2010 Mar-Apr Issue by Chain Media

Land of Opportunities Offshore Sourcing and Supply Chain Management

机会之地海外采购和供应链管理

China has emerged as one of the leading low cost markets for global sourcing. However, the recent economic downturn has created unprecedented risk for businesses and their supply chain managers. Companies that are sourcing offshore have always needed to consider procurement holistically to be successful. Today, supply chain managers must be cognizant of a large number of risks that are difficult to detect in any market – but even more so in less developed markets. Gaining insight to and mitigating risks in this market requires a different set of tools than in a past. However, if managed effectively the opportunities and benefits remain achievable.

中国是全球采购重要的低成本市场之一。然而，当前全球金融危机给公司及其供应链经理带来了空前的风险。实施全球采购的公司必须通盘考虑以确保采购成功。当今，供应链经理必须认识到在任何市场都存在大量难以觉察的风险，尤其是在发展中国家的市场中。洞悉和管控风险需要用与以往不同的方法，同时有效管理仍然可以带来吸引人的机会和收益。普华永道利用其全球视野和本土知识经验，为企业提供创新的，切实可行的解决方案，并为企业拓展业务和实现可持续发展提供新的机遇。

With our global insight and local knowledge, PricewaterhouseCoopers provide innovative and practical solutions to address these key business challenges and turn them into opportunities to expand your business and result in sustainable growth.

了解更多的业务范围，请访问普华永道网站：pwccn.com，或联系：

To find out more on how we can address your needs, please visit pwccn.com or contact:

Damon Paling 电话:+86 (21) 2323 2877 电子邮件:damon.ross.paling@cn.pwc.com

Robert Barrett Tel: +86 (21) 2323 3818 Email: robert.barrett@cn.pwc.com Damon Paling Tel: +86 (21) 2323 2877 Email: damon.ross.paling@cn.pwc.com © 2009 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the China firm of PricewaterhouseCoopers or, as the context requires, the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

Robert Barrett 电话:+86 (21) 2323 3818 电子邮件:robert.barrett@cn.pwc.com

Publisher: China Supply Chain Council Ltd. (Hong Kong) 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 subs@supplychain.cn 出版商：China Supply Chain Council Ltd. (香港) CHaINA杂志是为Council会员准备的免费杂志。我们协会会员和高质量的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 Monica Liau Art Director How Xu Graphic Designer Acco Fang

Photographers Kim Jin, Stephan Yang Contributing Writers Bill Dodson , Jeremy Chapman, Charlene Ruan, Charles Avery, Tulei, Damon Paling, knowledge@ wharton, Roy Lenders

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 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，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 end-users shippers, mainly 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运营经理总监副总裁或总裁。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 If you are located outside China, you can subscribe to this independent and insightful magazine today with full online access for only US$ 50 for 6 issues per year. For subscription inquiries, please contact: subs@supplychain.cn 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 supply chain management in Asia. Please email editor@supplychain.cn 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 MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

If someone asked me if supply chain was a sexy field to go into, I’d have to answer yes. Sure, people still compare the supply chain field to a KIA car instead of a BMW. However, looking beyond initial glitz, supply chain management touches on so many sectors that it not only opens doors for career advancement but it is also the key to whole economies. In order for India to advance the entire country, it will rely on revolutionaries like G.R. Gopinath of Deccan 360 to rethink the logistics sector and create new avenues Monica Liau of movement. Cisco slicks up their “value chain” with technology that connects offices across the globe via a Chief Editor product called “TelePresence”, their super-cool version CHaINA Magazine of videoconferencing. At the trucking level, dramas unfold every day between domestic shippers fighting to maintain prices and compete in China’s still fragmented sector. Supply chain education in China is also changing to fit a new role. The Chinese Ministry of Education has recently expressed support and funding for programs that move away from rote learning and support multidisciplinary thinking and teaching. This is an encouraging sign, as one of the biggest complaints of the Chinese educational system is their diet of theoretical instead of practical. Schools like Shanghai Jiao Tong, Jilin and Fudan University have all started programs with international eyes and a domestic base. Some have even partnered with the industry to further bring real life knowledge to the classroom. So, next time some protégé sniffs about going into supply chain management you should have this reply ready. “I’m sorry you feel that way, but we’re the ones moving the world.” 如果有人这样问我，供应链行业是不是一个前途无量令人激动的行业，我的回答一定是肯定的。当然，人们还是习惯与将供应链行业比喻成新兴崛起的起亚而不是宝马。然而，撇开那些浮华的表象和光环，供应链行业实际上涉足了许多部门的发展，这样不仅为职业晋升提供了更广阔的机会，还是整个经济发展的关键部分。印度为了刺激并推动整个国家的经济发展，就需要像G.R. Gopinath这样的改革家重新思考物流业的发展轨迹，并发掘市场发展的空白点。Cisco（企业网络产品的全球领先供应商）就完美地用科技诠释了“价值链”的概念。通过发布“远程监控”产品—这款超级酷的视频会议平台来连接全球的网点。而在货运方面，国内托运人为了守住价格而展开的一幕幕闹剧，不得不说货运在中国的竞争环境依旧是分散和不成熟的。供应链在中国的教育和培训机制也在不断转变着角色。教育部最近表示会拨款支持新型的跨学科跨领域式思维教学的发展。这的确是一个振奋人心的开始，注重理论而非实践是传统教育最大的问题所在。诸如交通大学和复旦大学这样的名校，都已开始实践已国际化的事业来观察和分析国内的行业发展所遇到的问题。有些学校甚至还和某些企业合作，把商业战场上的实战经验带入课堂。所以，下次要是再有人对你即将踏入的供应链行业颇有微词或嗤之以鼻，请准备好这样的台词：“很抱歉你居然会是这样认为，但我们才是真正撬动地球的那根杠杆。

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.

MARCH/APRIL 2010

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Spreading the Sandwich: Interview with Kurt Lipson, Subway Restaurant

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MARCH/APRIL 2010

Product Study: How much does the new Google phone really cost?

Finding a Better Way: Changes in Indian Logistics

www.supplychains.com

THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

MARCH / APRIL 2010

CONTENTS FIRST:

Logistics

08 Bankrupt DDS Logistics of Shenzhen dissolves, owes hundreds money

44 Road Wars: How domestic trucking agencies fight it out

NEWS Roundup

50 APL

10 Key stories impacting logistics and supply chain management in the Asia region

51 TTL/Manhattan

12 What the English Media missed A look at what the Chinese media is saying about logistics and supply chain management

52 Green Survey What professionals think about being environmentally friendly at work

EXECUTIVE Appointments

COLUMNS

55 With talent at a premium, CHaINA keeps an eye on which executives are moving where.

13 Forget London Bridge Wait a Minute

SPONSORED Feature

14 Rosy Real Estate Warehouse Finder

PROFILES 16 Sexy Cisco Interview with Jeff Galinett, Cisco Systems

56 Customs Alert Audits and Investigations

EVENTS 58 Luncheon Discussions Dining with Will O’Brien of Havi Logistics

LIFE

20 Electric Markets Interview with Eric Cassagne, Schneider Electric

60 Book Review Another look at Paul Midler’s “Poorly Made in China”

FEATURE

61 Cocktail Mixer French Flair at the Global Supply Chain Mixer

Sourcing & Procurement

www.supplychains.com

FOCUS

36 Odd Man Out: Is the age of the middleman in China fading?

62 CLASSIFIED

40 India vs. China: A comparison in sourcing potential

FINAL:

41 Racing Trade: Capgemini says global trade is speeding up

66 Complete Brake-Down Toyota recalls shake the Japanese automotive reputation

65 COMPANY

LISTINGS

INDEX

MARCH/APRIL 2010

LETTERS

Dear Editor,

COLUMNS

Indignant Postman Wait a Minute

Bob D dson s a pr nc pal of rend sAs a Ltd bas d in Shan hai whi h re ea ches and ana yzes s ci eco nomic and m rket re ds that an di rupt or ben fit bus ne s o era t ons in China He c n be r ach d at wdods n@ r ndsa ia a ia

Right n w gr ups like DHL or Fed- x annot cost ffectiv ly compete against lo al players in the expressletter delivery business.

n O tober 1st 2009 the Ch nese gove nment ena ted a l w d cla ing that any pa ce s del ve ed u ing exp ess se vic s w igh ng 50g or ess w th n a ity or 100g packag s b tween ci ies mu t be onro led ex lu ively by Sta e-owned post offi es Th s xpl c t c t t on me ns ore gn compani s c nnot nve t n his part of the post l segment and w s met wi h a gre t d al of p ote t rom m jor nte n t onal players ike DHL Wor dwide Express nc F dEx Corp and he Un ted Parc l Serv ce Inc A lot of th s deb te has been pent on wheth r or not China is vio a ing WTO ules of Na ional T eatment whi h sta es hat memb r coun ri s p esent a evel p ay ng field to dom st c and ore gn ntr nts But does he mp em nta ion of his new aw ea ly af ect he b g boys De pite the r obj ct ons his egment of he bus ness epreents a small l ver of evenue for he m jor nt rna ional car ie s The r s reng h dome t ca ly ies n get ing la ger packag s o heir d st na ions qu ckly s curely ran paren ly and at a onsi tent p i e evel Right now groups ke DHL or Fed ex c nnot ostff ct vely comp te gain t ocal p ay rs in the expre s- e ter de ivry bu ine s g ven he p ice sen i iv ty of he a rage Chine e con umer wh ther pr va e or commer ial B fore the ena tm nt of the new aw he S at owned se vice a re dy ontro ed abo t 20% of he xpre s e ter m rket which grew 21% in 2007 and 7% n 2 08 acco ding to the Wa l St eet Jou nal The move ac ua ly seems more a p rt of an ove ll rend oward guoj nm ntui - l te a ly he ta e dvances as he p iva e s ctor rec des - th n a pec fic j b at for ign inve ted compan es in he og st cs sec or The St te wan ed a pie e of he as -g ow ng ct on In eal ty t s ocal e press ca r ers that wi l be h rdest h t by he new law whi h r qui es api a za ion amoun s hat w ll l t ra ly clo e hundr ds of sma l domes ic expr ss serv ces In 2008 Ch na

had nea ly 2 500 xpress de very se vic s upportng n arly 2 0 000 employe s many of whom r de coote s o de ver parc ls as small as a l tt r o as arge as - w ll many of us h ve een he e ephanine s zed oads scoot rs in Ch na a e cap ble of c rt ng Other more ma ure del very se vic s though h ve prov ded re l compet t on to he Chine e po t o fi e I ve be n rea ly mpr ssed w th domes ic ca ri rs spec ally Shunfeng sa d Bhave h Mis ry Manag ng Pa tner of Eas W nd Prec s on Eng neer ng based in Su hou In the l st ight months they ve rea ly grown apidly and become qu te el ab e nd p ofe sion l Ac ord ng o Mis ry g oups ike Shunfeng have comput ri ed n he same way as he nte nat onal ca ri rs and h ve ormed par ner hips w th small ocal p ayers n towns so ou -o -th -way that t is p ohib t vely xpens ve to use a Fed Ex These car ie s an a so ost a rac ion of what the nt rnat onal arr ers ch rge in China Neve the ess is ng sa ary and uel cos s a e a ready for ing domes ic c rr ers o inc ease heir at s Wi h he fu ther d velopment of nt r-c ty inf as ruc ure ustomer requ rements for qua ity of serv ce nd del very t me w ll mply fu ther domes ic ndustry con ol dat on In wo to fo r ye rs th s ctua ly may tran l te nto new oppor uni ies as a gr ater number of ma ure dom st c compan es wi l be r pe or acqu si ion by for ign players who want o pene ra e more deeply in o he nl nd exp ess m rket t w l be du ing the a quis t ons of hese matu e domes ic comp nies th t arge nte nat onal car ie s w ll come up gain t nother of China s new egu at ons he nt -monopoly law A ready Be j ng has made judgments ag inst Coca Cola P nason c and Gen ral Mo ors wh ch ha e deeply roub ed mul in t onals acro s ndus ri s When he major e press ca r ers get o the po nt of wrang ng wi h Be j ng s diosyncr t c in erp et t ons of he an imonopoly law they may remember the r ar ier rus ra ions wi h the new po tal aw as ju t a wa k n he p rk

www ha n on ne om

JANUA Y/ EBRUA Y 2010

Send your comments and feedback to: editor@supplychain.cn

I am the Chief Representative of the Conference of Asia-Pacific Express Carriers (CAPEC) Beijing Office, which represents the interests of DHL, FedEx, TNT and UPS in Asia. I read “Indignant Postman” written by Bill Dodson on your latest edition, and have some follow up comments on the information given. In his article, Dodson says that “On October 1st, 2009 the Chinese government enacted a law declaring that any parcels delivered using express services weighing 50g or less within a city, or 100g packages between cities, must be controlled exclusively by State-owned post offices. This citation means foreign companies cannot invest in this part of the postal segment, and was met with a great deal of protest ….” There is no content about 50g and 100g in the Postal Law passed by NPC on April 28, 2009. There are two relevant articles on market access in the Law. Article 5 says that the delivery of letter articles within the scope of relevant regulations issued by the State Council shall be exclusively operated by postal enterprises. This refers to postal monopoly. However, the scope of postal monopoly is still undefined. China Post adheres to using the weight to define the monopoly while private firms advocate for the method of weight or fee. Article 51 says that foreign businesses are forbidden to invest in or operate domestic express delivery of letter articles. This exclusion provision does not allow Chinese companies and consumers full access to foreign express delivery service providers. As a result, there will be fewer options and lower quality services for customers. I also refer to Dodson’s comment that “right now groups like DHL or FedEx cannot costeffectively compete against local players in the express-letter delivery business, given the price sensitivity of the average Chinese consumer, whether private or commercial.” Cost effectiveness in the express industry is the ability to provide high-quality service at the lowest possible cost. Low price does not equal cost effectiveness. The Chinese consumer is no different than consumers of express delivery anywhere in the world. They require time-definite, guaranteed service with such add-ons as tracking and tracing of shipments. CAPEC members should be permitted to compete on a level-playing field in this market.

We reserve the right to edit the content of letters in order to achieve clarity and meet space requirements. We may also use them in all electronic and print editions. Writers should consider any connection or relationship in terms of the subject of their comments before submitting them to the CHaINA. China’ s Ports

– Wher e to N ow?

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THE MA GAZIN E FOR

GLOB S6 本为全球 AL 供应链管 UPPLY 理士倾 CHAIN LEA 力打造的 DERS 专业杂志

Correction Notices There were a few mistakes that should be noted in the January/February issue of CHaINA. First off, on page 16, our columnist’s name is Bill Dodson, not Bob. On page 43 in the article “Missing Parts” Lawrence Gavin is from the Delphi automotive company, not Adelphi. Last but not least, the Dell photos from “Bamboo Baby Steps” on pg54-55 should be attributed to their original source at PackWebasia, the online resource for packaging and supply chain in Asia. Some information was also used from their original article “Dell Bamboo Packaging.” Please go to their website at www. packwebasia.com to find out more about this group.

0 China R the M ises to omen t JANUARY FEBRUARY 2010 www ha naon i e om

THE MAGAZINE FOR

GLOBAL LO UPPLY

M 0 HK 40 S $9 E R 5 U $6

CHAIN LEADER 一本为全球供球供应链管管理士倾力打造的专业 S 杂志

We apologize for any inconvenience posed to the above parties.

MARCH/APRIL 2010

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FIRST Word

DDS LOGISTICS GOES BUST On January 25, 2010 the Guangdong Postal Authority announced that the Shenzhen Dongdao Logistics Co. (DDS) became insolvent and collapsed, leading to mass protests and riots by customers and employees not yet reimbursed by the company. Founded in Shenzhen in 1997, DDS operated over 800 branches in China, including Hong Kong. DDS ran into trouble after their branches in Eastern China began to fail in November 2009. The company started postponing customer payments in December. Gao Wei, the chairman of DDS, along with five other managers were taken into custody by police after the companyâ&#x20AC;&#x2122;s inability to pay was confirmed by a government investigation. His assets were also frozen.

70% 50 million

OF THE PAYMENT collection business in Southern China was occupied by DDS logistics. DDS also accounted for at least 10% of the courier business in Shenzhen.

