Toyota approach in fashion.

Hong Kong's Lever Style puts much on design and its focused business model. With Mainland government approval it is to open a state-of-the-art manufacturing facility in Hiuzhou, Guangdong Province late next year, with the prospect of producing 10 million garments annually, employing 8,000 workers. This'll greatly increase the output from Lever, which also plans to make its new facility a model of low energy-efficiency.

Coming at a time when many competing mid-sized clothing firms are shutting down or downsizing, many in the industry are wondering how Lever can skate over the many downside factors. It's a story which plays on the management's approach to re-inventing the firm, while remaining relevant in one of the toughest commercial environments for fashion clothing.

The company has a vision that many clothes manufacturers won't recognise, let alone share. "Our goal is to create a better way to make clothes, reduce cycle times and enhance flexibility. We aspire to be the Toyota of our industry," said Stanley Szeto, Chairman and CEO. The strategy to meet this goal is what the company calls "continuous improvement" including developing a more cohesive team than competitors and working on management and labour relations.

Szeto: strategy of continuous improvement.

The firm has weathered the global downturn by focusing on OEM and ODM operations, with a combination of quality garments, increasing "green" capabilities and diversification.

Lever Style has a US office in New York and operates existing factories in three locations in Shenzhen, producing shirts, blouses, suits, outerwear, pants and skirts. Its clients include top labels such as Abercrombie & Fitch, Ann Taylor, Armani Exchange, Banana Republic, Calvin Klein and Giorgio Armani.

It's one of the major suppliers to Japanese mass fashion retail phenomenon UNIQLO, while at the same time serving upper range names like Hugo Boss, J. Crew, Nordstrom, John Varvatos, Paul Smith, CERRUTI 1881 and Gieves & Hawkes.

The US is the group's major market with 40% of its business, followed by the Chinese mainland with 20%, the EU, Japan and Australia.

Styling for major brands.

Founded in 1956 Lever Shirt was a typical OEM operator like many others of that era. In 1981 it moved its production to Shenzhen and began to evolve into an ODM operator when third generation Stanley Szeto, a graduate of Wharton School, University of Pennsylvania, decided to take on the family business.

In November 2006 an office in New York was established to better serve clients with a full range of facilities and services. With in-house designers in the New York and Hong Kong offices, seasonal fabric designs and garment styling are available, aiming at speed and value.

By the fourth quarter 2006, Lever's shirting business doubled and 30% of it is devoted to ODM supply.

2007 was a significant year, with Lever Shirt merging with the outerwear division of Li & Fung. It brought haute couture labels such as Paul Smith, Armani Collezioni and Hugo Boss.

The company changed its name to Lever Style to reflect its expansion and diversification.

Efficiency is the guide to operations

Just-in-Time system for warehousing.

Lever Style says it's transformed the way it operates by changing from the traditional "bundle system" of production to "team assembly" aided by software systems such as MSC for enterprise resource planning, Fast React for production planning, ecVision for electronic data interchange, Gerber for CAD/CAM operations, as well as Nedgraphics for pattern design and RFID to trace the garment from point to point in the production process, while storing detailed records of employees' productivity.

"The Toyota approach is very applicable to the apparel industry," said Szeto. The lean production concept is applied to every step of the operation. Procurement and warehouse operations adopt Just-in-Time (JIT) delivery systems to avoid oversupply. The company organises shipments from the material factory to arrive just 48 hours before the cut-and-sew operation. Fabrics and materials are inspected and tested as well as preshrunk, ready for cut-and-sew completion within 48 hours.

On the sewing floor, work units of 30 workers operate the one piece flow production system. The workers are in a standing position throughout the operation and the shirt is finished within 35 to 40 minutes. Each cell unit can produce between 450 and 580 shirts per day.

Younger workers stand and deliver.

Shirts for ironing and packaging.

Younger workers prefer to work from a standing position as they find that it allows them the flexibility to handle more than one task at a time, the company says.

Orders can be completed in one day - minus the cut and sew and fabric preparation time. The entire cycle time is very fast and compressed. The one-piece flow system allows for JIT and small lot deliveries. It also facilitates monitoring of problems very early and workers are more aware of the requirement for quality and traceability. Importantly, this process nurtures a team spirit, the management believes.

On the other side of the sewing room runs a traditional bundling system where workers operate from a seated position. This is preferred by the older workers, said Alan Szeto, Senior Quality Assurance Manager. They found both the standing and sitting position have their advantages.

Sourcing is also part of a lean, JIT operation. No longer do managers "treat their suppliers as suppliers" the company explains, but "as partners". Partnership can improve efficiency and cost less management time. For example, from 50 possible interlining suppliers, only three supply ten styles to fit all needs. That makes for smaller inventories and warehouse use.

Eco-energy saving overhead costs

Lighting when necessary: for fabric inspection.

Using energy efficient lighting, cooling and air circulation facilities in the factory ensures good ventilation in the work rooms, while installing solar thermal panels for the workers' dormitory has helped reduce energy consumption and save overhead costs. Lever’s aim is to reduce energy costs by 10%.

Lever Style was one of 12 founding members of the Sustainable Fashion Business Consortium (SFBC), a Hong Kong-based group that promotes environmentally friendly and sustainable fashion operations. The founding members represent the fashion supply chain from design, yarn spinning, fabric and garment manufacturing to retailing.

Two to three years ago, Lever joined the Business Environment Council (BEC) for energy auditing. It has one of three pilot factories in the Pearl River Delta selected to run a WWF low carbon manufacturing programme.

In 2006 Lever became one of the first apparel manufacturers in China to be certified for SA 8000, one of world's strictest social responsibility standards. They obtained the ISO 9001:2000 certificate and are also certified by third party compliance audit firms such as CSCC and ITS.

Yuen: opening new markets.

The economic downturn has affected Lever like others in the industry. US and EU sales have been negatively affected by between 20% and 30%, but the company says its Japanese and Australian markets are stable, while regional markets in Asia and the Chinese mainland are doing well.

Orders are tending to come in very late said Joe Yuen, Executive Director and CFO. Opening up new markets and clients is the way forward, he said. In these difficult times it has seen double digit growth of business with client UNIQLO of Japan.

For the Chinese mainland market Lever says it has developed some new clients and anticipates an increase of sales. No workers had been laid off but hiring was frozen from October 2008 to April 2009 to reflect the rundown of orders. However, the firm is now beginning to rehire again as business picks up.

from special correspondent Vicky Sung, Hong Kong