The Apparel manufacturing industry today faces many challenges. Buyers are continually demanding shorter lead times. In many instances large volume orders are giving way to moderate to small volumes with multiplicity of styles. Quality norms are becoming stricter by the day. Delivering on time has become of paramount importance. A majority of the manufacturers face the below challenges in their day to day operations
On time delivery
On time deliveries (the original delivery dates as given in the PO) are well below 50% for the industry as a whole, with companies struggling to avoid air-freight & discounts.
A significant portion of top management time is lost in expediting delayed orders whether in the supply chain (due to delayed raw material arrival) or on the shop floor.
Incomplete Inputs for starting Production
Complete raw materials (fabrics & accessories) never arrive "as one set" for starting production for an order. Some components are always missing on the "Planned cut Date", with production managers either being forced to start production with incomplete components or take into production, alternate styles not on delivery priority.
This leads to situations - where the order is partly made & is waiting on the shop floor for the missing component. The incomplete order blocks the "production capacity" of the shop floor. Since the order is started, stopped & restarted, storage, handling & accountability issues also kick in, affecting both the quality & on-time delivery of the order.
In other instances due to "incomplete inputs" the shop floor 1st goes idle & generally towards end of week or month works over time, day & night to compensate for time lost & to meet delivery commitments.
Despite inspections at multiple points, quality problems arise from time to time, whether in supply chain - in terms of raw material quality or in finishing or processing ( washing ), in value added processes ( such as embroidery & printing ) or even in sewing at the shop floor.
A lot of productive time is lost on the shop floor due to changeover of styles. Frequently a new style hits peak production only on the 2nd day or the 3rd day. By then the production ends & a new style has to be introduced.
All above factors combine to massively reduce the "effective capacity" of the shop floor.
Most companies attempt to tackle these challenges by emphasising on efficiency ... in other words focussing on continual utilisation of machines. Thus, whether it is the supply chain or the shop floor, the emphasis is to flood them with orders. Thus, to maximise efficiency & lower the cost per minute, "large batches" of orders are naturally preferred everywhere.....from the supply chain to the shop floor.
To make larger batches, every department tends to group orders of similar type (styling, construction, same fabric type or even colour) & works on them, in an attempt to maximise its own efficiency / performance. Thus many orders are pulled ahead of their priority to make a bigger batch & hence produced ahead of time - while some priority orders are left behind due to smaller volumes...and get delayed.
This leads to a situation where many departments despite working long hours produce wrong priority merchandise, jeopardising deliveries of priority orders.
All above factors work in tandem to create a situation where:
A lot of Inventory / WIP present everywhere - along the supply chain as also the shop floor. Many production orders are simultaneously processed, yet not shipped out on the "original delivery dates". Factories struggle to avoid air-freight & cancellations.
Due to high WIP Lead time for completion of orders increases.
Quality problems also erupt, often in the last minute, further causing delivery delays & shortages
The order to ship ratio is often not good with many pieces going into rework & rejection.
Due to the larger lead times, cash to cash cycle elongates & this in turn increases the requirement for working capital.
Due to elongation of the cash to cash cycle the factory faces liquidity issues from time to time; hence working capital becomes a challenge.
All the above factors combine to lower the profitability & the ROI of the company.
The direction of Solution
Most conventional "Lean implementation programs" focus their implementation efforts only on the shop floor, aiming to increase efficiency. Given the inherent nature of the industry, order volumes are smaller & every 2nd or 3rd day a new order comes into shop floor for production. The real challenge lies in the supply chain to coordinate & get all raw materials to the shop floor as one set at the same time. The challenge thus lies, not at the shop floor but "across the entire supply chain".
Our solution elements are comprehensive & encompass both the supply chain as well as the shop floor. The key elements of the solution in sequence are:
Implementation of the CK (complete Kit) concept - across the supply chain level. This brings about synchronisation in the supply chain & all material required for an order are available for production to "shop floor" as one set - called CK ( complete kit)
Implementation of a Single Priority System for order execution across the company. The Single Priority System spans across both the supply chain & the shop floor.
Implementation on shop floor to introduce Quality at Source, Cellular layouts & Rapid changeover for increased productivity.
Implementation of the Solution Elements typically delivers the following results:
Due date performance ( DDP ) goes up to above 90%
Lead times become significantly shorter - in some cases they are reduced to half the industry standard lead times of 90-110 days
Execution of orders happens with Single priority system across both supply chain & the shop floor.
Due to continuous feeding & quality improvements, productivity on the shop floor increases substantially
Inventory levels reduce - to the tune of 40%, substantially freeing up working capital
Sales increase by 30% - 40% within existing capacity, people & time, with marginal Operating Expense increase
Leading to substantial increase in Profitability