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How does Li & Fung make the supply chain more responsive? Li & Fung manages about 7500 suppliers in more than 26 countries but does not run any of the factories because that would be a humungous task to manage such a large workforce. But working with these factories the company takes anywhere from 30% to 70% of their production so that Li & Fung is their largest customer. Li & Fung is customer focused company where they focus an entire division on serving one customer or has a smaller division structured around a group of customers with similar needs. Having these customer focused divisions allows the company to reduce response time as well. There are specialized teams in areas such as technical support, merchandising, raw material purchasing, quality assurance and shipping and then there are also specific sourcing teams for different countries. In addition, these divisions are flexible which can be created and destroyed depending upon the customer need. Today in consumer driven industry, where customer tastes are changing every day, it is crucial to move to smaller product cycles and reduce the inventory significant. To achieve this, Li & Fung dissected the value chain and managed multiple networks of dispersed production. At every step in the supply chain, the company looks at the best way to optimize the manufacturing process. The company has formed trustworthy relationships and manages its different suppliers to shrink the delivery cycle. Generally, when a company outsources manufacturing, it places an order for finished goods and leaves it on the suppliers to worry about procuring the raw materials. This process takes a long time and in addition the single factory does not have a strong buying power. But here Li & Fung does things differently. They look at the whole supply chain and if they know that a buyer is going to place a large order but does not currently have information about the color and styles. In this case, Li & Fung...
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