Date post: | 30-Oct-2014 |
Category: |
Documents |
Upload: | apoorvsinghal |
View: | 66 times |
Download: | 7 times |
SUPPLY CHAIN MANAGEMENTLI & FUNG
KUSHAL BAGADIYA (B006)KUNAL GUPTA (B020)MELVIN JOSE (B027)PRAVEEN RAJAGOPALAN (B047)SONAM SIKARIA (B051)APOORV SINGHAL (B054)
GROUP 1
Agenda
Introduction & Background of Li & Fung Evolution of Li & Fung Business Strategy Alignment between Strategy and Capabilities Evolution of supply chain Global Expansion opportunities vs challenges 7 Principles of Li & Fung SCM & Sourcing Trend Indian process network of Li & Fung with Client
Examples IT’s role in Supply Chain Management Conclusion
Introduction
Started in 1906 by the Fung Family
Listed on Hong Long Stock Exchange
Market Capitalization: HKD 106Bn
Employees: 14,490 (Annual Report
2011)
A Supply Chain Manager
Background
Export Trading Company Operates in three segments:
Trading Network Logistics Network Distribution Network.
Global Footprints
5
Americas (9 locations)
New York City BostonSan FranciscoDominican RepublicGuatemalaHondurasGuadalajaraMexico CityNicaragua
Europe/Mediterranean
(13 locations)
London Huddersfield AmsterdamRomaniaFlorenceTurinTunisIstanbulDenizliIzmirOportoJordanCairo
Africa
(3 locations) DurbanMauritiusMadagascar
South Asia
(11 locations) BangaloreChennaiMumbaiNew DelhiKarachiLahoreDhaka ColomboSharjahBahrainSoutheast
Asia
(9 locations)
SingaporeBangkokShah Alam ManilaHanoiHo Chi Minh CityJakartaPhnom PenhSaipan
East AsiaHONG KONG - Head office(21 locations)
Shanghai Dalian Nanjing Beijing Seoul QingdaoTaipei TokyoHepuNingboMacau Liuyang Huizhou Dongguan Longhua Guangzhou Shenzhen Zhongshan Shantou Zhanjiang
Li and Fung Business EvolutionStage 1: Regional sourcing
agentCustomer wants an item, Li and
Fung brings together buyer
and supplier
Stage 2: Manage and
Deliver Manufacturin
gClient expresses requirement and
requests for a production program
Stage 3: Dispersed
Manufacturing
Dissect the value chain to optimize
production process by spreading it across to many
smaller suppliers
Stage 4: Integrated
Supply ChainBuy the right things
and shorten the delivery cycle
Sta
ge 1 1906 to 1979
Started by Mr. Li Tom-Ming and Mr. Fung Pak-Liu the company traded in items like porcelain, silk, bamboo, ivory and from 1949 included labor intensive items like garments, toys, electronics and other plastic items.
Sta
ge 2 1979 to 1995
Third generation of Fung family Victor and William returned after education from US and started modernizing and restructuring the business.
Sta
ge 3
an
d 41995 onwards
Rationalization of supply chain. Implementing a complete supply chain. Enhancement of customer base, geographic reach through acquisitions. Leverage on IT, operational efficiency and virtual manufacturing
Borderless Manufacturing 1990’sDispersed manufacturing
• Manufacturing in HK became increasingly expensive.
