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Publisher: Global Supply Chain Council Ltd. CHaINA Magazine is a FREE bi-monthly publication for the members of the Council. There is no charge for members and qualified readers to receive subscriptions in China. For your free subscription, extra copies or address changes, please email email@example.com 出版商：Global Supply Chain Council Ltd. CHaINA杂志是为Council会员准备的免费杂志。我们协会会员 和业内专业读者都可以免费订阅。为了及时收到我们的杂 志，额外订阅或地址变更请发邮件至subs@supplychain.cn
Office and Team: Publisher Max Henry Chief Editor Kevin Foehner Junior Editor & Translator Chenyin Pan
Graphic Designers Cherry Chen Susy Song Photographer Jimmy Kim
Sean Maguire, Long Nanyao, David Fondillier, Peter Humphrey, Chris Chalmers, Greenpeace, Anish k. Kain, Chaman L. Jain
CHaINA Magazine is the only bilingual supply chain and logistics magazine in Asia with a strong focus on Greater China. In every issue, we write about the news, trends and best practices that will help manufacturers, retailers and distributors make better business decisions with their sourcing, production, logistics from, to or within Asia. CHaINA是亚洲地区唯一一本专注于中国的供应链和物流行 业的双语杂志。在每一期，我们通过刊登新闻，行业动向 和实践经验来帮助制造企业、零售商和发行商进行亚洲内 外的采购、生产和物流形式的选择。
Distribution: 10,000 copies on print (6 times a year) CHaINA Magazine is offered FREE of charge by direct post mail to qualified readers in Greater China who are involved in all aspects of supply chain management. It is also distributed through selected locations in major Chinese cities, including hotels, restaurants, service offices/apartments, business centers, airport lounges and other key locations. 发行量：一年六期，每期一万本 CHaINA杂志通过直接向中国各供应链管理的专业读者发送 邮件来提供免费的阅读机会。同样也分发到中国的主要城 市并在酒店、服务楼，商务中心，机场大厅或其他中心地 带免费赠阅。
Target Readers Our target readers are R&D, sourcing, procurement, manufacturing, logistics, warehousing, transportation, retail, distribution and operations managers, directors, vice presidents and decision makers. A majority of our readers are mainly end-users, shippers, and foreign-invested and local manufacturers and retailers. 目标读者 我们的目标读者有来自采购、制造、物流、仓储、运输、 零售和分销的各级管理人士。大部分读者是物流的需求 者，外资或国内的制造企业和零售商。
Subscription for Overseas Readers Go to supplychains.com/apple Stories Ideas, Comments & Feedback If you have an idea for a story, interview or case study, please contact the editor. We welcome feedback and comments about our content or any issues relating to your operations. Please send your email to firstname.lastname@example.org 反馈和意见 如果您有任何新闻故事、采访或实践案 例，请与我们主编联系。如果您就杂志 内容或亚洲供应链管理有任何的意见、 建议或新鲜资讯，请发邮件至 editor@ supplychain.cn与我们取得联系。
The interview issue has arrived! In your July/August edition of CHaINA Magazine, we let the pros do the talking, with insightful interviews and articles featuring six leading practitioners working for Nike, Sinopharm, Federal Mogul, Liqun Group, TE Connectivity, and Leggett & Platt Global Services. From fashion to pharmaceutical and everything in Kevin Foehner between, this issue has an interview that relates to you. Learn about the China-challenges Chief Editor these professionals face and the strategies they CHaINA Magazine employ to overcome them. In our feature, we take a moment to consider the often-puzzling Gartner Supply Chain Top 25 ranking. This annual ranking’s objectivity has come into question before, and for the 2011 release, CHaINA sheds some light on a range shortcomings with the help of several industry professionals. We also take a look at Xiamen and Qingdao, two tier-2 cities looking to move up the value chain in China, research the potentially lucrative remanufacturing market, and debate Tesco Express’ presence on the mainland. We answer questions about manufacturing shifts to the US, China’s copper strategy, and much more! 新期采访特辑杂志闪亮登场。在七，八双月刊里，我们将话语权交 给物流职场人士，倾听分别来自耐克，国药，美国辉门公司，利群集 团，TE
从时尚到医药，以及这之间的其他行业，本期里的采访总有一篇是涉 及到你所关心的问题。听听他们在中国运营的挑战和解决方法，或许也 能 对你有所启示。 除此之外，我们还将探讨高德纳供应链25强。这份名单的公正性一直 以来饱受争议，对于 2011年的排位，CHaINA杂志在多位资深人士的 帮助下对其进行了分析。 我们还将把视线转向沿海二线城市的发展，乐购便利店在大陆的发 展。除此之外，美国制造业的复苏，中国 的工业用铜策略，都将出现在 本期的讨论范围内，精彩不容错过！
DISCLAIMER Editorial and advertising are independent and do not necessarily reflect the views of the Council, the board, its members or the staff. While every efforts has been made to ensure accuracy, the publisher is not responsible for any errors. Views expressed by writers or contributors in this magazine are not necessarily those of the publisher. The publisher is not responsible for product claims and representations. @ Copyright China Supply Chain Council Ltd. (Hong Kong). All rights reserved The contents of the magazine may not be reprinted in whole or in part without the permission of the publisher. No part of this publication may be reproduced without written consent of the copyright holder. CHaINA is a registered trademark of the Global Supply Chain Council. 1
Big photo 8 In & Out 9 Wisdom from Weibo 10 China vs The US 11 Quotes 12 Invest-O-Mania
7 8 9 10 11 12
大事件 斗转星移 微博 中美对比 从业者说
16 18 20 21
Procurement News Procuring People Copper Bottomed Markets Made in Italy? Not Quite... M&A
JULY /AUGUST 2011
MANUFACTuRING 22 Manufacturing
News 24 The Innovation Connection 26 Remanufacturing 28 Made in the USA, Again
News 32 Raising the Bar 34 Taking Control 36 Falling Short of Supply
Distribution News 40 Distributing to the Masses 42 The Corner Store Battle
The LINKS Back Home Silk Road 56 How Dirty is Your Data 58 Forecasting and Demand Planning in Asia 63 Linkedin Question 54
36 供不应求 54 中国式的发展
56 失实的数据 58 亚洲市场预测 63 采购人士的报告 37 The CIF Dilemma Saving Face or Quick Profits
44 Retail Fraud in China
A Growing Issue
2 JULY/AUGUST 2011
Top 25 Demystified
The shortcomings of Gartner AMR’s Supply Chain Top 25
Xiamen vs Qingdao Tier 2 Cities on the Rise
厦门 vs 青岛
The Key Components
Federal Mogul’s Philippe Thegner outlines strategies, rising costs, and spending big.
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Vendorsdirectory.com Looking for the best supply chain and logistics solutions in Asia? Check out vendorsdirectory.com and click on the Services & Solutions tab to find the latest service offerings.
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On Supply Chain Times
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Join special interest groups, organized by industry and area of expertise on the only social media network dedicated to supply chain professionals!
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Renaissance Shanghai Zhongshan Park Organizer: GSCC Thu-Fri
3PL Luncheon with Frank Chang, Ting Tong Group Shanghai Organizer: GSCC
3PL Luncheon with Didier Chenneveau, CEVA Logistics Shanghai Organizer: GSCC
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Pharmaceutical Procurement Workshop Shanghai Organizer: GSCC
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4 JULY/AUGUST 2011
Nominate now! For more than six years, the CHaINA Awards have been the most prestigious in Asia, honoring best practices in operations, supply chain, procurement, and logistics! Who Should Nominate? Executives in operations, manufacturing, supply chain, procurement, logistics, distribution, IT and related fields are welcome to nominate their company, a specific project, initiative, executive or team. Service providers, IT/solutions vendors and consultants are also welcome, but a customer is required to nominate them.
Supply Chain Operational Excellence Chinaâ€™s Supply Chain Executive of the Year Best 3PL Supply Chain Provider Best Supply Chain Consulting Partner Best IT Supply Chain Solution Best Logistics Real Estate Development NEW! Training, Education and Development Award The Green Supply Chain Award
Nominate Online: http://cha.in/jfEP9W Deadline: October 15, 2011
Gala Awards Ceremony: November 3 in Shanghai during the CHaINA'11 Live event visit: www.supplychains.com
Follow - up An update on Japan In the May/June issue, we took a look at how the Japanese disasters affected glob‐ al supply chains. It’s been about 3 months and the effects are still being felt in Japan. In particular, at the Fukushima reactor and surrounding area, where teams are still working around the clock to contain radiation and prevent further meltdowns. Tokyo Electric Power has released a report stating that the Fukushima reactor would need another six to nine months to bring the facilities to stable working levels. Manufacturers within the 20KM restricted zone have shifted production to other plants in Japan, or to other Asian countries. From the wreckage however, new business opportunities have arisen. In particular, companies with quake proofing technology, like Mitsubishi Estate and Taylor Devices, are set to benefit handsomely in the near future, especially since a US geological survey revealed that Tokyo chances of being hit by an 8.6 magnitude quake in the next 10 years have doubled since March. Japan is not the only country quake-proofing ei‐ ther. Building safety in most Asian countries which sit on the Earth’s fault lines has been tightened, and as a result, orders have risen from China, Taiwan and South Korea by 65% for quake-proof technology.
Paypal severs ties with AliExpress In our previous issue, we debated whether B2B platforms could be trusted. Recently, Paypal announced it plans to ter‐ minate its partnership with AliExpress, Alibaba’s worldwide site, as of August 3rd of this year. The decision was made as a result of an audit on the cooperation of Alibaba and Paypal.
Paypal stated on its official blog that the company “insists on making regular evaluations of its businesses and relation‐ ships with its partners”. Alibaba has countered, stating that Paypal has ended the partnership due to AliExpress’ impact on EBay’s business in China. Either way, Alibaba will lose a major tool that enables it to conduct business with foreign companies.
RARE EARTH RUMBLINGS...
In our March/April issue, we discussed China’s aggressive policies for rare earth metals. China has continued to maintain its monopoly on the rare-earth market with quota-cuts along with increased tariffs on rare earth exports. Recently, the government has looked to crackdown on smuggling of rare earth metals, which is estimated to be between 33% and 50% of the total amount of metals exported from China. A few years back, one group of smugglers were caught with over 4100 metric tons of rare earth metals bound for export, valued at US$1.7 billion. Smugglers usually create false paperwork, falsely label the material, or export it with certain companies. China has strictly forbidden mining of rare earth metals by foreign companies; however export is not so restricted. China’s efforts to keep a firm grip on rare earth elements seems to be enticing companies to shift their manufacturing facilities to the mainland. For companies operating in China, it’s seemingly easier to acquire the metals. Just recently, Ming Yang, the NYSE listed wind energy producer, announced that they have secured prior‐ ity access to rare earth metals after signing an agreement with the Ganzhou government, in Jiangxi province.
We Want to Hear From You! We invite you to share your thoughts and opinions regarding all of our articles. We will publish selected readers’ comments in future issues of CHaINA Magazine. Correspondence may be edited for clarity or for length. Email us: email@example.com
6 JULY/AUGUST 2011
Poyang Lakeâ€™s reduction in size
Total economic damage caused by the drought
100 billion tons Annual cargo transported on the Yangtze
A fishing boat stranded on the cracked bed of Poyang Lake along the Yangtze River, due to the most severe drought in the last 50 years. Rainfall in the first 5 months of 2011 were only 50% of Jiangxi provinceâ€™s average. 7 www.supplychains.com
In & Out
Henning Malmgren Chief Commercial Officer, APAC Damco
Henning Malmgren has over 20 years of logistics experience, having worked in emerging regions such as Greater China, SE Asia and Latin America for Damco and Maersk.
Desmond Gay President, Asia Jacobson Global Logistics Desmond Gay will develop Jacobson’s companies in the APAC region after leaving DTW Logistics, where he was CEO of China for 3 ½ years.
Benjamin Revah Route Development Manager Europe-Asia Expeditors International
Benjamin Revah will manage key ac‐ counts in multimodal logistics for Expe‐ ditors. He previously worked for Dajin Logistics as a Project Manager.
Craig Foster Senior Vice President, APAC
Miranda Lou Director, Asia-Europe Trade
Xavier Leroi Managing Director China
Wallenius Wilhelmsen Logistics
Craig Foster will be responsible for UPS’s supply chains and overall healthcare ini‐ tiatives in APAC. He has worked with UPS since 2001.
After the resignation of Terry Gao, Mi‐ randa Lou will be responsible for the management and development of key accounts for OOCL’s Asia-Europe trade.
Xavier Leroi has held management roles for the company for over 15 years in Nor‐ way, France, and South Africa.
Thach Chuong Tong Supply Chain Director
Bruce Meyer Vice President of FMCG
Yanna Yang Senior Purchasing Manager
Thach Chuong Tong has 20 years of ex‐ perience in building and managing or‐ ganisations in Senior Management roles for companies like DHL and Toll.
Simon Chuang Regional Procurement Director, APAC TE Connectivity
Simon has more than 12 years experi‐ ence working in management positions in large MNCs and Asian companies like TE, Taiwan Power Company, and TOP. Prime.
Bruce Meyer previously worked for Coty, the world’s largest fragrance com‐ pany for 23 years, where he held several managerial positions.
Hou Enlong General Manager Suning Beijing Hou Englong will lead Suning’s retail operations in Beijing, after an 8-year stint as Suning’s GM in Chongqing.
Yanna has held several supply chain po‐ sitions with Nestle’s and has contributed in developing the companie’s business in China for 14 years.
Christina Cui CEO
Matrix Science & Technology Christina Cui is an experienced sales and marketing professional who has held several positions with companies like MFG.com, Honeywell, Global Sources and HP.
Guo Jianxing Chief Operating Officer
Eng Aik Meng President
Bob Sappio Senior Vice President
Guo Jianxin has stepped down from his role as COO for personal reasons. He held various positions with Lining since 1977.
Eng has resigned as President of APL container shipping business. Current North Asia President, Kenneth Glenn, will succeed him.
Bob Sappio, who headed PanAmerican trade, will leave APL for personal rea‐ sons after working with the company for 29 years.
8 JULY/AUGUST 2011
Wisdom from Weibo Sina Weibo, China’s answer to Twitter was launched in 2009, and now has 200 million registered users. More than 5000 companies and 2700 media outlets have accounts on Weibo as well. Check out what China’s chatting about below.
Joyo Amazon’s VP Jianfu Zhang: In the future, B2C competitors’ focus will change from cost to the value. Online shoppers care about the availability of the product, whether it is expensive or not, and how long it takes to deliver. So the new focus on value is the combination of the online shopping experience (product selection, price, website design) and behind-the-scenes operations (inventory, supply chain, customer service).
卓越亚马逊张建富：未来 B2C将从“价格战”转向“价值战”，网购消费者永远看重‘有没有’、 ‘贵不贵’和‘快 不快’等因 素。 “价值战”要涵盖 B2C前台零售端体验(选品、价格、页面体验)和后台运营端体验(仓储、物流、 客服体验)带给消费者的综合网购价值。
Do you know the following Apple facts? 1. Apple stores’ revenue per square feet is US$4406, higher than that of Tiffany and Coach; 2. Apple Sanlitun Store (Beijing) has the highest revenue worldwide; 3. Most of their retail team originally worked for GAP
以下苹果专卖店的故事，你知道吗？1.苹果店每平方英尺的年销售额达4406美元，比珠宝商蒂芙尼、奢侈品零 售商 Coach Inc.和百思买高得多。2.北京三里屯店是全球销售额最高的。3.零售团队最初许多成员来自Gap。
We knew that DHL sold A-Plus Express because the management has become a problem, but no one expected the problems to be this big. They bought the company for US$43 million, and now they are selling it for US$14 million! 知道DHL经营全一快递肯定是有问题才卖,但是不知道问题居然这么大。居然3亿买下，1亿卖掉！
Sales force and channels effectiveness Customer service optimization Customer insight and intelligence Distribution network configuration and inventory management
China vs. The US
How these giants match up on several key sectors and growth indicators
10 JULY/AUGUST 2011
‘It is the only country I devoted a chapter to, so that should tell you something.’
Howard Schultz ,
CEO of Starbucks, talks about the importance of China to his company, which he reiterates in the final chapter of his book Onward.
‘China in five years will probably still be about 50 percent of goods for Li & Fung and is definitely not going away. There is no viable alternative on the scale of China.’ Bruce Rockowitz ,
Chief Executive Officer for Li&Fung, on the continuing importance that China will play for the future of his company.
‘There is insufficient coordination between enterprises in the upper and lower links of the supply chain.’ Yu Xubo,
President of COFCO, addressing the China’s current food safety crisis. A survey showed that 90% of Chinese are not satisfied with current food safety levels.
‘We believe future GAAP earnings might not fully reflect the profitability of operations and that the new revenue recognition policy may distort a declining profit margin.’ UBS Securities Asia ,
commenting on the report that sent Li&Fung shares tumbling 7% in one day, to a 1.5 year low.
‘In China, dairy traditionally hasn’t been a part of consumers’ diets, making it tough for them to stomach. Secondly, the concept of delivery food hasn’t quite caught on in the country.’
Domino’s Pizza Chief Executive, comments on the company’s poor showing in China. Mr. Doyle might want to hop on a plane and check China out for himself.
No. 1 GM is on track to overtake Toyota after sales forecasts were cut due to Japan’s disaster.
300,800 TEUs exported from the US bound for China’s Chung Nam waste paper recycling plants.
391,000 Number of Facebook users in China
1,076,000 Number of LinkedIn user in China
10,000 Number of convenient stores that Lawson plans to have in China by 2020, from a current 300.
US$954 bn China’s planned spend for infrastructure development over the next 5 years
a i n a M O t s e Inv Xinjiang Road Network Xinjiang - US$23 Bn The Ministry of transport will spend close to US$23 billion to develop and upgrade road networks in Xinjiang Province.
Taobao Furniture Mall
Bayer Polyurethane Plant Qingdao - US$38.5 Mn Bayer has invested up to US$38.5 million in a new polyurethane plant in Qingdao. The project is part of Bayer’s plan to invest US$155 billion by 2012 to build downstream facilities in China, including three polyurethane plants located in Shanghai, Qingdao and Chongqing.
Beijing- 5 storeys Alibaba Group’s Taobao opened a five-storey home furnishings showroom in Beijing for customers to try out sofas, tables and other big-ticket items before placing an order online. This is the company’s first move into brick and mortar retail.
Road Logistics Base Chongqing - US$4.63 Bn The government of Chongqing has made plans to develop the Chongqing Road Logistics Base, an investment of US$4.63 billion that will cover 353,000 sqm and connect Chongqing to Hunan and Guizhou by expressways, a railway logistics facility and an air cargo facility.
Chongqing Airport Chongqing - 170,000 sqm Chongqing Airport has made plans to construct a 170,000 sqm cargo terminal with the first 30,000 sqm phase set to open by the end of 2011. Chongqing also plans to build a third runway, measuring 3800 meters in length.
Chek Lap Kok Airport
Chongqing - 20,000 sqm
Hong Kong - US$11 Bn
Kerry Logistics has put two new logistics centers, with a 20,000 sqm Chongqing center and a 18,800 sqm Kunshan facility. The company declined to disclose the total investments for the projects. JULY/AUGUST 2011
Hong Kong has unveiled a plan to develop a third runway and to construct a US$11.08 billion terminal by 2030.
Samsung LCD Factory
Kunshan - 29,000 sqm
Suzhou - US$3 Bn
Gazeley announced deals with Feiliks, Toyota and Guizhou Jiayou Shopping Group. Phase one is now fully leased leaving only the second phase of G.Park Kunshan which can accommodate build-tosuit projects up to 29,000 sqm.
Samsung Electronics is constructing a new US$3 billion 7.5 generation LCD factory in Suzhou, China. The facility, which will open in 2013, will be 600,000 sqm and will be capable of producing 100,000 large screen glass panels each month.
Bonded logistics center
Shenyang - US$1.4 Bn
Zibo - 380,000 sqm The Zibo Government will build the first inland bonded logistics center in Shandong. Siemens, SK Group among others will move in after the 380,000 sqm centre is completed.
Michelin will invest roughly US$1.4 billion into expanding its production facilities Shenyang, Liaoning Province. The investment is part of the companyâ€™s plan to grow production and establish R&D capabilities in China.
Amazonâ€™s new DC Beijing
Kunshan - 100,000sqm
Amazon will begin work on its eighth logistics base in China to be located in Kunshan. The 100,000 sqm base will be the site for two warehouses, set for completion in July and September respectively.
Wafer Factory Kunshan
Suzhou - US$77 Mn
Canadian Solar and Suzhou GCL Photovoltaic Technology announced a major solar jointventure to build a 600 MW capacity wafer plant in Suzhou. The total capital expenditure for the first phase of the project is approximately US$77 million.
