Introduction
The fashion industry emerges as a significant sector with a high impact and facing operation performance issues. Thus, due to the prevailing management paradigm emphasizing central company competencies, fashion companies should implement vertical disintegration to reduce costs, enhance competitiveness, and foster operation performances (Dzhengiz, Haukkala, and Sahimaa, 2023). Fashion-selling companies are changing from a vertical integration strategy to the emerging concept of vertical disintegration. The shift aims to improve company operation performances through reduced costs and enhanced adjustment to the business environment. Integrating the vertical disintegration concept positively impacts the company’s capacity to compete with rival companies (Kaiser and Obermaier, 2020). Moreover, outsourcing concepts improve fashion firms’ ability to attract and recruit the right skills from the external labour market in addition to threat identification and mitigation at times of economic downturn. The approach also promotes brand reputation and quality through quality and transparency enhanced supply chain structure. This debate paper explores the implications of vertical and outsourcing concepts in fashion entities and makes recommendations to these companies.
Impacts of Vertical Disintegration on Outsourcing on Fashion Companies
Competency Strategies
Vertical disintegration and outsourcing are rapidly emerging trends in fashion-selling companies. Due to the prevailing operation paradigm emphasizing primary competency strategies, fashion companies should adopt a vertical disintegration approach to improve operation performance. Disintegration allows fashion companies to focus on core competencies, such as product branding and design (Kaiser and Obermaier, 2020). For instance, the Gucci fashion company focuses on providing a wide range of luxury items that meet the needs of its target market while remaining authentic to its brand’s core values of quality. This is the core competency strategy with other fashion companies. The decision to outsource resources needed to produce and deliver their fashion products helps it compete in the sector. Therefore, the decision to purchase fashion products from outside or internally has notable implications for fashion companies in terms of the manufacturing cycle, link with users and suppliers, and subsequent competitiveness (Arcuri and Giolli, 2022). Disintegration allows fashion companies such as Gucci, Adidas, and Polo to emphasis on their central competency functions like value and high-quality products to promote creativity by outsourcing resources (Zhu 2021). Adidas shifted to the disintegration method in its manufacturing by increasing its outsourcing of its production supplies from Asia. By outsourcing manufacturing, these companies can emphasize their central competencies in design, brand, and high-quality products.
Fosters Flexibility and Scalability in Fashion Companies
Disintegration and outsourcing are emerging trends in fashion companies, enhancing strategic decision-making on sourcing manufacturing resources. Outsourcing manufacturing resources is an essential strategy fashion companies adopt to foster scalability and flexibility. The outsourcing concept integrates the aspects related to sustainability, including corporate social responsibility, and significantly impacts decision-making (Murcia, Panwar, and Tarzijan 2021). Adidas, Polo, and Gucci companies utilise outsourcing and disintegration concepts in addressing the issue of consent between insourcing and outsourcing manufacturing resources. Fashion companies should adopt disintegration and outsourcing manufacturing strategies since they help them create more stakeholder value, inspiring their emphasis on core business operations (Silva, 2022). This concept fosters flexibility and scalability, enabling these companies to adjust their business operations to changing consumer demands and buying behaviours. Therefore, vertical disintegration and outsourcing have significant implications for fashion companies, allowing them to quickly adjust production and supply volumes based on market demands.
Facilitate Access to Fashion Creativity Experts and Sustainable Supply Chain
The vertical disintegration of companies is a core aspect of industrial reform concepts. External stakeholders often integrate expertise and innovation that may not be available internally. Hence, fashion industries adopt a vertical disintegration approach to source experts from external sources. For instance, Adidas is known for manufacturing a range of high-quality fashion partners with Gucci and Moncler to improve their operation performances (Zahoor et al., 2023). Access to specialised expertise is vital to vertical disintegration approaches in the fashion sector. These three fashion companies integrate an outsourcing approach to get experts in several fields of their operation performance. These companies outsource manufacturing specialised to third-party distributors, many of which specialise in garment and textile production (Dzhengiz, Haukkala, and Sahimaa, 2023). With emerging technology, they also outsource technology that fosters innovation in the companies. Therefore, outsourcing and vertical disintegration strategies significantly impact the fashion company’s access to needed experts. In addition, vertical disintegration can affect the supply chain openness and sustainability if the concept improves the supply chain sustainability (Norris, Hagenbeck, and Schaltegger 2021). Adidas, Polo, and Gucci fashion companies have cautiously selected and partnered with external suppliers who comply with ethical business practices. The concept of vertical disintegration concept allows fashion companies to align with corporate social responsibility objectives.
Impacts on Fashion Brand, Quality Reputation, and Critical Risk Mitigation Strategy
Fashion companies benefit from vertical disintegration, allowing them to overcome threats linked to vertical integration and insourcing strategy. Manufacturing, marketing, and supply phases are associated with various risks influencing operation performance (Gurtu and Johny 2021). Adopting the concept of disintegration and outsourcing significantly impacts managing risks in fashion companies, including fluctuations in consumer demands and regulatory changes. Global supply chain management threats have created a discourse among business management experts. Vertical disintegration and outsourcing impact Fashion companies’ ability to identify and mitigate business uncertainties in selected supply chain management (Kaiser and Obermaier, 2020). Adidas, Polo, and Gucci fashion companies spread risk across diverse entities and reduce their exposure to single points of failure. However, outsourcing some skills to boost management operations may negatively affect the fashion company’s reputation (Gurtu and Johny 2021). The choice of an efficient approach to safeguarding brand reputation through vertical disintegration has notable impacts on the company’s productivity and product quality. Fashion companies that integrate a vertical disintegration strategy benefit from an expanded pool of experts representing and maintaining product quality outside their head offices and target market.
(Adidas Supply Chain, 2022)
Polo Ralph Lauren’s Supply chain
(polo.uk.2022)
Gucci Supply Chain Structure
(Gucci. UK, 2023)
Conclusion and Recommendations
The fashion industry is significantly impacted by emerging trends in fashion, especially the evolution from vertical integration approaches to disintegration strategy. This shift aims to improve performance and management through reduced costs, capacity to adjust to the prevailing fiscal environment, market uncertainty, and unplanned changes in consumer demands. Outsourcing and vertical disintegration concepts also allow companies to build and cultivate stakeholder trust while promoting brand perception. Product distribution channels are an essential element in contemporary fashion business operations, implementing an outsourcing approach to boost productivity positively impacts operation efficiency. From the discussion, vertical disintegration and external sourcing of resources are essential for the success of the Fashion Company. Polo, Adidas, and Gucci clothing companies are examples of thriving fashion firms utilising the concept of external sourcing and vertical disintegration as a strategy to improve performance. Therefore, disintegration and outsourcing in fashion companies have a significant influence on their operation performances. These impacts range from reducing costs to promoting brand perception, attracting a skilled workforce, risk mitigations, and business sustainability. Thus, vertical disintegration and outsourcing in fashion companies have significant impacts on their operation performance.
Recommendations
In the period of emerging business trends, companies should integrate vertical disintegration and external sourcing t. In addition, increasing digital marketing trends require companies to adopt vertical disintegration and outsourcing of critical production, supply, and marketing factors that reduce overall costs. It is recommended that modern companies implement this concept to enhance sustainability and product quality with emerging business trends.
References
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