Logistics Management: Strategies Adopted by Johnstons of Elgin

This report analyzes the supply chain management strategies adopted by Johnstons of Elgin, including vertical integration, upstream to downstream production, and agile and lean logistics strategies. The report also discusses the advantages and disadvantages of these strategies and how they have helped the company become more competitive in the market. The case study highlights the challenges faced by the company and how they overcame them. The report is relevant for students studying logistics management, supply chain management, and operations management.

Running head: LOGISTICS MANAGEMENT
Logistics Management
Name of the Student
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Executive Summary
The report has helped in the analysis of the supply chain management strategies which have
been adopted by Johnston of Elgin Company based in UK. Furthermore, the different kinds
of management strategies have been applied which has assisted the company in becoming
more successful in nature and be more successful in nature. This has been seen that there are
different kinds of issues or competition in the entire market which has affected the growth of
the company, however with implementation of agile supply chain management strategy, this
has helped them in becoming successful.

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Table of Contents
Introduction................................................................................................................................3
Overview of the Case.................................................................................................................3
Identification of Management Strategies Adopted by Johnstons of Elgin.................................3
Approach of Vertical Integration...............................................................................................4
Mechanism of Supply Chain and Driving Efficiencies..............................................................6
Employment of Upstream to Downstream Production and Finishing Processes.......................8
Agile and Lean Logistics Strategies...........................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................12

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Introduction
The report helps in the analysis of the different kinds of strategies of management
which is required to be adopted by the respective company Johnstons of Elgin. The different
strategies have to be analysed in an effective manner wherein this will help the company in
becoming more profitable by considering the different kinds of supply chain mechanisms into
account.
Furthermore, the entire focus is required to be provided on the lean and agile
strategies as to understand and identify the most suitable technique which will be appropriate
for the respective organization named Johnstons of Elgin.
Additionally, the different approaches of supply chain management is essential which
will be essential in nature as this will be the effective kind of strategy in order to become
more competitive in nature to compete with the other competitors in the entire competitive
market.
Overview of the Case
Johnstons of Elgin was founded in the year 1797 when Alexander Johnston took the
lease on woollen factory at Newmill based in Scotland. It is now more than 200 years old,
however the company is still in the same site and this is one of the last vertically integrated
mills which helps in carrying out the different processes from the actual receipt of the raw
materials to the different finished products at one single location.
There were different issues which were faced by the respective mill in the competitive
market wherein there was huge impact of low-cost competition in the market. However, the
company became successful in nature as they tried to beat the other competitors in the market
which was profitable for them.

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Identification of Management Strategies Adopted by Johnstons of Elgin
Johnstons of Elgin is one of the companies which is following the vertical integration
approach in which they have become more successful in nature as there are different kinds of
approaches which have been used by the company as to become more competitive in nature.
It has been seen and analysed from the respective case study that there are different kinds of
competitors in the market, however there are different strategies of management which has
helped the company in becoming more successive in nature (Stadtler, 2015).
Strategic Management helps in involving the different formulation along with
implementation of the major kinds of goals which will be taken by the management of the
respective organization Johnstons of Elgin which is done on the different resources along
with proper ascertainment of the different external and internal environments in which the
organization competes. Proper focus is required to be provided by the organizations which
will help and assist in becoming more competitive in nature as this will help in becoming
more successful in nature (Govindan et al., 2014).
Approach of Vertical Integration
Furthermore, in case of Johnstons of Elgin, the strategic planning plays a major role in
the organizations as this provides the focus which is required in nature in order to gain
competitive advantage along with being more competitive in comparison to the other
competitors in the market.
In case of Johnstons of Elgin, the main strategic approach which was undertaken by
them was the vertical integration approach which has been adopted by them in which the
entire control is being taken by them over one or more than one stages in the entire
production or the entire distribution of the different products (Turker and Altuntas, 2014).

