VF BRANDS

By: Haleigh Watson, Thomas Evans, Matt Mulligan, Brent Sanders, Stephen Giles, and Jared Huffman

ABOUT VF

• World's largest publicly owned apparel company
• Chris Fraser, President
• Supply Chain International for VF
• Brands include: North Face, JanSport, Wrangler, Lee, Nautica,
•      Vans, Timberland, Red Kap, 7, REEF, Eastpak

WHY THE NEED FOR CHANGES

• Ran out of new "low cost" places to source production
• Lack of coodination and trust between suppliers
• High inventory and long lead times
• VF can improve processes and reduce cost

VF'S THIRD WAY

• Sourcing strategy that employs a combination of both sourcing techniques
• This is a half way point between full integration and traditional outsourcing
• Suppliers receive short-term contracts to respond to exchange rates,
• tariffs, and quotas
• Pressures suppliers to reduce cost if they want their contracts renewed

VF'S THIRD WAY

• Disadvantage:
• Leads to lack of coordination and trust
• Advantage:
• Provides competitive advantage
• Best in the world in terms of quality, effiency and reliability

CAN VF RUN OFF ONE SINGLE SUPPLY CHAIN

• Only if they can implement their "Third Way"
• They already have the right infrastructure to gain
• and maintain this advantage

SOURCING STRATEGIES

• "Cut and Make"
• Vf uses contracts with different suppliers for different stages of production
• Example:
• Hire one firm to handle buying the fabrics and componets.
• Hire another firm to complete the sewing and washing

SOURCING STRATEGIES

• "Packaging Sourcing"
• A single supplier is in charge of the product from start to finish
• Works best with a collaborative style negotiation

STRUCTURE OF VF

• Varied due to the different sourcing stategies
• One side has many different steps involved in the supply chain
• The other side outsources nearly the entire process
• Sourcing depends on the product being produced

IMPROVING OPERATIONS, SOURCING STRATEGIES, AND STRUCTURE

• Utilize technology, brain power, and understand the process
• Consider the nature of demand for their products
• Don't mismatch between type of product and suppply chain
• Managers should primarily focus on market mediation
• Different strategies must be used since they have functional and innovative products

SOURCING STRATEGIES FOR EXPANDING TO ASIA

COMPREHENSIVE OUTSOURCING

• Engaging with a training partener for a multi-year period to strategically manage
• a comprehensive set of processes across all four functional process areas
• of your training organization
• Gives supplier some freedom while still allowing VF to come in and strategically
• change things as needed

COMPREHENSIVE OUTSOURSING

• Most complex strategy because it is across multiple functional areas
• Multiyear meaning that you are contracted for a longer period of time than your
• traditional sourcing
• No flexibility when it comes to changing suppliers
• There is a threat that the supplier could provide secrets to competitors once contract ends

SOURCING STRATEGIES FOR EXPANDING TO ASIA

BUSINESS PROCESS OUTSOURCING

• Engage a training partner to manage multiple processes within one functional area
• Not processes across functional areas
• Less complex because it is only across on functional areas
• This allows VF to pinpoint a specific area that needs improvement and take action
• Takes away fear that competitors will use these strategies due to dealing with one area

SOURCING STRATEGIES FOR EXPANDING TO ASIA

LICENSING A LICENSING AGREEMENT

• Forms of out-tasking and are used when sourcing a tangible asset
• Easier for VF to share and allow for the use of their technology to be used
• by their supplier to improve the supplier's process
• When the cost of implementation and set up are high, these deals are often multi-
• year so the client can amortize cost over longer periods of time

LICENSING A LICENSING AGREEMENT

• Vf could send knowledgeable engineers into specific plants and share
• intellectual knowledge to improve the supply chain
• Down side is it would be you risk giving away valuable knowledge
• that could be your competitive advantage

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