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EDITOR’S NOTE
EDITORIAL
Group Managing Editor
Vigyan Arya
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Editor
Patrick Francis
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Contributing Editors
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Eric Francis
Savio Pimenta
Saida Samai
Editorial Assistant
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ART / PRODUCTION
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Photographer
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Advertising & Marketing
sales@groupinfinity.com
4 Link January 2011
Image: Four Courts, Dublin
Issue 1 Vol 9 Jan 2011
The Link is the official publication
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Cover Design by Aslam AK
Dear SCLG Members,
Again a new year has started and first and foremost, on behalf of
the SCLG Leadership Team, I would like to wish all of you the very
best for yourselves, your families and your business. May 2011 be
a year of health and prosperity.
While 2010 was a year of
recovery in most businesses,
2011 will be a year of transition,
not only for our industry, that has
to transform to more sustainable
models, methods and processes
to ensure business continuity, but
also for the SCLG to adapt the way
it interacts with its members, the
industry, government departments,
other industry groups and the public
at large.
With Social Media and networking driving the modern
interaction between individuals, the SCLG also has to embrace
these tools and communicate in different ways. We increasingly
use information and publications from the internet and find
ourselves ‘linked’ to other professionals and part of industry
groups. This year the Executive Committee will focus on
communication through these platforms and keep current and in
touch, wherever and whenever, even whilst on the move.
We will also strive to transition more of our Student and Young
Professional members into our activities. They represent our
future and come with great ideas and enthusiasm to progress and
bring innovation to the industry.
Last but not least, we want to ensure international expansion
and facilitate relations across borders and into other continents
for our members. In an increasingly Global and Integrated Supply
Chain environment we need to open dialog with our partners in
the rest of the world.
I look forward to being in touch with all of you throughout this
coming year and working with you to continue the success of the
SCLG group.
Warmest regards,
André N. Verdier
President, Executive Committee SCLG

INSIDE
Contents
15 IRELAND SPECIAL
Value for Money – The Road to Success
Our success in achieving Value for Money (VFM) will only be fully
achieved when we have the processes in place to consistently
measure savings across multiple agencies
30
ISSUES
Cutting Freight Costs when
Fuel Keeps Rising
It would take a brave soul to predict relief in
the medium or even long term on fuel prices
REGULAR FEATURES
10 GCC - NEWS
Embraer names new executive jets service
center in Middle East
6 Link January 2011
32
OVERVIEW
Goods shipments: A two-speed
sector
Goods shipments play a large role in
operating in a real-time complex system
26
46
FINANCE
Bank investments in private
equity: An unfair advantage?
Private sector, government and logistics
industry collaboration are vital to realize
potential economic success
CASE STUDY
Predictive Demand, Planning
and Demand Sensing
Supply chain network optimization is a core
competency in the North Pole
42 IN FOCUS - MANAGEMENT 52 INTERNATIONAL - NEWS
The Asian region is better equipped to
handle recession than European countries
Malaysia’s CIMB seeks to boost its Gulf
business with new offers

Membership
Corporate Membership
Membership with the Supply Chain and
Logistics Group (SCLG) is open to all
organisations. Corporate members may
nominate four to six members, depending
on the category of membership – basic,
privileged or premier – they opt for.
All nominated members shall be allowed
to vote at the Annual General Meeting
(AGM) and at any Extraordinary General
Meetings. The Board of Directors (BoD) and
Executive Committee (EC) members shall
decide the annual fees for membership.
Individual Membership
This is open to any individual from any
part of the world. The annual subscription
shall be set from time-to-time as deemed
necessary by the BoD and EC members.
Student Membership
Only full-time students can be SCLG
members, but this membership does not
convey voting rights to the individual. The
annual fee shall be set from time-to-time
as deemed necessary by the BoD and EC
members.
Why be an SCLG Member
A membership allows access to educational
training, seminars and networking evenings
at concessional and rebated rates. It
also provides rebates on subscription
of membership to SCLG’s international
partners. There is also a certificate that
distinguishes a member as a professionally
focused individual or enterprise committed to
the cause of the supply chain and logistics
industry.
For more details, please visit our website
on www.sclgme.org. If you wish to volunteer
to help us foster a better supply chain and
logistics community, please contact Kanchan
Vora on admin@sclgme.org.
The SCLG Middle East is a non-profit
organization working under the umbrella
GLOBAL THOUGHT AND INDUSTRY LEADERS
Shashi Shekhar
Founder & Group
President SCLG
Mohammed Sharaf
DP World
Michael Proffitt
Fadi Ghandour
Aramex
Saadi Al Rais
RHS Logistics
Clifford Cuttelle David Wild
Sanjay Naik
Emirates Group
Jinendra Sancheti
TNT Express
Dr. John Gattorna
Mishal Hamed Kanoo
Kanoo Group
Essa Al Saleh
Agility
Hamdi Osman
FedEx
SCLG INFO
www.sclgme.org

SCLG INFO
REGIONAL DEVELOPMENT
COMMITTEE
www.sclgme.org
Dr. K. M. Madrecha
Abu Dhabi
Municipality
Dr. Ernst Schmied
East Europe, CIS,
Russia
Dr. Dermot Carey
UK & Ireland
Usha Kaul
University of Dubai
Ravi Kashyap
Steinweg Sharaf
Dirk Van Doorn
DHL
Mark Millar
Asia Pacific
Johnson Soans
Extron Electronics
Jassim Saif
Emirates SkyCargo
Pradeep
Melakandy
Pan-Pacific
Logistics
Dave Tootle
Southern Africa
Dany Vermeulen
Australia & New
Zealand
Tom Nauwelaerts
Al-Futtaim Group
of the Dubai Chamber of Commerce
and Industry to promote the cause of the
supply chain and logistics industry. It brings
opportunities for personal and professional
development through networking prospects
among like-minded professionals and
corporations on a global basis.
The SCLG was founded with the help
of senior management professionals
representing a wide spectrum of industries
in the supply chain. It strives to bring the
BOARD OF DIRECTORS
Tayssir Awada
FedEx
Roy Patterson
UTi
Geoff Wheatley
SSI Schaefer (ME)
Dr. Satish Mapara
GlobeApex
Management
Consultants
Madhav Kurup
Hellman Worldwide
Logistics
Capt. Arup Gupta
Retail Logistics
Nigel Moore
Logistics
Recruitment
Sanjay Babur
Cosmos Insurance
Graham Burne
best in education, seminars and interaction
through partnerships and alliances with a
variety of similar bodies across the globe.
The group’s official magazine, The Supply
Chain and Logistics Link, addresses the
needs of the supply chain professionals in
the Middle East. It presents news, views,
developments and information drawn from
industry experts.
The first of its kind in the region, The Link
aspires to be a benchmark for the industry
community, offering valuable insights
and information to the target market. The
M I S S I O N
The group aims to provide an accessible
and dynamic networking environment
that facilitates the achievements of its
members in a community that encourages
professional development and diversity
in the logistics and supply chain
management.
CONSULTATIVE COMMITTEE
Dr. Dermot Carey
MRM Global
UK & Ireland
Reinhard Wind
Jasamin Fichte
Fitche & Co Legal
Consultancy
Michael Stockdale
Dr. Cedwyn
Fernandes
University of
Middlesex
Andreas Dur
Xvise Logistics
Mohsen Al Awadhi
Dubai Logistics City
Melvin Varghese
Argonaut S.E.A.
Private Limited
Brian Forbes
DHL Express
Stephen Cross
ATMS
Naveen Arun
Hemant Barke
Prudence
Insurance
Brokers
Soma Shekhar
TrackIT
Sebastian Thomas
ZAFCO
John Halpin
AVT International
Group
Ayman Abouseif
On-Track Arabia
magazine’s articles and news features cover
innovative supply chain practices, emerging
technologies, e-commerce and market
information from industry leaders.

