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Li & Fung creates value for customers by offering customized, end-to-end supply chain solutions and building a digital supply chain for data-driven insights. They create value for suppliers by supporting capacity building, maintaining long-term relationships with over 45% of suppliers for 5+ years, and helping suppliers meet compliance standards. International differences in labor costs allow Li & Fung to achieve cost efficiency by strategically sourcing from low-cost countries while balancing quality and costs.

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Pragyan Prayas
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21 views

Question 1

Li & Fung creates value for customers by offering customized, end-to-end supply chain solutions and building a digital supply chain for data-driven insights. They create value for suppliers by supporting capacity building, maintaining long-term relationships with over 45% of suppliers for 5+ years, and helping suppliers meet compliance standards. International differences in labor costs allow Li & Fung to achieve cost efficiency by strategically sourcing from low-cost countries while balancing quality and costs.

Uploaded by

Pragyan Prayas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Question.1 How does Li & Fung create value for its customers and suppliers?

How do
international differences in labor costs play into this value?
Solution: Li & Fung, a global supply-chain company, excels in creating value for both its customers
and suppliers. Let’s explore how:

Value Creation for Customers:

 Customized Supply Chain Solutions: Li & Fung offers end-to-end supply chain and logistics
solutions for brands and retailers worldwide. Their flexibility and scalability set them apart. They
manage everything from product design and development to compliance, raw material sourcing,
manufacturing control, and logistics.
 Digital Transformation: Li & Fung is building a digital supply chain to navigate the digital
economy. By providing data-driven insights, they empower smarter business decisions for their
customers. This end-to-end visibility ensures agility and sustainability.
 Low Cost, High Quality, and Fast Delivery: Li & Fung’s services focus on delivering value
through low-cost production, maintaining quality, and ensuring timely delivery.

Value Creation for Suppliers:

 Capacity Building: Li & Fung supports suppliers in improving factory working conditions.
They invest time and effort to drive sustained change in the industry.
 Long-Term Relationships: Li & Fung maintains long-term relationships with many
suppliers. Approximately 45% of their suppliers have been partners for five years or more.
 Guidance and Compliance: They manage diverse requirements while adhering to social and
environmental standards. Li & Fung helps suppliers meet compliance standards related to health,
safety, labor, and the environment.

International Labor Costs:

 Cost Efficiency: Li & Fung leverages international differences in labor costs to achieve cost
efficiency. By sourcing from countries like China, Vietnam, Bangladesh, India, and Indonesia,
they optimize production expenses.
 Strategic Sourcing: They strategically choose sourcing markets based on labor costs and
capabilities. For instance, China remains a major sourcing hub due to its skilled workforce, while
other countries offer competitive labor rates.
 Balancing Quality and Cost: Li & Fung ensures that cost savings do not compromise quality.
Their expertise lies in striking the right balance between labor costs and product excellence.

To sum up, Li & Fung creates value through embracing digital change, managing a dynamic global
supply chain, and cultivating long-term partnerships with suppliers and customers.

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