An in-depth study of the emergence of mini-maestro in supply chain governance and their influence to logistics industry

Abstract

Faced with declining margins, many large trading firms have expanded their scopes of sourcing and supplying goods, to include the management of the supply chains and inventories as a mean to improve the operational efficiencies, and thus, overall margins. In some instances, these firms have chosen to undertake the responsibility of logistics themselves through their own subsidiaries. The emergence of these "mini-maestro" (a term coined by Professor Bitran) has shifted the balance of power with regards to the decisions of supply chain governance and the movement of goods. These models may, have huge implications to established logistics service providers such as UPS. While the models may pose new challenges to the existing logistics service providers, they may open up new opportunities for the existing logistics service providers as well. In this thesis, I will perform an in-depth study on one of the mini-maestros, Li & Fung Trading and its subsidiaries, with particular focus on investigating the underlying forces and the core competencies that make Li & Fung the leader in its field. This thesis will also analyze the degree of maturity of its logistics unit, IDS Logistics, and explore the areas in which established logistics service providers can add values to the chain.