Risk analysis

SWOT analysis can be used to map internal and external risks and strengths. All of the weaknesses and threads can create risks if solutions for them are not found.

Figure 23. SWOT analysis for NOMO Jeans.

Strengths

All of the strengths are hard to copy.

Weaknesses -Errors in handling large amount of information

-Scarce resources

All of the weaknesses affect on the delivery time and increase uncertainty.

Opportunities -Globally large markets -New concept -Webshop

-Pioneer, can gain the trust and loyalty of customers before competitors arrive -Possibility to ask premium from unique products

Threats

-Emerge of competitor with steady manufacturing facilities

-Deliver what is promised in time and handling of reclamations to achieve customer satisfaction

-Producers cannot handle fast growth or big changes in demand

-No own manufacturing - copying of processes and dependance of subcontractors

-Increase in costs of materials, production, deliveries

From the production point of view, the quality and inventory management are not on the best possible level in the production facility in China, and require lot of work to progress. Varying quality and production times cause lots of problems, when unique made-to-order products should be according to order at the first time, since reproducing again take a lot extra time. There are delays and uncertainties, and it is hard to get accurate information about production schedules, which means that there is no possibility to give exact ready dates for customers. This reduces the service level tremendously, and causes customer dissatisfaction. The facility is far away from customers and headquarters, which reduce possibilities to follow and control production. This increases also uncertainty in factory’s compliance of instructions and standards, both ethical and environmental, and this is hard to monitor. On the environmental point of view, frequent air deliveries increase the carbon footprint. Large amount of fabrics have to be purchased at once, which affects negatively to inventory turnover.

Reducing the amount of returns is a great challenge. Large percentage of returns is very costly, and affects negatively on customer satisfaction. The fit is the biggest challenge as well as finding ways to handle and re-produce returns as quickly as possible, since the customers have waited the promised delivery time already once. It is important to analyze thoroughly what is wrong to fix the cause for a return. There should be more analyzing done concerning varying shrinkages in the washes, and effects of fabric features and finishing. As the customers have varying feelings about good fit, it is important that the clerks are trained to describe different fits of different models, and how the details and fabrics affect to the fit. It is a big challenge to improve the fit so that it would satisfy all customers with different opinions. The product development team rarely sees the fitting or unfitting jeans on the customer, which makes harder to make changes in the base patterns.

Altogether, shortening and keeping the promised delivery time are required to obtain a high rate of customer satisfaction. Long delivery times increase the possibility for lost sales, and delays increase the dissatisfaction among customers and affect negatively to the company image. The shortening of delivery times requires still improvements in all stages from the purchase to the delivery, and there is still lot of time-consuming manual handling and checking to avoid mistakes. Close relations with producers are required, as well as more training and instruction to improve quality and efficiency.

7 CONCLUSIONS

In my bachelor’s thesis ‘Mass-customization in apparel and footwear’ (2008), I studied companies (Turo Tailor’s Windowshop, now called Your personal tailor; Left® foot company; and Mi Adidas) that are implementing customization concepts for certain products alongside of the traditional production. The conclusions were that the most of the companies implementing customization concept have a strong knowledge of the product, facilities for flexible production as well as existing supply of materials, ready distributions channels, and marketing networks. Production is executed along with traditional collections, and production volumes of customized products are small compared to normal production.

The situation is different when customization is not just an additional service; instead it is a whole concept. This allows focusing fully on customization, and all operations are planned and designed according to this strategy. There are fewer examples of apparel companies that produce only customized clothing because of challenges in demand forecasting, which means that at some times there can be less orders, and then suddenly over the capacity. Jeans are optimal product type to implement customized made-to-measure concept since it is not dependent on seasons; most people wear jeans every day and buy jeans all year around. This is an advantage as there are no certain peaks in demand and there are no major fluctuations in sales according to time of the year.

7.1 Discussion

Many researches define that mass customization requires modularity in the product architecture. According to these definitions, NOMO Jeans’ operations would be called mass-tailoring in the clothing industry. When customizing the fit of a garment, the size is individual in each product, and possibilities for modularity decrease. Implementing of modularity is much more convenient with standard size products. NOMO’s jeans construct always from designed modules, but these modules are difficult to pre-produce, since the size of each module changes according to customers’ measurements and detail choices. From the production point of view, all parts that could be mass pre-produced would accelerate the lead-time, but would require complex and large storage.

