Mgt300 Management | The Case Assessment Answers

Vertical Integration 

Vertical Integration is one of the most significant and useful strategies which are used by Johnstons of Elgin in its business operations. Currently, Johnstons of Elgin is the last left vertically integrated firm in the United Kingdom. Vertical Integration is a process in which supply chain and logistics process is owned by that firm only. It is the strategy under supply chain management under which a firm controls and regulates more than one step of supply chain and logistics system (Christopher, 2016). This is the processes that are used by businesses to turn its raw materials into finished products. Generally, every member of supply chain system produces different product and these products focus on meeting the common needs of customers. The companies use vertical integration as their management style which brings a large supply chain not only under single ownership but also in one company (Hingley, 2011).

About Johnstons of Elgin, it is true to state that it is a single vertically integrated mill which is left in Scotland, UK. It means that the company does everything from receipt of fibre to its conversion into final garment. Different processes like dyeing, spinning, knitting, weaving and milling, all occurs on a single site. By using this type of management strategy, the organization is able to improve its production and delivery processes. It assisted the organization to decline the costs by removing the price markups related to purchasing goods from third party. By becoming vertically integrated, Johnstons of Elgin is able to control the quality of fibers and garments. It allowed the mill to put effective control on its distribution and sales of garments and knitwear to the final customers (Mangan, Lalwani and Lalwani, 2016).

The implementation of vertical integration technique allowed Johnstons of Elgin to combine all the divisions to diversify and offer different products to its targeted customers. For several years of its establishment, it had been engaged in only the menswear business using suiting fabrics. Over the time, it started to produce women wear with much fashion content. It has shifted the focus towards customized product base. In this way, vertical integration technique has allowed the organization to make the logistics process smoother and it has been able to become more profitable in knitting and textile industry.

Driving efficiencies and supply chain mechanism’s 

For any organization in manufacturing industry, it is very important to develop its supply chain and logistics process so that it can meet the needs and demands of its customers (Shahzadi, Amin and Chaudhary, 2013). Supply chain management is related to the effective integration of factories, suppliers, stores and warehouses so that products can be manufactured and distributed in appropriate quantities and locations at right time. Thus, the efficiency and effectiveness of supply chain and logistics is critical to make sure that production and distribution processes goes efficiently and smoothly. Driving efficiencies in company’s supply chain system assists the organization to minimize the total costs of system and meet the service requirements of customers (Hill and Fredendail, 2016).

Johnstons of Elgin believes that an efficient supply chain process plays an important role in the growth and success of its business operations. To manage its supply chain system effectively, the company has focused on driving its different efficiencies like distribution management, manufacturing approach, procurement strategy, store management, product information and inventory management. It has focused on the above processes to drive the efficiencies in supply chain and logistics processes (Rajagopal, Krishnamoorthy and Khanapuri, 2017).

Johnstons of Elgin is very much emphasized on changing needs and trends of customers. Thus, the trend data flows routinely into the database of its head office. This information is used by mill’s designers to manufacture new product lines and make the changes in current ones. The mills of this firm have standardized information about the products with common definitions, enabling the accurate and quick preparation of designs with the obvious production instructions. In addition to this, the company is engaged in driving the efficiencies by managing its fabric, materials, design specifications, trim and physical inventory (Lawton, 2017). By doing this, Johnstons of Elgin is able to design the woollens with the available stock of needed raw materials.

After reading the given case study, it can be stated that Johnstons of Elgin considers that design is a significant basis for differentiation. By using this, the company can differentiate its products from other low cost competitors. The company has implemented number of innovations in its manufacturing process such as late-dyeing of yarn and purchase of new tools and equipment. Thus, the organization is driving its efficiencies so that it can develop its supply chain management process effectively (Myerson, 2014).