• Almost all labor intensive work moved across the border to China
• Design, packaging, and other technically advanced manufacturing techniques - in Hong Kong
• Eventually whole East Asian region pulled manufacturing based on strengths
• Li & Fung became expert at finding the best solution for each step in the manufacturing process
Smokeless Factory
AssemblyCHINA
ShellKOREA
LiningTAIWAN
FillerCHINA
ZipperJAPAN
Label, elastic,studs, toggle
and stringHONG KONG
Made in Hong Kong
Li-Fung: Business Strategy
Transforming customer experience Moving up the Value Chain : high value adding front and back
end tasks done in HK
Just-in-time sourcing
Eating into Soft$3 Add value to customer throughout the value chain
Virtual manufacturing Smokeless Manufacturing
Flexibility : More responsive to market shifts, technology change
Leverage Information Technology a core strength: Import Direct Shorten lead time from 3 months to 5 weeks
Add value to customer throughout the value chain
Implementation of Import Direct
ImportDirect
XTS-5
Tracking SystemSuppliers
Li & Fung staffForwarder
Customers
delivery of orders direct access
estimateshipment scheduleTrack production
progress
submit Quotations
$1 $4
Product design
SourcingLogisticsWholesale
retailInformationManagement
Alignment between Strategy and Capabilities
Strategy Capabilities
Buying Agency Acquisitions are key to grow market share in target geographic marketsLi & Fung is growing through global integra-tion
Sourcing Sources from virtually anywhere in the world and builds customized solutions for its retail customers
Borderless Manufac-turing
Network of 10,000 suppliers and staff in 40 different countries
Virtual manufactur-ing
Builds customized solutions for its retail cus-tomersAble to be both locally relevant and globally optimized
Supply Chain Man-agement
Orchestrates a supply chain network of 14,000 staff and 10,000 specialized companies in 40 countries
The Evolution of Supply Chain Management
The Supply ChainThe Supply Chain
Manufacturing Control
Shipping Control
Factory Sourcing
Raw Material Sourcing
Product DevelopmentConsumer Needs
Consumer Wholesaler/ Retailer
Product Design
LocalForwarding Consolidation
Forwarder Consolidation
Customs Clearance
Global Expansion Opportunities vs Challenges
Opportunities• Globalized in a short span
of time• Pressure from the US and
European retailers to cut costs by moving to cheaper sourcing locations
• Shortening product life cycles
• Direct outcome of the company’s efforts to add more value to its trading activities
Challenges Hiring local staff, developing
new vendors, dealing with local government authorities and coming to grips with local cultures
Proximity to customers, wage levels and manufacturing capabilities
Need greater supervision and travel costs in order to generate profits for new operations
Multitude of national trade restrictions
Li & Fung’s Integrated SCM
Sourcing trend
Evolved from a sourcing agent to a global supply chain manager
Instead of just sourcing- owns and licenses brands outright Manages supply chain through its office network in more
than 40 economies
Global Reach, Local Presence
What happens when Li & Fung gets an order?
What happens when Li & Fung gets an order?
European retailer
orders 10,000 garments
Buy yarn from Korean
manufacturer
Weave & dye in Taiwan
5 weeks later 10,000
garments reach Europe
Manufacture garments in
Thailand
Buy the beat Japanese zippers & buttons
All look alike as though
manufactured in five factory
Make best use of quotas, labour conditions split
order to 5 factories
Manufactured in China
Li & Fung’s clients
Li & Fung’s order process
There in “value network” added. Each step is identified as the most efficient &
cost effective step Looking for the best solution in each step Looking for best country to locate their
manufacturing facility “plus”
“This new approach to manufacturing, known as ‘dispersed manufacturing’, challenges the established notion of doing everything under one roof”
IT’s role in Li & Fung
INTRANET
EXTRANET
E-COMMERCE
VENDOR PORTAL
VIDEO CONFERENCE
VOIP
APPLICATIONS
IT’s role in Li & Fung - INTRANET
To link the Group’s offices and manufacturing sites around the world
To allow tracking of orders and shipments
Digital imagery allowed for online inspection and troubleshooting
To expedite and simplify internal communications
INTRANET EXTRANET E-COMMERCE OTHERS
IT’s role in Li & Fung - EXTRANET
To link the company directly to its key customers, with customization to individual customer’s needs Online product development and order tracking Platform for manufacturers and retailers to interface To streamline communications To promote quick response manufacturing
Enhance the supply chain’s efficiency and make the system more transparent to customers
INTRANET EXTRANET E-COMMERCE OTHERS
IT’s role in Li & Fung – E-COMMERCE
A B2B website linking small to medium sized businesses with suppliers
Offer a wide array of customization options to its clients Streamline supply chain management and reduce costs
INTRANET EXTRANET E-COMMERCE OTHERS
IT’s role in Li & Fung – OTHERS
1. Vendor Portal Automate all transactional processes Enhance all communication channels Reduce manual data entry
2. VOIP and Video Conferencing Place both audio and video calls to offices Enable effective communication and reduce travel costs and time
INTRANET EXTRANET E-COMMERCE OTHERS
Conclusion
Li & Fung’s competitive advantage : Strong Supply Chain Management Focus on customer experience throughout the value chain Innovation: global network though Dispersed
manufacturing Building mutually profitable relationships with network
partners Leveraging Information Technology: Employing enterprise
information systems to increase efficiency of supply chain Flexibility: Nimble organization design through Customer-
centric divisions, One-Stop-Shop Service Efficient work, information and cash flow in the supply
chain
THANK YOU