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New Supply Chain Models Evolving in AsiaNew Supply Chain Models Evolving in Asia
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A LEADING INTERNATIONAL COMPANY PROVIDINGA LEADING INTERNATIONAL COMPANY PROVIDINGINTEGRATED SUPPLY CHAIN MANAGEMENT SERVICESINTEGRATED SUPPLY CHAIN MANAGEMENT SERVICESUSING INNOVATIVE TECHNOLOGY SOLUTIONS ANDUSING INNOVATIVE TECHNOLOGY SOLUTIONS ANDINFRASTRUCTUREINFRASTRUCTURE
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• Ghengis Khan
• Alexander the Great
• The Russian Campaigns ofNapoleon and Hitler
• The First Gulf War
The Concept of Logistics Evolved as a VitalThe Concept of Logistics Evolved as a VitalMilitary ToolMilitary Tool
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The Army Logistics System ofthe Past
Velocity Management as aNew Strategy
Military LogisticsMilitary Logistics
• Massive• Unresponsive• Unreliable• Inefficient
Warehouses
Repair
Warehouses
RepairWarehouses
Repair
Warehouses
Repair
Warehouses
Repair
Non-value-adding activities areeliminated and value-adding ones
are continuously improved
• Improvedeployability
• Save $$
Materiel and informationare moved faster
and more accurately
Managed velocity reducesneed for massive resources
• Improve missionreadiness
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Evolutionary Path of the IndustryEvolutionary Path of the Industry
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From: OneDimensionalManufacturingModel
To: EstablishingStrategicManufacturingFacilitiesClusters ofManufacturingPlants in keyMarkets toMeet In-countryConsumerdemand
To:ManufacturingCenters ofExcellenceRegional HubManufacturingStrategy
To: VirtualManufacturingDynamicGlobalManufacturingNetworks
Evolutionary Path of ManufacturingEvolutionary Path of Manufacturing
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Global / LocalGlobal / LocalSourcingSourcing
ExecuteExecutePurchase OrderPurchase Order
TrackTrackMovement ofMovement ofProductProduct
Consolidate /Consolidate /Value AddedValue AddedServiceService
Custom Clearance /Custom Clearance /Govt. DocumentationGovt. Documentation
Determine OptimalDetermine OptimalDelivery RunsDelivery Runs
ConsumerConsumerSatisfactionSatisfaction
ManageManageTransportTransportfrom Originfrom Originto Hubto Hub
VISIBILITY PIPELINEInformation FlowInformation Flow
Integrated Product Flow (Shipping)Integrated Product Flow (Shipping)
InventoryInventory
Financial FlowFinancial Flow} Integration
Consumer DemandConsumer Demand
Bonded RegionalBonded RegionalHubbingHubbing
Retail StoreRetail StoreDeliveryDelivery
Distribution CentersDistribution Centers
CustomerCustomer--drivendrivenDemand ChainDemand Chain
Enhancing the Demand ChainEnhancing the Demand ChainEnhancing the Demand Chain
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China : Challenges & OpportunitiesChina : Challenges & Opportunities
China is becoming the Manufacturing Center of the
World
China will become the Largest Consumer Market of
the 21st Century (in stages)
This will require radical changes in global business
strategy
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Li & Fung Group
Case Study: “Virtual Manufacturing”
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Global sourcing network of 68 offices in 40 countries
Li &Li & FungFung TradingTrading
Europe & TheMediterraneanAmsterdamCairoDenizliFlorenceIstanbulIzmirLeedsManchesterOportoRomaniaTunisTurin
BeijingDalianDongguanGuangzhouHepuHong KongHuizhouLiuyangLonghuaMacauNanjing
NingboQingdaoSeoulShanghaiShantouShenzhenTaipeiTokyoZhanjiangZhongshan
North Asia
South AsiaBahrainBangaloreChennaiColomboDhakaJordanKarachiKathmanduLahoreMumbaiNew DehliSharjah
BangkokHo Chi Minh CityJakartaJohor BahruManilaPhnom PenhSaipanSingaporeYangon
SouthEast Asia
The AmericasBostonDominican RepublicFloridaGuadalajaraGuatemalaHondurasMontrealNew YorkNicaraguaUruguayVancouver
DurbanMadagazcarMauritius
South Africa
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CUSTOMERCUSTOMER
Li & Fung does the High Value-Added Front-and-Back End activities in Asia
Raw Materialand Component Sourcing
Raw Materialand Component Sourcing Managing Production
Managing Production
Organises the lower-value-added middlestages through its network of worldwide suppliers and factories
TextilesTextiles
ZippersZippers ButtonsButtons
