Understanding Productivity in Pakistani Garments (Pilot Project) - - PowerPoint PPT Presentation

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Understanding Productivity in Pakistani Garments (Pilot Project) - - PowerPoint PPT Presentation

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Understanding Productivity in Pakistani Garments (Pilot Project) Azam Mahvish Rocco Theresa Chris Chaudhry Faran Macchiavello Thompson Woodruff Lahore School of Lahore School of Warwick University Lahore School of Warwick University

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SLIDE 1

Understanding Productivity in Pakistani Garments (Pilot Project)

  • R. Creedon, J. Krstic, R. Mann, K. Ruffini, M. Skuodis, K. Smula, M. Vlekke

September 2014 IGC – Growth Week, Pakistan

Azam Chaudhry Mahvish Faran Rocco Macchiavello Theresa Thompson Chris Woodruff

Lahore School of Economics Lahore School of Economics Warwick University Lahore School of Economics Warwick University

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SLIDE 2

Main Motivation

DEVELOPMENT PERSPECTIVE

  • Garments and Textile industries historically associated with

“structural transformation”

  • A laboratory to understand broader issues underlying persistent

productivity differences across similar production units GLOBAL PERSPECTIVE

  • China accounts for approx. 30% of world’s RMG exports.
  • Increase in wages in China enormous opportunity for other

countries: Bangladesh, Myanmar, Ethiopia, Pakistan … PAKISTAN PERSPECTIVE

  • International Trade & Policy Environment
  • Job creation: Garments vs. Textile
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SLIDE 3

Within Asia, Declining Competitiveness Of China Lending Opportunity To Other Low Cost Countries

Source: Werner International, Textile Intelligence

0.7 0.8 0.9 1.9 2.1 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

2002 2004 2007 2008 2011

Labour Cost (USD/hr) in Textile Industry, China

Turkey China, coastal India Indonesia Vietnam Pakistan Bangladesh Widening gap in labour cost of China and other Asian countries

3

Main Motivation

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SLIDE 4

What do we plan to achieve ?

1. INTERNATIONAL BENCHMARKING

  • Compare productivity and managerial practices across firms

and countries (building upon data collection in Bangladesh)

  • Target IGC countries: Pakistan, Myanmar, Ethiopia, India
  • Develop a benchmarking tool to be give to factories

2. PAKISTAN CONTEXT

  • Design interventions to increase productivity grounded on a

detailed understanding of constraints and best practices

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SLIDE 5

Pakistan: What have we achieved?

1. COMPLETED DATA COLLECTION FROM 7 FACTORIES

  • Focus on Lahore (an estimated population of XYZ factories)
  • Sample selected by building relationships with associations and

buyers, possibly representative of broader sector:

  • 4 Large firms,
  • 1 Medium sized firms,
  • 2 Small firms.
  • (Line supervisors survey ongoing)

2. PLANNING AND FORMULATION OF INTERVENTIONS

  • Likely to focus on either information and/or quality
  • Strengthened relationships with stakeholders:
  • FACTORIES
  • BUYERS & OTHER STAKEHOLDERS
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SLIDE 6

Data collected for 3 months [Feb. 1st to Apr. 30th ] Data entry expected to be completed by December 2014

Production & HR Data: Overview

Factory

Size Production System

(lines/mixed)

Data Quality Supervisor Survey (yes/no) Main Products OP SUP

AA

518 28 line High yes Polo Shirts, Hoods

BB

910 28 line High yes Denim Jeans, Jackets and shorts

CC

1800 18 line High yes Denim Jeans

DD

510 12 line High yes Denim Jeans

EE

105 3 line High yes Knit Tops, Knit Bottoms, Woven Tops, Woven Bottoms, Scarfs

FF

1400 20 line Low/medium Yes at least 10 Polo Shirts, Hoods

GG

100 2 mixed low Yes Denim Jeans

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SLIDE 7

Supervisor Surveys

  • In 7 factories we conduct surveys with (line) Supervisors. The

population consists of 111 Supervisors. We estimate to survey 95 supervisors in total. Some of them will be production supervisors while some will be quality supervisors/Inspectors.

