Respective of the Business Lounge “Supply Chain Design and Localization” of February 28, 2008 in Shanghai

The design and management of networks and supply chains is emerging as a critical factor for success – in China as well as in global competition. Companies that master their supply chains, manage the pull for localization and overcome the specific challenges in China can both create customer intimacy and achieve cost efficiency.

Practical insight has repeatedly shown that only those who understand the Chinese market and fulfill the specific requirements will be successful in China. This includes on the one hand offering the “right” products with the required functionalities. On the other hand it includes that customer needs regarding delivery time, capability and reliability have to be met – facing limited stock levels. This is particularly challenging with respect to an enormous market growth, improvable logistics infrastructure, complicated processes and long delivery times due to a lack of localization or unsatisfactory performance of suppliers.

The localization of stocks, assembly, manufacturing and suppliers plays a central role in this context. Localization is not only strengthened to meet delivery requirements, but also to realize cost potentials and for fulfilling legal requirements for localization.

Each Global Player should certainly make each decision for localization in a way to achieve an overall optimization: a decisive factor is a global Supply Chain Design which ensures global efficiency and leaves room for taking specific regional requirements into account.

In consequence, several questions were discussed during the Business Lounge ”Supply Chain Design and Localization”:

- How to avoid that the supply chain becomes a bottleneck in tapping market potentials?

- What are the market requirements in China regarding delivery performance and logistics services?

- What needs to be considered when developing Chinese suppliers?

- Which products and processes should be localized in China?

- How to realize global efficiency and fulfill specific regional requirements?

- How to design global supply chains?

General Managers and experts in procurement, SCM and logistics attended the Business Lounge, inspired by outstanding presentations and speeches from: Mr. Bruno Petit (Siemens Ltd. China, Power Transmission and Distribution Group), Mr. Ulrik Storm (Maersk Logistics China Co., Ltd.), Mr. Joachim Holzner (ZF Drivetech Hangzhou Co., Ltd.) and Mr. Stéphane Duminy (Shanghai Automotive Brake Systems Co., Ltd., SABS).

Mr. Petit gave examples of the “tough lessons learned” throughout the localization process of Siemens Power Transmission and Distribution business in China from a procurement perspective. He showed comprehensibly that each company has to be very clear about the desired level of localization and that progress in China can be very slow when it comes to setting up a high quality supplier network. A different perspective was added by Mr. Storm through an in-depth presentation focusing on logistics challenges in Greater China, including past experiences, current challenges and a future outlook. Here, a special emphasis was put on the need for a “greener” supply chain to not only act environmentally friendly put also to save costs throughout the supply chain. Mr. Holzner called attention to the fact that a company needs a strategically intelligent approach on how to localize and adapt the supply chain in China in order to decrease both risks and costs. He highlighted the importance of a close relationship with the supplier, not only on a project but also on top-management level, in order to retain and continuously develop the suppliers. Process traps were explained by Mr. Duminy, who gave the audience an insight to the localization of production materials in China. He explained the process and its challenges from the first step to mass production with a focus on quality awareness and emphasis on the systematic evaluation of suppliers.

The event was introduced by the CEO of Seidenschwarz & Comp., PD Dr. Werner Seidenschwarz, followed by a presentation held by Dr. Peter Faust, Seidenschwarz & Comp. GmbH, with an illustration of the challenges, methods as well as tools on Supply Chain Design and Localization.

The Seidenschwarz & Comp. team would like to thank all speakers and participants for the excellent presentations and discussions that made this successful event possible. We are encouraged by the very positive feedback to continue our Business Lounge events in China in order to discuss actual topics in an expert network and develop new ideas.

Shanghai, March 2008