VW Car Plant
Foshan - US$2.1 Bn
Volkswagen will spend US$2.1 billion to build 300,000 car per year facility in Foshan, Nanhai. VW will build the Golf and is considering producing Audi cars at this facility.
Contents ► Procurement News /14 ►Procuring People /16 ►Copper Bottomed Markets? /18 ►Made in Italy? Not Quite... /22 ►M&A /21 行业短讯/14
Barbie, it’s Over
Greenpeace stepped up their high-pressure campaign against Mattel by hanging massive banners from several of the company’s buildings worldwide, depicting the famed Ken doll saying, “Barbie, it’s over. I don’t date girls that are into deforestation.” Greenpeace had already released a viral video campaign on Youtube, protesting Mattel’s use of Indonesian rainforest wood in their packaging. Mattel’s partnership with Asia Pulp&Paper(APP), a Singaporean supplier accused of clear-cutting large amounts of Indonesian rainforest, is the real target of Greenpeace’s attacks. Mattel has since told its direct suppliers not to purchase from APP. “We have directed our packaging suppliers to stop sourcing pulp from Sinar Mas/APP as we investigate the
deforestation allegations,” Mattel said. Mattel later announced that it would develop a new procurement policy with more attention to deforestation.
result of a 30 percent drop in price. Despite the cheaper prices, most manufacturers are holding back, buying only for the short run and hoping prices will fall further.
Gap Cuts Cotton Middlemen while Shandong Suffers
China Chooses Taiwan for LCDs
Popular clothing brand Gap is looking to reduce their costs for sourcing cotton and yarns over the long term by cutting out cotton vendors and buying directly from factories. Cotton prices have rocketed up over the past ten years, however sharp drops in the last year have forced suppliers in Shandong out of business. Nearly 50 percent of Shandong’s producers have closed their businesses as a
China’s television brands have banded together and have inked agreements with several Taiwanese LCD makers to source US$5.5 billion worth of LCD panels. Taiwan’s AU Optronics and Chimei Innolux stand to benefit from the LCD purchases, along with component manufacturers like Wistron and Silicon Precision Industries. The average size of panels in China has increased to 39.5 inches, up from 33.6 inches in 2010. China’s production of LCD televisions is expected to exceed 150 million units by 2014.
14 JULY/AUGUST 2011
Rio Tinto Buys Big in China
Rio Tinto, the multinational mining and resources group, announced plans to purchase US$1 billion in commodities from China in 2011, up from US$500 million in 2010. China currently accounts for 25 percent of Rio Tinto’s annual income, making it the company’s single largest market. Scott Singer, Rio Tinto’s global Purchasing Head, stated that there would be plenty of room for more purchasing from China. Rio Tinto’s current global spend sits at US$14 billion.
Li & Fung Regroup
On Friday, May 27th, Li & Fung shares were seen dropping 7% on the day in reaction to a report from UBS. The report predicted a severe increase in operating costs and that upcoming acquisitions
would have an adverse affect on earnings. The stock value has dropped 28% this year and has taken the position as the worst performer on the Hang Seng. Bruce Rockowitz has taken over as interim Chief Executive, stepping in for Victor Fung. William Fung will take over as permanent Chief Executive beginning next year. Li & Fung’s operations have suffered since the slowdown in US and European retail sales, combined with dramatic increases in Chinese labor and commodity prices.
Material ConneXion Arrives in China
Material ConneXion, the global consultancy for material solutions and innovations, has announced it will set up offices in Beijing, Shanghai and Guangzhou by the end of 2012. Material Connexion will enter at a strategic time, as
the Chinese Government has emphasized product design and development suitable for Chinese consumers in the latest 5-year plan. The company will work with local designers and companies to develop creativity and innovation in products and services.
If you thought that all chopsticks were made in China, you were wrong. A factory in Georgia, USA, is pumping out 2 million chopsticks a day for export to China. Jae Lee, a Korean-born American, set up a factory in Georgia where the wood is trimmed down into the basic shape to save on freight costs. The utensils are then shipped to a plant in Dalian for finishing, and sold in China, Korea and Japan.
Contact: firstname.lastname@example.org Tel: 0512-8889 8601
Procuring People Wally Krey, President of Leggett & Platt Global Services (LPGS) suggests the right mix of HR initiatives is the key for retaining qualified people. How big is the sourcing team outside of the USA? Leggett & Platt Global Services provides access to suppliers world-wide, not only in Asia but also in other emerging markets such as Latin America. Our sourcing team in Asia is spread over four countries: the majority of our Sourcing Specialist’s are based in Shanghai and in Guangzhou (China), with smaller teams in Ho Chi Minh City (Vietnam) and in Bangalore (India). In total we are talking about 30 people in Asia. How does Leggett & Platt Global Services recruit local/foreign talent? Recruiting is fairly difficult because we are requesting that applicants have professional experience, industry experience, commodity experience and a personality to fit into our culture. We only look for local people, not for expats. The only expat in the region is our Regional Manager in our Shanghai office, the rest of the team members are all from the local countries. Most of them have engineering degrees and are appointed Sourcing Specialists or Senior Sourcing Specialists.
in association with
“ ompared to other companies and industries, our salaries are not the highest. Actually, I would say that we are more ‘north of middle of the road’,” says Wally Krey. LPGS was established to support L&P’s international business transactions, specializing in product being imported into the US. Leggett & Platt’s four core business segments: Residential Furnishing, Commercial Furnishing and Components, Industrial Materials and Specialized Products.
And where do you find these people? There is no secret source; it is more the hard work of our HR person on the ground in Shanghai. We hired one fulltime HR person for Asia, and she is in charge of all the recruiting. I assume that the sources do not differ from other companies: internet, recruiters and self applications. We also encourage internal referral for some positions. But then you must invest a lot for retention, right? It depends how you understand the term ‘investment’. If you refer to salary and compensation, I can say that you will find LPGS middle of the road (third quartile). The investment we are making is more to find the right mix of HR initiatives, job enhancement, and culture to make LPGS attractive. This certainly includes compensation, but also bonus opportunities, the working environment and the supervisory leadership. At the end of the day it seems that we have been successful in finding the right mix: our turnover rate is clearly below the average in China/Asia.
16 JULY/AUGUST 2011
PROCUREMENT The IIAPS advisory board consists of nearly 100 decision makers in purchasing and SC management worldwide. Kenan Ozturk, an IIAPS advisory member, shares his experiences and approach to “HR challenges in Asia Pacific”. How important are these people for Leggett & Platt Global Services? Let me give you one example: the three people in India are managing the supply of oil, used in the production of product, to seven (7) manufacturing sites in the USA. Without this oil, production would stop immediately, or we would have to purchase oil on the open US market. Certainly, without having good people in India our US colleagues can’t produce effectively.” How is people development handled with regard to these professionals? This is done more on an individual basis when it comes to defining the goals for the next period. Depending on goals and personal preferences, people can take internal classes or learning opportunities or they can join outside training. We periodically develop, review and allocate high level strategic goals to the individual level. This encourages people to identify and obtain the knowledge and skills to accomplish their assigned strategic objectives. We also generate opportunities through enlarging or diversifying individual responsibilities, putting the learning acquired through training into use and thus enriching the individual’s professional experience.”
18,915 Worldwide employment
对于我们来说找到人类资源切入点，职 位晋升，以及公司文化的联合吸引力， 比高薪水还重要 “就薪资水平而言，同其他公司和行业相比，我们的行业不是最 高的。事实上，我们的薪资水平更像是‘中上游’一点 。”Wally Krey, 礼恩派集团的总裁在接受采访时谈到。礼恩派为其在全球所 有分公司提供内部服务。公司总部位于芝加哥，并在中国华北，华 南，越南，印度，东欧及南美设有分公司。礼恩派主要有四大核心 服务：家具装潢，商务场所装潢，工业材料及特殊材料。 美国以外的采购团队有多少人？ 我们的国际业务部为供应商提供全球服务。我们在亚洲的采购团队 主要在以下四个城市：团队主体分布在上海和广州, 小部分的团队 部署在胡志明市和班加罗尔。亚洲团队总共有30人组成。 那公司的全球服务部是怎样招聘采购人才的呢？ 招到适合的人才不是一件容易的事，我们要求求职者有专业经验， 行业经验，产品经验以及一个适合公司文化的个性特征。我们在各 地只招当地员工。目前，各地除上海办公室 的地区经理是外籍人士 以外，其他各地团队都是由本国员工组成。大多数员工有工程技术 类的学位，并且他们大多是专业采购师。 那公司是通过哪些途径来招人的？ 没有秘密途径；主要还是靠我们在上海负责人力资源同事的努力。 在亚洲我们有一名全职同事负责人力资源，由她来负责所有的招聘 事宜。我感觉招聘途径应该都差不多：网络，猎头公司以及自荐。 我们有鼓励内部员工的推荐。 那在留住人才上应该投资了不少吧？ 那要看你怎么理解‘投资’了。如果仅仅是薪水及物质奖励，礼恩 派是在中上游（四分之三）这么个水平。投资对于我们来说就是利 用正确的人力资源切入点，职位晋升，以及公司文化的联合吸引 力。留住人才当然要靠物质补偿，但奖金机制，工作环境以及领导 水平也至关重要。目前来看我们已经找到了正确的合体：我们员工 更换的频率低于中国/亚洲平均水平。
员工对公司的重要程度在哪？ 举个例子:公司在印度有3个同事在做石油供应的项目，这批石油是 用来供给在美国的7个生产地点。没有这批原油，在美国的生产就将 5032 停止，或者，我们就将在美国的期货市场购买原油的当日价。所以 Employment in China 说，如果我们不能在印度市场找到合适人选，美国的同事又谈何高 效工作呢。
18 countries Manufacturing Operations
IIAPS (International Institute for Advanced Purchasing & Supply) is dedicated to increasing international standards in purchasing and supply management through the Institute’s International Belts qualifications, competence assessment, benchmarking and HR services. The institute operates globally via its offices in USA, Europe and Asia (www.iiaps.org)
人员晋升又是怎样安排的呢？ 这主要还是要看个人在公司战略发展的地位。根据目标和个人偏好 不同，员工可以参加内部课程和其他学习机会。我们定时发展，检 验并归纳各个阶段的战略目标。这样可以激励员工更好去理解每个 阶段分配给他们的战略任务。我们还通过个人职责多元化让员工从 受训中增长个人职业经历。 在人才上的投资取得成效了吗？ 物超所值。从反馈信息中我们了解人力资源部的方式方法对员工的 企业忠诚度有了巨大积极影响。通过我们的职业规划，目前公司 80%的岗位空缺是由内部员工顶替的！ 17 19
Smoke and Mirrors in Chinese Metals Futures
Copper exports in the first three months of 2011 have Copper imports sitting pretty One of the more intriguing tales emerging from the soared, despite the fact that China is still importing commodities markets of late relates to China’s metal copper. Odd? Maybe not. When London prices are imports, particularly of copper, zinc and aluminum. above Shanghai prices, companies eager for loans are Copper has been the star of the show, with imports far importing copper in order to get back-door financing, whereas domestic traders, recognizing that domestic in excess of actual requirements, even in the face of the huge demand generated by domestic real estate and demand isn’t strong enough to justify those import infrastructure projects. Standard Bank has recently quantities, and perhaps eager to arbitrage the prices, reported that as much as 700,000 metric tons of copper are selling copper abroad. In the Alice-in-Wonderland world of Chinese is just sitting in warehouses rather than being shipped to end users, which is the equivalent of around 11% of banking where credit isn’t determined by price but by China’s total refined consumption and in the region quantity and hierarchy, China, at least temporarily, of 40% of China’s net refined copper demand. That turns into a merry-go-round for copper imports and Leading Copper Consumers exports. As Beijing University impacts copper demand and prices. (2010 refined copper consumption) professor Michael Pettis “Downside risks to copper prices are China 7,368 remarked in May: “This is great emerging,” warns Standard Bank in USA 1,745 Kt for copper traders, of course, a note picked up by some financial 1,343 Germany but perhaps not so good for the blogs. overall economy since someone 1,050 It would appear that the primary Japan has to pay for those outsized use of the copper in bonded South Korea 830 trading profits.” Not to mention warehouses is as a financing 610 India the dangers of linking the mechanism to provide cheap 592 Italy health of commodities markets working capital for businesses 522 Taiwan to China’s frothy real estate unrelated to the metals sector, either 350 2010 World Total: 19,303 kt Brazil schemes. by circumventing capital controls Source: Brook Hunt - a Wood Mackenzie company to bet on Yuan appreciation or Cooking the Goose that laid the copper egg? alternatively to bet on commodity prices outright. It Copper demand in all parts of the world is expected works like this: They would buy copper on foreign to rise in 2011-13 but growth rates will be highest and exchanges, receive letters of credit from government overall demand greatest in China. Continued high banks or some other form of financing, and pledge the prices will also strengthen copper scrap markets, which copper itself as collateral while they sunk the cheap will help to support supplies. Particularly for China, money into real estate projects they could later flip at a a big scrap importer, where scrap intake has already profit. Until then, the copper, kept piling up in China, increased to try and offset a scarcity of concentrate while the developers’ ability (and willingness) to pay this year. Recycling the metals used in electronics, back the loan depended on how their projects were for instance, requires only a tenth of the electricity doing, not how high copper prices climbed. As much required to smelt and refine metal concentrates pulled as 80% of China’s warehoused copper was being used from the rough. this way, mostly by developers who recognize that Estimates suggest that Americans recycle at most banks treat it as good in holding its value. 20% of their e-waste, with the rest going into landfills 18 JULY/AUGUST 2011
PROCUREMENT (where they comprise Top 10 Copper 70% of heavy metals). Producing Companies (000 Metric Tons) While European and Codelco 1,757 Canadian smelters are Freeport-McMoran 1,441 BHP Billiton 1,135 busy doubling or even Xstrata 907 tripling their e-scrap Rio Tinto 701 645 capacity, the U.S. lacks Anglo Grupo Mexico 598 even a single smelter. Glencore 542 As a result, America is SCC 487 KGHM 426 a major scrap exporter Source: GFMS to the PRC. China’s refined copper imports in April fell by 48 percent and concentrate imports fell by 23 percent from the previous year, analysts have reported. Scrap imports increased 2 percent. The side effects of copper’s recent high prices could make copper pipes in plumbing a luxury good and change the face of computing. To build the average house requires 180kg of copper. The average car
Copper exports in the first three months of 2011 have soared, despite the fact that China is still importing copper.
California-based nano-techonolgy company. There are also plans afoot to research and develop carbon nanotube-based interconnects as a possible replacement for copper in computer chips, although substantial challenges remain in synthesizing the materials and integrating them into chips. Yet a phenomenon known as electromigration threatens the reliability of nanometer-size copper interconnects. Electromigration causes internal and external cavities that lead to wire failure. Conclusion If copper prices remain high, the West might finally realize they’re throwing away a fortune when they trash their old PCs and cell phones, which are loaded with bits of increasingly valuable metals. The turnaround in copper prices demonstrates just how fast the cycles in commodity product pricing can move. China’s demand for refined copper fell 12.5% in the past months and sentiment is being affected by SPS printad_hires.pdf 1 11年6月17日 上午11:13 that nation’s newly developed trade deficit. China is not a certainty for 10% growth this year or next and this will impact upon copper demand and prices.
requires 25kg, and hybrid cars need 45kg. So the hunt for replacement materials is taking on an air of urgency. There are ongoing efforts within the computing industry to design copper out of applications wherever possible, which is easier said than done. “They’re trying to design copper out of applications where possible,” says Lisa Morrison, a principal consultant at the metals and energy consulting firm CRU, “which is not quite as simple as Top 10 Copper Producing Countries (000 Metric Tons) it sounds. Lightweight Chile 5,320 and highly conductive, US 1,310 copper is extremely Peru 1,260 China 960 difficult to swap out Indonesia 950 for say, aluminum, Australia 900 which is only half as Russia 750 Zambia 655 conductive. “ Canada 580 One response is Poland 440 Source: IBTimes 2010 to simply use less of it, pushing electronics companies toward greater miniaturization in the name of cost-cutting. “The smaller everything gets, the greater copper’s conductivity gets,” says Morrison. Another response is to replace metals altogether. There is an ever present chorus calling for telecom to replace copper cabling with fiber optics, which dovetails nicely with web content companies’ desire to push ever greater amounts of data into homes. “There is a burning need in the semiconductor industry for a new material to replace copper interconnects,” said R. Bruce Stewart, President of Arrowhead Research, a 19 21 www.supplychains.com
Is Prada hiding its China suppliers?
f you’re looking for upscale clothing, bags and accessories, look no further than Prada. The Prada brand has been at the height of the fashion industry for decades, and is very much considered a status symbol across the globe thanks to celebrity endorsements and branding gurus. The “Made in Italy” label is another key influence to consumers willing to shell out thousands of dollars for their leather products. Like every other fashion manufacturer, Prada is constantly looking to reduce its costs. According to a recent report from Goldman Sachs, Prada is outsourcing between 70 and 80 percent of its manufacturing. Media reports have revealed that a Prada bag costs about US$150. Shocking really when you realize that these bags are being sold at US$2000 or more in certain countries. What the report fails to mention is where the outsourced suppliers are.
Assembled in Italy A reporter from the China National Radio (CNR), Zhou Jin Zhu, recently discovered a factory in Zhongshan which Source: taobao.com operates under the business
name W.K. Maxy Industries Limited. When the business was called to inquire about supplying to Prada, the company denied any cooperation with Prada. The reporter then interviewed an online retailer who claimed to be doing business with W.K. Maxy and other suppliers of the sort, and claimed to be receiving goods like Prada and LV products from them. The retailer would then sell the goods online as fakes. An outsourcing professional, (who preferred to remain anonymous) with knowledge of Prada’s sourcing operations confirmed to CNR that Prada was in fact having parts of its luxury items manufactured in China. “Made in Italy means the button or zippers are made in Italy, for the rest, they are all made in China,” the professional said to Zhou Jin Zhu. In terms of finished goods, the professional confirmed that Prada’s final assembly is in Italy. A Sensitive Subject The strategy of outsourcing luxury brands is a highly sensitive subject that upscale fashion brands face. Prada is not the only company doing it, with companies like Gucci, Bulgari, Armani and Burberry producing less than one third of their items in factories in China
or other Asian countries. A few years ago, Burberry was heavily criticized for announcing it would shift production from a factory in Great Britain to China. The brand suffered heavy damage to its image and perceived quality. The news also comes at a relatively bad time, as Prada’s heads push for a US$3 billion IPO on the Hong Kong stock exchange. The very choice to list in Hong Kong as opposed to a European exchange shows the importance of the Asian market – who are willing to spend top Yen, Yuan, etc. for “Made in Italy” - to Prada. No Surprise For those in the fashion manufacturing business, it’s really no surprise that companies are outsourcing to the East. The World Luxury Association estimated that by 2009, more than 60% of luxury brands will have their products made in China. Companies need to maintain their margins, and one way to do that is by reducing manufacturing costs. Even Prada’s Patrizio Bertelli revealed at a Financial Times conferences six years ago in Shanghai that the company was considering shifting production to China. He was quoted then as saying “Lowcost labour will pose a threat
20 JULY/AUGUST 2011
to European labour over the next 10 years. But using Chinese labour will be seen as an opportunity to contain cost and price, which will be beneficial to consumers.” The real question is should brands that outsource some or a majority of their production still be allowed to carry a coveted “Made in Italy” or “Made in France” label? Other luxury brands, albeit on the lower end of the luxury spectrum, like Coach, Kate Spade and Armani have carried the “Made in China” label for the past few years. Should Prada have to do the same?
Mergers & Acquisitions US$2bn 8 7 US$906m
US$609m 67 5 US$470m
US$51m 47 3 US$30m
5th INDIRECT PROCUREMENT
第五届中国间接采购论坛 Shanghai，Sept 8，2011
1 Private equity firm Fidelity International Ltd’s Indian arm has invested US$13.5 million in Transpole Logistics Pvt. Ltd, a New Deli based company offering logistics services such as freight forward‐ ing, warehousing, distribution, third-party logistics and advisory services. 2 Baosteel has acquired a 10 percent stake in Noront Resources Limited, a Canadian mineral explora‐ tion company for approximately US$17.5 million. Noront is current‐ ly working on projects to discover nickel, chromite, and copper de‐ posits. 3 VietNam Steel Corporation ac‐ quired an 85 percent stake, at the price of US$30 million, in Lilama HaNoi’s zinc-plating factory at the HaNoi-based Quang Minh Indus‐ trial Zone.
4 Sinofibre Communications Ltd. has acquired a 60 percent stake in Dalian Xinbao Biomass, for ap‐ proximately US$51 million. Xin‐ bao Biomass specializes in trans‐ forming organic materials such as municipal solid waste (MSW), wood, agricultural waste, and other carbonaceous material into clean energy.
