
materials involved in the each stage of the manufacturing process and labours
involved in the process. Other than these, there are few other technical
parameters that are listed here, which have direct influence in the costing
process of the cutting department. They are,
• Number of plies used per spread – this determines the time required
to complete the order. More number of plies per spread will reduce
the operating time and so the cost of the process.
• Type of cutting used – manual cutting or machine cutting. In ma-
chine also, the type of machine. Normal straight knife, band knife or
computer controlled cutting machine. Based on the type of machine,
the cost factor will vary. The computer controlled cutting machine
completes the process in a short time than the manual and other
machine. But the operating cost of the machine and labour cost are
slightly higher than the other methods.
• Fabric type – The thickness, fibers used and structures decides the
number of layers, spreading methods and direction.
• Marker planning –Based on the maximum fabric utilisation, the
marker planning may suggest few changes in the spreading length
width and number of plies, which has direct influence in the cost of
the cutting process.
• Ply direction –The fabric type decides the of ply direction. It has
direct influence on the number of plies and spreads.
• Style complication of the garment and number of components.
The following examples will clearly explain the method of calculating the
cost for cutting department.
Example 12: A company received an order with the order quantity of 20,000
garments. The factory works with fourcutting masters and three helpers. The
wages the company provides are Rs. 250 /shift for masters and Rs. 100 /shift
for helpers. The average day production per shift is 2000 garments and the
company works two shifts per day. After cutting process, they have to prepare
the cut material for the sewing process. For that, they have to make 100 cut
parts together onto a bundle and every bundle is tagged with one tag which
details the description of the part. After bundling, all the pieces in the bundle
are stocked with a size sticker. Each garment consists of five parts. Calculate
the cutting cost for the order with 15% profit, if the price of the tag is Rs.
0.50 and the sticker is Rs.10/100 sticker and the company spends Rs.2000 for
power per month, Rs. 1,00,000 for other salary/ month, Rs.20,000 for building
rent per month.
Solution:

= =
No. of shifts required to complete the order= Daily production 10
2000
shifts
The company works twoshifts per day,
Hence the number of days required to complete the order is
Total shifts to finish order 10
= = =5
Shifts / day 2
No. of days to complete the order is 5.
In the department,fourcutting masters and threehelpers are involved in the
work with the wage of Rs. 250 and Rs. 100 per shift.
= (4×250×10)+(3 ×100×10) = 10,000+3000 = Rs. 13,000
The garment consists of five components and the order quantity is 20,000
garments.
Bundles
The cut components were made as bundle of 100 pieces.
Each garment has five parts. Hence, for 20,000 garments,
Number of parts = 5 × 20,000 = 1,00,000 parts.
1, 00, 000
So the number of bundles = = 1000 bundles.
100
Stickers
• Totally 1,00,000 components were cut. Hence 1,00,000 stickers are used.
The cost of the sticker = Rs.10/100 sticker
10
Hence, for 1,00,000 components = 1,00,000 × = Rs. 10,000.
100
Sticker cost =Rs.10,000.
Tag
The price of tag = Rs. 0.50
Total number of bundles = 1000 bundles
1 bundle =1tag. Therefore, for 1000 bundle =1000 tags
Price of tag =Rs.0.50 × 1000 = Rs.500
Total material cost = 10,000 + 500 = Rs. 10,500.
Step 4: Calculation of overhead costs

The company spends following costs as overhead. Assume company works
30days per month.
• Rs.2000 for power per month,

• Rs. 1,00,000 for other salary/ month,
• Rs.20,000 for building rent per month.
= Rs.2000 + Rs.1,00,000 + Rs.20,000 = Rs. 1,22,000
1, 22, 000
Cost / day = = Rs.4066.66
30
Company works for this order only for 5 days. Hence, the cost of five days
can be made as
= Overhead cost of a day × 5 = 4066.66 × 5 = Rs. 20,333.33.
Step 5: Calculation of total cost
= Rs.13,000+Rs.10,500 +Rs.20,333.33
=Rs.43,833.33
15
Adding 15% profit = 43,833+ {43,833 × } = Rs. 50,408.32
100
Total cutting cost of the order = Rs. 50,408.32
Total cost 50, 408.32
Cutting cost / garment = = = Rs. 2.52
The cutting cost of the garment is Rs. 2.52.
Example 13: A company received an order with the order quantity of

10,000 garments. The factory works with five cutting masters and two
helpers. The wages the company provides are, Rs. 200 /shift for masters
and Rs. 150 /shift for helpers. For cutting process, the company used one
band knife machine and four straight knife machines throughout the order
processing time. In this, the band knife machine was rented from a supplier
for the cost of Rs. 2500 per day and the straight knife was company owned.
For that straight knife company spends Rs. 250 / machine after every shift
for cleaning and knife changing during the working time. By using these
machines, the average day production per shift is 1500 garments and the
company works one shift for every day. After cutting process, they have to
prepare the cut material for the sewing process. For that, they have to make
25cut parts together onto a bundle and every bundle is tagged with one tag
which details the description of the part. After bundling all the pieces, the
bundles are stocked with a size sticker. Each garment consists of 12 parts.
Calculate the cutting cost for the order with 8% profit, if the price of the
tag is Rs. 1.50 and the sticker is Rs.12/125 sticker and the company spends
Rs.5000 for power per month, Rs. 50,000 for other salary/ month, Rs.15,000
for building rent per month.
Solution:
Step 1:Number of shifts required to complete the order.
Number of shifts required to complete the order = = =
6.66 shifts = 7 shifts
The company works oneshift per day, hence, the number of days required to
complete the order is = 7.
In this department, five cutting masters and two helpers are involved in the
= (5 × 200 × 7) + (2 × 150 × 7) = 7000+2100 = Rs. 9100
Labour cost = Rs. 9100.
The garment consists of 12 components and the order quantity is 10,000
garments.
Bundles
Each garment has 12 parts. Hence, for 10,000 garments
= 12 × 10,000 = 1,20,000 parts.
1, 20, 000
25
Stickers
• Totally 1,20,000 components were cut. Hence 1,20,000 stickers are
used.
The cost of the sticker = Rs.12/125 sticker
12
Hence, for 1,20,000 components = 1,20,000 × = Rs. 11,520.
125
Sticker cost =Rs.11,520.00.
Tag
The price of tag = Rs.1.50
1 bundle = 1tag. Therefore, for 4800 bundle = 4800 tags
Price of tag = Rs.1.50 × 4800 = Rs.7200
Total material cost = 11,520 + 7200 = Rs. 18,720.
Step 4: Calculation of other expenses

The company works 7 days to complete the order.
Hence, the band knife machine is rented for 7 days. The rental amount for a
day is Rs. 2500
Hence for 7 days,
= 2500 × 7 = Rs. 17,500
The number of straight knife machine used = 4 and the amount spent / shift /
machine is = Rs.250
The company works oneshift per day. Hence,
Expenses occurred on the straight knife machine = 4 ×250 × 7 (shifts) =
Rs.7000
Total machine expenses = 7000 + 17,500 = Rs. 24,500.00.
26 days per month.
• Rs.5000 for power per month,
• Rs. 50,000 for other salary/ month,
• Rs.15,000 for building rent per month.
=Rs.5000 + Rs.50,000 + Rs.15,000 = Rs. 70,000
70, 000
Cost / day = = Rs. 2692.30
26
Company works for this order only 7 days. Hence, the cost of 7 days can be
made as
= Overhead cost of a day ×7 =2692.30×7 = Rs. 18846.10.
Total cost = Labour cost + Material cost + Machine cost + Overheads
= Rs.9100 + Rs.18,720 + Rs.24,500 + Rs.18,846.10
= Rs.71,166.10
8
Adding 8% profit = 71,166.10+ {71,166.10× } = Rs. 76,859.38
100
Total cutting cost of the order = Rs. 76,859.36
Total cost 76,859.36
Cutting cost / garment = Order quantity = 10, 000 = Rs. 7.68
The cutting cost of the garment is Rs. 7.68.
5.6.2 Sewing department costs

In the sewing department of an apparel industry, the costing processes involved
are based on the machine types involved. Since, the operators are paid based
on their operating machine, it is essential to a merchandiser to know where a

particular type of seam is used. In general, the sewing department uses three
fundamental machine namely single needle lock stitch machine, overlock
machine and flat lock machine for both woven and knitted material. In sewing
department, based on the garment style, sometimes there may be a requirement
of special machines, in that situation, the company use to rent that machine
from different firms. In that case, the rent amount also needs to be included
in the costing process. Hence, on an overall aspect, the merchandiser should
understand the detailed operation breakup and stitches and seams used for any
given garment. So that based on the target date, he/she can decide the number
of operators to be set in a line and can arrive at the total costing of the sewing
department. Other than this, there are few raw material like buttons, zippers,
tapes and hooks which arealso directly used during sewing process. Cost of
any material that will remain in the final garment which is used in sewing
process will be added in sewing process cost as direct raw material cost. In
general, the influencing factors are:
a) Garment style details and number of operation – Based on the style
complication, the number of machines and operators need to be used
will vary. This will influence the cost of the garment.
b) Number of component and the size –The number of components and
size of the garment influence the operator handling and thus reduces
the working efficiency. Hence, the required time to complete the par-
ticular operation or garment will be high.
c) Type of fabric – The type of fabric has direct influence of the
production.
d) Special operations – Sometimes, a special operation may require a spe-
cial machine to perform it. Thus, the rental cost of the machine and
operator cost may hike the total garment cost.
e) Quality requirements –The quality details defines expected require-
ments. Hence, to achieve the required quality, the sequence of opera-
tion or number of steps performed in any operation may be altered and
hence the cost of the process increases.
The following examples detail the costing procedure in the sewing
department.
Example 14: An apparel manufacturing firm works with 12 single needle

operators, 18 over lock machine operators and 8 flat lock machine operators
to complete an order quantity of 10,000 garments with the average production
of 1667 garments per shift. The wages of the operator were Rs. 250.00, Rs.
200.00 and Rs. 150.00 per shift, respectively for flat lock, single needle and
over lock machine. The factory uses 8 helpers for this line alone with the wage
of Rs.120.00 per shift. Other than this during sewing, for construction, each
garment consumes 70 metres of sewing thread, 1.5 metre of twill tape and
7 buttons. The cost of the sewing thread is Rs.75 per cone, cost of the twill
tape is Rs.5.00 per metre and cost of the button is Rs. 100/ gross. The other
overheads incurred are Rs.25,000 / month for salary of other staff, Rs. 20,000
/ month for building rent and Rs.1,50,000 for other expenses. Calculate the
sewing cost of the factory with 15% profit, if the company works one shift
per day.
Solution:
5.99 ~ 6 shifts
The company worksone shift per day, hence number of days to complete
the order is 6.
The operators in this department are 12 single needle operators, 18 over lock
machine operators and 8 flat lock machine operators and 8 helpers
= (12(Single needle machine) × 200 × 6) + (8(Flatlock machine) ×
250 × 6) + (18(Over lock machine) × 150 × 6) + (8(Helpers) × 120 × 6)
Note: Since different machine operators were paid different wages, the
total expenditure is calculated machine wise and then added together.
= 14,400 + 12,000 + 16,200 + 5760 = Rs. 48,360
Sewing thread
During sewing, each garment consumes 70 metres of sewing thread.
Total number of garments = 10,000
= 70 ×10,000 = 7,00,000 metres
Normally, sewing thread for industrial usage comes in 5000 metre
cones. For domestic purpose, it is available in 2000 metre spools. Hence, the
cost provided is the cost of one cone with 5000 metre.
7, 00, 000
So the number of cones required to finish the order = = 140 cones
5000
Cost of one cone is Rs. 75.00, hence, the total cost of the sewing thread
is,
= 75 × 140 = Rs. 10,500.
Twill tape
During sewing, each garment consumes 1.5 metres of twill tape.
= 1.5 × 10,000 = 15,000 metres
Cost of tape is Rs. 5, hence, the total cost of the twill tape is,
= 5 × 15,000 = Rs. 75,000.
Button
During sewing, each garment consumes sevenbuttons.
= 7 × 10,000 = 70,000 buttons
Note: Buttons generally available in the unit of gross (12 dozen).
Each gross consist of 144 buttons. Hence, the price of the button is usually
provided for a unit (gross).
Cost of button / gross is Rs.100; hence, the total number of button
required is,
70, 000
= = 486.11 ~ 487 gross.
144
Hence the total button cost = 100 × 487 = Rs. 48,700
Total material cost = 10,500 +75,000+48,700 = Rs. 1,34,200.
30 days per month.
• Rs.25,000 / month for salary of other staff,
• Rs. 20,000/month for building rent
• Rs.1,50,000 for other expenses
= Rs.25,000 + Rs.20,000 + Rs.1,50,000 = Rs. 1,95,000

1,95, 000
Cost / day = = Rs. 6500.
30
Company works for this order only 6 days. Hence, the cost of six days
can be made as
= Overhead cost of a day × 6 =6500 × 6 = Rs. 39,000.00.
= Rs. 48,360 + Rs.1,34,200 + Rs. 39,000
=Rs. 2,21,560.
15
Adding 15% profit = 2,21,560+ {2,21,560× } = Rs. 2,54,794.00
100
Total sewing cost of the order = Rs. 2,54,794.
Total cost 2,54, 794
Sewing cost / garment = = = Rs. 25.48
The sewing cost of the garment is Rs. 25.48.
5.6 COST PER MINUTE OF A SEWING LINE

Total salary of the sewing line
…………………………………………………………………….…
Total number of man power × Daily working hour’s × 60 × Line efficiency%
Actual salary per day of all the operators and helpers

=……………………………………………………….....……………….
Total number of garments produced × Standard allowed minute (SAM) of garment
This formula can be used for the any operation or department to estimates
the cost of the process or department, provided the required information.
Example 15: An apparel manufacturing unit received a T-shirt order with the
order quantity of 9720 garments. The detailed illustration of the T-shirt is
provided in Figure 5.2. Calculate the sewing cost of the garment if the operator
wages for the machines are Rs.300 (over lock), Rs. 350 (single needle lock
stitch) and Rs. 375 (flat lock) per shift. The actual target date is 3 days from
today. Consider the company works two shifts per day.
Figure 5.2 Description of a T-shirt

During the manufacturing process, the company rented the button hole
and button attaching machines externally from a vendor for this order. The
button hole making machine is rented based on hour and the button attaching
machine is rented in shift basis. For button attaching machine, the rent per
shift is Rs. 1800 and for the button hole making machine, the rent per hour is
Rs. 250. The average production of button attaching machine is 200 garments
per hour and for the button hole machine is 350 per hour. For construction of
one garment 75 metres of sewing thread, 0.5 meters of twill tape and three
buttons are used. The cost of the sewing thread is Rs. 80/cone, twill tape is
Rs.2/meters and button cost is Rs.90. The cost spent for embroidery per gar-
ment is Rs.2.50. Calculate the sewing cost with 8% profit.
Solution:
The order quantity = 9720 garments
Target date = 3 days
Order quantity 9720
Number of days required to complete the order = = =
Target days 3
3240 garments/day
Since the company works two shifts per day,
3240
the production requirement / shift = = 1620 garments / shift
2
1620
Target per hour = = 202.5 ~ 203 garments / hour.
8
Since, no information regarding the labours was provided in the detail, by
using the garment picture, we can derive the actual number of labours required
to complete the order.
From Figure 5.2, we can develop the operation break up as provided in Table 5.8
Table 5.8 Operation break up and SMV allocation

S. Output / No. of
Operations M/C used SMV
No. hour operators
Target: 203 garments / hour
1 Placket preparation SNLS 0.3 200 1
2 Placket attach SNLS 0.6 100 2
3 Placket finishing SNLS 0.3 200 1
4 Size and brand label attach SNLS 0.25 240 1
5 Shoulder attach (both the sides) OL 0.6 100 2
Sleeve rib attach (both the

6 OL 0.3 200 1
sleeves)
7 Sleeve attach (both) OL 0.5 120 1.69 ~ 2
8 Collar attach OL 0.6 100 2
9 Collar finishing SNLS 0.4 150 1.35 ~ 1
10 Collar tape attach SNLS 0.5 120 2
11 Slit preparation OL 0.3 200 1
12 Side seam OL 0.6 100 2
13 Bottom hem FL 0.4 150 1
14 Top stitch on arm hole FL 0.6 100 2
Total
Total SMV 6.25 21
operators
To achieve the provided target, the company needs to use totally 21

operators with the following breakup.
a) Single needle machine – 8 operators
b) Overlock machine –10 operators
c) Flat lock machine – 3 operators
= (8(Single needle machine) ×350× 6) + (3(Flatlock machine) ×375× 6) +
(10(Over lock machine) ×300× 6)
Note: Since different machine operators were paid different wages, the total
expenditure calculated machine wise and then added together.
= 16,800+6750+18,000 =Rs. 41,550
Step 3: Calculation of other expenses – Machine rental costs
i) Button hole machine – rented hourly basis
Average production / hour = 350
Rent / hour = Rs. 250
Order quantity 9720
Hence, the total requirement of the machine is = =
 Target  350
 
 hour 
= 27.77hour ~ 28 hours
Hence, the total cost spent = 28 * 250 = Rs. 7000.
ii) Button attaching machine – rented shift basis

Rent per shift is Rs. 1800
Average production is 200 garments per hour
Order quantity 9720
Hence, the total requirement of the machine is = =
 Target  200
 
 Hour 
48.6
=48.6 hours = = 6.07 shifts ~ 6 shifts
8
Hence, the total cost spent = 6.07* 1800 = Rs. 10,926.
The total rental expenses for this order is = 7000 + 10,926 = Rs. 17,926.
Sewing thread
Total number of garments = 9720
= 75×9720 = 7,29,000 metres
7, 29, 000
So the number of cones required to finish the order = =
5000
145.8 ~ 146 cones
Cost of one cone is Rs. 80.00, hence, the total cost of the sewing
thread is,
= 80 × 146 = Rs. 11,680.
Twill tape
= 0.5 × 9720 = 4860 metres
Cost of tape is Rs. 2/ metre, hence, the total cost of the twill tape is,
= 2 × 4860 = Rs. 9720.
Button
During sewing, each garment consumes three buttons.
= 3 × 9720 = 29,160 buttons
Cost of button / gross is Rs.90; hence, the total number of button
required is,
29160
= = 202.5 ~ 203 gross.
144
Hence the total button cost = 90×203 = Rs. 18,270.
Embroidery
5.7 Embroidery Cost

The factors which affect the cost of the embroidery is
• Stitch quantity of the design
• Rate of per unit.
Here, a unit is considered as 1000 stitches. (Mostly for a dozen of gar-
ments unit is considered as 12,000 stitches). The formula is
Stitchquantity
= × Rate per unit
1000
For example, if the designs requires 7580 stitches and the cost of the em-
broidery process is Rs. 0.50, the cost of embroidery per garment is,
7580
= × 0.5 = Rs. 3.79.
1000
Cost of the embroidery / garment = Rs. 2.50

Total cost = 2.50 × 9720 = Rs. 24,300.
Total material cost = 11,680 + 9720 +18,270 + 24,300 = Rs. 63,970.
Note: Information regarding overhead costs is not provided. Hence, it is not
included in the calculations. However, in industry if the information is not
available (unable to collect or exists) the merchandisers will assume the
overhead as 120% of direct labour cost (based on requirement risk factor
involved with the order).
Total cost = Labour cost + Material cost + Other expenses + Overheads
120
= Rs. 41,550+Rs. 63,970 +Rs.17,926+ [41,550+ {41,550 * }]
100
= Rs.2,14,856.
8
Adding 8% profit = 2,14,856 + {2,14,856× } = Rs. 2,32,044.48
100
Total sewing cost of the order = Rs. 2,32,044.48.
Total cost 2,32, 044.48
Sewing cost / garment =
Order quantity
= = Rs. 23.87
9720
The sewing cost of the garment is Rs. 23.87.
5.8 Factors Affecting Cost of Embroidery

• Number of stitch
• Type of embroidery
• Time require to complete one batch
• Colour of thread
• Cutting of appliqué
• Place of embroidery
• Resource and hand involves in doing embroidery
• Any restriction on selection on embroidery machine
• Any compliance requirement
• Any restriction on use of embroidery thread
• Any lab test requirement.
5.6.3 Trimming and checking department cost

In trimming department, based on the factory size, either machine trimming
or manual trimming process is performed. Here, the efficiency and quality
of the operation depends upon the labour skill. The work of the checking
department is totally manual. The stitched garments will be inspected visually
for damages or quality deviations from the requirements are evaluated.
Here, the damages or quality imperfections are identified and the garments
are sent to rework for sewing department. Those garments are re checked
after re stitching and then passed to the next department. In trimming and
checking, no additional raw materials are used in general. Hence, the cost of
this department will generally will be labour cost or sometimes along with
it the trimming machine running cost will be included. In few cases, the
companies will also do job order.
Note: Job order or outsourcing: Any particular process e.g.,checking will be
given to external firms those who are specialised in that process and they get
the work done. In that case, the manufacturing company will pay the external
firm on the basis of rupees per garment. Based on the style complication, the
cost will be finalised by both the parties.
In trimming and checking department, the cost factor depends up on the
following factors:
i) Size and style complication of the garment
In trimming – For complicated styled garments, the number of
stitched components will be higher. This leads to more places to
trim and thus increases the time per garment. With respect to larger
garments, the handling will delay the process time per garment.
In checking – More number of parts or complicated styles lead to

deviate from the standard checking procedure and hence, the time
consumption increases.
ii) Quality requirement – Based on the specific requirement for individ-
ual styles, the trimming and checking points are increased. This will
lead to higher cost consumption.
Following examples will detail the steps involved in the checking
department cost calculation process.
Example 16: An apparel firm performs checking process after receiving the
garments from sewing department. The average production of the checking
department is 1200 garments and the order quantity is 20,000 garments. The
number of checkers used for the checking operations is 15 with the wages
of Rs.225 per shift. Calculate the cost of the checking department with 10%
profit if the company works one shift per day. The other overheads spent by
the company are Rs.15,000 for power, Rs.5000 for other salary,Rs.7000 for
building rent per month.
Solution:
Number of shifts required to complete the order =
= =
= 16.66~ 17 shifts
The company works oneshift per day, hence number of days to complete the
order is 17.
The operators in this department are 15.
Wages per shift = Rs. 225
= (15× 225 ×17) = 57,375

30 days per month.
• Rs. 15,000 / month for power,
• Rs. 5000/month for staff salary
• Rs.7000 for rent.
= Rs.15,000+Rs.5000+Rs.7000 = Rs. 27,000

Consider, company works 26 days in a month, then the
27, 000
Cost / day is = = Rs. 1038.46
26
Company works for this order only 17 days. Hence, the overhead cost of 17
days will be
= Overhead cost of a day × 17 =1038.46 × 17 = Rs. 17,653.84.
Total cost = Labour cost + Overheads
= Rs. 57,375 + Rs. 17,653.84
= Rs. 75,028.84.
10
Adding 10% profit = 75,028.84 + {75,028.84× } = Rs. 82,531.73.
100
Total checking cost of the order = Rs. 82,531.73.
Checking cost / garment = Order quantity = 20, 000 = Rs.4.12
The checking cost of the garment is Rs. 4.12.
Example 17: A trimming and checking department of a company received an order

quantity of 10,000 garments. The total number of labour used in the trimming and
checking process are 8 and 15, respectively. The wages spent are Rs.225 and Rs.
275,respectively for the trimming and checking personnel. The average production
of the department (for similar garments) is 800 garments per day and the department
works 2 shifts per day. Due to the complexity of the garment, two checking
personnel are used for the rechecking process with the same wage but one shift per
day. Calculate the checking cost of the style with 5% profit.
Solution:
Number of shifts required to complete the order= Order quantity
=
10, 000
=
12.5 shifts
Since, the company works two shifts per day, they need to work 6.25 days to
complete the order.
The operators in this department are 8 trimming persons and 15 checking
persons and 2 re checking persons.
Wages per shift = Rs. 225 for trimming persons and Rs. 275 for checking
persons.
Note: The rechecking personnel work 1 shift per day. Hence, for 6.25 days
they will work only 6.25 shifts. But the trimming and checking department
personnel will work for 12.5 shifts in 6.25 days.
= (8× 225 × 12.5) + (15 × 275 × 12.5) + (2 × 275 × 6.25)
= Rs. 22,500 + Rs. 51,562.5 + Rs.3437.5
Since, the overhead details are not provided, the 120% of the direct labour
cost will be used as overhead for the 6.25 days.
120
Overhead cost for the total order running days = Direct labour cost × ( )
100
120
= 77,500 × ( ) = Rs. 93,000.
100
Total cost = Labour cost + Overheads
= Rs.77,500+Rs. 93,000
=Rs.1,70,500
5
Adding 5% profit = 1,70,500 + {1,70,500× } = Rs. 1,79,025.
100
Total checking cost of the order = Rs. 1,79,025.
Total cost 1, 79, 025
Trimming and checking cost / garment =
Order quantity
= 10, 000
= Rs.17.90
The trimming and checking cost of the garment is Rs. 17.90.
5.6.4 Packing department costs

The process of packing department includes the following as a part of it.
They are
a) Pressing the garments
b) Folding and packing (primary packing like poly bag)
c) Attachment of packing materials like tags, stickers and etc.
d) Assorting and packing into carton boxes

e) Strapping and tapping the boxes.
In these activities, the skill level requirement of the labour varies at
different situations, the outer packing and pressing / ironing process involves
hard jobs where mostly men workers are used. In the case of primary
packing and packing material attachment processes, the women workers are
used based on the physical difficulties involved with the job. Following are
the important factors which have direct influence on the packing cost of the
garment.
i) Style feature of the garment – based on the style of the garment, the pressing
process and fold time will increase and so the cost of the product also will
increase.
ii) Type of packing methods (Primary) used – The method of folding and
packing also causes huge delay in some cases due to the practical difficulties
like finding outthe following: “where the tags are to be inserted?”,“which
part of the garments should be labelled?” and“Whether the stickers are to be
placed inside the primary packing or outside of the pack?”All these processes
affect the costing.
iii) Number of packing material – When the number of packing material
increases, the complexity in the placement of the packing also increases.
Hence, the packing process time gets delayed for each material.
iv)Type of assortment and outer packing – Assortment is the process of
arranging the primary packed material into the carton boxes. This is one of the
requirements of the customer. Hence, the criteria should be strictly followed.
The different types of assortments are
a) Solid size and solid colour – Each box contains one size in one
colour
b) Solid size and assorted colour – Each box contains one size in
different colours
c) Assorted size and solid colour - Each box contains different size
as per requirement of the customer and all those in one colour. The
ratios of size will be based on customer requirement
d) Assorted size and assorted colour –Each box contains one size and
different colours as per requirement of the customer. The ratios of
colour will be based on customer requirement.
The following examples will detail the cost calculation process involved
with the pressing and packing department.
Example 18: A packing department received an order of polo T-shirt with

quantity of 9550 garments. The department needs to press the garments and
pack it in the following method. Four T-shirts are needs to be packed with a
single pouch with an insert card for each garment and each garment must be
tagged with a brand name tag. The bullet tag is used for each tagging process.
Each pouchis stuck with one small barcode sticker and a size sticker. Each
carton box consists of 50 pouches. One big barcode sticker is stuck on each
carton box. After that, the carton box is taped with a brown gum tape. Each tape
roll can be used to pack five carton boxes. The company works with pressing
and packing production capacity of 1050 garment per day if the company works
one shift per day. The pressing department consists of eight labours with the
wage of Rs.280 per shift. The number of packing person used in the department
is 10 and their wage is Rs. 250 per shift. Calculate the packing cost of the order
with 3% profit. The cost details of the raw material are provided as follows: The
cost of a pouch –Rs. 3, Carton box is Rs.50, Insert card isRs. 0.90, Price of a tag
is Rs.0.40, Small barcode sticker price is Rs. 0.20, Size sticker price is Rs. 0.20,
Bullet (to tag brand tag) price is Rs. 15/100 bullet, Big barcode sticker price is
Rs. 1.00 and the price of the gum tape is Rs. 20 / roll. The average overhead
expenditure for the department is Rs. 850 per day.
Solution:
The order quantity = 9550 garments
Order quantity 9550
= 9.09 ~ 9 shifts
The company works one shift per day, hence number of days to complete the
order is 9.
The operators in this department are 8 operators in pressing, 10 persons in
packing.
= (8 × 280 × 9) + (10 × 250 × 9)
= 20,160 + 22,500 =Rs. 42,660
Pouch
During packing, four garment packed in one pouch.

