There are numerous publications on China’s rise as a global manufacturing hub and the creation of its world-class infrastructure. It is not often that one comes across a book on the phenomenal development of the supply chain management (SCM) industry there. Though initially created to address export needs, the application of SCM internally is now dramatically transforming China’s domestic retail system. Peter Levesque and contributing authors have put together an interesting work on this subject, utilising their considerable SCM operating experience in Asian markets, particularly in China.
The book is divided into four key sections: The Rise of China, Changing Face of Consumer Retail, Retail Supply Chain Innovation and Supporting the Dynamic Supply Chain. The authors provide real-life examples on how global organisations in China have created leading-edge SCM practices, initially to meet their global sourcing needs. Many of these examples, like that of Zara in drastically reducing its product lead times or of Walmart, are well known. However, those of relatively less-known companies like RYZ Footwear, which has used the skill and power of Chinese SCM to almost halve product introduction time frames and win market share from established players, are equally educative. The authors deftly weave varied elements of the supply chain from movement of production inputs to getting the final product on to retail shelves as well as its use by alternative channels like online marketplace.
Many interesting practices that stem from the effective use of SCM in China – manufacturing postponement, dynamic inventory and so on – are analysed along with cutting-edge practices like direct-to-store shipping and granular deconstruction of product costs through the SCM chain. An insightful inclusion is the analysis by Professor Steven DeKrey of the often neglected importance of human capital in the creation of successful SCM systems. The authors demonstrate how apart from IT systems and processes, the role of people and empowered leadership are vital to successful SCM initiatives. It shows how many outstanding SCM improvements have come from incremental, people-led innovations. This adds a dimension that is not commonly found in most material on this subject. Our own Dabbawalas and their simple yet insightful coding system find a worthy mention among these. There are lessons for India in the case studies of global players that used China as a sourcing hub, then recognised the opportunity in the domestic retail market and built successful retail operations there. This, coupled with ambitious domestic Chinese companies, also heralds the global arrival of powerful Chinese brands hitherto unknown beyond their domestic market.
A practitioner’s insight into the use of latest technologies like radio-frequency identification (RFID) and emerging ones like Bodoke, GIS mapping and so on plus an analysis of the strengths and challenges are offered. A significant level of detail on the SCM ecosystem in China – customs processes, bonded warehouses and logistics parks – makes the book one of interest to those who have a trade relationship with China. The authors also discuss current challenges with the Chinese SCM system and reveal some of the unpredictability around their administrative mechanisms. The section on dynamic supply chain is interesting, though the extensive detail of some very basic terminologies could have been avoided. The book is well laced with references to numerous other relevant works, many of which are not commonly known.
The authors start with a futuristic premise that the ultimate supply chain is “one that is individually based on the order itself”. Through the course of this well-put-together work they leave us with the proposition that for SCM in China this possibility may not be too far away!
This book is a must-read for those in India who are in any way connected with the SCM industry or trade with China, as it provides numerous insights into cost structures and innovative practices like the use of smart pallets by Walmart. It is relevant to Indian retail practitioners because learnings from SCM initiatives like that of RFID by the Metro group or smart packaging initiatives by CEVA Logistics offer possibilities for adoption here. It also provides a close look at the scale, costs and efficiency global retailers (some of whom even own dedicated satellite networks!) leveraging the Chinese SCM engine enjoy, a harbinger of the impact their likely arrival in India can unleash.
Lastly, for our bureaucrats and policy makers this book offers insights into what China has done in creating a global SCM benchmark. It also helps them by throwing light on potential learnings as well as likely pitfalls in the quest to transform our own infrastructure and export-import procedures. The authors have chosen an appropriate title in The Shipping Point, a worthy namesake to the earlier management bestseller, creating an interesting read even as it deals with a relatively arcane subject.
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The reviewer is a Bangalore-based independent corporate adviser
THE SHIPPING POINT
The Rise of China and the Future of Retail Supply Chain Management
Peter J Levesque
John Wiley & Sons
266 pages