Case Study: LI & FUNG

This paper will answer the case discussion questions on Li & Fung. Summarize the strategic and operational challenges facing global managers illustrated in the selected text.

At one time many of LI & Fung’s customers performed their own logistics and purchasing functions in-house. Now they outsource those functions to Li & Fung because they are experts in the supply chain management for its 350 or so customers, providing the convenience of one-stop shopping for raw material sourcing, production planning and management, quality assurance, export documentation, and shipping consolidation. To better serve the needs of its customers, Li & Fung is divided into small, customer-focused divisions. That has a network of companies that are willing to work together to produce an excellent product. (Hill International Business)

In order for Li & Fung to execute on its promise to deliver added value to its customers, the skills and competencies they must have is rapid delivery of product. Most of their larger clientele is in the fashion industry and the need for a fast turn around of the product is imperative. Each division is separated to specialize in the customer they are servicing. For example Gymboree’s division is equipped with direct software to the main corporations link. The design, technical support, merchandising, raw material purchasing, quality assurance and shipping are all handled in that particular division.

I believe they do not own any production facilities because their expertise is in managing and coordinating the best production facilities to coincide with their customer base. This way they limit cost and can have flexibility to utilize the best in every market. That way they can shop the market for best quality and prices. (Hill International Business)

In closing the strategic and operational challenges facing management with in this company can be managed. The management must take the basic product concept and research the market for the best providers. This company is set up on the customer service and quality industry. Li & Fung take orders from customers and then sifts through its network of 7,000 independent suppliers. This enables them to produce the product for customers at the most attractive combination of cost and quality. (Hill International Business)

Reference:

International Business: Competing in the Global Marketplace (5th ed.) C.W.L. Hill McGraw-Hill/Irwin, 2005 New York, NY

Chapter 16 Global Manufacturing and Materials Management; Li & Fung closing case