HONG KONG — Manufacturing, like marriage, comes down to finding the right partner.
With that synergy, retailer and wholesale brands can streamline costs, cut lead times and encourage creative cooperation.
Karl Fagerlin, global production manager for Hennes & Mauritz AB, speaking at the Prime Source show’s International Apparel Forum here, said all vendor-related decisions for H&M are about being on board with the company philosophy: “Design is nothing if you can’t bring it to the market. If you do it faster than anyone else, you will have success.”
H&M has no factories of its own, instead using its 22 production offices to buy from 700 suppliers.
“We work hard on lead time,” said Fagerlin, who participated in the “Fashion & the Global Apparel Buyer” session. “It is the same in Turkey, Bangladesh and China.”
For H&M, the key is to go from order process to production process with nothing in between.
“I can’t tell you how many times I’ve talked to suppliers in China who tell us about the problem of changing orders,” said Fagerlin, adding that the company has developed a system of using an array of samples before placing orders. “Instead of changing orders, you focus the whole organization on sampling before they order.”
Bob Rosenblatt, group president and chief operating officer of Tommy Hilfiger Corp., described Tommy Hilfiger as “a company forever in transition,” albeit one with $1.8 billion in annual revenue. Rosenblatt said the company, recently purchased by Dutch private equity firm Apax, is “looking to shrink the number of partners we have. We need to take advantage of technology and start strategizing with our partners.”
Hilfiger is moving more of its production out of the Western Hemisphere, giving additional business to factories in China, India, Sri Lanka, Bangladesh and Indonesia. He cited cost as one reason, but attributed the move more to the factories themselves.
“In the West, there is resistance to innovation,” Rosenblatt said. “They play it safe and are not keeping pace with the rest of the world.”
The opposite moves are being made by Mango, said Jose Gomez, the firm’s vice president of international expansion. He said as Mango, which produces 30,000 garments an hour, moves into North America, location is vital.
“We select suppliers according to a few factors, including proximity, to reduce lead times,” Gomez said.
The issue for some executives attending the inaugural event was that vendors with multiple customers could theoretically share information with the competition. But Liz Claiborne senior vice president Bob Zane dismissed such concerns.
“What if a vendor gives information to your competition? If we are doing our job properly as sourcers, then we are important to them,” he said. “If they would be so stupid as to risk a $30-, $40- or $50 million order, then they deserve to lose the business.”
Mango’s Gomez added, “If you’ve developed something with a partner, chances are you’ll get it first. I don’t care if anyone gets it later.”
That discussion dovetailed with a panel on “Speed to Market,” during which Bob Shorrock, managing director of Adidas Sourcing Ltd., noted that until the Nineties, the company used the same business model as others in the sporting goods industry.
“But as fashion moved toward sport and sport moved toward fashion, the market requirements changed,” Shorrock said. “We needed to recognize a winning product early and get it to market more quickly.”
That need led Adidas to turn to business models not often used in the apparel-footwear industry, Lean and Six Sigma. They are methods companies can apply to any manufacturing, transactional or service process to reduce waste, eliminate non-value-added actions and cut time and were first implemented by Toyota in the Fifties. Shorrock described them as “about flow,” adding, “You identify what is value-added and eliminate the non-value-added.”
Partex, an El Salvador-based factory that produces Adidas sportswear, is using Lean in all of its production for Adidas. “We were the guinea pig of Lean in 2002,” said Juan Zighelboim, chief executive officer. “It wasn’t an introduction so much as a threat.”
The biggest change for Partex is that instead of working by progressive bundle, there is now “one-piece flow,” he said. The defect rate has dropped to less than 1 percent, and small teams are more flexible and efficient.
Adidas is working on a 30-day turnaround from order to leaving the factory. “No one in the sporting goods industry has, to date, created a competitive advantage out of supply chain,” Shorrock said. “Adidas will be the first to do so.”