DOING 'LEAN' - IN THE FASHION WORLD

Lean seems to be the buzzword now in the business world. Lean is also the one of the principles behind agile project frameworks like Scrum.  One of the cornerstones of Lean is avoiding ‘waste’.

Flashback to some years backs – where I was the National Sales Manager for ‘Newport Jeans’ in India.  Arvind Mills, one of the largest manufacturers of denim fabric in the world and suppliers to most leading jeans brands, had major share of the Indian fabric market too. What they did not have at that time was a good share of the denim garment (readymade Jeans) market. With just a couple of Jeans brands in their portfolio, Arvind ambitiously wanted to make inroads into this sunrise industry.

Arvind decided to launch a value for money economy brand of Jeans called ‘Newport’, to serve the dual purposes of  ‘share of the Jeans market’ and ‘increase sale of the denim fabric’

Here is a summary of what we did-

1.    Low customer price of Rs.399 (tax included)- at less than10 USD, it was low enough to generate sales volumes but did not readily give good profit margins.

Price was not the first or an easy decision, but it is a good starting point for this blog.

2.    Will Newport make profits? - The challenge was to deliver value at a price of Rs.399 and keep costs low. In simple terms the challenge was to eliminate all non-value adding costs or ‘MUDA’ as the Japanese call it. The following is a list of what we did further

3.    Standard length- How often does one buy a pair of jeans, only to run to an alteration center to adjust length?

We decided to give a standard length in keeping with the target customer’s average height- less than competition by 4 to 5 inches. This was a big decision contested by many in the trade. Their arguments were based on a few tall customers who trickled in at times. What the trade did not see was that the Newport customer will not need to alter  his jeans- saving him  money and time.

This was a good saving of many meters of fabric (over millions of units).

4.    Limited washes or colors- Jeans means blue! We went with a Dark blue, Mid blue, a Light blue and of course a Black. We went with what we saw on the streets! 

Only 4 washes through the year meant 0 obsolescence cost.

5.    Limited waist sizes- our size set went from 28 to 38 inches- again catering to most of the audience and not all. This would mean keeping investment on inventory low. 

One can see that the ‘cutting of waste’ has gone from just the product cost (prime cost) to other contributing costs like ‘inventory carrying cost ‘and ‘obsolescence costs’. 

This also meant economies of scale and faster production.

6.    Cutting waste in distribution-   We decided to go with C&Fs (Carrying and Forwarding Agents) in place of Distributors who would work at half the margins or less! 

7.    Lower retail margins  (cutting waste at Retailer level) – We decided to offer a lower retail margin but ensure a higher ROI with better speed of sales.

8.    Cash on delivery to the retailer- compared to the average 30 to 45 days credit, which was the norm with other brands. This was big.

Points 6,7 and 8 were most difficult to achieve but not impossible. Lower channel margins, lower retailer margins and cash on delivery was possible under only one scenario- if the brand just flies off the shelf! -Meaning faster consumer sales at much faster velocity than other brands. How do you ensure that?

9.    High decibel multimedia advertising! A perfectly positioned product with a no nonsense message on the media did the trick. 

10. Newport just flew off the shelf- it was a sellers dream! We went to $15 Million  in revenue by year 3 through 2000 doors, creating records for highest sales at brand and retail levels.

Each of the initiatives above was a project in itself.  Success to be known only after launch- that was quite a wait!

Newport was a LEAN FASHION SUCCESS STORY- we were guided by the same principles, which guide any lean product development

-      Cut waste ruthlessly- ‘Anything’ need not be there if it does not add value

-      Look at the product development regularly and often from the customer viewpoint.

-      Look beyond just the physical product, consider the ‘Augmented product’

-      A passion to be successful against all odds!