Isegoria

3M has begun untangling the “hairballs” in its supply chain:

3M Co.’s Command picture-hanging hooks, made of plastic and strips of sticky foam, don’t look complicated. Until a couple of years ago, however, the Command production process meandered more than 1,300 miles through four factories in four states.

3M’s recently retired chief executive officer, George Buckley, branded such convoluted production trails as “hairballs.” The 110-year-old conglomerate is still trying to untangle them to wring costs out of one of the world’s most complex manufacturing enterprises.

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The goal is to reduce cycle times — the period needed to go from ordering raw materials to delivering finished goods — by 25%.

Before the war on hairballs, the production process for Command hooks began at a 3M plant in Springfield, Mo., which made the adhesives. Those adhesives were shipped about 550 miles to a 3M plant in Hartford City, Ind., where they were applied to polyethylene foam.

The foam was shipped 600 miles to a contractor’s plant near Minneapolis, where the product was imprinted with the 3M logo and sliced into needed sizes. Then the product was trucked about 200 miles to central Wisconsin, where another contractor bundled adhesive foam with plastic hooks and put the product into blister packaging.

About two years ago, 3M consolidated these steps at its plant in Hutchinson, Minn., one of the super hubs, where Scotch tape, Nexcare bandages, furnace filters and other items are made.

That plant creates finished Command products for the Americas while sending giant rolls of unfinished sticky foam to Singapore and Poland, where they are tailored for Asian and European markets. The cycle time for making Command has dropped to 35 days from 100, Mr. Welsh says.

3M’s Littmann stethoscopes used to be made in steps involving 14 outside contractors and three 3M plants. Now all processes are being brought into a plant in Columbia, Mo. The cycle time will fall to 50 days from 165, Mr. Welsh promises.

Hairballs mean more inventory costs because at each geographically separate production stage a buffer stock of unfinished items is kept to cope with any disruptions in the flow from another plant. Holding that inventory is expensive in terms of space and cash sunk into materials waiting to become merchandise.

Why did 3M let some processes get so complicated? Part of it, says Mr. Welsh, is the company’s risk-averse culture. An old saying at 3M is “make a little, sell a little.” In other words, don’t buy a lot of new machinery and set up plants until a product has proved itself in the market.

So 3M product developers would look around for available machines and expertise even if it was hundreds of miles away. That meant 3M could keep machinery running round the clock more often, gaining efficiency. But it also meant more costs for shipping and longer production cycles. Now 3M’s goal is to ramp up production much faster when it has a hit product and avoid “disjointed supply chains,” Mr. Welsh says.

Americans no longer dominate the Olympics, but the top three decathletes are all Americans — apparently because of a little decision by Visa years ago:

For nearly a decade, the credit-card giant Visa provided funding for the U.S. decathlon team. But in a demonstration of how far a modest amount can go, that funding ended nearly 13 years ago and never added up to a fortune. “It really was almost a rounding error in our budget,” said John Bennett, a retired Visa marketing executive who has been hailed as “the Godfather” of American decathlon.

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But this decline [after Bruce Jenner's 1976 win] bothered many in track circles, particularly Fred Samara, a former Olympic decathlete and the men’s track-and-field coach at Princeton. Along with fellow decathlete coach Harry Marra, Samara began knocking on corporate doors in search of funding. “We beat the bushes,” said Samara. “I mean, it was a long succession of pitches that didn’t go anywhere” — until they approached Visa. As an international Olympic sponsor, Visa was already spending $40 million on the Games. But Bennett, its marketing honcho, was intrigued. “I said, ‘Well, what do you need?’” Bennett recalled.

They created the USA-Visa Decathlon team, granting membership to the top-10 finishers at the annual national championships. Each athlete would receive a monthly stipend ranging from roughly $300 to $900, and the entire team would convene twice a year for national training camps, where they would receive top level-coaching. The entire program would cost just $200,000 per year.

Launched in 1990, the team recorded progress in 1992, when Dave Johnson secured America’s first decathlon medal in 16 years by taking a bronze. Four years later, Dan O’Brien broke a 20-year gold drought by finishing first at the Atlanta Games. America hasn’t gone without a decathlon medal since.

The Visa program ended in 2000, not long after Bennett retired. But its influence remains evident. Clay, the defending Olympic champion, attended Visa’s developmental programs as a youngster. At 32, Clay is hoping to become the first decathlete to win medals at three Olympic Games. “I would love to own that piece of history,” he said.

