Li & Fung Strategy Case
Li & Fung
STRATEGY CASE- 3
HIMANI GUPTA ROLL No. 15 PGDM-IB
4/1/2011
(Q1) Explain briefly Li & Fung’s business model today. Comment on the sources of its competitive advantage. Is it sustainable? Why?
Business Strategy
Li & Fung uses the holistic supply chain management (SCM) strategy to benefit their clients by shortening order fulfillment from months to weeks which allows clients to reduce the amount of inventory they hold. In addition they remained as the middle man, which allowed them to reduce matching and credit risks. Business Model
Li & Fung’s supply chain management services offer Total Value-Added Package: from product design and development, through raw material and factory sourcing, production planning and management, quality assurance and export documentation to shipping consolidation. The company determines which supplier manufactures which element at the lowest cost possible to shorten order fulfillment and provide competitive prices to their customers.
Li and Fung provide SCm services that determined what supplier in which country would best maximixe it’s clients quality and time expectations at the lowest cost possible.
It deals both in Hard goods and Soft goods.
HARD GOODS:
• Fashion accessories
• Festive or holiday products
• Giftwares
• Furnishings
• Handicrafts
SOFT GOODS: Mainly apparels
Li & Fung defines itself as a “network orchestrator”. What it means by network is a more flexible supply chain. If supply chain is a set of 11 players who are currently in the soccer field, network is a team including those sitting on the bench. For Li & Fung’s customer cheaper and faster delivery is what is needed and how Li & Fung mix and match the suppliers does not really matter.
Process of Li & Fung:
• Customers will be given an initial product concept of Li & Fung, such as product design, shape, color and quality requirements, etc., and then developed by Li & Fung customers a
STRATEGY CASE- 3
HIMANI GUPTA ROLL No. 15 PGDM-IB
4/1/2011
(Q1) Explain briefly Li & Fung’s business model today. Comment on the sources of its competitive advantage. Is it sustainable? Why?
Business Strategy
Li & Fung uses the holistic supply chain management (SCM) strategy to benefit their clients by shortening order fulfillment from months to weeks which allows clients to reduce the amount of inventory they hold. In addition they remained as the middle man, which allowed them to reduce matching and credit risks. Business Model
Li & Fung’s supply chain management services offer Total Value-Added Package: from product design and development, through raw material and factory sourcing, production planning and management, quality assurance and export documentation to shipping consolidation. The company determines which supplier manufactures which element at the lowest cost possible to shorten order fulfillment and provide competitive prices to their customers.
Li and Fung provide SCm services that determined what supplier in which country would best maximixe it’s clients quality and time expectations at the lowest cost possible.
It deals both in Hard goods and Soft goods.
HARD GOODS:
• Fashion accessories
• Festive or holiday products
• Giftwares
• Furnishings
• Handicrafts
SOFT GOODS: Mainly apparels
Li & Fung defines itself as a “network orchestrator”. What it means by network is a more flexible supply chain. If supply chain is a set of 11 players who are currently in the soccer field, network is a team including those sitting on the bench. For Li & Fung’s customer cheaper and faster delivery is what is needed and how Li & Fung mix and match the suppliers does not really matter.
Process of Li & Fung:
• Customers will be given an initial product concept of Li & Fung, such as product design, shape, color and quality requirements, etc., and then developed by Li & Fung customers a