Asia Pacific becomes more complex for supply chain directors

When it comes to considering outsourcing opportunities in the Asia Pacific region, there is a strong tendency to implement a “close to home” logistics strategy, particularly with the warehousing function.

That’s one of several conclusions drawn by the London-based consultancy, Analytiqa. In its latest report, “Asia Pacific Supply Chain Director Survey 2011,” analysts also noted that Asia Pacific companies are becoming far more sophisticated and knowledgeable in their approach to the logistics tender process.

“These retailers and manufacturers are consolidating their 3PL model as they strive to deliver more superior customer service at lower total cost by teaming up with a small number of trusted 3PLs that demonstrate potential to implement fewer, bigger contracts with much wider scope,” added analysts.

Demonstrating a highly targeted approach, retailers and manufacturers in Asia Pacific on average approach up to six 3PLs per outsourced contract, said analysts. However, within these parameters there are significant differences per distribution tender, or per warehousing contract.

“With one-in-four manufacturers and retailers only approaching up to three external logistics providers per tendered contract, it is vital for 3PLs to effectively communicate their services and raise their company profile for a better chance of winning a tender,” the report stated.

Analytiqa maintained that Supply Chain Directors understand that employing a single 3PL for their pan-Asia Pacific logistics requirements has the potential to reduce costs through economies of scale and promote more direct and frequent business relations between the client and the 3PL. In 2011, however, around 35.0 percent of Supply Chain Directors consider logistics providers to still be incapable of meeting their pan-Asia Pacific supply chain management and operational needs.

“These manufacturers and retailers believe that as supply chains extend across the Continent in line with its expanding geographic boundaries, let alone worldwide, they are far too complex and fragmented for a successful partnership with a pan-Asia Pacific “one-stop-shop” 3PL.

Clifford Lynch of C. F. Lynch & Associates, a supply chain consultancy, shared a similar observation with SCMR in a recent interview.

“A lead logistics provider should be brought into the mix,” he said. “Ideally, one that is not asset-based.”

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