Dov Charney’s American Apparel has long been one of our favorite companies. Here’s a guy who has figured out how to profitably manufacture low margin clothing from a factory in the U.S., California no less, while employing thousands at above minimum wage and providing healthcare benefits. All of those other clothing companies that feel the need to flee to sweatshops in the likes of Vietnam should be embarassed. Our excitement with the company is heightened by the fact that Dov and his team "get lean manufacturing" without really knowing it… which is yet another sign that real lean is common sense. Of course first you have to stop and pull your minds out of traditional business thought and traditional accounting methods so you can actually see common sense.
The June issue of Fast Company has yet another article on American Apparel, primarily to discuss ethics versus sex as a branding strategy. Embedded in that analysis were some more nuggets that prove Dov Charney and his VP of Operations, Marty Bailey, really do get it. Even if they don’t realize they do.
Quiet, serious, soft-spoken, and fully-clothed, Bailey was an industry veteran who had begun his long education in manufacturing efficiency – and the hard realities of globalization – with Fruit of the Loom more than 20 years earlier. He had come to see offshore outsourcing as a mixed proposition. He believed that its promised labor savings had been diluted by the costs of moving materials to the cheap-labor haven and back, and by sacrificed quality. He believed that with the right plan, a U.S. manufacturer could still make money.
Hallelujah! Regular readers know why "fully-clothed" was part of that quote… our friend Dov is an interesting fellow. Coincidentally he has managed to prove a lean point while exhibiting that statement. "Exhibiting" being the operative word.
The conversation paused when two designers working on men’s underwear appeared. They had just come from the factory floor, carrying several pairs of underwear that had been manufactured about 10 minutes earlier. Charney said they’d already gone through about 30 prototypes. "Imagine if we were outsourcing through China!"
He checked with me, then took off his pants and underwear and started trying on the samples. "I need a thin Sharpie," he said, taking off one pair and putting on another. He wrote on the removed pair: Good but tighter. There was a great deal of chatter about the legs and the waist, about taking in a half-inch, about the fact that the factory shift was going to end soon. "This is a great pair that I have on right now," Charney suddenly announced.
I’ll give you a few seconds to pause and get that visual out of your brain. Take longer if necessary. But think about what has just happened.
It’s easy to get distracted by the mental image of a pantsless chief executive. But the moment offers a gritty snapshot of the company – both its notorious aspects and its less-heralded ones. It showed things that the public image obscured: responsiveness to customer requests, designers’ excitement, the advantages of ashort elevator ride from the shop floor to the CEO’s office.
Bingo! The less tangible costs of offshore outsourcing. Try to run your operation with such speed and dynamism as Dov. Just keep your pants on. Please.