Maintaining the world's largest collection of tartans is not without its challenges. Located deep in the Scottish Borders at Galashiels, Lochcarron of Scotland stocks around 1,500 tartan fabrics. Ranging from the traditional 'Strome' preferred for kilt-making by the military and pipe bands to lightweight fabrics used for neck ties, scarves and sashes, the company's Highland Division maintains some 3,500 individual product lines.
Not surprisingly, the company has made effective use of information technology to ensure that offering customers a high level of choice and service is achieved at an acceptable cost. In fact, even though Lochcarron's Highlander Division has tripled its turnover over the past few years, the value of stock has been reduced from £2 million to £1 million over the same period.
Still a family owned company, Lochcarron's Managing Director, David Ogilvie, was brought into the business eleven years ago from the engineering industry to help introduce new production and management methods. He comments on the importance of stock control: "Warehouse stock can build up gradually over time and has a severe impact on overall profitability. Although it is easy to spot items stock that are simply gathering dust, it is more difficult to identify items that are moving slowing. It is a matter that can be open to personal opinions and guesswork unless systems are in place to pin-point problem areas."
Implemented in 1996 by textile industry specialist Reflex Data Systems, Lochcarron's Mertex system has played a major part in stock management improvements. Over the business as a whole, stock levels are virtually the same as they were ten years ago, even though turnover has increased from £2.5 million to £10 million. The system as part of a wider programme of business improvements, as David Ogilvie explains: "Our strategy was based on the production of bespoke and quality items, rather than bulk production and competing on price alone. Since this strategy necessarily required shorter production runs and faster turnaround times, a computer system was an essential component of our wider plans, which has involved a cultural change throughout the company."
Lochcarron's reputation has been built on its traditional highland wear and tartan fabrics. A visitor centre located alongside its main site in Galashiels tells the story of the history of the company, which still weaves tartan near the picturesque village of Lochcarron on the north west coast of Scotland - even using the original shed operated by crofters in the 1930's. In fact, traditional tartans now account for only half of the company's production, with innovative designs and production techniques enabling Lochcarron to make a powerful impact in the fashion industry. The company also runs thirteen retail outlets, stocking and selling a wide range of knitted goods and other garments.
The shape of Lochcarron's business has changed substantially since the system was first installed in 1995. The majority of stock is now held at the company's 13 retail, outlets, rather than at a single location. Given the tight profit margins, multi-location stock management is of particular importance. The company also holds stock at its overseas sales offices in New Hampshire in the USA and Ontario in Canada, where Lochcarron also manufactures kilts and other Scottish regalia. In addition, Lochcarron's products are marketed in Australasia, Japan, Korea, Europe, North America, and South Africa. The company's overseas achievements were recognised when 'The Princess Royal' presented it with the 'Gold Award for Export Achievement'.
Linking overseas offices to the Mertex system via VPN Internet technology provides them with immediate access to stock information, as David Ogilvie explains: "It used to take an hour or so to work out if we could fulfil an order from the USA. Now, staff at our office in New Hampshire can do the job themselves in a couple of minutes and without delays caused by different time zones." He adds: "It also minimises the risk of error. With up to half a dozen versions of individual tartans, a request for the wrong fabric could be a costly mistake since we often handle orders to equip complete pipe bands with highland dress."
The advantages of fast and flexible production planning are most apparent in the company's dealing with the fashion industry. Although the heavy weight of tartan fabrics mean that Lochcarron focuses mainly on the Autumn/Winter season, the fashion industry is driven by a few crucial fabric and catwalk shows. The company's creative team typically launches over 100 new designs each year, each of which requires production of sample fabrics. With individual tartans involving up to seven yarns, putting together a production plan used to take around one and a half weeks to complete, until the new system was implemented. Now, the process is completed in a matter of a few minutes - giving Lochcarron vital extra time to ensure success.
Lochcarron's success in this highly competitive market is demonstrated by the list of clients, which reads like a Who's Who of the Fashion Industry. David Ogilvie comments: "Our strategy is to focus on high value and low volume production. Although we deal with top fashion designers, we have around 650 live customer accounts at any one time, ranging from tourist boards and tea rooms to high street retailers and military bands. Accounts may vary in value from a few hundred pounds to £1/4 million and each market needs to be handled in a different way. But, having the right systems in place enables us to provide all of our customers with the same high level of customer service."
David Ogilvie acknowledges that the Mertex system provides information required to support Lochcarron's expanding business: "Knowing current stock levels or the production costs of a particular fabric empowers our team of managers to make cost-effective decisions and provide excellent customer service. We are 98% on time with delivery and we know why there were delays with the remaining 2% of orders - which enables us to do something about it."
Lochcarron of Scotland has not rested on its success. Locally, the company took over a Knitting mill in Hawick, in the Scottish Borders during 2002. Abroad, the company has recently opened a small sales office in Tokyo. Both ventures are now supported by the company's information systems, reducing production costs in Hawick and enabling marketing efforts to be targeted in Japan. David Ogilvie comments: "Our systems give us the confidence we need to expand the business. Not only do we have instant access to information, but we can trust the information. Given the high cost of investment in new production capacity or overseas expansion, this is crucial."
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