Li Fung Case Analysis

By: Perisha Akanksha Paridhi Urvashi Takreem

Major Observations
Three year planning process Followed drumbeat theory of management Success achieved in past: Planning & Scrutiny of core business Business Strategy : Disciplined entrepreneurship Implemented Entrepreneurship Aid Program 2 major reasons of growth: * did not own any piece of supply chain thus optimize pricing structure * acquisition of competitors Major Issues: * Over reliance on US Market * Global saturation of demand for soft goods Suffered loss in 2001, due to failure of Lifung.com

Solutions
Lower down the cost in sourcing warehousing & Transportation. Shorten production lead times and Delivery cycles. Adopt Information Technology to optimize the operations of the supply chain. Design, Implement, Evaluate and continuously improve work flow , physical flow, information flow and cash flow in the supply chain. Develop a close, risk and profit sharing relationship with business partners. Focus on ones core competency and outsource non core activities. Being customer centric and market demand driven Lifungs extranet links all components of the supply chain to: * provide tracking capabilities * streamline the flow of business information * provide in depth control of supply chain activities

Analysis
Li Fungs supply chain is: * Leanness : JIT brings in flexibility for modifying as per new requirements, & increased lead time for customers to change their orders, if desired * Responsive : can source & export from 4 continents across the globe * Cost effective: believes & deals in economies of scale Extensive use of IT Plug & Play model & centralized back office systems Other than traditional raw material & factory sourcing, L&F also provided additional service of custom product planning, designing, development, quality control & testing measures US onshore strategy better customer relations, information transfer & better fulfillment of needs