4 items found
- A Pandemic, Supply Chain Disruption, and Logistics Procurement: Lessons for the Future (Part I)
A lot has been said about the impact that COVID19 has had on supply chains, and what potential strategies organisations are likely going to use in the future to deal with such massively unpredictable mega impact events, and hence I will not talk about that. I am going to restrict my musings to the rather inconsequential matter of Logistics Procurement, and whether the buying strategy (if it exists) or the process of logistics procurement impacts the ability of the organisation to respond to black swan events. This is a perfect time to look at the role of Logistics procurement strategy and its impact on logistics execution and the ability to respond to company, industry, economy, or civilization level disruptive events. A large part of Logistics procurement is related to getting things moving at the lowest possible cost. And other things like size of Logistics Service Providers, their ability to scale up support, help launch new products or enter new markets, digital readiness for visibility and planning, ability to remain afloat in bad financial periods, customer centricity, and capacity to help improve core Supply Chain capability of the customer are evaluated to varying degrees by customers. In many cases Logistics is considered like a transactional service, which can be procured from an infinite pool of providers, and the more this belief, the more we tend towards Logistics Procurement being a L1 decision, lowest cost bidder wins, if he/ she fails, the next lower cost provider wins. And then equilibrium is found for a short while, churn continues, partnerships are not built, common programs not undertaken, and when a crisis strikes, we go looking for the L1 provider who can execute in crisis. We are not able to respond because we are like a couple coming to the Olympics Figure Skating Pairs event without any rehearsals, not knowing what mettle the partner is made of, and whether they can pull off the pair spins, lifts, jumps, death spirals or not. A perfect routine in a high stakes high pressure arena comes good based on expertise, fitness, character, and years of practice together, which in turn creates trust, intimate knowledge of strengths and weaknesses, and understanding of the role of each party. I am trying to suggest that deep partnerships based on assessment of capabilities, long term roadmaps, joint investments, and a response process honed through simulation and execution may significantly contribute to our ability to respond to Supply Chain Disruptions. A global crisis is not the time to go looking for the L1 provider on spot rates but a time to be able to work with the chosen partner(s) in confidence that this team has the strength and the playbook to navigate the crisis, and the Logistics Service Provider is not only capable but is invested into the customer relationship to switch on their best game for the customer. Will we see organisations reflect on Supply Chain execution failures in times of COVID19 and say some of this could have been avoided if we had a Logistics Procurement Strategy, if we had the concept of core partners, if we had a Lead Logistics Partner, if we had built joint roadmaps for capability development, if we had simulated response to disruptive events together, and if we had not worried so much about L1. The optimist in me says that organisations will look at Logistics Procurement and Partner selection as a key element of supply chain risk management. The Realist in me is not so sure. Sometimes the best opportunities come in a crisis, this is a great opportunity for Chief Supply Chain Officers to reimagine the role of the Supply Chain inside the organisation. My worry for the community is that we will all go back to L1.