RMB (US$7.4 million) was still owed to DDS customers when

insolvency was announced. Many customers had not been paid back for months, far beyond the usual window of 15 days.

2 months

OF UNPAID

wages were also left in the wake of DDSâ&#x20AC;&#x2122;s closure. Employees are seeking reimbursement from the government.

MARCH/APRIL 2010

Imaginechina

PEOPLE were arrested during protests for deliberately blocking traffic in Shenzhen, and four other were arrested in Foshan. Thousands of DDS employees and customers gathered together demanding legal rights. Protests touched cities around the Guangzhou district, including Shenzhen, Foshan, and Dongguan.

www.supplychains.com

A man holds a sign which says “Pay Back My Hard-Earned Money” as he protests alongside thousands of DDS clients and staff over wages and debts left unpaid

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MARCH/APRIL 2010

NEWS Roundup

News Roundup Japan’s biggest logistics firm taps into mainland China Japan’s biggest logistics services provider Yamato Transport Co., Ltd. has recently entered mainland China, following in the footsteps of other global express hot-shots like FedEx and the United Parcel Service. Yamato Holdings Co., Ltd., parent of Yamato Transport, teamed up with Shanghai Jiushi Corporation and a Shanghaibased investment firm to found a joint venture named Yamato (China) Transport Co., Ltd., taking a stake of 65%, 17.5%, and 17.5%, respectively.

OOCL unveils Mobile Cargo Tracking solution OOCL has launched its Mobile Cargo Tracking system allowing customers the ability to search and track their cargo by booking number, bill of lading number, or container number. Customers may also access the service directly from http://m.oocl.com/

MARCH/APRIL 2010

China raises rail freight price by 7% China has raised its unified national rail freight price by 7.28%. The price is now at RMB1.031 (US$0.15) per ton km, according to a bulletin issued by the National Development and Reform Commission (NDRC) and Ministry of Railways (MoR). The unified national rail freight price per ton km was raised RMB0.07, from the average RMB0.961 up to RMB1.031. The goods operation price also increased RMB0.07 from the average RMB0.631 per ton km to RMB0.701. The railway construction fee remained unchanged. While the hike will greatly impact the coal enterprises transportation costs, it is hoped that it will also restore the dropping rates of railway cargo transport companies’ dropping rates.

Hong Kong. The hybrid trucks, manufactured by HINO and distributed by Crown Motors, “are cleaner, more fuel efficient vehicles that contribute to a better environment,” a company statement said. Fedex has already launched these trucks throughout Europe, Japan and the United States.

Aramex in talks over Chinese expansion plan Dubai-based logistics firm Aramex is in talks with a Chinese company to finalize a joint venture deal as it looks to expand in one of the world’s fastestgrowing economies. Aramex already operates in China through

its Shanghai office, but plans to expand into Beijing and Shenjing after it concludes negotiations. Aramex posted a better-thanexpected 28% rise in fourthquarter profit and it is looking to focus on expansion in 2010.

Kodak grows in Xiamen In response to the growing plate demand in the Asia-Pacific region, Kodak is opening a second production line for its printing plate plant in Xiamen, China. While the expansion will further serve customers in region, the second manufacturing line will produce CTP plates for other regions. The plant will support development of current and new

FedEx to deploy dieselelectric delivery trucks in HK Fedex launched its first dieselelectric hybrid delivery trucks in

www.supplychains.com

NEWS Roundup products. Kodak previously announced expansion of customer service and internal operations in Xiamen, and last August relocated its Southeast Asia-based Logistics center to Xiamen.

sales in the first year. The Hong Kong-based company funnels clothes, toys and sporting goods to brand-name retailers including Kohl’s, Target, Marks and Spencer and Talbots. Originally

China’s largest logistics park to be built in Changsha ENRUI International Logistics Centre, the largest one of its kind in China, has started construction at Jinxia Logistics Park in central China’s Changsha City in Hunan province. The RMB3.8 billion (US$560 million) facility covers 133 hectares with a total construction area of two million sqm and will have the largest scale and the most comprehensive range of logistics services for industrial raw materials and finished products in China. The unique project is planned to include a traffic network of highways, railways, waterways and air transport. Plans also include service areas to handle steel, chemicals, paper, building materials and equipment plus 1,000 categories of raw material and services to provide manufacturers and operators with products and services.

Li & Fung to partner with Wal-Mart Li&Fung has signed a new non-exclusive agreement to supply clothes and other consumer goods to Wal-Mart Stores Inc, a partnership which could generate an additional US$2 billion of

will be installed at Lerentang’s 20,000 sqm regional DC in Zhengding, near Shijiazhuang City and will be integrated with their automated storage and retrieval systems (ASRS) including conveyors and a pick-to-light system. It will also integrate with Lerentang’s host ERP system.

Fears of Notebook PC shortage grow

William K. Fung, Group Managing director Li&Fung Limited

a company that connected buyers and sellers, in recent years Li & Fung has expanded to control more and more of the supply chain, from logistics to production to product design. Last year it took over Liz Claiborne’s sourcing arm; in October it bought U.S.-based Wear Me Apparel’s clothing and accessories operations, whose products are sold at retailers like Macy’s.

Lerentang chooses Manhattan WMS Lerentang Group, a leading distributor and retailer of pharmaceutical products based in Hebei Province, has chosen Manhattan’s Warehouse Management solution (WMS) as the technology backbone to support its distribution operations serving upstream and downstream customers across China. WMS

A leading Taiwanese laptop maker has warned that labor shortages in China’s booming coastal cities could affect the supply of computers amid an expected surge in world demand. The labor situation could also lead to shortages of components ranging from memory chips to hard drives to computer cases. He said the labor shortfall could worsen following the Lunar New Year holiday because many factory workers visiting their home towns might not return to the major coastal manufacturing zones where Compal and other electronics companies produce personal computers. Taiwanese makers account for more than 80% of the world’s laptop output by setting up assembly lines in China to take advantage of the mainland’s cheaper labor.

Shanghai bans dangerous cargo shipments during Expo APL, the container shipping arm of Singapore’s NOL, is warning that the Shanghai Maritime Safety Authority (SMSA)

has imposed restrictions on shipments of certain dangerous goods during the 2010 Shanghai World Exposition. The carrier announced that from April 15 to November 15 all port terminals located in the middle and upstream parts of the Huangpu River are prohibited from handling dangerous cargo. In addition, all port terminals, except for Yangshan terminals, will be prohibited from handling dangerous cargo from April 30 to October 31. Furthermore, the export of fireworks at WaiGaoQiao (WGQ) terminals will require local authority’s approval on a per voyage basis. APL recommended its customers “exercise caution when accepting prohibited dangerous cargo as there is no recourse when the vessel will arrive between the prohibited periods.”

China Post Logistics selects RedPrairie WMS for Guangxi DC Guangxi China Post Logistics has selected RedPrairie’s Warehouse Management solution to direct operations in its 8,000sqm distribution center in Guangxi. Guangxi China Post was particularly interested in managing inventory at a granular level, with visibility into individual serial numbers. The company also cited access control and global capabilities as core purchasing criteria for their selection of RedPrairie’s Warehouse Management solution.

ANY NEWS YOU THINK WE CAN USE? LET US KNOW WHAT YOUR COMPANY IS DOING

CHaINA Magazine is always looking for updates and news from its readers. If you think your company is doing something that is interesting to others, help us help you get the word out. Contact us at editor@supplychain.cn to submit a story or to get more information on guidelines

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MARCH/APRIL 2010

NEWS Roundup

What the English Media Missed Haier breaks ground

Legend likes cake

A cornerstone ceremony was held on January 25th to celebrate the beginning of construction on the Haier Qingdao Logistic Center. The new logistic center will cover 237mu (39.04 acres). This main Haier project marks the company’s goal to change from manufacturing industry to services industry. It also shows the beginning of Haier’s goal to build a community of “Haier brand logistics service” operating platforms.

Legend Capital has invested around RMB10 million into 21cake.com, a cake e-business website. Legend Capital Managing Director, Mr. Liu Erhai, said that future investments will be focused on investing new technologies into traditional industries, with sectors like e-commerce to be the main focal point of investment in 2010. 21cake is currently located in Beijing and Shanghai, where they use telephone call centers and independent distributors.

MARCH/APRIL 2010

Bank supporting supply chains The Agricultural Bank of China has created new services focusing on the supply chain finances of medium and smallsized enterprises. The goal is to help them solve finance problems and losses. These enterprises rely on the strength of their supply chain, and the bank will offer them comprehensive financial services including financing, settlement and financial management.

New year breakdown Online shopping giants like Taobao, DangDang, and Vancl all had to suspend their deliveries for one week or longer during the Chinese New Year holiday. The reason for this is because all of their regular logistics service providers stopped operations around February 9th not to resume again until at least the 17th or 18th. While groups like China EMS do still run through the holidays, they are too expensive to use for most e-commerce companies.

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COLUMNS

Forget London Bridge

he new decade began tragically in China with the collapse of a newly constructed overpass to the new Kunming international airport in Yunnan Province. The accident killed seven workers and injured 34. The central government has slated Kunming as a logistics entrepot between China and Southeast Asia, and between China’s east coast and its interior, with its airport positioned to be the fourth largest hub in the country. The speed at which China is developing its road transport infrastructure is truly admirable. China currently has 3.5 million km (2.2 million miles) of road. More than half of that is low grade, according to Reuters. China had only 53,000 km of expressways in 2007. The country is intent on building 80,000 additional kilometers of expressway over the next ten years, surpassing the length of the continental United States interstate highway network. Of course, the development of the logistics infrastructure will have monumental affects on the ease and declining cost of shipping goods throughout the country, and to neighboring countries. However, China’s bridges seem to be falling down - or falling apart - almost as quickly as they put them up. The Henan Road bridge, a busy throughway that spans the Suzhou Creek in Shanghai, developed cracks in mid-2009 as long as four meters in length, with chunks falling off the structure shortly after renovaton. Workers from the company that built the bridge used garbage - including plastic foam and leather bags - mixed with glue to fill the yawning cracks. The workers repairing the newly-built 120 meter Hanzhongmen Bridge in Nanjing were less creative than the Suzhou Creek crew during December 2009, and simply poured superglue into cracks that were large enough to fit one’s hand through. The country has about 500,000 bridges, many of which were built 20 or more years ago, Xiao Rucheng, secretary-general of the Institute of

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Wait a Minute Bridge and Structural Engineering, told China Daily just before one of the worst bridge-related accidents in China’s history: the 2007 collapse of the just-completed Jiantuo River bridge, Hunan province, which killed 36 people. Indeed, the frequency of bridge-related incidences seems to have increased considerably since 2007. In August 2009 a road and railway overpass under construction in Guiyang, Guizhou collapsed, killing several workers; a bridge built in the 1970’s collapsed in Heilongjiang in June of the same year when an overloaded truck attempted crossing, taking several other vehicles along with it into the ravine below. Also in the autumn of last year a major bridge near Tianjin port collapsed when five overloaded trucks fell off a ramp leading to the bridge. The accident closed down the Tianjin section of a vital expressway that linked Tianjin to Shanxi Province and to the rest of northern China. The design times of bridges have collapsed, Tao Hongyi, China director for the bridge builder Dorman Long Technology, told the BBC. A lack of adequately trained workers makes it difficult for crews to carry out engineering specifications, as well. “Part of the problem,” Tao continued, “is China’s desire to build infrastructure projects quickly, often to maintain economic growth.” He added that politicians tend to be in control of projects, not engineers. Of course, corruption and collusion sometimes play into the making of catastrophes, too. The Ministry of Communications reported in 2007 that some 6,300 bridges across the country were dangerous because of serious damage to “important structural components”, the China Daily reported. Though China’s transport infrastructure development frenzy has proven to make the transport of goods and people more efficient than ever before, it’s dependability is also proving to be less predictable - and perhaps more risky - than companies have planned on.

Bill Dodson is a principal of TrendsAsia Ltd., a systemic-risks advisory based in Shanghai. He is author of China Inside Out: Revelations and Revolutions (John Wiley & Sons) due out later this year. He publishes the This is China! blog, and can be reached at wdodson@ trendsasia.asia.

China's bridges seem to be falling apart almost as quickly as they are put up

MARCH/APRIL 2010

COLUMNS

Rosy Real Estate

I Jeremy Chapman is the director of Industrial Investment at Colliers International, which assist clients in the repositioning, disposal and development of projects. He can be reached at Jeremy.chapman@colliers.com

The potential pitfall for the market due to a slowness to react and to grasp an opportunity that seldom comes around in China

MARCH/APRIL 2010

n late 2008, I was working with financial investment in the industrial real estate sector and experienced the sudden vacuum and short fall of capital destined for the sector. Upon my recent return to the logistics real estate industry, I was surprised to find the sector experiencing a renewed vigor and interest from financiers. It is interesting to note that, from a property perspective, industrial real estate is generally the first asset class that feels the effects of an economic down turn and is also the last sector to recover. By nature of the way the industrial industry has evolved, China is particularly sensitive to such demand shifts given its successful drive to become the worldâ&#x20AC;&#x2122;s factory. Therefore, this renewal of industrial real estate investment comes with a different set of needs but is more focused and streamlined than in previous years. The Real Impact Looking at the plans of leading developers, the projected supply of logistics warehousing slated for 2009 and 2010, it was a common assumption that there would be an oversupply in 2010 and beyond. Given that the financial brakes were put on during the latter half of 2008, most of this projected supply never actually eventuated. Construction stopped across the market and land was banked for another day. Surviving investment committees pushed back on new potential purchases. It is rare to find investors who secured funding prior to the crash and have continued to develop their facilities. Herein lies the problem for the future of logistics service providers. This halt of development, lag time of funding and development of product will inherently affect the market supply of high grade facilities in many locations. During the frenzy of 2008 and before, a number of investors rushed into the country, buying what they thought to be high potential growth locations without really understanding their customerâ&#x20AC;&#x2122;s needs. There were also experienced developers

who did all the right homework but due to market forces still got caught out. On the other side of the coin there are those developers who have chosen well and developed Class A logistics hubs and it is these developments that have seen stable and sustained growth over recent years. Hence the creation of a fragmented market with some developers having done well during the recent tough times and others bogged down from a hangover legacy of bad investments. Most carry at least one or two troubled developments. It is this situation that offers a challenge to both the user and to the developer going forward. There are a few well located facilities, which are in short supply and high demand. Then there are those less attractive locations having their own issues. Added to the equation has been the difficulty of borrowing money for the development of facilities, both locally and from overseas. Investors may look to overseas financiers for funding as the cost of borrowing is potentially cheaper over time. This however comes with a myriad of statutory and other investment related issues. Window of Opportunity As was the case back in 1997 during the Asia crisis and again in 2008 to present, Foreign Direct Investment (FDI) into the industrial sector ground to a slow crawl when compared to the boom years. When FDI decreases, local industrial zones and governments tend to show greater leniency and flexibility to other classes of real estate including the development of logistics hubs. The need to attract investment is paramount, but to ensure that tax-income producing manufacturers/industries are balanced with low income generating logistics developers and users. The potential pitfall for the market due to a slowness to react and to grasp an opportunity that seldom comes around in China could result in the dominance of the market by one or two developers facilities, therefore reducing the flexibility and pric-

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COLUMNS ing needed to survive in an already competitive market. With the growth of the logistics providers’ business not looking to slow in the coming few years, the need to consolidate multiple businesses and locations into one stop regional hubs will be paramount for a lot of providers survival. It has to be noted that a number of users that took the chance to have design-built facilities back in 2007 and 2008, with delivery of the facilities over the next year or so, are in a good position to benefit from the market given its projected consolidation and growth. Given that there are investors willing to invest, governments prepared to be more flexible and a need for logistics providers to consolidate operations, there is no better time for logistics providers to plan the consolidation of their present and future real estate needs. However this window will only likely be open for a limited time.

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MARCH/APRIL 2010

PROFILES

Sexy

Jeff Gallinat VP, Global Manufacturing Operations Customer Value Chain Management Cisco

MARCH/APRIL 2010

Cisco www.supplychains.com

PROFILES Cisco recently announced a decision to elevate Greater China (including HK and Taiwan) to its own theater status, separate from the rest of Cisco Asia. Does this affect your department value chain at all? This move is a clear recognition of the strategic importance of the China market and means we’re going to provide a higher level of focus on it in the company, even higher than it was before– and that there will be additional resources to develop the whole ecosystem. However, this won’t affect our department so much as we’ve been focused pretty heavily in terms of enabling business in China – it just may mean that some of our plans get accelerated.

video are absolutely critical for us and our partners to scale the company and create enough bandwidth to create new solutions to move forward.