5 Home Inns & Hotels Management Inc. has signed an agreement to purchase Motel 168 Holdings Inc. for US$470 million. The deal is expected to close at the end of this year. Home Inns has stated it in‐ tends to keep the Motel 168 brand. 6 CP Pokphand, a Chinese provider of animal nutrition solutions, will acquire a 71 percent interest in CP Vietnam Livestock Corporation, for approximately US$609 mil‐ lion. The deal will allow CP Pok‐ phand to enter into one of the fast‐ est growing markets for feed and farming in SE Asia. 7 Lenovo has agreed to buy Medion, a German computer vendor. The deal, which values Medion at US$906 million, is the Chinese company’s largest acquisition since its takeover of IBM’s PC unit in 2005. 8 The VF Corporation, owner of Wrangler and 7 for All Mankind, will buy the Timberland Company, the boot maker, for about $2 billion in cash, paying a big premium in an effort to bolster its outdoor clothing offerings.
21 23 www.supplychains.com
Contents ► Manufacturing News /22 ►The Innovation Connection/24 ►Remanufacturing /26 ► Made in the USA, Again /28 行业短讯/22
China’s Small Suppliers Suffer
Small factories across China are starting to shut down due to high inflation rates and borrowing costs. Everything from raw materials to property is becoming more expensive, and combined with the government’s monetary tightening measures, small and medium sized business find their margins shrinking quickly. Wenzhou, a city renowned for its savvy business skills earning it titles like “China’s Shoe Capital”, is now having a difficult time staying afloat. Due to increasing rent, labor, and raw material costs, factories around the city are starting to shut for good.
Sichuan Brews Budweiser AB InBev has announced plans to brew Budweiser at a new brewery in Ziyang, Sichuan province which
will open by the end of this year. The US$100 million facility will produce one million tons of beer annually, and the Budweiser and Harbin brands are slated to be brewed at the facility. China is a key country in AB InBev’s strategy to grow, with Chinese beer drinkers consuming an average of 40 billion litres annually.
Summer Power Outages Slow Production
If your company produces in Jiangsu, Henan, Zhejiang, Guangdong and Hunan province, be prepared for power failures. The China Electricity Council is forecasting an estimated 30 gigawatt shortage over the summer. Jiangsu alone will bear 37% of the countries total power shortage. Beijing is sixth on the top ten list of regions most likely to be affected.
Gamesa‘S 5th Factory
Gamesa, the Spanish wind energy company, opened its fifth China factory in Jilin province at the beginning of June, which will produce nacelles (coverings) for the company’s turbines. Gamesa also has four factories in Tianjin providing blades, generators, nacelles and gearbox assembly for the company. The company will look to bolster its manufacturing base in China with an additional two factories in the near future.
Coach Confirms Production Move
Coach, the US luxury bag brand, has confirmed that it will shift 40 to 50 percent of its production out of China over the next five years. The company is currently setting up facilities in Vietnam, India and the Philippines, to enable the exit from China. Coach sites the rising
22 24 JULY/AUGUST 2011
MANUFACTURING labor costs as the major reason for shifting and diversifying its manufacturing base. Outside of manufacturing, the luxury accessory company has big plans for China, setting sales targets at US$500 million over the next three years.
Saab Completes China Deals
Saab’s parent company Spyker has reached a deal with Zhejiang Youngman Lotus Automobile to acquire a 30 percent stake (US$196 million) in Spyker. Saab also signed a US$157 million deal with Pang Da Automobile in May to distribute and manufacturer Saab cars in China. It’s been pretty well documented that the Swedish car brand has been struggling for sometime, and these deals with Chinese companies will help Saab stay afloat, as well as penetrate
the growing Chinese automotive market.
Pacific Brands in Trouble
Pacific Brands made the decision in February 2009 to close all of its local Australian factories and shift production to contract manufacturers in China. The company, which designs Bonds, Malvern Starr and Dunlop Valley, is now suffering from a drop in their own Sue Morphet retail demand Chief Executive at Pacific Brands thanks to new competitors in the Australian retail market such as Zara, as well as the rocketing cost of
manufacturing in China. ‘’Although costs have gone up, the benefits are still there,’’ says Sue Morphet, Chief Exec at Pacific Brands. ‘’The difference is significant between what it would cost us to stay here and dealing with China, even though the costs have gone up.’’
How Green is The ipad?
Apple has stated that it would be willing to pay for 400,000 tons of CO2 that it emits in the US, and for 500,000 tons of CO2 that it emits due to shipping its products. The payment would be part of a US Federal emissions program. Research has also indicated that Apple and its suppliers produce 3.8 million tons of CO2 as a result of manufacturing in China. Yet another blemish on Apple’s CSR record.
NEW PROLOGIS 崭新的安博
AMB Property Corporation and ProLogis have merged, creating the undisputed leader in the global logistics infrastructure business. In this combination, two great companies have come together to form the new Prologis. AMB和ProLogis 两大行业巨头的成功合并，开启了安博作为国际物流基础设施 服务行业全球领袖企业的崭新篇章。
Learn more at www.prologis.com 更多详情，欢迎浏览公司网站 www.prologis.com
安博中国 25 23 25 www.supplychains.com
The Innovation connection How TE Connectivity’s Director of Operations Strategy sees China on a domestic and international scale
an you talk about what you do and what your company does? I came on board with TE Connectivity about a year ago to enable better manufacturing and operation practices in the region. The philosophy in the company that says that we want to be in China not only to manufacture for the world, but to manufacture for the domestic market as well. Part of that means TE has to competitively produce local products with the right level of technology to be able to satisfy the local market. At the same time, we have to be able to leverage our plants here. We have 16 plants with over 30,000 employees to continue to serve the world. What we are looking for is innovation in TE manufacturing, TEOA (TE Operating Advantage) which means we bring in operating advantages like lean manufacturing and value stream mapping. Can you give us an overview of TE’s manufacturing operations in Asia Pacific? In Asia Pacific we have 20 plants in operation, from Japan all the way down to New Zealand. The majority of the plants are here in China with about 16 manufacturing sites. In the Asia Pacific region, in manufacturing per se, we have over 30,000 people. We have a bigger presence of manufacturing in China because we have already been here for 22 years now. We have plants located just about all over the coastal regions and we have a US$900 million investment capacity in China. Most of our growth is from emerging markets, and to win in the emerging market, you’ll have to win in China. We want to make sure that China is able to not only manufacture for the world but also able to shift the design for the Chinese market. We see that as a growing advantage for us.
Rolando Saavedra, Director of Operations Strategy 24 JULY/AUGUST 2011
Who are your biggest competitors in Asia Pacific? Our business ranges from undersea communication cables, to PCs and cell phone antennas, even power delivery to railroad. If you have a GM car, or even some Geely cars, they have TE connectivity products imbedded into it. We control connection points to airbags. We do antennae in consumer devices. Then we have industrial solutions. For example, we are in aircraft wiring for the new A380. The big take-away for TE is that we have core technologies that allow us to cross industries, and that makes us unique. We can bring something from a data server connection into the aircraft business. And that’s innovation. So who are competitors? Many companies. What are some innovations challenges in the APAC region? Innovation for the customer is a big challenge. We are very focused on what our customer needs and wants are. How do we understand our customer? By getting the design team close to our consumer base. We have our global Head of Engineering here in China with almost 300 engineers. The reason why we need that much engineering power here is to ensure speed to market, and speed to production. What are some manufacturing challenges in this region? One of our challenges is the fast changing environment. Some consumer products are very stable, like for airplanes. An airplane design lasts for 20 years. But for consumer electronics, every 8 months you get a new design. So TE is operating in a very extreme environment. The biggest challenge for us is really the fast pace change. In electronics, two things matter. One is time to market, and once customers begin to accept and give you more orders, there is time for total volume. Emerging Markets
China $1.9B sales 16 manufacturing sites
in US$ Millions
$1,727 Network Solutions
Brazil $300M sales 1 manufacturing sites
$8,070 Electronic Components
$1,549 Specialty Products $724 Subsea
India $200M sales 6 manufacturing sites
TE Connectivity的中国市场前景 能谈一下公司及您在公司的职责吗？ 我在TE Connectivity上任已有差不多一年的时间了。公司 的运营理念是既要中国制造出口海外，也要中国制造服务本 土。这就是说TE需要找到市场的科技准入点，提高自己在本 土市场的竞争力。与此同时，我们需要更好的整 合各个工厂 的生产。在华我们有十六家工厂三万多员工。对于生产，我们 寻求创新，公司内部有TEOA (TE Operating Advantage), 指的是我们将简约生产及价值趋向图等运营优势带入实际生 产。 能说说TE在亚太地区的生产情况吗？ 在亚太地区，南到新西兰，北到日本，我们有20多家工厂。其 中，中国有16家工厂，占到绝大多数。在亚太，就生产来看， 我们有三万多员工。正是由于我们在华成功运营已有二十二 年之久，我们在亚太的大部分工厂都落户在中国。在华工厂 多数设在沿海 地区，并且在中国我们有九亿美 金的投资能 力。谈到投资，介于今后的市场增长将来自新兴市场，而赢得 新兴市场有将取决于我们能否在中国市场上胜出。我们希望 公司不仅能在华生产满足全球市场的需求，而且我们也要为 满足中国市场而量身定制。这是我的发展优势。 你们在亚太的最大竞争对手是谁？ 我们的产品涉及面非常广，从海底光缆通信到个人电脑和手 机天线，我们的服务领域甚至涉及铁路 供电。通用汽车，甚 至是吉利汽车都有TE connectivity 的产品内嵌其中。我们 也负责对飞机座椅的信号连接。消费品设备里，我们也为之 提供零部件。我们也提供其他工业解决方案。比方说，我们 为空客A380 接通线路。TE的优势在于它对核心技术的保留 和传承。这使得我们能横跨多个行业，这也是我们的独特之 处。我们能让数据服务器与航空业联接起来，这也是创新。 我们很公司的核心技术及该技术于各个行业的运用是很自信 的。那么哪些公司是我们的竞争对手？很多都是。
Net Sales by Segment
Eastern Europe $900M sales 4 manufacturing sites
公司创新在亚太区域有哪些挑战？ 如何更好的体会客户所需的创新是一大挑战。我们很关注客 户的需求。我们是如何了解客户所需的呢？让设计团队更靠 近客户群。公司负责全球工程设计的主管及三百多工程师都 在中国。原因还在？加速进军市场，加速生产。 那在华生产又有哪些挑战呢？ 其一是我们该如何适应迅速变化的环境。有些消费品换代时 间比较长，像客机，一代客机设计能延续二十年之久。但像电 子产品，八个月可能就要更新一代。TE在这样极端的环境里 运营，所以最大的挑战就是如何应对迅速变化的环境。在电 子产品行业，两大因素至关重要。一是进入市场的时间，二是 ���客户接受该产品后，对量的寻求就会逐步增加。
25 27 www.supplychains.com
A Remanufacturing: Better
lmost every major multinational compa- especially in the logistics and purchasing areas.” ny with branches in China is beginning At the Bosch Automotive branch in Suzhou, Supto look at the next steps that will push plyOn WebEDI works to shorten the communication its China supply chains to the next level, length between Bosch and the suppliers, which saves both domestically and internationally. both Bosch and the suppliers a lot of time. Charling The market is more demanding, prices are going up, and Shen, Production Planner of Bosch Automotive Prodit’s time to factor organizational and flow technology ucts (Suzhou) Co. Ltd, also says that for his department, into the equation. SupplyOn helps to ensure accuracy and transparency of In order to help with the efficiency and the sustain- each data transfer. Bosch has also recently promoted a ability of their business, Bosch China is in the process of new business mode via SupplyOn entitled Vendor Manrolling out SupplyOn solutions in their purchasing, logis- aged Inventory (VMI). tics, and quality departments as part of a greater global Because of these new implementations, Charling says initiative. Bosch, which already has 15 departments and that the platform has optimized the process of procureplants in China using the SupplyOn platform, operates ment planning in his department whileNanyao, increasing work ► Long Interchina 47 entities in China and sees their branches here as the efficiency. “Before, we got purchasing orders from our next important node of modernization. “Our purchassuppliers byprod‐ email orhave fax, which wasted time and10couldn’t been in use for over years. remanufactured he remanufacturing in‐ document, ing has already reached an economy of scale in China,” ensure 100% data transfer,” he said. “Now the data can conser‐ dustry is a relatively ucts can achieve 70% savings in en‐ According to one expert’s says Huang Bin, Corporate Purchasing Director, Asia be delivered accurately on time, and suppliers can also underdeveloped sector ergy consumption compared with vative estimate, if 3-5 percent of Pacific at Bosch (China) “At this point, procurement at fasttools speed.” China’s plan machine need to be production of newdownload products,our 60% in China andInvestment one little Ltd. it’s very important that we have a very clear purchasing For the suppliers, advantages of a new mean year, the re‐ known to most people, but savings of raw materials, and 50% remanufactured eachplatform strategy and a well structured that they can see order reman market would be about it is one showing significant Existing Machines in China, 2010 organization.” quirements on SupplyOn 210,000-350,000 units per potential. Industry experts immediately. The Bosch sys49,570,000 year at present. estimate the annual produc‐ 7,000,000 Purpose for Using It tem will get Advanced 6,000,000 However, China’s Shiphuge tion value of China’s machine With these goals in mind, ping Notification (ASN) machine tool population tool remanufacturing industry, rolling has out been a newatIT no 4,200,000 automatically. includes many There low‐endis and which theplatform level of was the next step in streammanual operation during very old machine tools. Ac‐ about RMB 1 billion in the past 2,900,000 lining ofpurchasing practices the process, cording to anwhich officialmeans esti‐ couple years, will double by for Bosch China. While there less chance for human ermate, more than 60% of the 2015 to 400,000 to 600,000 units are many different forms that ror and less need for remachine tools in use in Chi‐ from 210,000 to 350,000 units SupplyOn confirmation data. na are alreadyofover 10 There years per year in can 2010.take when dealin s Cs N ol s ar l ingThe with a company, in Bosch’s is no manual operation or C o old now, and in the coming government has realized o e o t ne t y o case the solution acts as a webentrance of data during the e 0 5-10 years many of these old that the reman industry could N in in 1 h based platform between Bosch process, the data becomes ch ver ac machinesso will need over‐ make a huge contribution to a o m M e and suppliers, on which they more credible. s hauling and upgrading or those goals. It is fashioning a u Source: NDRC, InterChina Analysis can share purchasing informawill have to be scrapped. long‐term development strat‐ tion and forecasts in to order transpar- Moreover, Set up the re‐ The low proportion of CNC ma‐ costthe reductions. egy and delivery policy framework fos‐to help encythe of procurement transactions. reallybusiness importantproduces In terms effort,chine Bosch is working slowly out tools means to there is aroll large little of solid ter remanufacturing sector’s“It’sman to use modern technology in order to secure informathis system to all of its largeand small-scale suppliers. growth. According to one NDRC waste and air pollution, which can potential market for China’s reman tionbeand to estabtheircom‐ kick-off introduction with sector. Althoughmeeting the ratio (insuppliterms reduced by moreDuring than 80% lish a standardized ers, they do initial training and monitor the suppliers until to pared with production of new prod‐ of units) of CNC machine tools Remanufacturing is an process,” says Mr. they get the hang of the system. Charling says that from all machine tools in China has in‐ ucts. industrial process in Huang Bin.has “ITabout is 7start to finish, the rollout normally takes a total creasedprocess from 3.2% in 1992 to 19.79% China million units of which worn-out products increasingly imporof one month. The advantage of this system is that new tools in service now, and in 2008, that ratio is still much lower are restored to like-new tantmachine through all of users only need short-term training. Thomas Fendt, reportedly more than 60% of them than in the western world, where it condition. the supply chain, Senior Manager of Supplier Quality and Supplier Devel-
(and cheaper) than new ?
China finds an alternative way in machinery solutions
O N C Z L
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Au m tom ac o hi bi ne le ry C on m str ac uc hi tio ne n ry
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MANUFACTURING averages 60~70%. Considering the huge number of machine tools in use, there is tremendous market po‐ tential for the machine tool updating and remanufacturing business in China. Three major target industries for remanufacturing Automotive industry In March 2008, NDRC published a list of reman pilot projects for the auto industry which included 14 lo‐ cal automotive enterprises (FAW, Dongfeng, JAC, Chery, and Shang‐ hai Dazhong). The projects include such products as engines, gearboxes,
China’s Remanufacturing Market Market size: RMB 1 Billion Machine tools in service: 7 million units Machines in service for 10+ years: 4.2 million units generators, starters, and steering gearboxes. China claimed an “initial achievement” in remanufacturing the auto parts assemblies for the five companies listed above, and gained an aggregate reman capacity of 230,000 sets by May 2008. However, the pilot auto companies are not yet allowed to use the reman‐ ufactured old components (disman‐ tled from scrapped automobiles) in new vehicles or for sales to parts distributors. The remanufactured components can only be distributed in the automaker’s own after‐sales service networks. Given these limi‐ tations, remanufacturing has a lim‐ ited scope in the auto sector. On December 21, 2009, Ministry of Industry & Information Technology (MIIT) published a list of 35 pilot en‐ terprises and industrial zones (the first batch) to promote mechanical and electronics products remanufac‐ turing. The list includes seven con‐ struction machinery makers, seven industrial machinery and electron‐ ics equipment suppliers, four ma‐ chine tools companies, seven min‐ ing machinery manufacturers, four equipment builders for railway ve‐
hicles, one marine valve plant, three office equipment companies and two remanufacturing industrial zones. The MIIT list’s exclusion of the au‐ tomotive sector, an apparent glitch in coordination between ministries, has confused many in the industry. Construction machinery China’s construction machinery sector has made some initial prog‐ ress in developing the reman sec‐ tor, led by Caterpillar of the U.S., the world’s most successful pioneer of remanufacturing. Caterpillar, which also remanufactures for the automotive, locomotive and marine engine sectors, set up a reman cen‐ ter in Shanghai in 2006 to serve its clients in the China and Asia Pacific regions. The company also has an agreement with China Yuchai In‐ ternational, one of the largest diesel engine makers in China, to provide engine reman services for Caterpil‐ lar and Yuchai engine components. Other local construction machin‐ ery companies listed in the pilot promotion program include Xuzhou Construction Machinery Group (XCMG), Guangxi LiuGong, Chang‐ sha Zoomlion and Sany. Machine tools Four machine tool companies: Chongqing Machine Tools, Wuhan Heavy‐Duty Machine Tools, Qing‐ hai No.1 Machine Tools, and Wuhan Huazhong Automation Technology,
were included in a recent MIIT list for pilot remanufacturing project promotions. The current total annual revenue of China’s machine tool remanufac‐ turing business is estimated at about
RMB 1 billion. However, it is difficult to calculate actual gains from the re‐ man business since the industry is still at a very initial stage. Some data that is attributed to reman actually involves repairs, maintenance, ret‐ rofitting and simple upgrading with economical NC systems. The MIIT list also includes two lo‐ cal industrial zones for clusters of remanufacturing activities: Hunan Liyang Manufacturing Base and Chongqing Jiulong Industrial Park. Implications for foreign companies Foreign machinery companies need to understand and accept China’s plan for creating energy‐ef‐ Producing Remanufactured vs OEM
Savings Potential: 70% - Energy 60% - Raw Materials 50% - Cost ficient solutions in a cost‐efficient way. Large machine tool makers will become the main force in the re‐ man industry, and this will have an impact. For certain machine types, competition will eventually not only come from other makers selling new equipment, but also from reman players. The demand of new ma‐ chines in China will actually be re‐ duced in the long‐run, and Chinese machine reman players are expected to be a major exporter in the future. We believe that foreign players with strategic foresight should em‐ brace this challenge by exploring reman offerings to the Chinese mar‐ ket, and to actively shape this indus‐ try as well as the overall machinery industry. Right now, Chinese play‐ ers are still weak in know‐how and technologies, and foreign players have a role to play. Furthermore, re‐ man business falls into the category where foreign investment is ‘encour‐ aged’. The right strategy in such a case could be a JV partnership with a competent Chinese company to leverage governmental support and local logistical know‐how.
