APPAREL QUALITY MANAGEMENT - II

JURY DOCUMENT

TOPIC – RESEARCH ON EFFECT OF QUALITY ON PROFITABILITY

OF AN ORGANISATION

SUBMITTED TO – MR. SUMIT KUMAR

ASST. PROFESSOR

NIFT BHUBANESWAR

SUBMITTED BY – MAYA N M

NIKITA

SHIVANI JAYANTH

1 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 CONTENTS

1. INTRODUCTION..........................................................................................3
2. IMPORTANCE OF QUALITY CONTROL.....................................................3
3. PRODUCT QUALITY....................................................................................4
4. QUALITY AND PROFITABILITY...................................................................5
5. CASE STUDY - EVERLANE....................................…………………..………3
6. Everlane - The Brand…….…………….…………………………………...4
7. Efforts on quality improvement.....................………………………..……5
8. Everlane - Quality and Profitability........................................................7
9. Future Growth...........................................………….…………………....8
10. CASE STUDY - LEVIS...................................…..……………………………...9
11. Levis - The Brand…….…………….…………………………........….…...4
12. Quality management in Levis........................………………………..……5
13. Quality and Profitability in Levis.............................................................7
14. Future of Levis...........................................………….…………………....8

2 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 INTRODUCTION

Like any other product, maintenance of high standard of quality of garments is very
important. In this case quality issue is all the more sensitive. No one is interested to
purchase defective apparel. Human dignity and life style are clearly exhibited by the
apparel he/she wears. Apparel buyers around the globe demand product as they
want it, when they want it, and the best possible quality. In today’s highly competitive
global marketplace they are placing greater value on quality and delivery time.
Manufacturers similarly have begun to place more value on quality and delivery time
and companies are trying to gain a competitive edge and improve profitability
through increasing quality. In competitive industries, continuous improvement of
quality will differentiate a company from its competitors, leading to increase sales.
Ensuring quality is one of the main competitive factors among companies. The ability
to produce right quality of products influences export, sales and thereby revenue. 1

IMPORTANCE OF QUALITY CONTROL

 A quality control program will help spot and reject defects in apparel products
being manufactured. A defect can,
i. Be conspicuous
ii. Affect the saleability of the product
iii. Affect the serviceability of the product
 They can pinpoint production operations that need special attention.
 They can verify the general conformity and appearance of apparel products with
instruction/description and/ or sample received.

1
https://www.ijsr.net/archive/v7i2/ART20179780.pdf

3 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 PRODUCT QUALITY

Total quality management (TQM) is an approach to improving the

competitiveness, effectiveness and flexibility of a whole organization. TQM
involves placing the customer as the focal point of operations. The aim is to
continuously improve process performance in order to satisfy customer
requirements.

Product quality is the ability of a product to meet or exceed customer’s expectations.

The most common operational definition posits quality as the customer's perception
of product and service excellence. In today’s competitive environment, quality is the
key to an organization’s success and survival. Garvin developed a system of thinking
about the quality of products by describing the basic elements of product quality in
eight dimensions. The following is a summary of Garvin’s eight dimensions of
Product Quality,

 Performance refers to a product's primary operating characteristics.

 Features are additional characteristics that enhance the appeal of the
product to the customer. These are the secondary aspects of performance.
 Reliability is the likelihood that a product will not fail within a specific time period
when put in use.
 Conformance is the precision with which the product or service meets the
specified standards.
 Durability measures the length of a product’s operating life.
 Serviceability is the speed, ease and costs with which the product can be put
back into service when it breaks down.
 Aesthetics refers to how the product looks, feels, sounds etc. It is a matter of
personal judgement and a reflection of individual preference.
 Perceived quality is the quality attributed by the customer, noting that perception
is not always reality.2

