Capacity Building Workshop on
Trade Facilitation Implementation:
Tools, Techniques & Methodologies
Supply Chain Efficiency & Trade Facilitation
Geneva, October 18th 2004
Olivier Aba
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
1
Workshop Agenda
1. What is a Supply Chain, “SC”, & Supply
Chain Management, “SCM”?
2. Benefits of Supply Chain Management
3. E-business & Supply Chain – opportunities
4. E-commerce & Trade Facilitation: how to
improve Supply Chain efficiency &
competitiveness?
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
2
What is a Supply Chain?
P&G or other
manufacturer
Plastic
producer
Chemical
manufacturer
(e.g. Oil Company)
Supermarket
or 3rd
party DC
Supermarket
Chemical
manufacturer
(e.g. Oil Company)
Tenneco
packaging
Paper
manufacturer
Customer wants
detergent and goes
to Supermarket
Timber
industry
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
3
What is a Supply Chain?
 Every company is involved in one or more Supply
Chains
 A supply chain can be defined as “the sequence of
suppliers that contribute to the creation and
delivery of a good or service to end customers.
This encompasses virtually all aspects of a
business—sales processing, production,
inventory management, material supply,
distribution, procurement, forecasting, and
customer service, and several other areas…”
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source :Aglira & al. , 1999
4
Components of a Supply Chain
PLAN
Demand
& Supply
Planning
Oct04
BUY
MAKE
Sourcing
& Supplier
Management
Manufacturing
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
MOVE
Storage &
Transportation
SELL
Customer
& Order
Management
5
Logistics vs. Supply Chain
 Supply Chain is NOT logistics…
 Supply Chain is MORE THAN logistics
 covers the coordination of most activities
& flows upstream:
• from suppliers to manufacturing
 and activities & flows downstream:
• from manufacturing to end-customer
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
6
Logistics Costs in Europe
(as a % of revenues)
1998
Transportation: 40%
Warehousing: 26%
Inventory: 18%
Admin: 16%
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: ELA, Insight to Impact, 1999
7
Logistics Costs Worldwide
Region
Country
North America
Mexico
15.3
USA
10.5
Belgium
11.4
France
12.0
Germany
13.1
Greece
12.6
Spain
14.7
China
16.5
India
15.4
Brazil
15.0
Europe
Asia/Pacific
South America
Oct04
Logistics as %
of GDP (1997)
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Bowersox, Closs, Cooper, 2002
8
Flows in a Supply Chain?
 There are 3 types of flows to consider
in a Supply Chain:
 Material flows
 Financial flows
 Information flows
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
9
What is an Internal Supply Chain?
A company’s “internal” Supply Chain is
made of the material, information and
financial flows between the company and
its direct business partners.
Material flows
SUPPLIER
MANUFACTURER
CUSTOMER
Financial flows
Information flows
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
10
Integrated or Extended
Supply Chain
Need to take into account the supplier’s suppliers and the
customer’s customers because they generally have an
impact on the overall Supply Chain performance.
Material flows
2nd tier
suppliers
1st tier
suppliers
Manufacturer
Wholesaler
Retailer
End-customer
Financial flows
Information
flows
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
11
Porter’s Value Chain
SUPPORT
ACTIVITIES
Oct04
ITC
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Margin
PRIMARY VALUE-ADDING ACTIVITIES
Inbound
Outbound Marketing
Production
Service
Logistics
Logistics
& Sales
IT systems
Human resources management & training
Research & development
Purchasing & contracting
Finance, planning, etc.
