operational analysis of a select spinning mill - International ...

It has been observed that predicted production differs within the units of the same
company. The production achievement ranks given .It also shows that increased production
causes reduction in cost
7. FINDINGS
The following are finding arrived from the data analysis:
1. The yarn production depends on the raw material input and yield percentage. The data
have been tested with the multiple regression analysis. It shows that there is a significant
association between the Production, raw material consumption and yield ratio.
2. The Cobb Douglass production function shows the relationship between production per
spindle shift and various component costs per spindle shifts. Prediction of production is made
based on the co-efficient and constants arrived from the regression equation. It shows that there
is a difference in production though the same uniform costs are applied. The table also shows the
one day production and respective costs and also the cost per Kg. The cost per kg in SSM Ltd
Unit-1 is lesser because of greater production per spindle shift.
8. SUGGESTIONS
The following strategies may help the Textile Mills to meet the global challenges to grow
up as a global leader by improving the profitability:
1. Buy high yield raw cottons after testing the samples. Cottons without contamination would
give more yields. Before going for production the cotton has to be tested for its yield and then
order for raw materials. This would increase the productivity.
2. Reduction in cost per machine shift would reduce the cost of manufacturing. Monitor the costs
by applying activity based costing and remove the unnecessary activities and save the costs.
3. Increase the spindle utilization and make spin plan before starting the production so that count
change, count run outs and other reasons for spindle stoppage may be reduced to optimize the
spindle utilization.
4. Interest Charges: Due to the injection of more debt funds heavy interest charges occurs. Mills
are unable to use debt funds to magnify the profit as they are very often subject to so many risks.
Borrowing at lower rate of interest and timely use of debt capital shall reduce the interest burden.
To avoid heavy interest use matching principle in the mixing of Short term and long term funds.
Long-term funds in the form of issue of bonds for specific period and short term funds like
commercial papers may be planned in addition to the other sources of finding funds so as to get
optimal capital-mix.
5. TUF loan: Government has been giving Technology Up gradation Fund to modernize the plant
at lower rate of interest. This is a boon to the textile sector since it would increase the
productivity as well as the profitability.
6. Business Intelligence: It is a process through which the performance of the organization is
monitored with KPI’s (Key Performance Indicators) and reported for immediate action and
follow up. It is a “Measure-Monitor-Manage- Analyze-Plan system. Alerts and work flow
corrections are also indicated by the business Intelligent Software. Close watch over the financial
leverage, Asset leverage, Cash flow management and working capital shall make a concern to
reduce the interest burden and at the same time enjoy the benefit of zooming profit by taking
timely actions with the help of the business Intelligence software.
7. Unused capacity management: The actual situation would show the unused capacity in a
particular period may be managed by doing job works so as to recover the cost and increase
profitability.
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