VF Brands: Global Supply Chain Strategy - Case Study Example

? VF Brands: Global Supply Chain Strategy (Case Study) Sourcing Strategy (third way) The sourcing strategy (third way) was designed in supply chain management process as a half-way point between traditional outsourcing and full integration. In the year 2004, Christ Fraser, the president of international supply chain network for VF brand constructed a globally diversified and highly efficient supply chain management process. Impact of this Strategy This would help the organization to reduce cost in order to operate successfully in competitive market place. This strategy had performed well for several years but it had some drawbacks too. Lack of trust and co-ordination between the apparel organizations and suppliers led to long lead time and higher inventory. VF Brand Point of View This strategy takes huge lead time to complete a manufacturing process. Moreover because of this sourcing strategy the organizations may have to face huge inventory due to lack of trust and co-ordination between the organization and the suppliers that can hamper the logistics and distribution process. In-House Manufacturing Process In-house manufacturing process is a particular method which is implemented by the organization to complete a certain task using the internal technical organizational resources. Justification Basis on the Economic Situation Depending upon this assessment it can be said that VF brand should reduce its in house manufacturing process. During the economic downturn, it will be effective for the apparel organizations to keep limited stocks in inventory. Slow liquidation of inventory is one of the major problems in the supply chain management process of the organization. VF brand needs to manufacture products according to the current market demand. Global Strategy in terms of Brand The organization has successfully expanded their business in global market. They have established their platforms and footprints in Latin America, Europe and Asia. The organization has effectively explored the potential opportunities for future growth. In terms of customer service and preference, the organization has made commitment to build partnership and healthy relationship with the clients and customers. Global strategy in terms of organizational Culture It can be identified from the case study that, the organization generally follows supreme organizational value. VF brand has implemented informal organizational structure. The value and mission of the organization reflects from the organizational culture. Answer 1 VF brands are one of the leading organizations within the global apparel industry. The organization has implemented both outsourcing and internal manufacturing strategy. It is one of unique operational strategy in the global apparel industry (Friedman, 2007). The organization has several manufacturing units across the globe. In terms of US apparel market, the organization used outsourcing for its footwear, backpack and lifestyle apparel (Norman & Ramirez, 1998). However, coming into the main topic, it has evident that VF brands have several manufacturing plants in the Asian, European and American countries (Lee, 2012). The organization should not limit its manufacturing process in the home country. In order to practice effective global business operation, the organization should continue its manufacturing process in the foreign operating countries. It will be difficult for the organization to control global operation process depending upon the home manufacturing process. This strategy will be time consuming and costly (Collins & Porras, 2011). Considering the recent unfavourable economic condition around the globe, it can say that, the organization needs to support their global business operation by global manufacturing process (Justice, 2010). In terms of consumer buying behaviour, people are trying to save more rather than spending. Though the global economy is overcoming from the effects of recession, but still it can state that, several organizations are focusing on own production process. On the other hand, from the organization point of view, the companies used to focus on own production ability rather than outsourcing. Though the global economy is overcoming from the effects of recession, but still it is feasible that, several organizations are focusing on own production process. Therefore, the organization needs to implement backward vertical integration strategy. This supply chain management strategy will help the organization to control their manufacturing process in global operating countries (Ross, 2006). Moreover, the organization should decentralize their manufacturing process. This strategy will help the organization to bring pace in the manufacturing and supply chain process. Being a global brand, the organization will find difficulty in their business process by limiting their manufacturing process in home country. The organization has to collect the resources and raw materials from several part of the globe (Chomsky, 2008). Then, they have to manufacture and process the products. After manufacturing, the organization has to redeliver the products to several parts of the world. As a whole, this process is huge costly and time consuming (Jansen, 2007). Therefore, the organization should not limit their manufacturing process in their home country. The organization need to continue their manufacturing process in all the business operating countries. Answer 2 As it is discussed earlier, the organization should not limit its manufacturing process in their