From fibre to fashion, the textile industry value chain tends to be long, containing many stakeholders. Barring a few vertically integrated units, which have an end-to-end control of the entire supply chain, the usual flow spans multiple units specialising in one or two parts of the total value chain:<figure class="image"><img style="aspect-ratio:1600/937;" src="https://web-assets.vectorconsulting.in/storage/editor_uploads//vertically-integrated-textile-mills_1752999754.jpeg" width="1600" height="937"></figure>The raw materials few in number, undergo irreversible transformations at every stage or unit of this value chain. And in the process, the variety of output increases significantly. Let's take an example of cotton garments manufacturing. From a single fibre, such as cotton, varying the twists can create more than 50 types of yarn with different thickness and strengths. A combination of these yarns can be knitted into 100s of greige fabric – each varying in structure, thickness, and width. When the greige fabric is dyed into different hues, variety explodes into 1000s. Ultimately, a wide range of garments can be manufactured from the same fabric. A typical sequence of processes in a garment factory is shown below:<figure class="image"><img style="aspect-ratio:1478/1600;" src="https://web-assets.vectorconsulting.in/storage/editor_uploads//process-in-garment-factory_1752999765.jpeg" width="1478" height="1600"></figure>Generally, retail brands or downstream partners design the products they would like to order. Then, manufacturers come up with samples. Subsequently, the approved designs are manufactured. Currently, for most mills, not only is the total manufacturing lead time fairly long, but it is also highly unreliable. So much so that for brands, the ‘concept to delivery to stores’ lead time can vary from 9 to 12 months. The variety involved is huge, while fashion cycles are short, often shorter than the lead time! So, a ‘stock and sell’ model will overburden the supplier with huge inventories. This is impractical, to say the least.    As a result, most suppliers operate as ‘Make-To-Order’ (MTO) units to their downstream partners. An order is typically a collection comprising various designs. At each unit, the order gets more granularised. However, completing the assortment or delivering all the SKUs of an order together is of paramount importance. For example, let's say a retail brand places an order for its spring-summer collection with a garment supplier, ordering different quantities of 12 individual designs. On the garment supplier’s shop floor, each SKU will run individually and may get dispatched separately. However, such designs are typically part of a collection or storyline and are expected to occupy the retail shelf space together. Therefore, until all 12 designs are delivered, the brands collection remains incomplete and useless.  A similar situation can arise between a garment supplier and a fabric or trim supplier when the supply of some fabric SKUs arrives on time, but one fabric is missing from each assortment. This could happen between a fabric supplier and his yarn suppliers – weaving or knitting cannot start until all yarn SKUs in the required quantity are available. In the case of a yarn supplier, mixing yarns to achieve a desired shade cannot begin until all shades of the required fibres are present. <h5> </h5><h5>Chronic industry issues </h5>All textile units operate their shop floors to complete all SKUs in their various orders. But, despite sophisticated scheduling softwares and continuous expediting, these units experience the following chronic problems: <ul style="list-style-type:disc;"><li>The overall lead time of an assortment is high.</li><li>The inventory levels skyrocket as the rate of creating incomplete assortments (which cannot be dispatched) is significantly higher than the rate of closing or dispatching assortments.</li><li>The overall system reliability that customers experience is poor, although traditional measures of on-time performance may indicate otherwise.</li><li>Consequently, the supplier often has to pay for this chronic unreliability (delays, quality issues, or incomplete assortment) by having resorting to expensive airfreight and/or paying penalties to customers. </li></ul> But what creates these issues?<h5> </h5><h5>The root cause - A vicious loss of capacity</h5>Bulk manufacturing of textiles is a high-investment business. To ensure a good return on this investment, the efficiency of each work centre is diligently protected, and any capacity loss or idling is strictly prohibited. Moreover, these machines have an optimised sequence of work (e.g., yarn making has a count sequence, dyeing needs to maintain a particular colour sequence, etc.). To utilise the machines to the highest levels, most textile units follow a monthly planning system in which all opportunities for batching across the backlog of orders are utilised.  Based on the SKUs manufactured in the previous month, a plan is made at the beginning of each month for that month’s production. The plan is shared with vendors or downstream units. Vendors, too, experience delays. Moreover, different materials have different lead times. During this period, when the complete kit of materials is not yet available for production, the mill’s capacity is either lost or underutilised in the first half of the month and becomes overburdened towards the end of the month when all the materials become available. Therefore, work moves in ‘waves’ into the various work centres in the textile mill.  