Today's Solution is Integrated Virtual Inventory
Almost every day we see articles, releases and product
features about the automated future of the apparel and textile
manufacturing. Magazines and PR articles
regale the industry with breakthroughs and future technology announcing the
“digital revolution”. Meanwhile,
retailers and brands disappear at record rates, labor abuses migrate from
country to country and the deadly pollution of streams and rivers
continues. As an industry innovator and
holder of a number of technology patents I can say without any equivocation,
“There is no single magic bullet technology solution”. There is however a
strategic business solution.
Millions of dollars are spent every year on everything
from digital design platforms to robotic sewing but nothing really
changes. Sure automation, 3D printing,
sew bots and AI may be in the future, but what can we do today to
rebuild jobs and manufacturing. We are inundated by propaganda about the growth
of American manufacturing and other patriotic come-ons while reality is that off
shore apparel purchases increase every year.
Retailer, brands and manufacturers so terrified of change that they
cling to the belief that third world mass manufacturing labor costs will create
profits at home. August 2017 imports of
$42.6 billion were up 1.7% year on year according to OTEXA at the U.S. Dept. of
Commerce. Meanwhile, the country lost
over 5,000 retail outlets and tens of thousands of jobs, while billions of
dollars in new imports flooded the system.
Even though retail unit sales are increasing monthly (according to AcceleratedAnalytics,
September Update) the clearance sale discounts required to move this growing
surplus are destroying the profits needed to operate stores. The consumers will soon fill their closets
with these bargains and the inventory backup will reach an intolerable level of
constipation that will cripple brands and manufacturers that will loose more
retail selling outlets every day. Online
sales will relieve the glut ache for a while, but it can’t solve the overall
problem of dependence on the out dated “industrial revolution” philosophy of
leveraged volume efficiency. Waiting for
politicians or automation to solve today’s pain is a fool’s errand. The question is what can we do TODAY!
Why Can’t the Apparel Industry Catch-Up to Reality?
It can, and here’s how!
Take the technology we have today
and concentrate our efforts and money on integration. Over the past 18 years our team has built and
rebuilt demand factories in attempt to create the efficient ability to convert
inventory data directly into physical apparel.
We found that building bridges of integration between the technology
“silos” was the most efficient and immediate path to returning sustainable
profit to the apparel industry. The
integrated focus of all the available technology clearly was to connect the
risky physical inventory directly to sales at both the retail and online
level. This pursuit of the “Virtual Inventory” that literally
guarantees profit on every sale represents the key to individual customization
and thousands of localized apparel manufacturing jobs.
The goal is now attainable
and here are the technology integration steps required to start bringing back
jobs and profits product by product:
1. Technology Integration: Adopt Modern Coloration Technology
The single most important technology requirement is
shifting the sampling and production coloration of fabric from traditional mass
production spot color to modern digital process color. Mass production requires the man hours and
cost of color separations, custom color mix, dip approval, screen making,
registration, and production printing and drying, which, cannot match the
change-on-the-fly instant capability to change the print and colors on a
digital printing unit.
The textile industry and its research
organizations are focused on tuning old technology. The time and money they
have wasted on mass spot coloration has blocked much of the integration
required for change-on-the-fly coloration.
If they had spent one percent of those resources on process color we
would be changing colors and prints on the fly just like the color printer on
your desk. Digital process color
printers, like the printing units that businesses’ use every day, operate with
four or six fixed colors and create visual colors by adjusting the density of
the dots of each color. The variations
in density allow your eyes to process different colors from the reflections of
light from the different concentrations of dots. This is how everything from magazines to
labels are printed today it is even how your television and smart phone send
you images. The problem is, this is not
how 99% of apparel is colored today, that process hasn’t changed in hundreds of
years. Digital process color can remove
the pre press costs and press preparation labor as well as the post-printing
cleanup that drives minimum inventory purchase requirements.
 |
|
Example: The critical criteria for matching colors and
multi location output using digital Active Tunnel Infusion
permanent dye and
print coloration.
|
The transition isn’t easy it requires a detail
understanding of the basic colors and their distribution and dot density as
well as how the colorant reacts to each fiber type and construction. Unfortunately the “help” landscape is not
populated with many experienced practitioners.
The color experts are generally ink makers or printer makers and neither
have experience with the multitude of fabric and fiber combinations or the
multitude of care and wash tests required.
The fabric and industry experts have little experience with RIP’s and
dot placement so they often have little hope of color matching. This lack of integrated end-to-end knowledge can
be a real bump in the road. But then, learning how to use process color is not
any more difficult than learning how to use e-mail or a smart phone. Skills most of us have conquered over the
last few years.
