Supply Chain and Logistics Issues:

Year of the Dragon Has Entered: What Should Western Companies Moving into China Expect?

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Thu, 09 Feb 2012 14:32:00 -0500

Celebrations recently came to a close for the Chinese New Year. The Year of the Dragon has begun, making it a good time to reflect on what’s ahead for the country.

In China, 2012 will be a year of keeping economic growth steady, as well as employment. Trade is expected to continue to soften, just as it did in 2011. Western companies should anticipate some level of currency fluctuation as well.

Change in the political scene is also likely in China, as the country transitions later this year to new leadership when both the president and the premier step down from their party posts. Various policies in business taxation, intended to stimulate growth in some areas, will occur in 2012.

But what do these expectations mean in terms of profitable growth strategies for Western companies looking to move operations into China?

Michael Zakkour, who writes the China Business Blog and Podcast and is a Principal at Technomic Asia (a Tompkins International company), posted in his blog that China needs to continue to be the main focus of strategy for profitable growth.

Zakkour noted that one major adjustment to strategy for Western companies moving into China is the increased need to send the “A” game to the country. A typical move for Western companies is to try innovation and ideas in their home markets, then move them later into China as an afterthought. This includes people, processes and technology.

To be competitive, Western companies must move the innovative people, processes and technology into China at the same time as markets in the West, or even as the first market entry point.

For more tips on market entry into China, see Zakkour’s entire post at http://www.technomicasia.com/blog/2012/02/08/top-8-trends-in-china-for-2012/

Is your company in China? If so, what are you seeing now and what changes do you expect throughout the year? Be glad to compare notes.

Go!Go!Go!

Jim

More Resources

Asia Supply Chain Excellence

Asia Supply Chain Excellence Report - January 2012

Photo Credit: L2F1

M&A Activity is Slow Out of Gate: Take the Supply Chain View & Focus on Growth

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Fri, 03 Feb 2012 13:47:00 -0500

A few months ago, we wrote that “2012 will be a return to full speed ahead for M&A.” Our Strategies to Transform Your Supply Chains in 2012 article noted that M&A growth is expected to be robust.

But at this point, deal activity is slow out of the gate. The Financial Times reports that “deal making has had its slowest start to a year for nearly a decade, as companies’ appetite for M&A remains suppressed by the uncertain outlook for the global economy.” There is, however, a big caveat here – as the article later points out that company leaders are realizing that M&A needs to drive growth.

So as cash flow becomes available, organic growth slows and boards demand growth, we still expect a peak in M&A activity this year. Will it surpass 2011? Possibly not, but the focus will still be on profitable growth.

And if you want to succeed in M&A for value creation in the upcoming year, there are two essential requirements: speed and due diligence.

1) Speed – As supply chain leaders, we want to capture maximum value from an acquisition and set the pace for results. Stakeholders, the marketplace, and competition all watch this speed of acquisition and will value the acquisition based on the speed at which results are achieved.

2) Due diligence – When engaging in M&A activity, there is no give-and-take between creating it quickly and doing it right. To do right simply means to pursue the three M&A due diligence processes: commercial due diligence, culture due diligence, and supply chain due diligence. All three provide opportunities for revenue growth, cost reduction and risk mitigation.

There are also four very important strategies for creating value in M&A activity: business strategy, acquisition strategy, supply chain strategy and operational strategy. Our new white paper, Laying the Foundation for Successful M&A - A Supply Chain View covers the four strategies in more detail.

It appears that M&A this year will be more about driving growth and creating value than in previous years, and taking a supply chain view is the way to go.

What do you predict for M&A in the coming months? How do you see the supply chain fitting into the picture?

GoGoGo!
Jim

Resources

Mergers & Acquisitions Can Be Risky Business Without Supply Chain Due Diligence

Acquisition success thrives on supply chain integration
Mergers and Acquisitions in the Service Supply Chain Industry

Photo Credit: Ell brown

How Is Your Company Optimizing Inbound Flow of Goods?

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Mon, 30 Jan 2012 13:54:00 -0500

I am betting that you could answer this question in a variety of ways. But if your answer is somewhere along the lines of “not so well,” here’s some information that should pique your interest.

You may have read about our new partnership with ArrowStream. We are working together to help clients find savings in their order-to-delivery processes.

And last week, a couple of our logistics/transportation experts, Susan Evans and Bill Loftis, presented a Supply Chaincast on Bridging the Gap Between Transportation and Inventory Practices. This webcast showcases an innovative approach to driving inbound logistics savings with the ArrowStream Inbound Transportation Management (ITM) collaborative technology solution.

As a partner, we provide operations strategies, process improvements, and implementation assistance to ensure early and sustainable payback.

