With each company in the Supply Chain having to put up with increasing demands from its own financers, can we ever really get to Value Thinking, or will we always be trying to cut corners to meet our commitments?
Taking us through the value thinking route is Paul F. Bowes, Managing Project Director of Performance for Business Productivity Services Ltd., a reputed manufacturing consultancy firm operating from UK and Asia, who makes us realize that it is not cost cutting but value thinking that helps one to achieve growth targets.
The recent economic situation showed us that getting closer to the consumer, speeding up the Supply Chain, collaborating rather than competing, would help all organizations achieve better results. But have we really done so?
The Apparel Industry today is characterized by sales, markdowns, discounts, reductions, and special offers, with retailers fighting a fierce battle for market share. Too much inventory in a pipeline that is slow and unresponsive to consumer demand causes peaks and troughs in process of manufacture. Everyone suffers in start/stop cycles.
The apparel manufacturer is trapped between the retailers’ and suppliers’ demands. While on the one hand the retailers insist on lowering prices, expect consistent quality, better functionality and guaranteed delivery, on the other hand suppliers demand for higher prices, more tolerance for bearing faults, minimum quantity volumes, and reasonable lead times.
[bleft]The apparel manufacturer is trapped between the retailers’ and suppliers’ demands – one demands lowering of prices while the other wants higher prices. This ‘confusion’ has led to increase in wages, production stagnation, rising overheads, etc. This is where Value Thinking is required[/bleft]
This ‘confusion’ has led to further sufferings like increase in wages, production stagnation, rising overheads, etc. making it necessary for the manufacturer to either focus on simple cost cutting or go for Value Thinking.
As one Factory Director put it straight, “If I want to make money on these products, it has to be me, the workers and everyone including the security guard.”
Now, is the concept of Value Thinking too broad?
Will suppliers, manufacturers, buying offices and retailers work together in a combined effort and still allow each other to “win” in their area? Is it realistic that they will work together to create the overall lowest cost in the process, or will they always fight with each other for that extra bit of profit? Does the consumer really notice, or care?
Depleting investments in machineries and equipments, brief or little training, longer working hours, using cheaper raw materials and reducing focus on the sewing floor, are some of reasons leading to problems which recur time and again. No one takes the initiative, nor is anybody assigned responsibility to solve these problems.
Cost Cutting – The Solution?
Facing all these challenges, in addition to continual new legislative demands on chemical and environmental controls, social responsibility, and product compliance, is it really worth the effort of Value Thinking? Why not just cut the costs, isn’t it easier?
[bleft]Each organization must switch to Value Add Focus if it is to achieve sustainable cost reduction. Value Thinking alone will not provide the solution. It must be applied to continual improvement of value adding activities in a process[/bleft]
Well, yes it might be easier, but it is not sustainable, and it is dangerous for the company. Let’s take the simple cost cutting route, and see if the correct analysis is really done and where the cuts can be made without detrimental effect; or is it just a case of cutting down 30% of all costs?
Changing to a cheaper thread supplier may seem like a good idea and may show quick and easy returns on paper, but in reality, what is the impact on productivity on the sewing floor with more thread breakages, broken and cracking stitching, increased garment repairs, skipped stitching, machine breakdowns, no one measures these effects because it is difficult, and neither anybody has time to do it.
- Reducing indirect staff may provide a quick return, but if supervisors have to spend more time on moving work instead of problem solving, the overall productivity might suffer.
- Cutting the standard minutes may seem to be a good idea to reduce costs, but unless done through a careful method study, the value adding work force may get upset and leave when the need arises.
Eventually all the obvious costs are cut, but the workers and staff are unhappy, discontented and the company heads for a downward spiral with lesser productivity. Cost per unit, though decreases, but not by the levels required to secure the future of the company. But why not? Because there may still be too much waste in the system.
Does it Mean it is Time to Give Up and Go Home?
