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Blockchain and its Impact on Business Operations

blockchain

Blockchain and its Impact on Business Operations

When one thinks of blockchain, one thinks of cryptocurrency, but even though much of this article is dedicated to the use of cryptocurrency, the truth is that more can be done with blockchain technology. This is because blockchain technology allows people from all over the world to create a transaction on a computer system. This transaction is secure (cannot be tampered with), it is dated, and it can be signed in many secure ways.

In short, if you wished, you could conduct a large digital Mexican wave around the world, and not only would the entire process be secure and efficient, it would also be traceable and wouldn’t rely on a central authority or third party to action.

The Omise Story

Omise is a company the operates a payment gateway for Thailand, Japan and Singapore. Rather than moving money from one country to another, convert it and so forth, they created their own coin OMISEGO, which they can quickly transfer anywhere. It can be deposited with an Omise office in another country. To help keep the price of their coin from fluctuating too much, they only conduct inter-office transfers as a way of getting money from one country to another. This is far faster and cheaper than using an Automated Clearing House, and far cheaper than using wire transfers.

But, what about the problem that each transaction creates a little more OMISGO coin? The answer for them was simple. They released the coin onto the general market, which gave it a market price, which therefore solved the “bit-extra” problem and introduced the problem that transactions now had to happen quickly for fear of sharp rises and falls in the coin’s price, which pushed up the potential transaction fee. However, the increase was marginal, and it was still cheaper than wire transfer and is still almost as fast.

Can the Omise Story Transfer Over?

Well, it certainly transfers to other payment gateways, and even modern US banks have stated their intentions to create their own cryptocurrency so they may move money within their own branches more easily. They would maintain full control of the currency, including its mining, which means that theft is more difficult and price fluctuations are not a problem.

Still, if it is to be applied to business operations, it needs to somehow improve efficiency, otherwise it is just another path to the same objective. If your business has an international element, then there is a chance that blockchain technology, specifically cryptocurrency, will help you. Otherwise, cryptocurrency needs to evolve and be retooled before it can do things like pay separate departments on demand more efficiently than the methods you are using right now.

What About Automated Clearing Houses?

ACH is hardly in its death throes since despite online transfers being as common as salt in the ocean, companies are still wrapping themselves in the warm blanket that is ACH, so what are their arguments against blockchain?

Argument – Costs pretty-much the same for each transaction.

Counter – Yes, on a per-transaction basis, but you receive your money up to 24 hours quicker with cryptocurrency.

Argument – We conduct thousands of transactions per day that only a clearing house could handle.

Counter – Dealing with fiat money yes, but transacting thousands of blockchain transactions per day can be done in house with almost no security risks.

The truth is that there are many ways that blockchain technology can replace Automated Clearing Houses, especially in terms of speed, security and traceability. But, ACH is trusted, tried and proven, whereas blockchain is still too new for most companies to trust.

The Demand for More Transparency

Let’s say there is a new law where every company had to track every supplier from its source. Every screw and every wire from every phone ever made, and so forth. A similar thing already happens with products labeled “Organic” in stores. Such a law would cost most primary and secondary industries a fortune, but the costs could be reduced in such an event with blockchain.

They could use blockchain to track transactions from start to finish. That way, every product being sold could have its own history that is stored in digital form. If required, an authority figure could back track every single element within a product, from where the coffee beans were bought to where the glue was manufactured for the label. Plus, the system could be set up so that each supplier need not consult a central authority to execute transactions, and each transaction would be protected with encrypted data. It would be difficult for a single entity to disrupt the history of transactions, which on its own will make the transactions a lot more secure.

Supply Chain Tracking

Using the same method as above, a company could track its supply chain, which is more important in the food industry than anywhere else. Walmart is unable to trust the record-keeping of companies in China, so it is using blockchain to track the supply of pork. Record-keeping transactions are marked at intervals so that Wal-Mart can see if a piece of pork sat in a warehouse for six months before being processed. The record-keeping process happens with regards to where the meat comes from, is slaughtered, processed, and stored, and this information is then used by the company in the US to create its sell-by-date.

Conclusion – A Tool is Only as Good as Its Use

A paintbrush in the hands of a novice is no more useful than a shotgun in the hands of a kangaroo. The intrinsic benefit of blockchain, as described in the introduction, is very powerful, but businesses are having a hard time integrating it into their companies. There are plenty who claim they have tried, such as Tyson, Nestle, Unilever and Dole, but they are more like nervous children dipping their toes in the shallow end of the pool.

Blockchain will benefit those who wish to transact payments domestically and overseas, and those who wish to track a process, a supply chain, and/or who just wish to be more transparent about their business operations. However, it is only the really competitive industries like the financial and food industries that are worth the added benefits of blockchain for the slight edge that blockchain technology gives them over their competitors.

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Ava Williams is a Resumeble editor and a career expert from Vancouver. She finds her inspiration in blogging and career courses. Meet her on Twitter and LinkedIn

manufacturing

Predictions, Prophets, and Restarting Your Manufacturing Business Amid COVID-19

COVID-19 has created a drastic effect on global health and the economy. Every nation is struggling to deal with the challenge of keeping its residents protected against coronavirus. Businesses are witnessing huge financial losses owing to a reduced/lack of workforce and other resources. If we talk about the manufacturing industry, it also has been hit hard by the corona crisis, and the fact that it has a huge role to play amidst coronavirus lockdown, this impact is felt the most by everyone.

The global supply chain got disrupted because of coronavirus, and since it originated in China, which is considered as the biggest manufacturing market globally, the ability of the manufacturing industry to meet the needs of the customers came down significantly.

So, let us throw some light on the impact of coronavirus on the manufacturing industry, and figure out some effective ways that can help manufacturers restart their business proficiently.

The Prophets and Prediction

The Prophet: The problem with prophecies is that they are based on data that is just a few weeks old, which is not sufficient for business leaders to make hard, cold business decisions when it comes to coming back in the market.

The Prediction: With social distancing becoming a norm, most of the people look forward to buying online. This clearly means that the scope of eCommerce is on the rise, and manufacturers will be looking to make a shift gradually.

Restarting Your Manufacturing Business

Every business is looking to return to the market, but due to the measures that are being adopted to reduce or prevent coronavirus are affecting the supply chains directly, which, in turn, is leading to disruptions in the manufacturing operations worldwide.

If we talk about the manufacturing industries like automobiles where production is done on a massive scale, the schedules for production are rigid and efficiency-optimized. In a similar way, the working of supply chains is dependent on schedules that are fixed like months ago based on the demand projections. Still, automobile owners are looking forward to remodeling such systems to be able to meet the irregular demand atmosphere.

Every crisis consists of several challenges, but one should look for opportunities within them. So, keeping the new norms of personal protection and social distancing, businesses need to redesign their business models.

To help businesses get started again, we are providing some guidelines that will help them to:

-Evaluate the organization’s COVID-19 safety compliance and requirements.

-Restructure the workplace for personal safety and protection.

-Implement procedures for personal protection.

-Put into practice the action plan for restarting to ensure a secure future of the company.

As per a Deutsche Bank analysis, the growth of GDP on the global level will be lower in 2020 due to the coronavirus effects. This effect will leave its impact on most of the U.S. and Europe, with growth forecasts on the global front also likely to drop by 0.2 percent.

Taking Care of the Workforce

The manufacturing industry is dependent on its workforce, and most of them proceeded towards their hometown owing to the fear of contracting coronavirus. In order to get its workforce back, a manufacturing company must keep track of the health status of every worker, along with gaining knowledge on the happenings in their areas through digital mediums. This will help them in knowing from which parts of the country they can call back their workforce to restart the manufacturing processes.

However, at this point in time, most of the manufacturers have to wait, and even if they are able to start the operations with a minimal workforce, they will be unable to manage their other important processes like accounting. In such cases, opting for Outsourcing manufacturing accounting services becomes imperative.

Securing Supply and Inventory

Instant delivery and globalization have turned out to be huge risk areas. Suppliers, including sub-suppliers, are all going through a similar situation. During such crisis situations, a huge concern comes to the top since procurement teams are unable to have close contact with their manufacturing suppliers. This, in turn, restricts them from monitoring the capacity of the production on a weekly/daily basis or evaluating the latest logistics prices and routes.

Now, with COVID-19, supply and inventory are in a position where there is a high risk of contractual defaults and severe legal action concerning the inability to fulfill orders on time or otherwise.

