Cali-X Sports Operational Proposal

Objective for Operation Expansion

Cali-X Sports is an apparel manufacturing company based out of San Dimas, California. The manufacturer was founded in 2010 as an athletic wear manufacturer for local sports teams from nearby high school to independent adult sports clubs. The founder wanted to bring back manufacturers back to the US and be able to manufacture personalized and customized sports uniforms. Today, Cali-X Sports has grown to become a successful mid-size apparel manufacturer and takes orders from various American based brands all over the U.S. while still supporting the founder's root cause of supporting local sport communities. Cali-X Sports takes pride in producing quality apparels in an efficient and timely manner. With flexible manufacturers and many highly skilled operators, Cali-X Sports can pivot the operation to suit client’s needs both in styles and quantity. The popularization of athleisure apparel in recent years has caused the company to become known as an athleisure wear manufacturer. Due to limitations in current space in San Dimas, Cali-X Sports badly needs another location to expand their operation and capitalize on the current increasing demand for their athleisure wear.

Therefore, the main objectives for Cali-X Sports will be finding a new location for expansion. Our team suggested for the new location to be focusing on mass production with a big American athleisure apparel client, so there less needs to be flexible by keeping small to medium quantity orders back in San Dimas. Location of the new facility is the most important as it dictates the supply chain route, the location will be mostly dictated by Cali-X Sports various big clients' distribution center location. Second objective is to maintain the high-quality assurance and efficiency of production to be at the same level as the San Dimas location. Which came with the challenge of finding skilled operators and determined for the need for extensive training that could cause delays in opening the new facility. Another challenge is also how big the operation is appropriate while keeping the risk of failure in mind. Over expansion of operation may cause issues down the line once the athleisure trend is dying down, unable to pivot into the new trend due to limitation of skilled operators. The current trend of athleisure has been skyrocketing from the pandemic and increasing work from home jobs. Thus, the trend may not last once the pandemic is over. However, we also do not want to underexpanded to fulfill the demand from our existing and new clients and failed to capture the opportunity benefit. The last objective is to invest and incorporate new technology that could increase the operation and production efficiently thus less reliance on highly skilled workers.

Competitive Strategy

Cali-X Sports has many competitive strategies that helped them to become successful athleisure wear manufacturers in the current market such as manufacturing of high-quality garments, flexibility in volume, and convenient location, about hours away from Metropolis Los Angeles. Cali-X Sports relies on three strategies of differentiation of high quality, variety, and location to become successful, however, to stay competitive on the longer-term Cali-X Sports may need to make an addition to their competitive strategies while continuously maintaining and improving the existing one. The additional competitive strategy we suggest for Cali-X Sports is responsiveness and service. The immediate improvement Cali-X Sports is currently trying to do is the expansion of their operation which will allow Cali-X Sports to lean into their current competitive strategy of flexibility in volume. Currently, Cali-X Sports’ operation is limited due to the current space in San Dimas, thus their goal of finding another location to expand their operation will allow Cali-X Sports to accept bigger quantity orders. The bigger quantity orders mean there is more financial risk, thus the reason we suggest improvement on responsiveness which help better estimate the processing times that align with Cali-X Sports client’s demand; shorter processing times and send the orders on-time by expansion of operation. Secondly, our second suggestion is service, with second operation location main challenges will be keeping their quality strategies from their San Dimas location and transferring it to the second location. Thus, communication is very important, standardization of documentation, order status, and ensuring the clients of their order will have a long-lasting impression on top of quality garments that result in more loyal customers.

Additionally, Michael Porter's theories of five forces will help Cali-X Sports further realize the factors of their strengths, weaknesses, and risks. Porter’s five forces are bargaining power of customers, bargaining power of suppliers, threat of new entrants, threat of substitutes, and rivalry among existing competitors.

Bargaining power of customer: Cali-X Sports has a decent power over their customers within the vicinity of San Dimas and made in USA brands. Cali-X Sports not only produces high quality garments they also take orders from smaller start up brands to large brands, with flexibility, fairness, and transparency in the pricing, Cali-X Sports has managed to gain many loyal customers.