9550
Number of pouch required to complete the order = = 2387.5
4
~ 2388 pouches
The cost of one pouch is Rs. 3, hence, the cost of the pouch is,
= 2388 × 3 = Rs.7164.
Carton box
Each carton box consists of 50 pouches. Hence, the number of carton
2388
box required to complete the order quantity is = =47.76 ~ 48 carton
50
box.
Cost of one carton box is Rs. 50, hence, the total cost is,
= 50 × 48 = Rs. 2400.
Insert card
The price of the card is Rs. 0.90
Each garment is inserted with a card. Hence 9550 cards used for
the order.
The total cost is = 0.90 × 9550 = Rs. 8595.
Brand tag
The price of the tag is Rs. 0.40
Each garment is tagged with the tag. Hence 9550 tags used for the order.
The total cost is = 0.40 × 9550 = Rs.3820.
Bullets
The price of the bullet is Rs. 15 / 100 bullet. So, Rs. 0.15 per bullet
Each garment is tagged with the tag. Hence 9550 bullets used for the order.
The total cost is = 0.15 × 9550 = Rs.1432.50.
Stickers
Cost of the small barcode sticker is Rs. 0.20 and the size sticker isRs. 0.20
Each pouch consists of one barcode and one size sticker.
Hence the cost of the sticker is,
= (0.2 × 2388) + (0.2 × 2388)
= Rs. 955.20.
Big barcode sticker and gum tape
Total number of carton box used for the order is 48.
Hence, the number of big barcode sticker required is 48. So the cost of the
barcode sticker is,
= 48 × 1 = Rs. 48.
Each gum tape roll can be used for fiveboxes, Hence, number of rolls required
48
= = 9.6 ~ 10 rolls
5
Cost of one roll is Rs. 20. Hence the total cost is = 10 × 20 = Rs. 200.
Total material cost = Rs.7164 + Rs. 2400 + Rs. 8595 + Rs.3820 + Rs.1432.50 +
Rs.955.20+ Rs. 48 + Rs. 200
= Rs.24,614.70.
The average overhead expenditure / day is Rs. 850
The total number of working day is 9
Hence, the cost is,
= 850 × 9 = Rs. 7650.
= Rs. 42,660 + Rs. 24,614.70 + Rs. 7650
= Rs. 74,924.7.
3
Adding 3% profit = 74,924.7+ {74,924.7× } = Rs. 77,172.44
100
Total packing cost of the order = Rs. 77,172.44.
Packing cost / garment = = = Rs. 8.08
Order quantity 9550
The packing cost of the garment is Rs. 8.08.
Example 19: A packing department received an order of ladies woven pant

with quantity of 12,250 garments with a size ratio of 1:2:2:1.The average
production of the department is 1750 garments per shift. The department
needs to pack the garments in the following method;each pant should be
placed in a hanger and coved with a poly bag. Basically the order consists
of 4 different sizes, hence for each size different hangers used. The costs of
the hangers are, Rs.5, Rs.7, Rs. 8 and Rs.10, respectively for S, M, L and XL
sizes. The covered material kept in assorted manner into the carton box with
the size ratio of 2:4:4:2. After packing it into carton box, the box was strapped
with plastic tape and stuck with a sticker about content and customer details.
For this pressing and packing process, company used 15 workers. Out of that
five were used for pressing, six for inserting hanger and four for inserting poly
bag. The wages for the workers are Rs. 255/shift for pressing, Rs. 250/shift for
hanger inserting process and Rs.200/shift for packing. The cost of the sticker
is Rs.0.75/ piece and the plastic strap is Rs.4/metre. The strapping machine is
rented form an external concern for the cost of Rs.50 per hour. The machine
can pack 15 boxes / hour. The cost of the poly bag is Rs.0.20 per bag. Cost of
carton box is Rs.8 per box. Consider each carton box consumes 1.85 metres of
strap. The company spends Rs.3000 for other expenses, Rs.8000 for rent and
5.9 Poly Bag Consumption

The factors affecting poly bag consumption are,
• Poly bag length in inch
• 1/2 flap of poly bag (because flap is single layer and length, width
of poly bag is double layer)
• Poly bag width in inch
• Thickness of poly bag in gauge
• Number of print on the poly bag (print means text, logo, warning etc.)
In general, most used poly bags in garments industries are PP (polypropyl-

ene) poly bags, PE (polyethylene) and LDPE (low-density polyethylene),
HDPE (high-density polyethylene) etc. Basically there’re three different
ways to measure poly bags thickness.
• Mil (1 mil = 1 / 1000 of an inch)
• Microns (1 microns = 1 / 1000 of a mm)
• Gauge (1 gauge = 1 / 1,00,000 of an inch)
Conversion, 1 mil = 25 microns = 100 gauge. Gauge is the most used
system of counting poly bags’ thickness worldwide.
To calculate the kgs of polymer needed for 1000 pieces of poly bag
production,
If suppose, A poly bags having length 30″, flap 3″, width 16″, poly
thickness 150 gauge. The polymer requirement for 1000 pcs are,
( ) (
30 + 1.5 × 16 × 150 Gauge )
=
(
3300 Constant )
= 22.91 kgs for 1000 pieces,
For one poly bag, it is 0.023 kg of polymer. From this the merchandiser can
derive the requirements.
Rs.25,000 for other staff salary and Rs.5000 for power in every month. If the
department works 25 days in a month, calculate the total packing cost of the
order and packing cost on the garment.
Solution:
7 shifts.
The operators in this department are five operators in pressing, six persons in
hanger insertion and four for packing with poly bag.
= (5 × 255 × 7) + (6 × 250 × 7) + (4 × 200 × 7)
= 8925+ 10,500+ 5600 =Rs. 25,025
Hanger
There are four different hanger sizes with different price.
The size ratio is = 1:2: 2: 1
Hence, the number of hanger require is,
1
For S and XL Size = × 12,250 = 2041.6 ~ 2042 hangers required
6
2
For M and L Size = × 12250 = 4083.3 ~ 4083hangers required
6
Hence, the hanger cost is,
Cost of the S size hanger is Rs. 5 = 2042 × 5 = Rs.10,210
Cost of the M size hanger is Rs. 7 = 4083 × 7 = Rs.28,581
Cost of the L size hanger is Rs. 8 = 4083 × 8 = Rs. 32,664
Cost of the XL size hanger is Rs. 10 = 2042 × 10 = Rs.20,420
Total cost of the hanger = Rs.91,875.
Poly bag
Each garment hanged with a poly bag, hence, total bags used is 12,250.
Cost of one bag is Rs. 0.20; hence, the total cost is,
= 0.20 ×12,250 = Rs. 2450.
Carton box
Each carton box consists of size wise assorted garments in the
2:4:4:2ratio.
Hence, to calculate number of cartoon box.
For S and XL Size = 2042 garments
For M and L Size = 4083 garments
2042
For S and XL size = = 1021 carton box;
2
4083
For M and L Size = = 1021 carton box
4
Hence, the total cost of 1021 box is = 1021 × 8 =Rs. 8168.
Strap
The price of the strap / metre is Rs. 4
Each box is strapped with 1.85 metres hence,
The total length required = 1.85 × 1021 = 1888.85 metres
The total cost is = 4 × 1888.85 = Rs.7555.4.
Stickers
Cost of size sticker is Rs. 0.75
Each carton box consists of one sticker.
= 1021 × 0.75 = Rs. 765.75.
Total material cost is = Rs.91,875 + Rs. 2450+ Rs. 8168 + Rs.7555.4
+ Rs. 765.75
= Rs. 1,10,814.15.
Step 4: Calculation of other expenses
For strapping purpose, the machine is rented with the rent of Rs.50 / hour
The production capacity of the machine is = 15 boxes / hour
Hence, the number of hours required to complete the order is
Total number of carton box
= Hourly production
1021
= = 68 hours. Hence, the cost is = 68 × 50 = Rs. 3400.
15

The company spends following costs as overhead in a month of 25 days
• Rs. 5000 / month for power,
• Rs. 25,000/month for staff salary
• Rs.8000 for rent
• Rs. 3000 for other expenses.
41, 000
Hence the total cost per day = = Rs. 1640
25
The order runs only 7 shifts (7 days). So, 7 × 1640 = Rs. 11,480.
Total cost = Labour cost + Material cost + Otherexpense + Overheads
= Rs. 25,025 + Rs. 1,10,814.15 + Rs. 3400 + Rs.11,480
= Rs. 1,50,719.15.
Total packing cost of the order = Rs. 1,50,719.15.
Total cost 150719.15
Packing cost / garment = Order quantity = = Rs. 12.30
12250
The packing cost of the garment is Rs. 12.30.
5.10 Carton Box

• Carton box, which is generally used to pack the apparel products are
made of ply boards. Usually 3, 5, or 7 ply carton boxes commercially
used in the apparel industry. The quality of the box is defined by num-
ber of ply. So for every order merchandiser needs to find the quality
requirement and need to purchase the ply boards accordingly.
• To calculate the ply board consumption, the merchandiser should
know the finished length, width and height of the carton box in centi-
metres. To calculate the ply board consumption, the following formula
can be used.
Ply board consumption per carton box =
( ) (
Length + width + allowance × Width + height + allowance × 2 ) .
10, 000
5.6.5 Calculation of shipping and forwarding cost

The shipping and forwarding cost is the cost incurred during the
transportation of the goods from the place of the production to the place
of the sale. Goods produced are normally transported by road through
container when the destination is not so far or else by sea or air. In general,
the cost of sending products through sea is very less than the air way
transport. But the time for the transport makes the huge difference between
air and sea mode. The shipment cost varies according to the means of
transport, distance to be covered and also depends on the forwarder used
by the garment producers.
Forwarders are the people who perform the work of transporting the
goods from the place of production to the place of sale and they charge for
their work. The following are the chargers to be paid for a sea shipment.
1. ICD (Inland Container Depot) charges – It is the place where the
manufactured good are loaded into the containers, near the place of produc-
tion. The manufacturer, when the goods are ready for shipment, handovers
the goods to ICD, the cost of loading in container and storage chargescomes
under this ICD charges.
2. Container charges – In general, for ocean freight, the container charges
depend upon the space occupied by the goods in the container. The containers
are available in three different sizes, namely
• 20 feet container – capacity of 28 cubic metres
• 40 feet container – capacity of 58 cubic metres
• 40 high cube container – capacity of 68 cubic metres
If a supplier loads the full container, the rate of the container is fixed. If the
goods occupy only a part of the container, then the amount of space (in cubic
metres) occupied by the goods are calculated and paid to the forwarder.
3. Terminal handling charges – It comes under the shipment cost. Among
this terminal cost, 5% service chargers will be included. A 5% draw back
charge also needs to be provided for the forwarder.
4. Agency charges
5. Shipping bill–Shipping bill is the bill filled and processed for
government authorisation for export and for duty draw back.
6. Bill of lading – Bill of lading is the paper with details of which ship
has been used for the shipment, in which date the vessel has sailed and total
quantity of goods in the particular vessel for a particular supplier, goods
exported by and sent to whom. With this, the buyer cannot clear the goods
at the destination andthe exporter cannot negotiate the bill. The forwarder
issues it for reference.
In case of sir shipment, the cost of the shipment increases with the weight
of the shipment. The rate of sea shipment depends upon the space. The terms
of payment of the freight for the ship or air can either be done by the producer
– who sends the products or buyers – who receives the product. The costs
normally referred as,
• FOB –Free on Board
• CIF – Cost Insurance Freight
• CF –Cost & freight
Factors influencing the cost of shipment
The different factors which has direct influence on the cost of the shipping are,
a) Mode of shipment – Whether by air, sea, road or by combination of these.

b) INCO terms – INternational COmercial terms which are evolved to fulfil
certain rights and obligations imposed by a trade contract on the buyer
and seller. INCO terms will dictate the responsibility of the seller and the
responsibility of the buyer (e.g., CIF, FOB, etc.).
c) Volume or size of the order – The space occupied by the order or the weight
of the order will influence the cost of the freight directly.
d) Type of assortment
e) Destination country
f) Government rules and regulations
The following examples will detail the cost calculation methods involved
in the shipping and forwarding sections of apparel industry.
Example 20: The packing instructions of girlstop order was provided as follows,
for the order quantity of 22,000 pieces, the product was packed in such a way
that each carton box contains 3 pouches of 15 pieces and the size of the carton
box is 80 cm × 60 cm × 30cm. The normal freight charge for 20’ container is Rs.
35,000.Documentation charges Rs. 2500, Transportation charges Rs. 7000, Port
charges Rs. 10,000, Custom charges Rs. 10,000, Agent commission 1% of the
calculated cost and other service charges Rs. 5000. Calculate the shipping and
forwarding cost of the single garment.
Solution:
Freight charge
The total order quantity – 22,000 garments
Each carton box contains 3 pouches of 15 pieces each. Hence total garments
in a box is = 45
22, 000
The number of pouches required for the order quantity =
15
= 1466.66 ~ 1467 pouches
1467
Each box contains 3 pouches. So, the number of boxes are = = 489 box
3
to cover the order
Size of the single box = 80 cm × 60 cm ×30cm = 1,44,000 cm3 = 0.144 m3
The total area of the 489 boxes = 0.144 × 489 = 70.416 m3
The normal fright charge for 20’ container = Rs. 35,000
Area of the 20’ container = 28 cubic metre (cbm).
35, 000
Hence, the cost of a cubic metre= = Rs. 1250 / m3
28
If 1 metre cube space cost Rs.1250, the cost of 70.41 m3 = 70.416 × 1250 =
Rs.88,020.
Overhead costs
Other administrative overhead costs are,
• Documentation charges Rs. 2500,
• Transportation charge Rs. 7000,
• Port charges Rs. 10,000,
• Custom charges Rs. 10,000,
• Other service charges Rs. 5000.
Total cost
Total cost = Freight cost + Overheads
= 88,020 + 2500 + 7000 + 10,000 + 10,000 + 5000
= 1,22,520
Agent commission = 1% of the total value
1
Hence, the total cost = 1,22,520 + {1,22,520× } = 1,23,745.20
100
The total shipment cost = Rs.1,23,745.20
1, 23, 745.20
The shipment cost of a single garment = = Rs. 5.62.
22, 000
Example 21: A company received an order quantity of 10,000 pieces. The

packing instructions are as follows: Each carton box contains 150 garments,
the size of the carton box is 60 cm × 40 cm × 30cm. The normal freight
charge for 20’ container is Rs. 75,000. Terminal handling charges 550/m3,
Documentation charges Rs.5000, Transportation charges Rs.12,000, Port
charges Rs,6000, Custom charges Rs. 12,000, Agent commission Rs. 2000,
and other service charges Rs.2000. Calculate the shipping and forwarding
cost of the single garment.
Solution:
Freight charge
The total order quantity –10,000 garments
Each carton box contains 150 garments. Hence total garments in a box
10, 000
= = 66.66 ~ 67
150
Size of the single box = 60 cm × 40 cm × 30cm = 72,000 cm3 = 0.072 m3
The total are of the 67 boxes = 0.072 × 67 = 4.824 m3
The normal fright charge for 20’ container = Rs. 75,000
75, 000
Area of the 20’ container = 28 cbm. Hence, the cost of a cubic metre =
28
= Rs. 2678.5 / m3
If 1 metre cube space cost Rs.2678.5, the cost of 4.824 m3 = 4.824 × 2678.5
= Rs.12,921.4.
Terminal handling charge

The terminal handling charges = Rs. 550/m3
Total volume of space required = 4.824 m3
Total handling charges = 4.824 × 550 = Rs. 2653.20.
Overhead costs
• Documentation charges Rs. 5000
• Transportation charge Rs. 12,000
• Port charges Rs. 6000
• Custom charges Rs. 12,000
• Other service charges Rs. 2000
• Agent commission Rs. 2000.
Total cost
Total cost = Freight cost + Terminal handling charge + Overheads
= 12,921.4 + 2653.20 + 5000 + 12,000 + 6000 + 12,000
+2000 +2000
= 54,574.20
The total shipment cost = Rs.54,574.60.
54,574.60
The shipment cost of a single garment = = Rs. 5.45.
10, 000
5.7
Calculation of overall apparel manufacturing
cost (Cut – Make – Trim/Pack and Shipping)
This section consolidates the department wise calculation together. This will
improve the understanding and this is the process use to happen in industry
while the merchandiser receives the order. He / she have to estimate the cost
department wise and consolidate the CMT or CMP cost of that particular
garment. This cost excludes fabric cost (Yarn, processing and finishing).
Consider the following example.
Example 22: Develop a cost sheet for the following order specifications.
Order quantity – 25,000, Style: Basic round neck T-shirt. Company works
one shift per day, each garment consists of five components. Calculate
the cost of a single garment. The department wise details are provided in
Table 5.9.
Table 5.9 Order details for example 22

Pdn / No. of Wage
Department Materials used Cost in INR
shift labours / shift
100 pcs / bundle 1 tag – 0.5

Cutter – 6 250 1 tag, 1 barcode / bundle 1 barcode –
Cutting 1785
Helper – 4 200 Each component – 1 1.25
sticker 100 sticker – 15
Sewing thread – 35 m
SNLS – 6 300 55 / cone
/ gmt
Sewing 1000 OL – 5 250 5 / mt
Satin tape – 0.5 m / gmt
FL – 3 350 95
Button – 3 / gmt
Trim and Trim – 6 250
2500 - -
check Check – 12 350
1 pouch – 6 gmt 1 pouch – 3
Each gmt – 1 hanger 1 hanger – 5
Packing 2500 12 350 1 box – 3 pouch 1 box – 30
Each pouch with – 1 tag, 1 tag – 0.25
1 barcode 1 barcode – 1.0
Size of cartoon box – 80 cm × 90 cm × 50 cm
Shipping Freight charge – Rs. 350 / m3; Transport – Rs. 12,000; ICD charge – Rs.
4000; Commission – Rs. 1000
Power – 25,000 / 30 days; Rent – 20,000 / 30 days; Other expenses – 12,000
Over head
/ 30 days
Profit % 12%
Solution:
Cutting cost
=14 shifts
The company works one shift per day
Hence the number of days required to complete the order is 14.
In this department six cutting masters and four helpers are involved in the
= (6× 250 × 14) + (4×200 × 14) = 21,000 + 11,200 = Rs. 32,200

The garment consists of five components and the order quantity is 25,000
garments.
Bundles
Each garment has five parts. Hence, for 25,000 garments
= 5 × 25,000 = 1,25,000 parts.
1, 25, 000
100
Stickers
The cost of the sticker = Rs.0.15 / sticker
Hence, for 1,25,000 components = 1,25,000 × 0.15 = Rs. 18,750.
Sticker cost = Rs.18,750.
Tag
1 bundle = 1tag. Therefore, for 1250 bundle = 1250 tags
Price of tag = Rs.0.50 × 1250 = Rs.625.
Barcode
1 bundle = 1barcode. Therefore, for 1250 bundle = 1250 barcode
Price of tag = Rs. 1.25 × 1250 = Rs.1562.5.
Step 4: Calculation of total cutting cost
Total cost = Labour cost + Material cost
= Rs. 32,200 + Rs. 18,750 + Rs.625 + Rs. 1562.5
= Rs. 53,137.50.
Sewing cost
=25 shifts
The company works one shift per day, hence no. of days to complete the order is 25.
The operators in this department are six single needle operators, five over lock
machine operators and three flat lock machine operators.

= (6 × 300 × 25) + (3 × 350 × 25) + (5 × 250 × 25)
= 45,000+31,250 + 26,250 = Rs. 1,02,500.

Sewing thread
= 35×25,000 = 8,75,000 metres
8, 75, 000
cones. So the number of cones required to finish the order =
5000
= 175 cones
Cost of one cone is Rs.55.00, hence, the total cost of the sewing
thread is,
= 175 ×55 = Rs. 9625.
Satin tape
During sewing, each garment consumes 0.5 metres of satin tape.
= 0.5 ×25,000 = 12,500 metres
Cost of tape is Rs. 5, hence, the total cost of the twill tape is,
= 5 × 12,500 = Rs. 62,500.
Button
During sewing, each garment consumes three buttons.
= 3 × 25,000 = 75,000 buttons
Cost of button / gross is Rs. 95; hence, the total number of button
required is,
75, 000
= = 520.8 ~521 gross.
144
Hence the total button cost = 95 × 521 = Rs. 49,495
Total material cost = 9625 + 62,500 + 49,495 = Rs. 1,21,620.
Step 4: Calculation of total sewing cost

= Rs. 1,02,500 + Rs. 1,21,620
= Rs. 2,24,120.
Trimming and checking cost

10 shifts
The company works oneshift per day, hence number of days to complete the
order is 10.
The operators in this department are 6 trimming personal and 12 checking
personal with the wage of Rs. 250 and Rs.350,respectively.
= (6 × 250 × 10) + (12 × 350 × 10) = 57,000
The checking cost of the order is Rs. 57,000.
Packing cost
10 shifts
order is 10.
The operators in this department are 12 operators in pressing and packing with
the wage of Rs. 350.
= (12 × 350 ×10) = Rs. 42,000
Pouch
During packing, six garments packed in one pouch.
25, 000
Number of pouch required to complete the order =
6
= 4167 pouches
The cost of one pouch is Rs. 3, hence, the cost of the pouch is,
= 4167 × 3 = Rs.12,501.
Carton box
Each carton box consists of three pouches. Hence, the number of
4167
carton box required to complete the order quantity is = = 1389 carton box.
3
= 30 × 1389 = Rs. 41,670.
Tag
The price of the tag is Rs. 0.25
Each pouch is tagged with the tag. Hence 4167 tags used for
the order.
Bullets
The price of the bullet is Rs. 15 / 100 bullet. So, Rs. 0.15 per bullet
Each garment is tagged with the tag. Hence 9550 bullets used for
the order.
Barcode stickers
Cost of the small barcode sticker is Rs. 1
Each pouch consists of 1 barcode sticker.
= (1 × 4167)
= Rs.4167.
Hanger cost
Each garment consists of onehanger. The cost of the hanger is Rs. 5.
Hence, the total cost = 25,000 × 5 = Rs. 1,25,000.
Step 4: Calculation of total packing cost
= Rs.42,000 + (1,25,000 + 1250 + 41,670 + 1041.75 + 4167)
= Rs.2,15,128.75.
Shipment cost
Freight charge
Size of the single box = 80 cm × 90 cm × 50 cm = 3,60,000 cm3 = 0.36 m3
For 1389 boxes = 0.36 × 1389 = 500.04 m3
The normal freight charge for 1 m3 = Rs.350

Hence, the cost of a cubic metre = 350 × 500.04 m3 = Rs.1,75,014
Total shipping cost = 1,75,014 + 12,000 + 4000 + 1000 = Rs. 1,92,014.
Overhead costs
• Power Rs. 25,000 / 30 days
• Rent Rs. 20,000/ 30 days
• Other expenses Rs. 12,000/ 30 days
( 25, 000 + 20, 000 + 12, 000 )
Overhead cost per day = = Rs. 1900 / day
30
The maximum working shifts = 25
Total overhead cost = 25 × 1900 = Rs. 47,500.
Total cost of the garment

The total cost = Cutting cost + sewing cost + trim and checking cost + pack-
ing cost + shipment cost + overhead cost
Total order cost = 5 3,137.50 + 2,24,120 + 57,000 + 2,15,128.75 + 1,92,014 +
47,500 = Rs. 7,88,900.25
7,88,900.25
CMP cost of the garment = = 31.56
25, 000
12
Profit = 12% = 31.56 + {31.56 × } = 35. 35
100
Cost of the garment with 12% profit = Rs. 35.35.
Note: Here, the overheads can be calculated in two ways, either the maximum
number of working shifts can be accounted or the average working days (or
shifts) of the particular order can be considered for the costing purpose. Some
factories still calculate the overheads department wisewhere these overheads
can be added in the individual department cost, based on department working
shifts or days. For the above mentioned calculation, the maximum working
shifts (sewing department shifts) are accounted. Selection of any one of the
abovementioned way is based on the situation and competition in the costing
process, the first and second method will make tight (exact) costing than the
third method.
Example 23: A company received an order with 12,500 garments of basic

ladies top. Each garment consists of four components namely front, back,
sleeve and collar. If the company works two shifts per day, calculate the
total cost of a single garment. The department wise details are provided
in Table 5.10.

Pdn / No. of Wage
shift labours / shift
50 pcs / bundle
Cutter – 4 250 1 tag – 0.8
Cutting 1562 1 tag, each component
Helper – 2 200 50 sticker – 5
– 1 sticker
Sewing thread – 55 m /
SNLS – 6 300
garment 75 / cone
Sewing 1041 OL – 6 250
Care label – 1 / 0.15 / label
FL – 4 350
garment
Trim – 4
250 The department re checks averagely 300
Trim and Check – 6
2082 350 garments / shift and he works one shift per
check Recheck
200 day
person – 1
Each gmt – 1 hanger
1 hanger – 4
1 box – 25 garment
Packing 2082 8 350 1 box – 45
Each box – 1.5 metre
Strap – 5 / metre
of strap used
Shipping Freight charge – Rs. 20,000 / 20 feet container; Transport – Rs. 10,000; ICD
charge – Rs. 6000; Commission – Rs. 2000
Power – 15,000 / 26 days; Rent – 25,000 / 26 days; Other expenses – 18,000
Over head
/ 26 days
Profit % 15%
Solution:
Note:In this solution, the overhead cost calculated department wise is based
on each departments working shifts and added with the department cost.
Sometimes this method will increase the cost of the product/ garment. This is
because few departments may work parallel at some point of time.
Cutting cost
Order quantity 12500
Daily prodcution 1562
= 8 shifts
The company works two shifts per day,
In this department, four cutting masters and two helpers are involved in the

= (4 × 250 ×8) + (2 × 200 × 8) = 8000 + 3200 = Rs. 11,200
The garment consists off our components and the order quantity is 12,500
garments.
Bundles
Each garment has fourparts. Hence, for 12,500 garments
= 4×12,500 = 50,000 parts.
50, 000
50
Stickers
• Totally 50,000 components were cut. Hence 50,000 stickers are used.
The cost of the sticker = Rs.5 /50 sticker = Rs.0.10 / sticker
Hence, for 50,000 components = 50,000 × 0.10 = Rs. 5000
Sticker cost = Rs. 5000.
Tag
Total number of bundles =1000 bundles
1 bundle =1tag. Therefore, for 1000 bundle = 1000 tags
Price of tag = Rs. 0.80 × 1000 = Rs. 800.
Total material cost = 800 + 5000 = 5800.
• Power – 15,000 / 26 days;
• Rent – 25,000 / 26 days;
• Other expenses – 18,000 / 26 days
Overhead cost / day = Rs. 2230.76.
The cutting department works 4 days to complete the order. Hence,
the total expenditure for 8 day = 2230.76 × 4 = Rs. 8923.
Total cost = Labour cost + Material cost + overhead cost
= Rs.11,200 + Rs.5800 + Rs.8923.04
= Rs.25,923.04.
Sewing cost
Order quantity 12,500

=12 shifts
The company works two shifts per day, hence number of days to complete the
order is 6.
The operators in this department are sixsingle needle operators, sixover lock
machine operators and fourflat lock machine operators.
= ( Number of labours × Total working shifts x Wages per shift )
= (6 × 300 ×12) + (4 × 350 ×12) + (6 × 250 ×12)
= 21,600 + 16,800 + 18,000 = Rs. 56,400
Sewing thread
Total number of garments =12,500
= 55 ×12,500 = 6,87,500 metres
6,87,500
cones. So the number of cones required to finish the order =
5000
= 137.5 ~ 138 cones
Cost of one cone is Rs.75.00, hence, the total cost of the sewing
thread is,
= 138×75 = Rs. 10,350.
Label
During sewing, each garment consumes one label.
= 1 × 12,500 = 12,500 numbers
Cost of label is Rs. 1, hence, the total cost of the label is,
= 1 × 12,500 = Rs. 12,500.
Total material cost = 10,350 + 12,500 = Rs. 22,850.
Overhead cost / day =Rs. 2230.76
The sewing department works 6 days to complete the order. Hence,
the total expenditure for 8 days = 2230.76 × 6 = Rs. 13,384.56.
Total cost = Labour cost + Material cost + Overheads cost
= Rs. 56,400 + Rs. 22,850 + Rs.13,384.56

= Rs. 92,634.56
Number of shifts required to complete the order = =
= 6 shifts
order is 3.
The operators in this department are four trimming personal and six checking
personal with the wage of Rs. 250 and Rs.350, respectively. Other than
this one person with the wage of Rs. 200 used all the shifts for rechecking
purpose.
= (4 × 250 × 6) + (6 × 350 × 6) + (1 × 200 × 3)
= 6000 + 12,600 + 600 = Rs. 19,200
Step 3: Calculation of overheads
Overhead cost / day = Rs. 2230.76
The sewing department works 3 days to complete the order. Hence,
the total expenditure for 8 days = 2230.76 × 3 = Rs. 6692.28.
The checking cost of the order = Labour cost + overheads
= 19,200 + 6692.28 = Rs. 25,892.28.
Packing cost
= 6 shifts
order is 3.

The operators in this department are eight operators in pressing and packing
with the wage of Rs. 350.
= (8 × 350 × 6) = Rs. 16,800
Hanger
During packing, each garments packed in one hanger
The cost of one hanger is Rs. 4, hence, the cost of the hanger is,
= 12,500 × 4 = Rs.50,000.
Carton box
Each carton box consists of 25 garments. Hence, the number of carton
12,500
box required to complete the order quantity is = = 500 carton box.
25
= 45 × 500 = Rs. 22,500.
Strap
The price of the strap is Rs. 5 / metre
Each box consumes 1.5 metre of strap. Hence for the order quantity,
the cost spent on strap is
= 5 × 1.5 × 500 = Rs.3750.
Overhead cost / day = Rs. 2230.76
The packing department works 3 days to complete the order. Hence, the
total expenditure for 8 days = 2230.76 × 3 = Rs. 6692.28.
Total cost = Labour cost + Material cost + overhead cost
= Rs.16,800 + (50,000 + 22,500+ 3750) + 6692.28
= Rs.99,742.28.
Shipment cost
Freight charge
For 500 boxes = 0.243 × 500= 121.5 m3
20, 000
The normal fright charge for 1 m3 = = Rs. 714.28.
28
Hence, the cost of a cubic metre = 714.28×121.5m3 = Rs.86,785.71.

Total shipping cost = Rs.86,785 + 10,000 + 6000 + 2000 = Rs. 1,04,785.71.
The total cost = Cutting cost + sewing cost + trim and checking cost + packing
cost + shipment cost
Total order cost = R
s. 25,923.04 + Rs. 92,634.56 + Rs. 25,892.28 + Rs. 99,742.28
+ Rs. 1,04,785.71 = Rs. 3,48,977.83.
3, 48,977.16
12,500
15
Profit = 15% = 27.91 + {27.91× } = 32.10
100
Cost of the garment with 15% profit = Rs. 32.10.
5.11 Sample Cost Sheet with Dummy Values

Product Women T-shirt Yarn dyed feeder stripes
Style number XYZ Country USA
Buyer ABC Fabric Viscose jersey
GSM / width 150/30”
Particulars Details Amount (INR)
Fabric costing
Yarn price as per supplier list Per kg 250.00
Knitting charges Per kg 25.00
Greige fabric cost Per kg 275.00
Average dyeing cost 20.00
Weight loss on dyed fabric: 9.00% 26.55
Fleece brushing / peaching - -
Loss due to printing - -
Sub-total 321.55
Interest on yarn prices / margin 10.00% 32.16
Dyed fabric cost 353.71
Garment costing
Average fabric consumption 210.00 74.28
(gram)
CMTP charges
Stitching 20.00
Cutting 2.50
Finishing 6.00
Packaging 4.50 39.50
Embellishment 2.50
Trims 4.00
Sub-total 113.78
Overhead cost 12.00% 13.65
Margin (after overhead) 20.00% 25.49
Ratio / rejection 4.00% 5.10
Charges for on board 1.00
Total price of a apparel 159.02
Fob prices: US$ Rate: $ 2.33
68.00
Internal price FOB $ 2.33
Example 24: Calculate the CMT cost for the following order specifications.
Order quantity – 48,550, style: Basic Polo T-shirt. Company works one shift
per day, each garment consists of eightcomponents. Calculate the cost of a
single garment from the data provided in Table 5.11.

Pdn / No. of Wage /
shift labours shift
100 pieces / bundle
1 tag – 0.5
Cutter – 8 350 1 tag / bundle
Cutting 2555 300 sticker
Helper – 4 220 Each component – 1
– 25
sticker
Sewing thread – 112 m
75 / cone
SNLS – 8 350 / garment
10 / 15
Sewing 1940 OL – 6 250 Twill tape – 0.75 m /
metres
FL – 3 400 garment Button – 3 /
95 / gross
garment
Trim and Trim – 20 250
2500 -
check Check – 12 350
1 pouch – 10 gmt 1 pouch – 5
Each gmt – 1 hanger 1 hanger – 8
1 box – 30 pouch 1 box – 30
Packing 2555 18 350
Each pouch with – 1 1 tag – 0.25
price tag, 1 barcode and 1 barcode
each box with 1 barcode – 1.0
Table continued...

Shipping Freight charge – Rs. 550 / m3; Transport – Rs. 12,000; ICD charge – Rs.
8000; Commission – Rs. 2500
Power – 25.000 / 30 days; Rent – 20,000 / 30 days; Other expenses –
Over head
1,00,000 / 30 days
Profit % 10%
Solution:
Note: In this calculation, the overhead costs are estimated based on the
average working shifts for the particular order.
Cutting cost
= 19 shifts
The company works one shift per day,
In this department,eight cutting masters and four helpers are involved in the
= (8 × 350 × 19) + (4 × 220 × 19) = 53,200 + 16,720 = Rs. 69,920
The garment consists of eight components and the order quantity is 48,550
garments.
Bundles
Each garment has eight parts. Hence, for 48,550 garments
= 8 ×48,550 = 3,88,400 parts.
3,88, 400
100
Stickers
The cost of the sticker = Rs.25 /300 sticker = Rs.0.083 / sticker
Hence, for 3,88,400 components = 3,88,400 × 0.083 = Rs. 32,366.67
Sticker cost =Rs.32,366.67.

Tag
1 bundle =1 tag. Therefore, for 3884 bundle =3884 tags.
Price of tag = Rs.0.50 × 3884 =Rs. 1942.
Total material cost = 32,366.67+ 1942 = 34,308.67.
= Rs.69,920 + Rs. 34,308.67 = Rs.1,04,228.67.
Sewing cost
= 25 shifts
order is 25.
The operators in this department are eight single needle operators, six over
lock machine operators and three flat lock machine operators.
= (8 × 350 × 25) + (6 × 250 × 25) + (3 × 400 × 25)
= 70,000 + 37,500 + 30,000 = Rs. 1,37,500.
Sewing thread
= 112 × 48,550 = 54,37,600 metres.
54,37, 600
cones. So the number of cones required to finish the order = =
5000
1087.52 cones ~ 1088 cones.
Cost of one cone is Rs.75.00, hence, the total cost of the sewing thread is,
= 1088× 75 = Rs. 81,600.
Twill tape
= 48,550 × 0.75 = 36,412.5 ~36,413 metres
Cost of tape is Rs. 10 / 15 metre, hence, the total cost of the label is,
= (10/15) × 36,413 = Rs. 24,275.33.
Button cost
Each garment consumes three buttons. Hence the total number of buttons
used
= 48,550 × 3 = 1,45,650 buttons
1, 45, 650
The cost of the button is Rs. 95 /gross; total gross required is =
144
= 1011.45 ~ 1012
Total button cost is = 1012 × 95 = Rs. 96,140.
Total material cost = 81,600 + 24,275.33 + 96,140 = Rs. 2,02,015.33.
= Rs. 1,37,500 + Rs. 2,02,015.33
= Rs. 3,39,515.33.
Daily production =2500 garments
= 19.42 shifts
order is 19.42.
The operators in this department are 20 trimming personnel and 12 checking
personnel with the wage of Rs. 250 and Rs.350, respectively.
= (20 × 250 × 19.42) + (12 × 350 ×19.42)

= 97,100 + 81,564 = Rs.1,78,664
The checking cost of the order = Labour cost = Rs. 1,78,664.
Packing cost
= 19 shifts
order is 19.
The operators in this department are 18 operators in pressing and packing with
the wage of Rs. 350.
= (18× 350 × 19) = Rs. 1,19,700

Hanger
During packing, each garments packed in one hanger
The cost of one hanger is Rs. 8, hence, the cost of the hanger is,
= 48,550 × 8 = Rs. 3,88,400.
Pouch
Each pouch consists of 10 garments, Hence, the total pouches required is =
48,550
= 4855= 4855
10
Cost of single pouch is Rs. 5. The total cost is = 5 × 4855 = Rs. 24,275.
Carton box
Each carton box consists of 3 pouches / 10 garments. Hence, the
48,550
number of carton box required to complete the order quantity is =
30
= 1618.3 carton box.
Cost of one carton box is Rs.30, hence, the total cost is,
= 30 ×1618 = Rs. 48,540.
Price tag and barcode stickers
Each pouch is stacked with onebarcode sticker and a tag.
The cost of the sticker is Rs. 1 and tag is Rs. 0.25.
Total cost = (4855 × 1) + (4855 × 0.25) = 4855 +1213.75 = 6068.75
Each box consumes one barcode sticker.

