THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS 为全球供应链管理人士倾力打造的专业杂志
maY/JUNE 2011
Features Shattered Chains 震后零碎链 p.47 Can B2B platforms be trusted? p. 52 B2B可信么？
Social Media and Supply Chain p.54
社交媒体和物流
procurement Is Walmart Worried? 沃尔玛的烦恼 p.21 Retaining Talent 留住人才 p.22
Manufacturing Unions in China 工会在中国 p.28 China’s Agrochemical Biz p.30 中国化学农业市场
Logistics The Life of a Chinese Trucker
p.36
大卡司机师傅
China’s Logistical Challenges p.38
中国物流发展的挑战
Distribution Design and Ingenuity p.43 推诚出新
Other Mart p.44 其他“玛”
Plus The Sustainable Apparel Coalition The Future of Fashion Manufacturing Design and Ingenuity ERP Failures and Lawsusits
p.24 p.32 p.43 p.60
Supply Chain magazine
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Publisher: Global Supply Chain Council Ltd. CHaINA Magazine is a FREE bi-monthly publication for the members of the Council. There is no charge for members and qualified readers to receive subscriptions in China. For your free subscription, extra copies or address changes, please email subs@supplychain.cn 出版商：Global Supply Chain Council Ltd. CHaINA杂志是为Council会员准备的免费杂志。我们协会会员 和业内专业读者都可以免费订阅。为了及时收到我们的杂 志，额外订阅或地址变更请发邮件至subs@supplychain.cn
Office and Team: Publisher Max Henry Editor Kevin Foehner Junior Editor & Translator Chenyin Pan
Graphic Designers Cherry Chen Susy Song Photographer Jimmy Kim
Contributing Writers
Bob Ferrari, Michael Lee Serwetz, Holger Schober, Iris Duchetsmann, Lijuan (Cynthia)Zheng, Sankalpa Bhattacharjya Jason Zhang, Joanna Lei, Hilly Dannaoui, Eric Kimberling
CHaINA Magazine is the only bilingual supply chain and logistics magazine in Asia with a strong focus on Greater China. In every issue, we write about the news, trends and best practices that will help manufacturers, retailers and distributors make better business decisions with their sourcing, production, logistics from, to or within Asia. CHaINA是亚洲地区唯一一本专注于中国的供应链和物流行 业的双语杂志。在每一期，我们通过刊登新闻，行业动向 和实践经验来帮助制造企业、零售商和发行商进行亚洲内 外的采购、生产和物流形式的选择。
Distribution: 10,000 copies on print (6 times a year) CHaINA Magazine is offered FREE of charge by direct post mail to qualified readers in Greater China who are involved in all aspects of supply chain management. It is also distributed through selected locations in major Chinese cities, including hotels, restaurants, service offices/apartments, business centers, airport lounges and other key locations. 发行量：一年六期，每期一万本 CHaINA杂志通过直接向中国各供应链管理的专业读者发送 邮件来提供免费的阅读机会。同样也分发到中国的主要城 市并在酒店、服务楼，商务中心，机场大厅或其他中心地 带免费赠阅。
Target Readers Our target readers are R&D, sourcing, procurement, manufacturing, logistics, warehousing, transportation, retail, distribution and operations managers, directors, vice presidents and decision makers. A majority of our readers are mainly end-users, shippers, and foreign-invested and local manufacturers and retailers. 目标读者 我们的目标读者有来自采购、制造、物流、仓储、运输、 零售和分销的各级管理人士。大部分读者是物流的需求 者，外资或国内的制造企业和零售商。
Subscription for Overseas Readers Go to supplychains.com/apple
THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS
The fragility of global supply chains has never been more apparent than in the past two months. The devastating earthquakes have wreaked havoc on several industries that have Japan as a key link in the supply chain, as well as exposed holes in theories like lean and JIT. Unforeseen incidents like the Earthquake and Middle Eastern uprisings have exposed major Kevin Foehner risks in the way global operations choose to do business. Editor In this issue, we explore several types of CHaINA Magazine risks that have recently come to the world’s attention. Whether your business has partnerships in Japan, you rely on B2B online marketplaces like Alibaba.com, you’re planning a new ERP implementation, or you’re just fighting to keep key talent; risks in business have never been this high. New risks require new strategies, and CHaINA Magazine sat down with executives from Syngenta, Delphi, and Lafarge to discuss ways to move forward. We also get insights into the life of a Chinese trucker, see how social media can benefit the supply chain, and much more! 全球供应链从来没有表现的像在过去的两个月里那样弱不禁风。日本 在众多行业领域的至高地位也让她在经历不 幸时，影响波及全球各大公 司，物流管理中的精简瘦身也在震后饱受质疑。地震及中东地区的革命 与冲突再次告诫人们物流全球运营的不确定性。 本期杂志，我们将探究近期国际局势对供应链行业所带来的风险。无 论是你与公司在日本的合作伙伴往来，还是你在阿里巴巴上的贸易，以 至你对 ERP的实施执行，风险无处不在。 新的风险需要有新的策略来应对，为此CHaINA Magazine 将在本期同 Syngenta，Delphi和拉法基的高层们来探讨他们各自的策略。我们还将 带您走进卡车司机的生活，去关注一下他们的世界。 同样，我们也将讨 论网络社交媒体在供应链中的作用。更多精彩，敬请期待！
Stories Ideas, Comments & Feedback If you have an idea for a story, interview or case study, please contact the editor. We welcome feedback and comments about our content or any issues relating to your operations. Please send your email to 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。
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. 3
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MAY/JUNE
CONTENTS frontlines
Procurement
Big photo 14 Lost in Translation 16 In & Out 17 Quote Page & Social Media Activity
19
12
21 22 24 25
Procurement News Is Walmart Worried? Retaining Talent The Sustainable Apparel Coalition M&A
12 大事件
19 行业短讯
14 译网恢恢 疏而有漏
21 沃尔玛的烦恼
16 斗转星移
22 留住人才
17 从业者说
24 绿色服装联盟
& 社交媒体与物流
MAY / JUNE 2011
MANUFACTuRING 26 Manufacturing
Unionization – Current Developments of Trade Unions in China 30 China’s Agrochemical Biz 32 The Future of Fashion Manufacturing 28
26 行业短讯 28 工会化-中国工会的现状 30 中国化学农业市场 32 工业产业的未来
25 企业并购咨询
LOGISTICS
DISTRIBUTION
The LINKS
33 Logistics
41
Distribution News 42 iPad 2 Global Sales and Demand 43 Design and Ingenuity 44 Other Mart 46 Retail Struggles
57
News 36 The Life of a Chinese Trucker 38 China’s Logistical Challenges 40 India’s
developing Logistics Sector
News
43 行业短讯 35 行业短讯
42 ipad 2 全球供需
36 大卡司机师傅
44 推诚出新
38 中国物流发展的挑战
45 其他“玛”
40 印度的物流业发展状况
47 零售业调查
Interviews
Back Home Silk Road 58 Development at the speed of...CHINA! 59 Bouns Time! 60 ERP Failures and Lawsusits 61 Thinking Lean 66 What kind of a reports does a procurement guy create?
OPINION
20 18 The
Changing Landscape of Global Sourcing
Bob Ferrari 22
30
38
4 MAY/JUNE 2011
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FEATUREs
47
CHaINA Magazine Shattered Chains 震后零碎链
52
Can B2B platforms be trusted? B2B可信吗？
54
Social Media and Supply Chain 社交媒体和物流
5 www.supplychains.com
MAY/JUNE
Past Lessons for China’s New JVs Luncheon
Supply Chain Mixer
Lean Manufacturing Workshop
Supply Chain Mixer
6
Lean Manufacturing Workshop MAY/JUNE 2011
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CHINA Inside out Book Lunch
Past Lessons for China’s New JVs Luncheon
Supply Chain Mixer
Supply Chain Mixer
Lean Manufacturing Workshop www.supplychains.com
MAY/JUNE
7
Dotcom
CHA1N.com CHA1N has surpassed 1000 members! Many thanks to all that use the only social media site designed for supply chain professionals! We encourage current and new users to connect, network, discuss and benefit from the platform!
Your search for the best vendors starts here. The essential guide to providers, vendors, experts and consultants in supply chain, logistics and procurement is now available on iPad 2.
Interactive features provide more information through clickable hyperlinks (emails and website URLs) New user interface shows much more of the page improving reading experience Share directory with anybody with an e-mail address Read offline and anywhere regardless of a data connection or WIFI signal
Available for iPhone iPod Touch and iPad
To view and download Vendors’ Directory, search for “chaina” on iTunes, it’s easy. , You can also visit supplychains.com/directory
SCMTimes.com
VendorsDirectory.com
Supplychains.com/en/ photos
Why success will come from your supply chain
The 2011 Vendors’ Directory has arrived!
Supply chains are a dramatic way to double, triple, even increase your profit margins tenfold.
If you’re company isn’t in Asia’s top supply chain and logistics directory, visit the interactive site and get listed today!
Check out pictures from The Council’s networking mixer, lean manufacturing event, and more!
8 MAY/JUNE 2011
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EVENT CALENDAR
upcoming events
MAY 5 2011 JUN
MAY
The Yangtze River Strategy: A Go West Logistics Solution Four Seasons Hotel 500 Wei Hai Road, Shanghai Organizer:
THU
MAY
12 THU
TUES-SAT
The New China Challenge Four Seasons Hotel 500 Wei Hai Road, Shanghai Organizer:
The American Chamber of Commerce
Incoterms 2010
MAY
26 THU
Hong Kong Organizer:
The British Chamber of Commerce
The American Chamber of Commerce
Reverse Logistics and Returns Management Asia
MAY
18 19
Novotel Century Hong Kong Hotel Organizer:
Weds-Thu
IQPC
Supply Chain Networking Mixer
JUN
2
THU
Shanghai Organizer:
The Council
MAY
10 TUE
MAY
Taicang Supply Chain & Logistics Roadshow Taicang Organizer:
The Council
Global Sourcing Leaders’ Forum
19
Renaissance Hotel Zhongshan Park
JUN
Automotive Supply Chain & Logistics Forum
THU
16 THU
Organizer:
The Council
Renaissance Hotel Zhongshan Park Organizer:
The Council
MAY
11 WED
Changing Global Outlook and Global Production Networks Shanghai Organizer:
The Council
MAY
26 THU
JUN
22 WED
Qingdao Supply Chain & Logistics Roadshow Qingdao Organizer:
The Council
Expanding in Western China Myth or Must? PwC Center, Shanghai Organizer:
PwC, The Council
WHAT NEXT? JOIN THE ELITE FAST TRACK TO WORLD CLASS COMPETENCE Develop your competence to the highest levels internationally International Green Belt in Advanced Purchasing & Supply ® International Red Belt in Advanced Purchasing & Supply ® International Black Belt in Advanced Purchasing & Supply ®
Study for an advanced professional qualification in purchasing & supply
International Institute f or Adv anced Purchasing & Supply
For further details about IIAPS and its corporate accreditation & benchmarking services visit www.iiaps.org, or contact us at info@iiaps.org. To attend our next Black Belt Showcase Event in Shanghai on 2nd September, go to www.iiaps.org/events.html.
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MAY/JUNE
FRONTLINES Follow-up Rare Earth Revisited
R
are earth elements continue to make headlines, with China continuing to hoard its supplies while other countries look for new, viable sources of supply. On Monday, April 25th, Beijing released new quotas for rare earth metals. The government raised smelting quotas from 93,800 tons to 94, 400. It is currently unclear how these new smelting quotas will affect total productions of rare earth metals, but some analysts are saying the new quotas could further reduce output. Japan, the largest consumer of rare earth elements, has been affected the most by China restrictions. As a result, Japan has signed several new agreements with countries like Vietnam, Russia and Australia. “We are also committed to being a secure and reliable supplier to Japan of rare earth metals which are so important to advanced manufacturing,” pledged Australia’s Prime Minister, Julia Gillard.
A new source for rare earth elements
Mongolia’s aggressive plan to expand their rail networks will be extremely beneficial for Japan and South Korea, and will threaten China’s monopoly on rare earth elements. Mongolia has rich deposits of coal, iron ore, and rare earth metals, however the country has been held back due to lack of infrastructure. If Mongolia can get its infrastructure organized, it could prove to be incredibly economically beneficial for the country. “The key for the Mongolians is to attract investments from as many different countries as possible to lessen their dependence on China,” says Roland Nash of Verno Investment Management Ltd. Given China’s recent restrictions on rare earth exports which has forced nations like Japan, South Korea and the US to look for new sources, Mongolia now finds itself in a position to bring prosperity to its country. A potential mining boom has analysts forecasting an economic surge of 23% in 2013, and a possibility to bring diversity to the countries it trades with. China currently accounts for more than 75% of exports from Mongolia.
The Yuan continues to climb
S
ince being de-pegged last July, the value of the Chinese Yuan has risen by five percent. In late April, the Yuan hit record highs, as the Central bank allowed the currency to rise to fight inflation that continues to spiral out of control. Premier Wen Jia Bao continues deny the possibility of another one-off revaluation. For now, the banks will continue to allow the Yuan’s midpoint average to rise daily, which reduces the need for any revaluation.
Labor Shortage Update
C
ompanies which operate or do business with China have really begun to feel the squeeze, and most analyst predict that price increases on all kinds of products will happen shortly. Reports of labor shortages have been popping up in the media since 2004, but the breaking point seems to be looming. Several companies have reported that wages have risen between 10-20% per year for the past several years, but improvements in productivity had offset the higher costs. Economists now say that productivity increases are very hard to find, and manufacturers will have no choice but to raise their prices to keep margins in tact. China currently has a labor force of roughly 820 million people, however very few of the workers have the experience that companies demand. The rise in labor cost has priced developed cities like Shanghai, Shenzhen, and Beijing out of the market. As a result, the Go West movement seems to be underway, as companies like Foxconn to move west. GM, Honda, Intel, and Motorola shifted their operations into inland China a few years back, and have enjoyed cheaper wages and government subsidies.
10 MAY/JUNE 2011
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FRONTLINES Big Challenges facing Supply Chains
T
he Japanese disaster which resulted in severe infrastructure problems has forced factories to close or run with limited power, causing a shortage of key auto parts and supplies, including semiconductors and paint. It’s just one of a few unforeseeable supply chain challenges facing companies in the early part of 2011. General Motors’ CEO recently commented on the challenges facing his company. “We’re particularly focused on the semiconductor area,” GM CEO Dan Akerson told reporters, “but we’re feeling better than we did a month ago and a lot better than we did five weeks ago.” Akerson has stated that the company’s biggest short term challenge is ensuring that part shortages do not affect supply chain. GM has not cut its vehicle sales forecasts for 2011. Toyota and Nissan executives recently reported that part shortages are shrinking in Japan, which is excellent news. However, Toyota recently extended its North American production slowdown for six weeks highlighting the continuing challenges due to the quake.
We Want to Hear From You!
We invite you to share your thoughts and opinions regarding all of our articles. We will publish selected readers’ comments in future issues of CHaINA Magazine. Correspondence may be edited for clarity or for length. Email us: editor@supplychain.cn
www.pwccn.com
Would your company pass a customs audit or investigation on various import/export activities?
We work with clients to proactively complete trade and customs compliance reviews in advance of a customs audit/investigation so as to ensure compliance, mitigate the risk of financial penalties and other sanctions such as Enterprise Downgrading and detention of goods by Customs. Areas covered include Processing Trade, acceptability of related party transfer pricing, tariff classification, goods valuation etc. Our assistance aims at streamlining compliance, increasing transparency and the chance of a rule-based resolution to complex issues. Contact: Damon Paling Tel: +86 (21) 2323 2877 damon.ross.paling@cn.pwc.com © 2011 PwC Worldtrade Management Services (Shanghai) Co., Ltd. All rights reserved. In this document, “PwC” refers to PwC Worldtrade Management Services (Shanghai) Co., Ltd. Which is a member firm of PricewaterhouseCoopers International Limited (普华永道国际有限公司), each member firm of which is a separate legal entity.
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MAY/JUNE
11
FRONTLINES
China Takes Flight US$227 Billion The amount China will spend on increasing commercial airports by 2015.
220 Number of commercial airports to be in operation by 2015, up from 175
500 Million Projected number of airline passengers by 2015
12 MAY/JUNE 2011
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FRONTLINES
4500
Target size of China’s fleet by 2015, up from 2600
US$260 Million
Combined loss of 130 Chinese airports in 2010
<30%
Chinese Carriers Share of International Cargo in and out of China
13 www.supplychains.com
MAY/JUNE
Frontlines Lost in translation
Legal Matters Microsoft China President bought PhD Just recently, former Microsoft China President Tang Jun admitted to spending US$3000 to purchase a Pacific Western University PhD. Almost a year ago, the ex-Microsoft boss threatened to sue his accuser, Fang Zhouzi, for libel after claims of faking his credentials and buying PhDs from Caltech and Pacific Western University. Agility charged by US government KUWAITI logistics firm Agility must again face US prosecution after a US district court overturned the earlier ruling not to pursue the company for overcharging the US military in Kuwait, Iraq and Jordan. Agility expressed its disappointment over court’s decision but the company is ready to defend itself if dialogue can’t produce an agreement. In addition, Agility is facing the US government’s civil suit in regards to military contracts. Filipino Chief Fired Teddy Pan, former deputy chief of staff for logistics for the Armed Forces of the Philippines, was fired for going over his budget for fuel and lubricants by 250 million pesos (US$5.8 million). The money is suspected to have been used for retirement gifts for former AFP chief Gen. Ricardo David.
Railway transportation breaks tonnage benchmark
Shantou organizes itself for Taiwan freight
I
A
n the first 2 months of 2011, 13 one-way trips were made by freight ships, carrying 3484 containers, destined for Taiwan from Shantou, Guangdong. By comparison, 12000 containers were shipped in total in 2010. Shantou port was recently granted specific access to service freight to Taiwan and is making necessary changes to efficiently serve the island.
China Railway builds subway lines for Argentina
Sinotrans to build massive Chengdu DC
ccording to statistics released by the Ministry of Railways of the People’s Republic of China, 958 million tons of goods have been transported by railway nationwide in the first quarter of 2011, a 7.8 percent increase over 1 year, and a good sign of an evolving multimodal China.
S
C
inotrans will invest RMB300 million (US$46 million) in Chengdu’s Longquanyi district to build a new 90,000 square meter distribution facility. According to Mr. Jianwei Zhang, the CEO of Sinotrans, the investment fits into Sinotrans’ strategic nationwide operations plan.
Shanghai Pharma cooperates with China Post
BOLZONI AURAMO Group enters China JV
órdoba, the second biggest city in Argentina has approved the corporation between China Railway International and a local construction company to build 4 subway lines this year to relieve the city’s growing traffic congestion. The project will cost roughly US$1.8 billion, which CRI will contribute US$1.53 billion and equipment.
S
hanghai Pharma and China Post have agreed to collaborate to build modern medical logistics infrastructure. According to the agreement, China Post will provide custom delivery services to Shanghai Pharma, which will include a nationwide delivery network, special medicine delivery, and high value medicine express services.
T
he Bolzoni Auramo Group, the largest lift truck attachment manufacturer in Europe, has entered a joint venture with Hebei’s Huaxin Forks Co. Bolzoni Huaxin will have a 60% stake in the JV, and the factory will start production in January 2012. The factory will be located 250km south of Beijing.
14 MAY/JUNE 2011
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Frontlines
Jiangsu’s first 10,000 ton-capacity cold chain center
Chinese Couriers face rising cost
C
everal Chinese courier service providers have increased prices, after the National Development and Reform Commission’s decision to increase gasoline prices. Depoon Logistics implemented a 3% price increase for major delivery routes, while ZTO Express raised its overnight 0.5 KG delivery between Shanghai and Nanjing by 2 yuan. More price hikes from express companies are expected to follow.
onstruction of Jiangsu’s first 10,000 ton-capacity cold chain center has been completed and is ready for use in Gaoyou city, close to Nanjing. The total investment was RMB 68 million (US$10 million). The facility will be able to process, store and supply fish products. The value-added services are expected to increase the income of the farmers in the local area and promote the development of logistics infrastructure.
S
SinoLog Logistics 星络物流有限公司 No.446, Fu Te Dong Yi Road,Waigaoqiao Free Trade Zone, Shanghai 200131 上海外高桥保税区富特东一路446号,邮编200131 +86(21) 5866 6988, www.sinolog163.com
15 www.supplychains.com
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Been promoted? Let us know! editor@supplychain.cn
in & Out
Frontlines
in
Peter Tse
Matthew Li
Head of Implementation, North Asia SCM
Director, Supply Chain Management, North Asia Pacific Area
Damco
Otis Elevator
Peter Tse has been appointed Head of Implementation, North Asia SCM at Damco. Mr. Tse has more than 25 years of industry experience, and has held the position of VP of Internal Business Processes for NTS logistics, General Manager for JHJ and Ops Manager China at UPS.
