In the 1940s the Toyota Motor Company pioneered the concept of Just In Time manufacturing. Its objective was to eliminate waste, inconsistencies, and unreasonable requirements from the production process, thus resulting in improved productivity. It’s a process that can be applied to many different types of manufacturing, but is most famous in the fashion industry, for being applied to Zara’s and Uniqlo’s fashion supply chains.
Through their partnership with the large textiles manufacturer Toray, Uniqlo uses just in time manufacturing to produce a number of products including their innovative product range Heatech. The thermal underwear products use a chemically-treated smart fabric that uses air pockets to retain body warmth, milk protein for softness, and an antibacterial agent to minimize sweat.
Initially, working with Toray proved a logistical supply chain headache for Uniqlo. Toray, primarily an industrial products manufacturer, operates all year round. Fashion companies usually produce seasonally, so Uniqlo tweaked its supply chainmodel and employed the just in time manufacturing method.
Through the use of state-of-the-art technology that monitors customer-orientated information alongside weekly sales patterns, Uniqlo orders garments just before the stores are likely to need them. This way, Uniqlo rarely has excess inventory and spends less money on storing goods at its distribution warehouses. If they were to see a sharp dip in sales, work would not need to be halted. Instead, it would use the same fabric to make an entirely different product. So if sales of cashmere sweaters suddenly dip, they might turn that goat’s wool into scarves. Having their own factories helps them to produce items that are manufactured as a response to demand, in a matter of days.
…the point of just in time manufacturing is to produce small quantities of in-demand items that sell quickly.
Just in time manufacturing also allows for forecasting errors through its leading-edge forecasting systems. Should Uniqlo fall foul of their predictions it can manufacture new items in its factories instantly. The surplus items are sold at a 20-30% discount during their special sales periods.
Zara adopted this automotive business model, renaming it Lean manufacturing, and created a new business model for its high-fashion items (their more classic pieces are produced in Asia).
Their ability to utilise this famous supply-chain inventory strategy so successfully is based on a number of things.
Many of their manufacturing units are based within a 20-minute drive from their design team, product developers, and management. This is unusual when you consider that the majority of fashion producers, such as GAP, LV, Marc by Marc Jacobs and Gucci all separate their design and management infrastructure from their factories and outsource many of their core entry price point products to Indonesia, China and Vietnam.
These countries are selected because their manufacturing costs are attractive and the long production lead times enable the goods to be shipped by sea thus reducing costs further. Another factor behind this choice is that these brands have a specific theme that is relatively unique to their company. This means that they produce vast amounts of items, in bulk, and based on the same types of clothing that reflect their brand ideology or theme. They are only interested in creating or maintaining fashion trends and can predict, far in advance, what their customers will want to wear. They have a very specific handwriting that has evolved to become their signature look. They will generally design their entire range for the following season and send it overseas to be manufactured. Their supply chain looks like this:
- Design the full range
- Manufacture in bulk
By contrast, Zara predominantly “chases the trend.” Their market sector, “fast fashion,” is inspired by couture and catwalk fashion trends and converts them into ready-to-wear garments. Their strategic focus is comprised of two factors: speed and price. This is achieved by implementing a very capable management system alongside technological support.
The just in time manufacturing supply chain follows this formula:
- Design individual pieces
- Manufacture in small quantities
- Logistics- Factories are kept nearby
The low-risk formula of manufacturing in small quantities omits the risk factor from the equation. If stock supplies should drop, then manufacturing can fill the gap quickly due to the high turnover of product.
Every year this system is applied to 50% of Zara’s stock. Twice a week, at precise times, store managers from their 1,670 stores around the world order clothes, and twice a week, on schedule, new garments arrive. This equates to more than 10,000 new designs a year. The turnaround takes only 10 to 15 days to go from the design stage to the sales floor.
Zara was conceived to be responsive from the very beginning of its inception.
To ensure this happens, and as a “trend chaser,” Zara controls more of its manufacturing than most retailers do, by housing management and creative departments in one building called “The Cube” in Arteixo and basing the factory in La Coruña region in Spain.
Zara was conceived to be responsive from the very beginning of its inception. It built 14 highly automated factories with robots working around the clock cutting and dyeing fabrics and creating “grey goods” (unfinished product) which form the foundations of their final products. Their partner network in Portugal and Galicia, comprised of more than 300 small shops, is used to oversee the finishing work. The “grey goods” are transformed into dresses and suits. This approach enables them to identify winning items, through sales, and to deliver similar winners in-store within a matter of days.
With the just in time manufacturing formula at the helm of their operations and the money to implement a vertically integrated supply chain strategy, Zara has a unique competitive advantage that is hard to imitate. At the present time, no other fashion company has been able to match this speed, infrastructural investment or solid management.
If you’re starting out as a new fashion brand, it could be possible to apply the just in time manufacturing formula to your operations. Designing a core collection of trans-seasonal separates as “grey goods”, would enable you to test out print and embellishment techniques and to therefore later sell product on demand.
Items such as separates and some accessories lend themselves to this. Collaborating with up and coming artists, or designers whose practice complements your work can be a good way of creating products based on proven success elements. Another way would be to develop a good following and a great relationship with a manufacturer and then pick a basic best selling style of a product and offer some customization to customers. It would mean that the factory is making individual items on demand, but they would be demand-driven, rather than taking a guess and hoping it will sell. This method is very similar to t-shirt printing retailers who hold stock of the same style T-shirt but in many different colours and sizes. They are able to apply customers’ print ideas to the blank T-shirts on demand.
Consider housing your design and manufacturing under one roof. Employing an in-house cutter and machinist to produce your stock means your production processes could be accelerated. Avoid overproducing items, and remember that the point of just in time manufacturing is to produce small quantities of in-demand items that sell quickly, thus allowing you to re-invest in new items that appeal to your customer base.
Manufacturing your own product and developing a great relationship with a factory is paramount to the success of your business. Below are some helpful articles to get you started: