Gartner has published its annual list of leading supply chains in Asia Pacific with ten regional companies making the list. Gartner Research Director James Lisica said that Asia Pacific supply chain leaders continue to create agile and lean supply chains capable of dealing with regional challenges.
“We have observed some key themes across most industry segments that include building customer-centric supply chains, aligning to local markets while still serving global customers, strengthening risk management processes, improving cross functional communication, driving operational excellence to achieve fiscal discipline and prioritising talent management programs.”
While most regional companies still need to elevate their supply chain capabilities to compete on a global level, Lisica said it was encouraging to see companies had dramatically improved their position on the global ranking compared to last year, and that Samsung and Lenovo made the Top 25 Global Supply Chains list.
So which companies made the Top Ten and what are their key strategies, initiatives and best practices?
1. Samsung Electronics
Samsung saw a strong financial return through its Galaxy line of mobile devices, knocking Apple off its perch to become the world’s largest provider of smartphones. In fact, Samsung received the fifth highest peer vote of any company in the global list. The company continues to execute initiatives in planning, delivery, product life cycle management (PLM), corporate social responsibility (CSR) and talent. The vertically integrated South Korean manufacturer has also created a program for talent rotation between its headquarters and the regional offices to train supply chain talents on a wider variety of issues, cultural differences, and various market characteristics.
2. Lenovo Group
Lenovo’s growth strategy of looking beyond laptops and desktop systems continues to pay dividends, as the company prepares for providing total customer solutions by increasing its share of mobile technology. On the supply chain side, Lenovo has scaled up a corporate analytics centre of excellence (COE), supporting its supply chain, sales and marketing, and business units. It has also taken a data-driven approach and cross-platform visibility for manufacturing and sourcing decisions covering both in-house production and contract manufacturers. Lenovo has moved into the sustainability arena with a ‘pallet pooling’ initiative in Asia that produces real reductions in CO2.
This automotive giant moved up three places in the top 10 and 22 places in the global ranking, scoring better on financial parametres and improving on peer votes. Focusing efforts to address a series of recalls in 2013, Toyota is working to improve interfunction communication, introducing new and better systems to collect and analyse supply chain data, and building flexibility in its production methods. They are also putting greater emphasis on customer care, fathering information on vehicle reliability and performance from customers, suppliers and dealers to deliver sustainable solutions. By expanding its global production footprint, Toyota has limited its exposure to currency risk. As part of its digital strategy, Toyota is building its next-generation customer service model on a cloud-based platform that will allow owners, dealers and service agents to exchange information about the vehicle.
Hyundai’s localisation strategy sees it producing and supplying high quality cars in physical proximity to its target market. They continued to shift focus from sales numbers to profitable growth and quality, investing in fine-tuning quality before adding any new capacities. Last year, Hyundai strengthened its dealer network in several emerging markets such as China and Mexico, to improve on customer service. On the product front, the company has begun reducing its product complexity through platform integration, which has seen it reduce its model development time from 40 months in 2002 to 19 months in 2013.
After a brief absence from last year’s list, Huawei is back in the Top 10, having fared well in all three financial criteria and securing a reasonable number of peer and analyst votes. Their supply chain strategy revolves around strong customer collaboration, alignment with corporate objectives and the decentralisation of customer-facing operations. A supply chain COE drives critical process design and adoption, resulting in fewer supply chain personnel supporting aggressive revenue growth. Huawei has invested significantly in supply chain management technology, particularly back-office systems to support front-office processes, while strong cost-based optimisation models dictate trade-offs on profitable response to demand. The company is also committed to reducing its carbon footprint through logistics optimisation and innovative packaging.
The only Australian company to make the list, Woolworths had one of the highest ROA performances in the region. While other regional retailers are still developing supply chain strategies, Woolworths has already embarked on its supply chain transformation journey. Efficiencies gained from historical initiatives like ‘Mercury One’ – that touched almost every aspect of the supply chain including procurement, distribution, order consolidation, inventory management, merchandising, and in-store stock availability – have helped integrate and mature Woolworth’s supply chain capabilities. With an eye toward the future of online retailing, ‘Mercury Two’ looks to couple an already capable network with advanced analytics and deeper direct selling expertise to drive the future of retail and define the evolution of the company’s network. Last year’s investment in Quantium delivered advanced demand-sensing capabilities, positioning Woolworths to better understand the rapidly changing consumer environment and make informed trade-offs to optimise the flow of goods in and out of its network.
Honda saw significant financial performance across its car, motorcycle, and power products lines, improving its decision-making speed and supply responsiveness by reorganising its operations activities under the three separate business divisions. The company also set up a joint team of development, production and purchasing at each factory site to synchronise actions. Its cloud-based in-vehicle connectivity platform (HondaLink) connects drivers to news, information and media feeds from around the world using intuitive, audio-system-based interface. On the supply chain side, Honda is building a more diverse tier 2 and tier 3 supply base to minimise the risk of disruption.
This year, Flextronics focused aggressively on customer-centricity, talent development and disciplined execution, balancing supply chain velocity and risks. The company minimises risk while maximising opportunity through product, customer and geographic diversification. With 3D printing and various advanced engineering services, innovation continues to play a significant role in Flextronics’ future supply chain leadership.
9. LG Electronics
Korea-based electronics giant LG’s focus on the end-to-end value chain has seen a drive toward closer integration as they continue to collaborate with suppliers. Their investments in advanced planning and forecasting capability drives tangible benefits across the value network. With a strong customer focus, LG continuously tracks trends on future lifestyles and user experience to design and introduce innovative products.
Challenged with a need for faster product innovation, supply chain risk continues to influence Sony’s strategy, with initiatives in place to build resiliency in strategic partners by improving information flow and supply-based data. Still lagging behind some of its major competitions, Sony’s rise this year shows a focus on network optimisation and end-to-end visibility, not to mention an exit plan from PC into mobile, game and imaging. Sony is embracing digital strategy, leveraging digital networks to distribute content in the entertainment business. Leveraging against customers’ tastes and viewing habits, Sony is working aggressively to introduce a new, cloud-based television service.
More information on these leading supply chains is available in the report ‘2014 Gartner Supply Chain Top 25: Asia/Pacific’, available on Gartner’s web site at: http://www.gartner.com/document/2822721