One in four businesses exceed US$1 million in losses, but almost half of survey respondents in Asia Pacific did not insure their losses.
Zurich Insurance has revealed the key Asia Pacific findings of the Business Continuity Institute (BCI) “Supply Chain Resilience Report 2016”. Despite six out of ten organisations experiencing at least one supply chain disruption during the past year, with one in four exceeding US$1 million in losses, the report found that almost half of survey respondents in Asia Pacific did not insure their losses.
Partnering with BCI for the eighth year, the annual report is regarded as one of the most authoritative benchmark reports in this business area. The key findings for Asia Pacific (APAC) this year are:
IT/Telecom outages was named as the number one cause of supply chain disruption
One in four organisations experienced cumulative losses of over US$1 million
46% of organisations do not insure their losses, meaning they bore the full brunt of the cost
Only 30% of disruptions occur with an immediate supplier
48% responded that top management have made commitments to supply chain resilience
Managing supply chain risks is critical to the success of any business.
Although, the importance of supply chain risk management is perhaps most clear in Asia Pacific with its high growth rate, shifting industry trends, increasingly sophisticated consumers and expanding businesses.
With these marketplace dynamics comes greater interconnectivity of multinational risks. According to the World Trade Organisation (WTO), Asia Pacific includes nine of the world’s top 15 countries importing and exporting intermediate goods.
Companies in the region depend upon goods and services from companies in other countries in order to successfully operate their businesses, and vice versa. As the region becomes more interconnected and trade flows continue to increase, protecting valuable supply chains from both existing and new risks becomes critical to the success of companies based there.
However, managing these risks can be challenging. Today’s supply chains are becoming deeper and spread over more countries. Knowing exactly what, where and how connections can impact a company’s business can be difficult.
It is not uncommon for companies to have supply chains that go down several layers, beginning with one supplier or distributor which is dependent upon a second, which in turn depends upon a third and so on. A problem at any of these levels has the potential to disrupt a company’s business operations.
As a colleague of mine once explained: “You are only as good as your weakest link.” So it is important to have clear line of sight to all of the links in a company’s supply chain. Typically, issues such as quality control and incomplete or late delivery are top of mind when considering problems with the potential to disrupt a supply chain. There is another risk that is often underestimated, but can be equally as damaging – financial failure.
Many high-tech companies have adopted a “right-shoring” strategy for their manufacturing supply chains, an approach that balances factors such as cost, quality and transit time, according to UPS Inc.’s fifth-annual Change in the (Supply) Chain survey.
The survey, conducted for UPS by IDC Manufacturing Insights, polled 516 senior supply chain executives in the high-tech industry in North America, Europe, Asia, the Pacific and Latin America.
Offshoring of manufacturing and assembly operations to countries with low labor costs remains the most common strategy, but a growing number of tech firms said they are “near-shoring” — moving production closer to end markets — to improve service levels, reduce inventory in transit and gain more control over product quality.
Among the survey’s respondents, 45% said their companies use right-shoring strategies, 47% said they offshore and 35% said they near-shore. Near-shoring was up 25 percentage points from 2010.
“High-tech companies are building more flexibility into their shoring strategies and supply chains so they can respond better to demanding market dynamics,” said Dave Roegge, high-tech marketing director at UPS. “They’re thinking more holistically about their strategies to evaluate their transportation costs and the time it takes companies to deliver goods.”
Elemica, the leading Supply Chain Operating Network provider for the process industries, discusses lessons learned in 2014 that will deliver value to a company’s supply chain, better positioning businesses to champion their marketplace in 2015. Companies that use these lessons learned to implement evolving practices and gather metrics across supply chain processes will capture new market opportunities and mitigate risk, significantly reduce operating costs, and improve their customer service capabilities.
“2014 was a year of economic growth for many industry sectors, yet there is still room for improvement, especially if a company is on a continuous improvement journey,” said Ed Rusch, Vice President of Corporate Marketing at Elemica. “We’ve put together these ‘E Lessons Learned’ from real customer experiences, industry analyst expertise, and our own involvement with peers to help businesses grow and move forward in the New Year.”
Ecosystem – Supply Chains are becoming more of an ecosystem rather than disparate parts, enabling accountability, visibility and agility.
Experience – With customer requirements ever changing downstream, process manufacturers are deploying more sophisticated strategies to keep customer service levels high without resorting to piling on the cost in terms of buffering stock.
Extend – Instead of focusing inward on the company itself, outside-in supply chains put the customer first.
Expectation – Unmet expectations occur when companies attempt to force trading partners to collectively adopt a single standard. Integration across the varied, distributed, and complex needs of thousands of individual trading partners and their respective enterprises, without requiring any of them to change the way they do business, is a reality today.
