The digital textile value chain transformation and the role of Industrie 4.0
Just returning from an intense 2 weeks of discussions around Industrie 4.0 – and its translation into the textile industry. Many of the Industrie 4.0 publications are written from a “discrete point of view”, and resonate well with industrial machine manufacturers, or any other discrete industry. However, the concept of a lot size of 1 is already difficult to translate to process industries, even more so to textiles.
The textile value chain starts in continuous chemical processing during spinning and yarn production, moves through mill processing – a blend of process & discrete -, and results in rather discrete products for consumers, like shoes or shirts. Most manufacturing today takes place in Asia.
Once again, the textile value chain is undergoing dramatic changes: Rising labour cost in China, new levels of productivity through Industrie 4.0, as well as consumer-driven individualization of products not only provide huge new opportunities, but may also disrupt classical models.
I’d be interested to hear about your point of view, your observations – to start with, I’d like to share my take-aways from the conversations I had in the last weeks.
Being of rather average size weight and height myself, I usually find shopping for new winter gear & clothes an enjoyable experience. But I pity a number of colleagues and friends, who are taller, skinnier or bigger than the default consumer. While they can still find made-to-measure shirts and suits – even at a reasonable price if they’re lucky – they struggle when searching for coats, skiing gear or shoes, to name a few. A good friend of mine who is rather petite is not at all happy when she finds her choice reduced to the kids’ department featuring princess or transformer style clothing. But even with an average shoe size buying shoes online can be a nuisance. For my last Adidas sneakers I ended up with a German size 45, where I normally wear a 41.
But there is still hope, right? Will Industrie 4.0 come to my rescue – and provide me with perfect fitting gear and clothes – at a normal retail budget?
“The perfect shoes can change your life.” – Cinderella.
How do you define perfect then? Exclusive handcrafted shoes? Affordable industrial mass production from Asia? Or individualized sneakers as now on offer from Nike and Adidas? Lucky Industrie 4.0 was not around in the Grimms’ brothers’ day, or else Cinderella’s prince might have run off with the wrong girl…
Take the beautiful Nike SB Zoom Stefan Janoski skateboarding sneaker. It offers over 1.5 m options – excluding signature ID and size. Adidas personalization comes nothing short of this. You can even download their app to customize your sneakers with your own photos, or Star Wars movie pics.
Don’t expect to see me with Star Wars sneakers any time soon. Neither am I convinced that this is a large market in itself. But I am fascinated by the idea that this might be a turning point for the entire fashion and apparel value chain.
The classical value chain is spread over continents. Design proposals and samples are sent across the world, and eventually the final mass product is shipped from Asia to the target market. All this inhibits fast change of design, or even cost-effective small series manufacturing and fully individualized products.
Revolutionizing the textile value chain: adidas’ Speedfactory and Futurecraft 3D
adidas is working with a number of partners on their research project “Speedfactory”. They are aiming for industrial small scale & lot size 1 production – with tight integration of robots and human workers, thus enabling extremely short cycle times.
Futurecraft 3D is another, equally ambitious adidas prototype to create a 3D-printed midsole for ultimate personalization of a shoe to a specific athlete’s need.
Knit technology – as used in the Nike’s Flyknit Nike, or adids’ Primeknit – is another likely game changer, first of all from a sustainability perspective, reducing cut-off waste dramatically. This article from fashionmag.com quotes Carnes, creative director of sport performance for adidas, stating that the ultimate goal is to have machines create the entire three-dimensional shoe shape, getting rid of any hand-sewing altogether.
The ultimate flexibility and individualization – very close to the made-to-measure of the olden days – is adidas project of the “store factory”: measuring the customers’ feet in the store, and manufacturing the shoes directly on-site. This is Cinderella 4.0 – I hope this gets to market really soon. I picture myself waiting for my perfect fit shoe to be manufactured while I’m having a sip a coffee (or rather beer) and watching a sports channel.
The textile value chain partners in Asia may look at this with mixed feelings: their cost advantage and scale effect is threatened by the speed & proximity advantage when manufacturing moves closer to the end-consumer – i. e. back to the US or Europe.
Will mass customisation work in fashion?
Business of fashion take a closer look at success criteria for mass customisation beyond shoes. They look at a number of examples in fashion – from Tinker Taylor, Knyttan, Bow & Drape, to Burberry. They clearly see “individual products” as a growing trend.