EFFECT OF QUALITY ON COMPANY ECONOMICS

2
https://www.researchgate.net/publication/329208287_The_Effects_of_Product_Quality_on_Custome
r_Satisfaction_and_Loyalty_Evidence_from_Malaysian_Engineering_Industry

4 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

Quality affects company economics in two principal ways:

 The effect of quality on costs: In this case “quality” means freedom from
troubles traceable to office errors, factory defects, field failures, and so on. Higher
“quality” means fewer errors, fewer defects, and fewer field failures. It takes effort
to reduce the numbers of such deficiencies, but in the great majority of cases, the
end result is cost reduction.
 The effect of quality on income: In this case “quality” means those features of
the product which respond to customer needs. Such features make the product
saleable and provide “product satisfaction” to customers. Higher quality means
better and/or more features which provide greater satisfaction to customers.

The above two effects of quality on costs and on income interact with each other.
Product deficiencies not only add to suppliers’ and customers’ costs, they also
discourage repeat sales. Customers who are affected by field failures are, of course,
less willing to buy again from the guilty supplier. In addition, such customers do not
keep this information to themselves they publicize it so that it becomes an input to
other potential buyers, with negative effects on the sales income of the supplier.

In recent decades there has been much study of the effect of poor quality on
company economics. In contrast, study of the effect of quality on income has lagged.
This imbalance is all the more surprising since most upper managers give higher
priority to increasing income than to reducing costs. This same imbalance presents
an opportunity for improving company economics through better understanding of
the effect of quality on income.3

QUALITY AND PROFITABILITY

3
https://gmpua.com/QM/Book/quality%20handbook.pdf

5 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 IMPROVED PERFORMANCE, IMPROVED REPUTATION INCREASED
FEATURES, RELIABILITY FOR QUALITY MARKET SHARE

HIGHER INCREASED EXPERIENCE BASED

PRICES PROFITS SCALE ECONOMIES

Fig 1 - Market Gains

INCREASED
PRODUCTIVITY
LOWER
MANUFACTURING
IMPROVED LOWER COSTS INCREASED
RELIABILITY REWORK AND PROFITS
/CONFORMANCE SCRAP COSTS LOWER SERVICE
COSTS

LOWER
WARRANTY AND
PRODUCT
LIABILITY COSTS

Fig 2 - Cost Savings

There are different ways in which improved quality might lead to higher profitability:

Quality and Market Share

The first route is through the market: improvements in performance, features, or

other dimensions of quality lead to increased sales and larger market shares, or
alternatively, to less elastic demand and higher prices. If the cost of achieving these
gains is outweighed by the increases in contribution received by the firm, higher
profits will result. Quality improvements may also affect profitability through the cost
side. Fewer defects or field failures result in lower manufacturing and service costs;
as long as these gains exceed any increase in expenditures by the firm on defect
prevention, profitability will improve.

6 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

There exists a strong positive association between quality and profitability. High
quality produces a higher return on investment (ROI) for any given market share.
Quality improvements, by increasing share, also lead to experience-based cost
savings and further gains in profitability. The market-based link between quality and
profitability is, therefore, well established.

Quality on Cost

The second linkage described in Figure 2 is less firmly established. The relationship
between quality and cost depends on how the terms are defined. Some studies that
have equated quality with conformance, and cost with total quality cost, have found
an inverse relationship between the two. They have not, however, carried the
analysis a step further to find if profitability was similarly affected. Nor have the
studies focusing on the connection between quality and direct cost taken into
account differences in investment levels or capital costs, which would clearly affect
the relationship between quality and ROI.4

Quality and Customer Needs

Quality also has a direct relationship with customer satisfaction and customer loyalty.
Customer satisfaction goes beyond service experience that a customer went
through. It incorporates value judgment and comparison to initial expectation of what
the product quality should be; oftentimes based it is an overall comparison between
the value that customers perceive and the price that they pay. By focusing on
customer value organizations think outwards, toward external customers and about
ways in which customers can achieve greater responsiveness to their needs.
Fulfilment of customer needs through delivering customer value, in turn increases
customer loyalty. Organizations focus on achieving customer satisfaction and loyalty
by delivering superior value; have an underlying source of competitive advantage
which in turn promises profitability to the organisation. 5

