As a slow fashion brand, you’ve probably made a point to find production partners that align with your values and “get” what you’re trying to build. This is great, but I don’t think the conversation should stop here.
What I don’t see discussed – that I think is equally important to finding a factory that is the right fit for your brand – is how the relationship you have with your production partners creates incentives for your business. These incentives might fit right in with and support your goals, but they could be creeping into your decision-making in a way that is counter to your values. Do you know what incentives are present in your factory relationship? Are they aligned with your values?
Please note that just because there are incentives, that doesn’t mean that you have to (or do) act based on those incentives. You can create your own if incentives that align with your values aren’t naturally there. Before you can do so, though, you need to acknowledge what incentives are present currently.
(Also note that these categories do not necessarily correspond to legal designations for factory relationships. I have organized them here practically for today’s discussion. To fully understand the implications of any relationship, please review any agreements and contracts with a legal professional before signing.)
Supplier/Manufacturer
In a supplier relationship, you are purchasing a particular product at a set price for a certain volume. If you order blanks or buy wholesale products to resell, this is likely the relationship you have. When purchasing from a supplier, you aren’t involved in the design or manufacturing of the product. There is no long-term commitment. You buy the product as long as it fills the needs of your business and can stop buying it at any time when it doesn’t.
Brands purchasing from suppliers are incentivized to:
Plan or fill assortments closer to season
Because you aren’t part of the design or production of the product, you don’t need to be working 1-2yrs ahead of season. Wholesale markets are about six months ahead of the selling season.
Cancel and change orders if business or market conditions change
Different suppliers have different policies, but it is to your brand’s advantage to be able to change or cancel orders as close to the delivery date as possible. Things happen and as much as we’d like to predict the future and forecast what inventory is needed, it is rare that things go exactly to plan. With a supplier relationship, your business has little to lose by canceling an order and a lot of flexibility to gain if you’re able to do so.
Shop around for fresh product
There is very little risk to shopping around for new products from a different supplier and on the flip side, not too much reward for staying with the same supplier long term. Your brand is not tied down and has the freedom to try new things and experiment.
Contracted factory
This is probably the most common factory relationship that fashion brands have with their factory. Your brand designs the product and you hire the factory to make it to your specifications. It is specially made to your design. There is more collaboration with this relationship as you work together on the manufacturing rather than simply coordinating a purchase.
Brands who contract their factory are incentivized to:
Negotiate a lower price
Financially, your business and the factory are separate. There are incentives to be at odds as your brand looks to keep costs low and the factory aims to make a profit on the job. Have you ever asked a factory for a cheaper price or considered asking them to meet you half way to cover unexpected costs like new tariffs? Why did you feel it was beneficial to your brand and appropriate to ask? The incentives made it a win-lose relationship where it is easy for one side to profit at the expense of the other.
Rely on the factory for the technical details
This might be a good incentive to act on or a bad one depending on your brand’s situation (and your awareness of that situation). You have the ability to contract a factory that has the skills and experience that you or your team does not have in a particular area. This is a huge advantage being able to consult with experts at the factory that know more than you do.
It is all too easy in this case to leave the technical details up to your factory, though. If they’ve handled it all for you in the past, you don’t have an obvious incentive to build up that knowledge or process internally for your brand. Remember, a contracted factory is a separate business from your brand. Not all relationships last forever – including business ones. If you rely on your factory too much, you may find that your business isn’t as solid on its own as you thought it was.
Try out multiple factories
Contract factories are not exclusive relationships. Your business is free to use multiple different factories at the same time or to change factories. Some brands even countersource the same style at multiple factories to see which has the best quality, communication, and pricing. With a contractor relationship, there is no penalty for looking at other options.
Branch into new product categories more quickly
Because your brand is free to work with multiple factories, you don’t have to be tied to one product type. Each factory specializes based on the machinery and skills of their workers. New product categories often require a different factory. With a contractor relationship, you can always hire a second factory for the new product type and don’t have to design within the capabilities of your current factory.
Neglect designing waste solutions
Because a contracted factory is separate from your brand – both in business operations and location – you don’t get to see the daily operations of the factory. Yes, you can visit, but you aren’t there every day seeing the impact of your garment production. Out of sight, out of mind doesn’t naturally prioritize designing solutions for cut waste, damages, and excess inventory. If this is important to you, you have to intentionally go against this incentive.
Vertically integrated production
Having your own production team in-house and on your own payroll drastically changes the incentives for your business. With this factory relationship, the best interests of the design and “office” team are aligned with the best interests of the production workers.
Brands with a vertically integrated factory relationship are incentivized to:
Optimize designs for production efficiency and strengths
When you employ your own production people, you have to consider not only the profit margin of design, development, marketing, and operations, but also the profit margin of production. You will become keenly aware of which designs are the most profitable to make and which are time-intensive or frustrating for your team to produce.
Unlike other production relationships, it makes no sense to negotiate lower production costs because for in-house production it’d be like taking from your left hand to give to your right hand. Profit has to come from somewhere else, not from squeezing production margins.
With a vertically integrated production relationship, you’ll be more aware of your team’s production strengths and weaknesses which incentivizes you to design into those strengths. The success of your business is directly tied to the success of your manufacturing, so production efficiency becomes a bigger conversation in your business.
Rethink release schedules
The brands I know that have in-house production give a lot of thought to creating a steady stream of work for their team to stay busy. The team is on the payroll regardless of seasonality in sales. You have to consider production capacity as well as production consistency in your business model. This incentivizes your brand to think of launch schedules and collection sizes in a different way.
Invest in training and documentation
Overall, vertical production incentivizes your brand to think more like an engineer. Production relies on processes. With a production team you are responsible for, those processes have to be well documented and communicated. New employees need to be trained on your products and on how your brand operates and it falls on your business to do this. You can’t just drop your production team and switch to a new factory to find different skills. New skills have to be developed over time.
Collaborate across job roles
With both design and production under one roof, it is easy to collaborate across job functions and learn how decisions one team makes impacts the others. When team members understand and respect each other and their contributions, the work and the work environment only gets better.
Maker business
Although not really a factory, the relationship you have with production as a maker also has its own incentives for your business. Your decisions as a business owner and designer are affected by your role as product creator and vice versa.
Brands with a maker model are incentivized to:
Limit production to fit capacity
While not solely a factor for maker businesses to consider, production capacity is a bigger part of decision making for maker businesses. You are physically limited by how much you can personally create. If you want to stay solo, you can only scale production so far. You are strongly incentivized to keep quantities low and manageable.
Skip the technical documentation
It is just you and you know everything about your products. You designed them and produce them, so there is no clear incentive to externally document each style in a tech pack or even maintain fully up-to-date patterns. Beware of the limits of your own memory, though. Do yourself (and any future team members you may have) a favor and write it all down anyway. I promise that later on it will be worth it even though right now you might not see a clear benefit.
Offer personalization or customization
Not so much an incentive, but personalization is an opportunity that maker businesses have that brands with other factory relationships are incentivized not to pursue. If you are making each garment one at a time or to order, you can offer customizations far more easily than other brands can. Relatively, it is not that much extra work for you because of how you produce, but a huge value to the customer. Maker businesses naturally tend to be more creative with personalization because they don’t need it to scale.
When looking for a factory that is the right fit for your business, look beyond simple agreement or understanding of your brand’s values. Consider how the relationship you have with your production partners incentivizes your decision-making, business model, design choices, and long-term goals. If aligned incentives aren’t naturally there, it is up to you to push back on convention and create them in order to encourage the kind of future you want to see.