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Impactiva process optimization footwear

Retail Survival Depends on More than Just Speed to Market

by Jose R. Suarez

Speed to market has been among the most talked about topics in retail in recent years, but while brands and retailers focus on simply cutting days out of production processes, many don’t realize the critical role consumer experience plays in introducing greater speed into the supply chain.

With growing competition, consumer demands and pressure for faster deliveries, speed to market is more essential than ever in the apparel and footwear industries. But speed to market requires more than just cutting down on production processes—it requires delivering consistently high-quality products through a season-less development process that allows for continuously available fresh product.

 

The importance of consumer experience

Today’s consumer wants a shopping experience with seamless, end-to-end gratification, including stores designed for fun and inspiration, input on product designs and new technologies to explore, like in-store virtual product try-on. But above all they want freshness—new product in the omnichannel all the time.

Unfortunately, factory bottlenecks have made it difficult for many companies to deliver this customer experience. Specifically, while brands and retailers are striving to create optimized demand chains with a pull-versus-push product strategy, their factories haven’t been able to accommodate this change in paradigm.

Among retail’s problems in delivering on those consumer demands, have been challenges at the factory level. Brands and retailers are looking to create optimized demand chains, a pull versus push strategy for product, and many factories aren’t yet aligned to accommodate. Add to that, labor costs are continuously rising, the pool of skilled labor is continuously shrinking and constantly country-hopping to chase the lowest cost simply doesn’t work anymore.

To overcome these challenges and achieve the real speed to market needed for growth and survival, forward-thinking leaders should concentrate on three key areas: thinking in days, not months to sure product freshness; producing right from the start to deliver faster; and cutting manufacturing lead time by embracing lean processes.

 

Thinking in days, not months

 The retail environment is quickly evolving, and in five years, today’s newest strategies to speed supply chains will be the new normal.

To begin, companies must rethink product design. They should standardize a high percentage of materials and components, design with manufacturing in mind, and increase the frequency of collections. Season-less product launching will soon be commonplace, with brands and retailers moving from 2 seasons per year to 6, 12, 24 or more. Manufacturing lead times will shrink to as little as 30 days, and tier-2 material vendors may start supplying with a mindset of days rather than weeks.

Brands and retailers should immediately shift their thinking, as the benefits of product freshness can already be seen at retailers that have remained successful despite the industry’s general malaise.

For instance, at T.J. Maxx, where comparable store sales continue to outperform analyst expectations, a continuous product roll-out has fueled the “treasure hunt” sensation for consumers and resulted in increased foot traffic. At Zara, the release of new collections every two weeks has given rise to the “scarcity sensation,” encouraging shoppers to buy on the spot. This strategy has also allowed Zara to avoid the vicious promotional cycle.

Conversely, Macy’s has largely stayed wed to its summer and winter collections, plus capsules, and its stable supply of brands and big discounts. Not surprisingly, the retailer has been struggling to get out of a longstanding sales rut.

 

Producing right from the start

 Once brands and retailers begin thinking in days, not months, getting factories to work in this same manner entails transforming their facilities.

Accomplishing these goals requires creating a factory culture of managing with data, numbers and metrics. In addition, it requires optimizing Tier-1 and Tier-2 relationships to allow for close partnerships that find ways to reduce material lead-times by 30 percent to 50 percent. Materials must arrive with extremely high levels of quality so that they can go directly-to-cutting without the need for time delaying 100 percent factory re-inspections.

 

Cutting manufacturing lead-time by embracing lean processes

Transforming factories also requires standardizing processes and enabling quick changeovers. To do so, companies should embrace lean strategies to maximize production flow and dramatically reduce manufacturing lead-times to hours and not weeks.

A key focus of this effort should be on creating a culture of continuous improvement. 70 percent of the efforts should be on change management and only 30 percent on implementing the necessary tools, like line balancing, standardized work, Kanban.

Companies should take steps to ensure that new behaviors and habits become a day to day standard for leaders, instilling values like discipline, accountability, transparency, positive energy, experiment-to-learn, and safety. In turn, those values will result in a culture of high worker engagement and a mentality of continuous improvement.

