Desc Introduction Li and Fung, a Chinese company founded in has been experiencing high growth rates due to a series of acquisitions and the offer of a wide range of services in the whole elements of the supply chain from raw material till finished goods. Recently the question its managers have to deal is how to face the challenges posed by the internet, more specifically, its lifung. This company was an extension of its brick and mortar operations allowing the company to enter the SME Small and Medium Enterprises market.
Introduction This paper provides an overview of e-commerce activities in the textile and apparel industries.
With the advent of the internet, apparel sales have started to move on-line. To understand how the growth pattern of on-line apparel sales might differ from that of other products, we outline some of the critical ways in which the apparel purchase decision differs from purchase decisions for other consumer products, such as books and compact disks, which have experienced rapid growth in on-line sales.
In view of these differences, we characterize some of the new technologies and business practices that are being developed to facilitate on-line apparel purchasing.
The paper then focuses on business-to-consumer B2C business models that have emerged to sell apparel on-line. We then turn to an analysis of business-to-business B2B models that are beginning to surface, concentrating on the potential benefits these models offer to textile1 apparel-retail supply chain operations.
We also discuss some of the different models that are emerging, and how they are related to differences in channel power. The internet has already affected the apparel and textile industries. Driven to provide consumer convenience, the majority of apparel manufacturer and retailers have created a virtual version of some aspects of their current physical environment.
A few apparel manufacturers and retailers have used the internet to go beyond their existing offerings, providing the consumer with a value-added internet experience using, for example, customized on-line apparel catalogs, or offering custom-fit clothing.
However, the potential impact of the internet on the consumer, and on the industry, lies not in what the consumer sees and does on a computer, but in how retailers and manufacturers leverage the internet to meet both expressed and latent consumer needs.
The technology now exists to redesign the textile-apparel supply chain to provide consumers with what they want, when and where they want it. The barriers to implementation lie less in the technology than in the willingness of the members of the supply chain to redefine their policies and practices to take full advantage of the internet technology.
Industry Background1 The apparel industry can be segmented in several ways that are useful for trying to make sense of the different business models that characterize the industry. Cost is one basis for segmentation.
A large segment of the apparel industry competes on low cost. To achieve rock-bottom costs, manufacturers typically pursue production in low-labor cost countries and endure the long lead times that usually result from the combination of distant suppliers, low-cost transportation, and attempts to gain operational efficiencies by 2 manufacturing and shipping in large lot sizes.
Lower cost clothing is typically sold through mass merchants such as K-Mart and Wal-Mart or lower-end specialty stores such as the Limited. These firms are more likely to sell through department stores or higher-end specialty stores such as Ann Taylor.
In recent years, fashion attributes have infused nearly all garment types: These trends have created increasing demand uncertainty that has changed radically the basis of competition in the textile-apparel-retail channel. The forces driving lean retailing are summarized in Exhibit 2.
Exhibit 3a shows the structure and dynamics of a more traditional channel, designed primarily to minimize production and distribution costs. Exhibit 3b depicts the channel associated with lean retailers, designed to lower the risk of delivering such a wide variety of apparel products to retail.
Lean retailing practices have in many ways paved the way for e-commerce, by requiring and exploiting the use of various critical technologies, streamlining the supply chain, promoting information exchange in the supply chain, and requiring smaller quantities of products to be manufactured and shipped in response to actual consumer preferences.
See Exhibit 3a and 3b. Lean retailing has been facilitated greatly by the introduction and maturation of several key technologies: Bar coding and scanning devices for product identification, used to provide real-time, accurate information on which products are selling at the point-ofsale; Electronic data interchange EDIused by the retailer to place quick, accurate replenishment orders; and More sophisticated, often automated distribution centers, which allow manufacturers to pick and pack small replenishment quantities based on EDI orders.
Distinctive Aspects of the Textile and Apparel Industries: Factors Affecting ECommerce Adoption A number of distinctive aspects of the textile and apparel industries provide challenges to the implementation of electronic commerce. First, and perhaps most important, is the difficulty of accurately characterizing the product on-line.
Many of the characteristics of a garment that are pivotal to the consumer decision-making process -- color, touch and feel, and fit -- are difficult, if not impossible, to communicate virtually.
Moreover, unlike books, music, and consumer electronics, the difficulty in describing the product cannot be offset easily with customer reviews, reviews by industry experts, or comparisons based on independent performance evaluations.
Although for on-line purchases, like catalog purchases, brand names help consumers infer certain aspects of quality or fit, especially for consumers making repeat purchases. These obstacles likely will act more as a deterrent in the B2C segment of electronic commerce than in the B2B segment, since industry standards for characterizing color and fabric will be more familiar forms of communication for business partners than for individual consumers.
Compounding the difficulty in characterizing the product is the personal, often emotional nature of an apparel purchase.Capabilities of Li and Fung does srmvision.com leverage Li and Fung Brand name Share Li & Fung corporate Values Developing the company core competences • reputation is widely know • interpret any possible fears of using the internet • shares culture • spirit of autonomy and entrepreneurship.
Li & Fung, with its broad reach in the fragmented apparel industry, might define a set of standards for representing color and license the use of these standards to companies outside its process.
This new marketing and sales channel was ab le to leverage the company’s existing. capabilities from its successful mail order business model; Li & Fung has gone online.
Li & Fung 1. Source of Competitive Advantage 2. Corporate Culture What has been historic strength and strategy of Li and Fung? Q2: What capabies of Li and Fung does srmvision.com leverage? What are the risks of their strategy? Q3:What advice would you give William and Victor Fung?
Capabilities leveraged Thank you for your listening. What capabilities of Li and Fung does srmvision.com leverage? Because, in the end, the company keeps its traditional mentality by just adding a new mean of show more content In this sense a web presence is viewed as strategic to the Li & Fung group.
The third and final case presented in Part III is that of the Virtual Value Chain – Li & Fung. This is a good example of a new struc- ture and of a firm’s adaptability to its environment.
In this case, strategy is explicit, well articulated, original, and leads to tangible results.