Which of the newer Cisco technologies have been the most helpful to you? Loosely we could say the video/collaboration technologies; this involves everything from webex (a highly sophisticated PC based collaboration tool) – which we use continuously- to “TelePresence” which we’ve installed with all of our teams major partners and use when we really want to have the full affect of an in person meeting without jetting six thousand miles. There’s also a lot of interesting collaboration platforms we’re will be invested developing on the web like an integrated workspace A lot of people have been telling me the Supply in Cisco’s China experience – which works on the vision that you Chain is not a very sexy field to go into because programs over come everyday and open up your workspace and it it isn’t flashy and it doesn’t allow for much crethe next 3-5 years contains all the normal tools, groups, data and news ativity – if you were talking to a university stuthat you would need to access for your particular job dent, how would you react to this comment? there in front of you for your particular alignment. Well, I don’t know about sexy, but in the scope Many of our team members are expected to work in multiple dimenof my job, there’s a lot of opportunity to be very creative in the sions. So, the ability to tailor and get tools and information to people, supply chain space depending on what part you are operating in. At to collaborate interactively with people around the world, and the Cisco we constantly have a need for creative thinking to set up relaability to have a full featured meeting space is all incredibly critical. tionships with customers to deal with issue resolution and co planWith this technology, you can read every expression and solve the ning. There is a creativity in the way we architect solutions, manage most difficult problems. So I think that the whole sweep of capabilidata, information flow and information systems, in the way we deties that enable collaborations is what’s really important and video is sign our physical network and logical supply chains and in how we a tremendous accelerator to that – you could say that this is one of manage our ecosystems – which often times has many different types the sexy parts of of partners. There’s creativity in how we facilitate and organize and my work. lead our teams in this kind of environment. I think there are boundless opportunities to be creative – I think sometimes when people You teach a class for exsay its not a very sexy field, they’re referring to that fact that to some ecutives at the Supply Chain Leadership Institute (a joint degree supply chain is about making truly excellent execution. Someventure with Stanford University and Fudan University.) What one once told me it’s like making the trains run on time – but there is sort of skills do SC professionals need to advance their career? still a tremendous amount of breakthrough outside-the-box thinking There are certainly a lot of skills that SC professionals should have. and incremental creativity needed. While supply chain people can come from almost any kind of background, most of them tend to be pretty systematic thinkers. But to Cisco has been working a lot with new media outlets – how move forward, they have to be able to think about end-to-end soludoes this affect how you do your job? tions on a broader level. In my opinion, there is also no substitute, As we enter into businesses that are tailored more towards conparticularly in leadership, for experience – learning how to manage sumers, more solutions or products driven, or involve different kinds a project, operating in different environments and countries, knowof business that have different design/manufacturing paradigms, it ing not only theoretically but having experience with multiple discimeans that we have to generate different supply chain solutions. Our plines, geographies and tasks is really important and sometimes a bit executive team spends a lot of time thinking about the different busiunderrated in the world. There’s something to be said for someone ness models in the company and how to design the supply chain to who’s progressed through 10 or 20 different experiences, roles and suit those – you don’t want to have 300 different supply chains, but geographies – it creates a different sense in a person and it often certainly one size does not fit all, so one of the things we’re focused shortens significantly the learning time and prevents a lot of mistakes on is rationalizing and designing end to end solutions for these difand allows people to be more creative and have more bandwidth. A ferent segments and different products. We do spend a lot of time on persons educational or career background doesn’t always matter. that, but it’s also a great opportunity. Also, as a lot of these segments open up – well, we always eat For more information on executive education courses at the Cisco-Fudanwhat we cook – and the technology we produce, in addition to being Stanford Supply Chain Leadership Institute, visit their website www.cisco.com exciting to the world in general, are a major aid that helps our team and click on Cisco China Supply Chain Leadership Institute. The next session run a far more global, complex and broad sort of supply chain – we will be held from March 29-April 2 2010 in Shenzhen China. The curriculum will be taught in Mandarin. have partners around the world and a lot of these technologies like

US$16 billion

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MARCH/APRIL 2010

FOCUS China

Sexy

Jeff Gallinat VP, Global Manufacturing Operations Customer Value Chain Management Cisco

思科最近宣布了一个重要的决定，将大中华区（包括香港和台湾）作为脱离亚洲思科的独立发展体系。这会影响到你们部门的价值链发展吗？此举显然是为了进一步强调中国市场的战略性地位，我们必须承认并接受该市场在公司长期发展中的重要性，关注度比以往更高了—将会有更多的资源来发展我们的整个价值链。然而这对我们部门并不会有太大影响，因为我们一直以来都很关注中国业务的发展—唯一的影响或许就是我们许多计划都要加快速度提前完成。许多人都这样和我说，中国的供应链行业并不吃香，因为它要求十分务实的精神并不允许有太多创造力—如果您和一个大学生讨论这样的说法，你会如何应对这种评论呢？嗯，我不是很清楚这个行业在大学生看来是否是一个不错的选择，但在我的工作经验看来，有很多的机会可以让你在供应链中从事具有创造力的工作，当然取决于你所在的职位和运营模式。在思科我们一直鼓励所有创造力的思维来设立和处

MARCH/APRIL 2010

Cisco

理与客户间的关系，处理问题和制定合作计划，希望突破常规的思维能为我们找到管理数据、信息流和信息系统的有效解决方案。我们始终坚持创造性的思维来设计我们的实体网络和物流供应链网，以及管理我们的生态系统—尤其是在和许多不同的合作伙伴打交道时。可以说创造性思维是无处不在的，贯穿于整个组织管理过程中，并带领着整个团队在这样的环境中提高竞争力。我认为这里有无穷的机会需要发挥创意—我觉得当人们说它并不是一个香饽饽的时候，其实只是指我们的供应链在某种

程度上是以关注执行力为主，就好比打造一个可以准点到达的精密度极高的火车一样，但实际上除此之外我们还有大量需要创造性思维来完成的工作。思科一直都保持着和新营销媒体的合作— 这些对你的工作产生什么影响？我们所进入的领域一直在以客户需求为导向，不断进行着自我革新，出现了涵盖更多行业和生产模式的产品和解决方案，也就是说我们又有了更多样化的供应链解决方案。我们的执行团队花了许多的时间研究不同的商业模式以及与之对应的供应链方案—你肯定不希望有300多种供应链，但显然一种模式无法满足所有的需求，因此我们目前关注的就是在保持大框架一致的前提下，设计出合理的终端对终端的供应链解决方案来为不同的细分市场和产品服务。我们的确花了不少精力在上面，但这是一个很棒的机会来摆脱瓶颈。此外，许多细分市场是开放式的—我们总是习惯于接受我们自己所设计的方案和自主创新的科技，这会帮助我们的团队学会管理国际化。更为复杂的供应链—我

www.supplychains.com

FOCUS China 们在世界各地都有合作伙伴，视频这类技术对我们和我们的合作伙伴来说都是至关重要的，这些技术支持着我们公司的规模不断扩大，并能提供足够的带宽为进一步的发展创造新的解决方案。您认为在所有新的思科技术中，哪些对您是最有帮助的？狭义的来说，视频合作技术应该是最为重要的，它涵盖了我们一直在用的 WebEx（一个高度复杂的基于PC为平台的协作工具）的一切技术-这种技术我们所有的团队和大多数的合作企业都有安装，这样我们就能十分逼真地进行电话会议而不用只为了一场会议要长途跋涉六千公里。当然我们还有一些在网络上发展的有趣的合作平台，比如一个人高度整合过的全真模拟办公体验—就像你每天都去公司上班，所有办公的工具都一应俱全，你所需要的数据和信息都唾手可得，所有你面前的一切都能满足你所有工作的需要。许多我们的团队成员们就十分期待可以在这样多元化的环境下工作。由此可见，保证工作需要的信息和资源能分配到需要的人手里，团队成员间在全球范围内

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的有效沟通和互动，并打造一个全真模拟、功能完善的会议空间情境是多么重要。有了相关技术后，你就能轻易解读各

种需求，并解决异常棘手的问题。所以我认为这种促进合作交流和互动的技术能力对我们来说非常有帮助，因此视频技术就

能加速我们朝这个方向发展的进程—或许这就是我们工作最令人艳羡不已的地方。您在供应链领袖学院为员工们授课（一个斯坦福大学与复旦大学合办的学院）。您认为哪些技能是供应链专业人士们在以后的职场生涯中需要提升的呢？作为资深的供应链人士，需要掌握许多方面的技能—虽然从事供应链的人员可能来自不同的背景，但大多数都具有很好的逻辑思考能力。不过要想在职场上走的更远，他们需要在宏观层面上思考终端对终端的物流解决方案。我认为，在领导力的经验上是无法代替的—学会如何在不同的国家和环境下管理一个项目，知道怎样在理论和实践上都能结合不同的行业规则，地域特点来处理问题，这一点很重要，但往往得不到充分的重视—有一种说法是如果一个人在不同的地方能经历10-20种不同的工作职位和经验，那么这些经验就能明显得大大缩短他所需要学习的时间并能有效避免一些可以预见的错误，并能激发他更具创造性的思维。在这个时候，他的教育或工作背景就已经不再重要了。

MARCH/APRIL 2010

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PROFILES

Eric Cassagne Supply Chain Director Schneider Electric

Electric Markets Eric Cassagne has spent over eight years working in New World economies, including India and the Arabian Peninsula. He is now on his third year in China and today talks about the opportunities Schneider sees in this growing market.

What do you see as the main differences in doing business between the different regions you have worked in? Actually all of these regions have common issues in terms of market behavior. For instance with the signal of the demand you have very erratic trends of growth, with sharp peaks and curbs. This is always true in these very project oriented countries. With development comes a diffuse market but a very strong B2B market. To cope with such business environments as far as supply chain is concerned, we focus on the deployment of solid processes such as the collaborative forecast as well as sales and operating planning. As you can see, the supply chain role is really to be the bridge within the organization from the customer (marketing) up to the plant or vendors. In China, as far as distribution is concerned, you have the emergence of strong players with national coverage, including international distributors who are picking up in the country. In India the distribution players are very scattered. In the Arabian countries I’ve worked in like Saudi Arabia and Dubai, they have mostly developed their supply chain philosophy in line with the West and these countries are much smaller, so they are pretty different. Why is such a large portion of your company based in China as opposed to the West? We consider Asia and China particularly as a strong asset to the company. There is a huge market here – I mean, China and India are within 5000km of each other, which means you have 35% of worldwide population right here. So in the long run it makes sense to be concentrated in this part of the world. [This country] can also be used as our low priced manufacturing department but our first priority for moving out here was actually the domestic market which shows some great momentum as far as energy management and energy efficiency are concerned.

How do you see China developing its supply chain structure in the near future? Reaching a good level of consistency is important because right now it’s really a little bit unstable in terms of professionalism and quality of service. Obviously this comes from the fact that supply chain is quite a recent function in China. Even Europe still has problems with efficiency if you remember last year’s French port strikes. In the coming years, I think we will see a concentration of logistics as well as bigger logistics services emerging into the market, both local companies and joint ventures with international players. All the big players are here. In fact, one challenge with criteria of selection is assessing the capability of even national players to address a global account and provide a real consistency of multi services including the right information processes. In many cases, international forwarders or national organizations rely on local branches – and as global accounts it’s difficult to rely on local branches. I think the most I can predict is that in five years time the information side of logistics will be improved and consolidation will definitely happen more. I also think that universities will begin to turn out higher quality supply chain majors. There is a desperate need for them in the market right now. A report I read says that there are about 7000 supply chain graduates to fit around 80,000 job needs. Hopefully, local students will be able to begin to fill this need for supply chain people in China.

It’s not easy to address this market because it’s not yet mature but we are considering the mid term and the long term, not the short.

Does Schneider have trouble with supply chain transparency ? Things are definitely growing here step by step but there still remains room for improvement. In terms of transparency, we sometimes have goods that are damaged en route and we don’t find out until we receive the damage report a week later from a customer, which can be embarrassing. In India we actually face some of the

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same situations with transparency. More than transparency I would stress issues with traceability … [but we feel there will be] a real break through in the coming years.

What’s the hardest part of your job? On a daily basis, one challenging part of my job is ensuring customer satisfaction. Chinese customers are becoming more and more demanding and the company has to put out a lot of energy to meet our commitments and make sure we hear the voice of the customer, which is hard and needs humility and an open mind from us. The voice of the customer is there to give us new challenges – and as Chinese customers demand more it’s a challenge to develop in order to offer both free and paid services that meet their wants.

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PROFILES

电子市场 Eric Cassagne, Supply Chain Director

Schneider Electric

Eric Cassagne，施耐德中国的供应链总监，在包括印度和阿拉伯等新兴的经济发展国家有大约8年的工作经验，今年是他在中国的第三年。今天他将和我们分享施耐德在不断发展的中国市场中所遇见的机遇。您认为不同区域间经营模式和方法的最大不同何在？实际上所有区域的经营在市场行为上都有共同的问题。就比如说在消费者的需求预测上，上下波动的浮动太大，十分不稳定。或许这种情况在项目导向型的市场中不可避免，因为伴随着我们发展的是一个分散而又十分强劲的B2B市场。然而，在中国你有强大的基础设施和配送体系支持，而印度就相对落后了。此外，中国的物流体制不会过分集中，并有强大的B2B配送支持。在沙特阿拉伯和迪拜这样的国家和地区，他们发展供应链的逻辑大多和西方国家一样，而这些国家的面积并不大因此发展的过程显得困难重重。为什么公司的许多资源是以中国为总部而不是在西方国家呢？我们认为亚洲特别是中国对企业的发展有许多无形的资产可供开发利用。这里的市场潜力无限—我的意思是，中国和印度之间只有5000公里的距离，也就是说全球 35%的人口都集中在这里。所以对我们的长期发展来说，将公司的大部分资源集中在这个区域是有战略性意义的，同时我们的当务之急就是要成为亚洲市场本土化后的一部分。这里可以成为我们低价的制造工厂，但是我们以此为总部的首要考虑因素还是巨大的消费潜力。目前这个市场我们很难下一个定义，因为它尚未成熟，所以我们需要一段时间来规划我们的长期策略而不只是短期的效益。施耐德是否有过和供应链透明度有关的困扰吗？我们在中国的发展逐步并有序地进行着，但仍有改善的余地。在透明度方面，我们的产品优势会在运输途中被损坏，而我们在一周之后收到客户投诉的产品毁坏

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报告后才得知，这真是让人尴尬。在印度我们也遇到类似的有关供应链透明度的问题。您认为中国需要多久时间来发展一个成熟的供应链结构呢？这个问题很难回答。达到较高水平的一致性至关重要，因为当前中国的供应链状况在专业度和服务质量上参差不齐，很不稳定。但即使是欧洲在效率上也难免会有问题，一旦出现罢工或其他意外情况，也缺乏相应的备用方案。我认为在未来几年中国的发展中，可以预见到的是物流业脱离政府转而向集中化趋势发展，而更加全面完善的物流服务会在市场中被广为接受，本土企业和国际化的合资或跨国企业都能充分参与到市场竞争中。所有主要的大公司都在这了。实际上，一个选择的标准就是通过评估国内本土企业的资质来衡量国际企业所需要的能力。

息化的水平会进一步加强，公司间的兼并也会愈演愈烈。同时大学里会开设更多更专业的供应链相关专业，因为目前供应链人才市场需求还是很大的。我看到有报道说目前只有7000名左右的供应链毕业生，而实际需要的岗位却有 80000多个。希望中国的学生在未来的专业选择上能优化选择，更好地填满足应链产业发展的需求。你工作中最难的部分是？虽说处理经营中的业务问题和推动战略发展是非常重要的，可我工作时间的很大部分还需要花在人上—我指的是我的客户和我的团队。如果没有合适的团队和人才与我为伍，我就会像一个人独行在沙漠中那样孤立无援。在每天的工作中，还有一个挑战就是保证顾客满意度。中国的客户对产品和服务的要求越来越苛刻，因此我们就需要花更多的精力来实现我们对客户的承诺，而即时地听到客户的反馈和意见却并不容易。客户的任何反馈都会给我们不断地带来新的挑战——随着中国客户需求的提高，提供哪些免费和有偿的服务并优化组合来满足他们的要求都是一种不小的挑战。

