Developing a strategy to evaluate the productivity performance of active garment manufacturing in small and medium enterprise sector

Abstract

Apparel industry is one of the largest contributors in Sri Lankan economy while Small and Medium Enterprises (SME) play an important role. With the elimination of the quotas SME sector had to face the challenge ofproducing garments where competition is primarily based on price. Most consideration factors that affect on the price are high production cost, low productivity level, lack ofskilled man power and lack of adoption to new and efficient technology. Enhancing the productivity respective to manufacturing process ofthe garment had been identified as a solution to face these emerging challenges of SME sector. However, at present productivity performance is evaluated by considering five Key Performance Indicators (KPIs) separately and this method creates problems in evaluating. Thus this study was carried out to develop a common index using five indicators based on three months data. Principal Component Analysis (PCA) and Cluster Analysis (CA) were carried out separately for all three months and as well as pooled data to achieve the objective. Results found that the indicator developed consists of a linear combination of three Key Performance Indicators (Factory Efficiency - EFF, Defects Per Hundred Units - DHU and Absenteeism - ABS) can be used to asses factories either monthly basis or quarterly basis, instead of using the five KPIs separately. This new method is more efficient than the old method used. The developed indicator is named as “Direct Productivity Performance Indicator” and it is defined as: PCqi = 0.523Zeff - 0.531Zdhu - 0.481ZAbs. This method can be used to compare different factories as well.