Research on the Radical Innovation of C2M Business Model—A Case Study on Redcollar MTM Men’s Suits in China

For recently years, with the deep integration of informatization and industrialization, traditional manufacturing industries in China have been investigating for the road of transformation and upgrading. A Chinese garment enterprise, named Redcollar Group of China, has successfully transformed and upgraded to high-tech industry with high value added from labor-intensive industry. It is very important to explore the reason, method and business model it has created so as to provide some beneficial advice to China’s traditional manufactures. In this case study, indirect research, field research, comparison research and customers’ experience methods have been used. As a result, it is found that the enterprise has successfully created a C2M business mode of men's custom suits and has succeeded in producing customization suits with large-scale production efficiency. Redcollar is the first factory in the world which uses industrialization measures to produce thoroughly customized men’s suits. The Redcollar’s C2M model is the revolutionary and disruptive radical innovation which breaks through the traditional suits making, the traditional clothing manufacturing model, the value perception of traditional manufacturing industry and the existing business regulations.


Introduction
With the deep integration of informatization and industrialization, 3D print technology industrialization of the United States and intelligent manufacturing integrated with internet (Industry 4.0) of Germany have all become the two nations' strategies respectively, and they try to achieve the personalized customization of large-scale industrial production.So does China.
In 2014, there was a serious overcapacity and only about 5% net profit in China's domestic apparel industry, reported by China Commerce of Textiles and Garments.While at the same time, there was a Chinese private garment enterprise, Redcollar Group of China in Qingdao City, also known as Redcollar, whose production, sale and profit all had increased by 150%, but its inventory kept zero(X.Y. Zhang, S. Zhang, & C.Liu, 2015).
How did Redcollar achieve it?It is worth to study.
Redcollar was set up in 1995.It has more than 3000 employees with a registered capital of US$16 million.It has been awarded China's Famous Brand, the Most Competitive Brand in China, etc.It had been a cooperative partner of China's committee in the 28th Athens Olympic Games and a cooperative partner of China's delegation in the Asian Games from 2005 to 2008.It is the dressing civilization that one should pursuit quality, taste, personality in color, size, style and matching so that one's clothes match his own identity.As a pioneer of China's clothing brands, Redcollar has set up a business strategy of developing high-end men's personalized Made-to-Measure (MTM) suit since 2003.It took 10 years to realize personalized men's suit customization by way of massive production for which Redcollar had invested US$41.27 million in its 3000 workers' factory laboratory."Making Customization No Longer Luxury" as its mission, elegance and quality as its principles (Yu, 2014), Redcollar has become the first factory in the world in which all men's suits are customized completely.explains that C2M, namely "Customer to Manufactory", is a kind of direct sales which lets C drive M to complete transactions, cancels intermediate links and realizes interconnection between consumers and manufacturers.
For more details about Redcollar's C2M business model, this case study will reveal further.

Method
According to the research theme, the following methods have been used in this study.
1) Indirect research method.In order to obtain general information about Redcollar, the authors have read nearly all the articles about Redcollar's MTM men's suit cusomization in books, journals, newspapers and magazines, etc..They also have collected broadcasts or TV shows relating to its business on TV programs, videos or on-line programs.And They have traced Redcollar's website to catch its continuous development.
2) Field research method.The authors visited Redcollar Group in Qingdao to investigate its C2M business model and get the first-hand specific data.They visited all the production lines and had a deeper interview with the CEO and senior managers.They still visited a R&D branch office and a experience store in Shanghai.They've known more about the customers' satisfaction with Redcollar.
3) Comparison research method.With the comparison of several other famous brands of traditional Chinese Men's suits customization, the outstanding advantages of Redcollar's C2M business model have been obtained.4) Customers' experience method.One author customized a set of suit to experience the C2M business model.He, together with other customers' experiences, has tested the C2M radical service innovation.

