VF Brands: Global Supply Chain Strategy
Analyzation & Justification of Third Way Strategy
VF brands’ third-party sourcing approach is an example of an innovative concept. The organization delivers its engineering and supply chain capabilities to the suppliers in this sort of sourcing approach, which can improve process efficiency, capacity utilization, and infrastructure efficiency. It is possible for the corporation to lower the costs of completed items purchased from suppliers. The technical and supply chain capabilities of VF, which are well regarded in the industry, could aid the company in reducing the prices and time to deliver a product to end customers. As a result, the third-way sourcing approach could play a key role in giving VF brands a competitive advantage over their competitors.
The reasoning behind the third method sourcing approach is to reduce production costs while preserving the company’s considerable investments in plants and equipment. The motivation for deferring big capital investments in plants and equipment is to use the money for production by purchasing outsourcing strategies from various providers. The primary motivation for contemplating the third way strategy is to reduce the cost of a final product through improved supply chain and engineering capabilities of suppliers, hence gaining a competitive advantage over competitors.
The Impact of VF’s Business Strategy on Sourcing
Implementing third-party sourcing has a huge impact on VF’s business strategy. The third method of sourcing improves a company’s ability to maintain product quality under its standards while also shortening the time to get a product to the clothes store’s shelves. As a result, the company has yet to reap the benefits of using third-party sourcing, but it has saved money on facilities and equipment by negotiating with suppliers to expand and strengthen manufacturing and delivery capacities.
The organization can employ a varied sourcing strategy that comprises in-house sourcing, traditional outsourcing, and third-party sourcing because of the impact of its developed business plan. The company’s manufacturing capacity is increased thanks to the created business strategy of third-party procurement, which also improves delivery efficiency and product quality.
The Reason for the Third Way’s Existence
Third-party sourcing allows a corporation to distribute the production process among several companies, lowering the product’s cost. The supplier’s investment can be used for product lines, allowing the corporation to save money by sending raw materials to suppliers for manufacture. The third way sourcing method allows the supplier and the company to cooperatively schedule production capacity needed to fulfil the deadline, improving both organizations’ delivery efficiency.
Collaboration between the VF and the supplier would allow the VF to use its professional engineers to improve the suppliers’ production efficiency, which would be beneficial to both organizations. The VF offers raw materials and purchases fabrics for suppliers at a lower cost, allowing the company to minimize finished product costs and plant and equipment investments.
The Third Way’s implementation
When compared to the other option of getting finished goods for clients, implementing the third wayof sourcing allows the organization to reduce the total cost of a product. Third-way sourcing will increase the efficiency of getting products to apparel shop shelves. The third way will improve the relationship between the provided and VF brands by increasing collaboration among partner companies.
The corporation might save money on plant and equipment investments, allowing it to spend that money on raw material purchases from the supplier. At the end, third-way sourcing will allow the corporation to expand its manufacturing capacity without having to invest considerably in capital-intensive initiatives.
Comparison Between In House Sourcing, Outsourcing and Third Way Sourcing:
As shown in the above graph, the total cost of In house Sourcing is highest in all the sources having cost of $7.48 million whereas the Third Way Sourcing has a less cost of $6.96 million. So the VF Corporation should go with the Alternative of Third way sourcing.
Net Sales of VF brand from 2006 to 2008:
The graphically we can see that the sales of VF brand increase year to year in 2006. The VF Corporation has the sales of $6,138,087million which increase to $7,561,621million means the corporation has in strong financial health.
The current assets of the corporation are more in 2008 as compared to 2007, whereas the current liabilities of the VF brand decrease in 2008 as compared to 2007 it means the corporation is improving its debts and moves towards profitable direction. The working capital of the VF brand is also increasing in 2008, which is good and can help the company in future projects.
By analyzing all the three alternatives, we conclude that the third way, sourcing is a good option for the VF brand. This option costs less than other alternatives. The corporation can make long-term relationship with the suppliers by following the strategy of third way sourcing. With the third way sourcing the company has raw material with very lower cost and another benefit from this alternative is this the capital of company increases with lower expenditure. The VF brand has the strong brand recognition and brand equity in the market. Most of the customers in the United States prefer the products of VF incorporation because they have a dozen of brands with multiple designs, features and competitive advantage….
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