去处理好这个市场并非是件容易的事情。因为它尚未成熟，但我们考虑的是中期和长期市场潜力，而不是短期。

在许多情况下，国际货代公司很依赖他们当地的分支机构，而在世界各地的发展就很难实现这种依赖的可靠性。我认为我能预测的未来五年内的趋势包括—物流信

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PROFILES

全民三明治 Kurt Lipson, General Manager

Subway Restaurants(Shanghai)

首先我们想知道赛百味特许经营的商业模式是如何运作的？概括地来说，赛百味作为一种特殊的QSR品牌，与KFC这样的快餐连锁相比，最大的不同就是KFC90%的门店都是同一家企业所有，而赛百味全球32000家的门店是属于不同的被授权经营的企业。可以说赛百味走的是完全意义上的特许经营模式，也就说不同被授权企业之间是相互独立的。我们公司就是上海和江苏省的发展代理。这种经营模式似乎是一个较为分散的经营模式，那么你们是如何保证当地供应商的产品和服务质量？所有与我们合作的供应商都必须经过康涅狄格州总部和新加坡区域办事处的审核。为了保证高标准的质量水准，供应商需要通过相当严格的资质审核程序。新加坡办事处负责选址的实地考察，检查仓库和所有经过美国进口商批准的产品。麦当劳的物流合作伙伴夏晖物流负责我们产品的运输与配送。大部分的肉类和面包等冷冻产品都是实地进行质量检验。一直到夏晖物流的运输程序前，产品要经过三重检验。此外，我们还有先进的物流跟踪体系，以便了解每家门店的产品存货情况，这样我们就能知道哪些商店使用的的确是经过我们查验后的产品，他们也就无法擅自更换产品的配方或成分。哪些产品或配方是从国外进口的呢？上海和江苏门店的产品中，蔬菜都是由当地供应，但其他配料都是进口的，比如新西兰进口的奶酪，就能保证产品的优质和嫩滑口感。为什么赛百味的菜单和食品配方与美国趋于一致，而其他类似麦当劳的QSR品牌团体却一般会在菜单上做一些本土化的改变呢？中国市场的本土化是一个重要的策略，我们会在3月1日推出首批更适合中国人口味和喜好的系列产品—鸭胸肉三明治。这个产品的推出将会在上海率先进行。不过当赛百味初来乍到时，是有遭遇过一些不顺，有一部分原因是因为美国人的饮食习惯还是让大多数中国食客无法适应。您认为三明治快餐的理念能否在上海顺利推广呢？我认为这可以变成一种普遍接受的概念。两年前，我们80% 的客户都是外国人，只有20%的中国顾客，而如今这个比例恰恰相反。我们一直不断努力改变人们对三明治类产品的看法。以往人们对三明治的印象就是一个无需加热即可食用的三角形汉堡，并不觉得有多美味可口。而我们就是要通过宣传向顾客传达一种

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全新的三明治理念，并激发他们自己动手来做的兴趣和创意。我们有热狗和其他热饮和新鲜出炉的配料可供中国消费者选择。我们试图改变中国顾客传统的习惯和选择。这样人们可以自由选择搭配他们喜欢的面包和配料。记得第一次来的顾客面对这么多选择都已经无从下手，只能对服务员说“只要好吃的我都可以”。但是你的确能做到按照你想要的方式选择和搭配。一旦这种理念被广泛接受了，人们就会认为吃这样的快餐真是一件很酷的事。您是如何找到合适的人来买赛百味的特许经营权呢？我们在商店和一些网站都有广告发布。我们寻求的是长期的合作关系，因为我们的特许经营合同长达20年。最近我们还在尝试像大学生群体宣传这种经营模式。我们认为这对双方来说都是一个难得的机会，毕竟对应届毕业生来说，目前的就业市场并不乐观，所以如果条件允许的话，小资本的投入而成为自己专营店的经理也是一个不错的开始。那么如果有一些经营者处于某些原因，违反了特许经营的协议条款，诸如达不到相应的质量标准或未经允许就擅自做出改变等做法，你们会如何处理呢？我们会要求特许经营的店主在店内工作，了解赛百味的所有经营细节，不管是哪一方面都要非常熟悉。我们对每家店都会做月评估。如果说赛百味的食品在安全或其他任何一个方面违反了相关协议规定，这家店便会受到我们的调查信并很可能失去特许经营权。为了保护赛百味的品牌形象，我们始终坚持并维护国际标准的经营。目前你们的发展过程中遇到的最大挑战是什么呢？在不断发展壮大的过程中如保持各经营门店品牌形象的一致性应该说是最大的挑战。我们在上海的发展目标是在2010年底拥有55家门店，启动并投入正常运营。

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Iâ&#x20AC;&#x2122;m Loving It (McDonalds) VS. Eat Fresh (Subway) Headquarters Started in China Stores (worldwide) Stores in China Logistics Provider

McDonalds Illinois, USA 1990 32,000 326 Havi Logistics

Subway Connecticut, USA 1994 32,410 144 Havi Logistics

PROFILES

Spreading the Sandwich Kurt Lipson discusses managing his franchise and how the Subway “QSR” (which stands for Quick Service Restaurant, in place of “fast food”) business is catching on. So how does this whole Subway franchise model work? Basically Subway is a different type of QSR brand much different from like KFC, where 90% of the stores are company owned. Subway has 32,000 stores around the globe and they own only one. Subway is a complete franchise model, which means that different companies run the different franchises. Our company is the development agent for Shanghai and Jiangsu province. This seems like a potentially fragmented system, how do you ensure quality from local suppliers? All of our suppliers must be approved by our headquarters in Connecticut as well as the regional office in Singapore. It’s a very strict process that is really important in order to have these high standards. The Singapore office does site visits, checks out warehouses and all products are approved by US importers. We also have Havi logistics deal with our foods, which is the same company that works for McDonalds. Our frozen products, which are mostly meats and bread, get a Q&A check on site. Once its gets to Havi we do a triple check. Also, we are able to keep track of exactly what products go to each store, so we know what stores are buying, and they can’t replace ingredients with their own. Do you import any of your ingredients? Our vegetables for the Shanghai/Jiangsu region are sourced locally, but many of our other products are imported; our cheese is imported from New Zealand which ensures high quality. Why has Subway kept its menu and ingredients consistent with the American model when other QSR groups like McDonalds have made so many adaptations? Since Subway is a complete franchise model, the R&D and introduction of a new product must be in close coordination with the Subway HQ in the United States in order to maintain consistency and food safety. Brands like KFC and McDonalds have their own R&D facilities in mainland China and are able to release products into the market much quicker. If every franchisee here did its own research and development, Subway would be less able to control quality consistency and food safety. However, localization is an important part of our China market and on March 1st we will introduce our first China based product, a duck breast sandwich, to be launched in Shanghai.

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Kurt Lipson General Manager Subway Restaurants (Shanghai)

But when Subway first got into China it hit a few bumps, in part because the American model was so … foreign to Chinese customers. Do you think the concept of a fast food sandwich is catching on in Shanghai? I do. Two years ago, 80% of our customers were foreigners, 20% were local, now it’s the exact opposite. We’re helping to introduce the sandwich and sandwich products into the market. There was a perception before that a sandwich was a little refrigerated triangle thing that was eaten cold and did not taste so good. We give an education on what a sandwich should be, and we give the consumer the creativity to create their own. We have hot toasted subs and other hot options like soup that Chinese consumers can relate to. We’re working to change perceptions and habits. People get to choose based on what kind of sandwich they like and we have lots of options. The first time customers come in, so many options can actually be really confusing, and they don’t know how to choose. Our servers ask them what they want and they say “Just give me whatever is good.” But you can make it good how ever you want it. Once this sinks in, people think it’s pretty cool. How do you find the people to buy your franchise? We do advertising in store and on some websites. What we’re looking for here is a long term partnership because our franchise contract is for 20 years. We’ve also recently began pitching the franchise to college students. We think this a good opportunity for both us and them because the China job market is really difficult for new graduates, so a good option for those with a little start up capital is to become general managers of their own store. What happens if these owners, for whatever reason, violate the franchise agreement either with quality concerns or unapproved changes? We require that franchise owners work in the store and understand every little aspect of Subway, no matter what it is. We give evaluations every month to every single store. If safety or anything is out of compliance they receive a letter from us and could lose their franchise. To protect the brand image we’re very strict at upholding our international standards. What will be the biggest challenge with your job going forward? It will definitely be maintaining brand consistency with high growth. Our goal in Shanghai by the end of 2010 is to have 55 stores open, up and running.

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FEATURE Education

Educat the Masses By Monica Liau

aoke Wang is glowing. He just finished his thesis and is about to graduate with both a management MBA and an MA in engineering from the China Leaders for Manufacturing (CLFM) program, a joint venture between Shanghai Jiao Tong University (SJTU) and the Massachusetts Institute of Technology (MIT). CLFM is unique as it not only combines two education branches into a single program with a supply chain focus, but also includes a mandatory six month industry internship. A pretty tall order, but in Ke’s case, it has paid off. The extra bounce in Ke’s step comes from making it through months of intensive interviews and finally being hired by Cisco Systems, where he interned last year. He is one of the last of his classmates to secure a job, many of whom have gone to equally big name companies like Apple and Honeywell. “We have a unique selling point coming from this program,” says Wang “In China there are big opportunities for us because we can provide knowledge and experience right after graduation.” There are not many other students who can boast Ke’s experience. As companies in China move from manic growth-oriented strategies toward putting more value on intelligent supply chain approaches, demand for supply chain educated pro-

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fessionals is growing. However, when dippin g into the local ocal pool, many hiriring compani ess find the educati on n of their targete d talent is under-develop eloped. According to several sources, many supply chain and management graduates have never seen anything as basic as an RFID, which means they will likely require years of training once they are hired. Mind the Gap Many complain that the biggest problems with fresh Chinese graduates is that their education is chiefly fed a diet of theory, not “real world” case studies; most are not ready for the practical application of their profession. This is a complaint heard the world over from anyone who has ever hired new blood. However, Holger Schober, Director of Executive Education at the Supply Chain Management Institute, says that what a lot of Chinese students really lack is the ability to see the supply chain as a bigger picture and solve problems outside the box. “Students in supply chain should be able to look at a truck, and see not only

the truck but the possibilities beyond it,” he says. “These students can learn whole books by heart, but when you ask them what it means…you get blank looks.” Professor Ming Dong, Chair of the Operations Management Department and Academic Director for CLFM says a lot of MA students base their projects on literature without actually having research to back it up. “I recently had one student give his thesis on demand processing,” says Dong. “It turned out that he just reviewed a previous paper in his own words.” Bob Liu, president of executive search firm China Supply Chain Service, says this education gap is nothing wrong with the students and everything wrong with the professors who are teaching them. “If you look at the professors in China, very few of them have done major systematic study or research about supply chain,”

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FEATURE Education he says. “How can they teach these students if they just don’t have the necessary industry expertise to educate the people who will go into this work industry?” Liu says that while the professors are still much better prepared than their predecessors of 10 years ago, many are still primitive in the practical side of the profession, don’t stay in touch with the industry, and are not able to move to the next level Jack Kelley, President of the Shanghai Uni Supply Chain Resource (a company focused on supply chain professional education) recently did a project with a domestic MBA program. He also believes many professors are resistant to outside influences. According to him, there are some territorial issues with professors where they simply are not interested in working with people from the industry. “Professors are held in high esteem and because of this often remain unchallenged,” says Kelley. “But many of them don’t want to be challenged and there is some resistance to new adaptations and methodologies.”

universities to educate their students to start contributing 100% right out of college, whereas I have friends from excellent universities in the US who basically did nothing for 2 years but go through an intensive training program with their company.” Patrick Moreton, Associate Dean/Managing Director of the Washington University of St Louis (WUSTL) -Fudan EMBA program says that experience gaps within companies themselves can also make it difficult for new hires to learn necessary development skills when they start work, due to thinner management ranks. According to him, a lot of people in his EMBA class are there because they haven’t had bosses above them who could act as a role model and mentor. “A lot of these companies are very young and don’t have a generation of 50-year-old managers who have huge amounts of supply chain experience” says Moreton. “A lot of people in classroom may never have had a good boss or role model to learn from.”

A lot of people in the classroom may never have had a good boss or role model to learn from

Corporate Responsibility The corporate world, which obviously stands to benefit most from high-quality graduates, also shares some responsibility for enriching the workforce. According to Liu, there are many companies in countries like the United States who invest in and support practical research. This means sponsoring internships, developing training programs together with universities, and allowing students and professors into their factory to talk about the production line. Liu says that companies here, especially native Chinese companies, have higher expectations of their university graduates but seldom do anything to help educate the students. “When hiring new graduates, Companies say hey these guys suck, why do I have to train them?” says Liu. “They expect

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Supply Chain Attraction In addition to the influence that professors and corporations have on su p ply chain education, it is also a problem getting the most qualified students into the supply chain field itself. In a world where marketing and finance jobs are considered the most glamorous, it can be hard to convince students that supply chain is the way to go. “To ma nyy students, gooing into marketing is like the promise of driving a BMW, whereas supply chain represents a KIA,” says Schober. “Put yourself into the shoes of a student: What’s sexier? A BMW or a Kia…… Sales or supply chain management?”

David Robb, from the Department of Management Science and Engineering/ School of Economics at Tsinghua University agrees that when his students go to find internships the program requires of them, they’re often unable or unwilling to find positions in logistics and supply chain management. “I think many students go for the remuneration in other fields like finance and accounting.” he says. However, Dr. Martin Stößlein, who teaches at both Jilin University and the University of Dayton thinks that the supply chain field actually has a more of a fan base than it might otherwise seem. “I also think the interest comes from economic trends and working opportunities in the manufacturing and service industry,” says Stößlein. “Students know that supply chain management not only has a high entry level salary, but because it touches on so many different points like strategy and finance, procurement, production, and marketing, it can get you up to top management.” Concentration on Innovation Despite obstacles, there are programs that are beginning to look at supply chain education differently. WUSTL at Fudan University just started a program which exports their students to the US for a year to receive an MA in supply chain management. Moreton feels not enough students in China get the chance to go

abroad, which may ab mean a lack of “inme te national perspecter tive”. In addition to tive ave technical expertis experti e, he says students have also need to be able to acquire soft skills like communicating effectively and understanding practices that maintains a consistency and culture world wide. “We think its best for student to acquire these skills through an immersion program,

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FEATURE Education ing,” says Kelley, whose group travels all over Greater China to conduct training programs that last anywhere from two days to two weeks. “As we all come from supply chain backgrounds, we work to tie the curriculum in with contemporary BP’s and modern day examples that our students can relate to.”

which gives them a year of seasoning on experience to improve SC knowledge; in an international environment,” says textbooks are new but fixed, we want to Moreton. “Technical skills are not what put in new information.” is in short supply in China, what we’re missing is people who work effectively Part-Time Solutions For those unable to devote themselves with other people and cultures.” to a full-time program, corporate educaFor groups like CLFM at MIT-SJTU, students have an internationalized and tion with a supply chain focus also seems multidisciplinary curriculum that draws to be a reasonable way to help employees learn new skills from both the engithat they missed at neering and manageuniversity or at work. ment schools. This Education pursued program also requires a by professionals afsix-month-long structer they have actually tured internship, which entered the working often places students world can keep them with their corporate Cost of up to date on some of partners such as Cisco, CLFM Program the latest issues and Amazon, Apple and at Jiao Tong can also help them Honeywell. Students University apply what they have are required to write learned directly to their their thesis based on office, where it is most the projects that they needed. Groups like work on for that period of time. Based on feedback from their the executive education program at the corporate partners, they are able to mold Supply Chain Institute involve not only their curriculum to fit the industries a partnership between international and most current and pressing problems, national universities (Fudan University such as lean technology. “We are not a and Stanford University), but also intraditional Chinese academic program volve a corporate partner (Cisco) who because we are flexible and can meet the influences curriculum. “Companies that requirements of partner companies and hire executive education groups like my students,” says Dong. “We want to know company say they are looking for the how to do it in the real world with hands- ability to stimulate contemporary think-

RMB 158,000

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Encouraging Change Supply chain management education in China is certainly becoming a forefront issue for Chinese companies, but education programs are still working to catch up with demand. Full-time MA and MBA programs like Jiao Tong are only for the few willing to give up their job to study, able to afford pricey tuition, and based in the right city. While more supply chain programs outside of Shanghai and Beijing are often cheaper, many are also underfunded and behind the curve. One manager says that when hiring students out of places like Guizhou or Shandong, students sometimes even have to be taught basic computer skills like Microsoft Outlook. Corporate training, while more flexible, is often left to HR departments. While there are some who study on their own, much of this education relies on company initiatives and funding. However, Stößlein says that the Ministry of Education is encouraging and funding programs which move away from rote learning and support multidisciplinary thinking and teaching; an encouraging sign of support from the government. According to Liu, the challenge for companies going forward lies in producing fewer people with regular skills and finding those who can offer real quality to the supply chain. “Our problem is that we have too many people who are average but are lacking ones who are excellent critical thinkers,” he says. “Industry constantly blames universities and professors blame the industry, but everyone will have to do their own share for things to change.”

