The Role of the Supply Chain Orchestrator

1
The Role of the Supply Chain Orchestrator

• Ellen Martin
• VP Supply Chain Information Systems, VF Corp.
• Bill McBeath
• Chief Research Officer, ChainLink Research

2
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
4
Transformation of the Supply Chain
Success comes from managing the links!
5
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

6
Single Version of the Truth (SVoT)
7
SVoT Example Service Ecosystem
8
Managing Trust with Trading Partners

• When should you trust your trading partners and
  when should you withhold information from them?
• Never and Never

9
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

10
Evolution Of The Supply Chain
VERTICAL
VIRTUAL
FEDERATED
Enterprise Authority Domain
Enterprise Authority Domain
Domains of Authority / Influence
Enterprise Y
Enterprise A
Enterprise X
Process A
Process A
Enterprise B
Enterprise Y
Process Y
Enterprise C
Fully outsourced processes
Process B
Process B
Process C
Enterprise G
Process C
Enterprise Z
Process D
Process D
Enterprise H
Process H
Enterprise H
Shared execution
within the four walls
1990 2000 2004
POLICY Do It All Re-engineer/Outsource Ar
chitectural Partnership
PROCESS Push Mass Customization Market
-Driven
PERFORMANCE Cost Accounting/ROI Optimization/ROA
Risk Management
ENABLERS ERP APS/Integration Network/Mo
bility/RFID
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Supply Chain Orchestrator
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N-Tier Sourcing
Auto Manufacturer
Mining Co.
Old
T3
New
T2
S
Mill
S
T3
T1
T2
T3
Mill
Mining Co.
S
S
Auto OEM
S
T1
T3
T2
Mill
S
T3
Mining Co.
T1
S
Mill
T3
T2
T3
S
Mill
T2
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The Global Virtual Factory

• 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

Source ChainLink Research
14
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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North South American Jeanswear Coalition

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Outdoor Coalition
18
Imagewear Coalition

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International Jeanswear Coalition

20
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

25
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

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Questions?
bill.mcbeath_at_clresearch.com 617-762-4040 x414