02 id2019 joseph final d - li & fung...case study –us womenswear retailer investor day 2019 li...

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


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%


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%


Leadership in Core Verticals

Footwear & Apparel Food &Beverage FMCG Healthcare


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


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


3 x 3 Strategy

SOFT

People First


People First

Customers generate revenue.

Experiences delight customers.

People create experiences.


SOFT

People First

OperationsCentric

3 x 3 Strategy


OperationsCentric

Behaviours

Follow through Confront the facts

Incentivize the doers

Make decisions

Set clear priorities

Measure progress


SOFT

People First

OperationsCentric

Customer Obsessed

3 x 3 Strategy


SOFT HARD

People First

OperationsCentric

Customer Obsessed

Operations Excellence

3 x 3 Strategy


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


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


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.

+

=


SOFT HARD

People First

OperationsCentric

Customer Obsessed


Account Management

3 x 3 Strategy


Value Proposition

Value

= Service x Quality

Cost x Risk

= (Service, Quality, Cost, Risk)


E-commerceGoogle TrendSocial Media

Catching Trends


# Emerging, Trending & Declining Trends # Validated across sources # Deep-dive Enabled

Trend Engine


• 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


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


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


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


SOFT HARD

People First

OperationsCentric

Customer Obsessed


Account Management

Business Development

3 x 3 Strategy



Mission

Value

Story

BusinessDevelopment

BusinessDevelopment

BusinessDevelopment

BusinessDevelopment



1. Robust pipeline with sizeable targets

2. Global network attracting new prospects

3. 3D offering gaining traction

4. Conversion rate accelerating


SOFT HARD

People First

OperationsCentric

Customer Obsessed


Account Management


3 X 3 Strategy

Account Management


Sourcing & ProductionPlatform

Digital Platform

Engine One Engine Two


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


Twin Engine

Account Management



Engine One

Digital Platform

Engine Two

Account Management



Digital Platform


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


• The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without

notice and no representation or warranty express or implied is made as to, and no reliance, should be placed on, the fairness, accuracy,

completeness or correctness of the information contained in this presentation. This presentation does not intend to provide, and you may not

rely on this presentation as providing, a complete or comprehensive analysis of the Company�s financial or trading position or prospects.

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whatsoever for any loss or damage howsoever arising from any use of this presentation or its contents or otherwise arising in connection with

this presentation.

• This presentation contains projections and forward looking statements that may reflect the Company�s current views with respect to future

events and financial performance. Readers are cautioned not to place undue reliance on these forward-looking statements which are subject

to various risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information,

future events or otherwise.

• This presentation does not constitute an offer or invitation to purchase or subscribe for any securities or financial instruments or the provision

of any investment advice, and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment

decision in relation thereto, nor does this presentation constitute a recommendation regarding the securities or financial instruments of the

Company.

Disclaimer

02 id2019 joseph final d - li & fung...case study –us womenswear retailer investor day 2019 li...

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