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Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 1
Capacity Building Workshop on Trade Facilitation
Implementation: Tools, Techniques & Methodologies
Supply Chain Efficiency & Trade Facilitation
Geneva, October 18th 2004
Olivier Aba
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 2
Workshop Agenda
1. What is a Supply Chain, “SC”, & Supply Chain Management, “SCM”?
2. Benefits of Supply Chain Management3. E-business & Supply Chain –
opportunities4. E-commerce & Trade Facilitation: how
to improve Supply Chain efficiency & competitiveness?
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 3
What is a Supply Chain?
Customer wantsdetergent and goes
to Supermarket
Customer wantsdetergent and goes
to SupermarketSupermarketSupermarket
Supermarket or 3rd
party DC
Supermarket or 3rd
party DC
P&G or othermanufacturerP&G or othermanufacturer
PlasticproducerPlastic
producer
Chemicalmanufacturer
(e.g. Oil Company)
Chemicalmanufacturer
(e.g. Oil Company)
TennecopackagingTenneco
packaging
Paper manufacturer
Paper manufacturer
TimberindustryTimber
industry
Chemicalmanufacturer
(e.g. Oil Company)
Chemicalmanufacturer
(e.g. Oil Company)
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 4
What is a Supply Chain?
Every company is involved in one or more Supply Chains
A supply chain can be defined as “the sequence of suppliers that contribute to the creation and delivery of a good or service to end customers. This encompasses virtually all aspects of a business—sales processing, production, inventory management, material supply, distribution, procurement, forecasting, and customer service, and several other areas…”
Source :Aglira & al. , 1999
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 5
Components of a Supply Chain
Demand
& Supply Planning
Sourcing
& Supplier Management
Manufacturing
Storage &
Transportation
Customer
& Order Management
PLAN BUY MAKE MOVE SELLPLAN BUY MAKE MOVE SELL
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 6
Logistics vs. Supply Chain
Supply Chain is NOT logistics… Supply Chain is MORE THAN logistics
covers the coordination of most activities & flows upstream: • from suppliers to manufacturing
and activities & flows downstream: • from manufacturing to end-customer
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 7
Logistics Costs in Europe (as a % of revenues)
Source: ELA, Insight to Impact, 1999
1998Transportation: 40%Warehousing: 26%Inventory: 18%Admin: 16%
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 8
Logistics Costs Worldwide
Source: Bowersox, Closs, Cooper, 2002
Region Country Logistics as % of GDP (1997)
North America Mexico 15.3
USA 10.5
Europe Belgium 11.4
France 12.0
Germany 13.1
Greece 12.6
Spain 14.7
Asia/Pacific China 16.5
India 15.4
South America Brazil 15.0
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 9
Flows in a Supply Chain?
There are 3 types of flows to consider in a Supply Chain:
Material flows
Financial flows
Information flows
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 10
What is an Internal Supply Chain?
A company’s “internal” Supply Chain is made of the material, information and financial flows between the company and its direct business partners.
SUPPLIER
MANUFACTURER
CUSTOMER
Material flows
Financial flows
Information flows
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 11
Integrated or Extended Supply Chain
Need to take into account the supplier’s suppliers and the customer’s customers because they generally have an impact on the overall Supply Chain performance.
Material flows
Financial flows
2nd tier suppliers
1st tier supplier
s
Manufacturer
Wholesaler
Retailer
End-customer
Information flows
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 12ITC
InboundLogistics
ProductionOutboundLogistics
Marketing& Sales
Service
Purchasing & contractingResearch & development
Human resources management & training
IT systems
PRIMARY VALUE-ADDING ACTIVITIES
Finance, planning, etc.