Upstream to downstream production and finishing processes

There are various companies which use upstream to downstream production processes to make its logistics processes better (Rushton, Croucher and Baker, 2014). Under this, upstream production refers to the input of materials required for manufacturing of products whereas downstream is the opposite side where goods are produced and supplied. Upstream activities are the activities which are confined in the side of suppliers in the supply chain management process. It deals with purchases, suppliers and production lines. In the production system of Johnstons of Elgin, upstream activities include sourcing of raw materials and delivery of the raw materials to its mills. At this company, the most significant raw material is cashmere that is used to produce woollens (Forslund, 2012). This part of production process includes identifying the appropriate suppliers and sourcing raw materials like fibres, dyes etc. It does not practice anything with the materials like processing. It assists Johnstons of Elgin to maintain the large stock of raw materials and work-in-process for smooth and effective production of final garments.

In addition to this, the organization uses downstream activities of production that includes processing of fibres and cashmere gathered in upstream phase into final product. Downstream covers the selling side consisting of after sales, negotiation and recycling. At this stage, Johnstons of Elgin converts its raw materials into garments and sell them to retail stores and final customers. This activity has direct contact with the customers via garments and woollens. It helps in maintaining the minimized investment in the inventories in order to maximize the profitability of operations.

After completing production process, it is very important for a textile company to go ahead with finishing process. At Johnstons of Elgin, it includes the activities which transform the knitted cloth into usable garment. Moreover, it includes the process performed after dyeing the fabric and yarn to enhance look of finished garment. This company only uses natural and softest Scottish water to scour the fabric, ensuring that it is smoothly restored to its super-soft and natural state (Johnstons of Elgin, 2018). By using scouring, it eliminates the oil that is applied to safeguard the fibre during the production processes, when milling shrinks and stiffens the fabric. After doing wet finishing, this fabric is dried in tentering machine by passing over the rollers. There are some other finishing processes which are carried out like raising, cropping and ironing before final inspection. Thus, the company is using effective processes which assist it to define the quality and luxury of garments (Dale, Bamford and Wiele, 2016).

Agile and lean logistics strategies 

Apart from above management strategies, Johnstons of Elgin Organization adopts agile and lean logistics strategies. Lean supply chain is the strategy that reduces the costs and lowers the wastage as much as possible. This strategy is very important for the firms with the higher volumes of buying orders since the costs and waste can collect quickly. Apart from this, agile supply chain is developed to be very flexible for the objective to rapidly adapt with changing circumstances (Cooper, 2017). This strategy is important for the firms which want to become adaptable to forecasted changes in customer demands and technology. As per the case study, currently Johnstons of Elgin is using agile strategy of supply chain that enables the organization to meet the changing demands of customers. The company is working on increasing its production capacity considering the demands of customers towards woollens (Martínez-Jurado and Moyano-Fuentes, 2014). It produces unique items on demand for same unit cost as bulk-order production by using unmade technology. The company believes to become flexible, responsive and agile. In the future, the company can use the lean supply chain strategy to deal with the global competition from low cost brands (Christopher, Harrison and van Hoek, 2016). Johnstons need to consider that it is essential to use the combination of both lean and agile supply chain strategies.

Thus, it can be stated that Johnstons of Elgin is using effective management and supply chain management processes which allowed it to gain top position in textile industry and stay on its way to become more profitable.

Conclusion 

Thus, in the limelight of above mentioned events, the fact should be noted that the report discusses about the strategies initiated by the company Johnstons of Elgin to manage the supply chain issues present in the environment. The above mentioned analysis has gained information about the issues related to the company from the given case study and evaluated measures to make the logistics and supply chain activities more efficient. Activities like upstream to downstream production process, vertical integration etc. are used by the business to grow and succeed in the market. The report adequately identified the issues related to the case and management strategies to help the company achieve their position in the market.

Recommendations 

Below mentioned are some of the recommendations given to the company Johnstons of Elgin to maintain their logistics and supply chain activities in the market.