End-to-End – The process industries are moving away from a manufacturing focus to more of a supply chain view linking supply with demand.
Exponential – The network effect builds when the capability to do more with more makes all the existing participants better off.
Engage – Build better relationships with B2B Social.
Ease – Business Networks enable companies to find common ground with their customers.
Expose – Bring risk and variability to the forefront or expect surprises.
Envision – Master Data Management (MDM) creates a single view of the business.
What have you learn about supply chain in 2014? Share with us in the comment box. Feel free to send us a message for discussion and subscribe to get updates in your inbox.
Performance management involves more than simply providing an annual review for each employee. It is about working together with that employee to identify strengths and weaknesses in their performance and how to help them be a more productive and effective worker. Learn how to develop a performance management system so that you can help everyone in your organization work to their full potential.
Evaluate your current performance appraisal process
Identify organizational goals
Set performance expectations
Monitor and develop their performance throughout the year
Evaluate their performance
Set new performance expectations for the next year
Setting performance expectation for the next year is one of the important keys. What is your new year’s resolution? Feel free to leave us a comment or send us a message.
Indonesia said it will allow foreign investment in airports and ports as the government seeks to revitalize an economy growing at the weakest pace since the global recession.
The country may also ease limits on overseas holdings in its telecommunications and pharmaceutical industries, the Investment Coordinating Board said today, hours after a report showed economic expansion slowed for a fifth quarter. Gross domestic product increased 5.62 percent in the three months ended Sept. 30 from a year earlier, as a declining rupiah restrained investment in Southeast Asia’s largest economy.
Indonesian policy makers are grappling with a depreciated exchange rate, elevated inflation and diminished foreign capital inflows undermining President Susilo Bambang Yudhoyono’s legacy of economic stability before he steps down next year. His failure to fix infrastructure gaps in his two terms has added to price pressures, threatening his party’s chances at elections in 2014.
“The dust has yet to settle on the slowdown definitely,” said Wellian Wiranto, a Singapore-based investment strategist at the wealth-management unit of Barclays Plc. “Hopefully it will be replaced by construction dust coming from new infrastructure investment if they stick to these opening up measures.”
The rupiah fell 0.5 percent to 11,415 per dollar as of 3:45 p.m. in Jakarta today, according to prices from local banks compiled by Bloomberg. It has dropped more than 15 percent this year, the worst performer among Asia’s 11 most-active currencies tracked by Bloomberg.
Indonesia still remains as a major investment destination. If you want to learn more about investment, feel free to send us a messageor write a comment.
In the book there are many good examples of successful strategies. Companies like Abercrombie & Fitch, Best Buy, Joseph A. Banks, Borders, National Bicycle, Walmart, World and many others, are highlighted. I particularly liked the discussion of Zara, the fast expanding, fashion-right, company headquartered in the remote northwest corner of Spain in La Coruna. The founder – Amancio Ortega founded Zara in 1975 in order to better understand world markets for his fashion merchandise. A decade later he formed Inditex as a parent company for Zara, as well as several other retail concepts and suppliers that he had built.
While Zara’s original stores were in Spain, today it has stores throughout Europe, the Americas, the Middle East, and Asia. The company opened their first store in Russia on August 28, 2013. In fiscal 2012 Inditex reported total sales of € 15.9 Billion ($20.7 Billion); Zara represented 66% of total sales or €10.5 Billion ($13.6 Billion) with 120 stores world-wide. Other, smaller, divisions include Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterque.
Zara has focused teams of designers and product managers. They oversee the design, sourcing and production of a specific classification such as dresses or women’s sportswear. They are responsible for both the initial collection and in-season response. Importantly to its success, Zara produces where it sells. This achieves short lead times for new fashion ideas.
Zara has certainly revolutionized the fashion industry in terms of the supply chain management. If you want to learn more about supply chain management, feel free to drop us a message.
This article talks about a major challenge to supply chain planning. To have ample supply of iPhone 5s and 5c, how many does Apple need to plan and what is the production mix between the 2 models?
Steve Jobs‘ idea was to take the simple route by planning for one iPhone model only and focused on getting the best product to consumers. Tim Cook takes a different but traditional approach by introducing two models instead of one. He hope a cheaper model of 5c would attract more buyers, at least from the Asia. At least, this what the production plan tells us at the moment. The production plans for more 5c than 5s.
Contrary to what Tim expected, consumers would rather spend money buying the expense model 5s with new technology than buying the cheaper model 5c with previous generation of technology. This is why Apple needs to dramatically decrease 5c production and increase 5s production. This shows a supply chain planning mistake. It totally mis-calculates consumer demand by having a wrong product mix.
Check out this article for the challenges that Apple is facing and how we can help you to manage your supply chain.