Buyer-Supplier Relationships & Evolution of

Global Sourcing Supply Chains

2022-09-29

Gordon Lam
Adjunct Professor, HKUST Business School, Renmin University of China Business School, Zhejiang University School of Management &
CUHK (Shenzhen) School of Economics & Management
Vice President, Guangdong Society of Commercial Economy
Vice President, Asia E-commerce Research Institute, Guangdong Province
Deputy Secretary-General, Society of Guangdong Logistics & Supply Chain
Committee Member & Vice Chairman of Youth Section of China Commerce & Economy Society
Appointed Member of China State Council's Chinese Association of Hong Kong & Macau Studies
Committee Member, Chinese People's Political Consultative Conference 12th Guangdong Committee
Ex Part-time Member of the Central Policy Unit, The Hong Kong SAR Government

Global Brands Group

350+
700+ 50
Licensed &
Designers Offices
Controlled Brands

1
 Fung Retailing

Trinity Group

2
 Strategic Partnerships

7 Principals of SCM

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 7 Principles of SCM

(1) Be customer-centric and respond accordingly to the market

demand

Manufacturers Distribution/ retail

Sell Sell
Consumers
Inventory
Inventory

Supplier-centric/ the “Push” model

Demand Demand
Distribution/ retail
Manufacturers Consumers
Quick response, zero-inventory

Customer-centric/ the “Pull” model

7 Principles of SCM

(2) Focus on one’s core competency and outsource non-core activities, and
develop a positioning in the supply chain
High

Develop with outside Self-established

The uniqueness of the capability

M&A
consultant

Can consider
outsourcing
Outsourcing
Low

Low High

The enterprise’s capability

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 7 Principles of SCM

(3) In contrast to the traditional adversial relationship, modern SCM

emphases a close, risk- and profit-sharing relationship with
business partners

§ A collaborative environment that is flexible and adaptable to the

changing customer needs

§ Working with critical entities along the supply chain as a team

to eliminate non value-added processes, and leveraging the
capabilities of each team member to maximize value.

§ Avoid wasting time in matching the right partners, improve

product quality, shorten production lead-time and lower costs.

7 Principles of SCM

(4) Adopt IT to optimize the operation of the supply chain

n Facilitating information sharing, reducing lead times,

increasing accuracy in planning and enabling business
partners to engage in instantaneous worldwide communication,
analysis of complex decision rules, and real-time visibility in
most business processes.

n “Business drives IT” not “IT drives business”

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5
 7 Principles of SCM

(5) Design, implement, evaluate and adjust the work flow, physical
flow, information flow and fund flow in the supply chain

(6) Shorten product lead time and delivery cycles

(7) Lower costs in sourcing, warehousing and transportation

Quality

Speed Cost
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SCM in Practice

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6
 Supply Chain Management (SCM)
Consumers’ Product
demand design

Product
Consumers developmen
t

Online/ Vendor
Offline compliance
retailers

Material
sourcing
Wholesaler/
distributors
Supply chain orchestrator
Vendor
selection

Total
logistics Order
solutions management

Customs
clearance Production
management

Warehouse
management Fulfillment
Inventory
arrangement
management

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Network Orchestration & Supply

Chains

The Network: Universe of Suppliers

Order Fabric Cutting Sewing Packaging & Delivery

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7
 Dispersed Manufacturing / Borderless Manufacturing

Lining
Crystal

Design Assembly

Leather Zipper

yarn Shell

Performing ‘production slicing’ to identify the best location/ country to

undertake each stage of process, adding value along the way &
integrating the entire supply chain

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Soft $3

Orchestrate and discover value along the supply chain

Product Sourcing
Distribution
Logistics /Wholesale Information Management
Design

$1 The cost that is spread throughout the distribution

channels – the “Soft $3”
$4

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 9
Brands
Marketing
Logistics

Case Studies
Assembly
Manufacturing
“Smiling Curve”

Parts
Product
Development
Product design
Value Added Innovation

Chain
Value

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 Li & Fung’s Supply Chain

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Li & Fung Trading – Export Sourcing

n Take a holistic view of the supply chain

n Compete network against network
n Don’t optimize just one section of the supply
chain
n Cases:
– Overtime payment and airfreight are
expensive, but they can boost efficiency
and thus avoid a huge markdown cost
– Improve forecasts by delaying ordering and
sourcing decision to avoid markdown
– Turkey for fast fashion
– 2 million Christmas trees
– 30 million McD Cups
– HBC Full supply chain

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10
 Luxury Brands Innovations

Gordon Lam
Adjunct Professor, HKUST Business School, Renmin University of China Business School, Zhejiang University School of Management &
CUHK (Shenzhen) School of Economics & Management
Vice President, Guangdong Society of Commercial Economy
Vice President, Asia E-commerce Research Institute, Guangdong Province
Deputy Secretary-General, Society of Guangdong Logistics & Supply Chain
Committee Member & Vice Chairman of Youth Section of China Commerce & Economy Society
Appointed Member of China State Council's Chinese Association of Hong Kong & Macau Studies
Committee Member, Chinese People's Political Consultative Conference 12th Guangdong Committee
Ex Part-time Member of the Central Policy Unit, The Hong Kong SAR Government

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 Key Takeaways

• Highly adaptive and agile supply chain (comparable to fast fashion)

• High level of automation and robotics in factory (versus traditional

perception of “cottage craftsmanship” for heritage brands)

• Very detail attentive to customer service, big and small customers alike

• Copycats and fake very common, no production in China

• “Secretary Syndrome”

• Brand banality is a challenge for all brands at certain time of their brand
life cycles

• Ultra-luxury and Super-ultra-luxury as a counter strategy

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