4
https://sloanreview.mit.edu/article/what-does-product-quality-really-mean/
5
https://www.researchgate.net/publication/329208287_The_Effects_of_Product_Quality_on_Custome
r_Satisfaction_and_Loyalty_Evidence_from_Malaysian_Engineering_Industry

7 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

Quality Leadership and Marketability

Quality has the greatest weight among the factors which determine marketability.
Quality leadership is often the result of an original quality superiority which gains
what marketers call a “prior franchise.” Once gained, this franchise can be
maintained through continuing product improvement and effective promotion.

Quality, earning and stock market

8 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 AN ANALYSIS OF QUALITY PRACTICES AND THEIR
EFFECT ON PROFITABILITY AT EVERLANE

Organisations and companies must learn to effectively adopt quality management

practices that will affect productivity and profitability in the long run. Everlane is an
example of strong quality management strategy coupled with effective management
and profit planning. It serves as a strong example for all brands to model quality
management upon.

EVERLANE - THE BRAND

Everlane was founded in 2010 in San Francisco, California, USA, as a pure player
with the aim of selling its own designed, affordable luxury apparel at a cheaper price
by going direct to consumers. Everlane has $15 Million in revenues and 70
employees and top competitors are Cuyana, Herschel Supply and Reformation. After
having experienced fashion retail through showrooming and pop-up stores, Everlane
opened their first flagship store at 461 Valencia Street (San Francisco, CA). 6

Everlane is a clothing company with a strong focus on ethically sourced and

produced clothes. Their mantra, “we can all make a difference” runs through their
entire company. They cite their clothes as being an exceptional quality from ethical
factories with radical transparency.

Everlane doesn’t want consumers to buy a T-shirt that’ll become worn just a few
times before it starts to look old and tattered. They want consumers to buy their
pieces and have them for years. It all leads back to their focus and ideals of being an
ethical company sourcing only the finest materials. 7

Everlane claims to partner with the best, ethical factories around the world and
source only the finest materials.

6
https://fashionretail.blog/2017/07/25/everlane-goes-offline/
7
https://prisync.com/blog/everlane-pricing-strategy/

9 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 EFFORTS ON QUALITY IMPROVEMENT BY EVERLANE

Everlane spends months finding the best factories around the world, the same ones
that produce designer labels. Everlane puts efforts to visit them often and build
strong personal relationships with the owners. Each factory is evaluated, scored and
only if the score exceeds 90, they are given a compliance audit to evaluate factors
like fair wages, reasonable hours, and environment.

At Everlane, they do not focus on trends. Instead they manufacture pieces whichcan
be worn for years, even decades, to come. That’s why they source the finest
materials and factories for their timeless products, like their Grade-A cashmere
sweaters, Italian shoes, and Peruvian Pima tees.

They propagate the belief that their customers have a right to know how much their
clothes cost to make. They reveal the true costs behind all of our products, from
materials to labour to transportation, then offer them to consumers, minus the
traditional retail mark-up.

Their webpage is an epitome of radical transparency and they have mentioned the
cost breakdown of each of their best - selling products. This confirms the investment
made on the quality of their products which assures their consumers and increases
customer loyalty and profitability of their brand. 8

Fig 1 - Cost breakdown of ‘The Cashmere Crew’

EVERLANE - QUALITY AND PROFITABILITY

Everlane provides a model for how to communicate that our quality is what they say
it is. A team of designers presents ideas to the CEO, Preysman, along with head of
creative Alexandra Spunt (who formerly ran content at American Apparel) and a

8
https://www.everlane.com/about

10 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

handful of other department heads. Together they decide what to add to the line-up,
keeping a focus on timeless pieces made with high-quality materials.

