Factors Affecting Raw Material Write Off: A Case Study of the Sri Lankan Apparel Industry

Abstract

The Sri Lankan apparel industry is considered as the most significant and dynamic contributor to the country’s economy. Though the industry creates profits in significant still it has many losses in financial aspects such as the cost of raw material. Therefore this research was carried out as a case study in the Sri Lankan apparel industry to identify factors affecting raw material write off. The main raw material considered in the study was fabric being the single largest cost factor in the apparel industry. This research randomly selected 85 schedules as the sample. Both primary and secondary data were used and collected through author observations, interviews and secondary data sources. The data were quantitatively analyzed with regression analysis. The results showed that both excess ordered raw material quantity and yield per yardage saving were the significant factors that affected on raw material write off in the Sri Lankan apparel industry. Further descriptive analysis revealed that pattern changes and marker improvement mainly contributed to this yield per yardage saving. The regression analysis further identified a significant relationship among the raw material write off quantity, excess ordered raw material quantity and yield per yardage saving. Also this study suggested to create a Lean manufacturing culture to minimize raw material write off in the apparel industry