Disadvantages Of Package Sourcing

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Introduction V.F. Corporation (VF) designs, manufactures, distributes and markets lifestyle apparel, footwear, and accessories. The company offers jeanswear, outdoor and action sports clothing, imagewear, sportswear and contemporary brands. The company markets its products under famous brands namely, the North Face, Wrangler, Timberland, Vans, Lee, and Nautica, among others. It sells its products to specialty stores, department stores, national chains and mass merchants, as well as through direct-to-consumer channel consisting of VF operated stores and internet sites. What are the characteristics of different sourcing arrangements? By 2004, VF utilized two basic types of sourcing arrangements with their suppliers. First, the “cut and make” contracts, wherein VF would have separate contracts for suppliers at individual stages in the production process. This arrangement was applied in legacy products based out of Mexico and the Caribbean and managed in conjunction with internal manufacturing. VF also uses a “package sourcing” model in production where a single supplier is responsible for the entire garment, from raw material procurement to packaging and shipping finished goods to the market. “Package sourcing” has the benefit of low cost, as companies can choose between various suppliers all over the globe based on economic factors, such as labor and transportation costs, and trade quota or tariff considerations to get the cheapest price for finished goods. It also allows VF

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