VF’s Supply Chain Design
Like other companies, the economic crisis of 2008-09 took a toll on VF Brands. However, beyond the crisis, there was another obstacle standing in the company’s way of success. The President of the company discovered long-term structural changes throughout the apparel industry that could call for major changes when it came to how the company managed its supply chain. The company had to find cost saving ways of managing their supply chain. This paper discusses the positive and negative aspects, as well as the issues and concerns that come along with VF Brand’s supply chain.
In the apparel industry, supply chains were inflexible in the past. Wholesalers and retailers placed their orders approximately 10 month prior to the season, then the products would arrive at the beginning of the season. “After this point, the retailer had limited ability to adjust stocks in response to actual customer demand” (Pisano & Adams 8). For example, a retailer was not able to order more if they ran out of the product. Furthermore, the retailer would be stuck with the item if that particular item did not sell. Thus, this method of supply chains in the apparel industry can cause retailers to suffer the costs associated with stock-outs as well as excess inventory. This has led to manufacturers to build strategies in order to be more flexible in the market place. However, in 2009, VF Brands had not yet switched or altered their supply chain in order to be more flexible for their wholesalers and retailers. They continue to have the historical method when it comes to supply chains
One of the advantages of the VF supply chain is that it is efficient for the company. By having retailers and wholesalers to place orders 10 months prior to the season, the company knows exactly how much of each product they need to produce. This is cost efficient as well. The company does not lose money by producing too much or too little of their product. However, there are disadvantages for the wholesale and retailers in this method of supply chain.
One of the major disadvantages of the VF supply chain is that it does place a lot of cost onto their retailers. If their retailers runs out of the product, they do not have the opportunity to purchase more. This creates a financial loss for the retailer. Without the product, they cannot make any more money off of the product. On the other hand, it also financially impacts a company when they cannot sell the items they purchased for that season. This leaves the retailers with excess inventory. In other words, the retailer loses money by not being able to see excess inventory.
The major issue and concern regarding this method of supply chains is that retailers may not be able to make their money back. This is a concern to manufactures because if the retailers cannot make their money back, then they will stop ordering products from the manufactures. Supply chains need to be designed so no individual or company suffers a large economic loss. In other words, a company’s supply chain needs to be designed so that everyone wins. In conclusion, VF Brand’s supply chain needs to be designed so that everyone involved gains economically. This is the only way for a company’s supply chain to be successful in the long
Works Cited
Pisano, Gary & Adams, Pamela. “VF Brands: Global Supply Chain Strategy.” Harvard Business School. (2009). Assessed on 12 April 2016.
