Triple EFF Consulting

Asean Update January 2016

Contents

Background The Geography

The Facts

What to do

ASEAN Nations

Background

• ASEAN has become a market of over 600 million people overnight.

• ASEAN is fast tracking plans to implement economic integration activities.

• ASEAN member countries will form a single trade market.

• ASEAN will be the 8th largest economy in the world.• Each ASEAN nation represents a diversity of cultures,

religions, languages, art, geography and correspondingly demand signals.

• The explosion in mobile communication and digitisation is accelerating in ASEAN nations and in many cases market intelligence is going from 0 to 60 in record time.

Background

Indonesian Geography

The Geography

It Is What It Is

•The world’s largest archipelago, more than 17,000 islands, spread across three time zones with a distance of 5,000kms from Aceh to Irian Jaya.•If you superimpose a map of Indonesia over the top of a map of Europe it would reach from Ireland to Iran.•The country straddles the equator and is known for its rugged terrain, active volcanoes, tropical storms, and mudslides, as well as congested streets and poor infrastructure.•Having said that, today’s Logistics sector performs daily miracles in delivering goods and services.•The population is heavily concentrated on Java – the most densely populated island in the world: approximately 150m people or 57% of the country’s total.

The Facts

They Are What They Are

•Indonesian logistics costs are equivalent to around 27% of GDP.•Poor service driven by inadequate infrastructure, both quantitatively and qualitatively.•A further report published by the Indonesian Chamber of Commerce and Industry suggested that firms spend an average of 17% of their total expenditure on transport.•ASEAN member countries and regional peers on average spend less than 10%.

More Facts

• According to the World Bank, land transport accounts for an average 72.21% of all logistics costs.

• The world’s Bank Logistics Performance Index (LPI) in 2012 ranked Indonesia 75th out of 155 countries.

• By contrast, Singapore was 2nd, Malaysia 25th, Thailand 35th, Philippines 44th, and Vietnam 53rd.

• Port dwell times are amongst the highest in ASEAN, with our largest port, Tanjung Priok, averaging around 5.5 - 6 days.

What to do?

Taken 2 slices of this:

A) Government Initiatives•SISLOGNAS•MP3EI•SEA TOLL ROAD•6 ECONOMIC CORRIDORS

B) Business Initiatives•Conduct a Supply Chain Health Check•Stick to your knitting•Drive to WGL2•Others

S/C Health Check

•9 reasons why you should consider it:

1.ASEAN has become a reality.2.Operating strategies have and will change.3.You may have contracts or leases up for renewal (3PL).4.Business is growing (or shrinking) rapidly.5.Customer base and or product mix is changing.6.Old ways of working are not the norm.7.We have new tools in the supply chain toolbox.8.You have to hit targets – but no real plan of how to.9.You do it for yourself and your car (or at least you should).

Stick to your knitting & WGL2

• It means: understand what you are currently doing correctly and ensure you keep doing it.

• Share the results with your teams; it will give them understanding of why they do what they do.

• Focus on small incremental improvements that you can manage within your own teams, template review.

• Big consulting firms will tell you about “World’s Best Practice”; good to know but you cannot get to 99.98% DIFOTA from where you are today.

• Your operating teams will know What Good Looks Like for their operation and, by the way, they are the ones who will drive the outcome.

• It isn’t much more difficult than that.

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