The Core Structure of Redcollar Men's Suit Customization C2M Business Model
Through a long time investigation and analyses, the simple business model of Redcollar's C2M men's suit customization is as Figure 1.Under C2M mode, Redcollar has applied creatively the 3D printing logic thinking in its production process.The whole factory is recognized as a digitized industrial 3D printer which has realized the preliminary intelligence system of R&D with sequencing, automation and marketization.It also resolved the contradiction between individuation and industrialization in men's suit customization (Wen, 2014).
Specifically, under C2M business model, the factory produces suits according to the customer's personalized orders.When customers input their shape data or specific data into Redcollar's e-commerce backup platform, and select their patterns and styles, arts and crafts from it.The intelligent CAD system will automatically compare customer's personal information with its storage data of specifications sheet and garment pieces, convert them into standard customization information and output customers' size, specification, pieces of clothing, layout, production process instructions and BOM (bill of materials) order etc.At the same time, a 3D model of customized suit is displayed on the platform website from which customers can observe carefully the suits' style, colour, design details, fabrics, etc.They can modify every detail to their satisfaction.After this, each suit's production process is split into minor production points by the intelligent production management software, and the points are distributed to every worker on the production line.For instance, workers of sewing sleeves and workers of sewing collar can receive the sleeve's and collars' design and workmanship instruction respectively.
In the production process, each working place is equipped with a tablet computer against only one production process.The entire workshop is being imagined a large industrial 3D digital printer by which each product looks like being printed out.Nearly 3000 employees work in the network nodes of the workshop.All processes are completed on the information platform.
By the end of 2014, there is 60% of Redcollar customization from the American market, 30% from the European market, the remaining 10% in China's domestic market.Since 2015, with the identity of Redcollar customization by domestic users, the domestic market is close to go halves on a fifty-fifty basis with the US and European markets (Liu & Zhang, 2015).

Creating a RCMTM Suit Customization E-Commerce Platform
Based on accumulated data and tests over the past ten years, Redcollar had completed the R&D of men's suits customization and created a RCMTM (Redcollar Made to Measure) system (You et al., 2014), also known as "Kutesmart platform" (Hu & Zhang, 2014) in 2013, of which it has a completely independent intellectual property.Pan (2014) argues that under the RCMTM system, a database of human body's sizes, the patterns, styles and sizes of men' suits has been established.Based on the mathematical model in the database, Redcollar can make its 3D CAD version according to customer's physical data, just as making construction drawings.Customers only use Redcollar's unique method of "Measuring Way without Mistakes" to collect 22 figures of their bodies' 19 positions and input the measurement data into the RCMTM platform system.Then the system will form data modeling within one minute that is exclusive to the customer's version.It will be divided into specific processes followed by electronic labels to be transferred to computer identification terminal of each workshop for processing.
It is the core problem that deals with manual modeling if industrial production meets personal needs.RCMTM platform is the key to solve it, i.e. using large data system instead of man-made version.In the workshop, the first step is the process of this system, which is known as CAD.CAD is not the initial creation by Redcollar, but the big data which lies in the processing system is.The more the capacity of the database is, the more accurate the modeling based on it is.After the input of body size data, CAD can automatically match the most appropriate version of the body.For example, according to estimates, a data change will cause 9666 data synchronous change (Zhang, 2014), such as shoulder broaden 1 cm, affecting changes to other related parts so as to ensure well fitted.In the past 10 years, Redcollar has accumulated customized version data of more than 2 million customers, including versions of type, style and process data.There are various combinations of design elements, such as collar type, sleeve type, buckle type, pocket data and clothes piece combination, etc. (Liu & Zhang, 2015).The data has been accumulated to 100 billion.Redcollar has set up a team of 100-150 technicians to use the big data to establish a mathematical model between body's figures and layout of suits through exploration and repeated experiments.The model can cover 99.9% of the individual design requirements (Wen, 2014).
In addition, customers can choose fabrics, accessories, lapels, pockets, sleeves, buttons, embroidery, etc. from the RCMTM database according to their own preferences to meet their personal needs.

