Li & Fung to create ‘supply chain of the future’

Li & Fung has unveiled a three-year plan to create what it describes as “the supply chain of the future”.

Group CEO Spencer Fung said its plan for 2017 to 2019 would realign the business to focus on the changing environment.

“As we enter the next three years, our entire organisation is aligned around the need to transform the business in a fast-changing environment. We have a comprehensive plan in place to create the supply chain of the future,” he said.

“We see the next three years as one of the most exciting periods we have embarked on. We continue to be challenged by increasing uncertainties from geopolitical and macroeconomic events, weak consumer demand, and evolving sourcing and consumption preferences. However, the state of the world and the increasing complexity of the supply chain have created tremendous opportunities.

“Entering into our new Three-Year Plan, our vision is to build the supply chain of the future, to help our customers navigate the new digital economy and stay competitive. With our vast experience in supply chain management, we are confident that we can help our customers excel in this tumultuous time.”

The three-year plan will focus on speed, innovation and digitisation.

Fung says one of the primary drivers behind the new strategy is the increasing demand from retail clients for faster turnaround due to shorter order cycles, greater flexibility in inventory replenishment and a demand for smaller volumes so clients can react more quickly to changing consumer preferences.

“Speed is one of the most important decisions driving our customers’ global supply chains. Internally, we aspire to be responsive and fast like start-up companies, by maintaining a simplified structure and employing methods such as rapid prototyping to make quick decisions,” said Fung.

“Enhanced innovation allows us to deliver higher speed, and to improve our productivity and

efficiency by doing things creatively. By innovating business models, we will be able to adapt to the fast-changing environment. We will also increase our efforts in creating new products that help our customers differentiate themselves. We will continue to build upon this with our select product verticals, which allows us to capture new opportunities and enhance margins.

“Speed and innovation cannot be fully realised without the digitalisation of the entire supply

chain. We aim to digitalise all the key aspects of the supply chain, from product development,

material costing and sampling to manufacturing.

“A digital supply chain is essential to service a highly digitalised marketplace. It will allow us to create an effective ecosystem that benefits various stakeholders in the supply chain. In fact, our convening power in bringing together diverse players across the supply chain and analysing their data is a key differentiator.

With synchronised data, we can make better decisions on price, quality, working capital, inventory and other efficiencies. By providing end-to-end visibility for our customers and suppliers, Li & Fung will be at the forefront of providing a digital platform,” said Fung. “Together with data analytics, it allows us to create value along the entire supply chain.”

As it embarks on the new strategy, Li & Fung will first reorganise its business into two main divisions: one focused on services which includes supply chain and logistics solutions, the other  on products, which features the firm’s retail and wholesale business. The two divisions will have their own management teams.

“The digital supply chain, coupled with a better speed-to-market business model, will transform the supply-and-demand dynamics with our customers,” said Fung.

Li & Fung employs 22,000 people in more than 250 locations in over 40 different markets.

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