Vertical Integration
In the given case study, it can be seen that Johnstons of Elgin dates back to 1797 when Alexander Johnstons took lease for the woollen factory in Aberdeenshire Scotland. In more than two hundred years later the mill is still identified as the last remaining vertically integrated woollen mill which is able to carry out the processes from the receipt of the raw materials to the finished product in a single location. It was further seen that in the nineteenth century the company was able to develop a successful business for producing Estate Tweeds. These are considered as the derivative for the tartans. This is further identified as distinctively plaid and traditionally worn by the highlanders in the Scotland (Ocicka and Wieteska 2017).
The main interpretation of the report relates to identify the management strategies that enabled the company to continue its path to become more profitable. The report aims to discuss the different concepts of vertical integration and analyse the same in the perspective of Johnstons of Elgin. The section of the report has discussed on the factors Driving efficiencies and supply chain mechanism. This section is followed by the discourse on the employing, upstream to downstream production and finishing processes. The final aspect of the report has stated on both lean and agile logistics strategies.
Vertical integration is considered as a strategy which takes place when a company acquires a business within the same line of production. This process is conducive for the organizations in the implementation of the low-cost strategies and improve the overall efficiency. As discussed by Albalate, Bel and Richard Geddes (2017), the vertical integration in the PPP is derived from the different types of the risk factors pertaining to both construction tasks and operations task. The study shows that vertical integration among the PPP is important aspect of the efficiency gains which results in bundling derived synergies. In terms of the governmental expenditures the vertical integration has a big role in the effecting the per capita. This relates to the higher expenditures which are a result off the PPP contracts which are involved in the construction phase itself. The study has also found the net benefit to the companies for the vertical integration are seen with the initial cost, transaction cost and commercial risk. There are different investigations which has been able to suggest PPP design is pragmatic instead of a political decision (Zhou and Wan 2017).
As stated by Maleki and Cruz-Machado (2013), there is a lack of information to cover the different aspect of integrated vertical integration, Despite of such a gap in literature the study is able to suggest that the ability of the effective supply chain strategic decisions integrated with the vertical integration is based on the intricate level of the business decisions. The majority of the studies focused with the survey method to conduct the effectiveness of the vertical integration among the organization has been able to depict the significant nature of the benefits pertaining to the agent-based modelling (Crawford et al. 2018).
Driving Efficiencies in Supply Chain Mechanism
The vertical integration in Johnstons of Elgin can be traced from the evidences which are related to leasing of woollen factory at Newmill in Aberdeenshire. The company has relied its operations at the same site thereby keeping the transportation costs to a low level. In addition to this, some of the other competitive advantages gained by the company are depicted in terms of the different types of the strategies which are considered with the relying on a single mill for all the process. This includes the recept of the raw materials to the finished product in a single location. Moreover, the various type of the other initiatives taken by the company are seen to be considered as per the different types of the strategies adopted by the company relates to the estate having a significant land attached to the other estates.
An exploratory study conducted on the drivers enchasing the supply chain performance associated to the organizational output was able to find the framework for sustainability. The overall findings of the study suggested that whether the technology firm was service oriented or manufacturing it was able to increase the efficiencies and performances. The different types of the concepts of the study was also able to reveal the role of technology in enhancing the organizational factors (Morley 2017). The exploratory factors driving the efficiency in the supply chain mechanism in the study was considered worth the focus on the indispensable factors for the organization which led to increased efficiency in the supply chain of the company. In addition to this, the supply chain management of the company was also able to focus on the management of the activates pertaining to the procurement of the raw materials to the delivery of the final product to the customer (Wang, Mathiyazhagan, Xu and Diabat 2016).
The efficiency in the supply chain of the companies was further depicted to be reliant on the significant nature of the other facets which are seen to be directly associated to shift the focus of the company from menswear business to womenswear business with a higher fashion content and shorter life cycles. In addition to this, previously the company focused on producing standard line of products on a repetitive basis, which soon got focused to a more customised product base. Moreover, the time-based competition identified the present designs process which required greater agility in the delivery of services. The success of the company was determined with the significant number of innovations in manufacturing and purchasing of new equipment (Bourlakis, Maglaras, Gallear and Fotopoulos 2014).
The impact of the low-cost competition in case of Johnstons of Elgin is seen to be evident in nature due to the high prices set by its competitors, which has resulted in bringing more affluent customers. Despite of this, the increasing globalisation of the markets, the parties were affected by the reductions and removal of trade barriers. In addition to this, the new sources of the various types of the low-cost competition was evident in the beginning of the twentieth century. It was depicted that the various types of the products which were labelled for the cashmere needed to be sold in the supermarkets situated in the western countries for only a small portion of the price which was charged by the traditional manufacturers and retailers. This was depicted to be having a quick effect on the sale of the UK manufactured cashmere products. For instance, in 2008 the cashmere pashmina was bought by Tesco for a total amount of £ 29 compared to £200 pertaining to the departmental stores like Harvey Nichols (Swink and Schoenherr 2015). The different types of the products manufactured y the company and the efficiency driving factors were depicted with the manufacturing process followed with the fashion houses and the retails who were following a specific design cycle which was shorter and more flexible in nature. In many cased the retail customers of the company like Burberry was seen with an increasing count in number of seasons. This was particularly evident in the fourth year of operation of the company. This is also considered as a result of the introduction of new colours especially in the mid-season. This also called for the need of the preproduction of the samples of the company (PR 2017).
