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Balancing Risk & CostGlobal Supply Chain Shifts, New Supply Markets that Matter, Strategic Choices & Practical Considerations for the Resources Sector During Times of Uncertainty
21 Sep 2021
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• Global Procurement & Supply
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www.axisgroupinternational.com
Global Markets. Connected
3Source: Axis Group Analysis
Balancing Risk & Cost - Global markets offer attractive procurement & supply options but where to start? Four key questions help us navigate – Why, Where, What and How to Source Globally?
Why? Where?
What?
How?
Global Procurement
• Several factors, such as developed
infrastructure and a low price/quality
ratio, enable certain markets to have a
competitive advantage with
regards to global sourcing
• Successful sourcing from global markets is
complex and requires a thorough and thought-
out process
• Certain markets have the capability to supply
a number of high value-added products
that meet international standards at a
competitive price
See 3 mind maps in appendix
Make vs buy Which global sourcing models? Which countries? Which suppliers? What engagement
models?
Offshore / re-shore / near
shore/ onshore?
4
Agenda
Global Risk Landscape Trade & Supply Chain Shifts Competitive Dynamics
Impact on Global Procurement & Supply in
Resources Clusters & Categories
Integration
5
Complexity in ‘Risk & Cost’ tradeoffs and supply market ‘Cluster & Category’ choices define the shifting global sourcing landscape
Clusters
Categories
Risk
Cost
6Source: Various; Axis Group Analysis
A multitude of risks converge – now what? Complexity & dynamism
Now
• Global trade war (led by US-China/US-EU/EU-China etc.)
• Upcoming US election in 2020
• Geopolitical tensions
• Technological shifts (adoption of AI / ML)
• Environmental Challenges
Amalgamation of Risks
New History
• Deep tectonic shifts• How we readjust?
• How we cope?• How we adjust?• How much worse?• Does it get better?• How we correct to the previous
state?
1 Jan 20RiskContext
Impact
Key Previous
Risks
Covid-19 Unfolds
1st & 2nd
Order Effects…
Economic Tremors
Geopolitical Quakes
• Temporary initial scare
• Health crisis• Unregulated
and irrational demand/supply of PPE
• Scramble for masks/PPE
• Initial and on-going disruption in operations
• Will it spread?
History Recent Past Next Further
Out
Stretching a piece of string?
• Ripples widen, intensify
• Lockdowns• Travel bans• Supply delays• Prolonged lead
times• Logistics
disruption• Supply Chains
in crisis
• Significant cyclical damage
• Structural adjustment
• Global decline in production & consumption
• Slow down in global trade
• Social impact
• Hairline cracks in geopolitics become discerning
• International relations order being challenged
• End of Globalisation
• De-globalisation• China’s Rise• Rise of the
digital economy• Growing
demand for low-carbon supply chains
Does the pendulum swing back?
• End of Globalisation
• De-globalisation accelerated?
• Over-exposure to China
• Self-sufficiency?• Stress-testing• Inventory
buildup ‘just in case’
• End of Globalisation
• De-globalisation accelerated?
• Moving from ‘low cost only’ sourcing
• Drastic restructuring of the global supply chain
• End of Globalisation
• De-globalisation accelerated?
• Adapting to the “new normal”
• Fallout widens and organisations bunker down
• Historical proportions
• End of Globalisation
• De-globalisation accelerated?
• Leveraging technology
• Unprecedented ‘temporary’ societal change (At home and at work)
Way we think?
Risky World
Increased Risk
Rapid Risk Ramp Up
Deep Impact
Grave Unforeseen
Consequences
S/M Term L Term
Time
New Normal?
New Normal II?
“Dangerous tipping point or new soothing equilibrium?”
Way we live?
Way we work?
Way we do things?
7Source: Various; Axis Group Analysis
Supply Chains are stressed…
8
... and key risks across the value chain create a complex environment
• Supply Risk• Raw Material Scarcity• Price Risk• Over Exposure• Sustainability• Labor Shortage• Modern Slavery T1,
T2…
• Visibility to Tier 2 Suppliers…• Container Availability• Supply Disruptions• Economic Instability• Environmental Risks
• Health & Safety of our People
• Cash Flow• Pivot vs Strategy• Digitalisation• BCP• Inventory Management
• Visibility to Tier 2 Customers…• Container Availability• Re-shoring• Data Integrity
Supply Logistics Complexity & Costs Logistics
Information Challenges Across the Risk Landscape
• Market Risk• Customer
Health• Delivery Delays• Sales Price
Demand
CustomersSuppliers
Strategy, Planning and Management
InboundSupply Chain
Core Operations and Business Processes
Outbound Supply Chain
HR Finance IT Infrastructure
• Geopolitics • Covid-19 • Attitudes, i.e.Nationalism
• Regulatory shift
• Cyclical & structural change
9Source: Australian Government Productivity Commission; Axis Group Analysis
Australian Government Productivity Commission’s Analytical Framework
Findings on Australian Imports
Australian supply chains are also stressed; however, not all vulnerable imported products are essential or critical goods
1. Vulnerable
2. Vulnerable
and essential
3. Vulnerable, essential
and critical
1 FEW IMPORTS ARE VULNERABLE TO CONCENTRATED SOURCES OF SUPPLY
2 MOST VULNERABLE IMPORTS ARE CONSUMPTION OR INTERMEDIATE GOODS
3 THE MAIN SUPPLIER OF VULNERABLE IMPORTED PRODUCTS IS CHINA
4 MANY IMPORTS CLASSIFIED AS VULNERABLE ARE NOT ESSENTIAL OR CRITICAL
5 VULNERABLE IMPORTS MAY NOT BE CRITICAL TO THE PRODUCTION OF ESSENTIAL GOODS AND SERVICES
6 ESSENTIAL INDUSTRIES USED 130 VULNERABLE IMPORTS IN PRODUCTION
7 THE INCLUSION OF FOOD DOES NOT QUALITATIVELY CHANGE RESULTS
8 THE SUPPLY OF ESSENTIAL GOODS AND SERVICES IS NOT HIGHLY SUSCEPTIBLE TO DISRUPTIONS TO IMPORTED GOODS
10Note: 1. The Australian Government Productivity Commission defines a 3 step filtering process for identifying Vulnerable Imports. Step 1 – The main supplier accounted for > 80% of Australia’s imports. Step 2 – Products are sourced from a concentrated market. Step 3 – Australia sources its supply from the main global supplier
Source: Australian Government Productivity Commission; Axis Group Analysis
Australia’s Imports of Vulnerable Products1 by Country of Origin (HS Subheading level, 8-digit)
Australia’s Imports of Vulnerable Products1 by Product Type and Origin (HS Subheading level, 8-digit)
Vulnerabilities do exist in the supply chain, with Australia’s most vulnerable imports coming from China
199
7
9
4
39
6
28
Italy
Switzerland
France
India
USA
Other
China
0 50 100 150 200 250Number of HTISC products (8-digit)
Eco
no
my
8
47
1412
1617
38
7
45
66
8
2126
3Mineral productsRaw hides, skins, leathers and furs
Stone and glassPlastics and rubbers
Animal and animal productsTransportation
Footwear and headgearFoodstuffs
Machinery and electricalMetals
Vegetable productsWood and wood products
MiscellaneousChemicals and allied industries
Textiles
0 20 40 60 80Number of HTISC products (8-digit)
Pro
duct
type
CHINUSAINIAFRANSWITITALOther
11
Important considerations for the resources sector as macro events such as the COVID pandemic and geo-political tensions amplify global supply chain risk
3 Increasing Supply Market Competitiveness• Supplier propensity to take short cuts to remain competitive
Lead
ersh
ip
Sup
ply
Focu
s Low propensity for change
Security of supply
Highest quality
Protect social licence to operate
Capability to meet requirements
Security of supply
Cost competitiveness
Maximise output On time, within budget
Them
e
Resources Value Chain
Greenfield/BrownfieldDevelopment
Operations
Reso
urce
Sta
ge
Resources Organisational Objectives Global Supply Risks for Resources
1 Capacity Constraints• Stimulus and investment soaking up capacity
2 Increased Logistics Costs• 6x increase, material impact of TCO
4 Single Source Reliance• Clusters of capability depend on the same infrastructure
5 ESG Risks• More complex, deeper supply chain – out of sight
6 Nationalism• Customer co-trade vs local development
7 Specialist Supply Skills • Sourcing and logistics capability to manage complex global
supply chains
12
International inbound supply chains: a maze – much detail, much risk
Client WarehousesDe-consolidation
BondedWarehouse
End User
Port/Airport
BondedWarehouse
International Freight
BondedWarehouse Port/AirportPort/Airport
Raw Materials
Packaging
Air & ocean;sourcing &
procurement
ComponentsSupplier /
Manufacturer ConsolidationQuality Management
Capital Equipment
Finished Product
Inbound Supply Chain Outbound Supply Chain
Supplier Mine Customer
Cost Reduction Diagnostics
Supply Country Selection
Market Studies
Spend Analysis
Price Benchmark
Supplier Shortlisting
Technical Evaluation
Negotiating &
Contracting
RFxPlant Audit
Sample Arrangement
Audits/CSR/ Modern Slavery
Buying Trips
Quality Management
3rd Party Mgmt.
Inspection Expediting
QA/QC Buy & SellExports / Imports
Consolidation / Deconsolidation
Inventory Mgmt.