YarnsYarns
Fashion Wear Supply Chain NetworkFashion Wear Supply Chain Network
FRONT ENDDesign
EngineeringProduction Planning
FRONT ENDDesign
EngineeringProduction Planning
BACK ENDQuality Control + Testing
Quota ManagementLogistics
BACK ENDQuality Control + Testing
Quota ManagementLogistics
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Thailand(Cutting, Making &
Trimming)
United States(Fashion Wear)
Korea(Yarn)
Taiwan(Dying & Weaving)
Example of Fashion Wear Supply Chain NetworkExample of Fashion Wear Supply Chain Network
AsiaAsia--wide Virtual Manufacturing Networkwide Virtual Manufacturing Network
10.000 shirts
6 factories
3 countries
Europe(Fashion Wear)
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IDS Logistics Distribution Network within AsiaIDS Logistics Distribution Network within Asia
Regional Hubs
Distribution Centers
Regional Hubs strategically located inChina and Singapore
42 Distribution Centers across Asia withmultiple sub-depot networks
An extensive in-country MicroDistribution Delivery capability
Panyu
SingaporeMalaysia
Thailand
Hong Kong
Taiwan
Philippines
Shanghai
Indonesia
Vietnam
Urumqi
Wuhan
Xian
Nanjing
Zhengzhou
Tianjing
Zhuhai
Chengdu
Brunei
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Singapore Regional SCM HubSingapore Regional SCM Hub
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Case Study: “Regional SCM Hubbing”
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Impact of Regional SCM HubbingImpact of Regional SCM Hubbing
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Australia China Philippines Thailand Malaysia IndonesiaEuropeU.S.
Example of an Inefficient Supply ChainExample of an Inefficient Supply Chain
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Regional SCMRegional SCM HubbingHubbing Supply Chain EfficienciesSupply Chain Efficiencies
Australia China Philippines Thailand Malaysia IndonesiaEuropeU.S.
4PL Supply Chain Integrator
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Service Offerings and Market SegmentsService Offerings and Market Segments
ShippingCoordinationwith Vendors
ConsolidationTrucking
ExFty FOB
Supply Chain Services
Shipping DistributionCentres Retail
Stores
Integrated Flow ServicesInventory
Management
FreightForwarding
CustomClearance
CIFLDP
Hubbing
Integrated Flow ServicesInventory
ManagementServices
Solution
Optimized ShippingServices
IntegratedFlow Services
InventoryManagement Services
Buy Shipping, Transport, and clearance on an aggregated basis. Basic Online Tracking ofshipments. Single Billing either as principal or service fee model
OSS + Redefining the Supply Chain including KPI measurement of ServiceProviders. Transparency of rates through neutral benchmarking. Costcomponent analysisCreate P.O. & Define Optimal Order Quantity. Provide InventoryVisibility across the supply chain and implement KPI performancemeasures
HUB
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Original Logistics ChainOriginal Logistics Chain
Europe
China
Taiwan
Hong Kong
Japan
Philippines
Malaysia
SingaporeIndonesia
Thailand
India
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Europe
Supply Chain Model
China
Taiwan
Hong Kong
Japan
Philippines
Indonesia
Thailand
India
Australia
(Aggregation of Orders Across all Markets)
FIRST PHASEFIRST PHASE
• Coordinating shipmentof finished productsfrom manufacturingplants in Europe
• Consolidating sub-components to savelogistics costs and extramarkup by themanufacturing plants
SECOND PHASESECOND PHASE• Sub-component
assembly• Re-packaging• Labeling• Sorting & Packing• Order Processing
Singapore Regional SCMHub
THIRD PHASETHIRD PHASE
• Average transit timeto markets reducedfrom 90 to 5 days
• Create “VirtualWarehouse” with noMOQ restrictions
• Create dynamicsales distributiondelivery network
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Europe18DCs in 11Asian Markets
Consolidation
• Coordinating finishedproducts frommanufacturing plants
• Consolidating sub-components to savelogistics costs
• Sub-componentassembly (126 SKUs)
• Re-packaging• Labeling• Sorting & Packing• Inventory
Management
Sub-componentSuppliers
Freight
LocalDelivery
ManufacturingPlants
FreightRegional Hub
Asian HUB
• Average transit time tomarkets reduced from 30to 5 days
• First year savings ofUS$356,000 throughbenchmarking of freightand local delivery fees,etc.
