Global Supply Chain Management: Best Practices at Li & Fung Limited
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Case Details:
Case Code : OPER047
Case Length : 15 Pages
Period : 1996-2004
Organization : Li and Fung
Pub Date : 2005
Teaching Note :Not Available
Countries : Hong Kong, US, Europe
Industry : Trading, FMCG
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
The Global Supply Chain Manager
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Li & Fung's evolution into a supply chain manager took place in three stages,
driven by significant changes in the global retailing industry, customer and
retailer preferences and economic trends across Asia through the early 1970s.
In the first stage (during the 1970-78 period), Li & Fung acted as a regional
sourcing agent. The company extended its geographic reach by establishing
sourcing offices in Singapore, Korea and Taiwan. Li & Fung's knowledge and reach
in the Asian region held value for customers. This was because, many big buyers
could manage their own sourcing if they needed to deal only in Hong-Kong...
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Leveraging the Internet
With the emergence of the Internet as a major communication medium, industry
observers felt it would make trading companies like Li & Fung redundant. Li
& Fung opposed this view, stating that the key to its business was not
hardware but information and its application to the management of client's
supply chains. The company believed that instead of being a threat, the
Internet and e-commerce would offer more opportunities by helping it drive
supply chain costs down and integrating management of supply chain via IT.
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Analysts too felt that this was true. They said that the real
value of Li & Fung's business model lay not just in its ability to link
suppliers and buyers, but in its power to influence suppliers and manufacturers,
with whom the company had a strong relationship of trust...
Looking Ahead
In August 2003, Li & Fung finalized a licensing agreement with Levis, under
which the former would design, manufacture and market clothing under the
latter's Levi Strauss Signature label. According to company sources, these
products would be marketed in the US by late 2004... |
Exhibits
Exhibit I: Li & Fung's Supply Chain
Exhibit II: Li & Fung's Global Sourcing Network
Exhibit III: Li & Fung's Code of Conduct for Suppliers
Exhibit IV: Li & Fung - Consolidated Statements of Income (1997-2003)
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