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How to Thrive Through a Sustainable Network Amid the Ongoing Pressures of Globalization,
This review is from: Competing in a Flat World: Building Enterprises for a Borderless World (Hardcover)
Victor and William Fung, group chairman and group managing director respectively of a Hong Kong-based multinational corporation specialized in sourcing, have partnered with Jerry Wind, a Wharton marketing professor and co-author of the illuminating The Power of Impossible Thinking: Transform the Business of Your Life and the Life of Your Business (2005) about strategic inflection points, to provide an exceptional how-to book focused on drilling down globalization to the level of existing businesses. The Fung brothers are authorities on the topic since their firm, Li & Fung, is one of the world's largest trading conglomerates managing the supply chain for high-volume, time-sensitive consumer goods through a network of sixty-six offices in over forty countries. Instead of investing in production facilities, the Fungs have mastered supply chain management by providing the convenience of a one-stop shop for customers through a coordinated package which runs the gamut from product design and development through raw material and factory sourcing, production planning and management, quality assurance, and export documentation to shipping consolidation.
Without the burden of unnecessary overhead, the Li & Fung business model has allowed the company to generate over $7 billion in annual revenue on an employee base of only 7,000. It is the unprecedented geographic flexibility of the firm's operations that epitomizes what Thomas Friedman talks about in his groundbreaking book, The World Is Flat: A Brief History of the Twenty-first Century, when he elaborates on how the combination of information technology and instantaneous telecommunications has rendered the traditional need for a local labor market obsolete. Through the brothers' own example, Li & Fung has by necessity, a non-hierarchal organizational structure that allows them to respond quickly to customer needs. With this insightful book, they encourage firms to orchestrate among a variety of contracted suppliers and maximize technology and logistics to make the production process as seamless as possible.
This intricate coordination effort has been made even more complex by the escalating growth of niche markets demanding an even greater variety of products than what has been offered before. The need to service these segments concurrently has given rise to dispersed manufacturing which translates into multiple sourcing at different stages of production. The co-authors manage to explain clearly the steps that companies need to take to optimize their supply chains. Different industries have different levels of flexibility, and the scope and depth of Li & Fung's 9,000-plus network will not apply to all who read this book. Wind is particularly effective in showing how the lessons learned by the Fung brothers can apply to the non-manufacturing sector. It is not only the dynamic nature of managing the supply chain that remains pertinent no matter what industry, but also adherence to a consistent perspective on the customers' holistic needs.
The co-authors outline the three dimensions that make for a successful framework of supply chain management. The first is to balance the firm's interests with those of the network create by creating "big-small" companies that combine scale and agility. The second is the move away from traditional notions of control toward a specifically network-centric viewpoint given that the suppliers and consumers are more empowered than ever to upset the cart. The third is currently the most nebulous, the paradigm shift in the strategies and competencies necessary to succeed in a flat world. The co-authors wisely view this last dimension as a work-in-progress, as customer needs and the expectation to respond to them continue to evolve at an even faster rate. This is strongly recommended reading for the forward-looking executive.