Matthew Li, the former Sourcing Director at Carlisle Companies Inc has moved to Otis Elevator to become the Director of Supply Chain Management for the North Asia Pacific region.
Simon Chuang
Mark Lau
Regional Procurement Director, Asia Pacific
TE Connectivity With a background in engineering, Simon Chuang has recently taken on the position of Regional Procurement Director, Asia Pacific at TE Connectivity Ltd. He previously worked at Tyco Electronics for 6 years as the company’s Regional Procurement Director.
VP, Global Sector Head Retail
DHL Global Forwarding DHL Global Forwarding has appointed Mark Lau as global head of its retail business based in Singapore. Mr. Lau was the previous director of the company’s consumer and retail sector for Africa and Asia Pacific.
Masaru Satose Deputy Managing Director & Vice President Shuffle Master
Peter Robilliard Regional Director
Agentrics Peter Robilliard is now the Regional Director at Agentrics, a global provider of retail & supply chain solutions, based in Melbourne, Australia. Mr. Robilliard has previously worked for Manhattan Associates and Torex Retail.
Mr. Satose, currently the regional director for MOL’s operations in Singapore, Indonesia, Malaysia, the Philippines and Myanmar, will transfer to Hong Kong to assume the position of deputy managing director for MOL HK and oversee MOL’s south China operations.
Out Mansingh Jaswal
Michael Cole
Director
Director of Research, East China
GenEx Logistics
Colliers International
Mansingh Jaswal has been appointed as Director of GenEx Logistics India. Mr. Jaswal previously worked as Director for BLR Logistics for 5 years, and has been in logistics for more than 10 years.
Jane Wu Human Resources Director, North Asia
Menlo Menlo Worldwide Logistics has announced that Jane Wu has joined Menlo as Human Resources Director, North Asia. An HR professional with over 18 years of experience in the field, Jane served as Human Resources Director at Asia Timber Products before the current position.
Mr. Michael Cole has resigned as Director of Research, East China, Colliers International, as of April 1st, 2011. Mr. Cole has made the decision to pursue his own career path.
Gianfranco Lanci CEO
Acer Mr. Lanci has recently stepped down from the position of President and CEO of Acer effective on the 31st, March. Acer has suffered a 42.1% decrease in PC shipments to the US over the past year, and lost two percent in global market share.
16 MAY/JUNE 2011
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Frontlines
Quotes “By killing a few monkeys, we may be able to teach the chickens and cripple the network”
Singapore’s AsiaN Shippers Council released a document proposing strikes using predator drones against Somali Pirates. The document was later recalled in order to refine the wording.
The most difficult part for Strategic Sourcing is that you don’t have any options but a single resource, when the volume and tech of your supplier becomes exclusive, the word Strategic becomes “WEAK”
Yong CHEN, Asia Strategic Sourcing Director, Lonza
“We continued to be on a tear in China. Greater China saw iPhone sales being up over three times, almost 250 percent” Tim Cook , COO of Apple commented on the companies amazing sales figures in China. The company plans on opening 40 new Apple Stores in 2011.
“The cost of fabric and trim supply will still make China very efficient,”
Dr Harry Lee, CEO of TAL Apparel, points out that the government’s 12th Five-Year Economic Plan includes a doubling of wages as one of its objectives.
Follow the most influential supply chain minds on twitter! supplychainblog:
“We see CIOs in large enterprises acting as IT supply chain managers”
jimtompkins:
LSPs need to embrace benchmarking, now more than ever
supplychainmgt: iPhone 5: See you in September
3plnews:
Freight Train from China Arrives in Duisburg after Traveling 10,300 Kilometres
aboutlogistics:
The global supply chain still has significant issues could be months before any resolution.
scmtimes:
Electric car solution developed by Delta, Wistron, Qisda revealed in China
“Our direct sourcing from Japan is marginal, without foreseen disruption”
Frank Imbert, CFO of Faurecia told analysts during a conference call that his company, a subsidiary of automotive group PSA Peugeot-Citroen, has no direct exposure to the consequences of the earthquake and tsunami
17 www.supplychains.com
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Opinion
The Changing Landscape of Global Sourcing
T T
by Bob Ferrari
China’s Suppliers and Manufacturers Need to be Prepared
here have been a number of developments of late that indicate that the global landscape of component and end-item manufacturing may change over the coming months. Manufacturers and suppliers within China need to be prepared with a strategy and a response to these changing conditions not only in China, but globally as well. Inflation has become a significant challenge for China’s high-growth economy. This situation is already motivating some supply chains that are highly sensitive to direct labor costs to shift component and finished goods sourcing strategies which involve China. A Bloomberg BusinessWeek article published in early March noted that pay among China’s migrant laborers rose by 40 percent in 2010, and is expected to climb an additional 20 to 30 percent over the next three years. Predictions are that all of China’s 31 provinces and regions will likely have to boost minimum wage levels in 2011. Wage increases are not just confined to the manufacturing concentrated regions, but within some interior regions of China as well. Meanwhile, a growing global food crisis along with international pressures directed at accelerated de-valuation of China’s currency, adds fear for social unrest along with possibilities for further inflation. China’s monetary authorities have had to raise interest rates on multiple occasions since October because of threat of increasing inflation in China’s economy. Recently, multinational consumer goods companies Procter & Gamble and Unilever expressed the need to significantly raise prices on laundry detergent due to increased material costs, but were met with push-back and resistance from China’s policy-makers. As BusinessWeek notes in its article, wage sensitive producers involving global apparel, retail and specialty goods are already in the process of re-evaluating or shifting their China sourcing strategies, in favor of lower-cost regions. Other industry sectors may selectively follow, depending on their individual business needs and circumstances. To counter these developments, the central government is encouraging the manufacturing industry to develop into more of the
growing high tech, medical equipment and alternative energy sectors of the global economy. Higher wages will force many Chinese manufacturers to raise their prices to cover both labor and re-investment needs. Economists are already speculating that China’s economy may be in the lens of the termed ‘Lewis turning-point’, which occurs when demand for any surplus labor dries-up and hikes in wage, inflation and price ensue. The open question is when, in the next few years, this will occur. In our Supply Chain Matters 2011 Predictions for Global Chains published this past December , we predicted that the landscape for global outsourcing of components and finished goods would shift in 2011, and much more attention will be placed on outsourcing strategies. We however did not anticipate that changing global dynamics would come so quickly in 2011. The tragic earthquake that occurred in Japan has also provided a new reminder to multi-national companies that sourcing of process technologies or components cannot reside in a single country. If there is one significant lesson that can be derived from past sourcing decisions of multinational companies, it’s that sourcing teams will not necessarily view labor costs as a sole determinant in sourcing decisions. Other considerations will include intellectual property protection, access to China’s market, and service considerations. For China’s manufacturers, understanding your customers’ business , product innovation, cost and risk management needs while maintaining open communications and trust, now take on much more weighting. Moving beyond a high dependency on abundant direct labor, with more of a focus on technology, supply chain business strategy and analysis capabilities are the new competitive stakes in the global economy. Bob Ferrari is the Executive Editor of the Supply Chain Matters Internet blog, and the Managing Director of the Ferrari Consulting and Research Group (www.theferrarigroup.com/supply-chain-matters)
18 MAY/JUNE 2011
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Contents ► Procurement News /19 ►Is Walmart Worried?/21 ►Retaining Talent/22 ►The Sustainable Apparel Coalition /24 ►M&A/25 行业短讯/21
沃尔玛的烦恼/21
留住人才/22
绿色服装联盟/24
企业并购咨询/25
PROCUREMENT
China continues to be key for apparel sourcing
Sourcing leaders at the Prime Source Forum in Hong Kong agreed that China will continue to play a major roll in worldwide apparel sourcing. The country accounted for 38% of US garment imports last year and a staggering 76% of US footwear imports. “Which other country has the manpower or competitive potential to take up the slack if exporters did need or want to dilute their reliance on China?” asks David Dodwell, CEO of Strategic Access Ltd. Despite the speedy growth of emerging markets like Vietnam, which accounted for 7.8% of US garment imports, no country can currently match China’s product execution, reliability, flexibility, speed to market, and claims settlements.
IBM Sued
The Security and Exchange Commission (SEC) has report edly sued IBM for bribing South Korean and Chinese government
officials. IBM allegedly “provided improper overseas trips, entertainment and other gifts for officials,” according to the SEC. IBM agreed to pay US$10 million in settlement charges to make this mess go away. The South Korean bribes took place from 1998 to 2003, while the Chinese bribes occurred between 2004 and 2009.
operations. Senior managements’ bonuses will largely depend on the results of the EP&L report. The parent company, PPR, has even created a new sustainability division called PPR HOME, enlisting the services of former Puma Chief Exec Jochen Zeitz. Time will tell whether these efforts pay off.
Puma goes Green
Timberland set emission goals too high
Popular sportswear brand Puma has announced that it will work with PriceWaterhouseCoopers and Trucost, a supply chain analyst, to release its first ever Environmental Profit and Loss (EP&L) report in the second half of 2011. Puma hopes to integrate its environmental efforts deeper within its day-to-day
Timberland’s CEO, Jeff Schwartz, came clean last month, as the company failed to meet its goal of cutting greenhouse gas emissions in half by 2011. In a refreshingly honest statement, Schwartz admitted that they set their targets without researching the feasibility first. The company managed to reduce their emissions by 38%, which isn’t too shabby. Excessive air travel is to 19
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blame for Timberlandâ&#x20AC;&#x2122;s failure. The solution? Timberland plans on reorganizing their business process, spreading out their employees more evenly in places they have operations. Timberland also planned on investing in Video Conferencing solutions, but sighted cost as the factor that deterred the company from following through with the purchase. Maybe nowâ&#x20AC;&#x2122;s the time?
Panasonic eyes China
Panasonic has announced plans to shift its lithium battery production to a new China plant that will be built in 2012. Currently, 80-90% of Panasonics lithium-ion batteries come from Japan with the remaining 10% coming from China. With a new facility, Panasonic plans to boost Chinaâ&#x20AC;&#x2122;s share to 50% by 2015. The plan is estimated to save the company 30% on its manufacturing costs.
Asia Pacific Telecom partners with China Telecom Taiwan-based Asia Pacific Telecom and China Telecom will formally collaborate to strategically source tablets, mobile phones and other communications devices for their respective regions. The team will specifically focus on sourcing smartphones valued under RMB1000.
Vietnam: The Place for Pepper
Vietnam has surpassed all other countries as the place to source black pepper. The country has an estimated 110,000 tons of total black pepper crop, and has already exported 25,000 tons of it this year. India used to be the best place to source black pepper, but low surpluses in the country have resulted in less exports. China has become one of the biggest buyers of pepper and other agricultural products from Vietnam and other South East Asian countries due to a very poor agricultural season.
Harsh Koppula, Managing Partner No.93 Huaihai Zhong Road 26/F Shanghai Times Square Office Tower Shanghai 200021, China. Tel.: 021-5117 6377 E-mail: hkoppula@cgn.net
cgn.net
Business Performance Consulting United States | Europe | India | China
finding new answers in business.
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PROCUREMENT
Is
E
veryone is worried about inflation in China. So much so, that the conversation about appreciation of the Renminbi has all but stopped. As we know, price inflation will increase the price of exports, thus having the same effect as an appreciated exchange rate. The compound effect of an appreciated exchange rate and price inflation increases prices more. In fact, the effect is further compounded when raw material prices increase (as cotton has, triple), oil prices increase (unrest in Middle East), and food prices increase further than just inflation (in Beijing farmers got a big increase in minimum wage). Then, when labor rates go up by government mandate, and go up further due to labor shortage, prices go up further. Finally, when the reserve ratio goes up to 20.5%, as it has, bank money becomes expensive or impossible to get. In the latter case, usurious lending takes place. So what the above looks like is a perfect storm which will cause a financial
Worried ?
►Michael Lee Serwetz, President at Prophet Business Services
tsunami. Today, the NY Times lead article was entitled, “Inflation in China Poses Big Threat to Global Trade.” Inflation in China Poses Big Threat to Global Trade All the factors listed above, plus huge government debt and real estate investment, threaten a hard landing for the China economy, which, in today’s world, will have a massive effect on the world economy. When your biggest buyer goes bust or stops spending, what do you do? Here’s an effect closer to home that will also have economic consequences. The same article reports, “I hear that many Chinese exporters are rejecting orders from Wal-Mart and other Western retailers,” Mr. Tao (Dong Tao, economist at Credit Suisse Hong Kong) said. “I’ve been covering the Chinese economy for a long time, and I’ve never heard that before.” This is one hitherto unpublished and maybe unforeseen effect of the price tsunami in China: Wal-Mart and the other very successful mass merchants have literally built their businesses on
the ability to source very cheaply from China, thus presenting a low price retail model to the consumer (in the past, Wal-Mart shoppers were greeted by “Always the low price-always” and a smiley all around the store proclaiming “Rollback”), while preserving their own margins. The margin came from the sellers. But the orders were taken because they paid the lights and heat with their huge volume. And none of these retailers give any quarter on quality or compliance—but they won’t pay for it. Now the situation is different. A factory taking a Wal-Mart order may find themselves in a situation where the more they make, the more they lose. In my experience, when factories realize that, it is the Maginot line to just say no. OK, so let’s imagine Wal-Mart does have to pay more. Significantly more. What do they do? Either they pass the increase on to their customer or they take the hit in margins or both. Either way they lose. “So what?”, many say. Wal-Mart and the others will just source elsewhere where it is lower cost, like Bangladesh. There are several problems with that solution: 1. The volumes Wal-Mart and other mass merchants (like their own Sam’s Club) need to run their business are not easy to replace outside of China. 2. Costs will go up in the other COOs (Countries Of Origin) due to scarce capacity and mandated labor cost increases. 3. China is purely vertical, a one-stop shop for products. The other venues such as Bangladesh are not. 4. Logistics- TEU capacities from these countries are much lower, and more expensive. The more demand for the container space, the more expensive they will get. And, they require much longer transit times, which requires better planning and earlier commitment from Wal-Mart. The world is worried about China. Is Wal-Mart? They are very smart businesspeople and merchants, so I am sure they are. As they should be. 21
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PROCUREMENT
Retaining Talent
HR management in Asia “The cement industry does not attract talent like the high-tech industry – we have to be smarter in our HR approach.” “Finding the right people for procurement and developing them into high performers is, and will remain, one of my key challenges”, indicates Kenan Ozturk, VP Purchasing Asia Pacific of Lafarge and Advisory Board Member of IIAPS
H H
ow does Lafarge recruit local/foreign talent?
Well, we have chosen the typical ways such as career portals or attending university days for new hires, and the use of head-hunters for more experienced professionals. We start to be different when people are joining us by offering a broad range of HR actions which all have one aim: to develop each individual and to make it clear that Lafarge cares about every single person. Can you give us some examples? Well, there is for instance our cadet program dedicated to young engineers. Within two years time they run through various stages and gain technical expertise not only for procurement functions, but also for technical functions. Does this mean that not all of those engineers will work in procurement? Right, not all people from the cadet program will join the procurement team. And again: we show from the first day which perspective they will have and how we develop our people. What’s the most difficult part in recruiting local/foreign talent? In some locations, job markets are limited and there is less interest in procurement. Local people know the local market and culture better, which makes it easier and quicker to integrate into Lafarge. However, we try to recruit foreign talent for diversity. How do recruiting techniques change in Asia, compared to Europe or North America? If I compare the recruiting of local talents in Asia with the two other regions, one thing becomes obvious to
What are the strategies for retaining talent at Lafarge? As outlined, our retention strategy starts from the very first day with the way we welcome our new employees. We introduce our company, our HR policy, our development initiatives and the different career paths they can choose during their first few days! Other than an attractive package, we know that people want to stay in a challenging and growing company. Asia is a growing continent for us and a natural path for developing future leaders for the group But this can’t be everything, can it? You certainly have further levers for people retention? Well, let me mention two further things here. One, our coaching and mentoring program for high potentials, and two, the so-called IDP (individual development program) for every procurement employee. The mentoring and coaching is done by senior people within the procurement department including myself, and it helps people a lot in terms of orientation, personal development, and last but not least, it increases their loyalty to the company. These are great advantages of being part of an international group: learning from other experiences, benchmarking and best practicing. Do all your investment pay off ? It definitely pays off. We have feedback from people that our approach significantly impacts their loyalty and willingness to stay with us. And due to our career and successor planning, we are able to replace 80% of open jobs by internal people!
76,000
78
US$ 23.1 billion
6th
Number of Lafarge Employees Worldwide
$
me: title matters most for Asians! In Europe you can often attract talents with interesting job content, in the USA they care about the whole package. In Asia, job title is important for cultural reasons but as well a career path/ exchanges with other cultures.
Sales for 2010
Countries in which Lafarge Operates Ranking in the “Carbon Disclosure Project”
22 MAY/JUNE 2011
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The IIAPS advisory board consists of nearly 100 decision makers in purchasing and SC management worldwide. Kenan Ozturk, an IIAPS advisory member, shares his experiences and approach to “HR challenges in Asia Pacific”.
PROCUREMENT
招贤纳士-专访拉法基 亚洲人力资源管理“水泥行业不像高新技术行业那样吸引求职者 的眼球-所有我们要有更聪明的HR措施来找贤纳士 ”“找个合适 的采购人才，并把他们打造成职场精英 是我目前，同时也是今后 几年里，最大的挑战”，Kenan Ozturk,拉法基亚太采购VP
拉法基是怎样招贤纳士的呢？ 我们通过使用招聘网站，参加校园招聘来吸纳新手，同时，通过猎头公司来引进一些经 验丰富的专业人士。当然，变化是发生在员工加入到公司之后，人力资源部通过为员工 定踱职业发展规划来提升他们的发展空间，我们的目标只有一个：让员工知道，拉法基 关注每一个人的发展。 您能举例说明一下吗？ 比方说，在对青年工程技术人员培养上，我们有个“成长项目”。在两年的时间内他们 通过参与各项工程活动来增强采购及技术应用方面的专业技术水平。 这是不是说这些工程技术人员不一定都会从业于采购？ 是的，不是所有人都会去做采购。这里我要强调的是-从新员工到岗的第一天起公司就 会引导他们成为英才。 在招聘环节里，最困难的是什么？ 有些城市的人才资源规模小。本地员工对当地的市场及文化都有很好的了解，这使得拉 法基能够更好的融入当地市场。当然，我们也需要外籍员工来丰富我们的团队。 在亚洲招聘，从具体操作上讲，与在北美，欧洲招聘有什么不同？ 从招聘本土人才的方式上做对比的话，亚洲人更看重头衔！在欧洲，与众不同的工作内 容更能吸引眼球，在美国，整个用工福利会更被人看重。在亚洲，受到文化，及职业发 展等因素的影响，职位头衔更重要些。 拉法基是怎样留住人才的呢？ 我们在员工加入的第一天起就开始实施策略，留住人才。我们在员工到岗的第一天起就 会给他们介绍公司，人力资源政策，及个人职业发展规划！员工都希望能够就职于一家 富有活力，欣欣向荣的企业。亚洲是拉法基发展的新大陆，也是培养新一代领导团队征 程上的必经地。 但这些不可能是全部的措施吧？公司一定还有其他的针对高层的留人措施。 对具有极大潜力的采购员工，我们会提供个人职业培训项目，也就是IDP (individual development program)。督导和培训往往是由包括我在内的采购部门的老手提供的。这些 培训给员工个人发展提供的便捷，同时也提高了他们的企业忠诚度。就职外企的好处就 在于可以学习到先进经验和操作。 那关于 IDP，这是个什么样的项目？ 公司采购团队近百人，人人的未来两年职业规划都不同。这个项目包括“优先提高部 分”，“需采取特别措施部分”，及可行的职业规划。简单点说：项目旨在消除弱项； 它将帮助员工做好下一步职业规划。项目即包含技术层面，同样也有软技巧上的指 导。IDP为员工职业发展提供了无限的机会。 在人才上的投资取得成效了吗？ 物超所值。从反馈信息中我们了解人力资源部的方式方法对员工的企业忠诚度有了巨大 积极影响。通过我们的职业规划，目前公司80%的岗位空缺是由内部员工顶替的！
IIAPS (International Institute for Advanced Purchasing & Supply) is dedicated to increasing international standards in purchasing and supply management through the Institute’s International Belts qualifications, competence assessment, benchmarking and HR services. The institute operates globally via its offices in USA, Europe and Asia (www.iiaps.org) 23 www.supplychains.com
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PROCUREMENT
The Sustainable Apparel Coalition A work-in-progress
I
n a discussion with Michael Lee Serwetz, a fashion sourcing veteran and President of Prophet Business Services, he described the coalition as “a beautiful dream”. The Sustainable Apparel Coalition began as a partnership between Patagonia and Walmart to explore ways to convince the apparel and footwear sectors to adopt a uniform tool of measuring environmental and social impact. The coalition has since gone on to invite mega-brands into their group which include companies like JC Penny, Nike, Adidas, H&M and The Gap.
www.fmlogistic.com www.fmlogistic.cn
“We did quite a bit of due-diligence on the companies that we invited in and sure enough everyone who received an invitation from us in 2009 accepted,” said Rick Ridgeway, head of the Coalition, during a phone interview with CHaINA Magazine. A quick Google search on any apparel company’s manufacturing practices will surely yield a few horror stories. When asked to clarify about the due diligence that was conducted, Mr. Ridgeway responded saying, “It wasn’t anything too formal. It was rather to use our knowledge of the company and their public positions on sustainability.”
