You are on page 1of 8

Li & Fung

Li & Fung Limited is a global trading company, situated in Hong Kong, that supplies highvolume, time-sensitive consumer goods. Garments make up around two-thirds of the Li & Fung business which also covers the sourcing of hard goods such as fashion accessories, furnishings, gifts, handicrafts, home products, promotional merchandise, toys, sporting goods and travel goods. Li & Fung Limited provides sophisticated, one-stop-shop supply chain solutions to meet customers' specific needs. From product design, raw material sourcing and production management to quality control, logistics, shipping and other important functions, its spectrum of services covers the entire supply chain end-to-end. A Hong Kong-headquartered multinational group, recognized as the world's leader in consumer goods design, development, sourcing and distribution Three interconnected Business Networks - Trading, Logistics and Distribution - offering a spectrum of services that covers the entire supply chain With more than 100 years of history since 1906 World's leading supply chain manager operating in the consumer goods market for retailers and brands worldwide Global network covering more than 40 economies in the Americas, Europe, Africa and Asia: About 240 offices and distribution centers About 27,000 employees worldwide Access to a sourcing network of over 15,000 suppliers. Compound annual growth 21% . In 2011 their total turnover is 20 billion dollar.

BUSINESS (What they do?) They are in Three interconnected Business Networks - Trading, Logistics and Distribution TRADING More than 2,000 customers around the world. Company deals maximum with the innovative products like from softgoods (garments and apparel) to hardgoods (non-apparel products such as toys, home

1|Page

furnishings, sporting goods, footwear, and health and beauty products). With its comprehensive product design and development capabilities.

LOGISTICS Li & Fung operates an extensive logistics network around the world. The Company offers a comprehensive menu of logistics solutions, from warehousing, transport, repacking, customs brokerage, freight forwarding (supplying through heavy vehicle), hubbing and consolidation, and other value added services, including supply chain analytics and value engineering work. At present, we partner with local, international and multinational brand owners and retailers to help them optimize the flow of inventory and information to reduce cost and improve service level. DISTRIBUTION The Company's distribution operation consists of three pillars: Private labels, Proprietary brands And licensing of recognized brand

Li & fung employs over 300 vendors for monitoring compliance and work with supplier that produce their customers products. More than 2,000 customers around the world.

How they do BUSINESS ??.. They work as a mediator. If there is any demand from their customers for specific design or product so they are not the producer but from their supplier of raw materials buy the raw materials and then give it to the manufacturers for designing and shaping it according to the demand of the customer. Their customers are like Wal-Mart and other retail companies. Mentioned earlier.

BUSINESS MODEL OF LI-FUNG


2|Page

It describes a rationale how an organization creates delivers and captures the value. 1. Customers of LI- FUNG. Joann- fabric and craft store
K&G Fashion Superstore for Men's and Women's Clothing, Childrens', Shoes, & Accessories

Helly Hansen
Timberland LLC is a US-based global manufacturer and retailer of outdoors wear with a focus on footwear. Walmart retail outlet American multinational retailer corporation that runs through chains. Liverpool. Includes schedules, DJ profiles, events, playlist, information for advertisers, galleries, and competitions. Vergue- Network Solutions, Meijer is one-stop for higher standards and lower prices on everything from groceries to clothing, electronics, home goods and more Lancaster- paint sundry industry Bourjois- makeup, including lipstick, skincare and other beauty products Loblaws - largest food retailer in Canada

Kelloggs - From cereals to snacks and recipes Belk - is a leading retail department store offering the latest in women's, men's, juniors'
and kids' appare Loreal- Group international portal, leader in cosmetics and beauty

Bealls departmetal stores 70 locations in Florida with clothing, shoes, gifts,


housewares and home decor Bed Bath & Beyond- bedding, bath towels, kitchen electrics, cookware, window treatments, storage items.

