Ajax Safety Shoe Company

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Supply chain management is one of the main undertakings for companies regardless of industry of operation (Kahraman & Oztaysi, 2014). According to Sople (2012, 287), supply chain optimization “has applications in all industries manufacturing and/or distributing goods, retail chains, industrial products, and fat moving consumer goods.” However, supply chain management is very critical for companies to compete and be successful in the manufacturing and operation beyond domestic borders making for a further requirement for an efficient and effective supply chain (Graham, 2005). The increased global competition and improvements in transport and communication have made it more critical for firms to have well developed supply chains (World Economic Forum, 2013). Zara for example has excelled in the apparel industry owing to a focus on exceptional supply chain and it has revolutionized the fashion industry reducing lead times to at least two weeks and competing with well-established players (Choudhury & Holmgren, 2011 and Nordas et al., 2006). Supply chain decisions in the electronic industry with companies including Nokia, Apple, Samsung, Sony, and Motorola locating production centers in low costs areas are some of the strategic decisions companies have to make in efforts to be effective in supply chain management. The cost cutting measures as well as improving competitive advantage are the main goals of supply chain management (Monza et al, 2015 & Luo, 2012). The emphasis on having an effective supply chain cuts across all manufacturing companies include the food manufacturing such as Ajax Safety Shoe Company (Ajax SSC). The paper provides a review of the strategic decisions Ajax SSC has undertaken over the years and the results achieved, the alternative approaches that were available for the company and a determination for the choices that could have been more effective or least effective for the company.

Critical discussion of the theories in relation to Ajax Safety Shoe Company

Theories provide a platform to help us understand the practical aspects of business and other undertakings. The manufacturing industry provides a critical look at some of the aspects that companies have to content with in daily operations and can be explained through theories put forth by researchers. Demand and supply theory is clearly evident in the operations of Ajax Shoes Company with the company seeking to meet the needs of customers for safety shoed. The factors that affect demand include regulations in these industries including Chemical and electronics that form the core markets for Ajax. The supply is affected by production costs that have led to outsourcing products from Brazil and the need to reach clients easily including setting up locations in neighboring European countries. The low production costs and utilization of improved technology have aid in lowering the production costs increasing supply (Free, 2010). These aspects among others influence Ajax SCC ability to supply enough quality shoes to meet the demand by its customers.

Outsourcing is another theory clearly exposed by Ajax SCC and is used as a means of reducing the production costs while ensuring quality products are delivered to the consumers (Frederickson, 2011). The success of outsourcing requires an understanding of the core practices for the business and focus on those one’s while providing other competent firms an opportunity to undertake support activities. Globalization is another theoretical underpinning evident in the activities of Ajax SCC and has made it possible for outsourcing to be very effective for the company. The improvement of transport and cheaper faster communication has allowed manufacturing companies to outsource production activities while meeting the customer demand effectively (Kozlak, 2008). The success of Ajax in the global scene is partially sue to its ability to interact and communicate with the suppliers to deliver quality products on time for the development of high quality and safe shoes that meet the needs of its customers well. Supply chain and logistics is also clearly involved in the Ajax SCC business and is critical for the business global operations with a close collaboration with suppliers and customers (Boyce et al., 2016).

The approaches Ajax safety Shoe Company undertook and the results

Ajax SSC is a German based shoe making company and has been in operation for over 100 years. The company has managed to compete effectively in the market by implementing several strategies that have helped it overcome challenges relating to demand and supply of its products. The challenges the company faced in recent years include the decline of its traditional markets, coal and steel industries, influx of cheap imports from China and operating in a high wave economy. The company instituted several strategic measures that have been successful in mitigating these challenges including:

Outsourcing:

the company sources high quality uppers from Brazil where cost of production is low. Calori et al. (2000) provides shows that production costs in Brazil are low compared to European countries and the United States hence a basis for Ajax decision to outsource. The uppers imported from Brazil are also of high quality allowing the company to create high quality products that can compete effectively with the competition both at domestic and global level. The company also utilizes low cost labor in the assembling of the components minimizing cists in the process.

