It seems like a long time ago now, but in February 2020 the apparel industry’s biggest challenges involved keeping up with consumer demand – rather than trying to stay in business during the coronavirus pandemic. Shoppers back then wanted sustainable, personalized, functional products and the wanted them fast – with new collections finding their way onto the racks and shelves almost weekly.
That all stopped overnight. Production lines ground to a halt, shopping malls and highstreets closed, planes were grounded, demand all but dried up, and for several months the future of fashion (and a range of other industries) was uncertain.
A Forced Stop, A Difficult Restart
Governments had no choice other than to put the world on hold while they grappled to bring the pandemic under some level of control. The choice to enter lockdowns was a necessary one. But at the same time, there was no clear exit strategy and no time to develop one. Today, though, restrictions are being lifted gradually and cautiously, on a country by country basis, and as that process continues we are likely to find that people’s ways of thinking have changed… perhaps forever.
In fashion, that presents us with an opportunity to devise an exit strategy that can usher in a change in the way we bring products to market.
In many ways this change is not going to be optional. The sheer unpredictability of the world at the moment is having a dramatic effect on consumer buying behaviour: spending is slowing down again after an initial reopening spike, and where people are buying they’re looking for higher-quality products that will stand the test of time. Unlike the pre-COVID fashion industry, where volume and variety was everything, today’s market seems to moving towards a “less is best” attitude.
Recently we’ve seen a real backlash directed at unsustainably cheap, fast fashion products, which can only offer the price points and diversity they do because they rely on low cost overseas labour. As well as consumer perspectives, NGOs, governments, and other regulatory bodies are dictating that the high-volume model has to change – and they are going to hold retailers accountable for their actions.
And brands and retailers are already responding in kind, working to design new strategies to build more sustainable models that are made to last. In practice, this could mean producing on-demand, creating more sustainable products at higher quality levels, using more durable materials with clear provenance, delivering new, deeper customer experiences, and adopting best-in-class production and manufacturing methods to deliver it all.
As consumers shift their demand to wanting better quality merchandise, and regulators clamp down on unscrupulous labour practices, the outcome is likely to be that brands will be commissioning – and manufacturing will be making – smaller orders of higher-quality products. This is, of course, not a small change. In fact it’s the complete reversal of the low-cost, high-volume production paradigm that has hinged for so long on low-cost materials and cheap labour.
From an ethical and environmental point of view, this is a clear improvement, but it also brings with it entirely new challenges. With smaller, more frequent orders, manufacturers are going to be asked to respond to market shifts that occur in real-time, and they will need to become more integrated parts of the value chain – offering their customers clear visibility into their processes, and collaborating more closely with their brands.
Working together, manufacturers and brands will also need to gain greater control of the labour component of product pricing. In design and development, brands will need to make more cost-led decisions, while factories who are wrestling with the need to create higher-quality goods in smaller quantities – in shorter timeframes than ever – will need to optimize their processes to a degree they never have before.
To achieve both aims, the industry as a whole will need to rely on levels of labour costing accuracy that have so far only been possible at higher volumes, on production lines set up to create large quantities of a single product.
Measuring Labour: Epsilon Versus Delta
In traditional volume production, “fair labour rates” are arrived at by measuring operators and their individual operations across tens of thousands of pieces of a single style – or at the very least a very similar product. As we move towards an on-demand world, where smaller, more complex orders are the norm, manufacturers and their customers will not be able to rely on the same methods for gathering and analysing operation data. And as a result, the accuracy of the labour information they are able to factor into the cost (and retail price) of their products is destined to suffer.
To put it simply, today the delta errors in the accuracy or labour costing – i.e. the percentage accuracy of the operation cost – are compensated for by the higher quantities of those operations. When people make the same products over and over, the outlying operation times are smoothed away by the sheer quantity of times that are in tolerance. This smoothing will not occur in smaller production runs, making them more prone to inaccuracy in labour costing and therefore undermining final retail price and the brand and retailer’s margins.
Unfortunately, the foundations for making the change from that reliance on high volume to having a similar level of accuracy in smaller, more frequent production cycles are not in place. The reality is that many fashion businesses track their labour costs in historical Excel tables, and negotiation is done subjectively – based on an untrained person’s wristwatch, rather than a scientific, fair labour standard.
If retailer and manufacturers are to operate together on a new ‘fair labor rates methodology’ that is transparent and fit for that new demand-driven economy, then it must use clear and transferrable labour building blocks so that operations can be standardized between one product and another with comparable components and tasks. From seam types and lengths to shirt collar types, there is a new requirement for brands and manufacturers to unite around a standard, synthetic labour standard that relies on precision rather than volume to achieve accuracy.
With this in place, brands commissioning orders on a more frequent basis, and expecting better quality products in return, will be able to order with confidence that their details Bill of Materials (BOMs) are also being supported by equally detailed Bill of Labour (BOL) that are recognised by the International Labour Organisation – and that are accurate enough to support their requirements for greater cost accuracy at every level of design, development and production.
A New Paradigm
In the new demand-driven era, the definition of “fair labour” needs to evolve beyond that reliance on Delta rounding errors and high volume. Instead, I propose that we move to an Epsilon model, where labour cost can be calculated accurately, synthetically, and its output can be used to better plan and track products from concept to consumer. And most importantly, those accurate labour costs are direct costs, rather than today’s blanket overheads.
The value of making this transition will be significant, because labour costs have a high influence on the stress levels of product production across the entire value chain – as well as having a clear and measurable impact on product quality, price, fit, and a range of other metrics.
The tools for the transition already exist. It is already possible to track the full scope of motion elements and operations across a full suite of styles – from the simplest to the most complex – with all the required data held in a single database. And at the same time we can link the same synthetic labour information to the creative process: to 2D and 3D solutions, to grading scales, and other platforms.
This added value will be the key to delivering transparency and fairness across the value chain, as well as powering the future of production: connected, intelligence, and with accurate recognition of just how valuable each operation is.