ASEAN-CHINA
SME CONFERENCE 2011
LOGISTICS AND THE VALUE-CHAIN SYSTEM:
OPPORTUNITIES FOR SMEs
MOHD YUNUS IDRIS
SVP GLOBAL SALES
MASkargo
08th JUNE – 09th JUNE 2011
KUALA LUMPUR CONVENTION CENTRE
KUALA LUMPUR
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DEFINITION
1.LOGISTICS
Logistics is to get the right materials to the right place at the right time, while optimizing a
given performance measure and satisfying a given set of constraint.
Gianpaolo Ghiani, Gilbert Laporte, Roberto Musmanno (2004),
Introduction to Logistics Systems Planning and Control.
2.SUPPLY CHAIN MANAGEMENT
Supply chain management is an approach to manage the people physical and information
flows, from raw material through all the stages until it reaches the end user.
Aoige O’Riordan and Edward Sweeney (2006).
Outsourcing in Ireland: A literature Review and Survey Perspective to
Construct Outsourcing Roadmap.
3.3PL
Third-Party Logistics Services, 3PL is the activity which passes a part or all of the logistics
functions to the external logistics organizations.
Loretta Parashkevova (2007),
Logistics Outsourcing – A Means of Assuring the Competitive Advantage for an Organization.
4. OUTSOURCING
Certain business processes of the client are transferred over to the vendor, and the vendor’s office
then becomes the “back office” for the client outsourced business processes.
Subrata Chakrabarty (2009),
Strategies for Business Process Outsourcing: An Analysis of Alternatives, Opportunities and Risks.
Decline in one’s own business process that is not the core to the company and pass it to a company
which is specialized in the field.
Loretta Parashkevova (2007),
Logistics Outsourcing – A Means of Assuring the Competitive Advantage for an Organization.
It means finding a partner to establish a bilateral relationship and having the partner undertake
relationship-specific investments so that it becomes able to produce goods or services that fit the
firm’s particular needs.
Gene M. Grossman and Elhanan Helpman (2002),
Outsourcing in a Global Economy.
5. LOGISTIC OUTSOURCING
The fact of entrusting all or part of the logistic chain, whose activities were previously performed inhouse, to an external supplier on the long run, with a potential transfer of resources and with an
objective of performance.
Vera Ivanaj and Yvette Masson Franzil (2006),
Outsourcing logistics activities: a transaction cost economics Perspective.
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BASIC LOGISTICS ACTIVITY
RESOURCES MOVEMENTS
RESOURCE
SUPPLIER
MANUFACTURER
FINISHED PRODUCTS
MOVEMENTS
CONSUMER
LOGISTICS CAPABILITY REQUIRED:
1. LAND – Truck, Lorry, Van, Train
2. SEA - Sea freight
3. AIR – Air freight
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LOGISTICS PROCESS
CONSUMER OR CLIENT
MANUFACTURER
GOAL: 7R - RIGHT
1.PRODUCT
2.QUALITY
3.QUANTITY
4.TIME
5.PLACE
6.CUSTOMER
7.COST
PRODUCTS & RESOURCES FLOW
AIRPORT
OR
HARBOUR
PLANT
TRUCKING
OR
RAIL
AIRPORT
OR
HARBOUR
AIR OR
SEA
FREIGHT
CLIENT
TRUCKING
OR
RAIL
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AIRFREIGHT LOGISTICS ACTIVITIES
TRUCKING
MANUFACTURER
-
PACKAGING
STORAGE
BOOKING
SECURITY
COMMUNICATION
AIRFREIGHT
AIRPORT
OR
HARBOUR
TRUCKING
AIRPORT
OR
HARBOUR
-BUILD UP AIRLINE
PALLET
-SECURITY
-COMMUNICATION
-STORAGE
-FINANCE &
BILLINGS
-RESERVATION
-RAMP ACTIVITIES
-PACKAGING
-LOADING &
TRANSFER
CLIENT
-
BREAKDOWN
SECURITY
DELIVERY
REGULATORY
REQUIREMENTS
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The Sourcing Strategies
INVEST TO
PERFORM
INTERNALLY
Critical To
Competitive
Advantage
PERFORM
INTERNALLY
&
DEVELOP
OR
OR
OUTSOURCE
OUTSOURCE
Contribution to
Competitive
Advantage
OUTSOURCE
Not Critical To
Competitive
Advantage
OUTSOURCE
OR
KEEP
INTERNAL
Less
Critical
Relative
Capability
Position
More
Capable
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Resources : Ronan Mclvor, European Management Journal (2008)
The Sourcing Strategies
QUADRANT ONE
Most appropriate when:
Relative capability –
possible to replicate and advance upon
the superior performance
position of competitors/suppliers
in the process;
Contribution to competitive advantage –
Superior performance in the process
has a major impact upon competitive
advantage;
opportunism potential –
high potential for opportunism
associated with outsourcing.