Differentiation:

the company managed to overcome the influx of cheap imports through product differentiation and designing the products towards a specific market segment. Ajax SSC develop high quality products for the Automotive, Aerospace, Chemical and Electronics markets that focus on the value and quality of the product to ensure employee safety. The differentiation allowed the company to create a competitive advantage over cheaper imports. According to Dirisu et al. (2013), product differentiation offers a firm a strong basis for competitive advantage and organizational performance.

Customer focus: the company listens to the customers and provides products and services that meet this need. When customers require products faster than could be shipped, urgent orders are expedited by air for a $1 per pair not only improving customer satisfaction but ensuring there is high customer loyalty. The development of strong relationships with the customers is also evident with the creation of single source supplier arrangements with companies including Deutsche Telecom that has allowed the company to have direct access to the information needed for better customer-focused product development. The personal information includes shoe size preferences and their previous orders allowing the company to provide high customization improving satisfaction. A customer focused approach has allowed the company to improve performance and realize that “not all customers are created equal” (Mentzer, 2004). The realization has opened new opportunities for the company and endeared it to its moist important stakeholders.

Technology utilization:

the incorporation of retail technologies in the running of Ajax operations is also a plus since customers from companies including Deutsche Telecom can make orders and provide information through their online accounts. Automation in the production process is also evident at Ajax SSC allowing the company to easily meet demand through producing quality products within a short time. Tatlock (2012) highlights the need for process automation for companies and the associated cultural change to derive the highest performance improvements. Ajax achieved success through the automation of its product lines. s

Effective collaboration:

information sharing and collaboration with suppliers and customers is another aspect of the company that has been effective in strategic supply chain efficiency (Rosell & Lakemond, 2012). The company works with customers to develop special shoes that meet special needs that have provided new opportunities. The effect is the development of a new customer segment and the realization of new opportunities for growth and expansion of the company’s product offering.

The last aspect evident in the case is cultural competence. Setting up offices in neighboring European countries and staffing them with employees who have an in-depth understanding of the locality and provide customer service and product ideas that meet the needs of the local population has allowed the company to have a strong customer-centric orientation and improve its cultural competence in providing quality products for these populations. The effect is that the company is endeared to the local population improving its reach and regional dominance as quality shoe maker. Wilenius (2006) provides a clear exposition of the role cultural competence in the business world today showing its importance for Ajax SSC.

The alternative approaches the company may have taken that could have yielded better returns for the company

There are a wide variety of choices for strategic supply chain management and business can determine the most appropriate options given the situation. The mitigating factors for a choice of strategy include the costs, the availability of resources, the customer demands, and the extent of technology required among other factors. There are strategic choices that Ajax could put in place to achieve its goal of local and global expansion while cementing its place as a global quality safety shoe maker. These strategies include:

Product differentiation: Ajax could determine new opportunities that allow for product differentiation including entry into the non-regulated safety industries and provide high-quality shoes for official and non-official functions. The market for these shoes is very high and the company has established production facilities that ensure the shift is not costly while providing a strong potential for huge returns. The company’s commitment to quality products would allow it to gain a large customer following among the general populace if new products that meet the needs of the people were developed. The increased market presence would improve the company’s profitability and market share while competing effectively with cheap imports from China (Ventura–Neokosmidis, 2007).

Adopt demand driven planning strategies:

Ajax SCC could also implement demand strategies to ensure the product development process would align with the changing needs of the customers. The strategy would help the company manage better with the decline in the coal and steel industries by understanding new trends and new frontiers for quality shoes and developing products to meet this demand. Demand driven planning strategies would help the company make clear forecasts owing to its direct impacts on all aspects of the supply chain (Chase, 2013).

