Collaborative Production Planning

New Balance requires factories to seek authorization for any overtime hours beyond 48 hours per week. New Balance will work to determine if the overtime can be avoided, for example by pushing out the completion date by a few days, or investigating whether a customer is willing to accept a delayed delivery or if there is flexibility in the shipping schedule.

New Balance identifies product styles that are less seasonal, to provide loading stability for some factories. If a sharp peak in demand is anticipated, they seek approvals early to smooth out ramp up. Suppliers may be requested to ‘make and hold’ product, or ship early, to help level-load. For large programmes, the company qualify multiple suppliers to make the same style, so volumes can be adjusted between factories as sales fluctuate, to avoid situations of over or under capacity. Although suppliers were hesitant at first because of significant investment to develop a style, over time they realised the benefits are shared and they may be allocated styles developed by a different factory to fill low periods.

Some brands encourage key suppliers to diversify product assortment (e.g., not just seasonal products), to balance planning and orders and avoid extreme peaks and troughs of production through the year

Patagonia Sourcing and Planning teams meet to review the original forecast against the actual buys placed, both on a monthly ongoing basis and quarterly for a retrospective review. The ongoing reviews highlight variations, the reasons for them, identify any orders that were significantly under or over what was expected, and any means of balancing buys for the remainder of the season. The Social Impact team is alerted of any notable variations, and will reach out to the factory to see if there will be an issue such as potential retrenchment or excessive overtime. If issues are identified Social Impact works with the Sourcing team and the factory to find solutions to mitigate negative impacts.

adidas shares its forecasts with suppliers 6 months in advance. Because they use ‘Standard Minute Values’, especially for  strategic suppliers, they can do very detailed capacity plans and assist their suppliers in their own planning processes.  The accuracy of forecasts against actual orders is reviewed monthly and where there are significant fluctuations due to the consumer demand, they try to ‘level load’ by pulling forward some other orders to produce in advance, to reduce sharp peaks and troughs.

Fast Retailing has established long-term relationships with a select number of partner factories. Information sharing regarding business development, product planning strategies, and orders planned in advance (updated weekly), allows partner factories to efficiently plan capacity and production. This is done through regular meetings with senior management, by production department employees visiting key factories in person on a weekly basis in manufacturing countries, as well as annual factory conferences.

Fast Retailing regularly engages with suppliers to better understand their capacity constraints and to find solutions that mitigate negative impacts on workers. For example, UNIQLO has implemented a planning practice to book capacity directly with material suppliers /textile mills for its HEATTECH fabric (a popular product at UNIQLO with relatively predictable ordering), rather than multiple factories booking capacity individually. This means better efficiency for the mills, improved on-time material delivery, and a better bulk price negotiation. UNIQLO is continuing to identify large and consistent material orders that they can book capacity for, to expand the practice.

In apparel, New Balance has worked to improve communications between Tier 1 and Tier 2 nominated suppliers to promote early ordering and storage of greige goods so that delays are minimised and the Tier 1 factories can more easily manage the receipt of materials during peak or holiday seasons.