Posts Tagged ‘PAM mini-factory’

Employing a High Profit Integrated Mini-Factory

September 7, 2012 Leave a comment

Guest post by Bill Grier

[ Founder and current chief technology officer (CEO) of Critical Mass Manufacturing (CMM) ]

Apparel Made for You Inc. has created a game-changing revolution for very profitably restoring the lost US domestic apparel industry. And in the process, AM4U’s Purchase Activated Manufacturing (PAM) promises to annually save multi-billions of gallons of fresh water because AM4U’s patented fabric dying, printing, and imprinting uses NO water at all! The initial path to starting this revolution is by using AM4U’s ingenious Integrated Mini-Factories (IMF) as outlined in these previous blogs:

  1. Demand Manufacturing: AM4U (Apparel Made 4 You)
  2. How PAM and Mini-Factories can help us Avoid the US Apparel Industry’s Perfect Storm

This final article details the huge profit gains available by converting today’s unsustainable ‘Supply and Demand’ apparel production to AM4U’s new ‘Demand and Supply’ approach which makes NO finished goods inventories until all products offered are presold and paid for online!

When fully funded, AM4U will begin selling/and or licensing single or multiple IMF’s that can pay for themselves in less than a year with minimum output and quickly pyramiding profits. AM4U is so confident, they plan to offer a program license entirely paid out of the customers’ increased gross profit after one year.

An ideal initial use of IMFs is to test new products or to re-energize sales of high profit items or mature products that are stagnating. But the real payoff is to use IMF’s as a key new element in existing multi-channel marketing strategies.

Remember that IMFs using PAM remove ALL perishable finished goods inventories, so all the normal inventory carrying costs are saved also. This is especially beneficial for products that demand high levels of customization and/or personalized fit (i.e. team gear as well as its accessories and supporting training gear).

PAM is also ideal for short runs of volatile fashion goods, which depend on rich colors and unique prints that demand expensive large fabric commitments, but AM4U will dyed, print and imprint these garments one at a time from white fabric, and only after they are sold.

IMFs can also produce high per-unit profits in low volume niche market segments like active sports such as Surfing and Mixed Martial Arts (MMA) products and fast changing pop culture items.

In summary, there are three fundamental roles for IMF strategy in a major company’s marketing and manufacturing structure:

  • Product development and testing
  • High value / low volume product production
  • Multichannel income and retail traffic building

Product Development and Testing

The incredible flexibility of the mini-factory production path allows companies to test a product idea without the cost of production minimums or the risk of design “lock up” far in advance of market testing.  Companies can release multiple versions of the same style and only mass produce the successful choices.  Product developers can also allow consumers to select colors and prints from a limited online pallet to enable or reinforce forecast color or print decisions.

High Value/Low Volume

Products All companies have niche products or undeveloped niche markets that support products that produce high value profits when sold, but the units move in such low volume that manufacturing minimums and inventory costs make them impossible to exploit in a conventional manufacturing environment.  The two key features of the PAM manufacturing technology in the IMF are no minimums and change-on-the-fly color, print, and fabric at full manufacturing speeds. These features allow exact production volume to match exact product sales.  This synchronized production eliminates the profit erosion that prevents large manufacturers from capturing these high value niche products.

Multichannel Income and Retail Traffic Building

In the evolving multichannel retail world, an IMF strategy can employ a small footprint body scanning kiosk which can dramatically increase the sales per square foot index for a retail location. These kiosks have access to a vast catalog of custom fit apparel and coordinated accessories that can be picked up in the store or ordered for home delivery.  Once the consumer is scanned, the PAM technology can extend the store into the home for custom perfect fit apparel and personalized performance wear.  This  technology also allows the retail location the opportunity to order localized product in small quantities or for specific online offerings available only at that location.

The presentation above follows contains the following:

• Tactical marketing differences between in-store and online sales

• How to build a product selection matrix

• Model profitability of six mini-factory produced products

• Return on investment for the first two years of mini-factory operation

How PAM and Mini-Factories can help us Avoid the US Apparel Industry’s Perfect Storm

August 15, 2012 3 comments

Retail shopping is being transformed by technology in multiple ways. A recent article in USA Today titled ” Why shopping will never be the same,” by Jon Swartz touches on just a few of them.

