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Design in Society

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Title: Design in Society


1
Design in Society
  • Economics and Production
  • A2 Textiles

2
Introduction
  • We will look at
  • The business of manufacturing
  • Economic factors in the production of products
  • Sources, availability and costs of materials
  • The scale of production
  • Design, planning and production costs
  • Selling the product

3
The Business of Manufacturing
  • Textile product manufacture has stages that
    combine to form the supply chain.
  • Total time from fibre to consumer is six to
    eighteen months.
  • The stages are
  • Fibre production
  • Yarn production
  • Fabric manufacture (weaving, knitting etc)
  • Dyeing and finishing
  • Product manufacture
  • Retailing
  • Consumer

4
The Business of Manufacturing
  • Overall there are three sectors in the supply
    chain.
  • Primary, secondary and tertiary.
  • The primary sector Manufacture of chemicals for
    fibre production, maintenance of land for grazing
    sheep and growing cotton.

5
The Business of Manufacturing
  • The secondary sector Manufacture of textile
    fibres, yarns, fabrics, dyeing finishing and
    product manufacture.
  • High export earning sector.
  • Changes in technology and global economy mean
    less people are employed and product manufacture
    in developed countries has fallen.

6
The Business of Manufacturing
  • The tertiary sector retailing, advertising,
    marketing.
  • Employs most people in developed countries.

7
Economic Factors in the Manufacture of
ProductsCosts and Profit
  • Economic cost of designing and making.
  • Viable products are cost effective.
  • Viable market potential and profit of each
    sector.
  • Profit sale of product minus manufacturing
    costs.
  • Every part of a company must make a profit. Each
    department has a budget.
  • Planning costs in order to make a planned profit
    works.
  • Planned costs include
  • Direct / variable costs eg materials and labour.
  • Overhead / fixed costs eg design, marketing,
    rent, rates, insurance.
  • Overheads are usually 25-30 of labour costs

8
Economic Factors Sales Revenue and Price
  • Sales revenue price per item multiplied by the
    number sold.
  • Haute couture is a higher price to absorb
    variable and overhead costs but the sales revenue
    may be lower than mass produced products.
  • Mass produced garments lower selling price so
    more may sell. Cost savings can occur because
    processes can be repeated.

9
Economic FactorsPricing Products
  • Mass produced products need market penetration so
    price needs to be low.
  • Retailers pay a higher price for fast delivery
    for exclusive products or small orders.
  • Higher prices makes consumer think the product is
    higher quality so increase sales.
  • Ranges can be sold by a loss leader set a an
    artificially low price to promote sales.
  • Manufacturers and retailers allow for a of mark
    downs (sold in sales) to sell off products at the
    end of the season.

10
Economic FactorsPricing Products
  • Factors deciding price include
  • Style, fashion, function of the product.
  • Innovation or exclusivity.
  • Value of fabric / components silk, kevlar.
  • Value of work content lined, hand stitched.
  • Competition from other manufacturers.

11
Sources, Availability and Costs of Materials
  • Cost of materials depends on
  • Type
  • Quantity required.
  • Fabric price per metre is based on current price
    plus estimates of increases and reductions for
    large quantities.
  • All sewn product manufacture requires a
    continuous supply of raw materials eg fibres,
    yarns, fabrics, components.
  • Cost of raw materials is based on supply and
    demand.
  • Those in short supply cost more than abundant raw
    materials.
  • Raw materials difficult / expensive to process
    cost more.
  • Transportation of raw materials adds to cost.

12
Sources, Availability and Costs of
MaterialsNatural Fibres
  • Come from renewable and reliable sources eg
    cotton and wool.
  • Prices of natural fibres are mainly stable.
  • Cotton is grown in 80 countries.
  • Price of luxury fibres eg mohair and cashmere
    varies according to supply.
  • Cashmere (Mongolian goat) is harvested yearly and
    is in short supply so expensive.
  • One person can produce two tons of natural fibres
    per year companred to 22 tons of manufactured
    synthetic fibres.

13
Sources, Availability and Costs of
MaterialsNatural Fibres - Cotton
  • 75 of total market share of natural fibres.
  • Australia is the lowest cost producer of cotton.
  • Polyester is cheaper (but not natural).
  • Many countries subsidise the growing of cotton.