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Made in the USA, Again Manufacturing returns to America as China’s Rising Labor Costs Erase Most Savings U.S.A ► David Fondillier, The Boston Consulting Group
ithin the next five years, the United States is expected to experience a manufacturing renaissance as the wage gap with China shrinks and certain U.S. states become some of the cheapest locations for manufacturing in the developed world. With Chinese wages rising at about 17 percent per year and the value of the Yuan continuing to increase, the gap between U.S. and Chinese wages is narrowing rapidly. Meanwhile, flexible work rules and a host of government incentives are making many states—including Mississippi, South Carolina, and Alabama—increasingly competitive as low-cost bases for supplying the U.S. market. “All over China, wages are climbing at 15 to 20 percent a year because of the supply-and-demand imbalance for skilled labor,” said Harold L. Sirkin, a BCG senior partner. “We expect net labor costs for manufacturing in China
and the U.S. to converge by around 2015. As a result of the changing economics, you’re going to see a lot more products ‘Made in the USA’ in the next five years.” After adjustments are made to account for American workers’ relatively higher productivity, wage rates in Chinese cities such as Shanghai and Tianjin are expected to be about only 30 percent cheaper than rates in low-cost U.S. states. And since wage rates account for 20 to 30 percent of a product’s total cost, manufacturing in China will be only 10 to 15 percent cheaper than in the U.S.—even before inventory and shipping costs are considered. After those costs are factored in, the total cost advantage will drop to single digits or be erased entirely, Sirkin said. Products that require less labor and are churned out in modest volumes, such as household appliances and construction equipment, are most likely to shift to U.S. production. Goods that are labor-intensive and produced in high volumes, such as textiles, apparel, and TVs, will likely continue to be made overseas. Indeed, a number of companies, especially U.S.-based ones, are already rethinking their production locations and supply chains for goods destined to be sold in the U.S. For some, the economics have already reached a tipping point. Caterpillar Inc., for example, announced last year the expansion of its U.S. operations with the construction of a new 600,000-square-foot hydraulic excavator manufacturing facility in Victoria, Texas. Once fully operational, the plant is expected to employ more than 500 people and will triple the company’s U.S.-based excavator capacity. “Victoria’s proximity to our supply base, access to ports and other transportation, as well as the positive business climate in Texas made this the ideal site for this project,” said Gary Stampanato, a Caterpillar vice president.
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MANUFACTURING Zinser noted that executives should not make the mistake of comparing the average labor costs for production workers in China and the U.S. when making investment decisions. The costs of Chinese workers are still much cheaper, on average, than comparable U.S. workers, and some managers may assume that China is a better location. But averages can be deceiving. “If you’re just comparing average wages in China against those in the United States, you’re looking at the problem in the wrong way,” Zinser cautioned. “Average wages don’t reflect the real decisions that companies have to make. Averages are historical and based on the country as a whole, not on where you would go today.” “In the U.S., we have highly skilled workers in many of our lower-cost states. By contrast, in the lower-cost regions in China it’s actually very hard to find the skilled workers you need to run an effective plant,” added Doug Hohner, another BCG partner who focuses on manufacturing. Even though other low-cost countries—such as Vietnam, Thailand, and Indonesia—will benefit from companies seeking wage rates that are lower than China’s, only a portion of the demand for manufacturing will shift from China. Smaller low-cost countries simply lack the supply chain, infrastructure, and labor skills to absorb all of it, Hohner noted. Even as companies reduce their investment in China to
make goods for sale in the U.S., it is clear that China will remain a large and important manufacturing location. First, investments to supply the huge domestic market in that nation will continue. Second, in the absence of trade barriers that prevent offshoring, Western Europe will continue to rely on China’s relatively lower labor rates since the region lacks the flexibility in wages and benefits that the U.S. enjoys. Other LCCs will benefit from new US demand in Asia Size and infrastructure will affect ability to capitalize on improcing economics Country
Manufacturing wage rate Working age popluation (US$/hour) (m/% total)
News /30 ►Raising the bar /32 ►Taking control/34 ►Falling short of supply/36
Antwerp and Chongqing get linked!
The first train left the port of Antwerp with sights set on Chongqing in West China. At 20-25 days, the rail link speeds up the process of getting cargo from Europe to Western China, far faster than sea freight, which currently takes 36 days. Antwerp was the most recent addition to the Eurasian Land Bridge, which connects Xinjiang’s Alataw Pass and Kazakhstan, continues on to Moscow, with freight rail reaching Germany’s Duisburg via Poland, and finally ending in Antwerp.
Wuxi section of canal upgraded
The canal which connects Beijing to Hangzhou was plagued by a bottleneck in the Wuxi portion for ages. Problem solved! A US$170
million expansion project that was recently completed has widened the portion of the channel to 90 meters and increasing the depth to 3.2 meters. As a result, 1000ton vessels are now able to pass through.
AMB and ProLogis have globally merged together and as of June 3rd, 2011, the name of the new company is “Prologis”, take note that the upper “L” is now lower case. In China, the English name “AMB China” will change to “Prologis China” but will continue to use 安博中国 (Am Bo
Zhong Guo) as the Chinese name. When Prologis left China in 2008, they sold their assets to GLP, who continue to operate the facilities under Prologis’ Chinese name (Pu Luo Si).
Toll enters China’s Auto Logistics
Toll Group has acquired a 40% share of Tianjin Anda Logsitics, one of the largest 3PLs in China’s exploding automotive market. The automotive market grew 32% in 2010, with a staggering 18.6 million vehicle sales. “The Chinese automotive market is the largest in the world and offers immense opportunities for Toll to leverage our industry leading automotive capabilities,” said Toll Group Managing Director, Paul Little. China’s car market is slated to grow immensely for the next
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LOGISTICS while, given the ownership of vehicles is still very low at 50 per 1000 people compared to 750 per 1000 people in the US.
Solar ships…no good
Alibaba builds logistics base
Alibaba.com has entered into a partnership with China Post’s Zhejiang branch. The partnership will help AliExpress provide international delivery service for retailers and exporters. Both companies will also build warehouses in Xiaoshan, a small city near Hangzhou, and Alibaba will take charge of creating and managing a logistics plan.
NYK and Kawasaki industries have been working diligently on a solar-powered ship, but have yet to find a working solution. The latest attempt showed that even the slightest changes in weather would result in major fluctuations in power. What’s next? New tests will begin to verify a hybrid power supply system for shipping vessels.
Kerry builds Xiamen Logistics Center
Kerry logistics started construction on a 42,600 sqm Logistics Centre in Haicang
Export Processing Zone, in Xiamen. Upon completion, the center will facilitate products for the hi-tech & electronics, food & beverage, and the wine industry, as well as temperature-sensitive cargo.
Mapletree adds logistics center in South Korea
Mapletree logistics trust will adds Pyongtaek Centre in South Korea for US$68.6 million. Already one of the biggest centers in its province, the facility currently has a total floor area of 101,000 sqm, with the possibility of adding another 20,000 sqm.
Nike’s Paul Barnes discusses their impressive new distribution center, strategy, and the outlook for China.
Give us a brief overview of the project you directed The Nike China Logistics Center project has been a multi-year initiative that is intended to support the continued strong growth of our business in mainland China. The 120,000 sqm distribution center has brought a number of unique operational features to the apparel and footwear industry in China including helping to define how large-scale facilities can operate more sustainably. From the beginning, the design intent was to create a logistics center that married a high performing operation with Nike’s global commitment to sustainability and the environment. Our project team was a very diverse group of experts from over 13 countries, with activities occurring on three different continents. What is Nike’s long-term logistics strategy for China? We’re still seeing a lot of growth on the east coast, which drove the decision to put the facility in the East. At this point in time we have no long range plan on decentralizing; however we are continuously looking at potential supply chain solutions and updating our future network strategic plans. We prefer to find more efficient, more service-oriented solutions as opposed to automatically investing in another box. How does this project fit into Nike’s China logistics strategy? This center is now the single point of distribution for all shipments across mainland China, and replaces facilities that were spread across multiple locations which would have started to create inefficiencies and
increased operating and transportation costs. This project is one of the key components of our overall logistics strategy because it allows us to centralize our operations to drive optimal performance in warehouse execution, inventory management and transportation. We also are able to minimize facility operating costs by leveraging sustainable practices like energy reduction and water consumption. Why did Nike choose Taicang as the site location? The site location was determined through a detailed network study that was conducted at the very beginning of the project. We looked at our key supply chain drivers like import volumes and port of entry, domestic manufacturing base, the expanding retail store base, government infrastructure investments, etc. Based on all these inputs, Taicang was identified as the prime location and the proximity to our main commercial office in Shanghai was an added advantage as that supports improved and efficient communication with our business partners. Can you give us some numbers on the DC’s capabilities? It changes on a daily basis based on our order profile, but I can give you an example. In the last 4 weeks, on one specific day we shipped out over 500,000 units, and we’re not running the full operation yet. We still have the ability to go to multiple shifts if needed. Once we start pushing the capacities, we start getting to a point where we can process in a range between double and triple our previous capabilities, including apparel, footwear and equipment. We’re also evaluating if we
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LOGISTICS have an opportunity to bring our other brands into the facility as Nike.Inc also owns the Converse and Umbro brands. Why did Nike choose such a high-level of automation for the DC? The philosophy behind the design of the facility is to blend flexibility and technology. To date, we have only put in technology where it adds operation efficiency and increases shipment and inventory accuracy. There are a number of areas in the current footprint that provide us with the flexibility to introduce technologies at the appropriate time that support the changing business and market requirements. By centralizing our inventory and processes we are able to reduce lead times to our key markets and consistently drive improvements. What is the biggest challenge for Nike in China, in terms of logistics? We probably have the same challenges that everyone else has – a market place that continues to evolve, expand and mature, increasing raw material and labor costs, a fragmented transportation industry, etc. To address these challenges we are implementing a culture using LEAN principles throughout our supply chain as we strive to remove waste and reduce costs while improving services. Another challenge is how we continue to support the growing business without increasing our carbon footprint so we are looking at opportunities in the area of recycling, as well as implementing closed loop supply chains for consumables and products.
China Logistics Center Located: Taicang, Jiangsu Footprint: 120,000 sqm Operating Space: 200,000 sqm Expansion Space: 30,000 sqm
Paul Barnes谈耐克物流中心及公 司在前景 你简要谈一下您目前所做的项目吗？ 耐克中国物流中心多年来为公司在中国大陆的壮大做出了突 出贡献。十二万平米的物流中心给中国服装和鞋类行业带来 了不小的运作革新，这其中就包括对大规模设施可持续运作 的定义。从一开始，中心在设计上就秉承了耐克对高性能运 转及可持续发展的传统。 耐克中国在物流方面的长久规划是什么？ 东部沿海，公司发展势头强劲，这也是生产分销设施均设在 东部的原因。当然最终我们将进军西部，但目前来看，时机 还不成熟。目前我们还没有制定下放运营自主权，但我们将 向那个方向做努力，而不是仅仅去西部建一个物流中心。我 们希望能找到更适合的运营解决方案。 那这项计划怎样服务于耐克在华的物流战略的？ 相比较在多个区域建立多个物流中心，目前我们在华所拥有 的物流中心在整合物流运营及减小运输成本上具有优势。目 前的中心能让仓储设备运营成本减小到最低程度。 那公司最初为何选址太仓？ 选址在项目动工前就已经决定了。我们看中的是进口能力， 港口准入能力，是否可做零售规模扩大基地，政府投资规模 建设，等等。基于这些考虑，太仓成为最为理想的选择，它离 我们的上海办公室不远，又便于与生产合作伙伴的来往。 能告诉我们一些关于物流中心的具体的数据吗？ 数据是根据每日具体订单数而不断变化的。举个例子，在过 去的四周时间里，我们每天的出货量超过五十万件，但即便 是这样，设施依旧没有达到极限。我们有能力做三班倒。如 果真要那样的话我们能保证每日出货八十万件到一百万件， 这里包括服装，鞋类以及运动设备。我们也在考虑要不要将 包括框威，恩宝，Cole Haan在内的其他耐克旗下的品牌也 拿到中心来管理。 物流中心为何要那样高标准的自动化？ 当时物流中心的设计理念是融合科技与弹性。多年来我们一 直在不断更新中心的设施，既而达到对运营的高效能，增加 出货及存货的快速，准确。就目前情况来看，适时通过引进 高新技术来提高运营的灵活性，这有效的支持了我们在市场 中的应变能力。 通过集中处理存货清单和流程，我们能提 高运转效率，及时供货核心市场。 就物流而言，目前中国市场最大的挑战是什么？ 我们所面临的挑战和多数公司的一样——一个不断变化，扩 张，和成熟的市场；不断增长的原材料及人工成本，零散的 交通运输业，以及存货清单管理过严。应对这些挑战，在提 高服务质量，减小浪费和成本的基础上，我们形成了一种在 物流组织上简约的文化。另一大挑战是在中心怎样在支持公 司发展的同时减小对环境的不利影响。 33
Taking Control A look inside a Chinese conglomerates logistics operations
Liqun Group is a large conglomerate in Shandong province that controls a small empire of 800 convenience stores, more than 60 chain drugstores, 34 office buildings, 9 luxury hotels, and over 100 subsidiaries and branch companies. The complexity and range of the businesses which Liqun oversees makes for a complex logistics and distribution network. As a result, Liqun group has very high service and quality logistic demands.
Liqun manages a fleet of 200 trucks, 30 of which are refrigerated, and all are outfitted with GPS navigation, enabling drivers to deliver to any location in Shandong on time. So why buy, manage and operate such a huge amount of assets? “Trust,” according to Mr. Zhang. “By controlling our own logistics, we are better able to manage quality and reliability.” The company believes that their time spent developing and upgrading their logistics assets have allowed them to build an efficient and responsive logistics network.
Liqun Logistics Liqun started to move towards owning Distribution their own logistics assets in 2001. “At the Liqun distributes all kinds of goods, from fresh time, nobody could meet our needs,” said food and FMCG, to pharmaceutical, clothing John Zhang, General Manager of Qingdao and white goods, hence the reason for RuiTong Hi-Tech , the logistics arm of possessing such a range of logistics Liqun Group. He admits that now, solutions, and for demanding such a infrastructure and 3PLs are much more high level of service. sophisticated in China, however that’s The largest DC in Jiaozhou features not stopping Liqun from continuing cold chain and temperature controlled their acquisition of logistics assets. areas, and equipment like automated Like many Chinese companies, Liqun storage and retrieval systems, advanced is set on controlling all aspects of their forklift trucks, high-reach pickers and logistics needs. “If you outsource to a electric pallet, RF, RFID and Vocollect third party provider, whether it’s for Voice Solution. warehousing or for trucking, the solution John Zhang, GM One of Liqun’s main areas of focus is their will never be a perfect match for what Liqun Logistics Div. supermarket chain and more specifically, you’re looking for,” continued Mr. Zhang. fresh produce. To ensure the highest quality Liqun Group owns and operates three large-scale distribution centers in Qingdao, Jiaozhou, possible, the company has developed relationships and Wendeng. The company has also purchased nearly with local producers. Every day, farmers bring their 200,000 sqm of strategically-placed warehousing harvest directly to one of the Liqun DCs, where they space across Shandong province. On top of that, are stored for no more than 24 hours. By 4am each day, 34 JULY/AUGUST 2011
LOGISTICS all the produce has been sorted, packed, priced, loaded onto Liqun’s trucks, and are on the road and reach all of the company’s supermarkets before opening time. Not only does Liqun distribute for its own supermarkets, drugstores and convenience stores, it also provides distribution services for over a thousand clients in Shandong province. Large retailers like RT-Mart, Jusco and Hisense Square use Liqun’s distribution services to receive more than 500 local and international brands like Revlon, Philips, Dumex, and Wuliangye. Tech Impact Mr. Zhang truly believes in the benefits of advanced technology within the company’s warehouses, DCs and truck fleet. Liqun continues to look for ways to make their equipment and facilities more efficient. One of the latest additions to their Jiaozhou DC has been Vocollect Voice Solution. Since its introduction into
the groceries division, Mr. Zhang has noticed 28% improvement in productivity, and training times have been reduced by at least 50%. Voice technology has also improved Liqun’s order picking accuracy to 99.98% or higher. The company is looking to expand Vocollect’s voice technology into its pharmaceutical and apparel divisions, and to use in other areas like put-away, transfers and replenishment. Final Thoughts Liqun embraces new market players and their technologies in order to constantly improve. John Zhang says, “When foreign players arrived, I saw it as an opportunity to learn.” This mentality has been instilled into all of Liqun’s leaders, which has allowed the company to integrate new technologies into their operations and work with new market players to find new business opportunities. This will greatly benefit the company as it expands to neighboring provinces and online.
at a glance Sales (2010)
200,000 sqm Trucking Fleet
Convenient Stores 800
Swiss quality worldwide
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Falling short of supply CBRE’s Andrew Hatherley details China’s warehousing space issues ►Chenyin Pan
recent paper released by CBRE entitled “China’s Logistics: Rising Demand but a Shortage of Supply” outlines the warehousing rates of 5 Chinese cities in the first quarter of 2011. A general increase has been seen across China, including a 20% price jump in Beijing and Shanghai. Since 2000, China has represented 35% of global economic growth. The country has surpassed Japan in terms of GDP, and will rival the GDP of the US in the next 15 years. In terms of sheer volume of trade, China exceeded Japan’s totals a while ago, and should move past the US within the next 2 or 3 years. While the growth is staggering, it has put immense pressure on China’s commercial property use since a large proportion of the growth was influenced by infrastructure investment. The major drivers of the price hikes are a result of exports levels returning after the recession and domestic consumption levels. Even during the recession, domestic consumption in China was increasing 15% year on year. The recession couldn’t keep the Chinese from consuming almost everything, and this trend is likely to continue into the future. Logistics companies will have to account for this consumption demand, and more A-Grade warehouses will need to be established where the most amount of consumption is happening. For example, in order to cater to more than 200 shopping centers in Shanghai, the industry will need to establish warehousing space close by. This is where the problems arise. The Problems Finding property close to consumptions points has become more difficult and more expensive to do. Take Intel, who has recently moved their facilities from Waigaoqiao in Shanghai, to Chengdu and Dalian, which has provided the company with great savings. We can also look at the Olympics in 2008, where Beijing pushed a lot of polluting industries out the city, and what was left was logistics property. Now, it’s very difficult and expensive to find new plots of land to develop in Beijing. As a result, companies are looking to nearby Tianjin to
establish their warehouses. As of right now, Tianjin still has the land available to support growth from industries, and to develop warehouses to serve itself as well as Beijing. The situation is comparable to the relationship Shanghai has with neighboring Kunshan. One of the major problems is the policy that the central government has established, which states that from any investment into industrial land, only 2% of the land usage should go to logistics. Once that policy goes through the district government, who try to squeeze all profit out of each piece of land, that number is probably less than 1% for logistics use. District governments are looking to increase their employment numbers and tax revenues, and manufacturing or retail property contributes more than logistics real-estate. Central Government Stepping In The scarcity of land has forced the central government to sell the land directly to companies, rather than make district governments responsible for dividing the land. The district governments have a track-record of selling land for manufacturing or commercial use, because it’s more profitable. Beijing has realized that if this trend continues, there won’t be enough land left for other needs like agriculture. China has also opened its logistics market to international competition, with the hope that foreign competitors would bring their expertise and efficiencies to China, which in turn would reduce the cost of logistics and supply chain.
Percentage of land dedicated to logisticst for gov’t industrial land deals
Increase of rent for logistics land in Beijing and Shanghai Q1, 2011
5.8 mn sqm vs. 550 mn sqm
modern warehousing VS. warehousing space in China
36 JULY/AUGUST 2011
The CIF Dilemma by Chris Chalmers
Saving Face or Quick Profits
t has long been the trend for Chinese suppliers to push for CIF (otherwise known as CFR, C&F or CNF) terms with their international clients. The reason is simple: there is money to be made. International freight forwarding companies are quick to offer suppliers extremely low or zero dollar freight rates, or sometimes even refunds or kickbacks for making bookings. It is not uncommon for suppliers to receive a payment of US$30 per cubic metre or tonne of cargo they book with a freight forwarder as an incentive. And how do the international freight companies recover these losses on freight? They charge exorbitant fees to the final importer of the cargo which, although being described as local charges, are actually covering the freight which should have been paid by the supplier. Into Australia for example, general market rates for LCL port & terminal charges are about US$95 per CBM or tonne. But when an incentive rebate is being paid to the supplier by the freight company they will usually seek to collect somewhere in the vicinity of US$155 per CBM or tonne. The additional profit collected has to be rebated back to origin to cover the cost of the freight and the incentive paid to the supplier. The net effect is that the buyer is often left paying the freight twice - once to the supplier under CIF terms and again to the forwarder as local charges. Whilst the buyer may not realise that they are paying the freight via local charges to the forwarder, it usually leaves a nasty taste in their mouth when they query why the local charges are so high, only to be told to take it up with their supplier who
booked the freight. Most of the time the buyer will just pay up and shut up, but rest assured that they’re not pleased with the outcome and this has to affect ongoing business between buyer and supplier. The other downside to this situation is the inefficiencies it creates in the supply chain. Imagine you are a supplier with 25 cubic metres of cargo to send to your buyer. The terms are CIF and there is no instruction as to the shipping mode to be used. The most economical and efficient method of shipping would be as a 20’ Full Container Load (FCL). Shipping as an FCL offers better protection for the cargo by reducing double handling, and would also enable the buyer to take earlier delivery at destination by avoiding the need to wait for a consolidated container to be unpacked. But with the supplier being offered an incentive to ship as LCL (loose cargo) it’s not hard to see why the more profitable option is usually chosen. Suppliers who manage their CIF transactions by carefully checking the freight rate versus local charges ratio and get the balance right are much more likely to secure future business. Selection of the most efficient and economical shipping modes should be a concern for those on both sides of the transaction. An easy face saving exercise that will earn the supplier more respect and a healthy relationship with their buyers. Chris Chalmers is the C.E.O. of Tomax Logistics, a global player in the provision of freight, customs and transportation services. www. tomax.com.au
News /38 ►Distributing to the Masses/40 ►The corner store battle/42
Groupon Tries to Tame China
Groupon’s aggressive plan to expand internationally has come backfired, with international operations losing a combined US$170 million in 2010, compared to just US$10.4 million in the US. The losses in China can be attributed to a hiring rampage that Groupon’s core management went on. The company started off with 10 people in January on the mainland, and by March had increased their numbers to 1000. Assigning a management team unfamiliar with the local market and hiring bankers and international MBAs, most of whom were foreigners, are just some of the rookie mistakes that Groupon made during their entry into China. In early June, Groupon’s US headquarters took control of all international operations. Groupon continues to struggle in China, competing against hundreds of
copy-cats including Lashao, Meituan, Manzuo, and Ftuan.