EXECUTIVE COMMITTEE
Andre Verdier
President,
Executive
Committee
Juergen Hirsch
Agility (UAE
Kamel El
Ghoussaini
Span
Kinsella Paul
Chep ME Fzco
Pritesh P. N.
Modern Freight
Sigi Gruber
SSSI Schaefer
LLC
Ravi Subramaniam
Launchpad
Consultants
Vinod Jayan
Al Futtaim
Retail Division
Iyad Moussa
TNT
International
Express
Krishna Prasad
Aster Marine
Cargo (UAE)
O B J E C T I V E S
ËTo promote the cause of the supply
chain and logistics industry and raise the
standards of all industries on end-to-end
supply chain
ËTo protect the interests of member
organisations and support government
bodies in the formulation of policy
frameworks for logistics organisations
ËTo encourage the free exchange of
knowledge and skills relating to supply
chain and logistics among its members
ËTo provide members the opportunity
to network among one another and to
help facilitate an efficient commercial
environment
ËTo undertake studies and gather
information, statistical data and official
documents relevant to the industry
Dr. Dermot Carey
Ireland
Dr. Ernst Schmied
Austria
Khalid Bichou
Morocco
Mark Millar
Asia Pacific
Paul Lim
Singapore
Alan Waller
UK
Tim Sensenig
USA
Dr. Craig Voortman
South Africa
Prof Donald Tham
Canada
Tom Freese
USA
Mahendra Agarwal
Singapore
Vineet Agarwal
India
ËTo establish and maintain good relations
with similar international organisations
and other professional groups, and to
provide members the opportunity to
network with like-minded organisations
ËTo conduct training courses, seminars,
conferences and studies relating to
logistics and supply chain and to establish
a library and research centre to expand
the knowledge base information on the
industry
ËTo promote the cause of education in
supply chain and logistics among the UAE
nationals, thereby contributing to build a
cadre of professionals and highly-skilled
citizens to take up current and future
challenges in the industry.
INTERNATIONAL ADVISORS
Dominique De
Froberville
Mauritius
Horst Deffner
Brazil
Dr. Ganesh
Natrajan
India
Edward Sweeney
Ireland
Dimitriy Bulaenko
Ukraine
Igor Hribar
Slovenia
Dr. Tom Gulledge
USA
Terry Lee
Taiwan
Antony Walford
Switzerland
Ferenc Kovacs
Hungary
Dr. John Paul
Singapore
Winton Myers
South Africa
Dr. Heinrich Frye
Germany
Matthieu Gasselin
Italy
Andrew Saliba
Malta
Gerald M.
Mukyenga
Uganda
Dr. Jorg Rissiek
Germany
SCLG INFO
www.sclgme.org

GCC News
Al Jaber Aviation and Airbus showcase the
new A318 Elite Plus at MEBA 2010
The Al Jaber Aviation (AJA)
A318 Elite plus aircraft is on
display as the ideal design model
for corporate jets by Airbus, an
EADS company and leading aircraft
manufacturer at the ongoing Middle
East Business Aviation (MEBA)
2010 event in Dubai.
AJA, the new pinnacle of
VIP aviation and part of the Al
Jaber Group based in Abu Dhabi
will showcase the elegant and
comfortable ergonomic cabins
of the Airbus 318 that have been
designed to accommodate up to 19
passengers and two crew members.
With long haul capability, the A318 Elite
plus will be able to cater to requirements
from Heads of States, Rulers, VIPs and
those who wish to fly in comfort to far
destinations. The A318 aircraft is a more
viable option than traditional business jets
as it can fly larger groups making it ideal for
big companies and government delegations.
10 Link January 2011
This is further supported by the aircraft
offering cargo capability.
“The Middle East is a growing market
for business jets and is set to expand 15-
20% per annum over the next four years to
become a $1bn-per-year industry. We are
looking to secure a slice of this lucrative
segment and our aircraft are ready to cater
to this growth,” said Mohammed Al Jaber,
Petrochemical production in Gulf set to rise to $80b
Chemical production in the Gulf will rise
from $40 billion (Dh146 billion) to $80
billion by 2020 but that will not be enough
to achieve a major share of global output
in the sector, a senior industry professional
said yesterday.
“I would like to see the year 2020 value
hit the $120 billion to $150 billion per annum
range,” Saudi Aramco President and Chief
Executive Khalid A. Al Falih said at the fifth
Annual Forum of the Gulf Petrochemicals
and Chemicals Association (GPCA) in
Dubai.
“The strategic challenge for the region’s
chemical industry is not to grow from $40
billion to $50 billion in per-annum revenue
but to fundamentally alter its economic
role within the region... to leapfrog other
regions within the global petrochemicals
landscape,” Al Falih said.
Aramco will bring Wasit, its largest gas
plant, online in 2013, a year earlier than
expected, Al Falih said. The company
completed a crude expansion programme
last year that took its oil production capacity
to 12 million barrels per day.
Petrochemical production increased by
an average of 3.7 per cent in the Gulf last
year, with Saudi Arabia posting an increase
of 6.3 per cent; the UAE 4.4 per cent;
Kuwait 3.2 per cent and Qatar 7.4 per cent.
Global apprehension
“Last year at this time there was global
apprehension about economic recovery,”
said Mohammad H. Al Mady, Vice-
Chairman and Chief Executive of the Saudi
Basic Industries Corporation (Sabic) and
chairman of GPCA.
“Thankfully, today, there is more
optimism about growth. But this is no time
for complacency,” he said.
Al Mady said he sees expanded margins
for petrochemicals as increased demand
comes from emerging economies such as
China, India, South Korea and Indonesia.
Concerns for 2011 include excess
capacity in the Gulf and the possibility of
CEO of AJA.
The Airbus 318 Elite plus is the
newest Airbus Corporate Jet, and
features a stylish and practical
single-aisle cabin created by
Lufthansa Technik. All equipment
and seats have been designed to
be very simple to use, and to offer
the most comfort and generous
storage in a VIP charter aircraft.
The A318 aircraft boasts
mood-lighting system, new touchscreen
technology, and advanced
passenger entertainment and
communications - including
a PFIS (Passenger Flight
Information System), Internet and audio and
video on-demand. The cabin cross-section
is almost twice as wide as that of traditional
business jets. The benefits to customers
include robust long-lasting airframe
and reliable systems and an advanced
aerodynamic design powered by modern
and efficient engines.
asset price bubbles in the global economy,
especially in commodities and metals, Al
Mady said.
Shaikha Lubna Bint Khalid Al Qasimi,
UAE Minister of Foreign Trade, said
the Gulf’s leading position in the global
petrochemical industry is expected to grow
as capacity increases.
“Expansion of capacity continued even
in the tough economic environment [in the
past two years].
“It will be accelerated by increased
foreign investment in the sector,” she said.
The UAE’s Borouge, for example, will
triple capacity to 4.5 million tonnes per
annum by the end of 2013. By 2015, nine
new crackers and downstream plants
will come online across the Gulf, giving
the region a 20 per cent share of global
petrochemical production, she said.
“The 10 years to 2020 will be the decisive
decade of opportunity, a golden age for our
region in terms of economic conditions and
commercial opportunities,” said Al Falih.