► Kevin Foehner
A uniform way to measure impact The Coalition’s goal is to create a method of measuring a company’s impact on the environment it operates in, as well as the impact on its people. The major aspect to take note of is the Coalition is not attempting to set goals for its members at an operations level. “How a company uses the results that come from our tool is up to them,” said Mr. Ridgeway. The tool that is being developed will attempt to measure impacts across the full value chain of products. “It will assess the environmental impact of manufacturing, from the materials used,
Contact: sales@fmlogistic.cn Tel: 0512-8889 8601
24 MAY/JUNE 2011
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PROCUREMENT through manufacturing, packaging and transportation. It will also include customer care and use, as well as end-oflife responsibility,” said Mr. Ridgeway. “So as you can see, it’s incredibly comprehensive.” With that kind of information, the group could deliver a very clear picture of a company’s impact. Unfortunately, most companies can’t get this kind of information from their suppliers, or don’t reveal this information to the public, so how is a CSR coalition going to get a hold of it? A Few Thoughts CSR is a tough industry, especially when you’re working with apparel and footwear giants like the members of the Sustainable Apparel Coalition. If they can actually develop this tool to provide accurate results, it could expose companies with very wasteful practices in the fashion manufacturing industry. The key will be accurate information, which is hard to come-by in fashion manufacturing supply chains. What’s confusing is their open door policy for big brands to join the coalition and label themselves as a sustainable organization. Creating a coalition which promotes sustainability with members who don’t do so in practice, will likely call into question the legitimacy of the group. Companies that are truly pushing for sustainable practices will probably want to distance themselves from organizations that are not. Therefore it would make sense to conduct formal due diligence on companies that receive membership. As of right now, I’ll have to agree with Michael Lee. It seems like a beautiful dream. Founding Members include:
Mergers
Acquisitions US$25.5m 1
2 US$37.2m
US$42.1m 3
US$800m 5
4 US$763m
6 US$1.1bn
US$4bn 7 US$5.8bn 8
1 Mapletree Logistics Trust says it
has acquired IIjuk Gyeonggi Centre at a logistics cluster in South Korea for KRW 22 billion (US$25.5 million). The property consists of 23,400 sqm of gross floor space, and will increase MLT’s total portfolio to US$3.6 billion.
2 Steel pipe-maker Jindal Saw Ltd
plans to acquire Freightstar Pvt. Ltd, the India-based container train operating unit of Dubai’s ETA Group, for $37.2 million.
3 Keppel Telecommunications &
5 Schneider Electric is in talks to
take control of privately held Indian power and energy storage company Luminous Power Technologies for $800 million, according to online sources.
6 NESTLE will acquire a 60% stake
in a transaction that will increase its sales in Chinaby 25 percent. Helvea AG analyst Andreas Von Arx estimated the deal to be valued at about $1.1 billion.
7 Japanese air-conditioner maker
Transportation, has agreed to sell its 35% stake in China-based logistics services firm, Wuhu Annto Logistics Company for $42.1 million to its majority shareholder.
Daikin Industries said it has put efforts to buy U.S. rival Goodman Global on hold, due to Japan’s devastating earthquake and tsunami, eliminating one potential bidder for the estimated $4 billion deal.
4 Palo Alto-based private equity
8 DuPont Co. has received the final
firm H&Q Asia Pacific has signed a deal with Hong Kong-based Grand China Logistics, a subsidiary of HNA Group to manage up to about $763 million in private equity funds. The fund will focus on logistics and consumer sectors, including transportation, shipping and warehousing.
regulatory approval from Chinese regulators, needed for its planned $5.8 billion acquisition of Danish food additives maker Danisco AS.
25 25 www.supplychains.com
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Contents ► Manufacturing Stories /26 ► Unionization - Current Development of Trade Unions in China/28 ►China’s Agrochemical Biz/30 ► The future of Fashion Manufacturing /34 行业短讯/26
工会化-中国工会的现状/28
中国化学农业市场/30
工业产业的未来/34
MANUFACTURING
Automakers envision a Greener China The Chinese Government and a growing number of Chinese consumers are demanding greener automobiles as the country aggressively tries to lower its pollution levels. The 12th Five Year Plan outlined several pollution-reducing programs, including large investments into greener technologies. In response, several carmakers have unveiled strategies to produce more electric and hybrid vehicles to sell to China’s domestic market. Toyota President, Akio Toyoda, announced that his company would start production of low-emission vehicles in China very shortly, and is excited to introduce all of the new environmental technologies to China. Honda has also announced their intentions to tap into the world’s largest car market. Takanobu Ito, Honda’s Chief Executive said his company would begin producing electric vehicles in China by 2012. Ford Motor Company is also looking 26 MAY/JUNE 2011
for a piece of the China pie, as they have also announced plans to introduce a test fleet of electric vehicles to China in the coming year. Ford’s Chief Executive believes that China is the perfect country to showcase the company’s advanced electric technologies given their current pollution-reducing initiatives. Not to be outdone by their foreign counterparts, China’s domestic automakers like Geely Group and Dongfeng Motors have announced plans to start production on hybrid and electric vehicles by the end of 2012. Dongfeng has set a goal of 100,000 electric vehicle sales by 2015.
Boeing’s completes new Tianjin factory Beijing Tianjin Composites Company’s, a JV between Boeing and the Aviation Industry of China, has completed construction on a new energy efficient composites factory in Tianjin. The new factory has a total floor space of 25,000 sqm and will increase the JV’s production capacity by 60%. Components will be produced for several companies,
including Boeing, Hatch, Goodrich Corporation, Austria’s FACC, Korean Aerospace Industries, Triumph Group, and Shanghai Aviation Industrial Group
Michelin adds new China plant Michelin has entered into a new joint venture agreement with Double Coin Holdings Ltd, to produce an additional 15 million tires per year. Michelin will have a 40% stake in the JV, and the new plant will bring Michelin’s total factories in China to five. The company plans to produce car and light truck tires at the new facility.
Samsung to build LCD plant in Suzhou A South Korean giant is moving into Suzhou. Samsung Electronics has signed an agreement with China’s TCL Corp to cooperate and build a new LCD plant in Suzhou. Samsung will hold a 60% stake in the factory, which will open in 2013, and plans to produce 100,000 units per month of the latest generation LCD screen. www.supplychains.com
MANUFACTURING China recently became the largest market in the world for LCD televisions, with an estimated 40 million units sold in 2010. Shortly after Samsung announced its new factory, competitor LG Display made its own announcement, saying it would build a new LCD factory in Guangzhou.
Kumho sparks nationwide tire inspection Beijing has ordered a nationwide check on all brands of vehicle tires as a result of Kumho Tire Co.’s factory in Tianjin failing an inspection due to excessive use of reworked rubber. Use of reworked rubber in tire manufacturing is common practice in the industry. China’s Central Television Station Customers reported customer complaining about Kumho’s tires wearing out quickly. Kumho has three plants in China which produce 30 million tires annually for GM, Volkswagen A.G. PSA Peugeot Citroen, as well as domestic brands like Great Wall Motor Co.
Say hello to FRIDA
Carbon Fiber Apples
Meet FRIDA, ABB’s half-humanoid robot designed to replace people in industrial settings. Dubbed the “harmless robotic coworker”, FRIDA is well on its way to an assembly line near you. ABB has announced the completion of the research stage for FRIDA, and is now in the midst of pilot testing. Its design makes it look like a human hunched over an assembly line and is actually designed to work independently or hand-in-hand with a human.
Thank goodness for LinkedIn updates! A hiring at Apple Inc recently made waves on the tech blogs as Kevin. M. Kenney has taken on the position of Senior Composite Engineer. Kenney, is one of the most knowledgeable engineers on the planet in regards to carbon fiber. He’s also the CEO of a company called Kestrel, which shocked the world way back in 1986 by developing an all-carbon fiber bicycle frame. In general, whatever Apple does, its competitors do a few months later. If Apple is hiring a carbon fiber guru, it’s a safe bet that they’re trying to develop carbon fiber casings for the iPod, iPad, and Mac computers. Competitors take note.
Enjoy Simplicity
Logistics from a different angle The best way to manage lengthening and complex supply chains is an integrated approach that gives visibility across all your operations. As supply chain experts, here at CEVA we believe in making life as simple as possible for our customers. We give you a single contact that integrates every aspect of what we do for you. So it’s easy for you to coordinate your logistics. You’ll experience quick communication, direct contact with senior decision makers, and a highly responsive service. This integrated approach makes us unique – and life much simpler for you. Isn’t it time to see your supply chain from a different angle? We think so. Find out more about an integrated approach to all your logistics at www.cevalogistics.com/simplicity
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MAY/JUNE
MANUFACTURING
Unionization – Current Developments of Trade Unions in China
A M
► Dr. Iris Duchetsmann Lijuan (Cynthia) Zheng Salans LLP
lmost every major multinational compa- plyOn WebEDI works to shorten the communication ny with branches in China is beginning length between Bosch and the suppliers, which saves to look at the next steps that will push both Bosch and the suppliers a lot of time. Charling any companies and in collective salary agreements in 80% of its China supply chains Shen, Production Planner of Bosch particular western inall unionized companies in China by tovestors the next level, both Automotive Products (Suzhou) Co. - bearing their the end of 2013. ACFTU domestically and internationally. The Ltd, also says that for his department, home experience in ѣޞളᙱᐛՐ Recent Developments market is more mind demanding, SupplyOn helps to ensure accuracy - look prices askanceare of 1 Januaryof2011, Provgoing up,unions. and it’s time to factor organiand As transparency eachFujian data transat trade However, strengthince’s Regulations on Enterprise ColProvincial/Municipal zational and flowrights, technology into the fer. Bosch has also recently promoted ening employees’ empowering lective Bargaining and Collective General Unions their representatives and implementing equation. a new business mode via SupplyOn ⴷȽ䗌ᐸᙱᐛՐ Agreements took effect. The new regucollective are current matIn orderbargaining to help with the efficiency entitled Vendor Managed Inventory lations strengthen the enforceability of ters inthe China. But is thereofreason be and sustainability theirto busi(VMI). Provincial/Municipal negotiation process and the position of scared Bosch and what are the current rights ness, China is in the process Because of these new implementaIndustry Unions negotiators. and influences of trade unions on enof rolling out SupplyOn solutions in Charlingregarding says thatcollective the platform ⴷȽ䗌ᐸӝѐᐛՐ tions, Disputes barterprises? their purchasing, logistics, and quality has optimized the process of procuregaining or collective agreements may County/City departments of Unions a greater global General Unions ment planning his administration department while Organizationasofpart Trade be settled by in labor auTrade unions in which China are organized thorities, work who may also proactively ininitiative. Bosch, already has 15 increasing efficiency. “Before, we ৵ ᐸᙱᐛՐ hierarchically and led by the All China tervene in disputes. For severe cases of departments and plants in China using got purchasing orders from our supCounty/City Federation of Trade Unions (ACFTU). non-compliance with negotiation printhe SupplyOn platform, operates 47 pliers by email or fax, which wasted Industry Unions ACFTUinisChina the umbrella ciples, of up to RMB 100% 30,000 data may entities and seesorganization their branchtime andfines couldn’t ensure ৵ȽᐸӝѐᐛՐ of all Chinese trade unions and is the be imposed. es here as the next important node of transfer,” he said. “Now the data can world’s largest trade union with more In contrary to this, Guangdong has Grassroots Unions modernization. “Our purchasing has bestill delivered accurately on time, and than 190 million members. not implemented their already long ะቸᐛՐ already reached an economy of scale suppliers can also download our proEmployers must establish a trade announced regulations on democratic Member in China,” Huang Corpocurement plan at fastcollective speed.” bargainunion in the says company if theBin, employees management and Ր rate Asia trade Pacific For - the of a - withPurchasing the supportDirector, of the higher ing due suppliers, to lobbyingadvantages from employers; at Bosch (China) Investment new platform mean that theythey canhave see union organization – require so. Ltd. There“At according to media reports, this order on SupplyOn are npoint, it’s very important that we Collective Agreements againrequirements circulated a fourth draft with imsig Training andclear education of employees; nificant concessions. have a very purchasing strategyandDevelopments a well struc-in recent mediately. TheBosch system will get Advanced Shipmonths have Supervision over employers to ensure In Shanghai, new regulations on directed more attention tured organization.” ping to collective Notifica-tion (ASN) automatically. There is no democratic participation rights and agreements. In China,manual Employee Representative Council will this type of neoperationduring the process, which means less compliancefor with legislation; come into effect ofre-confirmation 1 May 2011 and gotiation is more exception rule, error Purpose Using It chance than for human and less needasfor Coordination and balancing. strengthen the participation rights of of despite long lasting government and With these goals in mind, roll-ing out a new IT of data. There isno manual operation or entrance Above the financial issue - compul- trade unions activities to increase trade employees via the employee representaplatform was the next step in stream-lining purchas- data during theprocess, so the data becomes more sory contributions of 2% of the total union density. Foreign companies are tive council, an organ which is suppleing practices for Bosch China. While there are credible. annual wages of all employees in the increasingly many targets of trade union ac- menting the trade union’s mission for different forms SupplyOn- the cantake when dealing company are leviedthat on employers democratic participation and represention as well. with a company, in Bosch’s caseunthesolution acts as a Set up specific rights of co-determination Under the Rainbow Plan, jointly an- tation. web-based suppliers, on Ministry In terms of ef-fort, Bosch is working to slowly roll der the Laborplatform Contract between Law are ofBosch sig- and nounced by the of Human Conclusion which can share purchasing in-formation this system nificantthey importance to companies: Resources andand Socialout Security of PRC,toall of its large- and small-scale suppliThe rapid development of laborwith law Negotiation of collective agreements; delivery forecasts in order to help thetransparency of ers. During theirkick-off introduction meeting the China Enterprise Confederation/ and employee protection in China in Participate intransactions. the implementation of important China Enterprise procurement “It’s really to use Directors suppliers,Associathey doinitial training of andeconomic monitor the supplithe context and social internal policies directly affecting em- information tion, and ACFTU 2010 itthey is the modern technology in order to secure and in May ers until getthe hang ofisthe system. Charling says dynamics reminiscent of the emerployees’ interests; aim of the trade unions to increase thetofinish, the rollout process normally to establish a standardized process,”says Mr. Huang that from start gence of labor and social legislation Notification before dismissal and through rate of collective 80% ofof one month. The advantage of this Bin. “IT is increasingly important all of theagreements takes ato total in Europe. However, globalization mass lay-offs. all unionized companies in China by users only need short-term training. supply chain, especially in the logisticsand purchasing system is that new demonstrates a new factor that did not the end of 2011. The ACFTU’s 2010 areas.” Thomas Fendt,Senior of Supplier exist inManager the 19th Century. ThereQualare a work report documents the target of number of countries in Southeast Asia At the Bosch Automotive branchin Suzhou, Sup- ity and SupplierDevelopment at Bosch Power Tools 28 MAY/JUNE 2011
MANUFACTURING
工会化 中国工会的发展现状 and Central America that are prepared to replace China as the leading production site. China must succeed, not only in its legislation, but also in actual law enforcement, in achieving the right balance between the employee protection - which often exists only on paper for many employees - and difficult investment conditions. Trade unions which act reasonably can help, but they certainly still need to gain a lot of experience.
参与权和有关法律、法规的贯彻执行；
多 公 司，尤 其 是 西 方 投 资 者，因为有母国的经验而对 工会 很有疑 虑。然而，确保 劳动者权利、给予劳动者代 表以更大权力以及实施集体合同谈判机制 正是中国目前大力提倡的主题。那么，有什 么理由对工会感到恐惧，工会目前又享有何 种权利，对企业能产生何种影响呢？
集体合同 近几个月的发展现状使集体合同事宜倍受 关注。在中国，尽管中国政府和工会组织一 直在努力加大工会的作用，此等协商更大程 度上属于特例而非常规情况。工会行动正日 益针对外国企业。 根据由中华人民共和国人力资源和社会保 障部、中国企业联合会/企业家协会和中华 全国总工会于2010年5月联合发布的彩虹计 划，至2011年年底的目标设 定为全国已建 工会企业集体合同制度覆盖率达到 80%。中华全国总工会2010年度工作报告 设定的目标为至2013年年底全国已建工会 企业工资集体协商制度覆盖率达到80%。 现行法律规定了进行集体协商的基本准则， 包括 协商、由职 工投 票表 决以 及 提 交当地 劳动部门审批。 但是，在实践中上述流程往往出现不能衔 接的情况，尤 其在 无法达 成协议 及 无法通 过劳动部门调解解决时。 目前在公司层面、行业或地区签订的集体合 同的内容往往局限于对法律规定或员工手 册中达成的相关约定的重复。 但是，在集 体合同的合同期内（通常一至两年），不允 许对个别员工执行 低于集体合同规定的条 件。
许
工会组织 中国工会实 行 垂直 组 织管 理体 制，由中 华全国总工会（ACFTU）统一领导。中华全 国总工会是中国所有工会的共同上级，并且 是世界最大的工会组织，拥有逾1.9亿名会 员。 如果职工在上级工会组织的支持下提出 成立工会的要求，企业必须建立工会组织。 对此没有时限或职工最低人数等的一般条 件限制。 企业有会员二十五人以上的，应当建立工会 委员会；职工二百人以上的企业的工会，可 以设专职工会主席。工会委员会成员和工会 主 席 通 过民主 方 式 选举，但企业 主要负 责 人及其近亲属不得担任上述职务。 工会的权利和任务 一直以来，中国工会组织的核心任务是建立 和维护企业和职工之间的和谐关系。为此目 的，工会的权利尤其包括： 保护职工的合法权益； 对职工进行培训和教育； 对用人单位进行监督，以保障职工的民主
进行协调和平衡。 除了财务事项 - 即企业必须按全部职工工 资总额的百分之二向工会拨缴经费外，中国 《劳动合同法》规定的企业和职 工的共同 决定权也是企业应重视的重要方面： 协商集体合同； 职工对直接影响其权益的内部规章制度 之制定的参与权； 职工在被公司解聘前和对企业裁员的知 情权。
行政主管部门解决，劳动行政主管部门也可 以 主动进行 协调处 理。如严重 违 反法律规 定的，可处以人民币三万元以下的罚款。 与此相反，由于用人单位的游说，广东许久 之前公布的民主管理和集体协商条例的草 案至今仍未定稿公布实施；根据新闻报道， 广东省政府将修改后做了很大让步的第四 稿有选择在一些单位内部传阅。 在上海，上海新的《上海市职工代表大会条 例》自2011年5月1日起实施，该条例强调了 员 工 通 过代 表大会的参 与 权，代 表大会与 工会一起进一步加强员工在企业管理中的 民主参与权，巩固了员工利益诉求的途径。 结论 在中国经济和社会迅速发展的形势下，中 国劳动法和职工保护的快速 发展令人联想 到欧洲劳动和社会立法的兴起。但当前全球 化所展现的新元素在十九世纪并不存在。 东南亚和中美洲的许多国家意图以中国替 代其他国家和地区作为其主要生产基地。中 国应不仅在立法、而且在实际执法上有所建 树，以实现对众多职工而言通常停留在纸上 的职工保护与颇具挑战性的投资条件之间 的权利平衡。工会的合理行为对此能有所帮 助，但工会仍需积累大量的实践经验。
发展现状 2011年1月1日，《福建省企业集体协商和 集体合同条例》生效。该新条例强化了协商 流程的效力和协商代表的地位。 因集体协商、集体合同发生争议可提交劳动 29 29
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MANUFACTURING
China’s Agrochemical Biz
C
The business of growing
an you give a brief introduction of Syngenta? Alex- The first thing to understand about Syngenta is that we stand for bringing plant potential to life. We serve all farmers around the world, and we are the market leader in agrochemicals. We sell chemicals and seeds, and we are the most diversified company in the field. We have a very strong base in Western Europe because we are a Swiss company. We are also very strong in the US, but our growing markets are Eastern Europe, China, and Latin America because we are very big in corn and soya. Tell us about your products. Alex - We have three types of treatments: herbicides, pesticides and fungicides. With the herbicides, you have two different kinds: selective herbicides which kill the weeds and leave the plants, and non-selective herbicides, which kill everything. What are your goals for the China market? James - We have a lot of ambition here in China, but we are quite small relatively. The government has invested a lot in chemicals, and there are a lot of local chemical companies around here. They produce very low-quality products, but at prices that are very affordable for the emerging markets. You mentioned that China is a priority market for Syngenta. What are some strategies to enter the market? Alex - One of the programs was sponsored by a very senior person in our company, and it was to find the right strategy for China. We chose corn herbicides, because it’s one of the big pillars of our growth in China. They did a study which looked at the different phases that the Chinese market is going to go through. Today it’s still very traditional farming, but farms are quickly transforming because of urbanization. There is less time do the spraying and to take care of the herbiculture, so farmers have to become more professional. We have a role to play there by bringing the technology to the farms. What are some specific projects you are working on right now? Alex - Inside China, we are developing strategies to protect our margins. One of our ideas is a solution model like spray services. As farmers are becoming scarce and have no time to do the spraying, we offer solutions models where you have
something like petrol stations in the fields where farmers come for the chemicals they want. We then mix the chemicals to order. It’s like we’re trying to establish infrastructure close to the farmers. The strategy has been submitted to the seniors in Syngenta, so we’ll see if the company moves forward on it. The other major focus for us is logistics. We do a lot of value stream mapping of our warehouses and other areas, to make sure we know every area that needs improvement so it will be ready for growth. Where are your manufacturing facilities in China? James – We have a facility in Nantong for adding ingredients and in Kunshan for formulation. From an international perspective, which areas do you want to focus on in China? Alex – We want to hone to the skills of the employees, to make them work more professional. What you see in China is this hunger for learning. Everybody wants to catch up with Europe and the US, in terms of professionalism. It’s really the pleasure to come over here to work. What are the challenges for Syngenta in the China market? James – In China, we sell in much smaller quantities. Chinese farmers are very cost sensitive, so if they compare two products, they will always choose the cheaper product. They
30 30 MAY/JUNE 2011
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MANUFACTURING don’t understand that a better product can produce better crop yields and additional benefits. They don’t have the knowledge yet, but it’s changing. Alex - They are learning over time that there is a price to pay for quality. Another thing that surprised me, was that Chinese competitors were fooling customers with the sizes of the bottles. Some competitors were selling 290ml bottles that looked like it contained 300ml, and then they priced it cheaper. So the generics are playing a lot of tricks to show the price-conscious farmer a better deal, but in fact it’s not. How much of your manufacturing is done in China? James – Only one product is produced in China. For most products, the most of the finished goods, raw materials are from overseas suppliers. We have suppliers from India, Switzerland and Germany. We import the raw materials from those countries and then we formulate the products in China to meet the local needs.
