Sharing Competitive Secrets

“Retailers and suppliers are in a tug of war,” asserted Bill McBeath, co-founder and chief research officer of ChainLink Research, Cambridge, Mass., when he opened the Supply Chain Summit session, “Supply Chain Orchestrator.”

McBeath’s suggestion was to replace the traditional approach of a retailer selecting a supplier that in turn selects its supplier, with a supply chain orchestrator that would manage and oversee the entire product life cycle.

After posing the rhetorical question: “When should you trust your trading partners and when should you withhold information?” he promptly answered, “Never, and never.”

Joining McBeath in the presentation was Ellen Martin, VP, supply chain information systems, for branded-apparel supplier and retailer VF Corp.

“If you share knowledge with a trading partner you may be giving away a competitive advantage to the next company that goes to them,” Martin said. “But we had to take that risk. Every partner in the supply chain has to make money, and we couldn’t do to our suppliers what we wouldn’t do to our own plants.”

VF Corp., which had 2006 revenues of more than $6 billion and is based in Greensboro, N.C., operates more than 850 retail stores, manages roughly 1 million SKUs every year and currently has active partnerships with 1,578 factories throughout the world.

Martin cited strategies that have helped VF to better orchestrate its global supply chain, including establishing creative partnerships, getting closer to the source and achieving the right mix of off-shore vs. near-shore suppliers.

VF now has 800 employees in Hong Kong and has recently opened its first prototype showroom in China. “Our designers can spend a week in this showroom making adjustments, and we’ve been able to reduce the lead time for prototyping from 70 days to 22 days,” she reported. “That makes a huge competitive difference.”

The company also owns plants in Mexico, which provide the near-shore presence necessary for faster replenishment.