VF Brands: Global Supply Chain Strategy - Case Solution
VF Brands is a leading apparel company that is home to many popular brands. The company is considering a shift from its current supply chain because it has certain drawbacks. Chris Fraser, President of the Supply Chain International for VF Brands, is also worried that it will not be able to meet the future demands of customers in the Asia-Pacific market. The company is looking into a "third-way" approach which would foster closer cooperation and partnerships with suppliers.
Case Questions Answered
- The supply chain options VF Brands seems to have on the table are to continue the accelerated shift from integrated manufacturing to full outsourcing under the industry practices specified above, refrain from further shifting from IM to outsourcing, and either keep the situation "as is" or even rebuild internal manufacturing capability or engage the "Third Way" as suggested in the case. Please decide which is the best course of action for VF.
- How has the supply chain strategy of VF Brands evolved over the two decades? How well aligned were the supply chain and business strategy prior to 2008?
- What is your evaluation of the Third Way sourcing strategy proposed in the case? Is it the "best of both worlds" or the "worst of both worlds"?
- Provide a concise case background.
- How has VF Brands' operations strategy evolved over the two decades? How well aligned were the operations and the business strategy?
- How would you characterize VF's various products/brands in terms of critical competitive priorities? What are the implications for the operations strategy?
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Introduction – VF Brands
VF Brands is an American company and the world’s largest apparel and footwear company founded in 1899. The company has two major brands — Heritage Brands and Lifestyle Brands. These two brands are organized into five coalitions: The jeanswear coalition, the Imagewear Coalition, the Outdoor and Action coalition, and the sportswear and contemporary brand coalitions.
The company’s primary strategy is to further growth. VF’s sourcing strategy for its apparel involves both in-house manufacturing and outsourcing from an extensive network of suppliers while optimizing costs.
The company is seeking to eliminate some of the inefficiencies with the current sourcing strategy that has affected its supply chain. For example, there is a lack of coordination and trust between the company and the suppliers.
Fraser, the head of the global supply chain organization for VF Brands, has proposed a new sourcing strategy called ‘Third Way.’ This strategy partially integrates both internal manufacturing and outsourcing elements, thus creating a strong partnership between VF and suppliers as well as an efficient supply chain.
Key problems
The main problem involves the implementation of the ‘Third Way’ sourcing strategy in VF Brands’ supply chain. There is a growing concern about whether this program is achievable and suitable for VF.
One secondary problem is the internal resistance to the strategy from the marketing and manufacturing teams. The marketing personnel is concerned about losing flexibility, while manufacturing people feel that VF’s superior expertise will be revealed to competitors.
Another problem is that some of the suppliers are unwilling to sign up for the Third Way partnership. Finally, there is a need to hire and train personnel to work in VF Brands’ manufacturing plants across the world.
Analysis
Fraser must make a critical analysis of internal manufacturing, traditional outsourcing, and Third Way sourcing before deciding on what is best for VF Brands’ competitiveness and success in the future.
a) Continue with its internal manufacturing of products (apparel)
Advantages of this option include:
Reduced lead times. The case notes that products manufactured in VF’s plants take a shorter time to produce, hence the ability to respond to customer orders quickly.
Ability to expand the sale of apparel to other market potentials. With internal production, it is easier for VF Brands to target rapidly developing markets like China or India. As the case notes, VF’s revenues from international sales rose from 19% in 2001 to 30% in 2008.
Ability to preserve technological and manufacturing expertise. VF Brands has a stable internal manufacturing capability and competence that provides a significant competitive advantage. This allows VF to produce high-quality products as well as achieve efficiency and reliability.
_Disadvantages of this option are: _
High capital investment. If VF Brands chooses to produce its products in- house, it will…
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