Supply Chain development - a cornerstone for business success

Agenda 1. Supply chain considerations 2. Benefits of a developed SCM strategy 3. Competitive advantage by using a LSP 4. CRM/SCM key to business success

Supply chain challenges The main goal is to keep customers satisfied and to go beyond their expectations. Going the Extra Mile What are the customers looking for in their supply chain requirements?

Supply chain challenges Maintaining or improving customer satisfaction The need to innovate and add value to earn customer loyalty Achieving global benchmarks that are being enforced & expected in the local industry. Inventory management - Eliminating excess and dead stock - Streamlining warehouse operations Cost optimization Speed Product life cycles are shortening

Supply chain requirements Integrated Logistics Solutions On time delivery One point of contact Optimized Solutions (Network, Route, Transportation) High Reliability (Process, Systems, People ) Flexibility in Solution /Operation Continuous Value Addition

Unique company processes Capitalize on what makes you competitive your unique processes and practices Customize to the way your company works Grow your solution with your business - respond with agility to changing conditions and new business opportunities. Save time by reducing or automating manual processes Gain insight to eliminate bottlenecks and improve process flows.

Business value of SCM Matching supply to demand and reducing inventory levels Improving delivery service and speeding product time to market Using assets more effectively Increasing sales by assuring availability of products Increased profitability Supply chain costs can approach 75% of total operating budgets

Supply chain : Time Strategic Marketing Product Management, etc. Planning Execution Demand Planning Supply Planning Inventory Management Replenishment Order Entry Management Pricing Management Inventory Shipments Credit/Collections Accounts Receivable Production Schedule Load Consolidations Years Months Weeks Days Shifts Hours = Marketing = Supply Chain = Sales = Shared resource

Supply chain challenges Supply chain management must address the following problems: Distribution Network Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers. Distribution Strategy : Centralized versus decentralized, direct shipment, Cross docking, pull or push strategies, third party logistics Information: Integration of systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation etc. Inventory Management: Quantity and location of inventory including raw materials, work-in-process and finished goods. Cash-Flow: Arranging the payment terms and the methodologies for exchanging funds across entities within the supply chain.

E Supply demand management Quantity Lost Sales Inventory Actual Demand Operational Response Time

Advantages of using 3PL As competition increases manufacturing and retail firms turn to outsourcing their logistics functions. Outsourcing is a viable business strategy because turning non-core functions over to external suppliers enables companies to - leverage their resources, - spread risks and - concentrate on issues critical to survival and future growth.

Advantages of using 3PL Elimination of infrastructure investments Access to world-class processes, products, services or technologies Improved ability to react quickly to changes in business environments Risk sharing Better cash-flow Reduction of operating costs Exchange of fixed costs with variable costs Access to resources not available in one s own organization

Supply chain integration Management & Co-ordination of the Global Supply Chains between Manufacturers and Regional DC/ Retail Outlets Asia Export DC Frt. Fwd Shipping Lines Port Services Financing Insurance Customs International Suppliers International Freight Destination Markets Export volume from each port of loading, e.g. HK, Shanghai, etc. Order volume from each DC/destination Buyer Consolidation at Source Order Processing Logistics Model De-Consolidation at Destination Forecast Coverage & Demand Velocity Frequency and Schedule of Shipments Strategic locations of inventory Shipment Equipment Carrier & Network Selection Replenishment Model Storage cost differential

Cost reduction in the SC Shipments are still being sent to distributors who then distribute them to customers. If a direct shipment strategy is used, it will eliminate the expense of operating a DC and reduce lead times Logistics Centre Logistics Centre Distributor Customer Customer Customer Customer Customer Customer

Ops & analytical CRM Operational: customer-facing applications such as sales force automation, call center and customer service support, and marketing automation Analytical: applications that analyze customer data output from operational CRM applications Based on data warehouses populated by operational CRM systems and customer touch points Customer lifetime value

Business value of CRM Increased customer satisfaction Reduced direct marketing costs More effective marketing Lower costs for customer acquisition and retention Increased sales revenue By identifying profitable customers and segments for focused marketing and cross-selling Reduced churn rate (number of customers who stop using or purchasing products or services)

Future requirements Political stability Stable economic growth Environmental awareness -hidden costs of business