Wednesday, September 10, 2014

Everlane: Fashionable Supply Chains for the Everyman

Ever feel like you're paying way too much for a nice, simple dress shirt? Many people do, and the power of the internet is transforming the retailing clothing model on its head. One of the recent trends I've seen is direct to consumer luxury goods that are successful due to savvy control of supply chain management.

Everlane is the company that seems to appear most in my Facebook feed, promoting a "high luxury, low markups" slogan, and their website state a key corporate motto: "Know your factories. Know your costs. Always Ask Why".

The ideas from lean manufacturing can be found directly in Everlane's model. They have asked tough "whys" to discover why traditional retailers mark up their clothing so much (usually about eight times the production cost) and what they could do to produce top quality goods at low prices. By analyzing "lean" tools and techniques (especially the "5 whys") they have created a breakout company. Most of all, by eliminating brick-and-mortar stores, they are able to pass on significant cost savings to their customers.

In an interview with, the owner was quoted as saying:
“We just never understood why the most beautiful and simple products needed to cost so much. We’ve just cut out the middlemen so we can take smaller margins without sacrificing on quality at all.”

Silk and cotton shirts range between $15 and $40. They do leather goods and other high quality accessories and bags that retail for less than $100. The factories they contract with are thoroughly vetted, high quality operations that treat employees well, and the supply chain process is critical to the company for two important reasons. First, they work to find quality operations, and second, they look to a factory with an operation that also will keep their products affordable. 

A really neat portion to their website is their factory tours. The one from their Los Angeles tshirt factory is really interesting to look at. I encourage you to check it out. There's 120 employees, and Everlane's management is present weekly to ensure quality control.

It is interesting to note that they use a contract, piece work factory model, not investing in their own factory to achieve their goals, which can be challenging to operations such as theirs.

They write: "In our initial phases of production, we worked with six different vendors to produce a single T-shirt. The process was painful and we had an inventory loss at every step. Those were early days. In an attempt to move to a ‘full-package’ vendor, we met with every major factory in Los Angeles. We were impressed by the workmanship here and the environment created for the factory workers. We visit this facility three times a week to check up on production and quality control pieces."

If a company is able to really have a close handle on their supply chain, they are able to do really amazing things in building a successful business model that has happy customers. 

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