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| Micro-Factory at SOURCING at MAGIC built by TUKATECH, Mutoh and Graphics One and integrated by Kai Buskirk Photo by WDG |
Finding a Home for Apparel Micro-Factories
Have you been to an
apparel show or textile technology show recently? Seems like every show is
enthralled with the "Micro-Factory", the industry’s shiny new object.
It is exciting to finally see significant technology changes in the way we design
product, color fabric and cut the pieces of apparel and home products. All of
these wonderful demonstrations still beg the question: Where does the
Micro-Factory fit?
Hundreds of millions of
dollars have been spent over the last 20 years to perfect digital printing,
visual design, robotic cutting and new technologies for sewing. Yet with all
these investments the question of where the Micro-Factory fits and its ultimate
purpose is still shrouded in mystery. Is this new paradigm the forerunner of
mass customization or is it just a little production site for samples. Now is
the time to clear up that mystery and look at the purpose and goal of the
Integrated Micro-Factory.
Purpose of the Integrated Micro-Factory
The primary
function of the Integrated Micro-Factory is to convert a digital Virtual
Inventory in to a physical inventory on demand. That reality allows a direct
connection between the production of product and the demand of the market. This
function give sellers the ability to switch sourcing away from the risk of
supply searching for demand to a real-time relationship between consumer demand
and timely product production. In the simplest of terms the purpose of
the integrated Micro-Factory is to create a selling environment that is, “never
out of stock, or never overstocked” by removing on-hand inventory risk and
cost.
Goal of the Integrated Micro-Factory
The goal of
the integrated Micro-Factory is one simple word profit. The big
difference is where the profit comes from. In the traditional sourcing model
the profit is determined to a great extent by the cost of goods. The problem
with forecasting cost in today’s real time world of instant trends and
saturating news is ordering inventory months in advance of sale. Ultimately
this time gap leads to high risk of trend shifts and unanticipated over stocked
"duds" or under stocked “hot SKU’s”. These common conditions can
change the cost to profit ratio dramatically after the product is on hand.
Since, most manufacturers offer lower per unit price based on volume, pursuing
traditional volume discounts increases the probability of overstocking and the
resulting clearance discounts and profit loss. Pressing for lower cost also
drives lower labor costs and poor labor conditions that can result in lower
quality, environmental disasters and bad press or worse.
The Integrated
Micro-Factory deals with each of these profit losses. First, the virtual
inventory can be converted to physical product and restocked based on actual
sales, which eliminates profit stealing clearance discounts. Second,
higher profits based on better sales velocity and sustained retail price can
support better labor conditions. Third, the cost of product digitally colored
and produced on-demand in an integrated Micro-Factory is always fixed regardless
of decoration or color allowing for extraordinary decoration agility and
digitally exact quality. In addition, most micro-factories operate with no
emissions, no use of water or emission of toxic waste. Another amazing side
benefit is that in some multicolored apparel designs digital printing can
reduce sewing labor up to 35%.
A demand-based
virtual inventory converted by an Integrated Micro-Factory allows the retailer,
e-tailer or brand to produce exactly the required amount to initially stock the
shelf and then only replenish what is sold. This positive control of the
real-time product life-cycle and the ability to replace a non-selling SKU
without a loss from dumping the held inventory usually results in a dramatic
multiplication of profit regardless of a slightly higher per unit cost.
Demand Sourcing
Positive real-time
control of on-hand inventory by linking it directly to the demand driven
Integrated Micro-Factory is the fundamental feature of demand sourcing. In
order to construct and demand sourcing infrastructure the selling entity
whether it is retail or e-tail needs to complete three basic pre-activation
tasks.
Establish real time profit risk analysis tools
- Product velocity index: point score based on gross profit times SKU turns per week
- Profit Lifecycle track: Average selling price per unit sold vs total units contracted plotted by week.
Establish period sales forecast for high-risk silhouettes
- Build or source an Integrated Micro-Factory that can provide no minimum replenishment of targeted silhouettes with variable decoration on demand.
- Negotiate a “Style Contract” for the on demand delivery of the total period volume of the targeted silhouette based on SKU’s from the Virtual Inventory.
Establish a Virtual Inventory
- Using high definition visual design software build a silhouette construction and decoration TekPak inventory for the choices available in store and online for the SKU’s. (Note: 10,000 different SKU’s will consume less than a TB of digital storage vs over 100,000 sq. ft. of physical inventory warehouse space.)
- Test the selected greige fabric fit pattern construction of the offered sizes and/or shapes of the physical production silhouette.
- Install the software and communication links to facilitate POS based product lifecycle replenishment.
Micro-Merchandising
The next step is to
establish the product in-store and /or online. Using the product
information from the TekPaks and the high resolution images from the visual
design software build the Augmented Reality (AR) tool needed to portray the
product both in-store and online in 3D/360° visualization. It’s
likely that your risk analysis tools will lead to the conclusion that
printed designs represent the highest risk. These are the products that
will eventually have to be put on deep clearance because of sold-out sizes or
unpopular decoration. It is important to remember, that integrated
Micro-Factory demand production does not fit for all apparel products,
therefore; it is important to use the profit risk analysis tools to select just
those silhouettes/SKU’s that fit in a demand sourcing profile.
Micro-Merchandising
is shorthand for integrating the advantages of the virtual inventory and demand
production to focus on niches that can represent high velocity inventory sales
focused on short trends or localized opportunities. Because production
can match the velocity of sales trends without the risk of volume buying and
long production lead times. Buyers and merchandisers can turn on a dime to take
advantage of hot events or subjects that drive the market through today’s
instant communication. An additional value of Micro-Merchandising is that
retailers can focus on a more timely entry of fashion decorations that match
local seasons and events. In this time of wild climate changes spring season
and spring fashion do not arrive at every locale right on schedule.
Where Can I Learn About the Technology of Real-Time Demand Sourcing?
In summary,
finding the proper role and location for Micro-Manufacturing is ultimately as
important as finding and adopting this new technology. Integrated micro
manufacturing depends on building an understanding of virtual inventory and the
tools that you use to build the appropriate and efficient demand to support the
factory. Many of the vendors who provide the technology for micro-factories are
beginning to understand that integrating their technology for demand production
with the techniques and software that support demand sourcing is critical to
the continued pursuit of domestic production and apparel profitability. In
addition, some of the shows and conferences in 2019 are recognizing the
importance of demand sourcing along with demand manufacturing. WTiN's Innovate
Textile & Apparel Americas 2019 (ITA) on May 1 thru 3 will feature both
Micro-Factory and the supporting itegration technology. This August, INFORMA’s SOURCING
at MAGIC in Las Vegas will feature both micro-factories and training in the
tools for Micro-Merchandising and Demand Sourcing. Attendees will have the
opportunity to learn the details of risk assessment methods, style contact
structures and AR product visualizations. Support is always available from AM4U,
Inc. the leader in Integrated Micro-Factory and Real-time Demand Sourcing
development. Contact bgrier@am4u.com check out the Principles of Demand
Manufacturing and related videos at AM4U.com.