Agree, disagree or have a different perspective? Help us continue the discussion, send us an email at editor@supplychain.cn and let us know what you think.

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FEATURE Education

王

高科正在走向成功。他刚刚完成他的管理学和工程学的学士论文，即将从他参与的中国制造业领袖培训计划（CLFM）毕业。CLFM是由上海交通大学和美国麻省理工学院合作的项目，它的特别之处在于它不仅将两种学科相结合并专注于供应链方向，更包括了6个月的工业工程实习。尽管王高科的另外一个挑战就是在经历了几个月密集的面试之后，他终于被去年实习过的思科公司录用。他是学员中最后就业的成员之一，他们中的很多人都已经在苹果、霍尼韦尔这样的大公司任职。王高科说：“这个学习计划让我们有一个独特的卖点。在中国，我们的知识和经验在毕业之后就可以找到用武之地。” 没有多少学生可以有和可同样的经验。中国的公司正在从狂热的成长

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导向战略向优化供应链的战略发展，供应链专业教育的需求在增长。探究国内的人才市场，许多用人单位发现他们锁定的人才有待进一步的提高。许多供应链和管理的学生连镭射商标这样最基本的元素都没有听说过，这意味着他们从被录用的那一刻起，就需要多年的培训。注意差距许多人抱怨说中国的应届生最大的问题是他们所接受的教育是笼统的理论填鸭，而非真实的案例分析，因而不足以应对他们所学专业的实践要求。这样的抱怨可以从任何曾经雇佣过应届生的人那里听到。但是 Holger

Schober，供应链管理学院的院长认为：中国学生真正缺乏的是将供应链的概念放大，并置身局外来解决问题的能力。“供应链专业的学生要能看得见卡车，更要能预见到卡车背后的可能性。”他说：“这些学生可以用心学习整本书，但是当你就一个简单的问题提问时，他们往往是一脸的茫然。”运营管理部门主席，CLFM院长董明教授指出许多研究生的课题都是利用文献资料缺乏调研的成果来支撑。“我最近收到一个学生关于需求处理的论文，”教授说：“完全是复制以前的论文，只是换了他自己的口气。” 中国供应链服务的调研主席 Bob Liu认为：教育差距和学生没有关系，有关系的是教他们的老师们。“看一看中国的教授们，很少有学过供应链的系统或者拥有调研的学习经验”他说，“既然他们自己都没有必要的行业实践，又怎么能去教即将踏入这个行业的学生呢？”刘宝红认为虽然这些教授已经比十年前他们的教授有经验的多，但是大部分在专业的实践领域还是很落后，没有与工业发展俱进，缺乏进入更高领域的能力。上海 UniSCR（一个专注于供应链专业教育的公司）的总裁 Jack Kelley 最近和国内 MBA 团队项目合作了一个项目。他也认为许多教授有排外思想。就如他自己而言，就曾经遇到过很多就是不愿和行业内人士合作的教授。“教授通常有很高的社会地位，因此他们的学术不容置疑。”Kelley说，“但是他们中的大部分反感批评而且也比较排斥新的版本和方法”。公司的责任商界虽然明显地受益于高素质的毕业生，但同样负有丰富劳动力资源的责任。就如刘宝红所说，在一些国家，比如美国，有许多公司投资并支持实践研究，具体来说就是赞助实习、与大学共同开发培训课程以及允许学生和教授参观并谈论生产线。刘宝红认为在中国，大多数企业，特别是本土的企业，对大学毕业生有很高的期望，却很少做些什么去帮助他们成长。“当录用刚毕业

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FEATURE Education

的学生时，公司会说，这些新人，为什么我要培训他们？”刘宝红说，“ 他们希望大学能把学生教育成一出校门就能百分百工作，然而我的一些毕业于美国著名大学的朋友，他们在2年中除了参加公司组织的密集的培训，其他基本没做什么。” Patrick Moreton，圣路易斯华盛顿大学（WISTL）的副院长及经理董事--复旦大学EMBA项目，解释道，由于并不团结的管理团队，在公司内存在的资历差距也同样使新员工在刚开始工作时较难学习到必要的发展技能。就Patrick 所说，在参加他EMBA课程的人中，许多是因为缺乏一个职位高于他们的老板能够作他们的榜样和导师。“在这些公司中，许多公司还非常年轻，缺乏50岁左右的具有丰富供应链经验的管理者”， Moreton 说，“在我的课堂中的人们，有许多是从来没有遇到过一个能够向他学习的好老板或榜样”。供应链的吸引力除了专家和企业对供应链教育的影响，怎样让最合格的学生自动进入供应链领域仍然是个问题。在当今的世界，市场和金融方面的工作最热门，要说服学生投身到供应链领域来是一件难事。“对于许多学生来说，进入市场营销领域就像承诺驾驶BMW，然而供应链则代表了KIA”，Schober 说，“如果你是学生，哪个个更具有吸引力？BMW还是KIA……营销还是供应链管理？” 来自清华大学经济学院管理科学与工程系的David Robb同意这种观点，当他的学生去寻找需要他们的实习项目时，经常不愿意或无法寻找到在物流和供应链管理领域的职位。“我想许多学生追求薪酬而去其他的领域，比如金融和财务”他说。然而，Martin Stößlein博士，授课于吉林大学和代顿大学，认为供应链领域实际上应该有一个比人们认为的更大的粉丝群体。“我还认为制造业和服务业的经济趋势和工作机会将会带来很大利益，”Stößlein说，“学生们知道供应链管理并不只是意味着一个入门级的高工资，更重要的是，由于它需要接触许多不同方面的问题，如战略和财务、采购、生产以及销售，它能带领你进入高层次的管理领域。”

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关注创新抛开这些障碍，有一些计划已经开始让供应链教育发生改变。复旦大学的WUSTL刚开始了一个与美国合作的为期一年的供应链管理硕士学位学习计划。 Moreton感觉在中国，有机会出国的学生太少，这可能会意味着国际视野的缺乏。除了要有技术实践，他认为学生同样需要掌握一些“ 软技术”例如有效的沟通和理解那些维持在世界范围内的一致性和文化差异性的实践。“我们认为最好的方

法是让学生专注于某一个项目，通过适应国际化的环境，来获得这些技能。”Moreton说，“中国所缺的不是技术技能，缺的是和其他人、其它文化有效沟通合作的能力。” 像CLFM和MIT-SJTU这样的组织，他们的课程都是从工程和管理的学校精选出来的，具备国际性和综合性。六个月的实习期做为教学计划的一部分，一般被安排在像思科、亚马逊、苹果和霍尼韦尔这样的合作机构。学生的论文也要求以这一段工作经历为基础来撰写。基于合作伙伴们的反馈，他们可以依据行业的近况和问题来打造与时俱进的课程，比如精益管理技术。“我们不是传统的中国学院教育，因为我们有更大的灵活性和满足学员和合作伙伴需求的能力”董说道，“我们想通过亲身的实践来学习实际操作过程中所需的供应链知识，教科书虽然新但是是固定的，我们要写入新的信息。”

解决时间问题对于那些无法参与全日制课程的人，聚焦供应链的企业教育也似乎是一个帮助员工学习新技能的可行方法，特别是在学校或工作中遗漏的需要学习的技能。在教育进入工作环境后，对教育的专业追求能够使教育与时代同步，了解最新的问题和情况，同时能帮助员工将所学的直接应用于工作，而这正是最需要的。类似于在供应链研究院所执行的教学计划的团体不仅涉及国际大学和国家大学间的合作（复旦大学和斯坦福大学），也同样涉及影响教学课程的企业合作伙伴（思科）。“公司雇佣执行性教育团体比如我们公司，是为了培养员工激发创意的能力，”Kelley 说。Kelley的团队在中国各地开展培训项目，在任何一个地方停留2天至 2周不等。“由于我们都有供应链背景，我们努力把课程与现在BP的课程相结合并优化案例，使案例新颖并且是学生能遇到的问题。” 鼓励改变供应链管理教育在中国已毋庸置疑地成为了中国公司最前瞻的课题，但是教育项目仍在努力追赶需求。全日制的 MA和 MBA课程，比如交通大学，只能针对极少数愿意放弃工作并承担得起昂贵学费的人在特定的城市去学习。同时更多的在上海和北京以外的供应链课程则更为便宜，许多甚至资金不足或遭人冷落。一位经理说，当在贵州和山东之外的地方招收学生，有时甚至需要教授他们基本的电脑技能比如微软Outlook软件。更为灵活的公司的培训则由人力资源部门管理。对于一些自学的员工，这类的教育是基于公司的倡议和资助。然而，Stößlein说，教育部门正在鼓励和资助那些摆脱死记硬背的学习、支持多学科思考和教育的课程，这正是一个令人鼓舞的政府支持信号。就如刘宝红的观点，制约企业发展的问题在于优化拥有基本技能的员工数量，并且找出能给供应链带来真正的质量的人。“我们的问题是我们有太多达到平均水平但是缺乏出色的全局思考能力的人”他说道，“行业不停的在归咎于大学，而教授又在归咎于行业，但是最终每个人都要分享自己的成果来推动现状的改变。”

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PRODUCT Study

Breaking It Down: Nexus One Smartph rtphone The Google Nexus One was released on January 5th among a swirl of rumors and a buzz of anticipation. Technology buffs and gizmo junkies alike were practically salivating at the prospect of getting their hands on the new phone with Android 2.1 technology and Snapdragon CPU. iSuppli recently conducted a breakdown study of the phone’s material cost and concluded with the cost of US$174.15. This price, when comretailed at US$530 (without a service plan) is impressive, since it has “the most advanced features of any smart pared to the fact that it’s being re phone ever dissected” by iSuppli. The iPhone 3GS, which is a less advanced piece of hardware, had a material cost of $178.96 when iSuppli ta into co consideration other costs involved in manufacturing, logistics or packaging. did an analysis last June. This price however, does not take journey doorstep.. Here’s a look at other pricing factors to consider in the Nexus’s jo ourney from factory to doorstep

MADE IN TAIWAN The Nexus is manufactured by HTC in Taiwan. According to an anonymous source, the margin of HTC for making the phone is over 30%. “The Nexus One is a kind of ODM [original design manufactured] model rather than HTC branded,” he says. “However, I don’t think HTC would accept only manufacturing cost without any margin.”

Taiwan ONLY 80,000 UNITS SOLD IN 1 MONTH!

Google Nexus Phone Stats Height: 119mm - Width: 59 8mm - Depth:11 5mm (slightly thinner than the iPhone 3GS at 12 3 mm) Weight: 130 grams w/battery (vs iPhone 135 grams)

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Google only sold 80,000 Nexus One mobile phones in its first month. In comparison, the Motorola Droid sold 525,000 units in its first month and the iPhone 3GS topped the charts selling 1.6 million in its first week.

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PRODUCT Study

Goggle Nexus One Phone Cost Breakdown Analysis Per Unit COMPONENT

SUPPLIER

PRICE

Baseband Processor

Qualcomm

US$ 30.50

Memory

Samsung Semiconductor

US$ 20.40

Electrical

US$ 16.30

Camera

US$ 12.50

Mechanical

US$ 2.80

Total cost of materials (estimated by iSuppli):

US$ 174.15

Manufacturing cost (est.) HTC

US$ 30-40

Airfreight costs (est.)

US$ 4-5

Fulfillment & others

Brightpoint

Total cost (estimated by CHaINA):

US$ 5-10 n US$ less than U $ 230

SHIPPED BY AIR TO THE USA Box Weight 0.9 kg - Dimensions: 25x20x16 cm Shipped from Taipei by air to HTC’s 3PL Brightpoint in Plainfield, Indiana, where the final configuration and packaging g g is done. It is estimated that the shipping cost ost is between US$4 to US$5 (based on current nt vol ume, size and weight) for each unit which is very low compared to the final sales price.

BRIGHTPOINT IN CHARGE Brightpoint performs all the fulfillment services for HTC relating to Google’s web store in the U.S., including inbound receiving, inventory management, kitting of product, and packing and shipping of enduser orders and transportation management. Google cut costs by not having warehouses, purchase point staff and any other logistic costs. “Even though US labor is more expensive, the labor content for a ‘finishing’ operation is probably only 5-8 minutes,” says Joe Joy, Supply Chain Consultant. “[These costs] can be more than offset by freight savings and better supply-demand alignment.

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Plainfield, Indiana

NEW HTC DESIRE TO COMPETE WITH GOOGLE In a more recent development, Google’s earnings may get even smaller soon. In February, HTC presented the world with its own smart phone called Desire, which has some characteristics remarkably similar to the Nexus One, including the Android 2.1 technology. It is also rumored that this phone will be sold at US$100 less than the Google Nexus.

MARCH/APRIL 2010

PRODUCT Study

产品分析与透视：谷歌的Nexus One 新款智能手机

谷

歌1月5日推出的Nexus One智能手机占尽了宣传前期的风头，在无数的期待和谣言中总算登陆市场。科技爱好者们和时尚追逐者们都迫不及待地想要尝试下这款采用了最先进的Android 2.1技术并内置Snapdragon CPU的智能手机。iSuppli公司最近进行了一项对这款手机的材料成本明细的研究，计算出的成本在US$174.15左右，这个成本和手机的零售价US$529 (不包括其他服务计划费用)相比，的确不足为奇，因为这款手机拥有比iSuppli史上任何一款智能手机都要先进的功能。而3G版的iPhone在iSuppli六月做的调查中显示其材料成本为$178.96，而在硬件上未必比Nexus One先进多少。当然这个价格不包括生产过程中的诸如包装和物流等其他成本项目，以下我们就一起来讨论下Nexus从生产到出货这一过程可能会影响到价格的其他因素。谷歌的Nexus One是由台湾的HTC生产制造的。根据富士康一名匿名员工提供的数据表明，HTC的毛利可能超过 30%。虽然Nexus One走的是原创设计制造（ODM）的模式，但该员工并不认为HTC会接受没有任何利润的生产订单。最近的市场发展还显示，Google手机的销售收入还会缩水。今年2月，HTC发布了其最新的只能手机，据说该款手机大部分的特性和功能都和Nexus One类似，包括Android 2.1技术。还有传言称HTC智能手机的售价很可能会比Google Nexus要低100美元。 Google Nexus是从台湾空运到美国印第安纳州 Plainfield完成产品包装。Camera Concierge的合伙人Betty Feng对我们说到：“我猜测这样的运输成本分摊到每个手机上可能不会超过0.5美元，这和它的销售价格相比显然是微不足道的。相关的市场报告显示Google手机推出后的第一个月销售出了80000部，（大约是苹果iPhone手机登陆市场后首月销售的八分之一）。也就是说将这些手机从台湾运到美国的运输成本不会超过40000 美元。我们是不是还没提到谷歌手机只通过网络销售？美国 Brightpoint公司与HTC签订了一份协议，将为其提供谷歌手机在美国网站销售所需要的所有服务，包括收货，库存管

MARCH/APRIL 2010

理，产品配套服务，终端用户订单的物流运输，以及订单跟踪管理等。这就使得谷歌可以减少了使用仓库，或安排购买门店的员工以及其他的物流成本，而利用Brightpoint优越的地理位置以廉价的成本将手机配送到客户手里。“虽然美国的劳动力较为昂贵，但完成所有操作服务只需要5-8 分钟”，供应链和企业商业发展顾问Joe Joy这样说道，“ 这些成本用来抵消运费成本绰绰有余，并能更加及时有效地调整存货和供求平衡。” 有很多人对Plainfield 的印象或许只是美国一个平原上畜牧业发达的小镇，但事实并非如此。以下数据或许能说明些问题：超过50%的美国和加拿大人口都聚集在印第安纳州一日车程的范围内约有75%的美国和加拿大人口都聚集在印第安纳州一日半车程的范围年内印第安纳波利斯国际机场是联邦快递的世界第二大中转站这些优势为交通运输，配送和物流操作都提供了极大的便利。 Telamon公司的物流总监 Joey Cline 说：“虽然我不知道他们[Brightpoint’s]的成本结构，但我可以确定的是他们的出货量以及和联邦快递的密切联系的确让他们能制定到一个极具竞争力的定价方案。

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FEATURE Sourcing & Procurement

t began with silk. Since Ancient China, middlemen were often the only ones who would walk the Silk Road, carrying with them goods and ideas. The long, often treacherous route prohibited many companies from making the journey directly, thus allowing traders that did cross the borders to build a lucrative business. This function of the middleman has persisted into modern business practices, and has since been a mainstay for international companies working in the domestic Chinese market. But things may be changing. Hanhua Wang, President of Joyo Amazon, recognizes that the role of the steadfast middleman is shifting, or even becoming extinct. With margins becoming more and more transparent and end users increasingly seeking direct contact with manufacturers, the international trading community is seeing a shift of dynamics in the way things have traditionally operated. The change is bringing to question the sustainability of trading companies and the agents who exist to serve them. “When information was unbalanced and logistics were underdeveloped, the middleman played a very important role [in facilitating each trade],” says Wang.