The key success factors of Everlane are,

 Radical transparency - “Know your factories. Know your costs”. This is what
Everlane advertises and follows. Everlane suppliers are located in some of the
“hotspots” of quality manufacturing like Ubrique in Spain, a village that produces
some of the best leather goods worldwide. Other suppliers are located in
Florence, Brescia, Vicenza or Hawick. Some of their suppliers are producing for
top luxury leading brands. Everlane also produces in China and Vietnam, and also
in Lima (Peru). They promote in their website many pictures of the “day in the life
of” their suppliers. Special pictures made with an artistic touch showing how
craftsmen manufacture their products.
 Affordable Luxury/ Minimalist Basics - Luxury brands mark up x 8-10 times and
Everlane x2 times.
 Sustainability - A well-made item will remain in consumer’s closet for a long time
if the quality is good.9

Everlane’s operating model, focused on designing minimalist, quality products while

curtailing overhead costs, allows it to deliver a luxury product without a luxury price
tag. As e-commerce continues to steadily rise as a percentage of retail sales,
Everlane will likely continue to acquire consumers at a rapid pace.Today, Everlane is
ramping up production, making everything from leather bags to sneakers to puffer
coats, and dropping an average of six new items into its line-up each month. Some
44,000 people joined the waiting list for a new line of denim in September. The
company has shipped products to more than a million customers, including
celebrities like Angelina Jolie, Karlie Kloss, and Meghan Markle, who’ve been
spotted with Everlane’s tote bags and loafers. And it’s profitable, according to the
company, with sales doubling annually for the past three years. Everlane hit $100
million in revenue in 2016, according to Privco, a firm that analyzes private
companies.10

9
https://fashionretail.blog/2017/07/25/everlane-goes-offline/
10
https://www.fastcompany.com/40525607/how-everlane-is-building-the-next-gen-clothing-brand

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Although denim is a more than $40 billion global market, Everlane delayed coming
out with jeans until Everlane’s head of product, Kim Smith, could locate a factory that
met the company’s sustainability standards. She eventually found one in Vietnam
that recycles 98% of the water used in denim manufacturing and turns the leftover
sludge, filtered of chemicals, into bricks that are used to construct affordable houses.
For several weeks before the denim was released online, Everlane shared pictures
and stories from the factory, which led to a record-breaking waiting list. When
Preysman alerted customers that the brand was dropping the price of its cashmere
sweaters from $125 to $100 to reflect the lower cost of raw materials, the company’s
cashmere sales jumped 200%.11

FUTURE GROWTH

Everlane espouses a solely web-based distribution model, circumventing capex and

labour expenditures associated with stores. Unlike more established retailers that
employ an extensive intermediary network, Everlane designs in-house and works
directly with factories, spanning from Vietnam, Spain, to California. Not only does the
direct relationship with manufacturers allow Everlane to pass on increased savings
to the consumer, it allows Everlane to more easily ensure that factories comply with
its labour and ethical sourcing standards, a problem that has plagued retail giants
like H&M and Nike.Everlane will likely continue to acquire consumers at a rapid pace
considering that consumers of the modern era are conscious of quality and
sustainability. However, it must be careful that its growth does not undermine the
brand equity it has so skilfully developed. Everlane would do well to consider the
effect of deliberately low inventory on missed sales and earnings opportunity.
Everlane’s rapid proliferation of products may also jeopardize its simple and easy
shopping experience. While scaling, Everlane must ensure that it continues to
aggressively manage factories to ensure compliance with its ethical standards and
sustain its high brand equity, its greatest asset but also its greatest liability. 12

11
https://digital.hbs.edu/platform-rctom/submission/everlane-building-a-business-on-radical-
transparency/
12
https://digital.hbs.edu/platform-rctom/submission/everlane-building-a-business-on-radical-
transparency/

12 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 QUALITY MANAGEMENT, PRODUCTIVITY, AND
PROFITABILITY OF LEVIS

From Levi’s products to their practices, innovation is integral and sustainability and
quality is as essential as fabric and thread. Their values: empathy, originality,
integrity and courage, guide every decision and every action the company makes.
This fuelstheir commitment to drive profits through principles.

