For years, cost, capacity and compliance have driven apparel sourcing decisions. But as tariffs reshape trade flows, geopolitical conflicts disrupt supply chains and labor markets tighten across key manufacturing hubs, productivity is emerging as a critical concern.
Once viewed primarily through the lens of factory output, the industry is now having to delve into the complex ecosystem of workforce stability, planning discipline, infrastructure reliability, operational leadership and other factors that impact a factory’s ability to execute. For brands and retailers navigating persistent volatility, it’s becoming harder to produce goods consistently, efficiently and profitably.
Getting to the root cause of lost man hours or low output can be challenging, given all of the considerations that come into play.
“It’s quite complex. It’s not only about units per hour. It’s about absenteeism, idle [time], management, leadership, line supervisors. It’s so many factors. It’s an intersection between labor efficiency and the resources a factory or a plant has,” said Jawed Bhinder, vice president of CRM and business development at supply chain management firm M5 Groupe.
“A factory can have a world class infrastructure, but it can still lose 20% of its efficiency due to power cuts, absenteeism, late fabric or late raw material deliveries, etc.”
As an example, Bhinder points to Bangladesh, which is a fast fashion and mid-market powerhouse. Even though the country exported more than $39 billion in apparel in 2025, he said it’s leaving money on the table. By his estimates, Dhaka and Gazipur represent the highest sewing efficiency of all RMG-producing cities in the country, but even they are operating at a 40 to 55% capacity loss.
As companies attempt to rein in costs and lead times, how they view productivity—and where it falls in their sourcing decision-making matrix—is changing.
“The importance of productivity varies by program. Speed-driven orders often prioritize execution capability, while large-volume programs remain cost-focused,” said Jenny Kim, director, ShinWon NY office. “In that sense, productivity has not necessarily gained or lost importance; rather, its definition has broadened and become more closely linked to overall execution―how consistently suppliers can deliver under different conditions.”
The increased costs associated with the U.S. tariffs is also shifting buyers’ priorities, making productivity a bigger focus—elevating it to a “critical” consideration.
“As landed costs rise, expectations around pricing, speed and flexibility become more demanding, which makes productivity a more important lever of competitiveness,” Kim explained.
Kim said those that operate across regions have an advantage here. For Shinwon, it means the company can take a big picture approach to productivity rather than focusing on the individual factories.
Cash flow considerations
While there are quantitative analyses of factory productivity, in practice factory scores reflect a large confluence of factors. In fact, how much a production facility can produce at any given time is a result of as many variables outside its purview as the goings on inside its walls.
“People don’t realize just how much buyer behavior is going to impact the ability for good productivity in a factory,” said Marsha Dickson, University of Delaware professor emerita and co-founder of Better Buying, which rates purchasing practices.
First, she said, every time a buyer successfully negotiates a lower rate for goods or refuses to accept a price increase in the face of higher costs or factory investments, the production facility gets pinched. As a result, there’s less money to pour into the workforce—things like keeping workers trained, keeping them happy or keeping them at all.
“So many manufacturers are not being paid to cover all the costs of production. So, if they are not financially sound and whole, how do they reinvest in the workplace? How do they invest in new systems? Paying enough is really critical,” she said.
When workers are unhappy, they’re more likely to skip out on work or find a new job altogether. As a result, churn is a big problem. It means constantly training new employees, who may not stick around long enough to gain the expertise it takes to become truly efficient.
Bhinder said this is why more factories are adding transportation, lunch rooms, health clinics, child care and the like. “Those who offer these things have measurably lower absenteeism as compared to those factories that do not. It’s not only a social responsibility anymore. It’s an investment,” he said.
It’s an investment that requires a steady flow of revenue, something that’s becoming harder to come by as sourcing strategies shift, demand wavers and geopolitics deteriorate.
While a shortage of orders creates an obvious problem, a sudden deluge can be just as detrimental from a productivity perspective.
