Reprint of an interview of Bill Grier written by Tansy Fall of WTIN for the new journal Textile 4.0 available at: http://textile40magazine.wtin.com/
Merchandisers
can drive on-demand manufacturing
By
Tansy Fall 26 February 2019
Moving from a traditional supply chain model to an on-demand
workflow is not as easy as flicking a switch. But AM4U CEO Bill Grier believes
there is a place in the supply chain for microfactories to make this transition
easier. Tansy Fall reports.
Among the biggest challenges facing apparel manufacturers
today is shortening time-to-market whilst simultaneously reducing inventory.
This issue has risen to prominence thanks to both ecommerce and the changing
demands of consumers, which has left the traditional textile and apparel supply
chain in a quandary over how to keep up with demand.
On-demand manufacturing has the potential to solve both
inventory and time-to-market issues. However, the lack of data sharing in the
industry is seen to be stifling brands’ and retailers’ ability to connect
orders with production. If businesses could better connect to the rest of the
supply chain, brands and retailers would undoubtedly see dramatic improvements
in sell-through (the percentage of a product that is sold by a retailer after
being shipped by its supplier) and ultimately in-store and online profits.
This is where US-based AM4U (Apparel Made For You) comes in.
The company is aiming to position itself as a leading consultant and supplier
of microfactories and CEO Bill Grier is confident that there is a way to change
the make-up of the supply chain, though admits it will be a gradual process.
Grier has long worked in the digital printing space but has also been employed
as a technical adviser to American apparel businesses. In 2012, Grier launched
AM4U with the goal of demonstrating the capabilities of a demand-based
integrated microfactory, for deployment in the apparel sector.
The company has since struggled to on-board the concept with
brands and retailers and Grier says this is largely due to the mindset of the
industry and its historic structure. “We are still mired in the industrial
revolution,” he explains. “The mentality of investment, the mentality of
purchase, and the mentality of stocking and inventory. We build factories for
capacity […] and capacity is the antithesis of demand. […] The brands were not
ready. Everyone visited us but nobody bought because they had no deployment
plan.
“We do have three manufacturers right now where we have
installed equipment and they have demand-based opportunities. [However] we have
to balance the money involved between the manufacturer, the brand and the
retailer. Because of the focus on cost, the manufacturer has been left in a
position where they can’t make the kind of money they need. […] Once you focus
on cost then you focus on labour, and you end up moving production.”
Most recently, the difficulties associated with working in
an industry very much set in its ways has led AM4U to partner with event
organisers UBM Fashion, to build three integrated microfactories on the show
floor of Sourcing at Magic, which took place in February 2019. The company is
endeavouring to showcase the customisation possibilities of a digital
microfactory and encourage those in sourcing departments to think outside the
box.
Away from the exhibition floor, Grier says he has also spent
millions of dollars trying to develop a new way of making apparel, with each
on-demand factory requiring an average investment of US$650,000 for set-up.
From this, he has learnt that there are two key elements for success, which are
now driving his business forward: integration across the supply chain and
deployment planning.
Driving
change
Considering supply chain integration and deployment
together, Grier is of the opinion that digital manufacturing processes and
microfactories will find their sweet spot if they are remote from traditional
sourcing practices. He explains: “Buyers aren’t going to change. Their job
description instructs them to find the lowest cost. [However] whilst buyers are
responsible for cost, merchandisers are responsible for profit.”
The role of the merchandiser at a brand or retailer is to
predict up-and-coming sales trends, and therefore to ensure maximum
profitability. Merchandisers make certain that products appear in the right
store, or online, at the appropriate time and in the correct quantities.
Moreover, the merchandiser directly liaises with the distribution centre and
often has access to data from the POS and the supply chain. This enables them
to identify production and supply difficulties and deal with any problems or
delays as they arise. As a result of this, the merchandiser is also well placed
to make decisions about product quantities, however they are often bound by
pre-ordered stock and are therefore also responsible for monitoring slow
sellers and therefore price reductions.
“There are items where you need to have inventory, so buyers
have a role there,” Grier continues. “But merchandisers deal with the
distribution centres, not the manufacturers. And, you can drop a pollution-free
microfactory into the distribution centre.”
Adding a microfactory to the supply chain at the
distribution stage in the process is a relatively new concept for the industry.