Interesting Times at Walmart
executives quit at the end of May for unknown reasons. Rob Cissel, COO, and Roland Lawrence, CFO, have resigned from their positions, citing the desire “to explore other opportunities.” Mario-Jose Medina will become the new CFO, and Del Sloneker will take the COO helm.
At the very least, things haven’t been dull at Walmart in China. Recently, Walmart announced it would partner with Yihaodian.com, a Chinese B2C website. Yihaodian has grown roughly 28% per month since it was established in 2008. The move is an attempt by Walmart to break into China’s exploding online commerce space. In other Walmart news, two top
Unilever China was fined RMB2 million (US$ 308,000) in early May for price fixing. Earlier this year, a spokesperson for Unilever stated that the company was set to raise prices by 15-20% on certain consumer goods like laundry detergent. As a result, panic buying erupted at stores in China with some retailers reporting sales of Unilever products at 10 times their normal rate.
38 JULY/AUGUST 2011
Ambitious Plans for RBT
RBT Holdings, which operates RBT restaurants and Happy Lemon, will look to increase its presence in China significantly. With a combined 300 current locations, RBT Holdings will look to increase Happy Lemon locations to 1200, and RBT restaurants to 500 over the next five years.
Illy Bring Boutiques to China
Illycafe Spa will launch a chain of stores in China, with hope of capturing the growing demand for coffee by Chinese consumers. The
first store will open in Shanghai by the end of 2011 and will sell coffee machines, coffee and tea from Illy. The company also plans on adding up to 5 more stores in 2012 in cities like Beijing and Guangzhou. Chinese instant coffee demand hit an estimated RMB5.1 billion (US$786 million) in 2010.
India to Deregulate Retail
The Indian government has proposed plans to deregulate its banking system which would allow foreign banks to expand their retail operations outside of major cities. If the bill passes, it would be possible to see Walmart or Carrefour outlets in
local shopping areas by 2012. Foreign investment is currently limited to 51% holdings in a single brand shop, and quite limited on wholesale stores. As a result, retail currently accounts for a dismal 3 to 4 percent of the Indian economy. In comparison, China’s retail sector accounts for 16 percent of its economy, and has been a key factor in its growth.
Starbucks Takes Control of China
Starbucks has arranged to retake control of its 250 franchised locations in China from its JV partner, Maxim’s Caterers. Starbucks has been looking to grow its business internationally, and China is a key country to do so. Store sales are 40% lower in China than in the US, and one of the key challenges for Starbucks will be to convince China’s consumers to drink more coffee.
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39 41 www.supplychains.com
Distributing to the Masses 16 US$12.4 bn
Sinopharmâ€™s Gu Yimin, Logistics Management Dept. GM, discusses their distribution network, rural area expansion and partnerships.
US$800 mn Logistics investment
an you describe Sinopharmâ€™s distribution network in China? In terms of sales, in the 12th 5 year plan, the volume is forecasted to exceed US$300 billion. Right now, our logistic centers are 60,000 sqm in total. Nationwide we have 50 to 60 DCs, of which 13 are modern facilities. Our logistics property is either owned by us or rented. Pharmaceutical products are sold on different platforms. Sales are conducted in retail and wholesale setting, and sometimes we must do direct deliveries during emergencies. Our distribution channels vary depending on the type of business we are handling. We have a logistics network that can cover the supply chain demand nationwide, we also manage our own warehouses. For transportation, we do inner-city and provincial level deliveries by ourselves. We outsource long-haul. Does Sinopharm distribute for foreign brands? For our pharmaceutical business, we were the first 3PL in the market, and now we are the biggest 3PL partner for all pharmaceutical businesses in China. We worked with Bayer 5 years ago, then we partnered with GlaxoSmithKline. We also worked with Pfizer and some other companies before. How do you work with or compete with foreign 3PLs? Very few foreign pharmaceutical 3PLs have entered the market as of right now. For the ones that entered the market, their network is not as vast as ours. However, local logistics companies are the ones that are truly competitive. What are some new distribution challenges that Sinopharm is facing? The Government is changing its industrial policy on pharmaceutical product distribution. Supplying basic
medicine to the countryside has become the priority of the central government, so they are encouraging the industry to extend its medical distribution network to rural areas. It is now a new challenge for our supply chain, but it is also a good opportunity for us to stay innovative.
40 JULY/AUGUST 2011
DISTRIBUTION What are some new regions that Sinopharm is looking to expand in? Except for Tibet, we have local branches in all the other provinces. In terms of business, we are seeking growth nationwide. Acquisition is a good way to expand business, it’s also a good way to optimize our resources. By 2015, our sales volume should exceed USD$27 billion. What is Sinopharm doing to expand operations to central and western parts of China? Our DCs are currently in all Tier 1 cities. For the central and western regions, we are investing a lot in Henan, Hebei and Hunan, but we’ll upgrade our inner city delivery facilities. For areas with high population density, we’ll consolidate our supply chain strength. To the rural markets, we’ll set up city level DCs to meet the demand. What is the biggest distribution challenge for expanding west? Our biggest challenge is to incorporate the unexplored territories into the distribution network. We are expecting to spend US$800 million on network expansion in the future. It’s a challenge to finance it and to find the right talent to manage it. Can you give us details of the expansion? In order to cover the logistics demand of 330 cities nationwide, we’ll construct and upgrade 40 provincial level DCs and 70 city level DCs. Delivery to customers in rural area should take no longer than 48 hours.
配送服务大众 中国医药集团物流管理总经理 顾一民���公司物流配送 公司的物流网络是怎样支持配送的？ 从公司的销售来看，在十二五计划里，公司的销售将超过1800亿 到20 0 0亿这样一个规模。目前在国内物流中心的布点超过了六 万平方米。在全国我们有50-60个（自己建的，或者租的）物流中 心。其中现代化物流中心有13个。 公司为国外品牌提供物流服务？ 国内医药领域的三方物流我们做的是最早的，现在也是最大的。5 年前我们和bayer公司合作。之后我们和GSK也进行了三方物流 的合作。后来和辉瑞(Pfizer)等公司都有过合作。我们有自营第 三方物流的团队,国药自2004年就与曼哈特软件开始了合作，改进 完善了国药的 供应链配送体系。经过几年的时间，我们已经可以 给客户提供非常好的服务。我们的服务水平远远超过客户对我们 的要求。 你们是怎么同国外三方物流合作/竞争的？ 国外公司目前也没有完全进入中国市场。即便是少数公司进入市 场，他们的网络覆盖还没有我们这么广。他们对我们形成直接竞 争还尚需时日，恰恰是本土公司会对我们行成竞争。 公司会面临哪些物流挑战？ 国家在医药配送上的产业政策在不断的调整。国家在对基本医 药保障的要求，就是希望我们能将医药配送向农村方面去延伸。 这对我们物流分销来讲是一个很大的挑战。这也将是我们供应 链寻求改变和创新的地方。 哪些地区是公司希望扩展业务的？ 我们公司的网点覆盖全国，除了在西藏我们还没有设立分公司以 外，其他各个省份我们都有分公司。业务方面，我们是全国范围 内进行拓展。拓展的方法呢第一个是通过收购，收购就实现了资 源的整合。对于未来的销售增长，我们还是比较看好的。到2015 年，我们的销售目标是1800亿。 公司是怎样延伸在中西部的运营？ 我们现在的物流中心是在大城市里，对于你所提到的中，西部地 区，像河南，河北，以及湖南，我们将加大物流建设的力度。未来， 我们将更倾向于城市配送中心的建设。人口密集地区的物流配 送能力，我们要加强。农村市场，我们要在地级城市建立配送中 心。 公司进军西部的最大物流挑战是什么？ 在没有网点的地方布设网点的问题。我们预计要在网点的建设上 投资50亿。不论是从资金也好，还是人力也好，这都会给我们带 来挑战。在管理层面来说，我们的物流可能还是独立运行的，没 有形成联网运作。下一步，我们希望将单点的物流实现网络化。 能说说公司业务扩展的细节吗？ 在物流建设上我们也有自己的目标。未来我们将建立，完善40个 省级物流中心，近70个地市级的物流中心，用以覆盖全国330地级 城市。乡村配送我们做出的是48小时配送这样一个要求。 41
Inside Tesco Express
The Corner Store Battle â–şChenyin Pan
In the convenience store business in China, rivalries among local names like Kedi, Quick and All Days, just to name a few, and their foreign counterparts like Lawson, FamilyMart and 7-Eleven have long dominated the express shopping scene. Local convenience stores use their working knowledge of the local consumers, along with strategic networks of stores, which has helped strengthen their positions in the market. For example, Quick, owned by Lianhua Group, has over 1,300 outlets scattered in Shanghai alone, a city that currently accommodates about 5,000 convenience stores. In 2010, Quick captured close to 25% of total sales out of all convenient stores in Shanghai. Japanese brands are also wracking their brains, trying to figure out how to get ahead of the fierce local competition. 7-Eleven is the frontrunner of Japanese companies, in terms of the number of outlets, followed by Lawson and FamilyMart as the second and the third biggest in the country respectively. These three big Japanese companies are focused on China, and the rivalry will heat
up as they look to open new locations across the country. Expanding Convenience Earlier this year, Lawson announced an ambitious plan to expand their locations to 10,000 by 2020, a very tall task considering the company currently has around 320 stores in China. The company has experimented with a new strategy to groom management talents in the last couple of years to support their plans for China. Instead of sending Chinese employees to Japan for management crash-courses, Lawson is training and hiring Chinese graduates from Japanese universities to work as store managers in China. The company now feels that its local management is better prepared for a large scale expansion effort. FamilyMart has outlined a more mixed approach, eyeing a franchise business model to expand and take the China market. In more mature markets like Japan and Taiwan, FamilyMart franchises account for 90% and 85%, respectively, of their chain stores. The company operates
over 400 FamilyMart locations in Shanghai, but only 40% are franchised. The company has been selective in choosing its franchisees, as it looks to uphold the high standard of service and quality itâ€™s known for in other East Asian countries. FamilyMart will also open 30 directly managed stores in Chengdu by the end of 2011, and increase that to an astonishing 1,000 locations in Sichuanâ€™s capital by 2012. 7-Eleven is also expanding their business in China, focusing on western cities like Chengdu, Sichuan Province. By the end of April, 7-Eleven had opened four new stores in the city, and by the end of year that number will rise to 50. New Competition? As the established convenience store players are devising new strategies and teaming up with new partners to maintain their dominance, Tesco Express, a modern take on convenient and quick shopping, could put a whole new spin on the express shopping market. Tesco Express was first seen in Shanghai in 2008. A typical Tesco
42 44 JULY/AUGUST 2011
DISTRIBUTION Express is 200-300 sqm in size, compared to that of a 120 sqm 7-Eleven ,or of 100 sqm FamilyMart location. The format of a Tesco Express blends a convenient store model with that of a small-sized supermarket. The Tesco Difference The stores offer almost everything that a convenience store would, but what sets them apart is the selection of fresh fruit and vegetables, as well as more variety for snack foods, quick meals, drinks and personal care items. The stores are far cleaner than the average convenience stores in Shanghai and are positioned in strategic locations. Tesco positions its Express locations in high traffic zones, usually close to busy retail outlets like Xujiahui shopping center or fast busy stores like Café 85. Above all, Tesco express offers goods to its patrons at a lower price than any convenience store can. What separates Tesco Express from its convenience store competitors?
It’s not only the better selection and fresher goods, it’s the backbone of any fresh goods retailer: its supply chain. Tesco manages its own low energy distribution center in Jiashan Country, Zhenjiang Province, a short drive from Shanghai. The company currently operates 12 Tesco Express stores across Shanghai, which share the same efficient distribution system that provides products to the company’s LifeSpace malls and Tesco hypermarkets. The proximity of Tesco Express stores in Shanghai to the company’s modern distribution center in Jiashan allows the company to deliver fresh goods regularly, as well as stock popular items as needed. Final Thoughts Is the Tesco Express model the future of convenient and express shopping? The quality and variety of goods, as well as the store setup make for a much more pleasant customer experience. With convenience stores expanding aggressively in Tier 1 and 2
cities across China, adding hundreds of stores each year, it seems like now is a good time for Tesco Express to make a move in the China market. However, developing a mere 12 stores in Shanghai alone is not going to make waves in the China market. It is time for Tesco Express to act decisively. Either commit to a reasonably aggressive expansion effort, or fall behind and drown in the flood of foreign and local convenience store expansion. Should they choose to expand, Tier 2 and Tier 3 cities are waiting for express retail to enter. Just recently, Xiamen’s Bureau of Commerce announced a plan to subsidize the entry of 220 new convenience stores in more remote areas around the city, hoping to raise the ratio of convenience shopping to 3-5 stores per 10,000 people. These developing cities want this type of retail. Why not give them Tesco Express?
Speakers from: LVMH Beiersdorf AG Kohler
RETAIL FRAUD IN CHINA
A Growing Issue
hile many economic sectors have been struggling with ups and downs and uncertainties since the financial cri‐ sis, the retail industry has remained an attractive arena for expansion in China. But retail is not only bringing in mall develop‐ ers and retailers, it is also a magnet for fraudsters. The retail industry in China attracts all kinds of unsavoury rackets, and foreign invested retail chains are espe‐ cially vulnerable due to the cultural and language gap, which leads to blindness. Foreign-funded enterprises have opened tens of thousands of square metres of new stores and malls over the past year or two – shops like the popular new H&M stores that now are spread all over China. Similar stories are unfolding with other re‐ tail brands in China’s large cities. But are the retailers ready to tackle the fraud risks? An example to consider: A developer of shopping centres in northern China was about to be acquired by a foreign retail firm. But this developer had scant regard for safety and a habit of cutting corners, no matter what the human cost. When a shopping centre built by the developer in central China suddenly collapsed, killing 20 people, the main person in charge of the project was somehow sprung out of jail and simply shifted over to another city where he contin‐ ued to handle the same sort of projects for this unethical developer. A few years later a similar safety disaster in that city was avoided by the narrowest of margins. In multiple locations across China, this same develop‐ er also lured individual retailers and store tenants into paying expensive rents with promises of trendy cafés and cinemas “soon to be built” and supposed to attract massive custom, which failed to ever materialise. In some instances the tenants’ anger boiled into active riot‐ ing. But because the developer’s owners had close ties to senior government officials, this swindle was never prosecuted by any court, and local media channels or‐ chestrated a campaign against the tenants. I led an investigation in Shanghai into a procurement fraud case involving a leading European multinational hypermarket chain. A new general manager had re‐ cently taken up his position and he had received a series of anonymous letters alleging that various purchasers were operating fraudulent or corrupt schemes and caus‐ ing losses to the company.
by Peter Humphrey
The allegations named a number of people in various sub-departments of the buying operation as well as a number of suppliers with which they allegedly had im‐ proper relationships. We began by investigating these companies’ ownership and physical operations, check‐ ing for conflicts of interest and looking into the lifestyles and affiliations of the suspects. A number of conflicts of interest were uncovered in the form of shareholdings owned by my client’s employees, plus the lack of any physical existence of the suppliers (i.e. they were phan‐ tom vendors), and other unethical arrangements includ‐ ing kickbacks, commissions, goods rebate scams, and manipulation of the hypermarket’s electronic transac‐ tion system. External inquiries were reinforced by internal investi‐ gation including workstation searches, computer foren‐ sics, monitoring and a series of interviews with suspects and witnesses. Conclusive evidence was obtained that four senior buyers had led various fraudulent schemes and an expatriate who oversaw the buying operation had turned a blind eye in exchange for sexual favours. All these staff were interviewed and dismissed. Their suppliers were terminated. A decisive breakthrough in this case came in connec‐ tion with one of the ringleaders, a young woman who headed the sub-department buying in high-margin foods and alcohol. From interviews, it was learned that one of her key collaborators outside the firm who was operating some suppliers was her boyfriend and that he was married. The man’s wife was identified and in‐ terviewed and provided significant information that helped resolve the case. Close associates and subordi‐ nates of the dismissed senior buyers were gradually re‐ moved. Business controls were strengthened. A Code of Conduct, personnel vetting and vendor screening were introduced. An analysis to quantify the losses suggested that the company had been paying 30% more than it needed to in some instances for the goods procured by the crooked buyers, thus eroding the true potential profit margins and causing millions of dollars in losses annually. Peter Humphrey is the founder of ChinaWhys, an advisory firm promoting business ethics and transparency. He is also the founding president of the mainland China chapter of the Association of Certified Fraud Examiners (ACFE).
44 JULY/AUGUST 2011
Top 25 Demystified The shortcomings of Gartner AMR’s Supply Chain Top 25
G Kevin Foehner
artner AMR’s list of Top 25 Supply Chains has been an influence on several industry players for the past seven years. However, supply chain professionals who deal with supply chain on an operational level have long been puzzled by the list. “The lists have been a little suspect from the beginning, at least as an ab-
solute and specific ranking of relative performance,” says Art van Bodengraven, a President of Van Bodengraven Associates. The companies which are consistently making the list are no doubt the top companies in the world in terms of marketing, branding, and popularity, however that doesn’t always translate into having the best supply chain in the world.
Peer Opinion Panel Compositon: Region
EMEA 29% Americas 59% Asia/Pacific 12%
Peer Opinion Panel Compositon: Revenue
To better understand the reasons be‐ hind the criticism of Gartner’s Supply Chain Top 25, the methodology must first be understood. According to Gartner, the breakdown of the methodology is as fol‐ lows: 1. A 50% weighting to publicly avail‐ able financial data 2. A 25% weighting for Gartner AMR Analyst Opinion – consisting of a voting panel of industry and functional analysts 3. A 25% weighting for Peer Opinion Panel – comprising supply chain profes‐ sionals in manufacturing and retail busi‐ nesses A further breakdown of the financial component valued at 50% of the total score reveals that three subcomponents are return on assets (25%), inventory turns (15%), and revenue growth (10%).
Criticisms More than $10B 42%
Less than $1B 27%
$1B to $4.9B 19% $5B to $9.9B
Peer Opinion Panel Compositon: Function
Sourcing/ Supplier Mgmt 10% Strategy and Planning 7% Transportation/ Logistics 3%
Supply Chain 70%
Although financial metrics are the ba‐ sis for what we use to measure anything in business, a 50% weighting on finan‐ cial data shifts the intent of the research to more of a Financial Top 25. Especially when you consider that very few supply chain performance metrics are actually utilized. “For example, a 15% weighting is given to inventory turns, which turns out to be favorable for companies like Mc‐ Donald’s, who being in the food business, require very low inventory,” comments Ashish Mendiratta, VP Materials at EIH. “Similarly Dell’s business model is based on high inventory turns, so they tend to benefit anyways.” This could be corrected if the other rat‐ ings were taken into account; however no other supply chain performance metrics are used for the study. As a result, compa‐ nies that keep more inventory are penal‐ ized, even if it benefited them in reality. As Won Hee Yee, Director of Public Rela‐ tions at TSPL, explains “Recent disasters in Japan have revealed chain vulnerabil‐ ity from JIT. Nissan lost less than Toyota;
among many reasons, it held more inven‐ tories and its supply chain is more global. More inventories mean more capital in‐ vestment stuck in the warehouses and the same with more global supply chain.” Furthermore, it’s strange to include rev‐ enue growth as a direct indicator of sup‐ ply chain performance, and to give it a 10% weighting for the company’s overall score. “Should Nestle with 0.8% and J&J with almost nil revenue growth be figur‐ ing in the list?” wonders Ashish Mendi‐ ratta. Nestle was ranked 18th on the list, while J&J came in at 21st.
