Every Friday, the California Apparel News newsletter contains ungated links to free content. Last Friday’s edition had numerous articles about the recent MAGIC and satellite shows in Las Vegas. The one element that is increasingly common -practically a clamor now- based on interviews with attendees and exhibitors alike is that immediates are selling best.
This isn’t anything new, I’ve been saying immediates (meaning, product delivery within 4 weeks) are the singular advantage you have over everyone else but DEs, in their struggle to be as profitable as the big guys, are copying what they think is most profitable about those models when what they’re really doing is copying the most obvious. This is a mistake. If the big outfits could, they’d try to be littler in terms of shortened delivery windows, smaller lots and higher prices. DEs are ideally suited to produce immediates; you can get more money for them because they are rare. Cutting to order prevents a stockpile of inventory diminishing the value of your product that you are forced to sell -and probably for less than you anticipated. Zara never has a sale, their inventory turns in two weeks or less.
A lot of DEs are making up product in advance of orders. Unless they have a track record and proven distribution already, most of them go broke. At best, they bleed money until they get lucky but most don’t. Get lucky that is. Making it is never a question of luck! Most DEs who adopt this model fail but their failure is invisible because they don’t last long enough to serve as a warning to other startups. DEs only see the outliers that get lucky enough to peg the market just right which builds the expectation that if you only hit the trends, you can make it too. In this way, the rare performer becomes the norm that everyone tries to copy. Worse, DEs aspire to producing large lots. I can’t tell you how many people say they have to make do with producing domestically until they get the numbers to go overseas when a different perspective could change their entire plan for the better.
Like it or not, people who will thrive in the coming environment are those who can produce for themselves. I realize this makes me unpopular but more of you seriously need to think about ways you can start producing for yourselves. The idea of a DE opening their own sewing factory faces two psychological hurdles and no one even realizes it. These two hurdles are what I describe as the franchise mentality and the second can be loosely defined as the desire to keep distance from production because it is repugnant and distasteful -only no one wants to admit that because it’s not politically correct.
The franchise mentality is an outgrowth of productivity myths. Are you familiar with Moore’s Law? Moore’s Law is an observation that computing power doubles (an order of magnitude) every two years. People think this is also true of productivity; one example being the lauded four hour work week. Over the past five years, it seems more people are looking at clothing production as MLM or a franchise; a turnkey operation they can do in a few hours after dinner. This is not a reasonable expectation. If your contractor were only working four hours a week, your stuff would never get done so the very idea that one holds this expectation for themselves but an entirely different yardstick for someone else strikes me as hubris.
Okay, so let’s consider the alternatives if you’ve decided to pursue producing your own stuff instead of doing the franchise thing. What are your barriers? Here’s a short list of possibilities:
- You don’t have the money
- You don’t have the skills
- You don’t have the time
You don’t have the money. Of them all, this makes the least amount of sense. If you don’t have any money, why are you doing this? You obviously must have some money or you couldn’t batch order a big quantity in advance of orders so you are finding money somewhere. Be honest; you’ve decided it’s worth paying for the batch order but you don’t want to invest in your own operation. The logical solution is to quantify what your decisions are really costing you versus what you really need. One reason people think a big order is okay is because accounting rules say inventory is an asset. Ha! In the rapid cycling apparel industry, inventory sitting on your shelf is a liability. It’s worth less the longer it sits there. Ideally, product comes off the sewing line and is put directly in a shipping box.
Let’s say you write a check for $20,000 to pay production costs for an item for which you have no orders. If you’re very very lucky, you’ll sell 40% of it in a timely way. 60% goes into the trash or into secondary resale markets that serve to lower the value of your brand. You lose money on this deal. You are much better off buying two new industrial machines (@ $1,600 ea), setting them up in a spare bedroom and hiring someone to come over to sew orders for you as they come in. You don’t have a place to cut? No problem, get a storage unit and do it there. Even if you only break even, you still have something to show for it -two machines you can resell. In real life, you make a little money, build relationships and credibility and put the money into the next round. Worst case scenario that nothing sells, you’re only out the loss of having to unload the two machines for less than what you paid for them rather than 20,000 bucks for inventory nobody wants.
You don’t have the skills. ~Yawn~ So what, join the club. Most people (75% or better) don’t have any skills when they started either. You can learn. My best performing companies (many of you send me articles about them not knowing they got their start here) were started by people who taught themselves to sew at the same time they started or were running their businesses. Let the people you hire teach you. That’s what the most successful companies do. How come you don’t copy that? They hire better talent as their budgets increase, bringing in people who have skills they want to populate across the company. Besides, who says you need to learn to sew? What you must learn is to facilitate the work of people sewing for you. A manager’s job is not to tell everyone what to do. It’s to establish targets and clear the path of whatever problems there are so people can meet the targets and standards you’ve established.
You don’t have the time. Unlike the first two, this is a real problem. You’ll have to find the time or wait until you do. I know that in general we say it is more efficient to hire someone if you have money but not time but it doesn’t work so well in manufacturing -this births the franchise mentality. I’ve worked for people who have money but no time and they easily wasted the most money. Worse, they didn’t go anywhere for all their efforts. You should only hire for the skills you lack, not for time you lack. An hour you buy of someone else’s time is rarely worth what you pay for it, especially if you have lots of money. People see you coming; if you don’t have time to do it, you won’t have time to keep tabs on them either. Buying time only works in limited ways, like paying a babysitter $10 an hour so you can go out and earn $20 an hour but you’re not buying their skills because you can watch your own kids best. If you can only afford one, buy skills, not time. The return on your investment is better.
Tomorrow I’ll lecture (sorry) about the second psychological factor that prevents people from opening their own sewing shops, namely the repugnance factor.