OPM chairman calls COVID-19 a ‘wake-up call’ and chance to rethink bringing production home
Posted May 14, 2020
By Devin Steele (DSteele@eTextileCommunications.com)
Reshoring. Onshoring. Nearshoring. Local for local.
These all were trends in the textile and apparel trade even before COVID-19 changed the world virtually overnight, but the pandemic has put these buzzwords in the spotlight and has seemingly helped clear the path for an accelerated movement “home.”
The global crisis’s impact on those trends was an underlying theme during a May 7 webinar, “Ten Reasons to Bring Production Back Home,” which featured J. Kirby Best, chairman and founder of Nashville, Tenn.-based OnPoint Manufacturing (OPM) with a manufacturing facility in Florence, Ala., and one of its suppliers, Israel-based Kornit Digital, a printer, ink and chemical producer for the apparel, home goods and textile accessories industry.
“As hard and as sad and as tough as COVID-19 is, it’s provided this very unique opportunity to examine the industry, to examine supply chains, to examine our accounting and to really look and see if we can reset it,” Best said. “It’s a wake-up call.”
The WTiN-organized online event, attended by 105 people mostly from the U.S. and Europe, also included Kornit Digital speakers Daniel Gazit, the company’s vice president and general manager, and Ricardo Nava, its direct-to-fabric sales manager.
Companies such as OnPoint Manufacturing certainly is among those on the cutting edge of disruption and bringing back manufacturing, as demonstrated in a video during the webinar and explained by Best. OPM specializes in purchase-activated, on-demand, personalized apparel manufacturing – all of which is driving the movement of textile/apparel production onshore. Its factory model automates and integrates nearly every aspect of the manufacturing process, from order entry to delivery.
“Kirby is manufacturing in Alabama today,” Gazit said. “That’s not in India or Bangladesh. And he's able to make good business out of it.”
In kicking off the hour-long discussion, Gazit pointed out that the current “structure” of the textile/apparel supply chain has existed for years – continent to continent, which requires large quantities of shipment for this model to make sense, he said.
“The question becomes, what happens when something breaks?” he asked. “I think we’ve had a good example of that in the last couple of months in the world and in the industry. And another question is, what does the future look like with regard to time to market and inventory keeping?”
During the event, moderated by Sharon Donovich, Kornit’s regional product marketing manager, speakers explained why production should be and is becoming more local because of 10 reasons – sustainability, ecommerce, social media/self-expression, customization, profitability, time to market, manpower, inventory, automation (Industry 4.0) and supply chain disruption.
Given its importance in today’s world, sustainability is a key factor when it comes to reshoring and is a vital element to shortening supply chains, Donovich noted, asking Best to elaborate.
“We look at sustainability broken down into two areas: The business model – is it sustainable? And, of course, from the environmental side – is that sustainable?” Best said. “On the business model side, anybody who thought what we were doing before was sustainable, it just wasn’t. The waste we create in this industry is horrendous and we need new models. We need different ways to look at things. And from an environmental side, if you look at how many gallons of water it takes to make a pair of jeans, I think the answer is about 1,600. And look at the transportation and the waste that we have in that. All the areas that we waste money and time on is just not a sustainable model.”
He explained further: “I think we need for the on-the-shelf model to coincide nicely with the on-demand side. The business model just isn't sustainable because of the length of time it takes, because of the multiple handling and touches that we have on it, the returns, the markdowns, the inventory. You look at the amount of things we destroy. And I love that we should have a goal of zero waste, but I don’t think that is possible. There will always be offcuts. There will always be things wasted, but I think we can minimize that. So from a sustainability picture, I think we need to re-examine our core values, and now is the time.”
Accounting also should play a role in the sustainability picture, Best said, positing that that area should not be siloed but should be part of the larger view.
“I‘m a big advocate that the cost per unit is a very important metric but the more important metric is the cost per unit sold, and I think we have to develop new ways of looking at things,” he said.
Bringing statistics into the waste discussion, Gazit said that about 30 percent of all garments globally are not sold, and another 30 percent are sold at discount because inventory forecasts were incorrect. And further on the topic, he reported that about 35 percent of Millennials are willing to pay more than 10 percent for sustainably made and sustainable products.
