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Optimisingenterpriseflows through successfiilsupply chain management is advantage,as iilustrated by the Hong one route to sustainablecompetitive Li company, & FungLtd (L&F). Kong-listed familybusiness, in beganits operation 1906as a Guangzhou The company trading in silk and porcelain.Thirty years later it had grown and expanded from this family operationand relocatedto Hong Kong. Todayit has grown to become a muitinational companywith more than 25000 staff operating in 40 countriesworldwide. The L&F Group has tlree main businessgroups: trading, retailing and distribution. Garmentsaccount for the major part of furnishings,gifts, handibusiness,which also includes fashion accessodes, crafts, home products, promotionai merchandise,toys, sporting goods and
travel goods.

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overthe a L&F is considered global exemplarof supply chain management; past 14 yearsit achieveda compoundannual growth rate of 22 per cent with positions as it sincethe 1980s in2005.Its success a 23 per centprofit increase in and experience optimising one of the premierknowledgecentes of research enierprise supply chains. L&F continues tb develop and extend its supply chain knowledgethrough: (1) an in-houseresearchcentre that scientifically (2) modelsthat how to further optimisesupplyprocesses; developing analyses leadership;and (3) academicpartnershipswith the Chinese sustainindustry Centrefor Supply Universityof Hong Kong though the Li and Fung Research ChainManagement.

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The Li and Fung Researchcentre advocatesthe following seven ='tt :iples as key successfactors for managing gtobal supply chainr, F customer-centricand market demand-drivenfocus F outsourcing non-core activities > risk and profit-sharingrelationshipswith businesspartners F continuous improvement of supply chain flows (i.e. work, mation, cash) > information technology dependent operationsoptimisation > shortenedproduction lead times and delivery cycles > lowered sourcing, warehousing and transportationcosts. From these principles L&F constructed the following central (1) dispersedmanufacturing; (2) a global supplier network; t3) a centric organisationalstructure; and (4) leveragingthe internet. 1. Dispersed manufacturing entails maximum outsourcing without saCii

customerquality. It is achievedby retaining 'end value-added ;aii+jH+ ,3 such as designand quality controf in Hong Kong,while relocatirrg'ffi activities lowestcostsuppliers to complying with L&Fstandards. '';,,
40 countries acts as a 'knowledge economy'; this ensuresbuilt-in .oni*
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gpnnioq .i* fnr 1. ^ gencies potential6rr^11 nrnin disruptions any of .r-'r- supplier,, ' -1,.i= ^.f for nntontirl economicrli.'.',n*;n-^ in the iffi tries, as well as anticipating and pre-empting changes the internatiffi in

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3. Customer-centric customisedprocesses minimise supplier errors.' '.ffi

example,when Li & Fung received an order for transistor radios,it creatudt# little kits (plastic bags) filled with atl the componenrsnecessaryro nuifdi

ation. A dedicated extranet linked key components of the supply chain,'io.l{ provide tracking capabilities, streamline the flow of businessinformitiofit l'
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sourcing via an e-commercewebsite cared www.lifung.com that linkid .$ small-to medium-sized businesses with suppriers, similarin concept *vl*.$ a alibaba.com. Asiaweek reports that this 'masscustomization' the companf:i,,; is new strategy, meaning'Li & Fung can offer buyersa wide variety of choices":-+ and combinationsof colour;size and designfor; say,a polo shirt. . . and stili .t
speedily executelarge orders'.

In addition to the precedingIT and processre-engineering Lff '_i expertise integratedthe centralchinese cultural value of informal networking Guonxi) ',+, throughoutits 70 worldwide office locations,suppliers,customers and trans-' '* portation.L&F reduced inventory and optimisedjust-in-timemanufacturingii= its
using this informal trust network.
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This informal network supportedby a corporateculture driving harmony, flexibility and adaptabilitystartswith the company'schairmanand flows down unit managers empowered are business Lower-ievel to all levelsof operations. productprices)and to (i.e. to be entrepreneurs havehigh autonomy determine solutions to compiexsupply chain to expected find innovative cost-efficient puzzles. practicesguide this dispersedautonomythrough a Corporategovernance which is premisedon high levels of trust. 'Code of Conductfor Vendors', environIt outlines the rules for sourcingsuppliers'corpolateresponsibility, and safety,and it providescorrective mental protection,human rights, health for measures transgressors. it is success unparalleled, opelates while L&F,ssupply chain management with continual downin a brutal industry [garments)of intensecompetition is on ward pressure profit malgins;additionally,supply chain expertise rapidly pricesin adjacentmalkets, such as mainlandChina.L&F at developing lower by respondedto this competitivechallenge_ shifting their focus to third-tier Chinesecities like Chongqingand Chenfiduwith a vision to fully integrating Chinain the supply chain.l7 OUESTIONS
l t bet the r elat ions hip ween he int er n a t i o n as u p p l y c h a i n a s s h o w ni n 1 . Discu ss . o s ev enpr inc iple s f s u p p l y c h a i n m a n a g e m e n tWh a t figu re1 3.1 and Li & Fung' s l f ac t or swit hin t he int er n a t i o n as u p p l yc h a i n a c t i v i t i e s ? a re th e ke y s uc c es s o t inf ? . How ca n Li & Fung' sadv anc ed or m at ione c h n o l o g y p t i m i s ei t s c o m p e t i t i v e c and inv e n t o r y o n t r o l ? in a dvan tag e s upply c hain par t ner s

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