Everything Is Connected: A

New Era of Sustainability at GROUP 4

Li & Fung
PRODYOT CHATTERJEE
ABHISHEK JAIN
ADITI YADAV
ANKEETA BHATTACHARYYA
AYUSH NANDAN
CHANDRODAYA CHAKRABORTY
Creating The Supply Chain of The Future HARSHAD SUTAR
Introduction 2

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A Global Supply Chain 3

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AN EVOLVING VIEW OF 4

SUSTAINABILITY-1

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 During the 1990s and 2000s-globalization -the easing
of market barriers -helped China and other emerging
economies-greater role in global supply chains.
 China opened up in earnest in the late ‘80s and early
‘90s,” - Korean, Taiwanese, and Hong Kong
companies went into China. they took ready-made
facilities.
 The short-term mindset spawned many bad practices
AN EVOLVING VIEW OF SUSTAINABILITY-5
2 Later, in the 2000s, as the Chinese currency


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appreciated and cotton prices increased,
many garment manufacturers moved into
Bangladesh, took over ready-made facilities, Garment
Manufacturers
and booked orders

Poor housekeeping and storage systems

Ineffective monitoring and control systems

Bad
Practices Poorly organized production layouts

work environments with inadequate light, fresh air, clean

drinking water, and safety exits.
AN EVOLVING VIEW OF SUSTAINABILITY-36
Conditions Customers or third-party representatives

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Labor for
practices unhindered access, with or without notice, to their
Business facilities and records related to compliance with
the Code
Safe, clean,
Ethical Otherwise,
and healthy A Supplier be unable to comply with the Code, a
work places
conduct LF reserves
the right to corrective action plan should be put in place and
terminate the Supplier must actively progress towards
Li & Fung
their compliance.
supplier
Code of relationshi
Conduct p. Regular audits, monitoring, and corrective action
Freedom of plans to ensure that suppliers were in compliance.
association Environme--
and ntal
collective protection
bargaining
Fair and Developed a number of tools, resources, and
equal training programs to enable suppliers to learn
treatment of
all good practices and improve over time.
employees
AN EVOLVING VIEW OF 7

SUSTAINABILITY-4

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economic
 The strategy was treated as a core aspect of LF’s
business and a key builder of competitive
advantage, with progress under regular review. • Reduce the
• Health and well-
 Under this strategy, social and environmental environmental
being employees,
compliance were critical parts of the value footprint of LF
as well as those of
operations and its
proposition LF offered to customers. its suppliers
supply chain
 In 2011, the formation of a Risk Management
and Sustainability Committee within the holistic
sustainability
company board of directors, which then took
ultimate responsibility for implementing the
strategy and managing the diverse risks and
opportunities presented by sustainability. social • Contribute to sustainable environmental

development in the many

communities in which LF
operated
 The China Factor -1 8

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 Foxconn Technologies factory 14 of the
young workers died
 Foxconn was a major supplier for Apple –
Global media Attention

Salary Increase for chinese workers- 2X

The government had decided it could no longer rely on exports fueled by cheap workers.
Impact
Raise Wedge – China’s future consumer class- Domestic Demand Raise

30 years of world Factory –Future 30 years as china as a global consumer

The Tazreen & Rana Plaza Trazedies 9

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 In the space of five months in 2012 and 2013, a fire broke out on the
ground floor of the Tazreen Fashions factory, killing more than 1,150
people, and the Rana Plaza building collapsed, killing over 1,100 people.

 Li Fung cannot influence these external factors in its favour, and in

contrast, these factors directly affect the operations and workings of the
company.

 Use of strategic model tools to make sure that they are aware of the
external environment.
Other problems 10

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 Variance in national and international laws
 Commercial restrictions and political stability are additionally integral factors that will
determine the success or failure
 Social & cultural norms
 Individual supplier issues
 Ever growing pressure to deliver goods quickly & inexpensively
 Tax policy will influence the cost of doing business
 Lack of political stability in a country can also impact business tasks
 Li Fung can use government assistance and grants for purposes of growing the
business, advancement, exporting, and innovative work. It can also be impacted by
when governments modify regulations and laws.
 New Era of Sustainability 11

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 Integrated, existing service to
 Include sustainable practices in business 15000 + vendors
operations
 Help factories move up value
 Suppliers improve performance continuously chain
 Sustainability driving innovation
 Regard factories as customers
 Business: socially engage member of global Vendor
community Support
System  Think beyond rating vendors
 Transforming way LF runs its business (VSS)

 Strong vendor ecosystem

 New Era of Sustainability-2 12

Energy,

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Factory compliance and Natural
Safety and VSS works to green its
workers safety most resources and
Compliance manufacturers
important the
Environment
Factories suffer audit Encourage simple
fatigue upgrades

Help suppliers in
Need of assessment,
increasing efficiency of
education and engagement
operations

Suppliers are partners and Safe and sustainable

LF is bridge factories
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Community Development

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 Sustainability effort were also intended to benefit communities by
creating better economic, social and environment system
 Improvement in Factory
 Working with non-complaint vendors to improve their operation
 Had supported certain customers to implement HER (Health Enables
Return)
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Supplier, Customer and Customer
Alignment

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 VSS was created in large part to serve LF supplier and much of the
sustainability effort was geared with working with Factories
 Customer alignment was difficult as customer constant push to lower
cost were viewed contrary to compliance need
 Customer education was critical for expanding sustainability ideas
 Provide customers with data on the ground visibility
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How to attain internal alignment

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 Proper education on the risks, costs & opportunities of business in
rapidly changing environment
 People should be more flexible and open to collaboration
 Start working together as whole and integrate their knowledge for
company’s betterment
 Treat employees like share holder
 Large companies need professional management
 Change mindset in order to change behavior
Responsibility, Accountability, and 16

Opportunity

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 We have to manage the whole supply chain, even though we may not
own it
 Real sustainability would require transformation up and down its
supply chain
 The whole production flow would have to be aligned to new standards
 The creation of VSS
 transform the supply chain system
 brands expects us to be their eyes and ears on the ground
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