2010 Sales
US$11.6bn
26,000 Countries with Syngenta Operations 90 Employees Worldwide
Total Investment in R&D
US$1bn
Qingdao
Supply Chain & Logistics Roadshow in Qingdao May 26-27, 2011 For more information, please visit: www.supplychains.com 31 www.supplychains.com
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MANUFACTURING
The Future of FA s H i o n Manufacturing Robert McKee forecasts the future of fashion manufacturing at Lawson ERP’s Superfreakin’ Fashionomics Event ► Kevin Foehner
W
here is the future of the fashion manufacturing? If you ask Bob McKee, a fashion-industry veteran of 40 years, he’ll give you a bold prediction that will raise a few eyebrows. Fashion manufacturing has notoriously sought the lowest price for producing its goods. The industry holds no preference for workers’ age, education, or experience. If a country can offer cheap prices, there’s a good chance the fashion industry will set up shop. China was the cheap alternative for most manufacturing, but has undergone an incredible amount of changes in the past few years. “In the past five years, the cost of an hour of labor has doubled,” stated McKee. With wages at an all time high, raw material prices rising fast, labor shortages, RMB appreciation and inflation, the fashion industry will soon look to end their once-beloved relationship with China.
“As an industry, we have been deflationary. Over the course of probably 30 years, there have been constant decreases in costs of textiles, apparel, and fashion goods,” says McKee. “We’ve finally reached a point where we are becoming inflationary at a time where global inflation is rising.” Several high-profile companies, like Coach Inc, have already shifted their operations to neighboring low-cost countries like Vietnam or Bangladesh, and McKee agrees that this trend is very likely to continue. “Over the next few years, we’re going to see a complete transition of the apparel industry away from China,” he confirms. The next hot spot The natural progression of economic development has seen low-tech manufacturing phased out by higher tech and more capital intensive manufacturing. China’s time to part ways with fashion manufacturing has almost come.
“We are a dirty industry, we produce a lot of waste, we use a lot of natural resources, and we don’t pay very well,” he says, as he shakes his head. “We are a great starting point for any economy.” Other emerging economies like Vietnam, India and Bangladesh will surely benefit from the exit of fashion manufacturing from China. These are countries that, to an extent, have already begun to develop their economies. So which economies are left on our planet that truly require a good start? “As much as you don’t want to think about this, start learning some African languages,” chuckles McKee. “I sincerely believe this industry is going to end up moving to Africa.” He adds, “I also believe that most of the ownership of those African factories will be Chinese.” Fashion divas, pack your bags.
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Contents ► Logistics News /33 ►The life of a Chinese Trucker/36 ► China’s Logistic Challenges/38 ► India’s developing Logistics Sector/40 行业短讯/33
大卡司机师傅/36 中国物流面临的挑战/38
LOGISTICS
Foreign Retailers start to buy land
Foreign retailers operating in China have faced rising real-estate prices, and as a result have switch from leasing to buying land and building their own stores. Walmart recently purchased a plot of land in Dalian to build its seventh Sam’s Club outlet in China. Tesco recently entered into a joint venture with HSBC’s Special Investment Ltd and Metro Holdings, valued at US$280 million, to build three shopping malls in China. Inter Ikea, Ikea’s mall development group, has announced plans to spend US$763 million build a shopping center in Beijing, where the second Beijing Ikea store will be built.
Paccar ponders China entry
Paccar is considering entering the China market and selling over-the-road trucks. Chairman and CEO Mark Pigott stated that the company is currently looking to find a joint venture partner among
印度的物流业发展状况/40
China’s 40 truck building companies. Truck building is one of the five proctected industries in China, so Paccar has no choice but to find a suitable partner for a JV. Paccar currently sources parts and assemblies in China, and sells bus engines for the domestic market. The company hopes to eventually build a truck designed to suit China’s cost and quality standards.
and will be complete by Septmeber, 2013. This is but one of a series of construction plans that will help facilitate trade, and part of a larger effort to link Europe and Central Asia with East Asia. The highway plans will also complement the “Silk Rail Project” which looks to connect Europe to East Asia as well, which will ease the current problems and dangers of shipping cargo from Asia to Europe.
Drivers wanted!
The New Silk Road The first major section of the “New Silk Road” project will run from Kashgar to Erketshtam, a 213km stretch of highway costing US$660 million. This will be the first highway to connect Central Asia with China across the Pamirs Plateau,
Care to test yourself on some of the most dangerous stretches of road in the world? The traffic is atrocious, the pay is terrible (3000 rupees or US$65 per month), and the police will harass you. You’ll also be away from your friends and family for long stretches of time, and there’s a very good chance that you’ll be robbed by the gangs lurk on the dark, undeveloped roads across India. These are a few of the countless reasons why India is facing the worst driver shortage in its history. “We face a 40 percent shortfall, which means we need three million 33
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MAY/JUNE
LOGISTICS more drivers,” said R.K. Gulati, spokesman for the All India Motor Transport Congress. The pay is sighted as the major concern, but rising fuel and commodity prices combined with very low margins, are preventing companies from increasing wages. This is a major issue which requires more attention, as it will affect India’s ability to grow. Over 70 percent of India’s freight is trucked.
Overwhelmingly in the Red
Growing Pains
India’s largest shipping port, Jawaharlal Nehru Port, is facing an ever increasing congestion problem, as poor rail services, monsoon season and high volume continues to create a massive pile-ups of containers. Several carriers were refusing export containers due to backlogs and containers are being diverted to different yards due to lack of space. Port-detention times for trains have doubled, from 6 hours to 12, and some trains are being detained before they reach the port, meaning containers aren’t making it on the right ship.
It was short-lived for Vietnam’s Trai Thien, an air cargo and shipping service which started operations in 2009, which has ceased operations as a result of massive debt. The company’s office in Vietnam is closed, the president is nowhere to be found, the ships are stationary, and aircrafts are grounded. Salaries have reportedly not been paid for the past five months as well. Crews who operate the six ships for Trai Thien confirm that there have been no salaries paid over the past five months. The company owes VND6 billion (US$286,000) to the ship crews alone. The office staff has also reportedly not been paid. “The president still cannot find the financial sources for the company. We have asked the president to return from the US to settle the problems. He has promised to return this month, but I am not sure,” said Nguyen Van Thang, deputy general director of Trai Thien Maritime Transport Development Company. Mr. Van Thang has stated that he was not paid for “many years”.
Warbug Pincus invests in India
facilities and solutions provider to clients across sectors in India,” said N. Amrutesh Reddy, executive director of CWCNSL.
So many Angry Pirates The first quarter of 2011 has seen a record 142 attacks on vessels by pirates, 97 of which took place off the coast of Somalia. Over the past 5 years, the violence associated with most incidents has increased, causing governments and organizations to take more severe action. More worrisome, is that the pirates seems to be targeting larger vessels. Of the 97 ships attacked, 20 of them had capacities of over 100,000 tons. Piracy also seems to be spreading, with several incidents now reported in Nigeria, and nine in Malaysia. Not only are the pirates forcing companies to rethink their shipping routes, but companies are now realizing losses due to fuel burning. Pirates are forcing ships to sail at higher speeds when entering more dangerous waters, as opposed to using slow-steaming which can provide significant fuel savings. “While it is difficult to say exactly what piracy is costing the liner shipping industry, I would guess it is at least US$2-$3 billion annually on the fuel front and as much as $1 billion on insurance,” said Ron Widdows, Chairman of
Warburg Pincus, the private equity firm which recently invested 2.5 billion into India, recently announced plans to invest US$100 million in Continental Warehousing Corporation (Nhava Seva) Ltd (CWCNSL) of Chennai. The investment will be used to expand and improve CWCNSL’s presence in India, and to develop rail-linked inland container depots at several locations across the country. “Their support will enable us to achieve our vision of further consolidating our leadership position as a one-stop logistic
34 MAY/JUNE 2011
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LOGISTICS the World Shipping Council and NOL President.
Cold Chain capacity to increase in China
CHINAâ&#x20AC;&#x2122;S Ministry of Commerce and National Development and Reform Commission will look to significantly increase its cold chain capacity by 2015. New logistics networks will be developed to enable cold chain logistics use for fruit and vegetables to increase 20%, meat to rise by 30% cent and aqua products 36% over the next 5 years. China currently suffers from huge amounts of waste when transporting food from farms, which also contributes to heavy food price increases.
According to the plan, China will build an advanced and environmentally friendly logistics network that will cover rural and urban areas of the country. The plan also hopes to attract international logistics operators by developing commercially competitive international and domestic markets.
Five western cities bid for Western China Airport Hub
Chengdu, Chongqing, Changsha, Zhengzhou and Wuhan will make their bids to build a major international hub airport for all of western China. China has planned to build three new international airport hubs in the next five years. According to the Civil Aviation Administration of China (CAAC), China will build 56 new airports and renovate 91 over the next 5 years. The 12th Five year plan has set aside RMB1.5 trillion to upgrade air transport capacity, with RMB 42.5 billion dedicated to infrastructure construction.
Global Sourcing Leaders Forum
May 19th, 2011 Downtown Puxi, Shanghai (Renaissance Zhongshan Park Hotel, Shanghai)
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LOGISTICS
Life
fa
Chinese Trucker
A special thanks to Dajin Logistics for setting up interviews with their drivers. Dajin is a leading fully integrated logistics service provider in China, specializing in transportation for chemical, DG, electric and electronics goods. Visit: www.dajin.com.cn
What are some changes you’ve noticed over the years you’ve been a trucker? The traffic! The biggest danger I have on the road is not other truckers, but small cars that weave between all the lanes. They don’t pay attention, and don’t realize that it takes us longer to stop.
Guo Yan Sheng Age
38
Years Active
12
Career KMS
600,000KM
License
10 Ton/ DG
Longest Haul
Shanghai – Daqing (2500KM)
Place of Birth Suqian Marital Status Yes Children 2 Family Whereabouts
36
Shanghai
If you weren’t a trucker, what would you be? I want to own my own business again. I used to have a small shop in my hometown selling car parts and doing small repairs. When I’m finishing trucking, I’ll go home and do that. » An experience from the road: About nine years ago, I was driving in Jiangsu Province for a local trucking company. I was driving a flatbed truck to Hefei loaded with cleaning products like kitchen chemicals and tile cleaners. The truck was overloaded, but at that time, people were less strict about what they put on flatbeds. I was just meters away from a service station on the highway, and I hit a big bump. I watched in my rear-view mirror as the load on the truck exploded upwards. I stopped a few meters later and my partner and I got out to see how bad it was. There was product everywhere! I took a few moments and thought about what to do. I saw some local people hanging around the highway. I shouted to them: “Hey! You want to make 50RMB?” At that time, that was quite a bit of money of a person living in the countryside. Four locals came running, and with my partner and I, it took six hours to clean up. We managed to pick up most of the product off the highway. We reloaded the truck, paid and thanked the locals, and left. We made sure the load was secured much better this time around. It was really nice of those people to help us at that time, I don’t think people would accept 50RMB each to clean up on a highway anymore.
LOGISTICS What are some changes you’ve noticed over the years you’ve been a trucker? The roads have developed quite well. The infrastructure in the east is very good, and it’s getting much better in the west. The roads are smoother, which makes for a comfortable ride. But the traffic is awful! If I have to use smaller roads in and around Shanghai, I know I’ll get stuck. It’s not good for our schedules. If you weren’t a trucker, what would you be? I’ve only ever been a trucker. Trucking is the only thing I know. When I retire, I have no idea what I’ll do, probably just relax in my hometown. Bao Jian Guo Age
42
Years Active
15
Career Kms
900,000KM
License
20-30 Ton/ DG
Longest Haul
Shanghai – Guangzhou (1500KM)
Place of Birth Shenyang Marital Status Yes Children
1
Family Whereabouts
Shenyang
» An experience from the road:
About ten years ago I was on a short trip from Shanghai to Huzhou, carrying an empty container. I was on my way to a port there to pick something up a heavy load. I was cruising along a quiet highway, when all of a sudden a brown dog ran in front of my truck! I slammed on the -breaks as hard as I could and my trailer started to turn behind me. I saw it in my mirrors and I was really confused. The road was dry and I wasn’t going that fast. I looked down at my dashboard and realized that my trailer brakes had disconnected at some point on my journey. The trailer started to jackknife and the dog was running right into its path. I closed my eyes and pushed with my braking foot as hard as I could. When I opened my eyes again I had stalled. I got out of the truck, breathing very heavily and looked around for a dead dog. There was no sign of him… he had made it past the trailer! The stones on the side of the road must have helped the trailer stop. Thank goodness I didn’t have a full-load, otherwise I think the dog would have been dead, and I could have been injured.
What are some changes you’ve noticed over the years you’ve been a trucker? The trucks have become much more comfortable over the years. The trucks used to have very few luxuries. I’m from Shenyang, and when I started trucking, it got really cold inside the trucks. Now they have heaters and air conditioners to regulate the temperate, which makes driving long-distances a lot nicer. If you weren’t a trucker, what would you be? I used to be an accountant. It’s surprising, I know, but I love driving. I’d rather be on the road than stuck in an office somewhere. Ji Ke Ming Age
47
Years Active
23
Career Kms
1,200,000 KM
License
30 Ton/DG
Longest Haul
Yancheng – Urumqi (3650KM)
Place of Birth Yancheng Marital Status Yes Children
1
Family Whereabouts
Yancheng
» An experience from the road:
In the winter of 2006, I was up north in Helongjiang province and the highways were iced. The maintenance crews outside of the big cities are much slower to arrive when the road conditions are bad up north. I had been driving for hours, and all of a sudden, a car came speeding by me and was clearly out of control. He crashed into the guard rail and stopped. I could see behind me that another car was going to crash into him. I slammed on my brakes, and the truck started sliding. I bit down and prayed that I would stop in time. My trailer started to slide and after a few moments, it was completely jackknifed. As my truck was sliding towards the guard rail and the crash, I hit a patch of snow, which slowed me down just enough so that I wouldn’t crash. The truck slowly stopped just before the other vehicles. I got out to see if the other drivers were ok. Eventually emergency crews arrived and helped the damage vehicle and the people. I was lucky that my trailer was empty that day, if I was fully loaded I don’t think I would have stopped. 37
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China’s Logistic 想张晖之所想
c
hallenges
Delphi’s going West. Hear what their Senior Logistics Manager for Asia Pacific thinks about it. Delphi进军西部. 专访公司亚太物流经理张晖 What kind of transportation methods do you use to connect Delphi’s sites in China? Trucking is the predominant mode of transportation we utilize, and we also use rail, air, and waterways. We are trying to take advantage of the government’s heavy investment in high speed rail networks and constantly exploring greener modes of transport to make ourselves more environmentally friendly yet without compromising total logistics cost. Delphi 是通过那些交通方式来连接各个生产，仓储点的？ 最主要还是靠卡车运输，有时也要通过铁路，航空和水路进行运输。 在政府大力投资高铁项目之际，我们也将乘势利用铁路，与此同时， 在不影响整体物流费用的情况下，开发其他更环保的运输方式。
How many logistics partners is Delphi dealing with in China? Whenever it’s feasible, we would like our shipments to change logistics service providers as few times as possible, otherwise it doesn’t offer economies of scale. The more you change hands, the higher the potential to encounter integration, connection, and communication problems. As China’s logistics market is highly fragmented, we are utilizing quite a few providers on a local level, however focusing on three to five providers who are getting the majority of the business. 在中国有几个物流合作伙伴？ 只要条件允许，我们会尽可能的不去换物流供应商，否则的话就不能 形成规模优势。在物流里，转手的次数越多，在整合，连接及沟通环 节里出现问题的机会就越大。中国的物流市场非常松散，我们在低级 别有多个物流供应商，但主要还是通过三到五个物流供应商来完成 规模大的运输。
What is the process for selecting these logistics partners? For management, we mainly look at the company culture and financials. For quality, it is mainly for ISO certifications. We surely focus on technology and operations capabilities; and of course all from a total cost perspective. We arrange on-site surveys before we enter into an agreement with a logistics provider and conduct post-selection reviews. 你们是怎么选择这些物流合作伙伴的？ 对于合作伙伴的公司管理，我们看重他们的企业文化和财政状况。对
于服务质量，我们会看看他们有没有ISO认证。科技水平和运营能力 也是我们所关注的，当然，价格上我们也会做比较。我们也重视择前对 合作伙伴的实地考察和择后的合作评判。
What are some challenges you face with logistics in China? The coastal area in China is pretty well developed, but now everybody is talking about “Going West”. The cheaper land, labor, and the preferential treatments offered by the government make it appealing, however logistically it is very challenging. The network and conditions of roads, railways, waterways, and the accessibility and connectivity to airports and seaports is underdeveloped. Another concern is the presence, operating capabilities and capacities of logistics service pro-
38 MAY/JUNE 2011
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LOGISTICS
viders. It is a lot tougher to attract and retain logistics talents in the west at the moment, and the industry’s development largely depends on the knowledge, skills, and experience of talent. 你们的物流运营在中国有哪些挑战？ 沿海地区目前来看已经非常成熟，所以现在大家都在是说‘到西部去’ 。地价，人工上的价格优势，还有地方政府所提供的特惠政策，这些都 是西部的吸引力所在。当然西部的交通网还不够健全，多种交通网络 的连接能力和可用能力都很局限。另外一个担心就是物流供应商在西 部的运做能力。目前来看，在西部找到物流人才不是一件容易的事， 而西部物流行业的发展又需要有大量有实力的人才。
What are some aspects of China’s logistics offerings that you would like to see improvements on? I would like to see some urgency to improve the intermodal connectivity in general, which will significantly enhance the logistics efficiency. As an example, rail access to seaport facilities should consistently be built into new port design, especially when connecting inland with ports. The other area is market consolidation. We have witnessed many international logistics service providers entering China’s domestic market by acquiring local players. We would like to see that the leading international logistics providers bring their expertise and better integrate with their local partners, especially for technology and information systems, rather than just a name change. China’s logistics market is dominated by numerous local logistics providers with limited scale and scope of logistics services. With further consolidation, we would expect to see some nationwide competitive logistics leaders emerging to optimize logistics cost structure, enhance logistics efficiency and competitiveness. 今后最希望看到中国物流在哪些方面有提高呢？ 希望在多式物流衔接这块看到显著的进步，这直接提升物流的效率。 举个例子，就航海港的铁路连接状况而言，铁路运输力应该涵盖在新 型海港，河港的设计里。另外一方面就是市场整合。多数物流跨国公 司在进入中国市场后常常会收编国内公司。我们希望在日后能看到， 这些跨国公司能把自己先进的操作规范带到中国市场，同时帮助国内 企业更好的融入国际化的运营。目前国内物流市场的格局是各种物流 公司鱼龙混杂，他们所提供的服务水平和服务范围也都很有限。我们 希望在今后，通过优化重组，一些高效，富有竞争力的大企业能应运而 生。
Are there any new developments in Delphi’s China business that will affect logistics? We are going west! We have already communicated with lo-
gistics service providers about that and have been working together with them to prepare for the shift. There will be multiple phases, and some aspects of the business are expected to commence at some point of this year. Delphi在中国的发展在那些地方会给物流带来哪些变化？ 我们要向西部进军！我们正在和我们的物流供应商协商相关事宜，共 同准备将要开始的转型。转型将分步完成，第一个阶段将在年内开启 实施。
What’s your biggest concern for moving operations west? It is still mainly about the availability of infrastructure and logistics talents along the supply chain. Managing logistics and making it competitive, largely depends on how you manage uncertainties and how you ensure the consistency and reliability of speed and quality across the pipeline. This essentially requires extensive integration and collaboration both across functions in your organization and upstream with your suppliers (which include logistics providers, and your suppliers’ suppliers), downstream with your customers (and your customers’ customers), where both infrastructure and logistics talent play critical roles. 那去西部，你们最大的担忧在哪里？ 主要还是担心那里的物流基础设施和物流人才状况。做好物流管理 在很大程度上取决于对不可知因素的处理及对物流各个环节畅通无 阻的保证。这就需要你的部门在商业运作的上层与供应商（包括担负 运输的部门和你的供应商的供应商）深度的整合和协作，在下层与客 户（以及你客户的客户）有优质高效的合作，而这些则需要物流基础 设施和人才的保障。
1999 US$ 500 Mn
Operations established in China
$
Total Investment by Delphi in China
16
Number of Delphi Manufacturing sites in China
40
Number of component parts and products produced in China
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MAY/JUNE
Outsourced
In-house
India’s developing Logistics Sector 48%
52%
Logistics Industry Overall
10% 60% 90% Warehouse
Transportation
Source: CSO (2008), KPMG Analysis (2006)
The key logistics trends to look out for in India. By Sankalpa Bhattacharjya, Associate Director, strategic & commercial intelligence, KPMG in India
A
t 13 percent of GDP, India’s spending on logistics is both significant and inefficient. These inefficiencies are largely a result of India’s diverse geographic conditions, poor core infrastructure, complex tax policies and supply side constraints — all of which result in high transportation, storage and service costs. However, India’s logistics story is indeed an attractive one, based on its rapidly growing economy, the increase in outsourcing of logistics, steady supply side changes, significant government investment in core infrastructure projects and landmark changes in tax and regulatory policies. Growth in Indian economy, key logistics sectors and Exports-Imports (EXIM) The growth in India’s GDP translates directly into growth in the logistics sector, there being a ~2x relationship between growth rates of GDP and the logistics industry. The post-recession resurgence of domestic sectors such as retail and manufacturing is expected to drive volume growth again. Based on industry discussions, EXIM is estimated to grow at over 15 percent per annum, and this will have a direct impact on port-oriented logistics. Rising outsourcing and consolidation Companies in India currently outsource an estimated 52 percent of logistics, but many more companies are increasingly considering outsourcing and Third Party Logistics (3PL) models as they seek to reduce costs and focus on their core businesses. Logistics is a highly fragmented industry, and with this rising outsourcing trend, the industry is also consolidating.