Why do Manufacturers Need to Rethink their Restart Strategies?

Most of the manufacturers are ready with their restart strategies and looking forward to implementing them ASAP. These new strategies are primarily focused on:

-The use of digitalization to receive data and have a superior visualization of the supply chain with control-centric solutions.

-Automation and robots to enhance the flexibility of the plant, including the capacity to run significant processes remotely or alone.

There is no denying that manufacturers are moving in the right direction, but they need to figure out for how long and at what pace they can carry out their production with a minimal workforce, technology support, and funds. The reason being local and international supply chains are disrupted, and one cannot say till how long this situation remains the same.

If a manufacturer is heavily dependent on the demand of a specific region or country, he may have to slow down his operations due to a lack of demand because of COVID-19. Low demand means a low supply and returns, leaving little funds for the manufacturer to operate. So, manufacturers need to assess their new strategies from every angle so that they are ready to face the forthcoming unexpected challenges.

This is a challenging situation for manufacturers for sure, and they cannot halt their operations for long. The above-mentioned suggestions will surely help manufacturers to not just get started but ensure smooth business operations in the future. Yes, they need to devise strategies, keeping in mind not just the present scenario but the possibility of forthcoming events, to stand strong against any unfavorable circumstances that might arise in the future.

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Gia Glad works as a Business Development Manager at Cogneesol, a well-renowned company offering data management, technology, accounting, and legal services. While handling the projects, she has witnessed a lot of changes over the years. She has been thoroughly researching and sharing her viewpoints about these industry trends and changes on many platforms across the Internet.

risk

How to Get a Handle on Risk in Uncertain Times: 10 Important Considerations

Risk: It’s the operative word on everyone’s mind right now. Whether it’s COVID-19 or oil prices, supply chain impacts or financial market concerns, understanding the impact of macro and micro-events, assessing their impact and putting in place the right action plans to mitigate that risk as best as possible is the priority task at hand.

Here we’ll examine ten steps to consider to ensure you’re being as thoughtful and rigorous as possible in your response to risk.

1. Take Care of Your PeopleHopefully, this has already been priority number one for your business after the past few weeks. How do we safeguard our people? How do we handle work from home – voluntary versus mandatory? What other flexible resourcing options do we provide – from sick leave to absenteeism considerations? What are the IT implications and subsequent human resource and capacity management concerns we need to consider and fully factor in? Err on the side of caution. Better to be safe than sorry.

2. Analyze Internal Risks – Before you can do that, you need to galvanize the right teams to be able to understand, assess and action against those risks. It’s critical to build the right cross-functional teams to be able to look at, and understand, the relevant issues to consider. This will involve finance, R&D (depending on your business) and marketing and sales. It will also involve teams like quality and sustainability leaders, as there will be implications and follow on ramifications despite your very best efforts.

3. Conduct Scenario Analyses – For critical categories, it’s important to get a handle on what alternative demand/supply options are. What are the pessimistic versus expected versus optimistic cases depending on what happens with the current situation, both in terms of the pandemic but also in terms of current and expected economic conditions? As part of any such assessment, you’ll need to score, assign probabilities and weights and adjust your thinking and actions accordingly.

4. Talk to Customers –This doesn’t tend to be the first thing people think about when it comes to procurement, but understanding the demand side implications for your business will be essential. How will demand be disrupted? Will there be specific products in your portfolio that will be more directly or severely impacted? Will this result in demand cutbacks or surges? Where will you source supply from? Can you cut back supply needs for others? How will buying patterns change – will there be channel shifts from offline to online? How does that play out in terms of critical suppliers and critical buys and requirements in the near to medium terms? Maintaining a dialogue with customers to understand their needs and issues and where all of this plays through for your team is essential.

5. Develop Plans for Strategic Categories –You’ll need to revisit your plans and the related risks around your most critical categories during a time of crisis. Make sure that these plans have been reviewed, the pressure points tested, the risk points analyzed and alternative plans considered. This could mean enhancing inventory levels (and rethinking inventory buffers based on the scenario planning we talked about earlier), assessing implications for delivery performance, gaining a view of multi-tiered supplier performance, increased inbound category visibility and more.

6. Examine Logistics Implications – By the same token, businesses must assess the logistics implications both inbound and outbound, either to make products or to ensure delivery. This has cost and timeline implications. All modes of transportation can be seen to be impacted, not least of which is shipping impacts – especially to and from China, but elsewhere, as well – whether these impacts are halts on movements, ramp downs, or the subsequently phased ramp back up. Or bypassing some of these options and going to airfreight which presents another level of cost to timeline tradeoffs.

7. Assess Liquidity – This will be critical and will call for a stronger partnership and alliance with finance. Looking at cash positions, assessing payables, and of course extending that into receivables, etc. will be essential. Add to this, talk of tightening credit markets and this makes it all the more important. Cash as always will be king if we need to endure near term instabilities, revenue disruptions, supply chain impacts, sourcing problems, and more

8. Assess Supplier Health – Part and parcel to all of this is assessing supplier health and evaluating who will be the most impacted. A clear view of your supplier segments – strategic versus mid-tier versus everyone else – is essential so you can focus your time and analysis accordingly.

For the most strategic suppliers, it’s critical to have a multi-tiered view of their supply base and related dependencies so you can adequately assess their performance and supply chain bottlenecks. This will involve structured risk analyses – looking across multiple variables beyond financials, to operational performance, to industry performance factors, to geographic and locational concerns and more. You’ll also need to identify alternate supply sources to shift production as and where needed, and as quickly as possible. Not all of this can be done at a moment’s notice. Some of it should have been done as part of a prior risk assessment exercise.

9. Think Ahead – Businesses can’t afford to simply think about today. Consider what the next three to six months look like. This is where scenario planning comes into play. It is critical to assess not only how you can react now but also how to prepare for eventualities later, when things are either fully back to normal or in some altered state based on longer-lasting ramifications from the events of today.

10. Work With Facts and Manage Emotion – Fundamentally, the most important thing you can do is to continuously monitor changes in a structured fashion. Have a programmed information collection and analysis mechanism. If we accept that the crisis is still unfolding and that the true impacts from a supply chain disruption perspective may not reveal themselves for months, we need to take tangible steps.  This can be done by establishing a process to monitor other regions outside the infected areas that could be impacted. Are ports outside the infected areas being impacted through disruption or through new regulations to protect against transmission of the virus?  Are suppliers struggling financially without access to the Chinese markets, jeopardizing their viability? Data will be important but data converted to relevant insight for your specific supply chain situation will be essential.

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Omer Abdullah is Co-founder and Managing Director of The Smart Cube and is responsible for managing the company’s Americas business.Omer has more than 25 years of management consulting, global corporate and industry experience across North America, Europe and Asia.

Prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA and a BBA from the University of East Asia.

ASEAN

Global Trade Talk: Navigating Geopolitical Currents in a Changing Southeast Asia

Global Trade Talk is part of an ongoing series highlighting international business, trade, investment, and site location issues and opportunities. This article focuses on the conversation between Simon Tay, Chairman of the Singapore Institute of International Affairs and Keith Rabin, President, KWR International, Inc.

Hello Simon. How have you been? Before we begin can you tell our readers about your background and current activities?

I am Chairman of the Singapore Institute of International Affairs (SIIA). We focus on the Association of Southeast Asian Nations (ASEAN), a regional organization comprised of ten countries in Southeast Asia, as well as the wider Asia Pacific and Singapore’s role as a hub for trade and investment and greater integration in the region. This includes a range of geopolitical issues including the rise of China, the role of the US, and most recently the coronavirus pandemic, which is serving as an accelerator for changes that have been occurring over the last decade.

Professionally, I am an attorney and was a member of Parliament from 1997-2001, serving during the Asian financial crisis. Then during the 2008 global financial crisis, I was stationed in New York at the Asia Society where we first met. These experiences have given me a unique perspective on the impact of globalization and other trends we have experienced over the past two decades.

While ASEAN currently possesses the third-largest economy in the Indo-Pacific and fifth largest in the world, many foreigners have never even heard of the regional group nor do they recognize its potential. Can you talk about how ASEAN evolved, what it represents as a commercial market and investment destination, and in terms of security and its global importance? What opportunities and obstacles and investment themes are of particular importance to foreign companies and investors in the coming years?

