Li

1
Li Fung Group

• 28 May 2004

2
Li Fung Group
Li Fung (1937) Ltd
Financial Investors
Public Shareholders
Li Fung (Retailing) Ltd
IDS Group/ Li Fung (Distribution) Ltd
Li Fung (Trading) Ltd

• Marketing, logistics contract manufacturing in
  Greater China and ASEAN
• IDS Manufacturing
• IDS Logistics
• IDS Marketing
• US 1 Billion
• 6,000

• Retailing in Greater China and ASEAN countries
• Toy R Us
• Circle K
• US 0.26 Billion
• 2,000

Core Export trading Business of soft goods
and hard goods to US
EU Turnover US 4.5 Billion Employee
6,000
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LI FUNG (TRADING) LTD
4
Background

• Li Fung is a specialist in the sourcing of
  private label consumer goods, primarily to
  retailers and brands
• Headquartered in Hong Kong
• Close to 100 years of history
• a sourcing network of 68 offices in 40 countries
• 6,000 staff
• Member of Hang Seng Index, Morgan Stanley
• Hong Kong Country Index, Dow Jones
• Sustainability Index
• Market cap approx US5 billion

5

Li Fungs Supply Chain Management
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Supply Chain and Supply Chain Management
Supply Chain

• A supply chain encompasses all activities from
  obtaining the raw materials, through production,
  wholesale, retail, warehousing and
  transportation, to the delivery of the final
  goods or services to the end-customers.
• Four Flows work flow physical
  flow information flow
  funds flow

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Supply Chain and Supply Chain Management
Supply Chain Management is about

• Supply chain optimization
• Buying the right thing and shortening the
  delivery cycle
• i.e. products to be produced at the lowest cost
  with the fastest turnaround time possible
• AdvantageOverall cost reduction with maximum
  efficiency

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The concept of Soft 3
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Li Fungs Supply Chain Management

• Globalization effect Competition is no longer
  between companies but between companies supply
  chains
• Definition of supply chain management is yet
  being compromised
• Harvard Business Review 6 case studies of Li
  Fung
• As a leader in supply chain management, Li Fung
  has derived seven principles in supply chain
  management

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Li Fungs Supply Chain Management
The 7 Principles of Li Fungs Supply Chain
Management

• Be customer-centric and respond accordingly to
  the market demand
• Focus on ones core competency and outsource
  non-core activities, and develop a positioning in
  the supply chain
• Develop a close, risk- and profit-sharing
  relationship with business partners
• Design, implement, evaluate and adjust the work
  flow, physical flow, information flow and cash
  flow in the supply chain
• Adopt information technology to optimize the
  operation of the supply chain
• Shorten product lead time and delivery cycles
• Lower costs in sourcing, warehousing and
  transportation.

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The Changing Role Of The Trading Company
Level of Value Added
Borderless Manufacturing
Sourcing
Buying Agency
1906
Now
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Borderless Manufacturing
Assembly CHINA
Made in Hong Kong
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The Changing Role Of The Trading Company
Level of Value Added
Virtual Manufacturing
Borderless Manufacturing
Sourcing
Buying Agency
1906
Now
14
The Changing Role Of The Trading Company
Supply Chain Management
Level of Value Added
Virtual Manufacturing
Borderless Manufacturing
Sourcing
Buying Agency
1906
Now
15
Li Fungs Business Paradigm
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Thank you.
28 May 2004