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LSCMS Blog

Blog for updates and happenings in logistics in the Asia-Pacific region

July 30, 2013

Supply Chain Risk Mitigation: Thinking Different (Even at Apple)

1395248_untitledThe latest example of hidden risks lurking in the supply chain surfaced yesterday when China Labor Watch (CLW) published an investigative report detailing the labor violations of three factories of Pegatron Group – a major supplier to Apple.

According to CLW – an independent not-for-profit organization – Apple has increased its orders to these factories, which have benefitted from and relied upon labor violations to increase their competitive edge.

CLW’s investigations revealed at least 86 labor rights violations, including 36 legal violations and 50 ethical violations. The violations fall into 15 categories: dispatch labor abuse, hiring discrimination, women’s rights violations, underage labor, contract violations, insufficient worker training, excessive working hours, insufficient wages, poor working conditions, poor living conditions, difficulty in taking leave, labor health and safety concerns, ineffective grievance channels, abuse by management, and environmental pollution.

Read more at the Supply Chain Management Review

Taiwan’s Foxconn Technology Group, which has also been criticized by labor groups for poor working conditions, now makes most of Apple’s top products through its flagship unit, Hon Hai Precision Industry Co Ltd.

Reuters has more on this latest labour violation

This will be unwanted attention on Apple after its 2012 issues with labour treatment and safety at its Foxconn supplier factories.

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July 23, 2013

The Impact of China’s Economic Shifts

The region’s largest market, China, is experiencing shifts in its economy. International companies initially came to China to capitalise on an abundant supply of low-cost labour and incentives to establish operations in Special Economic Zones. In addition, they are now just as interested in the opportunity to sell products to the huge and rapidly expanding Chinese consumer market. As the Economist noted, “Foreign firms that came for the workers will stay for the shoppers.”

Migrant workers, who moved to the coastal areas to work in the factories, are increasingly returning to their provinces as more work becomes available inland. As they do, the lower cost of living in rural areas results in greater spending power, driving domestic consumption in third- and fourth-tier cities.

For consumer goods companies, the logistics emphasis is just as much on distributing goods throughout the domestic Chinese market, as it is on transporting products from factories to coastal ports for ocean freight exports to the EU and the US. Increasingly, these rapidly expanding consumer markets are being established and opened up around the Asia region, notably in India, Vietnam and Indonesia.

Alternative Production Locations

As businesses pursue their China-plus-one strategies – usually seeking additional, rather then purely alternative low cost manufacturing sources – there are several options to explore – particularly India, Vietnam and Indonesia. But each alternative option has its own supply chain challenges. Companies considering manufacturing in alternative locations should consider the maturity and capability of their chosen market and assess the supply chain challenges they may face, including three critical aspects:

• The regulatory environment, including bureaucracy and administrative overheads, and its implications—for example, India’s state-level tax system often leads to operating multiple distribution centres across different states.

• Infrastructure – in many Asian markets the transportation infrastructure is underdeveloped which can lead to damage and delays resulting in costly inefficiencies in the supply chain.

• Talent shortages—more than 70 per cent of businesses are now affected by the industry’s ongoing skills shortage, according to the Logistics Executive 2012 Employment Market Survey Report.

Critical components for successfully navigating the complex landscape in The Asia Era are leveraging the available Knowledge and Networks that will empower effective supply chain ecosystems.

 

Mark Millar provides value for clients with independent, external and informed perspectives on their supply chain strategies in Asia – covering China and ASEAN. His presentations, seminars and corporate briefings help companies to improve business operations, plan more effectively, and increase the efficiency of their supply chain ecosystems. Mark serves on the Advisory Board of the Logistics and Supply Chain Management Society (LSCMS)

Mark@markmillar.com

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July 21, 2013

Finding a Voice to Run a Better Business

Filed under: General,Newsletter,Technology — admin @ 9:33 am

Voice is acknowledged as an industryforward technology for the modern warehouse and distribution centre (DC), and recognised as a better alternative to other technology platforms because of its simplicity and flexibility of use. It can be applied as a full implementation for a new DC setup, support existing warehouses by covering the shortfalls of legacy technologies, or adopted in parts of an operation that require higher accuracy rates.