Most appropriate when:
Relative capability - not possible to replicate
The superior performance position
of competitors/suppliers in the process;
Contribution to competitive advantage –
Process likely to diminish in importance
in the future; and
Opportunism potential - possible to
manage the potential for opportunism
associated with outsourcing by adopting
an appropriate relationship strategy.
INVEST TO
PERFORM
INTERNALLY
Critical To
Competitive
Advantage
PERFORM
INTERNALLY
&
DEVELOP
OR
OR
OUTSOURCE
OUTSOURCE
Contribution to
Competitive
Advantage
Not Critical To
Competitive
Advantage
OUTSOURCE
OUTSOURCE
OR
KEEP
INTERNAL
Less
Critical
Relative
Capability
Position
More
Capable
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Resources : Ronan Mclvor, European Management Journal (2008)
The Sourcing Strategies
QUADRANT TWO
Critical To
Competitive
Advantage
INVEST TO
PERFORM
INTERNALLY
PERFORM
INTERNALLY
&
DEVELOP
OR
OR
OUTSOURCE
OUTSOURCE
Contribution to
Competitive
Advantage
OUTSOURCE
Not Critical To
Competitive
Advantage
OUTSOURCE
OR
KEEP
INTERNAL
Less
Critical
Most appropriate when:
Relative capability - sourcing organisation
possesses a significant performance
advantage over competitors/suppliers
which is difficult to replicate;
Contribution to competitive advantage –
superior performance in the process
has a major impact upon competitive
advantage; and
Opportunism potential - high potential
for opportunism associated with
outsourcing the process.
Relative
Capability
Position
More
Capable
Resources : Ronan Mclvor, European Management Journal (2008)
Most appropriate when:
Relative capability - possible to replicate
and advance upon the superior
performance position of
competitors/suppliers in the process;
Contribution to competitive advantage –
Superior performance in the process has
a major impact upon competitive
advantage; and
Opportunism potential –
high potential for opportunism associated
with outsourcing.
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The Sourcing Strategies
QUADRANT THREE
Critical To
Competitive
Advantage
Most appropriate when:
Relative capability - not possible to
replicate the superior performance position
of competitors/suppliers in the process;
Contribution to competitive advantage –
process not a source of competitive
advantage; and
Opportunism potential - possible to manage
the potential for opportunism by adopting
an appropriate relationship strategy.
Contribution to
Competitive
Advantage
INVEST TO
PERFORM
INTERNALLY
OR
PERFORM
INTERNALLY
&
DEVELOP
OR
OUTSOURCE
OUTSOURCE
OUTSOURCE
Not Critical To
Competitive
Advantage
OUTSOURCE
OR
KEEP
INTERNAL
Less
Critical
Relative
Capability
Position
More
Capable
10
Resources : Ronan Mclvor, European Management Journal (2008)
The Sourcing Strategies
QUADRANT FOUR
Critical To
Competitive
Advantage
Contribution to
Competitive
Advantage
INVEST TO
PERFORM
INTERNALLY
PERFORM
INTERNALLY
&
DEVELOP
OR
OR
OUTSOURCE
OUTSOURCE
OUTSOURCE
Not Critical To
Competitive
Advantage
OUTSOURCE
OR
KEEP
INTERNAL
Less
Critical
Relative
Capability
Position
More
Capable
Resources : Ronan Mclvor, European Management Journal (2008)
Most appropriate when:
Relative capability –
sourcing organisation possesses a
performance advantage over
competitors/ suppliers in the process;
Contribution to competitive advantage –
process not a source of competitive
advantage; and
Opportunism potential –
possible to manage the potential for
opportunism by adopting an appropriate
Relationship strategy with a supplier or
spinning it off as a separate business.
Most appropriate when:
Relative capability –
sourcing organisation possesses a
significant performance advantage
over competitors/suppliers which is
difficult to replicate;
Contribution to competitive advantage –
process not a source of competitive
advantage; and
Opportunism potential –
outsourcing not possible due to
the lack of capable suppliers and
spin-off not feasible.
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OPPORTUNITIES OF OUTSOURCING IN AIR
FREIGHT LOGISTICS
1.WAREHOUSE
•Build-Up
•Breakdown
2.RAMP AIRSIDE
•towing
2.MAINTENANCE & SUPPLY OF MOVABLE EQUIPMENT
•Folk lift, tow trucks, of movable equipment
2.OPERATION
•Document Sorting
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