Introduction
The roadmap for U.S. apparel manufacturers’ survival in the future is paved with paired production, a combination of high velocity and low velocity manufacturing. To illustrate, picture a chart of the normal curve with size on the x-axis and quantity on the y-axis. In the center, at the peak, are the sizes for which you can expect to have to make the largest quantity and should use low velocity, low cost production. At the tails on each end are the sizes for which you have to make very few sizes and should use high velocity, higher cost production.
Steps in the process
It is necessary to move into the paired production mode of operation slowly. The first step in the strategy is to determine at which point along the normal curve that the velocity of manufacturing should switch from low to high. A key factor in this determination is the point at which changeovers become a problem. By reducing changeovers, capacity is immediately increased and costs reduced on the larger, low velocity line. Inventory investments downstream from that line are decreased. Combined, total item costs are reduced significantly, while responsiveness to customers is dramatically increased.
The second step in the process is to establish a high velocity line. This line would be a team filled with cross-trained workers who work with very small bundles (as low as bundles of one). Initially, their focus would be on non-replenishable SKUs, those sizes and quantities that require frequent changeovers. Gradually the line would add, during a fashion season, low-replenishable SKUs of whatever quantity. This enables retailers to move your products from the previously non-replenishable category to the replenishable category. Once the high velocity line is working efficiently, it can be expanded to include making samples, which are just a variation on bundles of one.
Manufacturing set up in this way is then ready for the final steps in the process. It does not matter which is implemented first. One strategy is to offer customization of existing product and the other is to implement a Balanced Inventory Flow Replenishment System. Both of these strategies significantly increase the options the manufacturer can offer to their retail and end-consuming customers. Manufacturing can be all domestic or a mixture of domestic and off-shore. The mixture could be accomplished through the following steps:
- Make a small part of the domestic manufacturing facility high velocity
- Expand the high velocity line to increase its versatilit
- Move the slow line to a location with cheaper production costs (off-shore)
- Retain and expand the domestic high velocity line.
The “people” issues are the most difficult part of paired production. Change is always difficult at best. However, the steps discussed here permit you to enter into the future slowly without risking the entire business. It gives you time to learn within your own “laboratory” and handle properly all of the transition challenges that will appear.
The Mass Customization Strategy
With an efficient high velocity line in place, it is possible to move beyond producing only stock items to explore mass customization. Mass customization is an outgrowth of mass production, it does NOT replace mass production. Mass customization is a consumer driven business strategy that uses information and manufacturing technology to efficiently produce goods with maximum differentiation and low-cost production, and is characterized by individualized mass production.
From the manufacturer’s perspective, speed is the competitive edge. The consumer gets what he/she wants, gets it fast, and gets it at a reasonable price. The financial impact on the manufacturer is higher margins, lower inventory, delivery of what is actually selling, and constant cash flow.
Start small. Allocate only 5% to 10% of your business. Mass customization is a continuum with many faces. Choose the one that is right for you. Three mass customization parameters impact the manufacturer:
- Is it stock?
- Is it limited-choice?
- Is it custom?
The three mass customization parameters of interest to the consumer are:
Most manufacturers today are producing stock items, that is, stock sizes of stock styles in stock fabrics. To move slowly into mass customization, all a manufacturer has to do is to add limited choice in one or more of these parameters of consumer interest.
For example, women would LOVE to have the (typical for males) option of purchasing shirts by sleeve length, and wouldn’t mind paying a reasonable premium for it. By offering the limited choice of high-velocity-manufactured stock style and stock fabric shirts with the limited choice of pre-determined additional sleeve lengths (a simple thing to accomplish when patterns are computerized), the manufacturer is delighting the consumer, who feels empowered finally to get a shirt with a sleeve that fits. Other sizing options might include additional torso length, a body builder configuration with broader shoulders, deeper armholes, and larger biceps, or a “plus bust” for the woman whose size determined by her shoulders and torso is smaller than her bust circumference would indicate. These options are really no different in concept than the traditional standard and portly versions of the same suit in men’s tailoring, but they are applied more broadly and expanded to females.
An example of a limited choice in styling would be a standard man’s shirt for which the consumer could choose the collar shape, cuff size and shape, and pocket shape. The computer setup to select the appropriate patterns for these choices is just as simple as for the sleeve length option.
Limited choice in fabric would allow the consumer to choose from a wider variety of fabrics than standard stock. This also has been traditionally available for men’s shirts. The concept can be expanded to other male garments and to female garments.
Limited choices are not difficult to implement slowly with the aid of a high-velocity line.
These hurdles are not insurmountable, and the cash is in hand BEFORE production begins. Once the handling of limited choices is running efficiently, then true custom can be added as an option, but, meanwhile, there is a world of profit-making opportunity that currently is not being exploited through limited choices.
Mass customization is a new business strategy that is facilitated by several enabling technologies that include
Order processing software that analyzes the order, determines the pattern pieces, size, alterations needed (if customizing size), then creates a text file to drive
- Off-the-shelf CAD software that collects, grades, and alters the patterns, then sends them to
- Automatic markermaking and cutfile generation
- Software to link each cut number to the software provided by the shipping company of choice to create shipping documents.
The Balanced Flow Supply Chain Strategy
The goal of a balanced flow supply chain is to achieve maximum revenue at minimum costs. The primary function of a balanced flow supply chain is to exchange information for product while minimizing throughput time. Money invested in raw materials is traded for new money coming in from the customer. A balanced flow should decrease throughput by 80% to 90%!
Three immediate benefits contribute to the maximization of revenues. The first is to minimize retail stockouts. It is typical to increase in-stock merchandise from an average 70-75% to at least 85-95%. Second, maximize cash flow once and minimize inventory expenses permanently by minimizing ALL supply chain inventories. This equates to approximately 14 cents on the dollar going directly to the bottom line. Third, minimize item cost by minimizing manufacturing demand variation. By lowering the amplitude of the variation curve, it is possible to eliminate expediting, smooth the feast or famine mode of operation, shorten forecasting times, and make daily checks to revise forecasting, thereby reducing the cost of making an item by 10-30%.
The process of balancing the flow in a supply chain begins with a picture of current reality. First post the retail on hand, the intransit, and the finished goods inventory. From this information, compute what should be shipped. Establish a retail basic inventory objective and rebalance the on hand, intransit, finished goods mix to balance the flow of goods in this portion of the supply chain.
Enabling technology for the Balanced Flow Supply Chain strategy is software that captures, analyzes, and graphs asset visibility throughout the supply chain based on demand by SKU and recommends what to cut and sew next.
Next post the work in process in manufacturing. Compute the “to make” needs, stopping when the assigned manufacturing capacity is consumed. This will trivialize the forecast and rebalance the TOTAL inventory objective of the entire supply chain. Make minor capacity changes by using the computation of variance.
After sufficient balance is achieved to protect the supply chain from stockouts, reduce the buffer at the constraint and transfer batch sizes until the combined benefits of additional sales, inventory savings, and lower quality costs equal any increased changeover costs. By speeding throughput and decreasing inventory, operating expenses for the supply chain should be the best they can be (given the reality of policy constraints). At this point, improvement efforts should shift to the manufacturing floor.
When downstream buffers can be lowered no more, reduce the batch sizes at the constraint using world-class teamwork, TOC, Lean, and Six Sigma techniques. Then lower buffers and repeat this process (classic continuous improvement).
The resulting consumer-driven, balanced-flow, lean supply chain is the only way to eliminate stockouts and minimize inventories BOTH AT THE SAME TIME while multiplying revenues and minimizing costs.