I don’t blame people for not knowing ASEAN. When one looks to Asia, one’s eyes are first drawn to the giants. China in particular has done very well over the past twenty years and no country has grown faster during that time. As it developed and labor costs and standards of living rose, Southeast Asia began to capture the attention of businesses, and deservedly so. ASEAN now has growing appeal, because of greater integration as we create an ASEAN Community with increased consumption and growth. That is why many people refer to us as the fifth largest economy in the world.

The reality, however, is a bit short of that – as we are not really one country or one system. We are, however, working to realize the “ASEAN 2025 Vision.” This is a roadmap adopted in 2015 to articulate regional goals to create a more cohesive ASEAN Community. SIIA is currently working on the ASEAN mid-term review, which is examining our progress, and how crises such as the pandemic can strengthen our will to more fully integrate. While an unfinished project, given the diversity in the region, it is — in some ways — every bit as ambitious as the establishment of the European Union (EU). The trend is toward closer integration.

Before the Asian financial crisis, which began in the summer of 1997, the region was mostly viewed, at least in the US, through the lens of the Vietnam War. Over the last twenty+ years we have advanced, however, and growth in ASEAN has been reinforced. This is true both in developed countries such as Singapore and Thailand, developing nations such as Vietnam and Myanmar, and those in between. Before the pandemic, ASEAN as a whole was growing at a faster rate than China. While the pandemic is hitting our people and economies hard, the region should still outperform the world.

The fundamentals are real. ASEAN is ascending from a lower base, leaving substantial room for further growth. There are many opportunities as countries raise consumption and leapfrog using software, digital innovation, and a greater online presence. Diverse sectors can do well, including labor-intensive manufacturing, infrastructure, services, consumer markets, and others that are part of the new economy.

As you note many people view ASEAN as being similar to the EU, a vehicle grouping together a group of countries into a more integrated market, though without a common currency. Is that fair and can you talk about both the diversity of ASEAN as well as the steps being taken to link these ten nations into a more cohesive entity? Is it possible for companies to have an “ASEAN strategy” or should they be looking at individual markets?

Given what I said about ASEAN, and how it is not yet a cohesive union, that is a very good question. The answer is yes and yes. Movement toward greater integration is very clear but we are not like China or the EU where you can put up one office and that’s it for the region. In a way, this is an economic strength as well as a political challenge.

In ASEAN you have an opportunity to link supply chains from a hub like Singapore, which offers first-class amenities, to less developed markets with eager and driven populations rising out of poverty and looking for jobs in factories and a more modern lifestyle. Myanmar for example is a sizable country with a pool of young people looking for jobs and a government seeking to develop. Myanmar also has a sizable expatriate population that has lived and worked in countries such as Singapore and Thailand, as well as Australia, Europe and the US, where they received education and training. Now their economies are opening – and they are returning with capacity, experience and ideas to implement change. So these countries are not starting from zero.

In between, you have countries such as Vietnam, Thailand, Malaysia and Indonesia. Labor there remains hungry for work, the land is relatively cheap and demand is growing. Today, a lot of attention is focused on Vietnam in particular. This is a country of almost 100 million young, dynamic, and hard-working people, which is well on its way to becoming a competitive supply base for many products.

ASEAN also benefits from not being China. Our diversity offers a decentralized model that adds diversification to global supply chains. It can be more complex to work across ASEAN — there is no one President or government to go to – but it is also less risky for those who can manage across borders – as it is not a case where if one government or economy fails, then the investor also fails. Moreover, ASEAN is not a threat to anyone politically. Vietnam for example has a trade surplus with the US whereas Singapore has a deficit.

Those who invest in ASEAN benefit from having an alternative to China, though are still located in this growing region. This allows synergies with production clusters based there. Being in ASEAN allows companies and investors to benefit and participate in this growing regional economy without putting more eggs into the China basket.

You mentioned the US has enjoyed strong ties with ASEAN since its birth in 1967. This was a time when the US sought to develop regional allies in the face of the Vietnam and Cold Wars. Today, however, despite a move to initiate an “Asian Pivot” under the Obama administration and talk of the “Indo-Pacific” under President Trump, some question US commitment to the region. How do you view the US presence and role within ASEAN? What should US companies and leaders know about ASEAN and how does their presence compare to other nations including Japan, Korea, Australia, and the EU?

The US remains an important partner and market for ASEAN and when looking at its involvement in the region, there are three strands we can talk about. The first is like an underlying current in the ocean, the second is the waves on top, and third like a bright object on the surface. If you look at the current, the destiny of the US remains very much an outward one. It is the country that created the modern world and global trading system you and I have grown up in. It was built to America’s advantage and I think this strong current of the US having shaped and benefitted from this world is ever-present despite current tensions. So we have not seen, whichever President, a lack of interest from US business, its military or security establishment. So whether you call it an Asian Pivot, Indo-Pacific region or before that the War on Terrorism, we believe this current can and should have reasons to continue.

At the same time, there are waves on the surface. These are more noticeable, as it is hard to see the underlying current unless you put your hand deep below. The waves do matter and I would say right now they are choppy and we are now going through a period where Americans are questioning globalization and retreating from multilateralism and international engagement. I was in Seattle during the 1999 WTO protests. At the time President Clinton had the political savvy to suggest we let these voices in to assuage concerns – even as he was the president who signed and implemented the NAFTA agreement. As a result, after a time, things calmed down and the situation became less tense for the moment.

Since then, however, the waves have gotten more turbulent, and it is important to recognize the tensions that brought Trump into office are not singular to him. Remember that Hillary Clinton responded to those choppy waves in her election bid. She supported the Trans-Pacific Partnership (TPP) agreement while Secretary of State, and yet as a candidate against Trump, she too expressed doubts about the TPP. So it is not just the Trump administration and we can see a wave of US constituencies questioning and expressing concerns.

The concern is rising to the point where now even the underlying current of outward movement that I mentioned is less visible. Companies are now being judged by how many jobs they are reshoring and their loyalty to America and American jobs. This is now seen as more important than an overall win-win growing the global economic pie paradigm, which has guided the thinking of policymakers and companies for decades.

And then there is the ball or float which can be seen in tweets and incendiary rhetoric. These attract a lot of attention and concern but they are not necessarily consistent. You mentioned the Indo-Pacific strategy and frankly, I haven’t really seen one. I have seen Indo-Pacific statements and senior US officials talking about issues, but I haven’t seen an overall strategy tying things together. I have to say I view this from an ASEAN perspective and generally, ASEAN is the final stop after a comprehensive strategy dealing with other parts of Asia is finalized.

There is also much less US involvement in multilateral institutions. This is important given the nature of the problems the world faces today. I also think the State Department itself has less access and the whole US establishment which has guided foreign policy and economic engagement, has been weakened.

At the same time other countries – and China in particular – have upped their game. They engage us, not only at the top level – but very thoroughly on an ongoing basis.  Ambassadors of these countries, whether you agree with them or not, are out all the time engaging people, and are much more present. The US is still here but less than in the past. Take something as simple as Ambassadors. How many ASEAN countries have sitting US Ambassadors? And if you talk with the ones that are here, how much access do they have into Washington and White House decision-making at a high level? Stove-piping is always a problem in big countries, but it is now becoming a more serious issue.

Since the early days of ASEAN, China has developed rapidly and has now become the world’s second-largest economy. It is also a major driver of economic growth and seeks greater regional and global influence through vehicles such as the Belt and Road Initiative (BRI) and Asian Infrastructure Investment Bank (AIIB), at a time when the US is backing away from multilateral institutions and its traditional role as a global leader on a range of important issues. As tensions rise between China and the US, both in terms of trade as well as influence and security, how is the region affected, and what are the challenges ASEAN countries face in navigating this changing environment?

The pandemic makes a vast difference. We are trying to figure out in a post-pandemic world whether China or the US will recover faster and at the moment the answer seems to be China. It is still early, however, and of course, there is now an outbreak in Beijing so we will have to see. At the same time within China, there seems to be a growing understanding they need to remain engaged with the outside world. They also did not have this pre-pandemic spirit of isolationism and questioning of whether it is good for China to export and invest abroad. So unlike the US, they did not come into this with a globalization backlash, strengthened further by the pandemic.

Singapore recently entered into a “green lane” agreement with China for business travel and Singapore-based businesses of all nationalities can now travel to six cities and regions of China with minimal testing as a first step toward reopening our borders. This is not political but an effort to restore supply chain links and our ability to operate as a hub while maintaining decent safety levels. We are also trying to open Australia and New Zealand, and other countries in ASEAN, but those discussions are not yet concluded.