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Vertical Integration approach is being applied by Johnstons of Elgin in which this has
been seen that this is the last company in the entire UK market which sells woollen products
and all the different processes are being carried from the entire receipt of the different raw
materials to finished kind of products at one single location.
For instance- The best instance which can be provided from the respective case study
is related to the Johnstons of Elgin business in which this was seen that the company started
producing Estate Tweeds which is the derivative of tartans. This is one of the traditionally
distinctive kind of plaid which is traditionally being worn by the highlanders of Scottish to
denote their clan. This is one of the best instances in which this was identified that only a few
people who worked on that respective estate wore such clothes which are custom designed
and produced tweed as well.
From the above instance, this can be analysed that in the year 1973, Johnstons of
Elgin started off with trading cashmere along with developed range of woven clothes in the
entire market which is separate knitting industry in Hawick in the borders of Scottish. The
vertical integration is one of the management techniques or strategies which has been applied
by Johnstons of Elgin as this helped them in:
Increasing the overall competitiveness is the first advantage which was gained by the
Johnstons of Elgin company in which this was adopted by them and this helped them to
increase their market share. This is kind of niche marketing strategy which has been adopted
by the company as the products which are being sold and produced are only for specific
group of customers and these kinds of products will help them in gaining competitive
advantage (Touboulic and Walker, 2015).
Furthermore, there will be increased coordination in supply chain of Johnstons of
Elgin Company which has helped and assisted the company in managing the different costs

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as the transaction costs of the market is limited in nature. The vertical integration adopted by
Johnstons of Elgin has helped in enhancing investments in the different kinds of specialised
assets and this has enhanced the growth of the company into different sectors such as they
introduced a new vertical of cashmere production in the entire market (Turker and Altuntas,
2014).
However, on the other hand, there are different kinds of disadvantages of the vertical
integration which was faced by the respective company as this incurs huge amount of cost
and in such scenario, the company cannot manage the different new kind of activities in an
efficient manner. furthermore, this has been seen that the flexibility will be reduced in nature
as there will be higher investments and the costs of the products will be higher in nature as
well 9 Wang et al., 2015).
For instance- In this respective scenario, this can be analysed and identified that
Johnstons of Elgin had to make huge and higher investments and this was the major cause in
increasing the overall price of the different products in the entire market which was a huge
problem for the company (Mangan and Lalwani, 2016). Furthermore, this has been analysed
and identified that Johnstons of Elgin needs to understand the advantages of the vertical
integration approach along with the different negative approaches which will be beneficial for
the company in an effective manner.
There can be another major disadvantage wherein this can be seen that the old
competencies and the new competencies may collide and this will lead to huge and major
competitive disadvantage. Due to these disadvantages, this can be analysed that there can
other major competitors in the entire market which can provide the customers with similar
kind of products at a lower price and the quality will be the same like Johnstons of Elgin
(Taticchi et al., 2015).

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Mechanism of Supply Chain and Driving Efficiencies
There are different kinds of mechanism of the supply chain which has been adopted
by the respective company named Johnstons of Elgin which has helped them to become more
competitive in nature in comparison to the other competitors in the entire market. Johnstons
of Elgin tried to overcome the different challenges related to the other competitors in the
market who were trying to introduce such products in the market at a cheaper price and the
quality is the same like Johnstons of Elgin (Coyle et al., 2016).
Furthermore, there are different other challenges related to the innovation related
techniques in which this was seen that the company was not being able to focus more on the
innovative approaches like the other competitors and this was becoming a negative approach
for the company to stand out in the crowd in comparison to the other competitors. In order to
overcome and reduce the different kinds of challenges in the market, this was essential for
Johnstons of Elgin to perform a major review of the different critical supply chain
management processes (Schoenherr and Speier‐Pero, 2015).
With the implementation of the process mapping, this can be analysed that this is the
management and planning tool which helps in visually describing the flow of the entire work
in an effective manner. The process map is the flowchart which is followed by the Johnstons
of Elgin, this has helped them in identifying the different opportunities for the reduction in
the non-value adding time along with removing the different bottlenecks (Monczka et al.,
2015). Additionally, this has been seen that there should be inclusive of the different kinds of
more fashion-oriented approaches which helped the company in introducing the cross-
functional approaches in the decision-making capabilities and this helped the company in
becoming more competitive in nature.