Majid Al Futtaim Ventures and Dalkia
recently announced an extension to
their joint venture, initially agreed in 2002,
which enables the companies to expand the
MAF Dalkia brand of facilities and energy
management services into the Gulf, Levant
and Egypt markets.
As part of the expansion, MAF Dalkia
will extend its focus to specific facilities
and energy management opportunities in
Saudi Arabia, Qatar, Egypt and other key
geographies, while leveraging regional
and international expertise in healthcare,
telecommunications, and other key industry
verticals across the region.
By 2011, MAF Dalkia will be providing
facilities and energy management services
for an estimated 3.3 million square meters
of commercial and residential space in the
Middle East, in addition to managing at
least 125,000TR cooling capacity and 2,550
Embraer has appointed ExecuJet
Aviation Group, in Dubai (UAE), as a
new Embraer Authorized Service Center
(EASC) for the Legacy 600 and Legacy
650 executive jets. ExecuJet Dubai will
provide scheduled and unscheduled
maintenance services at Dubai
International Airport.
“We are delighted to provide Legacy 600
and Legacy 650 executive jet customers
in the Middle East with a new alternative
MAF Ventures and Dalkia
extend joint venture
Mwh power managed through various client
initiatives.
“As an increasing number of commercial
projects and towers in the region are
completed, owners are looking for facilities
management partners that have proven
leadership in energy efficiency, operational
cost reduction, and maximization of resources
- MAF Dalkia has this firsthand experience,
and the expansion of our joint venture is in
large part a response to customer demand
around the region,” said Ahmed Galal Ismail,
CEO of Majid Al Futtaim Ventures and
Chairman of MAF Dalkia.
To expedite the regional roll-out of the
expanded joint venture, MAF Dalkia and
Dalkia International will merge their current
Embraer names new
executive jets service center
in Middle East
for their maintenance needs,” said Antonio
Martini Neto, Embraer Vice President
- Customer Support and Services, Europe,
Africa and the Middle East.
“As the fleet of Embraer super midsize and
large executive jets grows in the region, with
nearly 25 aircraft in operation, the naming
of one more authorized service center in
the UAE marks the Company’s commitment
to offer a comprehensive and high-level
support structure to our customers,” he
added.
This appointment coincides with last week’s
delivery of the first Legacy 650 large
executive jet in the region. It also reinforces
News
GCC
facilities management operations in Bahrain,
where the companies count banks, shopping
malls and mixed use destinations among
their current clients. With its focus on energy
optimization, MAF Dalkia has reduced CO2
emissions by more than 36,000 tons in 2009
by introducing more sustainable facilities and
energy management solutions for its clients.
MAF Dalkia commits to optimizing energy
usage, with a corresponding energy savings
of between 10-15%. In addition to energy,
telecom and healthcare, MAF Dalkia has
highlighted sectors such as hospitality,
education, commercial real estate, industry,
public sector and cooling plants as the
major drivers for growth in the Middle East’s
facilities management landscape in 2011.
the Embraer Customer Support and
Services network in the Middle East, which
now has authorized service centers in Abu
Dhabi and Dubai, and a dedicated spare
parts distribution center in Dubai.
“ExecuJet welcomes the opportunity to
extend its support to the Embraer Legacy
600/650 aircraft, which will be served out
of our newly acquired 5000 m2 hangar
situated next to our existing facility at Dubai
International Airport. ExecuJet currently
holds Legacy 600/650 line and base
maintenance authorizations with National
Airworthiness Authority approvals,”
stated Nick Weber, Maintenance Director,
ExecuJet Middle East.
January 2011 Link
11

IRELAND SPECIAL Business
Critical Success Factors in
the Re-engineering of 21st
Century Supply Chains
The changing business environment has sharpened
the focus on the need for robust approaches to supply
chain improvement.
This article sets out the key elements
of traditional re-engineering
processes. It goes on to outline some
of the key characteristics of SCM excellence,
based on the author’s experience and on
documented evidence in the literature.
Based on the performance of firms in
relation to these key characteristics, a
number of critical success factors (CSFs)
for effective supply chain re-engineering
are identified and the key elements of a
roadmap are proposed.
Organisational Re-engineering
Companies have long realised the need for
company-wide approaches to organisation
design and redesign. The development
of systems engineering approaches to
manufacturing system redesign in the 1970s
and 1980s was followed by the focus on
organisational re-engineering, often based
on business processes, in the 1980s and
1990s. A common feature of all of these
approaches is a recognition that “the
whole is greater than the sum of the parts”.
In other words, optimising subsystems
(whether those subsystems are functional
departments, production sites or individual
processes in the manufacturing cycle) can
result in a sub-optimised total system. Lack
The increasingly
international nature of
markets and companies
has resulted in many
companies becoming
part of large and complex
global supply chains
12 Link January 2011
of efficiency and/or effectiveness is often
a result of the poorly designed interfaces
between subsystems rather than any
inherent subsystem weaknesses. There
are numerous examples of companies who
have generated significant improvements
in competitive advantage as a result of the
application of this “total systems” thinking.
A product is delivered to the ultimate
customer through a complex interaction
of several companies on the way. The
supplier’s ability to give the customer
what they want, when they want it, at
the price and quality that they want, is
not just determined by the efficiency
and effectiveness of the supplier’s own
operation. Inefficiencies anywhere in the
supply chain will reduce the chances of the
supplier competing successfully. Without a
proper focus on “total” (i.e. integrated) SCM,
therefore, a company will never achieve its
true competitive potential. The increasingly
international nature of markets and
companies has resulted in many companies
becoming part of large and complex global
supply chains. In addition, the potential
benefits associated with emerging ICT
solutions provide the opportunity to
simultaneously improve customer service
levels and to reduce supply chain costs.
These factors have sharpened the focus on
the need for improvements in all aspects of
supply chain performance.
Characteristics of SCM
Excellence
So what are the characteristics in evidence
in companies that might be regarded
as world class. “World Class” in this
context means companies that have been
successful in tough, competitive international
Edward Sweeney
markets over a sustained period of time. It
is impossible to develop an exhaustive list
of the characteristics of SCM excellence but
the following four elements appear to be of
critical importance for most companies in
most sectors:
uIdentification and measurement of
customer service because customer service
‘sets the spec’ for supply chain design
uIntegration of supply chain activities and
information because many supply chain
NVAs are caused by fragmented supply
chain configurations
uSCM a senior management function
because SCM is a strategic activity
uEstablishment and measurement of
supply chain key performance indicators
(KPI’s) because what gets measured gets
done!
This is based on documented evidence
of SCM “best practice” and allies with the
author’s experience. These characteristics
form the basis of a roadmap for effective
supply chain re-engineering.
Supply Chain Re-engineering
Improving supply chain performance through
re-engineering involves: analysis of internal
and external parameters using relevant data
which has been collected; the identification
and evaluation of possible alternative

improvements and their detailed planning;
and, the implementation of planned
improvements including the associated
change management. In short,
Re-engineering = Analysis + Planning +
Implementation
It is important to bear in mind that, in
supply chain re-engineering, no panacea
or “magic solution” exists. Furthermore, as
every company and every supply chain is
unique in some respect it is inappropriate
to attempt to copy or imitate companies
regarded as being exponents of good
practice. The uniqueness could be with
respect to products or services supplied,
processes, customer expectations,
people and cultural issues, systems or
any one of a number of other factors. The
following section identifies some of the
key elements of such an approach, based
on the characteristics of supply chain reengineering
discussed earlier.
Elements of a Systematic
Approach to Supply Chain
Re-engineering
Understanding Customer Service. As pointed
out earlier, customer service ‘sets the spec’
for supply chain design. In other words, as
shown in Figure 1, a market driven customer
service strategy provides the performance
specification for integrated SCM.
In short, understanding customer service
requirements in targeted market segments
forms the basis of any effective supply chain
re-engineering and change process.
Supply Chain Organisation. In many
traditionally managed supply chains,
individual supply chain functions (e.g.
purchasing, production, transport
and warehousing) are measured and
management in isolation from each other.
The net result is that the overall supply chain
fails to achieve its true competitive potential
as the constituent elements operate at cross
purposes. A key SCM objective relates to
the replacement this traditional, often highly
fragmented, supply chain organisation
with structures which are characterised by
higher levels of integration. This has serious
implications for approaches used to more
effectively structure organisations. For
example, it is the author’s contention that
future organisational structures are more
likely to be described in terms of processes
and networks (both internal and external)
rather than functions and hierarchy.
Technology – The Great Enabler? There
can be little doubt that ICT has the potential
to have a serious positive impact on supply
chain performance. This is largely due to
its potential to facilitate higher levels of
integration of supply chain activities and
supply chain data. However, this potential has
often been unfulfilled for a variety of reasons.
These include a piecemeal approach to ICT
planning and implementation, and tactical (as
opposed to strategic) approaches to supply
chain integration. These problems have
often been exacerbated by legacy systems
with multiple platforms and standards both
internally and across the wider supply chain.
Supply Chain KPIs in World Class
Companies. In designing robust and
integrated supply chain performance
measurement systems it is important to
study and learn from organisations which
are regarded as exemplars of best practice.
Table 1 shows some of the features which
tend to be incorporated into the performance
measurement systems of successful
companies.
Figure 1: Customer service ‘sets the spec’ for integrated SCM
Business
TABLE 1: CHARACTERISTICS OF ROBUST
PERFORMANCE MEASUREMENT SYSTEMS
IRELAND SPECIAL
The net result is that
the overall supply chain
fails to achieve its true
competitive potential
as the constituent
elements operate at cross
purposes
The importance of performance
measurement and KPIs in the re-engineering
process can not be overstated. It provides
companies with a rational basis for
continuous improvement. It is important that
an integrated system of KPIs is designed as
part of the process and that the measures
become an integral part of the supply chain.
uMeasures should relate directly to company and business unit strategy
uAn integrated approach should be adopted across the company and the supply chain
uMeasures should change over time to reflect changing imperatives and priorities
uMeasures should be as simple and easy to use as possible and should give fast
feedback to staff
uExcessive numbers of measures should be avoided (if you try to measure too many
things you may end up effectively measuring nothing!)
uMeasures should aim to “teach” staff about their sphere of operation and as a basis for
continuous improvement, rather than being purely for monitoring and control purposes
January 2011 Link
13