Source: ITC, 2002
12
Supply Chain
Sources:
plants
vendors
ports
Manufacturers,
Regional
warehouses:
stocking
points
Field
warehouses:
stocking
points
Customers,
demand
centers
Supply
Material
Production/
purchase
costs
Manufacturing/
Inventory &
warehousing
costs
Transportation
Transportation
costs
costs
Inventory &
Source: Simchi-Levi & al, 2000
warehousing
costs
SCOR 5 Processes: Overview
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Supply Chain council, 2003
14
SCOR 5 Processes
(1)
 Plan:
 Processes that balances aggregate demand &
supply to develop a course of action which best
meets sourcing, production & delivery
requirements
 Source:
 Processes that procure goods and services to
meet planned or actual demand
 Make:
 Processes that transform product to a finished
state to meet planned or actual demand
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Supply Chain council, 2003
15
SCOR 5 Processes
(2)
 Deliver:
 Processes that provide finished goods and
services to meet planned or actual demand,
including order management, transportation
management, and distribution management
 Return:
 Processes associated with returning or receiving
returned products for any reason. These processes
extend into post-delivery customer support.
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Supply Chain council, 2003
16
What is Supply Chain Management?
“Supply Chain Management is a set of
approaches utilized to efficiently integrate
suppliers, manufacturers, warehouses, and
stores, so that merchandise is produced and
distributed at the right quantities, to the right
locations, and at the right time, in order to
minimize system wide costs while satisfying
service level requirements.”
Source: Simchi-Levi & al, 2000
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
17
Drivers of Supply Chain
Performance
 Inventory
 Transportation
 Facilities
 Information
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
18
Drivers of Supply Chain Performance
Competitive Strategy
Supply Chain Strategy
Efficiency
Responsiveness
Supply Chain
Structure
Inventory
Transportation
Facilities
Drivers
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Information
Source: Chopra & Meindl 2001
19
Considerations for Supply Chain Drivers
Driver
Inventory
Efficiency
Cost of holding
Transportation Consolidation
Responsiveness
Availability
Speed
Facilities
Consolidation /
Dedicated
Information
What information is best suited for each
objective
Proximity / Flexibility
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
20
Drivers of Supply Chain Performance
Inventory:
 Role of inventory in the Supply Chain:
 Anticipation of future demand
 Production and distribution costs reduction
• economies of scale
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
21
Drivers of Supply Chain Performance
Transportation:
 Role of transportation in the Supply Chain:
 Transportation moves the product between
different stages in a Supply Chain
• Transportation choices impact the responsiveness and
the efficiency of the Supply Chain
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
22
Drivers of Supply Chain Performance
Facilities:
 Role of facilities in the Supply Chain:
 Where inventory is transformed into another
state - manufacturing facility
 Where inventory is stored before being shipped warehousing facility
• Choices such as number of facilities or capacity impact
the Supply Chain
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
23
Drivers of Supply Chain Performance
Information:
 Role of Information in the Supply Chain:
 Serves as the connection between the Supply
Chain’s various stages (allows coordination of
actions)
 Allows daily operations of each stage of the
Supply Chain (ex. : a production scheduling
system needs information)
Source: Chopra & Meindl 2001
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
24
SC Nokia
 Nokia’s frequent & rapid product introduction,
major contributors to fast revenue & profit
growth are:
 supported by a very flexible & efficient SC
 Nokia has put in place:
 rapid response manufacturing,
 quick-ship logistics,
 global SC web that links Nokia’s suppliers &
plants, supports Vendor Managed Inventories and
collaborative planning
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Accenture, 2003
25
SC Zara
(1)
 Global clothing manufacturer/retailer – 44
countries
 Focused on time to market, costs, order
fulfillment & customer satisfaction
 Zara owns 630 retail stores worldwide
 Store managers send customer feedback
directly to Zara’s in-house designers via
handheld devices
 designers are kept abreast of fast-changing
trends & demands
 gives Zara vital information on sale of lessdesirable merchandise
 better managed inventories
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Accenture, 2003
26
SC Zara
(2)
 Zara acquires fabrics in only 4 colors &
postpones dyeing & printing until close to
manufacturing  reducing waste and
minimizing need to clear unsold inventories
 Zara can deliver new styles in 3 to 6 weeks,
compared with up to 5 months for
competitors
Source: Accenture, 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
27
SC Henkel
 Multinational manufacturer of consumer &
industrial products
 Put in place collaborative planning,
forecasting & replenishment (CPFR) with
Condis, a Spanish supermarket & several
packaging suppliers for laundry & home care
products
 Involves daily interchange for key items,
coordinates business planning (combined
promotions & collaborative forecasts) &
jointly defined & measured key performance
indicators.
