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Economic Analysis of Lean Wastes: Case Studies of Textile and Garment Industries in Ethiopia

Tigrai Online, July 25, 2013
[Tsegay Tesfay Mezgebe,  [Hadush Berhe Asgedom, Ethiopian Institute of Technology-Mekelle, Mekelle University, and Asayehgn Desta, Sarlo Distinguished Professor of  sustainable economic development, Dominican University of California, USA

Abstract

In today's competitive world, customers are demanding for better quality products with fast and reliable deliveries. To meet this demand, textiles and garments manufacturing technologies in developed countries have established lean production principles to minimize and/or remove waste elements in their production system in order to produce new products and ultimately achieve improvements in their manufacturing processes. However, since labor has become expensive component to produce textiles and garments in the developed countries, this labor intensive industries are moving to developing countries to minimize cost. As a result, a number of African countries are heavily using this opportunity as means to participate in the global market and eventually enhance their level of development.

Nowadays, for example, Ethiopia has become very active in producing textile and garment products for its local and foreign customers. However, these industries are not as profitable as they were expected. What is more, because the success of textile and garment companies in their competition for the global market rests in large part on their focus on more effective and efficient manufacturing processes, it is not surprising to observe that customers are becoming relatively dissatisfied with the quality of the products produced by some Ethiopia’s garment and textile manufacturers.  Thus, the necessity to reduce the cost of production has therefore caused manufacturers in Ethiopia to focus on waste minimization. As a result, a number of textile and garment companies are attempting to use different tools and management techniques to minimize cost and reduce or eliminate as much as possible non-value added wastes from their production processes.     

To eliminate waste in any business environment, it is important to understand exactly what waste is and where, how and why it exists. Waste is an uneconomical use of resources. Waste includes materials, machines, labour, time, and revenue, resulting in a supply of products in an unwanted quantity (over and above, less and below). For any waste, there is a strategy to reduce or eliminate its effect on a company, and improve overall performance and quality of the product or service delivered by manufacturing factories.  

Given this, the purpose of the study was to identify and analyse lean wastes surfacing in production lines of textile and garment industries. The research question of the study was: How can textile and garment industries in Ethiopia improve their production flow by identifying and classifying lean wastes and assessing their economic effects using a cost-benefit analysis?

To understand the impact of waste on their performance levels, the Augusta Garment (Addis Ababa), Hawassa Textile Factory (Southern Ethiopia), Bahir Dar Textile (North Western Ethiopia) and Almeda Textile and Garment Factory (Northern Ethiopia) were extensively studied. The study followed both qualitative and quantitative research approaches for collecting and analysing the data of the above enumerated four cases factories. The main methods used for data collection were questionnaires, shop floor visits, and check sheets. Based on theoretical concepts of lean production and economic cost analysis methods, production and marketing departments of the four case factories were analyzed exhaustively. Descriptive approach was used as an analytical tool, as well as waste detection parameters; defect, overproduction, motion, talent loss and the like were rigorously examined and factories were compared and contrasted accordingly.

Even though some data are missing from the respective factories, a smaller sample size did not affect the robustness of the result. After identifying problems observed via appropriate tools of investigation, the study was classified according to seven wastes nomenclature. The aggregate data collected over time showed that there was  substantial waste in the production process from the start of producing products to the day of delivery. Furthermore, the result of the analysis demonstrated that there was noticeable employee turnover and an inconsistent production rate per shift was detected.

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The conclusion of the study was that even though there is variation in the degree of waste allowed in the respective factories;  holistic observations and data results reveal that all the industries studied exhibited serious problems with wastes. Overproduction prevailed in all factories. Giving credit to the labor force is an indicator of modern knowledgeable management in an industrialized economy. However, this attention was not a priority in the chosen case factories. As addressed by the survey, the output defect rate was higher than input defect rate. Further more, the case factories disclosed that the inherent feature of factories was not operating in line with standard market principles. It is also very surprising to notice that the case firms seemed to have survived without being governed by market doctrine. Last but not least, the case factories were hardly motivated by inspirations that might arise from the global competitive environment.

Based on the survey of the literature, it is important to note that further work needs to be conducted to devise and test lean tools, techniques, and methods in order to eliminate/reduce the persistent wastes identified in the chosen cases. Nonetheless, based on our analysis it is possible to propose that a smooth working environment, with a minimum of interruption needs to be developed by the studied Ethiopian textile and garment case factories in order to produce the right quantity with the right quality and at exactly the right time. If this approach is systematically entertained, the textile and garment industries  in Ethiopia are most likely to compete effectively and efficiently in both domestic and international markets.

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