IRELAND SPECIAL Business
14 Link January 2011
December 2010
Dear Colleagues,
I am delighted to have the opportunity to
greet my fellow SCLG Colleagues around
the globe, the SCLG Management team
in Dubai and most importantly our broad
spectrum of members.
In this special edition of Link, the
focus will take on a very Irish aspect with
contributors from Ireland sharing their
thoughts, viewpoints and experience on
supply chain and logistics matters as
they pertain to the market in Europe. The
articles will provide an overview of the
political, geographic social and economic
demographics, which will influence the
impacts on supply chain and logistics
operations during 2011.
Regular readers will be familiar with a
number of our contributors and we have
added some new names and faces whom
I trust will provide you with a broader
range of views and opinions on SCM in
Ireland.
I would like to thank Patrick Francis
and his team at Link for their help in
producing this issue. Thank you to all our
contributors for their time and for sharing
their expertise with us. A special note of
thanks to our members for their continued
support of SCLG.
As an industry we are facing into
some very challenging times where
creativity and innovation will be the
differential between merely surviving
or achieving sustainable growth. Within
the SCLG we have the thought leaders,
practical implementers and energy
drivers to keep us at the forefront of the
new economy in the new year.
With this mind may I wish you a very
healthy and plenteous 2011.
Kind regards,
John Halpin
President
SCLG - Ireland
Towards a Supply Chain
Re-engineering Roadmap
A comprehensive supply chain re-engineering
roadmap must incorporate the four key
issues discussed in the previous section. It
starts with a market driven customer service
strategy which provides the performance
specification for integrated SCM. In relation
to supply chain organisation it requires a
focus on processes and effectiveness, with
a strong emphasis on network arrangements
and shared services. ICT has the potential
to facilitate integration between supply chain
processes. However, for this potential to
be realised creative ICT strategies need
to be developed and implemented. Again
the focus needs to be on (value-adding)
processes and on the people dimension.
Finally, the integrated supply chain process
KPIs provide organisations with a rational
basis for continuous improvement. These
measures feed back into the development of
the customer service strategy thus closing
the loop. This roadmap provides the basis for
logical and systematic approaches to supply
chain re-engineering. The Systems Approach
is one such approach.
Elements of The Systems
Approach
The systems approach to analysing supply
chains and improving their performance
recognises that the process of reengineering
supply chains needs to be
carried out in a logical and systematic
manner. The approach has been developed
based on the experiences of a range of
companies in a range of different business
sectors. There are at least four distinct
constituent elements of this systems
approach.
The principles summarise the underlying
thinking and concepts. If the supply
chain under consideration is regarded as
the system then the environment is the
business environment in which that supply
chain operates. The methodology is the
series of steps to be followed in analysing
and improving a typical supply chain. The
methodology helps to identify the most
suitable solution for a particular supply
chain but there are approaches which
appear to exist in the majority of worldclass
companies. The guidelines on good
practice summarise the main relevant
elements of world class operating practice.
Finally, the tools and techniques support the
implementation of the methodology.
Concluding Comments
Re-engineering is, first and foremost, about
change. The development of a supply
chain change management capability is of
paramount importance if the re-engineering
process is to result in real change and
sustainable performance improvement. The
reality in today’s competitive world is that
standing still effectively means falling behind.
Innovation in all aspects of SCM is the key to
survival and success. It is also worth noting
that in reality most innovation is a series
of small incremental steps in line with the
Japanese Kaizen principle. The approach
to re-engineering outlined in this article
focuses on the four key aspects of service
delivery based on clearly understood market
requirements, integration of supply chain
activities and data, supply chain organisation
and the measurement of performance.
The systems approach (to analysing
supply chains and improving their
performance) provides a basis for achieving
world class standards for supply chains
operating in all types of industry. The
approach involves considering the whole
supply chain and avoiding a situation where
subsystems are optimised but the whole
supply chain is sub-optimal.

Public Procurement and
Value for Money – The Road
to Success
Our success in achieving Value for Money (VFM) will
only be fully achieved when we have the processes
in place to consistently measure savings across
multiple agencies on the cost elements of the
procurement cycle.
Government Buildings Dublin Ireland
Public Procurement carries the
bureaucracy of cumbersome
regulations, directives and protocols.
They are there to provide mechanisms to
protect the integrity of how public money
is spent. Today with economic pressures
to save money a € saved is a € that we do
not have to borrow at expensive interest
rates. This is an important point, for
example in the private sector that same €
saved goes straight to the bottom line. It
can be a measure of our failure or success.
Our success in achieving Value for Money
(VFM) will only be fully achieved when we
have the processes in place to consistently
measure savings across multiple agencies
on the cost elements of the procurement
cycle. It is therefore in our interests to
avoid expenditure whenever and wherever
possible. This point alone raises some
important questions, for example: Does
how we spend Public Money achieve VFM?
Is there anything different we can do to
improve VFM? Do we collaborate with other
Departments sufficiently? Do we measure
our VFM achievements to a standard and
with challenging targets? The financial
challenges facing us for the foreseeable
future means we can no longer rely on the
old ways of doing things. Every element
where a cost arises in the Procurement
Cycle must be challenged and managed
Dr. Dermot Carey
Economics
IRELAND SPECIAL
for VFM. The private sector has faced
these challenges for the last few years and
have implemented cost controls for their
survival in many cases. There are many
similarities between the private and public
sector procurement and we should learn
what best and successful practices can be
adapted and adopted. It means for some
a radical shift in thinking, approach and
culture. We do not have the luxury to be
complacent when €Billions are at stake.
We must think commercially and embrace
the experiences of the private sector and
the advice from advocates of best practice
Procurement & Supply Chain. I mention
supply chain here because the public sector
procurement cycle demands a robust and
sustainable supply chain for our public
services. How this supply chain is selected
managed and measured determines the
quality of service delivered but also VFM. In
this context it makes common sense that we
manage our supply chains as an integrated
body. If we fail to address this fundamental
approach we are exposing ourselves to
unnecessary costs and multiple fragmented
activities with no value add. This is only
the tip of the iceberg, if we continue to buy
as separate entities we are sending mixed
messages into the market place. This not
only compromises our buying power but
adds unnecessary supply costs. If we are
January 2011 Link 15