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Accenture, 2003
28
The “Best” Supply Chains
“They are not just fast & cost effective.
They are also:
 Agile
 Adaptable
 and they ensure that their companies’
interests stay aligned.”
Hau L. Lee, Harvard Business Review, October 2004
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
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Supply Chain & SCM Benefits
 Reduction of SC costs
 non-transport costs
 transport costs
 Lower inventories
 Improved delivery time
 Improvement in service quality
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
30
SC Champions: Service vs. Costs
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
31
SC Champions – Costs &
Performance
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
32
The e-Business
 e-Business is a collection of business models
and processes motivated by Internet
technology, and focusing on improving the
extended enterprise performance:
 e-commerce is part of e-Business
 Internet technology is the driver of the business
change
 The focus is on the extended enterprise:
• Intra-organizational
• Business to Consumer (B2C)
• Business to Business (B2B)
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
33
e-Business and e-Commerce
 e-Commerce definition:
 Is often referred to as “buying and selling
using the Internet”
 e-Business definition:
 The transformation of key business
processes through the use of Internet
technologies (IBM)
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
34
Barriers to e-Business Adoption
 For customers:
 A large proportion of current
non-Internet users
• Look at your country
 The poor understanding of the
benefits
 For companies:
 No tangible benefits
 Not relevant to the business
 Technology costs too high and
difficult to understand
 Concern about fraud
 Concern about confidentiality
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
35
Introducing B2B and B2C
Business
Consumer
Oct04
Business
Consumer
B2B
www.dell.com
B2C
www.amazon.com
C2B
www.priceline.com
C2C
www.ebay.com
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
36
e-Business Environment
Environment today has more influence & impact
Global Environment
International, economic factors,
Legal constraints, cultural factors
Local Environnent
Technologies,
innovation
used by global
competitors
Supplier
organization
Customer
Technologies
Local Competitors
Society
Public opinion
Media
Moral…
Intermediates,
Channels
Country specific, economic factor,
legal constraints, cultural factor
Look at the top 100 companies
from 50 years ago, less than a quarter of them remain in the top 100, many have ceased to exist.
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
37
e-Business Processes
 In this context, e-Business specifically
refers:
Product
 to “the planning and execution of the
front-end and back-end operations
 in a chain using the Internet”
Supplier
Oct04
Manufacturer
Wholesalers
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Retailers
Customer
38
B2B & B2C Transactions
Supplier
Intermediaries,
Retail
channels
Channel
organization
Technologies
Consumer
customers
B2C
Organization or
business
customers
Technologies
B2B
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
39
Disintermediation
or “cutting out the middle man”
Consumer
Wholesaler
Retailer
Producer
Don’t kill your traditional sales channels but help them in new way of sales
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
40
e-Business & the Supply Chain
 Very broad impact of e-business on the
Supply Chain:
 upstream: sourcing, procurement
 inbound & outbound logistics: links & use of third
parties
 downstream: ordering, warehousing &
distribution…
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
41
The Role of e-Business in a Supply Chain
 Supply Chain transactions which can be
performed over the Internet:
 Providing information across the Supply Chain
 Negotiating prices and contracts with customers
and suppliers
 Allowing customers to place orders
 Allowing customers to track orders
 Filling and delivering orders to customers
 Receiving payment from customers
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
42
e-Business Opportunities & SC