On the other hand, implementation of modularity in production operations would definitively give an advantage and enhance performance.

The 3D body scanner makes possible to get trustful measurements quickly with a 3D image of a body shape, but one disadvantage is that the customer have to go to the store to get measured, and at the moment, NOMO Jeans has only two stores. Many web-based customization companies have video instructions and tools to enter self-measured measurements, which require a friend to help and this may not be accurate, but the jeans can be ordered from any location. This is also much cheaper option, which does not require investing in 3D body scanners, although the prices of scanners are getting down.

In addition, web-based companies do not require shop spaces and clerks, which also reduces costs. However, lack of physical shops reduces face-to-face opportunities with customers, which cannot be fully replaced with social medias and customer service trough the Internet. When buying garments, it is hard to get exact image of fabrics and materials only from pictures, and many customers like to still touch, feel and see the materials before purchasing. In addition, 3D body scanner is a part of the shopping experience with customizing the look of the jeans.

There is need to improve pattern layout efficiency, as well as production order and pattern creation flow after purchase. Finishing is a big challenge in mass customization.

Flexibility in production can be advanced with new technologies such as automated laser cutter to cut fast larger amounts of patterns. Special laser tool would be good for creating effects that look similar to ‘brushing’, but would not affect the denim fabric quality and would be much faster way to add the effect to jeans. Normally, industrial washing machines are designed for large amounts. Smaller washing machines to wash small amount or even single pieces of certain color would be more efficient in production of customized made-to-measure jeans.

Flexibility and scalability with excellent quality is quite hard to achieve with changing volumes. The most efficient solution is that there are designated groups of sewers who are trained to produce customized jeans. Continuous workflow would be the best option.

Factories have difficulties when there is a delay or interruption in weekly order batched, if creating production order, product cards and patterns takes longer time than estimated or there are not many order because of for example seasonal holiday when the stores have been closed. In these cases, there are not enough new orders coming to sustain workflow for designated cutters and sewers in the factories. Especially, this is not motivating if the workers are paid according to the number of produced jeans. On the other hand, it would not be profitable for a producer to pay monthly salaries in the case when there are less orders coming, and sewers have nothing to do and machines are not used.

If the designated group of sewers starts some other project while waiting, they need to finish it before returning to new batch of customized jeans, which causes then delays in delivery time. On the other hand, if the volumes suddenly rise a lot, the production time gets longer, before more workers are trained. When new sewers are designated, they

require also time to learn, and carefully check the instructions and product cards, otherwise the quality will suffers and amount of mistakes rises. This is why steady growth in sales is required, in addition that the product does not have notable seasonal changes in the sales. Also the producers should be informed about the daily sales so that they can be prepared. However, there is only days to react to the changes and fluctuations in sales with weekly batches.

7.2 Results

As a result, many tools for production were developed alongside this thesis. The practical part of this thesis consists of mapping the biggest challenges in the production of NOMO Jeans’ customized made-to-measure jeans and finding solutions for them.

Especially, planning and implementing the production in China has been challenging since the concept and production differ a lot from traditional, and production of NOMO jeans has required new kind of thinking for producers. The sewing and washing quality level has been raised to acceptable level by detailed instructions for production, planned quality assurance as well as frequent monitoring and feedback. The factors affecting efficiency and scalability of production workflow are studied, but a still lot of work is required in implementing and improving the workflow.

It has not been possible to measure the production time and efficiency accurately, since there are still many interruptions in the workflow because of occasional errors in patterns or product cards. Visits in the factories have mainly concentrated on problem solving to enable better workflow. With customized made-to-measure jeans, there has to be new kind of approach to production efficiency, because each product has multiple details, which can vary even though they are limited and pre-designed. Due to this, the production workers have to concentrate, take time, and be very careful to avoid mistakes, which extend the production time compared to traditional mass production.

The additional costs of implementing mass customization and producing more complex customized made-to-measure jeans can be compensated with lower mark-downs, reverse cash-flow, reduced warehousing, on demand production, and increase in customer loyalty of satisfied customer. The critical factor concerning the company’s performance and profitability is the amount of the returned jeans with quality problems.

The amount of returns has to be minimized, and kept in a very low level. This can be achieved with continuous improvements in product and process development, and quality assurance in all stages of the operations. In addition, careful monitoring of the operations is required to avoid problems that can affect the quality, and to find solutions to overcome them.