Source: International Monetary Fund, World Outlook Database ( 2010) 9.6 9.4 9.0 9.0 10 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------8.5 8.4 7.5 7.4 8 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------6.7 6
5.8
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------4
3.8 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------2 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11CL
FY12CL
Many manufacturing companies in India have legacy in-house logisOutsourced In-house tics set-ups, which have historically been perceived as a support func10% tion and, as a result, have grown 60% 40% 48% 52% unwieldy and cost-inefficient over 90% Logistics Industry time. Also, as companies seek to Warehouse Overall Transportation focus on their core businesses, imSource: CSO (2008), KPMG Analysis (2006) prove customer satisfaction levels and become more nimble in managing and expanding their logistics needs (often complicated further by multimodal or international requirements), they are realizing that working with external logistics experts is often the best or only way to achieve these objectives. 40 MAY/JUNE 2011
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40%
Contents
►
Distribution News /41 ►Design and Ingenuity/43 ►Other Mart/44 ►Retail Struggles/46
行业短讯/41
推诚出新/43
其他“玛”/44
零售业调查/46
DISTRIBUTION
Barbie takes a bow in Shanghai For those who live in Shanghai and knew about the ridiculously pink Barbie Flagship store on Huaihai road, it wasn’t too much of a shock to hear about its closing. The store featured 875 Barbie dolls which were showcased around a spiralling staircase, a Barbie bar, spa, and restaurant. The store had it all, except for customers. Mattel has left for now, but pledged to come back later this year with a bigger, better, and pinker Barbie campaign.
Chow Tai Fook Expands
Chow Tai Fook has announced plans to double the number of retail outlets over the next ten years to 2000 locations. Chow Tai Fook currently has 1000 stores in China, and had RMB30 billion (US$4.6 billion) in annual sales in 2010. More than half of the China stores are directly owned by Chow Tai
Fook, with roughly a quarter stores being franchised, and the rest having custom retail arrangements. Chow Tai Fook will focus on developing roughly 30% of the new locations in China as franchised outlets.
Burberry upgrades and expands China
Burberry plans on shedding its old-fashioned image by upgrading the equipment at its stores in China. Burberry will purchase iPads for its staff to help customers view Burberry products that are unavailable or out of stock at the particular location, and to help customers complete purchases online. The company also plans to install touch screen displays within all of its stores, for customers to enjoy fashion shows and entertainment content, as well as view special series’ products. Burberry also plans to add 10 new stores in the next year after strong sales numbers in China.
Gome partners with Sanyo
Gome, China’s electronics retail giant, has signed a strategic 5-year distribution agreement with Sanyo Electronics. The new agreement will see Sanyo products being sold exclusively through Gome retail outlets, with a target of 8.1 million TV sales over the next 5 years. The two companies began cooperating in early 2010, which resulted in Sanyo selling more than 400,000 TVs through Gome stores in a year.
Pepsi takes bottling to the next level PepsiCo Inc. has raised the bar for the entire bottling industry by unveiling its new eco-friendly bottle made entirely of plant material. “We’ve cracked the code,” Rocco Papalia, senior vice president of advanced research. The company has had a team of several dozen researchers work41
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MAY/JUNE
DISTRIBUTION ing on the new bottle for the past few years, and investment in the project is estimated in the millions. The bottle is said to have the exact look and feel of a plastic bottle, except that it’s entirely made of materials such
bottle made of 30% plant material, and recently claimed it would take several years before a 100% plant-based bottle would be viable. Pepsi’s latest innovation gives the company a major lead in the race to become more eco-friendly. Pepsi will begin trial runs of a few hundred thousand bottles starting in 2012, and once they confirm production capabilities on large scales, they will begin converting all of their products over to the new, environmentally friendly bottle.
Starbucks plans major China/India expansion as switch grass, pine bark, and corn husks. “It’s indistinguishable,” said Papalia. Pepsi eventually plans on using orange peels, oat hulls, and potato skins; all waste material from Pepsi’s food processing operations. Pepsi claims that it is the first plastic bottle made completely of plantbased materials, and has stated that the bottle does far more for reducing the company’s carbon footprint than rival Coca-Cola. Coca Cola currently uses a
Big moves for Starbucks in the two largest consumer markets in the world. The coffee giant recently announced its intention to have 1500 locations in China by 2015. To reach this goal, Starbucks will have to quadruple the amount of stores it currently has, and it plans on doing so by expanding into eight to ten new cities each year. The company has also recently announced its plan to turn their partnership with Tata Coffee in India into a full blown JV. Starbucks will hold a 26% stake in the JV, and will look to increase that
to 51%, under new Indian Law. The number of outlets Starbucks will look to open in India is still unknown.
Hola expands on the mainland Hola currently operates 26 locations in seven cities in China, and will look to add another 60 locations by 2014. Hola will focus its expansion of brick and mortar stores in Shanghai, Beijing, and Shenzhen, which are major growth areas for the company. On top of adding new physical locations, the Taiwanese company also plans to add a number of virtual sales channels, including online retailing, mail-order catalogs and television shopping.
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DISTRIBUTION
Design & Ingenuity A selection of the most stylish, creative and brow-raising designs from across the world!
Örflögur “Microchips”
Thanks to three young Icelandic designers by the (rather difficult to pronounce) names: Edda Gylfadóttir, Guðrún Hjörleifsdóttir, and Helga Björg Jónasardóttir, you’ll never have to clean a chip bowl again! The team has come up with a creative potato chip package that easily folds out to become a serving bowl.
Nendo‘s “Transparent Wood” Talented Japanese design firm Nendo has come up with a real treat for the eyes. Nendo matched the intricate details of a heavy grain plank of wood, then cast acrylic in the mould. The result was a detailed, translucent replicate of a piece of wood, which comes in white or black. Photos by Masayuki Hayashi
The Huawei “Leaf”
Thanks to Swedish design firm Claesson Koivisto Rune, there’s no longer need to feel embarrassed by your love for simplified phones! The Swedish firm unveiled its latest design for Huawei, which is aptly named folded leaf, and is designed to work with the natural lines of a human face.
Braun revisits its Roots
The company takes a step back into its history, with a little help from British design firm Zeon, which unveiled the latest design on its website. Simple and elegant was clearly the theme on this timeless piece, with a single button and a scroll wheel as the only interactive features of the watch.
43 www.supplychains.com
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No. of Chaine Indrividual Phar
DISTRIBUTION
Chained 26%
Other Mart
Individual 74%
In
Beijing
O
Chained 40%
Ind
Individual 60% Guangzhou
Selling through China’s supplementary channels
Individual Chained 57% 43%
Ind
►Jason Zhang, InterChina
Shenzhen
China
USA
Japan
1,842
2,216
3,315
No. of people served by one pharmacy 3,711
P
harmacies are the most important among China’s supplementary channels, contributing around 10% of all retail sales, but they remain unfamiliar territory for many companies. The pharmacy sector is highly regulated and extremely fragmented, with strict restrictions on foreign investment, although there is some degree of relaxation for Hong Kong investment under the CEPA. For example, the Hong Kong–based pharmacy chain Watson operates 87 outlets in Beijing, but so far only four have obtained pharmacy retailing licenses. Watson has 600 stores in China and plans to expand to around 1,000 stores by the end of 2011. China’s 400,000 pharmacies were serving an average of 3,711 Chinese people each as of the end of 2009, significant growth from the ratio of one pharmacy to 4,154 Chinese in 2006. Chinese pharmacies tend to be concentrated in urban areas, due to their higher population density and purchasing power. We believe that in the foreseeable future, western pharmacy chains such as CVS (U.S) and Boots (U.K) will find it very difficult to secure a solid niche in the already overcrowded pharmacy retailing sector due to the restrictive regulatory environment and increasing competitiveness of Chinese chains that are growing bigger, stronger and more
Hong Kong
competitive via governmentbacked consolidation. Moreover foreign chains will need time to climb the steep learning curve for operations in China and to build brand awareness among consumers. While there is an obvious oversupply of pharmacies, especially in the bigger cities, local governments are moving to cap this number. In both Beijing and Shanghai, local authorities have decided to approve just one pharmacy within every 300 meters, to prevent further loss of existing pharmacies. At the same time, horizontal consolidations are under the way. In Shanghai, Huashi Pharmacy acquired Leiyunshang and Xinyi, creating the largest pharmacy chain in the city, with 650 outlets. As they struggle to increase traffic and sales per customer
Individual 20%
visit, pharmacies are shifting from just Chaine selling drugs toward a more diversified 80% range of consumer goods. That trend is likely to accelerate in the next five to 10 years, driven by both upstream Shanghai and downstream factors. For one thing, profits from drug sales have been falling due to healthcare reforms that have amended the National Essential Drug List, lowering prices for drugs for common illnesses at hospitals and community healthcare centers. Meanwhile, consumer goods companies are exploring the use of pharmacies as supplemental channels to increase their sales and brand visibility. Independent pharmacies will still dominate the market for at least the next five years. At the moment, some 65 percent of China’s 400,000 pharmacies are individually owned and managed. About 2,000 pharmacy chains own the remaining 35 percent. Even the largest pharmacy chain in China, Nepstar, has only a 2.5% total market share, with sales worth RMB 3.1 billion from its 2,500 outlets across 14 provinces in 2009. In larger cities, though, pharmacy chains outnumber the independent ones, and play a more important role given the horizontal consolidation underway. For example, in Shanghai, some 3040 chains own 80% of the city’s 3,600 pharmacies.
44 MAY/JUNE 2011
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DISTRIBUTION
1,842
2,216
3,315
3,711
counters in Beijing and 317 in Shanghai. Success cases of selling Health food makers, meanwhile, have through pharmacies hit the jackpot by using pharmacies as Japan’s Shiseido, which introduced a main retail channel. Bishengyuan its Dermal Quotient (DQ) skincare (BSY), for example, is a successful brand in March 2010 for marketing Chinese brand in the functional exclusively through pharmacies, tea bag sector that began selling its has benefitted greatly by expanding innovative slimming and detox tea beyond the usual department store bags mainly through pharmacies in the sales. Women who buy cosmetics at early 2000s. BSY made inroads against pharmacies are highly conscious of skin some other well established brands of concerns and expect to find solutions weight loss drugs and slimming teas for any skin troubles at pharmacies. made of Chinese herbs and green tea, Shiseido began selling in China in a combination that well suits Chinese 1991, setting up its first joint venture culture and sensitivities. cosmetics company in Beijing, followed After a few years of quick and by another joint venture in 1998 in successful expansion, the company is Shanghai. It began manufacturing and now the leading slimming tea player, sales of its AUPRES brand exclusively with annual sales worth nearly RMB 700 for the China market in 1994, million in 2009. The bulk (i.e. > 85%) marketing that product line through of BSY’s sales is through pharmacies, upscale department stores. Shiseido and its products are available in also sells its Urara, Pure&Mild and around 100,000 pharmacies across 100 Uno brands, which are not sold cities. BSY has been expanding both in department stores, through the vertically and horizontally through country’s 4,300 specialized cosmetics hypermarkets and supermarkets, tea stores. Shiseido also sells its products shops, specialty stores and ecommerce No. ofsites people through supermarkets, convenience such as Taobao, China’s largest B served by one stores and general merchandise stores. to Cpharmacy website. So far, Shiseido has at least 300 The company has been pushing pharmacies in major cities selling its into more than 100 lower tier cites, DQ brand, including 42 pharmacies in leveraging its best practices and Shanghai and 15 in Beijing. According the accumulated experience of its to a Shiseido official, drugstore sales sales teams along with strong brand account for about 10% of its total awareness among consumers. BSY’s market in China and are growing at a success can be attributed to four double digit annual rate. strengths: Vichy, a cosmetic brand owned by a) the rightHong product proposition; L’Oreal, launched in ChinaChina in 1998USA b) Japan aggressive Kongmarketing; and now has democosmetic counters c) strong downstream control via an at more than 1,200 pharmacies across army of sales workers and 27 provinces, including 283 pharmacy d) quick expansion.
No. of Chained vs No. of Chained vs Indridual IndrividualPharmacies Pharmacies Chained 26%
Chained 35% Individual 65%
Individual 74% Beijing
Overall China
Chained 40%
Individual Chained 45% 55%
Individual 60% Guangzhou
Chengdu
Individual Chained 57% 43%
Individual Chained 52% 48%
Shenzhen
Hangzhou Individual 20%
Chained 80%
Shanghai
Top5 players in the drugstore industry in China 1 PG Pharma/Medicine Shoppe China 2 China Nepstar, Shenzhen-based (Largest Chinese Chain) 3 SuperPharm, Israeli company has about 65 stores in China, as of 2007 4 Watsons, owned by HK-based Hutchison Whampoa 5 Shenzhen Accord Pharmacy Co., Ltd.
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DISTRIBUTION
retail Struggles Best Buy shuts in China, which forgien retailer is next? Make your guess. Overall demographics
i
Graham Miller CFO at Beckett Asia Pacific “In China you either need a super strong brand, or you need extremely low cost. B&Q is getting caught in the middle ground. IKEA will beat them on branding and Homemart will beat them on price.”
i
Frank Schwerdtfeger i Michael Lee Business Development Serwetz Manager at Simba LogisPresident at Prophet tics (HK) Business Services “B&Q - they shut down already in How about Home Depot? ChiHK as DIY is not for Chinese people nese are not DIYers. Seems not a Sephora is definitely too strong already cultural fit, unless it dramatically 100 shops in China - 100 more planned changes its business model for in the next 2 years!” China.
Retail & Distribution OPERATIONS FORUM
Thursday, July 7, Shanghai
For more information, please visit: www.supplychains.com 46 MAY/JUNE 2011
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FEATURE
Shattered Chains “Immediately you have major
”
disruption to the logistics system, Martin Stopford of Clarkson Research Studies.
▪ All Japanese
ports closed and discharging operations stopped
11th
▪ Steel plants damage
being assessed at JFE, Nippon Steele, and Sumitomo. Steel Prices set to rise. ▪ Canon reports severe damage at optics R&D center and two plants.
March
►McDonald’s processing plants and DCs
▪ Four Fujitsu plants 13th
are damaged by the tsunami. Nippon Paper-Pak Co., a major beverage packaging firm, suspends operations at its two plants. Reports storage warehouses are damaged.
with building and equipment damage are being affected by nuclear plant explosions
On March 11th, 2011, the world watched as tragedy unfolded in Northern Japan. The country would be hit by an earthquake registering 9.0 on the Richter scale, which resulted in a tsunami that sent waves as high as 10 meters crashing deep into northern coastal regions. The four major earthquakes, as well as dozens of aftershocks and tsunami warnings have not only tested the Japanese people, but have exposed serious weaknesses in global supply chains. The disaster may have struck Japan, but countries, industries and individual businesses are feeling the effects all across the globe. Leaders of major companies continue to scramble to provide for their employees, projects and their future. The following is a timeline which depicts the far-reaching nature of the Japanese disaster and its effects on various industries. 47 www.supplychains.com
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FEATURE
Global supply of silicon wafers from Japan.
“There will be an impact, but we don’t know how big. We are trying to understand it, but we can’t get through to our suppliers yet. Eric Tang, VP, Powerchip
▪ Shin-Etsu Chemical Corp, the largest
”
silicon wafer manufacturer in the world, reports its main plant will be shut indefinitely. Japanese companies produce more than
▪ Korean NAND flash prices rise by 25 to 35%.
▪ Apple looks to shift production from
▪ Toshiba shuts down several factories, affecting worldwide chip sourcing.
Hitachi and Toshiba (and others). AU Optronics of Taiwan will produce 30 million display units for the year, roughly half of global demand.
▪ Toyota plans production
▪ Japan’s Coast Guard tells ship captains
stoppages at 12 Japanese plants until the 16th As a result, 40,000 vehicles will not be produced.
to navigate 80km away from the damaged Fukushima plant to avoid radiation.
▪ APL operations continue at the ports
of Kobe and Yokohama, but rejecting bookings from prefectures that were the most damaged in the disasters.
▪ Honda and Suzuki Motors
suspend Japanese production until at least March 20th
▪ Port of Kesennuma in Miyagi
▪ Japan’s major cargo center, Narita
has burned to the ground
“Winds are now dispersing ”
▪ Volkswagen predicts a
▪ Sony shuts 8 factories producing optical devices, IC cards, Bluray discs, etc.