 Reduce facility costs
 Eliminate retail/distributor sites
 Reduce inventory costs
 Apply the risk-pooling concept
• Centralized stocking
• Postponement of product differentiation
 Use dynamic pricing strategies to
improve SC performance
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Chopra & Meindl 2001
43
e-Business Opportunities & SC
 Supply Chain Visibility:
Reduction in the “Bullwhip Effect”
• Reduction in inventory
• Improved service level
• Better utilization of resources
Improve Supply Chain performance
• Provide key performance measures
• Identify and alert when violations occur
• Allow planning based on global supply chain data
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Chopra & Meindl 2001
44
Potential Revenue Opportunities
from e-Business & SC








Oct04
Direct sales to customers
24 hour access for order placement
Information aggregation
Information sharing in supply chain
Flexibility on pricing and promotion
Price and service discrimination
Faster time to market
Efficient funds transfer - reduce working
capital
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Chopra & Meindl 2001
45
Potential Cost Opportunities
from e-Business & SC
Direct customer contact for manufacturers
Coordination in the supply chain
Customer participation
Postpone product differentiation to after order
is placed
 Downloadable product (software)
 Reduce facility costs
 Geographical centralization and resulting
reduction in inventories




Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Chopra & Meindl 2001
46
Potential Cost Disadvantages of
e-business
 Increased transportation cost due to
inventory aggregation
 Increased handling cost if customer
participation is reduced
 Large initial investment in information
infrastructure
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
47
Fromages.com
 Founded in 1997
 Sale of French cheeses overseas:
 USA: 70%, Europe: 15%, Asia: 15%








Reseller, not a producer
No inventory
Key elements: quality & logistics
65% of costs: cheese, packaging, express delivery
85% of orders delivered in 24 hrs…
Average sale: 70/80 euros
Selling price includes transportation costs
Partnerships:
 Cheese producer & ripener in Loire-Atlantique
 Shipper – FedEx
 Sales (2003): estim - 1 M euros – profitable since 2000
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
48
Aquarelle.com
(1)
 Founded in 1997
 Online sale of flower bouquets in France, Europe, USA,
Japan, South Korea & Venezuela
 20 theme bouquets, as per the season
 Craft work & Just in Time
 Flowers purchases: 80% from Netherlands
 Centralized flower assembly north of Paris
 25 assembly florists
 Customer can « see » what he is purchasing
 Key success factors: availabiliyt, freshness, leadtime &
quality
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
49
Aquarelle.com
(2)
 Downstream logistics critical: transport, delivery, &
followup:
 Paris deliveries– E-liko
 Delivereies in France - Chronopost
 Specific packaging designed & used for the flower
bouquets
 Delivery fee added on customer bill: 9 euros
 Investment in information systems: 4 M euros – online
purchasing system for suppliers, supply chain
mangement & order management application
 Local partnerships
 Sales (2003) : about 8 M euros – profitable since 2002
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
50
ChateauOnline
(1)
 Founded in 1998
 50 people
 Sales:
 50% France – 50% export: Germany, UK, Belgium, Netherlands,
Italy, Switzerland, Luxemburg
 70% of sales made with existing customers
 Stakes: customer retention, develop sales, improve quality of
service, reduce operating costs
 Approach: Emphasis on processes & use of information systems
 Focus on the customer relationship management - CRM integrated
with information system
 Continuous process improvements & integrated inventory
management
• Automated E-mail for customer order acknowledgment
• Customer order status available on the site
• Handling of customer problems & anomalies – workflow process
between call-center, sales, logistics & accounting
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
51
ChateauOnline
(2)
 2000 products from 15 different countries
 Deliveries in France: 5/10 days, overseas: 7/24 days.