Creating an
Original "Three-Points One-Line" Measurement Data Acquisition Method Redcollar creates a "Three-Points One-Line" measurement method with independent intellectual property rights, which is also known as the "Measuring Way Without Mistakes" method.With a ruler and a set of body measurement instrument called "Shoulder Slope Measuring Instrument", customers' body coordinates such as endpoints of shoulders, neck and shoulder point, the point of the seventh cervical vertebra and middle lumbar line can be found to form a three-points one-line "Coordinate Measurement Method" (X.Y. Zhang, S. Zhang, & Liu, 2015).By simple point to point measurement in terms of "Three-Points One-Line" method, 22 figures of 19 parts are collected to be matched with the database in RCMTM platform.The set of body shape data will complete all the service in whole production process.At the age of Internet, no matter where the users are, they can use the RCMTM platform to customize suits for themselves as long as they can provide the 22 data

Reconstructing the Standardized Mass Production Process of Personal Customization
If not producing customized products, works in industrial assembly line are very simple because all products are nearly the same, processes and links are easy to be standardized.But in Redcollar customization, each suit is different from others in size, fabrics, sewing thread, etc. Redcollar makes full use of the internet and cloud computing to reconstruct its production line.It took 10 years for Redcollar to reconstruct gradually its unique industrial production workshop.Firstly, it dismantles rationally garments into specific process, i.e. more than 298 procedures and 25 ironing processes required (Zhang, 2014).Secondly, it calculates the workload at each point and working hours in each process through the strict algorithm program.In the production line in Redcollar, it is the electronic tags, which standardize all the works in every detail, drive workers to work on line.The workers only carry out the instructions in electronic tags.The intelligent production management system charged by the software development group makes the production automation to the optimal ratio.
After CAD department has made the pattern for each customer, it equips an electronic identification tag, also known as an ID card, for each piece of fabrics in which the specific production process is stipulated.This information will be transmitted to the Distribution Department who will prepare the materials in accordance with the requirements of the order, then the Cutting Department who will cut fabrics.After cutting, the fabrics of different sizes, different colours with RFID(Radio Frequency Identification) electronic tags will be transferred in and between 298 processes at the top of the hanging tracks (similar to train tracks) in the workshop.Workers on the assembly line scan the tags of each piece of cloth on computer identification terminals and can read the customers' requirements for technical standards and production operation.Then they sew clothes by hand or by machine according to technical instructions for the lining, buttons, sleeve edge, etc.At the upper right corner of each worker's place, are hanging sewing threads of at least 10 colours, up to hundreds of colours to meet customers' personalized requirements.The whole assembly line runs very smoothly, there is little excess workload between the transfer links.
Redcollar RCMTM system contains more than 30 subsystems which are all driven by data.The system automatically schedules, cuts, calculates and integrates customers' patterns.A set of customer's measurement data drives all custom made and service.The data could get through, share and transfer on line without manual changeover and paper transfer.Each employee works on his end point, i.e. on line, not on position (Wen, 2014).
In Redcollar laboratory, the production process is of high standardized.The full bespoke procedure only requires 7 working days.Generally, a global customer designs, measures and orders on Redcollar's 3D online ordering system on the first day.Redcollar makes plate, drawing and cutting on the second day and makes sewing on the third and fourth day.On the fifth day, Redcollar irons and inspects the suit.Assortment, packing and storage follow on the sixth day.On the last day, suit is shipped to the customer by logistics courier service.Please see Figure 1.
Redcollar has three customized production plants of suit jacket, shirt and trousers where about 2000 to 2700 custom suits can be made each day.

Taking the Customer Service as a Center and Removing Hierarchy
To match with the radical revolutionary in commercial and manufacturing mode, Redcollar made the reverse adjustment of organizational resources by regarding the customer's demand as the centre of management, and restructured its organization based on node management (Pan,2014).
1) Implementing "Source point" theory of management According to Phoenix Qingdao (2015), "Source point" is customers' demand.As a global enterprise, facing different requirements for clothes by global customers of different nationalities, different cultures and different shapes, Redcollar customization platform provides a variety of patterns, types, technology, size templates for customers' choice.The data of patterns and processes cover almost all of the prevailing design elements, and can meet the needs of more than million trillion kinds of design portfolio.Customers can own personalized design on the Redcollar's e-commerce platform, and also can use the Redcollar's version database to match freely the type, process, style and template size for their customization.

