Introduction:In the globalise era when most of the business organisations are involved in different business activities it has become inevitable for the firms to independently perform all the functions. Most of the companies do not operate their supply chain and rely on other firms to perform the multi-faceted tasks. The successful and efficient combination of the operations of these firms provides the company with the competitive edge in the market.
(Cook, DeBree, and Feroleto, 2001). Lummus and Vokurka (1999) points out towards the need for the managers to understand the performance of all the stake holding firms in the supply chain. According to (Pohlen, 2003), this insight in the performance of each firm will enable the managers to develop measures in order to fulfil the demands of the customers. The main task of the supply chain management is to develop a strategy which can cater the need of the customers and is aligned with the company objectives (Pohlen, 2003).
In this lieu it is important for the mangers to keep on measuring the performance of different parts of supply chain (Deloitte, 1999). It has been a proven fact that the improvement in the company’s performance cannot be undertaken with out improving the performance of its suppliers (Lummus, Vokurka, and Alber, 1999). The planning and information taking activities can be easily performed by the operations managers and senior executives it they have an up to date information regarding the performance of different supply chain firm and stake holders and the resources available to the firm.Authors (La Londe and Masters 1994; Lambert, Stock, and Ellram 1998; Mentzer et al.
2001) regard a supply chain as a set of firms involved in the upstream and downstream flows of products, services, information, and/or finances. Mentzer et al. (2001, p. 4) described a supply chain as “a set of three or more organisations directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer.
” Thus, the nature of a supply chain is comprehensive so that membership is not limited to a supplier, a manufacturer, and a distributor, but open to any firm that performs various flow-related services (Mentzer et al. 2001).The notion of production management has been transformed from the manufacturing activities and has expanded to activities as purchasing, warehousing, transportation, and other operations from the procurement of raw materials through various activities until a product in available to the buyer. The notion includes the process of delivering the services to the customers with the products.
With the changing time the aspects covered are increasing, the process now also includes R&D, value creation, marketing management, sales activities, accounting and finance.The operation management model constitutes of inputs and outputs. The list of inputs include,1. customer needs2.
Information3. Technology management4. Fixed assets of the business5. Human capital6.
Variable assets related to transformation process.Information and the physical factors play an important role for managers in order to produce outputs.Most of the physical assets remain unchanged. These include buildings, land, manufacturing plants, warehouses etc.
Planning, operating and controlling are the important constituents of transformation process. The improvement in the system is also an important aim of the model. Outputs consist of products and services and may even be information, such as that provided by a consulting organisation. (Koontz and Weihrich, 1994; p 633, 634)The international sourcing policy effects the corporate, marketing, purchasing, and other strategies.
It is important for the firm to connect the future objectives with corporate objectives and strategy. The purchasing function should also be undertaken in order to support the corporate objectives. It is often observed that the purchasing functions in the firms are undertaken without gathering proper and enough information. Also the purchasing decision of most of the companies are not undertaken in the line of the strategy of the company.
It is also important for the companies to undertake strategic planning while undertaking the purchasing decision. Most of the researchers emphasise the need of aligning the purchasing function with the firm’s strategic planning process. In order to undertake effective planning according to the company’s goal it is important to plan and implement strategic planning more effectively at the departmental level. Some of the researches also pay great attention in establishment of the link between the customers and the suppliers as part of their purchasing strategy.
The purchasing decision in the right direction can also help the company in acquiring the market leadership through cost reduction. “Purchasing’s contributions to corporate strategic planning include the following: monitoring supply market trends, interpreting the impact of these trends on the firm, identifying the materials and services required to support company and strategic business unit strategies, and developing supply options.” (Ellram and Carr, 1994) Value Chain Analysis:Porter introduced the concept of a value chain to help identify and evaluate potential sources of competitive advantage. A value chain desegregates a firm into its strategically relevant activities in order to understand the behaviour of costs and the existing and potential sources of differentiation.
Porter separated value activities into primary activities and support activities as shown Figure 1.Primary activities include the following: inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities cover the following: procurement, technology development, human resource management, and firm infrastructure. Essentially, the firm should analyse each one of the values creating activities mentioned above and create synergies among them.
