Textile and apparel manufacturing is complex and labor-intensive, creating a number of challenges to accurately calculating product costs. With low margins and increasing global competition, ImpactECS helps textile companies build dependable costing systems that deliver accurate and actionable results.
Product Costing and Work-in-Process (WIP) Valuation
Textile processes vary widely depending on the type of textile produced. Activities like fabric absorption, drying times, or elasticity and recipes to create dyes or fabrics differ between products. Handling waste is another essential component of textile production, and its disposition (recycled or discarded) affects the overall production costs associated with the process. With ImpactECS, textile companies can implement product-based detailed product cost models that can account for the variations in each textile produced.
Both woven and non-woven textile production processes have lots of WIP steps and valuing inventory at each step is critical. ImpactECS cost models are designed based on the specific manufacturing process to calculate costs at every WIP point and then roll-up the costs to deliver a completely loaded product cost.
The most significant variable cost that affects textile manufacturers is labor costs. Many companies have relocated or outsourced production to countries with lower labor rates to improve profitability. Other issues that come into play with global manufacturing are the different business and environmental regulations that can radically affect costs. With production occurring in multiple locales, companies need a fully-integrated costing solution to make apples-to-apples comparisons of cost performance. ImpactECS’ toolkit allows companies to use common costing methodologies while accounting for differences in machine efficiencies, currencies, labor rates or any other factor to calculate comparable cost results.
Accurate cost information is at the foundation of determining which products to manufacturing and the optimal locations to produce them. Furthermore, the ability to forecast costs of new products or estimate the affects of changing raw material prices, labor rates or market trends shape decisions on the products offered and the sales price charged by manufacturers.