Monday, March 29: Photo Essay Blog (Diechl, Edwardson, Eimermann, Farrell & Gardulescu)

Li & Fung Sourcing and BSFG - Building Skills for Growth:

Our First Presentation of the Day was from Deborah Vinson, Li & Fung Senior VP of Programming.  She spoke about the Building Skills for Growth Program Li & Fung had just completed.  The program was created after realizing that the company was having troubles finding creative talent externally so they focused their attention to its internal resources in which it allowed its employees in every position to apply.  

The program allowed employees to change their career path and develop their creative side.  The program involved instruction from top fashion schools Fashion Institute of Technology, Polytechnic University and Institute Francis De La Mode.  After seven months of instruction, the students were placed in New York, London, Paris, Tokyo, Hambourg and Keighley to follow designers and learn in the field.  They re-entered the Hong Kong offices in March in their new roles as Product Design Developers, Graphic Artists and Technical Designers.   The program was a great success and Li & Fung has plans to implement the program again in the future.  

The internal training program logo

The Li & Fung employees studying during the 7-month program

Sustainability Efforts at Li & Fung Trading:

Bruce Bergstrom,the Executive Officer of Sustainability at Li & Fung Trading, spoke to us about the sustainability efforts at Li & Fung.  Their main position on sustainability is to be "an agent of change."  They believe that as a trading company, they can do more than generate financial value for their customers.  Between supply and demand they can bring about great changes.  

Li & Fung Trading has been an agent of change since 1906.  Throughout their 100 years, they have contributed to a generation of economic and societal wealth through their leadership, supplier network and business model.  In addition, their three year plans look at societal and sustainability goals within the plan.  They also capitalize on their staff, their innovation, as it is their sole asset.  They are a Member of Business for Social Responsibility (BSR), a Sedex-AB member, and they are also on the Dow Jones Sustainability Index.  Additionally, they are on the FTSE4Good Index,  market index with a $30 trillion U.S. dollar market cap that screens for organizations who act responsibly on economic, social, and environmental business markers.  They are a signatory to the UN Global Compact, part of the Clean Cargo Working Group, and have been named part of the "Fabulous 50" by Forbes Asia. 

Their globalization also helps to develop lower economies.  By providing business in those countries, they increase their GDP, improve livelihoods and even work toward women's liberation.  They have 80 offices in over 40 economies.  

In addition, they have a "triple bottom line."  They evaluate their performance through three different lenses: Economical, Social and Environmental.  The economic dimension looks at the financial performance, shareholder value and wealth - both global wealth and prosperity.  The social dimension looks at human capital, diversity, production integrity (safety and ocmpliance - both socially and environmentally) and the community (aiding schools and providing disaster relief).  Finally, the environmental division looks at product stewardship (evaluating the life-cycle of products), supply chain efficiency, and climate change.   

The sustainability efforts for 2010 include 10 Commitments:

1.  Be a thought leader in sustainable sourcing

2.  Reduce carbon emissions by 10%

3.  Reduce energy consumption by 20%

4.  Reduce water consumption by 5%

5.  Reduce paper usage by 20%

6.  Design & build sustainable offices

7.  Engage our people to carry out our sustainability strategy

8.  Enhance health & well-being of our colleagues

9.  Build sustainable communities

10.  Contribute to development of customer's sustainability

  Kohl's Product Strategy:

        

To get a better idea of the partnership Kohl's has with Li & Fung, we were able to hear from technical designers Dawn Jester and David Wong. They spoke to us about the private and exclusive brand business at Kohl's and explained to us more about the strategic positioning of this portion of the Kohl's merchandise.  Private brands, like LC Lauren Conrad, Jumping Beans, and Apt 9, are fully owned, produced and distributed by Kohl's alone. Exclusive brands, such as Mudd or Chaps, are only found at Kohl's but have pre-existing equity.  Recently, Kohl's has definitely been making a push to increase the percentage of private brand merchandise in the stores and they have been doing so with great success.

