The Supply Chain Capabilities of Johnstons of Elgin - Essay Example

Logistics Table of Contents Introduction 3 Supply Chain Capabilities of Johnstons Enabling It to Attain a Competitive Advantage 3 Application of Johnstons Business Model to Companies in Other Industries 7 Conclusion 10 References 11 Introduction Johnstons of Elgin has been producing the premium cashmere and woollen clothing as well as accessories since the year 1797. The company became renowned due to its differentiation strategies to use the finest fibre strictly, i.e. cashmere in its knitted and woven products, which added to its competitive advantages (VisitScotland, 2014). The company’s mill is situated on the banks of the Lossie River, Elgin. From a broader understanding, the company has been able to attract its customers through the deliverance of quality products to them and in compliance with their requirements (Interface, 2013). The essay intends to determine how supply chain capabilities of Johnstons of Elgin, a company dealing with manufacturing and retailing woven as well as knitted products, have enabled it to attain a competitive advantage. Moreover, the extent up to which the business model of Johnstons can be applied to companies in other industries would also be described in the essay based upon the provided case study. Supply Chain Capabilities of Johnstons Enabling It to Attain a Competitive Advantage Organisations functioning in this modern day context often have to face challenges in developing and delivering quality and innovative products/services to their customers globally with the aim of attaining superior competitive position. Several factors can be found associated as a cause of these challenges. These include increased level of globalisation, pressure created by the competitive forces to innovate technologically advanced production or supply systems and growing complexities in managerial ideologies among others (CEVA, n.d.). In this similar context, supply chain capabilities support the business organisations to attain a superior competitive positioning in the form of offering quality products to the customers by way of focusing more on main competences, recognising the outsourcing trends and following the procedure of vertical disintegration in the operational strategies. As generally believed, proper and effective utilisation of various sorts of supply chain capabilities can certainly aid in making quality procurement decisions, which in turn can enable the modern business organisations to attain a superior competitive positioning over their chief rivals (Crown, 2012). It would be vital to mention that the prime facets of supply chain capabilities not only support the modern business organisations to attain superior competitive positioning but also enables their respective business to sustain in this competitive landscape. In this regard, the characteristics of supply chain capabilities fundamentally include quick customer response, greater level of efficiency and effective asset utilisation among others (A.T. Kearney, Inc., 2013). The notion presented above that supply chain efficiencies are often used by a modern organisation to gain competitive advantages can be related to that of Johnston. Certain significant factors relating to supply chain of the company were identified that rewarded Johnstons a superior competitive position in the respective industry. In this similar context, one of such factor was the company’s expansion in its manufacturing and marketing strategies from being solely focused on menswear products to women-wear products also, keeping in demand of the products and fashion trends from the customers’ end. While shifting its focus from the above stated business form, a transition was viewed on behalf of the company, which certainly supported Johnstons to attain a competitive advantage. The transition was mainly observed as focused on manufacturing standard products on a repetitive basis to much more customised product base. During this transition phase, the company paid utmost attention on designing the products that would certainly attract the customers at large. Notably, the notion of time-based competition had imposed extensive impacts upon the overall performance of Johnstons, which enabled it to attain a competitive advantage. The time taken by the company from designing its broad assortment of products and supplying those to the business markets were often lengthy. This was mainly due to the reasons of inflexibility persisting within the production along with finishing procedures that was taking excess time to implement changes in the design of the products as per the requests made by the customers. Due to the persistence of inflexibility in the manufacturing procedures, Johnstons became much concerned towards developing its product design for attracting the customers. Thus, keeping into mind this particular problem and realising that Johnstons’ traditional business markets became quite fashion oriented with shorter life cycles, the company decided to lessen its lead times during the manufacturing process. This can be duly regarded as one of the prime factors, which contributed in aiding the company to attain competitive advantages. In this regard, in order to lessen lead ties, the company began following a regular cycle, wherein utmost focus was laid upon working better on new designs as well as colour ideas among others. It is worth mentioning that the other factors, which assisted Johnstons to attain a competitive advantage, included its advanced supply chain towards becoming agile along with responsive and making investments in introducing new technological advancements. In relation