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An Industry for All Seasons

Once fabric and basic design have been settled on, adjustments can still be made to the quantity of items produced and shipped, according to demand for different sizes, colors, and decoration. Through a technique we call “staged manufacturing,” which is cost-effective for high-margin trend items, early orders — before the market has spoken — are kept to as little as 15 percent of anticipated sales. The remaining capacity is reserved and then deployed to reflect consumer tastes and patterns recorded at the point of sale and elsewhere. One apparel company that used this technique for its line of women’s jeans was able to capture a sales increase of 15 to 20 percent that would otherwise have been lost to out-of-stocks on popular size and wash combinations.

But none of this is possible without the cooperation of the manufacturers themselves. Long-term partnerships that ensure manufacturers high capacity-utilization rates and steady work for their most skilled workers make them more willing to negotiate lower unit prices. The close relationships that result from long-term partnerships also tend to produce goods of more consistent quality. Manufacturers that enjoy this status may even decide to pass along possible improvements in product design, such as elimination of unnecessary stitching.

The different streams of the clothing business, with their varying needs in terms of time and costs, have their counterparts in numerous other industries. Take, for instance, book publishing: Some publishers stay afloat on the strength of their backlists — they keep cloth-covered editions of perennials like The Sun Also Rises and The Great Gatsby in print and in stock. Other publishers excel at producing, in a matter of weeks, cheap paperback accounts of cataclysmic news events. But the publishers that can do both, and almost everything in between, will be the strongest. As will the apparel retailers and the other members of their supply chain that respond to the pressures of the moment while still serving the tried and true.

Author Profiles:

Doug Hardman ([email protected]) is a vice president in Booz Allen Hamilton’s Chicago office. He specializes in operations strategy, organization productivity, and supply chain management for consumer products and retail companies.

Simon Harper ([email protected]) is a principal in Booz Allen’s London office. He advises clients in the retail, consumer, and telecommunications industries on operations strategy, procurement, and supply chain transformation.

Ashok Notaney ([email protected]) is a senior associate with Booz Allen in San Francisco. He focuses on operations and supply chain strategy for retail and consumer products companies. 
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  1. Frederick H. Abernathy, John T. Dunlop, Janice H. Hammond, and David Weil, A Stitch in Time: Lean Retailing and the Transformation of Manufacturing — Lessons from the Apparel and Textile Industries (Oxford University Press, 1999): Analysis of the effects of information technology on the apparel industry’s supply chain. Click here.
  2. Diane Cardwell, “City Hopes to Allow More Offices in Garment Center,” New York Times, February 15, 2007: News story on the vestigial status of garment manufacturing in Manhattan’s garment center and efforts to rezone it. (Subscription required.)Click here.
  3. Doug Hardman, Simon Harper, and Ashok Notaney, “Keeping Inventory — and Profits — Off the Discount Rack: Merchandise Strategies to Improve Apparel Margins,” Booz Allen Hamilton white paper, January 2007: The piece on which this article is based goes into more detail for industry leaders. PDF download.
  4. Caroline Rennolds Milbank, New York Fashion: The Evolution of American Style (Harry N. Abrams, 1989): A series of profiles of American fashion designers by decade. Click here.
  5. Roger D. Waldinger, Through the Eye of the Needle: Immigrants and Enterprise in New York’s Garment Trades (New York University Press, 1986): Study of the reciprocal relationship between immigration and entrepreneurship. Click here.
  6. Zara Web site: The home page of the Spanish retailer. Click here.
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