2. Financial Integration: Understanding Physical Inventory Risk and Virtual Inventory Opportunity
A Virtual Inventory (VI) is a
digital warehouse of SKU’s that exists in binary form and is ready to convert
to physical product on demand. In VI
form a hundred thousand square foot physical warehouse of products in all sizes
and prints fits in one TB of storage on a standard computer. A fully complete VI contains all images
needed for retail merchandising and online presentation of the product in
3D/360° and all 2D nests and TekPak data needed to print/dye,
sew, label and finish the product on demand.
The savings in inventory management, reduced shrinkage loss, and storage
space costs are obvious but minor compared to the savings from avoiding over
production. Over production and the
resulting surplus inventory is the largest single contributor to the profit
erosion plaguing retailers, brands and producers today. According to “AcceleratedAnalytics.com”
retailers are selling less than 25% of products at retail price in
the first 8 weeks on display and less than 30% after 13 weeks. As a result of clearance discounts unit sales
are up but gross profits are down. Closing
locations may improve corporate G&A but it does nothing for individual
store operating costs, in fact it increases the inventory pressure by reducing
selling outlets.
 |
|
The inventory glut of off-shore mass
manufacturing is eroding
profits used to operate stores and pay employees.
|
This systemic glut of inventory and the accompanying
financial risk spreads up the supply chain to the brands and manufacturers, who
order or produce volume to leverage cost, then have to absorb charge-backs and
shipping order cancellations. At this level no amount of “Brand Outlet Stores”
will provide anything but temporary relief for this unsustainable economic
system of “Over Produce-Discount-Dump” apparel marketing.
3. Communication Integration: Adopt Real-time Sales and Ordering Data, Analysis and Communication
Since there is no demand manufacturing without demand, it
is critical for manufacturing to have direct access to consolidated POS
data. This data needs to include
distribution path protocols and transit times as well as status of retail on
hand sales inventory. One of the biggest
problems with demand manufacturing becoming a reliable source for retail
replenishment is POS systems that do not consolidate and order in real
time. The speed and accuracy of
inventory movement data is a basic component of building an effective and
efficient virtual inventory. Knowing the
characteristics and trends of a products movement is critical to establishing a
safe and appropriate on hand inventory and a consolidated Days-of-Supply (DOS)
for production scheduling. Product
movement mapping is critical for manufacturing and distribution scheduling, as
well as establishing on-hand DOS inventory safety levels at every product
movement stop between raw materials sourcing and final customer fulfillment.
Technologies like RFID and enhanced PAM and ERP software
are available but must be expanded to process and order product on a much more
timely basis to support demand manufacturing and weekly store replenishments
store by store and SKU by SKU.
4. Process Integration: Embrace Fully Integrated Solutions Connecting; Merchandising to Inventory to Production to Fulfillment
The apparel and textile industry was historically built as
an interrelated system of independent companies or cottages and for the most
part that system remains. The industrial
revolution only increased the size and production volume of the cottages, but not
the structure of the independent stations along the supply track. The connections between the farm, factory,
brand and store stations were working until the train was required to travel at
a much faster speed than the tracks could sustain.
Now that the technology is available to sustain the
demanded processing speed at each station we need to fix the tracks and bridges
to sustain the new digital system.
One bridge must be built between digital design platforms
and consumer product 3D/360° display devices that
provide customization and fitting both on the Internet and in-store. The same software must produce a
corresponding 2D pattern and TekPak suitable for storage, search and printing. Another bridge that needs to be built is
between consolidated POS data and the Virtual Inventory to provide scheduling
and logistics input for all the stations down the line to the store or online
transaction. Until all the stations are
connected and the supply and sale are linked a light speed the system will be
as efficient as its slowest link. The biggest opportunity however is that
brands and retailers can set up a test mini-factory to focus on a small
decoration sensitive product group like leggings or children’s pajamas and
profit from demand manufacturing immediately.
Summary
There are specific differences between a demand
manufacturing plant and a traditional assembly line mass manufacturing plant.
The primary profit approaches are very different. A demand plant is built to deliver product from a virtual inventory and
to assure a profit by replacing product that has been sold at retail price,
preventing clearance dumping. In mass manufacturing the buyer produces
profit by leveraging the cost through volume and manufacturing efficiency. The basic personnel organization of the
demand plant is in integrated independent modules that move variable product
traffic through a series of control and quality check points. The mass
manufacturing plant, on the other hand, produces a continuous line of fixed
identical production ending in the final inspection of the product. In demand manufacturing the emphasis is on
individually addressable customer value instead of cost leverage of volume
efficiency of mass manufacturing.