Delivery / Distribution
Professional Resourcing
What needs to be managed
What needs to be done
Processing
Global Supply Markets
• China & Northeast Asia• India & South Asia• Thailand & South East Asia• South Africa & Africa• Turkey, Poland & Eastern
Europe• Mexico & Latin America
13
Aug-21*Aug
Baltic Dry Index and China & Shanghai Containerized Freight Index (y-o-y growth %, Jan 2020 – Aug 2021)
Note: SCFI is the weighted average index from Shanghai to the main ports all over the world; CCFI is based on their freight rate and volume of 12 routes around the world, reflecting changes in freight rate; The Baltic Dry Index consider 23 different shipping routes carrying coal, iron ore, grains and many other commodities and the index provides a benchmark for moving the major raw materials by sea. The Drewry Compostite World Container Index is a weighted freight rate assessment of eight major east-west trades such as Shanghai to Los Angeles andRotterdamSource: Drewry; Shanghai Shipping Exchange (SSE); Global Maritime Hub; Axis Group Analysis
Logistics has never been a bigger challenge in global supply chains and soaring sea freight costs reflects constrained shipping / container capacity
%
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug
Drewry’s composite World Container index
Shanghai-Los Angeles
Shanghai-Rotterdam
Drewry’s Composite World Container, Shanghai-Los Angeles and Shanghai-Rotterdam Index (USD, August 2019 – August 2021)
Freight rate (USD 40ft Containers)
0
100
200
300
400
500
600
Jan Mar May Jul Sep Nov Jan Mar May Jul
Shanghai Containerized Freight Index
China Containerized Freight Index
Baltic Exchange Dry Index
14
20
30
40
50
60
70
80
90
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019 2020 2021
Share of Vessels arriving on time (%, Jan 2018- Apr 2021)
Source: Sea Intelligence; ING; Axis Group Analysis
The share of vessels arriving on time at major ports around the world declined towards the end of 2020, further hitting lows of below 40% in early 2021
%
15
Agenda
Global Risk Landscape• Increased risk• Increased complexity• Increased cost• Management task
Trade & Supply Chain Shifts Competitive Dynamics
Impact on Global Procurement & Supply in
Resources Clusters & Categories
Integration
16
China has become the major trading partner for most of the world; however, new (& old) markets may challenge that as Risk/Cost views shift
1998
ChinaUSEqual
Who is the larger trading partner?
2021 Next horizon…
Different Risk/Cost views?
Offshoring to i.e China vs. reshoring to i.e. India?
Nearshoring (i.e. Mexico for
US)
Onshoring viable?
Buy vs make?
17
Rank
1990 1995 2000 2005 2010 2015 2020
Country USD bn Country Rank USD bnGlobal Export
Share %
2010‐20 CAGR %
2019‐2020 Growth %
1 USA 552 USA 583 USA 782 Germany 977 China 1,578 China 2,273 China 1 2,591 14.7 5.1 3.72 Germany 405 Germany 524 Germany 550 USA 901 USA 1,278 USA 1,502 USA 2 1,430 8.1 1.1 ‐133 Japan 320 Japan 443 Japan 479 China 762 Germany 1,268 Germany 1,329 Germany 3 1,383 7.9 0.9 ‐7.44 France 266 France 284 France 295 Japan 595 Japan 770 Japan 625 Japan 4 641 3.6 ‐1.8 ‐9.25 UK 252 UK 234 UK 295 France 434 France 512 South Korea 527 Netherlands 5 552 3.1 1.1 ‐4.36 Italy 216 Italy 230 Canada 277 UK 393 Netherlands 493 HK SAR 511 HK SAR 6 552 3.1 3.2 37 Netherlands 173 Canada 191 China 249 Italy 373 South Korea 466 France 494 South Korea 7 513 2.9 1 ‐5.48 Canada 149 Netherlands 178 Italy 240 Canada 361 Italy 447 UK 466 Italy 8 496 2.8 1 ‐7.89 Belgium 127 HK SAR 174 Netherlands 213 Netherlands 350 UK 422 Netherlands 465 France 9 489 2.8 ‐0.5 ‐12.110 Switzerland 109 Belgium 168 HK SAR 203 Belgium 336 Belgium 408 Italy 457 Mexico 10 418 2.4 3.4 ‐9.311 Russia 94 China 149 Belgium 188 HK SAR 292 HK SAR 401 Canada 409 UK 11 396 2.3 ‐0.5 ‐14.612 HK SAR 90 South Korea 125 South Korea 172 South Korea 284 Russia 397 Belgium 398 Canada 12 390 2.3 0.1 ‐12.613 Spain 84 Singapore 118 Mexico 166 Russia 241 Canada 387 Mexico 381 Singapore 13 375 2.1 0.3 ‐7.114 Sweden 73 Spain 90 Taiwan, China 148 Singapore 230 Singapore 353 Singapore 358 Taiwan, China 14 347 2.0 2.4 5.315 South Korea 71 Switzerland 82 Singapore 138 Mexico 214 Mexico 298 Russia 344 Russia 15 347 2.0 ‐1.3 ‐18.616 Singapore 64 Mexico 80 Spain 113 Spain 193 Taiwan, China 274 UAE 300 Switzerland 16 318 1.8 5 1.417 Austria 59 Sweden 77 Russia 103 Taiwan, China 189 Saudi Arabia 251 Switzerland 292 Spain 17 312 1.8 2.3 ‐7.518 Denmark 50 Malaysia 74 Malaysia 98 Saudi Arabia 180 Spain 246 Taiwan, China 280 UAE 18 306 1.8 4.4 ‐21.319 China 49 Austria 58 Sweden 87 Malaysia 142 India 220 Spain 277 Belgium 19 298 1.7 0.8 ‐4.220 Mexico 49 Thailand 56 Switzerland 80 Switzerland 131 Australia 212 India 264 Vietnam 20 283 1.6 14.6 6.821 Saudi Arabia 47 Australia 53 Saudi Arabia 77 Sweden 130 Brazil 202 Thailand 214 India 21 275 1.6 2.2 ‐14.922 Norway 47 Saudi Arabia 49 Ireland 76 Brazil 119 Malaysia 199 Saudi Arabia 204 Poland 22 254 1.4 4.9 0.823 Australia 47 Denmark 49 Thailand 69 Austria 118 UAE 198 Malaysia 200 Australia 23 245 1.4 1.5 ‐824 Brazil 38 Brazil 47 Australia 64 UAE 115 Switzerland 196 Poland 194 Malaysia 24 234 1.3 1.6 ‐1.725 Malaysia 33 Indonesia 45 Austria 64 Thailand 110 Thailand 195 Brazil 191 Thailand 25 229 1.3 1.6 ‐1.926 Finland 31 Ireland 44 Indonesia 62 Ireland 110 Sweden 158 Australia 188 Brazil 26 209 1.2 0.4 ‐5.527 Thailand 29 Norway 42 Norway 60 Australia 106 Indonesia 158 Vietnam 162 Czechia 27 192 1.1 3.8 ‐3.728 Indonesia 29 Finland 40 Brazil 55 Norway 104 Poland 157 Czechia 157 Ireland 28 184 1.0 4.3 7.829 South Africa 27 India 32 Denmark 49 India 100 Austria 145 Indonesia 150 Saudi Arabia 29 177 1.0 ‐3.4 ‐29.930 Ireland 27 Portugal 23 Finland 45 Poland 89 Czechia 132 Austria 145 Turkey 30 170 1.0 4.1 ‐6
Top 30 14,597 85.6 1.9 ‐6.2Other Countries1 1,652 14.4 ‐5Global Total1 16,249 100 0.9
1 Calculated based on latest available dataSource: UN Comtrade; World’s Top Exports; Statista; World Bank; Axis Group Analysis
China, several high-income economies and new challengers from developing countries are the winners in global exports; there are also several losers
3 – 4.5%Above 4.5%
0 – 2.9%Below 0%
CAGR %Top 30 entry (after 1990) Last record in top 30Peak rank
Global top 30 exporters (1990-2020); 2010-20 CAGR; 2019 global share; 2019-2020 export growth
AsiaLatamEastern EuropeHigh Income
Positive growth
Negative growth
Countries that rank highest in 20202020 rank higher (or same) as in 1990 but not peakCountries with lower rank in 2020 than in 1990
Key Highlights: USA, Germany, Japan, Netherlands, France and Italy remained in the top 10. Canada, Belgium and Switzerland left top 10.
China, South Korea, HK SAR (China) and Mexico entered top 10. Vietnam, Poland, Czechia and Turkey entered as new top 30 challengers. Various EU countries and South Africa left top 30
18
World’s Major Exporters (2020)
Source: IMF; UN Comtrade; Axis Group Analysis
China was by far the largest global exporter in 2020, with total exports of USD 2.59tn, making up 18% of its GDP
0
500
1 000
1 500
2 000
2 500
3 000
3 500
0 20 40 60 80 100 120 140 160
Global Exports (USD bn)
2000 6,4522010 15,3022020 17,582CAGR (2010-2020) 1.4%
South Korea
SingaporeJapan
IndiaVietnam
Taiwan (China)
AustraliaThailand
Malaysia
HK SAR has a GDP of USD 52bn, whose exports are 158% of its GDP size
Singapore is a major shipping hub in SEA region. Its imports and exports are both very large relative to its GDP
China
Exports (USD bn)
Export/GDP (%)
Bubble Size: GDP = USD 2,000bn
Developed MarketsDeveloping MarketsEmerging MarketsChina
Hong Kong SAR
Germany
USA
UK
Brazil
FranceRussia
Italy
Canada
Spain
TurkeySaudi Arabia
MexicoSwitzerland
Poland Ireland
Netherlands
Czechia
UAE
19
China Mexico Vietnam India Poland Malaysia Thailand Brazil Czechia Turkey
2,590 418 283 275 254 234 234 209 192 170
5.1 3.4 14.6 2.3 4.9 1.6 1.6 -0.2 3.8 4.1
30.8 20.4 40.4 10.3 10.1 51.8 23.6 13.3 20.8 3
1 Telephones Cars Telephones Refined Petroleum Vehicle Parts Integrated Circuits Computers Soybeans Cars Cars
2 Computers Computers Integrated Circuits Packaged Medicaments Computers Refined Petroleum Cars Iron Ore Computers Vehicle Parts
3 Integrated Circuits Vehicle Parts Textiles Diamonds Seats Semiconductor Devices Vehicle Parts Crude Petroleum Vehicle Parts Vehicles for the
Transport of Goods
4 Textiles Vehicles for the Transport of Goods Leather Footwear Jewellery Furniture Palm Oil Gold Sugar Telephones Refined Petroleum
5 Light Fixtures Crude Petroleum Oil Furniture Cars Electric
AccumulatorsCrude Petroleum Oil Integrated Circuits Frozen Bovine
Carcasses Insulated Wires Jewellery
6 Semiconductor Device
Monitors & Projectors Insulated Wires Vehicle Parts Cars Computers Vehicles for the
Transport of Goods Soybean Meal Toys Gold
7 Toys Telephones Computers Telephones Cigars Blank Audio Media Refined Petroleum CornElectrical Protection Equipment
Raw Iron Bars
8 Vehicle Parts Insulated Wires Knit Sweaters Aluminium Vehicles for the Transport of Goods Rubber Apparel Pneumatic Tyres Sulfate Chemical
Wood Pulp Seats Non-Knit Women’s Suits
9 Monitors & Projectors
Medical Instruments
Semiconductor Devices Crustaceans Insulated Wires Telephones Air Conditioners Poultry Meat Packaged
Medicaments Knit T-shirts
10 Machine Parts Tractors Industrial Printers Iron Ore Iron/Steel Structures Oscilloscopes Rice Refined Petroleum Monitors &
Projectors Carpets
Note: 1. As defined by the World Bank. 2. Top 10 Products 2019 data used for Vietnam, Malaysia and ThailandSource: UN Comtrade; World Bank; Axis Group Analysis
Dynamic emerging markets are among the top 30 global exporters, with high-technology exports entrenched in their portfolios
Total Exports (USD bn, 2020)
Top 10 Export Products2
Global Export Rank (2020) 1 10 20 21 22 25 26 27 30
Product Category Key
High-technology Manufactured
Vehicles, Parts & Machines
Other Manufactured
Agriculture
Minerals & Resources
CAGR (%, 2010-2020)
24
High-technology Exports1 (% of Manufactured, 2019)
20
Agenda
Trade & Supply Chain Shifts• Change of the order• China leads• Strong high-cost incumbents• New challengers; Many losers
Competitive Dynamics
Impact on Global Procurement & Supply in
Resources Clusters & Categories
Integration
Global Risk Landscape• Increased risk• Increased complexity• Increased cost• Management task
21
Simplified Framework of Assessment: Drivers of China’s Manufacturing Competitiveness
Note: It is important to recognize it is not just about absolute position of i.e. China but we rather need to assess relative global competitiveness of all potential supply marketsSource: Axis Group Analysis
Various drivers support or undermine China & other global supply markets’ competitiveness. Underlying these drivers are a myriad of factors to understand
Geopolitics & Geostrategy
China’sManufacturing
Competitiveness
Inputs Integrated Supply Base
Macro DriversEmerging
Alternatives
Rising Wages
Low Total Input Cost
Increased Productivity
Manufacturing Clusters
Strong Infrastructure
Policy Support
OvercapacityStronger RMB (1 year)
Aging Population
Emerging LCCs / BCCs
Reshoring, Nearshoring &
Onshoring
XX
Category Clusters that Win or Lose?
