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Vertical Integration in Raymond

The Raymond Group is vertically and horizontally integrated across the textile and apparel supply chain. It has operations from raw material production through to retail stores. Raymond owns factories that produce fabrics, garments, and retail various apparel brands. Vertical integration provides benefits like reduced costs but also has costs like increased administration. Raymond has pursued several strategic partnerships and acquisitions in different countries to expand its global operations and capabilities across the value chain.

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Ayushi Shukla
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445 views

Vertical Integration in Raymond

The Raymond Group is vertically and horizontally integrated across the textile and apparel supply chain. It has operations from raw material production through to retail stores. Raymond owns factories that produce fabrics, garments, and retail various apparel brands. Vertical integration provides benefits like reduced costs but also has costs like increased administration. Raymond has pursued several strategic partnerships and acquisitions in different countries to expand its global operations and capabilities across the value chain.

Uploaded by

Ayushi Shukla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CORPORATE STRATEGY

Vertical integration

To understand vertical integration done by Raymond, we first need to


understand the supply chain of the apparel industry and the value added
through each node.
 The supply chain begins with the raw material in the form of cotton,
jute, wool, etc.
 Next comes in the processes of spinning, weaving and dyeing on this raw
material transforming it into thread form which is further used.
 Now this thread is cut into different sizes and fused with various
chemicals as per the required product quality.
 It is then sewed as per the product, washed properly, quality checks are
done and then the finished good are packaged and sent to the various
channels through which the company distributes its product to the
customers.
The below given picture shows the complex network of information and product flow in the supply
chain thereby giving us an idea about the heavy administrative costs vertical integration brings with
it.
Raymond in their corporate presentation in May, 2014 presented their
integrated operations across value chain from raw materials- fibre in the form
of wool, polyester, viscose and cotton to their own retail shops of various
brands. The value chain in completely integrated by Raymond.

The Raymond Group is horizontally and vertically integrated and offers end-to-
end solutions for fabrics and garmenting. They have in total six textile plants
and four garmenting factories in India and Europe combined.

BENEFITS AND COSTS OF VERTICAL INTEGRATION


The benefits from Vertical integration include reduction of the transaction
costs include the costs of searching and negotiating, drawing the contracts,
monitoring and enforcing of contracts and achieving technical economies from
physical integration of processes.
The costs of vertical integration include generating competencies/capabilities,
ambiguous optimal scale of production, Administrative costs, incentivisation
problems, competitive effects, flexibility, investing in unattractive business and
compounding risks.

Facts about Raymond’s vertical integration


1. Raymond - UCO NV of Belgium
It is a 50:50 JV. Uco NV is a leading manufacturer of specialty denim. Their JV
manufacturing and marketing specialty are denim fabrics.
Benefit: Geographical Scope, Risk Mitigation, Global Marketing network,
Reduction in searching costs
Cost: Administrative Costs
2. Raymond - Gruppo Zambaiti
Gruppo Zambaiti is one of the top three Italian high fashion cotton textile
majors in the world. The specialty is low cost production, technology and
distribution with Italian strengths of creativity, style, production know-how,
quality finishing and lead times.
Benefit: Vertical scope, technical economies
Cost: Administrative Costs, optimal production, competitive effects, flexibility

3. Raymond - EverBlue
This is a Forward Integration. EverBlue is a top of the line manufacturing
facility for Jeanswear, near Bangalore. The Specialty is the plant Having a high
degree of automation right which includes computerized Gerber spreader and
cutter to laser patterning and finishing.
Benefit: Vertical scope, technical economies
Cost: Administrative Costs, optimal production, competitive effects, flexibility,
incentivisation problems

4. Raymond - Flex
This is a technical collaboration. Flex is one of the largest dress shirt
manufacturers in Japan. “Celebrations”, the name of the unit in Bangalore has
enough flexibility to adapt to smaller runs and style changes. This flexibility
permits manufacture of both fused and non-fused collars and cuffs as per
customer requirements.
Benefit: Vertical scope, technical economies
Cost: Administrative Costs, optimal production, competitive effects,
Incentivisation problems

Distribution Channels
The Raymond distribution network comprises of more than 20,000 Multi Brand
Outlets and over 400 exclusive retail outlets in more than 170 cities which
includes ‘The Raymond Shop’ which retails Raymond Fabric and menswear
brands (Park Avenue, Parx, Manzoni and ColorPlus) and exclusive brand outlets
for Park Avenue, Manzoni, Colorplus, Parx and Zapp! The Raymond Shop also
has 31 outlets overseas in the Middle East, Sri Lanka and Bangladesh.
All brands from the Raymond Group portfolio are well entrenched in the
market and are sold through multi brand outlets, as well as dedicated,
exclusive stores, in India and the Middle East.

References

https://fashion2apparel.blogspot.com/2017/02/supply-chain-management-apparel-industry.html

https://www.textilesintelligence.com/tistoi/index.cfm?pageid=3&repid=TISTOI&issueid=129&artid=
1320

http://www.raymond.in/sites/default/files/raymond%20group%20pd1.pdf

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