This will be a source of competitive advantage for the firm. FIGURE 1: European Union:Europe is one of the most open markets for international companies, which are in a position to benefit from an integrated and border less European Union (EU) and a new single currency. In order to capitalise fully, however, they must be allowed to participate in the coming wave of privatisation. In addition, exports to Europe are threatened by new product standards and rules on testing and certification, growing incompatibility in business regulations, and remaining barriers in such areas as telecommunications, heavy equipment, and audio visual services.
Eliminating these obstacles is a primary trade objective of the U.S. government. U.
S. companies also stand to benefit from increased marketing efforts in the EU, particularly in Germany and Italy. In 1995, U.S.
firms had a 13.2 percent share of United Kingdom imports, but only a 6.5 percent in the rest of the EU. Each percentage point rise in the U.
S share of the EU market signifies a $13 billion increase in the value of U.S. exports.Since World War II, Western European countries have had distinct national markets in which governments protected their own business and imposed stiff tariffs on outside firms.
Jealousy, regulation, diverse economic conditions, and tensions among nations have characterised Europe for year. Viewed as separate entities, European countries have not represented sufficiently large customer base to warrant many international companies establishing business operations in Europe. Consequently, Europe has been economically stagnant since World War II, especially compared with the United States and the Far East. For several years during the 1980s, the combined results of the largest 100 companies in Europe, excluding the oil companies, showed a profit level of zero percent.
Unemployment in Europe still remains high and companies generally are not competitive in world markets.There are also still wide differences in product tastes across European countries. For example, the French want top-loading washing machines, whereas the British want front-loading washers. The Portuguese eat only 4 pounds of beef per capita each year, whereas the French eat 13.
2 points. Germans eat 3.8 pounds of poultry each year, whereas the Spanish eat 8.8 pounds.
Electrical outlets in Britain are different from those in Holland.With the exception of a few industries such as chemicals, chronic over capacity and high fixed costs, such as steel, detergents, pharmaceuticals, transportation, and banking mark most sectors of the European economy. There is no reason why Europe’s $2 billion turbine generator business should support 10 producers. Similar over capacity problem plague other industries, such as locomotive manufacturing, European companies are moving quickly; however, to correct the over capacity problems and survivors will likely emerge as strong competitors in world markets.
Differences among European countries are narrowing due to a massive increase in the flow of people and information across national borders, and European companies are moving rapidly to develop and market products that will be well received all over Europe. The Europlug, for example, has recently been developed and marketed in Europe as the electrical plug that will work everywhere (David).Unification and the Euro:Unification of Western Europe and the approaching adoption of a single currency are perhaps the single most important world events affecting business strategies in the 1990s. Fifteen countries speaking with one voice is more attractive to multinational corporations than 15 countries speaking with 15 voices.
A proliferation of cross-border mergers, acquisitions, and alliances in Europe is creating a new generation of European firms large enough to take on U.S and Japanese companies. In some industries, such as packaging and electric generating equipment, European firms have already replaced American firm’s world leaders.Unification of Western, Europe and the planned adoption of the Euro have reduced or eliminated trade barriers between European countries; people, goods services, and capital now flow freely across national boundaries.
European banks can operate in different countries without prohibitive barriers. Trucks pass freely between national borders instead of having to wait for hours at places such as the Mount Blane tunnel between France and Italy, where custom agents used to check documents and cargo. The Euro tunnel under the English Channel is spurring business between England and Europe. The estimated annual savings to European companies from the unification are $75 billion to $90 billion (David).
Unification also brought common licensing of food and beverage products in Europe, common radio and television signals, common health and safety standards, elimination of duplication in distribution systems, and standardisation of product lines. It has also prompted increased competitor analysis and alliances, decentralisation of business, new marketing efforts, new strategies, more emphasis on service, improved telecommunications and information flow, and increased momentum for a single monetary system evolving in Europe.Perhaps the most far-reaching feature of European unification is the planned establishment of a single financial market. The January 1,1999, scheduled introduction of a single European currency, the Euro, is expected to accelerate European downsizing.
