Inspiring Results in Supply Chain Planning

CHINA NOW RIPE FOR SUPPLY CHAIN OPTIMIZATION

Traditionally, organisations operating in China have built their supply chains based on a need to ensure market penetration and product availability. However following huge investments in infrastructure, the time is now right for companies to review their current supply chain configurations and achieve significant cost savings through effective optimization. This was the message from supply chain planning expert Fraser Ironside to delegates of the 4th Annual Supply Chain Modelling Forum, held near Coventry, UK.

The forum brought together over 80 supply chain professionals from a variety of industries to discuss the trends and developments currently taking place in the areas of supply chain modelling, warehousing and inventory management. In addition to Fraser Ironside, speakers also included Simon Duddy (DHL Excel Supply Chain), Simon Mitchell (Paragon Software Systems), Jon Tidey (Carlsberg UK Ltd.) and Vivienne May (Unipart) amongst others.

Ironside, Business Development Director for Network Design at supply chain specialists Barloworld Optimus told delegates: Historically, the supply chain in China has always been unreliable, with highly fragmented distribution centre configurations driven by infrastructure constraints and the dominance of local players. However this is already beginning to change with the entry of foreign owned 3PLs and the ongoing improvements to the road network.

At present, although China remains a low cost economy, spending on logistics in 2004 reached 21.3% of GDP. This compares to logistics spending of approximately 9% of GDP in Europe and the US. Nevertheless, the move from decentralised distribution centres operating at low cost and on short contracts to more centralised and higher quality facilities will certainly reduce this figure. As this change progresses, Ironside expects companies to be able to obtain similar levels of service from their logistics suppliers in China as they are used to receiving in Europe and the US.

Within just a few years, next day delivery for ex-stock product will become the standard service offer for top level customers, while the acceptable service time for make to order products will fall from the current 8-10 days to just 2 or 3 days.

For this reason, network modelling is not something that can be carried out once every five years, according to Ironside. Changing infrastructure and new trends make network modelling an ongoing process in order to ensure companies benefit from the most efficient supply chain achievable in the regions in which they operate. Getting the supply chain right can make a significant difference to the bottom line and this is particularly the case in China today.

About Barloworld Optimus
Part of Barloworld PLC, a multinational corporation with 25,000 employees and a turnover of $6.2 billion, Barloworld Optimus was formed over 20 years ago to optimise supply chains. The company now has more than 600 clients across the globe and boasts an impressive track record for success. Barloworld Optimus has offices in Europe, North America, Middle East, Africa and Asia-Pacific as well as a global network of Agents and Partners.