Selected Book
Competing in a Flat World: Building Enterprises for a Borderless World
- Hardcover
- Edition: 1
- Author: Victor K. Fung, William K. Fung, Yoram (Jerry) Wind
- Publisher: Wharton School Publishing
- Release Date: September 2007
- ISBN-10: 0132332906
- ISBN-13: 9780132332903
- List Price: $28.99
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Summaries and Customer Reviews provided by Amazon
SummaryThis is the eBook version of the printed book. In the "flat world," everything changes...above all, what it takes to run a winning company. Success is less about what the company can do itself and more about what it can connect to. Find out how it's done, from the company that pioneered "flat world" success, Li & Fung, which produces more than $8 billion in garments and other goods for the world's top brands and retailers -- without owning a single factory. Victor and William Fung and Jerry Wind, author of the best-selling The Power of Impossible Thinking, reveal how they've replaced "old-fashioned" infrastructure and huge employee bases with a fluid, ever-changing network that can design, manufacture, and deliver almost anything, anywhere. The key to success in this world is a set of principles for "network orchestration," described for the first time in this book. They examine how these principles can be applied in manufacturing, services and other industries. They show how to build and orchestrate your own world-class global network. Compete "network vs. network" and win! Create a "big-small" company that combines scale and agility. Forge loose-tight relationships with suppliers. Balance control with empowerment, stability with renewal. Manage the "bumps" in the flat world -- from politics to terrorism. |
Customer Reviews
Average Rating: 
Much better than propaganda but worse than the average business cases
Rating: 
As somebody who had lived in Hong Kong for decades experiencing the evolution of its textile and clothing industry, I did expect much more from this book about how Li&Fung turned itself to be debatably one of the most successful trading house, supply chain or "network orchestrator" as the authors crown themselves in the world. Little had been talked about how it had taken advantage of the opening of Mainland China and the pool of low cost Textile and Clothing human resources in the Greater China Region, and what edges Li&Fung had built and enjoyed to thrive beyond the thousands of trading house in the region. Disappointedly, the authors had been too busy to associate themselves with the "Flat World" euphoria and to "theorize" their work for a higher position in the academia and consultancy arena (Perhaps that's the fault of Wind, and not of the Fung's), or they had been too careful not to disclose their business secrets. For those who read more and better about the "Flat World" on a "strategic" level, I strongly recommend "A Whole New Mind by Daniel Pink". For those who expect the Fung's to tell you how to copy their success formula, or learn how to enhance your own supply chain or trading house practice, please give this a pass.
The idea is nice, but what happens when your musicians form a competing orchestra?
Rating:
Yes, the global communications and logistics systems does make it easier and even necessary to involve the globe in your manufacturing, marketing, and distribution systems. The idea of the "Flat World" is now in everyone's vocabulary, but I think it is a bit overdone. Just because information CAN be communicated anywhere, made in more places than ever before, and shipped from and to almost anywhere, does not mean that anywhere is equivalent everywhere.
Still, I think this book is interesting in the way they describe using your expertise to market and build just what the customer wants using global infrastructure by orchestrating the resources of a number of firms rather than building your own infrastructure and having to market to utilize your capacity rather than focusing on customer needs and desires.
We are seeing the problem with this theory, though. As American and European manufacturers moved their plants to other parts of the world, these places predictably learned. They are now either buying up Western brands or creating their own and bringing them to market in the West. Oops. They didn't stay in their role in the back of the orchestra, did they.
So, while this idea has some merit, the old rules of manufacturing, marketing, and aggressively competing in the marketplace with every tool (weapon) available still apply. You would be smart to think through handing the keys of your kingdom over to third parties based on these concepts. Rather than merely supporting your efforts, they may decide to push you aside and move in.
Reviewed by Craig Matteson, Ann Arbor, MI
Strategic and Operating Principles of Supply Chain Orchestration
Rating:
What is supply chain orchestration? It's an outsourced service that some use in fragmented supply markets to have someone else select and manage a supply chain for each purchase order. For example, a retailer wants to offer a supply of pants in various styles and sizes. Rather than bid among hundreds of suppliers for raw material, zippers, buttons, sewing, and packaging, the retailer might hire a supply chain orchestrator to perform those roles for a fixed price per garment. Although buying the supplies well would save some money, the big gain comes in putting the supplies together so efficiently that large costs like markdowns, needing lots of inventory in shipment, and last minute air freight are reduced.