Fast-changing consumer buying habits are absolute drivers for local-for-local production, Donovich said, with online shopping become more and more prevalent, reaching new heights in recent weeks as customers shelter in place.
“I see a trend towards people buying fewer items online and buying higher quality goods,” Best said. “People are buying clothing they really want to keep and less of the fast fashion where they wear it once and throw it out. They want to buy quality product and keep it for a longer period of time.”
Ecommerce is aligned closely with social media, a growing factor in buying decisions, Donovich said. And no one could have predicted just a few years ago the impact social media would have on fashion and in effect the textile/apparel industry, added Nava, who is based in Charleston, S.C.
“I read that close to 80 percent of women use social media for buying decisions,” he said. “More and more brands are paying influencers crazy amounts of money (to tout their brands). Another surprising fact is that almost half of Millennials say that social media sites are the first place they go to get ideas for clothing, even before they go to a brand or retail site.”
Asked to relate social media to self-expression, Gazit answered: “ ‘Selfie’ was the word of the year in Time Magazine five years ago. Today, the leader of the free world, Donald Trump, is expressing himself on Twitter. Self-expression can be all about who you are and what you wear. My daughter will not wear a brand logo such as Levi or Gap. She wants something personalized to her. And today, most companies – 94 percent – see personalization as a critical factor in their future success.”
Nava added that consumers also are willing to pay more for something that is unique to them. “I think that will change the way the supply chain and brands operate,” he said.
Which led Gazit to respond: “How do we supply personalized demand? That, I think, is the biggest question.”
That segued nicely into the next topic, customization, which Best called his “favorite topic.” He broke down customization into three categories: sizing and fit, personalization and printing.
On the first, he said, “We have this expression that fit is not a sizing issue, it’s an inventory issue. We can fit anybody, but nobody wants to carry that much inventory. So that's where the on-demand model comes in.”
Personalization, he continued, relates more to construction of the garment: “Whether you want a pocket here or a pocket here, or one sleeve longer than the other or a bigger cuff, that’s the personalization,” he said.
And Best said that digital printing is the most exciting thing to come to the industry in a long while.
“I think it's going to change everything,” he said. “I think it is the ultimate way to print exactly what you want on a garment, whether it’s a photograph, or the color you want or the exact hue of that color. It’s just going to open things up.”
Returning to sizing and fit, he noted that traditionally dresses come in sizes of 2,4, 6, 8, etc. – but OPM has eschewed such incremental rigidity and has developed micro-sizing because all of its products are one-offs, he said.
“And it's all done by computers through Gerber Technology,” he said. “We make a 2, a 2.5, a 3, a 3.5 and a 4 and so on, which is changing things. And that led us down to the idea to use cluster computing to auto-generate 40 million patterns per dress, and then we use a sequence and use ‘your’ measurements to pick the exact one to fit – whether it's a bust, weight, hip or height issue or another issue. And then, of course, with MTM (made to measure), combined with what Kornit is doing on the printing side and the availability of content in the marketplace now, we’re developing products that we've only dreamed of.”
He continued: “Every aspect of what we’re talking about today really ties together. It's kind of like the Olympic rings – they all overlap. (It’s) the idea of customizing a dress, personalizing the color of it and making it exactly the way you want it to fit and doing it fast. The old adage. ‘I want it my way and I want it now’ is so prevalent in the industry. And together through the collaboration with these firms, we’re now going to be able to offer that. It’s such exciting time in the industry and I think we'll see dramatic changes in some of the numbers. In our own products that we're experimenting with, we're seeing a return rate of about half of a percent, which is night-and-day difference compared to the rest of the industry.”
Doing all of this and doing it profitably is a “classic question” related to bringing production back home, Gazit said. After all, the reason manufacturing left many shores in the first place was to increase profitability, he added. But a larger part of the industry is now beginning to reverse course and develop national or hemispheric strategies, he noted.
“If return rates today are around 30 percent and return rates on custom made or one-offs are, in some places in single digits and in some places in fractions of digits, then even this has a positive effect on profitability,” Gazit said. “Research just came out last week that clearly says that if you don't go into reshoring and automation, you're not going to be able to survive in the long run. As Kirby said, that is a wake-up call.”
