VF Corp.'s Consumer-Centric Supply Chain

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VF Corp.'s Consumer-Centric Supply Chain

11/21/2006

The apparel giant looks to consumer insights to strengthen retailer relationships and better meet end-customer needs.

VF Corp. believes consumer insights ultimately drive many supply chain decisions.

"We spend a lot of time, money and resources trying to understand consumers and identify the needs and the wants that they have," said Boyd Rogers, president of global supply chain at VF. "We apply this research not only in the products that we develop, but also in the services and the business models that we [use to] present our products to them."

Speaking at a supply chain management/speed-to-market conference produced by Emanuel Weintraub Associates, Rogers said VF particularly utilizes its gained consumer insights to strengthen relationships with retailers and improve quick response.

"The best way that we think that we can be a relevant supplier is to understand the consumers as well if not better than the retailers and make sure we're helping them to bring consumers into their stores," said Rogers.

This rich consumer knowledge enables VF "to segment its consumers into logical groups" to aid retail merchandising decisions, he noted. Moreover, extensive demographic data further allows VF to pinpoint the type of consumer groups coming into each individual store that VF supplies.

"We're able to cluster these stores into logical groupings that have similar behavior patterns from their consumers so we can customize local product assortments targeting those specific consumers that come in," said Rogers.

Finally, VF evaluates the buying patterns of those consumers at the point of sale to improve shipment flow. "We have the ability with some of our quick response capabilities to replenish what's selling back to the shelves," he said.

Overall, Rogers stressed that strategic partnerships are "absolutely critical" in today's challenging retail climate. Rogers cited a litany of factors facing the apparel industry, including the loss of retail accounts because of consolidation, cross shopping, price deflation, competition from private labels and the emergence of e-commerce. These factors are in addition to other challenges such as the demand for shorter production cycles, deeper product offerings and more innovation and customization, he said.

While these factors call for closer partnerships with retailers, VF is also tightening relationships with contract suppliers that have been aggressively consolidating. VF's top 20 sourcing partners have grown to represent more than 50 percent of it sourced product, up from 20 percent a few years ago.

"We've recognized the need to identify key strategic partnerships with key players all up and down the value chain," Rogers said. "We're also doing everything we can to make sure our brands, our products and our services are the most relevant that they can be."

Retail expansion

Indeed, Rogers says VF's success largely depends on consumer demand for its brands. To that end, VF recently launched an aggressive plan to open flagship stores across many brands to build equity for those brands and ultimately enhance sell-through across its retail channels.

"We also look at our own retail stores as sort of a laboratory environment that allows us to develop skills and practices that we can then transfer to our retail partners and help us maybe be a better supplier to them as well," Rogers added.

Rogers also said that although prices for acquisition targets are currently high, VF will continue to look to acquire brands in order to present the best portfolio of brands to its retail customers."We hope to be one of the survivors of the consolidation, and we're trying to build our brands and identify other strong brands," he said.

Thomas J. Ryan is an Apparel contributing author based in New York.


Editor's Note: Part 1 of Apparel's coverage of the seminar below appeared in the last edition of "The Apparel eNewsletter." Here is a link to the story:
Federated Accelerates Private Brand Cycle
http://www.apparelmag.com/articles/features/feature11082006.shtml
Federated vice chairman Tom Cole shares how the retailer is shortening cycle time in development of its private label collections.

for more information

"Supply Chain/Speed to Market: Advice from the Experts"
Seminar produced Oct. 24 in New York by the management consulting firm:

Emanuel Weintraub Associates
[email protected] or 201-947-2404

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