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

“With the use of predictive and prescriptive analytics, we hope to help our customers and ourselves to make better commercial decisions,” he said.

According to Fernandez, the company’s previous documentation digitization initiative has created an internal digital library that consists of virtual samples and raw materials assets like fabrics and trims. Adding to this library is market and regulatory data from external parties. Data collected from different governments, shipping companies, financial services providers and weather observatories can now be included to make logistics decisions.

By consolidating data from its internal digital library and external providers, Li & Fung has deployed advanced data analytics to support the company in three different areas. First it helps to optimize the company’s logistic business by automating its daily delivery schedule.

Such analytics platform also provides its customers with better logistics recommendations like the best route for their shipments and the delivery ports, as well as the associated cost and time involved.

Most recently, this analytic platform is also extended towards manufacturing planning. Based on factors like availability of raw materials, customers’ requirements in production costs and time, the analytics platform can provide a list of recommended manufacturers.

Challenges encountered

During its digitization journey, Li & Fung faced challenges in two areas—changing mindset and identifying the right technologies.

Fernandez noted mindset change is the biggest issue. It is not easy for brand owners and retailer to accept virtual samples. But they are more open to new technologies, as long as the technologies demonstrate value to their businesses.

Comparatively, internal employees may take a longer time to embrace digitization. Aside from launching pilots to demonstrate the value for specific project, new skills training and idea generation workshops were also arranged to nurture a culture of open innovation among the staff at Li & Fung.

Another challenge is identifying the relevant technologies for its digital transformation. Fernandez pointed out business leaders should not be distracted by different emerging technologies. It is important to identify a specific objective in its digital initiative and adopt technologies that have been tested and proven to achieve such objective.

Reducing 50% lead time

Despite the hard work, initial success is starting to reveal at Li & Fung’s digitization journey.

The virtual design process has shortened product development time for its brand owners and retail customers. Fernandez noted that a traditional fabric sample typically takes weeks to produce and delivered, but a virtual sample can be created within a few hours. The end-to-end supply chain—from product design, material costing, product development, sampling to final creation and delivery—is also expected to reduce from 40 weeks to 21 weeks.

“We see a 50% increase in speed and an improvement in inventory markdowns,” he added.

With shorter lead times, retailers could place smaller orders, enabling them to have greater flexibility in inventory replenishment.

Looking ahead to emerging technologies

Fernandez noted the company is exploring disruptive technologies like industrial IoT, blockchain and AI.