The goal of effective supply chain management is to "gain competitive advantage through optimizing flows within the enterprise". The Hong Kong listed company Li & Fung Ltd represents one of the world's best examples of achieving this goal. The company financial history clearly tells that story. Just last year, L&F saw profit attributable to shareholder increase by 23%. In fact, over the past 14 years, L&F has seen steady compound annual growth rate of 22%. Not bad performance for a small family company that started in Guangzhou in 1906 trading silk and porcelain. In 1937, L&F moved its headquarters to one of the world's most efficient seaports, Hong Kong, a move that would have a critical impact on their supply chain management. The L&F Group now has three main business groups in trading, retailing, and distribution. Garments make up the major portion of L&F business also including fashion accessories, furnishings, gifts, handicrafts, home products, promotional merchandise, toys, sporting goods and travel goods.
L&F is a leading company in supply chain management. Its success over the past two decades has made it one of the premier knowledge centers of research and experience optimizing a company supply chain. Several case studies have been done on the company touting it as an ideal business education example of supply chain management success.
So what gives L&F their advantage in supply chain management? The Li & Fung Research Center explains that the company has seven principles forming the pillars of supply chain management. The research group says the key is that the "supply chain must be flexible, agile, cost-effective and responsive. Nowadays it is more common for companies to collaborate in a global context where each of them focuses on its core competency and outsource the rest." L&F has taken its core competency to the extreme by perfecting the science (and art) of outsourcing. The company follows the following principles to assure it stays at the leading edge of supply chain management theory and practice.
Be customer-centric and market demand driven;
Focus on one's core competency and outsource non-core activities, in order to develop a positioning in the supply chain;
Develop a close, risk- and profit-sharing relationship with business partners;
Design, implement, evaluate and continuously improve 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 production lead time and delivery cycles; and
On many occasions, Apple Inc. has been voted to boast the most efficient supply chain in the world. By leveraging wealth and pure business strength, Apple has been able to construct a supply chain that is both efficient and highly profitable. While much of this supply chain construction has come from great investing and business decisions by Steve Jobs and Tim Cook, it has come at the cost of many factory workers’ well being overseas. Overall, the construction of the highly organized supply chain has given Apple a competitive advantage over the rest of the market.
The company has a very good inventory control system. After they are able to locate good quality suppliers that are able to meet the demand of the company, they then strive to maintain those relationships. They have systems in place to forecast their future needs and then have set out to be able to maintain a supply on-site so they can meet the demands and not run out of the product. They also need to make sure that they are able to store the materials so that they are able to maintain the quality that the company needs.
Problem solving becomes systematic and horizontal as discussed in the process oriented section of the previous week (Taylor, 2013). Problem solving becomes preventative instead of reactive. The delivery of products and services are value driven and customer focused. The elimination of non-value added activities and waste improve the quality of products and services. Using a pull system reduces costs because of low inventories, using a JIT methodology (Russell & Taylor, 2011). Continuous improvement should be pursued, improving the quality of products and services to customer.
...ell. The key for them seems to be accurate systems, reliable data, and most importantly cross function communication. As the firm is distributing products with a short shelf life there is little room for error and they have created teams to help guide the supply chain through every step of the way. Communication is always first and rises above all other aspects of the supply chain management in this particular environment.
Moreover, the company’s president has emphasized the need to preserve the quality of its products as well as its reputation among customers, by not committing a large portion of their business to replica products. Essentially, the match between the market opportunities and organizational strengths is not present since the firm is not utilizing available opportunities to enhance its competitive power. For instance, one of their strength has been the quality of their supply chain, but with the rise of the mass merchandiser stores, the company has been unable to create strategies to avoid being eliminated by these stores.
The primary components of Lululemon’s value chain consist of five elements. First, the supply chain management needs input of real time from customers, to maintain long term relationship with their third party suppliers. Their fabric is sourced from about 65 manufactures. They also have strong relationships with their suppliers of raw materials.
After a lot of research a three step supply chain transformation was decided. According to the plan, the company decided to reorganize its supply chain organization, simplify the structure and define functional roles. Cost to serve its stores along with day to day supply chain reduction was planed. Finally foundation for improved supply chain capability for the future was
Li & Fung is a global trading group sourcing and managing the supply chain for high volume, time sensitive consumer goods. The group is associated with strong brands such as The Limited, Gymboree, American Eagle, Warner Brothers, Bed, Bath & Beyond, Levi-Strauss. With the rise of the internet, and the thrive of the B2B intermediaries, this memo will discuss the Li & Fung's E-Commerce strategy and how to use internet to facilitate supply chain management.
The difference between a product being a success or a failure can come down to how quickly a team can communicate and correct problems. There are strategies that can centralize a lot of supply chain decisions to maximize efficiency and minimize problems as well as down time. According to kinaxis the strategy that is taking over the industry is called supply chain control towers. What these actually do is combine technology, people, and a centralizing process to achieve a more reactive supply chain. When a problem comes apparent, a supply chain control tower will fast track the solution. The supply chain control tower will be able to use all of its assets and delegate the information to relevant personnel extremely quickly. If a company doesn’t use a supply chain control tower, the information will get out at a snail pace if it even gets there. Without a supply chain control tower, no one really knows all of the elements that are affected by a problem. Only a central supply chain control tower will know how to connect the moving parts and fast track the correction
It is suggested for any organization to review, reassess any existing supply chain management or any delivery techniques, before developing a new supply chain method so that any exposure to high risk of failure is reduced. Somerset as a company taken advantage of outsourcing and transferred it product manufacturing to China leveraging low cost labor and raw material. The labor cost and other cheap material reduce Somerset overhead cost, but there is always the risk of not delivering product on time due to the foreign country political climate, change in tax and tariff and local
Walmart is one the biggest companies in the world. In 2012, Walmart regained the No. 1 spot for fortune magazine’s list of 500 American companies’ ranked by revenue. This is no small feat with sales being over 400 billion dollars in 2012 alone. The United States in 2012 only accounted for 62% of the net profits of Walmart making a multinational enterprise. In the business world there are multiple types of performance measures that can be applied to Walmart showing how large this multinational enterprise truly is and the quality it provides. Walmart is able to maximize customer savings and its profit margins by controlling its supply chain by focusing on key aspects. Walmart’s operation’s strategy is the key to their success and must be understood before their performance can be measured as well as how their supply chain effects that performance.
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
The successful and integrated of supply chain is the reason behind the prosperity of international commerce these days, and thus caused to raise and flourished the global economy. Which means that the lack of the one of the supply chain parties or bugs in its elements make unexpected and negative results as an event at the end 2015 with the Hanjin Shipping Company. Hanjin one of the largest company sea freight. Exposed Hanjin necessary for financial large where lost the shares of great of their company with its recourse to Request protection from bankruptcy. This bankruptcy came because of the company try to raise shipping rates at the time of the global economy and the shipping cost was very low. And the result of it fully refusal many their
Distribution- work on alternatives of outsourcing the distribution network or transportation routes. Should focus on outsource this non-core business activities if it is non-profitable. It is costly by not understanding the multi distribution network in standard line delivery (Multiple drop off points through retail channel sales)
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.