Bargaining power of suppliers: Cali-X Sports in house supplies of fabrics, trims, threads, etc. are all from within the USA because Cali-X pride themselves as made in USA garments. Thus, Cali-X Sports heavily rely on local California and USA textile industries for the majority of their supplies. There is also some sort of symbiotic relationship between the local textile producers and Cali-X Sports.

Threat of new entrants: Cali-X Sports faces low threat of new entrants due to high cost of investment to start a garments manufacturer along with finding skill operators. Cali-X also has a long-lasting relationship with many American brands and clients that the new company may not have.

Threat of substitutes: Cali-X Sports is an made in USA athleisure wear manufacture. Cali-X Sports clientele is niche in that everything was sorted within the USA. Thus, there are very few companies who do what Cali-X Sports does. As long as Cali-X Sports kept improving their expansion of operation and operation efficiently there is a low threat of substitution.

Rivalry among existing competitors: Cali-X Sports has low rivalry among the existing competitors as a medium size manufacturer and being made in the USA are rare thus there are not many competitors out there. However, that also means there is lower demand for USA made garments due to the high price when compared with competitors that utilize oversea suppliers or oversea production altogether for cheaper production.

Products and Services

Cali-X Sports’ main product category is athleisure lifestyle sportswear for men and women which include t-shirt, tank top, hoodie, sweatpants, sport jersey, legging, and shorts. Cali-X Sports mainly deals with knit fabrics that are 100% cotton as much as possible for sustainable reasons, although it is not a focus for Cali-X Sports thus some products are made with cotton-blends because it is unavoidable for performance reasons. While Cali-X Sports have excess capacity they choose to make one of their inhouse designs as a safe stock for customers who are looking for basic or basic graphic prints. Cali-X Sports tends to lean toward basic design in manufacturing their products to avoid complication and complexity of design and skills that are needed, basic designs are also always sold thus Cali-X Sports lacks the insight toward the benefit of creating more complex products. Currently Cali-X Sports does not produce any accessories and they are looking to start once the new operation happens. Cali-X Sports operations lean heavily toward supply-chain based business models more than research or competitor base, thus the result of the basics of design.

Currently, Cali-X Sports departments are operators, human resources, Maintenance, finance/sourcing, delivery, quality control, and consultant. Operators is Cali-X Sports biggest department which includes all workers that work on manufacturing garments from cutting, sewing, graphic printing, quality control and packing. Human resources deal with pay compensation, benefits, vacation, creating company culture, job training, and hiring. Maintenance department deals with maintaining/fixing machines, cleaning and restocking, breakroom, restroom, office, etc. Finance/sourcing department deals with all budgets, taxes, ordering and tracking fabrics and supply, working with suppliers, and keeping all financial records. Delivery department deals with packing finished garments, loading, and delivery with company trucks. Lastly, the consultant department who works directly with clients for the pre-production process. Cali-X Sports is a medium size business, most departments only consist of few workers except operators.

Cali-X Sports offers extensive services to their customers due to their majority of Cali-X Sports’ clients being small and medium business. Cali-X Sports offers revolving around everything about manufacturing from pre-production to delivery. Pre-production includes consultation about client ideas/proposals, creating/evaluating techpack, sourcing fabric and trim, patternmaking, and creating samples. Cali-X Sports is currently unable to give consultation related to marketing, trend, and building a brand as it requires additional skills. Clients are expected to come with basic ideas already in mind. If the client decides to work with Cali-X Sports for production Cali-X Sports will then give them estimation of lead time. Cali-X Sports does this to give themselves flexibility on small and medium orders as bigger orders have exact deadlines and tighter time and action calendar. The main manufacturing includes cutting, sewing, basic graphic printing (if applicable), quality control, packing, and delivery. Cali-X Sports only offers delivery locally within 120 miles of San Dimas (up north as Bakersfield, as south as San Diego), otherwise additional third-service delivery needs to be arranged or self-pickup.

Cali-X Sports services for workers include breakroom equip with refrigerators, microwaves, sink, sofa, chair, table, coffee maker, water dispenser, cups, plates, paper towels, and hand soap. Cali-X Sports also provides workers with restrooms, locker rooms for small personal items, multiple security cameras, and a private parking lot with fences.

