Global Strain: The Supply Chain Stretch

Computerworld - Extending and maintaining its global supply chain has been a thorny challenge at VF Corp. The company sources finished products from the Far East and Central America, and also uses VF-owned factories plus other manufacturers operating under contract. "One thing about globalization is that it tends to throw a company into a constantly changing environment," says Ellen Martin, a vice president at the Greensboro, N.C.-based company.
As market demands push operations farther out globally, organizations such as VF are being forced to tweak and stretch their multimillion-dollar supply chain management (SCM) software investments to match the extended supply chains.
Along with globalization come the pressures of meeting ever higher customer demands, fulfilling tough service-level agreements (SLA) and adding increasingly sophisticated forecasting, tracking and replenishment systems, such as those based around radio frequency identification technology.
These new challenges follow the SCM boom of the late 1990s, when companies devoted considerable resources rolling out and then stabilizing complex forecasting, supplier management and replenishment applications, as well as related software, says Kevin O'Marah, an analyst at AMR Research Inc. in Boston.

Image Credit: Daniel Baxter

The year 2000 was the high-water mark for SCM spending, he says, but over the past year, there has been some new stirring in the marketplace, largely fueled by fiercer global competition. But buying patterns are more modest than they were five years ago, when business was booming for vendors such as i2 Technologies Inc., Manugistics Inc. and SAP AG. That's because manufacturers and suppliers face overseas rivals that are able to deliver the least-expensive products to retailers like Wal-Mart Stores Inc., which have a seemingly insatiable demand for low-cost goods, says O'Marah.
Companies that want to compete must shave expenses down while becoming more nimble. "If you go back even a couple of years, you could be a bit more supply-driven and push product out to the market, and if there was a drop, fix it with promotions," says O'Marah. "Today, you've got to be more demand-driven."
For VF, it's been especially difficult to establish factories in countries such as Bangladesh, where there is only rudimentary communications technology. Plus, the workforce doesn't speak English and isn't technology-savvy, explains Martin. The $6 billion a year company, which owns the Lee, North Face and Wrangler brands, needs a growing global supply chain in order to remain competitive. But that makes the accountability that VF's customers demand especially difficult to enforce.
Upgrades and Additions
VF runs i2's Demand Fulfillment 6.04 and Supply Chain Planner as its primary SCM system. To