This blog post has a follow-up guest post to a recent posting titled: Demand Manufacturing: AM4U (Apparel Made 4 You). I asked Bill Grier (founder and current chief technology officer (CEO) of Critical Mass Manufacturing (CMM), Bud Robinson (Chief Marketing Officer of Critical Mass Manufacturing Inc.) and Dr Peter Kilduff (chair of Cal Poly’s Apparel Merchandising and Management department (AMM)) to comment by developing the guest post below on the perfect storm currently taking place in the US apparel industry.

Current Online Apparel Sales Trends

How PAM and Mini-Factories can help us Avoid the US Apparel Industry’s Perfect Storm

We may never see a “parting of the waves” opportunity like this again, where crisis level problems meet potential solutions head on. The confluence of technological advances and market need has never been more in sync than it is today.  Yet with all this opportunity the apparel sector has been slow to recognize and embrace change, blinkered and straight-jacketed via sunk investments that link distant low-cost offshore manufacturing locations to increasingly dynamic and fragmented consumer needs.  The reality is that the existing US apparel marketing philosophy of mass foreign production, seasonal market overloading, up to 50% markdowns, and eventual unsold product dumping, is becoming increasingly untenable economically, environmentally, and (ultimately,) politically.

Yet, we have solutions close at hand if we just extend our reach.  Here is a list of the available technologies that have developed separately over the last ten years.

  1. We have a massive sophisticated consumer base with an expanding multichannel retail infrastructure (ERP, CRM) ready to serve.
  2. Bar code SKU based prediction profiles for trends and purchasing patterns.
  3. Both the government (DAMA) and the private sector have created efficient and accurate tracking (RFID) and communication/control (PLM, MMS) programs for supply chain management.
  4. Incredible design and visualization capabilities, with digital 2D and 3D computer-aided design (CAD) applications enhancing product development capabilities.
  5. Body scanning to obtain up-to-date sizing data, improved fit selections and with the promise to enable virtual reality fit to avatar permitting custom fit and custom design.
  6. Cutting and sewing technologies enhanced by computer integrated manufacturing systems are evolving at digital speeds.
  7. “Change-on-the-fly” digital printing technology that utilizes fewer water and energy resources and is perfect for the shorter runs needed by today’s fickle fashion industry.
  8. New advances in chemical-physics have unlocked the ability to permanently dye and print the polyester, spandex and nylon micro fabrics that dominate today’s worldwide fashion choices.

Individually, these technologies have provided the industry with opportunities for significant but incremental advances.  When amalgamated, as demonstrated by the Apparel Made for You (AM4U) project, they open the way for a radical new approach to apparel retailing and manufacturing – one that begins with the consumer purchase and integrates this with fabric and garment design, retail selling and garment assembly.  This Purchase Activated Manufacturing (PAM) model will produce custom-designed, custom fitted, and custom labeled apparel, eliminating finished goods inventories and dramatically improving profitability.  At the same time, it will considerably reduce pollution, energy and water use, and return a significant number of apparel jobs back to the USA.  PAM has the potential to be the most disruptive technical event to affect the sewn goods industry since the innovations pioneered by Elias Howe and Isaac Singer.   PAM promises an answer to the building storm of eroding profit margins, and the generation of huge waste and pollution in a world progressively expending its natural resources.  Not so much a perfect storm more a parting of the waves.

The Top Challenges in Apparel Retail

Reducing Out-of-Stocks. This is more critical than ever to apparel retailers, since many have adopted defensive inventory practices designed to keep only as much inventory in the store as is absolutely needed. This has put significant pressure on retailers to enhance supply chain efficiency by having real-time visibility to merchandise levels in their stores and at distribution centers.  PAM/Mini-Factory:  Garments are stored in digital form and sized to fit and produced when purchased.  There is no out-of-stock for any product ever stored in the inventory i.e., a standard DVD will hold over 1200 digital garments including all colors and sizes.

Lowering the Cost of Inventory. Retailers had to adapt during the recession, making difficult cuts to their inventories in order to avoid overstocks and markdowns. But the short selling seasons of apparel, as well as frequent reconfiguration of products on the sales floor, makes this challenge particularly poignant in the apparel industry. PAM/Mini-Factory: By targeting PAM production on high inventory cost and high risk designs, colors and prints, retailers can use a single display or touch screen image in place of product on the floor.