 

Case studies for achieving true speed to market

 Brands and retailers that are already focusing on these areas—through the implementation of a comprehensive quality assurance and continuous improvement programs—are yielding substantial results, as demonstrated by the following examples:

 

Women’s fashion footwear retailer. The brand, which produces more than 50 million pairs of shoes each year, faced delays among its Tier-2 leather supply chain. By implementing a Leather Quality Assurance Program with direct-to-cutting upon arrival from the tannery, it slashed 12 days from its supply chain. The company also improved its on-time delivery of its tanneries from 40 percent to 78 percent within the first 12 months. 99.5% of leather shipped without factory claims and nearly 98 percent went direct-to-cutting without factory re-inspection.

Casual women’s footwear brand. The brand, which produces more than 25 million pairs of shoes each year, was challenged to move production out of China due to cost reasons. In the new manufacturing country, they were getting a first-pass-rate of only 23 percent resulting in massive shipment delays. The company implemented a Footwear Quality Assurance Program, allowing it to reduce its rejection rate to less than 4 percent in only one season, thereby allowing it to meet their promised ship dates. Program teaching and coaching instilled a strong focus on quality among the factory’s artisans and supervisors, fundamental for the long-term sustainability of the transformation.

 

Ultimately, despite the many competitive and financial challenges facing the footwear and apparel industry, producing fresh, high-quality, efficiently made products remains the key to your future success. Your Survival = Consumer Experience * Speed2—the only way to ensure the sustainable satisfaction of all of your customers is to transform your demand chain now.

Impactiva Apparel Quality Control

Fast fashion calls for increasingly short lead-times

From what we read lately in fashion specialized media we get the impression that “fast” is never fast enough! All studies show that consumers want to instantly wear what they see and like. Brands and retailers work to shorten their conception-to-consumer lead-times in every possible way.

Today we want to address one of those possible ways: optimizing the link of the manufacturing supply chain that connects your Tier-2 with your Tier-1 suppliers, specifically the mills that supply fabric to your apparel factories.

A substantial part of the apparel found defective at final QC inspection is attributable to out-of-spec fabrics. Garments that get rejected at some point in production or when they are ready to be shipped, due to fabric stains, holes, knots, etc. If the mills fail to mark defects properly, the apparel factory can inadvertently cut the fabric into apparel. We know the consequences: reworks, rejections, replacements… in a word: delays… And of course: waste.

Inspecting fabric at the mill to ensure correct color, hand-feel and marking of defects can save the brand and its factories up to 20% of the fabric cost. And a lot of time.

Processes and procedures in place to prevent defects as early as possible.

These are some pictures of unmarked defects found in different clients and fabrics inspections, that can help illustrate this blog. Some are extremely noticeable and one can expect they won’t be cut into apparel, but it is best to mark all defects.

 

Stains

Fabric defect - stain 6Fabric defect - stain 1Fabric defect - stain 2  Fabric defect - stain 4  Fabric defect - stain 3Fabric defect - stain 7

 

Holes

Fabric defect - hole 1 Fabric defect - hole 2 Fabric defect - hole 3

 

Broken yarns

Fabric defect - broken yarn 1 Fabric defect - broken yarn 2

 

Foreign yarns

Impactiva Apparel Quality Control  Fabric defect - foreign yarn 3Fabric defect - foreign yarn 2

 

Pulled yarns

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Knots

Impactiva Apparel Quality Control Fabric defect - knot 2 Fabric defect - knot 3

 

Fabric joints

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Impactiva Apparel Quality Control

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Untrimmed thread apparel quality control

Defect Calibration: A Key Tool for Reducing Errors and Chargebacks

By Jose Suarez

In the fast-paced, competitive apparel and footwear industries, quality has always been important. However, with rising material and labor costs, combined with the growing pressure for faster deliveries and the proliferation of styles, minimizing defects is no longer just important; it’s essential.

Therefore, as part of their efforts to ensure short- and long-term growth, forward-thinking brands are investing in defect calibration, the practice of minimizing quality discrepancies that exist when a product is manufactured.