Much stronger competitors in Europe have emerged from unification, and consumers throughout Europe are benefiting from Lower price and better choices, However, European companies still pay the world’s highest wages and generally have trouble offering goods at globally competitive prices. The social welfare system Europe is especially costly to firms. Most European workers and managers enjoy lifetime employment guarantees. There is a fear throughout Europe that rising unemployment, already at 10.
5 percent, may bring back over regulation and protectionism, which would hurt firm’s efforts to be come more globally competitive.European industries expected to represent the greatest threat to U.S firms in the near future are publishing, communications equipment, pharmaceuticals, and civilian aerospace. Representing a lesser but still significant threat to U.
S firms will be European banks and producers of food, beverages, computers, electronics, and autos, U. S. industries that appear for the moment to be least affected by European unification are retailing, trucking, airlines, and insurance (David).The fact that legislation is a catalyst for economic growth and development is well known.
Differing economic, cultural and political circumstances abroad also suggest the need for a better understanding of employees with a broad context is important. Fortunately, the ability to study the implications of policies on economic growth abroad is expanding rapidly as a result of the emergence of global private equity markets and micro finance. International entrepreneur ship spans cultural boundaries and involves a variety of stakeholders, including the entrepreneur, investors and policy makers (Asel, 2003). “Social considerations must be given the same status as economic, financial and environmental concerns in a holistic approach.
It is time for global thinking and local action. The implementation of the Core Labour Standards and the laws and regulations that give effect to them at national levels can be significantly enhanced if the capacities of national labour inspectorates are built up and strengthened. Labour inspectors have a crucial role to play because they are the only ones with the authority to directly access and impose changes in the workplace.”(Albracht, 2005)The European union was expanded in May 2004 having 25 members.
The aim of the creation of the union was to create the most competitive and dynamic knowledge-based economy in the world, capable of substantial economic growth with more, and better, jobs and greater social cohesion (Elizabeth Hunt Recruitment). All the member states of the EU have to follow common trade and employment laws, which on the one hand provided them with the ease of free trade and larger availability of work force and a vast product market on the other.Introduction to Company:Laura Ashley Plc. is a small family company with very specialised products spread in the Europe, UK and US.
Started by the Ashleys in 1953 the company kept on embracing new products and companies and integrated vertically. The key for the significance and the competitive edge of the company was the design philosophy of Laura Ashley. Although the company faced a shock after the death of Laura Ashley but the company followed the line of Laura’s designs. By 1985 the company established its own supply chain and kept on supplying the products at shops.
The Company also implemented the Information system for effective communication with in the company Sales practice:The Company established the shops with the same design and undertaken research and development activities in order to analyse the consumer preferences regarding the brand. As a result of the surveys conducted the company found the brand name as the major asset of the company, which could prove to be the main source of competitive advantage of the company (Laura Ashley).The leading products of Company are the clothing and textile. The revenues come from exports and constitute about sixty percent of total earning of the company.
The lively combination of productive, creative, and managing activities turns out to be the main point of strength of the company, whose about 54,000 employees contribute to roughly 10% of the manufacturing sector’s added value. However, the problem is a decrease of turnover of fashion industry because of the invasion of Chinese products into all of Europe.As a result the sector has been struggling in recent years, losing more than Euro 5.2 billion (US$6.
3 billion) in turnover since 2001. The financial decrease has led to the closing of some companies and the sacking of some 90,000 workers.China entered the market timidly; a small nibble at the market but grew into a solid business. China flooded Europe with low cost shirts, pants, underwear, socks and shoes.
But how can Chinese manufacturers of low cost product threat high fashion of Europe?Ultra-cheap clothes, welcomed by consumers and retailers, undermine the fashion manufacturers, already challenged by the arrival of fast-fashion chains such as H&M and Zara, whose products are often made in the Far East. As Li Edelkoort, the respected fashion forecaster, warns, the Chinese whirlwind will flatten the fashion world as we know it and change radically its familiar landscape. “Everyone is putting eggs in one basket – China – and that is potentially devastating for our cultural heritage.” (Menkes, 2005)While producers are struggling to keep under priced clothes from flooding the European market, designer label brands are waging another battle – against imitations, or “knockoffs”, as they are known in the trade.