The ITM solution helps optimize order patterns to satisfy inventory requirements and optimize transportation. It also allows complete visibility on product (or service) orders, as well as complete visibility on transport constraints, delivery requirements, or financial targets.

Some other benefits include:

A shared planning system for collaboration between replenishment and transportation
Improved performance: inventory turns, transportation cost, and service (fewer stock-outs)
Improved operational issues: less miles and less dock congestion

If you’d like to dig deeper into this topic, download the on-demand webcast: Bridging the Gap Between Transportation and Inventory Practices.

Go!Go!Go!

Jim

Resources

Tompkins Supply Chaincasts

Tompkins Associates, ArrowStream Partner to Provide Innovative Supply Chain Solution for Product Distribution (Press Release)

Transportation Solutions & Assessment

Global Outlook Reveals Big Opportunities and Big Rewards for LSPs

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Wed, 25 Jan 2012 15:35:00 -0500

Global operations and strategies for companies in industries like retail, consumer products, and food & beverage are becoming more and more important to profitable growth. These emerging markets, particularly in China, provide major opportunities.

Having a China strategy is more important than ever in 2012, as “China for China” production by Western companies is creating great opportunities for companies to grow worldwide.

While there is a lot of buzz for various industries, logistics service providers should also make emerging global markets like that in China a priority this year. A newly published 3PL report showed that both shippers and LSPs see China, India, Brazil and Mexico as the biggest emerging markets for the industry.

Tompkins’ experts agreed in this article on the top priorities for LSPs in 2012 that success in these markets will hinge on having “the right strategy, the right structure, and the right partners” in place.

Though it is a challenge, the rewards for moving into these markets are great for LSPs, even if there isn’t as much buzz in the industry as compared to others out there. Expanded global capabilities are good for both LSPs and shippers to reduce costs while gaining competitive advantage.

See more on other priorities for LSPs in 2012 in this article.

GoGoGo!

Jim Tompkins

Photo Credit: FlyingSinger

Will Standards and Best Practices Vastly Improve Security for Pharmaceutical Companies in 2012?

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Mon, 23 Jan 2012 14:38:00 -0500

A variety of hot issues in the pharmaceutical industry are out there to tackle. But a big one that will continue to see a great deal of discussion, proposals and change in 2012 is the integrity of drugs and medical devices. Anti-counterfeiting, quality control, and security have traditionally been major priorities in this industry. A major part of this effort is track and trace, or an industry-wide effort to capture the pedigree of a drug or medical device from its production onward. Track and trace operations help reduce counterfeiting and other similar issues.

Track and trace initiatives are already making headlines this year in the US. According to the Pharma Times Online, new standards for track and trace in imports, anti-counterfeiting & anti-theft operations, and new best practices are the four main areas are being championed by the US Pharmacopeial Convention (USP).

While there are still disagreements about which standards and best practices are the right ones in this industry, the USP points out there are incentives for companies to come to an agreement. 2012 will be a key year in moving these proposals to becoming the standard for safer products in this industry.

For more on what to expect in the pharmaceutical and medical products industry in 2012, see this list of priorities for the year written by experts at Tompkins.

GoGoGo!

Jim Tompkins

Photo Credit: John Pavelka

New Sources of Innovation in the Consumer Products Industry

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Mon, 16 Jan 2012 14:36:00 -0500

In recent years, the name of the game for consumer products companies was to rebuild and rejuvenate. An uncertain market demanded strategies that allowed for flexibility coupled with profitable growth.

What does 2012 require in terms of strategies in this industry? Consumer products are moving past rebuilding and rejuvenating – and I recommend one more “R” word: Reversing.

Specifically, I mean reverse innovation. The phrase itself sounds like a contradiction, but it’s of particular interest to consumer products companies, which generate innovations for their products perhaps more than any other industry.

Reverse innovation does not refer to going backward. It is the concept of innovating within emerging markets. Companies don’t traditionally look at these emerging markets for innovation. The norm is to innovate in the mature markets, and then allow these innovations to trickle down to emerging markets.

Consumer products companies can learn a lot by reversing this process and going to emerging markets to find innovations. Because of the way that this industry is growing and how more and more companies are moving into emerging markets, reverse innovation has an important place in keeping products fresh and encouraging new ideas.

A major part of the success of a consumer products company is the new product innovations it creates. In 2012, I expect that more consumer products companies will embrace reverse innovation along with the traditional process of innovation for their products.

What else can we expect from this industry in the next year? The experts at Tompkins collected the top strategies for companies in the consumer products industry in 2012, which you can read about here: Top Consumer Product Industry Trends for 2012.

GoGoGo!

