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Allowable Defects Are Killing Your Brand Equity

The apparel industry is famous for maintaining the same modus operandi despite the strength of the headwinds it faces, but if the massive shift in retail this year taught us anything, dramatic experimentation and change is a must—and survival is at stake.

One blind spot for brands is the need to update their quality control sampling plans. Sampling plans refer to the percentage of units to be controlled during a final shipment inspection and the number of defective units that are acceptable.

The International Organization for Standardization (ISO) has developed standard tables outlining quantities that should be inspected and the tolerance for defective pieces, in order to determine whether a shipment gets approved or rejected.

Based on those ISO tables, if you are a premium footwear brand selling an order of between 501-1200 pairs of shoes to a retailer, for example, 125 pairs of shoes should be inspected. It also means that if you’ve decided the Acceptable Quality Levels (AQL) for your production and brand are 1 percent of major defects and 1.5% of minor, statistically, the “consumer risk quality” of your sampling plan confirms that up to 10 percent of the orders could have 4.2% of the goods with major defects and 5.27% with minor ones. This means that your brand has agreed, and is satisfied, that up to 9.47% (4.2% + 5.27%) of defects can occur in 10 percent of your orders.

If you are a lower-end brand with an AQL of 2.5% major defects and 4 percent minor, the consumer risk quality says up to 10 percent of your orders can have an astronomical 17.49% (7.29% + 10.20%) of shoes with defects!

This is how the industry has been working for decades, yet brands and retailers often still return to their suppliers voicing concerns that there are too many unsellable items in their shipments—even though the brands and retailers are ultimately the culprits, as they are the ones that have set, and thus accepted, the statistics behind the agreed upon AQLs.

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The main issue is that the consumer’s perception of quality has dramatically shifted.

When a shopper goes into a store and picks up a dress or a shirt and the stitching line is off or wavy, they may choose a different one of the same size or inquire with the sales person to see whether there are more in stock. Chances are, the next one won’t have the same defect, so the consumer will complete the transaction.

When it comes to e-commerce, however, a defect like that can mean the permanent loss of a customer.

If an e-commerce shopper orders that same dress or shirt and finds the wavy stitch once the package arrives at their home, it automatically becomes a return. In most cases, that customer will not order another one. But if they are truly dedicated to the brand and product and do order it again, finding a similar defect a second time could mean the shopper waves a permanent good-bye to the brand.

Research performed by some brands confirms that for every one complaint received, another 25 consumers will not bother to complain at all, so the negative, long-term impact on the brand is considerable.

Using a Tightened Inspection Level III plan

The 1 percent tolerance limit for major defects is no longer viable in this new product-being-received-at-home environment. The risks are too high and the damage to any brand is guaranteed. To ensure survival in this e-commerce era, buyers must transform their supply chains to ensure a zero defect policy.

To be a leader in this new e-commerce paradigm, companies will have to improve their knowledge and correctly set their quality control sampling plans relative to current consumer expectations.

A shift to using Tightened Level III sampling levels (instead of the industry standard Normal Level II) will increase the number of units to be inspected by 50 percent, helping to improve detection of bad quality in the required transformation to a percent AQL on major defects.

Another solution is to shift the focus and spend to quality assurance versus quality control.

Buyers will have to work to get their factories to take full ownership of quality so that the very low value-added final shipment quality control is altogether eliminated. Instead, it should be replaced by factory operators who are fully engaged and cognizant of a brand’s defect requirements, and who will take pride in not passing defective units from one step of the process to another.

Our industry is at a tipping point and factories need the direction and leadership from brands and retailers to force this paradigm shift in quality.

Chargebacks and markdowns for bad quality are pervasive but now, and even more damaging, is the possibility of losing a consumer completely.

Buyers can no longer afford to run their supply chains from ivory towers—they must spend the time, energy and resources on their factories to start implementing the quality management systems, processes and procedures to bring about the goal of zero defects going forward. The future survival of your company is at stake.

About the Author

Jose R. Suarez is the founder and CEO of Impactiva, the world’s leading supply chain optimization solution provider for the apparel, footwear and leather goods industries. Learn more at