Li & Fung

LI & FUNG: GROWTH FOR A SUPPLY CHAIN

SPECIALIST

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

Background

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 client’s whole production program

Phase III – Dispersed manufacturing to improve the efficiency in each link of the supply chain

Borderless Manufacturing

AssemblyCHINA

ShellKOREA

LiningTAIWAN

FillerCHINA

ZipperJAPAN

Label, elastic,studs, toggle

and stringHONG KONG

Made in Hong Kong

by

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 Turn-key systems installed in any

warehouse

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 2006 almost US$ 1 B business

The concept of “Soft $3”

$1 $4

Product design

SourcingLogisticsWholesale

retailInformationManagement

The cost that is spread throughout the distribution channels – the “Soft $3”

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

(2) Focus on one’s 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

(7) Lower costs in sourcing, warehousing and transportation

The 7 Principles of Li & Fung’s Supply Chain Management：

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