▪ Sony airlifts
emergency supplies to hundreds of employees stuck at a Blu-ray Disc factory in Miyagi.
15th
▪ Shanghai orders
radiation checks on produce, seafood, grains and drinking water, cargo containers, post, vehicles and personnel from Japan
medium-term components shortage
19th
▪ Carriers eliminate service to the badly damaged or destroyed ports in the northeast around Sendai.
▪ Apple suppliers Mitsubishi Gas Chemical and Toshiba temporarily shut down.
▪ Mitsubishi Gas Chemical, making
▪ Honda begins cancelling
overtime shifts in Alabama, USA,
▪ Toyota suspends overtime in North America
▪ Japan containers are being stopped at ports in UAE.
materials for printed wiring boards, suspends operations.
17th
▪ Asahi Kasei Corp, GlaxoSmithKline, JSR, Nestle, Nippon Paper Group, Sapporo Breweries Ltd and Morinaga Milk Industry, suspend production in the region. Workers are evacuated due to tsunami warnings or power outages.
in Zaragoza, Spain, cancels shifts at a factory in Eisenach, Germany for 2 days.
21st
ch ar
▪ GM plans 1 day closures at a plant 20th
radioactive material from the Japanese nuclear crisis over the Pacific Ocean, away from Japan and other Asian countries. - World Meteorological Organisation (WMO)
18th
14th
M
International Airport has yet to resume normal operations due to damaged road, broken train links and power outages.
▪ GM truck plant in Louisiana announces
a temporary shut down due to lack lack of Japanese-made parts.
60%
Global supply of wiring boards from Mitsubishi
“The cargo stockpiled in North Japan are being
moved southward. That will put much pressure on operators in the South. That may lead to delays in their transportation to China, Feng Ying, Shanghai Sanho Logistics.
”
“Supply of materials from the
Japanese makers will be reduced to some extent because of rolling power blackouts in Japan, but Foxconn has a two-week stock of ACF Foxconn Spokesperson
”
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“The last thing Japan needs right now is for people to abandon them,” Tim Wickmann Chief Executive of MCC Transport.
▪ Jamco, which produces
galleys for the Boeing 787 Dreamliner, says delivery could be delayed if oil products continue to be scarce
▪ Fuji Heavy Industries
announces all five of the car and parts facilities for Subaru will close until April 4th
90%
Global supply of BT Resin from Japan
▪ Toshiba output still
▪ German shipping
suspended
companies are avoiding Tokyo Bay area ports due to radiation fears
26th
23rd
25th
▪ Global auto output has shrunk 30th
at all its four quakehit plants, making communications equipment, routers and switches.
have dispatched at least 70 trucks from the Tokyo and Kobe to the quake zone, delivering $500,000 in food, water, blankets and toiletries to evacuation centers.
suspensions at five plants making digital cameras, camera lenses, flat-screen televisions and other goods, due to part shortages.
continue to affect auto and hitech production
▪ Apple agrees to absorb
▪ Ford in Canada ▪ Japanese small business
24th
suffer. Ri-ichiro Suzuku produces metal links for the New York Subway, says his production has been reduced from 100 units per week to 4 due to raw material shortages.
▪ Ford shuts
down Belgium assembly plant.
suspends orders for some black and red vehicles because their Japanese can no longer can make a metallic paint pigment called Xirallic
operations to produce vehicle repair parts, vehicle parts for overseas shipments.
▪ Liquefied natural-gas (LNF)
prices have increased 10% to 20% in Europe and Asia. Traders speculate that Japan will use LNF to subsidize nuclear power use.
►The Japanese government estimates damage at 16 to 25 trillion yen (US$198 billion-US$309 billion).
”
▪ Mazda resumes limited
used in mobile phones and electronic devices has risen about 8% in 20 days
production at all Japanese assembly plants
“They get four or five hours of electricity a day; there’s no gas. The food is difficult to get in that area right now, and so they’re just struggling to figure out what to do next. Pat McCoy, Fujikura, which built a new plant in Fukushima last November.
▪ Honda extended its production halt in Japan to April 3
▪ McDonald’s boosts imports to 31st
these planned down days as a precautionary move to ensure we have parts availability going forward given the current situation in Japan, Ford spokesman Todd Nissen said.
additional costs from its iPad 2 component vendors. Ensures Apple is top priority ahead of other tablet manufacturers
▪ The price of DRAM microchips
▪Nissan resumes
“We are pulling ahead on
by 13% to about 320,000 units since March 11th
▪ Rolling blackouts across Japan
28th
►NEC restarts production
27th
▪ Yakuza groups
▪ Sony plans production
Japan due to lack of supply. 88 McDonald’s restaurants remain closed.
”
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“Supply chain risk mitigation
1st
FEATURE
▪ Australia claims losses of US$2.1 billion due to the earthquake. Japan accounts for 15% of Australia’s exports, including iron ore, and coal.
“The best form of resilience in any complex
is just a passing thought to most organizations and sometimes without contingencies. Dylan Persaud,Managing Director at Eval-Source
system, including business supply chains, is redundancy. This resiliency is a trade-off against lowest possible cost of the chain, vs the cost of periodic disruptions and sales losses. Barrett Peterson, Manager, Accounting Standards, Procedures, & Analysis at TTX Company
”
”
▪ International shipping
2nd
▪ Milk supply chain
realizes shortage of cardboard cartons. Nippon PaperPak Co resumed normal operations as of March 31st but cannot match milk firms’ demand.
▪ Rail and road
networks in several parts of northern Japan are still disrupted or closed.
▪ Honda, Toyota and
Nissan make plans to restart all Japanese plants on April 11th, April 18th respectively. major parts shortages.
11th
▪ Sony Ericsson faces
▪ Sharp halts LCD panel production at 2 plants until early May.
▪ Lenovo
Group predicts component shortages for its LePad tablet computer.
▪ ZTE Corp. predicts shortages of batteries and LCD screens for months.
▪ Lenovo, Dongfeng Motors report part shortages from Japan. Chinese production affected.
▪ Bookings of 12th
6th
3rd
April
Hamburg report dockside stockpiles beginning to deplete. Ships that left Tokyo soon after the disaster start to arrive. ▪ Nissan’s assembly plant in Smyrna, Georgia, and engine plant in Decherd, Tenn. plan 6-day shutdowns due to part shortages.
dealers in Las Vegas start to realize shortages
8th
▪ Port of Rotterdam and
▪ Import car
9th
5th
companies begin asking for higher rates at Japanese ports.
tankers to send fuels to Japan rose 59% since March 11th.
▪ Cargo shipments
at ports and airports in the Tokyo region continue to be delayed.
4th
▪ Sony announces
PSP 2 delayed until 2012.
►The disaster happened in Japan has in fact really affected the supply chain, and as far my country India is concerned, it could create problems for the auto industry and to some extent the textile segment in terms of availability of critical parts. Ashok Nair, Head of Supply Chain Management, Halcyon Asia
”
“Japan will need approximately
250,000 barrels a day of fuel oil or 22,000 tons a day of liquefied natural gas to make up for about 8,600 megawatts of nuclear generation capacity that was lost from its damaged nuclear plants Christophe Barret of Credit Agricole
”
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“The global high-tech industry is suffering
FEATURE
significant production losses as Japan’s dominant semiconductor manufacturers struggle to resume operations. South Korean firms look to fill the void.
“We should be able to build a new Japan which
is further up the value chain and which has new forms of smart communities. The Japanese people are very quick to recover, and I think you will see the situation will return to normal far more quickly than people currently imagine. Hideaki Omiya, Mitsubishi Heavy Industries President
”
”
18th
▪ Toyota shuts down
factories for 8 days at several European sites including Turkey, France, Poland, and the UK.
▪ Elemica responds
to disaster in Japan by offering free service for Japanese Chemical Industry
2 week shutdown
23rd
20th
up production to rebuild Japan. Gas powered turbines being produced to relieve electricity problems.
and Toyota will halt production in North America. 15th
13th
production facilities in Japan.
▪ Mitsubishi ramps
▪ GM, Honda, Ford
▪ Sony considers
▪ Toyota restarts all
▪ Fiat says
European car production will be cut by up to 100,000 units because of supply chain hold-ups in Japan.
▪ Toyota
announces that global production will not return to full capacity until the end of 2011.
▪ Sendai International Airport reopens after 1 month shutdown.
▪ Harley Davidson,
▪ Intel CFO has seen no disruption to production
OOCL scans ships, exports, crew leaving Japan for radiation
forecasts slow sales due to wafer shortages
21st
17th
▪ HONG KONG’s
▪ Japan makes it
▪ Texas Instruments 19th
14th
production will be at 50% for May and June due to parts shortages
26th
Sony, reduce 2011 forecasts due component shortages
▪ Toyota’s Australian
“Because “Stuff Happens” it is critical for
companies to STOP paying lip-service to their Emergency Preparedness and Response Plans (EPRP). It isn’t just for IT anymore! The salient point is that if your plan doesn’t match today’s realities, it is worthless. Rick Feltenberger, Principal at The Supply Chain Center
”
illegal to enter a 20km evacuation zone around the Fukushima nuclear reactor.
▪#2 contract laptop maker Compal Electronics is being affected by raw material shortages. Expects Q2 sales to drop. ▪Newman
Technology, an auto-parts maker in Ohio, USA, lays off 130 workers due to Honda slowdowns.
“Supply chain professionals can learn the
same thing all business leaders must learn. That a ‘back up’ plan is fine but it won’t save a company. Once we have that, identify the vulnerabilities, weaknesses and threats to all elements of that critical path. Jean McKay, IT and Service Professional
”
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Can
► Chenyin Pan
The Scandal News broke out in late February that Alibaba Group, the biggest B2B platform worldwide, had granted “gold memberships” to 2,236 dealers who in the end cheated the buyers. Alibaba subsequently blamed over 100 sales people and a few managers out of their sales force of 5,000, for allowing the fraudsters to bypass the company’s control system. Also, Mr. Zhe (David) Wei, CEO of the company and Mr. Zhaoxi (Elvis) Li, the Chief Operations Officer, were forced to resign as a result of the incident. In the wake of the Alibaba scandal, other B2B platforms such as Global Sources, Made-in-China.com, TradeKey, and MFG.com have all tried to maintain a low profile, either by remaining silent or by distancing themselves from Alibaba in terms of service types offered. Business and general media alike are replete with discussions and debates following the Alibaba scandal. Alibaba’s announcement after its internal investigation admitted “that the pursuit of short-term financial gain at all cost had tainted parts of [the] sales organization, risking serious damage to [the] Company's core value,” and that the scandal was a “systemic break-down in [the] Company's culture of integrity”. While Alibaba pledged its conviction to prevent similar scandals from happening again, one paramount concern has emerged among procurement professionals: Can B2B platforms be trusted to have completed due diligence?
What is a gold supplier? 1.Provides: Unlimited product display with first-level Priority Listing Product Showcase Targeted exposure to tradeshow buyers worldwide Real-time statistical reports Promotional opportunities with global Big Buyers
The realities of B2B Each platform has designed different rating systems to differentiate the suppliers. Alibaba has its “Gold Suppliers”, Made-in-China.com has Gold members and “audited supplier” icons, and TradeKey is using GoldKey and SilverKey Memberships. Any changes to a members’ status on each platform requires an additional payment, and in the end creates differentiation between supplier profiles. For those who assumed that B2B platforms would conduct the due diligence for buyers, the Alibaba scandal was a major shock. The reality is, as Mr. Mitch Free, CEO of MFG.com, admitted, “Maintaining marketplace quality”, and “promoting trust is a human intensive task and is expensive”. Some B2B platforms work with thousands, and sometimes tens of thousands suppliers, making it very difficult to actually verify each supplier. Yet for many industry professionals, there was no surprise that B2B platforms were failing to conduct due diligence on each supplier listing. “It’s impossible to go ahead to each and every company and to qualify them”, says Michael Kleist, partner at Tradesparq, another online trade platform. Ecommerce has enabled small and medium sized businesses to buy and sell on a global level, however the risks associated with online
B2B Platforms
be trusted Life after the scandal
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2. To be a Gold Supplier: A supplier must complete an authentication and verification process by a reputable third-party security service provider appointed by Alibaba.com. Once approved, Gold Supplier members are authorized to display the gold supplier icon to demonstrate their authenticity.
business have become an increasing concern. Doing business with someone thousands of miles away requires tremendous credibility and commitment from both sides. The ability to find reliable manufacturers becomes even more difficult due to the nature of China’s manufacturing industry. Michael Lee Serwetz, President at Prophet Business Services, comments, “Just because a facility is verified, does not mean your orders will be produced at this facility; subcontracting is rampant in China, always has been.” Moving forward Many professionals have expressed their disappointment and distrust towards Alibaba after the scandal. “What’s bothersome about Alibaba is not that there was fraud, but that apparently it involved hundreds of Alibaba employees and managers. This suggests that it’s not an isolated incident, but rather a deep-rooted cultural issue. Can they be trusted? No.” Said Terry Taylor, a UI designer at Huawei. Many seasoned professionals also expressed their surprises. “I’ve been in the business for many years now, and there are all kinds of disabuses that go on. The actual fraud that happened was because there were employees in Alibaba that were tempted to either cover up, or to enable the suppliers to execute the fraud. That I think, is unprecedented,” said Brian Hager, the President & Founder of Tradesparq, an online B2B marketplace. Has the scandal changed the B2B platforms? Not really. Once the scandal went public, Alibaba lost about US$1 billion in market value. However, Alibaba claims that its users rates, page views and searches are roughly the same, if not improved. In the end, it will go down in history as a blip on a graph. Changes coming? Whether you’re searching B2B marketplaces to find suppliers, or attending trade shows and conferences to meet potential candidates in person, B2B marketplaces will always be a good starting point. Some believe, they should be left as just a starting point. “These B2B platforms can only be served as industrial listings and nothing more. I won't trust a third party verification, because they won't truly understand my needs, and their conclusion is doubtful if there is money involved,” said by John Shi, owner of Boyan Manufacturing Solutions Limited. For B2B platforms, cautions from buyers, along with
outside scrutiny from the media should urge them to rethink how to effectively regulate their supplier base. Alibaba pledged its determination to set a stricter standard for their suppliers in company’s official announcement after the scandal. Other B2B sites also explicitly expressed that they would be more cautious in their membership selection in the future. Alibaba and other B2B platforms have yet to come up with any specific plans to nip any future fraudulence in the bud. It seems like regardless of how diligently B2B platforms try to assure users of their sites’ safety, there will always be good reason to doubt. As for buyers, the incident is yet another reminder that thorough due diligence before purchase is an integral part of using any online marketplaces to find long-term suppliers and minimize risk. Can B2B be trusted? A quick Google search with keywords Alibaba + Scam, will definitely yield enough results to turn you off of buying from the site. But let’s face it, a lot of small to medium sized companies rely on B2B sourcing platforms because they don’t have the budgets or a dedicated purchasing department. So can B2B platforms be trusted? “There is no way online marketplaces can create a completely trusted market. Ebay has tried and still it's struggling to stop counterfeits. It's left up to the buyer for their due diligence before engaging in trade. Either sellers or buyers will have to change before these markets can prove completely trusted,” explains Ajay Khandelwal, Sr. Director Solutions Engineering at Allscripts/ NSLIJ Info Services. Most of us would probably agree.
61 Mn
Registered Users
1 Mn
Paying Members
8.5 Mn
Number of Storefronts
22,000
Number of Worldwide Employees 53
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Social Media and the Supply Chain Friends with Benefits
D I
t would seem pretty obvious that with social media being a platform to connect people, trade service providers would jump on the social media bandwagon as a tool for business, especially given the fact that over the last 5 years, supply chains have improved to become increasingly global. So what’s stopping professionals from signing up or logging on? In its report, "B2B Goes Social", digital marketing agency White Horse reveals that B2B firms aren't as active in their social media activity with only 32% engaging on a daily basis, compared with 52% of B2C firms. One particular obstacle that almost half of B2B firms have to overcome is an inhouse "perceived irrelevance" surrounding social media, with 36% having "low interest in social media". A Majority of B2B executives fail to see a measurable ROI and prefer to allocate resources to traditional means. Social Media in China With over 420 million online users and growing, China is undoubtedly the world’s largest internet community. However most of the current social media platforms in China are designed for B2C-functionality. Local companies have not embraced social media platforms for B2B functions as readily as their Western counterparts for several possible reasons. For one, the great Firewall has blocked several foreign social platforms, such as Twitter, which have been used innovatively for B2B networking outside China. Moreover, the Chinese put great value on trust amongst people they know, or guanxi. The notion of “virtual” relationships is unreliable for most traditional local businessmen. Face to face interaction is still the most widely known, and accepted means to meet someone for business. Deals are often sealed between drinks and good conversations that may not necessarily relate to the business at hand.
