Factory vetting process step — capacity utilisation review
In brief: A capacity utilisation review in a Bangladesh buying house is a quarterly written declaration from each active factory of how much installed capacity is booked across the next 60-90 days. The healthy band is 60-85%. Below 40% means fixed costs are not being covered. Above 95% means no buffer for fabric delays, machine breakdowns, or quality reworks.
60-85%
Healthy band
Where Bangladesh factories ship European orders on time and on spec.
<40%
Margin hunters
Factory not covering fixed costs — will accept your order at any terms.
>95%
No buffer
First fabric delay pushes your order to the back of the queue.
When European buyers ask me which vetting step predicts delivery problems earliest, the answer is not the BSCI audit and it is not the LEED certificate. It is the utilisation review. The utilisation number tells me whether a factory is hungry, healthy, or overloaded — and which of those three states a factory is in determines what happens to your order when something goes wrong. Something always goes wrong.
What is a capacity utilisation review in a Bangladesh buying house?
The capacity utilisation review is a written declaration the factory signs and dates: installed capacity in sewing lines and machines, booked capacity for the next 60 days and 90 days, and the buyer mix behind those bookings as a percentage. I require it from every factory in the active Bengal Origin Co. file every quarter. A factory that cannot produce this within two working days does not stay in the active file. The number itself matters less than the willingness to share it on a fixed cadence. Most Bangladesh buying houses do not request this document. The factories I have worked with for the last four years have learned to expect it.
Why does the 60-85% utilisation band matter for European orders?
Healthy utilisation runs between 60% and 85% of installed capacity. In that band, the factory covers fixed costs comfortably, holds slack to absorb a machine breakdown or a fabric delay, and is not desperate for the next purchase order. European orders typically run 60-90 days from PO to shipment. Within the healthy band, the production planner has the room to slot a 5,000-piece knitwear order into a realistic line, hold buffer for the inevitable counter sample revision, and still ship inside the window. Outside this band — in either direction — risk compounds. The 60-85% range is narrower than what most buying houses describe as healthy. I have made it deliberately narrow because I have watched what happens at the edges.
What does a factory running below 40% utilisation actually do?
A factory below 40% is not covering fixed costs. The owner is paying rent, electricity, gas, and supervisor payroll out of working capital that should be funding the next order's fabric. That factory will accept your order at any margin. It will quote prices 8-12% below the cluster average with no clear explanation. The hidden cost arrives in subcontracting, in skipped quality steps, and in a midpoint report that arrives a week late because the floor is running material from another buyer to cover wage payments. The first signal is the unexplained discount. I do not place trial orders into factories below 40% utilisation, regardless of what the quote says or what the BSCI score is. The BSCI audit score does not predict delivery — the utilisation number gets closer.
Why is above 95% utilisation a delivery risk, not a strength signal?
Above 95%, the factory has no buffer. Every line is committed. The first fabric delay, machine breakdown, or quality rework pushes one order to the back of the queue. That order will be yours if you are not the largest buyer in the booking mix, and European mid-market brands sourcing 5,000-25,000 pieces per order are not the largest buyer. The 95%+ factory reads well on a sales pitch. It is fragile on a Wednesday in week six of production. The first downstream signal is wage timing — a factory running above 95% will start to delay wages past the 7th of the month when the first thing breaks, and that is the same moment your delivery date starts to slip quietly.
The table below contrasts the utilisation states and what each one predicts for a European order.
| Utilisation band | What the factory is doing | What it means for your order |
|---|---|---|
| Below 40% | Not covering fixed costs | Margin-hunting quote, subcontracting risk, skipped QC |
| 40-60% | Covering costs, hungry for volume | Workable but requires financial health verification |
| 60-85% | Healthy operating band | Realistic planning, buffer for problems, on-time delivery |
| 85-95% | Tight but managed | Workable if you are a priority buyer in the mix |
| Above 95% | No buffer | First problem pushes your order to the back of the queue |
Source: Bengal Origin Co. operational vetting protocol, applied across 120+ Bangladesh factories vetted since 2022.
Capacity utilisation review — scope
Whether a factory has operational cash buffer
When margin-hunting quotes are about to appear
If subcontracting pressure is building quietly
How a factory will respond to a fabric delay
Where your order sits in the booking mix
When wage payment delays are about to start
Audit-day labour compliance scores
Chemical safety of finished goods
Whether fabric mills will ship on time
Counter sample approval timelines
Buyer-specific quality preferences
Port congestion at Chittagong
How do I document utilisation quarterly in an active factory file?
The format is one page. Installed capacity in lines and machines. Booked capacity for the next 60 and 90 days. Buyer mix as a percentage. Date. Factory signature. I file it alongside the bank solvency certificate and the written subcontracting prohibition. Those three documents form the financial vetting baseline at Bengal Origin Co. When a European brand asks me under CSDDD ongoing monitoring requirements or under the German Supply Chain Act documentation rules to show how Tier 2 suppliers are monitored between audits, the quarterly utilisation declaration is one of the documents I hand over. This is what ongoing monitoring looks like in practice, not on a compliance slide. A capacity utilisation review Bangladesh buying house operations actually carry out is rare. It should not be.
What This Means for European Brands
Ask your current buying house one question at the next quarterly review: what is the signed utilisation declaration for each factory in our active production. If they cannot produce a one-page document per factory within two working days, you do not have ongoing financial monitoring in place — you have an audit certificate, and the two are not the same thing. The capacity utilisation review is the cheapest forecasting tool a Bangladesh buying house has, and it predicts on-time delivery more reliably than any single-day audit. The 2022 supply chain failure that built Bengal Origin Co. would have surfaced six months earlier with this document in the file.
The utilisation declaration is one of three documents I treat as non-negotiable in every active factory file at Bengal Origin Co. The other two are the bank solvency certificate and the written subcontracting prohibition. None of the three costs anything to request, and each one surfaces problems before they become delivery failures. The full sequence sits at how Bengal Origin Co. vets factories financially.
If you want to see what a quarterly capacity utilisation declaration actually looks like in a Bangladesh factory file, I am happy to walk through the document and how it is monitored in practice.
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