Case Study Vanity Fair

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Case Study VF Brands: Global Supply Chain Strategy Ginger Peck Business 521 Spring 2013 May 4, 2013 Professor Wayne Pritchard For 125 years, Vanity Fair has been manufacturing apparel. It is the world’s leading supplier of jeans. It’s also acquired a massive portfolio of world famous clothing labels. Despite its billion dollar annual revenues and size, Vanity Fair competes in a highly competitive and fragmented industry. It owns only 5% of the market share. Vanity fair relied on cheap global labor and leverage its purchasing power to keep manufacturing costs down and margins high enough. When the economic crises hit, sales decreased and many suppliers were unable to sustain business on smaller volumes of production. Input prices increased all over the world. Additionally, the cheap labor market has been fully tapped and labor prices are increasing. Issues VF is challenged by product flow, competitive suppliers, and sourcing relationships to produce 600,000 SKUs. Supplier Problems Small margins in conjunction with recession cause suppliers to rapidly close and emerge making for a highly volatile manufacturing environment. VF hasn’t managed its supplier activities in the past, except for contracting. It’s costly for VF to closely manage the quickly shifting supplier market. Its personnel are spending more time maintaining close supplier relationships in order to predict or identify potential production stoppages because of closures. VF supply chain managers must be able to respond to closures quickly to meet production quotas. Supplier sourcing is difficult and costly; even more so when suppliers abruptly close. The distrustful win-lose competitive contracting is time consuming, win or lose, and results in excess inventory. Before the contracting, however, the right supplier selection must be made. The supplier must be able to
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