Outsourcing production: Birnbaum
If I can’t convince you to manufacture domestically, you owe it to yourself to pick up a copy of Birnbaums Global Guide To Winning the Great Garment War. I thought I’d hate it but it’s a great book. Although dated, the analysis of costing the process is invaluable. His greatest lesson is that it’s a wasted exercise to chase the lowest cost production considering the variables of quotas, the nation of origin politics and general conditions including infrastructure. If anything, I think this book is more likely to convince you to produce domestically than not. Politically incorrect and humorous, the book is easier reading than you’d imagine.
While the book is dated, his monthly newsletter is not. Deprecating and laugh out loud funny, he has a unique way of stating the obvious. Some excerpts from September’s newsletter (on a discussion of buying offices) explain why the fashion industry continually manages to defeat logic (the emphasis is mine; “customer is defined as the party placing the contract):
6. Customer’s price range:
…However, it is often not just for the most obvious reason that the more expensive garment is more difficult to produce. In fact, companies specializing in higher-priced garments tend to be less professional than their lower priced counterparts. Mass-market importers provide very accurate and more detailed information to their agents. Contrast this with your average high-priced importer who provides a sample and little else, leaving the agent to fill in the missing details.
7. Quality Requirements
Unfortunately, the garment industry has two measures of quality and they are inversely related:
- Quality Standard: This relates to the operations required to produce the product. A fine man’s jacket may require four separate operations (tow by hand) to set a sleeve. The mass-produced jacket may require only one. The fine man’s jacket has a higher standard of quality.
- Quality Levels: This relates to how well each operation is performed.
Ironically, the higher the quality standard, the lower the quality level. If a woman tries on a size 34 jacket at Giorgio Armani and finds the fit not to her liking, she should try another size 34 of the same style. She will find a subtle difference in fit. The Armani jacket requires so many operations and so much handwork that no two garments are the same. The $2,500 Armani jacket would be rejected by J.C.Penney for poor quality.
11. Style Risk
Some garment types have greater risks …For example, not every garment labeled “100% cashmere” can be traced back to a Mongolian goat. The increased demand for cashmere has resulted in substantial product adulteration. Chinese garment makers have discovered that it is far easier to increase label production than goat production.
13. Customer Culture
This is the most difficult factor. The garment industry …is an ego-driven business. The person who suggested that business decision-making is based on rational self-interest has never worked in the garment industry…[T]he designer-driven customer has the greatest problems because they are the least rational. Try explaining to a designer that the larger his staff, the greater his overhead, when for him the more assistants he has, the higher his status.
In addition, he explains the reasons why you do not receive the best service. This is not because you are not a good customer (as defined as someone with large orders and pays promptly). This is because the priority has gone elsewhere. This is no different domestically or internationally; these words of wisdom apply regardless.
Albeit pricey, if you can afford to outsource production, Birnbaum’s newsletter is a must read. $400 per year in PDF format and loaded with a dizzying array of charts and analysis.