Analyzing the relationship between the international supply chain and the seven principles of supply chain management advocated by Li & Fug, it can be stated that the principles are mainly concerned with optimizing the suppliers’ part. The focus on the customers as one of the factors (Czinkota, Ronkainen and Moffett 468), is through breaking and dissecting the value chain to bring the price and delivery time for the customers (Magretta 104).In that regard, looking at the figure of the international supply chain (Czinkota, Ronkainen, and Moffett), the part of the suppliers contained such elements as transportation, storage, where the principles promoted by Li & Fung focused on breaking down each section into several different suppliers, or what was called as dispersed manufacturing (Czinkota, Ronkainen, and Moffett). Dispersed manufacturing and its management can be considered as one of the breakthroughs of Li & Fung, a strategy the success of which was promoted by the seven principles advocated by the company. For example, outsourcing non-core activities implied that the sections distributed globally were distributed in a way that allows controlling the quality of manufacturing, while “information technology-dependent operation optimization” made sure that those sections and activities were controlled and coordinated.
Taking the central part of management between the customers and the suppliers, Li & Fung’s key success factors can be seen in increasing “the efficiency of its internal operations and managerial processes that span across the small, customer-oriented units within the company” (Martinsons 574). In that regard, time and costs are two factors, controlling and improving which, can see as the main priorities of supply chain management. Thus, the factors of success in international supply chain management, and the strategies derived from them are concerned with the who, i.e. global suppliers, and the how, dispersed manufacturing, focus on customers, and leveraging the internet. Accordingly, each of these is continuously improving through shortening production lead times, lowering sourcing, warehousing, and transportation costs (Czinkota, Ronkainen, and Moffett 468).
Another factor that should be mentioned as influential in the case of Li & Fung in particular and international supply chain management, in general, is knowledge management. It can be seen from the figure of the international supply chain, indicated in the textbook, that the interaction between various parts and activities of the supply chain is mainly based on effective exchange of information, a factor which was outlined in building a triple-A (agile, Adaptable, and Aligned) supply chain (Lee 105). Having information on the best available suppliers, and providing such information to customers and other partners can be seen as one of the key success factors in international supply chain management. Additionally, it can be stated that leveraging the internet and information technologies was largely driven by the desire to increase the effectiveness and the response time when exchanging such information between all the parties involved.
Another success factor that can be outlined from the case of Li & Fung is control. Time and costs are both good indicators of focus on the customer, but the quality of the product is an essential factor as well. Accordingly, dispersing the value chain and outsourcing non-core activities make it difficult to control all the aspects within the supply chain. Li & Fung focused on maintaining control over the front and back end operations” (Power 258).
Works Cited
Czinkota, Michael R., Ilkka A. Ronkainen, and Michael H. Moffett. Fundamentals of International Business. Mason, Ohio: Thomson/South-Western, 2004. Print.
Lee, H. L. “The Triple-a Supply Chain.” HARVARD BUSINESS REVIEW 82.10 (2004): 102-13. Print.
Magretta, Joan. “Fast, Global and Entrepreneurial: Supply-Chain Management, Hong Kong Style.” Harvard Business Review 76.5 (1998): 103-14. Print.
Martinsons, Maris G. “Electronic Commerce in China: Emerging Success Stories.” Information & Management 39.7 (2002): 571-79. Print.
Power, Damien. “Supply Chain Management Integration and Implementation: A Literature Review.” Supply Chain Management: An International Journal 10.4 (2005): 252 – 63. Print.