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Manufacturing Planning & Resilience

Take shoes as an example, besides HIMAX's own production plant, the sub-contractors that HIMAX will use have, at least three production lines.  This creates flexibility in the production planning. Both manufacturers and material suppliers are located in the southern part of China which is probably the largest footwear material and production area in the world.  This caters for flexibility in increases or decreases in order volume.  Different commonly used fabric / leather qualities can be stocked during declining orders for future use. These qualities will always be in demand, so there is little risk of temporarily storing them in warehouse.  This will be done in agreement between the material supplier, the footwear manufacturer, and HIMAX, the Project leader.
Some footwear manufacturers have a maximum output of 200,000 pairs of footwear per month, but it is not wise to calculate on maximum output. There must always be a reserve capacity in place for the unknown in order to stay flexible when orders go up or down.  This will allow for accepting low volume or infrequent orders.  A good partnership is valued on that manufacturing partner’s ability to produce high volume as well as low volume.  Many Global brands at HIMAX have been enjoying low volume production for marketing or promotion projects, and these small orders have not affected the normal production.  Then there is the element of HIGH season and LOW season that every manufacturer experience.  HIMAX and its network of footwear suppliers are used to fluctuations in quantities and they are also used to meet special tasks and assignments, when called upon, from their clients, involving lower quantities.  Should orders suddenly become unexpectedly large, and not according to pre advised quantities, then sub contractors will be deployed that are qualified to support the production and complete the orders.  They can be used for stitching uppers or print labels etc.  The quality control will not be affected negatively since the subcontractors are at arm’s length distance and situations like these are not unusual.  HIMAX and its subcontractors have great experience for this.


Since China will be the country of manufacturing, there is only one major issue that affects Lead Times, and that is the CLNY (Chinese Lunar New Year) Clients need to be aware of the situations that occur prior to this holiday and after this holiday. 
The period before the CLNY is characterized by mass movement of traveling people from all corners of China.  Workers leave the factory about 10-14 days before the New Year in order not to get stranded in the overly congested transportation systems.  From a planning standpoint, it is wise to make sure that production and orders that are to be delivered, shall have deadlines about three weeks before the actual CLNY day.
The period after the CLNY has a tendency to be not so chaotic since traveling people leave their homes to go back to work on different occasions.  Nevertheless, from a planning standpoint, it is wise to calculate with a 3 week stand-still after the CLNY day.  In conclusion it means that manufacturing facilities in China will be semi operational 2 weeks before and 2 weeks after the CLNY.  They will be fully operational  3 weeks before and 3 weeks after the CLNY day.  They will also be totally closed for at least one week in the middle of the CLNY.  The timing of the CLNY differs, but it is usually within Mid January to the first week of February. This can be easily found out on Google or similar.

As for ordering, it is advisable to place orders well in advance of CLNY. Then production materials can be ordered, stocked in warehouse and worked on three weeks after the CLNY.  If no orders have been placed before the holiday, there will be waiting times of up to a month before material arrives.
Other than the CLNY, lead times are safe to control and monitor.  HIMAX has, together with its subcontractor a production capacity of appx 120,000 prs /day,  producing technical footwear like Safety footwear and Technical, Waterproof Outdoor hiking boots. This makes HIMAX unique since 90% of other single manufacturer makes no possible to give such a capabiity of production output.  
From the day order is given to the day the container can be loaded, the normal lead time is 90 - 100 days.

Internationally accepted environmental agreements between shipping lines have slowed down the speed of Container vessels from 4 weeks to 6 weeks (while some lines try to reach 5 weeks transportation) . 
Add 3 days of customs clearance and another 7 days of inland transportation to the Leidos Supply Ltd Door and we have approximately 7½ weeks of transportation.
It is always advisable to add extra space in the planning for the unknown.  If the manufacturer has order in hands, and confirmation samples are clear, then the clock starts ticking according to above schedule.  If the order is unclear, uncertain, or becomes changed and altered after placement, then of course it will affect the time schedule.   A pre-planned order in its correct quantity is of course the best order to place and will enjoy the full benefits of all the production planning that has taken place before the order is placed.
Should the order become much larger than anticipated, then that will be solved with the deployment of subcontractors as described in the Risk Management section.

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