Sb: LO and Big layoffs LO5531
In response to my comments questioning Goldratt's conjecture, and giving
examples from apparel retailing Johanna raises a number of relevant things
that Bean could do to change its market standing.
We are, in fact, pursuing all of those options with one degree of
enthusiasm or another, plus a raft of other alternatives as well.
However, that is not Goldratt's conjecture. In this mature and highly
competitive industry, Bean can only grow at the expense of other
companies. Goldratt seems to hypothesize that all companies can grow at
once. I do not understand how that can be.
I think there are a number of weaknesses to his hypothesis as I have heard
them expressed here. I have not read the book, I am only responding to
what I read on this forum.
The idea that energy is infinite is irrelevant. There is a fixed amount
of energy that is economically available TODAY. Therefore, the only way
for me to grow my business is to either do it at the expense of another
company, or wait until more energy becomes available, and hope my ideas
for its use result in me getting some of it. Waiting is not realistic for
many corporations.
Energy is not the only variable. The market is critical, and the market
for apparel is clearly limited. Sure, one can invent new products, and
from time to time that happens. But generally today, the new products
replace or supplant old ones, they do not increase the market size. Polar
fleece, for example, dramatically reduced sweater purchasing. Some
exceptions occur. Book packs and Goretex increased market size. Others,
however, do not. Light loft, viewed as an inexpensive down substitute,
did not increase market size, it just supplanted down in many products.
Finally, the market for apparel is limited by available cash and credit.
Thus, in the last few years, home computer purchasing has taken about $10
billion out of the available cash for apparel, and apparel has, as a
result, grown at a slower pace.
As if that is not bad enough, forget retailing for a minute, and think
about the company that sews garments. The American consumer says they
prefer to buy American, but they do not follow through. Invariably, they
buy the best available in their price range, and these days, those goods
come from off-shore. American garment makers can eithe r close their
domestic plants and move off-shore (the ultimate downsizing), or they can
go out of business. They cannot pay Americans a living wage in this
country and simultaneously compete with foreign-made goods because foreign
wages are lower. Garment manufacturing is manually-intensive because the
garment is not 'stiff'. Automation is very difficult.
In the last 15 years, packs, sleeping bags, tents, footwear, have all
moved largely off-shore. In the next 15 years knits and woven shirts,
pants, and eventually, outerwear, will move off-shore. Most products are
in that transition now.
Therefore, the garment manufacturers are faced with a bigger issue trying
to live up to Goldratt than retailers are. How are to achieve Goldratt's
gaol goal in this environment?
-- Rol Fessenden LL Bean 76234.3636@compuserve.com
Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>