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With the implementation of the enterprise planning system, this helped the company
Johnstons of Elgin in continuously focusing on the improvement of the process. The
enterprise planning system, the efficiency has been increased and improved for the respective
company along with decreasing the costs in an effective manner (Wisner, Tan and Leong,
2014). As per the case study, this can be analysed that there are different kinds of challenges
faced by them which was required to be reduced such as optimization of the process of
business and there should be reduction of the time along with the costs of the litigation.
With the ERP, Johnstons of Elgin tried to reduce the delivery and lead time in an
effective manner which helped the company in assisting towards the planning of the
production and the inventory management is managed in an effective manner. Enterprise
Resource Planning helps in enabling that all the different kinds of functions across the
different departments of the company is being managed in an effective manner without much
hassle and this is efficient and appropriate in nature (Brindley, 2017).
Employment of Upstream to Downstream Production and Finishing Processes
Upstream is the actual supply network of the organization suppliers along with the
new suppliers. The upstream supply chain activities are something which will be coming into
the company from the different raw materials to finished kind of products and the final
product which is being delivered to the customers is the upstream part of the supply chain.
In case of Johnstons of Elgin, this was seen that there were huge changes in the
production processes in which this was seen that company focused on production of the
different menswear business with high quality products, however over the time, the company
tried to focus more on the different kinds of fashion related products in the organization with
the help of the different suppliers and this has helped the company in becoming more
successful in nature (Fernie and Sparks, 2014).

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However, on the other hand, this was seen that the company Johnstons of Elgin
included the downstream supply chain management activities in which this was seen that the
main coordination of the flow of the information relating to the different products and
services is between the different customers along with the clients. There is a huge contrast
between the upstream and downstream of the different activities (Beske, Land and Seuring,
2014).
As per the case study, this was seen that in the first few years, this was seen that the
company Johnstons of Elgin mainly focused on the different kinds of upstream activities
wherein the main focus was on suppliers and the coordination was basically done among
them. On the other hand, this was seen that after few years, the company used the
downstream approach in which this was analysed that the company mainly coordinated with
the different customers and this was essential and effective in nature for the company
(Martínez-Jurado and Moyano-Fuentes, 2014).
The finishing processes which have been employed by Johnstons of Elgin was a
management strategy and this helped the company in overall improvement of the appearance
and this was successful approach for the company and this helped them in gaining huge
competitive advantage in comparison to the other companies in the entire competitive market
(Carter, Rogers and Choi, 2015).
This was essential in nature for the company Johnstons of Elgin and this improved the
designs of the products which are being sold by them to the customers in the entire UK
market. Johnstons of Elgin started to produce different kinds of clothing and other products
for the other different customers in the entire market and this tried to increase their flexibility
in the entire process of production in an effective and efficient manner which was helpful in
changing the design of the product along with the different specifications as well.

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Agile and Lean Logistics Strategies
Lean supply chain management strategies are about reducing the different costs and
this will help in lowering waste as possible. This is essential for the organization with high
and huge volume of purchase orders and this will help in benefitting the efficiency in an
effective manner. On the other hand, agile supply chain management is highly flexible in
nature as this will help in adopting to the different kinds of changing situations easily.
In case of Johnstons of Elgin company, this can be analysed that the company needs
to opt for the agile supply chain management strategies in order to gain more competitive
advantage in an effective manner. Furthermore, this can be seen that there is huge level of
flexibility in the agile supply chain management approach which will be efficient in nature as
this will help the company in identifying the different kinds of opportunities which can be
gained by the company effectively and without much issues.
For instance- Burberry is one such company which can be taken as an example as
this has been able to increase the number of the different seasons for their collection of the
different products for their target customers in the entire market.
The flexibility is essential in the respective approach in which this was seen that
proper and effective ascertainment of the different products and services which are required
to be provided to the customers is essential in nature which will be in favour for the company
and for the different customers in the market.
Furthermore, the number of skilled employees in the organization is essential in
nature for the Johnstons of Elgin company which will help them in becoming more
competitive inn nature and gain more competitive advantage by implementing the agile
supply chain management strategies effectively as well (Troselj, 2014).

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Conclusion
Therefore, this can be concluded that the supply chain and logistics management are
essential in nature which has been applied in the case of Johnstons of Elgin Company.
Furthermore, this was seen that the company tried to apply different kinds of management
strategies such as lean and agile strategy along with the different kinds of the vertical
integration strategies which helped the company in managing the different kinds of issues in
an effective manner and this helped the company Johnstons of Elgin in becoming successful
in the different approaches which was applied by them in comparison to the different other
competitors in the market.

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References
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logistics perspective. Nelson Education.
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challenges in the retail supply chain. Kogan page publishers.
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