MARCH/APRIL 2010

Odd Man

Out Charlene Ruan

With the advancement of the internet and Chinasavvy companies, do trading agents still have a place here?

It’s not a question of ‘if’, but when. Hanhua Wang Joyo Amazon

“[Now it’s more about] the value-added space that the agent can fulfill.” Amazon.com officially merged with Joyo.com in August of 2004, creating Amazon.cn, and has since been operating as its own entity in China, separate from the U.S. office. Wang says that nearly half of their purchases are still made through third parties, either trading companies, distributors or otherwise, but that it is likely to change in the future. Referring to the elimination of the traditional agent completely, Wang says, “It’s not a question of ‘if ’, but when. Eventually it will happen as a force of the market, and the internet will facilitate that.” With the rise of sites like Alibaba and Global Sources, the World Wide Web not only gives anyone and everyone direct access to manufacturers, but it also allows for information and communication to be passed freely. Quotes are easily requested and logisitcs more efficiently managed. Fall of the Agent? Traditionally, middlemen existed solely based on their ability to acquire specific goods at specific price points. Sometimes it was just a simple matter of making introductions and getting a percentage of the invoice. Now that role has all but disappeared. Buyers are more interested

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FEATURE Sourcing & Procurement in middlemen who can do more than just source from the same vendors they can now easily find themselves. More than ever, middlemen need to be able to prove their creativity and value to keep their place in the market. “There is transparency from end to end and [with it] is the desire and ability of a lot of businesses to manage their own supply chain,” says Edwin Keh, referring to the almost instantaneous access to information. Keh is the Senior Vice President and Chief Operating Officer of Global Procurement in Walmart’s buying office in China. Established in 2001, Walmart’s current headquarters in Shenzhen is the largest buying office in the world and just under 1200 people. Though they still outsource things like final quality assurance inspections, the buying is all mainly done in-house and from suppliers who either own the factory or have control of one. Although Keh believes that a good agent could still prove invaluable to a retail operation. “The service required now is a quantum leap from what it was,” say Keh. “In terms of creativity, operation and fulfillment, [agents] that allow their customers to focus on retailing are the ones that will thrive.” Galy Liu, President of V-Mart Industrial Development Limited agrees. His factory produces wooden furniture for retailers like Crate and Barrel, Pottery Barn and JCPenney and he works exclusively with trading companies and agents to fulfill each order.“It’s not about the added cost of an agent,” Liu asserts. “It’s about the added value that an agent brings.” He stresses that the great agents don’t

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just source, but they are experts in their industry. They have better relationships with factories and have the responsibility for follow through. Liu believes that if someone has to be hired to do the job anyway, a good trading company is an excellent choice. “Everyone needs to make money, and if a person can justify their cost, then next it’s just about what other services they can offer,” Liu says. Metamorphosis If a retailer doesn’t already have its own operations in China, an agent or an existing relationship with a factory serves as the assurance for quality and delivery. “If we can go direct [to the factory], we will do that. [But that’s] because we have that relationship,” says Jeff Bishop, General Manager or AGD (ACE Global Distribution). With 4500 stores in the U.S. and hundreds more across 60 countries, AGD has their own buying team in Shanghai and a warehouse of more than 1500 skus serving their international storefronts. Bishop, however, recognizes that not all businesses are equipped to start purchasing operations in China and suggests those that can’t ought to look to agents. In China, it’s not uncommon to encounter a flurry of problems when dealing with manufacturers. From quality issues to delivery times to variances from order, issues are a part of doing business here. And those are only the ones you can expect. “We’re here and we still have problems,” says Bishop. “But we can hedge a

lot of them off because we have people on the ground.” Once a relationship develops, however, and a retailer gains the knowledge needed - or the Chinese vendors become more dependable - the agents’ survival is again jeopardized. “China will eventually get to that stage of reliability,” says Jeric Ma, Deputy Managing Director of Premier Resources International’s (PRI) Shanghai office. PRI, a U.S. international trading firm based in Richmond, Virginia operates as the purchasing office for several large retail groups, including Keystone, Midas and formerly Circuit City. In 1995, they pioneered the import direct program for Circuit City and then implemented the same at Best Buy the following year. “In order to ensure our continued existence we have to become more than just a buying agent,” Ma says. “Going beyond the supply chain, we now help our clients do branding and marketing and our core competence has become helping our clients develop their own private label.” Whether it’s offering more services or evolving into something completely different, the middleman seems to be heading in a new direction. Wang agrees that the survival of these middlemen relies on whether or not they can change into something that their clients cannot live without. “If the agent can [continue] to create value in their space, then they can continue to exist there,” he says. “[But] we’ll see - we’re living history.

MARCH/APRIL 2010

FEATURE Sourcing & Procurement

从

丝绸之路开始，中国古代的中间商就是丝绸之路上唯一能能传递信息和交换商品的媒介。长途跋涉而又险象环生的路途让许多渴望交易的商人们望而却步，从而就需要这样的中间商能替他们在贸易繁盛的丝绸之路上进行交易。中间商的这种商业性功能一直延续至今，并成为许多跨国企业在中国市场最主要的业务伙伴。不过这种局势在悄然改变。卓越亚马逊的总裁王汉华承认，经今坚如磐石的中间商的角色这在发生变化，很有被取代或逐渐消失的趋势。随着利润的日益透明和公开化，越来越多的终端用户尝试与制造商直接洽谈业务。国际贸易界正经历着一场传统交易方式的动态变革。这种变化不得不让人开始质疑中间商和贸易公司存在的必要性。王说到：“当信息传播不平衡，物流业也尚未发达成熟的时候，中间商在促进双方甚至多方贸易时起着至关重要的作用。而如今，贸易双方关注更多的是中间

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代理时代的终结商的服务所能创造的附加值。” Amazon.com 于 2004 年 8 月正式合并 Joyo.com ，成立了Amazon.cn ，并在此之后有了独立于美国的经营实体。王告诉我们他们依然有将近一半的采购是由第三方采购来完成的，不过无论是贸易公司，经销商还是类似的中间贸易媒介，都会在不久的将来发生改变。谈到传统的贸易商是否被其他模式完全取代，王说道：“我认为现在已经不是是与否的问题，而应该问这一刻何时会到来。这种趋势最终将会成为市场化不可抗的潮流，而电子商务的进一步普及会加速这一进程。” 随着越来越多的电子商务交易平台的不断兴起，像阿里巴巴和环球资源这样国际性的网站不仅让任何人都能轻易地直接与制造商联系，还能促进相关信息及时有效的传递。贸易双方的询价和物流都能得到更优化的管理。贸易代理商的末路即将到来？传统的中间商存在的前提是，他们有能力以特定的价格来交易相应的商品。或

者有时他们只是起到引进和推荐某种货物并赚取差价的作用。如今这种作用已经不复存在。买家只有兴趣和那些不仅能做采购这样一件他们自己也能轻易做到的贸易商合作。此外，与以往相比，贸易商还必须证明自己拥有不一般的创造力和价值能在市场中占据一席之地。沃尔玛全球采购中国办事处的首席运营官和高级副总裁 Edwin Keh 提到如今唾手可得的信息流时说道：“随着终端客户间的信息日益透明公开，许多企业都希望自己能有能力管理自己的供应链。” 沃尔玛公司设在深圳的总部成立于 2001 年，虽然只有不到 1200 人的规模，却已经是全球最大的采购总部。虽然他们的一些质量监督和审查可能还需要外包，但主要的购买还是在内部完成，大多都和自有工厂或工厂控股的的供应商合作。Keh 还认为一个优秀的贸易代理对零售运营来说依然有着不可替代的价值。 Keh 还认为：“现在商业服务的需求与以往相比已有了质的飞跃，在创意，运营和执行方面，能真正帮助客户专注

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FEATURE Sourcing & Procurement

发展零售的贸易商才会是最终的赢家。 V-Mart 工业发展有限公司的总裁Galy Liu 也同意这一点。他的工厂为Crate and Barrel 公司，Pottery Barn 和JcPenney这样的零售商生产木制家具，并和特定的贸易公司与代理合作完成每个订单。他认为：“这种做法与贸易商的成本输出无关，而和他们所能创造的附加值有关。” 他强调说，真正伟大的代理不单单只做采购，他们是行业的专家，和工厂的关系融洽，并极具责任心地跟进相关业务。刘还认为，如果非要一个人选择他的工作行业，贸易公司绝对是个不错的选择。每个人都想赚钱，而当一个人能证明他的劳动付出与企业的成本相当时，接下来他所能提供的额外服务就是竞争力的关键所在了。变形记如果一家零售商暂时在中国还没有自己的运营处，那么与一家贸易代理合作或与保持与现有工厂的合作关系就是能满足产品质量和交货期限的最佳保证。艾嵇谛（AGD）有限公司总经理 Jeff Bishop 说

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到：“如果我们能直接联系到工厂，我们当然会这样做，但前提是我们能有这样的渠道和平台获得这样的合作方式。 AGD 在美国就有 4500 多家门店，在 60 多个国家还有上百家分店，在上海他们有自己的采购团队和仓库，约有1500 多个的SKU库存来为全球的门店服务。而 Jeff Bishop已经意识到并不是所有的企业都适合在中国开展采购业务，并建议他们应该需找适合的贸易代理共同合作。在中国，和制造商打交道的时候难免会遇到一些问题。比如产品的质量问题，交货时间和订单差异，这些已经是我们所能预见到的大部分的问题，还有一些深层次不易发觉的问题也会遇到。 Bishop表示，即使他们在中国运营分部，任然会遇到诸如此类的问题，但是至少我们能有现成的工作人员来负责解决，所以大部分的困扰我们都还能应付。而一旦各方的关系深入发展，零售已获得经营所需要具备的技巧和业务实践能力或供应商变得更加可靠时，贸易商的生存将再次受到威胁。 “中国最终将达到这一成熟可靠的阶

段”，PRI 上海办事处的副经理Jeric Ma 这样说。 PRI 是一家以弗吉尼亚州里士满为总部的国际商务公司，为许多大型的零售企业服务，包括Keystone, Midas 和倒闭前的Circuit City 。1995 年，他们率先进口程序为Circuit City 服务，之后又成为百思买的制定程序服务代理。 Jeric Ma 还说：“为了保证我们不被淘汰，我们必须突破只是买方代理人的瓶颈，在供应链之外，我们还能帮助我们的客户打造品牌和辅助营销，而我们目前的核心竞争力就在于能帮助客户开发自己的自有品牌。” 不管是提供更多的服务，还是从事和以往完全不同的工作，贸易代理商正不可避免地经历一场转型和变革。王汉华也认为，贸易商是否能提供一些客户依赖而又无法轻易取代的服务，将决定他们未来的发展趋势。他说：“只要代理商们还能继续不断地创造新的价值，那么他们就能继续存在，不过，这也不一定，时间会证明一切的。”

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FEATURE Sourcing & Procurement

China and India: A Comparison in Sourcing Potential Charles Avery, The Beijing Axis the study found higher productivity levels in India, in terms of capital intensity, delivery frequency and stock-turn ratios, China had the edge. In a more recent, broader assessment across multiple industries, Deloitte found that here are many similarities the average number of days an item sits in between China and India inventory favored China at 24.2 compared to in today’s global-economic India’s 32.5. climate. Both have over one Beyond the factory floor, connecting prodbillion citizens, both have ucts to end users poses different challenges experienced resilient growth in output, and in China and in India. Within India there is a both have greatly expanded their roles in in- heavy reliance on roads. Their network is the ternational trade. The relatively inexpensive second largest in the world, behind the US, at yet well educated workforces of these two over three million kilometers. However, only countries have made them key prospects for around half of these roads are paved, and the sourcing of manufactured goods. Yet their width is generally too narrow to allow differences remain in their supplier and lo- the passage of anything beyond smaller, twogistical capabilities which must be taken into axel trucks. Road transit is further slowed account by sourcing professionals. by a fragmented Indian trucking industry Both India and China are capable of world and by state border checkpoints. China, in class manufacturing processes. A study per- contrast, has a far less extensive network of formed by the London School of Econom- roads. Out of its million-plus kilometer road ics on the supply chains of the two countries’ network, only around 300,000 kilometers are automotive industries found that two-thirds paved. But what China lacks in actual length, of their domestic suppliers were able to pro- it makes up for by having newer, more passvide inputs with defect rates of less than 100 able roads. It has five times the number of parts per million – the typical threshold for multiple lane highways than India. suppliers in the China also has Made in China US, Europe, and more transport opShare of world manufacturing output, % Japan. It was tions available to observed that its supply chains in 2003 1993 both Chinese the form of rail, air, 0 1 2 3 5 6 7 4 and Indian auto and waterways. Over manufacturers 78,000 kilometers of China domestically outterrain are connected South sourced compoby rail in China comKorea nent production pared with 63,000 in ASEAN at similarly high India. Goods can be rates, suggesting flown in and out of Taiwan an adequate availChina by way of 500 ability of local airports whereas there India competent supare only 334 locations Source:UNIDO pliers. Whereas to take to the sky in

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India. Thanks to geographical endowments, China also has more navigable waterways. Besides some of the world’s most active ports, commerce in China moves on 110,000 kilometers of inland aqueous passageways. This is more advantageous than India’s 16,000 kilometers of waterways, particularly in the movement of bulk commodities. These transportation differences are partially reflected in the World Bank’s Logistics Performance Rankings. China is rated the highest of all BRIIC (Brazil, Russia, India, Indonesia and China) countries at 27th in the world. Its comparatively higher scores in customs clearance, infrastructure adequacy, logistics, timeliness and tracking ability place it above India, ranked 47th globally. Some of the largest discrepancies between the two countries are shown in survey data collected by the World Bank. Responders reported much higher frequencies of compulsory warehousing/transloading and involuntary payment solicitation in India, while in China greater expenses were incurred in the form of agent fees. The infrastructure and logistical differences may explain why India is a more common site for the outsourcing of services, particularly IT services, which do not require a physical good to be brought to market. However, India should not be entirely discredited as a sourcing destination for manufactured goods. Both it and China have allocated over 10% of their GDPs toward infrastructure development which will enhance their future logistical abilities in bringing their products to the world’s consumers. The greatest similarity between China and India: neither can be ignored by the sourcing professional.

The China Sourcing Blog is THE BEIJING AXIS’ online platform on sourcing and the Chinese economy.

