Sourcing Journal: Production Efficiency Survey Report 2019

Executive Summary

Every facet of the apparel and footwear industries are feeling the pinch. Timelines, budgets and resources are shorter, smaller and harder to obtain. At the same time, expectations continue to rise.

The internet has put production and fulfillment on fast-forward, relegating lightening-fast speed-to-market to table stakes. Meanwhile, the margin of error for product defects has evaporated thanks to an increasing number of products heading straight from the factory to consumers’ homes.

And all of this is happening against a backdrop of political turmoil that has global supply chains in flux and endangered.

This do-more-with-less mandate has made efficiency the new watchword for both industries, putting all processes under the microscope. And the closer companies look, the more areas they find in need of improvement.

This report highlights:

• Macro trends necessitating greater efficiency
• Areas that have yet to be reformed
• Simple fixes that could have huge impacts
• The role every member of the supply chain plays in productivity and quality

The report incorporates findings from an industry-wide survey as well as additional context from experts, providing insights from the perspective of importers, patternmakers, brands and factories.

From the wide array of responses, it’s clear that productivity challenges begin long before production orders are placed. A large portion of respondents identified issues during product development, as well as either a lack of communication or miscommunication as areas that undermine production runs. One insider noted brands and retailers have a “major role in providing [factories with] timely info,” while another recognized that their company “should have a big role in analyzing their own initiatives first and treating factory partners like actual partners.” There was also a call to “streamline tech packs and communication,” which could reduce “errors due to incorrect or incomplete technical specifications.”

Additional challenges arise from demands that exceed the capabilities of traditional supply chains. As one survey participant stated: “Small orders, quick turnover time frame, tight delivery schedule [and] unexpected changes in planning” are major hurdles. Finally, respondents noted the problems that arise related to the varying degrees to which stakeholders embrace technology, with one pointing out that “getting overseas factories to change with the times is always a challenge.”

Ultimately these problems coupled with on-time delivery pressures often result in a range of quality issues, which, of course, further hampers efficiency.

While there wasn’t a consensus on a solution, many of the proposed ideas centered around:

• Better training
• Higher wages
• More consistent brand and retailer presence in factories
• A more collaborative factory-client relationship

From the survey responses, it’s clear that a closer working relationship between brands and retailers would have a huge positive impact. According to one respondent, “More on-site visits, [and] collaboration between design and the factory partners to find better, more efficient, lower cost ways to build product” is what’s needed to transform workflows. Meanwhile, others noted the need for more worker training, which puts more responsibility on retailers and brands, but one respondent said offering this assistance could have far-reaching benefits. “By being demanding on specifications and end product quality, you train the workers to get better for all of their clients, not just your own business,” they said.

No matter which tact a company opts to take, the reality is that addressing problems related to efficiency is even more challenging as geopolitical concerns loom over every sourcing decision. Further, the ongoing tariff escalation between the U.S. and China means brands and retailers are increasingly working in new countries with factories with which they’re not familiar. The result is uncertainty in skill sets, capacities, lead times and quality—all of which calls for supply chain partners to work even more collaboratively.

Efficiency Challenges

The good news is 57 percent of those polled believe their supply chains are more efficient today than they were five years ago. For 28 percent, however, things have been stagnant or, in some cases, moving in the wrong direction. And even for those on the upswing, there’s room for improvement.

The primary areas respondents focused on were delays due to the product development phase, the industry’s inability to deal with the size and frequency of orders today, and the need for technology to improve communications.

Other concerns like timely access to raw materials, silos within the organization and cultural barriers also received multiple mentions.

Planning

One respondent on the factory side put the blame for efficiency issues squarely on their clients. “We would be more efficient if our clients changed how they would respond, especially the retailers. We have to wait for information and they need to plan and make decisions quicker,” they said.

Another survey participant admitted that “poor planning during the development stage” hampers their ability to work more efficiently with their factories.

Ultimately, there seems to be enough blame to go around.

Another person who was polled spoke for many when they said “both sides” contribute to the problem by “not respecting the timeline and agreed upon [time and action calendar].”

Peter Wai Chan, production management chair at the Fashion Institute of Technology, said it’s impossible for factories to be efficient when they’re not receiving what they need to do their job. And he should know: Chan is also co-founder of Sunrise Studio Inc., a high-end sample and production factory in New York.

“If our clients can provide us all the raw materials on time, all the patterns on time or accurate patterns, we can increase our efficiency. We cannot do anything until we have everything on our table. It’s teamwork,” he said. “If the client has issues like giving us bad quality fabrics, etc., they will [stall] our production.”

For Jahir Ahmed, compliance/QC and global sourcing manager for Philhobar Design, a Canadian importer for brands like Catherine Malandrino, Nicole Miller and Ike Behar, brands and retailers can, in fact, throw a wrench into their own production processes from the very beginning.

“Brands aren’t focused on the beginning assessment,” he said. “If I place an order, I have to know if they’re capable of handling it.”

In other words, if brands and retailers place an order without fully vetting a production facility, there’s no way for them to know what types of capacity, skill or compliance issues could crop up down the line. And any of these surprises could lead to missed ship dates, increased remakes and disappointing margins.

For anyone skeptical that better planning at the product development stage could make a significant difference, 45 percent of the industry insiders surveyed credited it with aiding their company in improving efficiency.

Read the report here: Production Efficiency Survey Report 2019