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July 13th, 2001

Thanks to the 1995 North American Free Trade Agreement (NAFTA), lots of US underwear manufacturers decided to move production to Latin America.

Higher logistical costs more than offset the savings in production costs. Shipping costs were higher, and communications lines were extended and unreliable.

Several US companies have filed for bankruptcy protection, mainly as a result of these operational problems.  They include Fruit of the Loom, as well as Ithaca Industries and Beltex.

Not all underwear companies have suffered though.  Sara Lee outsourced, while Stone Apparel spent $1million on a system that wires its retail customers through to factories in the Caribbean. Stone Apparel reports sales up 40% to $60million, partly attributed to this system.

Source: Darwin, July 2001

Value Nets

David Bovet & Joe Martha, Value Nets: Breaking the Supply Chain to Unlock Hidden Profits. John Wiley, 2000.

veryard projects > component-based business > supply chain > value nets

In the last few years, Mercer Management Consulting has produced some excellent business books. I particularly like this one on the Supply Chain, for the clear and persuasive way it joins strategic issues with operational issues - usually addressed separately (and disconnectedly) by different levels of management.

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This page last updated on October 19th, 2001
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