IRELAND SPECIAL Economics
serious about Value for Money this cannot
be allowed to continue. The integrated
approach to procurement and supply chain
has been advocated for over a decade now
and many organisations are striving to adopt
the concept. This time presents us not only
with challenges but also with the opportunity
to make those radical changes for effective
procurement into the future.
We will explore some aspects of
the integrated approach and how it can
influence VFM. Organizations that effectively
collaborate with their procurement and
supply chain partners position themselves
for success in 21st-century markets. When
focused methods, and tried and tested
techniques are adopted or transferred to
specifically address the objectives of the
Procurement and Supply Chain arena, the
results are always positive, by contributing
substantial savings, efficiencies and
benefits.
When these methods and techniques
are followed it means that you are working
to a set of practices and principles that
deliver benefits in a consistent manner.
There is a growing awareness that
Integrated Procurement and Supply Chain
management provides the extra edge for
greater efficiency and differentiate itself
from the competition. One way to achieve
this is for Procurement managers to look at
their operation from a holistic perspective
by adopting effective, proven methods
to increase the chances of success.
Conversely if you don’t manage your
purchases and supply activities in a planned
and structured way, and you continue to
do what you have always done, you will
continue to get what you have always got.
Even with decades of hands on
experience in the procurement and supply
chain arena, we at MRM-Global never cease
to be amazed at the number of different
ways roles have adapted. There is no single
method of execution, and that can lead to
The importance of
effective procurement
and supply is summarised
as “Provide continuity
of supply of goods and
services ’’
16 Link January 2011
difficulties when being held accountable
for efficiency improvements and/or cost
reductions against a common background of
expectations.
Without doubt effective procurement
can provide a vital contribution through
VFM and yet, too often, no clear vision or
integrated action plan towards achieving this
objective is present. Why is this? There
appears to be no clear answer. Excuses are
abundant as to why certain things cannot
be done. The sheer volume and complexity
of purchasing and supply activities for the
majority of public organisations creates a
scenario where there is usually little time and
fragmented or no data/information available.
This lack of consolidated data creates a
problem because of the many variables
associated with procurement and SCM. This
often results in ‘fire-fighting’ becoming the
order of the day. Planned areas of activity
are often focused only on a part of the
whole, for example inventory turns, leaving
other areas of opportunity untapped and
inadequately managed.
The importance of effective procurement
and supply might be summarised as follows:
‘’Provide continuity of supply of goods
and services at lowest cost and minimum
contractual risk’’. From a performance
perspective, in private sector procurement, a
1% saving is equivalent, from a profitability
perspective, to a minimum of a 10% increase
in sales. A similar analogy needs to be
developed for VFM in the public sector. This
puts procurement into a position of being
an important contributor and a strategic
necessity and not an order department. If
we take one element of supply costs for
example, inventory, a primary focus will be to
achieve optimum stock turn rates. Not only
will this support providing high service levels
when properly managed, but also frees up
valuable working capital. With coordinated
actions good inventory management will
influence how well warehousing operates
and, in turn, logistics.
By integrating these efforts on a cross
functional level VFM will be optimised
through integrated procurement. So how
do you achieve Integrated Procurement
and Supply Chain Management (IPSCM)?
We at MRM-Global believe the answer lies
in the design of the process itself. Some
processes work better than others and the
better ones tend to have a more holistic
approach. The processes that are not as
The Four Courts Dublin
good are more fragmented in their design.
From our research we have found that the
integrated approach delivers better results.
This is evidenced by results from a number
of organisations, providing substantial
improvements in efficiencies and cost
reductions. The process supporting IPSCM,
when it incorporates project and portfolio
based models, improves performances
even further. Project and portfolio elements
have been proven to provide substantial
benefits. Unless the process reflects
and complements cross functional interrelationships
from demand planning to
fulfilment, and the associated operating
procedures, the danger of a fragmented
process remains. We have studied these
areas and have integrated our findings into
the creation of a new process model. We
have developed a process that supports end
to end procurement and supply.
Whilst most practitioners will readily
acknowledge the logic to the process, too
often they are constrained in implementing
such a model due to work pressures. This
is one of the main reasons that integration

1
percent saving is equivalent,
from a profitability perspective,
to a minimum of a 10%
increase in sales
is either not fully functional and/or not widely
practiced. It is logical, therefore, to state that
there are areas of lost opportunity or VFM
not being optimized by not capitalising on the
potential benefits derived from the integrated
approach. The question we must ask is, can
we continue to allow this to continue? Key
drivers and motivators at MRM-Global are
to create and provide solutions that both
support the concept for sustainability and
offer consistency in their application. To this
end we have developed the MRM-Global
Value Delivery Methodology. This process
in itself is the culmination of many years of
effort and commitment and represents a
significant contribution to the profession.
However, used in isolation, it still leaves
the responsibility to leaders and practitioners
to interpret and undertake an implementation
program. It is at this point that things tend
to go awry. It is not the lack of ability or
commitment from people to implement the
integrated processes and culture, it typically
comes down to the lack of time and support
tools to enable the transformation. To assist
in the achievement and enjoy the rewards
of world-class practices, we have developed
a product to support the procurement and
supply process. This product is called
PRESIS. It is compatible with existing legacy
as well as modern ERP systems and is
complementary to planning, purchasing,
inventory, warehousing and distribution
packages. We designed the product to
bridge the gap in existing processes to act
as a practical aid for practitioners to succeed
in the implementation of the integrated
concept.
Furthermore, it provides the necessary
tools and scenario based intelligence for
visibility across multiple agencies in the
procurement and supply functions. This
in turn provides a reliable method for
consistency in process, decision-making
ability, cost competitiveness and resilience
Economics
IRELAND SPECIAL
to cope with the challenges of the economy
and market changes. Legacy or bespoke
corporate systems tend not to have data
in a format that matches procurement and
supply decision-making needs. The data
is frequently of a transactional nature with
a financial reporting emphasis. PRESIS is
designed to provide the decision makers
across procurement with scenario-based
intelligence. This eliminates the need for
tedious analysis and more importantly allows
for cross-functional planning, accountability,
consolidation, collaboration and standard
measures for performance. This design
differentiates itself from other applications in
the market.
There is no one prescriptive method as
to how procurement is best managed and
many of the recommendations regarding
procurement will be applicable to any SCM
portfolio and will apply to both private and
public sector organisations. Any differences
in methods will be specific to the nature of
the organisation, however, the procurement
and supply cycle will have a common
approach. MRM Global’s recommended
methods follow a structured approach to
procurement in an integrated and project
based manner.
This approach requires that data is
converted into information at key points in
the decision making process throughout
the procurement and supply cycle. For
those organisations that have a fragmented
approach it will require time and resources
dedicated to capturing and converting data.
The upside is that, once completed, it is
easy to maintain and more importantly, you
can now develop procurement and supply
plans in a consistent manner.
Current literature, recommends the
integrated approach, typically without giving
a proven method as to how to achieve
that approach. Our experience shows the
integrated concept demands a structured
approach supported by detailed information
in a procurement and supply format. Our
offering and approach is one that has been
developed from decades of experience
and has proven successful for many
organisations. MRM Global offers tried and
tested methods, supported by unsurpassed
procurement and supply industry knowledge
underpinned with confidence in the
knowledge that ‘’it works’’.
Dr. Dermot Carey at www.mrm-global.com.
January 2011 Link 17