SU
PP
OR
TA
CTIV
ITIE
SM
arg
inPorter’s Value Chain
Source: ITC, 2002
SupplySupply
Sources:plantsvendorsports
Manufacturers,Regionalwarehouses:stocking points
Field warehouses:stockingpoints
Customers,demandcenters
MaterialProduction/purchase costs
Manufacturing/Inventory &warehousing costsTransportation costs Inventory &
warehousing costs
Transportation costs
Source: Simchi-Levi & al, 2000
Supply Chain
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 14
SCOR 5 Processes: Overview
Source: Supply Chain council, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 15
SCOR 5 Processes (1)
Plan: Processes that balances aggregate demand &
supply to develop a course of action which best meets sourcing, production & delivery requirements
Source: Processes that procure goods and services to
meet planned or actual demand Make:
Processes that transform product to a finished state to meet planned or actual demand
Source: Supply Chain council, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 16
SCOR 5 Processes (2)
Deliver: Processes that provide finished goods and
services to meet planned or actual demand, including order management, transportation management, and distribution management
Return: Processes associated with returning or
receiving returned products for any reason. These processes extend into post-delivery customer support.
Source: Supply Chain council, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 17
What is Supply Chain Management?
“Supply Chain Management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements.”
Source: Simchi-Levi & al, 2000
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 18
Drivers of Supply Chain Performance
Inventory
Transportation
Facilities
InformationSource: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 19
Competitive Strategy
Supply Chain Strategy
Drivers of Supply Chain Performance
Drivers
Inventory
Transportation
Facilities Information
Source: Chopra & Meindl 2001
Supply Chain Structure
Efficiency Responsiveness
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 20
Considerations for Supply Chain Drivers
Driver Efficiency Responsiveness
Inventory Cost of holding Availability
Transportation Consolidation Speed
Facilities Consolidation / Dedicated
Proximity / Flexibility
Information What information is best suited for each objective
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 21
Drivers of Supply Chain Performance
Inventory: Role of inventory in the Supply Chain:
Anticipation of future demand Production and distribution costs reduction
• economies of scale
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 22
Drivers of Supply Chain Performance
Transportation: Role of transportation in the Supply
Chain: Transportation moves the product between
different stages in a Supply Chain• Transportation choices impact the responsiveness
and the efficiency of the Supply Chain
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 23
Drivers of Supply Chain Performance
Facilities: Role of facilities in the Supply Chain:
Where inventory is transformed into another state - manufacturing facility
Where inventory is stored before being shipped - warehousing facility
• Choices such as number of facilities or capacity impact the Supply Chain
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 24
Drivers of Supply Chain Performance
Information: Role of Information in the Supply Chain:
Serves as the connection between the Supply Chain’s various stages (allows coordination of actions)
Allows daily operations of each stage of the Supply Chain (ex. : a production scheduling system needs information)
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 25
SC Nokia
Nokia’s frequent & rapid product introduction, major contributors to fast revenue & profit growth are: supported by a very flexible & efficient SC
Nokia has put in place: rapid response manufacturing, quick-ship logistics, global SC web that links Nokia’s suppliers &
plants, supports Vendor Managed Inventories and collaborative planning
Source: Accenture, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 26
SC Zara (1)
Global clothing manufacturer/retailer – 44 countries
Focused on time to market, costs, order fulfillment & customer satisfaction
Zara owns 630 retail stores worldwide Store managers send customer
feedback directly to Zara’s in-house designers via handheld devices designers are kept abreast of fast-changing
trends & demands gives Zara vital information on sale of less-
desirable merchandise better managed inventories
Source: Accenture, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 27
SC Zara (2)
Zara acquires fabrics in only 4 colors & postpones dyeing & printing until close to manufacturing reducing waste and minimizing need to clear unsold inventories
Zara can deliver new styles in 3 to 6 weeks, compared with up to 5 months for competitors
Source: Accenture, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 28
SC Henkel
Multinational manufacturer of consumer & industrial products
Put in place collaborative planning, forecasting & replenishment (CPFR) with Condis, a Spanish supermarket & several packaging suppliers for laundry & home care products
Involves daily interchange for key items, coordinates business planning (combined promotions & collaborative forecasts) & jointly defined & measured key performance indicators.
