Business > CASE STUDY > VF Brands Global Supply Chain Strategy, By Gary Pisano, Pamela Adams (Caase Notes /Answer with Free  (All)

VF Brands Global Supply Chain Strategy, By Gary Pisano, Pamela Adams (Caase Notes /Answer with Free Case File)

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VF Brands, owner of such well-known brands as Wrangler, Lee, The North Face, Nautica, Vans, Napapirji, and Eastpak, is one of the world’s largest apparel companies. The case study examines the evo... lution of the company’s sourcing strategy. Until the late 1990s, the company was a fully integrated manufacturer (with most of its production in North America). During the past decade, under a new growth strategy, the company focused on acquiring new “life style” brands and expanding its global sales and marketing reach. This strategy prompted dramatic changes in the company’s operating model, with a shift away from in-house production toward outsourcing. By 2009, VF produced 30% of its products in-house, and the remaining 70% through outsourcing. (In contrast, most large apparel manufacturers outsourced 100% of their production needs to 3rd party vendors). VF’s outsourcing relationships followed the traditional apparel industry model: armslength, short-term (one season, one model) with little loyalty in either direction and little cooperation. While such a model provided extensive flexibility to respond to changes in tariffs/quotas, exchanges rates, and regional differences in cost structure—as well as putting suppliers under relentless pressure to cut costs—it also involved costs due to lack of coordination. At the time of the case, VF is contemplating a change in its sourcing strategy that would improve coordination in the supply chain, while maintaining flexibility. The head of the company’s global supply chain organization has proposed a new sourcing arrangement called “Third Way” designed to mix the best elements of internal production and outsourcing. The focal question for the case is whether such a model can really achieve “the best of both worlds” and the conditions under which it might be appropriate. [Show More]

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