Global Supply Chain Management: Best Practices at Li & Fung Limited
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Case Details:
Case Code : OPER047
Case Length : 15 Pages
Period : 1996-2004
Organization : Li and Fung
Pub Date : 2005
Teaching Note :Not Available
Countries : Hong Kong, US, Europe
Industry : Trading, FMCG
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"We deliver a new type of value added, truly global
product that has never been seen before. We're pulling apart the value chain and optimising each step
- and we're doing it globally."
1
- Victor Fung, Chairman, Li & Fung, in June 2000.
"In an age when the Internet is supposedly going to
eliminate the middleman, here's a middleman, an old Asian trading company that
has made itself indispensable."2
- An Article in Forbes.
Introduction
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In January 2004, Li & Fung Limited (Li & Fung), a Hong Kong based global
consumer goods trading giant, announced that Li & Fung Trading (Shanghai), its
wholly-owned subsidiary, had been granted an export company license by the
Ministry of Commerce of the People's Republic of China (China).
After receiving the license, Li & Fung Trading (Shanghai) became the first
wholly owned foreign trading company to be offered direct export rights in
China. The company was authorized to export China-sourced goods directly to
customers worldwide and import raw materials for manufacturing in China. Li &
Fung was until then dependent on its Chinese partners for exporting from China.
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According to William Fung (William), managing director, Li & Fung, the license
freed the company from the many trading restrictions in China. It would
enhance Li & Fung's competitiveness and increase its share in the global
market.
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William said, "With the ability to directly export products from China to
our customers worldwide, Li & Fung is now able to offer an even more
complete supply chain service."3
Analysts felt that Li & Fung stood to benefit significantly from its new
license as it was one of the world's leading textile export traders, and the
largest to the US.
The company was well-placed to leverage China's leadership position in
textile manufacturing and exports, as that country was the company's largest
manufacturing hub, from where it sourced over US$ 2 bn worth products
annually. Li & Fung had 16 offices in China, which it planned to increase it
to 36 by 2007. |
Global Supply Chain Management: Best Practices at Li & Fung Limited
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