(Italian designers, 2005) Most of the fakes come from China or other Asian countries with the low labour costs and no concern for social services, welfare and pollution control.Although the company is currently facing unprecedented challenges but these challenges can be faced only by innovation. These include the abolition of quantitative restrictions (quotas) which took place on 1st January 2005. These challenges are occurring in a period of marked slowdown in economic activity, which has a significant impact on sectors such as textiles and clothing.
Furthermore, at the same time the Euro has shown a significant upward trend against the US dollar. All in all, every segment of textiles and clothing production, from spinning and weaving to garment make-up, has in one way or the other suffered from the impact of the developments of the last few years. (Textiles and clothing sector in the EU-25) The years 2001-2004 have been particularly difficult for the industry. After substantial falls in production and employment in the previous three years, it is estimated that in 2003 production fell by a further 4.
4% and employment by 7.1% (EU-25, source: Eurostat). The trade deficit (EU-25) amounted to € 29.4 billion in 2003, the trade in textiles reaching a surplus of € 3.
7 billion and the deficit in clothing € 33.1 billion.There’re two opposing views as to the future perspectives of fashion companies in Europe. Li Edelkoort believes that already the downward price spiral is leading to disaster.
Europe will abandon a centuries-old heritage and the industry will end up with bland clothing, limited varieties of textiles and basic prints. Raffaello Napoleone is more positive believing that in the future there will be a sole and dominant culture. “We will be confronted with different strong cultures which will stay in competition, everyone with its own prevailing identity.” (Menkes, 2005)Mario Moretti Polegato, president of Geox, thinks that by focusing on quality and specialising the smaller firms can survive.
Polegato predicts that in 10 years the market will be divided into the big, global brands on one side and, on the other, there will be specialised firms operating in niche areas where the larger groups cannot. (Galbraith, 2005)European firms need to continue restructuring for the new textile world, where they must focus on quality and innovation, their only competitive advantages over China. For example, Italy’s Biella is spending €2.8m on a marketing campaign to promote “the art of excellence”.
The need for innovation and excellence is also the best argument for the survival of Europe’s haute couture. (The sorry state of fashion, 2005)On International level the EU is the second largest exporter of clothing with China on no.1 position.In order to effectively compete in the market the company decided to change the way in which goods were moved from Europe to North America-and at the same time dramatically expanded its distribution capabilities in the United States.
The end result of the company’s efforts is a new 170,000 square-foot distribution centre strategically located in Groveport, Ohio, just outside of Columbus. Playing a prominent role in this facility are Hytrol conveyors, which facilitate the flow of merchandise from order receipt to shipping. The conveyorized operation efficiently handles current distribution needs. But just as importantly, it positions the company to support a sharp increase in order throughput anticipated in the very near future (Laura Ashley).
A Company on the MoveIn the United Kingdom in the early 1950s, Laura Ashley opened its first two stores in the United States in 1973. Today, it has more than 130 retail outlets across the U. S. and Canada.
An extensive product line includes women’s and children’s clothing, furniture and home furnishings, and bed linen.Prior to moving into the new facility in September 1997, Laura Ashley was stocking its stores from two primary locations-a Federal Ex-press-operated warehouse in Memphis and a distribution centre in Wales (United Kingdom), which shipped items soured in Europe.The new supply chain strategy finds Laura Ashley shipping an increasing amount of European-sourced product directly to the Groveport distribution centre, which then distributes the goods to the retail stores. In addition, all of the items formerly handled out of the FedEx facility in Memphis now move through the new distribution centre.
This consolidation of shipping activity has brought with it a number of benefits, reports Pat McGinnis, director of logistics for Laura Ashley’s North American retail operations. Both inbound and outbound transportation costs, in particular, have dropped dramatically because of consolidation opportunities and the facility’s central location. In addition, virtually every major LTL Company and express carrier has a Columbus area hub (Laura Ashley).Stressing the Basics:The conveyor operation at Groveport was designed as a basic system that could handle current needs, while upgrading easily as automation increases and throughput requirements expand.
