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Lesson #5: Make Efficiency Your Secret Weapon

Article Overview: When Charney filed for bankruptcy it was because American Apparel was suffering from a lack of one thing: efficiency. His staff were all in their 20s, a wildly creative bunch when it came to graphics and design, but few knew the ins and outs of running a business. And so Charney brought on Marty Bailey, an industry expert, who helped make efficiency American Apparel’s secret weapon against its competitors.

Lesson #5: Make Efficiency Your Secret Weapon

When Charney filed for bankruptcy it was because American Apparel was suffering from a lack of one thing: efficiency. His staff were all in their 20s, a wildly creative bunch when it came to graphics and design, but few knew the ins and outs of running a business. And so Charney brought on Marty Bailey, an industry expert, who helped make efficiency American Apparel’s secret weapon against its competitors.

Bailey is now American Apparel’s Vice President of Operations and the efficiency he brought to the company remains. One of his main strategies was to create what he calls “team manufacturing,” where groups of eight to ten people work on a single garment together, each performing a different task.

“Every nine seconds there’s a garment moving from operator to operator,” says Bailey. “We have teams that are producing 3,000 pieces a day. Right now, I can manufacture a t-shirt from start to finish in 90 seconds.”

Charney claims that his downtown Los Angeles factory can now produce more than one million garments a week. “As a result of this system, we’re able to compete with China and kick ass the American way,” he says. “It's less expensive, for me, the way we do business, to manufacture here in the United States. There's a high cost to going offshore.”

Having what Charney calls a “vertically integrated” system, with everything being knitted, dyed, cut, and sewn in Los Angeles not only saves him the costs of outsourcing, but it also lets him capitalize faster on the latest trends. “If you're working with a supplier in China, you've got to work months in advance,” he says. “If you're working with your own factory, you can wake up one morning and say, ‘Hey, let's make 10,000 tank tops today.’”

The clothes are made as efficiently as possible. For instance, American Apparel’s best-selling underwear is all made from recycled fabric scraps. Charney also insists on quick transfers between stores should there be a need. “Let's get something small – maybe a moped!” Charney exclaimed once. “Get a kid to just ride it from store to store. Some kids get off on that – living off exhaust! A customer could wait while this yahoo gets on his bike and gets his ass over here.”

Charney is determined to be as efficient as possible. It is not only the production side of operations that has been streamlined. Customer orders are processed faster than most others in the business. So long as a customer orders a product before 3:00 PT, the company will ship it the same day. If a product is out of stock, because everything is done from the same downtown L.A. factory, it can still be cut and sewn in time for the afternoon shipping deadlines.

“You know the face of your worker ... engineers and designers and finance people and knitters and dyers and chemists can come together in one location and say, ‘How can we do this better?’” says Charney. “You can produce products more efficiently than they can be made on an outsource basis.”

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Article Tags: american apparel, american apparels, bankruptcy, costs of outsourcing, creative bunch, efficiency, fabric scraps, garment, garments, industry expert, ins and outs, integrated system, kick ass, latest trends, marty bailey, one million, running a business, secret weapon, t shirt, vice president of operations



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