More importantly, voice-directed work processes helps to instil best practices and optimize individual performance. They enable mobile workers in DCs and warehouses to efficiently and safely execute their jobs by leveraging the most human approach to communication – a two-way dialogue – where the system literally talks them through their daily tasks. Via this step-by-step process, workers can achieve greater productivity, accuracy and safety – all of which are keys to improved job satisfaction levels.

Learn more about voice solutions, how they work and how they can be integrated in to an organisation’s warehouse process in the LIA Article from their May/June 2013 issue.

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July 15, 2013

Reliance on 3PLs Increasing for Supply Chain managers

Filed under: Logistics,Newsletter — admin @ 6:45 pm

MAN Truck & Bus: Consistently Efficient Tour 2011Eighty-six percent of Domestic Fortune 500 companies use 3PLs for logistics and supply chain functions according to a new report just issued by Armstrong & Associates.

The report “Trends in 3PL/Customer Relationships – 2013” leverages Armstrong & Associates’ proprietary database of 6,398 3PL customer relationships to provide detailed information on the top outsourcers to 3PLs, trends in service demand, and 3PL market size by vertical industry segment from 2005 through 2013E.

According to the report, General Motors, Procter & Gamble, and Wal-Mart each use 50 or more 3PLs. The report also quantifies the Global Fortune 500 3PL market at $250.2 billion, a 67% increase since 2005. Within the Global 500, “Technological” industry 3PL customers spent $66.8 billion with 3PLs in 2012 and are on track to spend $71.1 billion in 2013. The compound annual growth rate for Technological 3PL revenues was 9.3% from 2005 to 2012. “Electronics, Electrical Equipment” companies led all Technological industry sub segments with over $25.7 billion in 2012 3PL spend.

[Read more…]

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Asia’s Bright and Cloudy Future

Filed under: Economics,Logistics,Newsletter,Technology — admin @ 6:34 pm

Logistics in the cloudNever before has the global economic tide shifted as emphatically as it is now. Half of the world’s population lives in the emerging markets of Asia Pacific and they are getting richer. By 2030, Asia will host 64 percent of the global middle class and account for over 40 percent of global middle class consumption. Asia is both the biggest opportunity and the biggest challenge for global manufacturers and retailers.

In what the Economist describes as an ‘unprecedented gravitational shift’, multinational companies’ share of global revenues coming from Asia Pacific is rising ‘at warp speed’. By 2017, multinational corporations expect Asia Pacific to contribute 32 percent of their global revenues (compared to the region’s 35 percent share of the global economy).

However, trading across the region is complicated. Vast distances, real physical borders, cultural diversity and a multiplicity of regulatory regimes hamper effective monitoring and visibility of products as they move from source through complex supply chains to consumers. Cloud-based technology, which delivers business services on demand, will be an important part of building a pan-regional infrastructure that allows manufacturers and retailers to meet the needs of both customers and shareholders with flexible, responsive and cost-effective supply chains.

[Read more…]

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July 12, 2013

The drive towards automated logistics systems in Asia

Filed under: China,Logistics,Newsletter,Technology — admin @ 6:35 pm

AsiaProper warehousing procedures are key in any manufacturing facility, and like all other processes, businesses are always on the search for better means to optimise their logistical operations, in order to lower operation costs and raise profit margins. Amongst the more popular solutions to material handling, automated storage and retrieval systems (ASRS) have been around for decades, but adoption within Asia has been relatively slow unlike in Europe and the USA. In this region, many manufacturers prefer to employ the traditional forklift and reach truck to handle movement of goods in their warehouses.