Who does this sort of thing? Li & Fung, an eight-billion-dollar firm is in this business, and co-authors Dr. Victor K. Fung and Dr. William K. Fung share their perspectives among plenty of examples of how others try to perform the same functions with less good results.
Many such books end up seeming like advertisements for the firm being described in part, but Competing in a Flat World escapes that narrow message with plenty of description of general principles for strategy and operations. The key differences between traditional management efforts and this new business model are summarized on page 194 in table 12-1. If you don't have time to read the whole book, start with that exhibit.
The book's insights build on the observations of Thomas Friedman in The World Is Flat in describing the implications for business of converging technology, globalization, and the reduced effect of distances on costs and performance. If you thought that the Friedman book was interesting, this one will fascinate you more by drawing out more valuable points.
Because of the involvement of Wharton professor, Yoram (Jerry) Wind, the book has a professional academic feel without being inaccessible. There are many figures to illustrate the conceptual points that make the book easier to comprehend.
I was pleased to see that the authors appreciated that being good at supply chain orchestration will eventually require a focus on providing the same kinds of products to customers in the nations who are the low-cost producers for the offerings . . . a point that most Western-based businesses miss. I was also glad to see that the book drew on the idea of global contests to develop better models, but the discussion was pretty perfunctory. In many cases, such contests will be more important in global competition than supply chain orchestration will be.
I thought that the book didn't go far enough into getting into the specifics of how knowledge is acquired, tested, validated, retested, and distributed into a large organization that is a supply chain orchestrator. As a result, it's hard to know how important the value-added is for customers.
Many global commodities trading companies have often played similar roles in acquiring and distributing food, energy, and metals. I was surprised that the book ignored those organizations which provide similar streams of capability.
But for an introduction to network orchestration issues and opportunities, it would be hard to find a better book today.
How to Thrive Through a Sustainable Network Amid the Ongoing Pressures of Globalization
Rating:
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.
The way modern manufacturing processes are performed, international in scope and based on many relationships
Rating:
The phrase, "flat world" is one of those that would have been best left unused, substituted by a more accurate one. In databases, a flat file is one where the data is in one large file with no relationship connections. When there are multiple entities with connections between them, we use the term relational database. Also, the phrase "flat world" seems to mean that everyone operates on the same level surface, which is hardly the case. There are now and always will be advantages to locating specific business activities in one location over another.
In the context of business and this book, the phrase "flat world" is used to refer to the situation where business entities have complex relationships with entities in other countries. The manufacturing process is one where the phrase "country of origin" for a product no longer has any real meaning. The parts that are created to make the final product are often manufactured in several different countries and in many cases different steps in the assembly are performed in different countries. In this situation, the only phrase that is applicable is, "country from which the finished product is shipped."
This modern world means that there are companies that serve the role of what the building trades call "general contractor." This is the person or company who organizes all of the steps in the building of a home, from the first spade of excavation until the last bit of landscaping. The general contractor may not even so much as pound a single nail in the construction, yet is essential to the development of the final product.
This book is generally a case study of a company called Li & Fung that is the manufacturing equivalent of a general contractor. Having relationships with organizations literally around the world, Li & Fung is the brains and organizational prowess behind the manufacture of many goods without actually doing any manufacturing themselves. This requires an enormous amount of organization and timing, as segments of the end product are assembled in different countries, following the path of least cost. Those segments must then be shipped to sites in other countries, where the supply must be timely enough to keep the next plant functioning.
If you are interested in the way business will be done from now on, then this is the book for you. As a political junkie, I listen to some of the candidates for the American Presidency state how they are going to repeal American trade agreements, specifically NAFTA. This is of course ridiculous, the multilateral trade agreements are what have made this distributed assembly possible and any unilateral action would lead to a trade war and a very severe economic downturn. If you are a doubter, read this book and learn how deep the international relationships are between companies.
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