integrated distribution services: the asian context
DESCRIPTION
TRANSCRIPT
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INTEGRATED DISTRIBUTION SERVICES GROUP (IDS)
Redefining the Asia Distribution Landscape
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THE ASIAN MARKETAn Overview
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Opportunities in Asia
• Fastest-growing consumer market in the world
• Mosaic of Nationalities, languages, and cultures
• Provided the greatest long-term market potential
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Challenges in Asia’s Supply Chain System
• Complex supply chain system• Difficulty in getting access to the final consumers• Freight cost = 8-12% of total product price
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Background on the Asia Supply chain landscape
• Most brand owners generally used local Asian distributors to import goods
• Pre-1990’s :generally lacking in high quality consumer goods
• Local demand generally exceeded supply of imported goods
• Mark-ups of 20-30%
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Background on the Asian Supply Chain Landscape
• Change around late 1980s• Global companies started to set up operation in Asia
(Wal-Mart, Carrefour)• Consumers had more product choices• Both Asian and Western brand owners started to
develop new products to capture growing consumer demand
• Consumers became more demanding (low prices)
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• Traditional distributors started to feel the squeeze from both directions
• Brand principals no longer wanted to give distributors the lucrative margins
• Supply chain issues:
Logistics & Client Account
Warehousing Management
Background on the Asian Supply Chain Landscape
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INTEGRATED DISTRIBUTION SERVICES GROUP (IDS)
Redefining the Asia Distribution Landscape
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IDS Overview and Historical Context
• Challenges in Asia distribution landscape
• Li & Fung Group (LFG) over 100 years experience in Asia-West distribution
• IDS as a result of “reversing” LFG’s trading model
• Acquisition of Inchchape Marketing Services (IMS)
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A New Business Model
Make use of old assets + Think of a Better Business Model = Value-Chain Logistics
Logistics as a fundamental enabler to drive maximum efficiency
Position logistics as the main front-end business connecting traditional distribution service and manufacturing
It now calls itself an Integrated Distribution Service Provider
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STRATEGIC PLANS (1999-2001, 2002-2004)Reorganization and a Menu of Services
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1999–2001, 2002-2004Challenges
Manage
change
Create a new
culture
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How?
Allow customization.
Prioritize logistics, followed by technology.
Reorganize as a regional company with 3 business streams and key support functions across Asia.
Do away with country-based structures.
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Business Streams
Logistics Distribution Manufacturing
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Logistics
Ship
Store
Deliver
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Distribution
Promote Sell Bill Collect
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Manufacturing
Make Test Package
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STRATEGIC PLAN FOR 2005-2007Rewarded in the Capital Market
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Expansion
China
Malaysia
Singapore
United Kingdom
Taiwan
Philippines
USA
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Customer Experience
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Global brands as its key clients!
VSOperating the specific
functions internally Outsourcing
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Global brands as its key clients!
IDS’ value proposition is “compelling”• Allowed the brand
owners to focus on their core competencies (e.g. marketing or product design)
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Differentiator: China Advantage
• Invested significantly in operations in China• Built a national distribution network
• In 2004, IDS received a nationwide license• Expanded further
• Held first mover advantage!• Helped drive brand owners’ growth in China
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Unique China Advantageover 100 years of China supply chain experience
acquisition of Inchcape assets and investments in various Asian countries
optimal supply chain serving this
region.
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Challenges
Talent Management
Organizational Agility
Client Complexity
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Competition• NO competitors in Asia that offered this type of complete
pan-Asia end-to-end array of services. • A pioneer of the ‘Value-Chain Logistics’ concept
• Only have competitors of varying sizes and capabilities in EACH of its menu service offerings
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Growth and Aspiration
Organization Restructuring
Account-Focused Model for Revenue
Management
Redefining Value-Add The Three
Growth Drivers
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Global Ambitions
I won’t call it a revolution; I think it’s been an aggressive
evolution.
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Where is IDS heading?
IDS wants to be able to design comprehensive global supply chain solutions that are truly end-to-end: from the sourcing of the raw materials to the delivery of goods
to consumers anywhere in the world.
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THANK YOU!
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A Global Premium Beverage Alcohol Company
Each country’s market in Asia independently fed it’s respective demand forecast
Problems: high inventory build-up, slow response to market change, etc.
IDS asked to deliver a “regional hubbing solution”
Identify Optimal Geographic Location, Optimize tariff, Packaging Solutions
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Location Selection
Customized Warehousing Solution
Value Added Services
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Competitors