Not necessarily. But it is time to take a new approach. It is interesting that the most successful apparel organizations are the ones that closely control their supply chains. The retailers that have shrugged off the economic downturn do provide value for money clothing. Some of them even do it in an ethical way. But mostly, they can respond to customer demand for product quickly; they focus on the process of providing a value for money, quality product, when the consumer wants it, and create demand by limiting availability.
We now live in an age where information can be shared across the world in an instant. And yet in some supply chains it takes 6 months to decide what a blouse should look like and make it available for the customer. How can we dramatically reduce the time and links in the supply chain, to make decisions faster on what to produce and when to produce it?
I do believe that the Apparel Industry Supply Chain needs to work together as a whole, if we are to get the most value out of providing the consumer with what they want. Each link in the chain must complement each other, not make greater and greater demands and simply push cost back down the chain.
How many times have we examined a garment in the supply chain? How many times have we rewritten the same information? How many times have we tested the material? How many times have we paid for the same job to be done? What does the end consumer really care about?
If we provide a fair wage that allows people to move out of poverty to better personal living conditions, working in a clean and comfortable environment, will that alone satisfy people’s feeling of social responsibility?
Solution is Value Add Focus
Value Thinking, or what I would call Value Add Focus, means simply looking at every action we take to see whether it adds value in the eyes of the end consumer.
Each organization must switch to Value Add Focus if it is to achieve sustainable cost reduction. They must look at everything they do and ask themselves, “Why do we need to do this if the end consumer does not want to pay for it?”
Manufacturers should focus their efforts on the process of manufacture, because they make money when they sell the finished product to the retailer. Every action taken by anyone in the process of selling and making a garment should be assisting with changing the product from one state to another ready for delivery to the retailer. Every action then will be Value Added, and every employee will be focused on Value Thinking.
The management of this change is very difficult, as often you are questioning work that someone has done for many years. Does the planning department really plan, or just change information from one format to another? Does the merchandising team spend all day answering questions and writing reports for the senior management, or make sure that all materials, information, and resource is available to keep the production team cutting, sewing, packing and shipping the product? Does the IT system really help speed up the product being made, or slow down the process as more data input is required? What happens to the information that is captured? Is it acted on or filed?
Sewing operators spend more time searching for, collecting and sorting work, than actually sewing. Fabric is unrolled and rerolled 2 or 3 times before being cut. Why do we send fabric on rolls, when factories have to immediately unroll them for relaxing? Isn’t that a cost for both supplier and manufacturer? Send it in a bale form – it will probably take up less room to transport as well as saving processing time and resources.
Value Thinking alone will not provide the solution. It must be applied to the improvement of Value Adding activities in a process. We have to make a change at multiple levels in the Supply Chain:
Individual Level : This is Method Study. For example, the method an operator uses to transform the product from one state to another. Do we need to do the operation at all? I have seen many basting operations that have been added, just because operator training in correct handling has not been effective. If the operation is necessary, how can we reduce the waste work content, the handling to the machine, the way work is laid out to make it easy for an operator to place the component parts to the needle point?
Operation to Operation Level : This is what I term the Local Customer-Supplier Chain. What is the best way for the next operation to receive the work? If one operation works on the inside of the garment and the next on the outside, should we turn the garment before passing it on? If one operation works on the waist, and the next on the leg hem, how can the first operation present the leg hem to the next operation easily? Does your direct “customer” really want a bundle of work that is double tied and takes two minutes to undo?
- Changing the machine layout so that one operator could pass directly to the side of the next operator instead of placing the garment to lap, then machine bed and later passing to next operator; saved handling time per garment by three seconds. When this change was made over 16 different operations on the line, a total saving of 48 seconds per piece was realized, a 12% reduction.
- In the cutting room of one factory, a process was implemented that flowed down the cutting table, so that after spreading and cutting each block was checked, bundled, and placed into a basket/box straight off the cutting table. This reduced transportation of the work by 75%, and handling time from 32% to 10% for the operators in the cutting room.
