Supply Chain Strategiesin Asia

Calipe ChongManaging Director

Agenda

Why supply chain Asia economics Opportunities in China Who we are The AWE of China The ILL of China We can prevent the ills for you What are your benefits

In the 1980’s, material cost is about 60~70% of product cost

Now in 2000’s, material cost has shot up to 70~85% of product cost

Engineering achieves 2~5% cost saving through design change, productivity gain, yield improvement, and reduction on waste

Why Supply Chain

An effective supply chain strategy could achieve 20~40% cost saving and high inventory turns

In this competitive environment, the net profit is usually 5% of the sales revenue.

Hence a $1 million saving in direct material purchase, is equivalent in getting $20 million sales.

Many companies had committed much resources in promoting sales but insufficient resources and commitment in optimizing supply chain.

““In this world, a smart and fast In this world, a smart and fast global supply chain is becoming global supply chain is becoming one of the most important ways one of the most important ways for a company to distinguish for a company to distinguish itself from its competitors.itself from its competitors.””

Thomas L FriedmanThomas L Friedman

““The World is FlatThe World is Flat”” –– Supply chaining Supply chaining

China Economy (2007)

Third largest in the world in nominal GDP

GDP is US$3.42 trillion with an average growth rate of 9.9% since 1978

Export and import is US$1,216 billion and US$954 billion respectively

“World Factory” for merchandized goods, consumer electronics & electrical, industrial products & parts, automotive parts, Mold & Die, etc.

It has helped Wal-mart, Motorola, Dell, Sony, IBM, HP, etc to gain their global dominance

Source - http://en.wikipedia.org/wiki/Economy_of_the_People's_Republic_of_China

India Economy (2007)

Twelfth largest in the world in nominal GDP

GDP close to US$1 trillion with a growth rate of 9.1%

Export and import (FY 2006/7) is US$125 billion (excluding revenue on outsourcing services) and US$188 billion respectively

Main exports - textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, services

Source - http://en.wikipedia.org/wiki/Economy_of_India

ASEAN Economy (2007)

Countries consist of Singapore, Malaysia, Thailand, Indonesia, Philippines, Brunei, Vietnam, Cambodia, Laos, Myanmar

Combined GDP in 2007 is US$1,282 billion

Average per capita income is US$2,227

Total land area covers 4.5 mil sq Km (1.76 mil sq miles) with total population of 576 mil

It has abundant natural resources, manpower and industrial opportunities

Source - http://en.wikipedia.org/wiki/ASEAN_Economic_Community

Opportunities in China

Direct Materials (Industrial parts) Assembly / Sub-assembly parts Merchandized goods Indirect Materials Injection Molds, Dies & Tooling After service parts Distribution & Retail Financial & Marketing services Inroad for well known branded products

Tapping the vast growth of consumerism in China

Who we are

We are not a trading or consulting company

We are a virtual International Purchase Office (IPO) running the works for you in Asia with the mission of being your long term partner.

You place PO and make payment directly with the suppliers

There is no markup on the PO price by us

You pay us service fees which is dependent on amount and type of work rendered

All payments made to the suppliers and us are transparent and no hidden cost

Who we are

We can do a better job because:-

We are Asian and we have the astute knowledge on the culture, language, business practices and customs

We have 29 working years with American companies and we have good understanding of their expectations and goals

We have more than 18 years of experience in supply chain management

We are here to work and monitor the suppliers

We are the link between the East and West; and also between you and the suppliers

Vision

To be a renowned supply chain service provider which allow our clients to profit from the economic and competitive advantages in Asia and act as a bridge between East and West.

Mission

We want a long term partner relationship with our clients and help to lower their operating cost, enhance their operation efficiency and expansion of their market or manufacturing operation through: Sourcing appropriate, quality and cost effective products and services in AsiaIncorporating cost effective and efficient logistics managementMeeting delivery schedules and requirementsProviding all relevant integrated supply chain solutions and operationsSet up new factories, representative offices and joint venturesMarketing or establishing distribution for their products in Asia

In addition, we also want to be an establishment which we are proud of and envied by clients, peers and competitors for our integrity, ethics, professionalism, efficiency, innovative ideas and high esteem.

The AWE of China

Its incredible workforce Its potential Its perseveranceIts formidable combative awakening Its authoritative governmentIts humongous market size

The ILL of China Its rampant corruptionIts hidden/secretive actual operationIts complexity in business and governmental proceduresCommitments are not honored or follow through “Cutting corners” Violation of IPR

“China cracks down on shoddy toys”

We can prevent the ills for you

Source reliable and appropriate suppliers Conduct supplier assessment and plant audits

Coordinate and lead product test approval and acceptance process

Expedite delivery orders – monitor their materials delivery, production status, yields, inventory and logistics arrangement

Monitoring corrective actions and timely response from suppliers Conduct quarterly/annual supplier performance & quality review and

assessment Source and/or pre-shipment inspection Liaison to prevent misunderstanding/misinterpretation on

specification, quality and performance requirements

What are your benefits?

You have a virtual office in China (Asia) We are your outsourced Materials Department in Asia to

allow you to establish competitive advantages over your competitors at a lower cost outlay and expenditures

Win back the loss business Avoidance of cost and resources to set up office in China Avoidance of assigning expatriates and exorbitant cost Avoidance of dealing the confusing, nitty-gritty &

compelling situations with suppliers and government officials

Avoidance of extensive travels

What are your benefits?

Direct and prompt monitoring on quality and corrective actions issues and activities at suppliers’ location

Immediate feedback & follow up activities with suppliers on PO, delivery, engineering, samples, testing, etc

Stay ahead in your competition Pass on your cost benefits to your valued customers Staying abreast with the “Big Boys” in supply chain

leverage Ready pool of reliable and cost-effective suppliers for

most commodities

Let us help you to enhance your supply Let us help you to enhance your supply chain and improve your productivity, chain and improve your productivity, competency and competency and profitprofit

We look forward to be your reliable partner and supporting you to achieve your goals!

Thank You