LEVI - THE BRAND

Levi Strauss & Co. is one of the world's largest brand-name apparel companies and
a global leader in jeans wear. The company designs and markets jeans, casual wear
and related accessories for men, women and children under the Levi's, Dockers,
Signature by Levi Strauss & Co, and Denizen brands. Its products are sold in more
than 110 countries worldwide through a combination of chain retailers, department
stores, online sites, and a global footprint of approximately 3,000 retail stores and
shop-in-shops.13

QUALITY MANAGEMENT IN LEVI

Levis has been focusing on high quality, durable, comfortable and simple pants for
the last century.Levi's clothes, although always good looking, are also always simple.
But in this simplicity hides a unique and complex conception method based on high-
level design, tough and durable materials as well as a comfortable elasticity.

 Design - The Levi's collection of jeans is distinguished by its riveted construction,

additional seams, strong reinforcement points and lined back pockets.
 Durability - Levi's jeans have the flexibility and appearance of a 100% cotton
denim, but in fact they are made from Cordura fibers, allowing them greater
durability and exceptional abrasion resistance.

13
https://www.levistrauss.com/who-we-are/company/

13 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 Comfort/Stretch - The materials used in the construction of Levi's products
incorporate Lycra fibers that retain their elasticity over time, for optimum comfort
and durability. Levis jeans, even after one year of machine washing, will always
be as stretchy as the first day consumers wore them.14

Levis was the first apparel companies to join the Better Cotton Initiative (BCI), which
trains farmers to farm more efficiently, creating greater outputs (more cotton) with
fewer inputs (water and chemicals), which means a smaller environmental footprint
and better margins for them. They intend to source 100 percent of our cotton from
BCI growers, organic cotton farms, or recycled cotton suppliers by 2020.

QUALITY AND PROFITABILITY IN LEVIS

Levis sources their products primarily from independent contract manufacturers

located in approximately 26 countries around the world. No single country represents
more than 20 percent of their production. They require all third-party contractors and
subcontractors who manufacture or finish products for them to comply with their
code of conduct relating to supplier working conditions as well as environmental and
employment practices. In addition, they require their licensees to ensure that their
manufacturers comply with their quality standards.

The company’s commitment to quality is quite known and they have denoted design
details such as, their jeans are made of selected nine ounce Amoskeag Denim or
are sewed with the strongest linen thread. Once the company had taken the initiative
to challenge their customers to thoroughly inspect the pants and examine the
sewing, finish and fit which further increased the belief among consumers that the
jeans they purchase from Levis are not compromised on quality.

Levis jeans are sold in some 50,000 retail locations in more than 110 countries,
including through mass merchants, specialty retailers and department stores, plus
about 2,900 branded stores and shop-in-shops, of which 750 are company-operated
stores in 31 countries.

14
https://thinkempire.com/blogs/news/levis-quality-durability-style/

14 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

Levis have embedded a quality maintenance and improvement philosophy across
their businesses. They have streamlined their business units and reduced
discretionary spending in many areas, such as travel along with distribution
expenses. Their higher gross profit margin reflects the efficiencies they are realizing
from their global sourcing organization. These savings enabled them to invest in
initiatives like ERP for example which enhances productivity and drive future
business growth. The company remains relentlessly focused on productivity and
quality, including tightly managing overhead expenses and inventories so they can
continue to invest in the business. Their improved efficiency and quality in apparel
products also helped them to advance the sustainability initiatives.

FUTURE OF LEVIS

The Levi Strauss Company is experiencing losses and is continuing to under -

perform in the denim jean market. The firm faces the general problem of a dominant
firm losing market share when more firms enter the market. However, they continue
to capture most of the denim jean market.