Social Media for Supply Chain Supply chain providers can likewise leverage on social media platforms for their sourcing, HR, and to expand their partnerships. An example of a platform that does this and more, is Cha1n.com (www.cha1n.com), a social media site geared towards sourcing, procurement, logistics and supply chain professionals. Users can join or post discussions and events, and expand their network. Online sourcing - Sourcing by nature is a networking activity. Tradesparq.com allows professionals to connect and source via pre-matched suppliers, based on connections, relevance and verified networks. Research – Find out more about your industry by listening to your customers. Hootsuite (hootsuite.com) allows users to mine data by tracking mentions of your brand, industry, or applicable search terms. Another example is Seesmic (seesmic. com), a cross platform application that allows integrations of different social media services, including managing Twitter streams, streamlining data in real time. Research.Ly www. research.ly is another similar service. Collaboration - Collaborate and plan amongst teammates across regions. Example, Hootsuite acts like a social media “dashboard” which allows for team collaboration where members can share data without sharing passwords. Social Media for Logistics For logistics companies, the benefits of Social Media can run deeper that just a general improvement in brand awareness and leads. There are logistics companies already effectively using social media for a number of purposes. While the uses of social media are evolving daily as the platforms and tools change, the following are some areas of opportunity for Logistics companies to leverage on Social Media: - 3PL’s can post loads on social media platforms such as Freight Friend, a service that matches available loads between carriers and shippers
54 MAY/JUNE 2011
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FEATURE The power of the Linkedin
100 million - Total number of users 200 countries - Worldwide presence. 1 member per second - Rate at which new members are added 500,000 - Number of daily hits ALL Fortune 500 - Companies with LinkedIn members Half - Amount of total users that are business decision makers (HubSpot) What vendors can do on LinkedIn: 1 Update Your Status on a Regular Basis (now synched with Twitter)
2 Identify the Right Decision Makers in Specific Companies
3 Use Groups to Connect With Prospects & Clients
4 Ask Questions to Get Immediate Industry
5 Answer Questions to Boost Your Reputation 6 Get Recommendations to Attract More Clients
7 Share Your Latest Offerings Presentations 8 Create Company Profile to Boost Traffic 9 Promote Your Blog or RSS Feeds
Feedback
-Create social communities built around your core services, i.e. UPS’ Twitter site, http://twitter.com/UPS brings its clients and suppliers into a virtual conversation. Examples of Logistics-focused Social Media Speedity (www.Speedity.com) is a global freight exchange platform that works like a social network. Owners post offers and fill out necessary information including vehicle and load classification. Users can then contact the owner using private conversations. Users interested in the same offer will never have to meet in person. Other initiatives such as Freight Friend (www.freightfriend. comclaim to be a private load and truck internet posting service website for shippers, brokers and carriers. There are also some private companies like TMC Connect and Conway Tweetload (@ConwayTweetLoad) where carriers see the latest available shipments, bid on available loads, and share best practices. Commonly used B2B Social Media Platforms LinkedIn LinkedIn has been used an invaluable tool in job recruitments, but still largely underutilized in SCM and logistics. It’s off to a good start with forums created upply Chain Council, Procurement Professionals, and the Logistics and Supply Chain Networking Group, where members can post industry updates and questions relevant to the sourcing, procurement and supply industry. Twitter Twitter can be a valuable tool in managing transportation, supply and logistics. Four Soft, a company that specializes in internet and software solutions for the logistics industry, utilizes Twitter to enable local and international freight forwarders and shippers to exchange shipment updates amongst themselves. In addition, you can follow just about everyone. Using hashtags such as “#B2B”, will connect you
with several other like-minded businesses who are also trying to leverage on Twitter to build an online presence. Are we there yet? With all the B2B benefits from leveraging on social media, not to mention social media being free, we expected to be overwhelmed with examples of platforms that enabled B2B collaboration in supply chain management. After intensive research however, we realized that all the buzz what nothing more than talk at this point. Primary examples pointed to information procurement, sales, marketing and B2C communication very little, if any, mentions of collaborations with suppliers, inventory management, and social media’s integration into daily operations. What now? As the online landscape continues to mature and evolve, keeping connected with business relationships is not only important, it is necessary for survival. We’re not there yet, but we could be if more companies were willing to collaborate using social media tools more efficiently with their peers. Understanding Social Media is the key. When people take the time to learn a platform, they realize its potential. Only then can everyone realize the benefits and move forward to where B2C social media is now.What now? As the online landscape continues to mature and evolve, keeping connected with business relationships is not only important, it is necessary for survival. We’re not there yet, but we could be if more companies were willing to collaborate using social media tools more efficiently with their peers. Understanding Social Media is the key. When people take the time to learn a platform, they realize its potential. Only then can everyone realize the benefits and move forward to where B2C social media is now. Share your thoughts: After all that has been said, do you agree that Social Media is a valuable tool for Supply Chain? If you have other examples of Social Media in Supply Chain, we’d love to hear about it. Email: Editor@supplychain.cn 55
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FEATURE
社交媒体和物流： 良师益友加互惠互利 社交媒体能够转变物流及生产的方式吗 社交媒体在人际交往上发挥着越来越大的作用，敏锐的贸 易商们也发现这个扩展商机新途径，在过去的5年里，供应 链变得更加的全球化。那么，还有什么能阻止物流职业人在 社交媒体上登录，注册呢？在其报告“B2B Goes Social” 中，电子市场营销公司White Horse就指出B2B企业的日均 社交媒体参与度是32%，不及B2C企业的52%。半数以上的 B2B企业认为公司运营和社交媒体参与度无关，36%的被访 企业对参与社交媒体兴趣不大。多数B2B企业的高层领导们 也不能察觉到社交媒体的益处，他们更愿意通过传统渠道来 获取信息。 社交媒体在中国 中国现有网民4亿2千万，这个数字还将不断增长，毋庸 置疑，中国将是全球最大的无联网用户群。但中国目前的社 交媒体都是以B2C发展为基础的。中国企业在应用社交媒体 的B2B功能上并不像西方同行们那样积极，这可能有多种原 因。其一，“防火墙”无处不在，诸如像“Twitter”这样的 用于B2B的网站在中国却被封杀。再者而言，中国人更看重 自己的熟人，或者是通过关系认识的人。通过网络建立起来 的人际关系对很多传统的中国商人来说是不可靠的。通过面 对面交流做生意对多数人来说更容易被接受。生意能否谈成 往往是在酒席饭后。 社交媒体在供应链中的作用 供应链运营人可以通过社交媒体来完成采购，人才引进， 及 合作伙伴的开发。Cha1n.com (www.cha1n.com) 就是 一个很好的例证。用户可以通过注册或发起一个讨论，活动 来扩大他们的社交群。 在线采购–采购的本质在于它是一种交际活 动。Tradesparq.com 能让职业人士同供应商联系，进行采 购。 调研 – 了解行业动态，倾听同仁 经验。 Hootsuite (hootsuite.com) 能让用户通过寻找公司，行 业等关键词的搜索次数来挖掘信息。另一个例子是Seesmic (seesmic.com)，他的主要功能是整合不同社交媒体平台， 包括管理Twitter流量，实时流量显示。同类网站还包括 Research.Ly www.research.ly 协作 – 团队间的跨区域协作及规划。比方说， Hootsuite 就像是社交媒体里的“共通平台”，团队之间可以互通信息 且无须暗号。 社交媒体在物流中的作用 对于物流公司而言，社交媒体的益处不止是深化品牌效 应。出于多种考虑，很多物流公司已经在很好的使用社交媒 体。 社交媒体依平台和工具的不同，每天都在 变，以下利因正是物流公司能很好利用社交网络的地方： - 三方物流能通过社交网络发布关于货代的信息, 以及帮助 承运人和船公司牵线搭桥。
- 在你的核心服务领域构建社交群体，UPS就通过 Twitter 为客户与供应商建立对话平台。 专注于供应链行业的社交媒体 Speedity (www.Speedity.com) 是一个类似于社交媒体的 全球货代交易平台。户主通过网站来发布报价，填写包括车 辆及装箱明细在内的信息。注册用户可通过私人对话形式联 系户主。不同的买家将不用顾虑在真实场景中碰面。其他网 站还包括Freight Friend (www.freightfriend.com），他们 声称是专为货运，货代和承运人提供关于装箱，货运服务网 上信息发布的服务。同样还有一些公司，像TMC Connect 以及 Conway Tweetload (@ConwayTweetLoad)，货运人 可及时了解最新装船信息, 分享最优业务操作。 常见B2B社交网站平台 LinkedIn LinkedIn在公司招聘上显示了巨大的优势，但在供应链 领域，该网站潜力尚存。Global Supply Chain Council 在LinkedIn上创建的Procurement Professionals及the Logistics and Supply Chain Networking Group则是一 个好的开端,论坛成员可以实时更新行业信息，发布跟采购， 供应链相关的最新进展 Twitter Twitter 在运输管理，供应及物流上极具价值。Four Soft 是一家专为物流公司提供网络及软件解决方案的企业, 他们 通过利用Twitter为本土及国际货代货运公司提供咨询服务。 此外, 你还可以了解其他所有公司的情况。 我们准备好了吗？ 那么既然社交媒体对B2B有这么多的好处，且不说他们都 是免费的，我们一开始以为社交媒体会对供应链管理这一块 起很大的促进作用。但经调查后我们发现现状是雷声大雨点 小。这方面最典型的例证就是在调查中，供应链管理中在日 常工作中运用社交媒体与供应商联系，库存管理，各部门之 间的沟通的几率几乎为零。 那现在该怎么做呢? 网络市场的不断延伸与成熟, 在线与商 界同行，客户保持沟通就显得格外重要。我们在运用社交媒 体上同一些同行先进还存在差距。 更好的了解社交媒体是弥 补差距的关键。当我们花时间在这些社交平台上的时候就能 看到他们的巨大潜力。只有当社交媒体平台的潜质被广泛认 可后，大家才会接纳这种新途径。 谈了这么多，您认为社交媒体在供应链管理中起着什么样 的作用？如在供应链管理中运用社交媒体有其他例子，邮件 请发送到: Editor@supplychain.cn
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Contents ► Development at the speed of ... CHINA /58 ►Bouns Time/59 ►ERP Failures and Lawsusits/60 ►Thinking Lean/61 ►What kind of a reports does a procurement guy create?/66 中国式的发展/58
奖！/59
ERP的过失及所招致的官司/60
THE LINKS
供应链瘦身/61
采购人士的报告/66
Back Home Silk Road The long way home…
A
mboise Mathey is taking the long road home. Literally. Based in Shanghai for the last eight years, Ambroise has left, and is heading back to his native France. He’s on the road and will be for a while, as he bikes all the way back to Lyon, France! The last time we spoke to him, he had covered 1620km, mostly by bike, and was cycling through Hu Zuo Zhen, Gansu Province. Ambroise also happens to be a logistics professional, having worked for French 3PL Clasquin Logisitcs for several years. Since “Go West” is the hot topic for most logistics managers these days, Ambroise has offered to share his insights and observations into what he’s seen so far along the way. For the first leg of his journey, Ambroise followed the G312 national highway and comments:
“Using the G312 national road “guo dao” has allowed me to witness the modern development occurring in China next to an old national road. The G312 is now followed by a super modern rail road as well as a new highway, both linking Eastern China to Xian.” He plans to travel to the very west of China, take in the sights of Central Asia, cycle close to Northern Iran, pass through Turkey, and once he reaches Europe, well that’s the easy part. To follow Ambroise’s progress and to see stunning pictures as he travels onwards, visit: http://www.ambroise-baz.com
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THE links
W
hat is your take on the infrastructure development in China? It’s too fast! There are so many examples. I wrote a piece in CHAINA last year about the bridges. An engineer who was interviewed by the BBC said “we’re just building this stuff way too fast. We don’t have the expertise, and the research is completed in half the time.” And then there’s just the maintenance issue with the 60,000 existing bridges that were built in the last 30 years. For instance, a bridge in Nanjing had cracks in it as wide as a person’s hand! So the way that the maintenance crew fixed it was by injecting superglue mixed with garbage in order to hold it together. Similar incidents are constantly occurring.
How will this affect businesses which operate here? It’s probably the small-to-mid sized companies that wish to operate in the interior of China that may find the cost for logistics haven’t come down as much they’ve expected given the new infrastructure. That’s important, because it seems that as fast as the governments are building the infrastructure, they’re looking for the return on investment really fast, for whatever the reasons might be. Companies might end up paying tolls that may actually be more than the informal tariffs that they were paying to move from one province to another. From a logistics point of view, it may actually be as expensive, if not more expensive, in the long run.
i China Inside Out delivers startling facts, insights and trends that will forever change China and the people and businesses that are connected to the country. A must read for anyone visiting or doing business in China.
What are your thoughts on the magnitude of the development? Is it really necessary to have all the massive projects in development? On the one hand, yes I think you need this development. Especially in the interior, where there was no infrastructure quite literally. On the other hand, are bullet trains overkill? Is it really facilitating commerce or are they just money-grabs by profiteers? There’s something to be said about the necessity of these vanity projects. Do they all need to be world-class? These hard questions are only asked when there is no more money left. What is the strategy moving forward for a company doing business in China? As is the case with anything in China, you need backup plans. If a company is dealing with 3PLs, have backups for those companies, backup routes, and become informed on the latest inspection reports of routes that you may have to travel. For example, if you are in the airfreight industry and you’re flying into Kunming, it’s important to know that two summers ago cracks were opening up on the airfield at the Kunming airport. Planes couldn’t take off or land because of the drought. Don’t expect the due-diligence to end once you’ve made a final decision. China is still evolving and things will be fine for the next 5-7 years. I think that once economic growth begins to slow down, that’s when economic and infrastructure cracks will begin to show.
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THE LINKS
Bonus Time! The expected bonuses for Supply chain, logistics, and procurement professional
1
Hilly Dannaoui, Sales & Marketing and Supply Chain, Logistics & Procurement Manager at Robert Walters
.How are bonuses looking for your sector for 2011? Bonuses across Sourcing/3PL and Forwarding have been similar to 2010 figures- there have been very few increments in bonuses amount.
2
.What are the salary trends in your sector for 2011 â&#x20AC;&#x201C; which job function/ industries should see higher/lower wage growth and why? There is a higher likelihood of 5-10% base salary increases across industry as opposed to growth on the bonus side. Bonuses can be awarded in the form of company stocks or deferred payments. As companies look to retain talent without frustrating their employees with minimal bonuses, there is a higher likelihood of increasing base salary payments to ensure employee satisfaction in the short-mid term whilst companies are still rebounding from the economic downturn.
3.For the functions you are recruiting for, which industries do you see companies paying higher bonuses? Higher bonuses are generally paid to mid to senior management in niche positions, such as senior Sales, QA or MD roles, although they continued to be in line with 2010 levels. Bonuses ranged approximately 10% higher, although they were more likely to be offered in the form of deferred payments or company stock options across logistics and sourcing. That said, this trend was not as common across the board in comparison with the Banking and Financial Services sector.
4.Will multinationals pay bigger bonuses than local firms?
Why or why not? Smaller firms are likely to pay bigger bonuses to hold onto key talent, whereas multinationals could probably afford larger bonus pools due to deeper pockets and larger budgets.
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THE links
ERP Failures and Lawsuits It’s Not Just For the Tier I ERP Vendors
O
By Eric Kimberling President and Chairman of Panorama Consulting Group, www.panorama-consulting.com
ver the years, it seems as if SAP and, to a lesser degree, Oracle take a majority of the hits in the media for high profile failures and lawsuits. Waste Management, Hershey’s, the Shane Company, Overstock – all of these examples are well-known companies that blamed their new ERP systems for their difficulties, and the solutions are all provided by Tier I ERP vendors such as SAP and Oracle in these examples. However, as we published in a blog last year, Tier I ERP vendors aren’t the only ones
ERP Vendor
ERP Customer
with failures and lawsuits on their hands. For example, just a few weeks ago, a jury awarded pet food maker Sunshine Mills a $61M award against Ross Systems, a division of CDC Software, which was its Tier II ERP vendor. Several months ago, one of our business analysts put together a list of public information about recent ERP failures and lawsuits, going back several years. As you will see in the table below, there is a fairly even distribution of failures among all types of ERP vendors.
Reason for ERP Failure and/or Lawsuit
SAP
Lumber Liquidators
Problems appear to be largely related to employees having trouble acclimating to the new system, versus malfunctions in the software itself.
JDA Software (i2)
Dillard’s, Inc.
Dillard’s had alleged i2 failed to meet obligations regarding two software-license agreements for which the department-store operator had paid $8 million.
Capgemini and SAP
Dorset County in the UK
Some workers claimed a job which previously only took a minute was now taking an hour. The system still has to shut down a few days each month to allow data to be processed.
Epicor Software
Ferazzoli Imports of New England
Epicor’s system never worked as intended or promised. Initially paid: US$184,443.61. To date: US$224,656.42 (included the additional software and services meant to make the system operate properly).
SAP and Axon
City of San Diego
The city of San Diego, CA terminated its software implementation contract with services provider, Axon, citing “systematically deficient project management practices” and a project that was running $11 million over budget.
Infor Global Solutions
Carver Pump Company
The company sued Infor over a disputed $451,000 invoice Infor sent Carver in August 2008 for allegedly using the Maxim ERP package without a license since 2000. Carver says it received a perpetual license from CA (which acquired Maxim’s original developer, NCA) in 1998 as part of a Y2K upgrade, and claims it stopped using Maxim anyway in 2006. The companies settled out of court in November.
SAP
Levi Strauss
The company was forced to take shipping systems at its three massive US distribution centers off line for a full week only to lose business and customer orders.
SAP
Waste Management
Waste Management wanted an ERP package that could meet its business requirements without large amounts of custom development.
Oracle
Overstock.com
“When we upgraded our system, we didn’t hook up some of the accounting wiring; however, we thought we had manual fixes in place. We’ve since found that these manual fixes missed a few of the unhooked wires.”
SAP
City of Portland
Portland’s SAP project, budgeted at $31 million in 2006 for a 2007 go-live date, is now estimated to be nearly $50 million. Portland has fired its systems integrator, Ariston Technologies and Consulting, and is working directly with SAP services to get the system up and running.
2010
2009Corporation
2008
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THE LINKS Unfortunately (or fortunately, depending on how you look at it), Tier II and Tier III ERP implementations are just as likely to fail as Tier I implementations from SAP or Oracle. The reason is that success and failure does not have much to do with the software – it is more affected by how the software is implemented. Even the best ERP software solutions entail a fair amount of business and organizational risk, which is where most companies struggle. Assum-
ing you have selected a software solution that is a good fit for your organization, things like project management, process design, organizational change management, scope management, and other business related factors are much more likely to impact your odds of success than the software itself. So the lesson is simple: choose the right software and implement it well as a business initiative rather than a pure technology project. You can’t have success with just one of the two and failing in either area almost ensures that your overall project will fail, no matter how good the software may be.
Thinking lean
L
iam Cassidy, Managing Director of LCL Consult, has more than 30 years of manufacturing, supply chain and supplier develop experience. He also happens to be an expert on lean practices, and recently hosted a discussion on lean concepts at The Council’s event in late March. So what is lean? “Any activity that doesn’t add value to our processes or products is considered waste. Lean aims to correct these processes,” he said. One of the major values that Liam promotes is a relaxed and open environment, interactions that he calls formal informalities. He stresses that managers should be giving employees key messages in a very relaxed way. “Any manager who cannot achieve this in one to two years is failing. That’s the job of managers in a company,” says Liam. In this type of environment, people work better, they can feel more comfortable, they communicate better, and after
a short while you notice that operations are improving. But is this informal approach possible for Chinese managers? “You have to educate them. Of course Chinese managers can learn,” responded Liam. “The site that I’m working on right now in Minhang, the Chinese managers have learned faster than any other site in the world.” Liam also heavily promotes empowering the people you have to deliver greats results. What’s the first step to empowering your people? Listen to them. “People have the same needs all over the world. They’re concerned about their job, future, conditions… and they want to be involved,” he says. “You just have to listen to them.” Ultimately, Liam feels that lean is a mixture of common sense, doing the right thing and goal setting. For more information on Liam’s 10 Operating Principles and Lean Practices, visit www.lclconsultingltd.com 61
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CLASSIFIED Listings
LOGISTICS SERVICES 4SCM A10, 5/F, 61 Old Warehouse Building, 61 Yangshupu Road, Shanghai 200082 上海市杨树浦路61号老栈商务楼5楼A10室 邮编：200082 +86 (21) 6148 9800 www.4scm.com.cn ARJ Commercial Leasing Limited 1500 Lianhua South Road Max-Mall Office Tower Block 8-9 Unit 810, Shanghai 201100 中国上海市闵行区莲花南路1500弄 梅陇镇新都会,商务中心8-9号楼810室 邮编：201100 +86 (21) 3358 2270 www.arjchina.com Arvato Services 3203, Changping Commercial Building, Futian Bonded Zone, Futian District, Shenzhen, P.R.C. 深圳福田区福田保税区长平商务大厦3203室 +86 (755) 3386 1666 www.arvatoservices.com.cn A.S.I Logistic Room 1703,Hitime International Tower No888 North Sichuan Road, Shanghai, 200080 上海市虹口区四川北路888号海泰国际大厦 1703室，邮编：200080 +86 (21) 5187 2772 www.asilogistic.com BDP International Unit 2101-2110, Shanghai Bund Int’l Tower, 99 Huangpu Road, Shanghai 200080 上海市虹口区黄浦路99号上海滩国际大厦 2101-2110室，邮编：200080 +86 (21) 6364 9336 www.bdpinternational.com Best Logistics Technology Bidg 11 West, 1F West Lake Soyea Software Park 176 Tianmushan Road, Hangzhou, Zhejiang, 310013 浙江省杭州市天目山路176号西湖数源软件 园11号楼1层西2201-03室 +86 (571) 8899 5656 +86 (571) 8827 0027 www.800best.com cargo-partner Logistics 6F, Building A, Sun Young Center, No. 398 Jiangsu Road, Chang Ning District, 200050 Shanghai 上海市长宁区江苏路398号舜元企业发展大 厦A栋6楼,邮编：200050 +86 (21) 6195 3800 www.cargo-partner.com
LOGISTICS SERVICES Dajin Logistics 3000 South Lianhua Road, Prologis Logistics Park, Minhang, Shanghai 201109 莲花南路3000号，普洛斯闵行物流园区内， 邮编：201109 +86 (21) 3430 7666 www.dajin.com.cn Deret Logistics Asie Suite 1703 Shanghai Bund International Tower, 99 Huangpu Road, Shanghai 200080 上海市黄浦路99号上海滩国际大厦 1703室，邮编：200080 +86 (21) 6306 2592 www.deret-asie.com.cn
Hercules Logistics Unit 5A, Bldg. A, Shenfubao Hightech Park, No. 3, Huanghuai Road., Futian Free Trade Zone, Shenzhen, Guangdong 518038 广东省深圳市福田保税区， 黄槐道3号深福保科技工业园A栋5A， 邮编：518038 +86 (755) 8358 0000 www.hercules-logistics.com
DHL Supply Chain 3398, Xiupu Road, Shanghai 201315 上海市秀浦路3398号， 邮编：201315 +86 (21) 3825 6288 www.dhl.com
HYT Logistics HYT Logistics Center, Shiwei Road, Fuyong, Bao’an, Shenzhen 518103 深圳市宝安区福永街道十围路 鸿益达物流中心 +86 (755) 2998 7168 www.hyt-logistics.com
DSV Air & Sea Logistics DSV Logistics 38/F, 1 Grand Gateway, 1 Hongqiao Road, Shanghai 200030 +86 (21) 5406 9800 www.dsv.com www.dsv.com/cn
ID Logistics Room 19D, Dong Tai Plaza, 309 Tanggu Road, Shanghai 上海市塘沽路309号19D +86 (21) 6306 7083 www.id-logistics.com
DTW Logistics Group 16 Tianzhu Middle Road, Zone A, Tianzhu Airport Industrial Area, Shunyi District, Beijing 101312 北京市顺义区天竺空港开发区A区天柱中路 16号，邮编：101312 +86 (10) 5923 7777 www.dtw.com.cn Elee Logistics 375, Kefu Road, Nanxiang Town, Jiading District, Shanghai 上海嘉定区南翔镇科福路375号 +86 (21) 3912 4360 www.eleechina.com