CaseCase Study:Study:
““Regional Supply Chain HubRegional Supply Chain Hub”” (Year One)(Year One)
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Increased Sales• Sales of hubbed
product hasincreased by 300%
Lower Cost• Savings of over
20% on productvalue, andexpansion toaggregate othercommodities viathe SCM Hub
• Savings fromsub-componentassembly &sourcing in lowercost locations
Lower Lead Time• Improved lead time
from an average of 90to 5 days
• Gained a competitive
advantage for orderlead time over theirmain Asiancompetitors
• Eliminate risk of lostsales
Case Study:Case Study:Impact on the Supply Chain (Year One)Impact on the Supply Chain (Year One)
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India: Future OpportunitiesIndia: Future Opportunities
India has become the Leading Outsourcing Services Center of
the World (I.T Development, Customer Service Support,
Financial Analysis, Medical Diagnostic Support, Legal Analysis,
Pharmaceutical and Biotechnology Development etc.)
India will become the 3rd largest Consumer market in the
world within the next 10 years.
India will eventually become a Leading Secondary
Manufacturing Center as Infrastructure further Improves.
The Consumer Market will Dramatically Grow with a Rising
Middle Class.
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Case Study: “The Indian Value Chain”
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INDIAINDIA
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Copyrights @ 2007. All Rights Reserved.
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CyberlogCyberlog: Supply Chain IT Systems: Supply Chain IT Systems
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Global Demand Chain ProcessesGlobal Demand Chain ProcessesGlobal Demand Chain Processes
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CyberlogCyberlog: SCM Dashboard Visibility: SCM Dashboard Visibility
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CyberlogCyberlog: SCM Dashboard Business Insight: SCM Dashboard Business Insight
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Singapore GovernmentSingapore Government’’ss TradeXchangeTradeXchange
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Shipment Tracking ScreenShipment Tracking Screen
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Single Integrated FlowSingle Integrated Flow
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Typical MultiTypical Multi--location Distribution Networklocation Distribution Network
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Streamlined Distribution NetworkStreamlined Distribution Network
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GencoGenco India: Value PropositionIndia: Value Proposition
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INDIA HUBBINGINDIA HUBBING
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Retail DistributionRetail Distribution
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ArshiyaArshiya’’ss Project DiamondProject Diamond
FTWZ Hubs
Sub Hubs
Rail Network
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ArshiyaArshiya’’ss Project DiamondProject Diamond
Sub Hubs
FTWZ Hubs
Rail Network
Virtual DistributionNetwork
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ArshiyaArshiya’’ss Project Diamond & Project EmeraldProject Diamond & Project Emerald
Sub Hubs
FTWZ Hubs
Rail Network
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Industry RecognitionIndustry Recognition
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• Regional Hubbing • Value Added Services • Integration to Ocean Port
TheThe ““AsianAsian AerotropolisAerotropolis””
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Pearl River Delta
United StatesEurope
Asia
China Shanghai
SingaporeYantianNansha
Huangpu1
Shekou
Lianhuashan
Zhongshan
Hong Kong
MacauZhuhai
SingaporeSingapore HubbingHubbing:: EntrepotEntrepot betweenbetweenChina/Asia and the WorldChina/Asia and the World
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Singapore as a Pivot Point LeveragingSingapore as a Pivot Point Leveragingthethe ““Reverse LReverse L”” for Strategic Advantagefor Strategic Advantage
Asia Supply Chain Control Center
(Linked to China and India)
Coordination Point for futureVirtual Manufacturing
(Linked to China & Asean)
Financial Transaction Center
High End Technology DevelopmentCenter
(Linked to India)
Bio Medical Design & RegionalPharmaceutical Hub
(Linked to India)
ASEANINDIA
CHINA
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THE RISE OF ASIA WILL LEAD TO NEW MODELSOF SUPPLY AND DEMAND CHAIN MANAGEMENT
DRIVING NEW INNOVATIONS GLOBALLY