Li & Fung
How does Li & Fung create value for its customers and suppliers
Value for customers: low cost, high quality, fast delivery time, and customized services; and these are achieved by
a. Knowledge, experience, and network of connections with around thousands of suppliers and because of the knowledge network, the company knows who is good at producing what at the lowest cost level and delivery time
b. Organizing around customer-oriented divisions, combining the competitive advantages of different countries- to source raw materials from one country that can provide them cheaply and at high quality and then assemble them in another country that has an advantage in labor
c. Always expanding their supplier network to new countries/suppliers to gain the advantage in low labor cost
d. 1/5 of the company’s staff specializes in quality control and the company has a stringent process for quality assurance
e. Understanding trade restrictions thoroughly to align customers and suppliers and being flexible to move with new production sites to fulfill customer requirements should a trading policy change
f. The company’s divisions are free to tailor their services to each individual customer’s needs
Value for suppliers
a. Li & Fung as a longstanding business partner with solid working experience
b. Though the company is only the agent between customers and suppliers, the latter think of it as working for Li & Fung, of good reputation and credibility.
c. Li & Fung pays online and don’t reject finished goods for spurious reasons
d. Through working with the company, the supplier learns and grows
2. How does Li & Fung organize?
a. Li & Fung is structured to serve customers’ interests: having divisions serve particular customers by using branch offices located near concentrations of suppliers.
b. It has branch offices in ten countries, including seven in China. These branches enable all divisions, no matter where they are based, to use suppliers all over its network.
Value for customers: low cost, high quality, fast delivery time, and customized services; and these are achieved by
a. Knowledge, experience, and network of connections with around thousands of suppliers and because of the knowledge network, the company knows who is good at producing what at the lowest cost level and delivery time
b. Organizing around customer-oriented divisions, combining the competitive advantages of different countries- to source raw materials from one country that can provide them cheaply and at high quality and then assemble them in another country that has an advantage in labor
c. Always expanding their supplier network to new countries/suppliers to gain the advantage in low labor cost
d. 1/5 of the company’s staff specializes in quality control and the company has a stringent process for quality assurance
e. Understanding trade restrictions thoroughly to align customers and suppliers and being flexible to move with new production sites to fulfill customer requirements should a trading policy change
f. The company’s divisions are free to tailor their services to each individual customer’s needs
Value for suppliers
a. Li & Fung as a longstanding business partner with solid working experience
b. Though the company is only the agent between customers and suppliers, the latter think of it as working for Li & Fung, of good reputation and credibility.
c. Li & Fung pays online and don’t reject finished goods for spurious reasons
d. Through working with the company, the supplier learns and grows
2. How does Li & Fung organize?
a. Li & Fung is structured to serve customers’ interests: having divisions serve particular customers by using branch offices located near concentrations of suppliers.
b. It has branch offices in ten countries, including seven in China. These branches enable all divisions, no matter where they are based, to use suppliers all over its network.