In just a little over two years, high-tech clothing startup Ministry of Supply grew from a single prototype to over 10,000 customers. By integrating the latest textile manufacturing and fabric advances into their products, Ministry of Supply pioneered the “Performance Professional” category of men’s dress wear. Although customers loved the products, to the tune of $429,276 and $204,601 on Kickstarter, Ministry of Supply quickly confronted the daunting challenge of scaling up their Supply Chain to deliver all of those cutting-edge garments.
So how does a new retail startup scale from one customer to over 10,000?
Co-founder and President Aman Advani spearheaded the step-by-step development of the Supply Chain at Ministry of Supply and summarizes the evolution into four distinct phases:
Let’s walk through these stages chronologically and highlight the key decision points.
Phase 1: Idea (Fall 2011)
Your first prototype is relatively easy. It’s just you, your co-founders, some fabric, and a sewing machine. Everything is manual at this stage. Fulfillment and delivery are non-existent because you are also your first customer.
While much is to be learned about the product at this stage, nothing resembling a proper Supply Chain has yet to emerge.
Aman believes that for Ministry of Supply, “the goal of this phase was to truly understand the customer – his needs, and how his body acts or reacts in every situations, so when we build our product – we’re building it for a purpose.”
Phase 2: Concept (Winter 2011 – Spring 2012)
After initial product validation with a single prototype, the next step is to prepare a short alpha production run. By sewing the product in a commercial environment and forcing friends and family to be your wear-testers, you can work out product kinks with minimal investment.
In the case of Ministry of Supply, Aman and his team took a trip to New York City’s fashion district. They searched through a series of small shops to find the fabrics, buttons, labels, thread and other dress shirt essentials they would need (a typical men’s dress shirt has about 15 components). With all the components in-hand, they dropped everything off at a local NYC Sample Shop to cut and sew small batches of 2-100 dress shirts.
Once the garments were complete, the Ministry of Supply team drove back to New York City to pick them up. Each item was then manually packaged and delivered to its intended customer from their small office space in Boston. In this phase, Ministry of Supply iterated rapidly on their product, revisiting the Sample Shop in NYC on 10 occasions to pick up new, revised batches of product.
The outsourcing of the cut and sew operation was the first in a series of moves by Ministry of Supply to outsource non-core tasks so that they could spend greater energy on tasks which improved and differentiated their products.
During the course of the concept phase, Ministry of Supply focused on generating and testing the advanced manufacturing techniques they would require. Because of their use of advanced materials (e.g. stretch panels) and assembly techniques (e.g. seamless knitting), Ministry of Supply had to tackle a number of feasibility questions before advancing past this phase.
Phase 3: Project (Summer 2012 – Winter 2012)
Aman believes that the transition from Phase 2 to Phase 3 is where you “truly introduce your product to the world”. The summer of 2012 did not disappoint. When the Kickstarter campaign launched by Ministry of Supply exceeded target fundraising by 14x, Aman realized the Supply Chain would need to quickly evolve.
Looking at the massive set of pre-orders, Aman questioned, “where do we want to have an impact?” At this point, with over 1,000 customers and only 4 employees, he realized that his team could no longer meet every supplier in person and touch every finished product.
Now rather than sourcing raw materials locally from shops in New York City, a series of suppliers throughout the US and Asia were brought on-board to supply the dress shirt components. While the need to build relationships with disparate suppliers added a new layer of complexity to the production process, the additional volume and reach allowed Ministry of Supply to enhance their use of advanced materials. Specifically, Ministry of Supply took advantage of the opportunity to customize yarns, fabrications, and textile properties to ensure they aligned with product needs.
With the raw materials secured, Aman then located a mid-size manufacturer in Los Angeles that could handle the volume and the unique space-age materials. Suppliers shipped components directly to the manufacturer, who then performed the cut, sew, and assembly operations before shipping via UPS to Ministry of Supply’s new fulfillment partner.
At this stage, Ministry of Supply made the decision to outsource fulfillment to Quiet Logisitics in Devens, Massachusetts. Aman estimated that Quiet’s fulfillment costs were on-par with in-house fulfillment but wanted to free up the founding team to once again focus their time on the product. Although the rest of the supply chain has since evolved from this phase, Quiet Logistics has been able to grow with Ministry of Supply and remains a partner today.
Phase 4: Company (Spring 2013 – Spring 2014)
Having survived their first Kickstarter campaign and their first Holiday peak season, Ministry of Supply retrenched in the Spring of 2013 and started looking for new approaches to Supply Chain management to eliminate the pain points of the previous season.
Inspiration struck when a Board Member who was Patagonia’s former Head of Research and Development stated, “you have to buy finished goods.” This idea completely changed Ministry of Supply’s approach to sourcing and manufacturing. The company had previously bought dress shirt components piecemeal from suppliers and then had manufacturers assemble everything into finished goods.
By using this new approach, Ministry of Supply put the onus on manufacturers to source and manage individual components, taking ownership only once the product was complete. Now, Ministry of Supply could place a single Purchase Order for each manufacturing run. Not only did this drastically simplify headaches with suppliers, but it also allowed for much more favorable payment terms.
In the process of scaling to 10,000 customers, Ministry of Supply also outgrew the capacity of their Los Angeles manufacturer. Although Ministry of Supply maintained connections with their Los Angeles partner for short-run prototypes, the increased volume and greater demand consistency finally made it economical to outsource globally. During this 4th phase, Ministry of Supply developed partnerships with two strong manufacturers in Asia that could handle their new ordering model as well as their innovative product needs.
Now with solid supply chain infrastructure and relationships in place, Ministry of Supply went about building out their product line to include new items like the Atlas dress socks, designed to absorb odor and sweat by turning coffee grounds into a filter for your foot.
The last new challenge for Aman and his team was to figure out how to move products from Asia to Quiet Logistics in Massachusetts for fulfillment. Aman settled on a strategy the employs a mixture of 50% ocean freight and 50% air freight, using this shipment lever to mitigate the inherent volatility in the demand patterns of a young company.
Phase 5: Bricks and Mortar?
Ministry of Supply knows that it is hard to convey the differentiating touch and feel features of their products through a computer screen. To combat this difficulty, Ministry of Supply is moving in the opposite direction of many retailers today. They are currently evaluating brick and mortar possibilities for the upcoming year. To date, they have already experimented with retail store fronts in Boston’s Leather District and have operated a pop-up shop in New York City.
Needless to say, adding a new distribution channel with significant volume would require a new supply chain strategy. However, given the ability of Ministry of Supply to adapt and grow their supply chain thus far, don’t expect this challenge to hold them back for very long!