COMING OF AGE WITH THE INTERNET

As a student of history I’ve often wondered if people that were alive during the transition between one cultural/economic age and the next realized they were witnessing a critical evolution in the human experience. Did Johannes Gutenberg realize that even though he would be given the credit for the first use of movable type (a technology that had been developed years before). His marketing choice to print the Bible encouraged church to sponsor widespread literacy that ultimately led to individual property ownership and the science and technology of the Age of Enlightenment. History can be very obscure if you happen to be living in the middle of it. Now as we stand at the twilight of the Industrial Age and the rising Information Age, can we use our historical experience to choose the smoothest transition.

Product development in the information age

 Starting with the fundamentals, what’s the difference between the industrial age and the transition we are now in to the information age. In its simplest form products developed for the industrial age were generally focused on capacity and manufacturing efficiency in a specific technology. In the information age product development has to focus on the integration of critical data and functional translation across technology lines. Sometimes that concept is a little difficult to visualize but in the information age everything from pictures, to airplanes, to cars, to fashion is visualized, stored and manufactured in digital form. So in the information age the synergy of products, manufacturing, marketing and purchasing occurs in real time in a digital stream.

Integration vs Specialization

Dealing with this transition means that ideas, concepts and physical products have to focus not so much by building barriers to entry for their competition but, to create market power and profits by integration with manufacturing and communications systems. This means that any product development needs to be aware and if possible to embrace all four pillars of the information age. Let’s examine those four pillars one by one; first, the one we are all familiar with, is the real-time instant communication over the Internet. This ability to communicate, influence, decide, transact and even harm individuals and organizations anywhere in the world in real time is a dimension of our life that most of us have not yet learned how to safely and effectively use. The second pillar of the information age AR is just coming into its own, whether you call it Augmented Reality or virtual reality it is the ability to communicate at personal sensory level that transmits imagination and future reality in real time. How we use this requested or intrusive sensory experience has yet to be determined. There is no question however that represents a fundamental tool for marketing ideas, influence and products in the information age. The third pillar of the information age is Artificial Intelligence (AI) or the ability for digital machines to remember, learn, infer and ultimately decide based on more information than most humans can process in real time. In other words, AI allows us to distill and use much more information than we can normally process in the human time continuum. Most of us who visit the Internet have experienced websites that help us decide we want to buy, who we want to talk to or even which “ facts” we want to believe. As we’ve all experienced in the last few years weighted AI can drive huge herds of individuals and the direction of specific products, ideas or actions. Finding a way to understand and control the weights that are applied to this elementary use of AI is one of the first conundrums of the information age. As AI becomes more sophisticated it will drive even the machines that we make that in turn, make the things we buy. This ability leads us to the fourth pillar of the information age, the sophistication of Digital Manufacturing. Digital manufacturing is not limited to the antiquated industrial age concepts of automation. Traditional factories were built primarily based on efficiency and capacity so the idea of automation was to do individual tasks more accurately and efficiently than humans.  Digital manufacturing is the integration of AR, AI and Internet communication to transform Virtual Inventories into individual physical products.  Products can be customized, individualized by order or focused by demand and are manufactured in real time from a virtual inventory of digital information.

The Unintended Effect

If we examine the impacts and imbalance of the development of each of the basic components of the information age it is easy to see why the development of integration technology is more important at this point than the development of individual technology. One of the clearest examples is the development of the Internet as an economic engine without the co-development of the matching digital manufacturing technology. Even though digital printing has developed a rapid rate the integration of digital coloration of apparel and textiles or the integrated development of 3-D printing of toys, auto parts and tools has lagged behind as a viable economic engine. The economic focus of the Internet has been in support of traditional manufacturing, outsourcing and the search for cost savings. In the future this omnipresent communication tool has much to offer including the increase in marketing reach, product focus and merchandising and manufacturing consumer customization. Today's reality is however, growth of the Internet without synchronization with the other pillars of the Information Age has in turn increased the waste, pollution and labor abuse caused by the stockpiling, clearance and dumping of traditional mass-produced inventories.

Using the new digital tools

Synchronizing individualized offerings through micro merchandising, while limiting on hand inventory through demand sourcing and matching production with sales through digital manufacturing will become the profit ensuring norm of the information age. Using AI to offer targeted product over the Internet, while offering the augmented AR experience of visual try on and tailoring measurement in store will begin to restore personal value instead of just tolerating almost the right product based on price value. For the basic products that the store must stock in order to preserve its market positioning merchandisers and buyers will use AI-based learning algorithms to predict the individual on hand inventory lifecycle of each SKU by store location. This demands sourcing will take advantage of the pollution free 3 to 5 day replenishment available through the close proximity digital manufacturing. Using these new tools to create a seamless path synchronizing selling and manufacturing will create smaller, but responsive on hand inventories through distributed micro-factories tied directly to profit making products.

