Founded in 1906 and based in Hong Kong, Li & Fung is the world’s largest sourcing and supply company.
Through its 17,000 people it operates an extensive global supply chain network over 230 offices and 270 distribution centers in 50 economies around the world, primarily for US and EU brands and retailers.
The organisation’s significant investment in its digital supply chain capabilities, as well as its network of over 10,000 suppliers globally, has allowed it to successfully guide and support its customers through the current COVID 19 crisis.
Roger Young is the outgoing Chief Human Resources Officer of Li & Fung. Having joined the organisation in 2016 he has helped lead the global structural transformation and build their talent capabilities for the supply chain of the future.
Prior to joining Li & Fung he served as SVP HR for National Grid USA. His earlier career included leadership roles spanning Finance, General Management and HR for the multi-US$bn, global coatings supplier, PPG Industries.
Roger shares with Barracuda Search his experiences and reflections on the ongoing COVID 19 outbreak.
I think that in Hong Kong particularly, having had very deep experience in managing pandemics from the SARS crisis, the leadership was very well aware that immediate action and planning needed to be taken and so a crisis management team was immediately put into place.
It was a very comprehensive team of HR, operations and business leaders discussing plans of action and scenarios on a daily basis. We were monitoring the situation, deciding actions and then very quickly disseminating this information to the rest of the world and our other locations so that they could start thinking about what could be required to happen.
In terms actions, that then ranged from anticipating what would happen to implementing ‘A teams’ and ‘B teams’. We had to ensure that we would be able to continue business as usual and not impact our customers and our commercial priorities. We then had all our leaders start informing and working with their managers in terms of laying out the ‘how’.
At the same time we were ensuring that we would be able to work as safely as possible. Immediately we brought in temperature checks, stepped up the disinfection of common spaces and face masks were required to enter into our offices, so all the precautionary issues were immediately taken.
Now, the outbreak wasn’t happening at that point in Europe and North America so there wasn’t that same sense of emergency at that time; but certainly by that time we had agreed very
quickly that third parties, external stakeholders, internal people should not travel to our European or American sites, so the travelling was immediately stopped.
We had very tight communication with our vendors and the customers in terms of what were the issues going on in Asia and the supply chain concerns at that point. Although it was still business as usual in February in the retail environment here in the US, obviously as the supply chain, production and operations in Asia started being affected, there was tremendous collaboration and day to day contact between the ourselves the customers, the factories and the vendors in terms of managing any supply chain disruptions.
Firstly, with everyone working from home the use of virtual meetings was something that was stepped up tremendously. How people worked and communicated was something that was very important because we didn’t know how long the working from home was going to be.
Making sure that we established a very effective communications medium between the customers, the vendors and the Li & Fung team was very, very important at that time. We aimed to minimise physical human interaction without disrupting the business.
In terms of digital, I think that one of the things that Li & Fung has been at the forefront for the last few years is virtual product development, 3D design capabilities and using all the fantastic digital innovations and technology capabilities that we’ve been building.
This has allowed for us to be able to do things more effectively without the physical product or the need for human interaction and travelling. Because of this we have been significantly more efficient in terms of how we could work during this period and that certainly became a very important value-add contribution that we would bring.
A couple of things. Firstly, customers and retailers would be thinking in the long run is it worth having operations and physical assets all over the world, or can they reduce the risk by relying on a company like Li & Fung to be able to manage their supply chain and take away a lot of their risk. That certainly has been exacerbated through the COVID situation.
Secondly is the ability for us to do so much more of our product development and design along the various points of the value chain in retail. How can we use digitalisation to replace some of the ways of working that we do today? We have been on the journey for creating that digital supply chain of the future for the last few years. How do we continue to accelerate that and work with our customers in developing value propositions that would make it a lot easier for them?
I think the other area that we need to be looking at very aggressively is, if you take the US for example, I think there is going to be a permanent change in the way people behave, the way people work, the way people manage their lives day to day. You are temporarily seeing a very painful collapse of retail right now but I think there could be some longer term implications in terms of how people will shop. Will people be looking at different ways of living their life day today?
As a result, what does that mean for retailers and how can we partner with retailers to find solutions that will change the way that the whole retail environment is going to work in the future? That’s going to be a really interesting one. Many people feel that bricks & mortar will change in terms of their value propositions and so we need to be partnering with the businesses and the retailers very closely in looking at those solutions.
