Supply Chain Introduction

Supply chain management employs strategic outsourcing that formalizes the company’s
purchasing power consolidation. Through strategic outsourcing, the company can find the
desired values in the marketplace and align its business goals to the purchasing strategy. Digital
transformation has enhanced the growth of strategic outsourcing hence impacting the evolution
of supply chain processes. The approach requires an analysis of the core players in the company
and the possible strategies to enhance the responsiveness and efficiency of the operations. The
case questions seek to examine the understanding of different outsourcing strategies that can be
adopted in the VF Company.

Question 1

The world has become globalized in the 21 st century. The VF brands have therefore
become dependent on outsourcing more than before as a result of global marketing. The brands
have changed from being a vertically integrated supply chain to being more diverse which has
allowed for gaining a competitive advantage in the market. The idea of outsourcing production in
various companies is based on various reasons. One of the basic reasons is to save on the
production costs such as taxation and distribution since it can be conducted at both the local
(directly in the country) and regional (nearby countries) levels where products are sold unlike
other companies like Nike (Sardar & Memon, 2016).
The other reason is that outsourcing their products lowers the cost especially due to
increased profit margins. In the apparel industries, the market is fragmented and there is no
dominant player which makes outsourcing necessary. Besides, the central focus of the apparel

3

industry is to build on its brand. The concept allows them to gain a wide customer base as the
consumers remain loyal to the brand. Product differentiation is also minimal in the apparel
industry and therefore outsourcing plays a role in shifting their focus on brand building and
marketing (Sardar & Memon, 2016). Based on these reasons, it is evident that this is a strategic
issue for VF brands especially because they have to optimize their supply chain while expanding
the business globally. Such will allow the brand to gain a competitive advantage in the global
market.

Question 2

Evaluating the outsourcing strategy is significant for the success of any business. The
appropriate criteria need to be considered while evaluating different sourcing strategies in the
market. The efficiency of production is one criterion that the VF brands need to consider. The
criteria can be connected with the quality of goods being manufactured. The quality of goods
determines the bigger picture of the business to the eye of the consumer. Therefore, the company
has to maintain the actual quality of goods that they need their potential customers to perceive
despite the presence of trade-offs between costs and quality. The other criteria are the lead time
from the suppliers (Sarder & Memon, 2016). A short lead-time allows the company to optimize
the whole supply chain. In the apparel industry, the demand for a product is realized after it gets
to the market hence necessitating the shortest possible lead time from suppliers.
The other evaluation criteria are considering channel management. Some channels have
several partners which lengthen the time and increases the efforts needed to manage. The other
factor is the cost of maintaining a supply chain including the distribution and production costs.
The company needs to know the available resources and what they need to keep the supply stable

4

and sustainable. Besides, there should be trust among the supply chain partners since it enhances
company efficiency in managing the channel. Flexibility is another significant criterion that
should be considered in the evaluation (Sardar & Memon, 2016). The production should not rely
on an aspect that can delay the process of either distribution or production. The company should
also keep in mind the initial investment and its returns when building or modifying any strategy.

Question 3

The VF has utilized three strategies including the self-manufacturing of goods, the “Third
Way” of sourcing, and packed sourcing. The self-manufacturing of goods strategy means that VF
brands own the whole manufacturing process. The company also operates all facilities
independently and therefore everything is internal. The major benefit of this strategy is that there
is a shorter lead time since the company is not dependent on external players. In most cases, the
external players tend to delay the channel process as some may be working for competitors in the
industry. The other advantage of this approach is that the company has full control over
manufacturing processes hence maintaining the required quality and efficiency of production
(Cohen & Lee, 2020). However, employing this strategy is also associated with some
shortcomings. The company foot’s high costs of production as they run all the processes
internally. Besides, the company is likely to encounter competitive disadvantages from
companies that outsource their production since they have a relatively low cost of production.
The other strategy is packaged outsourcing, also referred to as outsourcing the production
entire production operations to different manufacturers. The strategy is associated with various
benefits such as freedom to choose the preferred supplier depending on factors such as costs and
geography. The general cost of production and distribution is low as compared to the self-