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The Importance of Outlining Quality Standards and Expectations

To achieve effective defect calibration, brands must methodically outline quality standards and expectations regarding defect classification with their factories.

While this action may seem obvious, consider the state of communication and understanding at your factories. If you were to ask the key 15-20 people at each factory (those who have an important impact on the quality of your product) to clearly state what you as the buyer define as a critical, major, and minor defect, would their answers be consistent? Probably not.

From the merchandiser to quality control managers and operators, few are likely to have a firm understanding of your expectations regarding defects.

It gets worse. Now consider the state of communication between you and your retailers. Like your factories, the likelihood is that you do not fully understand each of your retailer’s standards for critical, major, and minor defects.

If you are not clear on each retailer’s expectations, how can you relay the correct standards to your factories? You can’t.

 

The Loose Thread Example: Major or Minor Defect?

A clear example of the confusion and costs created by poor defect calibration can be seen in the inconsistent ways a loose thread is classified.

Traditionally, a loose garment thread is classified as a minor defect, However, if the thread is overly long, some parties may classify it as a major defect. But how long? The problem is that most companies do not specify the exact length at which a thread should become a major defect.

This lack of clear expectations may result in costly, avoidable quality errors.

 

Employing a Retailer-Specific Approach to Defect Calibration

It is important to note that while you and your factories may have different opinions on what constitutes critical, major, and minor defects, the opinions that should truly guide your standards are those of your retailers and consumers.

If consumers of a particular retailer tend not to care about a small, loose thread and pay for the product without requesting a discount, the defect should likely be classified as a minor defect. However, if the defect is significant enough that consumers of another retailer tend to purchase the product only at a 30-50 percent discount, it should likely be classified as a major defect.

Thus, since retailers have different expectations of product quality, based on their consumer base, brands should define and adjust their defect classifications accordingly. Then, they should educate their factories on the specific quality standards applicable to each product.

 

Adopting Factory Defect Books

Communicating quality specifications can take many forms, but chief among them should be the adoption of factory defect books. Distributed to your operations team and key personnel at each of your factories, defect books are manuals that clearly classify each possible defect as a critical, major, or minor, thereby turning your quality expectations into an objective standard.

For instance, the books should include pictures and figures specifying the length at which a loose thread is classified as a major defect. Further, if the brand or retailer has multiple sets of quality specifications (e.g., one for a mass-market line and one for a top-tier line), books should be created for each.

As issues arise and new determinations are made regarding a defect classification, defect books should be revised with new, descriptive pictures. In addition, books should be reexamined, updated, and reissued to factory personnel after each update.

Ultimately, by establishing precise quality specifications that align with retailer expectations, then effectively communicating them to your factories with tools such as defect books, brands stand to gain significant savings through reduced errors, chargebacks, and lost sales.

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Understanding Your True Cost of Poor Quality and How to Reduce It

By Jose R. Suarez, Founder & CEO

In today’s competitive apparel and footwear industries, brands regularly focus their efforts on acquiring new customers, increasing distribution networks, and preparing next season’s products. But what about reducing their cost of poor quality?

Despite their success in other areas, companies that do not understand and address their true cost of poor quality face substantial barriers to long-term growth.

Poor quality can weaken consumer relationships, damage your brand, and add major operational and financial costs.

 

The Underestimated and Compounding Effect of Poor Quality

The cost of poor quality comprises not only the costs resulting from product defects, but also company processes, practices, or functions that generate defects and errors.

For instance, consider the effect of a continued weakness within invoicing and logistics. The error may result in shipments of the wrong product, yielding increased freight costs, chargebacks, and even lost sales.

Similarly, errors in the product development stage may result in a host of additional costs. Suppose first samples are not adequate; additional money must be spent on couriers and redevelopment, with compounding errors leading to production delays, chargebacks, and cancelled orders.

In fact, companies lacking effective quality management often have a cost of poor quality equal to 20 percent of sales or more, according to a recent American Society for Quality guide.