Also, if you look back to the global financial crisis of 2008, it is notable that Asia and China kept growing. While the US did not shrink, in relative terms its global market share declined. That caused an adjustment similar to when an elevator goes up and suddenly stops. I feel if the US does not respond correctly to the current situation, we may experience another of those adjustments; it doesn’t mean the US will fade and fall down the elevator shaft, but there will be another jerky moment and perceptions in this part of the world will shift further as they did after the onset of the global financial crisis.

That said, people in ASEAN want more US involvement and encourage US investment and more participation by US firms. We think of the market and technology as rational and neutral, but it is beginning to get colored. Meaning if people think the winner will be China there is a tendency to go more in that direction – even though we are still fighting to keep things as neutral, rational, and as inclusive as possible. You can see that in the struggle over the decision this week to award Singapore’s 5G network to Ericsson and Nokia, though it still maintained a smaller role for Huawei.

In the past, there was a belief in the west that China’s development would lead it toward a more democratic form of government and integration within the global trading system that arose following the Second World War. In recent years it has become apparent this is not the case and China is embarking on its own path. This has led to growing concerns about China’s aspirations and efforts to exert global leadership and establish standards in new technologies as seen its “Made in China 2025 initiative”, its policy toward Hong Kong and Taiwan, cybersecurity and privacy, social credit scoring and other policies, practices, and beliefs. Do you share these concerns? How does China’s model translate to ASEAN and do you see a new “Cold War” developing in which countries will be asked to choose sides?

I have studied, lived in, and like the US, but never assumed China would become more democratic. I believe the Party will have to evolve and change in response to China’s development but never assumed this would necessarily be in a democratic direction. When I look at the region beyond China, I would also say most in Asia are not a democracy in the US-style. Even look at Japan, which you Keith know well. It is not a one-party system like China but it is not a US-style democracy. Neither is Singapore. We will have an election here in less than two weeks, yet there is almost no doubt which party will win. So I am not sure you as an American would describe such systems as democracy.

So I do not look at China through an ideological lens of democracy and have always thought China would do what made sense for China. As neighbors, we do have to figure out whether what is good for China will be a threat to us, rather than win-win. This applies when we look at Chinese investment; we tend to look at it through pragmatic calculations. I do not begin with the assumption that it is an attempt to politically suborn every place where they invest. There are of course risks that remain but they can be managed. For example, with BRI we have talked to Myanmar and others about the risks of unproven projects that burden them with high debt. That is Singapore’s style. We initiate projects incrementally. We start with one terminal and gradually expand to five, or one chemical factory into a large complex as demand is proven. We have an idea of where we want to go – but build incrementally rather than start with grand projects.

That is why you now see a number of Singapore industrial parks in Vietnam. These parks are not just physical spaces. Some provide training, education, and skills development for local workers so they can better serve companies based there. This helps our neighbors while developing our role as a hub. Singapore companies are also involved in BRI. For example, Surbana Jurong provides consultancy services to some Chinese investors in ASEAN countries, as well as acting for the hosts on other occasions. The Port of Singapore Authority (PSA) is also pushing out into the region and beyond; recently opening a joint port in Greece with Cosco, a Chinese shipping line. So Singaporean efforts are to seek cooperation and commercial deals that look non-ideologically to support globalization and free trade around the world.

The bigger question is the “new Cold War” between the USA and China. We do feel it. We try to make rational decisions based on market principles but increasingly everything is reduced to whether “you are for or against China or the US.” For the AIIB, Singapore participated from the start because infrastructure is a big issue in the region. We are in the Asian Development Bank (ADB) too and the World Bank. We think there is no reason we can’t be in more than one, and I do not see why the US objected to the AIIB or what was the alternative they were offering. On the other hand, when American’s spoke about the Indo-Pacific we were happy to work with our ASEAN colleagues to develop an ASEAN understanding and response.

The view of the Indo-Pacific that ASEAN has developed is slightly different than the US, as our goal was to make it more inclusive and not just for democracies. But we do agree a larger framework for the region is necessary. For Singapore, as close friends with India, we have no problems working with them as well and continue to hope they will become more and more integrated with the region.

Even before the coronavirus and heightened US-China trade tensions, corporations were beginning to reevaluate global supply chains to lessen their reliance on Chinese production. Many view ASEAN as a natural beneficiary, offering cost and diversification benefits. As a result, we see many clients giving the region more consideration given its strategic location, strong infrastructure and its ability to bridge operations that had been based in China and still rely on inputs from there. How do you view ASEAN’s potential as the region rises in importance as a hub within the global supply chain? What are the prospects for developing and more developed countries in ASEAN– as well as integration between the two, for example, the relationship between Singapore and Batam/Bintan and the Riau Islands, where we have been active for many years, located in Indonesia only 12 miles away?

Our greatest fear is not a splintering of global supply chains but rather the idea of bringing everything back home in response to growing nationalism. Big countries sometimes think they can do that – whether it is the US, China, India, or even Indonesia. They believe they can produce everything for themselves and capture their own market. We used to see this in the “import substitution” and “beggar thy neighbor” days. That is something we need to work together to avoid. Post-pandemic there will be exceptions and a degree of self-supply is important, for example with masks and ventilators, to prevent a cut-off of supply. Similarly, markets such as Singapore which imports almost 100% of its food supply, need to rethink being completely reliant on offshore sourcing. But we need to make sure that tilt does not go too far.

But I would emphasize we are not going to exclude China either. The interesting question is whether we still believe in global supply chains. I think the answer is that we do, provided that security and other key concerns can still be addressed. If that is the case, countries that can provide that, who can reliably manage increasing supply chain complexity with good governance and rule of law, with an ability to deliver will be rewarded. ASEAN and Singapore are well-positioned in that regard.

The larger danger is that countries retreat back completely to a reliance on national production and protectionism. It is a lesser danger for supply chains to split into two, one being the US and the other a Chinese supply chain. Sometimes it is important for other countries to have guts and stand up against that and bullying from either side. This is especially important during the pandemic when some powerful countries were trying to grab masks and other medical supplies for themselves when these had been contracted to others. For Singapore, and for me as an attorney and international lawyer, I emphasize the importance of fulfilling contracts. This does not always work to our advantage in Singapore. Sometimes in the pandemic, neighbors cut off supply but we still try our best to observe our commitments. The rule of law is important. The bottom line is – trust is something you can’t ditch in a crisis.

You ask about Batam and Bintan as part of our strategy to expand across the region. These islands are part of Indonesia but stand just a small distance from Singapore. Back in the early 1990s, there was a lot of excitement in Singapore about their development as an early step in regionalization and cross border cooperation. They are still significant; proximity still matters, but not quite as much as before. Other opportunities arise, and regionalization has deepened. One newer aspect is whether that proximity is connected to another market.

For example, a major Singaporean company now has an industrial park operating in central Java that caters to Indonesia, rather than offshore markets like Batam and Bintan. Singapore also has more than seven industrial parks in Vietnam – and we do more there than in these Indonesian islands nearest us. Why? It is not because we do not like Batam and Bintan; they also have a role to play. But they do not enjoy any special preferences or contiguous market, have no natural workforce so workers there are imported from other parts of Indonesia. In the end, they remain useful, allow easy commuting, but do not provide a definitive advantage in an environment characterized by deeper and more complex regional integration.

ASEAN has been severely affected by the coronavirus – and by most measures handled the pandemic relatively well. Can you talk about how the virus has been handled in Singapore and other countries in ASEAN, the nature of regional cooperation, and how the pandemic is likely to affect economic and other aspects of integration moving forward? What lessons should the US take from the ASEAN experience dealing with the virus?

There are differences in how ASEAN countries have handled this and from what we can see, Vietnam has come out on top in terms of controlling the pandemic. In Singapore, the overall national numbers may look scary, but it is under control for most of the community though the problem is acute within the foreign work dormitories which account for the bulk of numbers.

Singapore has a strong health system and has ramped up testing and treatment facilities; our medical system has coped and there has been a very low mortality rate. Malaysia and Thailand are also doing relatively well. For Laos, Cambodia, and Myanmar the numbers seem ok but it is really hard to know for sure, given low levels of testing. In Southeast Asia, I think the biggest worry is Indonesia where numbers are beginning to rise while the country faces strong economic pressure to reopen.

