Global Strain: The Supply Chain Stretch

As supply chains stretch around the world, companies look to tweak supply chain management systems

By Marc L. Songini

July 18, 2005 12:00 PM ET

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 help

Recommend Digg Twitter ShareThis

Email Print Send Feedback Reprints

Additional Resources

Xerox

Win a color printer!

By using solid ink technology only from Xerox, you could save up to 65% by printing color for the cost of black and white. Enter for a chance to WIN a PhaserTM 8860 network color printer!

Microsoft

Upgrade to Internet Explorer 8 today.

Save time and mitigate security risk. Deploy it now.

Sybase

NEXT-GENERATION MOBILITY PLATFORMS

In this white paper, IDC analyzes the role of next-generation mobile enterprise platforms as organizations seek a more strategic deployment of mobile solutions.

Learn the important issues you must consider before starting your next mobility initiative. Get your mobility white paper from IDC now, compliments of Sybase.

White Papers & Webcasts

Supply Chain Agenda 2009
Crisis dominates the supply chain agenda in 2009. Which projects will hold out in these difficult times? The study reflects the most important...

Usability Is Everything
Learn what sets Workday's HR and Payroll solutions apart from the competition....

Accelerate SSL Encrypted Applications
The amount of SSL traffic is growing in the enterprise. Because it is encrypted, it cannot be properly controlled and accelerated. Blue Coat...

The Value of Real SaaS at Workday
Cost savings, speed to value, and innovation brought to the enterprise by Workday's software-as-a-service solutions for HR and Payroll....

ESG Lab Field Audit
Many companies have successfully implemented Riverbed WAN optimization solutions within their Cisco networks. This ESG Lab Field Audit document explores the success that...

SaaS at Flextronics, Inc.
Dave Smoley, CIO of Flextronics, discusses the real value of software-as-a-service and why he chose Workday for his HR solution....

Shape Your Apps Strategy to Reflect New SaaS Licensing and Pricing Trends
Why are smart companies choosing software-as-a-service? Find out in the complimentary Forrester Research report...

Why Compliance Pays
This OnDemand webcast explores the relationship that firms with best compliance records have higher revenue, greater customer retention, lower financial losses from data...

Natural User Interface for Enterprise Applications
Learn how a revolutionary user interface can make a complex enterprise application so intuitive even casual users can jump right in....

Agile Enterprise Content Management (ECM) for Rapid ROI
Find out how combining ECM and BPM will help adress issues about content rich business processes....

All White Papers | All Webcasts