I think when we created the whole supply chain platform it accelerated the development of our country level platforms. This was in order to be able to give countries a lot more autonomy and to be able to be very nimble with visions to support our customers.
Li & Fung is uniquely positioned in the sense that if there were any specific issues that dramatically impacted our operations in one location then we could shift and be very nimble in terms of being able to produce and being able to fulfil our customer requirements from a different location. The system is structured in a way where we are able to be totally nimble and respond accordingly to things like COVID and we have that vast network and eco-system that allows us to do it very effectively.
Li & Fung is headquartered in Hong Kong SAR and has a significant presence in mainland China. As these markets begin to enter the recovery phase, how have you been preparing teams and sites to return to operations whilst being mindful of potential health risks to colleagues?
In Hong Kong we moved quickly, we learning a lot and have continued to perfect working off-site and being flexible in terms of how we do things so I think we are prepared to ensure the safety of our employees.
We would never have our employees concentrated to the point where we put them at risk during a situation like a pandemic. We have dispersed our people. The fact that we have a sourcing and supply chain platform that is very strong in Vietnam, in Thailand, in Indonesia, in Bangladesh, in China, in Guatemala, etc means we are again very well positioned and dispersed to be able to manage a crisis situation. Being able to be flexible and being able to ensure that we are not going to be in any way shut down or compromised during a situation like this is key.
In the US obviously things have been hit very hard. We have had our leadership team very connected across all the businesses so that we are working as one Li & Fung and working with our customers to ensure that they are informed on a daily basis in terms of what’s going on. They are informed how we are managing the supply chain while at the same time ensuring that we are absolutely taking care of and protecting our employees.
The first and foremost is crisis management. The reality is the US retailing environment has absolutely shut down. As you know and you have seen, the likes of Macy’s and basically all the retailers in the US have had to furlough their employees. At Li & Fung we faced a very challenging period in helping and ensuring that our customers could effectively manage their immediate needs and priorities in terms of orders and productions whilst also managing their supply chain changes and adjustments that they needed to make in the crisis.
Secondly, we have been working with customers on understanding how things are evolving; what their plans are becoming and then adjusting again in helping them manage their supply chain needs. We have been working with them on predicting the near-term future, when the retail environment is able to open again, when the US economy will start opening up and what that means in terms of planning for future needs.
We are also having the longer-term discussions around what does this mean in terms of their strategies, their vision for the future and how this might be impacted. Where there will be permanent shifts in the retail environment.
Our job at Li & Fung has been to partner with our customers side by side to understand all the different scenarios and understand how we need to plan for the future, and ensure that we continue to reduce the risk and ensure that we are able to support our customers through the changes that ultimately will need to be made within the industry and the individual countries.
It’s interesting because Asia has been very much used to for many years now understanding and managing pandemics, yet this has been new for most of Europe and North America.
I would say that firstly the way to win is global connectivity and really understanding and learning from where countries and regions have been successful and have had more experience in putting these things into practice. When we realised that it would come to the US and Europe and that we would have to be very disciplined on how we manage the processes, that was a fantastic big learning experience for me.
You mentioned earlier how Hong Kong, Korea and mainland China post-outbreak have been able to very successfully contain the virus through very rigorous discipline around contact tracing, around isolation, around the quarantines and the preventative measures on social distancing. I think one of the things we were able to do very effectively in Europe and the US at Li & Fung was to learn quickly from the actions of the crisis teams in Asia and understand how complex and how critical these actions are.
Secondly, I think innovation. For example, here in Manhattan people now question whether we need all this physical space and these office towers for people to do their jobs or whether there will be a significant shift in terms of ways of working, reducing physical office space and using technology to work differently. I think it is going to be quite a game changer in terms of how we work in the future.
The third piece for me is the absolute focus that organisations and people need to have moving forward on the planet, on sustainability, on health and wellness and on physical and mental health. This has been a really good lesson and I think we need to build a lot more focus around how we, organisations and governments do much more than we do today in protecting the planet and looking at health, risk and awareness.
Interview conducted by Barracuda’s Head of Hong Kong, Max Holdsworth.
May 2020