Source: Accenture, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 29
The “Best” Supply Chains
“They are not just fast & cost effective.They are also:
Agile Adaptable and they ensure that their companies’
interests stay aligned.” Hau L. Lee, Harvard Business Review, October
2004
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 30
Supply Chain & SCM Benefits
Reduction of SC costs non-transport costs transport costs
Lower inventories Improved delivery time Improvement in service quality
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 31
SC Champions: Service vs. Costs
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 32
SC Champions – Costs & Performance
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 33
The e-Business
e-Business is a collection of business models and processes motivated by Internet technology, and focusing on improving the extended enterprise performance: e-commerce is part of e-Business Internet technology is the driver of the business
change The focus is on the extended enterprise:
• Intra-organizational • Business to Consumer (B2C)• Business to Business (B2B)
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 34
e-Business and e-Commerce
e-Commerce definition: Is often referred to as “buying and
selling using the Internet” e-Business definition:
The transformation of key business processes through the use of Internet technologies (IBM)
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 35
Barriers to e-Business Adoption
For customers:A large proportion of
current non-Internet users• Look at your country
The poor understanding of the benefits
For companies: No tangible benefitsNot relevant to the businessTechnology costs too high
and difficult to understandConcern about fraudConcern about
confidentiality
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 36
Introducing B2B and B2C
Business Consumer
Business B2Bwww.dell.com
B2Cwww.amazon.co
m
Consumer
C2Bwww.priceline.co
m
C2Cwww.ebay.com
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 37
e-Business Environment
Supplier Customer
Local Environnent
Local CompetitorsIntermediates,Channels
Global Environment
Technologies,innovationused by global competitors
Country specific, economic factor,legal constraints, cultural factor
International, economic factors,Legal constraints, cultural factors
SocietyPublic opinionMediaMoral…
Environment today has more influence & impact
Look at the top 100 companiesfrom 50 years ago, less than a quarter of them remain in the top 100, many have ceased to exist.
organization
Technologies
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 38
e-Business Processes
In this context, e-Business specifically refers: to “the planning and execution of
the front-end and back-end operations
in a chain using the Internet”
ManufacturerSupplier RetailersWholesalers Customer
Pro
du
ct
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 39
B2B & B2C Transactions
Supplier
Intermediaries,
channels
organization
Technologies
Retail
Channel
Consumercustomers
Organization orbusinesscustomers Technologies
B2C
B2B
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 40
Disintermediation or “cutting out the middle man”
Don’t kill your traditional sales channels but help them in new way of sales
Producer
Wholesaler
Retailer
Consumer
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 41
e-Business & the Supply Chain
Very broad impact of e-business on the Supply Chain: upstream: sourcing, procurement inbound & outbound logistics: links & use of
third parties downstream: ordering, warehousing &
distribution…
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 42
The Role of e-Business in a Supply Chain
Supply Chain transactions which can be performed over the Internet: Providing information across the Supply
Chain Negotiating prices and contracts with
customers and suppliers Allowing customers to place orders Allowing customers to track orders Filling and delivering orders to customers Receiving payment from customers
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 43
e-Business Opportunities & SC
Reduce facility costs Eliminate retail/distributor sites
Reduce inventory costs Apply the risk-pooling concept
• Centralized stocking• Postponement of product differentiation
Use dynamic pricing strategies to improve SC performance
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 44
e-Business Opportunities & SC
Supply Chain Visibility:Reduction in the “Bullwhip Effect”
• Reduction in inventory• Improved service level• Better utilization of resources
Improve Supply Chain performance• Provide key performance measures• Identify and alert when violations occur• Allow planning based on global supply chain data
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 45
Potential Revenue Opportunities from e-
Business & SC Direct sales to customers 24 hour access for order placement Information aggregation Information sharing in supply chain Flexibility on pricing and promotion Price and service discrimination Faster time to market Efficient funds transfer - reduce working
capital
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 46
