Background of Johnstons of Elgin
The concept of supply chain management and logistics applies in the case of smooth and profitable conduction of any organization in a competitive business market. The supply chain management is an integral part of the operation of any organization as it allows the organization to complete the entire process of their production (Morali and Searcy, 2013, pp.635-658). The supply chain management helps the organization from collecting the raw materials to process the mid-level operations on that particular raw material and also acknowledges the end product configuration as well (Cohen and Roussel, 2013). Different inter-linking of the parts and the nodes of the supply chain management modifies and monitors the product and the service of the organization from the initial stage to the end point in the organizational diagram that is the consumption by the customers (Golicic and Smith, 2013, pp.78-95). The logistics management in its definition is the one the main component of the supply chain management which allows an organization to operate the different aspects of the operations of any organization (Christopher, 2016). The proper handling of these sectors allows an organization to not only survive adverse situations but also can build benefits out of it. The paper acknowledges the ability of logistics and supply chain management in the chosen organization named as Johnstons of Elgin in their survival in the adverse situations. The different parts of the paper provides significant proof of the excellence of the organization in proper restructuring of the logistics in order to accumulate profit even in difficult circumstances.
The organization is currently known as Johnstons Cashmere and is known to be a woollen mill situated in Elgin, Moray, Scotland (Johnstons of Elgin, 2018). The mill basically delivers cashmere garments and was formed in 1797 (Johnstons of Elgin, 2018). The general concept of the organization was to produce linen flax and oatmeal during the initialisation but the founder of the organization, Alexander Johnston proved his skill in the diversification with the introduction of the textile in the operation of the organization. The founder stopped the previous conduction of the business and concentrated on the new products. The concept of the founder in the use of tweed for camouflage became a style statement in form of Scottish Estate Tweeds. The organization introduced vertical integration with carrying out spinning, dyeing, weaving and finishing processes on one site (Wilson, 2015, p.5). It was known to be the only vertical mill in the country of Scotland (Wilson, 2015, p.5).
The organization was significantly influential for the people of Scotland with the brand and the quality of their products manufactured in the woollen mill. The organization was seemed to be reaching greater heights with the concept of usage of tweed for camouflage and the conversion of this concept in to the traditional Scottish Estate Tweeds was proving the excellence of their founder. Even in that period when the designed products of the organization were going well with the tradition and the culture of the Scottish people, specifically the highlanders, the organization led by Alexander concentrated on producing cashmere based products and started to produce woven clothes of significant quality. The general shift in the business was largely followed by the entrance of the organization in the cashmere knitting industry in 1973 with a separate factory near the Scottish borders. After several years of high cost business relating to the cashmere based product, the effect of globalisation was significantly observed with the sudden shift in the pricing of the cashmere based products. The globalisation of the industry introduced low cost competition in the concerned market with considerable number of new entries into the market. The general shift in the business economy of the industry regarding the pricing was possible by the compromise in the quality of the products of the new market entries. The new organizations started to buy limited amount of quality material in order to avoid the legal issues of the UK government and their entry had a tremendous impact on the sales of the cashmere based products in UK resulting in low price of the products. This led to an extreme shift in the operations of the concerned organization as they were feeling the impact of low cost competition as well. The general impact was observed as the concerned organization was much more focused in dealing with quality products with increased amount of price and cost associated with the products. The low cost of the products was a serious concern for the organization and the organization countered them with the conversion of their operating principle from default design to customize design according to the preferences of the customers. The general shift in the design was significantly critical part of the organization as that influenced the people in a greater manner to look for the products designed for them by the concerned organization. The organization even changed their approach of business which was mainly focused on the menswear with long life cycle to the highly fashionable products of the womenswear industry with low life cycle in order to cope up with the severe impact of the globalisation in the market of the cashmere based products industry. The organization felt a significant boost in their business with the concept of the design according to the customer preferences but that generally increased the time starting from the manufacturing to the sales. The number of design cycles started to increase with the suggestions of different colours in the products at the various instance of the cycles. The organization need to manage them to survive in that situation with specific focus in the supply chain management and logistics.
Shift in the business economy and impact of globalisation
The concept of vertical integration is a genuine tool for any organization to proactively manage their different operating parts (Atalay, Hortaçsu and Syverson, 2014, pp.1120-48). The generalised form of it helps the organization to monitor or control different parts of phases of the supply chain management (Lee, 2013, pp.2960-3000). There are four phases in the supply chain management which are noted to be manufacturing, commodities, distribution and retail (Hugos, 2018). Any organization is said to be vertically integrated when it controls more than one number of these phases at a single time (Gil and Warzynski, 2014, pp.i143-i168). As mentioned earlier, the organization was vertically integrated with all of the discussed aspects of the supply chain management getting controlled from a single mill. The concept of vertical integration helped the concerned organization in a great deal in the difficult situation of low cost competition. The organization was able to minimize their product cost by following the concept of vertical integration. As the vertical integration makes sure that the existence of the middle men in the business gets minimized, the cost significantly came down and the products were comparatively cheaper and that was advantageous for the concerned organization to promote their product even in that crisis in a suitable price (Zhang, 2013, p.1). The vertical integration provided comparatively more relaxation to the chosen organization in case of supplier dependency. As the organization was not dependent on the suppliers in such a manner, the organization was immune from the likely disruptions of the suppliers. This also played an important role in ignoring effect of the dominant suppliers of the market. The vertical integration was instrumental in providing an economical benefit to the organization by allowing them to cut down the costs in significant manner without any sort of hesitation of any labour or supplier unrest. This allowed the organization to reduce the cost of the materials by buying it in bulk. With the mention of the advantages for the organization in following the vertical integration, there were many disadvantages of the process as well but the excellent leadership of Alexander made sure that the conventional drawbacks of vertical integration like the absence of focus in changing according to the market trends, the mismatch in the skills of a sole retailer with a manufacturer or the issue of bulk investment required to integrate the chosen organization vertically does not produce any sort of obstacles in the smooth conduct of the chosen organization even in that difficult time.