 Logistics platform (2000 m2) handled by Easydis
(Casino subsidiary)
 800 references, 85 000 bottles
 Transportation towards end customer handled by UPS
 Alliance in 2003 with Henri Maire. Maire is responsible
for logistics: wine storage, order preparation &
delivery
 Average sale: 200 euros
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
52
ChateauOnline
(3)
 European leader of online wine sales
 Honored many times as the best ecommerce website
 Sales (2003) estim – 10 M euros –
profitable since end 2003
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
53
ChateauOnline Supply Chain
Information systems
PLAN
BUY
Sales
forecasting
& Purchases
planning
Purchases
& Supplier
Management
Professional
Buyers,
buying
direct in
France &
overseas
Oct04
MOVE
SELL
Order
handling
& payment
Storage
Upstream
Logistics with
partners.
Storage &
platform
Online order
management.
Promotions,
coupons…
Secured
payment.
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Transport
&
delivery
Outside
partners.
Transportation
Cost billed
to customers.
95% of deliveries
within leadtime.
54
LeShop.ch








First on-line supermarket in Switzerland
Created in 1998
75 people
Sales: 15.2 M CHF in 2003; 27 M CHF in 2004 (planned)
16 000 regular customers
Average basket: CHF 193 vs 34 in a supermarket
> 50% market share
Strategic alliance with Migros in September 2003 & with a
common & new online website in January 2004:
 find Migros as well major brand articles
 offer an excellent price/quality ratio
 Major items sold:
 Fruits & vegetables (bananas, carots, apples…)
 Delicatessen (chicken, ham)
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
55
LeShop.ch Supply Chain
CUSTOMERS
La Poste
Suppliers
Logistics Center
Suppliers
Suppliers
Oct04
La Poste
La Poste
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
56
Logistics
(1)
 « Ordered today, delivered tommorow”
 Distribution center in Bremgarten (close to Zurich)
 7000 m2
6 000 products – 80% fresh products
300/450 orders/day
Delivery cost billed to customer: CHF 12/delivery
Specific packaging: delivery box returned & isotherm
for fresh produce
 Transportation in refrigerated trucks from the
LeShop.ch logisitics center to the Swiss Post
distribution centers
 Goods delivered by Expresspost at the address given
at order time, directly at the customer door




Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
57
Logistics
(2)
 Own logistics center (not outsourced)
 30 people
 Products stored as per the nature of goods, process
sequence, & items turnover
 Specifics:
 customer requests items in small quantities, not full boxes or
palets
 need for different temperature storage areas: from -18 to + 20
degrees centigrades
 need for maximum handling care: fruits & vegetables,
bottles…
 Order handling: 33 minutes on average
 Order cost: CHF 24
 95% of orders delivered as per customer order
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
58
LeShop.ch: challenges
 Increase the amount fo the average
basket & frequency of purchases
 Increase the margin
 Increase the efficiency of the order
handling
 Reduce distribtuion & delivery costs
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
59
SC Collaboration
Material flows
Financial flows
Information flows
Suppliers - Manufacturers - Distributors - Retailers - Customers
Processes
Oct04
Organizational
structures
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Enabling
technologies
Source, INSEAD, 2002
60
Supply Chain Trends
(1)
 Focused towards customers:
 move from push - by firm to pull - by
customer
 more “personalized”
 logistics chain to take into account need
for global coherence, thus rationalization…
 global process allowing for reactivity…
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
61
Supply Chain Trends
(2)
 Integration & synchronization of the logistic
network:
 demand driven
 sharing of demand data between customers &
suppliers
 integration of incompatible information systems
 set up of appropriate production flexibility for the
firms & its partners
 permanent synchronization efforts between
internal & external logistic chain
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
62
Supply Chain Trends
(3)
 Partnership strategy on the way up:
 move from risk reduction approach to balanced