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Identifying the Five Major Categories of Your Product Cost of Poor Quality

To establish and benefit from effective quality management, quality guru Philip Crosby recommends that brands first understand and measure their cost of poor quality.

This step, what Crosby refers to as the “awakening,” entails identifying the costs of not conforming to requirements within the supply chain. Namely, companies must recognize the five major categories of the cost of poor quality:

  1. Rework costs
  2. Freight costs
  3. Chargebacks
  4. Product returns (replacement or cancelled orders)
  5. Lost sales (probation or permanent loss of customer)

 

1. Rework Costs

If you ship a defective product, the customer may ask for it to be reworked in your warehouse. For instance, if a garment is incorrectly labeled, you may need to spend $1, $2, or more per piece to open the packages, cut out old labels, print and attach new labels, and ship it back to the customer. Further, if the product itself needs rework, a frequent occurrence with footwear, the repair cost at a local rework facility can easily exceed $3 per piece.

 

2. Freight Costs

How many of us have supply chains that generate up to 20 percent late shipments, forcing us to incur millions of dollars annually in airfreight to deliver products on time? Even worse, how many of us have suffered from the delivery of a defective product that is the showcase item for our top customer’s key campaign, requiring us to rush a replacement production order that includes hundreds of thousands of dollars in airfreight?

In addition, how frequently do we negatively impact our bottom line by having to invest in additional in-land freight to pick up defective products from disgruntled customers?

 

3. Chargebacks

In today’s difficult retail environment, where consumers are demanding more value for their purchases, including product quality, retail customers are rightly requesting substantial chargebacks for un-conforming products. It has become commonplace for a seller to receive a claim for $25,000, $50,000, or $100,000 for even the slightest of product variances.

 

4. Product Returns (Replacement or Cancelled Orders)

If a customer chooses not to keep a defective shipment of garments or shoes, at best you may be able to negotiate a quick replacement. At worst, you receive a cancelled order. Should we not keep track of the loss gross margins that defective product returns have on our profitability?

 

5. Lost Sales (Probation or Permanent Loss of Customer)

Finally, a pattern of defective shipments may lead a major retailer to put your brand on probation, lowering your subsequent order volumes. If the retailer represents a significant portion of your sales, the cost of this action can be devastating. Even worse, the retailer may decide to sever the relationship altogether.

How many of us consistently lose customers because of deliveries of bad products? What impact does this continuous erosion of your topline sales have on the future growth, or even the survivability of your company?

 

The Fallacy of Passing Charges on to Factories

While the true cost of poor quality can be staggering, corporate finance departments often do not capture these costs. Further, even those that do often assume that the costs are of little consequence to their bottom line, as the general philosophy in our industry is that we “simply pass them on to the factories.”

In the world of operational excellence, this is called “fools gold,” as factories will need to “pad” their future costs with those chargebacks to maintain their financial viability. As a result, you will end up paying a higher price per piece, as the factory is assuming there will be future quality claims.

Also, in the current business climate, where consumers reward those brands that are eco-friendly, is it commercially sound to accept that billions of dollars are being wasted on our planet’s limited resources for un-sellable returns sitting in our warehouses or being sold at a discount?

 

The Path Forward: Working with Factories to Eliminate Quality Errors

To successfully reduce the product cost of poor quality, companies must:

  • Accurately keep track of the five major costs due to poor quality
  • Identify key errors throughout their supply chains
  • Implement corrective action plans to significantly reduce such waste from having a corrosive impact on their bottom lines

In addition, they must invest time and money in the hiring of process-minded professionals who can work with their factories to implement effective quality systems.

Ultimately, for brands that achieve the final step of quality management, what Philip Crosby terms “certainty,” remaining errors may drop to 2.5 percent of total sales—the equivalent of millions of dollars in savings for a company and its shareholders.

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Wrong handling of anti-mold stickers – Case #573

“A picture is worth a thousand words”. Practical solutions to problems encountered in the manufacturing process that demonstrate how we assist our customers’ factories to produce Right from the Start TM.

