In the global garment industry, all private sector strategies have but a single goal: To Increase Profit.
There are three interrelated means to reach this goal
Operational; e.g., Reduce costs
Marketing; e.g., Increase sales
Mixed; e.g., Increase margins
The range of possible strategies is to a large degree based on two factors:
a. What the supplier can bring to the table; i.e., core competency;
b. What the customer needs; i.e., core competency deficits.
However, these by themselves are insufficient to determine the best (or even a workable) strategy. We are still left with an almost infinite number of possibilities.
At the end of the day, the optimal strategy is based not only on what can be done but equally importantly, what cannot be done. Every strategic development project begins with client-imposed restrictions each of which limits the number of possible strategies.
Restrictions can be actual, perceived, or self imposed.
A factory client wishes to increase profits by changing his operation to provide speed-to-market, but has a serious restriction:
Actual Restriction: We have a logistics problem. We are located on an island in the middle of the Indian Ocean. This is a fact which must be recognized and accepted.
Perceived Restriction: We are located on an island in the middle of the Indian Ocean and therefore cannot achieve speed to market. This is not a fact, just a perception. Logistics is a cost factor. You can move product from anywhere to anywhere in less than 30 hours, if you are willing to pay for air freight. If your product is a low value-added basic commodity which cannot carry the cost of airfreight, the restriction becomes actual. On the other hand if your product is a high value-added fashion item, airfreight becomes viable and the restriction disappears.
In this situation, successful strategies are limited to those involving higher value added products
A factory client wishes to increase profit margins by changing his operation to produce higher value-added fashion products, but has a serious restriction:
Actual Restriction: Our country faces a nomadic-worker problem. In many countries, typically leave their jobs after six months to work in another factory. This is a fact not a perception.
Perceived Restriction: Our country faces a nomadic-worker problem and therefore we cannot provide them with the advanced training necessary to move to higher value added products. This is not a fact just a perception. True, it is not cost effective to train workers if they will leave immediately training is complete. However, it is equally true that workers will stay with their current employers if the company makes the necessary effort to keep them. Developing worker loyalty and motivation begins when management changes their attitude; no longer defining their workers as disposable tools and redefining them as capital assets.
Self-imposed restriction: Our country faces a nomadic-worker problem and therefore we cannot provide them with the advanced training necessary to move to higher value added products. Workers are uneducated and generally stupid. We cannot stop them from leaving. Investing in worker training will simply provide our competitors with better workers. If management insists on treating their workers as disposable tools — not caring if the workers leave — they should not be surprised when the workers do leave.
In this situation, there are no successful strategies. The factory cannot move up to higher value added products without worker training and no-worker-training is a self-imposed restriction
As you can see from the example above, not all restrictions are rational.
As a general rule, the less rational the restriction, the harder it is to overcome.
Actual restrictions are the easiest. Here the client recognizes a problem and is paying the consultant to overcome that problem.
Perceived restrictions are more complex. Here the consultant must first convince the client that the restriction is indeed perceived and not factual; e.g., geography in itself does not mandate longer lead times. Once the client recognizes that the restriction is perceived — not actual — the consultant can then work to create a viable solution.
Self-imposed restrictions. Are usually beyond solution.
Most are irrational: The factory owner who believes that workers are a lower order of human being — stupid, coarse and incapable of learning — is trapped in the 18th century. No argument will convince him otherwise. Since the supplier cannot move from low value-added commodities to high value-added fashion without long term training, there is no possible strategy.
Many self-imposed restrictions are ego driven:
My brand-importing company requires 52 full time designers — a common claim among companies led by designers, who mistake design is important for design is everything.
My Asian buying office requires 10 expatriate German managers — a common claim among some European companies where management is convinced that their nationals alone have a world monopoly on technical skills.
Some few are totally rational: Your strategy must not reduce the number of local employees. This is a special case where the client understands that this restriction will limit the possible strategies and will in any event prove costly, but is willing to pay the price.
Rational, irrational or totally insane, these restrictions are real. In real life, it is these limitations which usually determines the right strategy, if one exists.