3 West Guangzhou Road, Taicang EDZ Jiangsu Province.
江苏省太仓市经济开发区 广州西路3号 邮编：201103
CEVA Logistics 19/F, Jiang Nan Shipyard Building 600 Luban Road, Shanghai 200023
上海鲁班路600号江南造 船大厦19楼 +86 (21) 5302 9988 www.cevalogistics.com
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LOGISTICS SERVICES 6 Xingsheng Jie, Beijing Economic & Technological Development Area, Beijing 100176 北京经济技术开发区兴盛街6号， 邮编：100176 +86 (10) 6788 3335 www.havi-logisitics.asia
+86 (512) 8889 8666 www.fmlogistic.com www.fmlogistic.cn Geodis 3/F. OOCL Plaza, 841 Middle Yan’an Road, Shanghai 200040 上海市静安区延安中路841号 东方海外大厦3楼，邮编：200040 +86 (21) 6193 2323 www.geodis.com HAVI Logistics
IDS Logistics 8/F Tower Block, LiFung Plaza 2000 Yishan Road, Shanghai 201103 上海市闵行区宜山路2000号利丰广场主楼 8楼，邮编201103 +86 (21) 2416 4700 www.idslogistics.com Kuehne & Nagel Block 1, 11-16F, 1868 Gong He Xin Road, Shanghai 200072 上海共和新路1868号大宁国际商业广场 第一幢11-16楼，邮编：200072 +86 (21) 2602 8000 www.kuehne-nagel.com Linfox Road Transport 26-F, Cross Region Plaza, 899 Ling Ling Road, Xuhui District, Shanghai 200030 上海市徐汇区零陵路899号飞洲国际广场26 楼F座，邮编：200030 +86 (21) 5150 6699 www.linfox.com Linghua Logistics 333 Ke Yuan Road Zhangjiang HiTech Park Pudong New Area, Shanghai 201203 上海市浦东新区张江高科技园区科苑路333 号，邮编：201203 +86 (21) 5080 0107 Linkstar Logistics 49A, 199 North Riying Road, Waigaoqiao Free Trade Zone, Shanghai 200131 上海市外高桥保税区日樱北路199号49A, 邮编：200131 +86 (21) 5046 1666 www.linkstarlogistics.com Logisfashion Transportation Tower, Room 1101 218, Hengfeng Road, Shanghai 上海市现代交通大厦恒丰路218号1101室 +86 (21) 5180 1025 www.logisfashion.com Logwin Air+Ocean China
LOGISTICS SERVICES 5/F & 6/F, Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦5楼和6楼， 邮编：200001 +86 (21) 2326 2000 www.logwin-logistics.com
13/F Tower A, Golden Eagle Mansion, 1518 Min Sheng Road, Shanghai 200135
上海浦东新区民 生路1518号 金鹰大厦A座13楼 邮编：200135 +86 (21) 6160 1198 www.menlochina.com
MYS Global Supply Chain 51 Floor, 4068 Excellence Times Plaza, Yi Tian Road, Futian District, Shenzhen 518048 +86 (755) 8288 2131 www.mys-global.com Penske Logistics Room 1801, Honi International Building, 233 Weihai Road, Shanghai 200030 上海威海路233号恒利国际大厦1801室， 邮编：200030 +86 (21) 6227 8566 www.penskelogistics.com Schneider Logistics 1001-1004, 10th Floor, MAIGO International Building, #11 Nan Ma Road, Heping District, Tianjin 天津市和平区南马路11号麦购国际大厦10层 1001-1004,邮编：300022 +86 (22) 2622 8888 www.schneider.com SDV International Freight Forwarding 20/F, East Building, New Hualian Mansion, 755 Middle Huai Hai Road Shanghai 200020 上海市淮海中路755号新华联大厦东楼20 楼，邮编：200020 +86 (21) 3395 0600 www.sdv.com
Sinolog Logistics No.446, Fu Te Dong Yi Road, Waigaoqiao Free Trade Zone, Shanghai 200131
上海外高桥保税区富特东 一路446号 邮编：200131 +86 (21) 5866 6988 www.sinolog163.com
CLASSIFIED Listings
LOGISTICS SERVICES Sinotrans Guangdong 16/F, 97 Haiyuan Road, Huangpu, Guangzhou, China 510700 广州市黄埔区海员路97号外运大楼16楼， 邮编：510700 +86 (20) 8710 2800 gd.sinotrans.com SunJet Logitics 299 Huaxiang Road, Shanghai 上海华翔路299号 +86 (21) 6127 2637 www.sunjex.com Toll Global Logistics No. 388, Tieli Road, Yanghang Town, Baoshan District, Shanghai, P.R. China 201900 中国上海市宝山区杨行镇铁力路388号 邮编：201900 +86 (21) 3379 3366 www.tollgroup.com YatFai Logistics 39-H, Fortune Building, 88 Fuhua San Road Futian District, Shenzhen, Guangdong Province 广东省深圳市福田区福华三路88号， 财富大厦39楼H座 +86 (755) 3336 6898 www.yatfai.com
PROFESSIONAL SERVICES Accenture 30/F, Central Plaza, 381 Huaihai Road, Shanghai 200020 上海市淮海中路381号中环广场30楼， 邮编：200020 +86 (21) 2305 3333 www.accenture.cn AsiaInspection 2201-03, Guidu Building, 3007 Chun Feng Road, Luo Hu DistricUnit 810, Shenzhen 深圳市罗湖区春风路3007号， 桂都大厦2201-03室 +86 (755) 8231 6796 www.asiainspection.com Baker & McKenzie Suite 3401 China World Tower 2 China World Trade Center, 1 Jianguomenwai Dajie, Beijing 100004 +86 (10) 6535 3800 www.bakernet.com BBK Consulting 1812 Shui On Plaza, 333 Huaihai Middle Road, Shanghai 200021 上海市淮海中路333号瑞安广场1812室 +86 (21) 6137 3052 www.e-bbk.com Booz & Company Suite 2511, One Corporate Ave. No. 222 Hu Bin Road, Shanghai 200021 上海市湖滨路222号企业天地1号楼2511室 +86 (21) 2327 9800 www.booz.com/cn BPS Global Group Unit 3104, Tower 1, Kerry Everbright City, 218 West Tianmu Road, Zhabei District, Shanghai, China 200070 中国上海市闸北区天目西路218号嘉里不夜 城第一座3104室, 邮编:200070 +86 (21) 6317 8830 www.bps-group.net Control Risks Suite 1001 East Tower China Merchants Plaza, 333 North Chengdu Road, Shanghai 200041 上海市成都北路333号招商局广场东楼
PROFESSIONAL SERVICES 1001室， 邮编：200041 +86 (21) 5298 1800 www.control-risks.com Demand Solutions PO Box 6180, Norwest Business Park, Baulkham Hills BC NSW 2153 +612 9659 4555 www.demandmgmt.com Dragon Sourcing Suite 1502, Jin Tian Di International Mansions 998, Renmin Road Shanghai 200021 上海市人民路998号今天地国际大厦 1502室，邮编：20002 +86 21 6141 3955 www.dragonsourcing.com Elemica 300 Beach Road #13-06 The Concourse Singapore 199555 +65 6327 6143 www.elemica.com
PROFESSIONAL SERVICES Michael Page International 601-603 Shanghai Kerry Centre 1515 West Nanjing Road, Shanghai 200040 上海南京西路1515号，嘉里中心601- 603 邮编：200040 +86 (21) 3222 4758 www.michaelpage.com.cn MKT China Jiedi Building, Unit 1102, 2790 Zhongshan North Road, Putuo District, Shanghai 200063 上海市普陀区中山北路2790号杰地大厦 1102室,邮编：200063 +86 (21) 6095 5225 www.mkt-china.com
11/F, PricewaterhouseCoopers Center, 202 Hubin Road Shanghai 200021
上海湖滨路202号普华永 道中心11楼， 邮编：200021
27/F, Room 02 418-428 Jiang Ning Road 200041 Shanghai, China
上海市江宁路418-428号 27楼02室， 邮编：200041 +86 (21) 6217 0253 www.iiaps.org
InnoCSR Room 17-16, Yu An Building, 738 Dongfang Rd, Pudong New Area, Shanghai, China 200122 中国上海市浦东新区东方路738号 裕安大厦17楼16室，邮编：200122 +86 (21) 5237 7387 www.innocsr.com Kinaxis Level 19, Two International Finance Centre, 8 Finance Street, Central, Hong Kong 19层,国际金融中心2座金融街8号,中环, 香港中国 +852 2251 1859 www.kinaxis.com Lloyd’s Register Asia 20/F Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦20楼， 邮编：2000012 +86 (21) 5158 5700 www.lr.org www.lloydsregisterasia.com Logistics Executive Suite 13G, Shanghai Ind’l Investment Bldg. 18 North Caoxi Road, Shanghai 200030 上海市徐汇区漕溪北路18号， 上海实业大厦13楼G座，邮编：200030 +86 (21) 6427 6697 www.logisticsrecruitment.com.cn
+86 (21) 2323 8888 www.pwccn.com
Resources Global Professionals Room 2705-06, Lippo Plaza, 222 Middle Huaihai Road, Shanghai 上海市卢湾区淮海中路222号力宝广场 2705-06室 +86 (21) 6386 8700 www.resourcesglobal.com ThreeSixty Sourcing 5/F, 686 Jiujiang Building, No 686 Jiujiang Road, Shanghai 上海市黄浦区九江路686号宝龙大厦5楼 邮编：200001 +86 (21) 6322 5000 www.threesixtysourcing.com Tompkins International 58 Mao Ming Road (South) Room 502, Jin Tai Building Shanghai 200020, China 上海市茂名南路58号锦泰办公楼502室， 邮编：200020 +86 (21) 6473 2588 www.tompkinsinc.com
REAL ESTATE SERVICES AMB China Suite 2908, Plaza 66 II, 1366 West Nanjing Road, Shanghai 200040 上海南京西路1366号 恒隆广场二座 2908单元， 邮编：200040 +86 (21) 6135 1688 www.amb.com Blogis International Logistics +86 (755) 2669 4211 www.blogis.com.cn BlueScope Steel 12F HSBC Tower, 1000 Lujiazui Ring Road, Shanghai 200120 上海陆家嘴环路1000号汇丰大厦12楼, 邮编：200120
REAL ESTATE SERVICES +86 (21) 6841 1898 +86 (21) 6841 2340 www.bluescopesteel.com CB Richard Ellis 11th Floor Shanghai Wheelock Square 1717 Nanjing West Road Shanghai 上海市南京西路1717号会德丰广场11楼 邮编：200040 +86 (21) 2401 1200 www.cbre.com.cn Colliers International 16/F Hong Kong New World Tower, 300 Middle Huaihai Road, Shanghai 200021 上海淮海中路300号， 香港新世界大厦16楼， 邮编：200021 +86 (21) 6141 3688 www.colliers.com/china Gazeley Room 805, Kerry Centre, No 1515 Nanjing Road (W), Shanghai 上海南京西路1515号嘉里中心805室 +86 (21) 5298 6622 www.gazeley.com Global Logistic Properties Room 2708 Azia Center, 1233 Lujiazui Ring Road, Shanghai 200120 上海市陆家嘴环路1233号 汇亚大厦2708室， 邮编200120 +86 (21) 6105 3999 www.GLProp.com Goodman Group 2107 - 2109, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 上海淮海中路333号瑞安广场2107-2109室 邮编：200021 +86 (21) 6133 2000 +86 (21) 6386 2386 www.goodman.com
25/F, Tower 2 Plaza 66, 1366 West Nanjing Road, Shanghai 200040
中国上海市南京西路1366 号恒隆广场2座25楼 邮编：200040 +86 (21) 6393 3333
www.joneslanglasalle.com.cn
GSE China 27C Industry Building, 18 North Caoxi Road, Shanghai 200030 上海市徐家汇漕溪北路18号实业大厦27C, 邮编：200030 +86 (21) 6090 1388 www.gsegroup.cn Lingang Free Trade Port Economic Development 6/F, 188 Yesheng Road, Pudong, Shanghai 201308 上海市浦东新区业盛路188号6楼, 邮编：201308 +86 (21) 2095 0600 +86 (21) 2095 0604 www.linganglogistics.com
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CLASSIFIED Listings
REAL ESTATE SERVICES Mapletree Suite A-D,14/F, Times Square Office Building, 500 Zhangyang Road, Pudong, Shanghai 200122 上海市浦东新区张扬路500号, 华润时代广场办公楼14楼ABCD单元， 邮编：200122 +86 (21) 5836 7177 www.mapletreelogisticstrust.com www.mapletree.com.sg Nanjing ZAL Management Office 18 B Deji Mansion, 188 Changjiang Rd. Nanjing 210018 南京市长江路188号德基大厦18楼B座， 邮编:210018 +86 (25) 8572 6079 info@nzmcl.com Vailog Room 3102-3104, City Gateway, 398 North Caoxi Road, Shanghai 200030 上海市漕溪北路398号汇智大厦3102-3104 室，邮编：200030 +86 (21) 6090 5292 www.vailog.com Volume Industrial Park Zhuhai Gaolan Container Port Zone, Zhuhai, Guangdong 广东省珠海市平沙镇丰收路36号 +86 (756) 772 7118 www.volumeip.com Yupei Group No. 2500 Jinchang Road, Shanghai 200331 上海市普陀区金昌路2500号， 邮编：200331 +86 (21) 6627 7577 www.yupeigroup.com
IT & SOFTWARE SOLUTIONS Barloworld Supply Chain Software 15/F NCI Tower, 12A Jianguomenwai Avenue, Chaoyang District, Beijing 100022 北京市朝阳区建国门外大街甲12号新华 保险大厦15楼, 邮编：100022 +86 (10) 8523 3103 www.barloworldscs.com BravoSolution 13F-01, Tian’an Center 338 West Nanjing Road, Shanghai 上海市黄埔区南京西路338号天安中心1301室 +86 (21) 6145 8500 www.bravosolution.cn Emptoris Unit 01, Floor 7, 1 Grand Gateway 1 Hong Qiao Road, Shanghai 200030 虹桥路1号港汇中心1座701单元， 邮编：200030 +86 (21) 6447 6600 www.emptorischina.com Epicor Software 2008 Cross Tower, 318 Fuzhou Road Huangpu District, Shanghai 200001 上海市黄浦区福州路318号 高腾大厦2008单元，邮编：200001 +86 (21) 63912808 www.epicor.com
IT & SOFTWARE SOLUTIONS
IT & SOFTWARE SOLUTIONS
JDA Software Unit 06, 29/F, Raffles City, 268 Xizang Middle Road, Shanghai, 200001 上海市西藏中路268号,来福士广场2906室， 邮编:200001 +86 (21) 2327 9400 +86 (21) 2327 9401 www.jda.com
Tradecard Room B, 23/F, Jinrun Mansion, 6109 Shennan Road, Futian District, Shenzhen 518040 深圳市福田区深南路6109号 金润大厦23楼B座，邮编：518040 +86 (755) 8830 9265 www.tradecard.com
Kewill Room D, 9F Baoding Building No.550 Xu Jia Hui Road, Luwan District Shanghai 200025 上海市徐家汇路550号宝鼎大厦9楼D座 邮编：200025 +86 (21) 6466 3030 www.kewill.com Lawson Software Room 2H, Apollo Building, Yan Zhong Lu 1440, Shanghai 上海延安中路1440号阿波罗大厦2H +86 (21) 6248 5853 www.lawson.com Manhattan Associates Software Unit 2110, 21/F, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 上海淮海中路333号瑞安广场21楼2110室，邮 编：200021 +86 (21) 6057 3500 www.manh.com PowerE2E 20A, Tower 3, No.600 Tian Shan Rd, Shanghai China 上海天山路600弄3号20A(近芙蓉江路) +86 (21) 6274 9608 www.powere2e.com
EQUIPMENT PROVIDERS
40/F, Suites 8-10, 2 Grand Gateway, 3 Hongqiao Road, Shanghai 200030
上海市虹桥路3号港汇二 座40楼08-10室 邮编：200030 +86 (21) 6127 2488 www.chep.com
EQUIPMENT PROVIDERS Vocollect Asia Pacific Unit 3, 29/F, Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong 香港铜锣湾告士打道255-257号 信和广场3单元29楼 +852 3915 7000 +852 3051 8209 www.vocollect.com Dexion (Shanghai) Logistics Equipment Room 1102, Block A, Phase 1 Zhang Jiang Riverfront Harbour, 3000 Longdong Avenue, Pudong New Area, Shanghai, 201203 上海市浦东新区龙东大道3000号张江集电 港第一期A楼1102室，邮编：201203 +86 (21) 6879 4413 www.dexion.biz Loscam Packing Equipment Room 508, 707 ZhangYang Road, Pudong, Shanghai 200120 上海市浦东新区张扬路707号508室， 邮编：200120 +86 (21) 6104 8156 www.loscam.com Schoeller Arca Systems Unit 1111-1112, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 上海淮海中路333号, 瑞安广场办公楼1111-1112室 +86 (21) 3133 5080 www.schoellerarcasystems.comApprise
Schmidt Room 2406 Huashen Mansion, 398 Hankou Road, Shanghai 200001 上海市黄浦区汉口路398号华盛大厦2406室 邮编：200001 +86 (21) 6133 9708 +86 (21) 6133 9718 www.schmidthk.com SEEBURGER Room 523-526, 5F, Cimic Tower, 800 Shangcheng Road, Shanghai 200120 上海浦东新区商城路800号 斯米克大厦5层523-526室, 邮编：200120 +86 (21) 5835 7779 www.seeburger.cn SupplyOn Suite 1501, Silver Centre, 1388 North Shanxi Road, Putuo District, Shanghai 200060 上海普陀区陕西北路1388号银座中心 1501室，邮编：200060 +86 (21) 6149 8042 www.supplyon.com
The Supply Chain Social Network http://cha1n.com/
GXS International Room 1602, 16/F, Grand Gateway Tower 1, 1 Hongqiao Road, Shanghai 200030 上海市虹桥路1号港汇广场1座1602室， 邮编：200030 +86 (21) 6120 1088 www.gxschina.com.cn
64 MAY/JUNE 2011
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Automotive Supply Chain & Logistics Forum Thursday, June 16, Shanghai
For more information, please visit: www.supplychains.com
Supply Chain Networking Mixer Thursday, June 17th
For more information, please visit: www.supplychains.com
THE LINKS
n See
on
?
What kind of reports does a Procurement guy create
David Walsh Assistant Buyer - Construction and Works
The main answer is that it all depends on what the departments want to see! I would say, as a general rule from a recent data collection exercise, you could report on all spend, by department/cost code/directorate, then possibly by person.
Alexander Hankewicz SCM Analyst - Aerospatiale Aeronautique Assistance
According to Aberdeen, the Top 10 Procurement KPIs in use today ranked in order of priority are: cost reduction savings, cost reduction savings, of total spend under management, avoidance, ROI (savings/operating costs), of suppliers accounting for 80% of spending, performance (price, delivery, quality, service, etc.), compliance, PO, or invoice transaction volume, Price Variance.
Richard Barrett Consultant - Sourcing and Supply Chain
Typically, procurement professionals are measured against the savings they generate, but this can be tricky. If generated savings is the sole or even primary goal, then it is too often the case that, in a quest for lower pricing, purchasing managers will horsetrade quality and service deliverables
Raul Aristizabal Consultant - Seiri Group
I would recommend to have two type of reports, the first one to keep the customers informed about purchase/requisition status and the other one regarding performance of the Professional.
Jackie Kwinika Procurement Administrator - WHOLESALE & RETAIL SECTOR EDUCATION AUTHORITY
The best way is to start with spend analysis looking at the top vendors, top material, regional spend, open purchase orders, and after doing spend analysis you will get a clear picture of reports that you will need.
Ankush Sunkale Senior Manager - Strategic Sourcing at Business Access
For critical items summary of supplies received from suppliers against schedule given to them to know variance ( to check delivery performance of suppliers ) . This report will also highlight that if a particular supplier is not able to complete scheduled orders.
Linda Harrington Energetic, Results Orientated - Disciplined Professional
Utilizing automation tools, building the skill set and defining the reports needed, we were running future maintenance reports and reconciling to the contracts which provided GREAT cost savings.
Malcolm B. Eubank III Procurement Professional
You can work with your accounting groups and break down the G/L by department. Most department heads can not tell you what and who they spend for there overall budget. Providing them the real dollars they spend is sometime shocking to them.
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The CHaINA Awards honor companies, projects and individuals who have made significant contributions to strengthen the supply chain profession in China. Be acknowledged for your operational brilliance, innovative approache and dedication to the supply chain profession in China.
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CHaINA Awards Lunch Ceremony: November 3, Shanghai Contact: awards@supplychain.cn | www.supplychains.com
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MAY / JUNE 2011