Supporting Factors XX Undermining Factors
Key Advantages Persist or Not?
Weaker RMB (2014-2020)
22
61
294 307
199
39
118
17
283
23
160
51 78 62106
39
9411
1618
21
11
11
7
15
9
10
7
1513
5
11
919
23
47
39
31
18
23
27
16
29
19
2323
21
14
169
10
16
29
10
3
3
26
6
16
10
1016
6
10
3
0
100
200
300
400
China USA Germany Japan Mexico Russia India Australia Vietnam Poland Malaysia Thailand Brazil Turkey Indonesia SouthAfrica
Direct Labour Costs Warehouse Space Electricity Natural Gas
*Note: To facilitate a cost input comparison across economies, China’s total cost (i.e.. sum of labour, warehouse space, electricity and natural gas) is assigned a value of 100 within the index, and the costs in other economies are scaled accordingly
Source: Various; BCG, Axis Group Analysis
China remains very competitive relative to developed economies but other developing countries present lower cost alternatives in global context
Consists of total salaries of Blue-collar workers = 100; Engineers =
10; Operations Managers = 5
China’s total input cost (labour, warehouse space, electricity and natural gas) in 2020 is assigned a value of 100
Area = 6000 sq. m
1022 kWh per sq. m annually
1690 kWh per sq. m annually
Mexico’s labourcost is now 20% lower than China’s
India and Vietnam have some of the lowest manufacturing input
costs in the world
Input Cost Comparison* Across Selected Major Global Manufacturers (2020)
23
Product Manufacturing Complexity Spectrum – High Tech, High Capital Complexity (E.g. – Robotics)
Source: Axis Group Analysis
For high-tech products, China has largely caught up with developed markets; few developing countries compete
Low High
Reflects the expected relative competitiveness of manufacturing the product during the time period
China Significant growth in capabilities expected in
the LTLimited but growing capabilities
Maintain position in high tech manufacturingGlobal leaders in high tech manufacturing
Emerging player in high techLimited capabilities
Limited potential upsideLimited/no capabilities
Very limited capabilities Potential to emerge as high-tech hubs
Limited potential upside
Low High Low HighLong-termMedium-termShort-term
Limited/no capabilities
India
Others (Mexico, Turkey,
Poland)
Other Asian Economies (Indonesia/Vietnam/
Bangladesh)
Africa
US/Germany/Japan
24Source: Axis Group Analysis
For medium-tech products, China, India and several developing countries are becoming manufacturing powerhouses; expect significant shift
Product Manufacturing Complexity Spectrum – Med. Tech, Med. Capital Complexity (E.g. – Machinery)
Low High
Reflects the expected relative competitiveness of manufacturing the product during the time period
Emerges as a global manufacturing powerhouse
Significant machinery manufacturing capabilities
Still attractive but decline in tech. advantageHigh attractiveness due to technology
Major machinery manufacturer in the LTKey emerging machinery manufacturer
Key emerging machinery manufacturersLimited scope in the ST
Emerging machinery manufacturers Significant machinery manufacturers in the LT
Attractive for selective machinery categories
Low High Low HighLong-termMedium-termShort-term
Very limited scope in the ST
China
India
Others (Mexico, Turkey,
Poland)
Other Asian Economies (Indonesia/Vietnam/
Bangladesh)
Africa
US/Germany/Japan
25Source: Axis Group Analysis
For low-tech products, developing and emerging economies are challenging previous leaders; significant shift underway
Product Manufacturing Complexity Spectrum – Low Tech, Low Capital Complexity (E.g. – Textiles)
Low High
Reflects the expected relative competitiveness of manufacturing the product during the time period
Phasing out of low-value add Declining attractiveness but remain strong
High costs to persistLimited scope due to high costs
Gain in the MT but decline in the LTKey emerging low-cost destination
Global leaders in low-value manufacturing Key emerging low-cost destination
Declining attractiveness but remain strong Phasing out of low-value add
Key low-cost destination
Low High Low HighLong-termMedium-termShort-term
Emerging low cost destination
China
India
Others (Mexico, Turkey,
Poland)
Other Asian Economies (Indonesia/Vietnam/
Bangladesh)
Africa
US/Germany/Japan
26Source: Various; Axis Group Analysis
Other Asian LCCs such as ASEAN and India have emerged as tangible alternatives to China for some categories and products; new clusters are forming
China• Increasing R&D spending• Growing focus on investment to
consumption and manufacturing to services
• Supply of primary materials• Integrated supplier base• Strong physical infrastructure
• Rising labour costs: Increased costs of doing business
• Slowing economic growth• Industrial overcapacity• Regulatory inefficiencies• Complex reform agenda
India• Rich talent pool, lower cost unskilled labour• Rapid economic growth• Increasing infrastructure focus• Govt. support• Atmanirbhar Bharat – Self Reliant India• Sweeping reforms such as GST, DBT, etc showing
visible result in ease of doing business ranking (63rd)• Accelerated technology adaptation due to Covid 19• English language skill
• Demographic diversities – languages, culture ..• Poor infrastructure• Issues with bureaucracy and red tape• Need for labour reform, legal reform• Trade deficit• Very few Free Trade Agreements
Asia Facts 2050• 50% of world GDP• 54% of world population• GDP predominantly driven by services
sector• China is the world’s largest economy
ASEAN• Low manufacturing cost• Location (close to both India and
China)• Launch of AEC• Demographic dividend
• National vs. regional interests• Lack of supply chain integration• Regulatory/governance issues• Lack of infrastructure
Major manufacturers of certain product categories
Emerging player in global high-tech manufacturing
Losing competitive edge in low-end manufacturing
Governance and infrastructure need to be upgraded
The Indian govt. launched the ‘Make in India’ initiative in 2014 to develop India as a manufacturing hub by developing local manufacturing and attracting further FDI and technological investment. Start-up India, Digital India and Skilled India further underpin prospects
Poised to become a global manufacturing powerhouse
Fundamental economic issues still curtail growth
27Source: Various; Axis Group Analysis
Offshoring, reshoring, nearshoring and onshoring are complex choices. China vs India (or i.e. Vietnam) or US/Mexico make interesting case studies
Onshoring (USA)
• Low labour cost• Access to other markets in the
Americas through FTAs• Low energy costs
• Largely unskilled workforce• Relative lack of supply chain
integration• Lack of supplier base
3) Nearshoring:• Factors such as more favourable logistics and
reduced supply chain complexity are driving US manufacturers across all industries to seek out alternative LCCs such as Mexico
4) Onshoring:• The American ‘Manufacturing Renaissance’ has been a
critical driver of the reshoring trend• As the labour cost gap has closed, quality considerations
have become more important• Reduction in global supply chain complexity and the need
for ‘speed to market’ favouring the local market• Relocation costs do remain a critical issue
• Regained competitiveness in recent years
• Sustained technological advantage/focus
• Strong innovation focus• High productivity• Strong policy support
• High labour costs• Smaller range of manufacturing
capabilities (buyers for high-end goods only)
• High corporate tax rates• Growing FDI in overseas R&D
Nearshoring (to Mexico)
• Unskilled labour• Poor Infrastructure• Red-tapism
Reshoring (India)• Low labour cost• Strong government support
towards foreign investment• Improved ease of doing
business
• Increasing R&D spending• Low cost of manufacturing• Supply of primary goods • High domestic consumption
• Increasing cost of labour• Slowing economic growth
Offshoring (China)
2) Reshoring:• Lower cost of production, labour and a rising cost of
labour in China, make India the next destination for American businesses to shift their bases to
• A strong push from the Government towards foreign businesses to manufacture in India as well as efforts to upskill the labour force are other factors making India an important business destination
1) Offshoring:• China has world-class ports and a continuously improving
infrastructure• High production capacity, highly trained labour force and better
opportunities to diversify and expand make it a favourable manufacturing destination
28
Best practice leaders across industries incorporate EMs, such as China, India, the rest of Asia, Eastern Europe, and potentially Latin America
Retail• China, Bangladesh, India,
Pakistan, Cambodia, Myanmar, Vietnam, Turkey, Morocco and Romania
• Mainly sourcing from China and SE Asia
• New markets matter
Upshot• China still the main sourcing destination, several companies have
procurement offices in China, most often in Shanghai• Companies are adopting a portfolio approach complementing their existing
Chinese supplier base • China transitioning into a high-tech sourcing destination with increased
quality and supplier capabilities as well as high local demand but increased cost
• New markets matter – but not everyone can open multiple global sourcinghubs
• Local and regional proc. increasingly important; creates tension with EMspend objectives
Petrochemical
EPC/M
• China is the main sourcing destination