A 15% weighting is given to inventory turns, which turns out to be favorable for companies like McDonald’s Opinions
The other 50% of the components fail to reinforce relevance towards supply chain performance, considering their split be‐ tween peer opinion and Gartner analyst opinion. Gartner mentions on their web‐ site that they “monitor total representa‐ tion, with an eye to reasonably balance the panel across companies, industries and functions, and reserves the right to accept or reject any volunteer.” The peer opinion panel was made up of 156 panel‐ ists from a wide variety of industries, who received Gartner published material to be educated about the nominees before the voting process. With only 12 percent of the panelists coming from Asia, a distinct western bias can be noticed. “Do the Gart‐ ner analysts really know the companies in Asia? Especially if they are not cus‐ tomers,” debates Trevor Miles, a Thought Leader at Kinaxis. “When few people in the West have heard of Haier and Huawei it is unlikely that they will get many peer votes.” The 25% weighting for the opinion of 32 Gartner analysts is a not-so-subtle sign that results are skewed in favor of the company’s clients. “The agency conduct‐ ing the study should not build their own opinion, especially when they can be seen as having business interest in the compa‐
46 48 JULY/AUGUST 2011
nies,” suggests Ashish Mendiratta.
Surely a company that has as much in‐ fluence over industry perception would have motivation to skew results in favor of a client with deep pockets. But are Gartner’s results sponsored? Consider Mark Spearman’s, President and CEO of Factory Physics, story: “When our com‐ pany met with Gartner analysts we were, at first, confused as to why they immedi‐ ately began to describe studies and then kept asking us to “sponsor” one. After we finally did sponsor one with a Gartner competitor (in which our name appeared glowingly) we understood.” Admittedly, Mr. Spearman’s company was not at‐ tempting to be on the supply chain rank‐ ing, but if Gartner allows sponsorship of other research it publishes, who’s to say the Supply Chain Top 25 is any different?
Making the List
Despite stating that the primary source is the Global Fortune 500, each company must submit an application to become worthy of a spot on Gartner’s list. This is a rigorous process of interviews and analy‐ sis, which takes a lot of money and time, just to be evaluated, let alone achieve a spot. Since Gartner manages the process, it’s easy to notice that a company’s like‐ lihood of applying increases if you hap‐ pen to be a client of Gartner. According to Trevor Miles, a Thought Leader at Kinax‐ is, “If a company does not apply (and yes, it is far more likely that a Gartner custom‐ er will apply than a non-Gartner custom‐ er) it won’t even be considered. In other words if Apple didn’t apply it wouldn’t be #1.” As the list changes, there’s a likeli‐ hood that new companies decided to ap‐ ply, and non-returning companies didn’t bother.
The use of contract manufacturers shifts the responsibility of supply chain innovation from the end-user. “The con‐ tract manufacturing giants based in Chi‐
na and South East Asia merit a spot in the top 10,” protests Varun Bahl. “A consis‐ tent focus on SCM improvement by these contract manufacturers is the very cause of market success of most of the Ameri‐ can hardware giants.” In AMR’s report, the company praised number one ranked Apple for its embedded innovation, net‐ worked supply and demand shaping. “All said and done, if you restrict the scope to managing demand-supply equations, Ap‐ ple will rank at the top even though they have lots of backlog to satisfy,” remarks Ravi Hossur, an Industry Principal at In‐ fosys Technologies.
Top 5 Contract Manufacturers 1. Foxconn
2. Flextronics US$28.7bn 3. Jabil Circuit US$11.7bn 4. Celestica
5. Sanmina-SCI US$6.5bn *Based on Revenue
If outsourcing production is the reason behind supply chain success, then penal‐ ties should be given to those who partner with contract manufacturers who ignore laws and sustainable practices. “The top performing companies are in the busi‐ ness of making money for all the stake‐ holders,” states Ravi Hossur. “They will try to squeeze every ounce (of blood -if required) to be operationally efficient, reduce cost and improve profits.” One of the key findings that Gartner reviewed at the beginning of this year’s report was a focus on sustainable execution. If you consider Apple’s publicly known CSR issues with suppliers like Foxconn and Wintek, yet its No.1 ranking in Gart‐ ner’s study, it shows a major flaw in the scoring system. Gartner fails to add sus‐ tainability as a quantifiable component, meaning the only input that CSR gets is based on the peer and Gartner analysts’ perspectives of a candidate’s sustain‐ able practices, and the Gartner published material which is distributed to voters. Considering the PR-power of these megacompanies on the list, it’s unlikely that abuses will be detailed in Gartner’s mate‐ rial. So currently, there is no penalty for a company to use contract manufacturers which drive supply chain performance and innovation at the expense of socially responsible practices.
They will try to squeeze every ounce (of blood -if required) to be operationally efficient, reduce cost and improve profits.
-Ravi Hossur, Infosys technologies
In other words, if Apple didn’t apply it wouldn’t be #1. -Trevor Miles, Kinaxis
49 47 www.supplychains.com
Gartner’s Track Record Conclusion In 2009, a tech company Gartner happens to be one of the best Gartner has apparently realized the called ZL Technologies sued research companies at creating hype sur‐ shortcomings of their methodology, stat‐ Gartner; claiming US$132 rounding whichever company it analyzes ing on the final report that they have million in damages or ranks. Where did they learn to create considered making improvements. The
After we finally did sponsor one with a Gartner competitor (in which our name appeared glowingly) we understood.
- Mark Spearman, Factory Physics
A turn-out of 156 peer voters, plus 32 Gartner analyst votes, is hardly large enough to suggest a truly objective ranking.
such hype? The company was acquired by advertising executives from Saatchi & Saatchi in 1990 with funding from Bain Capital (the financial arm of Bain & Com‐ pany) and Dun & Bradstreet. In a nut‐ shell, Gartner is indirectly connected to Bain & Company, an organization highly involved in business acquisitions with Oracle. Is it any wonder that Oracle was named a leader in supply chain planning in Gartner’s 2010 Magic Quadrant study, despite its poor implementation record? There is far too much motivation for Gartner to sell their results, given their research garners so much attention that it can directly affect the financial outcome of the business. For example, in 2009, a tech company called ZL Technologies sued Gartner; claiming US$132 million in damages for being placed in the “niche” market of its Magic Quadrant. Gartner won the law suit due to its rights to pub‐ lish its opinions (even though they claim to produce objective research). The key takeaway here is how much several com‐ panies feel Gartner’s opinions are worth. Would this not give the ex-advertising executives who run Gartner a reason, as suggested by Mark Spearman, to modify its results based on sponsorship?
addition of metrics like days sales out‐ standing, independent customer ratings for input on customer views, cash to cash for supply chain throughput rates, and the ratio of inventory versus revenue change were suggested, but not feasible. In terms of the basic methodology, why not shift the focus from pure financial metrics in favor of industry-accepted sup‐ ply chain metrics, like fill rate, cycle time, balanced scorecard, or perfect order. Bias can also be greatly reduced by removing the Gartner analyst opinion weighted at 25%. “Even the polling has a very narrow base of 156 voters that possibly needs to be broad based.” A turn-out of 156 peer voters, plus 32 Gartner analyst votes, is hardly large enough to suggest a truly objective ranking. Gartner should also include ways to objectively measure their key findings, like a company’s approach to value chain integration and sustainable execution. Currently, there are no objective metrics used to arrive at these findings, implying they are simply based on the opinion of analysts. But given all the obvious shortcomings of the methodology, their track-record, and their rise through the guidance of advertising executives, the real question is: Does Gartner care to improve the ob‐ jectivity of the ranking?
To view the Gartner Supply Chain Top 25, go to: http://cha.in/sctop25
Note* CHaINA magazine received no feedback from Gartner after our questions and comments were sent. 48 JULY/AUGUST 2011
Tier 2 Cities on the Rise
► Chenyin Pan
hile low-tech manufacturing continues to shift to central and western Chinese cities like Wuhan and Chengdu, Tier 2 coastal cities are looking to move up the value chain. Recent Council roadshows provided insight into the ongoing development and progress of Xiamen and Qingdao, two promising cities looking to become major investment sites in China. Why Tier 2? With the world’s biggest companies vying for their piece of the China market, placement of an operation will have a major influence on the overall success of a company. While several organizations have chosen to set up their businesses in the large Tier 1 cities like Beijing, Shanghai or Shenzhen, there are some interesting advantages that can be gained from a Tier 2 location. Deviating from the Tier 1’s fierce competition, the shrinking plots of land, and labor rates, can really do wonders to benefit a manufacturer. Tier 2 governments tend to work harder to attract big business to their city, and are more willing to give better deals and giveaways to big names that choose to come. Take for instance Dell, who’s managing Director, Charles Cheung, revealed that the company’s strategy for China is to be the “Big Fish in a Small Pond.” By setting up their head office in Xiamen, Dell has enjoyed some tremendous perks. Their site is plugged in to the same grid as the international airport, meaning their facility will never lose power (unless there was a catastrophe). The government also delivered an expressway which connects Dell’s facility to the port directly. Mr. Cheung also boasted about the free office tower that Dell had just received from the local government. All these freebies are a result of two things, Dell’s huge commitment to Xiamen as well as China, and choosing a Tier 2 city as its base of operations. Philips Lighting, has also chosen to set up their facilities in Xiamen. Although they aren’t getting a free office tower anytime soon, their US$2.5 billion investment into their Chinese operations has given them a strategically located piece of land and a greatly reduced rental rate. In addition, labor has been a reason for many companies to favor setting up in Tier 2 cities. Retaining
talent has always been difficult in Tier 1 cities, with companies fiercely vying for labor to fill their assembly lines. Foreign companies in Tier 2 cities feel less pressure to hire and retain workers because local labor prefer to work for international employers. Xiamen vs Qingdao Roughly two hours by plane from Shanghai, Qingdao sits on the coast of Jiaozhou Bay. Close to other neighboring Asian countries, it has become a haven for investment from Japan and South Korean businesses due to its proximity and the lower costs. In addition, Qingdao enjoys investment from homegrown manufacturing giants like Haier, Hisense and Tsingtao Beer. Qingdao’s Economic and Technical Development Zone boasts 48 projects from Fortune 500 companies currently in progress, and operations by Aucma Sinopec, CIMC, and several other Chinese conglomerates who have set up. Xiamen also sits on the coast, by the East China Sea, facing one of its biggest investor, Taiwan. Although Xiamen is smaller, at 3.5 million people, it has managed to attract some serious international companies. The city’s economic zone is teeming with international giants
QMD’s Facility in Qingdao
such as Dell, Philips, and Stanley Black & Decker, Linde Forklifts, Huisman, Schneider Electric and Carestream. “Xiamen has more high-profile foreign investment projects than Qingdao,” says Peter Humphrey, the head of ChinaWhys, a consulting firm, who visited both cities through the Council’s roadshows. “But also you have to consider the fact that Xiamen had a much earlier start to 49
western investors like Federal Mogul, American Alcoa Company, P&O and Electrolux have medium-sized investments at best.
Linde Forklifts, Xiamen
get foreign investment. Xiamen was one of the original Economic Development regions to attract foreign investment 3 decades ago, and Qingdao was not.” It’s interesting to note that remnants of several Kodak facilities (one of which Carestream operates in) are still visible through the economic zones. Infrastructure While both cities have experienced tremendous growth in terms of infrastructure over the past decade, several international players favor the setup of Xiamen’s systems. Despite Xiamen’s placement in a mountainous region, numerous tunnels have been constructed to create more direct routes to the city’s port and economic development zones. Several bridges have also been constructed to seamlessly get from one island to the next. Xiamen’s Haicang Development Zone is also strategically placed close to the international airport, about a 20 minute drive. Qingdao is also set in the mountains; however the government has chosen not to develop a tunnel system, which has resulted in long, winding roads throughout the city. A true setback to Qingdao’s infrastructure is the fact that the economic zone is so far away from the downtown core. To get to Qingdao’s Huangdao Economic and Technology Development Zone from the airport, it’s roughly a 1.5-hour drive. The alternative is a 45 minute drive to the downtown ferry terminal, and another 45 minute ferry across the bay. The government has put forth plans to build a bridge over Jiaozhou Bay which would greatly reduce the commuting time; however the project broke ground in January of 2011 and is yet to be completed. Both cities are also looking to develop a subway system, however no lines have yet opened. An interesting attribute that Xiamen possesses is a raised road system dedicated to public buses. The road was originally constructing to a support a light-rail system, however the city has scrapped those plans in favor of a subway. Foreign Investment One of the major differences that should be noticed is the make-up of the major investors in each city. While Qingdao relies on Chinese giants as the major investors in its local economy, Xiamen has managed to attract mega-brands to its city, as mentioned above. According to estimates based on 2010 spending, Dell alone is likely to spend US$250 billion in China on procurement and other investments over the next 10 years. In comparison, Qingdao’s biggest player, Haier, cannot come close to boasting the same size of investments in China, and top
Korean & Taiwanese Investment In 2009, over 2,500 Taiwanese companies had invested in Xiamen valuing more than US$4.5 billion, according to McKinsey & Company. The proximity of Taiwan and Xiamen has made it the city of choice for several Taiwanese companies. Two Economic development zones: Taiwanese Development Zone and Xinglin Taiwan Merchants Development Zone are designated to cater to Taiwanese investors. Qingdao has enjoyed extensive investments from South Korea, as it is home to the second largest Korean expat population of 100,000. Over 28% of the foreign investment is from South Korean companies, making it the top investing foreign country in Qingdao for years. In 2008, there were over 5,000 Korean companies in Qingdao like Qingdao FineArt & Craft, a Korean Fashion Jewelry manufacturer. Conclusion Although Qingdao has major sites for Chinese manufacturing giants like Haier and Hisense, the majority of investment in the city tends to be mediumsized. Companies like Qingdao Marine Diesel, Qingdao FineArt & Craft, and Gerb Vibration Control all have relatively small sites scattered around the city. Qingdao’s main issues stem from its sprawling infrastructure and poor road connection due to heavy development. One of the major complaints from companies operating in the Huangdao and Chengyang economic zones is the difficult employees face when commuting to work. Once the infrastructure development is finished, the hope is that the traffic flow will improve. In terms of business, Xiamen is the better of the two cities to invest in. Xiamen has managed to attract bigger investment projects due to its strategically placed economic zones, efficient infrastructure, and the generosity of the local government. Investors also enjoy the stability of local labor pools who are seeking foreign employers. For companies searching for a growthseeking business-environment, Xiamen is the place to be.
Qingdao Foreign Investors
5,000 S.Korean 7.6 million
Xiamen 2,500 Taiwanese 3.5 million
50 JULY/AUGUST 2011
一些技术含量低的制造业目前开始转向包括武汉和成都在 内的内陆地区，而位处东部沿海的二线城市却在试图提升自 己产业链中的位置。近期由全球供应链协会组织的对厦门和 青岛部分开发区企业的考察带给我们很多新的启示。 为什么是二线城 市？ 在世界各大商业 巨头争相他们在中 国市场上的占有 率，在华运营的 选址就显得尤为重 要。很多公司都选 择将中国的分公司 落户在诸如像北 京，上海这样的一 线城市或者是深 圳。当然，二线城 市也不是一无是处 的。对于生产型企 青岛齐耀瓦锡兰菱重麟山船用柴油机有限公司的车间 QMD 业来说，规避一线 城市里的愈演愈烈的行业竞争，不断减小的工业用地规模以 及不断增高的人工费用或许将给企业带来更多的收益。二线 城市的政府部门为了让大项目落户自己的城市，尽其所能的 给以特惠政策。 拿戴尔来说，运营经理Charles Cheung在陪同考察时说道 公司在中国的策略是要做“小池塘里的大鱼”。将总部设在 厦门，戴尔收益巨大。戴尔在厦门的总部与国际机场毗邻， 这意味着在不发生重大自然遭害得情况下，他们的设施永远 不会断电。当地政府同样专门为戴尔修建了一条连接机场的 高速。Charles Cheung 同时提到了政府为戴尔免费提供的办 公大楼。获得这些益处的原因有两点，一是戴尔对厦门以及 中国市场的承诺，二是戴尔选址在一个二线城市。 飞利浦照明是另一家设厂厦门的企业。尽管他们在短期还 无法得到免费的办公大楼，但由于在华运营上二十五亿美元 的投入，他们还是取得了一块对公司运营战略意义不小的地 皮和相对便宜的租金。 厦门 vs 青岛 青岛坐落于离上海两小时航程的胶州湾。因为靠近比邻的 日，韩两国，以及相对一线城市的廉价，青岛业已成为两国 投资者的天堂。与此同时，青岛也是众多国产品牌的总部， 海尔，海信以及青岛啤酒都落户于此。目前有来自世界500 强公司的四十八个项目在青岛经济技术开发区建成投产，同 时，包括澳柯玛，中石化，中集集团在内多家国企都在开发 区设有项目。 厦门与青岛在很多地方有相似之处。厦门濒临东海，面朝 城市的最大投资人，台湾。尽管拥有三百五十万人口的厦门 比青岛要小，但它还是吸引来包括戴尔，飞利浦, 豪氏威马在 内的众多外资公司。
招商引资 两个城市在招商引资中最大的区别在于投资公司的构成。 青岛在地方经济发展中更依赖于少数几家国有企业，而厦门 更倾向于吸纳大型外资公司，前面提到的戴尔就是一个很好 的例证。根据公司2010年投资计划，戴尔将在未来十年内对 在华采购投资两千五百亿美元。相比之下，就投资而言，青 岛的海尔则逊色不少。 韩资与台资 根据麦肯锡公司的调查报告Xiamen: Leveraging Its Geographic Advantages ，在2009年，在厦门投资的台资企 业超过两千五百家，投资总额超过四十五亿美元。厦门与台 湾在地理位置上得天独厚，因而多数台资企业将其看做进军 大陆的首选。在厦门有两个经济开发区是专门服务于台商 的：海沧开发区和新阳工业区。 长期旅居青岛的韩国人有十万人，是全中国第二大韩国人 聚居地，来自韩国的投资自然也不少。据悉，韩国企业投资 占青岛实际引进外资的百分之二十八以上，使韩国成为青岛 的最大投资国。依照2008年的数据，青岛有超过五千家的韩 国企业。但处在单个投资项目排行前列的依然是像美国辉门 公司，美国铝业公司，英国的P&O以及依莱克斯。 基础建设 两地的基础设施都在过去的十年内有了很大的改进，但相 比之下，外企更青睐于厦门。虽地处山区，众多过山隧道将 市区与开发区很好的衔接在了一起。岛屿间的跨海大桥也让 交通变得畅通无阻。海沧开发区到机场更是只要二十分钟的 车程。 青岛也处在山峦之间，但交通主要还是通过环山公路，因 而增加了时间和成本。最致命的是青岛的开发区离市中心距 离太远。从市中心到黄岛开发区走高速要花上一个半小时左 右。横跨胶州湾的大桥已经与2011年1月开始投建，但离竣工 还有待时日。 两个城市都有新建地铁的项目。厦门更有优势的地方可能 在于市内公交的专线是以前计划修轻轨而留下的，但现在他 们更倾向于地铁。
结论 目前还很难断定谁在吸引外资上有绝对的优势。投资者们 最终也会受益于大规模的城市化建设。交通网络的构建让商 务出行，活动更简单。当然，中央对国企的掌控也可能会对 在青岛的外资企业带来消极影响。 而在这方面厦门的优势不言而喻。厦门在基础设施，当地 招商引资积极性上都颇具优势。投资者也无需焦虑当地劳动 力资源。对于在寻找运营空间的企业来讲，厦门是个不错的 投资地。 51
Components Federal Mogul’s Philippe Thegner, Director of Purchasing for East Asia, outlines strategies, rising costs, and spending big. Can you give us an overview of your sourcing operation? I’m responsible for the region we call East Asia, which is all of Asia except for India. We have 11 plants in China, and 1 plant in Korea, Japan and Australia. Regarding the sourcing spend, we buy around US$250 million from the region for the local region. We also source US$200 million for export to North America, Mexico, South Africa, India and Europe mostly. So we have a total spend of around US$450 million, but this year we should achieve around US$600 million. Our purchasing team is mostly centralized and is located in Shanghai. I have around 35 people that are working on our Global Purchasing team at different functions like supplier quality, projects and commodity purchasing. Additionally, we have 12 purchasing leaders, one in each plant. . Can you elaborate on your spend for the region? For the local market which is East Asia, it’s mostly for OEM products. We supply basically every car manufacturer. One of our strengths is our localization rate which is close to 80%. My team is putting a lot of effort into finding qualified suppliers in China. This helps to reduce our costs and offer better prices to our customers. We target 100% localization, but we are still struggling to find some suppliers for very specific steel and material. The US$200 million for global sourcing is basically all aftermarket, about 90%. I have 15 people on that team, and the spend should increase sharply to US$310 million this year. How many suppliers do you have in China? In China, we have around 300 direct suppliers,
meaning supplying products related to production. The suppliers are located across the country, mostly in Qingdao, Ningbo, Shanghai area, Wuhan, Sichuan area, Hangzhou, and Guangzhou area. We try to consolidate our supplier base into several clusters which help us to optimize our supply chain and supplier management. How do you monitor your suppliers? We evaluate on a monthly basis the performance of our supplier with a scorecard. We look at quality, delivery, commercial and technical performance. Based on the score, we communicate with supplier whether or not they remain preferred, or if we put a hold on them. For example, if the supplier is delivering bad quality, their status will become on hold, and for a period of time we won’t give them any new business until they improve. If the supplier improves, then we can give them new business again. If they don’t improve over a period of time, despite our support, then we phase this supplier out. Such cases are rare because we have robust processes to qualify new suppliers. How long do suppliers have to improve? Usually around 3 months. During this period, FederalMogul provides support and closely monitors the supplier. We do not compromise on quality, the parts we supply are key automotive components with direct impact on performance and safety. How do you invest in your suppliers? We have a team of supplier quality engineers focused on developing suppliers, working closely with product engineers and project launch managers. Their task is
52 JULY/AUGUST 2011
Global Revenue: US$6.2 bn Spend Breakdown: 63% OEM, 37% Aftermarket Key Products: Piston, Breaking, Chassis, Ignition, Sealing, etc. Employees: 45,000 Plants in China: 11
to teach and train our suppliers to continuously improve their own performance and help them to surpass our QCD requirements. We work mainly with local companies and adapt our training approach to our suppliers in China, putting priority on pragmatic training (LEAN concept, SMED, MIFA, etc.) with operational people from our supplier. Usually our team will go to our suppliers and do workshops, starting by an introduction to the methodology. Then do role-playing exercises where the supplier’s team will realize how the methodology works. After, we go with the team into their plant and identify improvement opportunities which become projects that we follow together. This kind of Kaizen event helps the suppliers gain efficiency and we both gain productivity. How does Federal-Mogul handle commodity fluctuations? The products that Federal-Mogul are selling have high raw material content. The main raw materials that we buy are aluminum, copper, tin and steel. We also buy chemical materials like rubber and oil. So how do we handle the fluctuations? We analyze the markets to anticipate trends and periods. When we know that a price has reached a peak, we set the price over a period of time. We also try to implement hedging directly or indirectly through our suppliers. Sometimes we try to use alternative materials if our customers validate it. We reduce the number of SKUs and standardize material for more leverage. We also leverage by renegotiating the sale price of our scrap. Finally, we work with the customer on recovery to share the constraints. Commodities are a big challenge for us. What is the biggest tool you have to overcome challenges? The key to our success is the strength and motivation of our sourcing team in our region. They take full accountability for the mission to reach and surpass our sourcing targets.