NEXT- Online shopping & computer solution company DKNY- Shop of the latest designer clothing & fashion for men & women Shopko - retail store in green bay NINA RICCI - French designer of Italian origin. It mainly concentrated on the retailers as there customers . it is mainly in B2B business. It is mediator between retaile companies and manufacturer. VALUE PROPOSITION-

By adding value to the raw materials as per the demand of their customers They fulfill the demand by there vendors & suppliers.
3|Page

CHANNELSFrom then to now Level of value added

Supply chain management

Virtual manufacturin g Borderless manufacturin g Sourcing

Buying Agency

1906

now

4|Page

SUPPLY CHAIN MANAGEMENT OF LI FUNG LIMITEDLocal forwarding consolidatio Customer clearance Wholesaler retailer customer

Customer need

Forward consolidatio n

Product design

Shipping control

Product development

Manufacturing control

Factory sourcing

Raw materials sourcing

Vendor compliance

How they do ?? For example

Decifer trends Mostly in usa but having world wide presence

Design LI FUNG 240 offices and 3 PL

Cotton supplier

weavers

Dyers

15,000 suppliers and world wide

retailors logistics

Garments manufacturers

Suppliers 5|Page

REVENUE STREAMS

Li & Fung is a $20 billion company. It is headquartered in Hong Kong and orchestrates some 14,000 factories in China and around the world. It is targeting a profit of over $1.5 billion by 2013 and a return on equity in double digits. Li & Fungs recently acquired of Loyaltex Apparel, Collection 2000 and Exim Designs among five new companies .Turnover and profit before tax of the five newly acquired companies were approximately US$660 million and US$80 million respectively .

Walmart is set to become its biggest client

Liz Claiborn decided to sell its sourcing operationswhich handle all aspects of production, from finding materials to manufacturing garmentsto Li & Fung Group for $83 million. Liz Claiborne still does the design and marketing for brands such as Juicy Couture, Kate Spade, and Lucky Brand jeans.

Talbots announced its intention to make Li & Fung its main global sourcing agent. It has also taken over production for Toys R Us, Timberland, and Sanrio, the Japanese merchandiser of Hello Kitty. Li & Fung is involved in the production of 40-50% of the clothes that you find in any US shopping mall as mentioned in forbes. It supplies to over 2000 customers including Kohls, Abercrombie & Fitch In the recession period it has got 62% revenue from the US market. CUSTOMER RELATIONSHIP Li & Fung tries to foster a long term win-win relation with the factories it works with. It follows the 30:30 rule . They guarantee that they will take at least 30% of the production but never more than 70% . This is unique because they do not want the factory to be overdependent on them and works with other clients too .. Thus it tries to maintain a very organic and strong yet not overwhelming relation with its suppliers. KEY PARTNERS
Suppliers Customers, Industry associations and non-governmental organizations

6|Page

Business for Social Responsibility (BSR) Supplier Ethical Database Exchange (Sedex)
Sustainable Fashion Business Consortium (SFBC)

The Natural Resources Defense Council (NRDC) United Nations Global Compact

SOURCING FROM China, US and Latin America, Bangladesh, Northen Africa, The Carribien, England. South east asia.Australia. How it earns cheapest?? Li & Fung has been following , like most others, the traditional supply chain model .The supply chain model to date goes like this:

Asia makes stuff and provides cheap labor; Developed nations buy it all. That supply chain pecking order, which took decades to set down , is going to change in a big way, according to Victor Fung, group chairman of Li & Fung. For the first time, demand is coming from countries that were traditional producers, explained Fung. That means its a much more nuanced world. Its a total shift in how the supply chain operates. It ll be sourcing everywhere and selling everywhere. At the recent IBMs Think conference in New York, he said economies and their associated supply chains will have to adjust to one key reality: Demand wont be onshore in the U.S. and other developed economies. As per the Chairman Fung :

China wont be the cheapest place to manufacture goods in the world. A supply chain restructuring will distribute work more evenly around the world. The supply chain is at an inflection point where costs take a back seat to speed and a fast order cycle.

7|Page

Sales in China grew to $526 million, or 6 percent of Li & Fung revenue, in the first half of the current year 2012 from less than 1 percent the year before This clearly shows that global supply chain is going to undergo a radical change and countries like China would become important consumers themselves forcing supply chain masters like Li & Fung to source as well supply to these places. The next two countries where their activities may be focused in the future could be India , Brazil and Russia ie all the BRIC countries . These are the countries which are showing the fastest increase in demand growth. CompetitorsUPS supply chain solutions APL logistics William A Connor &Associates and more..

THANKYOU

8|Page