We have heard about the Internet knocking out the middleman in thesupply chain. While this may have contributed to unemployment, it has,nevertheless, helped the consumer in that it has lowered the prices ofmany goods. At the same time, the Internet has not threatened themiddleman to the point of "extinction". What we do not often hear isthat the Internet has also been creating work for some types ofintermediaries. Hong Kong-based trading agent Li & Fung is an example.The Internet has been able topull in suppliers and buyers to trade and collaborate with each otherat a global level, who might have, prior to the Internet's commercialemergence, been limited to working mainly on a regional basis.However, it has created a more complex operating environment for theseplayers. The fact that they are now far more accessible viaInternet-enabled channels and hence, have more companies to negotiateand deal with, has made it more difficult than ever to identify thebest ones to do business with. What adds to this complexity is thatthe Internet has motivated end product makers to widen their sourcingof components across a wider geographical spread. In turn, thecomponent suppliers depend on their own set of global suppliers, andso on. It is this complexity that has opened up opportunities forcompanies such as Li & Fung.

At its core, Li & Fung plays the role of the traditional middleman,except that it has done this on a far greater scale that is onlypossible through the use of IT. Li & Fung wants to be a one-stop shopto "matchmake" its customers with suppliers. To its customers, Li &Fung shoulders the responsibility of ensuring full shipment of theirorders. To its suppliers (especially its top-tier business partners),Li & Fung is the entity they take orders from and answer to. Over theyears, it has specialised in helping customers source for supplies,and is now leveraging more on IT to hone its specialised skills evenfurther.

Say, a large US retail chain is looking for a party to supply ashipment of shirts made according to its specifications. There areumpteen places worldwide where shirts are manufactured. But instead ofsourcing for reliable suppliers on its own, the retailer can rely onLi & Fung to source on its behalf, negotiate a good deal, and optimisethe supply chain in order to have its supply of shirts delivered ontime and according to specs.

Li & Fung's strength stems from its intimate knowledge ofsuppliers--big and small--throughout the world and its ability toco-ordinate and influence them. This puts it in a position where itcan stitch together a network of suppliers to satisfy orders fromanywhere, whether from a retail chain in the U.S. or a Japaneseelectronics firm.

Li & Fung has links with more than 7,000 suppliers in 40 countries. Ithas more than 4,000 employees dedicated to the task of travellingthrough these countries to "manage" the suppliers--securingmanufacturing capacities, monitoring quality and so on--whilemaintaining close relationships as well as hunting for newsuppliers.