Potential Cost Opportunities from e-Business & SC
Direct customer contact for manufacturers Coordination in the supply chain Customer participation Postpone product differentiation to after
order is placed Downloadable product (software) Reduce facility costs Geographical centralization and resulting
reduction in inventories
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 47
Potential Cost Disadvantages of e-business
Increased transportation cost due to inventory aggregation
Increased handling cost if customer participation is reduced
Large initial investment in information infrastructure
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 48
Fromages.com
Founded in 1997 Sale of French cheeses overseas:
USA: 70%, Europe: 15%, Asia: 15% Reseller, not a producer No inventory Key elements: quality & logistics 65% of costs: cheese, packaging, express delivery 85% of orders delivered in 24 hrs… Average sale: 70/80 euros Selling price includes transportation costs Partnerships:
Cheese producer & ripener in Loire-Atlantique Shipper – FedEx
Sales (2003): estim - 1 M euros – profitable since 2000
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 49
Aquarelle.com (1)
Founded in 1997 Online sale of flower bouquets in France,
Europe, USA, Japan, South Korea & Venezuela 20 theme bouquets, as per the season Craft work & Just in Time Flowers purchases: 80% from Netherlands Centralized flower assembly north of Paris 25 assembly florists Customer can « see » what he is purchasing Key success factors: availabiliyt, freshness,
leadtime & quality
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 50
Aquarelle.com (2)
Downstream logistics critical: transport, delivery, & followup:Paris deliveries– E-likoDelivereies in France - Chronopost
Specific packaging designed & used for the flower bouquets
Delivery fee added on customer bill: 9 euros Investment in information systems: 4 M euros –
online purchasing system for suppliers, supply chain mangement & order management application
Local partnerships Sales (2003) : about 8 M euros – profitable since
2002
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 51
ChateauOnline (1)
Founded in 1998 50 people Sales:
50% France – 50% export: Germany, UK, Belgium, Netherlands, Italy, Switzerland, Luxemburg
70% of sales made with existing customers Stakes: customer retention, develop sales, improve
quality of service, reduce operating costs Approach: Emphasis on processes & use of information
systems Focus on the customer relationship management - CRM
integrated with information system Continuous process improvements & integrated inventory
management• Automated E-mail for customer order acknowledgment• Customer order status available on the site• Handling of customer problems & anomalies – workflow
process between call-center, sales, logistics & accounting
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 52
ChateauOnline (2)
2000 products from 15 different countries Deliveries in France: 5/10 days, overseas: 7/24 days. Logistics platform (2000 m2) handled by Easydis
(Casino subsidiary) 800 references, 85 000 bottles
Transportation towards end customer handled by UPS
Alliance in 2003 with Henri Maire. Maire is responsible for logistics: wine storage, order preparation & delivery
Average sale: 200 euros
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 53
ChateauOnline (3)
European leader of online wine sales
Honored many times as the best e-commerce website
Sales (2003) estim – 10 M euros – profitable since end 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 54
ChateauOnline Supply Chain
Sales
forecasting & Purchases
planning
Purchases
& Supplier Management
Storage
Transport &
delivery
Order handling
& payment
PLAN BUY MOVE SELLPLAN BUY MOVE SELL
Professional Buyers,buying direct in France & overseas
UpstreamLogistics withpartners.Storage &platform
Online ordermanagement.Promotions,coupons…Secured payment.
Outside partners.TransportationCost billedto customers.95% of deliverieswithin leadtime.
Information systems
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 55
LeShop.ch First on-line supermarket in Switzerland Created in 1998 75 people Sales: 15.2 M CHF in 2003; 27 M CHF in 2004 (planned) 16 000 regular customers Average basket: CHF 193 vs 34 in a supermarket > 50% market share Strategic alliance with Migros in September 2003 &
with a common & new online website in January 2004: find Migros as well major brand articles offer an excellent price/quality ratio
Major items sold: Fruits & vegetables (bananas, carots, apples…) Delicatessen (chicken, ham)
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 56
LeShop.ch Supply Chain
Suppliers
Logistics Center
La Poste
Suppliers
Suppliers
La Poste
La Poste
CUSTOMERS
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 57
Logistics (1)
« Ordered today, delivered tommorow” Distribution center in Bremgarten (close to
Zurich) 7000 m2
6 000 products – 80% fresh products 300/450 orders/day Delivery cost billed to customer: CHF 12/delivery Specific packaging: delivery box returned &
isotherm for fresh produce Transportation in refrigerated trucks from the
LeShop.ch logisitics center to the Swiss Post distribution centers