to the development of supply chain in order to make it more agile as well as responsive, the company felt to develop the same in order to cope with the increased level of demands of the customers for its products. In this similar context, the company focused more on making greater use of outsourcing and most significantly, following the strategy of separating the more predictable lines from the less predictable part of its business. These approaches eventually added to the competitive advantages gained by Johnstons over its chief business market competitors. Identifiably, Johnstons faced numerous problems including rapidly augmenting demands of the customers and increasing market competition among others, which in turn steered advancement within the company’s supply chain. To address and mitigate these challenges, the company decided to make substantial investments in introducing new technologies in the form of CAD/CAM and enterprise planning software from SAP. This further enriched its supply chain efficiencies and helped the company to offer its products with assured quality and in return of a competitive price, keeping the manufacturing and resource costs low. Likewise, these investments in technology enabled Johnstons to accomplish a competitive advantage in its market periphery. It would be vital to mention that the prevalence of extreme business market competition, disintegrated design functions and most vitally, lengthy lead times was leading to worsened supply chain management in Johnstons. To cope up with these challenges, the company made deliberate efforts in integrating its design functions, developing supply chain procedure and shortening lead times. Specially mentioning, the company strongly believed that it could reap several opportunities and mitigate the above-discussed problems by way of developing its supply chain procedure, making it more stable, agile and responsive. This can be justified with reference to the fact that the newly developed supply chain procedure would certainly bring more opportunities for Johnstons in the form of making greater use of outsourcing, seeking the benefits of low-cost manufacturing and accomplishing superior competitive position among others. From a broader understanding, it can be stated that the business market of the UK is quite competitive, specifically relating to textile and clothing industry. A better understanfding of how the supply chan advancements led to the competitive advantages of Johnstons can be examined in comparison to the supply chain strategies applied by one of its major rivals, Zara. By its organisational nature, Zara is a Spanish clothing manufacturer, which has managed to position itself as one of the low-priced or low cost leader in the respective industry. It operates in several regions including the UK and certainly holds the potentiality of competing with other brands functioning in the market. However, Zara lacked in shortening lead times, where Johnstons was able to avail the benefits through its supply chain innovations lessening lead times up to considerable extent (UBS, n.d.). In contrast to the traditional supply chain concept applied in Zara, Johnstons attempted to outsource its production activities along with worked on redesigning the said procedure with the aim of shortening lead times offering it greater advantages as compared to its rivals (including Zara). Application of Johnstons Business Model to Companies in Other Industries Johnstons had used certain effective business models that eventually enabled it to attain the desired level of competitive advantages. In this similar context, the business models of the company can be viewed focused on the formation of an agile and effective supply chain procedure to offer the benefits of shortened lead times and cost effectiveness. These sorts of business models can be applied to those companies operating in diverse industries that seek to meet market demands and fulfil the requirements of the customers with quality assurance by keeping up with their vision to competitive pricing. Certainly, manufacturing companies can obtain various benefits as well as opportunities from this kind of a business model. Prior to discussing the benefits as well as the opportunities that can be reaped from such business models, it is quite indispensable to acquire a brief idea regarding the applicability of those models to companies operating in dissimilar industries. Theoretically, lean and agile supply chain procedure is regarded as a method based on which, higher emphasis can be laid upon providing quality services to the customers and complying with the market demands rather than optimising costs. Overall, the procedure is often viewed to build business-wide capability, which largely develops information systems, operational procedures, logistics mechanisms and organisational structures offering long run benefits to the company in the form of brand identity and customer satisfaction (Christopher, 2000). It is worth mentioning that this particular business model, followed by Johnstons can be applied in Fast- Moving Consumer Goods (FMCG) industries, where quality centric differentiation strategies play a major role in delivering competitive advantages to the companies operating within this intensely competitive market periphery. The aforesaid business model can be applied to companies operating in the FMCG industry as it is indulged in manufacturing products similar to that of Johnstons. To gain a better insight of the way Johnstons’ business model can be beneficial in this industry sector, exemplary explanation can be drawn with reference to the challenges faced by Reckitt Benckiser plc. The