The Information-Integrated Channel: A Study of the U.S. Apparel Industry in Transition

Abstract

A Study of the U.S. Apparel Industry in Transition THE POPULAR PROGNOSIS for the U.S. apparel industry is bleak. Citing increased import penetration in many product segments and the concurrent erosion of domestic employment, many analysts regard apparel manufacturing in the United States as a dying industry. I The Department of Labor concurs, projecting a significant reduction in employment in the domestic apparel industry during the next decade. Under its most optimistic scenario, the department predicts employment will drop from a 1990 level of 839,000 to 649,000 in 2005; under its most Funding for this paper was provided by the Alfred P. Sloan Foundation. We are grateful to Tim Bresnahan, Richard Caves, Peter Doeringer, Oliver Hart, Peter Pashigian, and Peter Reiss for their comments on earlier drafts of this paper. We thank Katy George and Igor Choodnovskiy for their superb research assistance. 1. For example, Alan Blinder writes: "to remain a rich, high-wage nation, we must keep changing our industrial structure. We must let the routine industries that can thrive with unskilled labor migrate to poorer countries in Asia, Latin America, and even Eastern Europe, and we must concentrate instead on the complex, progressive tasks that require highly skilled workers.. .. This approach. .. will surely be bad news for both labor and capital in certain industries-as it already has been for, say, textiles and steel." Blinder (1992, pp. 13-14). 175 176 Brookings Papers: Microeconomics 1995 pessimistic scenario, employment is projected to fall to 479,000 in 2005.2 The arguments underlying this prognosis generally proceed in the following manner: apparel is an industry driven by price-based competition among generally small manufacturing establishments.' U.S. wage levels greatly exceed those of competitors in countries such as the People's Republic of China and Mexico. Because domestic wages are too high relative to the labor productivity of U.S. apparel workers, U.S. manufacturers operate at a significant cost and therefore competitive disadvantage. As a result, U.S.-based apparel manufacturers face a bleak future. This view oversimplifies the nature of competition in the apparel industry. Competitive dynamics in many segments of the industry are being transformed by technological innovations that allow the low-cost collection, processing, and dissemination of consumer sales data. These innovations lay the foundation for a new set of retailing strategies directed at reducing a retailer's exposure to market demand risk by using daily, point-of-sale information to adjust the supply of products offered to consumers at retail outlets to match actual levels of market demand. The new retailing strategies, in turn, lead to apparel supplier investments in the information technologies required to respond to realtime order requests. In the short term these developments may merely shift inventory costs backward to apparel manufacturers. In the long run, however, adoption of information-based and related practices by retail supplier...

Capacity Choice and Allocation: Strategic Behavior and Supply Chain Performance

“…More information must be better, so of course the retailers should tell the truth. This persuasive intuition is the cornerstone of many supply chain management innovations: JIT; Efficient Consumer Response (Gary 1993); Quick Response (Abernathy et al 1995); Accurate Response (Fisher et al 1994, Fisher andRaman 1996). However, in addition to not maximizing retailer profits, truth-inducing mechanisms fail to maximize the supplier's profits.…”

The US fashion industry: A supply chain review

“…Men's and children's merchandise usually fall into the basic category, while women's merchandise dominates seasonal and fashion categories, showing the importance of fashion and resulting frequent design changes in the women's market. A similar categorization is made in Abernathy et al (1995).…”

“…An efficient layout of the patterns on fabric is crucial in reducing the wasted material. CAD systems may be used for pattern layout and be further integrated to computer-aided cutting systems (Abernathy et al, 1995). The later stages of apparel manufacturing are quite labor intensive as they are not appropriate for any kind of automation.…”

“…In order to move the apparel faster through the successive sewing operations, some apparel producers began to use unit production systems, which reduce the buffer sizes between the operations. Another way is to use modular assembly systems, which allow a small group of sewing operators to assemble the entire garment (Abernathy et al, 1995;Blackburn, 1991).…”

“…On the manufacturing side, flexible, short-run and high-speed processing, automated material handling and modular production concepts are commonly practiced by Quick Response manufacturers (Hunter, 1990). Abernathy et al (1995) reports that a Quick Response retailer should be able meet the following standards:…”