vf corporation's role as a supply chain orchestrator
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www.csasupplychainsummit.com
The Role of the Supply Chain Orchestrator
Ellen MartinVP Supply Chain Information Systems, VF Corp.
Bill McBeathChief Research Officer, ChainLink Research
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Agenda
• Changing Business Models– Cooperation vs. Competition– Supply Chain Orchestrator
• VF Corporations Journey to Supply Chain Orchestrator– Vertical to Virtual– Leads Times vs. Inventory– Investing in supply chain trading partners– Visibility, collaboration, pre-positioning
3
Changing Business Models
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Transformation of the Supply Chain
Success comes from managing the links!
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What is the Problem?
Supply chains have become increasingly out-sourced, globally dispersed, and complex.
The importance of sharing data between trading partners and across multiple tiers has intensified
Tier 2 Tier 1 OEM Wholesaler Retailer
Delays, Distortion, Differences, Disputes
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Single Version of the Truth (SVoT)
Retailer
Wholesaler
OEM
Tier 2
Tier 1
SVoT
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SVoT Example: Service Ecosystem
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Managing Trust with Trading Partners
“When should you trust your trading partners and when should you withhold information
from them?”
“Never and Never”
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The Paradox
• Competition– Private Label vs.
Mfg. Brand
– Margin/Cost Pressures
– Compliance Disputes
– Who gets stuck w/ excess inventory
• Cooperation– Optimize Portfolio of PL
and Mfg Brands
– Reducing end-to-end cost
– Creative compliance improvements
– Improved forecasts, allocation, & replenishment
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Evolution Of The Supply Chain
1990 2000 2004…1990 2000 2004…
ProcessA
ProcessA
ProcessB
ProcessB
ProcessC
ProcessC
ProcessD
ProcessD
ProcessH
ProcessH
ProcessY
ProcessY
Enterprise Authority Domain
VERTICALVERTICAL
“within the four walls”
POLICYPOLICY: Do It All Re-engineer/Outsource Architectural PartnershipPOLICYPOLICY: Do It All Re-engineer/Outsource Architectural Partnership
PROCESSPROCESS: Push Mass Customization Market-DrivenPROCESSPROCESS: Push Mass Customization Market-Driven
PERFORMANCEPERFORMANCE: Cost Accounting/ROI Optimization/ROA Risk ManagementPERFORMANCEPERFORMANCE: Cost Accounting/ROI Optimization/ROA Risk Management
ENABLERSENABLERS: ERP APS/Integration Network/Mobility/RFIDENABLERSENABLERS: ERP APS/Integration Network/Mobility/RFID
ProcessA
ProcessA
ProcessB
ProcessB
ProcessC
ProcessC
ProcessD
ProcessD Enterprise
HEnterprise
H
EnterpriseY
EnterpriseY
Enterprise Authority Domain
VIRTUALVIRTUAL
Shared execution
Fully outsourcedprocesses
EnterpriseA
EnterpriseA
EnterpriseB
EnterpriseB
EnterpriseC
EnterpriseC
EnterpriseG
EnterpriseG
EnterpriseH
EnterpriseH
EnterpriseX
EnterpriseX
EnterpriseY
EnterpriseY
EnterpriseZ
EnterpriseZ
Domains of Authority / Influence
FEDERATEDFEDERATED
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Supply Chain Orchestrator
Customs Agency
Installation/Repair
Tier 1Component
SupplierRaw Materials
Supplier
3PL/Carrier
Design Shop
Physical
ServicesDelivery
Digital MediaServicesTier 2
ComponentSupplier
FinancialInstitution
Concierge
Call Center
Customer
ContractManufacturer
Brand Owner
Distributor
Retail Store
Supply ChainOrchestrator
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N-Tier Sourcing
Old
T1
T1
T1
T2
T2
T2
T2
T2
T3T3
T3
T3
T3
T3
T3
Mill
Mill
Mill
Mill
Mill
S
SS
S
S
S
S
AutoManufacturer
MiningCo.
MiningCo.
MiningCo.
New
S
AutoOEM
OE
M B
uy/
Sel
l
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The Global Virtual Factory
Source: ChainLink Research
• Selection of Suppliers Across Multiple Tiers (Picking the “Team”)• Location of Links, Matching of Competencies• Project-based (Project/program Manager)• N-Tier programs for supplier improvement (6-Sigma, Education)• Making Consumption commitments shortening lead times
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VF Corporate Overview
• VF a global leader in branded apparel with $7B in 2006 revenue
• Publicly traded on New York Stock Exchange - symbol VFC
• Founded 1899 Reading, PA
• Headquartered in Greensboro, NC with locations worldwide
• Over 43,000 employees worldwide
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VF Corporate Overview
• Divided Into 4 Operating Coalitions:
• Jeanswear - Wrangler, Lee, Rustler, Brittania, Chic
• Imagewear - Red Kap, Bulwark, Penn State, Nutmeg
• Sportswear- Nautica, Earl Jean, John Varvatos
• Outdoor - Jansport, Eastpak, The North Face, Vans, Reef
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Discount StoresDiscount Stores
Department StoresDepartment Stores
Casual PantsCasual Pants
1 out of every 4 jeans sold in the U.S. is a VF Brand!
®
WesternWestern
North & South American Jeanswear Coalition
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Outdoor CoalitionOutdoor Coalition
JanSportJanSport
The North FaceThe North Face
EastpakEastpak
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Imagewear CoalitionImagewear Coalition
• VF WorkwearVF WorkwearVF Brand SolutionsVF Brand Solutions
®
Licenses to produce Licenses to produce apparel from NFL,apparel from NFL,MLB, NBA, NHL, MLB, NBA, NHL, NASCARNASCAR
Customers include FedEx, Customers include FedEx, American Airlines, INS, American Airlines, INS, Sysco, AT&TSysco, AT&T
Licensed Sports Licensed Sports VF Solutions
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International Jeanswear CoalitionInternational Jeanswear Coalition
•
Strong market shares in a Strong market shares in a variety of global marketsvariety of global marketsStrong market shares in a Strong market shares in a variety of global marketsvariety of global markets
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Apparel Supply Chains
• Supply chains are going global, becoming increasingly more complex.
• Apparel companies that had vertically integrated supply chains, with US owned manufacturing have gone to non-owned, package sourced product from the Far East
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Global Recourses, Local Delivery
VF uses 1578 active partner factories throughout the world
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Vertically Integrated to Virtually Integrated
• Just how does a vertically integrated apparel producer transition to an environment of sourced manufacturing?
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Vertically Integrated to Virtually Integrated
• With longer lead times and lower inventory targets, how do you meet customer demand for increased service levels?
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Vertically Integrated to Virtually Integrated
• Melding, and molding, core competencies from a highly engineered manufacturing mind set to thinking in terms of global logistics and vendor partnerships
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Vertically Integrated to Virtually Integrated
• Global supply chain visibility and upstream collaboration are essential for pre-positioning of raw materials while minimizing inventory risks.
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Conclusions
• It is a new game, think different, think big
• Creative partnerships
• Get closer to the source
• Right mix of off shore vs. near shore
