VF BRANDS

Brand Coalition Strategies - Internal MFT.

• Internal Manufacturing:
• Pros: Full control, high quality, efficient, reliable, shortest lead time
• Cons: High cost
• Outsourcing:
• Pros: flexible outsourcing, minimize costs
• Cons: Lack of coordination/trust between supplier and buyer (high inventory, long lead time), network investment, careful monitoring of supplier manufacturing capabilities

Brand Coalition Strategies - Outsourcing

• Outsourcing:
• Pros: flexibility, cost minimization
• Cons: Lack of coordination/trust between supplier and buyer (high inventory, long lead time), network investment, careful monitoring of supplier manufacturing capabilities

Brand Coalition Strategies - Previously...

• 60% jeanswear in house
• Imagewear produced largely internally
• 100% outsourcing for lifestyle apparel, footwear, and backpacks.
• Provides competitive advantage

Brand Coalition Strategies - Challenges

• Product line complexity: over 600 SKUs, 100,000 SKUs for jeanswear alone.
• Differing needs/priorities: design is king for fashion products (no cost consideration); others focused on low cost + rapid replenishment

Brand Coalition Strategies - Recommendations

• "Other": Outsource (small %, low rev.)
• "Contemporary": third way, or design in house (fashion oriented) & outsource production
• "Outdoor": third way (varying seasonality - flexibility)
• "Sportswear": outsource (low rev., simplicity)

Brand Coalition Strategies - Recommendations

• "Imagewear": third way (flexibility for Sports jerseys) & outsource (mass production for generic Harley Davidson-esque items)
• "Jeanswear": in house (high product variability, i.e. 100,000 SKUs; good investment for highest revenue product)

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

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

SOURCING STRATEGIES

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

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

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

• 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

Untitled Slide