Dawn also explained to us a little more about her position as a technical designer. The main role of the technical designer is to analyze and improve size specifications by brand to ensure a consistent fit and quality of all of the merchandise.  Each brand has a specific customer it wants to attract and each piece of apparel in that brand needs to fit within the lifestyle of this target customer.  To keep these target customers consistent and separate, different size specifications are used for different brands.  We had an opportunity to see the models used as benchmarks to test the merchandise on for womens', mens', kids',and babies' apparel. A matrix is used to organize all brands by price and lifestyle to make sure that Kohl's is offering something for all customers.  If this matrix shows a new opportunity or a customer that is not being reached, Kohl's will consider forming a new brand that will appeal to them. To give us all a first-hand look at this process, we got to see actual merchandise samples and target customer descriptions of each of the brands which was very interesting.  

Sample Kohl's Clothing from the Presentation

Kelly, Sarah, Jessica & Angela watching the Kohl's presentation

Business Observations:

The route we took from Hong Kong to Shenzhen

  Li & Fung presented very unique business practices during the lecture on “Building Skills for Growth”, Corporate Responsibility and the company’s relationship with Kohl’s.

Deborah Vinson’s presentation explained why Li & Fung does work offshore. Overhead costs for factories and design offices are very high so the company tries to move to the location with a lower cost. Another factor the company considers is the efficiency of production: from design to final product. The LFUSA division of the company is based in New York City; however, a lot of products could be made quicker and cheaper if a design team was set up right near the factories. They no longer need to send items overnight across the world to check quality and design. Kohl’s has even sent a merchandising team to Shenzhen to cut costs and production time.

Li & Fung’s training program shows how Li & Fung runs its business by “investing in our people = investing in our business”. The company realized that its main assets are the employees so when looking for designers, most of them came from within. Li & Fung took a risk by moving people into a design career. The vision was to really broaden and strengthen skills, promote growth, give development opportunities, improve quality of customer service, and increase efficiency and effectiveness of the global supply chain. The company put much effort into perfecting the program by using resources from all over the world and by completing ongoing assessments to ensure the best success.

            

It was very clear that Li & Fung always practices business with its people in mind. Upper management realizes that finding talent from within is a great retention tool. The company gains loyalty by valuing its people and allowing them opportunities to grow.

Bruce Bergstrom explained how Li & Fung wants to be “an agent of change.” The company has ongoing stakeholder discussions about what they are doing with corporate social responsibility and what they can do better. The company has the power to affect the world, socially and environmentally, because of its role of an intermediary. These issues are included in the three-year plan. The company educates its suppliers, customers and investors on responsibility. Li & Fung does lots of its business in underdeveloped countries and try to integrate world economies. Finally, Li & Fung is actively involved in creating and retrofitting offices and factories to be lead certified and the company wants less of a negative impact on the environment.

In Shenzhen, Kohl’s presented information about product development and brands. Li & Fund handles 65% of Kohl’s business. The main goal of this relationship is to bring new items to market faster. Li & Fung reviews manufacturer capabilities to ensure quality and fit consistency. The company chooses the right factories for Kohl’s to work with. 

Li & Fung Business Values

Cultural Observations:

Our afternoon trip to Shenzhen was a cultural experience in itself.  In order to travel from Hong Kong to China, we had to pass through customs.  The lines to come into Hong Kong were extremely long, and we were all happy to be going the other direction and not have to wait for a long period of time.  The overall customs experience was interesting, as we were required to pass through two checkpoints (one to leave Hong Kong and one to enter China).  However, the entire process was relatively quick.

Upon entering Shenzhen, we all noticed a few great differences from Hong Kong.  We were quickly aware of the change in street direction when our bus driver accidentally turned the wrong way on the street.  Hong Kong follows the British street directions where drivers are on the left side of the road, and China is the opposite (and the same as America).  Mainly, we noticed immediately that English was not as predominant in Shenzhen as it is in Hong Kong. While many signs are in both Mandarin and English in Hong Kong, this is not as much the case in Shenzhen. We even noticed during our lunch that the waiters and waitresses did not speak English as we had become accustomed to in Hong Kong.  This was interesting for our group, but it was a great experience as it allowed us to begin to truly immerse ourselves in a culture different than our own.  Also, it was very noticeable that even when the people of Shenzhen did not understand us, they were always extremely generous and never acted frustrated with our barriers to communication.  Overall, our afternoon trip to Shenzhen was a brief look into a new culture, and we were all happy to have to ability to see another part of China.