company has been facing challenges to deliver the kind of quality products and/or services it desires at a competitive price, to its global consumers and hence, witnesses the risk of lower customer demands than expected. In such case, the business model of agile and lean supply chain procedure would be applicable. This business model can aid Reckitt Benckiser plc to respond effectively towards mitigating the above stated problems by a certain level through numerous ways. These ways comprise emphasising efficiency in the operational procedures, developing design functions through forming upstream as well as downstream incorporation with the suppliers and focusing much on minimum stock holding. Apart from meeting the market demands, Reckitt Benckiser plc can also attain certain other significant benefits with the application of agile and lean supply chain model as similar to that of Johnstons (Reckitt Benckiser Group plc, 2012). These benefits might comprise raising the ability of the company in controlling the required inventory levels, building effective capacity planning, better managing the operational costs such as procurement or manufacturing and better response towards complex activities of supply chain. Moreover, the other benefits can be identified in the form of manufacturing error free products that in turn can minimise the level of resource wastage and finally deliver quality services to the global customers (Christopher, 2000). The business model utilised by Johnstons to enable the successful attainment of a competitive advantage through shortened lead-time can be applied to Cadbury. Cadbury is a renowned and much appreciated company operating in the global confectionery industry (Cadbury, n.d.). To be mentioned in this context, the business model of shortened lead-time typically denotes lessening the time taken by a company from manufacturing products to delivering the same to the customers. In this present day context, wherein globalisation as well as internationalisation is incessantly rising and customers’ preferences are rapidly augmenting, the modern business organisations tend to shorten their respective lead-time in order to sustain in this competitive landscape. Evidently, the products of Cadbury have huge market demands and thus in order to comply with such demands conveniently, the company might adopt the business model of shortened lead-time. This shall not only aid the company by resulting in raising its profitability through meeting market demands and satisfying the requirements of the customers in a convenient manner, but also reduce resource wastage as well as the time constraints hampering its supply chain efficiencies. Cadbury, apart from meeting market demands in a cost and time effective manner, can also get benefitted in various fields from the application of shortened lead times business model. To be precise, the benefits in various arenas can be measured in terms of enlarged customer base, augmented profit margin, diminished inventory costs, less wastes as well as scraps and less capital investment among others (Simeonovova & Simeonov, 2012). Conclusion As per the above analysis and discussion, supply chain capabilities have many likely benefits towards supporting modern business organisations in accomplishing superior competitive position by maintaining a balance in their resource allocation efficiencies and serving the customers as per their convenience. Specially mentioning, certain effective supply chain capabilities have enabled Johnstons to attain the desired levels of competitive advantages. These capabilities include shifting focus in business, influencing time-based competition, formatting an agile as well as lean supply chain procedure, investments in technological advancements, with a motive to attain advantages presented by shortening lead times among others. Conclusively, the business model of Johnstons can be applied to various other industries, but mainly in the FMCG sector where differentiation on the basis of quality features embarks substantial differences in the demand for the products. References A.T. Kearney, Inc., 2013. Responding to Supply Chain Pressures. Winning Supply Chains Integrate Today’s Capabilities With Tomorrow’s Goals. [Online] Available at: http://www.atkearney.co.uk/documents/10192/764604/Winning+Supply+Chains+Go+Beyond+Cost+and+Service.pdf/539ed8bd-e3f4-4691-ad51-48e7f6e44f79 [Accessed March 15, 2014]. CEVA, No Date. Connecting Supply Chain Capabilities within the Publishing Industry. Documents. [Online] Available at: http://www.cevalogistics.com/en-UK/oursectorfocus/Consumerretail/Publishing/Documents/publishing_white_paper.pdf [Accessed March 15, 2014]. Crown, 2012. The Vision. Strengthening UK Supply Chains: Public Procurement, pp. 2-15. Cadbury, No Date. Products. Home. [Online] Available at: https://www.cadbury.co.uk/products [Accessed March 15, 2014]. Christopher, M., 2000. The Agile Supply Chain: Competing in Volatile Markets. Industrial Marketing Management, Vol. 29, No. 1, pp. 37-44. Interface, 2013. Supporting Scotland’s Key Industries. Annual Report 2012-2013, pp. 1-21. Reckitt Benckiser Group plc, 2012. RB History. RB Worldwide. [Online] Available at: http://www.rb.com/rb-worldwide/rb-history [Accessed March 15, 2014]. Simeonovova, I. & Simeonov, S., 2012. Introduction. Lead Time Reduction Methods, pp. 334-337. UBS, No Date. The Story of Zara – The Speeding Bullet. The Strategist’s Choice, pp. 1-3. VisitScotland, 2014. Overview. Johnstons Of Elgin Cashmere Visitor Centre. [Online] Available at: http://www.visitscotland.com/info/see-do/johnstons-of-elgin-cashmere-visitor-centre-p253391 [Accessed March 15, 2014]. Read More