FAST, GLOBAL & ENTREPRENEURIAL:SUPPLY CHAIN, HONG KONG STYLE

An Interview with Victor Fung By Joan Magretta

PRESENTED BY-> GAURAV KHARA(B04)SHIPRA GUPTA(B05)MOHIT CHAWLA(B06)

Li & Fung

Victor K. FungGroup Chairman

William K. FungGroup Managing Director

• 1906-1949Founded by Mr Fung Pak-Liu and Mr Li To-Ming.

Traded products like silk, bamboo, handicrafts and fire works.• 1949-1979

Starting exporting Labour Intensive Consumer Products.• 1979-1985

Opening up in China and industrialization in less developed Asian countries

Heavy investments made during this time.• Since 1995

Evolution of Multinational Group.

Li & Fung Business Evolution

Stage 3

• Intergrated Supply ChainStage4

Li & Fung’s developmentAssortment packing e.g.: Toolkit assembled from :Spanners from country AScrewdrivers from country B

Dispersed ManufacturingE.g. Transistor Radios

Source components from Korea/ TaiwanSend kits to China for AssemblyTest & Inspect in Hong KongShip out to the World

Dispersed mfg

Assortment

Trading

Seven Pillars

•Customer Centric and Market Demand driven•Focus on one’s core competency and outsource non-core activities•Close risk and profit sharing relationship with business partners•Design, implement, evaluate and improve the several flows•IT to improve efficiency of the SC’s operation•Shorten Production lead time and delivery cycles•Lower costs in sourcing warehousing and transportation

Information Platform for Integrated Solutions

How Li adds value Li Fung does the high value added Front

and Back end Tasks in Hong Kong

Front End-Design-- Engg

- Prodn Plng

Back End-QC-Test

- Logistics

Raw Matl+ Component

Sourcing

ManagingProduction

Li organizes lower value added middle stages thru’ its Network of 7500 suppliers. 2500 of which active at any given time.

Alignment between Business and IT

Three main BusinessIntranet and Extranet linksTracking systemsCentralised IT systemE-commerceClicks and Mortar pioneer

Overview of two marketLi Fung: Supplying Li Fung: Supplying Baby DollsLi Fung: Supplying Baby Dolls

Li supplies 10,000 Garments to European Retailer in 5 weeks!

Hong Kong-Design- Make molds

China-Mold- Assemble- Paint- Doll clothing

Hong Kong-Inspection-Packing

Distribute

ToThe

World

Back

KoreaYarn

TaiwanWeave

&Dye

ThailandGarment

Japan/ ChinaZippersButtons

2 2

3

4

1

Li Fung: Supplying Baby Dolls

Sources of Li & Fung’s Distinctiveness

Summary

THANK YOU!!