Li & Fung: Battling the Global Supply Chain Challenge

Li & Fung: Battling the Global Supply Chain Challenge
Case Code: OPER143
Case Length: 16 Pages
Period: 2018-2019
Pub Date: 2020
Teaching Note: Available
Price: Rs.400
Organization: Li & Fung Limited
Industry: -
Countries: Hong Kong
Themes: Operations and Supply Chain Management, International Business, Logistics & Supply Chain, Globalisation
Li & Fung: Battling the Global Supply Chain Challenge
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The case discusses global supply chain giant Li & Fung Limited’s (Li & Fung) evolution from a regional sourcing agent to a global supply chain manager supplying apparel, accessories, and other products to global retailers. The company became a ‘one-stop shop’ for Western retailers by delivering a ‘global value-added package’, including product design and development, raw material and factory sourcing, production planning and management, quality assurance, and shipping consolidation. While the company tasted success as a supply chain manager, its inability to grasp e-commerce and several digital trends proved to be catastrophic for the company and led to a decline in its revenues. The rapid expansion of fast-fashion brands such as Spanish apparel retailer Zara SA (Zara) and Swedish multinational clothing retail company Hennes & Mauritz AB (H&M), also shook up Li & Fung’s traditional sourcing business as retailers began directly communicating with factories to reduce their costs. To add to its troubles, the US announced trade restrictions on Chinese imports in mid-2018. Though the trade war had a huge impact on Li & Fung, it maintained that it was prepared to weather the storm. The company said that its global network of production in 50 countries, decades-long relationships with factories outside China, and its ability to quickly move to production countries would enable a smooth transition out of China. Despite Li & Fung’s optimism, analysts wondered how the company would tackle the challenge of the US-China trade war and continue with its supply chain management dominance in global markets.

Issues

The case is structured to achieve the following teaching objectives:

  • Understand the evolution of Li & Fung’s business
  • Study the supply chain management process at Li & Fung
  • Examine the challenges faced by Li & Fung in general and with regard to the US-China trade war in particular
  • Explore strategies that Li & Fung can use to reduce its dependence on China and continue with its dominance as a successful supply chain management company

Contents

Keywords

Supply chain, Integrated supply chain management, regional sourcing, global supply chain, value chain, production planning, ‘dispersed manufacturing’, quality assurance, Logistics; e-commerce, US-China trade war, Supply Chain Management, International Management, International Business

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