At every work centre, a few raw materials can be transformed into a wide variety of output. Therefore, it is easy to 'steal’ the raw material of a current order of, say, SKU-2 to produce a larger batch of SKU-1. In the process, the SKU-2 will now wait for raw materials to be available again while the stock of SKU-1 accumulates in the warehouse, awaiting completion of the assortment. So, despite the inventory ballooning over the month, this practice of cherry-picking across customer orders also creates erratic cycles of starvation and overloading in work centres. This also increases the time gap between manufacturing various items needed for completing orders (poor On-time In-full performance).  Subsequently, when pressure from customers or downstream units to process missing items of an assortment intensifies, batching considerations are sidestepped, and production plans are rescheduled. This affects the scheduling of other materials, creating further desynchronisation. By the time all the input material becomes available, time is running short. All planned orders for the month cannot be completed, and many orders will spill over to the next month.  At the end of the month, the large WIP and raw material in the system are again ‘netted off’ against pending orders and a new plan is made. Consequently, the same cycle of underutilisation in the initial part of the month and expediting towards the end of it repeats every month. <h5> </h5><h5>The vicious loop that such environments tend to experience is this:</h5><figure class="image"><img style="aspect-ratio:1600/1419;" src="https://web-assets.vectorconsulting.in/storage/editor_uploads//vicious-loop-in-textile_1752999773.jpeg" width="1600" height="1419"></figure>What is most ironic is that despite fighting hard to 'protect' returns on investment and profitability by focusing on utilisation and machine productivity, in the end, this is all in vain. The company does not experience any real improvement in overall utilisation. Additionally, due to system unreliability, there is a consequent increase in costs resulting from the need to frequently send materials through air freight and/or incur penalties. <h5> </h5><h5>Direction of solution</h5>These problems arise because various work centres of a textile mill are blind to how local decisions affect the fate of customer orders. So, how can mills address these issues? The only win-win way out of the conflict between order completion and utilisation is a method that limits WIP and defines the boundaries within which local batching considerations can prevail protecting efficiencies without delaying orders.  Sounds simple! doesn't it? Let's see how to do it.  <h5>Tactical steps</h5>Although the lead time for completing an order is often long, the actual processing time, or the time an order spends on the machines, is relatively short. The gap between touch time and lead time is long because orders often wait to be processed in front of various work centres or warehouses. To reduce the waiting time and to implement a paradigm of focus on completing orders rather than driving efficiency, the following tactical steps are needed:  1. Production scheduling with WIP control: As opposed to existing practice of monthly planning and batch releases, material release should be based solely on the daily gap in WIP i.e. new orders are released only when the same quantity is available. This can be implemented by first identifying the bottleneck or work centre in the system whose output determines the system output (called the Drum). Since, by definition, the other work centres have higher capacity, a day’s output from this can be the input to the system on the next day (Rope). With this rule in place, the mill will have sufficient visibility to perform batching, to meeting any technical requirements while protecting utilisation and ensuring the completion of work on the orders in hand. Consequently, the execution lead time, the time from the date of order release to the date of completion (Buffer) will be reduced. At the same time, this step also enables planning to be conservative and reserve some capacity while allowing execution to ustilise any unused capacity and maximise output aggressively.  2. Keeping track of the 'Flow’ of orders: To ensure the on-time delivery of a complete customer order, it is also essential that the completion of the assortment is managed rather than tracking individual components. All local-level measures and targets like ‘Daily dyeing output should be 10 tonnes’ or ‘Daily garments output should be 25,000 pieces’, which can hamper adherence to this objective (by encouraging batching), should be eliminated. High productivity of each work centre will likely be achieved, but only as a by-product.  3. Managing priority: Now, the delivery date of the order should be the only priority determinant on the shop floor. To enable this, a simple colour-based priority mechanism can be devised based on relative closeness to the due date. Red is the highest priority, followed by Yellow and Green, which is the lowest. The colour priority dictates expediting on the shop floor and at the vendors’ facilities.  4. Quoting due dates: The sales department usually generates new orders and quotes delivery dates with a fixed lead time or based on customer expectations. However, in such a system, quoting a fixed lead time delivery date may not always be sufficient, considering there is a queue of orders already in the system (waiting to be processed at the bottleneck work centre, also known as the drum). Allowing customers to pick a date may also upset this queue and, thereby, the already committed delivery dates. Therefore, the delivery date offered should not jeopardise the existing queue and should also allow for sufficient lead time to complete the execution after the processing at the ‘drum’.  