Presentation Global Supply Chain Management
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9 -3 1 2 -1 0 2
JANUARY 18, 2012
F. WARREN MCFARLAN
MICHAEL SHIH-TA CHEN
KEITH CHI-HO WONG
Li & Fung 2012
op yo This is the year when we see a sea change in our environment. We face a whole brave new world, when Asia becomes an important market. Our simple model, a company which orchestrates the supply chain, sourced primarily from the developing parts of the world and sold to the developed parts of the world, has to be changed.
— William Fung, Deputy Chairman of Li & Fung Limited
tC
In August 2011, William Fung, who would become Chairman of Li & Fung Limited in May 2012, was about to attend the regular Li & Fung biannual meeting with its 150 top managers, many of whom flew into Hong Kong from all over the world. Three months earlier, William’s elder brother,
Victor Fung, announced his retirement as Chairman after 23 years. Since 1989, the Fung brothers had turned Li & Fung from an Asia-based, family-run trading house into a global supply chain company managing intercontinental networks of manufacturers, suppliers, and distributors of consumer nondurable goods. During that period, Li & Fung grew its annual revenue from less than US$500 million to US$16 billion, yielding a compound average growth of over 20% each year (Exhibits 1 & 2 provide the consolidated profit and loss accounts and balance sheet statements for 2001 – 2010 respectively). All of this was achieved in an “asset light” manner, where the company avoided owning any piece of the supply chain it managed. Li & Fung’s phenomenal growth was facilitated by its Three-Year Plans, a strategic planning exercise the brothers introduced to discipline the company to define a new set of “zero-based” objectives every three years. Central to the Three-Year Plan was Li
& Fung’s continued efforts in acquisitions, to aim to “fill in the mosaic” where management saw the next growth opportunities to be. The acquisitions brought the company not only new growth engines
9 -3 1 2 -1 0 2
JANUARY 18, 2012
F. WARREN MCFARLAN
MICHAEL SHIH-TA CHEN
KEITH CHI-HO WONG
Li & Fung 2012
op yo This is the year when we see a sea change in our environment. We face a whole brave new world, when Asia becomes an important market. Our simple model, a company which orchestrates the supply chain, sourced primarily from the developing parts of the world and sold to the developed parts of the world, has to be changed.
— William Fung, Deputy Chairman of Li & Fung Limited
tC
In August 2011, William Fung, who would become Chairman of Li & Fung Limited in May 2012, was about to attend the regular Li & Fung biannual meeting with its 150 top managers, many of whom flew into Hong Kong from all over the world. Three months earlier, William’s elder brother,
Victor Fung, announced his retirement as Chairman after 23 years. Since 1989, the Fung brothers had turned Li & Fung from an Asia-based, family-run trading house into a global supply chain company managing intercontinental networks of manufacturers, suppliers, and distributors of consumer nondurable goods. During that period, Li & Fung grew its annual revenue from less than US$500 million to US$16 billion, yielding a compound average growth of over 20% each year (Exhibits 1 & 2 provide the consolidated profit and loss accounts and balance sheet statements for 2001 – 2010 respectively). All of this was achieved in an “asset light” manner, where the company avoided owning any piece of the supply chain it managed. Li & Fung’s phenomenal growth was facilitated by its Three-Year Plans, a strategic planning exercise the brothers introduced to discipline the company to define a new set of “zero-based” objectives every three years. Central to the Three-Year Plan was Li
& Fung’s continued efforts in acquisitions, to aim to “fill in the mosaic” where management saw the next growth opportunities to be. The acquisitions brought the company not only new growth engines