A key question is transparency. The more you test the more you find cases. So we look at testing rates as an indicator. In Singapore, we have good testing for a small population. As testing increased in dorms for migrant workers, this caused our numbers to really jump. It was just last week that Indonesia overtook us as having the most cases – and we have to ask why did it take that long? Basically, many countries are not testing enough. When they do test, it is for confirmed cases and not more generally – and the number of tests per million is very low. So from the reported numbers, the situation may look acceptable, but no one can be quite sure.

The current question is how to ease up the restrictions to restart the economy and allow travel across borders. There are worries about importing cases and all countries have at least temporarily closed off tourism, which are important parts of their economies. In the pipeline, I think green lanes for business are possible. But there will continue to be concerns about large numbers of tourists unless easy and reliable testing and (ideally) vaccines are ready. So we will have to figure out how to manage borders – allowing transport of workers as well as goods and services – to restart our economies and manage our integration and supply chains in an increasingly interdependent region.

One of the things we have learned is we have to be open to help from outside and cooperation is critical. In early February we first had a China-ASEAN meeting on how to deal with the virus and it was just China, but then we had an ASEAN Summit and this was notable in bringing in Japan and Korea – two countries that have the industry and technology needed to help. Now some of us are advocating Australia and New Zealand also need to be added as well. If we address the pandemic together – we have a much better chance of containing and dealing with it. Harmonizing our approaches to treatment and travel is important. Multilateral dialogue and cooperation are essential and world leaders should encourage talk rather than just closing borders.

India also represents a major economy that borders ASEAN and has traditionally had a major impact though often gets overlooked given the attention paid to China. What is your view on India as a regional and global player and how important is its economy to the development of ASEAN and how should companies be approaching this important market? Additionally, any thoughts on current tensions between India and China?

Last year before the pandemic we had the Regional Comprehensive Economic Partnership (RCEP) discussions which could potentially not only open up India but bring India more into the region as a major global manufacturer and supplier – much as China embarked on that path decades ago. RCEP’s importance rose after the US withdrew from TPP negotiations, and aimed to bring together all ASEAN members and our key trading partners — including India, Australia, China, Japan, New Zealand, and South Korea. But it seems the Indians didn’t like that vision or thought the costs of opening up their market were too high and walked away.

They thought they could scupper the whole initiative, but ASEAN has decided to go ahead without them. That was not our hope and it would have been much better to include them, but we were not going to let India veto RCEP, and it will now proceed, aiming to conclude by the end of 2020. I always tell my Indian friends we have to move – particularly now with the pandemic – and they would be advised to jump on board.

India has tremendous potential and their size and promise will always be there – but it is a bit like a giant universe operating by itself – cut off from the outside. That is sad as there are some really top-class Indian companies that can more than compete in the region. But India as a whole has not really been fully engaged. The politics are complicated – and while Singapore remains great friends of India – it remains to be seen if a path forward can be found. If Prime Minister Modi with all the support he enjoys is not willing to open up, how and when will it happen? Compound that with the pandemic and a lack of desire to integrate, and my fear is India will miss the boat.

For Indonesia, the largest country in ASEAN, it’s different. They know investors are questioning reliance on China because of costs and Sino-American conflict and are working to catch the attention to join global chains and attract more investment to create more and better paying industrial jobs. They are trying but it won’t be easy. China has retained many supply chains, and many that moved decided to go to Vietnam.  One Indonesian minister I know quite well is working hard to attract jobs and promote innovation and some companies are moving to base there. The minister told me his scorecard is based on an ability to attract foreign investors and industry. It will be difficult, but it is good they are trying. India, however, has mostly been sitting on the sidelines and it may only get harder over time.

Singapore is one of the world’s great success stories and has become a preferred destination to establish businesses and operate for companies in a wide range of sectors, including as a world financial center. For many years we operated our own company there as a base for activities in Myanmar, Indonesia and other ASEAN markets which lacked the same level of infrastructure, governance and services. Does the Singapore model hold, and what changes need to be made, as neighboring countries develop? Can you tell us about current Singapore initiatives, the upcoming election and the “bubbles” that are being created for business, travel and trade?

Singapore understands we serve as a hub for the region and if we cut ourselves off due to the pandemic and health reasons, we will find ourselves in a bubble that does not have enough air for all of us. You can live your life that way if you need to, but resources become scarce and it will not be much of a life. So we have to reopen, and all small economies face similar issues. New Zealand for example is further away but faces similar decisions.

That is why we talk about green lanes and bubbles. We need to start but in a controlled way with trusted partners. In the past, we were wide open. When you entered Changi Airport, even before you got to the doors, they opened wide. There was seldom a line and often no one even checked your luggage. Now, while I have not been there in five months, I imagine the scanners are working overtime. You need to show a health certificate and the process is much more cautious and guarded.

My analogy is that we have gone from an automatic door and seamless travel to a situation that requires a special pass and perhaps a key before you will be able to pass. Safety concerns are a priority. But for Singapore, the important thing is the doors need to remain open even if there are more checks and verifications to ensure adequate safety and easy passage. Singapore is committed to that. The government just formed a new public-private partnership called the “Emerging Stronger Task Force”. This will gather ideas on how to develop new processes and procedures to get better ideas on Singapore’s economic strengths, and how to move forward into the “new normal” in the wake of the pandemic.

It won’t be easy. But when I look back, there is reason to believe we can rise to the challenges. Singapore came out stronger from the Asian financial crisis and we are determined to do that again. That was true after the global financial crisis as well. If we get it right, Singapore can come out stronger this time as well. Of course, we could get it wrong and have made mistakes along the way;  two recoveries do not automatically translate into a third so we have to be careful not to have hubris and to work hard and innovate to succeed.

As you know we have been active and involved with Myanmar’s development for many decades, and one of the more interesting developments – at least in terms of Singapore – are long term plans to develop deep seaports in Kyauphyu, which would provide a land route into China. This initiative would allow shippers to bypass the Straits of Malacca and the Port of Singapore which has long dominated trade in the region. How do you view Myanmar’s prospects and the potential of these projects?

Do we see other ports in the region as a direct threat to Singapore? The answer is no. We think win-win. Our ports are busy and before the pandemic operated almost at full capacity. If Asia continues to grow, the volume of traffic will grow even more. The PSA has been expanding internationally to places in the region and beyond. Moreover, within Singapore land is very valuable and there is a plan to create a new mega port named Tuas in the north of the island. The current site of one port is very close to the city and is such valuable land that, rather than stacking containers, far more value can be realized if it is used for real estate and infrastructure development. So while we do want Singapore to continue as a major port, this means that we welcome and want to participate in growth across the region.

As for Myanmar more generally, we are very encouraged and remain positive. We would love to see them come up like Vietnam. As mentioned, there are several Singaporean industrial parks there and while there are none are as yet in Myanmar – we have very good relationships there and see lots of potential. Many people from Myanmar received their education and training in Singapore and many Myanmar companies rely on Singapore for banking, legal and financial services. So there are extensive people-people relationships and we want to help and be part of their development. Also, two of the most active banks in Myanmar, UOB and OCBC are from Singapore and as Myanmar opens up and liberalizes they are seeking to increase their presence.

Thank you Simon for your time and attention. Look forward to speaking again soon!

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Keith Rabin serves as President at KWR International, Inc., a global consulting firm specializing in international market entry; trade, business, investment and economic development; site location, as well as research and public relations/ public affairs services for a wide range of corporate and government clients.

disruptions

How to Manage and Overcome Disruptions in the Supply Chain

Regardless of the type of disruption, supply chain resilience is highly dependant on several factors, one of which being reliable end-to-end visibility created at the first sign of trouble. Whether it’s a health crisis, a series of policy changes, or other forms of disruption, proactive rather than reactive measures are critical in staying afloat when facing a variety of disruptions or bottlenecks.

Disruptions in the modern supply chain are simply inevitable and require a different approach in data management and predictability to successfully overcome the challenge at hand.  By effectively utilizing technology tools available and developing a solid crisis plan can make a significant difference in recovery times.

Below is a helpful infographic from DiCentral breaks down various predictable and unpredictable supply chain disruptions and what it takes in the planning, reaction, and response stages of managing and navigating challenges.

vessels

Vessels for Life: Here are the Ships that Make Our Lives more Livable

It’s amazing how interconnected we are as a world—from delivering goods along the supply chain to your local grocery store to the social distancing that has helped to control what we’ll unlovingly refer to as “The Outbreak.” As much as it can be sometimes difficult to be connected, it is this interconnectedness that also allows us to subsist in our day-to-day lives. Toilet paper, cars, and even oil are goods that we can access thanks to the Svengali-esque magic—or organization, rather—of the global supply chain. One could say that it, in fact, makes the world go ‘round.

