02 id2019 joseph final d - li & fung...case study –us womenswear retailer investor day 2019 li...
TRANSCRIPT
Joseph Phi, Group President
Business Update
Investor Day 2019 LI & FUNG Joseph Phi
F&A FMCGF&B H/C
Brick & Mortar
Ecom
TP
Focus
● Four core verticals
- Footwear & Apparel
- Food & Beverage
- FMCG
- Healthcare
ICL
GFM
● Three channels
- Brick & Mortar
- E-commerce
- Trade Partner
● Two streams
- In Country Logistics
- Global Freight Management● One region
- Asia
Investor Day 2019 LI & FUNG Joseph Phi
F&A FMCGF&B H/C
Brick & Mortar
Ecom
TP
Focus
● Four core verticals
- Footwear & Apparel
- Food & Beverage
- FMCG
- Healthcare
● Three channels
- Brick & Mortar
- E-commerce
- Trade Partner
● Two streams
- In Country Logistics
- Global Freight Management● One region
- Asia
Investor Day 2019 LI & FUNG Joseph Phi 3
Turnover Trend – LF Logistics
0
200
400
600
800
1000
1200
2011 2012 2013 2014 2015 2016 2017 2018
351 404
526
874 932 907
1,028 1,133
US$mCAGR 18%
Investor Day 2019 LI & FUNG Joseph Phi
COP Trend – LF Logistics
0
20
40
60
80
100
2011 2012 2013 2014 2015 2016 2017 2018
18 24
36
46 53
61
75
86
US$mCAGR 25%
Investor Day 2019 LI & FUNG Joseph Phi
Leadership in Core Verticals
Footwear & Apparel Food &Beverage FMCG Healthcare
Investor Day 2019 LI & FUNG Joseph Phi
Outlook - LF Logistics
1. Ride on the wave of e-Logistics growth
15 % retail salesmoved online
USD 6 billion rent in Distribution Centres
40 billion orders picked & packed
USD 20 billion logistics revenue
40 billion orders taken home
USD 77 billion courier revenue
USD 103 billion of economic activity transferred to the China logistics industry in 2017
USD 0.50 per order
Sources: China State Post Bureau (SPB) China Warehousing Industry Blue Book 2016
Investor Day 2019 LI & FUNG Joseph Phi
Outlook - LF Logistics
1. Ride on the wave of e-Logistics growth
2. Capitalize on the Greater Bay Area opportunities
3. Serve the new middle class in Asia
4. Enter new geographies and verticals
5. Digitalize and automate to increase productivity
Investor Day 2019 LI & FUNG Joseph Phi
3 x 3 Strategy
SOFT
People First
Investor Day 2019 LI & FUNG Joseph Phi
People First
Customers generate revenue.
Experiences delight customers.
People create experiences.
Investor Day 2019 LI & FUNG Joseph Phi
SOFT
People First
OperationsCentric
3 x 3 Strategy
Investor Day 2019 LI & FUNG Joseph Phi
OperationsCentric
Behaviours
Follow through Confront the facts
Incentivize the doers
Make decisions
Set clear priorities
Measure progress
Investor Day 2019 LI & FUNG Joseph Phi
SOFT
People First
OperationsCentric
Customer Obsessed
3 x 3 Strategy
Investor Day 2019 LI & FUNG Joseph Phi
SOFT HARD
People First
OperationsCentric
Customer Obsessed
Operations Excellence
3 x 3 Strategy
Investor Day 2019 LI & FUNG Joseph Phi
Aligned Goals
• Trend Engine
• Efficiency
• Quality Control
• Catch Trends
• Speed to Market
• Share & Margin
• Materials Management
• Capacity Planning
• Quality Assurance
Aligned Goals are prerequisites to Operations Excellence
CustomerGoals
LFGoals
Vendor Goals
Investor Day 2019 LI & FUNG Joseph Phi
KPI Dashboard
Aligned Goals
KPIs
Manageable
operational actions
based on data
collected and
monitored
KPI Dashboard
A Decision Support System
Operational Excellence
Better informed decisions to
improve performance, seek new
ways to gain advantage, set
industry benchmark for others to
reach for.
Cost to serve - $ invested to
achieve given KPI.
Understand and drive efficiency and
effectiveness
VALUE TRANSPARENCY ACCOUNTABILITYCore and Augmented Differentiated Service Offering
KPI Dashboard
Key Performance IndicatorsOn Time Delivery
By sea 97%
By air 93%On-time at consolidator 98%
ASN Accuracy 97%
1
In-line pass rate 70%
Final pass rate 90%
First-time pass rate 98%
Claims YTD $30K
2
By customer’s KPI 40%
3
Social Compliance B
C-TPAT A
Sustainability C
4Compliance & Sustainability RatingQuality Speed
Performance AnalysisFactory OptimizationSales (Unit $Million) Fulfillment
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2018 2019 (YTD)
2018 2019 2020
Claims
2017 2018 2019 2020
Investor Day 2019 LI & FUNG Joseph Phi
Lean Sigma
Lean Sigma organizes lean and six sigma to cut operations costs, improve quality and increase speed.
Lean is the application of a set of principles to identify and eliminate waste.
Six Sigma is a set of techniques and tools defect-free products.
