li and fung case study

Topics: Supply chain management, Supply chain, Value chain Pages: 13 (3870 words) Published: September 29, 2014

This assignment is based on Li & Fung, wherein the issues and the pre-requisites relating to the introduction of an integrated Management of Information Systems are to be critically analysed in respect to its current situation and suitable recommendations are given at the end.

Likewise, in the first section of the assignment, those internet issues prevailing in the company which justifies the need to consider the introduction of Information Systems are stated. In the second section, its holistic global supply chain is analysed in order to understand how efficiently it has been making use of the technology. Moreover the pros and cons of using “Bubble-in” and turnkey solutions to build the e-commerce portal are stated from the case study. Finally, the security issues that Li & Fung need to be considered while implementing their e-commerce B2b portal are also dealt.


2.1 Michael porter value chain model:

Schust (2008) stated that In order to highlight the specific activities in the business the porter value chain model is used. He further stated that the value chain model identifies the specific and critical points where a firm can use the information technology to enhance its operations. Porter’s value chain model for Li & Fung is considered to identify those activities which are critical, important, clearly lagging behind and if improved with the use of internet can add much more value to their existing value –chain and thus improving the efficiency and the performance of the company.

Figure 1: Michael Porter’s Value Chain Model for Li & Fung
Source: Oladejo, 2008

From the above figure of the value chain of the Li & Fung, it is understood that he primary activities of the company include development of the product from sourcing the raw materials and factory, planning of the production, quality assurance through controlling the manufacturing process, export and shipping expertise. While the secondary activities of the firm include human resources, finance, information technology and the procurement.

As mentioned in the case study Li & Fung did not own any strategic links in the supply chain rather they just managed and orchestrated the whole production process that starts with raw materials sourcing all the way through to the finished product by providing its customers the value-added services from product design and development, through raw material sourcing, production planning & management, quality assurance & export documentation in a “borderless manufacturing environment through the concept of supply chain customization.

By the above information we can conclude that Li & Fung is able to carry on all its primary activities just because of its implementation of the concept of supply chain customization which relates to the support activity procurement. Thus we can conclude that procurement is the activity which relates to sourcing the raw materials depending upon the customer needs and demands.

Furthermore, Li & Fung contained small management team of 90 around the globe operating as separate and individual companies which are focussed on the specific needs of the customers and also supported the secondary activities of the value – chain such as IT, Financial, Human Resource Management and the Administrative & Management. This decentralized corporate structure has allowed the company to be adaptable, flexible and sensitive to the external environmental changes e.g. fashion trends.

Thus by the above analysis we can further conclude that the small management teams are also very crucial to the success of the organisation as they support the procurement activity of the company.

2.2 Internet Issues:

After careful observation of the porter’s value chain model for Li & Fung we can summarize that the support activities namely procurement, information technology play an important role in the supply...
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