2) Removing hierarchy
Originally, Redcollar adopted hierarchical management, but now it has established a platform management which is subject to the reconstruction of the organization by regarding the customers' service department as the centre, node management as the core.No barriers exist from one point to another.
First, Redcollar adjusted and removed the redundant departments.More than 30 original departments had been integrated into six centres for collaborative management, such as supplies chain, production, customer service, financial, information and human resources centres.At the same time, established a management model by which the customer service centre is like the nerve centre of one's body.All needs of customers have gathered to the customer service centre which mobilizes all resources and sends instructions point to point directly.Each node in the customer service centre represents Redcollar to the outsiders and customers' demands to the insiders.
The customer service centre can send orders to any positions on any departments directly.Thereby Redcollar eliminates the intermediate "wall" between the customer's requirements and the company's capacity, does take the customer as the centre.
3) Adopting node management moden The so-called node management is the point to point high efficient, flat management mode by which customer needs can be directly assigned to the staff of nodes rather than their department supervisor.In Redcollar, all works are subject to point to point.Either chairman or president rarely signs his/her name on business documents.Their positions still exit, but the functions have changed because managers do more service and support jobs, such as setting up systems and regulations, rather than management control.
The essence of Node Management mode is standardization, normalization and systematization.All the problems which once required employee's experience and ability have been dealt with by the system.The responsibilities of each position are very clear; staff can only carry them out.But the workers in each position have an obligation to find out problems and feedback them.Every word or affair, said or done by Redcollar's staff in customer service centre, is stored in the system.When workers scan the electronic tags on their computer identification terminal screen, they can see the detailed instructions clearly and just follow them.
In the past 11 years, changes in management and manufacture in Redcollar have been made simultaneously.They rely on system, not person and self-discipline.
The employees are divided into two categories, one for creation or innovation, and the other for implementation.
The R&D departments of RCMTM system belong to the former.They should use internet thinking to make things done very well and very simple.Executive people, mainly staff on the production line, just implement orders driven by data.

Establishing a C2M+O2O Direct Selling Mode of Cross-Border E-Commerce
Recollar's C2M mode omits all links between customers and the factory.It forms a closed cycle between customers and the factory from orders to the production and sales.O2O (Online to Offline) is adopted.
Online is the main form, with Offline the supplement.Online means customization by computers, mobile terminals (APP, micro shops) and other forms.Offline is the fitting in flagship store, mobile experience store, etc.

The Advantages of Redcollar's C2M Business Mode with Comparison of Traditional Custom Suits
In the traditional concepts of custom suits, customization and industrialization are usually two natural antonyms.
There are usually two modes for traditional custom suits: one is to find a favourite tailor to customize based on his years of experience, manual measurement, manual version, making work blank with cheap cloth and revisions repeated after customers' try on.This kind of customization always takes a long time, maybe 3 to 6 months and the price is very expensive.The other is to find a garment manufacturer to process a suit through setting standard numbers.In China, there are only six regular versions, i.e. 46, 48, 50, 52, 54 and 56.The manufacturer doesn't provide a special version to each customer, but adding to or subtracting from a standard one according to customer's shape.The latter is the most common form of a custom suit.In fact, it is not a real personal custom because customers do not have exclusive versions and their choices are limited.The custom efficiency is not high.For instance, a Chinese domestic small custom production line only produces five or six sets of suits a day.
Customization is the necessity for the progress of human civilization.Pan(2014) argues that the breakthrough of Redcollar customization is not only the realization of "One person One pattern, One product One style" within one minute by its digital modeling and all the details customized which allow consumers to become fashion designers, but also the achievement of mass industrial production on the production line.The quantity of customization per day has increased to nearly 3000 sets, whereas the cost is only 1.1 times of non-customized suit (Zhang, 2014).Since the C2M model has no inventory, the overall cost is actually lower than that of the non-customized suit, and therefore it is sure to have strong market competitiveness.With the comparison of usual MTM suits, Redcollar has made suits by high efficient and accurate method with competitive price.