14
Sources, Availability and Costs of
MaterialsNatural Fibres - Wool
  • Decline in consumption since 1990.
  • Pure new wool is still prestigious.
  • Consumers wear less wool garments eg suits.
  • Wool lost market share with the collapse of wool
    consumption in Soviet Union and Eastern Europe.
  • Woolgrowers of Australia and New Zealand have put
    money behind marketing wool to retain market
    share.

15
Sources, Availability and Costs of
MaterialsNatural Fibres - Linen
  • Flax is a niche market textile.
  • Not used in medical and industrial textiles now.
  • 90 of linen market is consumer good. 10 is
    industrial.
  • Linen is used in designer collections.
  • Recent improvements in finish will improve market
    appeal.

16
Sources, Availability and Costs of
MaterialsNatural Fibres - Silk
  • Prospering in India and China.
  • Slow but sure rate of increase.
  • Micro denier polyester filament fabrics are
    undistinguishable from silk but real silk is
    still a luxury fibre and in demand.

17
Sources, Availability and Costs of
MaterialsRegenerated Fibres
  • Viscose, modal, Tencel and Lyocell are
    manufactured from chemicals and cellulose
    (softwood).
  • Softwood is grown in North America and Europe.
  • Management of these forests ensures a consistent
    and controlled supply leads to relatively
    inexpensive fibres.

18
Sources, Availability and Costs of
MaterialsSynthetic Fibres
  • 93 of world production of fibres.
  • Polyester has greatest market share.
  • Europe consumes more than it produces and imports
    polyester from Asia.
  • Made from crude oil.
  • Synthetic fibres are inexpensive to produce and
    supply is reliable.

19
Sources, Availability and Costs of
MaterialsImportance of Oil
  • Worlds largest oil producing countries are not
    major oil consumers export most oil.
  • Prices of oil climbed sharply around 1973 led
    to international economic downturn.
  • Oil costs fluctuate resulting in higher petrol,
    energy and raw materials prices worldwide.

20
Scale of Production
  • Predicts profitability because it influences how
    and where a product is manufactured, choice of
    products available and selling price.
  • For high volume production manufacturers and
    retailers base sales predictions of volume and
    price on
  • Testing selling in selected shops.
  • Sales of similar styles in previous seasons.
  • How product matches current and future colour,
    shape and design trends.

21
Scale of Production
  • Economies of scale are factors that cause costs
    to be lower in high volume production.
  • Unit price of a mass produced product is lower
    because raw materials are used more efficiently.
  • Economies of scale is mass production result
    from
  • Spreading cost of production between more
    products.
  • Bulk buying of materials lower cost.
  • Specialisation dividing up work between a
    workforce with skills that match the job.
  • Industry concentrated in one areas.
  • Componies concentrated in one area.

22
Design, Planning and Production Costs
  • Difficult for company to be profitable without
    developing new products.
  • Cost of product development is high.
  • New products require change in production methods
    and training costs.
  • Changes in production need planning and will
    overlap with existing production to keep company
    in profit.
  • Constant demand to reduce time to market of new
    products.
  • Need right product at right time, in right
    quantity at right cost.
  • Consumers perception of product needs to be that
    it provides the right image as well as value for
    money.

23
Design, Planning and Production Costs Costs
of Product Development
  • Includes design and manufacturing costs.
  • Following costs must be included in cost of the
    product
  • Employing designer.
  • Developing design concepts.
  • Modelling and prototyping.
  • Employing a pattern cutter to produce a prototype
    pattern.
  • Producing a sample (materials, labour, overheads)
  • Producing a production pattern.

24
Design, Planning and Production Costs Costs
of Production
  • Costs include adapting the manufacturing process
    and training operators.
  • Target production costs must be established at
    the design stage and feasibility checked against
    existing styles.
  • Major costs are incurred in the manufacturing
    stage.
  • DFM (designing for manufacture) is about
    designing for cost.
  • The aims of DFM are
  • Minimise assembly costs
  • Minimise product development cycle
  • Manufacture high quality products efficiently.