home country. They need to expand their manufacturing process in the operating countries. VF brand is a popular global brand due to its attractive apparel products (Vaidya, 2006). The organization should move its manufacturing process in several low-cost countries, such as China, India, Bangladesh and Sri Lanka. The organization can achieve several competitive advantages through this strategy. First of all, the organization can get the raw materials of superior quality. The climate of these countries will support the business process of VF Brands. Moreover, the organization can get effective resources in low cost. These Asian counties are economically growing countries. Availability of huge land and capital will motivate the organization to establish manufacturing plants in the operating countries. Moreover, the organization can get effective skilled labours in low cost (Bruce, Moore & Birtwistle, 2004). This strategy will help the organization to capitalize on the advantages of economies of scale. Effective communication modes with all global parts will help the organization to bring efficiency in the manufacturing process. The organization should not close down their manufacturing process in their home country. They need to decentralize the supply chain process. This decentralize supply chain process will help the organization to meet with the current market demand. Apparel industry is very much potential and competitive industry (Dooren, 2003). Several leading organizations within the industry are trying to increase their core competencies by implementing various unique strategies. Decentralization process is a unique manufacturing process strategy. Several potential competitors of VF brands have implemented this strategy. Decentralized process helps the organization to control its inventory and stock. And this strategy brings pace in the supply chain network (Wallace, 2004). However, if the organization tries to close down home manufacturing plant, then it will be difficult for them to supply the products according to the market demand within a quick period of time. Due to the recent financial crisis and global recession, the purchasing power of people has reduced drastically. Now-a-days, the middle class people of several countries avoid purchasing goods (Boal, 2009). They have the fear that, recession may hit for another time. This perception has restricted them to buy the apparel products. In terms of consumer buying behaviour it can state that, the consumers are tending to consume quality products with reasonable price range (Kluyver, 2010). Moreover, the frequency of product purchasing has decreas4ed due to the low disposable income. Understanding the recent global economical condition, it can be said that, the organization should establish new manufacturing plants in the low cost countries and should continue with home manufacturing process as they have financial capability of establishing new plants (Ferrell, Hitt & Ferrell, 2000). Answer 3 During the implementation of Third Way strategy, the president of the organization had perceived that, the Third Way strategy will be effective and will help to increase the global business network and business output. But slowly and gradually, several drawbacks of this strategy have started to reveal (Hill & Jones, 2012). The VF brand is procuring the apparels and other products both from a large supplier network and their own factory Similar to the other competitors, the organization is also outsourcing the strategy emphasized flexibility to manufacture specific garment in appropriate volume. Several individuals had believed that, this thirds way strategy will provide significant incentives to the suppliers (Plunkett, 2007). This strategy would help the organization to reduce cost and operate successfully in competitive market place. Though this strategy had performed well for several years, but it had some drawbacks too. Lack of trust and co-ordination between the apparel organizations and suppliers led to long lead time and higher inventory (Conrad & Poole, 2012). Effective supply chain process can help the apparel organizations to increase their business output. The organization is one of the leading global brands within the apparel industry. Day by day, the organization is creating a potential customer base around the globe (Rosen, Jaffe & Lopez, 1997). Therefore, it is recommended that, the organization should increase the number of suppliers with effective international standard. Slow supply chain process can harm the overall business activities. Limited number of suppliers can slowdown several business activities, such as collection of raw materials, manufacturing, processing and product distribution (Kotter, 2008). All these process needs the support of effective supply chain process. Limited number of global suppliers cannot fulfil the market demand of global market. Global distribution process is most challenging part within a business process. In terms of a global apparel manufacturing, it is necessary for the organizations to have huge supplier support. Increasing the strength of the numbers of suppliers is not a difficult task for the organization. They have the financial ability to implement this strategy. This strategy will help the organization to reduce time and cost. Effective supply of raw materials and product distribution within a specific time period will help VF Brands to increase their business efficiency and output. This strategy will help the organization to reduce their operational lead time. 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