Introducing the Future Factory Models of Demand Sourcing 4.0

Choosing A Digital Factory Footprint

Digital factories have one common mission… they transform a digital virtual inventory of SKUs into physical product. It doesn’t matter if the factory is making furniture parts with CNC cutters or assembling cars using robots the mission is the same.  However, the concept of a Micro-Factory as a stand alone structure is misleading at best and doomed to fail at worst.

Integrated demand sourcing digital factories can be tasked an unlimited array of dedicated factory footprints organized for specific profit and sustainability goals. How the symphony of different technologies is integrated to efficiently complete each individual quality product and deliver it on time, at a profit, environmentally and economically sustainable is a highly complex orchestration.

Digital apparel factories tend to fit in four different general structures.  Each of these generic types is based on production segment of the market or the supply chain.  Each factory is specifically tuned to support an individual business plan.  The experience gained by building each of the factory types and their variations since 1996 has provided a wealth of lessons that are available at AM4U.com or through direct contact with AM4U consulting at bgrier@am4u.com.

The demonstration of different factory configurations at SOURCING at MAGIC created a substantial buzz and sales for the exhibitors. Demonstrating the integration of the role of Digital Manufacturing and the impact of real time sourcing on the financial well-being and future global sustainability is a mission of SOURCING at MAGIC. Joining these factory types together with the 3D of visual design, the Augmented Reality (AR), retail/online merchandising, social marketing software and Virtual Inventory (VI) is the next step in online and retail consumer marketing.

The Direct-2-Garment (DTG) Demand Factory

This factory custom prints, imprints and/or embroiders decoration directly on athletic and leisure finished apparel.

It can be placed almost anywhere and provides outputs from 100 to 600 units per eight-hour shift depending on the printer output. The thousands of small to large DTG T-shirt factories reside in garages and small and large factories throughout the country.

Some of the key characteristics of the DTG production sites are:

• The small factories require no special power or air service, they operate at normal house power and a small commercial compressor can handle any air requirements.
• Most DTG operations do not require sewing capability because they are normally operating with blank pre-sewn garments.
• These facilities also can operate using either direct to garment printers or images applied to the garment through sublimation or transfer.
•  In most states DTG operations do not require either regulatory labor permits or expenses to dispose of toxic waste chemicals or water. This is because the printers used do not require dangerous chemicals or significant post-operational cleaning or garment washouts.

The downside of the DTG opportunity is oddly a byproduct of the low cost of entry and easy operation. Since there is very little barrier to entry the nationwide proliferation of DTG sources has created overwhelming competition and price pressure for small operations. Focusing on very short run custom printing has provided some relief but eventually DTT factories will have to expand from printed T-shirt blanks to additional cuts of athleisure apparel and accessories.

Because of the high level of competition DTG providers need to find a space in the sourcing path for local boutiques and small specialty retailers this opportunity will come as a result of the expansion of the product line beyond T-shirts.

 As stated, these factories are used to produce the initial stocking order for large multi-location retail chains and brands. This technology allows sourcing systems to become extremely lean because there is no requirement for time-consuming prepress or multi-location transportation of product. These factories also allow buyers to take full advantage of the digital design systems that can provide virtual inventories with wide ranges of choice and the ability to create multiple SKUs dedicated to various locations and fast-changing Internet trends.

Some of the key characteristics of the Digital Production factory sites are:

• The DP factories require special power or air service, including a minimum of 800 amp electrical service, numerous transformers and a complex compressed air delivery system.
• Most DP operations can require significant sewing capability based on their structured capacity.
• These facilities also can operate using either direct to fabric printers or images applied through sublimation.
• With the proper additional equipment DP’s are capable of permanently spot color dyeing fabric using change-on-the-fly technology without the use of any water.
• In most locations DP operations do not require either regulatory labor permits or expenses to dispose of toxic waste chemicals or water. This is because the printers and dying technology used do not require dangerous chemicals or significant post-operational cleaning or garment washouts.

 Unfortunately the downside of the adoption of digital production has been an industry that has a legendary resistance to change. This resistance coupled with significant requirement for capital investment and a microscopic supply of technically trained interdisciplinary workers and management will cause this necessary change to be roughly the equivalent pushing a brick in the mud.  Currently, the lack of integration between the digital technologies of merchandising, design, coloration, cutting and sewing are making the seamless vertical combination of these multiple technologies extremely difficult.