• Other important destinations include India, Mexico, Russia, Vietnam and South Korea
• New markets matter
• China is the main sourcing destination
• Other important destinations include India, Russia, Vietnam, Thailand, Philippines, South Korea and Mexico
• WP sources from at least 32 countries: China, Europe, Mexico, Canada, India, Israel and Indonesia
• New markets matter
Cement, Auto, Pharma, Manufacturing• China is the main sourcing
destination• Other major sourcing
destinations include India and South Korea among others
• New markets matter
Mining• China is the main sourcing
destination• Other important destinations
include India and Southeast Asia
• New markets matter
Rank & Location
1. China
2. Thailand
3. India
4. Other Asia
5. Eastern Europe
6. Latin America
Rank & Location
1. China
2. India
3. Thailand
4. Other Asia
Rank & Location
1. China (Pharma: India #1)
2. India (Pharma: China #2)
3. Thailand & Vietnam
4. Other Asia
5. Eastern Europe
6. Latin America
Rank & Location
1. China
2. India
3. Vietnam
4. Other Asia
5. Eastern Europe
6. Latin America
Rank & Location
1. China
2. India
3. Thailand
4. Other Asia
5. Eastern Europe
6. Latin America
Note: Selected industries consist of Cement, Auto, Pharma, Manufacturing, Retail & ApparelSource: Various; Axis Group Analysis
29
EU-27
Japan
China
US
India
Canada & Mexico
Central & South America
Asia-Pacific
Africa-Middle East
Developed countries are net exporters of mining equipment but developing countries are decreasing their deficit
-15 -10 -5 0 5 10 15 20
2011
2012
2013
2014
2015
2016
2017
Net Exports of Mining Equipment by Select Regions and Countries (USD bn, 2011-2017)
Source: European Commission; Axis Group Analysis
30
0 20 40 60 80 100 120Telephone
Data processing machinesIntegrated circuits
Other cloth articlesLight fixtures
Semiconductor DevicesModels and stuffed animals
Vehicle partsMonitors and projectors
Office machine partsFurniture
Electrical TransformersSeats
Other plastic productsRefined petroleum
UnspecifiedElectric heatersInsulated Wire
Liquid crystal devicesTrunks and casesElectric batteries
Microphones and headphonesAir pumps
Non-Knit women's suitsOther electrical machinery
Elec. Protection Equip.Rubber footwearAir conditioners
Knit sweatersValves
Sports equipmentPassenger and cargo ships
Circuits; printedBroadcasting accessories
Garments not knittedIndustrial printers
Pneumatic tyresStructures of iron or steel
Synthetic filament yarnRefrigerators
Video and card gamesMotor-working tools
Plastic ClosuresKnit women's suits
Flat-rolled IronPlastic housewareMetal mountings
Electric motorsCentrifugesComputers
FuelsTransportationAgriculture & ForestryChemicals & PlasticsMetals & MineralsTextiles, Hides & SkinsOthersMachinery & ElectronicsPercentage of total exports
0
500
1 000
1 500
2 000
2 500
4 6 8 10Articles of iron or steel
Textile footwearDomestic appliances
CarsIron houseware
Heterocyclic compoundsMattresses
Electrical control boardsElectric filament
Medical instrumentsPumps
Bathroom ceramicsMotorcycles
Machinery having individual functionsEntertainment articles
JewelleryOther knitted fabricsNon-Knit men's suits
Machinery partsHouse linens
Insecticides (retail)Raw plastic sheeting
VehiclesLeather footwear
ContainersMassage appliances
Floor coverings of plasticsTransmissionsIron fasteners
Vacuum cleanersKnit t-shirts
Electrical capacitorsWoven fabrics of cotton
KitchenwareAlloy steel flat-rolled products
Aluminium plates, sheets and stripPaper-based containers
CoatsOther heating machinery
Knit women's undergarmentsOther measuring instruments
Engine partsPolyacetals
Knit socks and hosieryNon-woven textiles
Rubberworking machineryLight-vessels
Building stoneElectric motor parts
Brooms
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100
Source: UN Comtrade; Axis Group Analysis
China’s exports are dominated by machinery & electronics products, which constituted 44% of its total exports in 2020
223170
X%
USD bn
44
12
1
10
14
1044
China’s top 100 global exports (USD bn, 2020)
Export Profile
China’s total export value for 2020:USD 2,591bn
Top 100 Shown:USD 1,815bn;
70% of total exports
Top 50 Shown: USD 1,458bn; 56%
of total exports
X%
31
Towards a ‘Risk vs Cost Scenario’…
Source: Axis Group Analysis
How to measure Risk & Cost NOW? How about in the FUTURE?
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
2
0 0,2 0,4 0,6 0,8 1 1,2 1,4 1,6 1,8 2
Risk
Cos
t
China India
2019
2021 ‘Prediction is very difficult, especially if it is about the future’
- Niels Bohr
2030a2030b
Poland Vietnam Mexico
2010
2010
2010
2030
?
?
??
2010
2030
2010
2030
20302030
2010
2021
2019 2021
2019
2021
20192021
2019
32
Rank
1990 1995 2000 2005 2010 2015 2020
Country USD bn Country USD bn Country USD bn Country USD bn Country USD bn Country USD bn Country Rank USD bn2020 Aus
Import Share %
2010‐20 CAGR %
1 USA 9 USA 12 USA 14 USA 17 China 38 China 46 China 1 61.1 28.8 4.92 Japan 7.2 Japan 8.7 Japan 9.4 China 17 USA 23 USA 22 USA 2 25.1 11.9 1.13 UK 2.7 Germany 3.7 China 5.6 Japan 14 Japan 18 Japan 15 Japan 3 12.7 6 ‐3.14 Germany 2.5 UK 3.4 UK 4.2 Germany 6.9 Thailand 10 South Korea 11 Thailand 4 10.2 4.8 ‐0.35 New Zealand 1.7 China 2.8 Germany 3.6 Singapore 6.9 Singapore 10 Thailand 10 Germany 5 9.8 4.6 ‐0.26 Taiwan, China 1.4 New Zealand 2.6 South Korea 2.9 UK 4.9 Germany 10 Germany 9.2 Malaysia 6 6.9 3.3 ‐2.17 Italy 1.2 Taiwan, China 1.9 New Zealand 2.7 Malaysia 4.8 Malaysia 8.5 Malaysia 7.3 South Korea 7 6.5 3.1 ‐0.58 China 0.89 Singapore 1.8 Malaysia 2.6 New Zealand 4.3 South Korea 6.9 Singapore 6.9 Singapore 8 5.7 2.7 ‐5.69 France 0.87 South Korea 1.6 Singapore 2.2 South Korea 4.2 New Zealand 6.9 New Zealand 5.7 UK 9 5 2.4 ‐0.910 South Korea 0.87 Italy 1.6 Taiwan, China 2.1 France 3.9 UK 5.5 UK 5.4 New Zealand 10 5 2.4 ‐3.111 Singapore 0.75 France 1.4 Italy 1.9 Thailand 3.9 Indonesia 5 Italy 4.3 Italy 11 4.9 2.3 0.412 Canada 0.65 Sweden 1.1 Thailand 1.7 Italy 3.5 Italy 4.7 Indonesia 4.2 Vietnam 12 4.5 2.1 4.213 Sweden 0.61 Malaysia 1.1 Indonesia 1.7 Indonesia 2.9 France 3.6 India 3.6 France 13 4.2 2 1.414 HK SAR 0.5 Canada 1.1 France 1.4 Taiwan, China 2.9 Taiwan, China 3.5 Taiwan, China 3.6 India 14 3.9 1.8 7.415 Malaysia 0.49 Indonesia 1 Vietnam 1.3 Vietnam 2.7 Vietnam 2.9 Vietnam 3.4 Taiwan, China 15 3.6 1.7 0.116 Saudi Arabia 0.49 PNG 0.86 Canada 1.2 Sweden 1.6 PNG 2.8 France 3.3 Indonesia 16 3.4 1.6 ‐417 Switzerland 0.49 Switzerland 0.75 Sweden 0.98 PNG 1.5 Ireland 2.2 Switzerland 2.4 Switzerland 17 2.4 1.2 1.718 Netherlands 0.43 HK SAR 0.75 Saudi Arabia 0.94 Canada 1.5 UAE 2.1 PNG 2.2 PNG 18 2.4 1.1 ‐1.519 Indonesia 0.39 Thailand 0.72 PNG 0.85 Ireland 1.5 Sweden 2 UAE 1.9 Mexico 19 2.1 1 4.520 UAE 0.37 Saudi Arabia 0.58 HK SAR 0.78 South Africa 1.2 Switzerland 2 Mexico 1.8 Netherlands 20 2 0.9 4.621 Thailand 0.36 Belgium 0.56 Switzerland 0.75 Switzerland 1.2 India 2 Canada 1.7 Canada 21 1.8 0.8 0.222 Belgium 0.34 Finland 0.55 Ireland 0.6 Saudi Arabia 1.1 Canada 1.7 Netherlands 1.6 Spain 22 1.5 0.7 ‐0.523 PNG 0.29 Netherlands 0.5 UAE 0.59 Belgium 1.1 Spain 1.6 Ireland 1.6 UAE 23 1.5 0.7 ‐3.524 Finland 0.23 UAE 0.41 Netherlands 0.59 HK SAR 1.1 Belgium 1.5 Spain 1.5 Ireland 24 1.4 0.7 ‐4.225 Brazil 0.23 India 0.41 South Africa 0.53 Spain 1 Mexico 1.4 Sweden 1.5 Belgium 25 1.4 0.6 ‐0.926 India 0.22 Spain 0.37 Belgium 0.48 Netherlands 1 Netherlands 1.3 Belgium 1.2 Sweden 26 1.3 0.6 ‐4.427 Denmark 0.19 Brazil 0.35 Finland 0.48 India 1 HK SAR 1.1 HK SAR 0.9 Austria 27 1.2 0.5 2.828 Austria 0.16 Ireland 0.35 India 0.45 Austria 0.78 South Africa 1.1 South Africa 0.89 Poland 28 1.1 0.5 13.129 Spain 0.16 Denmark 0.25 Spain 0.41 Denmark 0.75 Brunei 1 Denmark 0.85 Finland 29 1 0.5 3.530 Ireland 0.13 Austria 0.22 Brazil 0.4 Finland 0.69 Denmark 1 Austria 0.84 Brunei 30 1 0.5 ‐0.1
Top 30 194.6 91.8 0.48Other Countries 17.4 8.2 0.68Global Total 212 100 0.5
Australia’s import composition reflects the dynamics between traditional export leaders and new challengersAustralia’s top 30 import partners (1990-2020); 2010-20 CAGR (%)
Countries that rank highest in 20202020 rank higher (or same) as in 1990 but not peakCountries with lower rank in 2020 than in 1990
3 – 4.5%Above 4.5%
0 – 2.9%Below 0%
CAGR %Top 30 entry (after 1990) Last record in top 30Peak rank
Asia & APACLatamEastern EuropeHigh Income
Key
Source: UN Comtrade; World Bank; Axis Group Analysis
Highlights: 6 of Australia’s top 10 import partners are in Asia, namely China, Japan, Thailand, Malaysia, South Korea & Singapore. Vietnam, Mexico & Poland have also increased their share of Australia’s imports
33
Composition of Australia’s Total Imports by Sector (USD bn, 2020)
Australia’s top sector for imports in 2020 was in Machinery & Electronics, with China being its top import partner in this category
0 50 100 150 200 250
0 10 20 30 40 50 60 70 80 90 100
China
USA
Japan
Thailand
Germany
Malaysia
South Korea
Singapore
UK
New Zealand
Machinery and Electronics Metals and Minerals Fuels Chemicals and PlasticsAgriculture and Forestry Transportation Textiles, Hides and Skins Others
OthersTextiles, Hides and SkinsTransportationAgriculture and ForestryChemicals and PlasticsFuelsMetals and MineralsMachinery and Electronics
USD bn
Sectorial Composition of Australia’s Total Imports from Top 10 Countries of Origin (%, 2020)
Source: UN Comtrade; Axis Group Analysis
61.1
25.1
12.7
10.2
9.8
6.9
6.5
5.7
5.0
5.0
34
Australia’s top 100 global imports (USD bn, 2020)
Source: UN Comtrade; Axis Group Analysis