Redcollar's Customized Suits Are Delivered in Time
All the steps of Redcollar customization have been controlled by information technology which has broken all bottlenecks in production line for men's customized suits.They include designing, placing orders, making patterns, matching arts and crafts, planning, production, storage, distribution and customer service.No matter which countries the orders come from, it only requires 7 working days to complete customization without try-on.

The High Quality of Redcollar's Customized Suits Is Guaranteed
Redcollar customization has achieved all digital transmission for custom data, designing and placing orders through internet to ensure global orders transferred accurately without time lag and errors.Each customized product has its own exclusive electronic tag.Every process, every link can be real-time monitored online to ensure that the customized clothing is precise, fit, stable in quality and accurate for repeat orders, if necessary.

The Personalized Design of Redcollar's Customized Suits Is Outstanding
With the model of Redcollar's C2M, customers can choose and design their own styles, arts and crafts, fabrics and accessories.The model ensures that customers can customize clothes with the simplest, most convenient and happiest way in the shortest possible time to meet their individual needs.

The Price Advantage of Redcollar's Customized Suits Is Obvious
The Redcollar has realized its personal customized products by mass production, improved production efficiency, reduced the production cost, shortened the delivery time, but the price of customized products is only 10% higher than that of non-customized.
China has about 1.37 billion people, of whom about 3 billion wear suits.Since the size of each individual body is different, it is obvious that the customized market potential is huge (Liu, 2014).

The Radical Innovations of Redcollar's C2M Suit Custom Business Model
According to Schumpeter's innovation theory, innovation is generally defined as the combination of production factors, mainly including five forms, namely introducing a new product, opening up a new market, finding a new source of raw materials, inventing a new production process and adopting a new enterprise organization form.
Compared with the traditional clothing production, Redcollar's C2M business model has broken through the traditional bespoke suits' patternmaking model, production process and form of business organization.It has achieved a breakthrough in the men's bespoke technology paradigm through combined innovations.It is the birth of breakthrough innovation in business model driven by the high degree integration of industrialization and information technology.The RCMTM customization platform created by Redcollar has made breakthrough of the technical paradigm of the traditional "set number" suit customization.Through data modeling, Redcollar customization can complete "One person One pattern, One product One style" in all the details to achieve a personalized custom suit.Not only can customers have their exclusive patterns, but also can design through internet and choose the details of suit styles, materials, cutting, buttons style, embroidery and even the colour of sewing thread and sewing method.
Only from New York market the quantity of customized products has reached to 400 sets per day.

The Production Process Innovation of Redcollar's C2M Mode, and the Rebuilt of Organization Based on the Center of Customer Service Department have Broken through the Traditional Clothing Manufacturing Model
Traditional suit customization, such as work uniform, is usually in the form of large orders which require mass production to produce relatively standardized products, one lot one pattern.While a specific custom suit, usually one suit one pattern, is often subject to a small amount of order which cannot adopt mass production.The biggest breakthrough of Redcollar mode is the transformation of production and organization procedure that realizes mass production of customized personal suits.On the production line of more than 298 processes and 25 ironing process are hanging pieces of suits of different patterns, fabrics, accessories, buttons and embroideries.

The "Source Point" Management Thinking of Redcollar's C2M Mode Which Transfers Product-Oriented into Consumer-Oriented Has Broken through the Value Perception of Traditional Manufacturing Industry
In traditional manufacturing industries, products are designed and manufactured according to demands of industrial market, rather than individual needs, and then sold to consumers.Many companies focus on reducing costs by improving efficiency and thereby reducing price, and also think simply that diversification is sure to make money.So they extend and control their industrial chain.
In real business world, the quantity of products produced by enterprises is hard to be in consistent with that of consumers' demand.If it is lower than consumers' needs, enterprises may reproduce; once more than consumers' needs, thus often causes product backlog.As a result, the more products are made with high efficiency, the more backlogs.In spite of unit cost reduced, total costs of products have increased because of heavy backlog.
The "Source point" management thought of Redcollar has subverted the value perception of product-oriented."Source point", which represents customers' need, is the core element and fundamental driving force that constitute the management of internet industry.All management is driven by the source point.Phoenix Qingdao(2015) reported that through integrating their value chains and creating their management mode, Redcollar has ultimately achieved "the source's demand" and has realized its vision.It has proved that, the Redcollar's mode is the innovation of management thought, a kind of brand-new management thought.The Redcollar's C2M business model has transferred large-scale manufacturing to mass customization in order to meet the needs of individual users and their best experience.The guiding ideology of "source point" is the core of the whole system