Goods delivered by Expresspost at the address given at order time, directly at the customer door
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 58
Logistics (2)
Own logistics center (not outsourced) 30 people Products stored as per the nature of goods,
process sequence, & items turnover Specifics:
customer requests items in small quantities, not full boxes or palets
need for different temperature storage areas: from -18 to + 20 degrees centigrades
need for maximum handling care: fruits & vegetables, bottles…
Order handling: 33 minutes on average Order cost: CHF 24 95% of orders delivered as per customer order
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 59
LeShop.ch: challenges
Increase the amount fo the average basket & frequency of purchases
Increase the margin Increase the efficiency of the order
handling Reduce distribtuion & delivery costs
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 60
SC Collaboration
Information flows
Suppliers - Manufacturers - Distributors - Retailers - Customers
ProcessesOrganizational
structuresEnabling
technologies
Source, INSEAD, 2002
Material flows
Financial flows
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 61
Supply Chain Trends (1)
Focused towards customers: move from push - by firm to pull - by
customer more “personalized” logistics chain to take into account
need for global coherence, thus rationalization…
global process allowing for reactivity…
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 62
Supply Chain Trends (2)
Integration & synchronization of the logistic network: demand driven sharing of demand data between
customers & suppliers integration of incompatible information
systems set up of appropriate production flexibility
for the firms & its partners permanent synchronization efforts between
internal & external logistic chain
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 63
Supply Chain Trends (3)
Partnership strategy on the way up: move from risk reduction approach to
balanced relationship focus on core competencies, brand,
customers, new product introduction outsourcing of “non-strategic activities”,
such as delivery, transport, storage
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 64
SC Transformations
From functions to processes From profit to performance From products to customers From inventory to information From transactions to relationships
Source: Christopher, 1998
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 65
The SC of the Future
Changes Leading toFrom functions to processes
Integral management of materials & goods flow
From profit to performance
Focus on key performance drivers of profit
From products to customers
Focus on markets & creation of customer value
From inventory to information
Demand based replenishment & quick response systems
From transactions to relationships
SC partnerships
Source: Christopher, 1998
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 66
Supply Chain SCM is more than just technology & information
systems SC is vital especially for e-commerce SC implies a process and transversal approach
across functions One of the key drivers is information Emphasis is placed on collaboration &
coordination Requires substantial investment in information
systems Agility & adaptability Integrated SC and SCM require major
organizational transformations The human dimension remains essential:
People & change management Partnerships management
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 67
Example: Supply Chains in Tunisia
Analysis of Supply Chains in 5 export related sectors: Garement Automotive components Dates Olive Oil Arts & craft e-commerce
The selected companies are considered as « best in class » in Tunisia
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 68
Tunisia SC case studies (1)
Sector StatusProduct Sourcing
Target Market
Garement SME Local International Local
Garement ME Local InternationalLocal/international
Garement Large Off-shore International International
Automotive components
Off-shore International International
Dates Local Local International
Olive Oil Local Local International
E-commerce craft
Local Local International
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 69
Tunisia SC Case studies (2)
The analysis clearly identified functional & structural weaknesses that have a major impact on the SC costs
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 70
SC Costs Non-transport costs
ordering & admin costs load/unload inventory carrying cost storage cost losses/damages stock outs emergency shipment costs
Transport costs truck airfreight ship
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 71
Tunisia SC Case Studies SC performance (1)
SectorIncoterm
sSC costs as % of sales
SC costs as % of Value
Added
Garement SME EXW 17 47
Garement ME EWW 14 37
Garement Large
CIF 13 25
Automotive components
CIF 18 25
Dates CIF 24 53
Olive Oil CIF 14 26
E-commerce craft
CIF 26 80
Non transport costs: 9.7 %
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 72
Tunisia SC case studies SC Performance (2)
SectorIncoterm
sSC costs as % of sales
SC costs as % of Value
