The global supply chain is pushing into three straight years of turmoil, with ongoing cost headwinds, the pandemic, and geo-political disruptions. Few suppliers have successfully navigated these unprecedented times.
OrthoLite is an exception.
As the largest manufacturer and supplier of sustainable comfort insole technologies, OrthoLite has built on our market leading position with two back-to-back, record-setting years. Despite the challenging market conditions, we have reliably provided over 400 brand partners with uninterrupted, on-time deliveries. This year alone, OrthoLite insole solutions will be found in over 600 million pairs of shoes.
We attribute this unmatched level of reliability to our vertically integrated structure. We own and manage every aspect of our manufacturing, which enables agility, responsiveness, and more accurate capacity predictions.
What follows is an interview with CB Tuite, Chief Sales Officer at OrthoLite, in which he explains how OrthoLite’s vertical integration benefits footwear brands and T1 factories.
Q: Would you please give us a snapshot of OrthoLite’s vertically-integrated organization?
CB Tuite: OrthoLite owns and operates numerous chemical system-houses and manufacturing facilities across six countries and three continents. By owning the means of production, we can ensure premium quality, unmatched consistency, speed to market, and best practices in sustainability.
Q: Okay. So OrthoLite has effectively set up its own supply chain. But why is it more advantageous than the rest of the footwear supply chain?
CB Tuite: In times when the global supply chain is functioning smoothly, our structure provides an incredible efficiency and operational advantage. When the supply chain is disrupted, the advantage of vertical integration is amplified.
This is when our operational redundancies combined with the strategically positioned locations of OrthoLite’s global factories come into full focus and benefit. Our manufacturing footprint and local-for-local structure enables the leading footwear brands to mitigate risk and avoid unnecessary and costly disruptions to their production schedules – like those from COVID or other geo-political headwinds.
Q: What do you mean when you say that OrthoLite’s factories are strategically located?
CB Tuite: Many of the Tier 1 factory partners to the leading footwear brands are generally located in China, Vietnam, Indonesia, Europe, India, and Brazil. By design, we set up operations conveniently located to service these local factory partners. OrthoLite’s global footprint also enables brands the flexibility to allocate or even reallocate their production needs based on current supply chain requirements.
While the footwear brands nominate key components or their branded components, like OrthoLite, it’s their Tier 1 factory partners that are placing the actual production orders directly to each of the OrthoLite regional production facilities. As the locally nominated supplier, OrthoLite works collaboratively with each of these factories or factory groups on their specific production planning and overall delivery schedules.
Q: You’ve referred to vertical integration as “local-for-local.” Is it because OrthoLite has its T2 factories local to footwear’s biggest T1 factories all over the world?
CB Tuite: Exactly. OrthoLite is a local provider with global reach and scale.
This “local-for-local” operational structure allows us the ability to be responsive, and to work closely with the local factory groups on managing our capacity requirements. Speed to market is also critically important, and we are uniquely positioned to service these factories as a reliable, local, and worry free supply partner.
Planning capacity effectively in cooperation with both the brand and their T1 factory partners has also resulted in positive capacity utilization rates. This basically means that we are able to effectively pre-plan our raw material requirements as well as our production schedules to ensure on-time deliveries. And we have the ability to ramp up volumes as needed to support the continued growth of our brand partners.
Q: It seems this operational structure may give OrthoLite higher levels of quality control, too.
CB Tuite: Absolutely. Owning the means of production provides OrthoLite a unique leadership position. From our proprietary chemistry to owning our production facilities, we have full control to ensure premium quality, world-class service, and on-time deliveries across multiple regions.
Q: To your last point about on-time deliveries across multiple regions: The broad disruptions of these past few years have seemed to “normalize” supply chain uncertainty. Why put the resources toward this if a higher level of uncertainty is tolerated?
CB Tuite: It might be tolerated, but we prefer to deliver on our promises and to exceed expectations. What we provide is risk mitigation by reducing the number of uncertainties for our brand partners. They can trust OrthoLite to successfully manage capacities and to successfully navigate any turbulent headwinds to meet both their needs and the needs of their T1 factory partners. Our vertical integration allows us to minimize the risks and deliver quality on time.
Q: How does this affect costs?
CB Tuite: OrthoLite has been working hard to continually contain costs through a variety of initiatives and investments, most notably investments into automation and other operational efficiencies. The results are better resiliency and price stability for our brand partners.
Delivering value and minimizing the impact of cost increases is critically important. We must deliver consistency and the best overall value – from price, to quality, to on-time delivery, to customer service, to innovation, to sustainability, to our brand partners and T1s. Our Operational Excellence Team is continually making improvements and evaluating this ever-changing landscape to effectively manage our financial health as well as to provide pricing stability to our brand partners.
Q: Especially with the introduction of OrthoLite Cirql, sustainability has been a guiding force for OrthoLite. How does vertical integration correspond to your sustainability values and efforts?
CB Tuite: Operating our own factories means we can implement best practices in sustainability. OrthoLite’s factories have earned scores above the 90th percentile from the HIGG Index. We’ve activated a Zero Waste initiative and operational efficiencies, added solar panels, instituted waste water treatment solutions, added more automation, and even built our own recycling facilities to utilize our post production waste.
I mentioned risk mitigation from an operational standpoint. We also assess risk mitigation on the macro-level, around our environmental impact. We’re investing in innovation, and in more sustainable products and processes. We’re investing in new solutions to reduce, and then reuse, our post production waste. This all feeds a coordinated effort to support our people, the planet, and our partners.
You mentioned Cirql. When OrthoLite Cirql enters into initial development with brand partners in 2023, we’ll be positioned to actively help footwear brands elevate their sustainability efforts through cleaner manufacturing and a game-changing soil-to-soil, circular product solution.
Q: Are the benefits of vertical integration scalable, specifically for your partners?
CB Tuite: Yes, we’ve successfully expanded our capacities and overall global footprint over the last 25 years. The essence of OrthoLite’s local-for-local, vertical integration is the ability to be the most reliable and consistent supplier in footwear for an expanding network. Being the best partner to footwear brands and T1 factories is our top priority, and we will continue to invest in our global business strategy to ensure we succeed in that mission.
OrthoLite is planning for another record year in 2023. Current projections from brand partners support volume assumptions across all categories.