FEATURE 采购金额将超过6亿美元。全球采购团队由35名员工组成,主要多 集中于上海。另外，我们有13个采购经理分布在各个工厂。 能详细谈谈在各地区的花费吗？ 东亚市场上的产品主要是供应原始设备生产商。我们为包括上海 通用和吉利在内的汽车制造商提供服务。而百分之八十产品的本 土化生产是我们的优势所在。我们的团队为保证在华供应商的质 量做出了很大的努力。质优价廉的服务让我们的客户直接受益。 我们未来的目标是百分之百在华采购，但目前来看，我们在寻找 高质量钢材供应商方面还有所困难。花费在全球采购上的2亿多 美元中百分之九十都用在了零部件组装上。负责该部门采购的同 事就有15人，今年的采购预算也将达到3.1亿美元。 你们在中国有多少供应商？ 负责提供跟成品相关的直接供应商有300多家。供货商分布在全 国各地，但主要还是在青岛，宁波，上海，武汉，四川，杭州以及 广州。我们也准备将几个采购地点整合成几个大的集散地，使之 达到优化供应链和供应商管理的效果。 你们是怎样管理供应商的？ 我们每月在评分卡上为我们的供应商打分。评分标准由质量表 现、运输、商务表现及技术表现组成。我们与供应商沟通，通过 打分，，看看他们是不是满足了我们的需要。比方说，如果供应商 的运输服务质量很差，那评分卡上的相应显示将会是“暂停”， 在他们服务提高之前，我们不会再给他们任何业务。如果供应商 有所改进了，我们会继续同他们合作，如果没有，我们可能就将他 们排除在合作对象外。 供应商要花多久去改进服务呢？ 基本上在3个月左右。在这期间，公司将严格审查供应商，并为 他们提供必要的支持。在质量上，我们从不含糊，因为我们所供 给的部件是对于产品表现力有着巨大影响的汽车关键部位零部 件。 对供应商的投资方面呢？ 我们有一批供应商质量工程师专注与供应商发展，并同产品技术 人员及项目经理们保持联系。他们的任务就是保证供应商能不断 提高他们的服务质量。我们主要还是和本土公司合作的比较多。 我们强调供应商物流？操作人员的实用培训（简约意识，SMED, MIFA等等）。通常我们的团队会给供应商做一个从业务方式方 法介绍开始的简要报告。待供应商的团队了解业务的流程后，我 们会去他们的车间，找到可以改进的地方，这些地方就是日后我 们需要跟进的。我们就是通过这样的方式来帮助供应商提高效 益和生产力。
公司是怎样应对原材料价格起伏问题的呢？ 我们的产品对原材料需求较大。我们产品的主要原材料包括铝、 铜、锌和钢材。我们同样需要采购橡胶和原油。那如何应对价格 问题呢？通过市场分析来预判走势。价格处在涨停时，我们就拿 当时的牌价做为过去一段时间的价格。在客户允许的前提下，我 们也会采用其他材料来替换原先用的材料。当然，原材料价格问 题是对我们的一大挑战。
能简要谈谈你们的采购活动吗？ 我负责除印度以外的东亚地区采购活动。我们在中国有9个工厂， 在韩国，日本，澳洲和泰国各有1个工厂。关于在该地区的采购预 算，我们预计将花费近2.5亿美元,并花费约2亿美元为北美、墨西 哥、南非、印度及欧洲市场进行采购。但今年我们在东亚地区的
你们如何解决所遇到的困难 公司能否在中国形成竞争优势，重中之重在于我们的实力和进取 精神。我们团队的任务就是达到甚至是超额完成我们在这个地 区的目标。
53 55 www.supplychains.com
Contents ► Back home silk road /54 ►How dirty is Your data?/56 ►Forecasting and demand planning in Asia/58 ►Linkedin Question/63 中国式的发展/54
Back Home Silk Road The second instalment of a logistics professional’s amazing bicycle journey. Last issue, we introduced you to Ambroise Mathey, a logistics professional working for Casquin Logistics and a former resident of Shanghai. Ambroise started off on an amazing journey in April, taking his bicycle from Shanghai back to his native Lyon, France. Last time we left, he had just entered Gansu province after leaving Xi’an, Shaanxi Province. The travel has been an amazing eye opener for both Ambroise and those following him on his website. In particular, it should be taken as a lesson for any supply chain professionals involved with companies who are shifting operations to the center and
west of China. Logistics managers have voiced their concerns on the overall development and quality of infrastructure that’s in place in the west. “Any professional who’s worried about the development, they should get off their butts and go see it,” says Ambroise. “The development has come a long way. The roads are good and new. You can really see the investment by Beijing when you look at the quality of trucks that are on the road here. You can see fleets of new, orange Dongfeng trucks busily moving supplies to construction sites all over the west.” Ambroise exited Gansu province
and has successfully made his way through Xinjiang province, stopping in Turpan, Urumqi, and Kashgar. From his photos, you can see the development here. He’s taken the G312 and G314 national roads, which are newly paved and rather vacant highways. From a retail angle, you can even see the development, with luxury shopping malls in Aksu, Xinjiang. What’s next for Ambroise? At the end of May, he said his goodbyes to China, and crossed the border into Kyrgyzstan. See his stunning photography and follow him online at www.ambroise-baz.com.
54 JULY/AUGUST 2011
Trends from the
Brian M.T. Selby
Sourcing Leaders Forum
“What you can do, however, is to de-emphasize the labor, you’ll have to change your paradigm from a labor paradigm to production paradigm and efficiency paradigm.”
What does the future hold for sourcing in China? It’s a difficult question to answer given variables, like increasing inflation, shifting production to West China, revaluation of the Yuan, and the impact of Japan’s disaster. Concerns over rising costs have already been enough for some companies to diversify their supplier base, shifting some production to Vietnam, India, and Thailand, with some American companies renewing their interests in Mexico. So what’s the strategy? How do we move forward in the new business environment? Here are three key trends to look out for, from the The Council’s Sourcing Leaders Forum. The Costly Reality There’s no need to deny that China is becoming less cheap. “Chinese suppliers are not as hungry as they were 5 years ago, they can afford to consider their own strategic direction in the long term,” says Wendy Liu, the Sourcing Director from ITT. “But this doesn’t indicate that costs for OEM customers will be higher. For instance, for a supplier, if it doesn’t consolidate its business, then its line set-up and fixtures will be very inefficient.” As long as your Chinese suppliers are optimizing efficiency, then it can off-set the increases of labor costs and raw material. What else is Wendy doing with her Chinese suppliers? “Our cooperation with them has evolved from more than just a few simple components. We gave the suppliers components that are more complex, more engineering oriented, and more up-to-date.” By pushing manufacturers up the value chain, a company is able to maintain good working relationships with existing suppliers, while sourcing more complex components for the higher rates it must pay them. De-emphasize Labor Wages are comparatively higher than before and will inevitably go up in the future, and in order to retain their competitiveness, China’s suppliers need to become more productive. “What you can do, however, is to de-emphasize the labor, you’ll have to change your paradigm
from a labor paradigm to production paradigm and efficiency paradigm. Look at Germany, Germany is still one of the biggest exporting countries in the world, but what’s the cost of labor there in Germany? Why? Because the production is based on the paradigm of efficiency, based on production knowledge and based on technology,” says Brian M.T. Selby, Senior VP of Elemica. China or Mexico for America: a Triangle Love Affair “Mexico and China, if you think about the industry, they are quite similar. Both depend on the market in the US. It used to be that if you found a product being manufactured in Mexico, you could find the same product in China for an even cheaper price,” said Renato T. Goebel, the Chief Procurement Officer of Odebrecht Decathlon’s Brazilian subsidiary. Wages in China are about US$2.35/hour in manufacturing industries, compared to the average rate in Mexico is about US$2.50/hour. Due to the comparable wages and the lead-times for delivery, there’s a potential for Americans to shift manufacturing back to their southern neighbor. Conclusion Companies will undoubtedly undergo significant changes to their sourcing strategies, policies and supplier bases over the coming years as China’s east coast matures. The key is to react now and create a gradual plan to overcome overall cost increases. Diversifying your supplier base will help, but a focus on improving productivity and efficiency of your current partnerships will help control the size and productivity of current, trusted suppliers.
Renato T. Goebel
“Mexico and China, if you think about the industry, they are quite similar”
“Chinese suppliers are not as hungry as they were 5 years ago, they can afford to consider their own strategic direction in the long term”
How dirty is your data
Clean Cloud Power Report Card
We have generated 1.2 zettabytes of digital information (zettabyte =1 trillion gigabytes or 250bn DVDs) with our tweets, YouTube videos, Facebook status updates, iTunes downloads, emails and other data transfers. Additionally, there are five billion mobile users worldwide, and over 50bn mobile connections are predicted by 2020 as smart meters and other â€˜smartâ€™ devices are added to online networks. The size of the digital world is predicted to increase by a factor of 44 by 2020. The data centres that house this explosion of digital information currently consume more than 3% of US electricity, and approximately 1.5% to 2% of global electricity, growing at a rate of approximately 12% annually. Electronic devices account for 15% of home electricity use, and are predicted to triple by 2030, equivalent to the electricity demand of the US and Japan residential market combined.
Clean Energy Index*
For the complete report, visit www.greenpeace.org * Clean Energy Index and Coal Intensity are calculated based on estimates of power demand for evaluated facilities [http://www.greenpeace.org/cloudcomputingfacilities] * Scores are based on a standard letter grading system. 56 58 JULY/AUGUST 2011
Supply Chain Mixer
www.cha1n.com 57 www.supplychains.com
Forecasting and Demand Planning in Asia An overview of the currents best practices in Asia
Chaman L. Jain, Anish K. Jain - Institute of Business Forecasting & Planning – IBF
o get an understanding of demand planning and forecasting practic‐ es in Asia, the Institute of Business Forecasting and Planning (IBF) recently sur‐ veyed forecasters of different indus‐ tries located in countries/regions such as China, Hong Kong, India, Indonesia, Singapore, South Korea, Philippines, Malaysia, Thailand, Pakistan, and more. A successful forecast For a demand planning and fore‐ casting process to succeed, resourc‐ es as well as cooperation across various functions from within and outside the organization are need‐ ed. The Forecaster needs input from other functions at the company to do his/her job better. Salespeople, for example, are the eyes and ears of the market in terms of customer and competitive activity. There is really no one that knows more than mar‐ keting, in terms of which products it plans to promote and how many new products it plans to introduce, and so on. And of course, without
Forecasting process in place; 68% of them, S&OP; and 47% of them, CPFR. If 71% of companies have a Consensus process, it means 29% of the companies work in a Silo Structured environment, where each department prepares its own forecasts. With multiple forecasts, it’s difficult for demand planning Where forecasting Figure 1 to run effectively because it would function resides Finance be difficult to align supply with de‐ 2% mand. How can we achieve align‐ Others ment if demand is based on one set Strategic 15% of forecast numbers and supply on Planning Forecasting 6% another? Dept. 20% Where the forecasting function Logisitcs resides also impacts forecasts be‐ Sales 9% 25% cause each department has a bias Marketing of its own. If sales are evaluated on 13% the basis of quotas, and quotas are tied to forecasts, there is a tendency to under-forecast. If production is evaluated on the basis of customer Operations/Prod. 10% service and stock availability, there As we move from a Silo Struc‐ is an upward bias or over estimate tured mentality to Consensus Fore‐ their forecasts. Therefore, the best casting to S&OP to CPFR, forecasts thing to do is to have an indepen‐ improve and so do the plans. The dent forecasting department. The survey shows that 71% of com‐ survey results show that 20% of the panies in Asia have a Consensus companies in Asia have an inde‐ the support from top management, nothing will get implemented and supported. From our survey, we asked: how supportive is your top management? 47% of them said it is highly supportive; 44% of them, somewhat supportive; and 9% of them, it does not care.
58 60 JULY/AUGUST 2011
0.15 0.10 0.05 1 Month 1 Quarter 1 Year Ahead Ahead Ahead
of companies in Asia make forecasts one-month or less ahead (See Figure 2). Furthermore, the survey shows that for 57% of companies, produc‐ tion is locked only one-month ahead. This means if forecasts change, we can react to it. We may not be able to make a change in the production plan of next month, but we can do so in for the subsequent months (See Figure 3). Effectiveness The best data to use for demand planning is point of consumption, otherwise known as Point of Sale (POS) data when working at the retail level. This provides immedi‐ ate intelligence on consumer be‐ havior and how they are respond‐ ing to products. Plus, this level of
How far ahead Production is locked
pendent department. But the larg‐ est number of companies (25%) have this function in sales (See Figure 1). In fact, it may not make much dif‐ ference where the function resides, provided there is a true Consensus Forecasting process in place, where each department has an equal voice. One of the best strategies to deal with today’s dynamic marketplace is to forecast for a shorter time ho‐ rizon and revise more frequently. In other words, if we forecast, say, onemonth ahead, we are likely to quick‐ ly capture any change that may oc‐ cur in the market, enabling us to react. The survey shows only 16%
data tends to be more stable than demand/orders and shipment data, and thus yields more accurate fore‐ casts. The survey shows that only 29% of the companies in Asia use such data for forecasting. The effectiveness of demand plan‐ ning is also impacted by the tools they use. The survey shows that only 35% of companies use some kind of forecasting software or system, where the rest only rely on some kind of spreadsheet, mostly Micro‐ soft Excel. As we deal with more products and locations, one cannot do without specialized technology and systems to prepare forecasts that are timely as well as accurate. The effectiveness also depends on the forecasting metric used. Three most commonly used metrics in business forecasting are MPE (Mean Percentage Error), MAPE (Mean Absolute Percentage Error) and WMAPE (Weighted Mean Absolute Percentage Error). MPE is least effec‐ tive because in its calculation some of the over-forecasting errors are cancelled out by the under-forecast‐ ing errors. The survey shows most of the companies in Asia use MAPE (55%), but there are about 23% of companies that still use MPE. Only 9% of them use WMAPE, which is known to be the most effective met‐ ric. The remaining companies use other metrics, which are discussed only in textbooks on forecasting and statistics, but not often used in busi‐
ness. There are three types of models: (1) Time Series, (2) Cause-and-Effect, and (3) Judgmental. In Time Series, we simply extrapolate the data using one technique or the other to gener‐ ate a forecast. In Cause-and-Effect, we assume that there is a cause and there is an effect. For example, sales depend on price. We determine the relationship between the two using historical data, and then use that relationship to prepare a forecast of the next period. There are also judg‐ mental models, where judgment plays a dominant role in preparing a forecast. This type of model is of‐ ten used where we don’t have his‐ torical data as in the case of new products. The survey shows that the largest percentage of companies in Asia (62%) use Time Series models, followed by Judgmental and Causeand-Effect (See Figure 4). Final Thoughts Models used in business 0.70 0.60
0.50 0.40 0.30 0.20
0.10 0.00 Time Series
The only time we don’t need to forecast is when our lead time to produce products are zero, which is not realistic. Therefore, no matter where you are in the world, or what industry you work in, there will al‐ ways be a need to forecast. And if you can master some of the basic principles, you’ll be surprised how quickly you and your company will be reaping the rewards.
59 61 www.supplychains.com
4SCM A10, 5/F, 61 Old Warehouse Building, 61 Yangshupu Road, Shanghai 200082 上海市杨树浦路61号老栈商务楼5楼A10室 邮编：200082 +86 (21) 6148 9800 www.4scm.com.cn
DHL Supply Chain 3398, Xiupu Road, Shanghai 201315 上海市秀浦路3398号， 邮编：201315 +86 (21) 3825 6288 www.dhl.com
ARJ Commercial Leasing Limited 1500 Lianhua South Road Max-Mall Office Tower Block 8-9 Unit 810, Shanghai 201100 中国上海市闵行区莲花南路1500弄 梅陇镇新都会,商务中心8-9号楼810室 邮编：201100 +86 (21) 3358 2270 www.arjchina.com
DSV Air & Sea Logistics DSV Logistics 38/F, 1 Grand Gateway, 1 Hongqiao Road, Shanghai 200030 +86 (21) 5406 9800 www.dsv.com www.dsv.com/cn
Arvato Services 3203, Changping Commercial Building, Futian Bonded Zone, Futian District, Shenzhen, P.R.C. 深圳福田区福田保税区长平商务大厦3203室 +86 (755) 3386 1666 www.arvatoservices.com.cn A.S.I Logistic Room 1703,Hitime International Tower No888 North Sichuan Road, Shanghai, 200080 上海市虹口区四川北路888号海泰国际大厦 1703室，邮编：200080 +86 (21) 5187 2772 www.asilogistic.com BDP International Unit 2101-2110, Shanghai Bund Int’l Tower, 99 Huangpu Road, Shanghai 200080 上海市虹口区黄浦路99号上海滩国际大厦 2101-2110室，邮编：200080 +86 (21) 6364 9336 www.bdpinternational.com Best Logistics Technology Bidg 11 West, 1F West Lake Soyea Software Park 176 Tianmushan Road, Hangzhou, Zhejiang, 310013 浙江省杭州市天目山路176号西湖数源软件 园11号楼1层西2201-03室 +86 (571) 8899 5656 +86 (571) 8827 0027 www.800best.com cargo-partner Logistics 6F, Building A, Sun Young Center, No. 398 Jiangsu Road, Chang Ning District, Shanghai 200050 上海市长宁区江苏路398号舜元企业发展大 厦A栋6楼,邮编：200050 +86 (21) 6195 3800 www.cargo-partner.com CEVA Logistics 19/F, Jiang Nan Shipyard Building 600 Luban Road, Shanghai 200023 上海鲁班路600号江南造船大厦19楼 +86 (21) 5302 9988 www.cevalogistics.com Dajin Logistics 3000 South Lianhua Road, Prologis Logistics Park, Minhang, Shanghai 201109 莲花南路3000号，普洛斯闵行物流园区内， 邮编：201109 +86 (21) 3430 7666 www.dajin.com.cn Deret Logistics Asie Suite 1703 Shanghai Bund International Tower, 99 Huangpu Road, Shanghai 200080 上海市黄浦路99号上海滩国际大厦 1703室，邮编：200080 +86 (21) 6306 2592 www.deret-asie.com.cn
60 JULY/AUGUST 2011
DTW Logistics Group 16 Tianzhu Middle Road, Zone A, Tianzhu Airport Industrial Area, Shunyi District, Beijing 101312 北京市顺义区天竺空港开发区A区天柱中路 16号，邮编：101312 +86 (10) 5923 7777 www.dtw.com.cn Elee Logistics 375, Kefu Road, Nanxiang Town, Jiading District, Shanghai 上海嘉定区南翔镇科福路375号 +86 (21) 3912 4360 www.eleechina.com
1468 Nanjing Road West, Jing’an District
+86 (21) 3222 9999 www.skycargo.com
Geodis 3/F. OOCL Plaza, 841 Middle Yan’an Road, Shanghai 200040 上海市静安区延安中路841号 东方海外大厦3楼，邮编：200040 +86 (21) 6193 2323 www.geodis.com HAVI Logistics 6 Xingsheng Jie, Beijing Economic & Technological Development Area, Beijing 100176 北京经济技术开发区兴盛街6号， 邮编：100176 +86 (10) 6788 3335 www.havi-logisitics.asia Hercules Logistics Unit 5A, Bldg. A, Shenfubao Hightech Park, No. 3, Huanghuai Road., Futian Free Trade Zone, Shenzhen, Guangdong 518038 广东省深圳市福田保税区， 黄槐道3号深福保科技工业园A栋5A， 邮编：518038 +86 (755) 8358 0000 www.hercules-logistics.com HYT Logistics HYT Logistics Center, Shiwei Road, Fuyong, Bao’an, Shenzhen 518103 深圳市宝安区福永街道十围路 鸿益达物流中心 +86 (755) 2998 7168 www.hyt-logistics.com
