Unified Strategies: The New Strategic Paradigm in Action

The end of the FOB-only competitive era has opened the way to new, more rational strategies.  However, the 40-year reign of the marauding garmentos has left its mark.

It will take time to overcome the endemic mistrust between customers and their suppliers; as well as the even greater mistrust between the industry as a whole and rest of the world.

The problem is parallax:  Imagine you are an astronomer.  You are looking through your telescope at a specific star.  You then take your telescope, travel 500 miles and look at the same star.  You will see that the star has shifted position in the sky. In fact the star has not moved, it is you that has moved.  Astronomers define this apparent change as parallax.

What is true when we look at the stars in the universe is equally true, when we look at our relatively small global garment industry.

  • To the suppliers, customers are bunch of extortionists who care only about FOB price
  • To the academics, suppliers are a bunch of exploiters who unless policed 24 hours a day will invariably employ 10 year old children 70 hours per week in slave-labor conditions, just to earn a few extra cents profit.
  • To the customers and their factory suppliers, the academics are a bunch of ignorant ideologues whose entire knowledge of the global garment industry is limited to walking down the aisles of Saks Fifth Avenue; and who know More...

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Posted in Customer Strategies, Factory Strategies | Tagged , | Leave a comment

Benchmark Study III: India’s garment industry and the Public Welfare

Any foreign professional analyzing India’s economic, political, and social condition would probably conclude: Here is a country unable to move forward. A country given to the quick fix and political expediency rather than strategic change; where demagoguery too often trumps honest political leadership.

There can be no doubt that India faces a series of obstacles, which it seems government is unable to overcome.

Economic challenges

  • GDP growth is now 5%, the lowest increase in a decade
  • Inflation has reached 9.2%, among the highest in the world (rank 197th)
  • The budget deficit is among the highest in the world (rank 166th)
  • Government tax and other revenue totals 8.2%, perhaps the lowest in the world (rank 211st)
    • 40% of the economy operates in the grey area, paying 0 taxes
    • Foreign direct investment (FDI) is falling rapidly
    • The current account trade deficit is -$80.2 billion, among the highest in the world (rank 192nd)
    • Unemployment 9.9% (rank 107th)
    • Underdeveloped industry sector
      • 53% of labor force employed in agriculture accounting for 17% of GDP
      • 19% of labor force employed in industry accounting for 18% of GDP.
      • 65% of labor force employed in service accounting for 28% of GDP

Structural unemployment is rampant.  In an urban society, employment is cyclical, rising in good More...

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Posted in Factory Strategies, Garment Factories, Global Issues, India, Politics, Religion | 1 Comment

Benchmark Study India: Part II – Operational Problems v Structural Obstacles and Systemic Barriers

Part I presented a list of areas of performance, ranking India against its 6 major competitors:  Bangladesh, Cambodia, China, Indonesia, Turkey, Vietnam as measured by its customers and major competitor factories.

Among the most serious production related problems were the following:

Normally these would be operational problems, which can be solved by the factory.

  • Increased productivity by more worker training, which will lead to
      • Reduced Lead times
      • Greater value for price
      • Higher quality
      • Greater reliability
    • Decreased worker attrition by higher wages and greater benefits
    • Better customer service by better education for managers and merchandisers, which will lead to
      • Greater ease of doing business

However, there are exceptions where the problems are not operational but rather the result structural obstacles and/or systemic barriers. In these cases efforts on the part of management are equivalent to rearranging the deckchairs on the titanic.

I am not suggesting that more worker training, management education, higher wages, better working conditions and greater worker More...

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Posted in Articles, Garment Factories, Garment Factories, Global Garment Industry, Global Issues, India | Leave a comment

Corruption and the Garment Industry

And the winner of the 2013 Country-with-the-least-Corruption Award is CHINA.

This is something we all know, but few of us have recognized.

I bet the Chinese Government never expected to receive this honor. However, it quite true and quite deserved — if you are working in the global garment industry — which gives you an ideas of the places we go to make your T-shirts and jeans.

Transparency International lists 177 countries in their 2013 Corruption Perception Index . Theoretical top score 100 and lowest score 0. As of 2013 Denmark and New Zealand were joint 1st with scores of 91, while Afghanistan, Somalia and North Korea were joint last with scores of 8.

At the head of our Top 10 garment supplier list is China ranked 80th with a score of 40, and at the bottom lays Cambodia ranked 160th with a score of 20.

All of which leads us to an anomaly

On the one had, economists and development specialists have come to recognize that economic development is a natural process, which would take place without any outside assistance whatsoever. When an economy fails to develop, the issue, therefore; is not to determine what steps are necessary to induce development, but rather to determine the obstacles that block the natural development process and to take the necessary steps to remove the obstacles. The economists and development specialists have reached a consensus that CORRUPTION IS THE SINGLE GREATEST IMPEDIMENT TO GROWTH.

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Posted in China-Greater China | Tagged , , , , | 1 Comment