A daily perpetual order slotting system for Due Date Quotation, with a clear definition of capacity, is essential. That is, the production team must provide the sales team with 'safe dates' or highly reliable dates that they can offer to customers for orders that the sales team may close next. Then, not only will lead times be low, but the reliability will also be near 100%. This will also help smooth the load on the shop floor, as sales will have visibility into gaps in the production load and, thereby, help encourage sales even during lean periods.  5. Managing preparatory activities: The preparatory activities (sourcing of yarn and trims, submission of GSS samples to customers) can also be prioritised based on their relative closeness to the release date, with the help of a preparatory buffer, that is back-to-back with the production buffer. For instance, in a garment plant, a preparatory buffer should help create a bank of full kits of sales orders with completed fabric, trims, and approvals to ensure the continuous running of the stitching operation on correct orders. So, the overall system would look like: <figure class="image"><img style="aspect-ratio:4000/2481;" src="https://web-assets.vectorconsulting.in/storage/editor_uploads//tg-article-3-img-4-1736140762_1776858570.jpg" width="4000" height="2481"></figure><h5>Conclusion</h5>Once an organisation implements these tactics, synchronisation can be achieved with all the preparatory activities, including raw material supplies. Moreover, waiting times will be reduced, and lead times for order completion can be slashed by more than half.  With such an overall reduction in lead time, key customers who require orders in considerably lower lead time can be offered deliveries in half the normal lead time (possibly at a higher price). To achieve this, capacity can be set aside for running these orders without affecting other regular lead time orders.  This means that, in an industry chronically struggling with long lead times and poor reliability, a company adopting this method can build a competitive edge based on reliability and lower lead times while ensuring more output from the same capacity.

Key Takeaways

Textile companies fight hard to 'protect' their ROI and profitability by focusing on utilisation and machine productivity, but it does not really help. Changing their way of planning manufacturing can help.

A stitch in time: Cutting lead time and improving reliability of textile supply chains

From fibre to fashion, the <a target="_blank" rel="noopener noreferrer" href="https://www.vectorconsulting.in/en/industries/textile-garments/">textile industry</a> value chain tends to be long, containing many stakeholders. Barring a few vertically integrated units, which have an end-to-end control of the entire <a target="_blank" rel="noopener noreferrer" href="https://www.vectorconsulting.in/en/research-and-publication/articles/fashion-forward-navigating-supply-chain-challenges-in-apparel-retail/">supply chain</a>, the usual flow spans multiple units specialising in one or two parts of the total value chain:<figure class="image"><img style="aspect-ratio:1600/937;" src="https://web-assets.vectorconsulting.in/storage/editor_uploads//vertically-integrated-textile-mills_1752999691.jpeg" width="1600" height="937"></figure>The raw materials few in number, undergo irreversible transformations at every stage or unit of this value chain. And in the process, the variety of output increases significantly. Let's take an example of cotton <a target="_blank" rel="noopener noreferrer" href="https://www.vectorconsulting.in/en/research-and-publication/articles/reclaiming-global-leadership-in-textile-manufacturing-challenges-solutions/">garments manufacturing.</a> From a single fibre, such as cotton, varying the twists can create more than 50 types of yarn with different thickness and strengths. A combination of these yarns can be knitted into 100s of greige fabric – each varying in structure, thickness, and width. When the greige fabric is dyed into different hues, variety explodes into 1000s. Ultimately, a wide range of garments can be manufactured from the same fabric. A typical sequence of processes in a garment factory is shown below:<figure class="image"><img style="aspect-ratio:1478/1600;" src="https://web-assets.vectorconsulting.in/storage/editor_uploads//process-in-garment-factory_1752999718.jpeg" width="1478" height="1600"></figure>Generally, retail brands or downstream partners design the products they would like to order. Then, manufacturers come up with samples. Subsequently, the approved designs are manufactured. Currently, for most mills, not only is the total manufacturing lead time fairly long, but it is also highly unreliable. So much so that for brands, the ‘concept to delivery to stores’ lead time can vary from 9 to 12 months. The variety involved is huge, while fashion cycles are short, often shorter than the lead time! So, a ‘stock and sell’ model will overburden the supplier with huge inventories. This is impractical, to say the least.    As a result, most suppliers operate as ‘Make-To-Order’ (MTO) units to their downstream partners. An order is typically a collection comprising various designs. At each unit, the order gets more granularised. However, completing the assortment or delivering all the SKUs of an order together is of paramount importance. For example, let's say a retail brand places an order for its spring-summer collection with a garment supplier, ordering different quantities of 12 individual designs. On the garment supplier’s shop floor, each SKU will run individually and may get dispatched separately. However, such designs are typically part of a collection or storyline and are expected to occupy the retail shelf space together. Therefore, until all 12 designs are delivered, the brands collection remains incomplete and useless.  