Vf brands modes of sourcing

1. VF Brands
Global Supply Chain Strategy
Group 5:
Shashank Singh
Subhadeep Biswas
Vandana Rawat

2. Modes of Sourcing
Internal sourcing
Strong manufacturing capabilities
Aided by over a century of experience and
extensive proprietary knowledge
Provide a low lead time
Ensures low defect rates
High Capital investment
Outsourcing
Helped in capital deployment strategy
Cheaper alternative against insourcing
High lead times
Overall process of placing order was time
consuming
Lack of trust & coordination among suppliers

3. Types of Approach
● Cut and Make Approach: Suppliers are paid by VF for value addition at each step
● Package sourcing Approach: Single supplier takes charge for entire production
process
● Third way Approach: Integrate VF’s internal technical and supply chain expertise
into suppliers
● Products/Brands to be benefited from third way: Both the Jeanswear and
outdoor/action sports

4. “Third Way” Sourcing
● Halfway point between full integration and traditional outsourcing
● True partnership between VF and the suppliers
● Agreement for a specific product line and commit to a volume forecast over a
number of years
● VF would utilize its purchasing capacity to help the suppliers
● Suppliers would be paid on a cost plus basis with a margin to meet its ROA
requirements

5. Challenges in Implementation
● Loss of flexibility under the new approach
● Sharing of its proprietary expertise with outside suppliers
● Existing suppliers gave a cold reception
● Staffing

6. Benefits of Third Way
● Capital Deployment
● Production schedules
● Low cost raw material
● Process improvements
● Dedicated capacity
● Proprietary

7. THANK YOU