It is something that ecommerce marketplaces, such as Amazon, are implementing,
however, as Grier notes: “Amazon is trying to put things in at their
distribution point but it’s direct-to-garment. […] The problem is that Amazon
is doing what we used to call just-in-time. This killed American manufacturing
because it just moved inventory to the next level down.”
Moving inventory along the supply chain is not a solution.
However, adding microfactories to distribution centres, well placed to leverage
POS data, could be the appropriate first step towards digitalisation of the
industry.
Mitigating
risk
This is particularly applicable for high-risk products such
as prints. White or black garments still lend themselves to being manufactured
in bulk, responsibility for which remains with the buyer. But for those
products that are more experimental, be that in colour or design, on-demand
production can allow for garments to be bought before they are made; limiting
the risk the brand or retailer takes in producing them. If they are successful,
manufacturing capacity can then be increased.
AM4U currently has microfactories that are being tested by a
handful of brands in the US. The results of this will be first realised in
August and this testing will then go on for another year. “It has a direct
connection with 2375 stores,” Grier adds. “They are at risk, and they have a
huge pain at the moment, so they have to change. They’re therefore willing to
try this. Retailers need to develop new technology to evaluate how they
calculate product risk.”
This test is an extension of another AM4U project. Grier
continues: “We ran 100 of a major retailer’s stores on a test basis. The
question was, how many [products] do we have to make to cover their entire
licenced design children’s pyjamas? How many did we have to make a day? […] The
most we ever had to make in one day was 174.”
This assessment highlights the validity of the microfactory
concept, provided retailers and brands can be moved towards an on-demand
sourcing structure. “We began to realise that the biggest issue was that nobody
was ready to give us [the manufacturer] POS data. […] The manufacturers can’t
change until the point where the money enters the system changes.” Therefore,
the microfactory needs to be close to the end consumer, where the money enters the
value chain.
One AM4U customer based in Los Angeles, US, has embraced
this microfactory concept and has successfully set up partnerships with brands.
The business is a leggings manufacturer, and the owner is able to pay its
workers US$20/hr, Grier says, selling a pair of leggings for US$32. Grier
explains that the business has ‘silhouette discipline’ meaning that the design
of the leggings can be varied and easily changed whilst the tried and tested
shape of the leggings remains the same.
Moreover, Grier highlights the kind of contract the
microfactory has with the brands. He says that whilst the brand the
microfactory works with commits to buying X number of leggings a year, they do
not specify the design at the point of order. The design can therefore be
changed at any time, using digital technologies, and the microfactory is given
access to the brand’s POS data in order to guide its manufacturing decisions.
Grier says that the mircrofactory’s “sell-through rate is 80%, compared to the
average sell-through rate for women’s apparel, which is only about 23% at
retail.”
Regarding the importance of the supply chain having access
to POS data, Grier draws on experience from his family’s involvement in food
company General Foods, which was bought by Kraft in 1990. Grier references the
impact the barcode had on the grocery industry, providing the ability to track
buying patterns and apply this directly to stock quantities and production
needs. He says that this same approach could be applied in the apparel industry
if the retailers would release the POS data upstream and that the ‘sell-by
dates’ formula that informs inventory in the food sector, should be applied to
sourcing and inventory control in the clothing sector. Due to trends in the
fashion industry, garments also have a sell-by date and, whilst brands and
retailers are aware of this, which often results in them discounting items,
they are not currently managing their inventory and supply chains in order to
ensure the right number of garments are produced that can be sold by the
‘sell-by date’. Grier adds: “Sales should be based on promotion and not on
clearance.”
The
future of the factory
In the creation of microfactories, two areas of the supply
chain that have been very separate for the majority of the industry’s history
are united: “Colouration has been separated from cutting and sewing for so long
that they don’t have an understanding of it,” Grier comments.
This poses a big challenge to manufacturers or brands that
implement microfactories as processes are being connected that haven’t had to
interact with one another before. And, connection between the textile
manufacturing element of the supply chain and the apparel manufacturing element
is not the only communication problem. The design process needs to better
involve information from the manufacturing process as well. Grier says: “Up
until the middle of last year, not one design software available could see
directly into a RIP [raster image processor, which interprets and renders a
design into a pattern of dots for digital printing].”
Technology also clearly needs to advance to achieve the
seamless production processes that the implementation of microfactories require
to be successful. With the concept of microfactories at the distribution
centre, responsibility for investment could finally be brought to the table of
those that hold the most capital for investment, the brands.