Section to Section Level : This is the Departmental Customer-Supplier Chain. How should one department present the work to the next department to minimize waste time of sorting, handling, and organizing? For example, if your factory does panel inspection, do you place the panels that need to be joined together on top of each other, or leave each panel in a cut block causing more handling on sewing lines? If these panels are sorted and bundled together, operator handling and sorting time is reduced. This also helps reducing shading problems and numbering, and for no added cost. Don’t make life difficult or more wasteful for your customer department, even if it makes life easier for you.
- Supplying the first operations on the line with work in a box or basket, pre-sorted so that the operator can immediately take out the panels they need, saved 2-5 minutes per bundle collecting, checking, sorting, bag removing and untying (see photo).
- Labels were provided to the operator in a box rather than a bag that meant the labels had to be re-stacked. From the box they were immediately placed in a holder on the machine. This reduced handling time by 10% on the operation.
- Accessories were “ordered” from the RM Stores on a daily basis for the following day, by 12 p.m. This reduced sorting time onlines, eliminated re-counting, and provided control of accessories. The accessories were provided by 6 p.m. the day of ordering.
Factory Level : This is the overall flow of the process. If material goes back and forth, doubles back on itself, stops and starts, is moved from one store to another before being actually transformed into garments, then you have waste in your process and need to apply Value Added Focus. You are employing people to move work around without creating value.
- Placing the cutting table near the sewing lines reduced transportation by 85% and gave an immediate visual control of how much cut work stock was available for each line and when stock needed to be topped up. The number of indirects required to move work around was reduced to 1 per 5 teams from 1 per team.
- Moving the packing from a separate department to the end of line reduced sorting time, packing and unpacking time, size checking time, and transportation. The same indirects who brought cut work and accessories from the stores, collected finished goods and took them back to the FG store, again saving indirect labour.
Supply Chain Level : The Inter-Company Customer-Supplier Chain – the most difficult of all, but the one where the greatest gains can be made. If companies collaborate together to reduce the repeat operations then overall supply chain cost can be reduced. Savings can be shared between supply chain partners. For example, the consumer wears a garment and discards the packaging immediately. How can we work back in the supply chain to best present the product to the consumer without any excess packaging at all? How can we ensure the garment is to the correct specification once in the process, not checked at every stage? How can we define exactly the product so that everyone in the supply chain understands right from the start, without revising the information every week, and every time a new partner becomes involved?
- Collaborative design of a garment between the customer and manufacturer saved 25% on the costed standard minutes, 5% on the fabric usage, and eliminated some of the packaging.
- Placing a webcam in the stores pointed at the stock of cartons and giving a supplier online access, allowed the supplier to check when the next stock needed to be delivered
- Sending packing lists for fabric by email allowed one manufacturer to allocate store area to incoming materials before it arrived and pre-printing labels for each roll, reducing booking in time.
- Fabric suppliers sent bulk representative fabric in advance of bulk for assessment by the Testing Lab, allowing time to be saved by identification of issues pre-shipment.
- Sending material in bale form rather than roll form resulted in time saving for relaxation, time saving for unrolling and cost saving of tubes.
The opportunity to improve the industry through a Value Add Focus/Value Thinking based on the activities in the Customer-Supplier Chain, is freely available to all, and can be taken up at any time. The outcome will be reduced costs, reduced lead times, better presentation of product to the consumer, and availability of a product they want to buy.
Each part of the Supply Chain can maximize its own process, but only when all work together will the real benefits be realized. So, for now, I am sure we will have the usual round of cost cutting, not based on Value Add Focus, but on trying to save money in the most obvious and dangerous ways, while the waste continues.
Companies around the world are starting to realize that this is not the way to a long-term future, and will change to working on the Customer-Supplier Chain, with all activities being driven by the core “sales to product delivery” process. It is very much needed to remember that there is no single big saving, but many small savings throughout the process from design to delivery.
In simple terms, focusing on the process, making sure all activities contribute directly to selling, producing and delivering the garment to specification and on time will see the costs
magically disappear.
Or, ask yourself this question – Is the activity providing value to the end customer, or just adding to the cost?