Hence, the cost of this barcode sticker is = 1618×1= Rs.1618.
= Rs. 1,19,700 + (3,88,400 + 24,275 + 48,540 + 1618 + 6068.75)
=Rs. 5,88,601.75.
Shipment cost
Freight charge
The total order quantity = 48,550 garments
For the total of 162 boxes = 0.792 ×1618 = 1281.45 m3
The normal fright charge for 1 m3 = Rs. 550.
Hence, the cost of a total cubic metre = 550 × 1281.45m3 = Rs. 7,04,800.8.
Total shipping cost = Rs. 7,04,800.8 + 12,000 + 8000 + 2500 = Rs. 7,27,300.8.
Overhead cost
= Power + rent + other expenses = 25,000 + 20,000 + 1,00,000 = Rs.1,45,000
1, 45, 000
Overhead expenses per day = = Rs. 4833.33
30
The average working shifts of the factory can be calculated as
Number of working shifts in cutting dept + sewing + trimming and checking + packing
= 4
19 + 25 + 19.42 + 19
= = 20.6
4
The overhead cost = 20.6 × 4833.33 = Rs.99,566.59.
The total cost = cutting cost + sewing cost + trim and checking cost + packing
cost + shipment cost +overhead cost
Total order cost = R s. 1,04,228.67 + Rs. 3,39,515.33 + Rs. 1,78,664 +
Rs. 5,88,601.75 + Rs. 7,27,300.8 + Rs.99,566.59
= Rs. 20,37,877.14.
20,37,877.14
48,550
10
Profit = 10% = 41.97+ {41.97× } = 46.17
100
Cost of the garment with 10% profit = Rs.46.17.
5.8 Summary
This chapter summarises the important cost calculation methods used in dif-
ferent departments of apparel industry or different stages of apparel manu-
facturing process. This chapter throws light on fabric cost, other raw material
cost, preparatory process cost and processing cost, cutting, sewing, checking,
packing and shipping department cost calculations. This information helps
the merchandiser to perform a costing for an apparel product at any stage.
References
1. Grace I. Kunz, Ruth E. Glock, (2004), Apparel Manufacturing: Sewn Product Analysis.
4th Edition. Prentice Hall.
3. Krishnakumar M., Apparel Costing – A functional approach, Abhishek publication,
Chandigarh, India.
4. Prasant Sarkar, Garment CM cost estimation using SAM or SMV, http://www.online
clothingstudy.com/2011/02/garment-cm-cost-estimation-using-sam-or.html (Accessed
on Feb 2016).
5. Noor Ahmed Raaz, How to Make Costing Sheet for Knit Garments, http://textilecal-
culation.blogspot.in/2015/08/how-to-make-costing-sheet-for-knit.html. (Accessed on
Feb 2016).
6. Anon, Calculation of Weaving Cost and Profit, http://ordnur.com/textile-fashion/cal-
culation-of-weaving-cost-and-profit/(Accessed on Feb 2016).
7. Anon, Knit Garments, Costing Formula, http://apparelmerchandisingworld.blogspot.
in/2013/07/knit-costing-formula.html, (Accessed on Feb 2016).
8. Mayedul Islam, Method of Garments Costing for Knitted Polo Shirt, http://www.
garmentsmerchandising.com/method-of-garments-costing-for-knitted-polo-shirt/
(Accessed on March 2016).
6
Export procedure and documentation
This chapter details the export procedure and documents related to export. Ini-
tially, the chapter explains details pertinent to how exporting is done. Then the
payment terms and terms of delivery are discussed. The various international
commercial terms used in exporting are highlighted with special reference to
the delivery terms used in apparel export. The role of export credit guarantee
corporation (ECGC) in averting credit risk is mentioned. The types of pre-ship-
ment and post-shipment finance obtained are detailed. The chapter discusses
the export clearance formalities and all the documents used in export including
commercial, auxiliary and internal documents.
6.1 Export procedure

The merchandiser dealing with foreign buyers is expected to know the pro-
cedure of exporting garments to the buyer. The knowledge on export proce-
dures will only help the merchandiser to negotiate and manage the foreign
buyers properly. It is imperative to understand the procedure of exporting
and various allied documents used for it as he / she is the one point con-
tact for the buyers and should be proficient in answering the questions of
the buyers related to export of materials. The step by step procedure to be
followed by an apparel manufacturing company to export their material is
given below:
• Any company willing to export goods would follow the one time
licensing procedure to export / import goods.
• The company will apply for Indian export code number (IEC) to Di-
rectorate general of foreign trade (DGFT) with required documents.
Once the number is received, the company can export goods to for-
eign countries. This step would have been taken care by the com-
pany management when starting the company.
• As a merchandiser, the export procedure will start when a
buyer enquiry is received. Based on the buyer’s enquiry, quota-
tion with or without samples will be sent to the buyer as per his
requirement.
• Negotiations will be done with respect to the pricing, terms of pay-
ment and terms of delivery.
• Once buyer confirms the pricing, terms of payment and terms of de-
livery, the merchandiser and his team will send a proforma invoice
to the buyer stating their commitment of sale.
• Based on the proforma invoice, buyer will send an export order or
purchase order confirming the order.
• According to the terms of payment (advance payment, documents
against acceptance, documents against payments, letter of credit)
mentioned in the order, the buyer and merchandiser’s export de-
partment (If the company size is small, then there will be no export
department available and all the work will be done by the merchan-
diser.) will work for arranging payment.
• If the merchandiser’s company wants to cover the credit risks, they can
approach export credit guarantee corporation (ECGC) to get insurance.
• If the term of payment is anything other than advance payment
mode, then the merchandiser can talk to his export department to
arrange for finance against the export order. The banks may provide
export finance (pre- or post-shipment finance) against export orders
obtained.
• Once the required funds are obtained, order execution is carried out.
If the finished goods required quality checks by agencies like Inter-
tek, SGS, BVQI, etc., as designated by the buyer and is put in terms
and conditions, then such inspection is arranged.
• After inspection, goods are arranged for proper packing. Palletisa-
tion or crating is arranged for the material safety.
• The merchandiser or the export department will decide on the mode
of transportation as per the terms and conditions of the order and if it
is sea, then they will decide the container (LCL – Less container load
or FCL – Full container load) based on the type of goods and book
the carrier. They may use clearing and forwarding agents to arrange
for transport.
• If it is air transport, then the concerned air carrier will be contacted
to transport the goods.
• Once the shipment is ready for export, the export team has a major
role to play. They have to create many documents for exporting the
goods. It starts with creation of export invoice, export packing list,
etc. and they also apply for getting certificate of origin.
• Necessary documents required for export customs clearance are pre-
pared and sent to the customs department.
• Once required approval is obtained from customs, the material is
transported to the port. The port authorities will provide bill of lad-
ing in case of sea shipment and air way bill number (AWB) in the
case of air shipment.
Export procedure and documentation 255
• Based on the terms of delivery, the responsibility of the seller and

buyer for the exporting goods is fulfilled by both of them and ac-
cordingly the material is shipped.
• Once export is done, the necessary documents for payment as re-
quired by the bank and overseas buyer will be prepared if the pay-
ment term is other than “advance payment” mode.
• The export bill may be discounted or arranged for collection of pay-
ment based if on credit basis or negotiated if shipment is based on
letter of credit (L/C).
• If the merchandiser’s company had received pre-shipment finance,
then the discounted / negotiated export bill amount will be adjusted
once the bank receives the export proceeds thereby completing the
exporting procedure by successfully exporting goods and realising
payment.
To do effective exporting, a merchandiser should be aware of the process
mentioned above. He / she should know the terms of payment, credit risk in-
surance facilities, delivery terms (INCO terms),export finance, pre-shipment
inspection, details of inspecting agencies, shipment modes, procedure for
obtaining customs clearance for shipping and understand the overall export
documents that need to be prepared for export.
6.2 Terms of payment

The terms of payment for the materials or goods exported to foreign buyers
are discussed here. Any business would not be able to run without money and
so realising money for the export made is one of the foremost responsibilities
of a company doing export. The terms of payment are very important when
dealing with foreign buyers as the company might not know the credibility
of the buyer and so he / she should exercise caution when doing business.
If not, losses may occur and the business would collapse. Hence the terms
of payment should be decided up front during the order confirmation stage.
Some companies even do a credit check of the buyer through a third party be-
fore doing business with them as it is difficult to know the financial condition
of the buyer. It is essential for a merchandiser to know the various payment
terms and they are detailed below.
6.2.1 Advance payment

It is considered to be the safest mode of payment in seller’s perspective. As
the name indicates, the seller receives the complete amount for the transac-
tion in advance and thereby has no risk. However, the buyer’s risk is high as
he may be wary of the genuineness of the seller. As the seller receives the
payment in advance, it will help him / her to plan the financial activities prop-
erly and there may be no need for him / her to go to banks for loans to carry
out the order. Advance payment is done before the dispatch of goods and
not before the production commencement. Hence, the buyer also feels little
safe that the goods are ready for dispatch and risk is little less. However, this
mode of payment is selected by the buyer only when he / she is certain of the
genuineness of the seller.
6.2.2 Letter of credit (L/C)

The most sought after term of payment is L/C (letter of credit) as it is favour-
able for both the seller and the buyer. Letter of credit is a guarantee given by
the buyer’s bank to pay the amount to the seller’s bank on maturity. The L/C
for export import trade is based on the guidelines of uniform customs and
practice of documentary credit of international chamber of commerce. Letter
of credit minimises credit risk. It is very difficult to ascertain the credit wor-
thiness of the buyer as he is geographically located very far from the seller.
L/C helps in avoiding risk by having intermediate buyer and seller bank that
ensure proper payment. L/C is beneficial to the seller as all terms and condi-
tions are mentioned in the L/C and buyer cannot hold seller responsible for
any other reason that is not mentioned in the L/C and buyer cannot dispute
falsely on the quality of goods received by him. A L/C sample is shown in the
below Figure 6.1.
Parties involved in a L/C

The various parties involved in a L/C are given below:
a) Seller / exporter: He is the beneficiary of the L/C. He is the person who
gets money for the goods sold to the buyer. L/C is opened on his favour.
b) Buyer / importer: He is the person who applies for the L/C and L/C is
opened on his instructions.
c) L/C issuing bank: The bank that issues the L/C on the buyer’s instruc-
tions. It takes responsibility to pay the seller on receipt of documents
for the goods supplied by him / her.
d) Advising bank: It is the bank that takes responsibility for communicat-
ing with all the parties of the L/C and also with the required authori-
ties. Normally advising bank sends the documents under the L/C to the
issuing bank.
e) Confirming bank: It is the bank that confirms and guarantees to take
responsibility for payment as per L/C terms and conditions.
Issuing Bank and Authorized Signature
Figure 6.1 Letter of credit

f) Negotiating bank: The role of negotiating bank is to verify documents

and checking if they confirm with the terms and conditions under L/C
on behalf of the beneficiary to avoid issues.
g) Reimbursing bank: It is the bank which is authorised to honour the re-
imbursement claim of negotiation / payment / acceptance.
h) Second beneficiary: He / she represents the first or original beneficiary
in their absence. The credit belongs to the original beneficiary and is
transferable as per the terms and conditions that are mutually agreed
by the original and second beneficiary.
In many cases the role of advising, confirming, and negotiations are all
done by one bank (exporter’s bank) instead of having three intermediaries and
the role of reimbursement and issuing is carried out by the issuing bank itself.
If there is no account relation between issuing bank and exporter’s bank, then
there is a need for the reimbursement bank. Also when the exporter’s bank
doesn’t trust the issuing bank, reimbursement bank would be needed.
Types of L/C
The different types of L/C used in export are highlighted below:
a) Revocable L/C: This type of L/C is obsolete now where the buyer and
his bank had options to change or make corrections to the L/C with or
without the permission of the seller.
b) Irrevocable L/C: A better type of L/C that is used in practice where any
changes or amendment to the L/C is made by the applicant through the
issuing bank with the permission of the beneficiary or the seller.
c) Sight L/C: Payment is made to the seller immediately when the re-
quired documents have been submitted by the authorised bank and the
terms and conditions of the L/C are met. Sufficient time of close to
5 days is provided for the bank to study the documents received and
release the payment.
d) Deferred L/C: It is also called usance L/C. The payment is not made
immediately after receiving the documents and it is made at a later date
as mentioned in the L/C.
e) Confirmed L/C: When a second bank adds its confirmation (or guaran-
tee) to honour a complying presentation at the request or authorisation
of the issuing bank, then that L/C is said to be a confirmed L/C.
f) Unconfirmed L/C: When there is no second bank to confirm the L/C, it
is called as unconfirmed L/C.
g) Restricted L/C: If there is option for only one advising bank to pur-
chase the bill of exchange from the seller, then it is called a restricted
L/C.
h) Unrestricted L/C: If there is no confirmation bank specified, then the

exporter can claim the export proceeds by showing the bill of exchange
to any bank and he has no restrictions. This type of L/C is called unre-
stricted L/C.
i) Transferable L/C: A L/C which allows the exporter to transfer his cred-
its to a second beneficiary. This will be done in the case where the
exporter is an intermediary like a middleman and not the original pro-
ducer of goods and he doesn’t want the buyer and supplier to know
each other.
j) Non-transferable L/C: A L/C which cannot be assigned to a second
beneficiary is called a non-transferable L/C. Most L/C’s used in inter-
national trade are not transferable in nature.
k) Red clause L/C: It is an L/C with advance payment. Seller can request
for an advance to manufacture the products as per L/C terms and con-
ditions and claim the remaining amount after submitting the docu-
ments. In case of red clause L/C, a receipt is obtained from the seller
for getting the money in advance.
l) Green clause L/C: Unlike red clause L/C, once the goods have been
warehoused, a proof of warehousing is given to the issuing bank and
based on it; an advance payment is made to the seller with a receipt
obtained from him.
m) Standby L/C: These are similar to guarantees. If the guaranteed pay-
ment is not provided, the seller can invoke bank’s obligation to pay by
submitting all the required documents along with declaration that the
buyer has failed to meet his obligations.
n) Revolving L/C: This L/C is used for partial deliveries request of the buyer.
The payment is made for the value of each delivery once it is completed
and all necessary documents are submitted to the bank. If an order is likely
to be continued for a year with many partial deliveries, then this kind of
L/C can be used rather than opening one L/C for one delivery.
L/C operation flow

The operation flow of an L/C is explained below with a line sketch in
Figure 6.2.
• Once the buyer gives the purchase order to the seller (apparel com-
pany), then he approaches his bank (issuing bank) to open a L/C.
• The bank instructs the seller to fill the form for opening an L/C.
Along with required documents, copy of purchase order is enclosed
for opening the L/C. Seller details, seller bank details are also clearly
mentioned in the form.
• Once the buyer maintains the required margin amount, buyer’s bank
issues the L/C to the exporter’s bank which is also known as advis-
ing bank or negotiating bank based on the role played by the bank.
• The exporter is advised by the exporter’s bank that L/C has been
opened with him as the beneficiary and gives the L/C to the exporter
so that he can start working the order and also use the L/C to arrange
for pre-shipment funds.
• The exporter ships the goods once manufactured to the importer on
the agreed terms of delivery and shipment mode along with invoice.
• Then the exporter submits all those documents to his bank and those
documents are sent by his bank to the issuing bank to issue the
payment.
• The issuing bank will check with the importer to ascertain that the
goods are received by him as per L/C terms and conditions. On con-
firmation from the importer, the issuing bank accepts the bill for pay-
ment and pays the exporter’s bank.
• In case of more margin given to the buyer by his bank, it waits for
the buyer to make the payment and then transfers the payment to the
exporter’s bank.
• The exporter’s bank releases payment to the exporter and issuing
bank releases all the original documents to the buyer thereby com-
pleting the transaction and L/C is closed.
Figure 6.2 Operation flow of L/C (Source: www.bocusa.com)

6.1 Margin Amount to L/C

Margin amount to open L/C is based on the creditworthiness of the buyer
with his bank. Let us see an example to understand the concept of margin
amount.
If buyer is a new account holder for his / her bank and bank does not
know his / her other financial status, he / she cannot expect any finan-
cial support from his / her bank. He / she needs to keep 100% margin
amount with his / her bank. If the L/C amount is for USD 10,000, his /
her amount of USD 10,000 is blocked from his / her account to pay L/C
amount to your overseas seller on maturity date. He / she may have a
good relationship with his / her banker for the past many years, and his /
her banker knows his / her fixed assets, his / her fixed investments with
bank, other financial transactions and are happy with the credit worthi-
ness, bank decides the amount of margin to be collected from him / her
to open the Letter of Credit. It can be from 1% to 100% of USD 10,000.
Till the maturity date, he / she can continue to use the remaining amount
and on the day of maturity or payment, he / she has to pay the remaining
percentage of amount to the bank apart from the margin amount retained
in the account.
(Source: http://howtoexportimport.com/)
6.2.3 Documents against acceptance

Documents against acceptance (DA) is a payment term where the payment to
the seller is made on the maturity date mentioned in the bill of exchange. In
this payment type, the shipping documents are sent to the buyer’s bank after
shipment. The buyer’s bank asks the buyer to accept the documents. The buyer
accepts the document by signing the bills of exchange sent by the exporter and
agrees to pay the value of goods shipped as per the agreed period of time. The
buyer receives the original documents after accepting the bill of exchange and
he completes import customs clearance procedure with the original documents
and approaches carrier to deliver the cargo. The payment is made on the matu-
rity date to the buyer. This type of payment is risky for the seller and hence fol-
lowed only when the seller has a long standing relationship with the buyer and
he is ready to ship goods on a credit basis. Buyer’s credit worthiness is very
important for accepting this type of payment term. However there are various
credit agencies that provide insurance coverage if there is default of payment
for sale of goods by the buyer. In India, Export credit guarantee corporation
(ECGC) is an insurance agency which protects the seller when buyer defaults
payment. ECGC’s factoring scheme makes exports easier than ever. ECGC and
other insurance agencies also provide buyer’s credit cover, line of credit cover,
transfer guarantee, overseas investment insurance, customer specific covers and

national export insurance account (NEIA). DA payment term is riskier when no
insurance coverage is obtained for the sale of goods and it is advisable to obtain
insurance coverage before proceeding with DA payment term.
6.2 ECGC’s Factoring Scheme

•• Factoring – is a service that covers the financing and collection of account
receivables of series of trade transactions between a buyer and a seller in the
domestic as well as international market. It helps in securing finance, collec-
tion of receivables, credit protection and improving the exporter’s cash flow.
•• It applies on sales on open account terms, continuous business relation-
ship, clear performance of the seller, assignment of receivables, notice of
assignment to the buyer and on no counter trade.
•• It facilitates the purchase of the account receivables, 90% of approved finance
made available on receivables approved. A 100% credit risk protection against
overseas buyer payment default, sales ledger maintenance for each transaction
of exporter with buyer and constant follow-up with buyer for collection.
•• The eligible people are exporters with a good track record, exporters who deal
with DA (documents against acceptance) terms of payment with the buyer.
•• The advantages are a) Additional finance without providing collateral se-
curity, b) Documents need not be sent through the banks for collection and
c) Reduction in administrative cost. (Source: www.ecgc.in)
Procedure for getting coverage for DA payment term

Once the purchase order is executed between the buyer and seller, the seller
approaches these credit guarantee agencies. The order is submitted to the
agency with an application requesting for insurance cover. The agency col-
lects data related to the buyer. Credit worthiness study on the buyer is carried
out by the insurance agency. Confidentially, the financial status of the buyer
is found out. If insurance company is not satisfied with the financial status
of the buyer, they will not issue insurance thereby the exporter can become
aware that shipping goods is very risky under this payment term and may ask
for some other payment term to avoid credit risk. Based on the credit worthi-
ness of the buyer (if satisfactory), the insurance company approves the credit
limit for the seller. Once the agency gives its approval, the seller sends the
goods to the buyer after obtaining insurance policy against the buyer. If the
buyer doesn’t pay the money on maturity date, then the seller can approach
the insurance company to claim the money. These agencies contact defaulters
and demand for compensation. If the buyers don’t honour the requests, then
they are black listed and the details are shared with all exporters and thereaf-
ter the buyer cannot import any goods from the country of the seller.
6.2.4 Documents against payment

Documents against payment (DAP) or DP is one of the payment terms used
in export. Under this payment term, the documents under consignment are
delivered to buyer only after collecting payment from the buyer’s bank for
the materials sent. Bill of lading plays a vital role in the DP term. The original
bill of lading has to be presented to the carrier of the goods at the port of des-
tination for getting the goods released from the carrier. The buyer will be able
to possess the original bill of lading only after making payment to the seller.
Sometimes, there will be a delay in payment as the buyer waits (for confirma-
tion) for the goods to arrive at his port of destination and only then accepts
the documents and effects the payment.
Procedure for getting coverage for DA payment term

In this type of payment term, the cargo is sent to the carrier to transport to
the port of destination after completing all the required custom formalities of
the seller’s country. After dispatching the goods to the port of destination, the
original bill of lading (sea shipment) or airway bill (air shipment) is issued by
the carrier. Exporter submits all the documents along with bill of lading to his
bank and it is forwarded to the seller’s bank. The seller’s bank verifies these
documents and sends a copy to buyer to accept the documents and effect the
payment. The buyer makes the payment and that is sent to the seller through the
banks. The buyer then collects the original documents and produces the origi-
nal bill of lading or airway bill to the carrier and after completing his country’s
import formalities; he takes possession of the material that he has paid for.
6.3 Delivery terms

The terms of delivery for the materials or goods exported to foreign buyers are
discussed here. The delivery terms are governed by the international chamber
of commerce (ICC). They issue international commercial terms also known
as INCOTERMS which governs all the exports and imports made around the
globe. These terms are widely used in international purchase processes. These
terms will be normally three lettered abbreviations which are related to con-
tractual sales practices. Normally the letters in the abbreviation will denote the
first alphabet of the word thereby conveying the meaning of the INCOTERM.
These INCOTERMS were initially advocated in the year 1936 and at present,
the 8th version of it is being used from January 1, 2011 and is known as INCO-
TERMS 2010. It is periodically updated by ICC. These terms clearly provide
explanation about the responsibility and allocation of costs to the buyer and
seller in a transaction. The responsibility and allocation of costs varies from ex-
works EXW (all responsibility of loading from exporter’s place of manufacture,
transporting, shipping, unloading, transport to importer’s warehouse, insurance

payment, customs clearance, duty payment belongs to the importer) to delivery
duty paid (DDP) (all responsibility of loading from exporter’s place of manu-
facture, transporting, shipping, unloading, transport to importer’s warehouse,
insurance payment, customs clearance, duty payment belongs to the exporter).
Mostly in the garment industry, FOB (Free on board) delivery term is followed
and is commonly known as FOB pricing. Sometimes CFR (Cost and freight) is
also followed. It is imperative to understand the different delivery terms avail-
able and select the appropriate one for the export of goods as per the require-
ment. In this section, the various delivery terms are discussed.
6.3.1 INCOTERMS 2010

There are 11 terms or rules as per INCOTERMS 2010. The responsibility
of the buyer and seller as per each delivery term is explained with the chart
shown in Figure 6.3. The chart shows the activities carried out in shipment
ranging from export customs declaration, carriage to port of export, unload-
ing of truck in port of export, loading on vessel / airplane in port of export,
carriage to port of import, insurance, unloading in port of import, loading on
truck in port of import, carriage to place of destination, import customs clear-
ance and import duties and taxes payment. It says who holds responsibility
for the goods and also for the cost incurred during shipment very clearly. The
different delivery terms are explained below for more understanding:
Figure 6.3 Responsibility and allocation of costs as per INCOTERMS 2010
Ex works (EXW)
As per this delivery term, the seller gets the goods ready for shipment and
informs the buyer about the shipment being ready. It is the buyer’s responsi-
bility to take the material from seller place of manufacture to his place. The
buyer takes care of export customs declaration and all other activities thereof
till the material reaches his place. The entire risk of shipment is on the buyer
in the case of ex works. This kind of term will normally be used to quote the
pricing of the product apart from the delivery charges so that it will be easy
for the buyer to calculate the product cost. However, if the buyer has good
knowledge and presence in the exporting country with enough people work-
ing for him, then he can opt for EXW and transport the goods. If buyer is new
to the exporting country, then it is better to avoid choosing this delivery term
as he will not have any knowledge about the legal and export procedures
followed in the exporting country and hence avoid the cumbersome process.
Free carrier (FCA)

When FCA is used, then seller obtains export clearance and carries the mate-
rial to the designated place as instructed by the buyer. It could be like handing
the material over to the carrier or placing the material in seller’s own prem-
ises for the buyer to come and take it. This term is eclipsed nowadays by
FOB. As per FCA term, if the material is placed anywhere outside the seller’s
premise, then unloading the material from the transport vehicle and loading
on to a vessel becomes the responsibility of the buyer. If the material is kept
in areas where it is under seller’s control, then seller is responsible for load-
ing the goods on to the buyer’s carrier.
Free alongside ship (FAS)

In FAS delivery term, the seller delivers the goods alongside the buyer’s ves-
sel at the named port of shipment. The export clearances, carriage of material
to port of export and unloading of truck in the port of export are all respon-
sibilities of the seller and once material is unloaded at the port of shipment
and placed alongside the vessel, then the responsibility shifts to the buyer.
This term should only be used for non-containerised sea freight and inland
waterway transport.
Free on board (FOB)

It is the most commonly used pricing term in apparel export. As the name in-
dicates, the seller spends money and holds responsibility of the goods till he
loads the material on to the buyer’s vessel. The buyer pays the cost for trans-
portation (sea / air), insurance fees, bill of lading fees, unloading and trans-
portation of goods from port of destination. Due to FCA being advocated in
1980, FOB has to be used only for non-containerised sea freight and inland
waterway transport. However, in the real time scenario, FOB pricing is used
for all modes of transport. Sometimes it leads to contractual risks.
Carriage paid to (CPT)

As per this delivery term, seller’s responsibility increases. The seller has to
pay for the transport (sea / air), unloading of goods at named port of destina-
tion and transporting the goods to the named place of destination. The seller
bears all the cost till the material reaches the place of destination. Sometimes,
the unloading costs at the port are borne by the buyer; however that has to be
mentioned in the contract clearly. If buyer requires insurance, then carriage
and insurance paid (CIP) should be followed.
Cost and freight (CFR)

The seller pays for the carriage of the goods to the named port of desti-
nation. But the risk is transferred to the buyer once the material is loaded
on to the ship in the country of export. Insurance and delivery cost at the
named place of destination should be borne by the buyer. Sometimes cost
for unloading in the port of import belongs to seller as per the contract re-
quirements. In this case, seller pays the money for transport but the risk of
transporting the material belongs to buyer. So if there is any issue in transit,
it is at buyer’s risk.
Cost, insurance and freight (CIF)

It is similar to CFR, with the exception that the seller has to pay for the insur-
ance for the goods in transit till it reaches the port of destination. This deliv-
ery term requires seller to insure for 110% of the value of items shipped. CFR
should only be used for non-containerised sea freight and for all other modes
of transport, CIP should be used.
Carriage and insurance paid (CIP)

CIP is similar to CFR where seller pays the insurance for the goods till it reaches
the port of destination, with the exception that CIP can be used for all modes of
transport whereas CFR can only be used for non-containerised sea freight.
Delivered at terminal (DAT)

The responsibility of the seller increases in DAT where the seller delivers the
material at the named terminal. All the costs of transport, insurance and unload-
ing at port of destination are borne by the seller. Loading at the port of destina-
tion and carrying to buyer’s place is done by the buyer. The terminal can be a
sea port, airport which is having a facility to store the material for taking it to
the buyer’s place later. All cost like import duty, taxes, customs, carriage costs,
etc., after unloading at the terminal should be borne by the buyer.
Delivered at place (DAP)

DAP means that the material is ready at the buyer’s place for unloading.
Hence all the costs till the material reaches the named place of destination is
borne by the seller excluding import customs clearance and payment of im-
port duties and taxes. However, the risk passes from seller to buyer once the
material reaches the port of destination although the costs are borne by the
seller. The unloading at the named place of destination should be done by the
buyer. These type of delivery terms are used only when the seller has a strong
foothold in the buyer’s country as new exporters may not be aware about the
carriage facilities and transport regulations in the buyer’s country.
Delivered duty paid (DDP)

The most responsible person as per this delivery term is the seller. All the obli-
gations till the material reaches the named place of destination is completed by
the seller. Seller pays all the charges including import duties and taxes and takes
care of import clearance also. This type of term is very risky for a new exporter
who is not aware of the import policies of the buyer’s country. The only respon-
sibility of the buyer as per this term is that he has to take care of unloading at the
named place of destination. This term is similar to a non-INCOTERM called free
in store (FIS). It is a very risky term for the exporter as he / she may not be aware
of the extra unforeseen costs at the buyers place and also delay in delivery.
6.3.2 INCOTERMS 2000

In INCOTERMS 2000, there was four more delivery terms used. However, they
have been replaced in INCOTERMS 2010. These four terms may still be found
in some contracts and hence it is essential to know about these delivery terms too.
Delivered at frontier (DAF)

This term is used when rail or road transport is used especially in European
countries where rail / road transport is very common between two countries.
Seller pays transportation cost till the named place of delivery at the frontier.
Buyer takes care of customs clearance and carriage costs from the frontier.
The risk is transferred from seller to buyer at the frontier.
Delivered ex ship (DES)

In this delivery term, the passing of risk from seller to buyer happens only
when the material reaches the port of destination and material is ready for
unloading by the buyer. Unlike CFR and CIF, seller not only agrees to bear
cost, but also assumes the risk and responsibility till the material reaches port
of destination and is ready for unloading.
Delivered ex quay (DEQ)

It is similar to DES, with the exception that the risk is passed on to the buyer
from the seller after the goods have been unloaded at the port of destination.
This helps in avoiding buyer paying for products damaged during transit.
Delivered duty unpaid (DDU)

It is similar to delivery duty paid INCOTERM, with the exception that the
import duty alone is paid by the buyer and all other costs, responsibilities,
risks, obtaining import customs clearance are of the seller till the material
reaches the named place of destination and is ready for unloading by the
buyer. It is a risky INCOTERM for the seller similar to DDP.
The above INCOTERMS explain the various delivery terms used in ex-
port and as a merchandiser, knowledge about these INCOTERMS will be
very handy when there is a need for discussion (damaged material, shipping
delays, material lost in transit, insurance claims, passing of risk and responsi-
bility, etc.) on delivery terms with the buyer. The highlight of INCOTERMS
is that any term that is mentioned in earlier versions can also be used when
mutually agreed by the buyer and seller.
6.4 Export finance

Government of India provides various financial assistances to exporters to
enable them to export goods to foreign countries. The government is very
clear in its policy that no exporter should suffer from shortage of funds
to execute export order and provides various finance options to the ex-
porters. Arranging finance for manufacturing is the activity of the owner
of the company. However, in many companies, pre- and post-shipment
financing has become a day-to-day activity and merchandisers are manag-
ing the funds for each orders at times and so it is a necessity for merchan-
disers to know the various financing options available for exports. The
various initiatives of the government for providing finance are discussed
below.
1) Finance on FOB value for exports

Banks provide money up to 90% of FOB value for helping exporters to man-
ufacture and export goods as per government directive. Sometimes even
100% financing is done by the banks and at a lower interest rate.
2) Lower interest rate

The interest rates for export finance are kept very low to aid the exporters. The
rates are kept at around 6% to enable the exporters to utilise the funds for man-
ufacturing, procuring of materials and shipping the goods to the customer.
3) Increased credit period
The credit period provided for the exporters is up to 270 days. This augurs
well for the exporters as they will be realising the funds from the export pro-
ceeds before 270 days and would be able to pay the money back to the bank
within the credit period and avoid interests and other charges for the finance
received from the bank.
4) Pre-shipment finance
It is the pre-shipment finance provided by the banks based on the basis of
export stocks available for export. The exporter provides order details to the
bank along with the stock details. The bank inspects the exporter’s place and
takes stock of the material available and pays money to the exporter accord-
ingly. Based on the stock valuation, exporter is provided financial assistance
at a very lower interest rate. In other cases, where exporter doesn’t have
enough money to execute the export order, finance is provided to get material
and manufacture the material for export.
5) Short-term credits
This is one more facility provided by the banks to help exporters. In this type
of financing, the exporter can obtain short term credits for executing his export
orders from authorised banks. The amount and duration of short-term credits
are based on the government directives issued time to time in this regard.
6) Post-shipment finance
It is also known as bill discounting or bill negotiation. The exporter gets
money for the export he has already made and that money can be used by
the exporter for carrying out his next export order. Very low-interest rates are
maintained for post-shipment finance. After shipment, exporter sends all the
export documents to the overseas buyer and it takes time till maturity for the
exporter to receive funds and in the meantime, to execute the next order, the
exporter can claim funds from finance institutions to use it for the next order.
He applies for post-shipment finance by discounting of export bills already
exported. Bill negotiation procedures are followed to get post-shipment fi-
nance in the case of letter of credit payment term.
6.4.1 Pre- and post-shipment finance

