Crisis in the 21st Century Garment Industry

Two men are on a dungeon wall, chained, with their
arms extended and legs spread apart, totally immobilized.
One turns his head to the other and says,“Now here is my plan.”

Old New Yorker Charles Addams cartoon

This book is all about strategies – not a good way to begin a book for people in the garment industry.

We in the garment industry — both the factory suppliers and the importer/retailer buyers — none of us like strategies. We are very good at tactics. We are masters at dealing with crisis. But long-term strategies are simply not our thing. At best, strategic thinking in our industry is a last resort. At worst, it occurs only afterwards.

We all had ten years to create viable strategies to meet the challenges of the quota phase-out. We all knew the actual date that quotas would disappear on December 31, 2004. We all knew that the end of quota would bring the greatest change in the history of the global garment industry. Yet on January 1, 2005, we were all taken by surprise, unprepared.

Talk to the average garment industry professional about strategies and the immediate comment will be, “Are you crazy? Who has time for strategies? For me, long term is the end of the season.”

To any non-garmento who has inadvertently picked up to this book, let me immediately say, the professional has a point. When garment people say fashion is seasonal, they mean seasonal! The garment industry operates with its own unique calendar and it’s got about eight seasons. Count them – we have Fall I, Fall II, Holiday, Resort, Spring I, Spring II, Summer and Transitional.

What is even worse is that those worried about seasons are already behind the times. We now live in a new world (in fact it’s about a decade old). It’s a world without seasons — just ongoing continuous change.

We in the garment industry live in an extremely fast moving world, where long term is short term and where short term is immediate. It is all about NOW. And in the NOW, there is no time for strategies, only tactics. And, therein lies the problem.

Tactics provide short-term incremental change. Strategies provide something new. There is a difference between faster production or higher productivity and speed-to-market, just as there is a difference between reduced prices (whether FOB, DDP, wholesale or retail) and lower costs. Faster production and reduced prices are the result of applying successful tactics. Speed-to-market and lower costs are strategic.

This concentration on the short term traps us in the world of competition, where local factories vie against other local factories for increased orders, and where regional and national retailers vie against other regional and national retailers for a greater share of the consumer market. The world of competition is a game of known players who operate within fixed rules. The winning factory is the one which offers acceptable quality and reliable delivery with the lowest FOB price. The winning store is the one which offers the best style, best merchandising and best marketing with the lowest prices. The world of competition is a world where everyone tries to provide more of the same with the ultimate winner being the one who provides the most of the same.

In tactics we seek to move forward, by improving what we do and how we do it. In strategy we start with a goal — what do we want to achieve. From there we move backwards — by determining the steps needed to reach that goal and then by taking those steps.

As you will learn in this book, speed-to-market has nothing to do with moving into faster or higher productivity, and lower prices actually have little to do with reducing costs. At the present time, there are approximately 250,000 garment export factories operating in 192 countries and yet we are competing with the guy down the block. That just doesn’t make sense.

Imagine the following scenario. You have a T-shirt factory in Honduras. One day your customer shows up and says, “Sorry, I am moving my work to Ho Chi Minh City where the factory has offered me a better deal.”

Why is my customer leaving? What is this better deal? Who is this factory? Where the hell is Ho Chi Minh City?

Chances are the factory in Vietnam is not offering something better. What they are offering is something different. If you had a strategy then perhaps the other guy in Vietnam would be asking those same questions. Why is my customer leaving? What is this better deal? Who is this factory? Where the hell is San Pedro Sula (which is in Honduras but could be just about anywhere in the world where there are garment factories)?

Now imagine this. You are a giant retail operation in San Francisco. One day you look around and notice that your customer — the end consumer — is leaving and he or she says, “Sorry, I am moving my custom to these Spanish people who have offered me a better deal.”

Ask yourself the same questions as the guy in Honduras. Who are these Spaniards? From what I can see, their merchandising is nothing great. They have no marketing at all. Their prices are certainly not cheap.

Again this is not a case of something better. It is about something different. This is all about strategy. Tactics is about competition — winning the game against your competitors. Strategy is about excellence. And, if excellence is a game, there is only one player ­— you.

The great Brand name importers and retailers past and present did not compete. Each supplied something new. More than the companies, our industry was built by people, each with a very special strategic sense: Strauss, Lazarus, Schwartz, Fisher, Ortenberg, Walton, Pinault, Arnault, Ortega, Green. These are but a few of the people that built the industry.

The names on the factory side are less well known. However, as the supply side consolidates and the $100 million regional factories expand into billion dollar transnational suppliers, their names will also become more familiar. As you would imagine, many are Asian: Lee, Yang, Sung, Fung, Fang, Sinivasan. The new up-and-coming names are more global: Arias, Omar. These are the legends of our industry. They come from different countries, different cultures, different classes, but they all share a common characteristic – a compulsion to achieve excellence.

This is a book about achieving excellence in the 21st century garment industry.

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