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On-Demand Production as a viable shift for the Fashion Industry

Fashion's model of production where everything is made in response to customer demand.

Author:
Lui Iarocheski

Overproduction, overstocking, inadequate working conditions for employees, and severe pollution have all been associated with the fashion industry. The root of the problem is that manufacturing is still based on the outdated inventory model. In this era of technology and on-demand, the fashion industry still uses the conventional production and supply chain model for the most part.

Fashion's overproduction

 

Let's take a closer look at this. Design and manufacturing are normally lengthy and inefficient processes that can take up to a year to prepare and bring product to market. The majority of the big brands and corporations manufacture their products in developing countries. These factories take several months to deliver the garments and have a minimum order quantity, which is typically in the tens of thousands per model. This ultimately results in major overproduction, surplus inventory stock, and tons of unsold inventory. Last year, one of the largest fast fashion brands had $ 4 billion in unsold inventory. And what happened to the inventory that wasn't sold? It was deposited in landfills in developed countries, polluting and destroying the environment even further.

Many fashion labels have weighed in on the latest craze for mass customization, limited series, single parts, and more broadly on-demand manufacturing in the wake of these issues and the COVID-19.

Both of these are options for preserving (or increasing) margins while still satisfying customers' demands for more customization, sustainability, and a consistent stream of newness.

 

What is On-demand manufacturing?

On-Demand manufacturing is a production method in which products are produced only as required. This is also known as made-to-order in the fashion industry. In this case, brands will wait until their customers have placed direct orders for the product before sending the required quantities to their suppliers. This generally entails paying for the item in advance. Since the product has not yet been manufactured by the manufacturer at the time of order, this often results in longer wait times for customers.

 

 

Producing excess products that do not sell will waste money that could be spent elsewhere, leading to risky discounting and an increase in inventory. Discounting inventory to clear it out reduces margins and erodes brand value. It encourages bargain-hunting shoppers to keep looking for lower-cost alternatives.

The on-demand model differs significantly from conventional wholesale production, which is based on bulk orders of goods that designers hope consumers will purchase, which are typically seasonal. One issue with this method of production is that it often results in a significant amount of dead stock and product waste. It's likely that wholesale demand would suffer as a result of pressured production lines to meet seasonal quotas.

On-demand production eliminates the need for goods to be processed as consumers wait for them to be ordered. As a result, everything is made in response to customer demand. From a production standpoint, this allows for more flexibility for orders to be fulfilled because they are not seasonal. This may imply that goods can be manufactured to exact specifications or to a higher standard of quality.

In recent years, on-demand manufacturing has become more influential, as designers seek to refocus their business models and prioritize both ethics and economy.

The needs and expectations of today's fashion consumers are no longer fulfilled by traditional apparel manufacturing methods. The combination of nearshoring and on-demand manufacturing will equal a simple way to gain market share in a dynamic, ever-changing industry as the mass-market apparel sector shifts to a more demand-focused model. Companies can quickly adapt to customer demands and requirements by introducing an agile, demand-led production system without compromising quality or increasing costs. It is a straightforward way to achieve a competitive edge when properly implemented.

 

The Benefits of On-Demand Manufacturing in Fashion

1. Nearshoring

Local production gains a strategic edge thanks to agility. All of this takes advantage of one's close proximity to the market by shipping goods at a tremendous speed that no offshore competitor can beat.

2. Manage unpredictable demand

The customer is at the center of the process in an on-demand production model, in which procurement, production, and delivery processes begin only after the customer order is placed. It enables businesses to get rid of excess inventory, boost profitability, and win or keep market share. Trying to forecast demand months in advance in a post-internet era of microtrends and volatile customer buying decisions can be risky. Small series or capsule collections can be created without compromising a company's core business by using an on-demand development model to capitalize on shoppers' constantly changing tastes.

3. Customize without sacrificing profitability

Companies can also react to customers at the opposite end of the speed spectrum using the on-demand production model. In response to the quick fashion model's homogeneity, an increasing number of fashion customers are searching for exclusive, personalized items that set them apart. As customization becomes the norm, creative businesses that use an on-demand manufacturing model are seeing a new market opportunity emerge: made-to-measure. Made-to-measure clothing was once only available to the rich, but an increasing number of start-ups are bringing it to the masses.

4. Sustainable Fashion

Companies will stop placing their goods on the dreaded discount rack or, worse still, in the landfill if they don't have excessive stock due to faulty forecasting. For the growing number of environmentally conscious customers, the latter is particularly troublesome.

 

PlatformE technology for MTO operations

In business terms, what Fashion companies get from on-demand manufacturing:

 

PROFITABILITY CAN BE INCREASED BY MAKING SMALL SERIES AND ON-DEMAND FASHION.
GENERATE POSITIVE CASH FLOWS BEFORE STARTING PRODUCTION.
AVOID EXCESS INVENTORY BY PRODUCING IN PRECISE QUANTITIES.
OFFER EXCLUSIVE SHOPPING EXPERIENCES AND PRODUCTS TO EARN CUSTOMER LOYALTY.