Fmg18 Grp 9 Li & Fung 1
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Li & Fung transitioned from a buying agent to a supply chain manager by taking on more responsibility over multiple stages of development, from regional sourcing to managing global manufacturing programs. It claims to be an innovator in supply chain management by breaking up the traditional value chain, involving retailers more in the design process, shortening buying cycles, and focusing divisions on serving individual customers. The changing role of supply chain management now involves designing and managing entire processes, making many small decisions flexibly across globalized operations using information technology. The concept of postponement aims to delay supply chain activities until customer demand is revealed, benefiting apparel manufacturers by enabling semi-finished manufacturing and customization close to customers.
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Fmg18 Grp 9 Li & Fung 1
- 1. LI & FUNG - CASE STUDY - Group - IX
- 2. QUESTION 1 Discuss the transition Li &Fung made from a buying agent to a supply chain manager ?
- 3. TRANSITION Transition takes place through several stages of development. Regional sourcing agent Manager and deliverer of manufacturing programs Dispersed manufacturing
- 4. QUESTION 2 How would you justify Li & Fung ‘s claim that it is an innovator in the supply chain management?
- 5. Breaking up the value chain Manufacturing of global product. Participation of retailers in design process Shortening of buying cycle Focused an entire division on serving one customer
- 6. QUESTION 4 Discuss the changing role of SCM in the light of the article?
- 7. QUESTION 4 New role of SCM is to design and manage the processes. The soft $3. Making large number of small decisions instead of a small number of big ones i.e. more flexibility Globalization Introduction of Information Technology
- 8. QUESTION 4 Discuss the concept of postponement. How can apparel manufacturers be benefit by postponement?
- 9. Postponement A postponement strategy aims at delaying some supply chain activities until customer demand is revealed in order to maintain both low system wide cost and fast response.
- 10. Four Major Strategies Purchasing postponement Delay purchasing of some expensive and fragile materials Manufacturing postponement Products in semi-finished forms and can be customized quickly in production facilities Logistics postponement Products in semi-finished forms and can be customized quickly in production facilities close to customers Time postponement Finished products are kept in central location and are distributed quickly to customers
- 11. Apparel Manufacturing Process (Old) Spin or Purchase Yarn Dye Yarn Finish Yarn Manufacture Garment Parts Join Parts
- 12. Postponement Spin or Purchase Yarn Manufacture Garment Parts Join Parts Dye Garment Finish Garment
- 14. Still use aggregate forecasts to start manufacturing early
Editor's Notes
- 1. Extended our geographic reach by establishing offices in Taiwan, Korea, and Singapore. Our knowledgeof the region had value for customers. By working with a larger number of countries, we were able to assemble components; we call this "assortment packing.2. In the old model, the customer would say, "This is the item I want. Please go out and find the best place to buy it for me." The new model works this way. The Limited, one of our big customers, comes to us and says, "For next season, this is what we're thinking about-this type of look, these colors, these quantities. Can you come upwith a production program?“3. Dispersed manufacturing means breaking up the value chain and rationalizing where you do things. We completely lost the low-end transistor-radio business to Taiwan and Korea. What saved us was that China began to open up to trade, allowing Hong Kong to fix its cost problem by moving the labor- « intensive portion of production across the border into southern China. Labor intensive middle portion of the value chain is still done in southern China, and Hong Kong does the front and back ends.We dissect the manufacturing process and look for the best solution at each step. We're not asking which country can do the best johoverall.Instead, we're pulling apart the value chain and optimizing each step - and we're doing it globally. Retailers are participating in the design process.They're now managing suppliers through us and areeven reaching down to their suppliers' suppliers
- This Hong Kong model of borderless manufacturing has become a new paradigm for the region.3. Today assembly is the easy part. The hard part is managing your suppliers and the flow of parts. Inretailing, these changes are producing a revolution.For the first time, retailers are really creating produets,not just sitting in their offices with salesman after salesman showing them samples: "Do you want to buy this? Do you want to buy that?" Instead,retailers are participating in the design process.4. I've certainly made life harder for myself now. It would be easier to let the factories worry about securingtheir own fabric and trim. But then the order would take three months, not five weeks. So to shrink the delivery cycle, I go upstream to organize production. And the shorter production time lets the retailer hold off before having to commit to a fashion trend. It's all about flexibility, response time, small production runs, small minimum-orderquantities, and the ability to shift direction as the trends move.6. Extensive networks of suppliers are organized geographically, with the country units as their profit centers. As a result, it is hard for them to optimize the value chain. Their country units are competing against one anotherfor husiness. Our primary alignment is around customers and their needs. But to balance the matrix, every productgroup executive also has responsibility for one country. It makes them more sensitive to the prohlemsfacing a country director and less likely to make unreasonahle demands.(Page 109-110)
- quote frm case.. "Its not about making large orders small no of times, rather making small orders large no of times".. Instead of trying to save on logistics cost, you try to save the manufacturing cost "the soft $3".. New role of SCM is to to design and manage the processes, assets, and flows of material and information required to satisfy customers’ demands.. Globalization provides you opportunity and you must use it else fall behind.. IT allows you not only to monitor & control your SCM remotely, it also allows easy availability of information that you can utilize..