The pre- and post-shipment finance are two types of export finance which
are frequently used in apparel export and hence it becomes essential for the
merchandiser to have more knowledge on these two types. The pre- and
post-shipment finance are explained below for better understanding.
Pre-shipment finance
This credit is the loan got by the exporter from the financial institution
before exporting for the purpose of purchasing, producing, processing and
packing of goods that need to be sent to the buyer. It is also given as work-
ing capital expenses towards services on the basis of the letter of credit.
The time frame or the period of pre-shipment finance is determined by the
bank on a case to case basis. Based on the exporter’s time frame for procur-
ing goods, manufacturing goods and packing them, the time frame is pro-
vided. When exporter obtains pre-shipment finance, then after export, he
submits all documents to the bank so that the bank may adjust the amount
when they receive the funds from the buyer and pay the remaining export
proceeds to the seller.
The exporter is obliged to submit the export documents to the bank after
exports take place. The pre-shipment advance should be adjusted against the
export proceeds within 360 days from the date of advance, failing with it will
lead to levy of commercial interest rate from the date of pre-shipment finance
disbursement. Refinancing is done for a maximum period of 180 days as per
reserve bank of India directive. Pre-shipment finance is normally disbursed in
stages or lump sum based on the exporter’s requirement. Bank monitors all
the activities of the exporter with relation to the procurement, manufacture
and packaging of the export products as they have to ensure that the end use
of the amount is for the particular export order and not for any other purpose.
Separate account is maintained by the bank for pre-shipment finance so that
the export proceeds can be correctly adjusted on realisation. All the above
mentioned pre-shipment finance procedure refers to obtaining of packing
credit. The other way of obtaining pre-shipment finance is by getting advance
against cheques, drafts, etc.
Post-shipment finance
Post-shipment finance is a kind of loan provided by a financial institution
to an exporter or seller against a shipment that has already been made. This
type of export finance is granted from the date of extending the credit after
shipment of the goods to the realisation date of the exporter proceeds. Ex-
porters need not wait for the importer to deposit the funds. The post-ship-
ment finance can be extended up to 100% of the invoice value of goods. This
type of finance is not extended in case of pre-shipment stage. Banks can also
finance undrawn balance. In such cases banks are free to mention margin
requirements as per their usual lending norm. There are three time periods of
post-shipment financing. They are as follows:
Short-term: Credit given for 180 days
Medium-term: Credit given for a period of 6 months to 5 years
Long-term: Credit given beyond 5 years
The type of post-shipment finance can be classified as export bills pur-
chased / discounted, negotiated, advance against export bills sent on collec-
tion basis, advance against export on consignment basis, advance against
undrawn balance on exports and advance against claims of duty drawback.
6.3 Role of Exim Bank

• What is EXIM bank?
Export–Import Bank of India is the premier export finance institution of the
country. It was set up in 1982 under the Export–Import Bank of India Act 1981.
It is located in Mumbai (Head office), Ahmedabad, Bangalore, Chandigarh,
Chennai, Guwahati, Hyderabad, Kolkata, Mumbai, New Delhi, Pune with its
overseas offices at Dubai, Durban, London, Singapore, Washington DC.
• What are its objectives?
I ts objectives are to provide financial assistance to exporters and im-
porters and to function as the principal financial institution for coor-
dinating the working of institutions engaged in financing export and
import of goods and services with a view to promoting the country’s
international trade.
(Source: www.eximbankindia.in)
Export bills purchased/discounted

Export bills (Non-L/C Bills) that are used in terms of sale order may be dis-
counted or purchased by the banks. It is used in indisputable international
trade transactions and the proper limit has to be sanctioned to the exporter for
purchase of export bill facility.
Export bills negotiated
This is followed when L/C is used. The risk is lesser as L/C is used and the
export proceeds released by the buyer’s bank from the buyer are negotiated
against the payment made to the seller under post-shipment finance and the
remaining amount is given to the seller from the export proceeds.
Advance against export bills sent on collection basis
In this type, advance is given against the export bills that are sent on collec-
tion basis if the bills drawn under L/C have any discrepancies.
Advance against export on consignment basis

This type of advance is given to the exporter when the goods are exported on
consignment basis at the risk of the exporter for sale and eventual payment of
sale proceeds to him by the buyer.
Advance against undrawn balance on exports
If the seller has not drawn the complete balance from the export proceeds
from the account due to difference in rates, weight, quality etc., then money
is given against the undrawn balance for the seller to use for the next export
to a maximum of 10% of the export value. An undertaking is obtained from
the seller that he will pay the money within 6 months from the due date of
payment or the date of shipment of goods, whichever is earlier.
Advance against claims of duty drawback
Duty drawback is a type of discount given to the exporter in his own coun-
try. Banks grants advances to exporters at lower rate of interest for a maxi-
mum period of 90 days. After the shipment, the exporters lodge their claims,
supported by the relevant documents to the relevant government authorities.
These claims are processed and eligible amount is disbursed after making
sure that the bank is authorised to receive the claim amount directly from the
concerned government authorities.
6.4 Services of Exim Bank

1. Export credits
a) For Indian companies execut- b) For commercial banks c) For overseas en-
ing overseas contracts tities
i) Pre-shipment credit i) Rediscounting facility i) Buyer’s credit
ii) Post-shipment credit ii) Refinance of
post-shipment credit
2. Finance for EOU
a) Term finance b) Working capital fi- c) Export finance
nance
i) Project finance i) Working capital term i) Pre-shipment
loans credit
ii) Equipment finance ii) Export packing credit ii) Post-shipment
credit
iii) General corporate finance iii) Cash flow financing iii) Bills discounting
iv) Import of technology and iv) Long-term working iv) Buyer’s
related services capital and supplier’s credit
v) Domestic acquisitions of v) Letter of credit and v) Export receivables
business / brands / companies guarantee limits and warehousing
finance
vi) Export product development, vi) Export bills discount- vi) Export lines of
R&D ing credit
3. Lines of credit
a) To heavily indebted poor b) To low-income coun- c) To middle income
countries tries and least developed countries
countries
4. Overseas investment finance
a) For joint venture (JV) and b) For acquisition of c) Direct equity for
wholly owned subsidiary overseas business / com- JV and WOS
(WOS) panies
5. Other financing
a) SME financing b) AGRI financing c) Film financing
6.4.2 Other initiatives

Apart from these export finance initiatives, to improve export, government
has come out with various initiatives like setting-up of apparel export pro-
motion council (AEPC), creating special economic zones (SEZ), subsidies
for export oriented units (EOU), duty exemption, duty drawback, providing
market development assistance (MDA), market access initiative, duty enti-
tlement passbook, etc. Although these initiatives do not provide money for
financing the export, they help exporter to narrow down the costs or use
government fund for expanding his business.
1) Apparel export promotion council (AEPC)
AEPC started in 1978 provides assistance to the exporters in terms of or-
ganising buyer seller meet, taking exporters as trade delegation to visit other
countries to know their best practices, make them attend international fairs,
seminars, organise workshops, give training, disseminate information and ex-
plain the various schemes given by the government to improve their export.
2) Special economic zones (SEZ)
SEZ’s were started in 1965 to promote export. SEZ’s have the following ad-
vantages: No licenses are required for import. Duty-free import / domestic
procurement of goods for development, operation and maintenance of SEZs
and SEZ units is provided. Extension of income tax benefits under Section 80
IA of the Income Tax (IT) Act to SEZ developers for a block of 10 years in
15 years, as per the choice of the developers is granted. A 100% income tax
exemption for SEZ units under Section 10A of the IT Act for the first 5 years,
50% for 2 years thereafter and 50% of the ploughed back export profit for the
next 3 years is provided. External commercial borrowing by SEZ units with-
out any maturity restrictions through recognised banking channels is possible
thereby helping exporters to have more funds for exporting.
3) Export oriented units (EOU)

EOU scheme was launched in 1981 to aid exporters. It provides duty free
imports. 100% of foreign equity is allowed. Subsidies are provided for elec-
tricity duty payment; central sales tax paid on domestic purchases are reim-
bursed. They are given full freedom for sub-contracting.
4) Duty exemption
Although duty exemption and duty drawback do not provide export finance,
it helps exporters to reduce the cost of shipment. Duty exemption allows an
exporter to make duty free imports of raw materials used for the export of
product at pre-shipment stage. Normally, the exporter obtains an advance li-
cense to avail duty exemption.
5) Duty drawback
It refers to the refund with respect to central excise and customs duties paid for
the raw material and other inputs used in the manufacture of the product prior to
its export. An exporter is entitled to claim the amount of duty drawback as soon
as export of goods takes place. This money can be used for the next export order.
6) Market development assistance
Started in 1963, it helps exporters to get grants for sales cum study tours,
participation in fairs and exhibitions abroad and providing publicity through
printed material. Non-refundable financial assistance is provided to exporters
to develop their export business and to explore various foreign markets.
7) Market access initiative
This scheme provides financial assistance to exporters to do market-
ing studies on import countries, setting-up of common showrooms and
warehouses in foreign cities, participation in sales promotion campaigns
abroad, setting up of business centres in Indian missions abroad for visit-
ing exporters, etc.
8) Duty entitlement passbook (DEPB)
The exporter is eligible to claim import duty credit as a specified percentage on
the FOB value of exports using DEPB. This credit can be used by the exporter
to pay for the import duty on import of materials for the manufacture of export
product. Sometimes it is accepted even if the import material is not used for the
manufacture of exported product thereby enabling the exporter to use the im-
ported machine or material later for executing some other future orders.
6.5 Pre-shipment inspection

In any apparel export to foreign countries, buyers are very quality con-
scious and expect the products to meet their prescribed standards and
quality. In this regard, they engage with various private inspection agen-
cies who will do the pre-shipment inspection at the seller’s place and
confirm if the product meets the requirements as expected by the buyer.
During contract execution, buyer mentions the required quality and stand-
ards to be adhered in the final garment and informs the same to the seller
and puts it on the contract. Along with, the buyer engages inspection
agencies to inspect the material before dispatch. The details of the inspec-
tion agency are also mentioned in the contract. These agencies are also
used by some buyers for compliance purpose also. Once the final garment
is ready for shipment, inspection agency’s personnel visit seller’s location
and perform a quality check of the final garment. If the inspection is a
pass, they issue a certificate of inspection for the product as shown in Fig-
ure 6.4 and the product is eligible for shipment. The certificate of inspec-
tion should be enclosed with other shipping documents sent to the buyer.
Buyer also uses these agencies for compliance audit at times.
Figure 6.4 Pre-shipment inspection certificate (Source: www.selfic.com.cn)

Pre-shipment inspection is very advantageous to the buyer as it ensures

quality of the product, saves time in waiting for low quality goods if any, re-
liability of the parties involved increases and risk in quality is taken care of.
Inspection agencies charge fees for inspection and it is paid by the buyer or
seller as agreed in the contract. Global agencies in inspection which are very
common are SGS and BVQI.
6.5.1 Pre-shipment inspection agencies

There are various pre-shipment inspection agencies available around the
world. The below list gives the names of the agencies operating in India for
pre-shipment inspection:
• BVQI – Bureau Veritas quality inspection – Pan India
• SGS – Societe Generale de Surveillance – Pan India
• ELBI consultancy private limited – Kolkata
• Intertek testing services – Pan India
• Sandeep Garg and company – Gurgaon
• Superintendence company of India – Kolkata
• National marine consultants incorporation – Mumbai
• Value guru Chartered engineers private limited – Chennai
• New India shipping corporation – Mumbai
• SNG inspection services – Noida
• WLSI group – New Delhi
• TUV Rheinland India private limited – Bengaluru
• Tubby impex private limited – Mumbai
6.6 Shipment modes

It is imperative for the merchandiser to know about the various shipment modes
available for shipment. Mostly sea and air shipment are the two most followed
shipment modes for any exports from India. In Europe, rail or road transport
mode is followed. Majorly sea shipment is carried out as it is cost effective than
air shipment and air shipment is only followed when there is a delay in sending
the goods or the buyer wants the goods to be sent to him urgently.
For shipments, sellers employ carrier agents, freight forwarders to take
care of the shipment from place of manufacture to the named place of desti-
nation. The seller initially has to decide on the type of load and type of con-
tainer to be used for export.
6.6.1 Types of load

There are two types of loads in a container. They are explained below:
Full container load (FCL)

If an exporter has goods to accommodate in one full container load, he / she
books an FCL to send his cargo. In an FCL cargo, the complete goods in the
said container belong to one shipper. In an FCL owned by one shipper, the
cargo in the container need not have fully loaded cargo in the container. The
cargo can also be half loaded or quarter loaded container, if booked by one
shipper under one shipment. It is called as FCL shipment.
Less container load (LCL)

If the exporter doesn’t have enough material to put in one container, then
he can check with the buyer if he / she is ok with sharing the container with
some other shipper who also has partial goods so that cost can be minimised.
If the buyer agrees, then the seller contacts the freight forwarders and books a
LCL to transport the goods. This is called as LCL shipment.
6.6.2 Types of containers

There are various containers used in exporting. They are Standard Dry Contain-
ers, Open Top Containers, High cube Containers, Refrigerated Containers, GOH
Containers (Garments on hanger containers), Open Side Containers, Tank Con-
tainers, Half height Containers, Ventilated Containers, Car Carrier Containers,
Hard top Containers, Insulated Containers, Tunnel Containers, Platform Contain-
ers and Flat rack Containers. Out of these containers, the two main containers
used for apparel export are standard dry containers and GOH containers.
Standard dry containers

The standard dry containers are mostly used for garment exports. These con-
tainers are air tight and made of aluminium or steel. Aluminium containers
normally have a larger pay load and these containers are available in the sizes
of 20 feet and 40 feet as shown in the Figure 6.5. These containers are less
expensive than other containers.
Figure 6.5 Standard dry containers

GOH (Garment on hanger) containers

The Figure 6.6 shows a GOH container. It is also called as a hangtainers and
is available in the lengths of 20 and 40 feet. In these types of containers,
arrangements to use string or bar and a combination of string and bar are
available. These GOH containers are flexible and have greater loading capac-
ity. They also minimise transportation and handling costs. For apparel, good
amount of time, money and labour can be saved on packing and unpacking
of them. These containers are connected with racks and poles by screws and
nuts to load the garments safely. Dustproof clothing covers are available on
the inside of the walls. Maximum amount of garments can be loaded due to
the systematic arrangement of horizontal poles on the roof of the container.
Figure 6.6 GOH container

6.5 Triangular Shipment
A triangular shipment is one type of shipment where your buyer will re-
quest you to send the material to a third party who will be his buyer. An
example of triangular shipment can be that a company named ABC in USA
has placed an order for the garments to a company named XYZ in India.
As per the order, XYZ company may be asked to ship the goods to a new
buyer named RST located at China. This is because ABC has obtained an
order from his buyer RST and so ABC procures goods from XYZ. RST is
the final buyer. However, the payment to XYZ is made by ABC and ABC is
paid by RST. There will be no accountability of XYZ to RST and there will
be no connection between XYZ and RST. Certificate of origin of goods
under triangular arrangement will be obtained from XYZ in India as he is
the manufacturer of goods and not from buyer ABC situated at USA.
6.6.3 Selection of freight forwarder

A very important aspect while deciding on shipping is to select the correct
freight forwarder. The following points should be looked at while selecting
the freight forwarder:
• Transit time of cargo has to be found out as there can be delays from
the freight forwarder side especially in the case of LCL as he waits
for the container to get fully loaded.
• The forwarder should provide the box closing date (container stuff-
ing date), planning vessel schedule, vessel schedule at transship-
ment port, expected time of arrival at place of destination (ETA).
• The cost of shipping should be obtained in writing. Itemised details
like ocean freight to the port of destination, basis of charges (whether
CBM – cubic metre basis as in the case of LCL or container charge
as in the case of FCL).
• The destination service charges should also be obtained from the for-
warder and forwarded to the buyer so that the buyer should also be
ok with the charges and be ready to receive the consignment.
• The service of the freight forwarder’s counterpart at the buyer side
should also be verified as poor service will lead to damaged rela-
tionship with the buyer. The buyer should also be informed about
the freight forwarder’s counterpart details, their address and buyer
should also be ok with those people so that the consignment reaches
buyer’s place without any hindrance. Sometimes buyer may not be
ok with the agent in their country.
6.7 Export customs clearance procedure

The export customs clearance procedure has been made simpler nowadays.
Export clearance procedures are as simple as domestic sales procedures. In
India, the scenario change after 1992 when India became a liberalised econ-
omy. Before 1992, there were complicated procedures to do export. Usage of
software to file documents electronically has made life simpler for exporters.
The growth in information and communications technology ICT has boosted
the export customs clearance formalities. The procedure for obtaining export
customs clearance is detailed below:
• Once the packing list and invoice is ready as per the purchase order
or L/C, the exporter should work on obtaining the customs clearance
in advance.
• Normally a clearing and forwarding agent or a customs broker or a
custom house is appointed to take care of smooth and fast clearance
process.
• All the necessary documents for obtaining customs clearance

are submitted to the customs agent to complete the required
formalities.
• Then the broker files the shipping bill through customs online soft-
ware electronically.
• The filing software can be downloaded from ICEGATE for free and
uploading can be done from even home. So the exporter can also
directly work with customs authorities without a broker.
• The shipping bill is generated as per serial order all over the country
as this is a generalised software.
• After obtaining the shipping bill, the goods for export are moved to
the named port of destination.
• The goods are placed at the designated place as informed by the car-
rier. The custom officials then inspect the goods as per the require-
ment and enter the details in the software for approval of their higher
officials.
• The officials assess the value of goods and verify other information
as provided based on the documents submitted.
• They also verify the export schemes that the seller is trying to utilise
for this export order.
• After verifying all the documents, they issue the “Let export
order” as a proof of completion of export customs procedure and
formalities.
• After the approval, three copies of shipping bill are generated. First
one is handed over to exporter, second one is the exchange control
copy which is submitted to reserve bank of India through exporter’s
bank and third one is issued to shipping carriers to move the cargo to
the final port of destination.
• The carrier then ships the material to the port of destination thereby
completing the export customs clearing process.
6.8 Export documentation

In the previous sections, the procedure and activities to be followed for
executing an export order is discussed. For all the above procedure to be
taken care, there is a need for preparing documents with respect to each and
every activity that is carried out in export. With respect to the export proce-
dures, there are various documents that are required. Before seeing the var-
ious documents used in export, it is essential to know the need for export
documentation:
6.6 Harmonised System Code for Exports

Harmonised commodity description and coding system also known as the
harmonised system (HS) of tariff nomenclature is an internationally stand-
ardised system of names and numbers to classify traded products. These are
developed and maintained by world customs organisation which is an in-
dependent intergovernmental organisation based in Brussels, Belgium with
more than 200 member countries since 1988. They have categorised goods
into approximately 5000 commodity groups. More than 98% of import ex-
port trade all over the world is done by following HS codes. HS codes
consist of six digits. The first two digits refer to the HS chapter. Second
two digits refer the heading and last two digits refers sub-heading. Some
countries opt for more digits for more detailed specification of the products
like India which has Indian tariff code with eight digits. However, the first
six digits remain the same for all the countries based on the traded product.
For apparel product
In HS code of 610110, 61 refers to articles of apparel and clothing acces-
sories, knitted or crocheted, 01 refers to men’s or boy’s overcoats etc.,
knit or crochet and 10 refers to men’s or boy’s overcoats made of wool.
Similarly in 611110, 61 refers to articles of apparel and clothing acces-
sories, 11 refers to babies garments and accessories, knitted or crocheted
and 10 refers to these garments made of wool. If last two digits are 20,
it refers to cotton and 30 refers to synthetic fibre. The correct HS code is
used in every export.
6.8.1 Need for export documentation

• To effect the shipment on time
• To ship the correct goods
• To ensure the quality of goods
• To clear the export customs procedure
• To describe the shipment and the contents in it
• To indicate the ownership of goods
• To facilitate smooth flow of goods across borders to the designated
country
• To avoid disputes with the importer
• To ensure proper government procedures are followed
• To avoid any unlawful activities
• To obtain payment from the buyer after completing all the formali-
ties through his/her bank.
6.8.2 Types of export documents

The types of export documents that are prepared by the exporter are classified
as shown in Figures 6.7 and 6.8
Figure 6.7 Types of export documents (a)
The export documents are also classified in another way as follows:
Figure 6.8 Types of export documents (b)

Similar to the above types, there are various ways to classify export doc-
uments according to its usage. As all the documents used are same and only
the head under which each document falls is different in the above types, the
types of export documents (a) is dealt with in this chapter in great detail.
6.8.3 Commercial documents

These are the documents that are used in export as required by the customs of
trade for enabling physical transfer of goods, passing the title from the seller
(exporter) to the buyer (importer) and for realising the export proceeds. There
are 16 commercial documents in which eight are classified as primary and
eight documents are classified as auxiliary.
Principal documents
The various principal documents used in export are as follows:
1. Commercial invoice
2. Packing list
3. Bill of Lading / Airway bill
4. Certificate of Inspection / Quality control
5. Certificate of origin
6. Bill of exchange
7. Combined transport document and shipment advice
8. Insurance certificate.
1. Commercial invoice
The commercial invoice is the demand note for payment that is issued by the
exporter to the importer for the products shipped as per the sales contract.
It details all the particulars related to the product, terms of payment, trade
terms and cost. It is used for customs clearance, preparing other shipping
documents, accounting purposes, negotiation of documents for collection of
payment and to claim incentives. It helps the customs department to ascertain
the true value of goods for levy of duties and taxes. It is the bill given by the
exporter evidencing the sale of products. A sample of commercial invoice is
shown in Figure 6.9.
Figure 6.9 Commercial invoice (Source: www.freewordtemplates.net)
The contents in a commercial invoice include the exporter name and ad-
dress, invoice number, letter of credit number, date of shipment, bill of lading
or airway bill number, country of origin, currency, conditions of sale, con-
signee details, importer details if buyer is not the consignee, transportation
mode, total number of packages, product details, quantity, weight, unit price,
total value of each product and the grand total or the invoice value along with
the name and signature of the authorised personnel of the exporter and the
date of signing.
2. Packing list
It is the list with detailed packing information of the goods shipped. It con-
sists of the buyer details, shipping quantity, carton quantity, net weight, gross
weight, description of the item shipped, size wise and colour wise particulars
of the items shipped along with total pieces as shown in Figure 6.10.
Figure 6.10 Packing list (Source: www.garment-stocklots.com)
The packing list is used by the shipper or forwarding agent to determine

the total shipment weight, volume and item wise list of the materials shipped
to ascertain that the right cargo is being shipped. It provides the fullest details
of the goods including packing information.
3. Bill of lading / Airway bill
a) Bill of lading (B/L)
Bill of lading is the document issued by a carrier for goods sent by sea and it
acts as an evidence of contract between the shipper of the goods and the car-
rier. The original bill of lading should be produced by the buyer as proof of
ownership for claiming the goods once it reaches his / her country. It is used
for negotiation. The bill of lading is sent to the buyer through the bank for
claiming the possession of goods after importing. A sample of bill of lading
document is shown in Figure 6.11. The bill of lading consists of exporter,
importer, cargo details, port of receipt, loading, discharge and destination,
container number, marks, description of goods, weight, number of containers,
freight details and charges collected for shipping. The document is finally
signed by the shipping company’s authorised signatory.
Figure 6.11 Bill of lading (Source: www.asiatradingonline.com)
The procedure for sending B/L to buyer is as follows: Bill of lading is is-
sued to shipper after completion of export customs clearance procedures at load
port customs location of the country. After completion of export customs for-
malities, shipper hands over cargo to sea shipping carrier or his agent. As proof
of receipt of goods, sea carrier or his agent issues a document which is called
bill of lading. Bill of lading is generally issued in triplicate with non-negotiable
copies. B/L is also issued in quintuple on special request by shipper. Once after
obtaining original bill of lading from the sea carrier, shipper submits bill of lad-
ing with other documents with his bank, in turn bank sends to importer through
importer’s bank. Importer collects bill of lading and other required documents
from his bank and arranges for import customs clearance procedures.
6.7 Types of Bill of Lading

There are various types of bill of lading. They are explained below:
Ocean Bill of Lading: If a consignment is transported by sea, nationally or interna-
tionally, Ocean Bill of Lading is used. Ocean Bill of Lading is a common term used in
shipping.
Inland Bill of Lading: Inland Bill of Lading is the bill of lading which allows the ship-
ping carrier to ship cargo, by road or rail, across domestic land, but not overseas.
Multi-modal / Combined Transport Bill of Lading: This is a type of Through Bill of
Lading that involves a minimum of two different modes of transport, land or ocean. The
modes of transportation can be anything from freight boat to air.
Direct Bill of Lading: Direct Bill of Lading is used when it is known that the same
vessel which picked up the cargo will deliver it to its final destination.
Clean Bill of Lading: If a consignment with no damage on packages apparently, the
carrier issues a bill of lading called Clean Bill of Lading.
Clean On Board Bill of Lading: A consignment with no damage on packages appar-
ently and if such consignment gone on board the vessel, a Clean On Board Bill of Lad-
ing is issued by carrier of goods.
Unclean Bill of Lading / Clause Bill of Lading / Foul Bill of Lading / Dirty Bill of
Lading / Soiled Bill of Lading: If owner of ship or his agent does not agree with one or
more of the statements mentioned in the bill of lading, he adds the said clause or clauses
on the bill of lading. This bill of lading is called unclean bill of lading, claused bill of lad-
ing or foul bill of lading.
Shipped On Board Bill of Lading: A Shipped On Board Bill of Lading is issued when
the cargo arrives at the port in good, expected condition from the shipping carrier and is
then loaded onto the cargo ship for transport overseas.
Received Bill of Lading: Received for shipment bill of lading can be issued to shipper
immediately up on receipt of goods by the carrier after necessary export customs clear-
ance procedures of exporting country.
Through Bill of Lading: Under a Through Bill of Lading, the shipping carrier can pass
the cargo through several different modes of transportation and / or several different
distribution centres. This Bill of Lading needs to include an Inland Bill of Lading and /
or an Ocean Bill of Landing depending on its final destination.
Stale Bill of Lading: A Bill of Lading can be treated as “Stale”, if it is presented long
after sailing of vessel pertaining to a shipment at port of loading. Such presentation of
Bill of Lading could be with the Supplier’s Bank, Discounting Bank, Negotiating Bank,
Buyer’s Bank or buyer. The term “Stale Bill of Lading” is also used when a bill of lad-
ing is presented with a bank after expiry date of credit.
Straight Bill of Lading: Straight Bill of Lading is also known as Consignment Bill of
Lading. Straight Bill of Lading is a non-negotiable Bill of Lading where no payment is
required against the goods. The carrier of goods release cargo to consignee on produc-
tion of identity of consignee at port of final destination. The other bills of lading used
are “To Order Bill of Lading”, Transhipment Bill of Lading, Charter Party Bill of Lad-
ing, House Bill of Lading, Master Bill of Lading and Express Release Bill of Lading.
(Source: http://howtoexportimport.com/)
b) Airway bill
Airway bill is issued when goods are shipped by air. It serves as a receipt of
goods for delivery by the air carrier and states the condition of carriage but
it is not a title document. If goods are shipped by air, airway bill is given and
if it is shipped by sea, then bill of lading is given. However the difference
between the two documents is that bill of lading can be used for negotiating
the payments with the buyer after delivery of goods and person possessing
the original bill of lading becomes the owner of the goods (buyer – if he / she
is mentioned as consignee in the B/L) but a person holding airway bill do not
hold the title for the goods and it cannot be used as a negotiating document
for payment (Consignee not endorsed in AWB). However in some instances,
like in the case of DP (Documents against payment) payment term, it is es-
sential that airway bill also acts as a negotiating document as goods can be
claimed by the importer only when he has an original negotiating document.
In these cases, the airway bill is endorsed to the buyer to convert it into a ne-
gotiating document. An airway bill is shown in Figure 6.12.
Figure 6.12 Airway bill (Source: www.thepostalconnect.com)

The airway bill has all the contents similar to the bill of lading like
shipper, receiver details, shipment details, description of contents to be
shipped, dutiable shipment details (if any), origin, destination, weight, cost
of transport, payment details, services required and authorised signature of
the carrier and shipper. Airway bill issued by carrier is called master air-
way bill which will have signature of the carrier and airway bill issued by
freight forwarder is called house airway bill which will be signed by freight
forwarder. In master airway bill, protection of goods is carrier’s respon-
sibility whereas in house airway bill, it is the responsibility of the freight
forwarder.
4. Certificate of inspection / quality control
It is a report issued by the inspection agency designated by the buyer to in-
spect the shipment on the basis of quality, quantity, packing, etc., as men-
tioned in the contract and approve the shipment on behalf of the buyer. The
certificate of inspection is discussed in detail in the pre-shipment inspec-
tion section and a sample of it is shown in Figure 6.4 under pre-shipment
inspection.
5. Certificate of origin
It is the certificate stating the origin of the merchandise. It helps the im-
porter to get the quick delivery of goods from custom authorities and also
to claim special concession based on the country from where the material
is imported from. It gives adequate proof to the importer about the origin
of goods. It is important when countries have preferential rate tariffs. In
India, Federation of Indian chambers of commerce and industry (FICCI),
export promotion councils and trade associations are authorised by the
government to issue certificate of origin. A copy of certificate of origin is
shown in Figure 6.13. It consists of the exporter details, producer details,
buyer details, description of goods, producer, net cost, preference criterion,
country of origin and authorised signature. The certificate of origin is of
two types – Preferential and Non-preferential. Non-preferential certificate
of origin is the general certificate of origin which is normally used. Pref-
erential certificate of origin is the one that is used based on the bilateral
and multilateral trade agreements between countries and there are various
types in it. Some of them are NAFTA certificate of origin (Producer – USA,
Importer – Canada, Mexico), Mexican certificate of origin (Avoid Asian
textiles and footwear dumped into Mexico through USA), Israeli certificate
of origin (Producer – USA, Importer – Israel), Japanese certificate of origin
(Preferential tax treatment under GATT), South African certificate of origin
(Goods qualify for lower rate of duty), Turkey certificate of origin (Goods
liable for anti-dumping).
Figure 6.13 Certificate of origin (Source: http://www.wordmstemplates.com/)
6. Bill of exchange
Bill of exchange is a negotiable document prepared by the seller addressed
to the buyer. It is an instrument in writing containing an unconditional order
signed by the drawer directing a certain person to pay a certain sum of
money only to or to the order of a person or the bearer of the instrument. It is
also known as “draft”. It is drawn on the issuing bank mostly. A copy of bill
of exchange is shown in Figure 6.14.
Figure 6.14 Bill of exchange (Source: http://www.letterofcredit.biz/)
The bill of exchange consists of name and signature of the drawer

(seller), name of the drawee (buyer), payee (buyer or a third party), spec-
ified sum and date of payment with authorised signature of the drawer.
After shipping the goods, the required documents for import along with bill
of exchange are submitted with exporter’s bank to send to foreign buyer
through buyer’s bank. The bill of exchange is drawn in duplicate. The im-
porter signs on the bill of exchange for accepting it and on the maturity date
of the document, the buyer effects the payment through his/her bank. The
types of bill of exchange are inland bill, foreign bill, trade bill and accom-
modation bill.
7. Combined transport document and shipment advice
a) Combined transport document
When goods are transported using more than one mode of transport, the is-
suer of the collection takes responsibility for the whole of the journey by
issuing a combined transport document.
b) Shipment advice
It is the letter or form sent by the exporter to a foreign buyer informing that
the ordered goods are shipped and it is on its way to reach the buyer. A copy
of bill of lading, invoice and packing slip are attached with the shipment ad-
vice. Figure 6.15 shows a copy of shipment advice.
Figure 6.15 Shipment advice
8) Insurance certificate
An insurance policy is an insurance document evidencing insurance has been
taken out on the goods shipped, and it gives full details of the insurance cov-
erage. An insurance certificate certifies that the shipment has been insured
under a given open policy and is to cover loss of or damage to the cargo while
in transit. The different types of insurance and policies available are marine
insurance, specific voyage policy, time policy, floating policy, open policy,
open cover policy. The insurance certificate is shown in Figure 6.16.
Figure 6.16 Insurance certificate (Source: http://avgoogle.info)

The above discussed documents are all commercial documents which are
used in export. The mandatory documents for exporting are bill of lading /
airway bill, commercial invoice, packing list and shipping bill or bill of ex-
port. All the above mandatory documents have been discussed in this section
except shipping bill. Shipping bill is a part of regulatory document and will
be discussed later in this chapter.
Auxiliary documents
The various auxiliary documents used in export are as follows:
1. Proforma invoice
2. Intimation for inspection
3. Shipping instructions
4. Insurance declaration
5. Shipping order
6. Application for certificate of origin
7. Mate’s receipt
8. Letter to bank for collection/negotiation of documents.
1. Proforma invoice
Proforma invoice is provided by exporter prior to the shipment of merchan-
dise, informing the buyer of the kinds and quantities of goods to be sent, their
value, and importation specifications (weight, size and similar characteris-
tics). It is also referred to the quotation sent in the form of regular invoice as a
reply to an inquiry. It is the basis of all trade transactions and it will be useful
for the importer to obtain import license and foreign exchange. It is shown in
Figure 6.17.
The proforma invoice consists of exporter, importer details, terms of
sale, transport details, complete and accurate description of goods, weight,
quantity, cost, date of shipment and authorised signature of the exporting
company.
2. Intimation for inspection
The export inspection council should be intimated for inspection. An appli-
cation has to be submitted to the council. A 100% EOU and units in SEZ are
exempt from compulsory inspection of Export inspection council (EIC). If
not an application with 0.4% of FOB value as draft for inspection fee should
be submitted to the council at least 7 days before the shipment. The EIC has a
right to exercise supervision of inspected consignments at any place or time.
After scrutiny of application, an officer not below the rank of technical of-
ficer will be deputed to carry out the technical inspection of the consignment.
Figure 6.17 Pro forma invoice
The officer will then issue a certificate for acceptance or rejection based on
the terms and conditions. If it is voluntary inspection requested by buyer or
seller himself, then seller should inform the inspection agency well in ad-
vance to inspect the consignment.
3. Shipping instructions
It is a document advising details of cargo and exporter’s requirement of its
physical movement.
4. Insurance declaration
An insurance declaration page is a document that provides basic information
about an insurance policy.
5. Shipping order
The shipping order or the shipping permit is provided by the shipping com-
pany to the exporter with a confirmed space booking, authorising the cargo
inspector at the container terminal or dock to receive a specified amount of
goods from the named exporter. A shipping order (S/O) typically contains the
space booking number, names and addresses of the shipper and customs bro-
ker or forwarder, vessel and voyage number, sailing time, delivery date and
location, customs closing date, and number and type of packages. The cus-
toms broker or forwarder generally requires the packing list of a consignment
in order to book the shipping space and to obtain the S/O and / or to prepare
the shipping note. A copy of shipping order is shown in Figure 6.18.
Figure 6.18 Shipping order (Source: www.geotrans.eu)