Problem: the Micro-Pak stickers were exposed to the air and what’s worse, the operators stuck them in their hands and clothes before placing them into the shoe boxes.

case 573 pic 1 impactiva mold prevention footwear case 573 pic 2 impactiva mold prevention footwear

Impactiva solution: we got the factory to use the Micro-Pak box to keep the stickers effective.

case 573 pic 3 impactiva mold prevention footwear

Stay tuned for more Impactiva technical solutions to every day production problems.

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Waist band not well aligned – Case #564

“A picture is worth a thousand words”. Practical solutions to problems encountered in the manufacturing process that demonstrate how we assist our customers’ factories to produce Right from the Start TM.

Problem: the center front waist band was not well aligned due to the incorrect placement of the center front button (3/16” from the top).

case 564 pic 1 impactiva apparel qa case 564 pic 2 impactiva apparel qa

Impactiva solution: we developed a template for the operators to use in order to attach the button correctly.

case 564 pic 3 impactiva apparel qa case 564 pic 4 impactiva apparel qa

Stay tuned for more Impactiva technical solutions to every day production problems.

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Construction improvement – Case #563

“A picture is worth a thousand words”. Practical solutions to problems encountered in the manufacturing process that demonstrate how we assist our customers’ factories to produce Right from the Start TM.

Problem: incorrect stitch shape in a reversible garment. The factory was doing a dummy stitch  and the final fly tacking on both sides of the fly at the same time. They had allotted 2 operators for this. With this construction sequence the factory was getting only 25 pieces per hour.

case 563 pic 1 impactiva apparel qa

Impactiva solution: we got the factory to eliminate the operation of dummy stitch on both sides of the fly. Then we got them to do the fly tacking stitch on a single layer of face and reverse sides by the same operator. They consequently reduced the machines and man power used for dummy tacking. With this improved construction sequence the factory was able to get 30 pieces per hour, what means a 20% increase in productivity. Note: this solution was provided within our Apparel QA service, this was not a Process Optimization project.

case 563 pic 2 impactiva apparel qa case 563 pic 3 impactiva apparel qa

Stay tuned for more Impactiva technical solutions to every day production problems.

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Allowable Defects Are Killing Your Brand Equity

by Jose R. Suarez, Founder & CEO

The apparel industry is famous for maintaining the same modus operandi despite the strength of the headwinds it faces, but if the massive shift in retail this year taught us anything, dramatic experimentation and change is a must—and survival is at stake.

One blind spot for brands is the need to update their quality control sampling plans. Sampling plans refer to the percentage of units to be controlled during a final shipment inspection and the number of defective units that are acceptable.

The International Organization for Standardization (ISO) has developed standard tables outlining quantities that should be inspected and the tolerance for defective pieces, in order to determine whether a shipment gets approved or rejected.

Based on those ISO tables, if you are a premium footwear brand selling an order of between 501-1200 pairs of shoes to a retailer, for example, 125 pairs of shoes should be inspected. It also means that if you’ve decided the Acceptable Quality Levels (AQL) for your production and brand are 1 percent of major defects and 1.5% of minor, statistically, the “consumer risk quality” of your sampling plan confirms that up to 10 percent of the orders could have 4.2% of the goods with major defects and 5.27% with minor ones. This means that your brand has agreed, and is satisfied, that up to 9.47% (4.2% + 5.27%) of defects can occur in 10 percent of your orders.

If you are a lower-end brand with an AQL of 2.5% major defects and 4 percent minor, the consumer risk quality says up to 10 percent of your orders can have an astronomical 17.49% (7.29% + 10.20%) of shoes with defects!

This is how the industry has been working for decades, yet brands and retailers often still return to their suppliers voicing concerns that there are too many unsellable items in their shipments—even though the brands and retailers are ultimately the culprits, as they are the ones that have set, and thus accepted, the statistics behind the agreed upon AQLs.

The main issue is that the consumer’s perception of quality has dramatically shifted.

When a shopper goes into a store and picks up a dress or a shirt and the stitching line is off or wavy, they may choose a different one of the same size or inquire with the sales person to see whether there are more in stock. Chances are, the next one won’t have the same defect, so the consumer will complete the transaction.

