Global production of woven labels. Is this a model of future?

WOVEN LABELS - GLOBAL PRODUCTION VS ALTERNATIVE PROPOSALS

This is a question about which most of us have thought widely. Woven labels that are applied in garments or other textile items, should they be produced in a global way, decentralize, in different countries where the clothes are manufacture?


The big textile chains and distributors have relocated the production of clothes in countries with less expensive labour costs. The manufacture of clothes is very intensive in work force and not so much in capital. In fact, a big part of the production is still made by hand; or at least, human hand is very important along this process. It is obvious that in this case, the operations of less value such as sewing or ironing must be moved towards countries where labour costs are cheaper in order to get a better price.


In contrast to clothes production, woven labels are a very technologic product, highly intensive in capital and not so much in work force. In this context, which would be the interest to decentralize the production of woven labels as it is happening with clothing production? The only opinion we could share to justify this relocation of production is the proximity or closeness to the place where it is consumed that in the end, it is the place where woven labels are sewing or hang tags are applied.


Do we find other valid reasons to justify the investment abroad to allow the production at point of origin? When we decentralize the production of woven labels towards third countries, it could be done to be closer to the origin of consume as we have mention before. Nevertheless, we cannot find additional advantages to the ones already mentioned.
Let´s analyse different factor involved in the cost of a woven label and we will determine in which way they could affect us.
 

• Energetic cost: After having executed some researches, we determine that the energetic cost in countries such India or China is even superior to the one currently in Europe. That is why, from this point of view, it is not justified the investment in countries of South East Asia looking for cheaper costs. 


• Cost of raw material. The most important raw material used in woven labels is polyester. Polyester is a very common raw material that has a homogeneous price worldwide. The big difference in prices is found not so much in raw materials but in high quality finishing. Nowadays, there are strict regulations tending to control the use of raw materials and chemical substances in general, to avoid damaging the environment, to put in danger humanity … The use of colorants of high quality, exempts of Azo dyes, with high solidity to light, resistance to rubbing ... involve a cost to be considered in the total price of the spinning. However, if we would like to consider the total price of the spinning and raw materials which match with these requirements, accepted in its use towards environment, not being toxics to the humanity…it is not possible to reduce substantially the cost.


Consequently, and attending this criterion, it would neither be possible to execute investments abroad to try to obtain materials of better quality at a better price. In a competitive environment such as the one nowadays, we have materials of excellent quality at a very reasonable price. However, this objective is not possible to be done at any price, and at no point we consider to use the possibility of using other materials of doubted origin that no fulfil the standards of quality already defined and commented.

- Cost of work force. Obviously, there are other countries where work force costs are infinitely inferior to the one in Spain. Our labour regulation tends to protect social rights and safeguard the security at work as a principal element. This involves inflexibility from the point of view of costs and obliges to do training actions, to implement the adequate procedures to obtain a right productivity, to avoid accidents,… This normative frame also generates the culture of written “procedure”, and helps the organization of the process, having all these direct consequences in the quality of the products.

In several researches done in countries where we have tried to decentralize part of our productive process, we have reached the conclusion that we could reduce the costs of work force and the staff of low professional qualification.  This type of staff is less necessary in our process. On contrary, if we look for qualified work force, with degree in Textile Engineering and with certain experience in knitting in Jacquard mechanical loom, we face a very reduce offer and if we could find it in countries such China and India, the cost would be higher than the one in Spain due to the limited existing availability. Following this reasoning, we conclude that the reduction of work force could be done only in the part of low qualified staff.

Up to now, we have not found a clear advantage among the different factors analyzed to decentralize the production of woven labels. However, what we have found have been some disadvantages.

- Control of production.
The concentration of the woven labels production generates economies of big scale that produce other collateral benefits. These are difficult to obtain in the case of diversification of manufacturing in different production units. Nowadays, there are very advanced systems of controls but undoubtedly the relocation add a small inconvenient, and although it could be overcome, it increases the cost of production in woven labels. In a word, if we pretend to control the production of diverse units of production, this we could do it, but with a higher cost than in the model of production we are trying to get, base in the concentration.

- Control of quality
We must consider that the labeling for clothing is precisely the element of communication for the image of the Brand in the product. It is through the woven labels and hang tags how the consumers perceive the brand of the product. Would it cost the same a jumper with a label of “X” brand than the same jumper without it? No matter how good the quality of the jumper is, if the consumer is looking for the brand “X”, they identify it from the woven label and hang tag. 
Therefore, is it important how the label is capable to communicate the brand? We believe so and indeed it is like that. The control of quality takes special importance in this sense. The cost of control of quality of the woven label is lower if there is a concentration of production that if this is divided in several units. For this reason, with the decentralization, we will also generate a reduction in the process of control of quality and an increment in the costs. If indeed, we would like to do it at the level pretended for the communication activity already mentioned. 


- Quality consistency. The production of woven label for clothes should be homogeneous.
Starting from the same design, we can obtain different woven labels. Why? The homogeneity of the woven label also depends in the quality of the spinning, of its tone, of the weaving process,…
Is it possible to get homogeneity with a decentralize production? Once more, it is possible to get it but the cost could be very high if the production is decentralized. We could get to knit the labels in different location with the same type of weaving, with the same tone…If we do it like that, what is the meaning of decentralization? Wouldn´t it be more convenient to produce everything in the same place and organize the logistic to the consumer afterwards?

When different factors are analyzed, and also different advantages and inconvenient of each system; we reach the conclusion that is perfectly possible to execute a strategy of decentralization in the production of woven labels in different locations in the world. Nevertheless, this creates that in many occasions they are hidden costs. And although it is difficult to count them, they generate an intangible cost to have in consideration anyhow.

How much it cost to have woven labels and hang tags (Being all of them of the same brand and the same model) with different colors at the point sales?

What impact would it give to the brand to have labels with different quality, color, …? Could we create doubts to the consumer about the authenticity of the product they are buying?

As we have already commented, these factors are difficult to count. For this reason, if we compare 2 proposals (decentralized production vs. centralized production with a logistic solution as we have proposed.), we should also consider other hidden costs for the decentralized solution which are still difficult to count them, such as :

    - Control. How much cost the extraordinary control that it requires?
    - Negative impact that it could generate on the brand due to the differences for being produce in different places (differences in quality, colour, finishing,…)
    - Impact that could have to the brand and/ or distribution chain for the possible use of labels which does not match the environmental norms and other European regulations about health.

Contact us and allow us to analyze your case and concrete need. We will propose you a solution which will satisfy the exigencies of your process at a very competitive price