The textile industry in the world: The most agile and versatile.
Hundreds of thousands of garments are produced daily on a global scale in record times. Each and every one of these garments is produced based on the likes and latest preferences of consumers. Getting closer and closer to the customer, faster and faster, that is how the textile industry reacts to fashion trends.
Those clothing items, once produced, are packed and sent by air or sea from origin, the regions where most factories are located. In combination with ground transportation, garments are delivered to large central warehouses owned by different brands to be immediately distributed to points of sale.
This is when we get to the central topic of this analysis and the following question arises:
How has the textile industry managed to provide such an immediate response to the consumer’s wishes?
The first answer I imagine, perhaps intuitively, is that fashion is the industry that has adapted the best to globalization. If we dig deeper, creative minds and entrepreneurs in this sector, who already had a “vision and contact with the world” even before globalization, have not only been able to adapt to it, but have also used it in order to turn it into a competitive advantage.
However, this first answer is too broad. In order to deeply understand today’s fashion industry we must seek for something far more particular, accurate and clear about its functioning, its management system and results.
In this analysis we realize that little has changed in textile factory production lines over time. Therefore, little has changed in manufacturing techniques. We can’t find the solution to our conundrum in this aspect.
After further discussion, we come to the conclusion that what has fundamentally changed since the days of traditional textile industry to the current fashion industry is stock management, the generation of more statistical data and an improvement in processes.
Therefore, that immediate response to the market has been achieved thanks to the reduction of stocks based on the implementation of the “Just in Time” model, the generation and deep analysis of business information, the improvement of purchase and production processes, and an absolute efficacy of the logistics network.
Breaking away from the traditional time and pace established in the conservative textile industry of yesterday with two seasons a year has been possible thanks to the added value in the supply chain. This has been accomplished by improving response time; optimally positioning productions in order to increase volumes, accelerating production times and optimizing the transport and delivery of products.
In summary, raise productivity, reduce costs, shorten processes to the minimum and increase flexibility.
A large part of this has been achieved thanks to technological and communications developments that have led to globalization, which –in connection with my initial intuitive response—has been perfectly leveraged by the textile industry to create value.
Fast fashion, an intermediary between the client and the provider.
The fashion brands that produce fast fashion, figuratively speaking, are the intermediaries between the demand at stores and the supply chain. Because of the speed at which that intermediary needs to analyze and decode the customer’s message, it could be defined as a “simultaneous translator”. These structures must possess analytical capacity and accuracy to detect the consumer’s desire, what they want, and to establish effective dialogue with suppliers, through whom they must provide quick and efficient satisfaction.
If that dialogue is clear and steady, these companies will achieve what every fashion company aspires: response speed, product turnover, large volumes and profitability.
Perfectly greased and synchronized supply chain.
The initial approach of the textile industry and the fashion business is long gone.
The process now begins where the final line once was. First, the sale price of a garment is set, then the profit margin, and that is how we arrive to the purchase price. That will be the target price for the garment that will be requested to the supplier based on a certain amount of items.
From the automobile industry, the fast fashion took the Just in Time concept and it is currently applying it to the supply chain: high style turnover with almost no storage.
Given this scenario, suppliers of fabrics, accessories, beads and materials have had to restructure their working systems to be more flexible and agile.
Basic, non-perishable articles with clear rotation are purchased and stored in order to give an immediate response when purchasing orders are received. In addition to the product, now the service has become an important value. If suppliers don’t have response capacities, they lose orders.
For raw materials suppliers, delivery times are always less than a month and they range from two to three weeks. The orders they lose are those with a required delivery timeframe of less than 10 days.
As the textile value chain is one of the most extensive and varied, many parts are involved in the production of a given material. If we focus on the finished garment, that chain is even more extensive and it multiplies exponentially as the model becomes more complex, whether in its design or the raw material used for production.
The try-and-success model in combination with “Just in Time”.
A few units of a given model are produced and sent to a number of preselected stores to be sold. With set parameters of time and pace of sales, if the results are positive because the garments have had a warm reception, have been sold within the specified timeframe or were quickly sold-out, the company sends an order to the supplier for the mass production of this model.
With the try-and-success model, through their sales ratio, the production of a model implies less risks, quantities to be produced are defined with greater accuracy and storage space in stores is eliminated.
World textile industry
This model combined with the sophistication of the Just in Time system from the automotive industry has created four key elements in the industry:
Steady, fluid communication between the stores and the production department to detect the customer demand and satisfy it with the right product.
Strong link among departments: sales, design, patterns, production, sourcing and logistics.
Production of small quantities in order to reduce risks and focus on production times more than costs.
A perfect combination between the logistics system and the Just in Time model.
This article was originally published in the June, 2016 issue of Peru Retail.