Jim Tompkins

Photo Credit: epSos.de

Footwear and Apparel Companies Going for the Gold in 2012

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Thu, 12 Jan 2012 14:03:00 -0500

Last year, the footwear and apparel industry dealt with many sudden changes and difficulties, including a spike in cotton prices. In 2012, changes are on the horizon. One development that the experts at Tompkins expect to see is more footwear companies moving into China. This move is not being made specifically to manufacture in China, but to sell to the market within the country itself. There is ample opportunity for Western footwear companies to fill in the gap. This is true especially among luxury brands, which are very popular in China.

However, some expectations for the market are likely to come from a major event this year: The 2012 London Olympics. Big brands in footwear and sports-related apparel are going to be on the world stage at the games, which is a great opportunity for these companies. Of all industries that could be affected, the footwear and apparel industry will see the biggest demand hikes from the games. It will be interesting to see how footwear and apparel companies respond to this unique opportunity in 2012.

For more industry strategies to use in 2012, read the new article by Tompkins experts, “Will 2012 Bring Stability to the Footwear and Apparel Industry?”

GoGoGo!

Jim

Photo Credit: Ömer Ünlü

Dividing Up the Pie: Food and Beverage Companies Splitting Up in 2012

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Tue, 10 Jan 2012 11:08:00 -0500

What isn’t set to change or grow in the food and beverage industry in 2012? For instance, food safety will be a growing concern; more food and beverage companies are moving into the huge market potential of China; and sales of private label products are set to continue with the growth they have experienced over the last few years. 2012 is going to be a big challenge for this industry.

One more area of interest is mergers and acquisitions. This activity will be increasing this year as available cash and financing are becoming more available.

However, a more recent trend is that very large companies are splitting up. In 2012, some of the biggest American food companies will divide themselves, according to this Foodprocessing.com article. The companies in question include Kraft Foods Inc. and Sara Lee Corp. This is fairly recent news, and we may see more of these splits as the year continues.

For more on the big challenges we’ll be seeing in the food and beverage industry in 2012, read this new article written by Tompkins Associates experts: Strategies to Transform Your Supply Chains in 2012 for the Food & Beverage Industry.

GoGoGo!

Jim Tompkins

Photo Credit: Michael Karshis

Transforming Your Supply Chains in 2012: Retail Industry is Ready to Grow

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Fri, 06 Jan 2012 11:21:00 -0500

Around the holiday season, many consumers purchase most of their items online due to convenience. The frustration arises when the wrong package is received or delivered late. That’s right…a late package, or a difficult return process: What could be more frustrating for consumers?

Online sales will continue to grow in 2012 and will become a bigger focus for retailers. Therefore, consumer sophistication, consumer behaviors, ease of access, and retailer incentives are all needed to boost online sales, as well as in-store sales.

For retailers this year, the question to ask yourselves is: Are you ready to grow? We know that supply chain organizations have their supply chains finely tuned - especially since retail customer service is not living up to standards - and now is the time to step up to the challenge.

The key focus is improving customer service and managing processes. For instance, making your website user-friendly will allow for increased purchases and satisfied customers.

Below are some trends and challenges to be on the lookout for in 2012:

Best practices
Speed to market
E-Commerce
China as a market
Demand-driven supply chains

Following these five trends will position retailers to emerge as industry leaders and allow for healthy growth in the retail industry. Preparation will help beat out the competition, so begin strategizing now for profitable growth.

For additional information on retail trends: Is Retail Ready to Accelerate in 2012?

Go!Go!Go!

Jim

Resources

Strategies for Transforming Your Supply Chains in 2012

Photo Credit: bikracer

Priorities, Not Predictions, for 2012’s Global Supply Chains

webteam.nospam@nospam.tompkinsinc.com (Jim.Tompkins) — Thu, 05 Jan 2012 11:06:00 -0500

As we ring in the new year and welcome 2012, I have been seeing a lot of talk about ‘predictions’ for supply chains and business in general cropping up. Predicting anything about business in the last few years is a difficult, if not impossible, task.

I think it would be more worthwhile if we would consider what priorities we should have on our lists for the new year (versus guesswork). These priorities should lead to measurable results – instead of hoping for the best, we know we are working toward what’s best.

With this in mind, Tompkins’ experts prepared priority lists for a variety of industries, including consumer products, food & beverage, footwear & apparel, industrial & equipment, LSPs, pharmaceutical medical products, and retail.

We also produced priorities for two major factors that will affect us a great deal in 2012: Supply chains in China, and what’s going on in merger and acquisition activity.

Visit the “Strategies to Transform Your Supply Chains in 2012” website to see each article for these individual topics – so you can get an idea of what priorities to expect in your industry this year. I am hoping each of us can harness the great potential that this year brings!

http://www.tompkinsinc.com/2012/

GoGoGo!

Jim

Photo Credit: aussiegall