The Forecast Based High Volume Digital Production (DP) Factory

This high-volume factory design is used primarily for Retail and Brand initial stocking orders it included overhead sewing delivery systems, multi-ply digital cutting and high volume printing. This design requires at least 400-800 amp service and compressed air distribution and multiple transformer power supplies.  These factories can output 3000- 6000 m² per hour of fabric with no minimums or pollution.

High-volume digital production is the likely replacement for current coloring, printing and cutting technology. DP factories are still likely to be overseas or at least in areas with lower labor costs. This type of factory still demands huge sewing facilities with hundreds if not thousands of product handlers, sewers and other support individuals. Until sewing is sufficiently automated high-volume factories are likely to remain offshore.

 As stated, these factories are used to produce the initial stocking order for large multi-location retail chains and brands. This technology allows sourcing systems to become extremely lean because there is no requirement for time-consuming prepress or multi-location transportation of product. These factories also allow buyers to take full advantage of the digital design systems that can provide virtual inventories with wide ranges of choice and the ability to create multiple SKUs dedicated to various locations and fast-changing Internet trends.

Some of the key characteristics of the Digital Production factory sites are:

• The DP factories require special power or air service, including a minimum of 800 amp electrical service, numerous transformers and a complex compressed air delivery system.
• Most DP operations can require significant sewing capability based on their structured capacity.
• These facilities also can operate using either direct to fabric printers or images applied through sublimation.
• With the proper additional equipment DP’s are capable of permanently spot color dyeing fabric using change-on-the-fly technology without the use of any water.
• In most locations DP operations do not require either regulatory labor permits or expenses to dispose of toxic waste chemicals or water. This is because the printers and dying technology used do not require dangerous chemicals or significant post-operational cleaning or garment washouts.

 Unfortunately the downside of the adoption of digital production has been an industry that has a legendary resistance to change. This resistance coupled with significant requirement for capital investment and a microscopic supply of technically trained interdisciplinary workers and management will cause this necessary change to be roughly the equivalent pushing a brick in the mud.  Currently, the lack of integration between the digital technologies of merchandising, design, coloration, cutting and sewing are making the seamless vertical combination of these multiple technologies extremely difficult.

The Demand Based Integrated Micro-Factory

This factory design works directly with the point-of-sale information from retail and online clients to replenish only what is sold or required to maintain proper shelf stock. The Integrated Micro-Factory (IMF) represents the most significant change in the traditional sourcing structure.  The IMF is a substitute for the projected on-hand inventory of product in excess of the initial stocking order.  The IMF allows merchandisers/buyers to replenish in-store or online sales as they occur rather than purchasing the entire forecast and holding finished product awaiting sales.  The IMF’s mission is to increase product offering while removing inventory risk. The IMF is best placed in or near the distribution center and can operate on 3 to 5 day delivery directly from consolidated POS data.

Some of the key characteristics of the Integrated Micro-Factory sites are:

• This factory requires a minimum of 5,000 sq. ft. in a dedicated space with compressed air distribution and 400amp service.  An IMF can output 300—1500 units per 8-hour shift depending on sewing capacity.
• IMF’s can operate using either direct to fabric printers or images applied through sublimation.
• With the proper additional equipment IMF’s are capable of permanently spot color dyeing fabric using change-on-the-fly technology without the use of any water.
• The IMF with the proper additional equipment is capable of full dye and print in the same pass as well as art composite placement and piece drop dying production technology.
• The IMF configuration is also the best suited for higher volume (more than 200 units per day) Purchase Activated Manufacturing (PAM) or custom one off production.
• In most locations IMF operations do not require either regulatory labor permits or expenses to dispose of toxic waste chemicals or water. This is because the coloration technology used does not require dangerous chemicals or significant post-operational cleaning or garment washouts.

The Mobile Project/Event Micro-Factory

 The Mobile Micro-Factory (MMF) design is specifically built to fit on a single truck and be installed in a 200amp facility within 3 to 5 days. Its purpose is to provide provisional production for license products and other apparel and accessories, which may have a specific lifespan. It is also used to support events like concerts and fairs. It can produce up to 1000 units per eight-hour shift depending on configuration.

Some of the key characteristics of the MMF sites are:

• The MMF can operate from a truck, tent (with a 40kw generator) or a space with 200amp service.
• The mobile factory normally requires 3-5 days for installation and product testing.
• MMF’s are designed to convert a pre-established Virtual Inventory of multiple designs to finished product on demand.
• These facilities also can operate using either direct to fabric printers, images applied through sublimation or embroidered patches.
•  In most locations IMF operations do not require either regulatory labor permits or expenses to dispose of toxic waste chemicals or water. This is because the printers and decoration technology used does not require dangerous chemicals or significant post-operational cleaning or garment washouts.

