TBS 908 Assessment 1: Analysis of Coats

Introduction

Coats North America, a subsidiary of Coats PLC established in the UK, has confronted a
malaise on the subject of supply chain management and practice. Rapid environmental
change is to blame as the key rationale behind the supply chain turmoil. The key points raised
in the literature review are that there has been a need to for an organisation to extend its
control and influence of the supply chain to cope with environmental changes, especially
among the emergence of Fast Fashion (Johnson et al., 2006; Bruce et al., 2004; Dewhurst et
al., 2000); strategic supply chain should remain flexible and responsive across procurement
function, manufacturing, inventory, and dyadic relationships (Bake, 2007; Stevenson and
Spring, 2007; Jenkins and Wright, 1998). Thus, the aim of this research report is to study the
relevant literature as well as to analyse the impact of the change of environment on the
business of Coats. The approach of Porter’s five forces will be used to examine the impact of
the environmental change. The report is divided into five sections: introduction, research,
analysis, conclusions, and evaluation.

Research

Of course, environmental factors not only internal factors but also external factors have a
significant influence on a business (Dewhurst et al., 2000, pp. 246-247). In fast moving
market including textiles and clothing industry, it is common to experience a good deal of
change, in particular global sourcing and intense price competition (Bruce et al., 2004,
p.151). Understanding the changes affecting supply chain management is therefore
considered necessary. It is in an attempt to increase the ability to anticipate changes as well as
to respond in a direction that can gain competitive advantage (Johnson et al., 2007, pp.33-34;
Bruce et al., 2004, pp.151-152). A wide range of analyses can be used to keep track of those
driving forces, such as market analysis, supplier analysis, competitor analysis, and so forth.
To survive in an age of rapid change in addition to strong competition, it is required for an
organisation to commit in the development of effective skills, strategies and technologies as
well as the continuous improvement, to create responsive organisational structures and to
capture the benefits of an outstanding supply chain management. It was furthermore claimed
that the success or failure of various supply chains is also determined by inventory holding
and warehousing strategies. Supply chain strategies for products, which appear to be short
product lifecycle such as fashion and high technology, may suite with no inventory holding
approach. As a result, the company is required to identify consumer trends and to drive those
products into the market, directly (Baker, 2007, pp. 76-78; Bruce et al., 2004, pp.165-166).
Due to the patterns of dynamic demand, managing supply chain in support of apparel and
textiles suppliers needs to be synchronised. Moreover, relationships with partners are
considered crucial for a company in order to develop advanced technology and to cope with
the changing demands in the supply chain (Bruce et al., 2004, pp.165-166). It has thus
become imperative for a company to be able to rapidly respond to changing markets as well
as provide rapid replenishment.

Analysis

Coats North America, a large thread for apparel manufacturer, has discovered that there was a
significant misalignment between the customer base and the asset base. Also, the supply
chain strategies did not maintain responsive and effective. It was found that Coats operated
on traditional MRP-based scheduling approach, which gave rose to high supply chain costs.
This is due to very long inventory holding in addition to obsolete inventory. It could be seen
the point that Coats’ supply chain network, supply chain processes, as well as technology
were in an essential to be redesigned. It is also important to remark that the competition
appears to be intensive on account of the fast pace of globalisation and development of
technologies. Therefore, the porter’s five forces framework is fundamentally used to analyse
the position of the company (Jones and Jones, 2006; pp., 26-32).

At Coats, the threat of potential entry into the industry is relatively low because of high cost
of investment. Also, the threat of substitute products is considered low, of course. The
bargaining power of suppliers appears to be medium. On the contrary, the degree of rivalry
among existing competitors and the bargaining power of buyers seem to be high, on the basis
of the intense industry competition, as aforesaid. It is clear that apparel industry is
substantially diverse and fast moving with a variety of parties engaged in. Moreover, the
emergence of Fast Fashion and its influence across the industry has a major effect on Coats,
driving the company to dramatically change its supply chain management. As a result,
transformation strategies in the direction of effective supply chain management are needed in
order to bring about the success of entire business at Coats. The markets competition is today
based on supply chain against supply chain, no longer company against company.
Conclusions

The research report has given emphasis to the adoption of research knowledge provided in
the literature to the business situation at Coats North America. It was found that, certainly,
the supply chain management is very important, contributing to the success or failure of a
business. According to the case study, Coats North America has struggled with unresponsive
supply chain approach, costing the company a large amount of money. Thus, Coats will need
to quickly react with its supply chain turmoil. The company should transform its supply chain
into lean supply chain so as to eliminate of the entire sources of waste, such as lead time,
inventory, and so on (Bruce et al., 2004, pp.152-152). However, since apparel products are
short lifecycle, the approach also needs to be able to respond to the environment with the
rapid and volatile change.

Evaluation:

It has become confident that Coats definitely needs to transform its supply chain management
to survive in the global competitive environment. Lean supply chian along with continuous
improvement appears to be suitable approach for Coats. At any given point, there have been a
number of successful supply chain systems implemented the lean concept. Consequently,
further work needed to be achieved is to study an effective way to apply the concept of lean
supply chian at Coats.

References:

Baker, P. (2007) An exploratory framework of the role of inventory and warehousing in

international supply chains, The International Journal of Logistics Management, Vol. 18(1),
pp. 64-80.

Bruce, M., Daly, L., and Towers, N. (2004) Lean or agile: A solution for supply chain
management in the textiles and clothing industry? International Journal of Operations &
Production Management, Vol. 24(2), pp. 151-170.

Dewhurst, F., Spring, M. and Arkle, N. (2000) Environmental change and supply chain
management: a multi-case study exploration of the impact of Y2000, Supply Chain
Management: An International Journal; Vol. 5 (5), pp. 245-260.
Jenkins, G.P. and Wright, D.S. (1998) Managing inflexible supply chains, International
Journal of Logistics Management, Vol. 9(2), pp. 83-90.

Johnson, P.F., Leenders, M.R., and Fearon, H.E. (2006) Supply’s Growing Status and
Influence: A Sixteen-Year Perspective, The Journal of Supply Chain Management, Vol. 42
(2), pp. 33-43.

Jones, R. and Jones, R.M. (2006) The Apparel Industry, Second Edition, India: Wiley-
Blackwell,

Stevenson, M. and Spring, M. (2007) Flexibility from a supply chain perspective: definition
and review, International Journal of Operations & Production Management; Vol. 27(7), pp.
685-713.