The Redcollar's C2M Model, Which Eliminates Intermediate Procedures and Reduces the Price of Its Customized Suits, Has Revolutionized the Untimely Old Business Rules
The price of the Redcollar's personalized custom suit is calculated by its production cost plus a reasonable service fee.It is only 1.1 times of the non-customized suit, but the return is at least two times.The gross profit is higher than the industry average.The reason is that in the traditional clothing manufacturing industry, manufacturers usually spend 80% or even 90% of the cost on channels, and the channel operators increase their expenditures and profit on the selling price layer by layer.Plants do not get benefits, but consumers bear high price.Under Redcollar's C2M model, directly from consumer to factory, there is no price increase in the middle channel.Consumers usually experience suits in a display store, and then collect their own shape data to customize online.
The Redcollar's C2M model has eliminated the intermediate links which once resulted in non-transparent, unreasonable and unfair elements, has created a new business philosophy.

Conclusion
Redcollar has succeeded in personal customization of men's suits by industrialization efficiency.The core value of Redcollar's C2M model is to explore a new paradigm of the deep integration of internet and industry.This new paradigm includes the Internet thinking of industrial production, the whole production process driven by data, the reconstruction of the production line, the organization of removing hierarchy, and the direct linkage of customer and manufacturer.Redcollar has realized transformation and upgrading of its traditional garment manufacturing industry by this new model, has obtained the deep integration of its real economy and virtual economy, has improved its competitiveness and vitality, and has made sustainable development.
Today is the era of consumer sovereignty with the pursuit of perfection, simple, cheap and fast.Under the background of rapid integration of informatization and industrialization, the success of Redcollar's C2M mode is helpful to explore the restructuring and upgrading of "Internet+ traditional manufacturing industry" in China and other countries or regions around the world.

Further Research
1) As for Redcollar's C2M business model, an automatical measurement method by convenient electronic equipment should be created instead of man-made.
2) Research on the application of Redcollar's C2M business model to women's custom suits should be made.
3) Research on the application of the model to the restructuring and upgrading of other traditional manufacturing industries in China should be made.
Redcollar's C2M model coincidences with China's national conditions and is of high replication and extension value and leads a large number of Qingdao local enterprises transiting to internet industry, including Haier Group, one of the biggest traditional Chinese appliances manufacturing enterprises.Haier group makes intelligent transformation or new manufacturing in Qingdao Haier drum washing machine factory and Shenyang refrigerator factory.In the central control room of the drum smart factory, Haier engineers divide the washing machine into a number of modules that users can customize them on line according to their own preferences.This can be regarded as "Redcollar mode" applied in Haier.Therefore, Redcollar mode is not limited to one garment enterprise, is not limited to one traditional garment industry, but has important value and significance of the transformation and upgrading of the Chinese traditional manufacturing industries."Internet+" represents a new economic form which will result in comprehensive changes in people's thinking mode and previous business model, so that makes market a decisive force in allocation of resources.
However, for the traditional manufacturing industry, the purpose of "Internet +" is to build internet organizations which promote enterprises and industries with internet tools so as to make them more efficient and better off customers' and users' needs.But it does not mean that "Internet +" is bound to promote the development and progress of traditional manufacturing enterprises.
Not only does a successful enterprise have the Internet thinking, but also more importantly should produce high quality products for the consumers.Without high quality products, it is impossible to retain customers, even if there is a good network marketing model, enterprises cannot succeed.
Figure 1.Redcollar's C2M business model of men's suit customization

4. 1
The Personalized Custom Made by RCMTM Platform Has Broken through the Traditional Suit "Set Number" Customization Technology Paradigm

Table 1 .
The Comparison of Redcollar's full bespoke suit and normal MTM suit