With the COVID-19 pandemic, supply chains around the world experienced unprecedented turmoil last year. As leaders compete to order medicines to care for their sick, global demand changes dramatically, affecting many industries and nearly paralyzing foreign trade. Created a shortage.
However, pandemics are not the only supply chain disruption in recent years. Medical supplies The only product that felt oppressive. The rise of e-commerce, the digitization of industry, and the ongoing US-China trade war all continue to put pressure on international commodity flows, forcing companies to innovate for the future.
As a result, companies that buy and sell goods have had to find ways to adapt to ever-changing situations in order to continue their business. Join Spencer Fung, a family-owned Li & Fung with a history of 116 years. This is a Hong Kong-based supply chain management business that serves 1 billion people worldwide.
The company helps global retailers design, develop and procure materials for their products and coordinate how those products work around the world. Fung is a member of the Northeastern University Board of Directors and an advisory board to the Northeastern Emerging Markets Center. After graduating from Damoa McKim Business School, he told students in the northeast on Tuesday about the future of the global supply chain, where businesses are facing ongoing turmoil.
“We haven’t seen any stability since COVID started,” says Fung. “Production is always shut down in a blink of an eye, and for many there is a huge supply chain disruption. Various industries.. “
Recognized as one of the world’s largest apparel sourcing agents, Li & Fung can innovate to adapt to changing supply chains by capturing trends that have grown in popularity in global business strategies over the last two years. Fung says. Over the years: Companies are increasingly outsourcing manufacturing and production to different parts of the world.
This trend actually began in the early 1970s, but recovered earlier in the century, Fung says. From 2005 to 2018, companies around the world moved their manufacturing primarily to factories in China. By 2019, the country was responsible Almost one-third of the world’s manufacturing industry..
But recently, manufacturing capacity has begun to expand again. Fung saw this shift as an opportunity to build relationships with suppliers in different countries and leveraged its network of manufacturers to hedge future supply chain disruptions.
“When you diversify, that means you have choices,” says Fung. “If you have choices, that means you can quickly activate different choices.”
That’s why Li & Fung operates in more than 50 countries.
“I believe in us Competitive advantage “This is our diversification. Over the last few years, our customers have been producing everywhere, including Vietnam, Bangladesh, Indonesia, India and Guatemala.”
According to Fung, many of our competitors are optimizing supply chain management to reduce costs rather than diversify. As a result, their work is concentrated in just a few places.
“The long-term strategy is global diversification,” he says. “It’s like a stock portfolio manager. If you give someone a million dollars to manage your money, you don’t know if you want that person to invest in just three stocks. Most portfolio managers will have at least 20 to 30 shares. Diversify over time to achieve an acceptable average return. “
Tuesday’s supply chain talk was facilitated by Ravi Ramamurti, a prominent professor of international business at the university, and Nada Sanders, a prominent professor of supply chain management in the northeast.
“Spencer has reinvented this company, which was reinvented in the past. This time, to address these megatrends, society Being part of the future supply chain. ”
Fung says companies can expect Supply chain Instability that lasts “for the next 10 or 2 years”.
Quote: What is the future of the global supply chain? (February 23, 2022) Obtained February 23, 2022 from https: //phys.org/news/2022-02-future-global-chain.html
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What is the future of the global supply chain?
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