Analysis of Li Fung

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Logistics and transportation
Mei Jin
2011954440
ECOM-ICOM

Analysis of Li & Fung Case

Logistics and transportation

Name: Mei Jin

Student No. 2011954440

1

Logistics and transportation
Mei Jin
2011954440
ECOM-ICOM

Analysis of Li & Fung Case
Background
Founded in 1906 in Guangzhou by Victor Fung's grandfather, Li & Fung was the first Chinese-owned export trading company in China at that time. From the traditional export trade companies to large modern multinational supply chain Management Corporation; this 106-year old company witnessed the transformation of the supply chain management. Export trade, distribution and retail are Li & Fung’s three core businesses. Li & Fung Focus on the needs of customers, and provides effective product supply, in order to supply appropriate consumer products in right time and price to all customers.

1 Strategic evolution in the new age of global competition
From the traditional export trade companies to the large modern multinational supply chain Management Corporation, Li & Fung has experienced four stages: purchasing agency, borderless manufacturing, virtual Manufacturing, supply Chain Management.

1.1 Purchasing agency (1906-1975)
The founder of Li & Fung relied on his spoken English, built relationship between factories and merchants from China to America. They continued providing “value added” to customers:
(1) Provide the latest information of market to the buyers
(2) Evaluate each manufacturer, and provide the appropriate manufacturers or suppliers to the buyers
(3) On the behalf of buyers to purchase products
(4) Assist factory to produce and monitor factory, ensure the production process conform to the standard
As a middle man in factories (suppliers) and buyers, Li & Fung set up a long-term partnership between them and achieved a win-win situation in that time.

1.2 Borderless manufacturing (1976-1994)
In borderless manufacturing, Li & Fung were responsible for formulating a complete 2

Logistics and transportation
Mei Jin
2011954440
ECOM-ICOM

production plan, doing market research, purchasing raw materials, and finding the most suitable product manufacturers for customers directly according to customers’ initial product concepts. Furthermore, Li & Fung made plan and monitored the process in order to ensure the products quality and delivery timely. In this stage, Li & Fung was engaged in high additional value businesses in Hong Kong. They transferred lower additional value businesses to the most suitable places, and then made whole production procedures and processes globalization.

1.3 Virtual Manufacturing (1995-1999)
As a virtual manufacture, Li & Fung became buyer’ suppliers, and signed the contract with the overseas buyers directly. They outsourced productions to the competent factory, made overall arrangements and involved in the whole production process closely.

In this stage, Li & Fung’s “value added” extended to product design, procurement, product management and control, as well as shipping and other supporting work.

1.4 Supply Chain Management (2000-



In today’s fast-paced, global markets, Li & Fung provided comprehensive supply chain services. In addition to providing the service before, Li & Fung engaged in developing and distributing the raw materials to the factories, providing technical assistance, organizing transportation and shipping delivery service, applying information technology in product development and new suppliers hunting, and trying their best to meet customer’s individual requirements, in order to fulfill products value-added globalization.

2 success factors analysis
2.1 Strategy
(1) Customer-centric
Customer-centric is the key element of supply chain management. Li & Fung always put the customers’ demand in the first place and respond accordingly to the market demand. They do their best to contest their customers, including organize product, choose manufacturing and supplies, design...
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