LI & FUNG: GROWTH FOR

A SUPPLY CHAIN
SPECIALIST

By,
Chandra Deepthi
(102)
Jaya Lakshmi (104)
Murali (107)

Backgro
und
A specialist in the sourcing of private
label consumer goods, primarily to
retailers and brands
Headquartered in Hong Kong
Close to 100 years of history
Traded in both soft goods and hard
goods
A sourcing network of 80 buying offices
in 40 countries by 2008

Transformations

Phase I Turning Li & Fung from a

local trading company to a regional
sourcing agent

Phase II Planning the clients whole

production program

Phase III Dispersed manufacturing

to improve the efficiency in each link
of the supply chain

Borderless Manufacturing
Assembly
CHINA

Lining
TAIWAN

Shell
KOREA

by

Made in Hong Kong

Label, elastic,
studs, toggle
and string
HONG KONG

Filler
CHINA
Zipper
JAPAN

Business Strategy

Transforming customer experience

Just-in-time sourcing,
manufacturing of products for
customers customer able to
change orders

Information Technology a core

strength
Managed logistics of supply chain
process
Centralized back-office systems

Business Strategy

Move up the value chain

Soft goods: Provided product planning,

design services, development, raw
material & factory sourcing
Made creative suggestions to customers

Eating into Soft $3

Add value to customer throughout the

value chain
U.S. onshore strategy
2003-2006 Acquired 7 onshore US businesses
Acquired 70,000 sq ft space in Manhattan
fashion district

The concept of Soft $3

Product
Wholesale
SourcingLogistics
InformationManagement
design
retail

$1

$4
The
cost
that
is
spread
throughout
the
distribution
channels the Soft $3

The 7 Principles of Li & Fungs

Supply Chain Management
(1) Be customer-centric and respond
accordingly to the market demand
(2) Focus on ones core competency and
outsource non-core activities, and develop a
positioning in the supply chain
(3) Develop a close, risk- and profit-sharing
relationship with business partners
(4) Design, implement, evaluate and adjust the
work flow, physical flow, information flow
and cash flow in the supply chain
(5) Adopt information technology to optimize
the operation of the supply chain
(6) Shorten product lead time and delivery
cycles

Sourcing Trend In 2008

Suggestions:
Restructure
Collaboration could be encouraged
Develop a Vendor Managed Inventory
(VMI) service
Target small business segment in the
US
Organic Growth
CPFR