So today, we’d like to introduce some of the power players in this arena, the unsung voices that help us to have access to different goods each and every day. And these unsung voices are ships, the carriers that are key to our worldwide supply chains.

What follows are five major carriers and eight individual vessels that play an important role in shipping vehicles, cargo containers for manufacturers and other goods and equipment of all sizes that make our lives more livable each day.

MSC Gülsün (MSC)

The MSC Gülsün is a ship in the fleet of the Mediterranean Shipping Co. (MSC), a world leader in container shipping. The MSC Gülsün is the largest container ship in the world, with a max capacity of more than 23,000 TEUs. (Try that on for size!) It has more than 2,000 refrigerated containers; a hybrid exhaust gas cleaning system; a dual-tower firefighting system; 35 cabins; and double-hull protection.

The MSC Gülsün also has an eye for sustainability, increasing the efficiency of the CO2 emitted by 48 percent. With a hybrid exhaust gas cleaning system (EGCS), this ship is also self-cleaning. The vessel can carry 8 million solar panels, more than 47,500 cars, 223 million bananas, nearly 3 million washing machines and 386 million pairs of shoes, MSC boasts.

The ship was built in South Korea at Samsung Heavy Industries. The MSC Gülsün is 400 meters long and 60 meters wide. Despite its size, its engineering reduces resistance from the wind, which leads to lower fuel consumption.

Venus Leader (NYK Line)

The Venus Leader is a vehicle carrier with the Nippon Yusen Kaisha (NYK) Line, a global shipping and logistics company. The roll-on/roll-off (ro-ro) division of NYK is the largest worldwide. Built in 2010, the Venus Leader sails under the Japanese flag. It carries up to 15,301 t DWT (tanker deadweight tonnage). Her draught is 7.1 meters. The Venus Leader has a length of 186.03 meters and is 28.2 meters wide.

The NYK line has a fleet of 118, which carries more than 3.4 million cars each year. In addition to cars, the NYK ro-ro division also carries agricultural machinery, plant equipment and specialty cargos such as boilers, transformers and yachts. The company has sustainability goals. For instance, by 2050, it aims to have a zero-emissions ship, the NYK Super Eco Ship.

M/V Liberty (ARC)

The M/V Topeka was re-flagged to American registry and re-named the M/V Liberty on Jan. 31, 2017, to be consistent with the practice of owner American Roll-on Roll-Off Carrier (ARC) to name its ships after American values. M/V Liberty is now among the most capable and militarily-useful vessels in the U.S.-flag commercial fleet, able to carry tracked vehicles, helicopters, trucks, and other military and high and heavy project cargoes. The vessel is 199.99 meters long with a beam of 32.26 meters, a stern opening of 15.2 meters wide and 5.4 meters high, and a stern ramp rated for cargo up to 237 metric tons.

Vessels in the ARC fleet are known for their ramp access and system optimization, which helps with quick reconfiguration that allows for maximum lift capacity. That explains why, besides military cargo, ARC ships carry commercial breakbulk as well as agricultural and construction equipment for developing countries. Considering itself one of one part of its partners’ supply chains, ARC also works with the warehousing capabilities of other countries.

Actuaria, ACX Crystal, ACX Diamond (ONE)

The top three vessels with Ocean Network Express (ONE), based on TEUs, are the Actuaria, ACX Crystal and ACX Diamond. Built in 2009, the Actuaria holds up to 6,589 TEUs and flies under the Portugal flag. Built in 2008, the ACX Crystal carries up to 2,858 TEUs and flies the Panama flag. And built in 2008, the ACX Diamond can handle 2,858 TEUs and flies the flag of Singapore. They are but three of 225 vessels in ONE fleet that travels to more than 120 countries and can handle a total of more than 1.5 million TEUs.

The sixth-largest carrier worldwide as of January 2020, ONE operates under four core values: “Lean & Agile” to be a new definition of what a new reality can be; “Teamwork” that builds new value; “Best Practice” through the collaboration of its partners; and “Challenge” that takes strengths to face challenges without being afraid to fail.

Magleby Maersk and Munich Maersk (Maersk)

Two of the biggest ships of Maersk—the Denmark-based logistics giant—are the Munich Maersk and the Magleby Maersk. The Munich Maersk, which has a TEUs capacity of 19,630, was built in 2017 and sails under Denmark’s flag. It has a draught of 7.1 meters with an overall length of 399 meters and a 58.6-meter width.

The Magleby Maersk, which can handle up to18,270 TEUs, is 398 meters long, 33 meters deep and 73 meters high. Built in the Daewoo Shipbuilding and Marine Engineering shipyard, the ship is engineered with two low-revolution and two long-stroke engines. Each packs 9,785 horsepower. According to Vessel Tracking, Maersk operates 538 container ships, which can ship more than 3 million TEUs.

In short, these are a handful of ships that are making waves in transportation and logistics, playing a major role in moving the goods that keep us going each day. Onward!

supply chain

In the New Normal Supply Chain, Firms Must Pivot Quickly

What will our supply chains look like after the impact of the pandemic has turned from an all-hands-on-deck crisis to some sort of new normal? Will either demand or supply patterns return to pre-COVID-19 levels? And should that happen, will it be in carefully managed phases, or more rapidly?

Many consumer-market experts speculate that we may find some of the changes in consumer buying—such as increased adoption of food home delivery or stocking cupboards with monthly visits to large-format stores—habit-forming, even after restaurants, hotels and fast-food outlets are once again operating at max capacity.

To imagine the future, we can look at what’s happening in the present crisis—astonishing, even heroic acts of supply chain flexibility.

-An industrial gases company pivoted so it was able to deliver a month’s worth of desperately needed medical oxygen in three days.

-A chain of currently shuttered department stores has loaned its distribution facilities and assets to a supermarket chain under pressure to keep food shelves full, as far more of us than usual eat three meals a day at home.

-A plastics molding company designed, developed and distributed a foldable, portable intubation shield within weeks.

These businesses have something in common—they have been able to use data and industry-specific software solutions to quickly adapt to shifting fulfilment and delivery operations, often over and over.

The need for flexibility in making and distributing goods is and will be, most obviously on show at the delivery end, where goods and services reach the point of purchase or consumption. Today’s newly responsive, efficient supply chain needs to stretch all the way to the supermarket shelf or patient’s bedside.

That won’t be possible without the ability to access and analyze extraordinarily detailed data about delivery operations. For distribution companies, this will be the key to competing and winning in a post-COVID-19 business landscape, where the ability to pivot quickly will be most prized.

What’s absolutely crucial is that companies can quickly model multiple potential new distribution strategies before they make actual changes. When granular-level information about what was delivered where and when yesterday is fed into delivery-planning software, it can help supply chain executives run myriad what-if scenarios to determine what resources to deploy tomorrow. What inventory, trucks and drivers would be required if sales volume dropped 50 percent, or doubled? What if orders are fulfilled out of a different distribution center?

Purpose-built route planning software like Aptean’s answers these and other questions in a matter of minutes—a superpower we are all going to need in the future. For example, it means a retailer can pivot quickly and easily, back and forth between replenishing outlets and delivering to homes, or rapidly increase service to demand hotspots. Regarding the “new normal” in delivery operations, the only certainty will be uncertainty. The ability to deftly manage this unpredictability will be a huge competitive advantage.

And yet, for a large number of businesses, delivery operations remain hampered by a lack of visibility or fine-tuned control. Too many rely on rudimentary distribution planning tools, or even paper-based systems to plan and assess their delivery operations. This means they are caught flat-footed when circumstances demand rapid change. Worse, the critical information about particular customer needs and demands too often resides in the head or heads of delivery planning staff, and becomes unavailable when those workers go sick or leave.

We need to pay heed to the lessons we’re learning during this challenge. The supply chain, like the virus, is global, but its effects are ultimately felt in individual businesses and homes. For companies reliant on delivery operations, if management of the final mile wasn’t a strategic imperative before COVID-19, it is now. It’s time to wake up to that reality and build delivery capabilities that are more flexible, more collaborative and, above all, data-smart.

To learn more about how to automate your route planning, contact info@aptean.com.