Individual products are somewhat contradictionary to fashion products where a designer’s vision of a brand is essential. So mass customization goes only so far – a number of options are provided to the customer, but an essential aspect of the design will always under the control of the manufacturer.
What drives a lot of value chain transformation (and sometimes also drives the necessity to build new “make-to-order plants”) is lead time. Lead time differs by product. While footwear customers are willing to wait (today) for a few weeks until a product is delivered, someone buying a shirt or a scarf gets impatient after 2 weeks.
One aspect of the solution is to shift the production closer to the target market. Another interesting aspect mentioned here is a hybrid approach where Bow & Drape import pre-made T-shirts and sweaters, and manufacture in somthing like a”finish-to-order” mode.
What’s the impact for textile mill manufacturers?
At first glance, this clearly poses a threatto the existing value chain model, especially in Asia. We will see smaller lot sizes down to lot size 1 – close to the end-consumer- , and more frequent changes both on designs and on order sizes – also further down in the supply chain.
Will we soon also see lot size 1 in the textile mill? To a large degree this depends on the manufacturing equipment & process constraints, like set-up and cleaning times after colour changes, or set-up effort when changing between weaving patterns.
It also depends on the ability of the supply chain to cater for many small orders. Will we be able to manage the increased throughput? Luckily, technology is playing into our hands here…
Experiences from other mill industries indicate that lot size one production is clearly feasible. Fundermax, a mill manufacturer from Austria, manufacturing panels and board in a dazzling set of design options, shared their experiences at the SAP IT Summit in Salzburg. Lot size 1 was a huge supply chain challenge. Luckily their combination of SAP ERP and SAP APO on SAP HANA gave them the power boost to handle this increase in throughput.
Getting to the next level of efficiency with Industrie 4.0
Some analysts calculate up to 30% efficiency potential through applying Industrie 4.0. I think this estimate varies a lot by industry – depending on the existing level of automation, the option to evolve the company’s business model, among others.
On my journey, I found it helpful to re-consider the definition of Industrie 4.0:
- vertical integration (from the physical sensors in the production machine to the ERP level of profitability and sales orders)
Sam Castro made a great point in his blog on IOT where he stated that vertical integration is not about sending data up and down the MESA pyramid. It’s about ERP-level business context for smarter operator decisions (and decision support systems), and using sensor data to trigger & adapt business process decisions.
This is about raising efficiency to the next level by new insights on best practices; continuously improving the “golden run” – like six sigma – but with big data smartness.
Actually, this is not mainly about big data, but rather correlating very heterogeneous information sources – from geo, weather, process, quality, lab, plant maintenance, text based shift notes, customer complaints into one insightful picture.
- horizontal integration (from one production machine to the next, from one plant to the next, and beyond the company borders to the up- and downstream value chain partners)
This is about speed and agility, dramatically reducing waste through pull supply chains, and yes, about lot size 1.
Once everyone gets exactly what he wants, this may put an end to bull whip effects and “Sommerschlussverkauf” (end of season sales to empty the shelves).
- seamless engineering across the lifecycle
I’m still struggling with this one. I believe there needs to be an inbuilt flexibility, to drive individualized consumer products through the entire textile value chain. I may look into this in another blog – and I am curious to hear your experiences in this area.
Digital transformation – out of the box?
What I took away from the many discussions boils down to 3 pieces of advice:
- Explore your journey into Industrie 4.0 rather than buy “ready-to-run” from the shelf
We would like you to co-innovate with us on this journey, in order to combine our technological and industry business process expertise with your deep domain insight into your specific manufacturing processes, machines and products. In many cases there won’t be a predefined path, but a journey of exploration and learning.
- Do not re-invent the wheel
We would like to accelerate you with a lot of industrial-grade “building blocks” in our IOT platform including predictive analytics, self-service analytics, machine learning – plus ready-to-run IOT applications like SAP Predictive Maintenance & Service, cloud edition. Also, we can bring our data scientists to work with your team.
- Keep horizontal integration in mind
Setting up a small POC with a few sensors, and a bit of predictive analytics in one plant is done rather quickly. Good for learning, but the real value may require the broader picture, like building a secure, robust IOT application integrating with your operators, internal and external supply chain partners, or even re-thinking your business model.
So, how will digital transformation look for you? Still more of a risk mitigation initiative making sure you do not get disrupted? Or a strategic initiative with strong backing from your top executives?
In any case I would like to invite you: Let’s discuss & explore together. Share you vision. I am looking forward to embarking together with you on this exploratory journey.