+
=
Investor Day 2019 LI & FUNG Joseph Phi
SOFT HARD
People First
OperationsCentric
Customer Obsessed
Operations Excellence
Account Management
3 x 3 Strategy
Investor Day 2019 LI & FUNG Joseph Phi
Value Proposition
Value
= Service x Quality
Cost x Risk
= (Service, Quality, Cost, Risk)
Investor Day 2019 LI & FUNG Joseph Phi
E-commerceGoogle TrendSocial Media
Catching Trends
Investor Day 2019 LI & FUNG Joseph Phi
# Emerging, Trending & Declining Trends # Validated across sources # Deep-dive Enabled
Trend Engine
Investor Day 2019 LI & FUNG Joseph Phi
• Assortment Gaps
• Design Competitive Check
• Popular Trends
• Attribute Combination Performance
• Catch Up Products Suggestion
Product Development
• Category Assortment
• Benchmarking
• Historical Assortment Comparison
• Fabric Content Comparison
Merchandisers
• Pricing Strategy
• Product Launch Comparison
Marketing
Trend Engine
Investor Day 2019 LI & FUNG Joseph Phi
Trade Dispute
Aug7
No. of Tariff Lines 818 279 6,031 6,031 All
Amount Impacted US$34B US$16B US$200B US$200B Remaining US$300B
Additional Tariff % 25% 25% 10% 25% 25%
Relevant Impacted Items:
Industrial goods Electronics, plastics,chemicals,
semiconductors,railway freight cars,
motorbikes & electric scooters.
Handbags, Accessories, Furniture, Hard Home,
Limited Soft Home & etc.
Handbags, Accessories, Furniture, Hard Home,
Limited Soft Home & etc.
All Consumer Items
June 2019(Expected)
Jul6
Sep24
May 102019
Phase 1 Phase 2
Investor Day 2019 LI & FUNG Joseph Phi
2019 Immediate
Reduce China Penetration
We are well-positioned to help our customers neutralize the impacts of trade tariffs
China
Denim Apparel Accessories
• Vietnam • Vietnam• Indonesia• India• Bangladesh• Cambodia• Jordan• Philippines
• India• Bangladesh• Cambodia• Myanmar• Philippines
2019 and 2020+
Identify ways to mitigate riskWork with vendors to minimize impacts Leverage vendors with multiple countries of production to secure
capacity and shift production
Explore new production countries with existing multi-
country vendors
Introduce new non-China vendors with available capacity
Phase out Chinese vendors that have no offshore production
70%▼
20%
China Penetration
reduce China penetration within
one year
Winter 2019
Winter 2020
▼50%
Case Study – US Womenswear Retailer
Investor Day 2019 LI & FUNG Joseph Phi
2019 Immediate
Reduce China Penetration
We are well-positioned to help our customers neutralize the impacts of trade tariffs
2019 and 2020+
Identify ways to mitigate riskWork with vendors to minimize impacts
Introduce new vendors in other countries of production
Look for alternative countries of production with existing vendors
Re-negotiate with vendors to neutralize impacts of tariffs
40%▼
10%
China Penetration
reduce China penetration within
one year
2019
2020
▼30%
Bags
DPD
China
Leather Soft Goods Jewelry
• Vietnam• Cambodia• India• Philippines• Taiwan• Indonesia
• Cambodia• Korea• Vietnam
• India• Cambodia• Philippines
• Vietnam• Taiwan
Leverage vendors with multiple countries of production to secure
capacity and shift production
Case Study – Accessories
Investor Day 2019 LI & FUNG Joseph Phi
SOFT HARD
People First
OperationsCentric
Customer Obsessed
Operations Excellence
Account Management
Business Development
3 x 3 Strategy
Investor Day 2019 LI & FUNG Joseph Phi
Business Development
Mission
Value
Story
BusinessDevelopment
BusinessDevelopment
BusinessDevelopment
BusinessDevelopment
Investor Day 2019 LI & FUNG Joseph Phi
Business Development
1. Robust pipeline with sizeable targets
2. Global network attracting new prospects
3. 3D offering gaining traction
4. Conversion rate accelerating
Investor Day 2019 LI & FUNG Joseph Phi
SOFT HARD
People First
OperationsCentric
Customer Obsessed
Operations Excellence
Account Management
Business Development
3 X 3 Strategy
Account Management
Business Development
Sourcing & ProductionPlatform
Digital Platform
Engine One Engine Two
Investor Day 2019 LI & FUNG Joseph Phi
Digital Platform
Materials Marketplace• Mills• Selecting Fabrics• Sharing Collections• Fabric Data Overview• Fabric Evaluation
Dynamic Costing • Cost breakdowns• Pre-costing• Multiple quotes• Final cost for production
Digital Libraries• Digital Assets Collection
• Avatar • Fabrics• Trims• Blocks and Patterns
Collaborate• Project / Style Tracking • Organise Digital Assets• Design Collaboration• Virtual Line Selection
Quality Management• Resource scheduling
optimisation• Transparent quality and
inspection risk management
Capacity Management• Capacity requirements• Rolling 13 months• Searching and releasing
capacity to meet demand
Investor Day 2019 LI & FUNG Joseph Phi
Twin Engine
Account Management
Business Development
Sourcing & ProductionPlatform
Engine One
Digital Platform
Engine Two
Account Management
Business Development
Sourcing & ProductionPlatform
Digital Platform
Investor Day 2019 LI & FUNG Joseph Phi
My Reflections - SCS
1. “Whole of company” focus towards the call to action
2. Momentum gaining across all fronts
3. Culture of execution taking shape
4. Irrefutable value and impact to customers and vendors
Investor Day 2019 LI & FUNG Joseph Phi
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