Standardization of Product:

It is important for the organization to standardize the quality of the product that they use in their business. In the current era, the company is using products and services that are traditional and old fashioned in nature. This aspect is reducing the efficiency of the company to grow. Thus, the organization should standardize the product and innovate them so as to attain increment in sales.
Technology Advancement: 

Highly efficient technological resources such as ERP system should be used in the business so as to help the organization compete in the market. This will make the products and services highly competitive in the target market.
Just in Time: 

The company should make use of just in time process so as to eliminate the baggage of dead stock available with them. The textile and knitting industry is very fluctuating as it keeps on changing its trend. So, with the use of this strategy the company can analyze the adequate demand of the product and produce them accordingly without creating dead stock.

References 

Chopra, S. and Meindl, P., 2007, Supply chain management: Strategy, Planning and Operation. Upper saddle River, New Jessey: Pearson.

Christopher, M., 2016. Logistics & supply chain management. UK: Pearson.

Christopher, M., Harrison, A. and van Hoek, R., 2016. Creating the agile supply chain: issues and challenges. In Developments in logistics and supply chain management (pp. 61-68). Palgrave Macmillan, London.

Cooper, R., 2017. Supply chain development for the lean enterprise: interorganizational cost management. UK: Routledge.

Dale, B., Bamford, D. and Wiele, T., 2016, Managing Quality: An Essential Guide and Resource Gateway. John Wiley & Sons, Ltd, pp. 21-26.

Fernie, J. and Sparks, L., 2014, Logistics and retail management: emerging issues and new challenges in the retail supply chain. UK: Kogan page publishers.

Forslund, H., 2012, Performance management in supply chains: logistics service providers' perspective", International Journal of Physical Distribution & Logistics Management, 42 (3), 296-311.

Hill, E. and Fredendail, L.D., 2016, Basics of Supply Chain Management, US: CRC Press.

Hingley, M.K., Lindgreen, A., Grant, D.B., and Kane, C., 2011, Using fourth-party logistics management to improve horizontal collaboration among grocery retailers, Supply Chain Management: An International Journal, Vol. 16, No. 5, pp. 316-327.

Johnstons of Elgin, 2018, Finishing, Available from https://www.johnstonsofelgin.com/international/about-johnstons-of-elgin/the-craftsmanship-story-johnstons-of-elgin/finishing/ [13 August 2018].

Johnstons of Elgin, 2018, Our story, Available from https://www.johnstonsofelgin.com/international/about-johnstons-of-elgin/our-story-johnstons-of-elgin/ [13 August 2018].

Lawton, J., 2017, Think Efficiency Is Enough In The New Age Of Manufacturing? Think Again, Available from https://www.forbes.com/sites/jimlawton/2017/07/30/think-efficiency-is-enough-in-the-new-age-of-manufacturing-think-again/#216ed2f14f50 [13 August 2018].

Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain management. US: John Wiley & Sons.

Martínez-Jurado, P.J. and Moyano-Fuentes, J., 2014. Lean management, supply chain management and sustainability: a literature review. Journal of Cleaner Production, 85, pp.134-150.

Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. UK: Cengage Learning.

Myerson, P.A., 2014, A Lean and Agile Supply Chain: Not an Option, But a Necessity, Available from https://www.inboundlogistics.com/cms/article/a-lean-and-agile-supply-chain-not-an-option-but-a-necessity/ [13 August 2018].

Rajagopal, S., Krishnamoorthy, B. and Khanapuri, V.B., 2017. Modelling linkages of logistics performance in the supply chain-A study of the Indian textile industry. SMART Journal of Business Management Studies, 13(2), pp.26-34.

Rajagopal, S., Krishnamoorthy, B. and Khanapuri, V.B., 2018. Competitive logistics capability for sustainable organisational performance: a study of the textile industry in India. International Journal of Logistics Economics and Globalisation, 7(2), pp.105-124.

Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. UK: Kogan Page Publishers.

Shahzadi, I. Amin, S. and Chaudhary, K.M., 2013, Drivers of Supply Chain Performance Enhancing Organizational Output: An Exploratory Study for Manufacturing Sector, European Journal of Business and Management, 5 (14), 53-64