  • Survey currently in the field (completion in September/October

2014)

  • Focus:
  • line level practices,
  • worker’s well-being,
  • quality,
  • authority
  • compensation to workers
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SLIDE 8

Spot the Difference

PAKISTAN

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SLIDE 9

Spot the Difference

PAKISTAN BANGLADESH

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SLIDE 10

Measuring Productivity

  • Measuring physical productivity when units of outputs are

heterogeneous (apples and oranges) is challenging

  • Need a way to convert physical output of heterogeneous products

into a common unit

  • Each piece of garment comes with a SMV (or SAM): standard minute

value (or allowance): time required to produce 1 piece of garments*

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SLIDE 11

Measuring Productivity

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SLIDE 12

Measuring Productivity

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SLIDE 13

Measuring Productivity

  • Measuring physical productivity when units of outputs are

heterogeneous (apples and oranges) is challenging

  • Need a way to convert physical output of heterogeneous products

into a common unit

  • Each piece of garment comes with a SMV (or SAM): standard minute

value (or allowance): time required to produce 1 piece of garments*

  • This allows us to measure (heterogeneous) output using

(homogenous) time units Efficiency= = # output pieces * SMV # operators * runtime Output Minutes Input Minutes

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SLIDE 14

Watch Your Neighbours: Efficiency Around the Globe

Countries Average Pay-

  • ut (USD

p.m.) Key Product Category Country Average Operational Efficiency Labour Pool Technological Advancement FTA / GSP with Major Markets Raw Material Availability China 220-270 All Products 55-57% 813.5 mn High

  • All

Indonesia 170 Woven Synthetic 44-46% 113.7 mn Medium EU, US, Japan Synthetic Fibre Vietnam 120 All Products 40-42% 46.5 mn Medium EU, US, Japan,

  • Aus. & NZ

None Pakistan 116 Denim 42-44% 53.8 mn Medium EU, China Cotton Cambodia 88 Denim, Woven 42-44% 8.0 mn Medium EU, US, Japan,

  • Aus. & NZ

None Bangladesh 83* Knitwear, Woven Bottoms 38-40% 70.9 mn Low EU, Japan, Aus., Canada, US1 None India 130 All Products 44-46% 467.0 mn Medium Japan, EU2 Cotton

Source : Technopak Analysis 1- GSP with US has a negligible impact on T&A exports from Bangladesh to US, 2- EU- FTA under discussion,

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SLIDE 15

Dispersion Across and Within Units

.02 .04 .06 .08 20 40 60 80 Efficiency (Output Minutes / Input Minutes) TFP Disp. (Across Factories) TFP Disp. (Within Factories)

Across factories 75th / 25th: 1.95 ; 90th/10th = 2.79 Benchmark (Syverson 2004): 75th / 25th = 1.92; 90th/10th = 4.02 Within factory (across lines) 75th / 25th = 1.22; 90th/10th = 1.64

Sample: preliminary data from 5 Bangladeshi factories

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SLIDE 16

Benchmarking Tool

  • Adequate firms capabilities
  • Benchmarking against other firms in same country/other country

Introduction

Select the time period for analysis Select the month for analysis Select the date for analysis. Financial Metrics

  • A. Labor Cost per Earned Minute (Tk)
  • B. Average Cost for Wasted Time (Tk)

0.9 0.6 1.5 1.0 2.3

  • 3.4
  • 1

1 2 2 3 3 4 4 5 5 Line-04 Line-05 Line-06 Line-07 Taka Sewing Lines OT NH 3,063 1,049 5,467 191

  • 1,000

2,000 3,000 4,000 5,000 6,000 Line-04 Line-05 Line-06 Line-07 Taka Sewing Lines

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SLIDE 17

Next Steps

1. ENTER & PROCESS DATA, “APPEND” TO BANGLADESH DATASET 2. ANALYSIS OF DATA AND SUPERVISOR SUVEYS 3. DESIGN OF INTERVENTIONS: Two main areas have been identified: 1. Information flows within firms 2. Quality upgrading