Process innovation will be even more important than product innovation for apparel retailers seeking to improve their speed to market, according to Munir Mashooqullah, founder and chairman of garment manufacturing and supply chain management company Synergies Worldwide, and Guido Schlossman, the company’s CEO.
Speaking at Sourcing Journal’s “Currents of Change” Summit in New York Thursday, the two said shortening the cycle time between design and delivery will require not only an expansion of capabilities, but also changes in the company’s core culture.
In their presentation on “The Dynamics of Speed to Market,” Mashooqullah and Schlossman set out to “disrobe and demystify” the fast fashion process for the standing-room-only crowd, suggesting that the process and its benefits are within reach of increasing numbers of retailers, not just the giant global ones.
Explaining the distinction between two commonly confused concepts, Mashooqullah said, “Fast fashion is disposable product sold by the shipload at an affordable price to be worn a few times, while speed to market is responding in time to consumer demands and not carrying inventory.”
Mashooqullah added that though lower raw materials prices and the strong dollar have made 2015 a somewhat less stressful year for sourcing executives, the pressure to lower costs will continue, given the highly competitive retail environment. Share gains made by fast fashion players like H&M, Inditex, Forever 21 and others are putting pressure on more traditional retailers and brands who, along with their suppliers, will have to increase their ability to analyze and understand costs beyond just raw materials, and find innovative new ways to reduce expenses.
“The fast fashion players have figured it out,” he said. “Dynamics, speed to market—it’s all related.”
Schlossman, who will take over the Synergies CEO reins later this year when Mashooqullah retires, outlined the three key processes that companies will need to focus on: communication, raw materials and accessories procurement, and vendor selection.
Improved internal and external communication, which Schlossman called the “electricity” that powers the reduction in speed to market, needs to become embedded in the DNA of a company’s culture. New technology solutions are allowing companies to streamline communications in areas like decision-making, product development and purchasing. Enterprise Resource Management (ERP), Product Lifecycle Management (PLM) and other like systems are helping companies improve communications across functions and with suppliers regardless of where they are in the world.
Schlossman said one area of frustration for sourcing organizations is the degree to which the delivery cycles are increased when some aspect of the product is changed. “There is a lot of time wasted because of redundancy in processes,” he said, citing the example of a change in design that requires reworking tech packs and bill of materials. Companies seeking to reduce redundancy in the product development process are investing in PLM systems that change everything in the system accordingly when one change is made.
Another area where communications could be streamlined for many retailers is in the issuance of purchase orders, which in some cases can take up to eight weeks to be issued given the number of people in the organization that need to sign off on them. Fast fashion players issue block orders so that certain actions can be taken by the vendor before final details of the order have been determined.
Increasing accountability and responsibility of people in the organization will also help shorten response time and increase efficiency, Schlossman said.
Raw Materials and Accessories
Companies need to change the way they think about raw material and accessory sourcing to speed up the production cycle. Determining not just fabric, but considering the availability of fabric at different phases of production is also key. Schlossman gave an example of a European company that sources a fabric from China, has it finished in Italy, and then ships it to garment manufacturing in Tunisia, Portugal and Turkey.
Fast fashion retailers are also rapidly evolving the way they procure and manage accessories and tags, with many opening small offices in production countries to handle it rather than doing it on a centralized basis.
Identifying vendors that a company wants to source from is another key to improving speed to market. Differentiating vendor identification between three product categories—basic, basic plus and fashion—is necessary. Basic articles require a strong focus on planning and process. Basic plus items have a bit more styling, so need a vendor stronger in R&D, design, and virtual manufacturing. Suppliers of fashion articles are a bit easier to find, because they are higher-priced. But technology is becoming just as important here as in the more basic product categories. Schlossman mentioned a textile supplier in Italy that can digitally print 120 meters in one minute, shortening the time from “catwalk to shop floor” in three weeks.
The presenters wrapped up the talk saying how important it is for organizations to stay open-minded and be willing to learn and to improve processes. It will also be important for them to encourage innovation from vendors and to keep a lean organization structure.
In talking about compliance, a hot topic in the industry today, Mashooqullah said companies who go above and beyond and set new standards for responsible sourcing need to be rewarded. “We are not being honest with ourselves,” he said, adding “We want compliance but we are not rewarding it. We are putting compliance in the FOB price.”
To encourage compliance, he said, the government should consider giving a duty benefit.
Mashooqullah also warned against sacrificing flexibility for bureaucracy. “Process is good, overprocess is not good,” he said.