Eaton is coached by Marra, the cofounder of the Visa team. A three-time NCAA champion at the University of Oregon, Eaton is hoping at age 24 to win a spot at his first Olympics. And Hardee, who has posted two of the top three scores in the world since the Beijing Games, is coached by Mario Sategna, who competed as a member of the Visa team. Hardee, 28, was holding down fourth place in Beijing until he bonked the pole vault.

At the University of Arkansas, meanwhile, is a young hotshot named Gunnar Nixon — a freshman who holds the national high-school decathlon record. His coach studied under Kip Janvrin, who once starred on the Visa team. Marra said he considers Nixon to be a “third generation” product of the Visa program. “It’s heartwarming to see what we started still going forward,” said Marra.

Salvatore Ferragamo first made his name by developing comfortable, attractive, period-appropriate cowboy boots for Hollywood:

“The West would have been conquered earlier if they had had boots like these,” said director Cecil B. DeMille.

Then he developed the arch:

He enrolled at the University of Southern California, in Los Angeles, to study anatomy.

There, Ferragamo tested his theories about weight distribution and the human skeleton. And he realized that he, like everyone else, was making shoes wrong. By measuring the foot while flat, they were creating shoes that supported the ball and the heel only. But human feet, when they are wearing shoes, need arch support. Ferragamo began building it into his shoes, and suddenly his customers began telling him he made them the most comfortable shoes they’d ever worn.

After establishing a successful shoe shop in Los Angeles, he went back to Italy:

Over the years, to increase his inventory, he had begun to sell some machine-made footwear — made on his own arch-friendly lasts — but had never been satisfied with the quality of the shoes. He began to wonder why the factory model couldn’t be applied to handmade shoes. In Italy, where labor was cheaper than in America and shoemaking a more widespread artisanal craft, he could hire other cobblers to work for him, creating an assembly line on which every stage of manufacture would be touched by human hands.

Italian shoemakers weren’t won over easily, however. Ferragamo went first to Naples, where the cobblers laughed at his proposal. He tried Rome, Milan, Turin, Venice and Padua with no luck. Finally, he settled in Florence, all but bribing shoemakers to work for him by offering the highest wages around. With 60 men in his employ, Salvatore designed an 18-shoe collection. Then, after sailing back to New York, he invited the city’s top department-store buyers to his room at the Roosevelt Hotel to see his new shoes.

George Miller of the I. Miller department store was first to arrive. “You have nothing, nothing!” he proclaimed. “Go back to Hollywood.”

Ferragamo then called Manuel Gerton of Saks Fifth Avenue and braced himself.

Gerton was in a rush, but Ferragamo could see that his eyes were alight. “You have done something new, Salvatore,” he said. “You keep these shoes away from everyone. I want them.”

And so Ferragamos became the first Italian shoes ever to be exported and sold internationally.

The Great Depression and sanctions imposed on Italy almost killed his business. Then he developed the wedge.

How can a middle-brow company like Amazon become a credible source of fashion rather than merely apparel? Virginia Postrel offers a few suggestions:

Emphasize that you are providing a large market, rather than a mass market.

Mass markets spread the fixed cost of producing the same good over a lot of different buyers. They tend toward homogeneity and one-size-fits-all products. Large markets simply have a lot of people in them. A large population can transform a formerly unprofitable niche into a profitable market. The bigger the market, the more varied the goods. That’s why you find more variety in New York than in Kansas City.

The big advantage an online retailer like Amazon offers a fashion house is the chance to bring together all the potential customers scattered outside the largest cities. At the pricey end, at least, Amazon is not looking for a mass market. It is creating a large one — making room for many more niche brands and potentially for a given brand’s full line of styles. Success doesn’t depend on dumbing down fashion. And selection, not low prices, is the killer app.

Don’t be Macy’s when you can be Bloomingdale’s.

Macy’s Inc. owns both department stores, but Bloomingdale’s Inc. carries more expensive, exclusive fashion brands. Amazon’s primary site competes with middle-market Macy’s. It needs a different brand to compete with Bloomingdale’s. That could be MyHabit, its existing upscale flash-sale site, or it could be something new.

The 1972 Chouinard catalog shaped the sport of climbing and changed the business of selling climbing equipment. Yvon Chouinard had taught himself how to blacksmith, and his pitons were the best in the business — until he decided that pitons were destroying the rock faces he loved, and he issued his “clean climbing” manifesto, which launched a whole new product line.