relationship
 focus on core competencies, brand, customers,
new product introduction
 outsourcing of “non-strategic activities”, such as
delivery, transport, storage
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
63
SC Transformations





Oct04
From
From
From
From
From
functions to processes
profit to performance
products to customers
inventory to information
transactions to relationships
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Christopher, 1998
64
The SC of the Future
Changes
Leading to
From functions to Integral management of materials &
goods flow
processes
From profit to
performance
Focus on key performance drivers of
profit
From products to
customers
Focus on markets & creation of
customer value
From inventory to Demand based replenishment & quick
response systems
information
From transactions
SC partnerships
to relationships
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Christopher, 1998
65
Supply Chain
 SCM is more than just technology & information
systems
 SC is vital especially for e-commerce
 SC implies a process and transversal approach across
functions
 One of the key drivers is information
 Emphasis is placed on collaboration & coordination
 Requires substantial investment in information
systems
 Agility & adaptability
 Integrated SC and SCM require major organizational
transformations
 The human dimension remains essential:
 People & change management
 Partnerships management
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
66
Example: Supply Chains in Tunisia
 Analysis of Supply Chains in 5 export related
sectors:





Garement
Automotive components
Dates
Olive Oil
Arts & craft e-commerce
 The selected companies are considered as
« best in class » in Tunisia
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: MKC, 2003
67
Tunisia SC case studies
Sector
Oct04
Status
Product
Sourcing
(1)
Target
Market
Garement SME
Local
International
Local
Garement ME
Local
International
Local/international
Garement Large
Off-shore
International
International
Automotive
components
Off-shore
International
International
Dates
Local
Local
International
Olive Oil
Local
Local
International
E-commerce craft
Local
Local
International
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: MKC, 2003
68
Tunisia SC Case studies
(2)
 The analysis clearly identified functional
& structural weaknesses that have a
major impact on the SC costs
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
69
SC Costs
 Non-transport costs







ordering & admin costs
load/unload
inventory carrying cost
storage cost
losses/damages
stock outs
emergency shipment costs
 Transport costs
 truck
 airfreight
 ship
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
70
Tunisia SC Case Studies
SC performance (1)
Sector
Incoterms
SC costs as % SC costs as %
of sales
of Value Added
Garement SME
EXW
17
47
Garement ME
EWW
14
37
Garement Large
CIF
13
25
Automotive
components
CIF
18
25
Dates
CIF
24
Olive Oil
CIF
14
26
E-commerce
craft
CIF
26
80
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Non transport
53
costs: 9.7 %
Source: MKC, 2003
71
Tunisia SC case studies
SC Performance (2)
Sector
Incoterms
SC costs as % SC costs as %
of sales
of Value Added
Garement SME
EXW
17
47
Garement ME
EWW
14
37
Garement Large
CIF
13
25
Automotive
components
CIF
18
25
Dates
CIF
24
53
Olive Oil
CIF
14
E-commerce
craft
CIF
26
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Non transport
26 12.4 %
costs:
80
Source: MKC, 2003
72
Tunisia SC Case Studies
SC Performance (3)
Sector
Incoterms
SC costs as % SC costs as %
of sales
of Value Added
Garement SME
EXW
17
47
Garement ME
EWW
14
37
Garement Large
CIF
13
25
Automotive
components
CIF
18
25
Dates
CIF
24
53
Olive Oil
CIF
14
26
E-commerce
craft
CIF
26
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Non transport
costs:
6.8 %
80
Source: MKC, 2003
73
Tunisia SC Case Studies
SC Performance (4)
Sector
Incoterms
SC costs as % SC costs as %
of sales
of Value Added
Garement SME
EXW
17
47
Garement ME
EXW
14
37
Garement Large
CIF
13
25
Automotive
components
CIF
18
25
Dates
CIF
24
53
Olive Oil
CIF
14
26
E-commerce
craft
CIF
26
Oct04
Source: MKC, 2003
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
80
Non transport
costs: 10.3 %
74
Tunisia SC Case Studies
SC Performance (5)