With the new start of new operations Cali-X Sports anticipating a bigger workforce with a bigger department and an opportunity to diversify the current department to be more specific in what they do. In addition, Cali-X Sports hopes to add a showroom for their items which also come with additional workforces. This will mostly benefit customers who want to connect with Cali-X Sports through in-person and see what kind of materials Cali-X Sports stocks in-house without going through the main manufacturing facility while operators are working. It will also give private space for clients to be able to have private chats with the consultation department. This will improve client favorability, profitability of this addition operation is still questionable as it greatly depends on quality of services Cali-X Sports is able to provide, thus hiring good workers for this role will be important. Cali-X Sports should hold off on creating additional products while developing the new operations and evaluating how much inventory space is available.

Capacity

Cali-X new facility will need to be big enough to house all the require departments that they will need to operate the business. The 2022 forecast tells our team that Cali-X will need at least 41 machineries for 6 production line for manufacturing department alone. The number does not include the cutting, quality control, packaging, and inventory. Cali-X also need to consider for future expansion as they expected to be growing every year, meaning extra production line and space need to be taken into consideration. Cali-X should allow for room for growth per leading build capacity strategy where Cali-X should anticipate for future demand increases. With the new forecast in increase of demand, Cali-X also need to reevaluate their operations for possibly bottleneck that may occur because the 2022 forecast, expected output per year is 75,000 units with 71,250 hours of processing time needed for it. Cali-X should expect for bigger pre-production, quality control, and inventory space. Additionally, analyzing the 2022 forecast, Cali-X product 1 has the most forecast demand along with the most processing time, however product 6 has the most profit, while having less demand. This is due to high production cost, to maximize Cali-X profit, Cali-X should consider optimize increase their efficiency capacity by having good training for each operator’s employee to create higher skills operators. This will increase the Cali-X operation cost, but benefits will last long time.

` Our team proposed Cali-X to plan for facility around the 17,500 to 20,000 sq. ft. With planned estimate on how much each department will need to operate efficiently and comfortably. About, 2,500 sq. ft. will go to cutting department, 1,000 sq. ft. will go to office include HR, accounting, consultant, sourcing, maintenance, and IT. Pattern room will need to be about 500 sq. ft. include in the space are prototype development with their own working space. Each line of operation will take about 600 sq. ft., with total of 6 line that bring the number to 3,600 sq. ft., 500 sq. ft. showroom, 1,500 sq. ft. for employee’s lounge area that include kitchen, lockers, restroom, etc., 1,000 sq. ft. for printing department, and 1,000 sq. ft. for quality control, that bring the total to nearly 12,000 sq. ft. of just operation space. The rest of the area will be for inventory, storage, training, and expansion. We believe that with 17,500 to 20,000 sq. ft. Cali-X will have enough space to handle increase of demands not only for 2022 but also for the future.

Processing and Facility Layout

Figure 1. Cali-X's New Factory Layout

Quality Programs: Kaizen

Our suggested manufacturing program that will be implemented with the new manufacturing for Cali-X is Kaizen. Kaizen comes from the Japanese word Kai meaning improvement and Zen meaning good, which translates to “continuous improvement” (Do, 2017). Kaizen is a lean production practice that creates a continuous improvement by taking all the feedback and suggestions from employees without discrimination against their role or position (Do, 2017). Major benefit of Kaizen is that it is easy and inexpensive to implement and goes along with some of the already existing work culture that Cali-X already has; encouraging employees to be actively involved and engaged with the company by handing out benefits, training, and teamwork.