Australia’s manufacturing imports i.e. machinery & electronics, transportation, textiles & chemicals will see further dynamic changes in ‘source countries’
0 3 6 9
Motor vehiclesRefined petroleum
Telephone setsData processing machines
GoldVehicles for transport of goods
Packaged medicamentsCrude petroleum oil
UnspecifiedHuman or animal blood
Medical instrumentsPneumatic tyres
Vehicle partsFurniture
Monitors and projectorsOther cloth articles
Planes/Helicopters/SpacecraftsEarthmoving machines
Machinery partsFood preparations
SeatsOrthopaedic appliancesTaps, cocks and valvesElectrical Transformers
CentrifugesSemiconductor DevicesOther plastic products
Models and stuffed animalsRefrigerators
Insulated WireInsecticides (retail)
Trunks and casesAir conditioners
Microphones and headphonesPlastic ClosuresElectric heaters
Non-Knit women's suitsGas turbines
Structures of iron or steelIndiv. Function machinery
Light fixturesTractors
JewelleryPumps
FertilizersElectric motors
Beauty productsAir pumps
Electric batteriesTransmission shafts
1312
0
50
100
150
200
250
0,0 0,2 0,4 0,6 0,8 1,0
Baked goodsSports equipment
Broadcasting accessoriesHarvesting machinery
Articles of iron or steelIndustrial printersLifting machinery
Motor-working toolsGarments not knitted or crocheted
Elec. Protection Equip.Aircraft parts
SilverVideo and card games
Leather footwearMachinery for processing minerals
Knit t-shirtsKnit sweaters
Raw plastic sheetingOther heating machinery
WineEthyl alcohol (volume less than 80%)
Electrical control boardsChemical analysis instruments
Trailers and semi-trailersHouse linens
Laboratory reagentsMixed mineral or chemical fertilisers
Petroleum cokeMetal mountings
Iron fastenersMattresses
Other enginesFork-lifts
Non-Knit men's suitsCheese and curd
Preparations for animal feedingOffice machine parts
Liquid dispensing machinesPlastic housewareBlank audio media
Respiration apparatusSwine meat
Textile footwearWashing and bottling machines
CoffeeHormones
CigarsAluminium plates, sheets and strip
MotorcyclesOther electrical machinery
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100
Australia’s total import value for 2020: USD 212bn
Top 100 Shown:USD 151bn; 71% of total imports
Textiles, Hides & SkinsMetals & MineralsAgriculture & ForestryOthersChemicals & PlasticsFuelsTransportationMachinery & ElectronicsPercentage of total imports
USD bn
27
14
8
14
11
6
10
10
X%
Top 50 Shown:USD 121bn; 57% of total exports
35Source: Western Australia Government; Axis Group Analysis
Western Australia import profile reflect same characteristics – machinery from China in the lead
$0b
$10b
$20b
$30b
$40b
$50b
2000-01 2005-06 2010-11 2015-16 2020-21
Total Machinery & transport equipment Other(a)
$1.0b
$1.0b
$1.0b
$1.6b
$1.6b
$1.6b
$2.0b
$2.4b
$4.4b
$6.4b
$0b $2b $4b $6b $8b
Spain
Indonesia
Germany
Malaysia
United Kingdom
Singapore
Thailand
Japan
United States
China (Mainland)
2019-202020-21
• Western Australia accounted for 11% of Australia’s goods imports in 2020-21.• The value of Western Australia’s goods imports rose 1.4% to $34.4 billion in
2020-21, with: o Machinery and transport equipment imports rising 23.1% to $12.3 billion.o Other imports falling 7.6% to $22.1 billion, due to decreases in gold,
mineral fuels and chemicals imports.• Western Australia’s real goods imports rose 1.3% in the 2019-20 financial year.
The 2020-21 WA Government Pre-Election Financial Projections Statement forecasted Western Australia’s real goods imports would grow 0.25% in 2020 21 and 1.0% in 2021-22.
• In 2020-21, Western Australia’s largest market for goods imports was China ($6.4 billion or 19%), followed by the United States ($4.4 billion or 13%) and Japan ($2.4 billion or 7%).
• The largest increases in Western Australia’s goods imports in 2020-21 were from Spain (up $786 million or 452%, mainly due to higher imports of ships, boats and floating structures), United Kingdom (up $744 million or 88.3%, mainly due to higher silver, platinum and gold imports) and China (up $563 million or 9.6%, mainly due to higher gold imports).
• The largest decreases in Western Australia’s goods imports in 2020-21 were from Papua New Guinea (down $1.5 billion or 94.9%, mainly due to lower gold imports), Thailand (down $1.2 billion or 38.8%, mainly due to lower gold imports) and United States (down $482 million or 9.9%, mainly due to lower petroleum imports).
Western Australia’s Total Imports (AUD, 2000 – Aug 2021)
Western Australia’s Major Import Markets (AUD, Jul 2019 – Aug 2021)
36
Agenda
Competitive Dynamics• Measure Risk & Cost real-time• New options, complex choices• Opportunities & threats are
intertwined; also for Australia
Impact on Global Procurement & Supply in
Resources Clusters & Categories
Integration
Trade & Supply Chain Shifts• Change of the order• China leads• Strong high-cost incumbents• New challengers & losers
Global Risk Landscape• Increased risk• Increased complexity• Increased cost• Management task
37
Classification of the total spend of typical Mining Companies
Spend Tree of Typical Mining Companies (High Level)
Total Spend
Direct Spend
Construction
Site, Mine and Facilities
Construction Services
Mining Ops
Mining Equipment
MRO
Consumables
Others
Materials Handling
Material Handling
Equipment
Others
Other Material
Processing
Processing Equipment
Consumables
Bulk Chemicals
Others
Other Material
Electrical Instrumentation
Electrical Equipment
Consumables
Others
Mining Commodities
Explosives
Explosives Accessories
Others
Direct Services
Mining Services
Indirect Spend
Facilities
Office Facilities
Utilities
Facilities Management
IT
IT Material
Logistics
Transport
Travel
Indirect Services
Professional Services
Financial Services
HR Services
CAPEX
OPEX
Services
38
Elements of expenditure profile potentially addressable via BCC sourcing (1)
Source: Axis Group Analysis
Direct Spend (1/2)
Construction
Site, Mine and Facilities
Modular house
Capex
Steel structure
Capex
Pipe
Capex
Construction materials
Capex
Scissor Lift
Capex
Construction Services
EPCM
Services
Specialist professional
Services
Quantity Surveyor Services
Services
Mining Ops
Mining Equipment
HME
Electric rope shovel
Capex
Drilling machine
Capex
Bulldozer
Capex
Grader
Capex
Wheel loader
Capex
Dragline
Capex
Proximity detect. system
(PDS)Capex
Truck
Capex
UME
Underground drilling
Capex
Load haul dump (LHD)
Capex
Cable passenger carrier
Capex
Shuttle car
Capex
Underground roof support
Capex
Armored face conveyor (AFC)
Capex
Shearer
Capex
Road header
Capex
Blower
Capex
MRO
Engine
Opex
Motor
Opex
Lubricant pump
Opex
Trail cable
Opex
Cylinder
Opex
Undercarriage
Opex
Base plate (dragline)
Opex
Handrail
Opex
Cabin
Opex
Mechanical components
Opex
Bearing / Bushing /
WheelOpex
Piping
Opex
Mil liner
Opex
Consumables
GET
Opex
Liner
Opex
Truck cylinder
Opex
Filter element
Opex
Hose (air, oil)
Opex
Coal pick
Opex
Truck tray
Opex
Concrete sleeper
Opex
Roof bolt
Opex
Wire mesh
Opex
Jumbolter
Opex
Wire rope
Opex
OTR & general tyre
Opex
Drill bit
Opex
Steel rod
Opex
Others
Tyre management
Services
rental or leasing
Services
Equipment rental or leasing
Services
MRO services
Services
Technical support
Services
Climate control
Services
Materials Handling
Equipment
EquipmentSilo
Capex
Compressor / Turbine / Blowers
Capex
Stacker reclaimer
Capex
Feeder / Screens / Cyclone
Capex
Overhead crane
Capex
Mobile crane
Capex
Forklift
Capex
Loadout station
Capex
Wagon tippler
Capex
EquipmentBelt conveyor
Capex
Slurry pump
Capex
Bucket elevator
Capex
Hoist
Capex
Screw conveyor
Capex
Rolling stock -underground
Capex
Railway track
Capex
Rail
Capex
Others
Conveyor belt
Capex
Conveyor idler
Capex
Pulley
Capex
Pump parts
Opex
Fluid handling consumables
Opex
Maintenance services
Services
Conveyor installations
Services
Cost Saving Opportunity Identification
Low impact – Not a priority in global sourcing
Not appropriate for global sourcing
BCC sourcing opportunity
Spend was categorised into BCC sourcing opportunities, low impact or not appropriate for global sourcing
Capex Capex Capex
Capex Services
Capex Capex
Capex Opex Opex Services Capex Capex
Bulk Handling Infrastructure
Capex
Snatch block
Opex
Scissor Lift
Capex
39
Elements of expenditure profile potentially addressable via BCC sourcing (2)
Source: Axis Group Analysis
Direct Spend (2/2)
Processing
Consumables
Grinding media -Forged
Grinding media -Casted
Opex
Grinding media - Rolled
Grinding media - Ceramic
Grinding rod
Smelting consumables
Graphite electrode
OpexOpex
Electro paste
Magnesium / Fesi
Oxygen lance
Additives
Opex
Aluminum powder
Refractory brick
Opex
PET coke
Opex
Anthracite
Collector bar
Bag filter
Opex
Lime
Opex
Bulk Chemicals
Glycine / Cyanide
Soda ash
Opex
Flocculants
Opex
Caustic soda
Opex
Flotation agent
Opex
Sodium hydro sulphate
Opex
Amberlite
Opex
Frothers
Opex
Sulfuric acid
Opex
Collector agent
Opex
Other chemicals
Opex
Others
Liners Steel / Non steel
Opex
Screen panel
Opex
Process water
Opex
Effluent treatment
Services
Sampling and testing
Services
Plant Technical & engineering
servicesServices
Material preparation
Services
Electrical Instrumentation
Electrical Equipment
Mine ventilation
Capex
Transformer H/L voltage
Capex
Switch gear
Capex
Diesel generator
Capex
Motor & gearbox
Capex
3D printer
Capex
Solar panel
Capex
Consumables and Others
Light bulbs
Opex
Electrical equip. parts
Opex
Electrical cable
Opex
Other control & instr. parts
Opex
Electrical, control instr.