5

manufacturing strategy. The company also has the freedom to invest in other areas in the apparel
industry such as marketing and brand building (Cohen & Lee, 2020). Therefore, packaged
outsourcing offers more expansion opportunities. Nevertheless, the strategy has various
disadvantages which limit its level of preference among producers. There is a longer lead time
due to reliance on external players which increases the probability of issues of excess inventory
and stock out. Besides, there is the possibility to compromise the quality of products. The lack of
trust between core players in the company leads to inefficiency in production especially in cases
where the same suppliers offer services to other competing companies. The strategy also lacks
flexibility hence the inability to alter production parameters.
The third strategy is the “Third Way” of the sourcing approach. The strategy stands
between the self-manufacturing of goods and packaged sourcing strategies. The strategies merge
the advantages of the two strategies to enhance production efficiency. Such is achieved through
sharing the VF technology with suppliers to improve the organizational relationship (Heydan et
al., 2020). In this approach, the VF brands create a strategic partnership with external players
like suppliers of a particular product. The partnership contract is signed for several years instead
of having to repeat the ordering cycle afresh in every season. The strategy has various benefits
including shorter leads time and better quality and efficiency as compared to the packaged
strategy. The company also gains control over the production as partnership prevents the
competitors from taking their suppliers. The strategy also allows the company to invest in other
areas of interest in the apparel industry such as a brand building. Some of the disadvantages of
this strategy are that the company have to share their technology with external players to enhance
operational efficiency. The selection process is also time-consuming especially because it is
difficult to choose suppliers who are willing to work in this form of sourcing (Cohen & Lee,

6

2020). The suppliers also need to be trained and mentored which is a form of expenditure adding
on production and distribution.
From the analysis of the three strategies, it is apparent that there is no perfect strategy. All
of them have both advantages and disadvantages. Besides, they all come with some sort of trade-
offs and none can be said to be entirely effective. However, employing the third strategy of
outsourcing can be effective for a company. VF brands can optimize the outcomes while
minimizing the disadvantages in the long run. Therefore, the most preferred outsourcing strategy
for VF is “Third Way” since it merges the advantages of both the self-manufacturing of goods
and packaged strategy.

Question 4

The framework of product type and supply chain type has various elements. Under the
supply chain types, there are efficient and responsive supply chains. On the product demand,
there is function and innovation. Some products in the apparel industry are more innovative
hence the ability to change and meet the demand and uncertainties in the market. The responsive
aspect of the supply chain means that it has some aspects of efficiency in place (Hannibal &
Kauppi, 2019). Therefore, the VF Company needs to come up with a strategy that incorporates
the aspect of both the efficient and responsive type of supply chain. Expansive use of the “Third
Way” outsourcing strategy is recommended. The company should also strive to improve the
strategy by reducing and eventually eliminating risks and disadvantages associated with this
form of outsourcing. The implication will be enhanced optimized production while minimizing
the negative aspects likely to affect the production efficiency.
Conclusion

7

The case questions seek to examine the understanding of different outsourcing strategies
that can be adopted in the VF Company. There are various outsourcing strategies and none
proves to be entirely effective. However, the “Third Way” strategy would be most appropriate
for VF especially because it merges the advantages of both the self-manufactured goods and
packaged outsourcing strategy. Selecting an effective strategy boosts the overall productivity of
the company since it can optimize the output while minimizing the input. Therefore, VF brands
should consider adopting the “Third Way” sourcing strategy.

8

Reference

Cohen, M. A., & Lee, H. L. (2020). Designing the right global supply chain network.
Manufacturing & Service Operations Management, 22(1), 15-24.
Hannibal, C., & Kauppi, K. (2019). Third-party social sustainability assessment: Is it a multi-tier
supply chain solution?. International Journal of Production Economics, 217, 78-87.
Heydari, J., Govindan, K., Nasab, H. R. E., & Taleizadeh, A. A. (2020). Coordination by
quantity flexibility contract in a two-echelon supply chain system: effect of outsourcing
decisions. International Journal of Production Economics, 225, 107586.
Sardar, S., Lee, Y. H., & Memon, M. S. (2016). A sustainable outsourcing strategy regarding
cost, capacity flexibility, and risk in a textile supply chain. Sustainability, 8(3), 234.