The continuous cycle of Kaizen activity consisted of six phases: Identify a problem or opportunity, analyze the process, develop an optimal solution, implement the solution, study the results and adjust, and standardize the solution (Do, 2017). The first process is to identify the problem or opportunity for improvement. The process can easily be implemented by listening to all their employees about issues or concerns they have regarding their job, manufacturer process, work culture, infrastructure, machine, workspace, etc.… There are many ways to achieve this either by asking management or coordinator to collect information on their respective teams they oversee, however this method may actively engage employees but might not be the best idea due to lack of anonymity and fear of reprimand. Thus, a Cali-X should also set up an anonymous way to report employees' concerns such as online surveys or suggestion boxes. The second step is to analyze the process which will require someone that understands the underlying problem and the root cause of the problem. The last thing Cali-X wants to do is solve a problem that does not exist. Then Cali-X can proceed to the third step of developing an optimal and long-lasting solution. Kaizen suggested that the proposed solution should then be tested on a small-scale first before proceeding so adjustments for unforeseen issues can be made (Do, 2017). Once there is no problem with the small-scale test, Cali-X proceeds to the last step standardizing the solution which means implementing the solution throughout the manufacture. Then the process repeats itself until all issues are solved.

However, just implementing the process will not be enough. Cali-X needs to teach their employees about what Kaizen is and the purpose, encourage engagement from workers and measure that everyone of their suggestions or concerns is being heard. All ideas should be documented, anonymously, progress of ongoing issues should be easily trackable with constant update on what is going on and when or how the issues will be solved and implemented. Once employees see that their ideas are being heard and fixed, that will improve their morale and engagement within the program (Do, 2017).

Quality Control

Continuing in line with the quality program of continuous improvement process, Cali-X new manufacturing facility quality control will be built into the process of making garments. This is done to stop obvious and common defections to proceed into the final quality control check. If the defect is detected early on, Cali-X can save labor in producing and finding a solution before proceeding. Each department within Cali-X will require to be constantly observative of their work and following quality control measurements guidelines.

Our proposal of quality control mechanisms that are going to be put in place specifically for each department for Cali-X will include: 100% Inspection Method, Checklists, X-Bar Chart, P-Chart, and C-Chart. The quality control measurements may vary depending on which methods were used. The 100% inspection method is a quality control process that involves inspecting all products and parts. We proposed this method because sewing garments is very manual and hand on job which require workers to look at the pieces they construct and quickly judge whether it is pass or fail. Although this is known to be expensive, Cali-X can modify this method to be simpler, we can teach sewer to be aware of obvious defects that cutting room may missed such as stain, oil spill, snag, hole, and cut within the main fabrics thus putting it aside, move on and sew the rest first, and reports to supervisor at the end. This will save Cali-X workers time and labor to not be wasted on constructing garments that have defects that cannot be fixed. Checklists is a simpler method of quality control that requires workers to check off a list of items. Checklists can be used at multiple departments that require less attention to quality and more about quantity, such as for sewer making sure that every machine has equip with correct thread color and size, correct needles, and for supervisor checklist can be used for checking at the end if Cali-X produces enough garments to meet the minimum order requirements and noting down the extra, etc. Checklists will be integrated to the whole Cali-X as it is simple to use and cheap while making sure that everything is in order. X-bar chart is a quality control method where garments will be randomly selected for quality control. This method can be more detail oriented and can be used during or final quality check. This method tracks the degree of variance of errors to be analyzed if defects randomly occur or systematically. The measurements for this method are likely going to be the difference between sample and target spec for the garments. P-chart is a black and white method of quality control, the inspector decide whether the quality of garments is past or fail, and records how many garments fail inspection of the whole entire production to determine if Cali-X produce enough and if thing need to be adjusted such as increase error allowance and cut more extras. C-chart is a quality control method where an inspector records the number of defects within a sample. This can be used to analyze the performance of a sewer and judge if a sewer who made more mistakes than others needs additional training to be up to standard.

Cali-X does not have to use all our proposed quality control methods, but these methods will keep Cali-X up to a high standard and continuously improve the whole process from machinery to human resources. The extra training to teach each employee to look out for defects could offset the wastes of labor time for sewer to continue to finish defected fabrics or quality control inspector to do detailed inspection to discover something that could be easily avoided early on in the production processes.

