VF Brands' Third Way Global Supply Chain Strategy
This paper examines VF Brands' transition from a traditional low-cost labor sourcing model to its innovative "Third Way" supply chain strategy, implemented under the leadership of Chris Fraser, president of Supply Chain International. Drawing on a wide range of industry experts and reports — including analyses from IBM, McKinsey, CAPS Research, and the Supply Chain Council — the paper surveys the major challenges facing global apparel supply chains, including demand volatility, rising labor costs, SKU complexity, supplier risk, and long lead times. It then maps those challenges against the specific strategic responses embedded in VF's Third Way approach, demonstrating how the strategy aligns with supply chain management best practices.
- Introduction to VF Brands and the Third Way Strategy: VF's shift from low-cost labor sourcing model
- Supply Chain Management: Definition and Benefits: SCM definition, goals, and core benefits
- Industry Expert Perspectives on Supply Chain Challenges: Expert analyses of global SCM challenges
- Risk, Volatility, and the Case for Supply Chain Reconfiguration: Risk factors, disruption costs, and reconfiguration rationale
- Best Practices and the Business Case for SCM Excellence: SCM best practices and financial performance gains
- VF's Internal Challenges and the Path to Third Way: VF's specific pressures driving Third Way adoption
- Conclusion: VF's Strategic Response to a Changing Landscape: Summary of VF's strategic Third Way response
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- The paper systematically triangulates VF Brands' strategic decisions against a broad base of independent industry sources — IBM, McKinsey, CAPS Research, the Supply Chain Council, and others — which gives the argument strong external validity.
- Each expert citation is immediately connected back to a specific aspect of VF's Third Way strategy, keeping the analysis tightly integrated rather than drifting into generic literature review territory.
- The paper uses a consistent compare-and-confirm structure: identify an industry challenge, cite expert commentary, then show how VF anticipated and addressed that exact challenge — an effective rhetorical pattern for a strategy evaluation paper.
Key academic technique demonstrated
The paper demonstrates effective use of multi-source corroboration: rather than relying on a single authority, it builds credibility by showing that multiple independent analysts — from consulting firms, academic research centers, and trade publications — all converge on the same supply chain challenges that VF identified. This convergence technique is particularly useful in business and management writing, where practitioner sources carry weight alongside academic ones.
Structure breakdown
The paper opens with a contextual framing of VF's situation and a definition of supply chain management, then moves through a survey of industry expert opinions on SCM challenges, organized thematically around risk, volatility, cost, complexity, and customer service. The final section returns to VF specifically, summarizing the internal pressures that made the Third Way strategy necessary. The bibliography is extensive and draws on trade publications, consulting reports, and academic research, reflecting an undergraduate-to-graduate level business analysis.
Introduction to VF Brands and the Third Way Strategy
This paper examines VF Brands' global supply chain strategy as it transitioned to its "Third Way" sourcing approach. Until 2009, VF's sourcing had followed the more traditional model typical of the apparel industry. Like many other apparel companies, VF's supply chain strategy was focused on chasing low-cost labor from one country to the next. The industry had evolved to the point that apparel was produced virtually "everywhere on Earth," and VF, like many of its competitors, had run out of new low-cost places to source production. This situation led Chris Fraser, the president of Supply Chain International for VF Brands, to conclude that it was time to start finding cost savings by managing the supply chain more efficiently.
Based on industry experts' assessments, Fraser did a number of things correctly in putting together his Third Way strategy. DeAngilis (2011) discusses an IBM report, IBM's Top Five Supply Chain Challenges, commenting on how analysts recommend building the supply chain of the future from the "outside in" — that is, starting with the requirements of the customer's customer and working backwards to translate those requirements to the supplier's supplier (DeAngilis, 2011). VF took this approach by reinventing their sourcing solution beginning with customer requirements — that is, demand — and working backwards from there to shorten lead time for order placement and provide more flexibility in sourcing.
Supply Chain Management: Definition and Benefits
Rockford Consulting Group (2009) defines a supply chain as a stream of processes involved in moving goods from the customer order through the raw materials stage, supply, production, and distribution of products to the customer. Managing this chain of events is what is known as supply chain management (SCM). VF faced the challenge of updating its SCM to meet current competitive pressures.
