PAM is a Revolution in Manufacturing

In a highly variable industry    like clothing, inventory based manufacturing models are an economic failure


Today's inventory-based models date back to the era of Henry Ford's innovation of mass manufacturing.  Even the "Just-in-Time" model implemented in the 1980s is based on managing inventory and pushing the inventory load downstream to the suppliers where it has caused immense economic harm.  The term "Inventory expands to fill all available shelves" was the recognized mantra of the JIT transitional era, unfortunately, JIT didn't solve the need for inventory it just pushed it downstream.

Today's Internet Retail Business Model is not the Savior of Inventory:

Inventory is the bane of internet retail operations.  Online clothing retailers expected that since they are not manufacturers and since they don't have brick-and-mortal retail stores, they would be immune to the overhead costs of manufacturing and physical properties.  We'll they were wrong. They have to carry an ever enlarging inventory of finished clothing to supply to their customers.  Most online retailers are swamped by inventory and margins are generally on the order of 10% or less because of inventory and inventory effects.

The Effect of Inventory on Online Retail:

  • Over supply
    • Because of lack of knowledge of what will actually sell
    • Minimum order sizes from manufacturers and dye lot sizes force excesses
  • Discounting
    • Mark-downs and Discounting to attempt to move inventory only reduce effective margins and cause real losses
    • Discount retail chains - inventory is moved across tiers of outlets that are maintained to attempt to sell excess inventory while incurring high movement and handling costs
  • Disposal
    • The retail clothing industry destroys and disposes of 50% of all garments manufactured into the landfill - 100% loss plus the cost of disposal.

The Cost Savings of Low Cost Labor, of  "Manufacturing in Asia," of using a Volume-based Global Supply Chain are all myths that actually drive up costs for any class of product requiring high variability or customization, like apparel!

The Revolution of Purchase Activated Manufacturing solves all these problems at high profitability:

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