- Cross Border Supply Chain ApproachPublished on August 8, 2019
Technology: This is the world of technology, the world of Artificial Intelligence. In retail, the world of E-commerce.Customers are increasingly defining how companies should build their supply chain strength. They can now shop anytime and anywhere, expect a more fulfilling experience from the retailers. The job of the retailer, doesn’t end only by making the best product available to the customer, but also in ensuring that the delivery of the product is seamless and hassle free to win customer preference. Hence, retailers are starting to seriously consider how to build a robust and sustainable supply chain model for long term business growth to meet fast evolving consumer demand, while minimizing costs and achieving profitable growth. The expectation of delivery experience remains same even if the retailer procures products from overseas. Typically, what a retailer does to take care of supply chain is to appoint a leading logistics service provider, who takes care of the entire process of delivery of the product, starting from sourcing to last mile delivery. The service provider, on the other hand, charges the retailer and executes various processes within the supply chain through partners. While this process is fine with smaller consignments involving a limited volume of products restricted to geographical proximity, this goes extremely difficult when international supply chain with no boundaries across the world is to be handled by a retailer and the same experience is to be delivered to it's consumers. There are quite a few reasons behind this inference. First of all, dependency on a single courier service provider like last mile partner or adoption of ‘inorganic’ supply chain management can have a huge impact on the cost to the retailer. This is because, typically a player needs to either an expert in international movement and domestic also they have presence worldwide to handle end to end supply chain which is quite rare in today's scenario. Secondly, post engaging with a courier service provider, the retailer has zero control if exact point to point tracking is not provided. End consumer dependency is completely on that overseas tracking right from source to delivery and we are talking of giving same experience as a domestic last mile delivery. Cross Border supply chain approach What should an enterprise retailer do to give the same experience of domestic delivery to their International product deliveries. Some of the critical aspects of a retailer’s global supply chain involves First mile consolidation from Overseas sellers, domestic shipment, International air freight forwarding, destination custom clearance, destination fulfillment and last mile delivery. In an ‘organic’ approach, retailers can segregate the scope of work and engage with a best in class service provider for each function and interact with a player who has International presence with a global network and ability to handle end to end supply chain or a supply chain integrator . By partnering with such player in the market, retailers can now expect greater assurance and reliability of operation as each function requires skillset. Moreover, this approach helps in creating a scalable ecosystem where both the retailer and the service provider get an opportunity to grow their business through large scale consignments. This approach also gives greater visibility and control to the retailers as they now have the exposure to the performance of each and every function. Also, for enterprise retailers, it makes a lot of sense to partner with the best in class service providers in such functionality of the logistic supply chain. It is like having a team of specialists executing their jobs perfectly, rather than depending on a particular individual to wear many hats. However, there is a caveat in selecting such partners. A retailer must be really careful in choosing partners. Performance standards should not be compromised while selecting the service provider. All service providers must adhere to uniform bench marking standards and procedures to ensure that the delivery process does not suffer. Moreover, pre-defined Standard Operating Procedures need to be laid out for each function so that the retailer can measure the performance from time to time and eliminate any constraint that affects the functioning of any of the department. A third party omni-channel technology enabler with experience in working with enterprise brand is a better bet to partner with to take care of all these processes. Enterprise retail brands need to envisage that investing only in delivering better products is just half the job done. The same degree of focus, if not more, is needed to be given on how to provide best in class supply chain service to customers. A sound logistic management goes a long way in the brand building process for enterprise retailers. Cross-Border Parcel Solutions JUSDA is a pilot in integrating Component to Manufacture to Consumer (C2M2C) solutions. We leverage our 17 years of experience to help enterprises transform and upgrade their supply chains by applying our innovative business model that covers the flow of trade, goods, information, capital, technology and processes. The premiere supply chain management platform for Foxconn Technology Group, JUSDA is committed to driving professionalism and growth through the application of advanced technology and research and development. The organisation is focused on increasing the ability of e-commerce retailers, or e-tailers, to grow in cross-border markets. Through it's global network and strong tech base. They are able to solve the primary challenges in the cross border E-commerce space as below: Reduced transit time and lower cost to international markets for faster expansion; Reduced product cancellation rates internationally due to strong process flow and minimum TAT; An easy solution with international in-country return capabilities; Unified tracking internationally regardless of first and last mile logistics carrier Jusda India Supply Chain Management easily facilitate the integration of their solution with retailers and e-tailers where both API, EDI, and even XML become standard integration formats and can make the onboarding process faster with any customer. With the help of massive freight and trucking solution, Jusda added first mile, fulfillment and last mile solution and build the entire end to end supply chain which was the key need in the market.
