Case: VF Brands
Global Supply Chain Strategy
It was August 2009. Chris Fraser, president, Supply Chain International for VF Brands, was driving to his office just outside Milan near Lake Como. On this sunny morning, the sparkling lake was a picture of tranquility, a striking contrast to the turbulence of the global apparel industry. In the shorter term, the economic crisis of 2008-2009 was taking its toll on the entire business from the largest marketing companies to the smallest subcontractor. But beyond the crisis, Fraser also foresaw long-term structural changes in the apparel business that could call for profound changes in the way VF, the world's largest publicity owned Apparel Company, managed its supply chain strategy in apparel was focused on chasing low cost labor from one country to the next. Today, apparel is produced just about everywhere on Earth, and we have basically run out of new "low cost" places to source production-until, of course, penguins learn to sew. We have to start finding cost saving by how we manage our supply chain".
For some time, Fraser had been advocating that VF shifts its supply chain strategy. VF currently procured apparel both from its own plants and from a large network of supplier. Like its competitor, VF's outsourcing strategy emphasized flexibility. Most suppliers in the garment industry received short-term contracts (typically a few months) to produce a specific garment in specific volumes. This strategy allowed garment markets like VF to shift production among suppliers in different locations in order to optimize costs and to respond to changes in exchange rates, tariffs, and other cost factors. Many believed that this approach also provided strong incentives for suppliers to reduce costs in order to complete for future contracts. Fraser admitted that while this approach had worked well for many years, it had its drawbacks. The lack of coordination and trust between suppliers and apparel companies led to higher inventory and long lead times. In addition, Fraser felt that a company like VF, with its strong internal manufacturing capabilities has expertise that it could share with suppliers in order to improve.
For this assignment, read the case study, "VF Brands: Global Supply Chain Strategy,".
Once you have read and reviewed the case scenario, respond to the following questions with thorough explanations andwell-supported rationale.
1. Contrast the advantages of utilizing company-owned plants to using a large network of suppliers.
2. The development of strategic supplier relationships was discussed in the case. Why is this important to both thecompany as well as to the suppliers?
3. Analyze the strategic growth plan of VF Brands with respect to their acquisitions. Their mission in theseacquisitions was to preserve the organizational culture and unique brand identities of these acquisitions. Why wasVF Brands concerned about this?
4. Analyze whether VF Brands should expand the "Third Way" sourcing strategy, expand internal manufacturing, ordo more traditional sourcing. Include your rationale.
Your response should be a minimum of 4 pages in length, double-spaced. References should include your textbookplus a minimum of one additional credible reference.
All sources used, including the textbook, must be referenced;paraphrased and quoted material must have accompanying citations per APA guidelines.