Levi's brand is iconic because it's trusted by consumers, trusted for innovation,
quality, performance, durability, style, fit and more. Levi's listens to its shoppers and
empowers them to help guide the company.

However, denims could fall out of favour again, which could damage growth. Levis
also still has to compete with non-traditional players selling denims. There are also
risks to the brands from new entrants and niche players. Levis has to take care not
to chase fleeting fashion trends to generate quick upticks. It must focus on areas
where it can build value and brand equity in a sustainable way. 15

15
https://www.retaildive.com/news/whats-different-about-levis/551558/

15 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 QUALITY PRACTICES AND THEIR EFFECT ON
PROFITABILITY AT RAYMOND INDUSTRIES LTD

Quality means those features of products which meet customer needs and thereby
provide customer satisfaction. In this sense, the meaning of quality is oriented to
income. The purpose of such higher quality is to provide greater customer
satisfaction and, one hopes, to increase income. Raymond is a diversified group with
majority business interests in Textile & Apparel sectors as well as presence across
diverse segments in national and international markets. Having enjoyed the
patronage of over a billion consumers, Raymond as a brand has been consistently
delivering world class quality products to its consumers since the past nine decades.

Raymond Limited’s philosophy of quality is to leave no stone unturned to ensure

flawless quality garments. For them Quality is critical in terms of both visual defects
and measurement conformance for every garment. They believe satisfying their
customer this way will reflect in growth of revenue and profit curve. 16

EFFORTS ON QUALITY IMPROVEMENT BY RAYMOND INDUSTRIES LTD, 17

The Raymond name symbolizes quality, leadership and excellence and as a

company that has always stood for setting standards in ethical business
performance, innovations and services. With history of more than 75 years, they rely
on long-standing reputation and loyal customer base. They have mastered the art of
making quality fabrics and readymade garments.

To ensure that quality is maintained in all manufactured fabrics at Raymond Limited

they employ best of the Quality Systems and Procedures which are continuously
followed up and monitored to perfection.

Quality Assurance department has its presence in every stage of production. The QA
Department‘s function starts with receipt that is, once the fabric and trims reaches

16
https://www.raymond.in/theraymondgroup?subcat=130
17
https://www.raymondcorp.com/about-us/quality

16 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

the stores, the quality of fabric and trim are checked. Then quality check of cutting
process & sewing process as well as finishing department

They had four point system for Inspection. In process inspection, they have a quality
manual that details how its quality management system operates. They also follow
the 5s quality system under Total Productive Maintenance. 18

All levels of management within The Raymond Corporation are committed to

implementing an effective quality management system and strive for continuous
improvement in products and services. With the support of Sales and Service Centre
network and supplier base, they provide customers with cost-effective products and
services, for trouble-free material handling operations worldwide.

QUALITY AND PROFITABILITY- RAYMOND INDUSTRIES Ltd.

Quality objectives are established and periodically reviewed to provide dedicated

employees using state-of-the-art technologies, the ability to secure cost-efficiency
and shareholder growth.

Raymond has developed different projects to improve quality and to satisfy their
customers, they believe that this will increase revenue growth and profit.

 Right from the first day - In support of this mission, it is every employee's
responsibility to assure products and services are free of all defects and "right
from the first day". Quality is the foundation of everything done at Raymond and is
designed and built into their products, services and processes. They offer superior
value through effective and efficient materials handling solutions, emphasizing the
use of appropriate technology, ergonomic design, innovation, productivity,
reliability and maintainability. They support an intelligently managed, financially
sound, progressive business organization that practices high ethical standards in
all its relationships with employees, customers, suppliers and the community.

