Abstract

The protagonist Jamie Brown had been working in the textile industry for 32 years. He was passionate about the industry and enthusiastic about improving Coats’s operations, particularly in the Shenzhen, China, factory.
At an operational level, Jamie was challenged by the conflict of business priorities. One of the key directives set by the board of directors was to maximize cash flow. Inventory was the significant contributor to cash constraints in this industry, and Coats began to reduce batch sizes for production, and to reduce inventory stockpiles. To meet customer requirements for short lead times, thread was produced in small lots, and after the order was filled, the remaining thread was placed in inventory. With his strong operational background in the textile industry, Jamie was aware that by following this procedure, Coats was sacrificing economies of scale that could hurt profitability which could also impact cash flows through the year. This sacrifice also raised the question of whether Coats should pursue a make-to-stock or make-to-order strategy, since a make-to-order strategy implied that lot sizes would be set in accordance with customer orders.

Learning Objectives

The case enables students to understand the difference between maketostock and maketoorder strategies and evaluate their advantages and disadvantages alignment in strategic objectives within a business particularly between cash flow inventory and service levels the unique factors and challenges faced by companies operating in the manufacturing sector challenges created by a companys position within the supply chain and how a company can differentiate itself and its products