IRELAND SPECIAL Trade
Evolution of the Irish Supply
Chain – Irelands Engagement?
Notwithstanding the excellent lineage of industry trade
and support bodies, albeit superintended by-in-large,
with Supply Chain practitioners from the state and
semi state companies.
Ireland is often described as a small
highly fragmented trading nation.
Notwithstanding the excellent lineage
of industry trade and support bodies, albeit
superintended by-in-large, with Supply Chain
practitioners from the state and semi state
Companies. The Irish Supply Chain market in
the main, remains locked in a uncoordinated
sector of suppliers competing for diminishing
volume; in loads, consignments, shipments,
cargo, warehousing, customs clearance
etc. The exception to this is the MNC’s
specifically, the manufactures who excel
under their own six sigma programmes. The
government over the past 10-15 years has
18 Link January 2011
not helped its own significant trade sector and
by default itself, with an absence of a National
Supply Chain Policy. Ireland is an island and
wholly dependent on its import and exports.
Ironically Irish Exports are currently equal
to or better than the Euro average, which
highlights two key points: (1) Ireland’s private
sector manufacturing and exporting services,
even against the current economic back drop
is doing very well (2) the need to understand
how an Integrated Supply Chain can act as
a catalyst for effectiveness and efficiency at
a time when it is most needed for the public
purse.
Fig 1. 1975 – 2010 Key Supply Chain Logistics Evolution - Note: Time line is best estimate only
Nigel Devenish
Continuity & Change has witnessed continued improved SCM value-added solutions

Fig 2
The predominant command-andcontrol
structure of regulatory policy can
be, is and continues to be, restrictive and
inefficient in developing a strong Irish Supply
Chain position. Integrated Supply Chain
management solutions, for example through
the collaboration between government
agencies and regulated entities has not been
pursued, with continued reluctance to accept
and acknowledge private sector solution
design models, these programs have not
gained widespread public body acceptance.
The cognitive and institutional barriers to
this acceptance continue to burden the Irish
taxpayer. These barriers act out of force of
habit, creating a resistance to change and a
rejection of new forms of working for example,
‘smarter not harder’. The policy change
requires a shift in how individuals think and
how institutions guide that thinking. Apply this
to the Irish Health System, and through an
integrated supply chain the savings to the tax
payer would be measured in multi millions
whilst simultaneously improving service
levels.
But how far advanced are the Irish Logistic
and Supply Chain operations /operators
compared to their European / Global Rivals?
(Where are Ireland’s core areas of activities in
the SCM Execution of today?)
Transport
With weighted preponderance to owner
drivers, in-cab technology is not universal;
the high capital cost for implementation
and poor ROI put’s off many. This is further
exacerbated when small hauliers only
have the security of one main contract and
aggravated further by limited commercial
supply chain experience by those operators.
The ability to coordinate loads and volume
to ease the empty running through
collaboration / partnership is not in evidence.
This is exacerbated by the refusal to adopt
post codes throughout ROI. Over 200 Million
people throughout Europe have them, but
the authorities in ROI have consistently
blocked and or delayed entry of post codes.
There is evidence this may occur in 2011 but
30 plus years after the rest of Europe! The
absence of this simple universal accepted
practise, further illustrate how the Irish
Government even the Green Party has failed
to grasp the environmental and commercial
benefits by having post codes and the direct
benefit this has for the whole supply chain
management and by default, Irish SME’s
cost effective operations.
3PL & 4PL Operators
The key 3PL / 4PL Operators further combat
the perennial ‘one way traffic’ with their
clients where investment is held back with
‘open book’ contracts. Managing the weekly
angst of manufactured factory approach to
RFQ’s is giving way to the extraordinary high
contract churn rate with ever decreasing
margins, we are seeing logistics being taken
back in house. In part, in Ireland (excluding
the MNC’s in the main) why is it so many
Irish based SME enterprises have their
Supply Chain Cost as a percentage of their
overall operating cost, well in to double digits
when it should be between 8-10%? Ireland
in Supply Chain terms within the 3PL /4PL
organisations have become no more than a
Trade
IRELAND SPECIAL
cheap labour market. It has been a race to
the bottom, as this critical business is seen
increasingly as a commodity! Interestingly
by in large and one can argue specifically
within Ireland; so many SME’s still do not
see Supply Chain Management as an
Executive function, thus we see it as a
function for Financial Directors and not by
Supply Chain Directors. Surprising when you
look at the overall cost of the Supply Chain
to their own businesses (see above)? One
criterion remains fundamental; the market
has not changed: as the following illustration
demonstrates, the commercial Needs and
Wants of all customers and end users is
universal they all want:
Conclusion
As Fig 1 shows the market is moving
towards greater complexity. It can be argued
SCM Consultants including 3 & 4 PL’s have
focused on the ‘Supply’ side without much
consideration for the Demand side. The time
– line in Fig 1 does reflect the acceleration
of change and adoption of new methodology
within the industry. As part of this change
the industry can expect a move towards
the true value proposition being developed
under ‘knowledge Capital’ to generate the
optimum solution – Demand & Supply. Why?
Because the current manufactured RFQ’s,
commoditisation and contract churn within
the industry is unsustainable. Future solution
design will come from credible knowledge
Capital solution design engineers. In effect
they will look to integrate the supply chain.
This will require getting on board early
on with customers in the sales cycle and
or building the bridges in confidence with
customers to design the optimum solution.
This will not involve high capital cost
programmes, future solution design will be
underpinned by Saas on a pay as go basis.
This will integrate even the smallest of
operators to provide the last mile optimum
solution......
The benefits of SCLG are to offer
practical industry advice, solutions,
guidance, and training to support
practitioners throughout the Middle East,
Ireland, and in due course the UK. I look
forward to working with the Irish members
in 2011.
Nigel Devenish BSc,Executive Director Jarlis Ltd,
http://ie.linkedin.com/in/nigeldevenish
January 2011 Link 19

IRELAND SPECIAL Information Technology
The Utilization of Information
Technology for Supply Chain
Management in Ireland
The traditional concern of supply chain management
has been the movement of materials from original
source to the point of final consumption.
The traditional concern of supply chain
management has been the movement
of materials from original source to
the point of final consumption. In addition to
the downstream flow of materials, modern
supply chain management is also concerned
with other flows such as the upstream flow
of reverse logistics and the flow of funds
through the supply chain. Supply chain
management seeks to carry out supply
chain activities in an efficient and effective
manner. In order to do so, organisations
must recognise the need to streamline not
only their internal processes but also the
20 Link January 2011
processes that link to their trading partners.
Collaboration among supply chain
partners enables the supply chain to better
meet the needs of the final customer.
Collaborative practices act to make the
supply chain more competitive by reducing
costs and adding extra value thereby
increasing the profitability of the supply chain
participants. Collaboration is seen in practice
in a number of approaches to supply chain
management. Vendor managed inventory
(VMI), collaborative planning forecasting
and replenishment (CPFR) just-in-time (JIT)
and efficient customer response (ECR) are
Liam Doyle
some of approaches to collaboration that
have brought benefits to supply chains in a
number of industries. There has also been
an increasing awareness of the need to
adopt an appropriate approach to supply
chain strategy. Companies have adopted
lean or agile approaches, or an appropriate
combination of both, to support their supply
chain strategy. In many cases companies
have moved from the traditional push based
model, where goods are produced in the
hope the hope that demand will arise, to the
pull based model where goods are produced
in response to demand.
Regardless of the supply chain strategy
adopted or the supply chain practices
employed, the efficient and effective
operation of supply chains requires the
sharing of information. Pull based models
require the sharing of demand information
among supply chain participants. Push
based models require the sharing of
forecasts. Collaborative approaches require
information such as demand and stock
levels to be shared.
The requirement for sharing of
information requires the flow of information