6. Application for certificate of origin

Every export consignment needs a certificate of origin as discussed before
and to obtain a certificate, the concerned exporter should apply to the issuing
authority in writing using the application form for getting the certificate of
inspection. The application is shown in Figure 6.19. It consists of the address
where the goods are available, specifies the tariff applicable as per general-
ised system of preferences (GSP), supporting documents submitted, gives an
undertaking and requests for a certificate of origin to be issued with the sig-
nature of the authorised personnel of the exporting company.
Figure 6.19 Application for certificate of origin (Source: www.pmpindia.com)
7. Mate receipt
When the cargo is loaded on the ship, the commanding officer of the ship will
issue a receipt called the “mate receipt” for goods. The name of the vessels,
berth, date of shipment, description of packages, marks and numbers, con-

dition of the cargo at the time of receipt on board the ship, etc. are men-
tioned in the mate receipt. It is a temporary receipt issued for goods that have
been delivered to the vessel. It is a preliminary document and is replaced
with bill of lading at later stages. The commanding officer will be responsible
for the deficiency in number of any goods received after signing the mate
receipt. If the material is received in the warehouse, the receipt issued by the
shipping company is called dock receipt. A copy of mate receipt is shown in
Figure 6.20.
Figure 6.20 Mate receipt (Source: confluence.org)
8. Letter to bank for collection / negotiation of documents

After shipping the goods, the exporter writes a letter to bank for realising
the export proceeds. The letter written to exporter’s bank is shown in Figure
6.21. The letter consists of exporter, consignee details, invoice number, buyer
order number, drawee (if other than consignee), details of all the accompany-
ing documents, instructions, letter of credit number, declaration by the ship-
per and his / her authorised signature with seal. This document is used by the
bank for verifying all the attached documents and then forwards the same to
the buyer’s bank for realising the export proceeds. The terms and conditions
of the transaction are mentioned in the second page of the document by the
exporter’s bank which details about rate of exchange, bank’s obligations, ex-
porter’s obligations, insurance clauses, etc.
Figure 6.21 Letter to bank for collection / negotiation of documents (Source:

indusind.com)
6.8.4 Regulatory documents

The various regulatory documents used in the export are given below:
1. ARE-1 Form (for Central Excise)
2. Shipping Bill / Bill of Export (for Customs)
3. Port Trust Copy of Shipping Bill / Export Application / Dock Challan
– Port
4. Vehicle ticket – Port
5. Exchange Control Declaration / GR / PP forms – RBI
6. Freight Payment Certificate – Shipping company
7. Insurance Premium Payment Certificate – Insurance Company
8. Receipt for payment of port charges.
1. ARE-1 Form
The manufacturer or the exporter has to get clearance from central excise
department before shipping the goods coming under excise duty payment.
The exporter files ARE-1 form for obtaining clearance of excisable goods
to export. The clearances can be “under claim for rebate of duty” or “under
bond”. The central excise authority will inspect the goods and seal them
at the factory and the goods will be ready for shipment. After shipping the
goods, customs officer endorses ARE-1 form and it is taken as evidence by
excise department for considering rebate in duty or cancellation of bond.
The goods can be sealed at the place of removal or can be inspected by
the customs authorities at the port and sealed as per the exporter require-
ment (terms and conditions in the sales contract). AR4 / AR4A and AR5
forms are replaced with ARE-1 forms. The ARE-1 form consists of the de-
scription of goods, quantity, certification of customs officer, rebate sanction
order, etc.
2. Shipping Bill / Bill of Export

Shipping bill is issued for export of goods under bond, duty free goods, du-
tiable goods, goods under claim of drawback and claim of DEPB. It is the
main document required by the customs authority for allowing shipment of
all products exported. It is also called bill of export. To process the shipping
bill, the following documents should be submitted:
• GR forms in duplicate
• Four copies of packing list
• Four copies of invoices
• Sales contract, L/C, purchase order
• ARE-1 form
• Inspection certificate.
Figure 6.22 Shipping bill (Source: www.cbec.gov.in)
A copy of shipping bill used for export of duty free goods under bond
is shown in Figure 6.22. The signing of shipping bill by customs authorities
completes the customs clearance procedure and it gives green signal for ex-
port (LET EXPORT ORDER). The date when shipping bill is signed can be
regarded as the “Let export date”. The shipping bills are generated from cus-
toms electronic data interchange (EDI) system.
3. Port Trust Copy of Shipping Bill / Export Application / Dock Challan

The port trust copy of the shipping bill is called as dock challan at Kolkata
port trust, export application at Chennai and Cochin and as port trust copy in
Mumbai port trust. This copy is required by the exporter to approach the shed
superintendent at the port for obtaining carting order. Carting order is the per-
mission given by the port trust authorities to get the goods inside the docks.
4. Vehicle ticket
It is also known as cart chit or export cargo ticket. Vehicle ticket is prepared
by the exporter along with the gate pass (required by central excise) and in-
cludes details of the export cargo in terms of the shipper’s name, the number
of packages, the shipping bill number, the port of destination and the number
of the vehicle carrying the cargo. The driver of the vehicle cargo should pos-
sess the ticket and when the vehicle is brought at port gate, ticket should be
presented to the gate keeper along with other shipping and port documents.
The gate keeper after verifying that the vehicle is carrying the cargo as men-
tioned in the document allows it to pass the gate.
5. Exchange Control Declaration / GR / PP forms
Exchange control declaration forms are prepared by the exporter. These
forms are requirement of reserve bank of India (RBI). These forms are sub-
mitted to RBI after realisation of proceeds by the exporter’s bank. Inward
and outward remittance of the country is monitored by Reserve Bank. In an
export trade, inward remittance from foreign country is effected and in an im-
port trade, money is transferred from importing country to a foreign country.
To ensure economic stability of the country, all inward and outward move-
ments of money have to be monitored and Reserve bank is the government
agency for the same. This is the reason for involvement of Reserve Bank on
each export of country and hence requires exchange control forms like GR
(Guaranteed remittance) or PP and SOFTEX forms.
6. Freight Payment Certificate
It is the certificate issued by the shipping company to the exporter upon pay-
ment of the amount for the freight. If the terms of payment don’t involve
freight charges to be paid by the exporter, then this document is not needed
and freight charges are paid by the importer.
7. Insurance Premium Payment Certificate
It is the certificate issued by the insurance company for paying the premium
for the goods that need to be exported.
8. Receipt for payment of port charges
There are different port charges incurred for a shipment and a receipt is given
by port authorities for payment of those charges.
6.8 Different Port Charges

• Demurrage charges – Charges that the charterer pays to the ship
owner for its extra use of the vessel.
• Wharfage charges – Charges on all goods that are loaded, unloaded
or transshipped within the port by any means of transportation.
• Lighterage charges – Charges paid for the process of transferring
cargo between vessels of different sizes, usually between a barge
and a bulker or oil tanker.
• Pilotage charges – Charges or fee paid to the pilot for his or her
services.
• Anchorage charges – Charges paid for anchoring the ship.
6.9 Internal documents for merchandiser

There are many other miscellaneous documents used for export and as a mer-
chandiser, knowledge on the below listed documents will be very handy during
exporting. The apparel industry merchandiser uses few other documents inter-
nally, inside the manufacturing organisation to deal with other departments and
also to maintain a track on his / her own activities. The following documents
are not limited and also not mandatory to maintain in a factory. However, it is
recommended to have a proof for all the communication. In that aspect, the
following documents are essential for a merchandiser. They are detailed in this
section and the sample documents were provided in the annexure 1.
6.9.1 Customer information

The customer information is the collective information of the each buyer. The
merchandiser will develop or collect the information during his experience
with the customer. This provides detailed information, starting from, whom
to communicate, what is their testing procedure? Sampling steps / procedure
/ requirements based on their policies, etc. This will be kept as an internal
record in the manufacturing unit. When the company handles the orders for
the same buyer in the future, they will use this information for the reference
for the order processing. The sample format for the customer information is
provided in Figure A1.1 (a–d).
6.9.2 List of customer

The merchandiser will also maintain a list of all the customers, with whom
the company deals with and also with whom he / she deals with. The format
is maintained internally inside the company for the better availability of the
information. The sample format is provided in the Figure A1.2.
6.9.3 Sample / pattern request form

This is a general form to request either sample or the pattern from the sample
/ pattern department. After all the corrections incorporated, the final pattern
or sample will be developed and kept in respective department. Once the pro-
duction planning or Industrial Engineering department is about to start the
next order, they request the concerned department by filling the information
in this form. The sample copy of the form is provided in the Figure A1.3. The
form generally consists of the information like order numbers, buyer infor-
mation, style description and style number and other fabric or accessories
related information to specifically mention any one particular order.
6.9.4 Order review form

This document is generally handled by the merchandiser, where the informa-
tion about any particular order will be detailed as shown in example Figure
A1.4. The form is generally used by the merchandiser to confirm the infor-
mation like lab dip approval, print work completion, etc., before starting the
bulk production. This will ensure that the merchandiser has a track of the
exact order status to communicate to the buyer.
6.9.5 Order register (OCN)

Order register form is also known as Order Confirmation Number (OCN).
This record is used to maintain the list of buyers and orders handled in the
company. Each and individual orders will be provided with a unique number,
called as OCN. This will provide an idea to the higher management author-
ities about the buyers, their countries and also about the order quantity and
delivery date information. The sample format for the OCN record is provided
in Figure A1.5.
6.9.6 Accessories indent form

This particular format showed in Figure A1.6, is generally used to get the
required trims or accessories from the stores. This format is mostly pre-
pared by the production department in-charge and verified by the production
merchandiser. The form consists of the trims or accessory related informa-
tion against order details, style number, order quantity required, requested
quantity, balance quantity along with other order information like requested
date, received date.
6.9.7 Fabric indents cum cut planner

This document is used to request the fabric for the cutting process from
the fabric stores. This form is generally prepared by the cutting depart-
ment production in-charge and will be approved by the production mer-
chandiser. This form consists of fabric information like buyer, fabric type,
GSM, colour, program, style / order number, etc. Other than this, the cut-
ting department personnel will request the required amount of fabric in
kilograms for their production with detailed consumption description as
shown in Figure A1.7.
6.9.8 Yarn requisition form

Yarn request form is needed if the factory has in-house manufacturing facility.
In that case, the knitting or weaving depart of the factory will request the yarn
requirement, by mentioning the buyer, order number, OCN, GSM, colour (if yarn
dyed), quantity required, etc. This form will be prepared by the production de-
partment personnel and approved by merchandiser. It will be received by the fab-
ric department or stores in-charge. The sample format is provided in Figure A1.8.
6.9.9 Lap dip approval report

Lab dip approval report is generally prepared by the merchandiser. Once, the
developed fabrics are dyed with the various shades of the same colour, the
developed swatches are pasted onto this form with a reference number and
will be sent for the buyer approval. The buyer will go through the shades and
select the required shade and sign on the selected fabric swatch and reference
number. The document consists of details like style number, buyer, season the
fabric belongs to, lab dip initiated date and approved date information. The
sample format for the lab dip is provided in Figure A1.9.
6.9.10 Photo sample / fit sample / size set report

This document is used to submit the samples. As mentioned in the title, it
is a common format, where it can be used for photo sample or fit sample or
size set sample submission process. This document contains the informa-
tion about manufacturer details, buyer details, season and style or OC num-
ber. After submitting the sample, the buyer will compare and evaluate with
the original sample and comment the feedback in this form with a detailed
description of the issue and corrections required. If needed, the buyer will
also use the photographs of the garment and detail the requirement. The
form also contains information about the garment evaluator from the buyer
side with their contact information. Once the sample is approved, the buyer
will seal the sample and sign it on the top of it as “Approved” and will send
it back to the merchandiser. This format shown in Figure A.1.10 is used till
the sample acceptance.
6.9.11 Work order

The work order is the final report that the merchandiser will develop with
all the approved items. The format contains the selected or approved fabric
swatches, trims, labels, accessories, etc. The format will be distributed to all
the departments before the production schedule of that particular order. This
will help the department heads to ensure the quality of the material used dur-
ing the bulk production in their respective departments. This document will
be prepared and approved by merchandiser, factory manager and then it will
be passed to all the department head. The sample format of the document is
presented in Figure A1.11.
6.9.12 Pre-production meeting form

It is the report the merchandiser develops after the pre-production meet.
In this meeting, merchandiser will detail the quality requirement and
other needs from the buyer for the particular style. The other department
heads will discuss the possible practical difficulties that they may face
during the bulk production. The merchandiser will keenly observe their
comment and notice the important parameters which need to be clarified
from the buyer. This document consists of information related to each ac-
tivity from sample approval to production planning. The sample format is
provided in Figure A1.12.
6.9.13 Bulk fabric approval and trim card approval

After the lab dip process, the accepted fabric colour way will be produced in
terms of bulk process, where the whole order quantity of the fabric will be
produced with the same shade which has been accepted in lab dip. That par-
ticular fabric sample swatch will be sent to the buyer for final confirmation.
This format is general for fabric and trims / accessories. The sample format is
shown in Figure A1.13 (a) and (b).
6.9.14 Amendment form

The amendment form is specifically used by merchandiser in two cases. Either
the previous order (which was completed in the last few seasons) comes again
for the current season or any changes (size addition / reduction or colour way
addition or order quantity alternation) with existing order, this particular doc-
ument will be used. The merchandiser will indicate the latest amendments for
the same OCN or style number. The form contains information like quantity,
measurements, print, embroidery and other information as in Figure A1.14.
6.9.15 Order status report

The order status report will be maintained by the each production department
or planning department. The merchandiser will be verifying the report at fre-
quent intervals. This report details the information about daily production in
each department against the planned schedule. The merchandiser will extract
the information from this report and he / she will update their time and action
plan. The sample document is provided in Figure A1.15.
6.9.16 Customer feedback form

This document is used to receive the feedback from the customer, once goods
are delivered to them. The merchandiser will mail the document and receive
the feedback from the buyer / customer based on different aspects like aes-
thetic appearance of the goods, quality, fit measurement, company’s overall
performance, response time, etc. This form will help the company to assess
their quality and improve their performance in the future business. The sam-
ple format is provided in Figure A1.16.
6.10 Summary
In this chapter, the procedure for exporting an apparel product is detailed. The
basics of exporting and documents for exporting are explained. The chapter
throws light on the different terms of delivery and terms of payment with their
merits and demerits. The various types of L/C’s used are detailed. The export
finance knowledge needed for a merchandiser is detailed with reference to pre-
and post-shipment finance options available for exports. The focus is also given
on the exports customs clearance formalities to be followed by the merchan-
diser (in the absence of export department) or the export team in an export or-
ganisation. Different documents used in exports including internal documents
are explained with sample documents for better understanding of the reader.
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fubo-full-sleeve/attachment/ga-mens-shirt-packing-list/, January 3rd 2013 (Accessed
on September 14th, 2016).
13. Thailand Export agent, http://www.asiatradingonline.com/shippingbilllading.htm
(Accessed on September 14th, 2016).
14. http://www.thepostalconnect.com/main/showsection.asp?SectionID=88 carrier air-
way bill (Accessed on September 14th, 2016).
15. http://cvjazz.dvrlists.com/experience-certificate-sample-copy.html (Accessed on Sep-
tember 14th, 2016).
16. http://www.letterofcredit.biz/ (Accessed on September 14th, 2016).
17. Cargo Insurance Certificate Sample, http://avgoogle.info/cargo-insurance-certifi-
cate-sample/ (Accessed on September 14th, 2016).
18. Geo Trans shipping order, http://www.geotrans.eu/english/orderform/index.php (Ac-
cessed on September 14th, 2016).
19. What is shipping order(S/O),http://info.jctrans.net/jcnet/osg/ioos/2007111542518.

shtml, November 1st 2007 (Accessed on September 14th, 2016).
20. http://pmpindia.com/pdf/export/Application-for-Certificate-of-Origin.pdf (Accessed
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22. http://www.indusind.com/content/dam/indusind/PDF/Export%20Document%20cov-
ering%20letter.pdf (Accessed on September 14th, 2016).
23. http://www.cbec.gov.in/resources//htdocs-cbec/excise/cx-forms/ARE 1.pdf;jses-
sionid=A5764F2DFA9496403AFEE20C6EF003EA (Accessed on September 14th,
2016).
24. http://www.cbec.gov.in/resources//htdocs-cbec/customs/forms_pdf/96.pdf (Accessed
25. Sree Rama Rao, Certificates related to Export shipment, http://www.citeman.
com/3381-certificates-related-to-export-shipment.html, June 6th 2008 (Accessed on
26. Deepak Shah, (2009), Special Economic Zones in India: A Review of Investment,
Trade, Employment Generation and Impact Assessment. Ind. Jn. of Agri. Econ.
64(3):July–Sept.
27. L. Lakshmanan, Evolution of Special Economic Zones and some Issues: The Indian
Experience, https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=558
dated Sept. 2009 (Accessed on September 14th, 2016).
28. 5 Tips to exporters while booking LCL shipments with a Freight Forwarder, http://
howtoexportimport.com/5-Tips-to-exporters-while-booking-LCL-shipments-wi-110.
aspx.
29. Sanjeev Bagal, Difference between FCL and LCL, 2015. https://www.linkedin.
com/pulse/difference-between-fcl-lcl-bagal-seeking-challenging-position-with?arti-
cleId=6078173925727096832 (Accessed on September 14th, 2016).
30. How to differentiate BL and HBL? http://howtoexportimport.com/How-to-differenti-
ate-BL-and-HBL--470.aspx. (Accessed on September 14th, 2016).
31. The IMF and the World Bank – Fact sheet, http://www.imf.org/external/np/exr/facts/
imfwb.htm, (Accessed on September 14th, 2016).
32. Martin Nwadiugwu, A project of the world bank or IMF that created problems for
the nations that received its assistance? University of Ilorin – Thesis, DOI: 10.13140/
RG.2.1.3755.6966, https://www.researchgate.net/publication/281098996_A_PRO-
JECT_OF_THE_WORLD_BANK_OR_IMF_THAT_CREATED_PROBLEMS_
FOR_THE_NATIONS_THAT_RECEIVED_ITS_ASSISTANCE.
ANNEXURE I
Internal documents for merchandiser
ABC Apparel Pvt Ltd

CUSTOMER INFORMATION ABC / MER /01
CUSTOMER : TESCO CUSTOMER CODE: TES-01
1. CONTACTS
ADDRESS Phone
Fax
e-mail
Preferred courier
Courier code
CONTACT PERSONS (Name & Designation)
2. BUYER OFFICE - Hub
ADDRESS Phone
Fax
e-mail
Preferred courier
Courier code
ADDRESS ( Branches) - INSPECTION TEAM Phone
Fax
e-mail
Preferred courier
Courier code
Page : 1 of 4
(a)
ABC Apparel Pvt Ltd

CUSTOMER: CUSTOMER CODE:
3. APPROVAL REQUIREMENTS
S.NO. APPROVALS DETAILS To be approved by
Customer Hub
1 Fit Sample Fit Purpose
2 Green Seal Sample Per Production Sample
3 Lab Dip Initial Shade Approval
4 Strike Off Base Color & Print Art Work
5 Trims Approvals Trims Color, Size & Quality Approval

4. INSPECTION REQUIREMENTS
S.NO. INSPECTION STANDARDS INSPECTION BY

Customer Agent Third Party
1 Fresh Inspection
2 Reinspection
5. TESTING REQUIREMENTS
S.NO. TESTS STANDARDS TOLERANCES
NOTE :
Page : 2 of 4
(b)
ABC Apparel Pvt Ltd

CUSTOMER: TESCO CUSTOMER CODE: TES-01
6. CUSTOMER PROPERTY
Products generally supplied by the customer:
NIL
7. CUSTOMER NOMINATIONS
A. NOMINATED ACCESSORY / FABRIC SUPPLIER

ADDRESS Phone
Fax
e-mail
Contact person
B. NOMINATED INSPECTION AGENCY
ADDRESS Phone
Fax
e-mail
Contact person
C. NOMINATED TESTING LABORATORY
ADDRESS Phone
Fax
e-mail
Contact person Saravanan
D. NOMINATED C & F AGENTS
ADDRESS Phone
Fax
e-mail
Contact person
Page : 3 of 4
(c)
ABC Apparel Pvt Ltd

CUSTOMER: TESCO CUSTOMER CODE: TES-01
8.STATUTORY & REGULATORY REQUIREMENTS
1. WASH CARE LABEL A NA
2. BRAND LABEL A NA
3.PACKING METHOD A NA
4. PACKING GRID A NA
5. TEST REQUIREMENT FORM A NA
9.DOCUMENTATION REQUIREMENTS
Details Copy's
1. INVOICE - 6
2. PACKING LIST - 6
3. APPEND 1& 2 - 4
4. SELF DECLARATION - 1
5. TPN PACKING LIST - 1

10. DETAILS OF CUSTOMER MANUALS
TESCO MANUAL
UPDATED ON
MANAGEMENT REPRESENTATIVE
Page : 4 of 4
(d)
Figure A1.1 a), b), c) and d) Customer Information

ABC Apparel Pvt Ltd

LIST OF CUSTOMERS CCC / MER / 02.Iss.No.01 Dt:01.01.2008
S.NO CUSTOMER CODE CUSTOMER COUNTRY HUB / AGENT COUNTRY
Figure A1.2 List of Customer

6
UPDATED ON : 01.01.2008 APPROVED & REVIEWED BY

313
ABC Apparel Pvt Ltd ABC/MER/03
Job No: Date:
314
Sample Requisition Form
Buyer : Group: Style No: Date: Req.Del.Dt:
Description: Tops:
Bottoms:
Enclosures: 1. Spec sheet 3.Original Sample :

2.Sketch 4.Paper pattern:
Type of Sample /Pattern required

Colour
Size required
Quantity required
Fabric Details Placements Trims Details

Shell Fabric: 1. Main label :
Lining: 2.Size/Care Label:
Inter Lining: 3.Wash care Label:
Washing Type: 4.Flag /Patch Label:
Fabric Swatch 5.Hang /Price tag Placement:

1.Shell 2.Lining
Consump: Wgt/kg Consump: Wt/kg 6.Embroidery Placement:
Figure A1.3 Sample /Pattern request form

Total Fabric reg: kgs Total Fabric reg: kgs
Comments:
Fix fabric Fix Fabric
Swatch Swatch
Merchandiser Co-ordinator Sample incharge Sample Q .C

ABC Apparel Pvt Ltd
Order Review Form ABC/MER/04.
Buyer Name : Style No: Description :

Lmpo. NO : Lmpo. NO : Lmpo. NO :
SL.No Review Details Order Ex.Fac. Dt: Order Ex.Fac. Order Ex.Fac.
Y N Y N Y N
1 Style No /Article No
2 Sketch with Dimension
3 Size and Colour Ratio
4 Washing And Care Instruction
5 Fabric construction & Composition
6 G.S.M and Colour Shade
7 Elastic
8 Printing
9 Marking & packing Requirement
10 Packing & Forwarding Inst.
11 Price
12 Mode of Payment
13 Delivery schedule Category
14 White stone
Figure A1.4 Order review form

15 Special Notes
Reviewed by Merchandising Manager
O. D -Order Received Date: Standard Specification: Stitches /Inch, Type of Stitch.

315
316
ABC Apparel Pvt Ltd

Order Register (OCN) ABC/MER/05
Order Shipment Shipment
Date OCN Buyer Style No Description No/Country Order Qty Delivery Dt Date QTY
Figure A1.5 Order register format

ABC Apparel Pvt Ltd

Accessories Indent form ABC/MER/06
SL NO : OCN:
Ref No :
Qty:
Order Number :
Date :
Description :
Particulars O.Qty PONO PO QTY TARGET PO DT DEL REC QTY REC DT BAL AMT
Figure A1.6 Accesories indent form

ABC Apparel Pvt Ltd 318
Knitting Dyeing Programe ABC/MER/07.
Date
Buyer
Dept
Fabric Knitting &Dyeing
Colour
GSM
Programme
LMPO#
OCN
Fab Inhouse Dyeing Unit Option No and Dt Colour Total Dia on Table GSM Cons in Fab reg in In KGS
8/10 12/14 16/18 20/22 Pcs Top Pant in GMS KGS With Process
loss
3%
Total
TOP
Figure A1.7 Fabric Indent cum Cut Planner

BOTTOM
ABC Apparel Pvt Ltd

Yarn Requisition Form CCC/MER/08.
REQ .No: Buyer :
Date : OR.NO:
OCN NO: Garment Description :
Yarn Fabric Consp Total

Counts Quality /GSM ColoursQTY Pcs (GMS) Required KGS Fabric Excess % Req.KGS
Expected Del.Date
Prepared By Approved By Received(Fabric Dept)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
Purchase Details
P.O NO :
DATE :
Total Req.WT Excess
No.Of. Each Bag (With Fabric Purchase from
Party /Mill Name Bags WT P.O .QTY loss) our required Remarks
Figure A1.8 Yarn Requisition Form

LAB DIP REPORT
Production Office / Agent office: Submit date:

Supplier name: Fianl lab dip approval date:
Contact information: Fabric quality:
Seasson / Division: Fabric article:
Style number: Units / quantity ordered:
Option 1 Option 2
Option 3 Option 4
Colour Name: Comments
Colour Number :
Approved :
Rejected :
Date:
Figure A1.9 Lap dip Approval Report

SIZE SET SUBMIT
ABC Apparel Pvt Ltd ABC/Merc/10
Brand / Buyer Supplier Name:
Garment Discription: Season: Target Group:
Component / Set: Sample: Status: New sample / Revision

Remarks about the submitted sample: (Pictures ca be used)
Figure A.1.10 Photo Sample /Fit Sample /Size set Report

Sample evaluated by Sample approved by: Responsible / Conatct information:

321
ABC Apparel Pvt Ltd

ABC/MER/11
Date: Work Order Del.Date
No. W.O No:
Supplier Name:_____________________________________________ OCN No:
Address ____________________________________________________ LMPO/K/no
____________________________________________________ Style/Order No
____________________________________________________ Buyer
Tel No: ___________________________ Description _______________________________
FABRIC SWATCH
COLOUR FABRIC 1 FABRIC 2
SIZE
RATIO
ORDER QUANTITY
EXCESS %
TOTAL QUANTITY FABRIC 3 FABRIC 4
FABRIC DESC _____________________________________________________ FABRIC CONSUMTION

FABRIC 1 QTY FAB.1 :
FABRIC 2 QTY FAB 2 :
FABRIC 3 QTY FAB 3. :
FABRIC 4 QTY FAB 4 :
ACCESSORIES
MAIN LABEL SIZE
QTY
WASHCARE LBL SIZE

B.CODE
QTY
THREAD THERAD CONSUMTION
THD 1 QTY THD 1 :
THD 2 QTY THD 2 :
THD 3 QTY THD 3 :
THD 4 QTY THD 4 :
ELASTIC _______________________________________________ ELASTIC CONSUMTION
ELASTIC QTY
LACE ELASTIC _______________________________________________ LACE ELASTIC CONSUMTION

LACE ELASTIC QTY
TWILL TAPE _______________________________________________________ TWILL TAPE CONSUMTION

TWIL TAPE QTY
MOBILAN TAPE _______________________________________________________ MOBILAN TAPE CONSUMTION

MOBILAN TAPE QTY
LACE _______________________________________________________ LACE CONSUMTION

LACE QTY
SATIN BOW
COLOUR
QTY
BUTTON /COLOUR NO.OF .BUTTON/GMT
QTY
HANGER SIZE (I) ORIGINAL GMT: YES/NO
QTY
POUCH SIZE (ii) CUT PLAN : YES/NO
POLYBAG QTY
(III) SPEC :YES/NO
CARTON DIMENSION
PCS/CARTON SIZE (IV) PRICE :
RATIO
SOLID
NO OF CARTON
Approved by Received By Merchandiser
Figure A1.11 Work Order format

ABC Apparel Pvt Ltd

PRE-PRODUCTION MEETING REPORT
ABC/MER/12
BUYER NAME: OCN# W.O # No OF COLORS DATE
S.No DESCRIPTION YES NO MATERIAL TYPE OF IN-HOUSE DETAILS

DESCRIPTION MATERIAL RCVD QYTBALANCE
1 APPROVED SAMPLE (P.P SAMPLE) FABRIC
2 ORIGINAL TECHPACK INTER LINING
3 ORIGINAL SPECIFICATION ELASTIC
4 FABRIC IN-HOUSE REPORT ROPE/DRAWCORD
5 FABRIC INSPECTION REPORT WASH TYPE
6 APPROVED PATTERNS MAIN LABEL
7 SHIRNKAGE REPORT SIZE LABEL
8 SHADES BAND SPECIAL LABEL
9 APPROVED SIZE SET REPORT ADD LABEL
10 APPROVED TRIM CORD THREAD
11 WORK ORDER SHEET NEEDLE
12 P.P MEETING FORMATS BUTTON
13 PRODUCTION PLANNING SNAP

14 RISK ASSESMENT RIVET
15 EYELET
16 PACKING TRIMS
17 HANG TAG
18 JOKER TAG
19 PRIZE TICKET
20 TISSUE PAPER
21 POLY BAG
22 CARDBOAD
23 CARTONS
``
Figure A1.12 Pre Production Meeting Form

BULK SUBMIT FORM

Contact information: Trim :
Seasson / Division: Catalog only ( ) catalog and stores ( )
BULK FABRIC / TRIM FOR QUALITY, COLOUR, FINISH APPROVAL

Colour Number :
Approved :
Rejected :
Date:
Figure A1.13 a) Bulk Fabric approval form

TRIM APPROVAL CARD

Contact information: Trim :
Seasson / Division: Catalog only ( ) catalog and stores ( )
Option 1 Option 2
Option 3 Option 4
Colour Number :
Approved :
Rejected :
Date:
Figure A1.13 b) Trim approval form

√
ABC Apparel Pvt Ltd
Amendment Form ABC / MER /15
Buyer : Amendment No. :
Style : Amendment Dt :
LMPO No. :
No. Amendment in Amendment Details
1 Delivery
2 Quantity
3 Measurement
4 Colour
5 Print
6 Embroidery
7 Accessories
8 Packing
9 Price
10 Style
11 carton
12
Reviewed by
Copy to
Merchendising Production
Fabric Checking & Finishing
Cutting Accessories
Figure A1.14 Amendment Form

ABC Apparel Pvt Ltd

ORDER STATUS REPORT ABC / MER / 16
Date : Customer : TESCO

Del. Date Ex - Factory Ex - Factory
S No. Order No. LMPO No. Status Remarks
(On Board) planned Expected
FABRIC CUTTING PRODUCTION PACKING
Figure A1.15 Order Status Report

327
ABC Apparel Pvt Ltd

CUSTOMER FEEDBACK FORM ABC / MER /18
Customer : Date:
Product Quality Rating

Comments
S.No Criteria Excellent Good Satisfied To Improve
1 Style & Appearance

2 Fit & Measurements
3 Workmanship
4 Physical properties
(Dimensional stability,Colourfastness)
Delivery Rating
Comments
5 Delivery on time
6 Delivery of documents on time
Sampling Rating
Comments
7 Sample collections
8 Developments
9 Delivery of samples on time
Communication & Service Rating
Comments
10 Response to enquiries
11 Order status reporting
12 Co-ordination for Approvals
13 Co-ordination during inspections
14 Response to Complaints
15 Scheduling & hospitality during
your visits
Figure A1.16 Customer Feedback Form

