Jinjian Business Strategy Jinjian Garment Term Paper

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There is no forecasting system in place to understand customers' requirements well ahead of time; from the case study it appears the orders are fought for in bidding wars between factories with price and availability being the two factors the majority of factory general managers rely on to win business.

The factory's short-term focus of just completing one order after another forces employees to also be very short-term in their work ethic as well; each order is a battle between employees and the managers of the factories. This dynamic appears to play out across the entire industry.

Basing compensation purely on piecework as a measure of productivity will nearly always lead to work slowdowns by workers to force up the rate per piecework, especially when the order is large and has a short deadline. Workers see these orders as an opportunity to earn more money.

The workers are actually running the factory right now to their benefit, despite any illusions Mr. Lou Baijin has of being in control. They are dictating when the order gets done to extract higher wages from Mr. Lou Baijin.

Cost structures are out of alignment to a significant degree when 60% of the cost of an item is labor; this introduces a very high level of variable cost to each item making gross margins and profitability nearly impossible to predict reliably.

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Opportunities:

Develop a consortium of manufacturing companies to spread the risks of unpredictable demands and often unpredictable costs. In constructing this consortium, Mr. Lou Baijin could recommend that the group of companies begin to define supply chain participation standards including cost of the materials and develop standards for supplier performance. The consortium to also assist each other in developing more evenly distributed production levels.

Much higher levels of productivity are possible if Mr. Lou Baijin chooses to use operations research to analyze the workflow processes in his factory and develop a series of "specialization hubs" that specialize in one specific step of the Cutting, Manufacturing & Trimming (CMT). Using operations research methods, Mr. Lou Baijin needs to trim as much wasted time and materials as possible from each step in the CMT process.

With long-term stability and retirement being the major objective of the workers who often save up to a decades' worth of wages, Mr. Lou Baijin needs to consider having a compensation plan that pays a minimum wage level and then pays bonuses on top of the baseline salary to reward exceptional performance. Trimming back the 250 workers he has to the top 20%, or 50, and keeping them on.....

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