Added
Garement SME EXW 17 47
Garement ME EWW 14 37
Garement Large
CIF 13 25
Automotive components
CIF 18 25
Dates CIF 24 53
Olive Oil CIF 14 26
E-commerce craft
CIF 26 80
Non transport costs: 12.4 %
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 73
Tunisia SC Case Studies SC Performance (3)
SectorIncoterm
sSC costs as % of sales
SC costs as % of Value
Added
Garement SME EXW 17 47
Garement ME EWW 14 37
Garement Large
CIF 13 25
Automotive components
CIF 18 25
Dates CIF 24 53
Olive Oil CIF 14 26
E-commerce craft
CIF 26 80
Non transport costs: 6.8 %
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 74
Tunisia SC Case Studies SC Performance (4)
SectorIncoterm
sSC costs as % of sales
SC costs as % of Value
Added
Garement SME EXW 17 47
Garement ME EXW 14 37
Garement Large
CIF 13 25
Automotive components
CIF 18 25
Dates CIF 24 53
Olive Oil CIF 14 26
E-commerce craft
CIF 26 80Non transport costs: 10.3 %
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 75
Tunisia SC Case Studies SC Performance (5)
SectorIncoterm
sSC costs as % of sales
SC costs as % of Value
Added
Garement SME EXW 17 47
Garement ME EXW 14 37
Garement Large
CIF 13 25
Automotive components
CIF 18 25
Dates CIF 24 53
Olive Oil CIF 14 26
E-commerce craft
CIF 26 80
Non transport costs: 8 %
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 76
Tunisia SC Case Studies SC Performance (6)
SectorIncoterm
sSC costs as % of sales
SC costs as % of Value
Added
Garement SME EXW 17 47
Garement ME EWW 14 37
Garement Large
CIF 13 25
Automotive components
CIF 18 25
Dates CIF 24 53
Olive Oil CIF 14 26
E-commerce craft
CIF 26 80
Non transport costs: 6.8 %
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 77
Supply Chain Cycle Time (in days)
Product TunaCoffee
Garments
Potatoes
Garments
Okra
Yemen to
Germany
Yemen to
Japan
Egypt to USA
Egypt to Germany
Jordan to USA
Jordan to UK
Ordering process, sourcing & manufacturing
2.47 114 65 16 57 3.67
Goods preparation
.29 7 2 1 1 .08
Transportation up to final destination
2.20 31 27 12 21 .71
Total # of days
4.96 152 15.4 29 87 4.46Source: Delvin & Yee World Bank, 2002
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 78
Supply Chain Costs
Product TunaCoffee
Garments
Potatoes
Garments
Okra
Yemen to
Germany
Yemen to
Japan
Egypt to USA
Egypt to Germany
Jordan to USA
Jordan to UK
Non Transport SC costs in %
38 76 20 41 12 11
Transport costs in %
62 24 80 59 88 89
Main modes of transportation used
truck & air
truck & ship
truck & air
truck & ship
truck & airtruck & air
SC costs as % of landed price
54.9 7.2 15.4 26 6.7 48Source: Delvin & Yee World Bank, 2002
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 79
Tunisia SC analysis: First Findings
Lack of coherence in the practices of the parties involved in the export process
Lack of links & access to international markets
Costly & inequitable border control process Insufficient intermodal transfer
infrastructure Not harmonized processes & documents Deficiencies in road transport &
multimodal transport underdeveloped Lack of institutional coordination
Source: MKC, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 80
Implications for Trade Facilitation & Policy Decision
Makers Most companies have the same
objectives: Improve response time Reduce inventory Reduce costs:
• transport costs• non-transport costs
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 81
Food for thought…
Supply Chain is a critical element of the companies as well as country’s performance in any economy…
What can be done to improve the global logistics & SC performance of companies & of the country?
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 82
Questions for Policy Decision Makers… (1)
What is the state of the Supply Chain & Trade Facilitation in your country? How does it serve domestic as well as foreign trade actors (import & export)?
What is the impact of the logistical system in the performance of the domestic economy & foreign trade? What are the hurdles & obstacles to an improved performance?
Can the performance of import and export companies be improved significantly? How?
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 83
Questions for Policy Decision Makers… (2)
What are the plans to improve the links & interrelationships within the SC & Trade Facilitation?
In what way can the current regulatory environment be amended to allow for a development of the SC? Note that Supply Chain & Trade Facilitation are related to transversal processes, linking many different sectors & actors and thus under no direct control by any government institution…
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba 84
Implications for Trade Facilitation & Policy Decision
Makers Information Flow:
Telecom infrastructure Basic skills & access to IT technology & PC’s Access to & development of use of Internet
Inventory: Port, road infrastructure Efficiency & dependability in admin procedures
Transport & dependable logistics: Port, road infrastructure Skills & knowledge (import/export/logistics) Coordination Management of information flow
Regulatory environment: Responsive & efficient Work by exception – customs Listen to “customers”