Vf Brands Case Analysis

Submitted by

Sukriti Gupta(PGP09051)

Aanchal Agarwal(PGP09064)

Ayushi Budhiraja(PGP09075)

Atul Kumar Sonu(PGP09074)

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Answer 1

Operational strategy

VF used a mixture of both internal manufacturing and outsourcing, a relatively unique operations strategy in the apparel industry.

In the 1980s, many major apparel companies began to sell off their internal manufacturing operations and source their products from specialized suppliers whereas many of VF’s major competitors no longer had any internal manufacturing and relied completely on outsourcing.

In the late 1990s, VF would subsequently acquire, had no internal manufacturing. VF’s existing manufacturing infrastructure was not well suited to these lifestyle brands because VF’s plants were largely focused on jeans and denim products and VF plants were located in Mexico and the Caribbean in order to optimize the logistic costs and tariffs to serve the US market. Which led to closing of many of VF’s internal manufacturing plants

By 2009, VF produced about 30% of its products in-house (in its 40 remaining plants), and sourced the rest from independent suppliers. VF produced about 60% of its jeans in-house. Imagewear, which was largely targeted at the US market, and which required very quick response times, also sourced the vast majority of its products internally. On the other hand, VF used outsourcing for 100% of its lifestyle apparel, footwear, and backpacks.

On the sourcing side, building up a reliable and high-quality supplier network required an enormous investment in time. Prospective suppliers needed to be visited and their manufacturing capabilities carefully assessed.

VF had a strict policy of only doing business with suppliers who followed internationally established standards for worker safety and protection. It also took time to establish good working relationships with suppliers, and only experience could really   tell which ones were reliable.

By 2009, VF had relationships with more than 1600 contractors and 30 distribution centers around the world. The top 20 suppliers accounted for about 45% of the outsourced volume procured by VF on an annual basis. To manage this, the company hired Chris Fraser in 2000. He focused upon the Asian markets and proved it by acquisition of many new lifestyle brands, the company’s sourcing volume in Asia alone increased 15 fold to reach a total value of $1.8 billion

Business Strategy

By 1983, jeans accounted for 75% of the company’s $1 billion in sales. In 1984, the company focused upon expanding the jeans product line and diversifying into new areas. It acquired Blue Bell, Jantzen and RedKap. Through quite a bit of its history, Vanity Fair sought after a vertically incorporated assembling technique in jeans, with huge numbers of its manufacturing plants situated in the United States.