Forecasting Method

The best forecasting method we suggest Cali-X to start with is the quantitative forecasting linear trend. Linear trend is one of the simplest forecasting methods to predict demand by averaging all historical demand data and drawing the best average fit as a forecast. This forecasting method will not work very well in seasonal products because linear trends take average of all the low and high seasons historic demand data. Linear trends forecast is unable to capture the demands during high season making Cali-X losing profit as they may not be producing enough to meet the demands, meanwhile during low season Cali-X will be producing too much and has to store the leftovers. However, Cali-X does have a big storage area and depending on product quantity it may be worth it to produce certain seasonal items all year round and wait to sell it during high season. Benefit to linear trend forecasting apart from its simplicity is a stable production schedule as Cali-X will always be producing something all the time. Unlike other methods of forecasting when one is trying to predict demand, there needs to be more balancing in production schedule to finding work for your employees to do during low season. Meanwhile, the linear method does not face that concern to an extreme extended that they might face using predictions that follow too closely to the demand like the moving average method. Cali-X always believes in fostering their employees and keeping them for very long to reap the most benefit from various the training Cali-X provided. Another benefit of the linear trend forecasting method is that it forecasts into many periods in advance, Cali-X could see when the trend is going down and stop producing, or which trend is going up and try to replace the production for down trend with another new on demand product based on Cali-X market research.

Linear trend forecasting methods cause minimal impact on the Cali-X operation whole process. While Cali-X will be unable to capture certain demanded items to their fullest extent, Cali-X will be able to have constant production outputs which can be beneficial when dealing with additional incoming customers’ orders and suppliers. Cali-X first and foremost is a manufacturing company that does a lot of small and medium quantity orders from small to large businesses. Thus, if Cali-X focuses their capacity too heavily toward their own seasonal production, Cali-X will have to delay or deny incoming orders from their customers. During the low season, Cali-X may have to lay workers off if there is not enough work to do. Thus, the biggest benefit of linear trend forecasting is constant stable production that can easily be observed to make operation plans.

Example of Linear Trend Forecasting Method for Product 1.

ERP System

Our team recommended Cali-X to go with the Enterprise Resource Planning (ERP) system. Although the ERP system is more expensive and has more functions than Cali-X may need to get the new manufacturing facility to function. The ERP system will be perfect down the line as Cali-X has been rapidly growing and is going to expand their operation or services in the future. Starting off with the ERP system, Cali-X will not have to add another type of system for the rest of the department that deals with payroll, finance, documentation, supply chain, forecasting, quality assurance, MRP, inventory, etc.… as it is all included in the ERP system. The ERP system integrates the whole manufacture and operation process into one single system. Another benefit of ERP systems is the cloud data system which allows all employees in any department to see the progress and data from other departments and get data they need without waiting, compared to MRP systems where only one person can utilize it at a time is less efficient in whole business operation and management. Cost is the main factor that may prevent the Cali-X from ERP systems, but we believe with the rapid growth of the business the ERP systems will pay itself off. If Cali-X decided to go with MRP systems, they may have difficulty integrating ERP systems in the future if they were ever needed.

Inventory Control Management

The new Cali-X manufacturing facility will need an inventory system in order for them to operate smoothly and efficiently. Inventory is crucial in meeting the customers demand and to measure the performance of the production systems. Our goal for Cali-X is to have an effective inventory system with a high turnover inventory rate. Efficient use of the inventory will help Cali-X to be organized, help keep track of items, reduce cost by minimizing workload and holding cost, prevents stock issues such as stock-out or excess, etc.

Cali-X has been operated by relying on a large quantity of safety stocks especially for their popular items and basics. This was done because Cali-X’s large portion of their customers are small to medium businesses that order basics customized with prints and are looking for quality garments with a short delivery schedule. Having plenty of safety stocks allows Cali-X to capitalize the market by having competitive advantage in quality and speed. Thus, the reason why the new Cali-X manufacturing facility was made sure to be big enough with extra space for safety stocks while keeping up with the current increase in demands. Cali-X also has a large quantity of raw materials in their inventory because buying in rolls of fabrics larger quantities help Cali-X stay competitive in price. Thus, Cali-X only has to reorder their raw materials to create safety stocks garments when all the raw materials have been used and space that is designated for the raw materials has become available.