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Nicole O’Rourke has 25 years of success in building strategic marketing organizations and is responsible for leading Aptean’s global marketing and communications efforts as Chief Marketing Officer. She previously held the position of Senior Vice President and CMO for Manhattan Associates. Before that, she served as CMO at Covance Inc., and in senior strategic marketing roles at Aetna and Johnson & Johnson. O’Rourke holds a Master of Business Administration from Northwestern University’s J.L. Kellogg Graduate School of Management and a Bachelor of Arts in English Literature from Cornell University. She resides in Atlanta, Georgia, near Aptean’s global headquarters. Nicole can be contacted directly on LinkedIn or via info@aptean.com.

education

IS THERE A BRIGHT FUTURE FOR TRADE IN EDUCATION?

American University Blues

The arrival of COVID-19 sent students packing mid-semester as many universities continue to mull over options for restarting in-person classes in the fall. Many international students who had returned home for the spring break were unable to return to the United States to finish out their studies.

Travel restrictions and changing student visa rules will have international applicants questioning whether to pursue studies abroad. Universities are working to increase their capabilities to deliver courses virtually but online classes may be less attractive when part of the allure and prestige of American universities is associated with the campus experience. Prospective foreign students may also decline to enroll if they cannot network to secure post-degree employment in the United States.

This is happening against a backdrop of declining new enrollment in American universities by foreign students after a decade-long boom. New international student enrollment has decreased year on year since the 2016/2017 academic year, though the overall number of international students in the United States has increased as more students take advantage of Optional Practical Training, which allows them to stay under their student visa to work for one year.

Education as an Export for International Students

During the 2017/2018 academic year, American educational institutions hosted over one million students. When foreign students come to the United States to study, those institutions are exporting their educational services. Perhaps surprisingly, educational service exports ranked 5th among all U.S. services exports, valued at $45.3 billion in 2018, according to the Bureau of Economic Analysis.

Services trade can be described as supplied in one or more of four ways: the service itself travels over a border but the provider and consumer remain in their home countries; the consumer travels across a border to receive a service; the provider establishes a commercial presence in another country to provide the service; and/or, the service provider travels to another country to provide the service.

Educational services – to varying degrees – are being provided today in all four of these ways. Of course, the most traditional approach is for students to enroll and travel to attend classes in educational institutions abroad for a semester, a year or for a full degree. To a lesser extent, professors may travel to campuses overseas to teach in residence.

As communications technologies improve and become more widely used, virtual education is increasing in popularity. Think: distance learning, corporate training online and expansion of educational software and platforms. Lastly, it has become much more popular in recent years for large universities to open satellite campuses overseas.

Limited Trade Commitments

In the WTO General Agreement on Trade in Services (GATS), members have taken commitments to create more market access, enabling the expansion of global educational exports. However, education services still rank among the least committed of all sectors subject to GATS coverage (after audio-visual and energy services).

WTO members are not required to make any commitments to liberalize their markets for educational services and GATS provides exemptions for members to avoid commitments where services are supplied “in the exercise of governmental authority,” or in other words, providing a public service. Furthermore, where educational services are covered in a country’s commitments, they may maintain some limitations on foreign investment, or set limits on the number of service suppliers, on the total value of service transactions or assets, or other types of limitations such as ensuring that quality standards are maintained.

U.S. is Still Top Destination

The Organization for Economic Co-operation and Development (OECD) estimates that 8 million students will be studying abroad by 2025.

The United States has long held the number one spot for students seeking an international education. According to the Institute of International Education’s 2019 Open Doors Report, the United States played host to over 30,000 students per year during the 1950s. By the late 1990s, that number reached 500,000 and reached an all-time high of 1,095,299 students in the 2018/2019 academic year, including undergraduates, graduate-level students, and students undertaking a one- or two-year post-graduation experience under their student visa.

The U.S. education system attracts students from virtually every country of the world. China sends the most students to the United States by far. India is a not-so-close second.
As a percentage of total students in higher education, however, the United States has relatively fewer international students than many other countries, at only 5.5 percent. By comparison, Australia’s average foreign student body is 28.0 percent, Canada’s 21.4 percent, the U.K.’s 20.9 percent, France’s 12.8 percent, and Russia’s 8.6 percent.

The Foreign Student Premium

It pays for universities and governments to attract international students. Aside from the cultural value, diversity of perspectives and ideas they bring, international students studying at U.S. colleges and universities contributed $41 billion in revenue and supported 458,290 jobs during the 2018/19 academic year, according to NAFSA: Association of International Educators.

International students in the United States, as well as in Australia, Canada and New Zealand, pay on average double the tuition fees paid by domestic students. In the United States, this is largely due to the difference between in-state and out-of-state tuition at public universities, but in other countries, international students are charged separate – often much higher – tuition rates.

In addition to padding university budgets, international students bring additional spending to local shops and restaurants, and tend to travel in their host country, helping to support jobs in the community and through tourism. For example, NAFSA found that international students in the top two enrolling states, California and New York, contributed $6.8 billion and $5.3 billion to each state’s economy, and supported 74,814 and 59,586 jobs, respectively.

Graduating to the Next Level?

Educational service exports are facing some serious headwinds. If schools want to keep hold of the huge benefits international students bring, they must incentivize new student enrollment and ensure safe returns to campus. One country doing just that is Australia, which is trialing a pilot scheme to gradually reintroduce international students, whose presence in the country supports 259,000 jobs.

In addition to delivering their educational services on campus, the global health pandemic is forcing universities to adapt and innovate to deliver education online. The mainstreaming of distance learning may also create opportunities for more providers to offer educational services across international borders. We’re all learning in this new environment.

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Alice Calder received her MA in Applied Economics at GMU. Originally from the UK, where she received her BA in Philosophy and Political Economy from the University of Exeter, living and working internationally sparked her interest in trade issues as well as the intersection of economics and culture.

This article originally appeared on TradeVistas.org. Republished with permission.
supply

E-Commerce Logistics and Supply Chains: Journey to the Future

The transition of commerce to an electronic format is a well-established and economically sound process which is in its prime. Shopping and paying online has already become an integral part of modern life. Conversion of e-commerce platforms is more than 7% versus just 3% in the retail sector. But how has the transformation of e-commerce affected logistics?

The transportation of products remains a physical process that cannot be realized through the Internet. However, electronic administration of logistics processes is available now, and advanced technologies help optimize the product movement along the supply chain. How does this all happen and what are the current trends – let’s understand.

Why Classic Logistics Has Become Obsolete

The answer is simple: needs are growing.

If we immediately exclude the possibility that a business delivers goods on its own without involving third parties, then, in any case, there is some company in the chain between the brand and the consumer. With its help, goods get into the hands of buyers from different cities and countries.

But if earlier, in most cases, it was a matter of delivering the product to stores and other retail structures, now everything is much more sophisticated. Buyers may request delivery to their nearest post office, special pick-up point, or even directly to their home. This required a qualitative change in storage conditions and technologies used.

Reasons for the Rapid Development of Logistics

In order to take their place under the sun in a trading niche, brands choose the most effective methods. This is what is most appreciated by any buyer – a wide range of products and short delivery time: who would want to wait for their goods for several months? The same goes for digital commerce. Therefore, you should not be fooled, for example, a case of Photza digital photo retouching service, when they reduced the delivery time from 3 days to 2 and began to send ready-made photos not only through your personal account on the website, but also duplicated by email link to Dropbox, increased conversion by 17.3%.

A good example of successful adapting to new realities is Amazon. By activating 50 picking warehouses throughout the United States, this giant got the opportunity to promise customers next-day delivery. With the help of a special code (SKU), each item was designated, then it arrived at the distribution center, and was ready to be further piece-picked for individual orders.

The closer the inventory to the buyer, the faster the delivery. Other retailers and businesses quickly realized this and began to deploy new capacities, using both internal departments and shared resources managed by third-party partners.

New Trends and Their Impact on Logistics

Implementation of Digitalization

This is a crucial thing that makes sense to mention. Advanced technologies, the ability to create and use customized software adapted for each business and its logistic model, electronic databases and much more allowed many brands to reach a new level.

Digitalization not only accelerates work, but it also provides greater stability and sustainability in the implementation of supply chains. With its help, brands can check the availability of products in any storehouse at any time, request information on the latest deliveries as well as the status of different orders, manage inventory and pre-compile optimal routes.

The Same-Day Delivery

The question of how to speed up the process of getting the product into the hands of the buyer continues to occupy the minds of brands. The most relevant category of goods for delivery on the same day is, of course, food. One can also include consumables here. Short-lived commodities do not stand the test of time, therefore, special conditions must be provided for them. And this is not a whim of the client or the quirk of the manufacturer, but an urgent need.