Services
Mining Commodities
Explosives
ANFO
Opex
Packaged explosives
Opex
Bulk emulsion
Opex
Water / Dry gel explosives
Opex
Explosives Accessories
Electric / Non Elec. detonator
Opex
Electronic detonator
Opex
Seismic detonator
Opex
Initiating software
Opex
Shock tube
Opex
Booster
Opex
Others
Industrial gas
Opex
Lubricant
Opex
Fuel
Opex
Fuel management
Services
Explosives and blasting services
Services
Direct Services
Mining Services
Load and haul services
Services
Contractor equipment hire
Services
Discard management
Services
Drilling services
Services
Dust control
Services
Underground shaft and incline
development
Services
Miningcontracting
Services
Operational site services
Services
Staff
Services
Payroll
Services
Environmental services
Services
Opex
Opex
Opex
Opex
Opex
Opex
Opex
Opex
Opex
Opex Opex Opex
Opex
Opex
Opex
Low impact – Not a priority in global sourcing
Not appropriate for global sourcing
BCC sourcing opportunity
Cost Saving Opportunity Identification
Capex Capex Capex Capex
Capex Opex Opex Capex Opex Opex Opex Opex Services
Opex
Crusher / Breaker
Capex
Screener
Capex
Grinding mill (SAG / Ball)
Capex
Thickener / Mixture
Capex
Flotation equipment
Capex
Filter press
Capex
Pipes, Valves & Fittings
Opex
Cyclone
Capex
Furnace
Capex
Slag pot / Ladle
Capex
Heat exchanger /
CoolerCapex
Pumps
Capex
Cooling tower
Capex
Coal washing machine
Capex
Processing Equipment
Capex
Pressure Vessels
Capex
Turbines & Compressors
Capex
Pipes, Valves & Fittings
Capex
Bearings
Opex
OpexOpex
Opex
Opex
Opex
Opex
Opex
Opex
Apron Feeder
Capex
40
Elements of expenditure profile potentially addressable via BCC sourcing (3)
Source: Axis Group Analysis
Indirect Spend
Facilities
Facilities Management
Office supplies
Opex
Furniture
Opex
Climate control
Opex
Hand tools & workshop cons.
Opex
Security drones
Opex
Security
Services
Catering
Services
Cleaning services
Services
Courier services & parcels
Services
Building and real estate services
Services
PPE (personal protective
equip.)Services
Safety equipment
Services
Maintenance, repairs &
operations)Services
Integrated facilities mgmt.
Services
Storage
Services
Waste mgmt.(domestic)
Services
Waste mgmt.(industrial)
Services
Utilities
Gas
Opex
Electricity
Opex
Wastewater treatment
Opex
Water
Opex
Waste gas extraction
Opex
IT Material
IT hardware
Opex
IT software
Services
Specialty software
Service
Telecom
Services
IT services
Services
IT networks
Services
CCTV
Services
Logistics
Transport
Air transport
Services
Shipping
Services
Freight forwarding 3PL
Services
3rd Party warehousing
Services
Rail transport
Services
Road transport
Services
Inventory mgmt.
Services
Travel
Car hire
Services
Travel agency
Services
Passenger transport
Services
Aviation
Services
Air travel
Services
Hotels
Services
Services
Professional Services
Translation services
Services
Consulting
Services
Market intelligence -
SourcingServices
Marketing agency
Services
Memberships & subscriptions
Services
Audit / Tax
Services
Legal
Services
Public affairs service
Services
P2P
Services
Back officeoperations
Services
Quality mgmt. QA / QC
Services
Financial Services
Insurance & risk
Services
Banking services
Services
Credit cards
Services
HR Services
Employee benefits
Services
Medical services
Services
Training
Services
Recruitment
Services
Temporary & contract labour
Services
Low impact – Not a priority in global sourcing
Not appropriate for global sourcing
BCC sourcing opportunity
Cost Saving Opportunity Identification
Capex Capex Capex
Services ServicesOpex Opex Services ServicesServicesServices
41
With improved production capability in BCCs, procurement decision drivers are becoming more multilayered with cost remaining an important element; but there are many complex considerations that stretch bandwidth in teams
Source: Axis Group Analysis
Production Time
Short production time led by advanced technology in relevant industries
China,EE, SEA, Mexico
Transportation Time
Major shipping ports are more practical for export and offer faster services
China, India, Turkey, S.E.A.
Supplier Base
Large and diverse supplier base create competitivenessin the market and lower the price
China,India,S.E.A.
Raw Material Supply
An abundant supply of raw materials is conducive to BCC sourcing
China, India, S.E.A.
ExportRegulations
Favorable policies and incentives (Taxes, Free Trade Zone) facilitate BCC sourcing
China, S.E.A., India
After Sales Service
Improved after sales serviceencourages clients for more BCC sourcing
China, S.E.A., India
Technical Strength
The level of technical barriers existing in the industry influences the product quality
China, India, Turkey, S.E.A.
R&D Capability
Capability to upgrade the industry level and avoid I.P issues
China, Eastern Europe, India
Talent Pool
Sufficient HR support brings a big value to the product output
India, China
Labor Cost
Labor cost is still a fraction of advanced economies
China, India, Turkey, S.E.A.
Delivery /Manufacturing
Cost
The cost of manufacturing, including utility, domestic and international delivery
China, India, EE S.E.A.
ManagementCost
Project management including quality and progress
China,S.E.A.
TransportationInfrastructure
Developed infrastructure makes transportation more fluid and offers shorter lead time
China, EE, Mexico
Decision Drivers
Quality
OthersLead time
& Logistics
Cost
42
Agenda
Impact on Global Procurement & Supply in
Resources• Many potential choices• Not easy process
Clusters & Categories
Integration
Competitive Dynamics• Measure Risk & Cost real-time• New options, complex choices• Opportunities & threats are
intertwined; also for Australia
Trade & Supply Chain Shifts• Change of the order• China leads• Strong high-cost incumbents• New challengers & losers
Global Risk Landscape• Increased risk• Increased complexity• Increased cost• Management task
43
Global Exports and CAGR of Select Axis Group Mining Product Categories (USD bn, 2020)
Source: UN Comtrade; Axis Group Analysis
Axis Group selected 14 mining product categories for further interrogation. Global exports of these categories amounted to USD 540bn in 2020
0
20
40
60
80
100
120
140
160
Motors &Transformers
Pipes, Valves,Flanges,Fitting
Pumps SteelStructure
GrindingMedia,
Steel/CeramicBalls
ConveyorSystems,
Belt, Pulleys,Idlers, Gears
Bearings Drilling andBlasting
Equipment
Turbines &Compressors
Excavators HeatExchangers &
PressureVessels
Crushing,Grinding,
Pulverizing,Ball Mills
Refractories Screens &ScreeningMachinery
2.1%
-0.3%
1.7%
1.4% 3.7%
-0.5%2.7%
1.6% 0.3% 0.6% 5.1%
-4.4% -1.1% 0.1%
X.X% CAGR 2010-2020Motors & Transformers was the largest category
with global exports of USD 154bn in 2020
Heat Exchangers & Pressure Vessels had the highest CAGR
of 5.1% of all categories between 2010-2020
44
0,0 0,5 1,0
LithuaniaIsrael
CroatiaEstoniaBelarusGreeceLatvia
Bosnia HerzegovinaNew Zealand
ArgentinaColombia
EgyptNorth Macedonia
GuatemalaZambia
Rep. of MoldovaSri Lanka
KenyaJordan
UzbekistanNamibia
AzerbaijanEl Salvador
LebanonPakistan
CyprusSenegalGeorgia
BotswanaBoliviaIcelandGuyana
KyrgyzstanMauritius
UgandaArmenia
DRCUruguay
MontenegroZimbabweBarbadosGrenada
Belize
Source: UN Comtrade; Axis Group Analysis
China leads, followed by high income economies (high cost) and trader economies. 6 developing countries are among the top 20 global exporters
0 10 20 30 40 50 60 70 80
ChinaGermany
USAJapanItaly
South KoreaFranceMexico
NetherlandsUK
Hong Kong SARCzechiaPolandSpain
AustriaIndia
Taiwan, ChinaThailand
SwitzerlandCanada
SingaporeBelgiumTurkey
HungaryDenmarkSwedenVietnamRomaniaSlovakiaFinland
MalaysiaPhilippines
BrazilIndonesiaSloveniaPortugalNorway
South AfricaUkraine
LuxembourgSerbia
AustraliaIreland
111.7123456789
10111213141516171819202122232425262728293031323334353637383940414243
44454647484950515253545556575859606162636465666768697071727374757677787980818283848586
Developing CountryDeveloped CountryTrader
Global Exporters of Axis Group Selected Categories (USD bn, 2020)
Others
45
111,7
72,4
41,5
34,628,1
17,215,4
14,9
14,711,9
11,8
11,3
11,0
9,8
9,2
9,1
8,0
7,6
7,6
7,2
0
1
2
3
4
5
6
7
0 5 10 15 20 25
Developing Country
Source: UN Comtrade; Axis Group Analysis
While China has the highest country share for our selected products, Poland is growing fast with a CAGR of 6.4% between 2010 and 2020
154,3
83,5
60,244,7
43,9
35,8
27,5
20,3
19,919,2
18,5
6,8
3,4
1,9
-6
-4
-2
0
2
4
6
8
0 5 10 15 20 25 30 35
X.x USD bnHeat Exchangers, Pressure Vessels
Screens & Screening Machinery
Pipes, Valves, Flanges & Fittings
Crushing, Grinding, Pulverizing, Ball Mills
Motors & Transformers
Pumps
Turbines & Compressors
Excavators
Bearings
Refractories
Drilling & Blasting
Equipment
Steel Structures
Conveyor Systems, Belts, Pulleys, Idlers,
Gears
Grinding Media, Steel/Ceramic Balls
Export CAGR for the period 2010-2020 (%)
Product Share of Category Global Total (%)
Selected Axis Group Categories’ Exports (2020)
Category Share of Country’s Total Global Exports (%)
Country Share of Category Global Total (%)
Top 20 Exporters of Selected Axis Group Categories (2020)
China, 5.1%
Germany
USA
Japan
Poland, 6.4%
Czechia, 3.7%
Canada
Mexico, 3.5%
South KoreaFrance
UK
Spain
Netherlands
Italy
Austria
Taiwan, China
Switzerland
Hong Kong SAR
Thailand, 1.7%
India, 2.6%
CAGR 2010-2020
These 14 categories total USD 540bn of
exports in 2020
Developed Country
Trader
USD bnX.x
46Source: UN Comtrade; Axis Group Analysis
China’s exports of Axis-selected mining products grew at a faster rate between 2001 and 2010 when compared to growth between 2010 and 2020
