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Emerging Markets Offer Fertile Ground for Global Supply-Chain Strategies

18 November 1999

Emerging Markets Offer Fertile Ground for Global Supply-Chain Strategies, Logistician Tells Automakers

   Lessons Learned can Then be Transplanted to More Developed Markets With
                 Reduced Risk and Lower Implementation Costs

    ANTWERP, Belgium, Nov. 18 -- A leading supplier of logistics
services to the global automotive industry told a group of industry officials
meeting in Europe today that emerging markets such as those in Asia and Latin
America can offer even more exciting opportunities for developing effective
supply chains than the more mature markets.
    "At first glance, the relative absence of infrastructure, technology and
training in developing countries presents a daunting picture for firms
pursuing global marketing and production strategies," said Donald McKay,
director of logistics strategy for the business logistics unit of APL
Logistics, Oakland, California.
    But McKay, speaking at the Global Automotive Logistics Conference 1999 in
Antwerp, said today's new technologies, along with a strong emphasis on
training and education in emerging markets, are changing all that.
    As a result, he said the emerging markets have become "fertile ground for
the most innovative supply-chain strategies".  The lessons learned by
automakers and other manufacturers in these markets can be transplanted to the
more mature markets with reduced risk and lower implementation costs.
    APL provides contract logistics and analytical services for global
automakers as well as for firms in other industries, and is currently working
with General Motors Corp. at new production facilities in both China and
Thailand.
    "Thanks to new Web-based technologies that can easily be set up in remote
or less-developed locations, extensive corporate training programs and a
business environment that is more open to new ideas and processes,"
McKay said, "the emerging market inherently lends itself to advanced
supply-chain-management practices."
    Among the Web-based and other technologies now available for application
in emerging markets, said McKay, are order-management, tracing, documentation
and planning systems that optimize the logistics network on an information
platform that is cost-effective and universally accessible.
    Other advantages of sourcing or distributing in emerging markets, says
McKay:  The initial market is relatively small and costs are low, permitting
companies to experiment with new supply-chain techniques on a more reasonable
scale; manufacturers are not already invested in conventional technologies,
equipment and warehouses; and suppliers and personnel may be less committed to
"comfortable" old processes.

    Experience with GM Offers Hints for Success
    APL has served General Motors since 1984.  For GM Thailand, APL's
challenge is to design and manage the entire inbound material flow from
numerous suppliers in Europe and Thailand to the plant, without warehousing.
For Shanghai GM, APL's project scope includes managing the flow and storage of
vehicles from the plant to the dealerships.
    McKay said his company's current work for GM in both Thailand and China
offers some hints for firms in virtually any manufacturing sector that would
like to globalize and better manage their supply chains.
    For example, he observed that an "adaptive approach" by manufacturers can
enable the logistics provider to change the process and criteria for supplier
selection, minimizing paperwork and attracting a wider range of local bidders;
to customize lean-materials strategies to the local market; and to form
creative new partnerships among first-tier and second-tier logistics
providers.
    Also, he lauded the benefits of training both management and line
personnel.  In some cases, he said, training should include visits to plants
in other countries where staff can observe and learn state-of-the-art
practices on a first-hand basis.
    Thanks to these and other critical factors, including leadership
involvement, emphasis on teamwork, cultural understanding and technical
competence, McKay said APL's results in emerging markets have been positive.
Project implementation has been on schedule and within budget, and operations
are meeting current expectations.
    Logistics activities are the fastest growing business segment at APL,
generating annual revenues of some US $330 million.  The company's business
logistics unit provides contract logistics and analytical services to the
automotive, chemicals, retail, consumer goods and other sectors.
    APL provides customers around the world with container transportation and
logistics services through a network combining high-quality intermodal
operations with state-of-the-art information technology.  APL is the container
and logistics arm of Neptune Orient Lines Limited, a global transportation and
logistics company engaged in shipping and related businesses.