The U.S. tariff situation has pushed brands and retailers into a game of red light, green light, with orders rushed through the system any time there’s a respite from the latest trade machinations out of Washington. The result has been frontloading, an innocuous enough sounding term until you consider what it looks like on the factory floor.
“If you suddenly have excessive overtime, people are going to get tired. Plus, the manufacturer has to convert the whole factory to that order for a short time, and nobody ever really gets past the learning curve [for those styles]. So, workers aren’t doing it as productively as they could,” Dickson said.
Volatility stumbling blocks
In less chaotic times, Kim said planning is key to fostering consistent productivity levels. The ideal scenario is one in which supply chain partners align to ensure materials are where they’re supposed to be, forecasts are accurate and communicated, and orders flow rather than bunch. Without this level of “discipline and coordination,” things start to slip.
“Clear direction and stable planning enable efficient operations, while changes in demand, timing, or program requirements can introduce complexity into production planning,” she said. “These shifts may require line rebalancing, affect utilization and impact overall output, even when individual operator performance remains unchanged.”
Planning, of course, is almost out the window with the war in Iran adding to the uncertainty that’s shrouded operations over the last year.
While Kim said the conflict doesn’t directly affect the factory floor, she pointed to a list of supply chain problems that impact factories’ ability to fulfill orders.
“Shipping uncertainty, route disruptions and rising energy and logistics costs are reducing planning visibility and making execution less stable. This disrupts material flow, production scheduling and capacity allocation, which indirectly lowers overall efficiency even if sewing performance remains unchanged,” she said.
The energy crisis—resulting from the industry’s overreliance on imported fuel—is just the latest impediment to meeting, and maintaining, optimal outputs.
Mohiuddin Rubel, additional managing director at Denim Expert Ltd. and managing director of Bangladesh Apparel Exchange, said productivity doesn’t stand a chance in the face of “a fuel supply crisis, fuel price hikes, increased power outages, workflow disruptions, higher spending on diesel and equipment damage from voltage fluctuations.”
He said the industry will be feeling the effects well beyond the end of the war, which means the drag on total factor productivity (TFP) will continue.
The people factor
While the current energy issues are a major factor in the overall structural weaknesses hampering Bangladesh’s productivity, Rubel said logistics inefficiencies and a lag in technology adoption are proving to be equally detrimental to the country’s total factor productivity (TFP). And addressing any one issue alone isn’t enough.
“Countries that are improving share one common feature: they approach productivity holistically,” Rubel said. “Success is not just about pushing workers to produce more. It requires deploying modern technologies and maintaining a skilled, efficient workforce.”
He points to technology as a major lever that directly impacts both speed and quality. In Bangladesh in particular, Rubel said factories are investing in high-tech automation and resource-efficient wet processing to improve lead times. But Rubel these advancements require skilled technicians and engineers to improve problem-solving capacity and automation adoption. Overall, the industry is facing a shortage of both.
Kim agreed, saying simply throwing technology at the problem won’t work. “The key is not simply introducing technology, but building the capability to use it effectively and consistently at the operational level.”
It all comes back to people, specifically middle management.
“The gap between a factory running at a 50% efficiency and a factory which is running at a 75% efficiency is due to the production managers, is due to the industrial engineering system,” Bhinder said. “It’s about how well they have trained their production managers and line supervisors, because those are the teams and people who will train the sewers, the people who are working in finishing, in pressing —any one of the 55 professionals who will touch the garment.”
Oftentimes production issues are easy to spot, if you know what you’re looking for. Bhinder said work in progress piling up at sewing stations, idle operators disengaged supervisors or lack of a defect board or system to track real-time rejection rates are all symptoms of issues with middle management.
Ultimately, with all of the factors impacting output, maintaining optimal output requires a continuous effort to offset volatility on the sewing floor, at the factory level and across the entire supply chain.
“Productivity is not only about peak performance, but about how reliably that performance can be sustained,” Kim said.
