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Why Fashion’s Adopting Leaner, Localized Manufacturing Models

Apparel and footwear manufacturers and brands have been tested during Covid-19, but one of the positives to come from the pandemic is an openness to embracing technology and new production models.

Concepts that had been on the back burner—including nearshoring, shorter runs, 3D design and digital customization tools—recently gained traction as companies coped with the disruption of the past year. But there are business and sustainability cases for leveraging these models to lean out inventory even after the crisis. During a panel at Sourcing Journal’s virtual Sourcing Summit Hong Kong, speakers shared how their businesses have adopted alternatives to the traditional long-lead, push strategy.

“As a manufacturer, one has to provide multiple operating solutions,” said Murtaza Ahmed, director of Artistic Milliners and founder of Star Fades International (SFI). “While we still see a lot of demand for chase, or long volume programs, we’re also seeing a lot of small runs, a lot of capsule collections.”

Responding to this demand, earlier this year, Artistic Milliners opened a laundry facility in Los Angeles specifically geared toward small runs. This subsidiary, SFI, focuses on wet and dry processing, but it partners with local factories to provide fully onshored manufacturing. Coupled with its larger operation in Pakistan that includes textile and garment manufacturing, Artistic Milliners has the flexibility to span small- and large-batch orders. For instance, a company could test a style in the U.S., and then shift production to Pakistan if it warrants greater volumes.

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Courtesy of Covid-19, more businesses are seeing the value in onshoring. According to Amara Group founding partner Devender Gupta, companies are open to paying slightly more to purchase fabric in close proximity to production to shorten lead times. He added that bringing manufacturing closer to the target market also helps circumvent the current high costs and extended timelines for logistics.

Many companies had to adjust to lower inventories throughout 2020 out of necessity, but leaner models are strategic. Gupta noted that one of the benefits of holding less merchandise is improved margins due to reduced discounting.

Taking small batch to a one-to-one degree, customized sneaker brand Diverge produces entirely to order. Even in today’s culture of immediate gratification, customers are willing to wait a few weeks for their shoes to be fashioned just for them. In addition to aligning inventory precisely to demand, Diverge boasts a return rate three times lower than the industry average since customers take more care with sizing and selection.

Underpinning these moves to nearshoring and demand-driven production are technology and improved supply chain collaboration.

One piece of the puzzle is having factories that are able to deliver on new models. “Made to order is a long-term game, and it requires quite a lot of effort from both the brands and the manufacturers, because it entails very different processes versus regular operations,” said Joao Esteves, co-founder and CEO of Diverge. As it grows its business, Diverge constantly has to think ahead and line up additional factories before it maxes out its capacity.

Both made-to-order and small-batch makers are benefitting from direct-to-consumer connectivity between manufacturing and the end purchaser. Asmara is encouraging partners to use DTC channels to test out a wide range of SKUs and adjust accordingly. With shortened lead times, products can go from design to delivery in as few as 20 to 45 days.

“The collaboration has become deeper; the trust factor has gone up,” said Gupta. “Suddenly the customer is also realizing that a lot of the things which they were wasting their time on was not really necessary.”

PlatformE is taking on fashion’s inventory problem by replacing physical samples with digital assets such as 3D images and photos. With what the company calls “E-Fashion,” companies can bypass extensive photo shoots, and move straight to selling merchandise using these assets. This also prevents overproduction, enabling brands to start with just a few styles made and then expand manufacturing to other variations based on customer interest. By linking sales data and the supply chain, production can be adjusted based on actual demand.

“Fashion is probably one of the latest adopters to this; in pretty much any other industry—electronics, phones, cars, etc.—everything that you see is typically digitally made,” said Gonçalo Cruz, CEO and co-founder of PlatformE. “So, it will be just a matter of time before we really scale the adoption of E-Fashion.”

 

In Case You Missed It: All of the sessions from this year’s Sourcing Journal Hong Kong Summit: “Recovery & Reinvention” are available to purchase and view on-demand. Click here for access.