Questioning the relentless shift to offshore manufacturing
Supply chain management
The last twenty years has seen a relentless shift to offshore manufacturing as retailers chase ever-lower labor costs. The results of this strategy can now be evaluated and we propose that some adjustments are in order. We analyze the case of a North American apparel manufacturer that has successfully emerged from a period of major change with a strong and strategic position in the apparel supply chain. Griffin Manufacturing, Inc., is a U.S. garment contactor manufacturing athletic wear for
... r national and international brands. For a decade, the strategic goal of one of Griffin's major customers has been to eliminate U.S. factories, and to replace Griffin with offshore manufacturing. While 80% of the manufacturing has indeed moved offshore, a critical mass remains. This case study documents Griffin's survival through evolution in capabilities, technology, and especially attitude. The Griffin case study suggests that keeping a portion of the manufacturing onshore at an agile, quick response factory is cost effective: It increases sales and improves margins. However, the new relationship between the parties is much more complex and requires commitment on both sides. The Offshore Crisis at Griffin In 1990, foreseeing competitive offshore pressures, Griffin changed its mission to the production of athletic apparel, and working with a small, innovative company, Griffin produced some of the first-ever jogging bras. Griffin invested in new sewing machines and by 1993 was producing 20,000 garments per week. Since then, Griffin has steadily grown 20% annually to a current volume of $20 million. A dramatic change occurred in 1993 when our small, innovative customer was taken over by a large, multinational corporation that immediately attempted to move the manufacturing to Honduras. We can now look back on several cycles in which new managers visited Griffin with the goal of eliminating the last "irritating amount" of domestic manufacturing. After these meetings orders would abruptly fall to zero, but within weeks would start to flow again. The usual explanation was that some "unexpected event" had occurred which necessitated "a few" quick response orders. At first, the sewing that moved offshore was of basic styles. "Basics" are the ongoing styles in a few colors that sell all year round. It made sense to move these offshore because with just a few styles, the training machinery requirements were less. Also, what remained were fashion styles, and the response time for these was much shorter. Twice a year the design department created entirely new lines that involved managing colors through lab dips, constructing prototypes, making pattern changes to ensure correct fit, and producing sales samples. Griffin's ability to respond quickly to these issues was an essential asset in meeting design department schedules. In addition, assigning fashion production to Griffin allowed the design department even more time for their activities.