He and his wife own the entirety of his company, Patagonia, which brought in $414 million in sales last year — very little of it from climbing equipment:

The evolution of Patagonia into a clothing company began in the 1970s, when Chouinard — then a world-class mountain climber and a designer of mountaineering equipment — started importing durable rugby shirts and corduroy knickers for his climber pals to wear. Soon enough, Patagonia was designing its own line of clothes. Soon after that, sales of the clothes far outstripped sales of the climbing gear. This is how Yvon Chouinard became an accidental apparel mogul. This truly hit home when fashion models in New York City started wearing Patagonia fleece vests. He had no idea why, and didn’t really care. But he realized his life had changed.

Most corporate social responsibility (CSR) initiatives may do good, but few play to a company’s strengths:

Chouinard got his books in order. He vowed to run the company debt-free, which he now does. Then he looked at everything Patagonia made, shipped or processed, and resolved to do it all more responsibly. He changed materials, switching in 1996 from conventional to organic cotton — despite the fact that it initially tripled his supply costs — because it was less harmful to the environment. He created fleece jackets made entirely from recycled soda bottles. He vowed to create products durable enough and timeless enough that people could replace them less often, reducing waste. He put “The Footprint Chronicles” up on Patagonia’s website, exhaustively cataloging the environmental damage done by his own company. He now takes responsibility for every item Patagonia has ever made — promising either to replace it if the customer is dissatisfied, repair it (for a reasonable fee), help resell it (Patagonia facilitates exchanges of used clothes on its website), or recycle it when at last it’s no longer wearable.

To be sure, these initiatives also serve as effective branding. Part of Patagonia’s appeal stems from its commitment to the environment. Consider the clever reverse psychology of its recent advertising. Last November, on Black Friday — the unofficial American holiday of consumer gluttony — Patagonia took out a full-page ad in the “New York Times” with the bold-face headline “Don’t Buy This Jacket.” Below a picture of the fleece jacket in question, the ad copy listed, in grueling detail, how much water was wasted and carbon emitted in the course of its construction.

“I’ve never seen a company tell customers to buy less of its product,” marvels Harvard Business School professor Forest Reinhardt. “It’s a fascinating initiative. Yvon has the confidence to pull it off.” In fact, Chouinard says the ad boosted Patagonia sales — though he argues it didn’t drive more overall consumption, but rather stole existing customers from his competitors.

Reinhardt co-authored a Harvard Business School case study of Patagonia in 2010. Like many of the other business-school professors I spoke with about Patagonia, he seemed genuinely impressed by Chouinard. Which is logical: In one sense, Patagonia’s current success stems from classic business-school principles. The brand has maximized what B-school types refer to as WTP, or willingness to pay. Patagonia’s perceived quality and do-gooder aura convince customers that its goods are worth a higher price.

It’s not just the marketplace Chouinard is affecting — it’s the workplace. His flex-time policies allow workers to come and go whenever they want — say, when waves are high at the nearby surf point — as long as deadlines are met. There’s a yoga room available any time of day (I walked in on the head menswear designer meditating there at around 11 a.m. on a Tuesday.) At the prodding of Chouinard’s wife, Malinda, Patagonia was one of the first companies in California to provide on-site, subsidized day care. Even the chief bean counter, COO and CFO Rose Marcario, seems spiritually fulfilled. In previous jobs at other companies, she says, “I might have looked for ways to defer taxes in the Cayman Islands. Here, we are proud to pay our fair share of taxes. It’s a different philosophy. My life is more integrated with my work because I’m trying to stay true to the same values in both.”

Skeptics argue that this kind of feel-good stuff could never work at a giant, publicly listed corporation, or at one that doesn’t charge eye-popping prices for its gourmet gear. But when Chouinard counseled Walmart on sustainability, the retail behemoth found it actually saved money through environmental initiatives, like reducing its packaging and water consumption. “We are very focused on lowering prices for our customers,” says Fox. “There were some investments we needed to make at the beginning, but the returns were quick enough that it came back in a reasonable time frame.”

Similarly, Levi Strauss — with more than 10 times the annual revenue of Patagonia — has embraced Chouinard’s efforts to set data-driven benchmarks for improving apparel makers’ environmental practices. Levi’s has spent the past 18 months redesigning processes to save 45 million gallons of water, along with the energy that would have heated that water. This is not simply altruism. While the company won’t share specific numbers, “the business savings costs are real,” says Michael Kobori, Levi’s V.P. of social and environmental sustainability.

It says something about the way that people and organizations think that bottom-line oriented firms won’t make money-saving “green” changes in order to save money but only as a side-effect of being “forced” to examine their environmental impact.