Alibaba's secret three-year experiment to reinvent the factory

Beijing

AFTER helping more than a million brick-and-mortar Chinese retailers modernise their operations, Alibaba Group Holding has now set its sights on a new target: the country's outdated factories.

China's largest corporation unveiled in September its first smart factory, a secret experiment that Alibaba's been conducting for three years on the outskirts of its hometown of Hangzhou.

The three-storey facility, Xunxi, is the company's attempt at using its consumer data and technologies to help the multi-trillion-dollar manufacturing arena improve efficiency and meet rising consumer expectations.

Alibaba's path to smart manufacturing starts with garments, a market worth 2.2 trillion yuan (S$449 billion) in China last year, based on Euromonitor International's estimates.

Alibaba has said that one in four clothes purchases in the country was shipped via its e-commerce platforms, granting it access to an ocean of data that it is now deploying to assist domestic garment makers in design and production planning.

It is also centralising the material procurement process to help reduce costs. Artificial Intelligence (AI), robotic arms, as well as many other in-house technologies have also been use at the Xunxi factory prototype.

It usually takes months for apparel companies to bring a new design from the runway to stores, but Alibaba claims it is able to cut order lead times by 75 per cent with its solutions. This would address the growing demand for instant gratification among China's Gen-Z consumers.

For instance, with the help of AI, designers can review simulated rendering effects on so-called digital fabrics on their computer screens, rather than going through a time-consuming process to dye the fabric.

Garment workers at the factory have high-tech assistants, such as AI-enabled cutting machines, that help fine-tune their work.

Once a step has been completed, the item will be transferred to the next work station via a conveyor belt. Since the entire workflow is recorded digitally, factory management can track the progress remotely on computers or through their mobile phones.

The data and technology deployed at the Xunxi factory mean merchants, which typically need at least 90 days to get their goods ready for the storefront, can decide what items to make and the scale of the production over the course of two weeks, reducing the need to accumulate inventory.

Its ultimate goal, Alibaba said, is to become a one-stop production solution provider for garment merchants on its Taobao and Tmall marketplaces. BLOOMBERG