When it comes to e-commerce, however, a defect like that can mean the permanent loss of a customer.

If an e-commerce shopper orders that same dress or shirt and finds the wavy stitch once the package arrives at their home, it automatically becomes a return. In most cases, that customer will not order another one. But if they are truly dedicated to the brand and product and do order it again, finding a similar defect a second time could mean the shopper waves a permanent good-bye to the brand.

Research performed by some brands confirms that for every one complaint received, another 25 consumers will not bother to complain at all, so the negative, long-term impact on the brand is considerable.

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Using a Tightened Inspection Level III plan

The 1 percent tolerance limit for major defects is no longer viable in this new product-being-received-at-home environment. The risks are too high and the damage to any brand is guaranteed. To ensure survival in this e-commerce era, buyers must transform their supply chains to ensure a zero defect policy.

To be a leader in this new e-commerce paradigm, companies will have to improve their knowledge and correctly set their quality control sampling plans relative to current consumer expectations.

A shift to using Tightened Level III sampling levels (instead of the industry standard Normal Level II) will increase the number of units to be inspected by 50 percent, helping to improve detection of bad quality in the required transformation to a percent AQL on major defects.

Another solution is to shift the focus and spend to quality assurance versus quality control.

Buyers will have to work to get their factories to take full ownership of quality so that the very low value-added final shipment quality control is altogether eliminated. Instead, it should be replaced by factory operators who are fully engaged and cognizant of a brand’s defect requirements, and who will take pride in not passing defective units from one step of the process to another.

Our industry is at a tipping point and factories need the direction and leadership from brands and retailers to force this paradigm shift in quality.

Chargebacks and markdowns for bad quality are pervasive but now, and even more damaging, is the possibility of losing a consumer completely.

Buyers can no longer afford to run their supply chains from ivory towers—they must spend the time, energy and resources on their factories to start implementing the quality management systems, processes and procedures to bring about the goal of zero defects going forward. The future survival of your company is at stake.

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What are fashion brands doing to eliminate toxic chemicals from their supply chain?

This is from Sourcing Journal July 5th: “Our assessment shows that the textile industry as a whole is not doing enough to go toxic-free. Sixteen out of the 19 brands assessed are stumbling over transparency issues or failing to eliminate toxic chemicals; with only three years left they must speed up now if they’re to meet their 2020 deadlines,” Greenpeace Germany’s head of the Detox My Fashion campaign, Kirsten Brodde, said.

Three years is still enough to put Restricted Substances under control, specialists ratify. But the brands need to put this project in motion right away. Companies taking a passive approach are prone to serious liabilities, from regulatory penalties and recalls to a damaged reputation and loss of market share.

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Inspection and testing alone will not ensure restricted substances compliance. There are too many regulations, requirements change rapidly and differ by country. Further, testing sizes are too small, as there are components, works-in-process and final products to test.

 

The Best Approach: Implement a Quality Management System (QMS)
To prevent hazardous substances from entering the product, the best approach is to establish a QMS that takes all variables into account. The first step is to assess industrial partners in order to determine the current state. Then set the goals and design a plan to implement a Quality Management System to progressively reduce the contaminated product until its complete elimination. Products must be analyzed to identify high-risk areas. Inspection and testing methods must be customized according to each particular situation (product, manufacturing roadmap, final destination of the products, etc). Last, but not least, a monitoring system must be created in order to sustain the achievements.

This is a process that requires full support from the management, and a firm commitment to create a culture of accountability, internal data transparency and discipline. It is essential that all the stakeholders understand that in order for the change to be sustainable in time, the new processes in place must be relentlessly followed and challenged from time to time with a continuous improvement mentality. Every time a new style is produced, the same protocols must be followed. New materials are constantly arriving at the factories, new product is being made every day, and therefore controls can never relax.

To establish a rigorous Quality Management System for Restricted Substances is a significant step toward supply chain transparency and environmental responsibility, and it will guarantee compliance.