[Read more…]

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July 10, 2013

Supply-chain management grads – the new celebrities

Filed under: Education,General,Jobs,Newsletter — admin @ 6:30 pm

GraduateLooking for a major that’s nearly guaranteed to find you a job? Supply-chain management has grown to be in high demand as online shopping and home delivery of goods has taken the global market by store. Best of all, this business isn’t a fad. It will only continue to grow and development, creating new jobs in transportation, technology, and of course supply-chain management.

According to the Georgia Center of Innovation for Logistics, almost 200,000 supply-chain related jobs will go unfulfilled in the U.S. each year until 2018. What does this mean? A very high demand and a very low supply means college graduates with qualifying degrees and skills have a very high value to employers – an edge they will want to take advantage of.

[Read More…]

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July 2, 2013

FedEx to add 1,900 light, fuel efficient delivery vehicles

Federal Express is adding 1,900 new lightweight, fuel efficient vehicles in a bid to achieve its newly revised goal of improving the overall fuel efficiency of its fleet by 30 per cent by 2020 against 2005’s performance.

FedEx said it set a goal in 2008 to improve the overall fuel efficiency of the FedEx Express vehicle fleet by 20 per cent by 2020. In March 2013 the company surpassed this with a 22 per cent improvement.

To reach its new goal FedEx Express has purchased 1,900 lightweight, composite-body Reach vehicles from Utilimaster, a division of Spartan Motors. They will join the 400 Reach vehicles already in service, bringing the number of such vehicles to 2,300.

FedEx is also working with XL Hybrids, a developer of low-cost hybrid electric powertrain system, to convert 10 conventionally-powered vans into more fuel-efficient, hybrid vehicles.

This conversion not only reduces fuel consumption and emissions, but will also extend the engine life of fleet vehicles by supplementing the necessary power with their hybrid-electric drive train.

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July 1, 2013

Tesla announces 90 second automated, swap Supercharger stations

Filed under: Logistics Social Responsibility,Newsletter,Resources — admin @ 8:44 pm

Tesla CEO Elon Musk has shown off an upcoming advance in the service it provides for its electric cars after demonstrating the first battery pack swap for a Model S. Two cars were serviced in the time that it took for a pre-recorded filling of a 20-plus gallon gas tank, indicating the simplicity and speed of the process.

Currently, Tesla cars can be recharged for free at a Supercharger station, but the process takes between 20-30 minutes and yields three hours of driving time. The new option is for those who are in a rush or without patience.

It is, however, not free and will cost somewhere between $60-$80. Tesla says that figure is based on the local price of a 15 gallon tank of gas — a reasonable comparison for a ‘fill up’.

That rate is based on ‘loaning’ the new battery not buying it outright. When a Tesla owner returns to the original supercharger station they get their original battery back (fully charged) and pay the refill fee again. Those that opt to keep the new battery pack must pay the difference in cost — which is worked out based on the difference in age between the new and original batteries.

Musk says that the recharging stations cost Tesla some $500,000 a pop, and they will be installed at selected charger stations, initially on the I5 corridor in California and Boston-DC route on East Coast. The swap facilities should arrive before the end of the year, most likely in the final quarter, he added.

“I think it’s important for us to address the concerns that people have. We need to address the reasons that people aren’t buying electric cars,” Musk said. “People need to feel that they have the same level of freedom as a gasoline car.”

Musk also said he will entertain the possibility of third party involvement, though he noted that vendors would be required to make their setup at least as convenient as Tesla’s.

Tesla engineers had been planning for a battery swap option since day one. The swap system is built into the ground and automatically removes the pack from the floor of the car, changes coolant and then re-bolts the new battery to the vehicle.

With this new move, Tesla’s is positing its Model S as something that is as convenient as a gas-powered car, in order to counter the argument that electric vehicles are inconvenient and bothersome.

Generally, it will be better for people to take a pit stop and wait for the free supercharge. But, by introducing the battery swap, Tesla presents a quicker option to those in a rush or unconcerned by paying what amounts to a regular gas charge to top up.

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