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Li & Fung’s Jason Kra on Diversifying to Defy Disruption

The famous quote, “It’s all the same, only the names will change,” certainly applies to supply chain challenges. If it’s not last year’s regional lockdowns, factory closures and logistics delays, it’s today’s raw material volatility, rising labor issues, developing energy concerns and inventory management woes.

The problems revolve, the pain persists.

Flexibility and agility are the only ways to steel yourself against today’s and tomorrow’s unforeseen global jolts and steady stream of “black swan” events.

“No longer ‘irregular,’ such events must now be viewed as inevitable and something that needs to be prepared for as an unavoidable part of doing business,” said Jason Kra, president of supply chain giant Li & Fung, who is speaking on the panel “Sourcing 1: Manufacturing Solutions” at Sourcing Journal’s Fall Summit: Strategic Solutions to Complex Challenges, Oct. 18, 2022 in New York City.

Supply chain dependability has become all about risk mitigation and diversification. “The US-China trade war was an early signal that the global trading landscape was going to change dramatically, yet many in the industry have too many eggs in too few baskets and, as a result, have suffered from these external forces,” said Kra, who oversees Li & Fung’s factory direct, wholesale and distribution import businesses for the North, Central and South Americas markets.

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Diversification comes with a cost, however, as managing a more diversified supply chain requires more countries, regions and boots on the ground to manage well. “The industry was trained for over 30 years that a lean, just-in-time, strategy delivers higher quality and profits, but being lean in too few locations increased risk based on global jolts,” he cautioned. “Traditional hub-and-spoke strategies fail when disruption happens in the hub.”

But if diversification is supply chain insurance, it’s well worth the alternative when disruption occurs. “Li & Fung is a company that has always been diversified globally, and we leverage that strategy and our scale to help our customers mitigate their changing pain points,” he said.

Once goods are produced, managing inventory has also proven difficult, what with inconsistent ordering patterns, ebbing consumer demand, renegotiated terms and an uncertain trade backdrop, and this has remained a heightened concern today. “The disruption of the pandemic might have started upstream, but it has been moving downstream ever since,” Kra said.

But despite the revolving and seemingly endless list of supply chain challenges, not to mention new layers of complexities, the industry is not doomed to an endless cycle of uncertainty and misery.

Many of the earlier disruption points have now seen relief, especially with reduced global demand over the past few months, and demand reduction has helped areas of disruption come back to equilibrium. As a result, Kra said, there has been some improvement in port loading, sailing schedules, container prices and factory shipment predictability.

“However, the disruption bubble is taking two full years to work its way downstream,” he said. “It’s safe to say that supply chains will not be the same in a post-covid world.”

On the Summit panel, Jason Kra will be joined by Juliette Barre, director, enterprise sales for Sourcemap, and Devender Gupta, co-founder of Asmara International Limited. All speakers will share their firsthand knowledge of supply chain mapping and manufacturing, with a focus on the immutable need for visibility into end-to-end operations.

Visit our events page to purchase tickets.