18
https://www.slideshare.net/livelifeananya/quality-policy-in-raymond

17 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 Made-To-Measure - The 1st thing that most of the customers look for in a
garment is the FIT. Since every individual has got different body measurements,
so that mass produced garment don‘t fit them properly. To fit the garment perfectly
on the body, the patterns have to be customized before making garment. This
concept of making a garment according to the measurement of the individually is
known as Made-To-Measure or MTM. A garment which belongs to uniquely to you
as your personal signature.

These project aims at making standard procedure to define the quality level of
individual garment and thereby reduce the errors regarding quality as well as making
system for customer feedback. It will also reduce the rework and improve the quality
of garment as well as brand name and customer satisfaction which will bring more
revenue to the company.19

Company’s core focus is on the quality they provide to the customers. Their focused
advertising campaign, by Enterprise is on their customisation and fit quality this is
responsible for positioning Raymond as the leader in the textile market.

Over the past years, Raymond had been delivering world class quality products for
all its textile and apparel brands, resulting in a large number of loyal customers. With
the launch of the quality promising programmes, the store visits increased by 24%,
and repeat sales by 55% due to large number of customers. The loyalty members
contribute 63% to overall sales.

FUTURE

Raymond is moving away from being a product-centric company to a customer

centric organisation. That’s Raymond 2.0. The fundamental shift is in making not
what the company wants to sell but what the consumer wants to buy, if a consumer
says, wants a tailored jacket in a particular format in 48 hours, then Raymond will to
deliver it. The company has shifted gear from Raymond 1.0.

A decline in operating margin had to be arrested, growth of revenue curve had to be

ahead of the market, and the daunting task of cash flows had to be ensured. After
19
http://14.139.111.26/xmlui/bitstream/handle/1/114/Implementation%20of%20Quality
%20Management%20System%20in%20Raymond%20made%20to%20Measure..pdf?sequence=1

18 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

meeting most of the targets, the company moved to Raymond 2.0: from turnaround
to transformation.

The Complete Man advertising weaved in product proposition to highlight the

qualities of product. Global expansion was also identified as another key leg of
Raymond’s makeover. The key for Raymond is to be consistent in performance for
the last 16 quarters; Raymond has had strong double digits, except during the
demonetisation quarter, and is 1.5 times the actual market growth rate. 20

20
products/garments-/-textiles/the-complete-man-raymond-is-now-trying-to-get-a-complete-makeover-
heres-how/articleshow/62962580.cms?from=mdr

19 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

 QUALITY MANAGEMENT, PRODUCTIVITY, AND
PROFITABILITY OF GUCCI

GUCCI

Gucci is an Italian fashion label founded in 1921 by Guccio Gucci, making it one of
the oldest Italian fashion brands in operation today. Like many historic fashion
houses, the brand started out as a luggage manufacturer, producing luxury travel
goods for Italy’s wealthy upper-classes, as well as equestrian equipment. Now they
are manufacturing and distributing leather goods, shoes, ready-to-wear, silks,
timepieces and fine jewellery.

EFFORTS ON QUALITY IMPROVEMENT BY GUCCI

What makes a 'quality' product is not based on how hard it is to make or whether or
not it costs a lot of money, as manufacturers typically believe - this is incompetence.
Customers pay only for what is of use to them and gives them value. Nothing else
constitutes quality. The production of regular everyday clothing is not the best quality.
Gucci products are made in Europe, and the workers are paid much more than the
workers in China, Bangladesh, etc. These products are made to be the highest quality
possible. They have better materials (such as pima cotton), better workmanship, as
well as better work conditions. Buying Gucci products isn’t just a purchase, it’s an
investment.
Domenico De Sole21

CEO of the company transformed Gucci from moribund to a multiband company. He

took lot of initiatives to make sure each product which is going out from Gucci is of
high quality.