25
Design, Planning and Production Costs Labour
Costs
  • Sewn products need a lot of labour not automation
    as production is complex.
  • Cutting, sewing, pressing are direct labour costs
    and account for 20-25 of total direct costs.
  • Sewing and pressing are most labour intensive
    (cutting uses CAD CAM).
  • Higher the level of productivity lower the labour
    costs per unit and higher the potential profit.

26
Design, Planning and Production Costs Cost of
Quality
  • Manufacturers aim to produce a competitive
    product that is good quality and value for money.
  • Cost of quality is budgeted, measured and
    analysed.
  • There are three types of cost related to quality
  • Cost of checking it is right.
  • Cost of making it right first time.
  • Cost of getting it wrong.

27
Design, Planning and Production Costs Cost of
Quality
  • Cost of checking it is right
  • Related to checking
  • Materials, processes and products against
    specifications.
  • That quality system is working well.
  • The accuracy of equipment.

28
Design, Planning and Production Costs Cost of
Quality
  • Costs of making it right first time
  • Designing, implementing and maintaining a quality
    assurance system stops things going wrong.
  • It is set up before production begins and results
    in costs relating to
  • Setting customer quality requirements.
  • Developing training for employees.
  • Design, development, purchase of equipment for
    checking quality.
  • Developing specifications for materials,
    processes and products.
  • Planning and using quality checks against
    specifications.

29
Design, Planning and Production Costs Cost of
Quality
  • The costs of getting it wrong
  • Internal failure costs and external failure
    costs.
  • Internal failure costs products dont reach
    quality standard detected before despatch.
    Includes costs relating to
  • Reworking product to correct faults
  • Scrapping products
  • Inspecting reworked products
  • Selling products as seconds
  • External failure costs products dont reach
    quality standard detected after being sold to
    retailer. Includes costs relating to
  • Customer service
  • Returned or replacing products
  • Investigating returned products
  • Products liability legislation
  • Damage to company reputation relating to future
    sales

30
Design, Planning and Production Costs How to
Cost a Product
  • Cost must be an accurate price that makes product
    saleable and create profit.
  • Too high reduced sales below profitable margin.
  • Too low no profit even if many are sold.
  • Comparing prices of competitors is an indicator
    used.
  • Computer systems are used to estimate costs and
    forecast profits.
  • Cost is more than adding a set percentage to cost
    of making.

31
How to Cost a ProductCost and Value
  • The best price is one that generates the highest
    profit not the one that sells the most products.
  • Cost of making (materials, electricity, labour)
  • Maintenance, storage, transportation to retail
    outlets.
  • Rent, administration design, marketing.
  • Profit

32
How to Cost a ProductCalculating the Selling
Price
  • Costing takes account of
  • Direct costs (variable costs). Cost of
    manufacture eg materials, labour, energy used,
    packaging. Accounts for 50-65 of total product
    selling price (SP).
  • Overhead costs (fixed or indirect costs). Cost
    of design and marketing, admin, management,
    maintenance and repair of buildings and
    machinery, cleaning, security, safety, pattern
    cutting, sampling, quality, rent, rates,
    insurance, storage, lighting, heating,
    distribution.
  • Overheads are shared between all products in a
    line. Marketing costs account for 15-20 of
    total SP.

33
How to Cost a ProductCalculating the Selling
Price
  • Costing also takes account of
  • Profit (gross or net). Amount left after all
    costs have been paid.
  • Gross profit is revenue from sales minus direct
    and overhead costs.
  • Net profit is gross profit minus tax.
  • Net profits pay dividends to shareholders,
    bonuses to employees and are used for new
    machinery and product development.

34
How to Cost a ProductCalculating the Selling
Price
  • The break even point how to pay back direct and
    overheads.
  • Break even analysis works out how many products
    to sell to make a profit.
  • This is done by accountants and financial
    controllers.
  • Break even point overhead costs
  • selling price direct
    costs
  • Eg Direct cost of garment is 13, sells to
    retailer for 20. Overheads for 1000 are 5000.
  • Break even point 5000
  • 20-13
  • Break even point 714.
  • This means 714 products must be sold to break
    even.

35
Selling the Product
  • When setting price need to find what consumers
    are willing to pay.
  • Pricing decisions include
  • Social values value for money and customer
    demand.
  • Political values economic policy, culture of
    profit.
  • Economic values booming economy, recession.
  • Technological values electronic money transfer,
    distribution systems.
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