Improving Speed to Market. Fashions change at blinding speed, and new trends and consumer preferences emerge at the blink of an eye – today, even more than in the past. Apparel brand-owners must get their products from the design center to the store faster than ever, and retailers must stock and sell those products immediately while consumer interest is at its highest – and before the next selling season begins. PAM/Mini-Factory: With real time design, on the fly patternmaking and one-off production, retailers can test the market continuously without delay or cost.  Consumers can make, color and print changes and see them on their bodies before they purchase.

Reducing or Reallocating Labor. Gross margins on apparel have dropped significantly in the past two years as a result of the recession, as retailers have slashed prices to move merchandise. This has put renewed pressure on retailers to be more efficient with their labor allocation in order to recoup a few percentage points of margin lost by price-cutting. Additionally, more retailers have begun adopting source tagging, moving the process of attaching tags to the front end of the supply chain, where it can be done more cost effectively.  PAM/Mini-Factory: Consolidation of tasks removes the dye-house, the wet printer, the label maker, the hang-tag printer, the cutter and all the transportation and duties in between these sites.  The key to gross profits is not paying less per person but to pay less people. A mini-factory will pay less people higher wages and still more than double gross profit.

Generating Data to Manage and Maximize Programs. As both sales and gross margins have slipped among apparel retailers and brand owners in recent years, more money has been spent on direct-marketing programs to drive store traffic and encourage purchasing activity. But retailers need additional, real-time information in order to determine what promotions are working and which ones are not, while manufacturers need this information to determine which retailer marketing campaigns they will continue funding.  PAM/Mini-Factory: PAM is both real time and real money data, plus it generates size and demographic details never before available.  Remember there are no markdown or sale promotions because there is no inventory to markdown.

Preserving Brand Integrity. Apparel counterfeiting remains a huge, vexing problem. It robs retailers of legitimate sales opportunities, erodes margins, confuses supply-chain partners and erodes a brand in the eyes of consumers who receive shoddy substitutes for the real thing. Retailers and brand-owners are taking extra steps to ensure that their brands are properly and consistently presented to consumers. PAM/Mini-Factory: Total manufacturing control of high end products allows security and anti-counterfeit techniques and applications never before possible.

Enhancing Customer Satisfaction. Research from Harvard Business School has consistently noted that when a product is out of stock when a customer comes in, that customer is highly likely to shop for the product in another store and perhaps unlikely to return again in the future to the original store for that product. It also means that the customer doesn’t buy additional apparel products and accessories, robbing the retailer of important add-on sales and profits. PAM/Mini-Factory: The consumer participates in the fitting and coloring in real time online or in the store and since the inventory is digital nothing is ever out of stock.

Reducing Shrink. Apparel is the number-two category for shrink worldwide, according to the Global Retail Theft Barometer. Reducing shrink is a huge step toward improving the bottom line of apparel retailers, especially considering that higher-margin products such as accessories, designer-label clothing and intimate apparel are stolen at even higher rates. PAM/Mini-Factory: Every garment has an owner before it even starts through the factory. Elimination of shrink is a major contributor to increased gross profit.

Maximizing Sales. At a fundamental level, retailers are in business to sell products that their customers want to buy, and they need to do everything possible to maximize sales. Having the right mix of products, maintaining adequate shelf availability, and keeping prices competitive are all key to their long-term success. PAM/Mini-Factory: The PAM selling strategy increases consumer participation, provides for multichannel convenience (in store, online/in store pickup, online/ship) and creates personal tailor level customer loyalty.

An example of the PAM Mini-Factory strategy for recovering the US apparel manufacturing base can be seen daily in thousands of Lowes, Home Depot, Orchard Supply, and other home centers and paint stores through the country.  Paint was a staple product for years but it suffered from high inventory costs and large floor space consumption.  The problem was that every color had to be in stock and if you did try to mix a new color it was almost impossible to match the customer’s chip.  Sound familiar…?  Then a smart young lady decided to apply the new low cost spectrophotometer technology to the problem.  This permitted colors to be mixed and matched in-store right at the counter with white paint!  Voila! Purchase Activated Manufacturing mini-factories were born in home centers across the United States (and the rest of the world)! Suddenly, integrated diverse technologies joined to reduce waste and inventory and more than double gross profit.

Standby, because in the next guest blog post, Bill, Bud and Peter will demonstrate how to maximize profits through matrix product selection and multichannel sales distribution.

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