Li & Fung digitizes supply chain to deliver speed and data insights

Li & Fung digitizes supply chain to deliver speed and data insights [Story updated on 22 May 2017]

The emergence of digital technologies and ever-changing customer demands are exerting mounting pressure across many industries to embrace changes. Companies in the supply chain business are no exception. They have to disrupt or to be disrupted in the digital economy.

Hong Kong-based trading group Li & Fung recently unveiled its three-year digitization plan with a goal to create “the supply chain of the future”. The company plans to invest US$150 million over the next three years to carry out this plan.

“Our focus is to digitize every aspect of the supply chain, speed up the time-to-market and gather more data to make better decisions for our retailers and ourselves,” said Manuel Fernandez, Group CTO at Li & Fung (Trading) Ltd.

Indeed, this is not the company’s first endeavor to transform its business digitally. Since 2011, the company has been going through digital transformation to lower manufacturing costs and improve production efficiency. Its technology investments focused on core ERP consolidation and documentation digitization to support its order, transport and freight management—areas that are core to Li & Fung’s supply chain business.

But the company finds that is not enough. Fernandez noted that retail customers are seeing the significance of speed to market and innovation, instead of merely cost reduction.

Digital supply chain platform

This is one of the drivers for Li & Fung to broaden its digital transformation journey by incorporating speed, innovation and data-driven insights into this new three-year plan.

“We are always digitizing [our processes], but we now have a clear business focus to expand the scope across the entire supply chain,” he said.

Fernandez said the company has built a digital platform to connect different stakeholders across its global supply chain business. To align this business goal, he said the company’s enterprise architecture is also moving away from an on-premise and closed design approach, into a modular and open platform to accelerate application development.

Some of the new digital initiatives include introducing new virtual design process and costing analysis.

In traditional product design for apparel, bags and shoes, physical samples are commonly used in the design process. Li & Fung is adopting 3D design software to create virtual product design samples, aiming to replace physical samples. With these virtual samples, the product design approach can be more iterative with the experimentation of different colors and patterns.

The company is also introducing a new costing analysis application. To be completed by July, the application aims to replace Excel spreadsheet to calculate and compare material cost for its customers. It aims to automate the costing analysis and provide reports with different material’s cost, background data and images on a dashboard.  The application also aims to provide comparative and dynamic costing analysis based on different factors, like the choice of factories or the source of raw material.

Creating a data ecosystem

Apart from speeding up application development, Li & Fung also aims to use the digital platform to capture and share data across the entire value chain to create a data ecosystem.