The reason behind the success of the chosen organization was the ability of the supply chain components in driving the efficiency of the organization in that period. The supply chain components basically constitute with the planning and control of the given organization, work structure, the flow of the products and the service along with the management methods and work culture (Rushton, Croucher and Baker, 2014). The planning of the chosen organization in order to restructure their operations was crucial in this case. The organization changed their strategy of designing their products in a particular and default format and concentrated on fulfilling the wishes and preferences of the customers. With the introduction of the concept of the customized products in the organization, the customers felt the comparative sense of belonging to the organization which was crucial for the given industry to overcome the assumed threat of losing the customers with the introduction of the new organizations producing the cashmere products in relatively less price. The organization managed this concern in positive way by involving the customers in their design of the products. The amount of risk that was related with the low cost competition was turned back into the favour of the organization in a brilliant manner. But this also added some extra pressure on the design section of the organization as the amount changes that was recommended by the highly demanding customers was immense. The changes were frequent and the organization being thought as a design-led organization was not in the position to turn them down. The organization had prime focus on their design section and that went well with them as the restructuring observed the organization in need to break their conventional design cycles and was forced by the retailers to increase the number of design cycles. The idea of customized design for the products added the frequent colour preferences of the customers as well. This was the absolute proof that even the vulnerable market status of cashmere based products was not able to cause any sort of major disturbance in the business of the given organization and that was largely influential in driving the efficiency of the organization.
Importance of Supply Chain Management and Logistics
It is controversial to comment that the changes in the conduction of the business in the new situation was solely depending on the downstream production as the predefined aim behind the choices of the material changed from long life cycle to short but the general changes in the conduction of the business of the concerned organization were related to the downstream production where the processing of the product of the organization took the major significance (Kim et al., 2013, pp.862-876). The preference of the organization regarding their menswear products was seemed to be changing to the significantly fashionable womenswear products. The organization had a major change in their operation or technique of processing in form of the customization of the products. The conversion of this process of operation of the concerned organization was incredibly influential for the organization in order to survive and conduct a profitable business. The general shift in business of the products from menswear to womenswear and the customization aspect of the design of the organization significantly related to the processing of the products. The organization was able to sustain the pressure of the change in the industry due to their characteristics of following the trend and customer preferences may that be the colour or the changes in the design. The organization increased the number of the design cycle in order to increase their flexibility of the products and the design cycles were shorter so that the finished goods get designed according to the customer preferences as much as possible.
The organization under the leadership of Alexander Johnston followed various aspects of the lean logistics where according to the strategies, the organization was primarily focusing to cut down the costs as much as possible with the introduction of the vertical integration (Karim and Arif-Uz-Zaman, 2013, pp.169-196). This helped the organization to minimize the non-valued activities and helped the organization to reach the top with the quality of the design. The organization went on to reduce the interval between the order received and order delivered in order to improve the efficiency of the organization in acknowledging the lean logistics (Stentoft Arlbjørn and Vagn Freytag, 2013, pp.174-205). The organization with the customization approach of the design was able to be satisfactory for the customers which made them feel connected to the organization due to the products and that satisfied the desired outcomes of using the strategies of lean logistics.
The organization was able to adapt the sudden change in the cashmere based products industry. The rise of the low cost competition was a sudden threat to the organization as they were conducting a stable business in the high cost cashmere products industry. The general strategies to cope up with this abrupt change were followed by the strategies of agile logistics which ensured that the organization sustain the pressure by implementing some changes in the processing and designing of the products. The agile logistics strategies enabled the organization to focus on the sudden changes in the design recommended by the customers to serve their need and the change in the decision making processes keeping a close look on delivering quality fashion oriented products to the marketplace played a significant role in their recovery (Mangan, Lalwani and Lalwani, 2016).
Employment of Lean and Agile Logistics Strategies
The organization was able to manage the effect of globalisation in a significant manner by following the lean and agile logistics strategies. The recovery of the organization from the difficult conditions of the market in that period was possible for the implementation of the suitable strategies, strategized in accordance to the situation of the market. However it was a fine managerial performance in terms of strategy forming by the organization, yet it had a major concern related to it. The organization shifted their focus from delivering highly stable menswear products with long life cycles to the highly fashionable womenswear products but with a short life cycle. This aspect of the strategy is a significant concern for the customers in order to buy the product of the organization. The assessment of the effect of the environmental factors on the life cycle of the product is also absent in this case. These are to be managed by appropriate functioning of the decision making parts of the organization to provide guarantee on the quality of the products.
Conclusion:
The organization was in an acute position during the globalisation of cashmere based product industry but with several changes in their processing and design sector, the organization survived the impact of the globalisation in a fruitful manner. The organization was able to plan in a significant manner by shifting their focus of the business and was able to connect to a larger amount of people through their strategies of customization in the product designing which added into the list of benefits for the organization. Alexander Johnston utilized different strategies of the lean and agile logistics in order to pull the organization out of the danger of the low cost competition and was significantly successful in doing so.
References:
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Gil, R. and Warzynski, F., 2014. Vertical integration, exclusivity, and game sales performance in the US video game industry. The Journal of Law, Economics, and Organization, 31(suppl_1), pp.i143-i168.
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Johnstons of Elgin. (2018). Johnstons of Elgin | Cashmere Clothing, Accessories and Fabric. [online] Available at: https://www.johnstonsofelgin.com/international/
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