Product and technology development

Cost is not a big factor for luxury goods, customers looking for its high quality and
elegant design. Technology plays a big role to shape the products and increasing the
quality. With use of the latest technology the quality of the product will be high

21
https://www.ukessays.com/essays/marketing/strategic-management-of-gucci-marketing-essay.php

20 NATIONAL INSTITUTE OF FASHION TECHNOLOGY

standard. De Sole helps the supplier to provide latest technology and financial
support for up gradation of the equipment to produce high quality goods and to
reduce the production cost.

Suppliers

Suppliers are backbone of a company and without cooperation of suppliers

accompany will be paralyzed any time. Gucci’s success is because of the quality
craftsmanship and which all-time low in 1993 because unable to pay. De Sole visited
every individual suppliers and selected best of them and cut the rest and pushes
them hard to reach the parameter of Gucci’s expectation. Suppliers have clear vision
after discussion with De Sole that what they have to do with to continue the
relationship with Gucci.

Gucci Employer Brand22

100% of employees are proud to be part of the Gucci brand while 82% of employees
believe they work in a positive work environment. Gucci's Employer Brand is
comprised of a B+ rating for Retention, an A+ rating for Office Culture, and a B rating
for Happiness. Employees are highly satisfied they would care about product they
invest part of themselves, working harder and providing a bigger value. They will
care more and that will, in return, increase their workplace satisfaction and quality of
the products.

QUALITY AND PROFITABILITY- GUCCI

 Technology plays a big role to shape the products and increase volume of the
production. With use of the latest technology the quality of the product will be high
standard and production will be faster so that easy to balance the production and
demand. Gucci uses the latest technology to cut the leather and results cutting will
be better, faster and wastage will be less; high quality leather is very costly so lot of
savings for Gucci and ultimately production cost less and profit margin high.
Centralized inventory system to monitor the stocks of goods and demands. Stop
licensing to the new products to help the quality control and basically focus on main
22
https://www.comparably.com/companies/gucci/employer-brand

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products and improve the brand image and profitability.  Gucci also looses the luxury
brand image once so the outsource limited to Italy and the no of suppliers had been
reduced drastically. Few trusted suppliers had been helped financially and
technology to improve the quality of the product and uses of latest technology to cut
and stitch the goods so that the quality improves, manufacturing cost reduces as well
as the no. of production increases. High quality produces a higher return on
investment (ROI) for any given market share. Fewer defects or field failures result in
lower manufacturing and service costs; as long as these gains exceed any increase in
expenditures by the firm on defect prevention, profitability will improve. Improvements
in performance, features, or other dimensions of quality lead to increased sales and
larger market shares.

Employee satisfaction is significantly related to service quality and to customer

satisfaction, while the latter in turn influences firm profitability. Also found that firm
profitability has a moderate non-recursive effect on employee satisfaction, leading to
a “satisfaction–quality–profit cycle”. 

FUTURE

Gucci has been the biggest earnings driver at the French luxury conglomerate
outperforming most of its peers since 2016 thanks to a flamboyant makeover under
designer Alessandro Michele. Key to Gucci’s success is a simultaneous creative and
merchandising strategy. While the approach led to dramatic growth in the first years,
sales have started to slow down in 2019, decreasing 2 percent year-over-year in
North America in the second quarter of 2019. During the same period, the sales
growth rate in the Asia Pacific region also slowed to 23 percent versus 47 percent
the prior year.

Alessandro Michele delivered a significant aesthetic shift for the brand at the Spring
2020 runway, which closed a Milan Fashion Week that saw many designers
embrace a simpler and edited focus in their collections. Michele picked up on that
energy in his own way, delivering a pared-back collection that picked up on Gucci's
sex-charged history. Michele’s fantastical design lexicon came at exactly the right

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time, providing a rich world of escapism for the luxury shopper that was a near-
instant hit and has managed to continue to captivate shoppers. 23

23
https://www.businessoffashion.com/articles/news-analysis/will-guccis-aesthetic-shift-secure-future-
success

23 NATIONAL INSTITUTE OF FASHION TECHNOLOGY