- Cross Border E-commerce Study
What is cross border ecommerce Cross-border ecommerce can refer to online trade between a business (retailer or brand) and a consumer (B2C), between two businesses, often brands or wholesalers (B2B), or between two private persons (C2C), e.g. via marketplace platforms such as Amazon, Flipkart or eBay. Opportunities in India India is one of the fastest growing markets for e-commerce. The number of Internet users stood at 481 million in December 2017 and is expected to reach 500 million by June 2018. The number of online shoppers in India is expected to reach around 220 million by 2020 from only 39 million in 2015 (Confederation of Indian Industry (CII)). This growth has been supported by government initiatives such as Digital India. Post demonetisation, digital modes of payments have increased. According to the Reserve Bank of India (RBI), approximately 282 million point-of-sale transactions were made on debit cards and 115 million on credit cards in February 2018. In recent years, a number of start-ups have emerged in areas such as e-retailing (Flipkart, Snapdeal, Meesho), credit lending (Faircent), food delivery services (Swiggy.com, Zomato IN, Fresh to Home, ID Fresh Food), and logistics management services (FarEye, Unbxd). According to NASSCOM (National Association of Software and Services Companies) and Zinnov Management Consulting, aggregators in e-commerce are receiving substantial funding from investors, which is leading to the scaling up of start-ups. All these factors will support the growth of this sector in the domestic market. Concerns One of the key concerns of players in this sector is that Indian companies are small compared to global multinationals such as Alibaba Group Holding Limited (which is mainly engaged in C2C sales), Amazon.com Incorporated, and Google LLC, and they lack the ability to compete with these global giants. India is a net importer of e-commerce. Moreover, While regulation is evolving, there are some gaps in regulations and policies. For example, India is one of the few countries that does not allow FDI (foreign direct investment) in inventory-based model for e-commerce, which has compelled global e-commerce companies such as Amazon.com, Incorporated to change its business model in India. Further, there are issues related to protection of intellectual property rights, consumer privacy, and regulation of global e-commerce and technology giants. The country is yet to have strong national security and data protection regulations, and there is no clear policy on how to tax e-commerce transactions. Regulatory Landscape for eCommerce Foreign Direct Investment (FDI): B2B: 100 percent FDI is allowed in companies engaged in B2B eCommerce, e.g. Walmart and Alibaba can operate a cash & carry (B2B) business. B2C Marketplace: 100 percent FDI is allowed in the online retail of multi-brand goods and services B2C under the marketplace model, e.g. Amazon, Flipkart, Snapdeal. Any eCommerce entity providing a marketplace cannot exercise ownership over the inventory and is not permitted to sell more than 25 percent of total sales through its marketplace from one vendor to their group companies. There are also conditions restricting to offer discounts by marketplace. B2C Inventory-Based: FDI is not allowed in inventory-based model of eCommerce. Single Brand: A single brand retail trading entity operating through brick and mortar stores is permitted to undertake retail trading through eCommerce subject to local sourcing requirements. Food retail: 100 percent FDI is allowed for trading (including eCommerce) of food products manufactured or procured in India. Multi-Brand Retail: No FDI is allowed in companies which engage in multi-brand retail trading by means of eCommerce. Other Government Actions: The National Institute for Transforming India (NITI Aayog) has set up a high-level committee to consider issues related to eCommerce including FDI. The Food safety and Standards Authority of India (FSSAI) has also issued draft norms for licensing online food operators. The Consumer Affairs Ministry is also planning to regulate eCommerce through the proposed new consumer protection law. B2B eCommerce To tap the huge potential in the B2B eCommerce market in India, leading B2B companies have started to build their own platforms for small business owners and traders. More and more companies and SMEs are buying and selling online and plan to shift procurement transactions through the internet. Understanding this untapped potential of the B2B eCommerce industry, the government has allowed 100 percent FDI in B2B eCommerce, which has enabled global companies such as Walmart and Alibaba to show interest in the Indian B2B eCommerce industry. The Indian B2B eCommerce market is expected to reach $700 billion by 2020. India has 14 million retailers fueling a $525 billion market. The higher profitability in the B2B segment can be the result of the lack of heavy discounts, greater emphasis on quality rather than on price, and higher volumes of purchases, etc. Software as a service (SaaS) platforms can provide a stable platform to small and medium businesses in India that shy away from making huge