Hy-Tek Material Handling Inc., a distributor of Hytrol equipment based in Columbus, worked closely with Laura Ashley on the design and installation. To expedite the process, most of the conveyor equipment needed was ordered through Hytrol’s FasTrak Distribution Centre in St. Louis.
The centre can provide 24-hour shipping on more than 50 conveyor models in over 2,400 sizes.The Groveport facility relies on basic gravity roller conveyors (19SR) and minimum pressure horizontal power units (190-ACC). One section of gravity conveyors, arranged in a horizontal and vertical pattern, is used as a forward picking area for assembling store orders. If 200 sweaters are needed for 30 different stores, for example, they are pulled into that forward area and placed into the appropriate storage carton.
These orders accumulate on the vertical gravity conveyor lanes.Adjacent to this section is the carton flow racks. The completed store orders are taken from the gravity conveyors and placed on the flow racks. In effect, the racks are used for bulk picking-an unusual application that is dictated by the nuances of the existing order management system.
Each lane of the flow racks is dedicated to a particular retail store. On a store-by-store basis, the orders are picked from the racks and placed on a power conveyor line. One segment of the power conveyor leads to a manifesting station at one end of the flow racks; the other leads to a station at the opposite end.From the manifesting stations, the completed orders are transported to the shipping area.
The majority of shipments move via parcel delivery or LTL motor carrier. Thanks to the distribution centre’s central location, most of the company’s retail stores are able to receive delivery in 2.5 days or less.In addition to the main picking area, the distribution centre includes a special project area where cut-off and re-ticketing and size and colour sortation takes place.
Store recalls also are handled here. The merchandise is set up and staged on two long horizontal and multiple vertical gravity conveyors. This configuration allows for ease of movement and handling of the merchandise being worked on (Laura Ashley).Poised for Future GrowthThe Groveport distribution centre is going through a period of rapid transition.
The current throughput of 48,000 units a week is expected to double by October 1998 as the centre assumes a lead role in distributing product that formerly moved directly from Europe to the stores.On top of that, Laura Ashley plans to implement a new Warehouse Management System (WMS) at Groveport. When this application is completed and the operations become more automated, appropriate changes in the facility’s configuration will have to be made.But management is confident that any upgrading will go smoothly because of the basic and flexible conveyor design.
And they’re equally confident that it can be accomplished with minimum down time. Going forward, the Groveport distribution centre will become an even more critical link in the company’s world-wide supply chain (Laura Ashley).Laura Ashley Distribution Centre:Laura Ashley’s 170,000 square-foot distribution centre in Groveport, Ohio is basic and straightforward in design. Orders are staged and assembled in the forward picking area, which is comprised of gravity conveyors.
Completed orders then are placed into the flow racks in the appropriate lane for each store. From the flow racks, the orders move on horizontal power conveyors to one of two manifesting stations. The facility also has a special projects area where cut-off, re-ticketing, and colour sizing and sortation take place. Gravity conveyors are used here for ease of handling and movement of the merchandise.
As throughput expands and automation increases, the centre’s basic conveyor system can be readily upgraded (Laura Ashley).;Conclusion:Production management refers to all those activities necessary to manufacture products; it may also include purchasing, warehousing, transportation, and other operations. Operations management has a similar meaning, referring to activities necessary to produce and deliver a service as well as a physical product. It is important for the supply chain management to give importance to all of the above activities.
Since a low level of performance from any part of supply chain can effect the whole process. (Koontz and Weihrich, 1994; p.653) The method of operations research, which is the application of scientific methods to the study of alternatives in a problem situation to obtain a quantitative basis for arriving at the best solution, should be used. Other tools of production management such as linear programming inventory planning and control, the just-in time inventory system, and distribution logistics should be used to enhance the productivity of the Company.
Other tools and techniques such as time-event inventory system, engineering, work simplification, quality circles, total quality management, and a variety of computer-aided approaches can also be used according to the need. (Koontz and Weihrich, 1994; p.653);;;;;;;;;;;;;;;;;;;;;;;;Albracht, G. (2005).
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eu.int/comm/enterprise/textile/euromed.htm;The Economist (on-line), (2005). The sorry state of fashion today – European textiles.
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