Dr Gautam Dutta
Mekong Institute
OUTLINE PRESENTATION
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Introduction
 Objective
 Process
 Outcome
 Q&A
Value Chain
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The term value chain refers to the full range of activities that are
required to bring products from conception through different phases of
to delivery to the final customers and disposal after use.
A value chain exist when all the actors operate in a way that generates
maximization of value across the chain.
Common questions that value chain should reply
analysis
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Who are the actors that participate in businesses across value chains?
Are there actors that coordinate activities in the overall value chain?
What are the contractual arrangements under which actors buy and sell
products?
How do actors exchange information and learn about solutions to
improve
products and business performance?
What technical, business and financial services are available to
support actors in the chain?
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How much value do actors add to the product in the different steps in
the chain,
what are their costs and how is this value distributed?
What are the power relations in the chain and to what extent do they
determine
how economic gains and risks are distributed among chain actors?
What kinds of barriers exist for firms to enter the value chain?
What is the level of competitiveness of firms in the value chain?
What bottlenecks exist and what opportunities are available for
development (upgrading) of the value chain?
Which policies and institutions constrain/support chain actors and
facilitate value chain development?
Global value chain and cluster linkage
Pakistan
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Twain
India
Bangladesh
pur
Raw
cotton
Spinning
Dying
Knitting
Thailand
Selling
Finishing with
Japanese zipper
EU
Barbie is sold in 140 countries at a rate of two dolls every second.
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Barbie's story begins on the outskirts of Los Angeles where Mattel's
team of experts on commodity and material prices determine the
optimum locations to buy the plastic resins, the cloth, the paper and
other materials.
Barbie has never been made in the United States.
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The first doll was produced in Japan in 1959,
More than 40% of the dolls are sold overseas, primarily in Europe and
Japan.
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Taiwan's imported oil--about 32%--comes from Saudi Arabia. Other
major sources include Oman (10%), Kuwait (10%), Iran (8%) and the
United Arab Emirates (7%).
Most of the moulds themselves, the most expensive item in toy making,
come from the U.S. (for Barbie), Japan or Hong Kong.
Pricing
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Virtually all the materials used in making Barbie are shipped through
Hong Kong and trucked to the Guangdong factories
In most cases, the only things that China supplies are the factory
space, labor and electricity.
Pricing: US Retail price: $9.99
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Leaving Hong Kong harbor: $2 which includes :35 cents for
labor,65 cents for materials. 80 cents for transportation
and overhead, 20 cents profit for the companies that
manage the manufacturing process.
Shipping, ground transportation, marketing, wholesale,
retail, : $5.99
Approx Mattel profit:$2
Barbie's Sourcing
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El Segundo: Mattel Inc.
U.S.: Cardboard packaging, paint pigments, moulds
China: Factory space, labor, electricity
Saudi Arabia: Oil
Hong Kong: Management, shipping
Taiwan: Refines oil into ethylene for plastic pellets for Barbie's body.
Japan: Nylon hair
Nike’s Value Chain
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In footwear, Nike has been able to develop long-term relations with
several large Korean and Taiwanese firms. With some of these
firms, Nike designers create and then relay via satellite new
footwear designs and styles for upcoming seasons to suppliers,
who in turn, develop the prototypes.
• Once these prototypes are approved, these lead suppliers fax the
product specifications to their various plants throughout Southeast
Asia, where production can take place almost immediately.
•In apparel, given short product cycles and volatile trends,
the situation is completely different. Nike works with
numerous suppliers, most of whom are also working for
other (often competitor) companies.
NIKE’S Sourcing ke
Assembly
Product Design
Lining
Label, elastic, studs,
toggle and string
BY
X
Shell
Filler
Zipper
Performing production slicing to identify the best location/ country to undertake each
stage of process, adding value along the way & integrating the entire supply chain
Cluster linkage with GVC /IPN
Orchestrate & discover value along the supply chain
The Evolution of SCM
Consumer
Needs
Product
Design
Product
Development
Raw Material
Sourcing
Consumer
Li & Fung’s
Supply Chain
Wholesaler
Factory
Sourcing
Local Forwarding
Consolidation
Customs
Clearance
Forwarder
Consolidation
Shipping
Consolidation
Manufacturing
Control
Li & Fung Group
Li & Fung Group
Li & Fung Trading
Export Sourcing
• USD14 billion in 2008
• Soft & Hard goods
• 40 countries, 70 offices
(HKSE#494)
IDS Group
Integrated-Distribution
Services
• USD1.7 billion in 2008
• Asian Distribution
• Global Logistics
(HKSE#2387)
Li & Fung Retailing
Retailing
• USD900 million in 2008
• Toys ‘R Us, Trinity, BLS
• Circle K (HK GEM)
(Privately held)