investments to enter the online retail space, establishing their authority and payment infrastructure. With these platforms, a startup can launch its own eCommerce portal in a much-reduced cost over a monthly rental or a revenue sharing basis on pay-as-you-go model. Import clearance regulation: With the change in cross border clearance policies in CB XII and CB XIII courier clearance, supply chain and logistics companies are moving towards building a more robust and compliant model in cargo commercial channel. This will change the entire value chain where the goods will be valued properly and the taxation will be streamlined. The growth of Cross Border E-commerce import will slow down but definitely it will rise to a new channel of supply chain which is more long lasting. International Supply chain companies like JUSDA supply chain, Flexport entering to this field which will definitely make the space more competitive and compliant. I as the India lead of the cross border supply chain vertical in a global company like Jusda India SCM and seeing the change in India business trader's and marketplace's actionable in terms of moving towards more compliant process makes me believe that there is a huge potential in the market which is yet to start it's journey. The major crack down in the Indian customs on Chinese etailer's parcels has just slowed down the business for a short while but it helped the business to be more matured and long lasting. It is evident that bigger brands from China, US, Europe will enter this potentially huge market in near future but in a compliant way. That is when bigger global supply chain players will come into play in a full fledged scale also there will be quick ramp us of Indian logistics companies like Delhivery, Xpressbees, Shadowfax etc in the cross border SCM business.
- [Real Stuff]Deep Analysis of Development Trend for B2B Global Manufacturing Supply Chain
In 2019, it is a year of "turbulence" in the global industrial chain. Not only did this happen between China and the United States, but even Japan and South Korea also had such tit-for-tat games. The U.S. Department of Commerce has issued a "ban" on Huawei on May 15 this year. Huawei and its 70 subsidiaries have been placed on the "Entity Control List". It makes necessary for U.S. enterprises to obtain permission before selling products to these companies. Although the U.S. Department of Commerce announced in the official website of on May 20 that it would give Huawei and its partners a 90-day temporary license, but it was not still seen for the intention to "Untie" Huawei. On July 1, Japan announced that it would step up efforts to restrict the export of three core cutting-edge materials to South Korea and formally restricted the export of related products to South Korea on the 4th this month. It will undoubtedly deal a "fatal" blow to China and South Korea's semiconductor industry. Because there is a weakness for an industry with a mature and tight global division of labor, such as semiconductor, that is, raw materials are extremely dependent on the international market, especially on the supply of the US and Japan. Self-help is imminent for them now. On the one hand, localization is needed; and on the other hand, single materials or a few key materials are not allowed to be held in the hands of specific countries or manufacturers, thus minimizing the risk of "trade strike". Therefore, judging from the development of the trend, it is being broken for the stable one-way industrial chain in the past few decades. Changing Global Supply Chain Management With the changes in the global industrial chain and the advent of Internet, the possible links of a commodity supply chain include local factory production, overseas production in multiple factories, and finally procurement in multiple countries around the world. What is needed is the management and service capability of brand-new global supply chain. In other words, in the global industrial chain, a core component in the future will contain multiple core enterprises, and they may be distributed in multiple countries. In the meanwhile, the raw materials needed by these core enterprises also need to be purchased in many countries around the world. This can also be considered as an embodiment of the evolution and upgrading of supply chain management from line to plane. In the supply chain management for the traditional "Chain", because of the too many participants in multinational enterprises, each link becomes too trivial and scattered, so the fault is serious, and the visibility of the whole chain is very low, resulting in the serious bullwhip effect (time/ inventory/ personnel) and the increase of operating cost. It is found that there are still quite a number of multinational enterprises that do not know who their suppliers are at all levels and where their sources and downstream are. The risk brought by the above is that it is difficult for enterprises to monitor the operation and implementation of different suppliers in their supply chain. In 2011, it is reported that a Japanese global semiconductor giant tried to understand its vulnerability to the third and fourth layers of supply