Some lessons learned from WFSGI Manufacturers Forum “Beyond Lean Manufacturing”

December 2-3, 2015, Hong Kong

Lean manufacturing, by Carsten Zur Steege of Bosch Automotive:
Lean increases efficiency by eliminating waste. Lean must be a holistic exercise to work. Therefore, it must go beyond borders of individual players in the supply chain. In practice lean improves processes in CIP (Continous improvement cycles). The trick is to shift from always working from principle of full production to producing what the customer wants without decreasing flexibility. A Bosch plant in Thailand showed a 36% drop in inventory and a 34% raise in productivity after 6 CIP annual cycles. It is also very important to share gains with involved players in the supply chain. If lean is only used by buyers to increase their margin, support from manufacturers will evaporate.

Increasing speed to market with product development optimization by Janice Wang, Alvanon
Speed to Consumer is key. Retail has to create feeling of newness and scarcity. There is value in that. In addition, speed must work for all distribution channels. Speed requires cooperation within the company and the supply chain. Manufacturers must be engaged with consumers in ‘one direction of the supply chain’ but ‘in the other direction’ they also must be fully aware of developments in raw material innovation. Fashion is juggling continuous improvement on processes with stopping development when a product is sufficiently good for the consumer targeted. Engaging consumers in product development is a particularly good way of creating customer value.

Circular manufacturing, by Steve Evans, University of Cambridge
A definition of circular manufacturing is ‘keeping each molecule, fibre, fabric or product in the economy as long as possible’. At this moment he notes cost saving skills have been used most on labour, and not enough on energy, water and material usage. The method he uses to identify value losses in the supply chain is called ‘Failed Value Exchange’ or FVE. Once FVE delivers insights into where value is lost in the system, ways can be found to keep this value in the system, either by preventing the loss of value (reducing cutting losses for example), by finding ways to reuse the lost value within the system (using heat generated in one part of the process in another process component) or by selling waste, preferably to generate the highest possible value. The central message was that there is a huge amount of value to be unlocked.

The Marriage of Sports and Denim by Adriano Goldschmied
Fashion and sportswear are coming closer together. Denim is getting more comfortable and more concerned with performance. Sportswear is becoming more fashionable. Adriano is creating a denim that can stretch as much as athletic tights, up to 55%. He does that by using a circularly knitted base fabric with denim characteristics and denim washes. If this product breaks through, it would require new combinations of processes and therefore new type of factories.

Roadmap to the supply chain of the future by Edwin Keh of HKRITA
Mr. Keh divided the supply chain options open to brands and retailers into three main categories, namely ‘keep going, keep moving’; ‘go home’; or ‘improve’. He proposed that the framework for making these decisions is now increasingly given on a product level, defined by the level of labour intensiveness and the level of price sensitivity. Brands have product in different segments of the resulting matrix and therefore different supply chains. Additionally, the fast growing share of online sales is affecting supply chains greatly. According to Keh, in logistics, we are now ‘optimising to the 40 ft. container’ while increasingly we should be optimizing the supply chain to the level of the consumer. An optimal supply chain according to Keh is aligned, agile and adaptive.

Nick Smith, Covestro and Thomas Schmidt, Huafeng Textile Group on chemistry and coating
Using a water borne method Covestro has made an innovative, sustainable raw material with no concessions to performance. The presentation made clear that the market does not accept concessions and that it also doesn’t need to.

HuaFeng uses special printing techniques to produce and deliver ready made shoe uppers with many different custom made effects (colour, textures, gloss)to manufacturers. This shows a development whereby upstream manufacturers perform more functions, perhaps taking over functions from shoe or garment manufacturers, shaking up traditional supply chain relations. This trend can also have positive sustainability effects because there is less cutting wastage. Manufacturers must care in some instances not to be squeezed by raw material suppliers dealing directly with brands. To counter, they can take the lead in the coordination of the necessary communication between them, the brand and the raw material suppliers. Tier 1 suppliers may become more and more coordinators.

Gerhard Flatz, KTC and Alex Thomas, VF on CSR and the Bottom Line
Gerhard Flatz showed how clearly in KTC’s factories in China CSR was used a successful policy to increase engagement of workers to the company and therefore increase productivity, quality and lower personel turnover rate. Interestingly, KTC was deliberately building itself into a brand. VF shared with the audience its Third Way program. In this program, VF shares its best practices with a select group of suppliers who have a desire to make their facilities among the highest quality, socially progressive and cost effective in the industry. It is a concept that helps VF generate mutually beneficial, long term relationships with strategic suppliers. It is clear that CSR can be made to also serve directly the bottom line.

Tyler Lyman of Micro Benefits and Elena Fanjul-Debnam of Workplace Options
Micro Benefits has surveyed a big group of garment factory workers in China. It found that 82% of workers determine if they are going to stay with their employer on the first day of work. Asked what workers want in working life, 50% answers they want to start their own business, often in their home village or town, 35% wants to work in a new industry and 15% wants to further develop itself in the same factory. Therefore, offering online training tools accessible via smartphones and aimed at personal development to factory workers, be it in or outside of the company is a very effective way to create a better engagement of the workers which goes a long way to to create a better performance. At this point, Micro Benefits has provided 7 million completed mini courses to its Chinese users.

Workplace Options is the largest global employee assistant program provider with clients including the US Military, GE and Apple. They use text messages as a way to communicatie with workers, because outside of China, smartphone ownership is lower. A lot of improvements in engagement of workers are still possible by improving communication, as was illustrated by the fact that according to Workplace Options 23% of employees in garment factories in China simply didn’t know they had free health care on the factory site.

Conclusions by Steve Evans:

  1. Leadership: Necessary to deal with change
  2. Technology changes taking place now are genuinely disruptive: So just start
  3. The role of tier 1 manufacturers is changing: More coordination tasks needed.


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