Moreover, there is a certain relationship between service and money, which people consider appropriate to pay for it. This balance should be carefully calculated and taken into account. It is also interesting that more than 60% of clients are willing to pay more in order to receive the goods on the same day or at least the next day. If the brand has the opportunity to fulfill this desire, then we can say that it is already one step ahead of its other less savvy competitors.

To reduce the cost of delivery and ensure its optimization, platforms such as Uber implement market models that analyze and compare supply and demand. For example, they select available couriers and orders received in real time and, by appointing a courier to deliver a product, seek to minimize the average travel time. The whole system is fully automated: large amounts of money were invested to ensure its correct functioning. Notably, they fully paid off, because as a result, the organization has received a platform that provides stable and trouble-free operation.

The scheme of working with local couriers is gaining momentum, and in the near future, many large retailers are expected to switch to it. This is convenient and, as indicated above, requires the greatest cost only at the initial stage of implementation. With the correct formulation of the problem and the determination of the goals pursued, success will not be long in coming: it remains only to maintain the system and periodically update it. No one wants to be left overboard as an outdated option.

Couriers Robots

Delivery of goods by robots is also not as far away as it might seem. Starship Technologies is already launching its standalone food delivery robots in Tempe. Self-guided robotic vehicles can carry orders weighing up to 40 pounds over a distance of 3 miles. Autonomous navigation is provided by a 360-degree camera, which makes a robot an absolutely independent counterpart to couriers, reducing labor costs by more than 70%. Bots work best in urban centers.

There is no information about possible obstacles to their movement yet. In addition, such machines encounter far fewer legal barriers than their unlucky colleagues – drones.

The Power of Social Media

While marketing and link building strategies allow the brand to improve its online visibility, social networks dominate in matters of instant communication with customers. Clarification of address details, obtaining prompt feedback and providing the information requested by customers optimize logistics processes from a coordinating point of view.

SaaS Options to Streamline Supply Chains

Manual supply chain management with modern production volumes nowadays seems almost impossible; to say the least, then certainly both an outdated and inefficient method. Therefore, many businesses resort to various software-as-a-service supply management options.

This process became especially popular after the entry of cloud computing into the game. It made available timely informational and structural updates and created easy ways to manage infrastructure costs.

Advanced Product Tracking Scheme

The use of GPS has become another milestone in the history of an e-commercial boom. With its help, it became possible to track the location of the goods at any stage of their journey, whether it be moving to a regional storehouse or last-mile delivery. Moreover, tracking is a useful option for customers: they can clearly imagine and assume how much they have left to wait for their goods.

In the event of an unforeseen situation, brands can immediately detect problems and take all necessary measures to restore the procedure for transporting products to the buyer.

In the End

Modern problems require modern solutions. Therefore, in parallel with the new e-commerce opportunities, up-to-date options appear that handle the transportation of small and large goods equally well. Digitalization has given a significant impetus to the growth of new capabilities. Timely delivery at a price that satisfies the customer is what businesses strive for by updating their logistics models.

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Marie Barnes is a Marketing Communication Manager at LinksManagement, where you can buy real backlinks, and is a writer for gearyoda. She is an enthusiastic blogger interested in writing about technology, social media, work, travel, lifestyle, and current affairs.

risk mitigation strategies

Moving Past COVID-19: Risk Mitigation Strategies to Drive Supply Chain Resilience

As the world begins to ease movement restrictions imposed during the COVID-19 pandemic, companies are wondering where they go from here and how they can reduce risks moving forward.

These questions are especially relevant to supply chains, as the pandemic disrupted trade flows across borders, from raw materials to finished products. The initial decline in production in China rippled across the world, as the country sits at the heart of many global manufacturing networks. As the virus spread west, more nations instituted lockdowns to protect public health, leading to an increase in factory closures and a sudden drop in consumer demand.

The shock to the global economy was breathtaking in both scope and speed. The search for efficiencies within disrupted supply chains is now driving organizations to look at the lessons that can be learned, in order to better manage and mitigate risk of disruption from future events.

Before you develop risk mitigation strategies, you have to first understand how your suppliers were affected by the pandemic. Are they considered essential? Did they have trouble sourcing raw materials or run low on critical inventory? Did they suffer a shortage of labor due to workers falling sick? Did they face transportation issues?

Once these questions have been answered, then you can start developing and implementing risk mitigation strategies: from immediate actions to enhance supply chain resilience and reduce future supply bottlenecks, to longer-term strategies that require a greater investment of time and resources.

Short- to Medium-Term Strategies

1. Develop a supply chain risk monitoring program

If not already in place, companies should integrate risk management into their supply chain, sourcing strategies and ongoing category management processes. A comprehensive risk monitoring framework should capture the following key elements:

-Understanding the critical risk-prone categories and level of risk across the supply chain

-Regular monitoring of different risk types across suppliers – going beyond just financial indicators, to cover operational, compliance, strategic and geographic risks

-Scenario and contingency planning for unforeseen situations

2. Identity alternative logistics partners for future contingencies

Companies trying to recover from economic lockdowns will face hurdles in shipping markets roiled by deep capacity cuts and weeks of disruption. Airfreight could be constrained for months as airlines continue to operate reduced schedules. Identify and qualify alternative logistics providers to mitigate service failures by an existing partner.

3. Shift supplier base to other low-cost countries

The drop in exports from China in the first quarter led to a significant increase in sourcing from other countries for many product categories. American and European manufacturers started sourcing raw materials and goods from low-cost countries such as India, Vietnam, Bangladesh and Turkey. A diversified geographical sourcing strategy is an effective way to ensure supply chain continuity. Larger companies are leading the charge in this respect: Apple, for example, recently pledged to invest more in Vietnam.

4. Adequate focus on ensuring compliance with new regulatory norms

Companies need to assess new regulations put in place by regulatory bodies across the globe, and identify those that impact their supply chains, manufacturing processes or end products. Dedicating time and resources to reviewing and adapting existing procedures will be critical to ensure compliance with the latest requirements.

Long-Term Strategies

1. Implement a Direct-to-Consumer (DTC) model for uninterrupted supply

COVID-19 has affected many e-commerce businesses as well as how consumers shop. Brands need to be agile and able to move at speed to find and meet demand. Many B2C businesses (and their partners) are pivoting to a direct-to-consumer model because it helps strengthen brand loyalty and increase consumer confidence in terms of certainty and guaranteed supply of goods and products.

2. Develop alternative supply chains

Developing new supply chains in collaboration with respective governments can ensure faster delivery of key raw materials. Further, to avoid supply chain disruptions arising from factory shutdowns in the future, companies can develop a manufacturing network strategy that leverages government economic development programs that encourage domestic production.

3. Consider supply chain digitalization supported by automation

The coronavirus crisis may be a tipping point in the transition to digital platforms and applications that help establish an interconnected network of supply chain components. In a digital supply chain, every activity is able to interact with one another, allowing for greater connectivity between areas that previously did not exist.

Investment in technologies such as artificial intelligence, machine learning and Internet of Things can help companies gain real-time visibility, better manage inventories, improve logistics tracking and make better-informed decisions. These alternatives to often error-prone ERP systems and manual spreadsheets can help businesses predict disruptions and design actionable mitigation strategies.

4. Adopt robust demand planning practices

Traditional planning tries to match demand with supply for the next 30 days. The problem with this process is that a lot of things can change in a month, or even a week. Today’s fast-moving markets require more forward-looking planning to correctly determine demand for future production and identify potential material and manufacturing capacity shortages. Companies should also invest in strengthening their online presence, and focus on quality assurance and delivery timelines, as more and more customers become reliant on e-commerce channels.

Outlook for the future

The COVID-19 pandemic has had significant effects on international supply chains. Going forward, the crisis is likely to give further impetus to trends already underway. More companies are seeking to leverage their production plants outside China or are planning to build production in new locations. The shift to online shopping will accelerate, putting more pressure on companies to meet expectations in an on-demand economy.

When planning ahead, timely, relevant market intelligence is fundamental to making complex decisions and embedding long-term strategies.

Access to timely, relevant market intelligence, conducting the right analysis and asking the right questions now, will provide the opportunity to build a robust, agile procurement strategy that minimizes risk and safeguards business continuity, without sacrificing profitability.

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Tavleen Kaur and P Vijay are Research Managers at The Smart Cube