Turning Risk into Reward

A.T. Kearney's Perspective on Textile and Clothing Quota Elimination

The elimination of textile and clothing quotas in January 2005 forever changes how manufacturers and retailers conduct their businesses. As industrywide wholesale prices drop, we still do not know what the effect on retail pricing will be. Will Wal-Mart set pricing precedent by passing the cost savings along to consumers? How should retailers and manufacturers manage import volumes this year and next? How should sourcing and supply chain strategies change? This paper discusses the potential impact of quota elimination on retailers and manufacturers. It outlines the changes taking place, explains the advantages and drawbacks, offers a perspective on country choices for outsourcing, discusses ideas for dealing with the “Wal-Mart factor,”and presents a quota elimination transition plan.