chains. A team of hundreds of senior executives spent more than a year figuring out which companies were in its extended supplier network. Therefore, along with the transformation and development of manufacturing industry, it will become urgent problems for breaking the information isolated island and realizing the interconnection between manufacturing enterprises to be solved at home and even in the world. On January 29 this year, JUSDA, who received round A financing of 2.4 billion yuan (the largest single financing in supply chain logistics), stressed that "We will continue to increase investment in globalization and other areas. In the meanwhile, we here officially propose that a new layout of Manufacturing Digital SCM (hereinafter referred to as MDS) is being developed. Through digital-driven intelligent collaborative supply chain solutions, enterprises can be helped to shorten the supply chain links, reduce the total cost of the supply chain, and change the traditional manufacturing supply chain from single-line links of enterprises on a single chain to networked, multi-level and all-round links. " In view of the two major features of "Digital Drive" and "Collaborative Sharing", JUSDA is to connect multiple participants of different industries active in the B2B supply chain through the same platform, and to provide visualization, collaboration and digitization for them through AI, big data, IoT and other new technologies, so as to realize seamless linking and dynamic visualization of collaboration and information transmission of different roles, reduce inventory and fluctuation. In the future, we can see that the management of a manufacturing supply chain will continue to expand the scope of services and improve the technological content from pure manufacturing supply chain to digital manufacturing supply chain and then to future industrial digital supply chain. The Attack of Chinese Supply Chain Enterprises In the global industrial system, there have been three generations under the leadership of the United States. From Germany and Japan to Southeast Asian countries represented by the four little dragons of Asia, and then to China, it has become the third-generation producer in the global division of labor system led by the United States. In the past 20 years, China has mainly exported low-value-added personal consumer goods to the world. In the future, it will focus on breaking through high-end manufacturing and high-tech industries, and intelligent manufacturing will become a new direction for industrial upgrading. Under such a background, we can see that the three major economies of the United States, Germany and Japan have given birth to world-class global supply chain giants such as UPS, FedEx and DHL, etc. As the second largest economy in the world, driven by the new industrial era and digital technology, it can be expected that China will have more than one world-class global supply chain giant in the future. A new global supply chain cannot be separated from a globalized network. For B2B large manufacturing enterprises, the supply chain logistics has a globalized market. From the global procurement of raw materials to the external output of finished products produced in factories in many countries, the support and coordination of global network resources are indispensable in every link of the end-to-end supply chain. The coverage of the network can not only determine the volume and income, but also have a greater impact on the coverage and timeliness of services. With the deepening development of economic globalization, the highly integrated industrial chain and supply chain system have connected the world economy. This is why the global supply chain system is greatly affected by policies and situations. The protracted Sino-US trade friction has also changed the global supply chain pattern. For this, it has been significantly released for the JUSDA’s capacity of full-process supply chain service accumulated for large multinational enterprises for many years. With its 155 bases in the United States, Japan, South Korea, Vietnam, India, Southeast Asia, Europe and other countries, as well as its global network resources and strong resource integration capability, it can cope with the continuously dynamically reorganized global supply chain network with flexible supply chain full-link management. Taking Vietnam as an example, due to its advantageous geographical location and demographic dividend, it has attracted world-class enterprises such as Intel, Samsung, Coca-Cola, Pepsi-Cola, P&G and Nestle to set up factories in Vietnam. It is precisely because of the blessing of more and more world-class factories that the demand for professional integrated international logistics services in Vietnam will increase in the future. Moreover, the service is not only simple transportation, warehousing and customs declaration, but also will extend to the global supply chain management. Undoubtedly, Vietnam will become one of the most important nodes in the globalized supply chain in the future. It is also the reason of Vietnam's unique location advantage that JUSDA has already carried out strategic layout in Vietnam. Taking