A similar situation can arise between a garment supplier and a fabric or trim supplier when the supply of some fabric SKUs arrives on time, but one fabric is missing from each assortment. This could happen between a fabric supplier and his yarn suppliers – weaving or knitting cannot start until all yarn SKUs in the required quantity are available. In the case of a yarn supplier, mixing yarns to achieve a desired shade cannot begin until all shades of the required fibres are present. <h5> </h5><h5>Chronic industry issues </h5>All<a target="_blank" rel="noopener noreferrer" href="https://www.vectorconsulting.in/en/industries/textile-garments/"> textile</a> units operate their shop floors to complete all SKUs in their various orders. But, despite sophisticated scheduling softwares and continuous expediting, these units experience the following chronic problems: <ul style="list-style-type:disc;"><li>The overall lead time of an assortment is high.</li><li>The inventory levels skyrocket as the rate of creating incomplete assortments (which cannot be dispatched) is significantly higher than the rate of closing or dispatching assortments.</li><li>The overall system reliability that customers experience is poor, although traditional measures of on-time performance may indicate otherwise.</li><li>Consequently, the supplier often has to pay for this chronic unreliability (delays, quality issues, or incomplete assortment) by having resorting to expensive airfreight and/or paying penalties to customers. </li></ul> But what creates these issues?<h5> </h5><h5>The root cause - A vicious loss of capacity</h5>Bulk manufacturing of textiles is a high-investment business. To ensure a good return on this investment, the efficiency of each work centre is diligently protected, and any capacity loss or idling is strictly prohibited. Moreover, these machines have an optimised sequence of work (e.g., yarn making has a count sequence, dyeing needs to maintain a particular colour sequence, etc.). To utilise the machines to the highest levels, most textile units follow a monthly planning system in which all opportunities for batching across the backlog of orders are utilised.  Based on the SKUs manufactured in the previous month, a plan is made at the beginning of each month for that month’s production. The plan is shared with vendors or downstream units. Vendors, too, experience delays. Moreover, different materials have different lead times. During this period, when the complete kit of materials is not yet available for production, the mill’s capacity is either lost or underutilised in the first half of the month and becomes overburdened towards the end of the month when all the materials become available. Therefore, work moves in ‘waves’ into the various work centres in the textile mill.  At every work centre, a few raw materials can be transformed into a wide variety of output. Therefore, it is easy to 'steal’ the raw material of a current order of, say, SKU-2 to produce a larger batch of SKU-1. In the process, the SKU-2 will now wait for raw materials to be available again while the stock of SKU-1 accumulates in the warehouse, awaiting completion of the assortment. So, despite the inventory ballooning over the month, this practice of cherry-picking across customer orders also creates erratic cycles of starvation and overloading in work centres. This also increases the time gap between manufacturing various items needed for completing orders (poor On-time In-full performance).  Subsequently, when pressure from customers or downstream units to process missing items of an assortment intensifies, batching considerations are sidestepped, and production plans are rescheduled. This affects the scheduling of other materials, creating further desynchronisation. By the time all the input material becomes available, time is running short. All planned orders for the month cannot be completed, and many orders will spill over to the next month.  At the end of the month, the large WIP and raw material in the system are again ‘netted off’ against pending orders and a new plan is made. Consequently, the same cycle of underutilisation in the initial part of the month and expediting towards the end of it repeats every month. <h5> </h5><h5>The vicious loop that such environments tend to experience is this:</h5><figure class="image"><img style="aspect-ratio:1600/1419;" src="https://web-assets.vectorconsulting.in/storage/editor_uploads//vicious-loop-in-textile_1752999744.jpeg" width="1600" height="1419"></figure>What is most ironic is that despite fighting hard to 'protect' returns on investment and profitability by focusing on utilisation and machine productivity, in the end, this is all in vain. The company does not experience any real improvement in overall utilisation. Additionally, due to system unreliability, there is a consequent increase in costs resulting from the need to frequently send materials through air freight and/or incur penalties. <h5> </h5><h5>Direction of solution</h5>These problems arise because various work centres of a textile mill are blind to how local decisions affect the fate of customer orders. So, how can mills address these issues? The only win-win way out of the conflict between order completion and utilisation is a method that limits WIP and defines the boundaries within which local batching considerations can prevail protecting efficiencies without delaying orders.  