Rapid Technological Advancement and High Case Study

Pages: 11 (3576 words)  ·  Style: Harvard  ·  Bibliography Sources: 11  ·  File: .docx  ·  Level: Master's  ·  Topic: Business

SAMPLE EXCERPT . . .
The prototype is required because even the drawing having every detail sometimes is insufficient to judge the design. The prototypes are not only used for the purpose of internal decision making related to the evaluation of the design but it is also shown to the retailers which are the prospective customers. In response to different privacy and security concerns and issues along with the issues of speed and responsiveness, the prototypes are made by VF in the development centers which are either owned by the company or are partners of the company. This whole process consumes almost time period of four weeks. Along with this process the marketing department works on forecasting and predicting important factors like prices, sales, volumes, and profit margins related to different products and items. These forecasts and predictions made by marketing department have huge and vital impact on the design and strategy of supply chain of the company.

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Once all the design is finalized and all important decisions are taken by the marketing department the next step is to decide for the sourcing and other important steps related to the design of the supply chain. The company decides whether it will hire internal supplier or external supplier for the job and what will be the location of the supplier and other related matters. The sourcing decisions encompass the multiple levels including the sources of raw materials, accessories, fabrics, and other material. Several factors are considered before deciding the suppliers like location of the suppliers, economic factors including cost, and also the skills and expertise of the suppliers. For this purpose the company has different sourcing offices located at several locations which manage the process of procurement in the local region.

Case Study on Rapid Technological Advancement and High Assignment

This process of sourcing and procurement takes couple of months including identification of the suppliers, getting quotes on prices, and production of samples. Once this is done the contracts are signed for the respective products and associated volumes. There is high lead time involved therefore the prediction and forecasting should be done carefully and efficiently. The production of the final garments and items is completed in time period of four to five months and the final products are shipped back to United States through the sea which takes around two weeks. After clearing customs the products are shipped to the distribution centers of VF and are finally delivered to the retail outlets and the stores (Pisano & Adams, 2009).

ISSUES AND PROBLEMS WITH THE EXISTING SUPPLY CHAIN:

The existing supply chain of the company involved high lead time and was less flexible and responsive. The supply chain was competitive in the old scenario of apparel industry. Previously the supply chain of the overall apparel industry has been very inflexible. The retailers and wholesalers were required to place their orders about eight to ten months before the season. At the start of the selling season the products were delivered and the retailers were not able to adjust stocks and respond to the changing requirements and needs of the customers. The cost associated with the stock outs and excess inventory was to be tolerated by the retailers (Pisano & Adams, 2009).

With the passage of time, different technological advancements and changes have changed the outlook of the overall industry. The manufacturing companies in the apparel industry along with the retailers are looking for new methods and techniques to increase the flexibility and responsiveness of the supply chain.

This imposes increased pressure on the VF to revise and change the supply chain strategy and make it more flexible and responsive in order to remain competitive in the industry. The company responded to this challenge by forming different new strategies for managing the supply chain of different products and items. The company was able to create a supply chain which was highly efficient and was globally diversified. But the low cost and high efficiency is no longer the wining criteria in the industry. People now want quick service and flexibility.

THIRD WAY SUPPLY CHAIN STRATEGY:

In response to changing needs and requirements of market and industry the management of the company was looking for new methods and strategies to remain competitive in the market and increase the market share of the company. The company recognized that to some extent the supply chain was inefficient and irresponsive because of the lack of trust and coordination among the company and the suppliers. The contracts are short-term and the company and suppliers are not loyal to each other. The company changes the suppliers in order to further reduce the cost and the suppliers were also working with different companies. This lack of trust and coordination resulted in holding excessive inventory and increasing the lead time. The overall process involves high time and there was no improvement in the process.

On the other hand in-house production facility of the company was far more competent and efficient. The company could have increased the flexibility and responsiveness of the supply chain by utilizing the internal expertise and internal manufacturing. But the company was not ready to invest in the fixed manufacturing plants and other associated equipments as it was not consistent with the corporate capital development strategy of VF.

The president of the supply chain international for VF Brands, Chris Fraser, came up with an altogether new idea and concept of managing the supply chain of the company named as 'Third Way Sourcing'. He suggested that the company can further improve the efficiency of the supply chain along with increasing the flexibility and responsiveness, with the help of leveraging and internal technical expertise. In this way the company can try to gain higher level of control on the supply chain without owning the suppliers in reality. He was of believe that if the company will be able to enforce its internal technical expertise in the supply chain it will have clear competitive edge over other companies in the industry. The strategy which was put forwarded by him that was in between the strategies of full integration and traditional outsourcing. The main idea or focus was to build a true partnership between the supplier and the company.

Fraser suggested that the company will enter into a contract or an agreement with the suppliers for a particular product line for a long time period and the supplier will not serve any other competitor. The production line will be established by the supplier which will be dedicated to the products of VF. Suppliers and VF will work in collaboration in order to develop production schedules according to the needs and requirements of both the partners. Both the partners will share the information related to the forecasting of the order and the production capacity. VF will work along with the suppliers in order to improve the process. The engineering resources of the company will be available in order to improve the processes of production without charging any cost. Whenever it will be needed and required the company will make investments in the equipment and other specialized capital material. The company will help the suppliers in getting the raw material at discounted and low prices by using the purchasing capacity. At the same time the company will buy back any raw material which will be unused. Under this agreement cost plus basis along with the margin will be used to pay the suppliers (Pisano & Adams, 2009).

The company has formed five different third way agreements or partnerships with different suppliers. These third way partnerships include (Pisano & Adams, 2009):

1. Production of backpacks in Thailand.

2. Production of jeans in Bangladesh.

3. Production of jeans in Morocco.

4. Production of jeans in China for Chinese market.

5. Production of outwear in China.

Although the company also faced some backfires like in the case of partnership with the Moroccan supplier and the company had to buy the manufacturing plant. The company was able to reduce the overall cost involved in the supply chain process and was able to make the supply chain further efficient and competitive (Pisano & Adams, 2009).

CHALLENGES OF THE THIRD WAY SUPPLY CHAIN:

There are different issues, problems, and challenges of the third way supply chain which have to be faced by VF. First of all the company has to manage the internal resistance and criticism. The marketing department of the company was concerned about the flexibility of the supply chain which is the major driving force in the industry. According to them if the company will move away from its traditional sourcing strategy it will loss the flexibility. The manufacturing department was concerned about the closing of the internal manufacturing plants and was frustrated over the issue as they knew that they had the expertise and were more competent because of their strong and exceptional performance. And they were also against the idea that the sourcing team will handle and manage the engineering resources. They were also concerned about the concept of sharing… [END OF PREVIEW] . . . READ MORE

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