7
Communication skills for merchandiser
This chapter details the communication skills required for a merchan-

diser. Initially, the chapter explains details pertinent to communication,
its process and elements. Then the difference between communication
and business communication is discussed. The objectives and importance
of business communication is explained. The types of communication
are highlighted. The principles of good communication are explained.
The chapter also explains the barriers in communication and the ways
to overcome that. The communication skills expected for a merchandiser
including e-mail etiquette is discussed in detail. Few cases are discussed
to highlight the importance of communication for a merchandiser. Fi-
nally, the various ways to improve communication for a merchandiser are
discussed.
Keywords: Business communication, e-mail etiquette, communication barriers, com-
munication skills.
7.1 Communication
Communication is the act of conveying intended meaning to another en-
tity through the use of mutually understood signs and semiotic rules –
Wikipedia.com.
Communication is the imparting or exchanging of information by speak-
ing, writing, or using some other medium. It is the successful conveying or
sharing of ideas and feelings.
Communication is simply the act of transferring information from one
place to another – skillsyouneed.com.
Any task or transaction that requires more than one person can only be
successfully completed with communication – study.com.
Communication is the process by which information is transmitted be-
tween individuals and organisations so that an understanding response results
American Management Association defines, “Communication is any be-
haviour that results in an exchange of meaning”.
D.E. McFarland defines communication as, “Communication may be

broadly defined as the process of meaningful interaction among human be-
ings. More specially, it is the process by which meanings are perceived and
understandings are reached among human beings”.
Keith Davis states that “Communication is the process of passing infor-
mation and understanding from one person to another”.
The above references to communication explain clearly that commu-
nication is anything that helps in transferring information and conveys
meaning to the person receiving the information. Communication plays
a greater role in day-to-day life as we use different ways and modes of
communication to convey what we think or what we know to others.
Communication may fail if the person who has to receive the informa-
tion doesn’t receive it the way it was intended. So care has to be taken
to communicate without error. The sole purpose of communication will
be in vain if the intended person doesn’t understand what was commu-
nicated to him. There are different forms of communication existing like
general communication, interpersonal communication, business com-
munication, intellectual communication, technical communication, etc.
In these forms, business communication is very important for the proper
working of a business.
7.2 Process and elements of communication

The communication process involves a cycle where the message is ini-
tiated by the sender and the feedback about the message and its related
action is provided by the receiver (Figure 7.1). The process begins when
someone wants to convey information, facts, figures, data, reasons, find-
ings, apprehensions, issues, thoughts to an another person. The sender is
the person who wants to convey some information as mentioned above
and decides on the message to be passed onto the sender. He puts the
message in the way that the receiver will understand. For example, the
message is encoded as a picture, gesture, words and actions and passed
onto the receiver. The receiver decodes the message and tries to under-
stand the complete message and based on the understanding, the receiver
responds to the message to the sender through feedback. There may be a
communication gap due to the disturbance in the flow of information and
it is called noise.
Let us understand the elements of communication:
1. Sender: Sender is the person who decides on the message that needs
to be communicated. The communication process begins immedi-
ately when the sender decides to communicate the message to the
intended person.
Communication skills for merchandiser 331
2. Message: The information, facts, figures, data, reasons, findings, ap-

prehensions, issues, thoughts that needs to be conveyed to another
person is the message.
3. Encoding: Receiver cannot read the mind of sender. So sender con-
verts the message into a language or other communication symbols
such as pictures, gestures, etc., which will be understood by the re-
ceiver. This process is known as encoding.
4. Media: It is the way or means through which the encoded message
can be transmitted to the receiver. The most commonly used ways of
transmission are a phone, e-mail, letter, blogs, social networks, mes-
sages, etc.
5. Decoding: It is the process where the receiver decodes the message
that is encoded by converting it into the form that he or she will
understand.
6. Receiver: He / she is the person who receives the message. He / she
decodes and understands the message.
7. Feedback: After understanding the message, the receiver conveys his
response for the message from the sender and that is called as feed-
back. The communication process ends once the feedback is received
by the sender. Feedback also involves decoding and encoding pro-
cess as the sender should understand what the receiver intended to
convey in his message.
8. Noise: Anything which leads to disorder, diversion, disturbance or
interruption in the flow of information is called noise. More noise
leads to communication gap where the receiver will not receive the
exact content what was intended to be received as expected by the
sender. The noise causes communication gap. Examples of noise are
incorrect media selection, improper encoding and decoding, distur-
bance in the internet connection, theft of documents on the way, loss
of data, improper phone lines, etc.
Figure 7.1 Communication process (Source: yourarticlelibrary.com)

7.3 Business communication

Business communication differs from general communication in many
ways. Business communication is more formal in nature compared to the
general communication. In general communication, people are not required
to be using formal language whereas it is totally different in the case of
business communication. In business communication, business related in-
formation is shared whereas, in general communication, all information
is shared and discussed. Business communication is more directed in ap-
proach and specific format is used for communication with no or little room
for using personal feeling in business messages. It follows organisational
policies and it involves practical information that is objective in nature with
less partiality. It has specific audience whereas general information doesn’t
have a specific audience to whom it is addressed to. Feedback is very im-
portant in business communication whereas it is not important in general
communication. It clearly shows us that more care should be taken for
proper business communication than general communication as it involves
a lot of important information that would make or break the business. Busi-
ness communication is defined by many people and some of them are given
below for better understanding:
It is the sharing of information between people within an enterprise that
is performed for the commercial benefit of the organisation. In addition, busi-
ness communication can also refer to how a company shares information to
promote its product or services to potential consumers.
– Businessdictionary.com
Business communication is any communication used to promote a prod-
uct, service, or organisation – with the objective of making sale – Notesdesk.
com.
It is the mutual exchange of understanding, originating with the receiver.
Communication needs to be effective in business. Communication is the es-
sence of management. The basic functions of management (Planning, Organ-
ising, Staffing, Directing and Controlling) cannot be performed well without
effective communication. – Managementstudyguide.com
Business communication enables businesses to take complex decisions
and communicate them to the entire business channel and also to the sup-
pliers and customers. Proper business communication leads to fostering of
growth between all business channel partners. As mentioned in the notesdesk.
com, sometimes, communication is looked as a promotional tool to make a
sale. In apparel industries, proper business communication will enable mer-
chandisers to maintain a good relationship with the customers and also the
vendors. Many orders get cancelled especially in export industries due to lack
of communication wherein information is not properly transferred to the cus-
tomer about delays in the process, shipment, etc. It is very important that
merchandisers know the art of communicating.
7.4 Objectives of business communication

The important objectives of communication are given below for better
understanding:
1. To convey information and create an understanding among all
workers.
2. To develop an approach that is necessary for motivation, cooperation
and job satisfaction.
3. To avoid misinterpretation of facts and figures, ambiguity and
rumours.
4. To enable workers for a change in working process, methods or envi-
ronment by giving them the required details in advance.
5. To persuade team members to give new ideas and suggestions for
improving the product, process and work environment.
6. To increase worker–management relations by keeping the communi-
cation channels open.
7. To encourage social relations among workers by promoting inter
communication.
The other objectives include providing advice for organisation mem-
bers when required, issue orders, provide suggestions, educate the mem-
bers and also issue warning whenever the assigned work is not carried out
properly.
7.5 Importance of business communication

The one point we can take from here is that communication is the base
for any work to happen properly in an organisation as improper commu-
nication may lead to a lot of damages. To understand how communica-
tion plays a major role in business, the importance of communication in
an organisation is discussed here. The importance is explained using the
Figure 7.2.
Figure 7.2 Importance of business communication
Aids in decision-making: Proper business communication will lead to ef-

fective sharing of information among stakeholders thereby leading to proper
decision-making. Getting accurate information for taking decisions is only
possible when communication is proper. The decision maker should be aware
of all the positives and negatives of taking a decision and that is possible only
when there is good communication.
Enables cooperation and coordination: Effective communication leads to
better cooperation and coordination between all the people in the organisa-
tion. The manager will be able to talk to the worker only when communica-
tion is proper. It will enable the management to know the needs and wants of
workers and also the workers will know the strategic objectives of the com-
pany and work with a concerted effort in achieving those objectives.
Helps in proper delegation of duties to sub-ordinates and workers: Only
when there is good communication, it will be possible to allocate duties to the
sub-ordinates and workers easily and promptly. Time delays will be avoided.
The workers and sub-ordinates can be delegated with the work to be done and
they can also be educated by proper communication about the requirements
from them in completing the work. The schedule can be informed to them so
that they can manage and complete the work well ahead of time. All these are
possible only when there is proper communication between the manager and
his sub-ordinates / workers.
Ensures smooth working of organisation: When the communication
is proper, everyone involved in the organisational work will know their
duties, responsibilities, requirements, deadlines and start working ac-
cordingly. The communication gap can be avoided. This will reduce un-
necessary errors, fights, envy and confusion among the workers and with
managers thereby resulting in smooth working of all the parties in the
organisation.
Aids in change management: Bringing change in process or procedure
in any organisation is the biggest challenge for the management as peo-
ple will always be reluctant to change and will always want to work in
the older way which they have got used to and find it comfortable. So
change management is a big area where managers need to work a lot in a
company whenever there is any change with respect to the work done by
the workers. So with proper communication, the workers can be advised
well in advance about the changes planned in the organisation, the need
and importance for the change, the benefits of changing and ill effects of
not changing. The workers can be kept well informed and be ready for the
change. This is possible only when there is proper communication exist-
ing in the organisation.
Increases efficiency and productivity of the organisation: The strategic
goals, objectives, long-term plans of the company can be communicated to
all the parties involved in the company and this will enable the labour to un-
derstand the need for effective working and therefore they will exercise their
duties properly leading to increased efficiency and productivity of the organ-
isation. With proper and effective communication, workers can be motivated.
They can be educated about the benefits they get in the long-term because
of efficient working and make them work effectively and efficiently thereby
leading to overall improvement of the organisation.
Maintains information flow between channel partners: In today’s context,
the success of a business is not only based on the internal development of
the company as it involves the external environment where there should be
a win–win situation for both the organisation and its channel partners like
suppliers, distributors, retailers and customers. So it is essential that effective
communication is necessary with external environment also for on time man-

ufacturing, delivery and business growth.
The above points tell us the importance of communication and it can also
be understood that proper business communication will lead to the develop-
ment of morale of the people in the organisation thereby motivating them to
work effectively and will promote peacefulness in the organisation.
7.1 Effective Communication Skills
7.6 Types of business communication

There are various types of communication like oral, written and non-verbal
communication. In a business environment, there are mainly two forms of
communication: formal and informal communication. These forms of com-
munication exist in two different types of environment which are the internal
environment and external environment. For example, a merchandiser com-
municates internally with all the department heads and also externally com-
municates with a buyer, supplier and shipping authorities.
7.6.1 Formal communication

Formal communication is the official communication that takes place in an
organisation. The official details exchanged between the organisational mem-
bers and business channel partners fall under formal communication. For-
mal communication includes views or information or messages or decisions
related to official matters that are communicated to the stake holders. For
example, formal communication includes work assignment, responsibility al-
location, target set for employees, providing details about approval authority,
permission granting authorities, etc.
Formal communication will always most commonly be in written form

like notice, circular, letter, document, memo, e-mail, etc. In formal commu-
nication, oral communication is avoided because there will be no proof of
conveying the details when needed at a later period.
The formal communication is divided into four types based on the com-
munication flow. They are as follows:
a) Downward communication: The flow of information from the higher au-
thorities to the lower level or sub-ordinates or workers is called as downward
communication. It helps in delegating the work to sub-ordinates. The poli-
cies and procedures, strategy and goals of the company, deadlines, schedules,
project status can be communicated to the sub-ordinates by the managers.
The performance of the staff can also be conveyed by the manager in this
type of communication. This communication will be effective only when the
higher level people communicating are clear of their message that needs to be
transferred to their sub-ordinates. An example of downward communication
is shown in Figure 7.3.
Figure 7.3 Downward communication
b) Upward communication: The flow of information from the sub-ordi-

nate or lower level worker to the higher authorities is called as upward
communication. This communication is normally about feedback from
workers about process, products, work environment, their grievances,
opinions or any problems encountered by them. In a participative work
environment, upward communication plays a major role as workers ac-
tively participate in decision-making by passing on their thoughts and
ideas to the higher management. At many times, upward communication
becomes very useful for the company as sub-ordinates will come out with
useful information based on their experience. The flow of upward com-
munication is shown in Figure 7.4.
Figure 7.4 Upward communication
c) Horizontal communication: This form of communication takes place be-

tween two persons working at the same level of communication between
a purchase manager and production manager. Normally, different depart-
ment chiefs discuss information about the schedules, planning, delivery
dates, etc. The policies and procedures followed by each department will
be communicated through horizontal communication. Discussion between
two workers of different departments or within departments for any offi-
cial reasons like on the job training, transfer of work acumen also belong
to horizontal communication. An example of horizontal communication is
shown in Figure 7.5.
Figure 7.5 Horizontal communication
d) Diagonal communication: This form of communication exists when there

is a communication between people of different departments with different
levels of authority. The information transfer between a salesman and produc-
tion manager can be considered as a diagonal communication. The salesman
might want to get the product at an earlier date to complete the floor arrange-
ment whereas production manager might inform about the delay in send-
ing the items and there exists a diagonal communication. It helps in quick
transfer of information rather than waiting for each department head to di-
vulge the information to their sub-ordinates. However, there may be an error
in information transfer due to their authority levels and conflict might arise
between department heads when their sub-ordinates are delegated by other
department head. Proper authority, hierarchy and policies should be framed
before following diagonal communication to avoid any issues. The flow of
diagonal communication is shown in Figure 7.6.
Figure 7.6 Diagonal communication
Advantages of formal communication

Formal communication offers the following advantages to the organisation:
• Proper transfer of information between all the stakeholders of the
organisation
• Ensuring minimum error in information transfer and thereby reduc-
ing the organisational losses
• The systematic flow of information and at any time, the sender can
be identified
• Proper recording of communication to avoid errors
• It is easy to control the performance of workers through formal
communication
• It helps in proper transfer of details about work practices to the sub-or-
dinates and grievances of sub-ordinates to the higher authorities
• It identifies the responsibilities of all people in the organisation.
Disadvantages of formal communication

Formal communication has few limitations:
• More impersonal way of information transfer thereby lacking emo-
tional appeal
• The information might be delayed as it has to follow a particular
flow as decided initially and breaking the flow will not be possible
• The communication has to pass through all the required channels

and absence of one of the communicators in the information chain
may delay the message or lead to the erroneous transfer of message
thereby leading to losses.
7.2 Dangers of Poor Communication
7.6.2 Informal communication

Informal communication is the communication existing between two peo-
ple of an organisation without any proof of communication. It is an informal
channel of communication. Sometimes, it takes place between people of an
organisation who may not be officially attached. It involves social discus-
sions, friendly talks and unofficial consultations. It is also called as grapevine
as there is no standard fixed path of information transfer and flow of com-
munication in informal communication. It also does not involve fixed source
of information and many times, the sender and the validity of the message
cannot be found out. Some of the common informal communications existing
in an organisation are given below:
a) Gossips: The information may exist with one person in the organisa-
tion and he may divulge it to his social group and there is no fixed
pattern of information flow.
b) Clusters: The information may be passed on between two people who
trust each other and one of that among the two feels the same trust ex-
isting with another person and shares the information with him thereby
forming clusters.
c) Single strand: Each person communicates the information to the next

person and it follows a single line.
d) Probability: The information gets transmitted randomly from one indi-
vidual to all other individuals.
Advantages of informal communication

Informal communication doesn’t offer many advantages to the organisation.
However there are few which are listed below:
• The emotional attachment will exist between employees leading to a
friendly relationship and social satisfaction
• Informal communication travels faster than formal communication
as there is no systematic flow of information and no proper channel
to follow
• Few issues and matters that cannot be discussed through official
ways can be discussed informally and this is one of the important
advantages of informal communication. We may say that this is
one of the reasons for informal communication to still exist in an
organisation
• Any communication gap arising from formal communication can
be filled by passing the message informally thereby saving time and
losses
• Higher level authorities may get correct information about employ-
ees, their morale, problems, response of workers on policies, proce-
dures, rules, etc., through informal communication.
Disadvantages of formal communication

Informal communication has the following disadvantages:
• Improper transfer of information between all the stakeholders of the
organisation
• It leads to more errors in information transfer due to its fragile nature
as no fixed path is followed
• The sender and the validity of the message cannot be found out in
this form of communication
• Any communication will not have proof and thereby taking deci-
sions based on informal communication may lead to errors
• Gossips may lead to the inefficient working of people in the
organisation
• There is a chance of confidential information getting leaked due to
informal communication.
7.6.3 Communication in internal environment

It is also known as internal communication. Any communication between the
internal members of the organisation comes in this category. It involves the
transfer of information between managers, supervisors, workers, sales per-
sons, etc. The internal communication will be a combination of formal and
informal communication which is explained earlier. Proper internal commu-
nication will lead to harmony between all the internal members and lead to
the growth of the company thereby minimising the losses and errors. Effec-
tive internal communication leads to organisational transparency and a means
to address the concerns of all the parties in the organisation. It helps in im-
proving job satisfaction, reducing time and cost, increasing productivity and
profit.
7.6.4 Communication in external environment

It is also known as external communication. Any communication between the
organisation and its suppliers, vendors, customers, shipping agencies, gov-
ernment agencies, law-enforcement agencies come under this category. This
type of communication should always be formal in nature so that informa-
tion transferred between the parties is well-documented for future reference
purposes. Proper communication with the external environment will allow
the organisation to increase its sales volume, public credibility, operational
efficiency and profits. It will improve the corporate image of the organisation
with positive word of mouth spread in the outside world. It helps to achieve
the organisational goals and leads to customer satisfaction. The merchandis-
er’s key role is to interact with the outside world, especially customers and
suppliers. In that case, using formal communication to the best possible ex-
tent will help the merchandiser in improving the relations with the vendors
and customers. However, sometimes there is a need for informal communica-
tion between merchandisers and customers for the betterment of the business
especially for export market which will be discussed later in this chapter.
7.7 Principles of good communication

It is understood that communication is very important in an organisation
and it is imperative for it to be concise in nature and provide meaning to
the receiver to act accordingly in receipt of information. In this regard, it
is essential to find out the principles of good communication. For effective
communication, there are 7 C’s and 4 S’s that can be followed which form the
basis for principles of good communication. It can be applied to both oral and
written communication.
7.7.1 7 C’s of communication

The 7 C’s are discussed in detail below:
a) Completeness: Any communication carried out should be complete in all
aspects. It should convey all the facts required by the intended user. It should
not have ambiguity and raise questions related to the completeness of infor-
mation. Giving complete information increases the reputation of the organ-
isation. If communication is complete, then it avoids losses incurred due to
incomplete information. It helps in eliminating questions in the minds of the
receiver. By being complete, it helps in easy and faster decision making, es-
pecially in a business environment. Completeness can be enhanced by check-
ing if all W’s have been answered (What, Where, When, Which, Who, Why).
b) Conciseness: Being to the point is being concise. The message should be to
the point without being “beating around the bush”. It is where the communica-
tion is carried out with least possible words but ensuring that it is complete in
nature. The act of being concise helps in saving time and effort. It also saves
cost. If a message is not concise and lengthier, then the receiver may not under-
stand correctly. It may lead to errors. The main message will be lost if there are
more add-ons to the message which may not be required. It is, in fact, non-re-
petitive in nature and it will also be more appealing to the receiver. The receiver
will be able to comprehend the message quickly if it is concise in nature. Con-
ciseness helps in categorising the message logically and accurately.
c) Consideration: Any communication made in the organisation especially
should be considerate in nature. It means that the intended receiver should be
kept in mind during communicating. It is also called as “stepping into other’s
shoes”. It means thinking from the point of a receiver if we are the sender so
that we can understand if the receiver would have got the message clearly
or not. The receiver’s mind-set, social background, understanding, education
level, technical knowledge should be considered before communicating the
information to him so that he will receive the message without error. It should
be ensured that the self-respect of the receiver and his / her emotions should
not be debilitated. To ensure that the message is considerate, it should be
modified in such a way that it is able to be understood by the receiver how-
ever not compromising on the completeness and conciseness. Considerate
messages would be like gift wrapping what the sender tries to say and should
have more of “we” in the message rather than “I”. The message should be
positive like stating what can be done rather than telling what cannot be done
and should have empathy.
d) Clarity: It means that the message should be clear enough for the receiver.
When communicating a message, we may be concise but that should not affect
the clarity of the message. The message should have completeness, conciseness
and clarity. The receiver should understand the information clearly and it
should be free from ambiguities. Clarity also refers to laying stress on one mes-
sage or goal at one point rather than trying to target all at once. Clarity leads to
better understanding and increases the meaning of the message. The message
with clarity will consist of exact content that will pass on the clear message to
the receiver. There should be clarity with the sender also about the information
that is being passed so that errors can be avoided. More clarity can be given if
messages are accompanied by audio-visuals, illustrations, etc.
e) Concreteness: It refers to the message being specific and particular rather
than being confused and generic. If the message is concrete, then the in-
tended user will get the exact picture without deviations. The importance of
the message can be communicated when the message or information is con-
crete in nature. It provides confidence to all the parties involved in the com-
munication. It involves providing exact facts and figures thereby avoiding
misinterpretation.
f) Courtesy: Similar to being considerate, courtesy is one another important
aspect that needs to be followed for better communication. Courtesy involves
both the sender and receiver being courteous to each other in the communi-
cation process. The sender should be aware of what the receiver’s mind-set
will be and he should be courteous in conveying the message rather than ridi-
culing the receiver. Sender should be generous, polite, sincere and enthusias-
tic. However, that should not stop from conveying the exact meaning of the
message to the receiver. Sometimes as a boss, the sender may be curt in his
message but he should ensure that the curtness should only be to correct the
sub-ordinate and not attack him personally. The sender can omit messages
that hurt, irritate or belittle the receiver and try to use more positive phrases
in the message.
g) Correctness: One of the important principles of good communication is
correctness. It is ensuring that the message or information conveyed is cor-
rect and no mistakes are there in it. It implies that there should be no gram-
matical errors in the communication. The message should be exact, correct
and should reach in time. Correct messages will improve the integrity of the
sender and also provide confidence to all the parties thereby having a positive
impact on all the stakeholders. Systematic organisation of message will en-
sure correctness in the message.
The above 7 C’s of communication contribute to better communica-
tion between parties in an organisation and following these will help any-
one in the organisation to communicate properly. Along with these, there are
four S’s of communication which have become a part of principles of good
communication.
7.7.2 4 S’s of communication

The four S’s of communication are very similar to the 7 C’s of communica-
tion. They are explained below:
a) Shortness: Similar to conciseness, the message should be as short as pos-
sible. There should be an economic usage of words. There should not be
complex words used as the meaning might be difficult for the receiver to un-
derstand. Simple, common vocabulary should be used.
b) Simplicity: The messages should be simple in nature. It should be
kept short and simple for better and quicker understanding. It is similar
to concreteness where the message should be finite and not confuse the
receiver. Clarity of ideas will be effectively received when the message
is simple.
c) Strength: Strength of the message refers to the convincing power of the
message. The message should have enough strength to convince the receiver
and make an impact on him or her. Half-hearted statements, inaccurate mes-
sages, partially truthful content should be avoided. The strength of the mes-
sage is based on the sender’s credibility.
d) Sincerity: The last but not the least among the 4 S’s of communication
is sincerity. The messages that are conveyed should appeal to everyone
who receives the message and should be sincere in nature. There should
not be any falsification of content and errors in the message. Sincere ef-
forts should be taken to avoid ambiguity in the message. It also adds cred-
ibility to the sender.
7.3 Communication Models

SHARE model for giving good information are:
•• State the main point of your message
•• Highlight other important points
•• Assure the receiver’s understanding
•• React to how the receiver responds
•• Emphasise / summarise your main ideas.
FOCUS model for getting good information are:
•• Focus the discussion on the specific information you need
•• Open-end question to expand the discussion
•• Close-end question to get specifics
•• Use active listening skills to understand what you are hearing
•• Summarise and close the discussion.
7.8 Barriers in communication

It is imperative to find out the various barriers in communication that lead
to improper communication and message delivery. Misinterpretation of the
message communicated will lead to errors and losses. So it is expected that
the managers in an organisation identify these barriers and overcome them
for effective communication.
There are four categories of barriers in communication which are explained
in detail below:
i) Semantic barriers: It refers to hindrances caused in communication due to
problems with the interpretations of word meanings. It means that the words
and phrases used in communication may be understood differently by various
people in the organisation. For example: If the general manager informs his
employees that the business for the last quarter has given very high profits and
eventually these profits will be used for the growth of the company, then the de-
partment managers will understand that the money will be used for the growth
of assets in the company like machinery and technology advancement whereas
lower level employees will be thinking that their salaries will be increased. This
kind of communication differences occurs when the clarity of the message is
not there. Semantic barriers occur normally because of the following:
a) Incorrect message conveyance
b) Improper message translations
c) Assumptions not clarified properly
d) Using technical words that are not understood by all known as jargons
e) Improper body language used
f) Lack of knowledge from the receiver’s side (workers in the case of an
organisation)
g) Using words that have different meaning but sound similar. (E.g.: ex-
tant / extent, sea / see, lose / loose, etc.)
ii) Psychological barriers: Psychology of the receiver and sender play a major
role in communication. Psychological factors coupled with emotion become
a big barrier to communication. The psychology of the receiver should be
understood by the sender before communicating which means that the man-
ager should know the psychology of his workers before he communicates a
message. If the receiver is an emotional person, then the way to communicate
to him should be different from communicating to a person who doesn’t get
emotional. If psychological factors are not taken care, then it leads to a lot of
errors. For example, a person who fears the manager will always receive a
message from the manager with more nervousness whereas a fearless person
will not be anxious when the boss communicates with him. Some of the rea-
sons for psychological barrier to exist are listed below:
a) Lack of trust between manager and the worker

b) The receiver may have come to conclusion before understanding the
message completely
c) Hasty evaluation of the message
d) Errors occur due to poor understanding and transmission of data or message
e) Poor retention capability of the receiver
f) Lack of interest in the message
g) Poor relation between the communicator and receiver
h) Lack of knowledge on organisational behaviour
i) Poor listening skills of the receiver.
iii) Organisational barriers: Every organisation has its own structure, rules,
regulations, policies, procedures, authority, requirements, strategies, goals,
objectives, performance improvement plans and long-term plans. All these
details are communicated to the employees so that they are clear about the
requirements from them to reach the organisational goals. However, some-
times lack of clarity in the above-said items may lead to miscommunication.
Improper framing of rules, regulations, structures, objectives act as organisa-
tional barriers for communication. For example, the organisation will have
a rule that no oral communication should be used for taking any decision
on production stoppage and only written communication should be accepted.
During emergency times, it may not be possible to follow these rules and
people have to resort to oral communication. In this case, the rules of the
organisation have turned out to be an organisational barrier in communica-
tion. These barriers affect the efficiency and productivity of the organisation.
Some of the organisational barriers are given below:
a) Inflexible rigid rules and regulations may lead to delay in information
delivery and action thereby leading to losses
b) Organisational policies not conducive for proper information transfer
c) Obstacles in free flow of information due to authoritarian nature of the
sender (manager)
d) Differences in designation and authority where top management peo-
ple may not believe the information provided by sub-ordinates
e) Complex organisation structure will lead to organisational barrier
f) Improper assignment of work responsibilities in an organisation
g) Lack of organisational facilities like drop box, day to day meetings
will also lead to communication barriers
h) Overload of information on manager and difficulty in transferring all
the information to the lower level employees.
iv) Personal barriers: Apart from the organisational barriers, personal barriers
contribute a lot to miscommunication. The free flow of information between
the sender and receiver will be affected by the personal factors. For example,
when the receiver does not have knowledge of the message received, then he
might not understand the content fully and it will lead to errors. Similarly, there
are few personal barriers which affect communication. They are given below:
a) Lack of trust on the sub-ordinates
b) Lack of knowledge of the sub-ordinates
c) Lack of interest of the manager and the sub-ordinate
d) Lack of growth in the organisation
e) Lack of incentives
f) More authoritativeness of the superior
g) No participative work culture
h) Personal distractions
i) Not keeping emotions in check.
7.8.1 Overcoming barriers in communication

All the above-discussed communication barriers can be overcome by the fol-
lowing ways:
a) The message should be clear and complete in nature
b) The sender must have complete understanding of the message
c) The sender should be aware of the organisational barriers that may lead
to improper deliverance of the message
d) The communication should be made based on the needs of the receiver
e) The receiver should possess adequate knowledge about the communi-
cation and the message that is getting delivered to him / her
f) Proper consultation should be done before communicating
g) There should be a proper selection of language, media, words and form
of communication so that loss in information can be prevented
h) Employees should be given a proper growth plan and training
i) Proper appraisal procedures should be followed
j) Employee morale should be improved to avoid lack of interest
k) Participative work culture should be followed rather than
authoritativeness
l) There should be an open mind when listening to information
m) Simple organisational structure with clear responsibilities for all the
members are essential to avoid misinterpretation of information
n) Perception differences should be avoided by proper training of
employees
o) Proper body language should be used for communication
p) Information overload should be avoided
q) Proper media selection should be done to avoid errors in communication
r) There should be flexibility in meeting targets
s) Based on the requirement, there should be provisions in the organisa-

tion to have flexibility in rules and regulations
t) Constructive feedback should be provided to the sub-ordinates so that
they avoid errors in the future
u) Managerial training is necessary so that they understand the impor-
tance of communication and avoid errors in communication
v) Gender differences and authority differences based on designation
should be sorted out in the organisation for proper communication.
By following the above points, the communication barriers can be sorted
out in an organisation and will lead to overall growth of the organisation.
7.9 Merchandiser and communication

In the above section, we have dealt with different aspects of communication.
It is essential to understand how communication is important for a merchan-
diser. Merchandiser is one individual in an organisation who communicates
with all the people in the organisation and also with the outside world. Mer-
chandiser interacts with all department heads of the organisation like sales
head, production head, purchase head, export manager, etc., and also with
external members which includes buyers, suppliers, shipping companies, in-
termediaries, third party inspection agencies, etc.
As discussed earlier in previous chapters, merchandising is one of the key
roles in an apparel industry which grows the business. They make or break
the business as many times, they are the single point contact with the buyers
or customers who place orders to the company. Being in this crucial role in-
volves having all communication skills possible in the armoury to perform
his / her duties to the fullest possible extent. Communication is very impor-
tant for a merchandiser as he coordinates the entire order starting from buyer
enquiry to material dispatch and funds realisation. The functions of merchan-
diser have been explained earlier. Based on the functions and responsibilities
of the merchandiser, we can identify the communication skills required for
a merchandiser. In this section, we will identify the various communication
skills required for a merchandiser and also list the ways to improve the skills.
7.10 Communication skills for a merchandiser

The various communication skills required for a merchandiser are given below:
a) Listening skills – As a merchandiser, listening skills are very important. The
merchandiser should actively listen to the production heads and also to the cus-
tomer so that he doesn’t miss out on any important points conveyed by them.
Only with proper listening skills, merchandiser can understand the requirements
of the customers clearly. For example, the buyer will be situated in USA and dur-
ing a teleconference, he might divulge some important details about the apparel
product to be manufactured and if the merchandiser doesn’t listen clearly due to
the accent difference and language proficiency, he may interpret the information
incorrectly leading to mistakes while executing the order.
7.4 Good Listening Skills for A Merchandiser

• Face the speaker and maintain eye contact
• Be attentive, but relaxed
• Keep an open mind
• Listen to the words and try to picture what the speaker is saying
• Don’t interrupt and don’t impose your “solutions”
• Wait for the speaker to pause to ask clarifying questions
• Ask questions only to ensure understanding
• Try to feel what the speaker is feeling
• Give the speaker regular feedback
• Pay attention to what isn’t said—to non-verbal cues.
b) Use of body language in communication – A very important aspect for a mer-

chandiser is his body language. During interactions with clients, peers, sub-ordi-
nates, he / she should convey the correct meaning by appropriate use of body
language. The positivity in the message will be enhanced by body language. For
example, during a visit by the customer to the factory, if the merchandiser doesn’t
use the right body language in greeting them and showing them interest, then the
buyer may lose confidence with the company itself and may not place the order.
c) Writing skills – It is very important for a merchandiser to have adequate
writing skills as most of the communication between buyer and him / her
takes place through writing, especially by e-mails. There is a very important
requirement that the merchandiser uses proper e-mail etiquette while writing
e-mails. There should be more language proficiency so that grammatical errors
are avoided. For example, when the customer enquires about the order status,
if merchandiser has limited writing skills, then he may convey wrong or in-
complete information through e-mail like saying “Shipment send tomorrow”
instead of saying “Shipment will be sent tomorrow” raising many questions to
the receiver. Sometimes wrong interpretation happens and leads to huge losses.
d) Presentation skills – The merchandiser should have adequate presentation
skills. He will make presentations to the higher authorities of his company,
to his department heads and also to the buyers. In all these instances, his
presentation skills play a greater role as the wrong presentation may lead to
cancellation of orders, delay in orders, wrong projections to the management,
etc. For example, merchandiser would have to present the expected orders
from his buyer for the next half year. If he lacks presentation skills, he might
give wrong numbers leading to incorrect planning. Another example can be
that merchandiser wants to convey the importance of shipping the apparel
before the deadline. If he is unable to make an effective presentation to stress
the importance, then others may not respond on time for order execution.
e) Negotiation skills – A very important skill required is this negotiation skill where
the merchandiser has to negotiate with buyers, internal peers, management, suppli-
ers, shipping companies, etc. Many times, informal communication may help mer-
chandiser to win orders when speaking with buyer like enquiring with buyer about
his holidays, work nature, etc. During pricing negotiations, communication skills of
merchandiser come to the fore. He / she has to effectively negotiate to win the order
for the company. For example, when buyer is looking at reducing the price for the
garment of a particular order, merchandiser should be able to use his negotiation
skills to make the buyer understand the need for increasing the price and effectively
negotiate to create a win–win situation for both.
7.5 Rate Your Listening Skills

