Supply chain excellence has become a key driver of competitiveness in most industries globally. A supply chain encompasses all activities from obtaining raw materials through to the delivery of final goods or services to the end-consumer. These include material sourcing and handling, product design, production planning, order processing, inventory management, transportation, warehousing and customer service. It also includes the management of information flow that facilitates communication among all these functions.

For a company to be competitive, its supply chain must be flexible, agile, cost-effective and responsive. Nowadays it is more common for companies to collaborate in a global context where each of them focuses on its core competency and outsource the rest. As a consequence their success becomes increasingly dependent on how well they can orchestrate the different aspects and manage the external parties involved along the supply chain. Equally important are companies' abilities to satisfy their customers' needs, shorten production lead time and lower cost.

Li & Fung has evolved from a sourcing agent to a global supply chain manager by being an innovator in the development of supply chain management. Through our practice and research in this area, we have derived the following seven principles which constitute the pillar of Li & Fung's supply chain management:

The seven principles serve as a guideline for Li & Fung to resolve many complex decisions, e.g. which channels to use for customers and suppliers, whether to manage operations internally or outsource, and how to implement new technologies to optimize the supply chain etc. By mastering the supply chain, Li & Fung can provide better customer service and establish long-lasting supplier relationships, which becomes an enduring competitive advantage over its competitors and leads to market share gains.

The globalization trend and its resulting competitive pressures will continue to underpin the development of supply chain management. As consumers and suppliers increasingly demand for quality and efficiency along the entire supply chain, Li & Fung's track record as a pioneer in global supply chain management certainly reaffirms the company as the partner of choice to those who are keen on expanding their businesses.