Friday, October 24, 2008

Logistics today is all about cutting costs and enhancing customers' experience.

Faster and more 'delightful'

Logistics today is all about cutting costs and enhancing customers' experience.

Umesh Pandey

Amid the global economic doom and gloom, companies are looking for ways to lower their expenses, which can be achieved through good supply-chain management.

The power today has shifted from manufacturers to retailers, says Mr Russell.

"There are lots of opportunities for companies in the region to improve their supply chains and bring about more efficiency in their business processes," said Jeffrey Russell, managing partner for Supply Chain Asia Pacific with the consultancy Accenture.

Mr Russell said that companies in logistics and supply-chain management were still witnessing high growth, although slower than in the past, mainly because companies across Asia Pacific were looking to increase their efficiencies in reaching customers at the lowest costs.

The key, he says, is the growth driven by fast-moving consumer goods (FMCG) companies that are looking to make as much impact on clients as possible.

"The key for the big manufacturing companies in today's market is how to make the customers' shopping experience a delightful one," he said, adding that the power today had shifted from the manufacturers to the retailers as the retailers are the people who are dealing with the customers directly.

In an environment when most people are cautious in their shopping habits, he says the delight of the shopper has become the key to rack up sales revenues.

He said that all sides were now realising that their earlier ways of working where they only opted for "one size fits all" were no longer the key and therefore they were all changing their habits.

Citing the likes of major global logistics companies such as DHL and others, he said they too were adapting to the changing environment as some manufacturers were now looking at logistics companies to do part of the packaging for them.

"There are now logistics companies who are undertaking packaging for some of their clients because the clients don't want to have the extra burden of having to package and store the goods at their warehouses," he said.

By doing so, these companies are able to lower their cost substantially while the logistics companies are adding value to the usual process they undertake of delivering the goods.

He said this was the phase that Asia's logistics companies are now undergoing and soon Asia was set to become a distributors' market where the power of distributors was likely to be greater than those of manufacturers and the distributors would play a greater role in the supply chain.

Mr Russell says that the key is to make the Asian supply chain stronger and in line with those seen in western countries. He added that countries such as Singapore and Thailand were among the leaders in the region.

He said Singapore was a leader because it realised its advantages and disadvantages as a small island state, while Thailand is in a more advanced stage due to the development of the sector and the rise of hypermarkets.

Other countries such as China and India have a different problem as the costs of servicing these countries are slightly higher, mainly due to their sheer sizes. Among Asean countries the highest growth is being witnessed in Vietnam as the FMCG segment there is among the fastest-growing, at around 18-20% per year, although the supply chain there is not efficient to support the fast pace of growth.

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