Li & Fung reorganises factory support services and is expanding vendor services
The Hong Kong based multinational group, recognised as the world’s leader in consumer goods design, development, sourcing and distribution is reorganising its factory support services and expands vendor services. The company is about to finalise a new three year plan (2014-2016) to be announced incoming March
The profit situation was difficult in 2013 and Li & Fung’s share value suffered, it practically halved. Now the company states that there was a solid finish of the past year and in line with previous announcements of operating financial performance returning to (excellent) 2011 levels.
One of the initiatives in the next three year plan will be the reo-organisation and expansion of the vendor services. The company is establishing a dedicated Vendor Support Services business unit to enhance factory and worker safety, by raising standards and improve operational efficiencies in it global supply chain.
The Vendor Support Services business, including vendor compliance, will be led by Group Chairman Dr. William Fung, and this new initiative will be expanded as an integral part of Li & Fung’s new three year plan.
The newly created unit will incorporate the Company’s existing range of vendor support services to factories plus new offerings including product testing, provision of logistics, support to factories, and other practical input to enable factories to move up the value chain. Presently, the Company’s vendor support services include safety and compliance training and audits, trade credit services as well as the handling of letters of credit, product liability insurance, fabric, trims and accessories procurement, product development, technical and operational support. The company will continue to ensure that the provisions of such vendor support services conforms with the agreements on provision of services to the company’s customers.
The company already provides services to about 15000 factories in its vendor base to enhance their competitiveness, operational efficiency and ability to comply with ever-tougher health and safety requirements. The enhanced services are also the result of the backdrop of the tragedies in Bangladesh. It comes at a time when more garment production is moving into emerging economies and when credit for factory owners is tighter than ever.
The revenue generated from Vendor Support services forms only a small part of the company’s total revenue, the company views this new initiative as a key ingredient of its enhanced business offering in its new three year plan.
At the same time, Li & Fung reorganises its Factory Support Services into a new business unit Vendor Support Services and also this unit will be led by Group Chairman Dr. William K. Fung.