Profitability is possible with technology and processes, he added. “Speed is money. Inventory is money. Simple processes and less labor are money. Demand and supply as opposed to supply and demand is money. And all of those are profits.”
Time to market
Still, time to market is a challenge, especially when working with customized products, Donovich said.
“We have a program that we call 3-3-3,” Best said on the topic. “People cringe when I bring it up. I’ve watched how many customers need on average about 12 months from the time they finish their base pattern to the time it gets on their shelf. So through our 3-3-3 program, I want to get it to three months, then I want to get it to three days, then I want to get it to three minutes. Now, that won't be to a physical shelf, but to an electronic shelf.
“We now can produce about 2.3 dresses a minute in our factory, meaning that about 2.3 dresses a minute are coming out the back end when we're fully staffed and fully operational,” he added.
With fewer skilled operators available in an industry that phased out manufacturing employees for years, the trend now is to produce more with fewer people, Nava said. Doing so is difficult, but it starts with examining your supply chain and processes in order to streamline operations and improve efficiencies, he added.
“Obviously, automation and technology are really going to help reduce manpower,” he said. “The technology is really in our hands and it keeps getting better and better every year. The word ‘microfactory’ is used a lot in the textile industry, but obviously the art of microfactory is it's truly a utopia. It’s a concept that allows you to reduce manpower, streamline manufacturing processes where you can have the fewest steps possible during that process. You want to simplify it, automate it, eliminate it, reduce pre- and post-treatment processes, nest jobs, batch jobs, improve order management and barcoding systems and then cut it.”
Asked his thoughts on inventory, Best quipped, “get rid of it!”
“I couldn't resist that one,” he said. “Inventory is such a swamp to get into and it just gets worse and worse and worse. It seems to be almost a self-fulfilling prophecy, where, as you grow, you get more inventory. More inventory requires more warehousing. It just goes on and on and on and it's a horribly insidious issue that we all face, particularly when you see how much either gets marked down or destroyed or pulped or whatever happens.”
As such, inventory should be looked at end to end, he continued, examining where all of the costs lie.
“Again, it’s not the cost per unit, it’s the cost per unit sold – that is the important metric there,” he said. “There are so many new ways that we can control it through computers and automation and mid-max theories where you have certain periods of the year where you have seven sizes of one color. And as the year goes on, that gets down to one or two. If we can replace it in hours, then the risk of not having the inventory is eliminated.”
Indeed, the ability to reshore rests heavily automating, according to Donovich. Best said he believes in using as much automation as possible throughout the manufacturing and shipping processes – but not by sacrificing sewing jobs, he said.
“I fell in love with sewing,” he said “I love what our sewers do. My goal has always been to automate absolutely everything, from the time the designer has finished and created a base pattern to the time it's in the customer's hands. Other than when the sewers are sewing it, automate everything.”
Best asserted that OPM’s factory is one of the most automated plants in the world, and said that its planned second plant will make the first one look “almost Stone Age.”
“I've always loved computers and I've always loved automating equipment using computers, and that' s what we'll continue to do,” he said. “And it does not involve taking out the wonderful, creative side of the sewers or the designers – it’s just automating everything in between.”
Supply chain disruption
And, finally, talking about disruption … COVID-19 “destroyed” everything in the world, Gazit said.
“Trade wars were out there for quite a while and they're actually quite destructive in our supply chains,” he said. “But we’ve never seen anything like the uncertainty today, even the economic recessions. This time, it’s global. Now, tie it all back to what we just discussed: sustainability, social expression, the need for speed, reduction in inventory, automation, technology … and the question is being asked: Are we at a point of disruption? For me the answer is quite clear. If we look at it three to five years from now in the days after COVID-19, it will be clear that THIS is the time that things changed. It started before, but this is the time when it changed. Online (habits) have gone up in a month what it was forecast to go up in three years. That is disruption.”
He concluded: “When we ask in surveys, Is near-shoring going to happen? The answer is an absolute yes from more and more respondents. By 2020, near-shoring will be stronger, and local production will be much stronger than before. And that brings me to maybe the most important question: Are we ready for this?”