In an industry shifting from the status quo to a fashion-streaming, direct-to-consumer model, the criteria for a 21st Century factory has changed. At an Americas Apparel Producers’ Network (AAPN) meeting early this month, 36 member companies, including 11 factories, seven brands and other supply chain players talked about the new necessary checklist for a modern-day factory.
Yes, we discussed TPP, of course. But we decided that neither TPP nor China were worth our debate. What mattered to us as the industrial organization of the U.S. and Americas were five strategically relevant topics: fast fashion, or a variation of it we can do in the West, which we call fashion-streaming; direct to consumer which gives the proximity of the Americas a considerable competitive advantage; fabric innovation (not just with R&D at the yarn level, but with higher speed inkjet printing of textiles); flexibility to change styles with multiple lean teams on the factory floor and social programs incentivizing them; and technology and software and the new processes and skills that accompany them in this steep innovation curve.
Here’s what a 21st Century factory needs to make it in today’s market.
Knowledge of the U.S. market
The 21st Century factory goes to trade shows, equipment expos, fabric forecasts, merchandising events and private supply chain meetings. In the connection economy, the value is where the connections are made.
Imagine a factory, showing up for a sales meeting with a prospective brand. They bring fabric swatches created in the Pantone colors forecast for the season. The fabric swatches were printed in-house using inkjet spray. They bring samples they designed, then cut and sewed in their high-tech sample room. They bring a color catalog with the entire collection all priced and ready to be made.
What do we call this? We call it “design thinking.” It is the new mandate for all businesses – make design a priority. Everything you do is design. In the above case, all the customer has to do is adapt to their color set, fine tune the specs and start production. How much easier could that possibly be?
All companies compete as supply chains. Next to none meet as chains. They should. There is enormous value in drilling down into your chain and learning the knowledge of every link. Great factories take care for their suppliers. They always make sure to meet with them when they call on the factory. Your suppliers know the truth, know who pays their bills, know who is making what for whom.
Take these suppliers. Avery Dennison applied its technology to weave the top of a Nike basketball shoe. Think they’re just a label company? YKK anticipated the impact of yoga wear on their jeans and pants customers. Think they’re just a zipper maker? GCMoore moved its investment in sublimation printing of elastic waist bands up after a roundtable with several retailers. Think they just sit there in isolation? No, they network and it gives their customers a competitive edge.
What do you need to get speed? First, trust. Second, raw materials. And third—believe it or not—very strong social programs. Strong programs cut turnover, reduce absenteeism, raise skills, increase volume and are the key to flexibility.
Then, there are integrated technologies working today at blistering speeds – 2D/3D generated product development, sublimation inkjet printed fabrics, advanced lean manufacturing processes enhanced with piece goods flow mechanisms, direct store shipping, you name it. Factories didn’t buy these hoping they would help. They were almost always implemented in partnership with a global brand committed to helping their factory.
Speed is more than just a world class customer, it’s also access to world class raw materials, specifically fabric. No doubt, relative to Asia, the West lost a high percentage of fabric production. It’s coming back. It‘s coming back as Asia invests in yarn spinning in the U.S. It‘s coming back as massive regionally funded textile mills are being built and/or expanded in the Americas.
The usual business model is to cut cost by chasing cheap. And when you get to cheap, the fabric is there, so you make sure the sewing is done there too. However, several factors are changing that model.
First, for some fashion fabrics, if you are able to sell a garment at a premium margin, then cut and sew and ship it direct to the consumer, wouldn’t it make sense to invest in the fabric, bring it close to the consumer and wait for the order? As it turns out, it works. More brands are turning to face the consumer directly and produce in a direct-sale model from cut/sew factories here in the U.S.
At the same time, exponential advances in inkjet chemicals, sublimation papers, inkjet printers and in pixel targeting software has made inkjet printing of greige fabrics extremely viable. We see it applied today in activewear, especially yoga pants, but in Europe we have seen up to 20,000 yards of fashion fabric printed this same way in one day.
Much sourcing today is still measured on initial markup which does not show real costs or value. In the 21st Century, the quick and nimble will kill this traditional pricing practice. Zara’s success came from changing this math, ignoring the cost of the garment to focus instead on the value of speed and delivery to the consumer. One major brand exec said of the Americas, “I will pay more for small runs because they are better for my consumers.”
Ease is a dual-edged sword. The more you know about operations, the easier it is to work with the operator. One veteran sourcing executive summarized this by saying, “There are so many new buyers, they didn’t learn manufacturing, they only know the numbers.”
One of our factory owners, a third generation family business, said, “I was on the factory floor fixing sewing machines when I was 14.” Do you think he knows what he is doing? Another factory owner said, “I arrived in the U.S. in 1973 and we had a three-machine sewing factory in 1975, one for my mom, one for my brother and one for me.” What do you think you can pull over on him?
One result of the digital explosion is that boundaries separating industries are beginning to blur. Another result is that many people, the vast majority of whom you will never meet because they are not in your industry, are smart and have made the lives of those of us who do get to know them far easier.
Implementation of 2D/3D technology isn’t just about computer screens. It’s about accepting that you’re going to have to give a couple of years minimum for each operator you hire to truly become skilled. Yet, from the start, 21st Century factories found that these systems made cycles faster, eliminated samples, built trust and unleashed greater creativity.
It also did something a bit revolutionary – it inspired factories to create their own brands. Why not? They were doing all of the R&D for their customers. They knew what they were doing. They had Internet platforms and cloud based application to sell direct. They had a mature responsive logistics infrastructure. In short, it made them design thinkers.
The great factories of this hemisphere who survived the “giant sucking sound” realized they had to stop selling what they knew how to make and start making what it knows their customers could sell. Today, the 21st Century factory is learning what it can sell.
One brand executive said, “In our brand, we have merged fashion and technology with social programs. They are now one mission statement. Our customers want to know they are helping someone.” Another added that their definition of the four pillars of sustainability are: people, product, planet and partnership.
AAPN members are the supply chain overlaying this hemisphere. We know the Americas. Unlike the other side of the oceans, Americas’ cultures are wound together so tightly you could never unwrap them, but you can do nothing and watch them unravel. The stability and safety of sourcing in this hemisphere are strategic and impact sustainability.
For example, the investment by just one synthetics textile mill in El Salvador not only saved 10,000 activewear sewing jobs there but created 10,000 more. Those are not 20,000 families wishing to come to the U.S. As Johnnie Rush, HSNi’s vice president of retail innovation, said in one May annual meeting about marketing today, “It’s not just the brand, it’s the stand.”
You’re the risk. You think you’re safe. You think you know enough. Why show up? You’re too busy. Even if you’re online, information is not the same as knowledge. In fact, the great American philosopher William James famously said, “We should never assume that our knowledge of anything is more than partial.”
Roughly every four months, Harvard Business Review writes an article telling you to network, to show up. They put it best in January 2007 when they wrote, “We’ve found that networking is simultaneously one of the most self-evident and one of the most dreaded developmental challenges that aspiring leaders must address. Yet the alternative to networking is to fail.”
The 21st Century factory is anchored right here in the U.S. and the Americas, in or near your time zone. It can be better, faster, easier, safer and even cheaper than anywhere else in the world. It offers mature logistics, proven trust, world class social programs, low country risks, and advanced specialization in key markets.
Now we turn the question and ask, are you a 21st Century brand?
Mike Todaro is managing director of the Americas Apparel Producers’ Network, the supply chain organization of the Americas.