etween the supply chain partners. This flow
of information is therefore another supply
chain flow in addition to the flow of materials
and the flow of funds.
An information flow facility can be
constructed through the use of information
and communication technology (ICT).
Traditionally, technologies such as electronic
data interchange (EDI) were used for
sharing information among trading partners.
These technologies were often expensive
and confined to larger trading partners. The
expansion of e-commerce technologies,
based on the Internet platform, has
transformed inter-organisational exchange of
information.
The lower costs associated with these
technologies have opened the power of
ICT to a much greater range of users.
The increased functionality of modern
technologies allows increasingly powerful
applications. The ubiquitous nature of the
Internet enables information to be shared
among trading partners regardless of
location. Together these features allow
organizations of all sizes to participate in
trade with supply chain partners on a global
basis in an efficient and cost effective
manner.
The requirement for
sharing of information
requires the flow of
information between the
supply chain partners
Research carried out in Waterford
Institute of Technology examined the use of
information technology by Irish companies
to facilitate their participation in supply
chains. Ireland is a very open economy
that relies heavily on international trade.
A notable feature of the Irish economy is
the high level of foreign direct investment
especially in the information technology
sector.
Companies were asked to identify the
importance of various reasons for adoption
of information technology for supply
chain management. The highest ranking
strategies were to manage information
flow, knowledge development, to serve and
manage global customers and suppliers, to
control and to integrate supply chains, and
to accelerate changes in business. It is clear
from the results that Irish companies regard
information technology as a key enabler of
supply chain strategies.
The major perceived benefits of adoption
of IT for supply chain management were
identified as learning more of the market
and of customers, improved information flow
including improved internal and external
information exchange, improved planning
and control, improved customer satisfaction,
and improved supplier satisfaction.
The companies were asked to identify
the importance of various application areas
for use of IT. The major areas identified
were order processing, purchasing/
procurement, supplier relationship
management, and inventory management.
Within order processing the major facilities
identified were recording of trade history
with customers, providing order information
to customers and providing order
information to suppliers.
It the area of purchasing/procurement
the most important application of was
maintenance of contact with suppliers. In
supplier relationship management, online
purchasing of product from suppliers,
coordination of delivery from suppliers’
inventory, process of returned materials
to suppliers and providing information for
suppliers’ queries were the highest rated
application areas. In inventory management
the highest rated functions were the ability
to contact customers when out of stock,
coordination of JIT deliveries and contacting
customers with order shipment dates.
In general there is a very positive view
taken by Irish companies to the role of
information technology for supply chain
management. IT is seen as a key enabler
of supply chain practices to link to both
suppliers and customers. The flow of
information between the company and both
its customers and suppliers and the ability
coordinate movement of goods in both the
upstream and downstream sections of the
supply chain are highly regarded by Irish
companies.
Liam Doyle is a lecturer in Information Systems
in Waterford Institute of Technology, Ireland. He
specialises in the use of information technology
within supply chains, business process design
and information systems strategy. He is a
member of the INSYTE research group in WIT.
ldoyle@wit.ie
Information Technology
IRELAND SPECIAL
George Banks has more than 25 years
experience in the Procurement & Supply
Chain arena.
He has held a number of senior
management and Directorship positions
in the Supply Chain and Logistics function
for a number of private independent
companies and also with a number of blue
chip multinational organisations.
George’s experience has given him a
wide breath of knowledge and experience
in the Healthcare, Pharmaceutical,
Medical Device and allied industry support
sectors. In ten years of consultancy
he has successfully completed many
assignments in a variety of industries at
home and overseas.
He formed and successfully developed
his own logistics company into a full scale
3PL business which was subsequently
acquired as part of a global acquisition
and merger initiative.
His experience was gained in the USA,
Europe and Asia and spans many sectors.
George is currently CEO of his own
Supply Chain Management Consultancy
business but sits on the board of a
number of other companies with a supply
chain and Logistics brief.
Through his work with WIT (Waterford
Institute of Technology) George is involved
in a number of industry research initiatives
and works closely with Liam Doyle of the
INSYTE Research Group.
George’s role within SCLG Ireland
will be to focus on the development
of membership support and activities
regionally and nationally.
George can be contacted via email at
george.banks@sclgme.org
January 2011 Link 21

IRELAND SPECIAL Recruitment
Recruitment Market – 2010
Review and 2011 Prospects
Smooth seas do not make skilful sailors.
– An Old African Proverb
Turbulent times indeed. Financial
crises, threat of defaults, rising
unemployment, falling income, rising
education costs, diminishing opportunity.
Let’s stop there and look past the headlines
to the reality of the situation on the ground.
Ireland has been through three consecutive
years of shrinking economic development
and undoubtedly there are some tighter
years on the way with the measures
introduced in the IMF / ECB sanctioned
Budget for 2011 through 2014.
However, life and work will go on,
commercial exchange between supplier and
customer will continue, goods will continue
to move, imports and exports will continue
to travel through our ports and supply
chain professionals will be at the centre
of ensuring that all of this vital economic
activity is driven in a seamless and cost
effective fashion.
It brings us back to the fact that the most
important element in supply chains is that
people design them, people make them
happen and people deliver for people.
So what were the last twelve months like
for recruiters in the Supply Chain sector in
Ireland?
“2010 has been in an interesting time for
Supply Chain in Ireland. We have moved
on from the opportunity drought of 2009
and have embraced the movement within
the market. The majority of movement
comes from the multinational companies
and has moved away from the typical middle
management positions to more senior
strategic positions and also more specialized
junior positions above the graduate level”
says Mel Donnellan, Head of the Supply
Chain Team at Sigmar Recruitment.
The trend would appear to be that more
‘thought led’ roles are where opportunities
arose over the last year.
According to Shaun Du Preez of
Brightwater Recruitment, “In the past year,
we have seen recruitment focus on the front
22 Link January 2011
end of the supply chain i.e. procurement and
planning. Demand for experienced Planners
(Supply, Demand and Master Scheduler) is
at an all time high. In fact, the availability of
suitably qualified and experienced planners
is shrinking fast, belying the general
impression that there are large volumes
of adequately qualified and experienced
specialists on the live register”.
“Due to the economic situation,
companies expect to leverage significantly
lower prices for goods and services. On this
basis, supply and service level agreements
are being revisited and renegotiated.
This has led to increased demand for
Procurement specialists as well as Vendor
Managers. We have also seen a rise in
senior management positions, particularly
in the areas of Strategic Sourcing and
centralisation of procurement/ purchasing
functions.
In regard to warehousing and materials
management, again we have seen a demand
John Halpin
for analysts and improvement specialists,
who can reduce inventory overhead,
streamline warehouse operations, and
introduce just-in-time material delivery etc.
We have also seen a significant rise in
the number of contract roles available in the
market, which showcases the conservative
nature of recruitment currently. Companies
are hiring on a project basis. If they cannot

