CMT vs FOB (Garment Manufacturing)

CMT (Cut-Make-Trim) is a manufacturing service model where the factory provides only cutting, sewing, and trimming labor. Raw materials (fabric, trims, accessories) are provided by the buyer. The factory charges per piece for labor only. Common in Bangladesh, Cambodia, and parts of Vietnam.

FOB (Free on Board) is a complete manufacturing model where the factory sources fabric, trims, and accessories themselves, manufactures the garment, and delivers finished goods. The factory charges a per-piece price that includes materials, labor, and margin. Common in Turkey, India, and China.

Financial differences are significant: CMT margins are 10-15% of labor cost; FOB margins are 8-12% of total cost but on a 3-5x larger base. Working capital requirement is much higher for FOB because factory finances materials.

TextileERP supports both CMT and FOB in the same facility — per-order configuration determines whether material cost is included in order costing. Critical for Bangladesh, Vietnam, and Cambodia factories that serve both FOB and CMT customers simultaneously.