Here are some questions to ask yourself to find out about your listening
abilities. Answer these questions honestly, you can say “yes” or “no”.
1. Do you tune out a speaker who is discussing a dry subject?
2. Are you more conscious of a speaker’s mannerisms than what they
are saying?
3. Do you fake attention to a person who’s speaking?
4. Do you find yourself mentally arguing with a speaker while they
are still talking?
5. Do you feel you can fill in the rest of a speaker’s message after
hearing just the first part?
6. When you have something on your mind, do you find it hard to
concentrate on what the other person is saying?
7. Do you give up when the speaker is presenting hard to follow material?
8. When a speaker uses offensive language or says something you
know to be untrue, do you have such a strong emotional reaction
that you stop listening?
9. Do you allow your opinion of a speaker to influence your willing-
ness to listen?
How many did you say “YES”? If you said more than six yes, then
your listening skills leave a lot to be desired. Your poor listening skills may
be affecting the way you relate to colleagues and friends.
Source: Shirley Taylor & Alison Lester, “Communication: your key to success”, Marshall Cavendish In-
ternational (Asia) Private Limited, Singapore, 2009.
f) Intercultural communication skills – Many merchandisers deal with

foreign buyers and also locally they have to deal with sub-ordinates from
different states with different languages. So in these cases, he / she should
be good at intercultural communication. Growth in e-commerce has led to
communication cutting across caste, religion, race, country, language, eth-
nicity, etc. It is required that merchandiser understands the cultural aspects
and readies himself for communicating with people based on it. For ex-
ample, in India, asking a person for his name, we use the phrase “What is
your good name?” whereas, in USA, it is considered bad if we ask the same
question. People may reply asking if their name is a bad name. This is due
to language difference and culture difference. So during interactions with
buyers of USA, if merchandiser doesn’t understand these cultural differ-
ences and interact accordingly, it may lead to disturbance in communica-
tion and business.
g) Speaking skills – Any work would involve speaking and merchan-
diser job is no less in speaking. There is a lot of speaking required in
this job starting from speaking with sub-ordinates to speaking with sup-
pliers and customers. Effective speaking skills are required to communi-
cate the details to the sub-ordinates, buyers, suppliers and get the work
done effectively. Improper speaking skills with errors in language may
lead to losses in organisation growth. For example, not having good
command on local language, a person from south India working in north
India will have difficulty in conversing and communicating the infor-
mation. He may use incorrect words and convey wrong meaning to the
listener or receiver.
h) Conducting effective meetings – The merchandiser should have skills
in conducting effective meetings with his peers, sub-ordinates and also have
knowledge on how to conduct corporate meetings. Any high-level meet-
ing taking place in the apparel company related to growth and goals of the
company will involve merchandising manager to present his / her views and
many time arrange for such meetings. So he / she should be able to arrange
and conduct effective meetings.
7.11 Improving communication skills of a

merchandiser
The need for communication skills for a merchandiser and various skills re-
quired has been discussed in the previous section. In this section, the various
ways of improving those communication skills for better working of a mer-
chandiser is detailed.
7.11.1 Improving listening skills

Listening is an important aspect of the communication process for a mer-
chandiser. Any communication can be made only when listening is proper.
Listening is a dynamic process. As a merchandiser, effective listening can be
achieved by following the below points:
• Merchandiser should grasp and understand the content properly.
• He / she should not loose calm while listening. Shouldn’t get angry
as anger affects communication.
• He / she should be ready to accept new ideas and information
• Important points should be noted so that it is not missed out later
• He / she should summarise and rephrase the speaker’s ideas so that
he understands all the points
• During listening, he / she should avoid distractions
• Effective listening would involve asking questions wherever re-
quired to understand the message correctly. This will be very helpful
to merchandiser when he is listening to buyers from foreign countries
• Merchandiser should put himself in other’s shoes (speaker) and un-
derstand the context based on what the speaker is intending to say
• He / she should be attentive and should not assume and ignore
information
• Should have empathy while listening to acknowledge what the
speaker is saying and clearly understand the facts and figures
• He / she concentrate on what the speaker says so that there is no loss
of information
• He / she should find out any opportunity coming their way during
listening like asking questions internally “what is in it for me?” and
grab the opportunity.
The above points will help merchandiser in decision making as he / she
will have complete information. It is said that during any communication
70% of the time should be spent on listening and 30% for speaking. It will
effectively help merchandiser to enhance the quality of communication with
proper listening.
7.11.2 Improving body language in communication

Kinesics which is the study of body language should be clearly understood
by a merchandiser to improve his communication skills. During any discus-
sion, the merchandiser should demonstrate appropriate body language so that
the right meaning and attitude of him / her is conveyed to the other person or
group. The ways of improving body language are listed below:
• The merchandiser should maintain proper eye contact when inter-

acting with sub-ordinates, peers, management and buyers. The mer-
chandiser should not fix his eye contact with one person for more
than 5 seconds. He / she should not keep staring at one person and
not speaking by seeing all the people in the meeting will show a lack
of confidence of the merchandiser.
• The merchandiser should maintain a firm handshake and not a loose hand-
shake when shaking hands with the buyers as firm handshake ascertains
that he / she is confident about what he / she is saying. A stronger hand-
shake will show dominance over the other person and that can be avoided.
• Merchandiser should not cross his arms when making a presentation
or in any discussion as it may indicate that he / she is not open to any
new ideas or opinion.
• The sitting posture of the merchandiser during discussions should
be upright in a relaxed position and not lean on the chair. If he / she
sits back in the chair, it may show a lack of interest or rejection on
merchandiser’s part.
• Proper gestures should be shown like nodding the head for approval,
proper facial expressions for accepting and rejecting the ideas told,
etc. Effective non-verbal communication should be there.
• As told above, facial expressions will show if the merchandiser is
agreeing or disagreeing to any discussion. It will show whether a
person is sad, anxious, happy, disheartened, etc. So a merchandiser
should always maintain a positive sign on his face by smiling.
These points will help merchandiser during presentations, discussions,
negotiations, meetings, etc.
7.11.3 Improving writing skills

The writing skills are essential for a merchandiser as he is the single point
contact for the buyer and major communication with buyer takes place
through e-mails where there is a need for a lot of writing skills. The various
ways to improve writing skills are given below:
• Content must be clear, concise, complete, accurate and confident
• Merchandiser should choose short sentences / words to communi-
cate the message. However should ensure that the meaning is con-
veyed. For example, “I wanted to keep you all posted that we have
made a profit of Rs. 20 crore” can be rephrased as “Our profit is Rs.
20 crore” where there is only usage of 6 words instead of 17 words
in the first phrase and the message is also clear and complete in 6
words itself.
• The subject line should be objective in nature and should enable

the reader to understand what the content of the message will be by
reading the subject.
• The message should be complete and merchandiser should ensure
that there is no chance for assumption on the receiver’s side.
• Merchandiser should ensure that the receiver knows what action has
to be taken after reading the message.
• Merchandiser should make sure that the message is persuasive in na-
ture so that it creates more accountability on the part of the reader.
• The content should be formatted logically so that reader gets a clear
understanding.
• Proper usage of words and language is essential so that the message
is conveyed without errors.
• He / she should proofread the content before sending so that mis-
takes are avoided.
• Merchandiser should not be fearful while writing. He should execute
his work with confidence. He should write exactly what he wants to
convey to the receiver. For example, if a reminder needs to be sent
to his sub-ordinate for not completing work on time, his message
should intend his sub-ordinate to complete the report and send it on
time. However, it should be ensured that usage of words should be
assertive in nature and not authoritative.
• Avoid jargons while writing.
• It should be ensured that the writing is simple and not heavy. It
should be lucid and easy to understand with less complicated words.
• Proper facts and figures should be provided in the write-up and
should avoid misrepresentation of data.
• The document written should be free from grammatical and spelling
errors.
Apart from the above writing skills, merchandiser should be proficient
in report writing and also in writing effective e-mails. In this regard, the next
section highlights on the effective report writing skills and e-mail etiquette
that the merchandiser requires.
Effective report writing skills

The merchandiser would have to write effective reports especially when com-
municating to the top management about the prospective buyers, a roadmap
for company’s future development with respect to the growth of buyers and
their orders, new product areas to explore, etc. Sometimes, the buyers may
ask for reports on their order like report for a customer complaint received
from the buyer, reasons for the poor quality, etc. During writing these reports,
merchandiser should effectively communicate the information without any

errors. The steps in writing a report and ways to effectively write reports are
provided below.
Steps in writing the report
• Analyse the objective of the report like problem to be addressed
• Collection of data, samples, information, test reports required for
writing the report
• Verify and analyse the above data received
• Plan the contents of the report including the facts to be presented in
the report based on the analysis
• Prepare an outline for the report
• Drafting the report
• Edit the drafting report
• Send the report if necessary to higher officials for feedback and rec-
ommendations before finally submitting the report.
Improve report writing skills
• The report should be focused on clear objective
• The quality of the intended receiver of the report, their requirements
and level of understanding should be analysed before writing the
report
• The length of the report should be decided initially
• The report should always contain true and accurate information
• It should have details related to all sides of the problem with no
partiality.
• Proper facts and figures to substantiate the claims should be pro-
vided in the report
• The report structure, writing style and presentation should be
pre-decided
• The main subject matter of the report should be highlighted in the
report for quick understanding
• The report should be carefully documented and should be proofread
to avoid errors and mistakes
• Merchandiser should be open for feedback on the report so that it
will give a chance to correct any shortcomings in the report with
respect to language, structure, content, facts and figures
• Statistical data should be presented neatly using graphs and
pie-charts
• Paragraphs should be in such a way that it attracts readers to read
the report and not get tired of seeing it. So appropriate paragraph
sizes should be chosen and bullet points can be used to highlight
important information
• Finally, the report margins should also be checked. Normally, all side
margins should be one inch broad with lower margin alone being
broad by 1.5”.
E-mail etiquette for a merchandiser

In today’s context, merchandiser works majorly on the computer. Either he/
she works on the ERP system available to take care of all the orders or on the
e-mails to the buyers, suppliers, etc. Majority of merchandiser’s work, roughly
30%–40% (of his / her time) is spent on working on the e-mail sent by buyers
and reply to them with results. Hence, e-mail etiquette is very important for
merchandiser. Initially, companies hand hold merchandisers in writing e-mails
with guidance from a senior merchandiser so that they write e-mails without er-
rors and gain confidence. If a merchandiser can write proper e-mails, inevitably
it will lead to very quick growth for the merchandiser in the organisation. Here,
few e-mail etiquettes are discussed for merchandiser’s benefit.
• People always need a swift response. Ensure that all mails are an-
swered before the end of the day. If the merchandiser doesn’t have
an answer by the end of the day for the client, it is essential that he /
she acknowledges the receipt of an e-mail from the client and reply
them with a due date rather than leaving the e-mail unnoticed
• The subject line should be meaningful and it should be ensured that
the e-mail consists of a subject. Many times, e-mails are sent without
a subject
• Merchandiser should understand the usage of all tools in an e-mail
like reply is to reply to the intended person or persons, reply all is to
reply to all the persons who are there in the initial e-mail, forward is
to forward the contents to a new person other than the people who
are aware of the e-mail, “Cc” is to mark the e-mail as a “for your
information” to people other than the main receiver who is in “To”
column, “Bcc” is to mark the e-mail to someone without the knowl-
edge of the people in the “To” and “Cc” rows, compose is to write
the e-mail and send is to send the e-mail to the intended receivers
• Based on the above tools in an e-mail, merchandiser should use them
correctly when needed
• He / she should not use reply to all always as it may not be required
for that e-mail to be seen by all. For example, the general manager
would have sent a mail to all department heads asking them to sub-
mit their weekly reports. It might have been informed earlier to mer-
chandiser that the profit and loss report should only be sent to the
general manager and it should be confidential. If the merchandiser
replies all and sends the report, then all the recipients of the e-mail
from general manager would be able to see the report thereby lead-
ing to leakage of confidential information
• To avoid huge losses to the organisation, the “To”, “Cc”, “Bcc” line
should be checked twice to ensure that the e-mail is only sent to the
correct recipient and not to the unintended recipient
• The same message thread should be used. If the buyer has asked
for a report, the report should be sent as a reply to buyer’s original
e-mail rather than creating a new e-mail so that it will be easy for the
buyer to understand
• When forwarding e-mails, data that are not required for the recipient
should be removed and only then it should be sent
• Spelling and grammatical errors should be checked before sending
the e-mail
• Any e-mail typed should be read twice to ascertain the content so
that mistakes and grave errors are avoided
• Confidential information should be shared in e-mails after getting
proper permission
• It should also be ensured that e-mails have a disclaimer at the bottom
related to actions on breach of confidentiality, virus liability, etc.
• There should not be any racist, sexually offensive comments in
an e-mail even for the joke as it would affect the reputation of the
merchandiser
• Abbreviations and emoticons should be avoided or should be used
only when absolutely necessary with clear reference to their mean-
ings. For example, still many people would not know the meaning of
“-)”. So sending this emoticon would raise doubts for the recipient.
Abbreviations like “FYI” – for your information; “FYI&A” – for
your information and action; “PFA” – Please find attached, should be
avoided when communicating with buyers and higher officials and
can be used when communicating with sub-ordinates, provided they
understand the meaning of those abbreviations. Abbreviations like
“LOL”, “ROFL” should be avoided in all e-mails
• When attachments are sent with the e-mail, it should be checked that
they are correct and free from errors. Wrong attachments should not
be sent
• Junk e-mails like chain messages, forward e-mails should not be sent
to buyers unless if it is of any relevance to the business with buyers
• E-mail is harder to read. So spacing should be proper and also should
be concise
• Writing e-mail is an art. All questions asked in the e-mail should be
answered promptly and also additional information should be pro-
vided for more clarity
• E-mail should be customised and personal in nature

• Proper structure and layout should be used
• High priority function should not be overused. It should be used only
when there is a need for a quick review of the e-mail
• When e-mails are written using capital words, it intends that you are
shouting or giving a warning. So avoid capital words usage
• Proper formatting should be done. Selection of fonts, styles, font
sizes should be appropriate to the e-mail content and should not be
very fancy as business communications don’t need those. Colours
used in the background should enhance the viewing of e-mail and
not obstruct the viewing
• Don’t request for read receipts and delivery receipts with your buyer
as he / she may not be interested in using those
• Ensure e-mails are error free and don’t recall a message as it clearly
tells that you have committed a mistake
• However, in the above case, if any errors are committed, reply with
apologies and send the corrected matter immediately
• Keep e-mails short and simple and avoid lengthy sentences
• Merchandiser should use information or data from the third party
only with their permission. Copyrighted information should not be
shared without permission
• The language used in the e-mail should be gender neutral. The buyer
can be a male or female and addressing them as he or she may not be
suitable if we are not clear about their gender
• Avoid replying to spam e-mails as that may lead to misuse and theft
of data
• When writing an e-mail to sub-ordinates and higher officials, re-
member the harassment and discrimination policies in mind
• When writing to buyers, it should be ensured that it is written in the
language that they understand
• Try not to use e-mail to scold people as it may not be the effective
way
• Always ensure that e-mail contains salutation and signature
• Correct punctuation marks should be used
• E-mails to the buyers and higher officials should be more formal in
nature and to the sub-ordinates, it can be informal at times based on
the understanding that exists between them
• In addition to the above point, e-mails can also be informal at times
when speaking to the buyer if there is healthy relationship with the
buyer. For example, Americans are very particular about empa-
thy. They like people asking them how they spent their holidays,
appreciating the things they bought, etc. So to maintain a friendly
relationship, merchandiser can contact the buyer once in a week with

a friendly e-mail asking them how their weekend was, what their
kids on to during holidays, how is their new car’s performance, etc.
Such discussions will help merchandiser’s to have a healthy relation-
ship with the buyers. Just formal contact alone may not help in risky
situations like shipment delays
• Good rapport with buyers can be developed through e-mails.
7.6 E-Mail – Etiquette Rules
7.11.4 Improving presentation skills

Many times, merchandiser will be entrusted with the duty of making pres-
entations to the buyers for getting orders. The effective presentation skills
required are given below.
• The presentation should be prepared in accordance with the require-
ments of the audience
• It should be concise in nature
• It should convey the required information without errors
• Merchandiser should be calm and relaxed during the presentation.
The fear in his / her mind should translate into confidence and posi-
tive energy during the presentation
• Good body language should be demonstrated during the presentation
• More usage of visual aids should be used
• Merchandiser should not block the view of the audience
• Planned, practiced and rehearsed presentations should be made
• Merchandiser should encourage the audience to ask questions so that

there will be clarity after the presentation in audience mind
• Merchandiser should have proper balance with an open posture during
the presentation thereby creating interest in the audience
• He / she should use positive quotes, humour, important facts when
needed judiciously to enhance the presentation
• He / she should be affirmative, optimistic during presentation with
an open mind for feedback and suggestions
• Presentations should end with proper summary, conclusion and work
to be done for the future, if required
• Confident gestures, short, simple words free from grammatical er-
rors should be used during presentation
• Any doubts in the mind of audience should be cleared through
discussion.
7.11.5 Improving negotiation skills

Merchandiser is involved in lot of negotiations with buyers, suppliers, inter-
nal organisational members over various matters like pricing, delivery tim-
ing, production planning, etc. Hence there is a need for better negotiation
skills for a merchandiser as given below.
• Any negotiation done by the merchandiser should lead to a win–win
situation between two parties and should not be a loss for any of the
parties as organisations now look for inclusive and mutually benefi-
cial growth
• During negotiation, he / she should talk about the priority issues and
not discuss irrelevant issues
• Technical knowledge plays a major role during negotiations as facts
and figures can be accurately provided during negotiations
• Price negotiations with buyers should be done after evaluating buy-
er’s interests, competition, etc.
• Negotiations should be done keeping away personal differences
• During starting of negotiations, introduce others and maintain a firm
handshake with all the people
• Whenever required verbs like “please” and “thank you” should
be used
• No interruptions should be made during discussion and watching the
language is important
• He / she should be honest and straight forward during discussions
• Correct deadline should be given related to delivery dates, produc-
tion dates, etc.
• False data should not be provided during negotiations
• The other party views should be considered and answers should be

given in such a way that the other party accepts it
• Price negotiations are very difficult and it should be done with more
knowledge on the existing issues involving the company so that
profit results because of executing the order
• He / she should be optimistic and should not have fear of losing
• Should look for opportunities during negotiations
• Should be ready to accept challenges and should understand that
there are opportunities outside these negotiations if it did not go
through as expected
• No false promises should be made
• A mutual agreeable outcome should result of negotiations
• Merchandiser should be calm and composed during negotiations es-
pecially when handling customer complaints and talks on compensa-
tion resulting from that.
7.7 Negotiation Skills For Merchandiser

Brilliance: Be as fast as you can. Analyse problems, search for solutions,
and precisely respond to questions during the negotiations. Be creative.
Precision of expressing: Speak clear and simple language. Determine the
order of issues and keep up on it – these scheme will help you not to miss any
issues.
Careful listening: Show interest to your partner. Pay your whole atten-
tion to the other side. Keep in mind, that e.g., you should not look at
your watch or use phone. Ask questions, your partner will know that you
understand what he is saying and you can also obtain some additional
information.
Proper evaluation: Constantly analyse your negotiation results. Try to be
objective and fair. If you see that something is going wrong try to fix it up.
Honesty: Be honest during negotiations. Remember that if you would like
to cheat or lie.
Persuasion: Accurate selection of the arguments. Accurate, consistent and
factual presentation of the arguments.
Patience: Avoid quick decisions and forcing the other site to them.
7.11.6 Improving intercultural communication skills

As discussed earlier, merchandisers interact with buyers worldwide and they
should have knowledge on the cultural aspects of majority of countries doing
business with them so that proper interactions will take place between them.
Some of the ways to improve them are given below.
• Sensitive remarks should be avoided

• Before speaking about religion, race, language, merchandiser
should know if it is apt to discuss them. For example, Once a mer-
chandiser had an informal talk with a buyer from USA and wished
him merry Christmas during Christmas times. The buyer was from
a different religion and he got irritated because of the wish and said
he doesn’t belong to that religion. That is when the merchandiser
understood that he could have said happy holidays instead. All this
can be learnt by understanding the cultural differences existing be-
tween people
• Slangs and idioms should be avoided
• Specific and relevant words should be used
• Careful listening helps a merchandiser during intercultural
communication
• Any questions arising should be clarified immediately to avoid
ambiguity
• Appropriate body languages and gestures should be used
• Before talking with buyers, a study about their culture and places
can help a merchandiser lot during discussions
• Proper business etiquette should be followed according to the coun-
try to which the buyer belongs to. For example, when you meet a
Chinese group of buyers, they might greet you with applause and
you will be confused what they are trying to do. So it is essential that
he / she knows about business etiquettes of the buyer’s country and
act accordingly
• He / she should ensure that no offensive words, gestures are used
• Proper intonation should be used while communicating
• An attempt should be made to understand the various cultures.
7.11.7 Improving skills to conduct meetings effectively

The merchandiser can work on the following for conducting meetings
effectively:
• Meeting should be planned well in advance
• Points to be discussed and agenda of the meeting should be circu-
lated to all the members of the meeting in advance
• Decision-making in meeting should be unambiguous
• Meetings should be conducted professionally and should lead to pro-
ductive outcomes
• There should be no deviations in discussions during meetings and it
should be well-focused
• Merchandiser should be punctual for the meeting

• He / she should have understood the agenda clearly and prepare well
enough for the meeting
• He / she should start the meeting on time. Introduce all the
participants
• Circulate notes / hand-outs promptly
• He / she should involve all the participants in the meeting
• He / she should encourage new ideas, thoughts from the participants
• The merchandiser should avoid distractions during meeting and
should ensure that all issues and agenda of the meeting are discussed
within the time frame
• He / she should evaluate the meeting by getting feedback and then
circulate the minutes of meeting to ensure that all the members have
same understanding
• He / she should plan for the next course of action based on the meet-
ing outcome.
7.11.8 Improving speaking skills

The speaking skills required for a merchandiser can be discussed for any
length as it is one of the most important skills required by him / her. Many
of the skills required will be in common with the skills that we have seen
earlier in negotiation, conducting meetings, usage of body language and in-
tercultural communication. Some of the ways to improve speaking skills are
provided below.
• Merchandiser should be clear about the content that needs to be
spoken
• He / she should be fluent in English when speaking with buyers and
fluent in local language when speaking with sub-ordinates
• He / she should have proper intonation. In India, people don’t give
much importance to intonation (stressing the right word) whereas in
USA, they don’t understand the meaning if wrong word is stressed.
For example, a simple sentence “I didn’t say he stole the money”
can be interpreted in seven different ways by stressing each word
separately in the sentence. If the word “he” is stressed, it means like
“HE” didn’t steal, another person might have done it. If the word
“stole” is stressed, it means like he didn’t steal the money and it was
taken after getting permission
• He / she should avoid grammatical errors while speaking
• Learning new words in English would help, however, should avoid
using complex words to convey meanings
• He / she should use simple sentences to communicate

• He / she should be focused on the group he / she is speaking to and
avoid distractions
• The merchandiser should not indulge in a fight during speaking and
should be courteous
• He / she should not make negative statements about anyone
• Positive body language should be used while speaking
• Assertiveness should be exerted during speaking
• During speaking, merchandiser should engage the listeners effectively
• Usage of humour, facts and figures can be done as and when required
• Over usage of any word like using more of “and” and “the” should
be avoided
• He / she should avoid stuttering and stammering during speaking
• He / she should pronounce words properly. Can use internet to get
help on how to pronounce words correctly
• He / she should slow speech down to the level where the listeners
understand what he / she is saying. Rate of speech should be main-
tained appropriately
• Overall the merchandiser should manifest constructive attitudes and
beliefs during speaking.
7.12 Cases to understand importance of communi-

cation for a merchandiser
Case 1: Negotiation for order price increasing
During 2007, yarn price hike issue, a leading garments exporter in Vapi, Gu-
jarat had bagged the order at $3.5 per garment in the early part of the year.
When the order was executed in the later part of the year, it was impossible
for the company to work out the pricing at the pre-agreed price. So the man-
agement asked the merchandiser to increase the price of the garment by talk-
ing to the buyer. It was a difficult task for the merchandiser to convince the
buyer. However merchandiser successfully handled the situation. He main-
tained a very good relationship with the buyer by frequently contacting the
buyer through e-mails and having a good rapport through personal informal
communication. He used to send greeting e-mails weekly once and enquire
about the well-being of the buyer. He also used to forward latest happen-
ings in India related to apparel sector. So he used the opportunity by sending
articles from various news agencies through e-mails to the buyer casually
about implications of yarn price hike in India. After sometime, he called the
buyer and told him how it has caused an impact to their business and then
asked for a negotiation to increase the price. Due to the good relation with
the merchandiser, the buyer came for a negotiation and to have a win–win
situation for both, the buyer agreed to increase the price per garment to $4.25.
Such impacts which may seem impossible may happen if merchandiser has a
good relationship with the buyer.
Case 2: Convincing the buyer for delayed delivery
In another case, the shipment got delayed due to poor material quality from
the supplier and delay in delivery of quality goods from the supplier. The
merchandiser keeps track of the production status of his buyer. So he pre-
empted the situation and before the delivery date well in advance, e-mailed
buyer to let him know that the order will be delayed by a particular time due
to the poor response of the supplier and explained how he will avoid such
issues in the future by telling him about the actions taken in correcting the
supplier. The buyer accepted the merchandiser’s request as he was truthful
and timely in letting the buyer know the delay for planning in advance. The
situation was amicably taken care due to the effective communication of the
merchandiser.
Case 3: Negotiation on losses due to poor product quality
A buyer complained about the poor product quality of the garments shipped.
The merchandiser’s responsibility was to ensure that the quality is main-
tained. However due to the urgency in delivery, it was difficult to manage the
product outcome. So merchandiser spoke to the buyer and negotiated for a
reduction in price of the garment by 10% for the mistake. The merchandiser
communicated that it was one off case and it will be ensured that such things
don’t happen in future and before buyer asking for a price reduction, he vol-
unteered for a 10% reduction in price which made the buyer happy. The ap-
parel company did not mind the 10% reduction as order cancellation would
make them lose 90% of money. The merchandiser’s quick response saved
80% of money to the company.
Case 4: Issues due to customer complaints
Buyers are very particular in their requirement and the get annoyed if they
get any customer complaints for their product in the market. However, mer-
chandiser’s shrewdness and communication skills helped avert a bad situa-
tion. This happened for an apparel company in Tirupur. The T-shirts sent to
UK buyer were reported to have poor washing fastness by the customer who
bought it from the buyer. The merchandiser had complete reports of wash
fastness tested when the product was made. So he asked the buyer to check if
the washing was done according to the standards and then it was found that
it was due to the washing method of the customer. The customer did not fol-
low the washing procedure and due to that it lead to poor wash fastness. The
buyer was happy that the issue was sorted out easily.
Case 5: Negotiations with bad suppliers

A Bangalore based apparel company was buying fabrics for shirts from
Salem. It was found by the merchandiser that the quality of the fabric was
very inferior and on further checking with the supplier, it was found that he
was outsourcing and not manufacturing on his own. Immediately the mer-
chandiser cancelled the order with supplier and informed his buyer that there
will be a few days delay because of supplier dysfunction. He ordered the
same fabric from another supplier and delivered the material to the buyer at
the earliest possible time. It shows that merchandiser should also be tough
with people who don’t deliver their duties properly and should not always be
passive.
Case 6: Change management in the organisation
Apparel buyers are very specific in their requirements and they cancel or-
ders if there are few deviations from their specifications. Similarly, work-
ers in an apparel company have set procedures to follow and when asked to
make changes as per the request of the buyer, they may not do it saying it is
very difficult to produce such kind of styles. It is important for the merchan-
diser to honour the buyer’s request. Hence merchandiser should have an ef-
fective strategy in relation to the change management of workers. He should
effectively handle his workers so that they don’t resist changing. To counter
this situation, merchandiser keeps the production team informed about the
buyer’s requirement well in advance and asks production team to plan for
training if needed and also talk to the workers about the benefits of changing
according to the buyer needs. Effective communication skills of merchan-
diser would help companies to aid in change management.
Case 7: Heeding to buyer’s request
Sometimes the buyer may ask for products earlier than the delivery date. The
buyer may request saying he needs products in advance so that they can be
displayed for sale earlier. In one such case, a merchandiser found that the
buyer was in great need for early delivery and he was a very big buyer. He un-
derstood by frequently communicating with the buyer about his requirements
and future plans. It was found that this buyer would need more products in
future. So by executing this order early, it might lead to bagging big orders.
He discussed this with his management and decided which of the other run-
ning orders can be stopped for some time till this buyer’s order is complete.
He stopped those orders and completed this buyer’s order and delivered the
product as per buyer’s requirement. This in turn made the company get more
orders in future from the buyer. This was all possible due to effective commu-
nication skills of the merchandiser with buyer and management.
The above cases give an idea of how effective communication skills of a
merchandiser help in the growth of the apparel company.
7.13 Summary
In this chapter, the importance of communication in an organisation is de-
tailed. The basics of communication including 7 C’s and 4 S’s of commu-
nication are explained. The chapter throws light on the different forms of
communication with their merits and demerits. The barriers of communica-
tion at all levels in an organisation are detailed. The communication skills
needed for a merchandiser is detailed with reference to the listening skills,
writing skills, negotiating skills required for a merchandiser. More emphasis
is given on the e-mail etiquette to be followed by the merchandiser in an ex-
port organisation. Few cases are provided at the end to understand how mer-
chandiser’s effective communication skills help in contributing to the growth
of the organisation.
References
1. Venkatesh, Communication: Meaning, elements, process and need, http://www.
yourarticlelibrary.com/management/communication/communication-meaning-ele-
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tion.html (Accessed on May 6th, 2016).
3. What is communication? http://study.com/academy/lesson/what-is-communica-
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(Accessed on May 6th, 2016).
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cessed on May 6th, 2016).
7. Rasel, Difference between business communication and general communication,
http://www.businesscommunicationarticles.com/difference-between-business-com-
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important-objectives-of-communication.html (Accessed on May 6th, 2016).
9. Olivia, Difference between communication and business communication, http://www.
differencebetween.com/difference-between-communication-and-vs-business-com-
munication/, May 18th, 2011 (Accessed on May 6th, 2016).
10. Saritha Pujari, Communication: Importance, forms and improving effectiveness in
communication process in an organisation, http://www.yourarticlelibrary.com/organ-
isation/communication-importance-forms-and-improving-effectiveness-in-communi-
cation-process-in-an-organisation/8726/ (Accessed on May 6th, 2016).
11. Royale Scuderi, 15 vital business etiquette rules, https://www.americanexpress.com/

us/small-business/openforum/articles/15-vital-business-etiquette-rules/ (Accessed on
May 6th, 2016).
12. http://www.managementstudyguide.com/seven-cs-of-effective-communication.html
(Accessed on May 10th, 2016).
13. http://skillcrush.com/2015/01/20/client-first-impression/ (Accessed on May 10th,
2016).
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Corporate_Email_Etiquette.pdf (Accessed on May 10th, 2016).
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nesscards.com/chinese-culture-tips-china.html (Accessed on May 10th, 2016).
Index
A bobbin 123
boxes 126, 221, 222, 224, 227, 228, 230,
AATCC 48 231, 237, 243, 250
abrasion 41, 49, 55 brand 4, 10, 24, 30, 32, 46, 50, 52, 59,
absence 258, 306, 340 61, 213, 222, 223
accesories 317 budget 11, 31, 54
accessory 68, 303 buffer 6, 73, 74, 76, 78, 82, 83, 84, 86,
accountability 171, 278, 355 88, 151
add-on 199 bulletin 19, 136, 139, 140
additive 194 business-communication 368
administrative 44, 179, 231, 232, 238, buyers 1, 2, 7, 13, 15, 16, 17, 18, 19, 20,
262 23, 24, 25, 26, 33, 34, 39, 42, 46, 48,
AEPC 273 159, 166, 170, 229, 253, 255, 262, 263,
aesthetic 21, 41, 50, 54, 306 267, 274, 275, 303, 349, 350, 351, 352,
agency 229, 261, 262, 275, 289, 294, 353, 354, 355, 357, 358, 359, 360, 361,
301 362, 363, 364, 366, 367
alterations 34 buying 2, 11, 24, 26, 148, 171, 367
anti-dumping 289
anxious 346, 354 C
appearance 16, 25, 31, 40, 41, 48, 50,
59, 65, 70, 306 calendar 18, 72, 73, 151
approval 6, 7, 13, 15, 16, 17, 23, 71, 74, cargo 261, 263, 277, 279, 280, 285, 286,
76, 145, 150, 153, 162, 163, 170, 254, 287, 292, 294, 295, 296, 297, 301,
262, 280, 303, 304, 305, 320, 324, 302, 307
325, 336, 354 carton 127, 155, 177, 221, 222, 223,
armhole 58, 114 224, 227, 228, 230, 231, 237, 243,
arms-cye 140 249, 285
artificial 20 certificate 254, 275, 278, 283, 289, 290,
assortment 31, 221, 230 292, 293, 294, 296, 299, 301, 307
ASTM 48 claims 268, 271, 272, 356
auxiliary 253, 283, 293 clauses 287, 297
client 43, 63, 66, 357
B clothing 23, 25, 33, 41, 154, 278, 281
CMTP 244
bags 23, 126, 225, 226 co-ordinate xix
barcode 155, 222, 223, 233, 234, 237, color 15
245, 249, 250 communications 12, 62, 156, 279, 340,
barometer 37 359
benchmark 172 compacting 55, 140, 202, 203
bluntly 108 competition 161, 238, 361
372 Index
composed 145, 362 decitex 118

