Process management: a vital cog in the value chain wheel

Abstract

Process management in today's `value added' society has come to play a crucial role in an organization's strategic planning and operations. As process management includes every phase in a corporation's operations, from research and development to procurement of materials right through to distribution and delivery to market, its scope is broad. This research paper examines Li & Fung's strengths in process management and its use of Knowledge, Technology and Relationship Management to achieve its underlying success. This flagship of process management is chosen to illustrate how effective process management helps achieve a competitive edge and contributes to profitable gains to all member stakeholders. Li & Fung have proved to be world leaders not only in fashion manufacturing coordination but also in value adding at every step of the way.

How quickly does time change? Just a short while ago, most organizations focused on growing the top line, investing in infrastructure to support high growth and rapidly leveraging the benefits of mergers and acquisitions. Now, the focus has shifted, suddenly and dramatically, to survival, thus riding out the economic downturn by identifying new opportunities for fast sustainable value creation. With capital expenditures constrained, organizations are aiming to quickly extract value from existing operations; the failure to do so could prove to be disastrous—from lost market advantage and plummeting share prices to hostile takeover or even bankruptcy.

Each operational task in the value chain comes under the banner of process management, but this title also incorporates several other crucial management objectives, which includes `knowledge management, technology management and relationship management'. These three components of management incorporate all business processes from customer and employee relationships within the corporation to website advancements and capital knowledge.

Li & Fung Corporation is one of the Hong Kong's premier trading companies and is renowned in the industry as a process `killer' in the marketplace due to its unique business model and efficiency in managing its value chain from fashion manufacturing to delivery (See Apendix A, B and D). Li & Fung coordinates production for various fashion apparels, hard goods and accessories. It offers a distinctive value proposition to its clients by coordinating the most challenging processes in the value chain. They use a huge network of suppliers to source their raw materials and have a similar sized entourage of willing manufacturers and distribution companies to work together to produce superior products within short time frames. The ability to produce garments on a five week manufacturing cycle has made them a world leader in co-ordinating clothing and footwear manufacturing.