How to Calculate the Standard Minute Rate (SMR) in Garment

 

Learn How to Calculate Standard Minute Rate (SMR) in Garment Manufacturing — Formula, Example, and Step-by-Step Guide

In the apparel manufacturing industry, cost control and productivity are essential for profitability. One of the most important tools for cost calculation is the Standard Minute Rate (SMR). It helps factories estimate labor cost per minute, set accurate garment prices, and evaluate operator efficiency.

In this article, we’ll explain what SMR is, why it matters, and how to calculate it step-by-step — with a practical example.

What is Standard Minute Rate (SMR)?

The Standard Minute Rate (SMR) represents the cost of one minute of labor in a garment factory.

It shows how much it costs the factory to produce one standard minute of work and is a key factor in merchandising, costing, and efficiency analysis.

Factories use SMR to:

• Calculate cost per piece (CPC).

• Determine line and operator efficiency.

• Help buyers and merchandisers make accurate price quotes.

• Monitor labor performance and profitability.

SMR Formula

The basic formula for calculating SMR is:

$$\textbf{SMR} = \frac{\text{Total Labor Cost per Day}}{\text{Total Minutes Attended per Day}}$$

Or more simply:

$$\textbf{SMR} = \frac{\text{Total Daily Labor Cost}}{\text{(No. of Operators × Working Minutes per Day)}}$$

Step-by-Step Process to Calculate SMR

Let’s break it down into simple steps:

Step 1: Determine Total Labor Cost per Day

Include all direct labor costs:

• Operator wages

• Helpers’ wages

• Allowances (attendance bonus, overtime, etc.)

Example:

Suppose a line has 40 operators, each earning Tk. 800 per day.
Total labor cost = 40 × 800 = Tk. 32,000 per day

Step 2: Calculate Total Working Minutes per Day

Multiply the total number of operators by total working minutes.

Example:

Each operator works 8 hours (480 minutes) per day.
Total minutes = 40 × 480 = 19,200 minutes

Step 3: Apply the SMR Formula

$$\text{SMR} = \frac{32,000}{19,200} = 1.67 \text{ Tk/minute}$$

Standard Minute Rate (SMR) = Tk. 1.67 per minute

SMR Example in Practice

Let’s say the SAM (Standard Allowed Minute) for a T-shirt is 20 minutes.

If SMR = Tk. 1.67 per minute,
then Labor Cost per Piece = 20 × 1.67 = Tk. 33.40

So, the labor cost to produce one T-shirt is Tk. 33.40.
You can then add overheads and profit margin to determine the final garment cost.

Key Factors Affecting SMR

Several factors influence the SMR in a garment factory:

1. Wage structure (basic salary, bonuses, allowances)

2. Working hours and breaks

3. Number of operators and helpers

4. Factory efficiency level

5. Overhead and indirect labor costs

By regularly reviewing these factors, factories can maintain accurate SMR values and control costs effectively.

Tips to Improve SMR Accuracy

• Update SMR calculations monthly or quarterly.

• Include both direct and indirect labor costs.

• Ensure accurate attendance and wage records.

• Recalculate when wages or work hours change.

• Use software or Excel tools for consistency.

Why SMR Matters in Garment Costing

An accurate SMR helps:

• Set realistic target costs for buyers.

• Compare line performance across styles.

• Improve pricing transparency.

• Identify inefficiencies in production.

Without knowing your true SMR, you risk underquoting prices or losing profit margins.

Conclusion

Calculating the Standard Minute Rate (SMR) is crucial for understanding labor cost and maintaining competitiveness in garment manufacturing.

By following the simple formula and steps discussed above, you can easily determine your factory’s SMR and make smarter costing, planning, and pricing decisions.

Key Takeaway

SMR = Total Daily Labor Cost ÷ (No. of Operators × Working Minutes per Day)

Knowing your SMR means knowing your cost per minute — and that’s the foundation of smart garment costing and higher profitability.