Employing Upstream to Downstream Production and Finishing Processes
As discussed by Hofmann and Rothenberg (2013), the main intention of he study has been able to focus the important nature of the considerations which are seen to be depicted with observing interim performance measurement for the agents and finding how they are valuable to the principal. The important consideration of the information on the upstream and downstream production aspects are seen to be having a positive impact on the outputs. The upstream agents are seen to be important for observing the signal. On the other hand, the downstream is identified with the successful contribution of the agent versus reduced cost for the upstream agents. In addition to this, the private observation is also able to reveal the valuable aspect of the principal and forward-looking factor (Madhani 2018). The choice among the downstream and upstream is often depicted to depend on the non-importance of the backward-looking aspect. The important nature of the results drawn with the study has been further able to suggest on the value of the observation and dissemination of the information as per the dependency of the interim signal which is dependent on the informativeness of the output and signal relating to the downstream production and upstream. The final observations of the study stated that the principal would be preferring on opting a downstream or upstream agent for gathering systems relating to performance measure, interim report long with the backward and forward looking signal quality. In addition to this, the net effect of this on the incentives were related to the conditions pertaining to the preference for the no signal versus the privately monitored agents (Vakharia and Wang 2014).
As per the given case study it can be determined that the effectiveness of the upstream and downstream strategy has been conducive in creating an effective image for the company equivalent to the low import strategy. The most evident flow of the downstream component of the company are depicted to be evident with the adoption of the low-cost strategy. Some of the different types of the other strategy implemented by the company further relates to the lining up the products in the separate and relevant deportments for the ease of identification of the products by the customers (Ku, Wu and Chen 2016). This adoption of the strategy by the company is seen to be considered as the upstream strategy. The effectiveness of the aforementioned strategy for Johnstons of Elgin has brought a considerable improvement pertaining to the increased range of the inclusion of the products. In additions to this, the new line of the products by the company is able to relate to the significant nature of the factors which are depicted to be focusing on the current operations of the company as per the downtrading policy (Kulak et al. 2016).
The conceptualization of agile and lean strategies is concerned with reducing the costs and lowering of the waste to the maximum extent possible. This is critical for the organizations producing in large quantities and dealing with high volume of purchase orders so that the costs can be accumulated quickly. In general, it has been depicted that the companies dealing with high volumes and lesser variability of purchase orders like food items are often benefited from the efficiency aspect by the incorporation of lean supply technology (Nabelsi and Gagnon 2017). The focus of the lean supply chain is depicted to be based on adding more value to the customers. This concept is related to more of identifying and eliminating the waste and any other component which does not add any value. On the other hand, the concept of agile is associated with managing a situation of unpredictability. This includes consideration of constant series of product innovation, its ability and speed. That a strategy is particularly seen with using a wait and see approach for the customer demand and preventing any commitment to the final product until and unless the actual demand is known. The agile supply chain is also inferred to be responsive to the predetermined demand and opens the scope for further use of information as a substitute for inventory with integration among the key suppliers and customers (Hada?, Stachowiak and Cyplik 2014).
Lean and Agile Logistics Strategies
The relation of this concept needs to be depicted with overall business environment of textile industry in Scotland during 2007. There had been several estimates made which shows that 17,000 people associated to the industry were working, however the decrease in overall level of activity was compensated with increasing the value of output in the remaining industry. It is further estimated that the industry standing in the thousand seven was responsible for an overall turnover of £ 1 billion including exports of £ 390 million. The company waited for boom in the manufacturing industry but sales were sluggish in nature. However, this was identified as an opportunity and to compensate with this challenge, the company decided to reduce the total capacity of the industry which led to large increases in demand. The problem was critical particularly with the large brands such as Chanel, which required ordering from such a company. In the past the company focused on reducing the capacity to take costs out of business, which soon got shifted by optimum utilisation of the existing capacity and access the same elsewhere. The problem with the capacity was however not seen with the number of machine hours but availability of skilled people. Due to the ageing nature of the work force several traditional manufacturers failed to cope up with the competition. Johnstons of Elgin also suffered this competitive pressure and although it earned profits, it reduced from £ 2.2m to £ 336000 (Wronka 2016).
Conclusion
The study has identified the success of Johnstons of Elgin with several types of different concepts applied within the organisation relating to its process and functions. The different types of discourse of the study associated to vertical integration shows that Johnstons of Elgin relied on this strategy by leasing of woollen factory at Newmill in Aberdeenshire. This allowed the company to operate from a single base, which was conducive in reducing the overall transportation costs. Moreover, the significant nature of the competitive advantages was also seen with relying on a single manufacturing unit which permitted it to operate from a single location thereby adding to faster procurement of raw materials. The findings as per the factors responsible for efficiencies in supply chain mechanism was evident with low-cost competition. The new sources of the various types of the low-cost competition was evident in the beginning of the twentieth century. The important aspects of such a strategy was seen among the supermarkets of Western countries, where only a small portion of the price was charged by the traditional retailers. The adoption of agile strategy by the company’s evident with focusing on costs out of business, which soon got shifted by optimum utilisation of the existing capacity and access the same elsewhere. Moreover, Johnstons of Elgin visited for increasing sales however the market condition never got in a favourable situation. Despite of such hurdles it made the most to compensate with the challenge and reduce the overall capacity which led to increasing the demand. Moreover, it needs to be also identified that despite of increasing competition and ageing workforce of the company the company still managed to earn a significant level of profit whereas it competitors experienced an unrecoverable downturn in their business.
Low-Cost Competition Impact on Johnstons of Elgin
References
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