Summary

Virtual inventories, digital manufacturing and real-time demand sourcing are here to stay.  Ten years ago 50m² was a top speed for printing fabric today inkjets can operate 100+ times faster and change images and colors on the fly.  Today, we can transform a digital file into a pair of shoes.  Today, a picture of the Internet can shift a fashion trend 180° in just hours while a style forecasts still takes months of prep and conventional production.  Today, the World Bank says that 20% of the world’s water pollution comes from coloring and processing textiles while the digital manufacturing technology is available to dye and print using no w

3D Digital Design and Demand Sourcing

Over and over we hear the mantra “ time-to-market” is the key selling point for the exciting new technology of 3-D design. Although time-to-market can be an important function of digitizing the design development pattern making and other functions of 3-D, it’s not the most important result of the adoption of this technology. The incredibly complex development that reduces a complex product including design, machinery, process and colorization to a packet of binary code that represents a product in its entirety is a fundamental building block of the information age. The real impact point of 3-D design is not its function but the form of its output. In this vision of the real future, hundreds of thousands of square feet of warehouse space and billions of dollars in inventory are reduced to tiny computer files accessed from a digital cloud through your phone, tablet or laptop. Millions of products accessible on-demand through digital manufacturing and ready for purchase when the consumer is ready to buy. Tons of waste and pollution disappear because products are produced on demand from local factories from vast virtual inventories available online or at your local store. Stores that using AR to provide the opportunity for shoppers to browse through hundreds more products than were ever available from racks and shelves. Products that are available digitally manufactured on-site or in a nearby Micro-Factory. These successful retailers no longer have to risk inventories built from long-range forecasts and rendered outdated by ethereal trends that shift with the speed of the Internet.

The Seismic Impact of Virtual Inventories
Building virtual inventories is the most important eventual output of digital 3-D design. As the companies who create this fantastic software begin to understand their overall role in the commerce of the information age they are extending their software to include both merchandising and manufacturing links. The ability of the virtual inventory to connect directly with digital manufacturing allows it to become a true infinite warehouse of products. Even more important is the demand link between virtual design and the retail and e-tail merchandising of products.  Providing visual link that allows retail stores and e-tail providers to increase their selection through a highly efficient AR experience that allow the consumer to efficiently find exactly the product they want is the critical part of the extension of the 3-D digital design function. Using 3-D software as the initial point, vast inventories of products can be created through virtual design, sold through AR’s virtual sensory experiences and digitally manufactured on demand. In addition the further development of real-time digital design will allow consumers and buyers to customize product to fit their specific needs guaranteeing higher value and by extension higher profits. The digital design information handshake between virtual inventory and digital manufacturing will allow high levels of efficiency and accuracy while reducing waste and pollution in providing these custom products.

Pursuing Profit Not Just Lower Costs
In reality ” speed to sale” will always trump “speed to market” as the ultimate goal for visual design software. Creating an efficient path with intrinsic value as a path to the ultimate source of funds, the consumer, will always be a winning hand. Unfortunately, very few of the strategic planners in the visual design category are clearly pursuing the virtual inventory solution as their ultimate goal. In the end the ability to create more designs faster without linking them directly to merchandising technologies is likely to increase the risk of overproduction and possibly lower the sell-through rate at retail.
Is understandable why the software companies have focused on the process of design and development because these areas were both time-consuming and often the source of confusing or inefficient communication. Solving these problems could create a clear and quicker path through an expensive and difficult period of physical product development. Since cost savings was the focus of buyers at every level creating technology, which focused on saving time, and reducing confusion was a logical path. Now is the time for the visual software companies to begin to shift their target from just cost savings to increased measurable profits at the money generating end of the supply chain. Creating, digitizing and storing product in a form that can be easily manufactured and merchandised on demand puts virtual design software in the key role of generating profits. Capitalizing on this change in direction will put these companies in a leadership role as consumer goods commerce shifts from “supply and demand” to ”demand and supply” a paradigm which is the key to sustainability in the information age.

SOURCING at MAGIC Pioneers Integrated Purchase to Fulfillment Technology
Beginning next month SOURCING AT MAGIC will introduce brands and buyers to a new section on the floor dedicated to the evolution of technologies that create an integrated demand sourcing path from consumer merchandising through demand manufacturing and back to consumer fulfillment. This new fashion technology area will feature software and equipment dedicated to the new era of individualized high-value consumer merchandising. SOURCING AT MAGIC will continue to grow this section featuring new merchandising inventory and design technology twice year in February and August at MAGIC in Las Vegas.

Where Does the Micro-Factory Fit in the Sourcing World???

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.