Vietnam as a link, JUSDA has helped manufacturing enterprises to open up the One Belt One Road major channel from Vietnam across China to Europe to the north, to provide comprehensive services for foreign trade in the supply chain of the ASEAN Free Trade Area from China to Southeast Asia via Vietnam to the west, and to radiate the transportation network of air, sea and land railways to the United States, Mexico, India and other countries. While providing supply chain logistics for these multinational manufacturing enterprises, reverse logistics and comprehensive customs services are also Vietnam JUSDA's most prominent advantages. Therefore, Vietnam JUSDA is "the local supply chain logistics company that knows most about China." But JUSDA is different from traditional logistics enterprises. On the basis of building a global network stronghold, JUSDA has practical experience in integrating manufacturing chain into distribution chain. It is one of the few end-to-end supply chain management service-oriented enterprises with a global network layout, providing customers with a whole-process supply chain integration solution from raw material procurement to factory manufacturing, and then to the end consumption link (C2M2C). Let's take an example below. This is Sharp's global supply chain management service in Japan, which is also one of the core projects of JUSDA (hereinafter referred to as "SJL"). The business is mainly divided into purchasing logistics, production logistics, sales logistics and recycling logistics. Sharp’s products have hundreds of kinds of raw materials from dozens of different countries, and these raw materials are needed to be purchased to Japan for processing and production, and then to the end consumption link (C2M2C) of the whole supply chain integration solution. Sharp's purchase and transportation of raw materials is mainly by sea and air, which is also the main cost item. In less than three years from October 2016 to August 2019, SJL helped Sharp save nearly 2.8 billion yen (190 million Yuan) in costs. JUSDA plays a coordinating, ordinating and operating role in Sharp's global supply chain management. It participates in Sharp's supply chain planning to top, collaborates with upstream and downstream participants in the supply chain, organizes various resources to bottom, and promotes the efficient operation of all links in the whole supply chain system. It is embodied in the logistics services, and it integrates various logistics service providers to realize the operation and management of procurement/factory entry, on-site, sales and after-sales logistics. In terms of international air and sea freight, SJL has carried out global bidding through the combination of goods with international well-known enterprises such as Foxconn and Sharp. The combination and scheduling of resources have helped Sharp save nearly 30% of international air and sea freight every year. In addition, in Sharp's entire project, SJL also carried out various warehouse integration and store distribution route optimization for Japan's domestic logistics to help Sharp reduce costs and increase efficiency. " This year, SJL has also launched a transportation coordination platform system for Sharp. The next step is to connect multiple participants in B2B supply chain that are active in different industries in series to realize digitalization and visualization of the whole process of goods in transit. For a sales company with multiple production bases overseas, this is a new momentum for upgrading and transforming the supply chain of manufacturing enterprises. For example, master the quantity being produced in the factory, the quantity of finished products to be shipped, the quantity of goods already shipped, the quantity of goods ready for customs clearance, the quantity already in the warehouse, etc. This allows Sharp to control the overall inventory situation in real time, and then maximize efficiency by deploying other functional departments. This is a function SJL will realize in the future. In Sharp's entire project, it is involved in cross-border transportation, VMI warehouse management, supply chain management (planning, procurement, production, sales, etc.), customs, finance and other services. The core of the future is to get through all kinds of services including processing, finance and so on through data, from raw material production and manufacturing to warehouse management, to goods transportation, to after sales, so as to realize digitalization and visualization of the whole process. Judging from the development of SJL, the core of completing the whole end-to-end service of global supply chain management lies in the global resource capacity (warehouse, car, etc.) and the collaborative platform of data. On the whole, the global industrial chain is changing, and the subsequent changes in the supply chain platform will definitely not the current logistics system to achieve the upgrade of the cost, efficiency and experience, but rather a platform driven by technology and driven by the cooperation and globalization of the upstream and downstream of the supply chain.
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