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FEATURE Sourcing & Procurement

Racing Trades

Â&#x201E; Roy Lenders, Capgemini

Capgemini Global Trade Flow Index reveals that trade levels are picking up across the globe

he growth of developing growth of 7.52 % in trade during Q3 2009, countries may be taking a back as government liberalization initiatives and seat as a driver of global trade. infrastructure investments were put in place. According to the Capgemini China, (Figure 2) in particular, witnessed posiConsulting groups, the latest tive trade growth of 6.5 % on account of agtrade figures from the 23 largest trade countries gressive macroeconomic stimulus measures, globally (from Q3 2009) reveal that trade levels alongside other tax cuts and consumer subsihave picked up dramatically from Q2 towards dies which helped boost domestic demand. In addition to China, India and Q3 2009 with an increase of Russia, which saw 12.1 % 8.5% (Figure 1). As trade levand 11.5 % growth in total els are a good leading indicatrade respectively, have made tor for country economies a significant improvement in as a whole, we will see GDP their position in the Index levels start growing from Q1 Trade level since before the recession, 2010 onwards. increase in driven by effective governWhere in Q2 2009 global the world top ment stimulus packages. trade was primarily driven 23 countries The big question for the by local market growth in next two quarters will be the emerging countries and whether the world has indeed by big government stimulus programs in the BRIC countries, during Q3 reached a turning point where emerging coun2009 the big developed economies picked up tries will be driving global economic growth steam again and were driving significant expan- and power is moving from West to East, or sion of global trade. The biggest increases in whether the old economic rules drive the martrade were seen in the US, where total trade ket again with growth in emerging countries grew by 8.6%, against a fall of 2.4% the pre- primarily driven by the export growth towards vious quarter, with trade benefitting from the the big developed countries. Also, the ending of government stimulus weak dollar. Stabilization in consumption and investment, in combination with recovering plans will be a key impact on growth in the exports and declining imports, has also put next two quarters. As many governments are European economies on the road to recovery, eagerly waiting to cut their cost levels to get with the biggest growth in global trade seen in their government finances back-in-order, the Germany (8.6 %), France (8.5 %), the UK (7.7 timing of these cost cuts will need to be very precise so as not to disturb the current growth %) and the Netherlands (7.4 %). BRIC economies also witnessed a significant in the global economy.

8.5%

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Figure 1 Total Trade Top 23 Countries (Billion USD) 1497.75

+8.5%

2008

2009

Growth(%) Value (billions USD)

Figure 2 Total Trade China (Billion USD)

2008

2009

General information Description

Values

GDP

1170 Billion USD

GDP Growth

7.7%

Population

1339 Million

GDP per Capita (2008)

6000 USD

Rank

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2010 China Warehousing Map 2010中国仓储地图 The Council recently developed a new digital map to help you find a warehouse for all of your storage, sourcing and logistics needs. Here are a few of the newest pieces of real estate on the market. To search more warehouses, please visit www.supplychains.com/ map. If you are interested in showing your property, please email map@supplychain.cn 全球供应链协会最近开发了一种新型在线地图，帮助您在中国找到合适的仓库，解决任何储存、采购和物流问题。以下是一些新开地产的信息。搜索更多仓库信息，请登录www.supplychains.com/map。如果您也想加入地图，请发邮件至 map@supplychain.cn。

Special Thanks to:

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FEATURE Logistics

ROAD By Tulei

n a busy warehouse near the railway station in Zhengzhou City, Henan Province, Fan Jinxing and six other workers have been loading big plastic bags of cargo onto trucks since 8am. This is a common daily scene mirrored all down South Shuncheng Street where about 20 logistics companies of different sizes are closely crammed together on 500 meters of road. “Each day, we load at least two trucks,” said Peng Shimeng, a small-time logistics boss who has worked in the business for eight years. “Most of them run to other parts of the province by the next day, and some to Shandong Province every other day.” Road transport in China is big business and currently occupies a majority of transport volume in the country. According to the Ministry of Transport, the 2008 road freight volume was 19.17 billion tons, accounting for 73% of the country’s comprehensive transport system. However, the nation’s road networks still has a long way to go, especially

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when the market is scattered with thousands of players, many that exhibit low efficiency rates and low levels of expertise. Despite intimidating odds and numbers, companies are still working to expand in this bloodthirsty market. Some even think that the opportunity for road delivery has come as the financial downturn forces many companies to give up local air transport due to high costs. Mui- Fong Goh, general manager of A.T. Kearney, Beijing a US-based consulting company says that the road transportation market in China reached $265 billion as of 2008, and there are plenty of players who want a piece of the action. Driving competition When it comes to their business, charge rates are the defining competitive factor , especially in this sensitive market where it is hard to unify prices due to a variety of operators with different levels of service and expertise. Xu Shuibo, CEO of TNT-HoauXu said in the logistics meeting held in Zhengzhou

that in Europe there are around 5000 registered companies providing road transport services and around 7000 to 8000 in the US. This is compared to around 780,000 logistics companies based in China. This means that the competition in China between different players is cutthroat and the logistics sector has often been accused of “disorganized competition.” “Normally, we charge less than RMB10 ($1.46) for one piece from Zhengzhou to Xinxiang, less than 100 kilometers distance,” said Peng, adding that the price is lower than other big players. His smaller business employs about 100 people and uses 20 trucks, all rented. However, TNT-Hoau and DP Express, two large players with business around China, are able to charge RMB100 ($14.65) and RMB60 ($8.79) per cubic meter of goods, respectively, for the same distance from Zhengzhou to Xinxiang. “Along our logistics street, most small operators charge similar prices, with fluctuations of RMB1-2 ($0.15 or $0.30) for more or less for the same

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FEATURE Logistics distance,” said Peng. Peng’s words were shared by another logistics operator surnamed Wang, whose shop is across the street. Wang said the price war is still serious even among the smaller-time rivals, because “the boss always has his say on pricing.” ‘Scattered market’ However, prices aren’t the only factor in the competition. Service and transportation lines are also important. In the past eight years, Peng has opened about 50 lines covering Henan, Hebei and Shandong provinces. That compares to the more than 600 cities in China that TNT-Hoau has served over the recent 14 years. “We have about 20 trucks, and sometimes we are short because they may be all used up,” said Peng. “However, we can not afford to buy new ones,” Peng added that their profit is around 10%, or about RMB1000 ($146.46) per RMB10,000 ($1464.62) worth of business, and “the cost is increasing as oil prices soar.” According to Goh, China’s road transpor-

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tation market continues to have a “highly scattered market.” For instance, the top 10 logistics companies have less than 3% of the market share. For carload freight, the main leaders are China Merchants Logistics with a 0.6% of the market share, China Post Logistics with 0.4%, and Sinotrans Group also with 0.4%. Goh attributes the decentralized market to its low threshold of entrance because operators may start up their businesses without setting up any comprehensive network or mastering any professional sales methods. Price wars and the different levels of operators are also contributing factors, she said. TNT-Hoau’s CEO Xu agreed and said the low level logistics companies make up most of the market. Invisible hand As for the future of the logistics market in China, the government still believes in a hands-off approach that lets the market determine the future of all companies great or small. “Currently, the government has

no plan to lift the entry level of the logistics sector, and we will let market competition decide who survives,” said He Dengcai, deputy secretary general of China Federation of Logistics & Purchasing, at a Zhengzhou logistics meeting. One company feeling extremely confident in these uncertain times is Hoau Group, the wholly-owned subsidiary of TNT in China, which recently announced its domestic investment plan to add 437 trucks and hundreds of employees. Its third-quarter fiscal report saw a revenue income increase of 19.4% compared with the same period last year. “I expect double-digit growth in revenue and plan to build 12 additional distribution centers around the nation next year,” said Xu. As for small players like Peng, they will continue to concentrate on local markets and advantages. “We only want to do our own business and improve our service,” said Peng. “We will not die.”

MARCH/APRIL 2010

FEATURE Logistics

Finding a Better Way Can India’s Logistics Industry improve their methods for Transporting Goods? by Knowledge@Wharton

.R. Gopinath revolutionized travel in India with his low cost airline, Air Deccan. Now with his new express transportation and logistics venture, Deccan 360, Gopinath wants to redefine the industry of transporting cargo, not people. “Deccan 360 will change the way deliveries are made all over India,” Gopinath says. “At present, next-day connectivity is limited to the metropolitan areas and a few cities. My goal is to connect 75 cities in India to each other on a 24-hour delivery schedule within the next year.” If he delivers on his promise, Gopinath could change how companies big and small look at

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their supply chains and run their businesses. “The idea of starting a logistics business was He began air cargo operations from India to both instinctive as well as fueled by my own the Middle East and Southeast Asia in 2009 frustrations.” Gopinath notes that many times in Air and plans to integrate domestic and internaDeccan’s early days, a flight cancellation tional operations over time. could be attributed to the lack When Gopinath launched of adequate logistics services in Air Deccan in 2003, only 1% India. A spare part would come of Indians traveled by air. By from somewhere in the world the time he sold his venture of Inda’s GDP to Mumbai within 24 hours, to industrialist Vijay Mallya in but several days would be 2007, the figure had jumped Goes to needed to complete the journey to 5%. Why is Gopinath, a Logistics Cost domestically. More often than former army pilot and farmer, not, Gopinath wouldn’t know venturing into the logistics space now? “Many entrepreneurial decisions how long it would take for the part to arare taken at a subterranean level,” he says. rive. Once it took seven days to move a spare

13%

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FEATURE Logistics

engine from New Delhi to Kolkata; it was cheaper to transport it via Singapore. Gopinath’s experience largely sums up the state of the logistics industry in India: inefficient and expensive. Industry players and analysts say logistics costs in India are among the world’s highest - accounting for 13% of GDP, according to a report by KPMG. That is far greater than in the United States (estimated at 9%), Europe (10%) and Japan (11%). Outside of the metros and a few cities, the timing of deliveries is uncertain. Big Hurdles Logistics is still a nascent and, fragmented industry in India. It is estimated that while outsourced logistics accounts for 54% of total logistics spending in India, organized players have only 10% of the pie. In road transportation, which accounts for the biggest portion (36%) of logistics spending, 74% of operators are small-time players owning a single vehicle. In outsourced warehousing, 92% of players are from the unorganized sector. Even among the organized logistics players, few have offerings across multiple modes (air, water, rail and road) and

services (transportation, warehousing and value-added services such as packaging, cold chain and customs clearance). A lack of adequate infrastructure plus complex taxation and regulations are big hurdles. For example, most domestic airports don’t have adequate cargo terminal facilities. Blue Dart, the leading express logistics player in India, set up in 1983 and now owned by the global player DHL, started cargo airline operations in 1996. In most airports, Blue Dart operates from the same amount of space first given to it by airport authorities. “In this business, turnaround time is critical,” notes Anil Khanna, managing director of Blue Dart Express. “If one does not have the right facilities in terms of size and site within an airport, it is a huge challenge.” Blue Dart is the only logistics player in India with dedicated cargo aircraft (just seven). Other logistics companies typically turn to the belly space in passenger airlines, something even Blue Dart does occasionally, depending on the load. Moving cargo by road has its own set of problems. National highways form only 2% of India’s road network, but they handle

G.R. Gopinath, Deccan 360 “Starting a logistics business was both instinctive as well as fueled by my own frustrations.”

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Anil Khanna, Blue Dart Express “If one does not have the right facilities in terms of size and site within an airport, it is a huge challenge.”

more than 40% of road freight traffic. This naturally leads to traffic jams. Regulatory requirements and cumbersome documentation also compromise speed. “On average, a commercial vehicle in India runs at a speed of 20 miles per hour. In Western Europe and the USA, the average speed is over 60 miles per hour,” notes Vineet Kanaujia, general manager at Safexpress, which has a fleet of 3,500 vehicles. Moreover, India’s tax system is complex. To avoid multiple taxation, companies typically have warehousing operations in every state. The result is a large number of small warehouses around the country which lack the latest warehousing processes and technologies and don’t offer economies of scale. Betting on Hub-and-spoke Despite the limitations, industry players see strong potential. Several initiatives and projects are under way to boost development of roads (including the Golden Quadrilateral, North-South and East-West Corridors), ports (Pipavav, Mundra and Dhamra), and airports (Bangalore, Hyderabad, New Delhi and Mumbai). The complex central sales tax is expected to be phased out in coming years. The emergence of India as a manufacturing hub, growth of the organized retail industry, increased domestic consumption, and multinationals bringing in global best practices are all expected to boost the logistics industry. Gopinath, for one, is betting big. He is creating India’s first hub-and-spoke distribution model for express logistics. A 100 acre state-

MARCH/APRIL 2010

FEATURE Logistics

of-the-art cargo handling facility in Nagpur, Central India will serve as the hub for his operations and will connect the metros as well as tier two and tier three cities through an air and surface network. Deccan 360 will begin operations in October with three Airbus aircraft and a network of 30 franchisees (for surface transport, warehouses and collection points). At first, Deccan 360 will offer nextday connectivity to 30 cities in India. Within a year, Gopinath plans to increase the air fleet to five Airbuses and four aircraft from French-Italian manufacturer ATR, ramp up the franchisee network and offer next-day connectivity across 75 cities. “No logistics player in India has the hub-and-spoke model that we are setting up,” says Gopinath. “Like in the case of Air Deccan, I am establishing a different model ... that will both increase the reach and bring down the cost for the customer.” It may not be all that simple. The huband-spoke model, though new for India, was introduced years ago by the global major FedEx. It is a tried-and-tested model the world over. Yet in India, Blue Dart, which holds 43% of the air express market, does not follow this model. Instead, it flies three different routes: crescent (Chennai to Kolkata via Bangalore, Mumbai and Delhi), zigzag (Hyderabad to Mumbai via Ahmedabad) and direct (Bangalore to Delhi). Blue Dart studied the hub-and-spoke model closely before starting operations. It even had a sales alliance with FedEx at the time. Despite the close association, Blue

MARCH/APRIL 2010

Dart chose a different model. According to Blue Dart’s Khanna, “We found that that this model works well when you have a large fleet of aircraft. If you have only a few aircraft, you end up losing capacities. We restudied

Gopinath, is creating India’s first huband-spoke distribution model for express logistics. this model once again a few years ago, and again found it to be unfeasible.” Others who tried running cargo airlines gave up. Gati, a multimodal player with more than 4000 vehicles and six marine vessels, is among them. Mahendra Agarwal, managing director and CEO, attributes the decision to “commercial bottlenecks.” Gati, he says, initially wanted to have its own cargo aircraft. However, faced with regulatory issues and a lack of expertise in running cargo aircraft, it chose to outsource two freighters from Air

India. “We had a successful operation of these two freighters regularly on the Chennai-Delhi route,” he says. “While operating [them], we realized certain commercial bottlenecks and therefore decided to close the operation for the time being.” Competing Approaches Others have made their own moves. In 2007, Blue Dart earmarked a five-year investment of US$250 million to go to aircraft acquisition as well as strengthening its air and ground infrastructure. Last year, to mark the company’s 25th anniversary, Khanna announced 25 initiatives to upgrade the product range and improve quality. At TNT India, managing director Abhik Mitra is working toward expanding the reach and strengthening TNT’s network in tier two and tier three cities. “We also want to invest in the infrastructure in our hubs and depots and take them to the next level of efficiency,” he says. TNT was the first multinational express distribution company to enter the Indian market with a direct subsidiary. TNT came to India in 1994 for international operations. Over time, it realized that the domestic market was a much bigger part of the pie. In 2004, TNT made its domestic foray, and in 2006 it went a step further, acquiring road

43%

Blue Dart hold in the Air Express market

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FEATURE Logistics

Kolkata and Mumbai express firm Speedplus a network of age Express. slightly smaller distriSafexpress, meanbution centers across while, has zeroed 10 other cities in India. in on warehousing. Srinivasan plans to first The company has approach his own venmore than five mildors for business. Over lion square feet of the next 12 months, he warehousing space aims to spin this off as across the country a separate and neutral and is planning to set logistics company and up 32 state-of-thesecure other IT disart logistics parks tributors as customers. and add another five Vineet Kanaujia, Safexpress But Srinivasan’s ambimillion square feet in “With the phasing out of the tion is not limited to IT the next two years. central sales tax, we expect a huge demand for world-class distribution and wareFive of these parks warehousing.” housing. Redington are already operating. Says Kanaujia of Safexpress: “With the buys products from vendors and sells phasing out of the central sales tax, we to a vast network of channel partners. expect to see a huge demand for world- Srinivasan wants to leverage this expertise and become a third-party logistics class warehousing in the country.” Redington, a leading distributor of service provider across industries. Analysts say industry players’ atIT products, is also eyeing the logistics space and is setting up a state-of-the- tempts to expand their reach, offer art automated distribution center in industry-specific solutions and work Chennai. Spread over 11.6 acres with toward more integrated operations are the latest very-narrow-aisle technology, moves in the right direction. Meanwhile, it is one of the most advanced distribu- what role Gopinath plays in transformtion centers in India. Managing direc- ing Indian logistics remains to be seen, tor R. Srinivasan plans to set up simi- but his entry into the segment will no lar distribution centers in New Delhi, doubt accelerate the pace.

