In supply chain management different firms undergo different types of integration to gain sustainability and competitive advantage both within and outside their functional horizon. Especially when it comes to vertical integration the firms strive to merge or acquire with their stakeholders of the same production process in two different ways. One is backward integration and another one is forward integration. While we had short interpretation on backward integration with the help of Sula Vineyards (https://logisticsmatters.blogspot.com/2020/08/backward-integration-with-every-sip-of_8.html) today let us unfurl a precise reading on forward integration with the help of dazzling sarees of Kanchipuram.
Before we begin to entwine the silk, let us understand what is forward type of vertical integration is; so as the term speaks itself, it is a strategy where the firm expands frontward by taking control of direct distribution of their products to seek advantages like:
- Increase in market share
- Create barriers for competitors
- Gain control over distribution channel
- To cut down the middlemen
- To gain specific competitive advantage
And now to India’s silk, as a country India takes the pride in possessing a sum of iconic silk cities through which it enjoys being the world’s second largest silk producer. Among those cities, Kanchipuram stands out to be one with more than 60,000 operating looms having an early turnover more than INR 200 billion.
In general silk industry of Kanchipuram functions in two ways: One, where the experts and semi trained weavers of the city loom the vibrant colored silk sarees either by hand or by semi machinery setup, later various third party traders buy these weaved sarees from the weavers and trade it both nationally and internationally. Second functionality happens through the co operative societies framed by the Tamil Nadu Government where both financial and selling aids are provided to the weavers.
In both these methods weavers get only a certain allocated compensation with a fixed margin which hits the ones who wants to expand bigger in size with better marginal pricing. Hence weavers started adopting forward integration where they served being both the manufacturer and the retailer. This idea on one hand helped the weavers in pricing on the other hand provided the customers a choice of customization (customers who previously bought a ready weaved sarees now can just walk in and ask the weavers to customize one for them).
Yet, being a manufacturer cum retailer the weavers of Kanchipuram should maintain certain standards to get qualified by Geographical Indication registry and by Silk Mark, who certify the purity of silk in the textile.
Although, the weavers are up-grading through computer aided design and in automation certain other factors like branding and marketing should also be focused to catch up with the prevailing completion. Thus folks, cottage industries of Kanchipuram are no lesser than the showrooms when it comes to Silk Sarees. # Happy learning_5
Integrating their manufacturing unit and showroom is one way to show the customers the value of the product or the path the which brings life to the product. I believe this type of implementation is done to a lot of hand looms across India, especially in the north where wool weavers have the manufacturing unit and the showroom all in a facility.
ReplyDeleteYes it is but in India very few cities have their geographical identification received from the Government and one such place is Kanchipuram, here paramount effort is needed to maintain the quality unlike non geographically identified ones.
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