3 West Guangzhou Road, Taicang EDZ Jiangsu Province.
江苏省太仓市经济开发区 广州西路3号 邮编：201103 +86 (512) 8889 8666 www.fmlogistic.com www.fmlogistic.cn
13/F Tower A, Golden Eagle Mansion, 1518 Min Sheng Road, Shanghai 200135
上海浦东新区民 生路1518号 金鹰大厦A座13楼 邮编：200135 +86 (21) 6160 1198 www.menlochina.com
ID Logistics Room 19D, Dong Tai Plaza, 309 Tanggu Road, Shanghai 上海市塘沽路309号19D +86 (21) 6306 7083 www.id-logistics.com IDS Logistics 8/F Tower Block, LiFung Plaza 2000 Yishan Road, Shanghai 201103 上海市闵行区宜山路2000号利丰广场主楼 8楼，邮编201103 +86 (21) 2416 4700 www.idslogistics.com Kuehne & Nagel Block 1, 11-16F, 1868 Gong He Xin Road, Shanghai 200072 上海共和新路1868号大宁国际商业广场 第一幢11-16楼，邮编：200072 +86 (21) 2602 8000 www.kuehne-nagel.com Linfox Road Transport 26-F, Cross Region Plaza, 899 Ling Ling Road, Xuhui District, Shanghai 200030 上海市徐汇区零陵路899号飞洲国际广场26 楼F座，邮编：200030 +86 (21) 5150 6699 www.linfox.com Linghua Logistics 333 Ke Yuan Road Zhangjiang HiTech Park Pudong New Area, Shanghai 201203 上海市浦东新区张江高科技园区科苑路333 号，邮编：201203 +86 (21) 5080 0107 Linkstar Logistics 49A, 199 North Riying Road, Waigaoqiao Free Trade Zone, Shanghai 200131 上海市外高桥保税区日樱北路199号49A, +86 (21) 5046 1666 www.linkstarlogistics.com Logisfashion Transportation Tower, Room 1101 218, Hengfeng Road, Shanghai 上海市现代交通大厦恒丰路218号1101室 +86 (21) 5180 1025 www.logisfashion.com Logwin Air+Ocean China 5/F & 6/F, Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦5楼和6楼 +86 (21) 2326 2000 www.logwin-logistics.com MYS Global Supply Chain 51 Floor, 4068 Excellence Times Plaza, Yi Tian Road, Futian District, Shenzhen 518048 +86 (755) 8288 2131 www.mys-global.com
Penske Logistics Room 1801, Honi International Building, 233 Weihai Road, Shanghai 200030 上海威海路233号恒利国际大厦1801室 +86 (21) 6227 8566 www.penskelogistics.com Schneider Logistics 1001-1004, 10th Floor, MAIGO International Building, #11 Nan Ma Road, Heping District, Tianjin 天津市和平区南马路11号麦购国际大厦10层 1001-1004,邮编：300022 +86 (22) 2622 8888 www.schneider.com SDV International Freight Forwarding 20/F, East Building, New Hualian Mansion, 755 Middle Huai Hai Road Shanghai 200020 上海市淮海中路755号新华联大厦东楼20 楼，邮编：200020 +86 (21) 3395 0600 www.sdv.com Sinotrans Guangdong 16/F, 97 Haiyuan Road, Huangpu, Guangzhou, China 510700 广州市黄埔区海员路97号外运大楼16楼， +86 (20) 8710 2800 gd.sinotrans.com Sinolog Logistics No.446, Fu Te Dong Yi Road, Waigaoqiao Free Trade Zone, Shanghai 200131 上海外高桥保税区富特东一路446号 邮编：200131 + 86 (21) 5866 6988 www.sinolog163.com SunJet Logitics 299 Huaxiang Road, Shanghai 上海华翔路299号 +86 (21) 6127 2637 www.sunjex.com
113 Eunos Avenue Gordon Industrial Building #02-12, Singapore 409838
+65 6748 4484 www.swisspost.com
LOGISTICS SERVICES Toll Global Logistics No. 388, Tieli Road, Yanghang Town, Baoshan District, Shanghai, P.R. China 201900 中国上海市宝山区杨行镇铁力路388号 +86 (21) 3379 3366 www.tollgroup.com YatFai Logistics 39-H, Fortune Building, 88 Fuhua San Road Futian District, Shenzhen, Guangdong Province 广东省深圳市福田区福华三路88号， 财富大厦39楼H座 +86 (755) 3336 6898 www.yatfai.com
PROFESSIONAL SERVICES Accenture 30/F, Central Plaza, 381 Huaihai Road, Shanghai 200020 上海市淮海中路381号中环广场30楼， +86 (21) 2305 3333 www.accenture.cn AsiaInspection 2201-03, Guidu Building, 3007 Chun Feng Road, Luo Hu DistricUnit 810, Shenzhen 深圳市罗湖区春风路3007号， 桂都大厦2201-03室 +86 (755) 8231 6796 www.asiainspection.com Baker & McKenzie Suite 3401 China World Tower 2 China World Trade Center, 1 Jianguomenwai Dajie, Beijing 100004 +86 (10) 6535 3800 www.bakernet.com BBK Consulting 1812 Shui On Plaza, 333 Huaihai Middle Road, Shanghai 200021 上海市淮海中路333号瑞安广场1812室 +86 (21) 6137 3052 www.e-bbk.com Booz & Company Suite 2511, One Corporate Ave. No. 222 Hu Bin Road, Shanghai 200021 上海市湖滨路222号企业天地1号楼2511室 +86 (21) 2327 9800 www.booz.com/cn BPS Global Group Unit 3104, Tower 1, Kerry Everbright City, 218 West Tianmu Road, Zhabei District, Shanghai, China 200070 中国上海市闸北区天目西路218号嘉里不夜 城第一座3104室, 邮编:200070 +86 (21) 6317 8830 www.bps-group.net Control Risks Suite 1001 East Tower China Merchants Plaza, 333 North Chengdu Road, Shanghai 200041 上海市成都北路333号招商局广场东楼 1001室， 邮编：200041 +86 (21) 5298 1800 www.control-risks.com Demand Solutions PO Box 6180, Norwest Business Park, Baulkham Hills BC NSW 2153 +612 9659 4555 www.demandmgmt.com
PROFESSIONAL SERVICES Dragon Sourcing Suite 1502, Jin Tian Di International Mansions 998, Renmin Road Shanghai 200021 上海市人民路998号今天地国际大厦 1502室，邮编：20002 +86 21 6141 3955 www.dragonsourcing.com Elemica 300 Beach Road #13-06 The Concourse Singapore 199555 +65 6327 6143 www.elemica.com InnoCSR Room 17-16, Yu An Building, 738 Dongfang Rd, Pudong New Area, Shanghai, China 200122 中国上海市浦东新区东方路738号 裕安大厦17楼16室，邮编：200122 +86 (21) 5237 7387 www.innocsr.com iiAPS 27/F, Room 02 418-428 Jiang Ning Road 200041 Shanghai, China 上海市江宁路418号-428号，27楼02室 邮编：200041 + 86 (21) 6217 0253 www.iiaps.org Kinaxis Level 19, Two International Finance Centre, 8 Finance Street, Central, Hong Kong 19层,国际金融中心2座金融街8号,中环, 香港中国 +852 2251 1859 www.kinaxis.com Lloyd’s Register Asia 20/F Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦20楼， 邮编：2000012 +86 (21) 5158 5700 www.lr.org www.lloydsregisterasia.com Logistics Executive Suite 13G, Shanghai Ind’l Investment Bldg. 18 North Caoxi Road, Shanghai 200030 上海市徐汇区漕溪北路18号， 上海实业大厦13楼G座，邮编：200030 +86 (21) 6427 6697 www.logisticsrecruitment.com.cn Michael Page International 601-603 Shanghai Kerry Centre 1515 West Nanjing Road, Shanghai 200040 上海南京西路1515号，嘉里中心601- 603 邮编：200040 +86 (21) 3222 4758 www.michaelpage.com.cn MKT China Jiedi Building, Unit 1102, 2790 Zhongshan North Road, Putuo District, Shanghai 200063 上海市普陀区中山北路2790号杰地大厦 1102室,邮编：200063 +86 (21) 6095 5225 www.mkt-china.com Resources Global Professionals Room 2705-06, Lippo Plaza, 222 Middle Huaihai Road, Shanghai 上海市卢湾区淮海中路222号力宝广场 2705-06室 +86 (21) 6386 8700 www.resourcesglobal.com
11/F, PricewaterhouseCoopers Center, 202 Hubin Road Shanghai 200021
上海湖滨路202号普华永 道中心11楼， 邮编：200021
REAL ESTATE SERVICES Goodman Group 2107 - 2109, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 上海淮海中路333号瑞安广场2107-2109室 邮编：200021 +86 (21) 6133 2000 +86 (21) 6386 2386 www.goodman.com GSE China 27C Industry Building, 18 North Caoxi Road, Shanghai 200030 上海市徐家汇漕溪北路18号实业大厦27C, 邮编：200030 +86 (21) 6090 1388 www.gsegroup.cn
+86 (21) 2323 8888 www.pwccn.com ThreeSixty Sourcing 5/F, 686 Jiujiang Building, No 686 Jiujiang Road, Shanghai 上海市黄浦区九江路686号宝龙大厦5楼 邮编：200001 +86 (21) 6322 5000 www.threesixtysourcing.com Tompkins International 58 Mao Ming Road (South) Room 502, Jin Tai Building Shanghai 200020, China 上海市茂名南路58号锦泰办公楼502室， 邮编：200020 +86 (21) 6473 2588 www.tompkinsinc.com
REAL ESTATE SERVICES Blogis International Logistics +86 (755) 2669 4211 www.blogis.com.cn BlueScope Steel 12F HSBC Tower, 1000 Lujiazui Ring Road, Shanghai 200120 上海陆家嘴环路1000号汇丰大厦12楼, 邮编：200120 +86 (21) 6841 1898 +86 (21) 6841 2340 www.bluescopesteel.com CB Richard Ellis 11th Floor Shanghai Wheelock Square 1717 Nanjing West Road Shanghai 上海市南京西路1717号会德丰广场11楼 邮编：200040 +86 (21) 2401 1200 www.cbre.com.cn Colliers International 16/F Hong Kong New World Tower, 300 Middle Huaihai Road, Shanghai 200021 上海淮海中路300号， 香港新世界大厦16楼， 邮编：200021 +86 (21) 6141 3688 www.colliers.com/china Gazeley Room 805, Kerry Centre, No 1515 Nanjing Road (W), Shanghai 上海南京西路1515号嘉里中心805室 +86 (21) 5298 6622 www.gazeley.com Global Logistic Properties Room 2708 Azia Center, 1233 Lujiazui Ring Road, Shanghai 200120 上海市陆家嘴环路1233号 汇亚大厦2708室， 邮编200120 +86 (21) 6105 3999 www.GLProp.com
25/F, Tower 2 Plaza 66, 1366 West Nanjing Road, Shanghai 200040
中国上海市南京西路1366 号恒隆广场2座25楼 邮编：200040 +86 (21) 6393 3333
Lingang Free Trade Port Economic Development 6/F, 188 Yesheng Road, Pudong, Shanghai 201308 上海市浦东新区业盛路188号6楼, 邮编：201308 +86 (21) 2095 0600 +86 (21) 2095 0604 www.linganglogistics.com Mapletree Suite A-D,14/F, Times Square Office Building, 500 Zhangyang Road, Pudong, Shanghai 200122 上海市浦东新区张扬路500号, 华润时代广场办公楼14楼ABCD单元， 邮编：200122 +86 (21) 5836 7177 www.mapletreelogisticstrust.com www.mapletree.com.sg
Prologis Plaza 66 II ,Suite 2908 1366 Nanjing Road West Shanghai, 200040
上海南京西路1366号恒隆 广场二座2908单元 邮编：200040 +86 (21) 6135 1634 www.prologis.com
REAL ESTATE SERVICES
IT & SOFTWARE SOLUTIONS
Nanjing ZAL Management Office 18 B Deji Mansion, 188 Changjiang Rd. Nanjing 210018 南京市长江路188号德基大厦18楼B座， 邮编:210018 +86 (25) 8572 6079 email@example.com
Kewill Room D, 9F Baoding Building No.550 Xu Jia Hui Road, Luwan District Shanghai 200025 上海市徐家汇路550号宝鼎大厦9楼D座 邮编：200025 +86 (21) 6466 3030 www.kewill.com
Vailog Room 3102-3104, City Gateway, 398 North Caoxi Road, Shanghai 200030 上海市漕溪北路398号汇智大厦3102-3104 室，邮编：200030 +86 (21) 6090 5292 www.vailog.com
Lawson Software Room 2H, Apollo Building, Yan Zhong Lu 1440, Shanghai 上海延安中路1440号阿波罗大厦2H +86 (21) 6248 5853 www.lawson.com
Volume Industrial Park Zhuhai Gaolan Container Port Zone, Zhuhai, Guangdong 广东省珠海市平沙镇丰收路36号 +86 (756) 772 7118 www.volumeip.com Yupei Group No. 2500 Jinchang Road, Shanghai 200331 上海市普陀区金昌路2500号， 邮编：200331 +86 (21) 6627 7577 www.yupeigroup.com
IT & SOFTWARE SOLUTIONS Barloworld Supply Chain Software 15/F NCI Tower, 12A Jianguomenwai Avenue, Chaoyang District, Beijing 100022 北京市朝阳区建国门外大街甲12号新华 保险大厦15楼, 邮编：100022 +86 (10) 8523 3103 www.barloworldscs.com BravoSolution 13F-01, Tian’an Center 338 West Nanjing Road, Shanghai 上海市黄埔区南京西路338号天安中心1301室 +86 (21) 6145 8500 www.bravosolution.cn Emptoris Unit 01, Floor 7, 1 Grand Gateway 1 Hong Qiao Road, Shanghai 200030 虹桥路1号港汇中心1座701单元， 邮编：200030 +86 (21) 6447 6600 www.emptorischina.com Epicor Software 2008 Cross Tower, 318 Fuzhou Road Huangpu District, Shanghai 200001 上海市黄浦区福州路318号 高腾大厦2008单元，邮编：200001 +86 (21) 63912808 www.epicor.com GXS International Room 1602, 16/F, Grand Gateway Tower 1, 1 Hongqiao Road, Shanghai 200030 上海市虹桥路1号港汇广场1座1602室， 邮编：200030 +86 (21) 6120 1088 www.gxschina.com.cn JDA Software Unit 06, 29/F, Raffles City, 268 Xizang Middle Road, Shanghai, 200001 上海市西藏中路268号,来福士广场2906室， 邮编:200001 +86 (21) 2327 9400 +86 (21) 2327 9401 www.jda.com
Manhattan Associates Software Unit 2110, 21/F, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 上海淮海中路333号瑞安广场21楼2110室，邮 编：200021 +86 (21) 6057 3500 www.manh.com
EQUIPMENT PROVIDERS CHEP 40/F, Suites 8-10, 2 Grand Gateway, 3 Hongqiao Road, Shanghai 200030 上海市虹桥路3号港汇二座40楼08-10室 邮编：200030 +86 (21) 6127 2488 www.chep.com Dexion (Shanghai) Logistics Equipment Room 1102, Block A, Phase 1 Zhang Jiang Riverfront Harbour, 3000 Longdong Avenue, Pudong New Area, Shanghai, 201203 上���市浦东新区龙东大道3000号张江集电 港第一期A楼1102室，邮编：201203 +86 (21) 6879 4413 www.dexion.biz
Loscam Packing Equipment Room 508, 707 ZhangYang Road, Pudong, Shanghai 200120 上海市浦东新区张扬路707号508室， 邮编：200120 +86 (21) 6104 8156 www.loscam.com Schoeller Arca Systems Unit 1111-1112, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 上海淮海中路333号, 瑞安广场办公楼1111-1112室 +86 (21) 3133 5080 www.schoellerarcasystems.comApprise
PowerE2E 20A, Tower 3, No.600 Tian Shan Rd, Shanghai China 上海天山路600弄3号20A(近芙蓉江路) +86 (21) 6274 9608 www.powere2e.com Schmidt Room 2406 Huashen Mansion, 398 Hankou Road, Shanghai 200001 上海市黄浦区汉口路398号华盛大厦2406室 邮编：200001 +86 (21) 6133 9708 +86 (21) 6133 9718 www.schmidthk.com SEEBURGER Room 523-526, 5F, Cimic Tower, 800 Shangcheng Road, Shanghai 200120 上海浦东新区商城路800号 斯米克大厦5层523-526室, 邮编：200120 +86 (21) 5835 7779 www.seeburger.cn SupplyOn Suite 1501, Silver Centre, 1388 North Shanxi Road, Putuo District, Shanghai 200060 上海普陀区陕西北路1388号银座中心 1501室，邮编：200060 +86 (21) 6149 8042 www.supplyon.com Tradecard Room B, 23/F, Jinrun Mansion, 6109 Shennan Road, Futian District, Shenzhen 518040 深圳市福田区深南路6109号 金润大厦23楼B座，邮编：518040 +86 (755) 8830 9265 www.tradecard.com
#1 in the Business of Voice™
Vocollect Unit 3, 29/F, Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong
香港铜锣湾告士打道255257号信和广场3单元29楼 +852 3915 7000 www.vocollect.com
62 JULY/AUGUST 2011
Logistics providers focus on what they do and not on what the customers want Tom Craig President - D2M & LTD Management
The ones that do off the shelf, I would wager, struggle to break out the commodity service/ lowest price multitude of competitors and have high customer turnover--and for good reason. Those that do the solution design create a value proposition and competitive differentiation with customers that mean higher margins and increased retention.
Bao Anh Dinh Deputy General Director - SCT Vietnam
One of the major possible benefits from logistics provider is efficient operating cost. Sometimes, the want or the need from demand side is only fast delivery at the lowest cost, and without problems. This can lead the logistics providers to the tendency of doing it right rather than doing it better.
Michael Mete Category Manager - IBM
To create the opportunities, LSPs really need to have a deep understanding of the clients’ business plan and the key elements such as the marketing plan. For FMCG, how can the LSPs provide value to gain a competitive edge? All sorts of innovations can be developed…
Shane Van Eyck Sales Manager - UTi Worldwide Inc.
Clients need supply chain services and/or solutions that complement and enhance their existing core business. The service provider who understands this fundamental need fully will be the one who will succeed.
Alex Maxwell Operations, and Supply Chain Pro- APAC Healthcare Logistics
Very often 3PLs fail to understand the customer from the get go and this can be a big turn off. Having said that any solution design has to be a collaborative process if it is to be a successful one. The key is finding a 3PL who will fully collaborate with their principle rather than squeeze them into one of their off-the-shelf boxes.
Gideon Ong Deputy General Manager/ Operation Director Sinotrans Guangdong
I really think this is a generalized comment. Logistics company make money from saving that can be generated from the services provided to their customers. This has to be the case or LSP will be replaced by insourcing the services within the customer. There are values generated here or it will not have evolved into this state today.
Luke Wang Key Account Assistant Manager - NNR Global Logistics
If you go to a McDonald’s you have few kinds of hamburgers to choose from. Logistics is like the fast food industry, making money by not diversifying.
Aaron Poole Owner - BR International
I think the key in this and similar situation is to be “purpose fit” instead of “forcing others to accept what you have”. The more flexible we become as 3 or 4PL operators become, the more needs customers will have for all of our services.
The Magazine for Global Supply Chain Leaders
Top 25 Demystified 高德纳的名单
JULY / AUGUST 2011