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Hong Kong clothing trader Li and Fung adopts IT to upgrade service

Hong Kong-based Li and Fung a major outsourcing service provider mainly catering to major Western retailers and fashion brands such as Wal-Mart Stores and Macy' is planning to spend $150 million over the next three years to build an an online system for better efficiency in its services.

Li and Fung is a global supply chain manager primarily for US and EU brands, department stores, hypermarkets, specialty stores, catalogue-led companies, and ecommerce sites. Today, Li & Fung employs about 22,000 people worldwide. It does product design and development, raw materials and factory sourcing and capacity building, vendor compliance and distribution. It has over 250 offices in 40 markets. It works with 15,000 suppliers to service 8,000 customers.

The Hong Kong trading giant in the age of digitalization is striving to stop the steady decline of sales because of the growing trend between manufacturers and retailers. Li & Fung aims to create a system that halves the time needed for the process of planning, developing, manufacturing and delivering retailers' products, from about 40 weeks to 21 weeks by 2019.

The centerpiece of Fung's turnaround strategy is building a system that allows the entire process of planning and designing apparel products to be done over the internet. The system, which will have a 3-D virtual design feature, will allow corporate customers to view images of finished products and see production costs for various design options, such as using different buttons on a product.

Amid the erupting tensions between the US and China Li & Fung is considering forming a partnership with a Hollywood animated film studio to help upgrade and refine the system. The company is adapting to corporate clients' need to design and produce items more flexibly in response to fleeting fashion trends and capricious customers. But smaller suppliers cannot afford to adopt this strategy. But still the new system will enable customers to cut back on inventories and increase profitability.

 
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