Two months ago I dealt with the question, Going forward,where will my supplier be located? I showed that there is an ongoingevolutionary change from the past characterized by the notion of
Last month I dealt with the question Going forward, whowill be the supplier? As I explained, the answer to that question is noone because in the new factory model, customer and supplier merge into asingle entity.
This month I deal with the question, Going forward, whatwill be the role of the factory?
Lets go back a bit here. In the past, a factory wastraditionally defined as a large machine built to produce something. Buildingthe factory traditionally began with a seemingly single question: What doyou want to produce? Once you knew what it is you wanted to make,everything fell into place. In those days, success was measured by how well-howefficiently and at what cost-the factory produced that something.
The only challenge was to define what that something is. Itwas not enough to decide, "I want to produce men's woven shirts."A factory that produces fine Sea Island cotton dress shirts will notsuccessfully supply Wal-Mart with chambray sport shirts because the factorystructure of the two operations are dramatically different. The machinery isdifferent. The workers are different.
The best way to meet this challenge was first to ask yourcustomer what he needed and then to build the factory to build those needs. Formany years most customers provided the same answers: I want a factory thatwill produce W number of units per style, at X quality, in Y period of time andat an average of Z FOB price. In short that factory was all about theproduct.
Setting up this traditional factory was a relativelystraightforward operation. It was located in a specific place (or places) -perhaps10, 000 miles away from the customer-with offices and machinery. It was definedby the production process itself -cutting, sewing, finishing and packing.
Now, however, the traditional factory model has finallybecome obsolete. Actually it was fundamentally flawed in the first place. Therecession has simply exposed the existing flaws of thefactory-as-a-product-maker paradigm.
The new supplier paradigm that we need to be looking at isbased on two targets:
- To take over most of the manufacturing operations previously performed by the customer and thus reduce direct costs.
- Speed-to-market, not just by reducing lead times in the production process but in the pre-production and post-production processes.
In a sense, in order to attain these two goals, we arelooking a single word: This is service, because real speed-to-market is the resultof an entire range of services.
The move from a product-oriented operation to aservice-oriented operation now dictates where the supplier is located. In thepast, as long as the factory existed only to make a product, all communicationwas one-way instructions-from the customer to the factory:
- This is the product I want and how I want it made: Technical sketch and Tech Sheets
- This is the sizing: Spec Sheet
- This is how I will ensure you do what I want: Buying Office
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One-way instructions will work regardless of the location of the factory. All that mattered was the speed with which the customer's instructions arrived at the factory. As cables were replaced by telex and telex by e-mail, the customer located in New York was able to provide clear and detailed instructions with the knowledge that the tech sheets and spec sheets sent today would be on the factory manager's desk in Zamboanga when he arrived at work the next morning.
But once the factory increases its role to include services, the process changes. It now begins with a designer concept, long before the customer has any tech sheets or spec sheets. For this to work effectively, one-way instructions must now be replaced by a two-way conversation. When that conversation takes place by e-mail, the time frame increases from information the following morning to a very large number of following mornings.
Furthermore even the latest technology cannot solve the new problems we are trying to solve. This is because design work involves more than looking at things (sight) or discussing those things (sound). There is also feeling the fabric (touch), an area where computer-driven conference calls cannot go. Beyond that, the factory will want to show the designer new materials, special production elements, etc. In this sense, technology actually becomes counterproductive and ends up limiting design.
For the factory to provide full services, it must be located a taxi ride away from the customer and the customer's designer, wherever they are located. The location of the plant and machinery becomes irrelevant. That is why the factory of the future has no location.
The move to full service and particularly speed-to-market defines just who is the manufacturer. When the role of the factory was limited to making garments, the manufacturer was the guy who made the garments. He had the cutting tables, the sewing machines, the pressing equipment, etc. Later on as the industry became more competitive, the manufacturer added a material supply component, first by going vertical and later becoming part of clusters.
Now the ability to provide full service adds another dimension which changes the basic customer/ supplier relationship. The traditional factory deals with a variety of customers doing business on an order-by-order and season-by-season basis. Delivery dates are based not only on production time but more importantly on how busy the factory is. An order for a specific style may require 30 days during the slow season but 45 days in the busy period. A fast turn factory-one that provides speed-to-market-cannot exist with the traditional customer/ supplier relationship. The fast turn factory requires the customer to be an integral partner in the manufacturing process, providing long-term programs and guaranteed production instead of simple orders.
This leads us to the factory of the future: the virtual vertical factory (VVF) which brings all the elements of the manufacturing process together in a single entity for the sole purpose of serving a specific customer. The VVF is also flexible. For example, no entity within the VVP is limited from dealing independently outside the relationship with any customer.
About the Author:
David Birnbaum is the author of The Birnbaum Report, a monthly newsletter for garment industry professionals. Each issue analyses in-depth US garment imports of four major products from 21 countries, as well as ancillary data such as currency fluctuations, China quota premiums and clearance rates.
Here 'I' refers to him.
Also read:" The New Garment Supplier: Where-Who-What:&sec=article&uinfo=<%=server.URLEncode(2061)%>" target="_blank"> Part I and &sec=article&uinfo=<%=server.URLEncode(2061)%>" target="_blank">Part II"
This article is reprinted with due permission from &sec=article&uinfo=<%=server.URLEncode(2061)%>" target="_blank" title="blocked::http://www.fashiondex.com/">Fashiondex.com
Refer the newsletter of: The Birnbaum Report/Strategic Sourcing for Garment Importers
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