E-Logistics2 Essay Example | Topics and Well Written Essays - 3250 words

E-Logistics2 - Essay Example This report describes the various challenges in global supply chain strategy of VF and provides recommendation to improve the â€Å"Third Way† supply chain system globally. Challenges of â€Å"Third Way† supply chain Strategy of VF VF produces apparel products from its own manufacturing plant as well as acquires apparels from other suppliers. The outsourcing strategy of VF focuses on flexibility. VF possesses strong manufacturing capacity and it can also outsource from suppliers to improve the manufacturing process and thus reduce the cost of production. The suppliers of clothing industry use term contract to produce particular garment in particular quantity. This strategy helped VF to shift production among suppliers in different locations for optimizing cost and respond to the changes in any business conditions such as changes in tariff or exchange rates and other factors related to cost. VF had responded to the market condition and implemented â€Å"Third Way† supply chain strategy to gain advantage of both in house manufacturing and outsourcing as well. VF had two critical elements in the growth strategy which were to expand sales outside the US and expand the ‘direct to consumer’ business. ... For example, Walmart, one of the largest jeans retailers of the US had launched jeans under their own brand. The apparel companies mostly concentrated on design and marketing rather than production. The production was generally a labour intensive method which had several disadvantages. This enabled the garment companies to outsource the production of their design in high competitive terms (Pisano & Adams, 2009). As the supply chain had become globalized, it was a great challenge for VF to find good supplier and develop good relationship in order to coordinate the production flows. The apparel companies do not possess appropriate skill and good bond for efficient outsourcing in Asian region. For this reason, a few Asian manufacturers had started to modify their business to provide fully incorporated supply chain to the apparel companies (Pisano & Adams, 2009). The economic recession of 2008–2009 was also another challenge of VF. Compared to other competitors, VF had managed the global recession much better, though it has also seen decline in sales by 9% in the year 2009. Their income had reduced by 30% in the same year, but the financial condition of VF was strong. It had relatively lower debt, good credit line and comparatively higher cash than their competitors. The biggest fear for VF was the long term impact of the economic crisis on the supply chain. Several garment suppliers were operating on low margin and did not have any financial cushion. When the volume fell because of low demand of garment products, suppliers were forced to shut down their business. The sudden closure of supplier’s business had proved to be troublesome for VF Company. For example, a supplier of VF had informed that it would close down its