The benefits of SCM include:
• Strengthening vendor-customer relations
• Facilitating planning at all levels
• Minimizing bottlenecks
• Enabling all parties to participate in process improvements
• Eliminating duplicate efforts
• Enhancing supply chain security
VF's reworking of its sourcing strategy positions the company to fully benefit from these SCM advantages (Freese, 2006). Supply Chain Management Software (2011) defines the main goal of any business concern as meeting "the two broad objectives of reducing cost, and obtaining the maximum customer satisfaction." VF's Chris Fraser reflects a similar perspective, as evidenced by the strategy VF developed to manage its supply chain challenges.
Industry Expert Perspectives on Supply Chain Challenges
Fraser was not the only supply chain management executive to reach these conclusions. According to Blanchard (2009), in his discussion of the top nine supply chain challenges for 2009, the need for supply chain risk mitigation tops the list. More so than in past downturns, risk mitigation was receiving increased focus because of the following factors:
• Supplier financial risk
• Volatility in energy, commodity, currency exchange, and labor rates
• Unpredictability in economic recoveries
Blanchard also mentions the need to shorten the supply chain, pointing out that U.S. manufacturers would continue reconfiguring their supply chains by moving plant operations and sourcing vendors closer to home and away from Asia. He offers several justifications for supply chain reconfiguration, including limited free trade agreements, high energy costs, and rising labor and production costs — all factors that lead companies to re-evaluate their extended supply chains (Blanchard, 2009).
Blanchard's analysis confirms VF's strategy, given that VF was facing challenges similar to those Blanchard identified. In one instance, a VF supplier had moved its operations to Vietnam — a much less favorable location due to quotas, tariffs, and logistics — giving VF only three months' notice to find an alternate supplier. Additionally, in 2008–2009 in China alone, it was reported that over 60,000 small production shops had closed their doors.
In his opening speech for the 2011 OpsInsight Leadership Forum, Bob Ferrari (2011) commented on the continual challenges facing production and operations management: more demanding customers, complex and globally stretched supply chains, rising labor costs, and dramatic increases in disruption and risk events — all of which can significantly impact an organization's ability to compete.
Dittman (2009), a former supply chain executive at Whirlpool Corp., offers similar conclusions in his analysis of supply chain management issues. He identifies what he considers timeless challenges to reaching supply chain excellence. His primary concern is too much product complexity, noting that virtually all firms know they carry too many SKUs. As the case study indicates, VF had over 600,000 SKUs, making product line complexity one of the biggest challenges of running such a large apparel supply chain.
Dittman also cites the problem of ineffective matching of supply with demand — another challenge VF faced. According to Dittman, this situation arises from the mismatch between sales, which is driven by revenue goals, and manufacturing, which is driven by cost management; these objectives often conflict. He further claims that globalization holds many promises but also presents significant challenges, including long supply lines, volatile fuel costs, and unpredictable exchange rates. Just as Dittman points out, VF was experiencing the same difficulties with long supply lines and the unpredictability they introduced into the apparel production process (Dittman, 2009).
In a research study by CAPS Research (2009), the authors identified similar challenges to supply chain integration. Among their 14 key challenges, the following apply directly to VF operations:
• Establishing a vision of how financial and non-financial results will improve with supply chain integration — VF proposed its Third Way strategy to address this.
• Developing people, culture, and an organization that supports the supply chain vision — VF had its own highly successful internal manufacturing operation.
• Developing multiple supply chains to meet the needs of different customer and market segments — each of the VF coalitions maintained separate brand identities and decentralized management.
• Finding ways to share risks and rewards equitably among supply chain partners — the Third Way strategy proposed to do exactly this.
• Building trust within and across organizations in the supply chain — one of the key components of the Third Way strategy (Carter, Monczka, Ragatz, & Jennings, 2009).
Because VF took these challenges into account when formulating the Third Way strategy, the company positioned itself to take advantage of supply chain integration best practices.
Conclusion: VF's Strategic Response to a Changing Landscape
This paper has examined the literature on SCM and the challenges that companies faced in the wake of the economic crisis of 2008–2009. VF Brands responded to these challenges by developing and implementing a new sourcing strategy. The challenges it faced — demand volatility, rising costs, supplier instability, SKU complexity, and long lead times — are consistent with those identified by leading industry analysts and research organizations across the globe.
For all of these reasons, Fraser began implementing the Third Way as an alternative supply chain strategy. The strategy's emphasis on customer-driven demand planning, supplier partnerships, risk mitigation, internal manufacturing expertise, and performance metrics positions VF to compete more effectively in an increasingly volatile global apparel market. The early results of the partial Third Way implementation, reflected in Exhibit 4's cost and lead time reductions, suggest that VF's strategic response was both well-conceived and well-executed.
Always verify citation format against your institution’s current style guide requirements.