Sector
Incoterms
SC costs as % SC costs as %
of sales
of Value Added
Garement SME
EXW
17
Garement ME
EXW
14
Non transport
costs:
37 8 %
Garement Large
CIF
13
25
Automotive
components
CIF
18
25
Dates
CIF
24
53
Olive Oil
CIF
14
26
E-commerce
craft
CIF
26
80
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
47
Source: MKC, 2003
75
Tunisia SC Case Studies
SC Performance (6)
Sector
Incoterms
SC costs as % SC costs as %
of sales
of Value Added
Garement SME
EXW
17
47
Garement ME
EWW
14
37
Garement Large
CIF
13
Automotive
components
CIF
18
25
Dates
CIF
24
53
Olive Oil
CIF
14
26
E-commerce
craft
CIF
26
80
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Non transport
25 6.8 %
costs:
Source: MKC, 2003
76
Supply Chain Cycle Time
Product
Coffee Garments
Potatoes
Garments
Okra
Yemen
to
Germany
Yemen
to
Japan
Egypt to
USA
Egypt to
Germany
Jordan to
USA
Jordan
to UK
Ordering
process,
sourcing &
manufacturing
2.47
114
65
16
57
3.67
Goods
preparation
.29
7
2
1
1
.08
Transportation
up to final
destination
2.20
31
27
12
21
.71
Total # of days
4.96
152
15.4
29
87
4.46
Oct04
Tuna
(in days)
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Delvin & Yee World Bank, 2002
77
Supply Chain Costs
Product
Tuna
Coffee Garments Potatoes
Garments
Okra
Yemen to
Germany
Yemen
to
Japan
Egypt to
USA
Egypt to
Germany
Jordan to
USA
Jordan
to UK
Non Transport
SC costs in %
38
76
20
41
12
11
Transport costs
in %
62
24
80
59
88
89
Main modes of
transportation
used
truck &
air
truck &
ship
truck &
air
truck &
ship
truck & air
truck &
air
SC costs as %
of landed price
54.9
7.2
15.4
26
6.7
48
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: Delvin & Yee World Bank, 2002
78
Tunisia SC analysis: First Findings
 Lack of coherence in the practices of the
parties involved in the export process
 Lack of links & access to international
markets
 Costly & inequitable border control process
 Insufficient intermodal transfer infrastructure
 Not harmonized processes & documents
 Deficiencies in road transport & multimodal
transport underdeveloped
 Lack of institutional coordination
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
Source: MKC, 2003
79
Implications for Trade Facilitation
& Policy Decision Makers
 Most companies have the same
objectives:
 Improve response time
 Reduce inventory
 Reduce costs:
• transport costs
• non-transport costs
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
80
Food for thought…
 Supply Chain is a critical element of the
companies as well as country’s
performance in any economy…
 What can be done to improve the global
logistics & SC performance of companies
& of the country?
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
81
Questions for Policy Decision
Makers… (1)
 What is the state of the Supply Chain & Trade
Facilitation in your country? How does it serve
domestic as well as foreign trade actors
(import & export)?
 What is the impact of the logistical system in
the performance of the domestic economy &
foreign trade? What are the hurdles &
obstacles to an improved performance?
 Can the performance of import and export
companies be improved significantly? How?
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
82
Questions for Policy Decision
Makers… (2)
 What are the plans to improve the links &
interrelationships within the SC & Trade
Facilitation?
 In what way can the current regulatory
environment be amended to allow for a
development of the SC? Note that Supply
Chain & Trade Facilitation are related to
transversal processes, linking many different
sectors & actors and thus under no direct
control by any government institution…
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
83
Implications for Trade Facilitation
& Policy Decision Makers
 Information Flow:
 Telecom infrastructure
 Basic skills & access to IT technology & PC’s
 Access to & development of use of Internet
 Inventory:
 Port, road infrastructure
 Efficiency & dependability in admin procedures
 Transport & dependable logistics:




Port, road infrastructure
Skills & knowledge (import/export/logistics)
Coordination
Management of information flow
 Regulatory environment:
 Responsive & efficient
 Work by exception – customs
 Listen to “customers”
Oct04
Capacity Building Workshop UN SCM Geneva
slides Olivier Aba
84