As of Thursday, October 23, 2014
One of today’s hottest fashion trends is as much a part of the West Coast as sand, surf and sunshine—apparel that wears the label “Made in California.”
While more than 97 percent of apparel sold in the U.S. is manufactured overseas, according to the American Apparel and Footwear Association, domestic production is vitally important to many West Coast companies. Higher Chinese labor costs, long lead times for overseas production, the rise of fast fashion and changes in consumer preferences have created new openings for California-made apparel.
Increased rewards, greater risks
But what exactly is Made in California, and how do the risks and rewards compare with overseas sourcing? Take a closer look and you’ll find major differences. Most imported production is sourced as “full package,” in which a company cuts a single purchase order to the overseas vendor and submits the techpack. The factory takes over from there, absorbing any changes in cost due to schedule, delivery and material quality.
With Made in California, a company’s responsibilities grow exponentially. Depending on the model, brands or retailers may be responsible for raw materials, in-transit goods and manufacturing processes, including cutting, screen-printing, embroidery, sewing and more. Instead of a single P.O., companies must manage multiple purchase orders and delivery dates. While production sourcing shifts the liabilities to vendors, Made in California assigns all the risks to the brand or retailer, from design through manufacturing. If the raw materials arrive late or damaged, production schedules slip or labor costs increase, it’s their responsibility.
The rewards of Made in California can be immense—rapid response to design trends, the flexibility to quickly change styles, more control over raw materials and components—but this increased complexity creates additional risks. After all, the higher the number of moving parts, the greater the chances of breakdown; and there are a lot more moving parts to manage when companies not only design but manufacture as well.
Visibility is key
How can companies increase the rewards and minimize the risks in apparel manufacturing? In a word, it’s visibility, from design all the way through the manufacturing process, at every point along the supply chain.
As an example, styles and production needs can change at any time, so immediate visibility to raw material and production status is required to help companies make the right decisions. This information must be visible to everyone in the supply chain that is impacted by a change. After all, when a customer wants a change, you can’t afford to waste time getting answers—otherwise, the fabric may be cut, sewing is in progress and it will be too late. The ability to manage changes further into the manufacturing process is one of the key benefits of local production. Excess finished-goods inventory can be the downfall of a company, and local manufacturing helps minimize that problem.
The role of technology
Fashion technology systems such as PLM (product lifecycle management) and supply chain management (SCM) have long proven their value in sourced production. Technology is even more important in a manufacturing environment due to all the additional moving parts that must be coordinated and managed.
What kinds of systems provide visibility in a manufacturing environment? Depending on the business model, a company may require solutions for:
PLM: To manage initial design and concepts, rapid design changes and bill of materials modifications. This is important regardless of where the manufacturing is done.
SCM: To track movement of raw materials from purchasing through delivery of finished goods at the distribution center. The closer to home these processes take place, the more your supply-chain requirements will change.
ERP [enterprise resource planning]: To manage supply and demand of raw materials. Purchasing raw materials is a critical part of Made in California. Controlling material costs means knowing what you need, when you need it and where it is—then being able to change material purchases as late in the cycle as possible.
Shop-floor control: With Made In California, it is critical to know the true cost of labor. A shop-floor system can measure operator efficiency and earnings, identify low productivity, manage work in process through the factory, manage materials, etc. Contractors and manufacturers alike can remain competitive only if they carefully control labor costs.
The good news is there are a number of choices available in fashion technology, with features that provide end-to-end visibility and help make local manufacturing a proactive, not reactive, business process. These systems can be ideal for helping companies manage the complexities of high-style, short-run, fast-fashion products that must be designed and delivered quickly.
Made in California has a definite place in the fashion world. While both the risks and rewards are greater, fashion technology can help companies minimize the risks and increase the rewards.