16
8
18
1618
16
10
2221
11
14
11
23
17
0
5
10
15
20
25
0 5 10 15 20 25 30 35 40
China’s Global Exports of Selected Axis Group Categories (2020)
Export CAGR for the period 2001-2020 (%)
Heat Exchangers, Pressure Vessel
Screens & Screening Machinery
Pipes, Valves, Flanges, Fitting
Crushing, Grinding, Pulverizing, Ball Mills
Motors & Transformers
Pumps
Turbines & CompressorsExcavators
BearingsRefractories
Drilling & Blasting Equipment
Steel Structures
Conveyor Systems, Belt, Pulleys, Idlers, Gears
Grinding Media, Steel/Ceramic Balls
Global Market Share (%)
A bubble of this size represents total export value of USD 1 bn
47Source: Axis Group Analysis
Even as we open the list up, China stands out with the largest number of mining procurement supply packages in the region
JapanPrimary Secondary• Transformers• Switchgear• Stackers and
reclaimers• Steel pipes• Variable speed drives
• Grinding mills and crushers• Conveyors• Flotation cells and magnetic
separators
South KoreaPrimary Secondary• Transformers• Switchgear• Steel pipes
• Conveyors• Stackers and reclaimers• Structural steel and plate work• Variable speed drives
MalaysiaPrimary Secondary
• Switchgear• Conveyors
IndonesiaPrimary Secondary
• Transformers• Switchgear• Structural steel and
plate work
ChinaPrimary* Secondary• Transformers• Switchgear• Grinding mills and crushers• Conveyors• Structural steel and plate work• Pre-fabricated housing• Steel pipes• Flotation cells and magnetic
separators• Variable speed drives• Grinding media
• Stackers and reclaimers
IndiaPrimary Secondary• Grinding media • Switchgear
• Steel pipes• Flotation cells and
magnetic separators• Variable speed drives
ThailandPrimary Secondary• Structural steel and
plate work• Grinding media
• Transformers• Pre-fabricated housing
Selected Categories – General
48
What about capex project procurement - for project owners’ teams, PMC’s and EPC/M’s?
Source: Axis Group Analysis
Operation & Maintenance
Design & Engineering
Construction
ProcurementCos
t In
fluen
ce
Time (Project Lifecycle)
EPC Model for Projects: Do Procurement Early for Strategic Suppliers
100%
0%
Planning & Feasibility
Construction Cost
Ability to influence 100%
0%
Startup
Tendering or Sourcing
Contract Award
Contract Management
StrategicProcurement
Planning
What about Projects?
ProcurementRequirement
Definition
BidEvaluation &
Selection
49Source: Axis Group Analysis
AreasProject Identification Prefeasibility Studies Detailed Design Mine Operations
Resource Estimation Feasibility Studies Project Management Operations Optimisation / Enhancements
Mine Planning FEED Construction Management Tailings Management
Metallurgical Studies /Mineral Economics
Permits & Other LegalCompliance Arrangements
Building Material Procurement Reclamation Engineering
Bid Proposal Financing: LT & ST Machinery Procurement Decommissioning
Risk Assessment & Corporate Governance Construction
Water Management Work Force Employment & Deployment
Geotechnical Commissioning
Tailings and Waste Rock Studies
Project Sourcing & Consulting1 Feasibility Engineering &
Construction Preparation2
Project Construction3 Operations, Asset Management,
Decommissioning, Reclamation4
Low HighCapabilities: Enhanced capability as a result of foreign cooperation
Blue highlights represent China’s “core” capabilities
Orange highlights represent potential areas for Chinese participation if working alongside a foreign company
Grey highlights represent China’s “non-core” capabilities where opportunities exist but require further evaluation
Assessment of China’s Capabilities Across the Mining Value Chain for Overseas Projects
In addition to China’s core capabilities across the mining value chain, China’s non-core capabilities can also be leveraged with the help of non-Chinese partners with relevant expertise
50
Agenda
Clusters & Categories• China will still lead• Explore alternatives• Opex, Capex and Services• Much internal resistance
Integration
Impact on Global Procurement & Supply in
Resources• Many potential choices• Not easy process
Competitive Dynamics• Measure Risk & Cost real-time• New options, complex choices• Opportunities & threats are
intertwined; also for Australia
Trade & Supply Chain Shifts• Change of the order• China leads• Strong high-cost incumbents• New challengers & losers
Global Risk Landscape• Increased risk• Increased complexity• Increased cost• Management task
51Source: Various; Axis Group Analysis
History and recent past should be instructive to organisational thought processes
Black Swans exist
Basics exactly right
Interconnectedness
Key Lessons… …Must Shape New Thinking
Holistic view
Rethink habits
Think Global
VisibilityMitigation cost
Org Culture“Human
ingenuity as antidote”
Dictum: Pre-empt & anticipate
52Source: Various; Axis Group Analysis
Conversations in boardrooms on Global Procurement & Supply must adapt
Technology & People Global Partners
Technology & people to compete• Magic combination• Digital solutions for agility &
resilience in global SC• Innovation
Partnerships for global reach• Strategic and capable on-the-
ground partners• Calibrate 3PL, 4PL models…• Outsourcing vs in-house
Supply Portfolio
Supply-base portfolio• Single source?• Over-exposure?• New markets that matter?
Information & Strategic Intelligence
Information quality & speed• Risk radar• Process, decide, communicate• Internal & external
Top Table
Elevate Global Procurement & Supply to the top table
• Executive-level attention• Risk matrix• Mitigation strategies & BCP
53
Upshot
Cost & RiskGlobal
Clusters & Categories
Ignorance vs Strategic
Intelligence
Challenge Choice Enable
54
Key practical considerations and actions
Every procurement professional can help minimise any potential adverse global supply chain disruptions by…
Supplier Engagement• Re-evaluate contract structures• Communicate limitations and expectations• Assess current supplier health and
capabilities
Inventory Management
• Increasing / decreasing inventory for specific categories
• Relooking at what are essential vs. non-essential goods
• Review stockpiling quantities
Logistics Partnership• Treat logistics providers as strategic
partners• Re-assess the trade-off between lead-time
vs. transport cost• Integrate supply chain control tower
Supply Chain Visibility• Remain aware of evolving supplier risks• Understanding of primary supplier
operations essential (sub contractors, logistics service providers etc.)
Operational Requirements
• Know what supplies are critical to the operations
• Understand current performance challenges
• Establish future requirements and potential risk concerns
Sustainability• Investigate regulations that protect natural
resources• Understand long-term impact on different industries• Need for CSR audits to ensure ethical production• Inclusive of local businesses
Practical Activities
55Source: Axis Group Analysis
Get ‘Right things Right’ for Global Procurement & Supply success; find YOUR focus
Supplier Process
Management
Supplier Analysis
Global Supply Market Assessment
Multi-Country/ Cluster Focus
Select Country/ Cluster
Selection
Phase 1: Country Analysis Phase 2: Procurement Methodology
Supplier Engagement
Prac
tical
Poi
nter
s
Analytics Complexity Negotiation Contract M Quality M
Strategy Partner Supplier RMSupplier
PerformanceM
People Portfolio TCOInternational
Freight MSupplier
DevelopmentM
Analytics Complexity Negotiation Contract Management
Quality Management
Strategy PartnerSupplier
RelationshipManagement
SupplierPerformanceManagement
People PortfolioTotal Cost
Of Ownership
LogisticsManagement
SupplierDevelopmentManagement
56
A number of internal constraints across strategic, operational, organisationaland informational spheres need to be acknowledged
Strategic
Operational Organisational
Informational
Spheres of Influence
Strategic• A lack of top or senior management
support causes a range of problems across the organization, including a discrepancy between the group strategy and procurement strategy
• Top management to focus everyone’s direction on all spheres of influence
Operational• Large number of different and
fragmented specifications and lack of technical clarification to BCC suppliers
• Weak coordination between procurement team and mine site end users
• Difficulty in finding the right BEE/BCC sourcing mix
Organisational• Buy-in is not happening across the
organisation• End-users do not show interest in
testing models provided by procurement teams, and end-users do not tolerate any deviation/change in specifications
Informational• Language difference and
unfamiliarity with BCCs’ business cultures, practices and legal systems lead to ineffective negotiations
• Tendency to choose suppliers with local service support in South Africa over other suppliers
• Small product range for global sourcing leads to limited success
• A hurdle rate above realistic target leads to unachievable goals
• A short lead time limits capabilities of procurement team to fully identify cost saving opportunities
Champion at the top
Unrealistic savings target (hurdle rate)
Communication Barriers
Local Support
End-user resistance
Standards/Technical Specifications
Knowledge of BCC
Coordination Process –> End-user, Engineering, Procurement, China/India
Organisation-wide buy in
Limited Spend Bucket
Unrealistic savings target (hurdle rate)
Knowledge of BCC
CulturalBarriers
Leadership space in the past
Goals / KPIs not aligned with GEMP
‘Local OR Global’ Mindset
BEE Scorecard Impact?
