UPS Survey Shows Supply Chain Focus on Service, Visibility and Risk Management
BEIJING, 10 November, 2011 - Providing higher customer service levels is a top priority, for high-tech manufacturers in China, according to the 2011 "Change in the (Supply) Chain" survey conducted by IDC Manufacturing Insights and sponsored by UPS. Seventy-three percent of the Chinese survey respondents noted a clear focus on providing higher service levels during the last two years and 77 percent intend to focus on this area over the next two years.
"While Asian manufacturers have primarily been outsource manufacturers for more established brands, many are investing in R&D and are providing better value-adds to their customers," said Steven Wong, Vice President, Supply Chain Operations, UPS China, "As we work with our customers, we are seeing those in the high-tech industry growing in their capabilities and service offerings. They are also understanding supply chains better and are leveraging them to maximise their profits and efficiency."
The survey revealed that the pressure of reducing total supply chain costs is prevalent across the Asian region. Chinese companies noted the need to improve their efficiency and supply chain visibility while improving their returns and reverse logistics processes as well. Risk management and demand planning will also become more of a priority within the next two years, demonstrating the growing maturity of companies to create sustainable longer-term foundations, potentially in response to the learnings from the Japan earthquake.
"Changes in the global economy have re-defined the supply chain needs of high-tech companies," explained Chris Grubb, Vice President of Marketing for UPS Asia-Pacific. "We have partnered with IDC Manufacturing Insights to conduct this annual survey in order to observe changes in the market, gain new insight, and learn how we can better support our customers in optimizing their supply chain and honing their competitive advantages in the fast-evolving global market."
While China and Japan will remain the main suppliers to most high-tech companies, survey findings indicated that many decision makers across the region plan to shift supply sourcing to both emerging and mature Asia Pacific countries over the next three to five years. Locally, Chinese companies currently source 92 percent of their supplies domestically. While these numbers are expected to dip slightly, respondents' are optimistic when considering the increase of intra-Asia trade over the next five years. In addition, a potential shift of domestic sourcing into third and fourth-tier cities within Mainland China to account for the gradual reversal of roles can be foreseen. A majority 56 percent of respondents indicated that they felt intra-regional trade was "good for the region"; also noting that they plan to expand their sourcing across the region to include "Mature Asia Pacific" countries, (Thailand, Malaysia, Hong Kong and Singapore) countries that they do not currently source from.
"China is one of the most important international markets for UPS. We are continuously investing our network and services so that we can better fulfil our customers' changing demands, especially those in the high-tech industry," said Steven Wong, Vice President, Supply Chain Operations, UPS China.
Other highlights from the UPS "Change in the (Supply) Chain" survey include:
New Drivers of Supply Chain Change
Beyond the short-term focus of improving service levels and reducing costs, 64 percent of respondents listed sustainability as one of their top priorities for the next three to five years -- a clear indicator for the future of the industry.
Regional Impact of Disasters in Japan
The survey also explored trends around risk management on the heels of the dual natural disasters that devastated Japan's East coast in early 2011. Findings show that risk management is a clear issue for high-tech supply chains in Asia.
Although almost half of the companies surveyed reported minimal disruptions or none at all due to the earthquake and tsunami in Japan, the event has increased awareness of the need to improve risk management plans. While most companies (96 percent) reported having some sort of risk management plan in place, only 11 percent said they had the resources or readiness to react in times of significant disruption. According to the survey, almost a third of respondents plan to improve supply chain resilience through better risk management.
"As a consequence of continuing globalization and the lengthening of supply chains, any global economic, political, or environmental event could have far-reaching effects on the performance of companies," said Dr. William Lee, senior research manager at IDC Manufacturing Insights Asia/Pacific. "Moving ahead, we expect to see manufacturers placing greater emphasis on supply chain risk awareness and mitigation."
For more information on the survey findings and to download an executive summary of survey results, visit pressroom.ups.com.
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