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.

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7 comments

  1. Carmel Dolcine says:

    I was once an advocate of overseas outsourcing, but I’ve seen firsthand how difficult and incredibly complicated it can be.

    For software engineering or tech consulting, overseas outsourcing may work reasonably well. I know of a number of engineers who often use programmers in India and Malaysia without incident.

    However, nealry all of my fashion designer friends (20+ former and current schoolmates) have had one problem or another outsourcing production.

    I think the real problem is that prior to the industrial revolution, the artisan was both designer and manufacturer. Kind of like how design-build architects are responsible for managing and performing the tasks of design and construction of buildings.

    I think many designers could eventually improve their operations qualitatively by returning in some way, shape, or form to the artisan model and promote more in-house production. Or at the very least, designers may seek out local artisans and manufacturers with shared values to improve their control over the production process.

  2. timo says:

    It’s interesting that quality level is equated with uniformity of end result (regarding the Armani example). I don’t know if I’m the only one who delights in the slight variations one comes across even in mass-produced clothing; it’s a subtle reminder that most clothes are still put together by a person (operating a machine) somewhere. Workmanship of risk, I believe, is what David Pye called it all those years ago.

    As for fictitious labelling, it’s not a problem limited to China. I can’t speak for the US, but in Australia I’ve seen all manner of tales on labels. In my first job many years ago I had to unpick the ‘Made in China’ labels from box-fulls of ‘cashmere’ jumpers that had just arrived, and replace them with ‘Made in Australia’. The designer’s argument was that because the jumpers were overdyed here, they qualified for the latter label. I’ve also seen stretch denim with ‘100% cotton’ labels, suiting with a Lurex stripe with ‘100% pure new wool’ (imagine the sheep!) and so it goes.

    Thanks, Kathleen, for the excellent site!

  3. Leah Barrett says:

    I worked for 6 yrs in India and 3 in HongKong with exporters and buying offices, for high end designers and mass producers. Then 3 yrs with Canadian design houses. I was struck by how true the observations of “quality” standards were, in India and Hongkong we could have simply not got away with any inconsistencies in the product we shipped, and faced severe financial risk from taking any chances.
    Working on my own design label now I feel like I have come full circle.. I have to face the challenges that Designers face when dealing with overseas contractors. And, I am surprised and relieved when my retail clients accept the variances in colour, measurement etc when brought to their attention before shipping.
    My 2 cents..Just like a business has to be “export ready” (well established local sales), it must also be import ready (well established production process) before sourcing from overseas.
    I found the best way for me, at my current stage, is to source components and finish product here, so I’m able to modify any disasters if necessary. The components (fabric, trim) are the main cost so I’m still getting some of the price advantages of working overseas.
    And, use the experience of immigrants who have worked as sample makers, export merchandisers, production managers on both sides if you can.

  4. Lisa Bloodgood says:

    Doesn’t this go with the chapter/section(s) in Kathleen’s book about quality?

    I didn’t know stuff as high end as Armani was actually so poorly made. That’s too bad because sometimes the designer stuff has the best looking/feeling and most interesting fabric.

  5. Kiran Bindra says:

    We have a company where we do design and manufacturing of collections for private labels and individual designers. My business partner and I read Birnbaum’s book about 4 years ago as we were struggling with overseas development in Hong Kong and India. Having spent months overseas training the staff at our manufacturing partners’ facilities, and still facing quality, design and delivery issues for our clients – we decided to shift gears and find solution domestically.

    The financial models discussed in the book are very much in line with the true cost analysis in production. We applied the same model to our clients’ business models and the results were astounding! Just as Birnbaum describes, the true cost is very close if not cheaper in doing production domestically vs. overseas (with certain high volume and delivery schedule exceptions).

    Then we faced the problem of finding a one-stop-shop for apparel production in the US. Instead of getting discouraged, we launched our own operation in Dallas, TX. It has been truly rewarding to have customers approach us and create true ‘Made In USA’ collections!

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