Republished with permission from Knowledge@Wharton, (http://knowledge.wharton. upenn.edu), the online research and business analysis journal of the Wharton School of the University of Pennsylvania.

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New Study Says 6.2% In their February 2010 Strategic Analysis of Indian Logistics Market, Frost & Sullivan (F&S) has found that logistics costs actually account for 6.2% of India’s GDP, less than original estimates. The market earned revenues of US$75.19 billion in 2009 and is expected to reach US$120.42 billion in 2014, meaning a compound annual growth rate of 9.9%. Transportation segment accounts for close to 62.0% of the total market reiterating the fact that it is the most important logistics function for all industries. Furthermore, the agricultural sector accounts for slightly over half of the total logistics market in India, owing to the extensive storage and transportation activities associated with agro products within the country. According to F&S, the steady expansion of operations by large domestic industrial groups as well as an increasing number of global majors in industries ranging from automotive to pharmaceuticals have been targeting spots in this highly lucrative Indian market. While the report admits that manufacturers and logistics companies are still hindered by the problem of poor infrastructure connectivity in rural areas, it concludes that multimodal transportation solutions are becoming possible with the development of inter-connected transportation infrastructure facilities. This positive trend especially applies to dedicated freight corridors by railway and improvements in coastal shipping facilities. Similarly, the construction of logistics parks at key distribution hubs are helping to meet specialized warehousing needs of industries. These developments are encouraging companies to increasingly outsource their logistics functions, stimulating market growth.

MARCH/APRIL 2010

FOCUS Executive

James McAdam, President APL Logistics

Joseph Lee, Managing Director Greater China, APL Logistics

Harnessing the Domestic Surge James McAdam and Joseph Lee talk with Monica Liau about future plans that are afoot for China. How has APL been able to get over the obstacles posed by the economic downturn? McAdam: Honestly, we saw this downturn coming as early as the summer of 2008, so we started taking steps in the third and fourth quarter of that year. Obviously it was a more severe downturn than even we expected with the extreme slowdown of demand in Asia. China in particular was down into the double digits. This was unprecedented but because of our forecast, we were able to get in line and be prepared to support slowing top line growth with sustained cost management initiatives. How about the China stimulus package, any help there? M: We’ve definitely seen a direct impact from the stimulus package in terms of domestic consumption. For example, there has been an upturn in China’s domestic automotive sales which has been demonstrated by the increase in logistics business that our joint venture, CMAL in Chongqing has been doing with Chang’An motors. Lee: However, the stimulus package has not provided a quick fix for China’s exports

MARCH/APRIL 2010

due to the reliance on demand from global markets. On a positive note, the amount of stimulus money that is being spent on infrastructure is definitely opening up new avenues that follow the migration of factories out west. This movement is definitely a long-term business opportunity. What have been some of the challenges of organizing a network of Chinese offices? M: From an international organizational point of view, the process of setting up, organizing and running our company networks here is no different from our strategies in other places. We currently have nearly 600 employees in Greater China, and the overall structure is quite similar to what we employ in other markets, although here we participate in two domestically owned joint ventures, CMAL and Lenovo through Legend Holdings, which is branded by APLL-Zhiqin. This is a Beijing-based firm that focuses on the Chinese markets as they relate to our business. Our involvement in these two JV’s is obviously an enormous advantage for us in the domestic market. L: From the managing point of view, we en-

courage a multinational way of doing business among our employees, but obviously we do have some different cultural nuances. The most sensitive part of managing the team is the importance of business titles. You definitely cannot underestimate the importance and power they have here. It is also important that job titles are meaningful and are supported by a clear scope of work that colleagues and customers understand. I think that there is an internal culture where the contribution that each employee makes to the team is respected and valued at every level. How will APL Logistics address the anticipated surge in domestic demand? M: It is an interesting change. The past role of China has been completely focused on export-driven industries. But what we’ve seen with the economic downturn and the stimulus package is that logistics companies like us need to not only support the export business, but also help our export clients develop business models to get their goods into Chinese markets. We have nearly two million square feet of warehousing and distribution capacity here for our consolidation services, but everything is positioned close to the coast. Industries have not only been migrating from south to north, but are also moving further west. We work on the basic premise that we go where our customers go. This means that more of our supply chain entry points need to move west as well. We have been enhancing our vendor logistics services as well as our first-mile land-based transportation and milk run services. Our two joint ventures in the west have become incubators for developing best practices and supply chain practices. So, where do you see APL Logistics’ biggest potential for growth? M: Historically, I would have said Europe or the US, but today the most impressive growth is greater China and Asia, which is currently the world’s biggest market. In our view, the trade within the Asian countries will begin to accelerate and expand, so for multinational companies like ourselves, this is where our companies need to be. We have a firm foothold in the region and can build out from these strategic points.

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FOCUS Executive

Ting Tong Logistics and Manhattan Associates talk with Russell Beron about their technology partnership. Why did you choose Manhattan for your solutions? Roger: We started by looking at a few other American and Japanese companies, but we found that the other group didn’t meet our needs. We have a very diverse number of industry segments and customers that we service – some are electronics, some F&B, and some are cosmetics. We found that Manhattan has the flexibility and scalability to meet all of these needs in each of our different industries. We were also impressed by the experience that Manhattan consultants had. Pete: Most of our employees have over three years of experience in our offices here. This is one of our competitive advantages. Have there been any unique challenges you have had implementing your technology in China? P: Everyone of our implementations generally have some unique problems – but for the most part most of the needs are pretty similar. So as Roger was describing earlier, what they were looking for with Manhattan was someone who covered all of the key areas that they needed help with but also some of the industry or vertical market expertise and that’s pretty common around the world. So there are some unique market requirements, such as language or some local government regulations, which we have to tailor to the Chinese, U.S. or French markets, but by and large the 3PL industry needs are similar around the world. What is Manhattans global strategy? P: Today we have 26 offices in 13 countries so we have a broad geographic footprint and have a direct presence in most of the globes most important supply chain markets. This doesn’t cover the entire globe but in other parts of the world where we don’t have a direct presence we have about 20 global partners in places like South Africa, Russia and the Middle East, who help us meet the needs of customers and markets where we don’t have a direct presence. Our objective is similar to our objective in China – to make

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Pete Sinisgalli, CEO Manhattan Associates

Roger Chou, IT Director Ting Tong Logistics

Solving Problems Across Borders sure we can meet the needs of our global partners as they deploy solutions around the world and take advantage of so-called globalization while at the same time being positioned to meet the specific needs of that domestic market. We believe we are one of the few companies that has the deep rich functionality required but also has the global presence to be able to meet their needs in whatever geographies [those companies] choose to operate in. What differentiates you from your competitors like SAP or Red Prairie? P: SAP is a very good company but their depth of solutions within supply chain is not nearly as deep as ours – in situations like Roger’s where there is complexity in the supply chain, SAP generally doesn’t have the depth or breadth needed to meet these specific business needs. Now if you contrast that to solutions like Red Prairie’s one of the things that we believe makes us a more effective partner than them is the number of

solutions we have to help meet customer’s needs, so in terms of warehouse management, labor management etc all of those capabilities are tightly integrated in our solutions. What have been the benefits/changes you have seen in your company after using Manhattan? R: After implementations, the biggest improvements were seen in the productivity and accuracy in our warehouses – it’s very obvious. In terms of accuracy, there were roughly one million RMB in losses – some due to management mistakes, stuff getting lost, and theft – a lot of different reasons. Also our efficiency has gotten better. Before, the exact locations of products were not very accurate, but accuracy rates have improved a lot. Also our transportation uses the Manhattan routine model to improve efficiency and productivity mostly with our land transportation in terms of route optimization, and we also improved a lot here.

MARCH/APRIL 2010

FOCUS Green

Coming Up

Green What are the professionals saying about implementing a green supply chain?

lot of hype surrounds spececulations in China’s “green” en” future, as the country has recently lobbed around some hefty goals for carbon emissions cuts and green technology boosts. But when it comes down to the practical aspects of company and sector application, details grow fuzzy. Motivated to understand current awareness, perceptions, practices and the future direction companies are taking towards green supply chain management in China, the Global Supply Chain Council and global B2B eCommerce solutions provider GXS reviewed the responses of 145 professionals coming from a broad range of industry focuses. It’s no secret that softer concerns such as CSR and green best practices were put on the back burner in the face of China’s rapid growth and industrialization. Perhaps as a result, there is a perception among the professional surveyed that companies here need more information on environmental sustainability before concepts can re-

MARCH/APRIL 2010

ally be put into practice. According to the individuals surveyed, the biggest obstacle that companies face in China is a general lack of awareness about environmental issues followed closely by problems of waste disposal. (Figure 1) Other issues such as conserving natural resources and green consumer buying preferences were also of some concern. Despite these challenges, close to one in four (24%) of the companies surveyed said they

would be implementing some sort of green initiative in the next six months, with another third of respondents citing within two years as their target for starting green initiatives. However, one in five companies still say that to their knowledge, they have no green supply chain initiatives. Best Foot Forward Companies have several different options in how they take their first step towards an environmentally friendly supply chain. Many of the more popular ones involve strategies which improve efficiency and cost savings alongside ecological preservation. Using electronic processes to create efficiencies in sourcing and procurement was a top initiative cited by close to half (43%) of the survey respondents. Other initiatives such as employing green friendly design and product lifecycle management or working with suppliers on sustainability and green SCM guidelines were almost equally planned and implemented initiatives. Reducing pa-

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FOCUS Green Barriers to Adopting Green SCM Practices (Figure 2)

Incentives for Implementing Green practices (Figure 3) Brand building as a "green company" Compliance with company sustainability goals Increase supply chain eﬃciency/reduce waste A competitive advantage for doing business Complying with customer requirements Save cost through implementing eﬃciency Motivating suppliers to perform better No motivation for applying Green SCM Other

Cost is prohibitive Too complicated to implement/lack of expertise No financial incentives to apply Green SCM Balancing buy side demands with market reality Not a priority No government incentives to apply Green SCM Existing technology does not support green initiatives Lack of Executive support No barriers Other

per in contracts and auditing suppliers were the least commonly implemented initiatives (both cited by less than a third of respondents). There was also a lot of interest recorded on the execution of green warehousing and distribution actions, most likely because these initiatives also often mean added efficiency. Companies appear to be most ahead in green practices when dealing with inventory reduction and product handling (61% have already implemented initiatives), their ability to consolidate orders (51% have already implemented these initiatives) and usage of reusable containers and storage equipment (60% have already implemented these initiatives.) When it comes to reducing energy consumption through the use of solar panels or green roofing options, surprisingly 25% of companies say they have already adopted such initiatives. Similarly around 29% of companies report that they have already optimized the location of their distribution hubs. Many of these initiatives show direct cost and efficiency benefits, but up-front cost associated with them may be why they are not more widely adopted. Surveyed companies in China also say they are fairly well advanced in adopting green transportation focused initiatives. Similar to production and warehousing proposals, there is a crossover between these implementations and levels of efficiency. Almost half of companies surveyed are already reducing expedited shipping and therefore air freight. This along with optimizing routing reduces empty miles and increases cube utilization to

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of the price and complications involved with turning green, being perceived as a such in the eyes of society is still very important to over half of the respondents. Brand building was listed as one of the top incentives (Figure 3) for implementing green practices, along with compliance with company goals on sustainability (53%) and increasing supply chain efficiency/waste reduction (52%). Other incentives for implementing GREEN green practices include cost Money Counts SUPPLY CHAIN CHINA SURVEY savings, efficiency and a As seen by these results, 中国绿色供应链 perception that being green costs are ultimately a big will bring a competitive adfactor that companies weigh vantage. There are very few when creating strategies companies in China that and practices in green supfeel there is no motivation ply chain management. This for applying green practicperception is echoed in the es. (Figure 3) voices of the survey parWhile perhaps not alticipants, who cite that costs truistic, this is among the prove the biggest perceived barrier (36% of respondents) to adopting many encouraging signs in the Green SupGreen SCM practices. Many also shrug some ply Chain in China survey results. While methods off as too complicated to be prac- wide adoption of Green SCM practices has tically implemented (35% of respondents). not yet happened, there are positive indicaAlmost a third of the companies surveyed tors in terms of the way that companies are (32%) felt that there were no financial incen- maintaining their supply chain, including the tives to justify adopting Green SCM. Lack intention of many companies to adopt green of executive support was not felt to be a sig- SCM practices in the near future. nificant barrier. The message seems clear that if green SCM makes financial sense and is easy to implement, chances for adoption are To read the full results of this survey and learn more about how other companies are viewing a green supply much higher. (Figure 2) chain, please go to: http://tinyurl.com/SupplyChainGreenSurvey The Price of Going Green Despite the fact that companies seem wary or call us for a hard copy.

create efficiency. Adoption of more sophisticated green transportation measures which have less direct relation to efficiency and cost savings are not in wide practice. More advanced green transportation measure such as using alternative power sources for refrigerated trailers, more aerodynamic trucks and more alternative fuel powered trucks, were adopted by 11% or less of companies.

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EXECUTIVE Appointments

Executive Appointments With talent at a premium, CHaINA keeps an eye on which executives are moving where.

Jeremy Chapman Director of Industrial Investments Industrial Department, Colliers

Peter Mackie Group President CHEP Asia Pacific

Paul van Benkelen Chief Executive Officer TÜV Asia Pacific

Colliers recently appointed Jeremy Chapman as Director of Industrial Investment. Jeremy has over 15 years of China industrial real estate experience and 10 years in the construction industry. Prior to his recent charity work in Mongolia, Jeremy was Senior Vice President of Acquisitions at New City Corporation Shanghai. The new role at Colliers will allow him to assist clients in the repositioning, disposal and development of projects including that illusive “Industrial Investment market”.

Peter Mackie will join the executive leadership team as group president of CHEP AsiaPacific, taking the place of Craig van der Laan. Mr Mackie currently is president of CHEP Europe and acting group president of CHEP Europe, Middle East and Africa (EMEA). Mr Mackie will take up his new role once a permanent group president of CHEP EMEA is appointed. CHEP Australia president Paul McGlone will act as group president of CHEP Asia-Pacific, until Mr Mackie assumes the role.

On January 1st, 2010 Paul van Brenkelen joined TUV Asia Pacific Ltd. (a member of TUV NORD group) as CEO and regional manager for China, Japan, Korea, Taiwan and Hong Kong. Based out of Hong Kong he will be responsible for further growth, strategy, M&A, P&L of the entities within the region. He previously held positions with SGS and Bureau Veritas as Global Director Product Development and Director Technical Services Europe. He has been based in Hong Kong since June 2005.

Simon Shaw Senior Director of Sales Smurfit-Stone Global Packaging Solutions

Sean Burke Senior Vice President Sales and Marketing Swan Logistics

Simon was previously the Sales and Marketing Director at IPS and SCA Packaging Asia. Simon has generated significant profitable packaging business through development and implementation of precise sales and marketing activities. Simon graduated from ESSEC Business School, Chartered Institute of Marketing, Kingston University.

Sean Burke recently joined Swan Logistics as Senior Vice President of Sales and Marketing. He will lead a global team to develop the supply chain business, focusing on North American imports inbound from Asia. Burke most recently served as Vice President, Business and Services Development Asia Pacific for YRC Logistics based in Shanghai.

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IS THIS YOU? If you have recently changed tions in the Asia Pacific re positions gion,, we want to hear about it! nnounce your new appointTo announce mentt with CHaINA magazine or for more mo information about bout this his ion, please send an email section, ditor@supplychain.cn to editor@supplychain.cn

MAR AR R CH H

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