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From Pennies to Productivity, Apparel’s Shifting Priorities

Gone are the days when simply sourcing at the lowest cost determined the winners in the apparel industry. These days, there’s a new currency at play.

At Sourcing Journal’s first international Sourcing Summit in Hong Kong Tuesday, founder and president Edward Hertzman welcomed a panel of forward-thinking executives who are using technology to transform the way the industry functions. Though each is focused on different parts of the supply chain, the panel collectively had one thing in mind: productivity. Whether it’s wringing inefficiencies out of the inspections process or injecting digital tools into the factory floor, in one way or another the companies they represent are embracing a future they say isn’t so far off.

Despite still being a work in progress, blockchain, for instance, is only about a year out from becoming a reality in the apparel business. That’s according to Aleksander Niemanas, chief legal officer of Libelli Limited, a spinoff of blockchain innovation company Cryptotec AG.

At Libelli, the focus is on providing an invaluable asset that’s too often in short supply in the long, circuitous and complicated apparel supply chain.

“It creates a web of trust,” Niemanas said of blockchain. For those in the audience who were still in the dark about exactly what blockchain is, he described it as simply a distributed database in which information is time stamped and linked together.

For anyone still unclear about how this technology, which is most closely related in most people’s minds to cryptocurrencies like BitCoin, could aid the apparel industry, Niemanas provided a real-world example. Imagine, he said, being able to vet a supplier on the other side of the world and feeling confident about your choice—without having to cross borders.

“If you want to work with a new supplier you could go there and check if they’re compliant with labor laws, health laws, whatever,” he said, indicating all of the due diligence that goes into starting a new partnership today. “[With blockchain] when you already have a supplier that you’re working with and this supplier works with the other supplier, he can tell you this is a trustworthy company.”

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Peer recommendations like this “save a lot of energy and time,” he said.

To Inspectorio co-founder and managing director David Klein, inspection and compliance processes rack up a wealth of wasted hours, and they couldn’t be more inefficient.

The company has created a platform that takes pen and paper as well as Excel and email out of the equation. By automating the process, he said brands and retailers can cut preshipping inspection time down by as much as 40 percent, meaning goods get to stores faster—in some cases by as much as a week. While speed is one benefit, it also allows brands and retailers to focus on value-added activities rather than getting bogged down in administrative tasks.

Further, AI allows these companies to be proactive rather than just reactive. Using the data compiled across all of the agents, brands, retailers, factories and inspection companies on the platform, Inspectorio can help determine the most likely issues a factory might face and pinpoint the causes, allowing companies to get to solutions faster.

“We’re entering a new stage of global sourcing,” Klein said. “It’s not a race to find the next country to source. It’s a race for more efficiency and predictability. And the factory/vendor relations have already been matured so the processes and approaches need to change.”

According to Peter Santora, chief commercial officer for Softwear Automation, the changes that are on the horizon aren’t small incremental steps, but vast sea changes.

First, he said, forget the vision you have in your head about what the factory of the future looks like. It’s not a place. It’s the whole process from design to delivery.

“It’s why this conversation ends up being more about productivity not production, because you’re talking about how productive is that whole system not how much production can come out of one factory,” he said. “If it’s a connected system, you’re talking about all factories in the system. When you’re looking at your factory of the future, you can see your whole supply chain.”

And not surprising from someone whose business is about automating the sewing process, Santora’s vision for the new factory means fewer workers.

“The factory of the future is labor independent,” said Santora. “It’s more based off of the intellectual property in the system and what kind of controls or leverage that gives to the organizations or groups that have that property. That’s incredibly different from what exists today.”

It only takes looking to a company like Amazon to see how the future will shift to one that’s lead by IP rather than people. Already, Santora said, brands like Nike and Adidas have smart factories that aren’t mired in the traditional infrastructure.

That’s not to say factories will be completely devoid of workers. But it does mean that as technology evolves, the lowest level tasks will become automated first—something the industry has to be prepared for, he said. The most at-risk in the short term, Santora said, are T-shirts sewers. He estimates that of the 3 billion T-shirts the U.S. consumes each year, within the next five years a third will be made in the U.S. for the U.S. market through automation. Then, as machines improve, more garments will be automated, making people needed solely for specialized tasks.

“There are plenty of opportunities to upskill the workforce to move to more premium operations where you’re already facing bottlenecks today,” he said. Even with that, though, some workers will be displaced. “The new innovations create new opportunities but not at the rate we need them to do it so. You have to plan for picking up the pieces for those who get left behind,” Santora said.

Mason Chenn, vice president of global sales for MicroBenefits, is already preparing for that day. His company is focused on the workforce of tomorrow. And in some cases, that means funneling people out of production altogether.

“Part of the upskilling idea might also be outskilling,” Chenn said. “We’re looking at how do you transition to other industries because manufacturing is often the first rung on the ladder for a worker. We’re experimenting on how do you deliver soft skills to workers that enable them to take jobs in other industries.”

For those who remain on the factory floors—and to Chenn’s mind things aren’t ever going to be totally robotic—Chenn’s company uses technology to manage and empower that workforce. In addition to making human resources tasks more streamlined, the MicroBenefits platform both pushes information to frontline workers as well as solicits their feedback.

“The hypothesis is that through engaging the frontline worker and solving key problems, you make the whole system more efficient,” Chenn said.