Cali-X current inventory management systems and operation is just-in-case inventory strategy where there is a large amount of inventory sitting waiting for demands. This was done to prevent large amounts of demand at unpredictable times disrupting the sewing production schedule or what they are currently working to replenished orders. Although not the most efficient system it has allowed Cali-X to satisfy a larger range of customers who want something quick and fast to customers who want something more customized or manufacturing new designs. Just-in-time inventory strategy would have not worked with the current Cali-X clientele and require Cali-X to hire more workers to keep up with the demands. With Just-in-case inventory Cali-X can use down time or slow season to stock their basic designs. Cali-X heavily focused on keeping workers for a long time and properly training and educating their workers, thus having to constantly hire and fire part time for extra help every busy season because just-in-time systems would have Cali-X keep as little inventory as possible and run the risk of stock-out and lower quality due to poorly train newer employees. Nonetheless, Cali-X still adopted some elements that were the main elements in just-in-time systems such as continuous improvement (kaizen), balanced and flexible workflow, and partnerships with key suppliers. Cali-X has great relationships with suppliers because they order very large quantities of raw materials and share information of expected next delivery for raw materials in forecast form. Quality American made textile has a limited number of suppliers and Cali-X wants to continue to work with the one that has been consistent in quality, delivery, price, and service for a long time.

Overall, Cali-X will not likely to change their current inventory systems that have been working for them for years now. However, in the future that may change, but the transition into new systems would not be difficult because of Cali-X values in education and respect for their employees, striving to continuously improve themselves, and adapting and changing to survive.

Aggregate Planning and Master Scheduling Plan

The new Cali-X new manufacturing facility should include a proper planning schedule to make sure production is running smoothly, as the integration of ERP systems will require Cali-X to use these systems. Aggregate planning purpose is to establish operation capacity followed by a master schedule plan which establishes schedules for specific products.

Aggregate planning is done by determining demand and capacities for a given period to achieve a production plan that will effectively utilize the organization’s resources. Aggregate planning can help Cali-X to run smoother and better throughout the supply chain as it impacts costs, equipment utilization, employment levels, and customer costs, equipment utilization, employment levels, and customer satisfaction. Aggregate Planning Inputs includes resources, workforce/production rates, facilities and equipment, demand forecast, Cali-X’s policies, and costs (inventory carrying, Back orders, Hiring/firing, overtime, inventory changes, subcontracting) which then will give Cali-X total cost of a plan and projected levels of Inventory, output, employment, subcontracting, and backordering. These are many ways to plan aggregate schedule, but we suggested Cali-X to go with alter capacity to match demand strategy in which to increase production rate to match the demands as much as possible because in fashion industry Cali-X will need to be competitive in pricing, which Proactive strategy would not work because it alters demand to match capacity. Usually, what alter demands is the price, but too high of the price may lead customers to Cali-X competitors instead. This does not mean to underprice the products as Cali-X is not a cheap fast fashion brand, but a high-quality American made one. Therefore, proactive level capacity strategy may fit the best with Cali-X workplace culture the best. Capacity strategy aims to maintain a steady rate of regular-time output while meeting variations in demand by a combination of options such as Inventories, overtime, part-time workers, subcontracting, and back ordering.

Master scheduling plan indicates the quantity and timing of planned completed production and is very important as it impacts other aspects of business operations such as marketing, capacity planning, production planning, and distribution planning. Master scheduling has three inputs which are beginning inventory, forecast, and Customer orders. Beginning inventory is the actual quantity on hand from previous productions, forecast is quantity that is expected to be in demand, lastly customer orders are committed capacity. This information is used to determine the projected inventory, production requirements, and the resulting uncommitted inventory also known as available-to-promise (ATP) inventory. We suggested Cali-X use rough cut capacity planning (RCCP) which is a tool used in the validation process to help balance capacity and demand to test the feasibility of a master schedule. Otherwise, there is no point in the plan schedule if it is not possible to achieve or be solved.

Overall, the aggregate plan provides a big picture guideline for master schedule which specifies the timing and volume of the production of individual products. The master scheduler takes the aggregate schedule as goals and tries to achieve them.

Master Scheduling Plan: Input & Output