The 1-10-100 Rule

The apparel industry has one of the highest return rates compared to other sectors. In 2020, American consumers returned products worth 428 billion dollars. A study by McKinsey found that in the United States, 25% of clothing bought online was returned. Out of the total number of e-commerce returns in 2020, 21% were clothing items followed by shoes at 12%.

The high rate of product returns is a major challenge for apparel brands: a large percentage of merchandise will not produce revenue for them, and the company now has to pay to process returns from their customers. One way to tackle this issue is for apparel brands to integrate the 1-10-100 rule into their manufacturing processes to cut down on quality-related returns.

The 1-10-100 rule explains that as a defected product moves through each stage of the production process, the cost to fix the issue becomes multiplied by a factor of ten. The longer the quality issue goes undetected by the brand, the more the cost rises to fix the issue. For example, if the quality error is noticed and corrected during the pre-production stage, the brand only has to spend $1. However, if the same product moves into production, the brand must now pay $10 to fix the problem. Once production is finished and product goes out to customers fixing the problem will now cost the brand a $100. 

However, for the 1-10-100 framework to be deployed correctly, it is important for brands to have full visibility into their supply chains. Technology can help businesses gain real-time visibility into their supply chain to detect issues pre-emptively and take corrective action promptly. Smart solutions like TrackIT allow brands to have increased control over their global production. Stakeholders can use the data generated from the platform to put together timely action plans to detect and tackle quality problems before the costs can snowball.

More emphasis must also be placed on pre-production planning. Brands must study their entire manufacturing process from start to finish and examine them for potential risk to quality. This preventative approach may take longer and be more expensive, but in the long run it will lead to lower quality-related returns and more money saved.

Finally, the brand must have a strong quality inspection program to make sure no defected products make it out to consumers. Apparel supply chains are geographically scattered, but the physical distance can be overcome with the use of technology. Digital quality management solutions like QUONDA allow apparel brands to ensure product quality during in-line and final inspections using real-time data, analytics, and reporting.

The 1-10-100 rule highlights the importance of detecting and correcting issues early in the process to reduce costs. By implementing technology that increases visibility in the supply chain, stakeholders are able to make better, more informed decisions in real-time. This translates into reduced costs, higher customer satisfaction, and more revenue generated for the brand.


The 1-10-100 Rule
Triple Tree Solutions
Published 30 December 2022

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