Sourcing Journal: How Apparel Brands Maintain Factory Productivity Amid Consolidation

The future of the supply chain may be driven by consolidation as Covid-19 fueled bankruptcy hits more manufacturers and suppliers.

But even if more factories close, the challenges apparel retailers and brands have faced in gaining visibility over their processes can be overcome if they’re willing to get as close to the source as possible.

Jose Suarez, founder and CEO of Vaēso, a comprehensive digital shop floor execution system providing real-time visibility to the shop floor including work in progress, says that while consolidation concerns are real, retailers and brands still have ample room to improve productivity within their factories.

In fact, Suarez believes that these companies can double the rate of output within their factories with the same labor and overhead.

Case in point: Suarez highlighted that Caleres’ last factory in North America, which was shut down in 2003, would produce small runs within a range of 200 to 400 pairs of shoes in a batch, with an individual floor operator producing 2.3 pairs per hour on average.

“Seventeen years later, in nonathletic footwear in Asia, the average is 0.5, or 0.6 [pairs produced per hour]. The best factories are at 1.0,” Suarez said.“That shows you that there’s no reason why we can’t consolidate factories in our industry, dramatically improve productivity of those that remain and not have to construct another factory for the next 10 or 15 years if we start leaning out our factories. But the only way that’s going to happen is to get the retailers and brands involved down to the shop floor, and a lot of them are resistant.”

Naturally, that lack of urgency could be, and in some cases already has been, a major detriment to retailers and brands as they deal with fluctuating, uncertain customer demand, especially as the pandemic starts to slow down in 2021.

To put it bluntly, Suarez said that “probably 100 percent” of retailers and brands had no visibility into their shop floor in the early months of the pandemic.

“There was total blindness as to how to manage and shift production as we started having the factories come back,” Suarez said.“I believe the industry realized that they were lacking in digital information with respect to the shop floor.”

Vaēso, which was built on the basis of improving the visibility, quality and productivity within factories, aims to train the workers, which it refers to as “Artisans,” to maintain consistent production quality, even as brands attempt to ramp up the efficiency within the factories.

The only way brands can bring in new, untrained artisans onto a production line and get them up to speed on product production quickly is through digitization, according to Suarez. Vaēso provides its factory clients with an RFID-enabled tablet at every workstation, so that every unit product, whether it’s a bundle or single piece, will have an RFID tag.

“Every Artisan is going to control the quality of the previous workstation, and that’s how you start building in a zero-defect culture,” said Suarez.“That’s how you can ramp up and control quality and not have massive in-process rework, which is wasteful for our industry…Provide them with digital tools so that they understand the quality requirements of their process step before they pass it onto the next.”

Click the image to watch the video to learn more about why Suarez says retailers and brands must get more involved in managing factory efficiency and quality.