The current year has been extremely eventful for Li & Fung. Not only has it announced its three-year strategy for growth (2017-2019), but has also got into some very critical partnerships on its way to achieve its goals. “We are creating the supply chains of the future,” says Spencer Fung, Group CEO, Li & Fung of the three-year-plan, wherein speed, innovation, and digitalization are the areas of thrust. The company is not only promising a new look company but is also taking action to deliver its promise!
As a strategic supply chain solutions provider, Li & Fung has built a structure that nurtures capability to serve the customers’ business and product needs regardless of how they want to buy their product – whether through an agent, importer, wholesaler or supplier. With offices and people in all key production markets, the company has created a network of suppliers and associates to meet the design, sourcing and production needs of customers that include national brands, specialty stores, department stores, e-commerce, clubs, hypermarkets and off-price retailers, across all product categories and market segments, from mass market to luxury.
As market conditions change, the young CEO of the Group has taken a proactive approach for the future to stay relevant. “Speed is the first thing our customers want from us to be competitive. To help them navigate today’s fast-changing world, we remain focused on strategic investments that leverage new technologies, optimize processes and connect the dots of our digital supply chain. We aim to decrease lead times and increase speed to market for the global brands and retailers we serve,” says Spencer Fung.
Indeed, the advent of Fast Fashion has set a precedent for consumers and also for major brands and retailers. Now consumers expect to shop a look almost as soon as it walks down the runway. This fast rate of change is redefining the supply chain. Two-thirds of consumer product companies questioned in EY’s 2016 ‘Disrupt or be Disrupted’ report said they are under pressure to reappraise their operating model and almost three-quarters said they needed to make significant changes if they are to sustain margins.
For Li & Fung, speed is about better serving customers in ways that reduces their production lead time and improve speed-to-market so that they are successful and continue to delight their end-consumers. “Our ability to facilitate speed and capture its benefits is a major part of the transformation of our business,” says Spencer Fung. In the process, the company is also spearheading the use of technology to upskill and create an agile workforce that can operate efficiently, and drive innovation through projects and new ways of working. Data-driven insights, process optimization, transparency improvements and workspace reorganization are the tools to meet the challenges of today’s fast-changing world.
To innovate at the rate needed today requires openness to new ideas, people and knowledge. “We’re using open innovation to find ideas as well as technology and partners to create the future supply chain,” reasons Spencer Fung. The effort is to search both inside the organization and outside to surface new ideas. New collaborations are being forged with partners who have existing capabilities, knowledge, platforms and technologies to take advantage of specialization and multiple points of view. Teams are being encouraged to be innovators through crowdsourcing, connecting them with communities of innovators and to external ideas, knowledge and people. “We are even redesigning our work spaces to be more flexible to promote idea sharing, fluid project management practices, and a flat structure for all colleagues across our global network,” avers Spencer Fung.
The ultimate goal is a Supply Chain where brands and retailers, and vendors and suppliers can seamlessly connect into an ecosystem of digital services and data insights that was never possible until now. “Our ambition is to reach a state where we can deliver predictive analytics to enhance the business performance of our customers and partners,” shares Spencer Fung. Li & Fung’s integrated digital platform has been built to capture and share data across the entire value chain, and the result will be an engine designed to enable smarter, faster, and more effective decisions… This is the future of supply chains.
The preparation for the future supply chain is in full swing and the three product verticals in sweaters, furniture and beauty are being strengthened. The latest activity in this direction is the joint venture with South Ocean Knitters Holdings Limited to combine the operations and resources of Li & Fung’s sweater vertical together with South Ocean’s knitwear business to become one of the largest and most innovative knitwear suppliers globally.
As per the JV, 62% of the newly formed company, Cobalt Fashion Holding Limited, will be owned by Li & Fung and 38% by South Ocean. While South Ocean Knitters bring to the table strength in yarn development and manufacturing knowhow, product design and supply chain innovation will be the contribution of Li & Fung. The total turnover of the JV is about US $ 700 million and it will service brands and retailers at all price levels and in all segments, covering the US, UK, Europe, Japan and other Asian markets.
Silas Chou, President and CEO of Novel Enterprises Limited, the parent company of South Ocean, well-known for building billion-dollar brands Tommy Hilfiger and Michael Kors, is confident that this partnership will be an important milestone for the global knitwear industry. “South Ocean is one of the most established knitwear companies in Asia with over 40 years of experience in supplying the world’s top brands and retailers with beautiful, functional and innovative knitwear,” said Silas Chou. “We see tremendous synergies in the joint venture with Li & Fung. Together, we will be driving innovation in the industry and delivering value to our customers,” he added.
Li & Fung is very excited to join forces with South Ocean, as it sees South Ocean as a major step in achieving its thee-year plan. “We have been steadily investing in deepening our product expertise across our three product verticals: sweaters, beauty and furniture since 2015. With this JV, we aim to be not just the largest in the knitwear industry, but the best-in-class,” concluded William Fung, Group Chairman, Li & Fung.