“We took a decision recently to close our two clothing factories in this country, because they simply cannot compete with imports from Asia. Before we implement the decision, we would like you to take one last look at the situation, to see if we have missed anything which could allow us to keep them open on the basis of achieving sustained profitability”.
Overview of Changes
A 2-week preliminary survey of the plants established that orders for both the Asian Plants and the Domestic Plants were placed between 9 and 12 months in advance of the target fashion season. Batches, which could vary in size between 500 and 1,000 garments were taking anything between 60 to 80 days from the issuing of the Manufacturing Order to Dispatch. The delays were driven by the Quality Control points which were located at each of the production lines. When defects were detected they were put to one side before being sent to a central workshop area to be repaired. Due to the enormous backlog and the luxury of time before the next season, it was two months and more before completed batches emerged. The batches were then dispatched to a large central warehouse where they were stored with the garments arriving from Asia. They remained in storage until the time came to dispatch them to the stores in time for the next season.
Under the business model which was in place, when garments were popular with Customers they were quickly sold out and stocks could not be replenished due to the lead times involved. On the other hand, when particular garments did not sell well they could be moved in and out of the Stores during Sales for up to 4 years before being sold off at practically zero value as a Job Lot. The preliminary survey concluded that the key to survival on a competitive basis was the transformation of the Plants into ‘Rapid Response Centers’, producing garments for the current season. The changed approach would allow the size of the orders placed in Asia to be reduced thereby reducing the cost of handling slow-moving product, while on the other hand, the stock of garments which were selling well could be replenished on a make-to-order basis.
The transformational changes introduced at the Plants saw the lead time from ‘Order to Delivery to Store’, reduced to between 9 Days for Shirts (least complex) and 14 Days for Leather Jackets (most complex). Several years later both Plants remain open.