BEE Scorecard Impact?
Various Constraints
Knowledge
Leadership
Goals
• Vision from top• Clear direction• Catalising buy-
in?
• Roles• Capabilities• Relationship between
departments
• Data, market intelligence• Decision-support• Processes, systems, behaviours
Organisationstructure
• KPIs• Benefit communication• Alignment with overall strategy;
overall category strategy
57
Skills, Capabilities & Partners for Success
Skills Capabilities Partners
People Organisations Ecosystems
58
Looking forward to the future Global Supply Market opportunities
Increased global capability- more choice, speed and reduced cost
New technologies- increased visibility, innovative products
Improved Supply team capability- opportunity identification, risks
mitigation, partnerships
taking advantage of… being prepared for…
Driving more resilient supply chains without weakening competitiveness
Significant disruptions- leveraging alternative markets
Potential brand damage - higher degree of validation
59
Spend Analysis
Global Sourcing Strategy & Execution Framework
Success with global sourcing is supported by a clear strategic intent, and a well developed, executed plan
Cat. Strategy&
Execution Plan
Endorsement of Business Case
Risk Assessment
Opportunity Identification
Global Market Assessment
Supplier Qualification
Product Qualification
Process – Logistics, QA
Partnerships
Change Management
Supplier Agreement
Performance Tracking
Supplier Relationship Management
Exec
utio
n
Analysis Validation Implementation
Corporate Strategy Objectives & Risks
Leadership Governance Structure
Representative execution team Partnerships
Str
ateg
ic I
nten
t
Operations Procurement
Supply Chain Legal
LogisticsSourcing
Warehousing Quality
Global Supply Strategy
Risks & Opportunities• Products• Markets • Partners
Governance Structure
Expected Benefits
60
Agenda
Clusters & Categories• China will still lead• Explore alternatives• Opex, Capex and Services• Much internal resistance
Integration• Strategy• Implementation, people• Complexity management• Leadership & change mgt
Impact on Global Procurement & Supply in
Resources• Many potential choices• Not easy process
Competitive Dynamics• Measure Risk & Cost real-time• New options, complex choices• Opportunities & threats are
intertwined; also for Australia
Trade & Supply Chain Shifts• Change of the order• China leads• Strong high-cost incumbents• New challengers & losers
Global Risk Landscape• Increased risk• Increased complexity• Increased cost• Management task
61
Final word
Global supply chains are realigning
Better risk management
necessary
Leadership is crucial
‘Right things Right’
Be bold in the pursuit of a
balance in risk & cost
Pursue new supply
markets & clusters
Get China sourcing right
Partnerships matter
Develop capabilities &
skills
62
Imagine the entire globe was your supply marketplace?
Do we know what supplies will stop our business?
Are we looking far and wide enough?
Who can we leverage to be better?
Have we validated the opportunity?
63
Multi-disciplinary
Consulting
Implementation
Outsourcing
ServiceProvider
Supplier
Logistics & Supply
Chain
Technical & Quality
Management
Managing Quality
Excellence
Methodology-based
Cost Reduction
Supplier Database
Managing Standards
Managing IP
Negotiation Industry & Category Coverage
Capex, Opex& MRO
Organisation
8000+Supplier database
Experience
5000+Sourcing & procurement projects completed
1800+Pre-qualified suppliers
10-30%Average savings (range of 5-70%)
800-2000%Typical ROI
USD 21bnSpend analysed
One of the world’s largest integrated market access & logistics companies operating within
26 countries with 25,000 employees
An Imperial Company
Global Procurement & Supply Sourcing Hubs
Global Reach
Johannesburg
Singapore
ShanghaiMumbai
DubaiBangkok
BeijingDelhi
Perth
Denver
Integrated Solutions
Analyse Source Quality Manage
LogisticsManagement Supply
Our solutions are truly integrated and span the entire end-to-end international value chain
from source to final supply
3500+Clients served
Logistics Capability
Comprehensive Global Procurement & Supply
Solutions
Comprehensive global procurement & supply solutions that drive down cost,
assure quality, expedite schedules, mitigate risk and ensure ESG
compliance
Integrated Sourcing & Supply
Global Procurement
Services
Capital Project Procurement
Solutions
1
2
3
Professional Resourcing
4
• Local Knowledgeo Incorporate Local Knowledge
and Supply Market Intelligence into your low-cost country sourcing strategy to reduce Risk
• Speed to Value o Rebalance your overseas
sourcing risk profile with New Savings bringing genuine Speed to Value from harnessing Local Knowledge
• Remote Managemento Allows you hands-off Remote
Management of supplier appraisal, engagement and selection – and complex execution in remote low-cost country sourcing destinations
Global Procurement & Supply. Solved
Comprehensive global procurement & supply solutions that drive down cost,
assure quality, expedite schedules, mitigate risk and ensure ESG
compliance
Cost-downESG
Compliance
Risks Managed
Quality Managed
ScheduleExpedited
64Dubai | Perth | Beijing | Shanghai | Singapore | Bangkok | Mumbai | Johannesburg | Denver
For clients that compete in complex international markets our experience, global reach, integrated solutions, multi-disciplinary capabilities and ethos of excellence translate into business performance and profitability
www.axisgroupinternational.com
Global Procurement & Supply. SolvedAxis Group International delivers comprehensive end to end global procurement and supply solutions
Best value
Quality assurance
Schedule adherence
Risk mitigation
ESG compliance
Our value proposition includes
Our offering spans the entire international value chain and includes
Analytics & Assessment
Source toContract
QualityManagement
InboundLogistics
End to end service
65
Dubai | Perth | Beijing | Shanghai | Singapore | Bangkok | Mumbai | Johannesburg | Denver
www.axisgroupinternational.com
Complex end to end Global Supply ChainsAxis Group simplifies the supply chain for our clients
Global Supply Markets
Client WarehousesDe-consolidation
BondedWarehouse
End User
Port/Airport
BondedWarehouse
International Freight
BondedWarehouse Port/AirportPort/Airport
Raw Materials
Packaging
Air & ocean;sourcing & procurement
ComponentsSupplier /
Manufacturer ConsolidationQuality
Management
Capital Equipment Finished Product
Axis Group End-to-End Integrated SolutionsAxis Group Customer
• China & Northeast Asia• India & South Asia• Thailand & South East
Asia• South Africa & Africa• Turkey, Poland & Eastern
Europe• Mexico & Latin AmericaTy
pic
al G
lob
al S
up
ply
Ch
ain
Ou
r so
luti
on
incl
ud
e
Cost Reduction Diagnostics
Supply Country Selection
Market Studies
Spend Analysis
Price Benchmark
Analytics & Assessment Source to Contract Quality Management Inbound Logistics Supplier
Shortlisting
Technical Evaluation
Negotiating &
Contracting
RFx Plant Audit
Sample Arrangement
Buying Trips
Quality Management
Inspection Expediting
QA/QC Buy & Sell Exports / Imports
Inventory Mgmt.
Delivery / Distribution
Professional Resourcing
3rd Party Mgmt.
Consolidation / Deconsolidation
Audits/CSR/ Modern Slavery
66
• Founded in 2002 to enable best-cost country alternative supply• Acquired by Imperial in 2019 – a USD 3bn conglomerate • Addressed over USD 8bn spend globally• Achieved on average 10-30% cost reduction (within a 5%-70% range)• Multiple industries and categories covered• Over 70 staff in 8 best-cost country sourcing hubs• Significant presence on-the-ground in Asia, Middle East and Africa• An Axis Group database of 8,000+ suppliers across markets & industries
5000+Sourcing &
procurement projects
completed
8,000+Supplier database
1800+Pre-qualified
suppliers
10-30%Average
savings (range of 5-70%)
800-2000%Typical ROI
USD 21bnSpend
analysed
3500+Clients served
Dubai | Perth | Beijing | Shanghai | Singapore | Bangkok | Mumbai | Johannesburg | Denver
www.axisgroupinternational.com
About usA truly global capability positioned to be a direct supply partner or procurement Service provider
Facts and figures
67
• Integrated freight management & contract logistics provider with significant scale, offering end-to-end solutions in key industries using technology as a differentiator
• Reduce time-to-market, improve customer service & mitigate risk
Logistics AfricaMarket Access
• Take ownership of inventory & responsibilityfor the full order to cash function
• Build complex route-to-market solutions that provide our clients & principals’ access to consumers across Southern, East & West Africa -mainly in healthcare & consumer industries
Logistics International
• Partner with clients to integrate logistics functionsinto their end-to-end supply chain
• Leading capabilities in chemical & automotive industries
• Specialised express distribution capabilities
Imperial at a glance
www.imperiallogistics.com
USD3 billion in revenue in 2020
Leading provider of market access & logistics solutions
Key industries -healthcare, consumer, automotive, chemicals
and industrial
25,000+ employees in 26 countries
Ranked amongtop 30 global
logistics providers
Axis Group, an Imperial company Bringing more solutions to our clients
Dubai | Perth | Beijing | Shanghai | Singapore | Bangkok | Mumbai | Johannesburg | Denver
www.axisgroupinternational.com
Level 11, Brookfield Place125 St George TerracePerth, Australia
Kobus van der Wath, CEOT +61 (0)483 386 118 / +86 138 0111 2112E [email protected]
Dubai | Perth | Beijing | Shanghai | Singapore | Bangkok | Mumbai | Johannesburg | Denver
www.axisgroupinternational.com
Global Procurement & Supply. Solved
Rachel Wu, MD: Global Procurement & Supply
T +61 (0)408 859 125 / +86 135 0111 2984
Axis Group International in Australia
69
1. Axis Group Selected List of Mining Categories
2. 3 Mind maps: Where/why, what & how to source globally?
3. Export clusters that matter
4. Selected ‘Export-Champion’ Profiles• China • Mexico• India• Vietnam
Appendix
• Poland• Malaysia
• Thailand
• Brazil
• Czechia• Turkey• Indonesia• South Africa