Produce less, earn more with made to order manufacturing

Why we need agile made to order fashion production in the time of COVID-19

In March 2020, the first wave of the COVID-19 crisis unfolded across the world, with nationwide lockdowns and the implementation of full-time telecommuting. Fashion companies suddenly found themselves with months worth of overstocked inventories, resulting from rapidly shrinking consumer demand.

One of the key lessons to be drawn from this crisis is that mass production is no longer the default model, given its many drawbacks such as excess stock, demand forecast inaccuracies, and lower quality. If we look at the winners of this crisis, such as Reformation, Le Slip Français, Bonobos, and Sézane, their main mode of production is either made to order or small-batch.

By manufacturing after order reception or in limited volumes, these fashion companies can avoid overstocking their inventories and reduce their waste while offering capsule series, limited editions, in-season replenishment, and personalization. This model allows companies to put the consumer and his or her needs at the center of the production process.

How to choose the right technology with the right capabilities to achieve MTO success

While many renowned retailers have quickly embraced the model, some are still hesitating to do so because they are worried about the amount of money, time and effort it might take. Many companies are shying away from MTO production because of the common fear that a drastic supply-chain transformation is needed to accommodate this. Despite the fact that the benefits of MTO production outweigh the costs, fashion companies are concerned about the disruption it will bring to their existing workflows, and the amount of effort needed to upskill their employees. 

Given  the  smaller  volumes  they  will  be  producing,  companies  also  worry  that  this  will  increase  production  costs  and  reduce  their  speed  to  market,  as  they  can  only  launch  production  after  the  order  has  been  placed. Many companies simply do not have an IT infrastructure that is agile enough for MTO production.

However, there is a surefire way to ensure MTO success, which is, to choose the right technology that automates this process from order reception to final cutting stages. This will help them avoid all issues and enjoy the benefits of MTO production. Choosing the right technology can be tricky. It is important to have both solutions and cutting equipment that have capabilities that are specifically geared towards facilitating the MTO production process.

We have come up with a list of such capabilities that will help you achieve MTO success. Read our e-guide to find out more.

Why fashion companies are hesitant about adopting MTO ? 

While big fashion retailers such as ASOS, ZARA and Boohoo5 have embraced the model, others are shying away from MTO production because of the common fear that drastic supply-chain transformation is needed to accommodate this. Despite the fact that the benefits of MTO production outweigh the costs, fashion companies are concerned about the disruption it will cause to their existing workflows, and the amount of effort needed to upskill their employees. Given the smaller volumes they will be producing, companies also worry that this will increase production costs and reduce their speed to market, as they can only launch production after the order has been placed. Many companies simply do not have an IT infrastructure that is agile enough for MTO production. But what many companies are overlooking is that by simply implementing the right technology to automate this process from order reception to final production stages, they can avoid all these issues, and enjoy the benefits of MTO production

By doing so, they will not have to create independent workflows for one-off items and can still keep their existing production chain for their core collections. But what does the ‘right technology’ entail? It is important to have MTO production solutions and cutting equipment that come with certain capabilities that are specifically geared towards facilitating the process itself. We have come up with a list of such capabilities that will help you achieve MTO success.

The MTO production model and its advantages

A far cry from the ‘push’ supply chain and mass manufacturing, MTO production works by matching demand with supply accurately with a bottom-up approach that starts with the consumer. This model is less risky for fashion companies, as they are producing exactly what their customers want (no forecasts needed), in terms of quantity and quality. This means smaller inventories, a higher sell-through rate, fewer markdowns, and improved environmental sustainability. They can also test new products on the market and stop production immediately if they see that their target consumers are not responding positively, like Zara and Boohoo, companies that use the read-andreact approach.

For companies that mass produce, by either switching to or adopting MTO production additionally, they will no longer need to waste time on forecasting demand and production planning, as producing large volumes often requires a lot of preparation time. They can test their designs on different types of fabric, and understand their constraints instead of committing to producing large volumes right away. They can also add more collections to their permanent ones, such as capsule and limited edition series to stand out and strengthen their brand identity.

For smaller players, they can produce on demand to personalize and co-create their products with their consumers, build intimacy with them, and test their products first before producing more to reduce risk. They can also release one product at a time instead of collections, like Everlane, Bonobos, and Ministry to meet specific needs. MTO production, in a way, levels the playing field. Both small and big fashion players get to differentiate themselves from each other, and not compete solely on economies of scale.

Besides preventing both stockouts and overstocking, the MTO production model enables fashion companies to practice what they preach, that is, when they preach sustainability, especially for socially responsible brands. Many fashion companies have promoted their brands or products as environmentally sustainable without fundamentally changing their production methods.