Adopt an agile or lean supply chain: Studies by Gilanina et al. (2011) and Konecka (2010) have shown the positive relationship between adopting a lean or an agile supply chain or a hybrid combination in developing competitive advantage. The change business environment makes sense for Ajax to adopt any of these supply chain strategies for competitive advantage. The agility of the supply chain would allow the company to be more responsive to customer needs and changing conditions another factor that builds competitive advantage (Sukati et al., 2012).

Innovation: there is no doubt that in the current business operating environment, there is a need for an innovative workforce and research oriented business analytics to achieve better performance. Ajax SCC would ensure through innovation, new product designs that align with the manufacturing cycle and supply chain operations to ensure the right cost of production, place and time are well determined to achieve the highest revenue for the company.

Introduce sustainability in the supply chain operations of the business: there has been a time when sustainability in operations has been more crucial than the current business environment. Implementing sustainable operations would make the company more entrenched with its consumers augmenting customer loyalty while ensuring environmental protection. Sustainability in business operations has also been shown to have a positive impact on the company’s bottom-line (Collier & Evans, 2014).

Alternative options that could have been worse for the company had it decided to implement

Note all strategic choices yield the best results for a company. The different location and customer characteristics all make it impossible for all strategic choices to fit all companies. Therefore, there are certain strategic choices that would not be a good for Ajax SSC to implement including:

The first worse option would have been focusing on the domestic market. The option would yield limited growth opportunities for the company. The option would also have seen the production costs for the company increasing while the market either remained the same or diminished leading to lower profits.

The other option that would yield low returns to the company is setting up production facilities in high costs locations. Strategic supply chain choices have to be made in consideration with costs and profitability and such a decision would go against these aspects limiting the company’s aims of competing effectively.

Ajax SCC has succeeded in the shoe manufacturing business owing to a strong commitment to supply chain efficiency, The Company realized the need for a commitment towards an efficient supply chain and meeting customer demands well, which has allowed it to overcome challenges attributed to changing operations environment. Some of the decisions that set the company apart in its operations management include high quality product provision, sourcing of quality products from low-cost location, listening and implementing customer concerns and opinions in the production process, and an automation of the supply chain. Online ordering and efficient warehouse to customer supply chain management have also ensured the company has been successful at domestic and international level.

References

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Calori, R. , Atamer, T., & Nunes, P. (2000). The Dynamics of International Competition: From practice to theory. Sage.

Chase, C. W. (2013). Demand-driven forecasting: a structured approach to forecasting. John Wiley & Sons.

Choudhury, B., & Holmgren, T. (2011). Supply chain agility towards global outsourcing within fast fashion industry, a case study at Gina tricot.

Collier, D. A., & Evans, J. R. (2014). Operations Management: Goods. Services and Value Chains, 2nd ed., Madison, OH: Thompson South-Western.

Dirisu, J. I., Iyiola, O., & Ibidunni, O. S. (2013). Product differentiation: A tool of competitive advantage and optimal organizational performance (A study of Unilever Nigeria PLC). European Scientific Journal, ESJ, 9(34).

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Rosell, D. T., & Lakemond, N. (2012). Collaborative innovation with suppliers: a conceptual model for characterising supplier contributions to NPD. International Journal of Technology Intelligence and Planning, 8(2), 197-214.

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Tatlock, R. (2012). Manufacturing Process Automation. BioProcess Int, 10 (1).

Ventura–Neokosmidis, Z., Neokosmidis, I., & Theofilou, A. (2007). Productivity, Product Differentiation and Profitability: A Comparison between the Chemical and the Textile Industries in Greece. Oxford Journal, 6(1), 97-101.

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Wilenius, M. (2006). Cultural competence in the business world: a Finnish perspective. Journal of business strategy, 27(4), 43-49.

January 19, 2024
Category:

Business Economics

Subcategory:

Corporations Management

Subject area:

Company

Number of pages

10

Number of words

2587

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