Describe about the Global Management Perspective For Manufacturing Casual Category.
The success lies in the fact that it has its own production technology with which the company assures quality along with complete control over the value chain. The company has seen a tremendous move from cow to shoe. This report has reflected the strategic steps which ECCO took in its footwear business.
ECCO has been a success and the only footwear brand among the competitors who manufacture and sell retail product. As the company developed it faced threats from the international competitors, to curb the same, ECCO took a strategic step of focusing principally on the production and tanning not from the host country, but offshore to the other countries which are low cost in order to reduce the production cost. This off shore production has proved to be a distinct advantage to the ECCO of its competitors. The major competitors include, Clarks, Timberland and Geox. Few indirect competitors include, Adidas and Nike. However, ECCO cannot be considered as a branded marketer since, it does not majorly focuses on international branding tin comparison to brands such as Clarks.
However, the company currently following the offshore production and manufacturing of each of their product, according to the operations management and profitability, the current strategic program seems fit for ECCO, for the fact that the company does not brand its products in other markets; therefore, the market presence is less in comparison to the other brands. This in turn reduces the revenue and further the profitability. Therefore, to stay sustainable, the company must focus on the quality products.
Benefits of Off Shore Manufacturing
Offshoring has proven to be cost effective because it allows the manufacturer to work with the cheap and talented labor in different markets. It saves money and therefore enhances the profitability (Remoteresouces., 2017). In today’s scenario a lot of companies are turning to offshore production to attract technical support. However, before they can set up there are political and cultural issues to deal with. The other side of the story states that procuring and manufacturing in the other countries make the product cheap for the people in that country, thereby benefitting the company in terms of reduced cost, to customers, as they get product at a cheaper price and also provide work opportunity to the people in that country (Tatano et al. 2012, 66-75)
In House vs. Overseas Manufacturing
The off shore production also benefits the company in terms of the supplier power. The company has multiple suppliers at each place to procure the items from, thereby reducing the supplier power. This also helps them earn economies of scale (Longman 2017)
ECCO is known for manufacturing casual category footwear having Nike a large competitor to fight against with. However, the offshore production helped the ECCO to fight against it. The in production helped it maintain the quality of their shoes. Therefore, making it difficult for the competitors to create similar light weight shoes as ECCO without having to change the production team (Longman 2017).
The value chain for ECCO is spread over many countries, but home country. They are working their production in the Netherlands, Indonesia and Thailand. The company has sales in 90 markets across the Globe. For the leather they utilize, they need millions of cows, it makes it easy for them to procure the best quality while working with their manufacturing units in multiple countries. They gain expertise from the Netherlands. The company has their research center in Denmark. Therefore, the ECCO is Denmark’s most successful brand (Blesch, 2014).
The attention is given to the quality and product reliability in ECCO. In order to achieve this company needs to produce the shoes as per the customer specification, while producing in one market and selling the same in 90 markets across the globe will be difficult. This way the company will not be able to cater the demand of such high market also; producing in house will affect the supplier power, reducing the profitability by tremendously increasing the cost. The current value chain provides them the flexibility to alter the production as per the customer specification for high quality and customer satisfaction (Proff 2011, 16-35). Asia provides the labor at reduced cost; therefore, the majority of the manufacturing is located in there.
The Portuguese market is high in technological advancements; therefore, the company uses Portuguese technology (Adolfo. 2015). The employees are continuously trained in the Danish training centers to increase teamwork, commitment and producing high quality product. However, the company lacks the benefit of lead time, the lead time is high due to the offshore production to curb this issue, and the company needs to either install a production unit in Russia or to reduce the 3-4 week transportation time from Asia. Currently, in order to overcome this, the company has taken a strategic move by opening a production facility unit in Slovakia, not only at par production the facility here is also made to serve to create extra capacity, which helps reducing the delay risk (Adnan et al. 2014, 134-138).
Impact of Doubling the Compensation
The workers therefore, are experts in their own processes, thereby increasing the effectiveness and efficiency (Modgil, Sharma and Singh 2013, 816-831) the doubled compensation along with marketing the product in other countries such as India will enhance the internal and external customer satisfaction.
With off shore production not only, the cost is reduced, the risk is also spread across; the company’s production units are specialized in the task they perform. Now in the end, it could be inferred that offshore production company could easily reduce the risk and strengthen the business outcomes effectively.
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Longman, Nye. 2017. “How ECCO Shoes built an innovative supply chain”. Supply Chain. Accessed November 10, https://www.supplychaindigital.com/company/how-ecco-shoes-built-innovative-supply-chain#.
Modgil, Vikas, S. K. Sharma, and Jagtar Singh. 2013. "Performance modeling and availability analysis of shoe upper manufacturing unit." International Journal of Quality & Reliability Management 30, no. 8: 816-831.
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