Professional guide

Production in the future

What will be the model for production in the future? How will sourcing move globally? Here are some predictions and projects that point the way.

As a consequence of carbon credits, we may very well see new order in global business, mirroring the World Trade Organization's global quotas which were dismantled in 2005. The President of the Chinese company Li & Fung, Bruce Rockowitz, believes this will drive production back to local markets. At the same time, the party we've experienced the last 15 years where China has exported deflation, is about to end. Rockowitz predicts that in ten years the number of consumers in the world will have doubled because of the growing economies in China, Russia, India and Brazil - with the result that the number of consumers will outpace production capacity. This will result in higher prices and higher wages, which will fuel consumption even more.

Rockowitz believes we are about to come full circle: The supply chain has regained some of the flexibility when the factory was just a short drive from the store and retail was a regional business. The speed of production is no longer an issue, the issue remaining is the speed of decisions.

Factory for the future
German mail-order giant Otto Group and the NGO Grameen Trust have combined to set up a ‘modern social business’ in Bangladesh, for the production of textiles – the ‘Factory of the Future’. The partners have formed a joint venture to set up the Grameen Otto Textile Company and say their venture is the first ‘social business’ worldwide to work on a profit-oriented basis. Otto says two types of ‘social business’are recognised by the international development community.

A Type 1 social business generates additional social value by the manufacture of very inexpensive but highquality products, or the supply of services such as food, housing space, health provision or education. It does not set out to make a profit, but helps poor people by giving them access to these products. A Type 2 social business, on the other hand, is profit-oriented, but instead of paying dividends to investors, it uses the profit to improve the living conditions of the employees, their families and communities. Grameen Otto is claimed to be the first Type 2 social business worldwide.

The ‘Factory of the Future’ will be set up in Dhaka and will produce clothing for export, under socially and ecologically sustainable conditions. The ecologically optimised, CO2-neutral building will be fitted with the most up-to-date insulation, energy-saving lighting and optimised air-conditioning systems, paying special attention to the use of renewable energies. Initially, between 500 and 700 people will be employed. The Otto Group is giving an interest-free loan to cover the investment costs of setting up and running the factory. The loan will be paid back over a period of 10 to 15 years from the profits of the Grameen Otto Textile Company. The profits will not be distributed as dividends to shareholders or investors, but will serve to expand and modernise the company and to pursue social objectives locally. (Sources: Impact/WWD)