Sounds simple! doesn't it? Let's see how to do it.  <h5>Tactical steps</h5>Although the lead time for completing an order is often long, the actual processing time, or the time an order spends on the machines, is relatively short. The gap between touch time and lead time is long because orders often wait to be processed in front of various work centres or warehouses. To reduce the waiting time and to implement a paradigm of focus on completing orders rather than driving efficiency, the following tactical steps are needed:  1. Production scheduling with WIP control: As opposed to existing practice of monthly planning and batch releases, material release should be based solely on the daily gap in WIP i.e. new orders are released only when the same quantity is available. This can be implemented by first identifying the bottleneck or work centre in the system whose output determines the system output (called the Drum). Since, by definition, the other work centres have higher capacity, a day’s output from this can be the input to the system on the next day (Rope). With this rule in place, the mill will have sufficient visibility to perform batching, to meeting any technical requirements while protecting utilisation and ensuring the completion of work on the orders in hand. Consequently, the execution lead time, the time from the date of order release to the date of completion (Buffer) will be reduced. At the same time, this step also enables planning to be conservative and reserve some capacity while allowing execution to ustilise any unused capacity and maximise output aggressively.  2. Keeping track of the 'Flow’ of orders: To ensure the on-time delivery of a complete customer order, it is also essential that the completion of the assortment is managed rather than tracking individual components. All local-level measures and targets like ‘Daily dyeing output should be 10 tonnes’ or ‘Daily garments output should be 25,000 pieces’, which can hamper adherence to this objective (by encouraging batching), should be eliminated. High productivity of each work centre will likely be achieved, but only as a by-product.  3. Managing priority: Now, the delivery date of the order should be the only priority determinant on the shop floor. To enable this, a simple colour-based priority mechanism can be devised based on relative closeness to the due date. Red is the highest priority, followed by Yellow and Green, which is the lowest. The colour priority dictates expediting on the shop floor and at the vendors’ facilities.  4. Quoting due dates: The sales department usually generates new orders and quotes delivery dates with a fixed lead time or based on customer expectations. However, in such a system, quoting a fixed lead time delivery date may not always be sufficient, considering there is a queue of orders already in the system (waiting to be processed at the bottleneck work centre, also known as the drum). Allowing customers to pick a date may also upset this queue and, thereby, the already committed delivery dates. Therefore, the delivery date offered should not jeopardise the existing queue and should also allow for sufficient lead time to complete the execution after the processing at the ‘drum’.  A daily perpetual order slotting system for Due Date Quotation, with a clear definition of capacity, is essential. That is, the production team must provide the sales team with 'safe dates' or highly reliable dates that they can offer to customers for orders that the sales team may close next. Then, not only will lead times be low, but the reliability will also be near 100%. This will also help smooth the load on the shop floor, as sales will have visibility into gaps in the production load and, thereby, help encourage sales even during lean periods.  5. Managing preparatory activities: The preparatory activities (sourcing of yarn and trims, submission of GSS samples to customers) can also be prioritised based on their relative closeness to the release date, with the help of a preparatory buffer, that is back-to-back with the production buffer. For instance, in a garment plant, a preparatory buffer should help create a bank of full kits of sales orders with completed fabric, trims, and approvals to ensure the continuous running of the stitching operation on correct orders. So, the overall system would look like: <figure class="image"><img style="aspect-ratio:4000/2481;" src="https://web-assets.vectorconsulting.in/storage/editor_uploads//tg-article-3-img-4-1736140762_1776858552.jpg" width="4000" height="2481"></figure><h5>Conclusion</h5>Once an organisation implements these tactics, synchronisation can be achieved with all the preparatory activities, including raw material supplies. Moreover, waiting times will be reduced, and lead times for order completion can be slashed by more than half.  With such an overall reduction in lead time, key customers who require orders in considerably lower lead time can be offered deliveries in half the normal lead time (possibly at a higher price). To achieve this, capacity can be set aside for running these orders without affecting other regular lead time orders.  This means that, in an industry chronically struggling with long lead times and poor reliability, a company adopting this method can build a competitive edge based on reliability and lower lead times while ensuring more output from the same capacity.

<h5>A stitch in time: Cutting lead time and improving reliability of textile supply chains</h5>

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Vector Consulting Group - Research and Publications: Drum-Buffer-Rope planning method helps textile companies improve OTIF performance &amp; efficiency. Know more.