concise 342, 343, 354, 358, 360 decorative 23, 31, 127, 194
confused 344, 363 defective 156
consignee 284, 287, 288, 297 delegating 337
consignment 263, 271, 272, 279, 287, demographic 60, 61
293, 294, 295, 296 dependencies 77, 79, 88
consolidate 232 design 4, 5, 6, 9, 13, 15, 22, 24, 26, 30,
consumer 33, 40, 61, 62, 64 31, 37, 38, 39, 40, 41, 43, 44, 45, 46,
consumption 8, 12, 19, 41, 44, 71, 72, 47, 51, 52, 55, 56, 60, 61, 64, 65, 69,
98, 106, 107, 108, 109, 111, 112, 113, 113, 124, 145, 150, 193, 194, 195,
114, 115, 116, 117, 118, 120, 121, 196, 216
122, 123, 124, 125, 126, 137, 138, designer 2, 4, 22, 25, 31, 36, 37, 38, 39,
140, 141, 142, 181, 191, 193, 199, 40, 41, 42, 43, 61, 67, 70, 150
201, 218, 225, 228, 244, 304 dips 13, 150, 151
contract 63, 230, 266, 275, 276, 283, disorder 331
285, 289, 299 disposable 54
coordinator 6, 17 disseminate 273
cosmopolitan 45 distinctive 13
costing 6, 7, 44, 45, 46, 137, 175, 176, distribution 25, 26, 44, 176, 178, 179,
179, 180, 184, 193, 204, 208, 209, 287
221, 238, 244, 251 distributors 335
cotton 35, 55, 99, 104, 115, 118, 180, documentation 18, 164, 230, 231, 232,
183, 184, 198, 199, 200, 201, 281 253, 280, 281, 317, 323, 325
course 26, 30, 101, 181, 364 domestic 1, 47, 152, 156, 210, 262, 272,
creativity xvii, 2 273, 274, 279, 287
crochet 281 doodles 67
croquis 41 dozen 31, 211, 216
cubic 229, 230, 231, 238, 244, 250, 279 drafting 356
cues 50, 54, 350 draping 43
cuff 114, 122, 123 drawings 41, 78, 178
currency 284 dummy 16, 244
customer 1, 2, 5, 6, 10, 11, 13, 16, 17, dynamic 33, 143, 150, 175, 353
18, 20, 25, 29, 31, 33, 35, 38, 42, 47,
51, 60, 61, 62, 63, 64, 66, 71, 73, 118, E
134, 140, 147, 149, 150, 152, 157,
e-mail 63, 329, 331, 337, 350, 355, 357,
161, 163, 164, 165, 195, 221, 224,
358, 359, 360, 368
262, 269, 302, 306, 328, 333, 342,
economic 1, 32, 273, 301, 308, 345
349, 350, 355, 362, 366
educate 20, 44, 333
cycle 133, 146, 172, 330
elasticity 41
electronically 279, 280
D
embroidery 8, 9, 15, 16, 20, 39, 53, 113,
damaged 156, 164, 268, 279 150, 180, 213, 226, 217, 306
deadline 351, 361 empathy 343, 353, 359
decision-making 12, 147, 148, 151, 334, employees 157, 177, 336, 341, 346, 347,
337, 363 348
Index 373
encoding 26, 331 74, 76, 96, 97, 98, 99, 100, 101, 102,
engineering 1, 19, 35, 45, 72, 98, 136, 103, 106, 107, 108, 109, 111, 112,
158, 167, 168, 173, 303 113, 114, 115, 116, 135, 137, 138,
english 18, 118, 183, 200, 307, 364 140, 141, 145, 147, 150, 151, 153,
enquiry 6, 253, 349 154, 156, 157, 175, 177, 179, 180,
enthusiastic 344 181, 182, 183, 184, 186, 188, 189,
entrepreneur 2 190, 191, 193, 194, 195, 197, 198,
environment 173, 198, 333, 335, 336, 199, 200, 201, 202, 203, 204, 209,
337, 342, 343 232, 244, 251, 303, 304, 305, 318,
equipment 77, 148, 162, 272 324, 367
estimation 71, 72, 92, 94, 96, 98, 175, facilities 10, 44, 74, 154, 255, 267, 347
191, 193, 198, 251 factory 15, 17, 19, 39, 44, 71, 76, 109,
etiquette 329, 350, 355, 357, 360, 363, 127, 128, 129, 130, 131, 134, 135,
368, 369 136, 137, 140, 142, 148, 149, 150,
execute 71, 156, 268, 269, 355 152, 179, 187, 204, 206, 209, 210,
exhibitions 38, 274 217, 250, 299, 302, 304, 305, 350
expenditure 190, 210, 214, 222, 224, fashionable 43, 54
240, 241, 242, 243 feedback 7, 16, 20, 21, 22, 34, 305, 306,
expenses 178, 179, 185, 186, 187, 188, 328, 330, 331, 332, 337, 349, 350,
189, 190, 191, 195, 197, 208, 210, 356, 361, 364
211, 214, 215, 216, 221, 227, 233, feeling 194, 332, 350
238, 239, 240, 246, 250, 270 female 359
experts 29, 47 fiber 35, 55
export 1, 8, 17, 28, 104, 147, 156, 157, FICCI 289
183, 229, 253, 254, 255, 256, 258, filament 20, 118
259, 261, 262, 263, 264, 265, 266, financial 63, 255, 256, 261, 262, 268,
268, 269, 270, 271, 272, 273, 274, 269, 270, 271, 274
276, 277, 279, 280, 281, 282, 283, finishing 6, 10, 18, 21, 44, 50, 51, 58,
286, 287, 289, 293, 296, 297, 299, 84, 91, 92, 95, 96, 97, 98, 99, 127,
300, 301, 302, 306, 307, 308, 317, 132, 133, 135, 175, 184, 190, 193,
323, 325, 333, 342, 349, 368 197, 198, 199, 200, 201, 213, 214,
exporter 154, 157, 160, 229, 256, 259, 232, 245
260, 261, 262, 263, 264, 267, 268, flatlock 210, 214
269, 270, 271, 272, 273, 274, 277, flexibility 74, 152, 156, 160, 348, 349
279, 280, 282, 283, 284, 285, 289, fluorescent 20
291, 293, 295, 296, 297, 299, 301, foil 193, 194
365 follow-up 1, 8, 9, 35, 72, 152, 163, 262
extrinsic 50, 54 forecast 26, 35, 149
eyelet 155 formalities 146, 253, 263, 279, 280, 281,
286, 306
forwarding 6, 8, 228, 230, 231, 254,
F
279, 285, 358
fabric 2, 6, 7, 8, 9, 12, 13, 15, 16, 17, fragile 341
18, 19, 20, 23, 24, 25, 30, 31, 34, 35, frames 79, 195, 196
36, 37, 38, 39, 40, 41, 42, 43, 44, 45, frequently 32, 36, 161, 171, 269, 365,
48, 49, 50, 53, 54, 55, 56, 57, 67, 71, 367
374 Index
functional 50, 54, 127, 251 H

fusing 132, 133, 194
hand-made 25
G handwoven 153
hanger 52, 127, 155, 224, 226, 233, 237,
gantt 73, 77, 78, 79, 84, 86, 88 239, 243, 245, 249, 277, 278
garment 2, 4, 6, 7, 9, 10, 13, 15, 16, 19, harmony 342
20, 23, 25, 26, 27, 28, 34, 36, 38, 40, haute 36
41, 42, 43, 44, 46, 47, 48, 49, 50, 51, helper 187, 188, 190, 192, 233, 239, 245
52, 53, 55, 56, 59, 60, 64, 70, 98, 106, hierarchy 2, 10, 339
107, 108, 109, 110, 111, 112, 114, highlighted 253, 258, 329, 356
115, 116, 117, 118, 120, 121, 122, hindrances 346
123, 124, 125, 126, 128, 129, 130, holidays 22, 73, 74, 351, 359, 360, 363
131, 132, 133, 134, 135, 136, 137, hood 122, 123
138, 139, 140, 141, 142, 145, 147,
151, 153, 154, 156, 157, 159, 160,
175, 180, 181, 183, 184, 190, 191, I
194, 195, 196, 197, 201, 203, 204, ideal 72, 157, 165
205, 206, 207, 208, 209, 210, 211, identity 287
212, 213, 215, 216, 217, 219, 220, illustration 212
221, 222, 223, 224, 226, 228, 230, impact 157, 308, 344, 345, 365
231, 232, 234, 235, 237, 238, 239, import 21, 253, 256, 261, 262, 263, 264,
240, 241, 244, 245, 246, 247, 248, 266, 267, 268, 271, 272, 273, 274,
250, 251, 264, 275, 277, 278, 305, 281, 286, 291, 293, 301, 307
351, 365, 366 importer 256, 260, 264, 270, 281, 283,
gathering 62 284, 285, 286, 288, 289, 291, 293,
gauge 225 301
gender 50, 54, 349, 359 inches 109, 125, 140, 142, 198
generous 35, 344 incoterms 263, 264, 267, 268, 307
geo-demographics 62 indent 303, 317, 318
geographical 11 indicator 50, 54, 155
gestures 331, 354, 361, 363 indigo 153
girls 119, 129, 134 industry 1, 2, 4, 6, 12, 13, 15, 17, 18, 23,
glamour 45 27, 28, 33, 35, 38, 41, 44, 47, 48, 49,
glitter 194 61, 64, 71, 77, 78, 81, 98, 104, 132,
global 4, 38, 43, 64, 147, 173, 276 143, 145, 146, 147, 148, 150, 151, 154,
gossips 340, 341 156, 159, 166, 172, 175, 176, 185, 195,
gradation 127 198, 199, 203, 208, 216, 228, 230, 232,
grading 9 251, 264, 289, 302, 349
grammatical 344, 350, 355, 358, 361, 364 inferior 194, 367
grey 195, 197, 199, 201 infrastructure 17, 147, 154, 162
grievances 337, 339 initiative 2, 190, 273, 274
gross 1, 63, 127, 210, 211, 215, 235, insert 222, 223
245, 248, 285 inspection 16, 18, 20, 48, 50, 170, 254,
guarantee 163, 253, 254, 256, 258, 261, 255, 274, 275, 276, 283, 289, 293,
262, 272 294, 296, 299, 349
Index 375
inspirations 4, 36 L
institutions 269, 271
labdips 20
insurance 25, 178, 179, 229, 254, 255,
label 20, 25, 44, 45, 53, 56, 59, 127,
261, 262, 264, 265, 266, 268, 283,
155, 213, 239, 241, 248
292, 293, 295, 297, 299, 301, 307
labour 22, 44, 76, 127, 148, 149, 156,
intellectual 330
176, 177, 178, 179, 185, 186, 187,
intercultural 352, 362, 363, 364
188, 189, 190, 191, 192, 196, 197,
interlining 113, 127, 155
204, 205, 206, 207, 208, 210, 211,
interlock 202
213, 214, 216, 217, 218, 219, 220,
internet 331, 365
221, 222, 224, 226, 228, 233, 234,
intrinsic 50, 54
235, 236, 237, 239, 240, 241, 242,
inventory 26, 149, 173
243, 246, 247, 248, 249, 250, 278,
invoice 146, 161, 254, 260, 270, 279,
335
283, 284, 291, 293, 294, 297
lapel 34
irrespective 31, 124, 159, 160, 203
lay-out 9
lead-time 26
J
lectra 8
japanese 289 legal 25, 265
jargons 346, 355 levy 270, 283
jewellery 23 liaison 2
journal 35, 64, 173 limitations 157, 339
judgment 166 loading 9, 229, 263, 264, 265, 266, 278,
judiciously 361 285, 287
jump 16 location 10, 11, 24, 55, 59, 153, 275,
junior 6, 46 289, 295
junk 358 logically 72, 343, 355
just-in-time 173 logistics 10, 20, 74, 145, 154, 156, 159,
180
K long-term 18, 271, 272, 335, 347
looms 186, 188
khadi 194
lubrication 177
kids 46, 53, 68, 184, 360
kilograms 8, 181, 304
M
kinesics 353
knife 204, 206, 208 machinery 118, 153, 177, 178, 346
knit 15, 106, 153, 183, 202, 251, 281 magazine 27, 35, 45, 46, 64, 143, 172
knitting 35, 101, 102, 103, 137, 140, maintenance 162, 188, 262, 273
175, 183, 184, 185, 186, 202, 244, make-ups 26
304 managers 21, 60, 77, 335, 337, 342, 346
knock-offs 36 mannequin 43
knotting 186, 187, 188 manufacturing 1, 2, 4, 7, 8, 17, 18, 19,
knowledge 4, 18, 19, 35, 38, 44, 64, 127, 26, 27, 29, 30, 31, 38, 39, 40, 43, 44,
128, 136, 158, 166, 176, 193, 253, 46, 47, 51, 64, 72, 73, 74, 76, 114,
265, 268, 270, 302, 306, 343, 346, 126, 137, 146, 147, 148, 149, 152,
347, 348, 352, 357, 361, 362 153, 154, 156, 157, 158, 159, 163,
376 Index
170, 171, 172, 173, 175, 176, 178, morale 336, 341, 348
179, 180, 182, 187, 198, 199, 203, myer 2
209, 212, 213, 217, 232, 251, 253,
268, 269, 270, 302, 304, 336, 367 N
margin 156, 244, 245, 260, 261, 270,
neck 54, 55, 59, 108, 109, 114, 115, 116,
357
123, 124, 131, 132, 134, 137, 139,
mark-downs 26
140, 142, 145, 232
mark-up 25, 26
needle 57, 58, 59, 116, 117, 119, 120,
marker 8, 9, 133, 203, 204
121, 122, 123, 124, 125, 142, 209,
measurement 20, 27, 48, 54, 106, 107,
210, 212, 214, 234, 241, 247
108, 109, 111, 112, 114, 119, 120,
negotiate 150, 229, 253, 351
125, 127, 139, 140, 165, 172, 180,
network 77, 80, 81, 82, 85, 87
181, 306
non-incoterm 267
media 16, 32, 331, 348
non-negotiable 286, 287
meeting 8, 15, 30, 45, 305, 323, 348,
non-refundable 274
352, 354, 363, 364
non-transferable 259
memo 337
non-verbal 336, 350, 354
mercerisation 200, 201, 202, 203
non-woven 112, 113
merchandiser 1, 2, 4, 5, 6, 7, 8, 9, 10, 11,
notional 178
12, 15, 16, 17, 18, 19, 20, 21, 22, 23,
numbering 118, 155
24, 27, 28, 29, 30, 31, 32, 37, 38, 39,
numerous 167, 175
40, 41, 42, 43, 44, 45, 46, 47, 49, 50,
nylon 45
51, 52, 60, 61, 64, 71, 72, 73, 74, 76,
77, 78, 79, 88, 98, 103, 118, 119, 126,
O
127, 128, 129, 131, 132, 136, 140,
142, 145, 146, 147, 150, 151, 152, objectives 30, 271, 329, 333, 334, 335,
153, 154, 156, 172, 175, 176, 180, 347
181, 191, 193, 197, 198, 203, 209, obsolete 258
225, 228, 232, 251, 253, 254, 255, obstacles 347
268, 270, 276, 302, 303, 304, 305, off-shoring 147
306, 309, 329, 336, 342, 349, 350, offensive 351, 358, 363
351, 352, 353, 354, 355, 356, 357, offers 11, 339
358, 359, 360, 361, 362, 363, 364, offline 61
365, 366, 367, 368 one-size-fits-all 61
metallic 194 operation 19, 45, 51, 57, 58, 59, 72, 83,
metre 98, 101, 102, 106, 112, 113, 114, 84, 86, 89, 90, 94, 95, 97, 118, 119,
117, 121, 137, 138, 140, 181, 182, 123, 128, 130, 131, 132, 133, 134,
183, 184, 186, 188, 189, 193, 197, 136, 137, 139, 140, 148, 185, 209,
198, 199, 200, 201, 202, 210, 215, 212, 213, 217, 259, 260, 273
224, 227, 230, 231, 235, 238, 239, operator 72, 76, 124, 128, 130, 132, 133,
241, 243, 244, 247, 248, 250, 279 140, 146, 184, 209, 212
milestone 12, 19 opportunity 43, 47, 149, 353, 365
misinterpretation 333, 344, 346, 348 optimization 173
mistakes 344, 350, 355, 356, 358 organisation 39, 48, 63, 71, 72, 158, 167,
mock-up 15 170, 281, 302, 306, 332, 333, 334,
model 16, 25, 43, 165, 173, 345 335, 336, 339, 340, 341, 342, 343,
Index 377
344, 346, 347, 348, 349, 352, 357, 329, 330, 331, 340, 341, 346, 351,
358, 367, 368 352, 353, 354, 357, 364
original 6, 8, 9, 16, 17, 36, 107, 116, persuasion 362
117, 142, 150, 185, 258, 259, 260, pessimistic 89, 90, 94, 95, 96, 97
261, 263, 285, 286, 288, 305, 358 picks 99, 181, 186, 187, 188
ornamentation 6, 8, 9 pigment 193, 194
outlet 11 pilot 17, 302
outsourcing 156, 217, 367 placket 53, 54, 55, 56, 57, 213
overheads 176, 179, 185, 186, 187, 189, plain 55, 114, 186
191, 192, 206, 208, 210, 211, 216, planning 2, 4, 8, 9, 11, 19, 21, 24, 29, 30,
218, 219, 220, 224, 228, 231, 232, 35, 47, 64, 71, 72, 77, 80, 98, 127, 128,
238, 241, 242 132, 136, 142, 203, 204, 279, 303, 305,
overlock 57, 58, 209, 214 306, 332, 338, 351, 361, 366
ownership 171, 281, 285 planogram 27
oxford 175 plastisol 194, 195
pocket 112, 113, 114, 122, 123, 131, 132
P policies 34, 47, 71, 73, 157, 267, 292,
packing 8, 17, 20, 21, 44, 51, 52, 81, 96, 302, 332, 337, 338, 339, 341, 347,
97, 126, 127, 132, 133, 135, 136, 164, 359
175, 177, 179, 203, 220, 221, 222, polybag 127
224, 226, 228, 230, 231, 232, 236, polyester 55, 99, 180, 199, 200
237, 238, 239, 242, 243, 244, 245, polyethylene 225
249, 250, 251, 254, 270, 272, 278, polypropylene 225
279, 283, 285, 289, 291, 293, 295, portfolio 65, 165
299, 307 positioning 32, 50, 54
padding 155 post-shipment 253, 254, 268, 269, 270,
panels 135, 138, 141 271, 272, 306
pantone 37 posture 354, 361
parameters 15, 16, 42, 45, 82, 140, 145, pre-costing 44, 98, 137
156, 160, 180, 190, 204, 305 pre-production 7, 8, 17, 305
partners 43, 332, 335, 336 predecessor 80, 81, 83, 85, 87, 88, 89,
passbook 273, 274 90, 94, 95, 97
pattern 9, 15, 34, 43, 62, 69, 303, 314, 340 preference 84, 289
payment 74, 146, 177, 229, 253, 254, preparatory 13, 251
255, 256, 258, 259, 260, 261, 262, pressing 51, 220, 221, 222, 224, 226,
263, 264, 267, 269, 271, 272, 274, 236, 243, 249
278, 281, 283, 287, 288, 289, 291, price 7, 11, 22, 25, 26, 32, 36, 40, 44,
299, 301, 306 50, 54, 145, 146, 148, 150, 156, 159,
performance 2, 12, 16, 24, 40, 46, 62, 161, 164, 167, 168, 169, 170, 171,
133, 137, 148, 152, 160, 165, 166, 175, 179, 182, 183, 184, 185, 190,
167, 168, 169, 170, 172, 173, 262, 191, 192, 193, 195, 196, 198, 200,
306, 337, 339, 347, 360 202, 203, 204, 205, 206, 207, 211,
permeability 48, 49 222, 223, 226, 227, 234, 237, 240,
person 2, 5, 12, 18, 25, 36, 46, 61, 147, 243, 244, 245, 247, 249, 284, 351,
222, 239, 241, 256, 257, 288, 290, 361, 362, 365, 366
378 Index
pricing 7, 160, 161, 176, 180, 253, 254, relationship 18, 61, 150, 156, 261, 262,
264, 265, 351, 361, 365 279, 332, 341, 359, 360, 365, 366
principles 329, 342, 344 relaxed 350, 354, 360
printing 8, 9, 16, 18, 180, 190, 193, 194, reliability 157, 161, 276
195, 196, 244 religion 352, 363
prints 39, 40, 76, 150, 194 rental 208, 209, 214, 215
processing 19, 20, 140, 151, 159, 175, report 22, 37, 52, 78, 289, 304, 305, 306,
190, 191, 197, 199, 201, 206, 232, 320, 355, 356, 357, 358
251, 270, 302 represents 2, 15, 31, 50, 78, 80, 109,
procuring 269, 270 122, 126, 127, 258
producers 40, 228 reputation 50, 343, 358
productivity 335, 342, 347 requested 13, 15, 16, 161, 294, 303, 304
profile 1, 17, 61, 62, 63 research 11, 22, 32, 33, 34, 36, 37, 39,
promostyl 35, 57 46, 60, 65, 173, 179, 307
proportion 149 resist 193, 367
prototype 18, 25, 39, 43, 78 resources 60, 165, 166, 304
psychological 33, 34, 346 responsibilities 1, 2, 10, 17, 29, 64, 151,
publications 34, 35, 38, 64, 172, 251 152, 172, 255, 265, 268, 335, 339,
purchasing 157, 158, 165, 172, 173, 270 347, 348, 349
retailers 16, 26, 33, 35, 148, 149, 335
Q rework 150, 170, 217
ribbon 55
qualitative 167, 169
rivets 127
quantitative 165, 166, 167, 169
roles 1, 4, 6, 10, 18, 27, 29, 349
quantum 12
roll 107, 114, 127, 222, 223, 224
queries 127
questionnaire 34
S
quintuple 286
quota 18 safety 117, 118, 155, 162, 254
quotation 146, 161, 253, 293 salary 177, 178, 179, 186, 187, 188, 189,
190, 204, 206, 208, 210, 211, 212,
R 218, 226, 227
sale 11, 20, 22, 26, 149, 228, 229, 254,
ratio 103, 104, 114, 117, 140, 141, 170,
261, 262, 271, 272, 283, 284, 293,
171, 173, 224, 226, 227, 245
332, 367
re-costing 7
samples 6, 7, 8, 12, 13, 15, 16, 17, 18,
re-cutting 132, 133
25, 27, 28, 40, 43, 50, 150, 170, 253,
re-engineering 47
304, 307, 356
realising 255, 269, 283, 297
scheduling 19, 21, 22, 71, 72, 78, 79, 80,
reasonable 154, 161
84, 86, 88, 98, 128, 143
receiver’s 343, 344, 345, 346, 355
scheme 261, 262, 274, 362
record 26, 162, 262, 302, 303
screen 193, 195
regular 13, 26, 34, 78, 118, 160, 180,
seams 19, 20, 51, 59, 117, 209
293, 350
seasonal 37
reimbursed 274
segmentation 60
rejection 6, 109, 111, 119, 140, 245, 294,
self-adhesive 59
354
Index 379
self-appeal 52 sportswear 31, 35, 36, 37

self-respect 343 spreading 132, 133, 203, 204
selvedge 107, 112, 114 statistical 30, 356
sender 330, 331, 339, 340, 341, 343, sticker 155, 194, 203, 204, 205, 206, 207,
344, 345, 346, 347, 348 222, 223, 224, 227, 233, 234, 237, 239,
shade 7, 16, 20, 190, 304, 305 240, 245, 246, 247, 249, 250
shank 173 stitch 35, 48, 57, 58, 59, 113, 116, 117,
shed 186, 198, 199, 301 118, 119, 120, 121, 122, 123, 124,
ship 229, 261, 265, 266, 267, 278, 281, 125, 142, 209, 212, 214, 216, 217
287, 296, 297, 302 stitches 15, 48, 51, 59, 116, 118, 122,
shipments 74, 276, 308 125, 209, 216
shirt 34, 52, 104, 114, 115, 199, 201, storage 162, 229
251, 307 storyboard 46
shoes 343, 353 strategies 29, 145, 147, 148, 149, 175,
shoot 16 347
shop-floor 117 strike-off 16, 20, 150, 151
showcase 198 studios 24, 39
showrooms 40, 274 stylemax 38
shrinkage 16, 48, 99, 101, 102, 103, 106, stylesite 35
137, 138, 140, 141, 182, 183, 184, 202 stylewatch 45
signature 285, 289, 291, 293, 296, 297, 359 styling 2, 8, 25, 41, 46, 50, 54
silhouette 26, 34, 38, 39, 41, 42, 43, 46, subsidiaries 63
50, 54, 68 supervisor 187
size-set 16 suppliers 7, 11, 25, 145, 146, 156, 157,
sketches 41, 42 159, 160, 165, 167, 168, 170, 171,
skirt 34 172, 173, 332, 335, 342, 349, 351,
SKU’s 27 352, 357, 361, 367
sleeve 53, 54, 56, 57, 58, 59, 104, 107, swatches 13, 42, 304, 305
108, 114, 115, 122, 123, 124, 125, swimwear 31
131, 137, 139, 140, 142, 214, 238 symbol 16, 124
slopers 43
SMVS 133 T
SNLS 122, 131, 132, 139, 213, 214,
t-shirt 52, 53, 115, 122, 125, 134, 135,
233, 239, 245
137, 139, 195, 201, 202, 212, 222, 232,
softex 301
244, 245
software 41, 88, 279, 280
tacking 139
solid 13, 55, 76, 193, 221
tagging 222
sourcing 2, 4, 13, 18, 19, 20, 21, 24, 30,
tailor 62
34, 35, 43, 48, 73, 76, 81, 127, 143,
tangible 50
145, 146, 147, 148, 149, 150, 151,
tape 53, 55, 57, 58, 126, 127, 155, 210,
152, 153, 154, 156, 157, 172, 181,
211, 213, 214, 215, 222, 223, 224,
197
233, 235, 245, 248
speaker 350, 351, 353
tariffs 148, 289
specification 6, 7, 15, 19, 20, 27, 42, 43,
tech-pack 47
44, 45, 47, 49, 50, 51, 52, 70, 81, 111,
technology 26, 29, 44, 64, 73, 76, 127,
126, 146, 203, 281
380 Index
153, 156, 160, 161, 173, 272, 279, V

346
vacuum 30
telephone 63
values 40, 89, 132, 136, 137, 182, 199,
tentative 21, 73, 76
244
texindia 153
variables 33, 133, 170, 176
textile today 27, 64, 143, 172
velcro 127, 155
textrend 153
vendor 24, 55, 63, 145, 147, 150, 152,
texworld 41
153, 154, 156, 157, 158, 160, 161,
thickener 194
162, 164, 165, 166, 169, 172, 173,
thickness 40, 116, 124, 204, 225
180, 213
ticket 299, 301
verbal 50, 53
timeliness 146
verified 63, 279, 303
tolerance 43
versatility 40
toxic 194
vessel 25, 229, 264, 265, 279, 287, 295,
traceability 162
297, 302
transaction 11, 61, 255, 260, 262, 263,
visual 11, 20, 26, 48, 50, 60, 79, 360
397, 329
vocabulary 345
transport 25, 195, 197 228, 235, 239,
vogue 45, 46
246, 254, 263, 264, 265, 266, 267,
voyage 292, 295
276, 277, 283, 287, 289, 291, 293
transshipment 279 W
trends 25, 26, 32, 34, 35, 36, 37, 38, 40
trimming 37, 175, 217, 218, 219, 220, wage 185, 187, 188, 190, 192, 195, 196,
236, 242, 248, 250 205, 207, 209, 219, 222, 233, 236,
trouble-shooting xi 239, 242, 243, 245, 246, 248, 249
trouser 34, 111, 112, 113 wales 101, 181, 202
twill 53, 55, 56, 57, 58, 126, 155, 210, warehouse 17, 146, 264, 297
211, 213, 215, 235, 245, 248 warp 98, 99, 100, 101, 181, 182, 183,
188, 189, 198, 199, 200, 201
U warranty 161, 164
wastage 6, 9, 103, 105, 106, 107, 109,
ultraviolet 20 117, 118, 141, 185, 188
undertaking 60, 177, 178, 272, 296 watch 36, 362
unethical 159 wearability 40
unique 13, 25, 303 weather 194
units 13, 31, 127, 133, 177, 273, 274, weavers 186, 187, 188
293 weaving 155, 175, 184, 186, 187, 188,
unloaded 265, 268, 302 189, 198, 199, 201, 251, 304
unofficial 340 week 41, 76, 90, 94, 360
unpacking 278 weighted-point 165
unrestricted 259 well-focused 363
unskilled 178 WGSN 35, 37
upcoming 35, 36, 37 wholesalers x
update 18, 35, 39, 44, 78, 306 willingness 351
utilisation 135, 204 WLSI 276
utility 40 women 221, 244
Index 381
workers 18, 60, 148, 177, 188, 221, 224, year 26, 36, 63, 171, 259, 263, 351,
333, 334, 335, 337, 338, 339, 341, 365
342, 346, 367 yellow 104, 105, 106, 140, 141, 142,
workforce 61, 156 195, 197
worldwide 24, 34, 225, 362 yoke 34, 114
wrapping 177, 343 young 46
yourself 351
X
Z
xxxxx 52
xyxy 52 zero 91, 149
zigzag 117
Y zipper 127, 155
zones 273, 308
yards 40, 118
yarns 13, 15

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WOODHEAD PUBLISHING INDIA PVT LTD

First published 2018, Woodhead Publishing India Pvt. Ltd.

Trademark notice: Product or corporate names may be trademarks or registered

Woodhead Publishing India Pvt. Ltd. ISBN: 978-93-85059-32-2

Typeset by Allen Smalley, Chennai

2.6.7 Style presentation 51

4.7.1 Supplier / vendor selection criteria 157

6.4.2 Other initiatives 273

7.6.2 Informal communication 340

This volume on the subject of ‘Apparel Merchandising’ is a valuable

Wishing good luck.

“Apparel Merchandising” book has been written keeping in mind the

1.1 Introduction to apparel industry

Figure 1.1 Operational hierarchy of an apparel industry

1.2 Merchandiser in apparel industry

Figure 1.2 Process flow of an apparel industry

Figure 1.3 Types of merchandising process / merchandisers

1.3 Roles of a fashion merchandiser

Figure 1.4 Work flow of a fashion merchandiser

1.4 Role of a production merchandiser

Table 1.1 Roles of apparel merchandiser in an apparel industry

1.1 Primary Roles of the Merchandiser

1.5 Role of a retail merchandiser

in their sector. The general analysis in terms of following factors is

Figure 1.5 Work flow of a retail merchandiser

1.6 Samples in apparel industry

1.2 Bit Loom vs Lab Dip

The process of sample department varies continuously, and the development

1.6.1 Sampling process

Figure 1.6 Sampling process in an apparel industry

1.3 Knit Down – Sample

1.4 Mock-up Sample

1.6.2 Samples and their importance

Table 1.2 Samples and their importance

1.7 Responsibilities of a merchandiser

• After accepting an order, it is essential for the customer to review the

1.8 Quality of a merchandiser

1.9 Merchandiser interface with other departments

in one or another way. For most of the manufacturing oriented department,

1.5 Colour Matching - Labdips

In return from quality department

Hence, the merchandiser communicates this kind of feedback to the buyer

merchandiser/ merchandising department plays a vital role by communicating

Figure 1.7 Merchandiser interface with other departments of apparel industry

1.10 Terminologies and abbreviations used in

Category: Sometimes called as “product group”, it is used to group together

9. Kathleen Fasanella, The 13 different kinds of samples, http://fashion-incubator.com/

Figure 2.1 Primary components of merchandising activity

2.2 Line planning

Figure 2.2 Basic elements of line planning process

2.3 Line development

Figure 2.3 Process flow of a line development process

2.3.1 Fashion forecasting process

Figure 2.4 Classification of research involved in the forecasting process

2.3.2 Market research

Market segment analysis

2.3.3 Fashion research

Trade publications: Trade publications are the newspapers and magazines

2.3 Knock-offs or high street fashion

Fabric and trimming research

2.6 Garment Trade Fairs

2.4 Product development

1.9 Merchandiser interface with other departments

1.10 Terminologies and abbreviations used in

2.4.1 Role of merchandiser in product development

2.6.8 Example of apparel analysis process: Analysis of