An innovative approach to SCM
During the last few years, supply chain management and logistics companies have been increasingly adding technology elements to their value propositions in order to improve the service level and to offer more efficient ways to create value for its customer either to source raw materials, to operate their warehouses or to manage and track the transport of goods.
Since 2017, Li & Fung (LF) has been trying to bring that same technologization process to the next level, especially in the apparel business. Through their proprietary LF Digital Platform, LF goal is “to create the supply chain of the future to help our customers navigate the digital economy and to improve the lives of one billion people in the supply chain”. The Digital Platform’s main objective is to integrate both the customer and the vendor portals into a unified platform that allow both parties to improve SCM operations from collaborative designing to digital sampling, through online costing and fitting reviews, transforming analog, manual work into digital solutions, all powered by data analytics. LF considers its size and scale as a unique advantage to position its platform as the pioneer to transform the global supply chain with integrated end-to-end data flow.
How the Platform Creates Value?
– Easier material sourcing: LF has developed a digital marketplace for raw materials to manufacture apparel, seamlessly connecting thousands of retailers and suppliers, in a reliable manner, anywhere and everywhere. This element of the platform eliminates the need for visiting trade shows abroad and meet physically with suppliers, reducing the procurement search-and-connect cycle time from two weeks to just a few hours.
– Quicker design iterations: By leveraging 3D virtual design capabilities and standardized processes, the Digital Platform is allowing customers to have a direct impact on the operational level. For instance, case studies show that designer productivity has tripled; sampling and fitting costs have been reduced by half, and speed-to-market has increased as much as 40%.
– Working closely with production plants: LF team also has also developed a Production Platform, making it easier to track the WIP inventories and giving both suppliers and customers better visibility to capture production defects earlier. The same tool helps streamline quality-assurance activities and improves decision-making processes and communications.
– Becoming a better touchpoint for partners: Having a single, central point of touch for vendors and customers, with access to value-added tools and all the related information, make SCM operations easier to manage and benchmark.
Value Capture Strategy
The development of the Digital Platform means a huge business opportunity for LF to capture more commercial volume and to integrate its operations vertically along the supply chain. Besides attracting more retailers and suppliers with the easy-to-use platform, the fact that the tool helps them to reduce time-to-market gives LF higher turnover, which should lead to higher revenue. Moreover, offering new value-added services (e.g. 3D design) to their users means new revenue streams at higher margins, too.
 Spencer Fung, Li & Fung CEO. Analyst Day Presentation, March 2017, page 4.
 “LF Digital Platform” – https://www.lifung.com/supply-chain-innovation/lf-digital-platform/#content-area
 Sean Coxall, Li & Fung President for Supply Chain Solutions. Digitalization Update Presentation, 2018, page 4.
 Sean Coxall, Li & Fung President for Supply Chain Solutions. Digitalization Update Presentation, 2018, pages 8-19.