identify further projects, time or purpose
limited contracts are offered. Contract
roles now represent approx. 50% of open
vacancies.
The same cautious positivity cannot be
said of the logistics side of the business.
Significant restructuring and redundancies
in the past 2 years have led to a certain
amount of stability, but unfortunately this has
not yet led to an upswing in recruitment. We
have seen a limited number of opportunities
this year, most of which have been strategic
and with a strong commercial edge”.
Reasons To Be Cheerful
Mel Donnellan feels there is good reason to
be optimistic about the immediate future as
“companies have made their cuts and are
now planning for the growth stage again.
Because of Ireland’s attractive Corporate
Tax Rate of 12.5% and sound geographical
placing, many multinationals set up their
Europe Middle East and Africa headquarters
in Ireland. Typically, these companies search
for candidates with strong virtual supply
chain experience”.
“The procurement area in particular
has seen major movements this year.
Companies are looking for procurement
SUPPLY CHAIN & LOGISTICS
SALARY SURVEY 2011
SUPPLY CHAIN
JOB TITLE ROI €
Supply Chain Director €85,000 - €120,000
Head of Supply Chain €85,000 - €120,000
Procurement/Purchasing Manager €55,000 – €80,000
Procurement/Purchasing Specialist €40,000 - €60,000
Procurement/Purchasing Officer €30,000 - €45,000
Materials Manager €55,000 – €75,000
Inventory Manager €45,000 - €55,000
Commodity/Vendor Manager €55,000 - €85,000
Inventory Controller/Analyst €30,000 - €40,000
Planning Manager €55,000 - €75,000
Master Scheduler €50,000 - €70,000
Demand Planner €35,000 - €50,000
Supply Planner €35,000 - €50,000
Production Planner €35,000 - €50,000
Buyer /Planner €30,000 - €50,000
Senior Buyer €50,000 - €70,000
Buyer €35,000 - €55,000
Supply Chain Analyst €38,000 - €48,000
professionals who can bring real cost
savings to surface in a time when value for
money really is the name of the game”.
Interestingly the geographic spread for
employment opportunities in Ireland is
widening. Dublin would be traditionally
regarded as the main employment centre
but recent years have seen the development
of FDI led initiatives creating demand in all
corners of the country.
According to Du Preez,” Industry in
Ireland is spread across the country and
demand has been felt nationwide. The
Greater Dublin region remains the leader
in volume terms, but opportunity has been
offered right across the country, albeit
primarily with multinational manufacturers,
which have weathered the economic
downturn with little impact”.
The experience has been similar with
Sigmar, “The majority of positions we have
filled in 2010 have been in the Dublin area
while Cork and Galway are also very strong
in the pharmaceutical and medical device
sectors where demand is increasing” says
Donnellan.
So what of 2011 and the outlook for
employment opportunities in the coming
year?
Recruitment
LOGISTICS
IRELAND SPECIAL
From Shaun Du Preez’s perspective
the outlook for 2011 is less clear cut than
would normally be the case for companies
planning and forecasting headcount
growth. “The most significant conclusion
we can draw at the close of 2010 is that is
practically impossible to accurately predict
developments in 2011. In fact it is this
unpredictability which is proving the most
destabilising factor in recruitment terms.
Organisations do not have certainty in regard
to how they will fare in 2011 and so cannot
successfully and comprehensively plan
against given certainties, as would usually
be the case. The fluctuations experienced
now have highlighted the need for more
flexible, reactive and on-time Supply Chains
in order to rapidly respond to changing and
unexpected demand, as well as maintain
control and transparency. Individuals
capable of adding value in these challenging
times will still find opportunity and will be
invaluable to Ireland’s stabilisation and
gradual recovery”.
Shaun Du Preez is the Supply Chain
& Logistics Consultant at Brightwater
Recruitment, Ireland
Mel Donnellan is Head of the Supply Chain
Team at Sigmar Recruitment, Dublin.
JOB TITLE ROI €
Director of Operations €80,000 - €110,000
General Manager €75,000 - €95,000
Logistics / Transport Manager €55,000 - €75,000
Transport Supervisor €30,000 - €40,000
Warehouse Manager €45,000 - €60,000
Warehouse Supervisor €30,000 - €38,000
Inventory Controller €25,000 - €35,000
Logistics Co-ordinator €25,000 - €38,000
Freight Forwarder €25,000 - €38,000
www.brightwater.ie
January 2011 Link 23

IRELAND SPECIAL Finance
Ireland: neighbours envy
The Celtic Tiger was a thriving, credit rich, ambition
driven economy that over the period from 1995 to
2007 placed Ireland at the forefront of the European
Economic ideal.
24 Link January 2011
It may be a small island on the periphery
of Europe and the last isolated country
in terms of road or rail connection to
mainland Europe but Ireland has recently
risen to the top of the global economic
agenda as a result of the financial crisis that
has struck across the Euro Zone.
In the not too distant past the main
European powers were championing Ireland
as the economic and commercial model
that all should follow. The Celtic Tiger
was a thriving, credit rich, ambition driven
economy that over the period from 1995
to 2007 placed Ireland at the forefront of
the European Economic ideal and during
that twelve year stretch of year on year
growth, Ireland became the envy of many an
emerging economy.
The reality for economies run on the
Fractional Reserve Banking system, is that
sooner rather than later, the Bankers call in
their debt as their ‘reserves’ are not sufficient
to cover the loans spread in the markets.
They never have been and never will be. It is
a system run on debt.
Ireland’s banks benefited from the low
interest rates available in the markets
and began pumping enormous sums into
the construction sector for developers to
speculate on property prices rising, the result
of which was ‘values’ soaring at alarming
rates. In Supply Chain circles, sustainability
is a central mantra, the financial services
sector is now adopting this as an integral
philosophy as part of their re-structuring.
At the centre of Ireland’s current woes
is the government bank bail-out which left
holes in national accounts and the country
in need of an emergency cash injection. It is
hoped that with the involvement of the IMF,
The National Procurement
Service in Ireland has
targeted savings of
approximately €40 million
in 2010, with €50 million
savings proposed for 2011.
This will rise to €65 million
by 2014.

that stability in the public finances will be
achieved swiftly and that confidence in the
country to operate efficiently and effectively
be maintained.
Public Spending regimes will need to
change. At time of writing the Country has
had a Budget of such austerity that the
impact on personal finances will be deeply
felt by everyone in Ireland. On average 70%
of the annual Public Spend is on salaries.
This is not sustainable in an economy that
is fighting for its financial soul. Radical
change is necessary in the allocation of the
public budget. However significant savings
can be achieved without the need for major
job cuts or a negative impact on front-line
services by focusing on the remaining 30%
spent on consumables and services. An
integrated approach to alignment of thinking
on these policies is crucial. The National
Procurement Service in Ireland has targeted
savings of approximately €40 million in
2010, with €50 million savings proposed for
2011. This will rise to €65 million by 2014.
An integrated supply chain management
process will far surpass the level of public
spending savings identified by the present
Government.
Corporation Tax
Central to the wellbeing of the region is the
more complex relationship between Ireland
and its fellow EU member States and in
particular its Euro currency zone partners.
The current pressures on the Euro are
not solely confined to the ‘Irish’ situation.
Larger economies across the EU are under
considerable stress regarding the strength
and intrinsic value of their currency, the
stability and liquidity of their banks and the
ability of their political structures to withstand
what is fast becoming a financial implosion
of such magnitude that the very viability of
the single currency is under question.
Ireland is currently under fire from her
European partners in relation to her 12.5 %
Corporation Tax rate. A recent report in the
London Financial Times quoted an unnamed
French official as saying the rate in Ireland
was “almost predatory”. The battle lines are
clearly visible across the Continent and in
particular Lucerne (Switzerland) this year
reduced its combined cantonal and federal
taxes from 19 per cent to 14 per cent and
aims to have the lowest rate from 2012 of
12.1 per cent. Ireland is being squeezed by
friends and neutrals alike. A considerable
Terminal 2
As Supply Chain
practitioners we are now
well placed to work with
Government in relation to
re-engineering the nations
supply chain resources.
positive in all of the current difficulties is that
fact that the 12.5% corporation tax remains
steadfastly in place.
With a highly skilled, well educated and
conscientious work force, corporation tax
maintained at 12.5% and costs for services
expected to be slashed across the board,
Ireland remains at the forefront of desirable
locations for Foreign Direct Investment. The
country remains open for business.
Employment
Achieving a balance between reducing
the numbers on the live register by getting
people back into employment must not tip
too far to one side of the equation. Keeping
people in employment is equally crucial to
the immediate and long term prospects of a
sustainable economy.
Running cost efficient and productive
supply chains in industry is vital to the
sustained financial viability of commercial
operations. As Supply Chain practitioners
we are now well placed to work with
Government in relation to re-engineering the
nations supply chain resources. Technology
Finance
IRELAND SPECIAL
is key, investment in training and up-skilling
is crucial, human input is essential. It is
people who make things happen.
The structural components necessary
for reducing unemployment have also
been highlighted by their lack of cohesive,
interactive communication and by a shortfall
in the foresight required with regard to
identifying skills shortages, experience
gaps and opportunity to place supply chain
management at the forefront of education
and training programmes.
There is a growing realisation and
understanding that business continuity
planning – an effective proactive approach to
ensure the continuation or rapid restoration
of delivery of an organisation’s service or
product following a downturn – must address
the entire supply chain. This is now required
on a National Deployment basis.
As Supply Chain professionals I believe
it is incumbent on us to proactively engage
with Government and their partners to
bring to bear the best proven commercial
practices from the Private Sector for the
overall benefit of the national purse. The
leadership team of SCLG Ireland has begun
engagements with representatives of the
major political parties to discuss the ‘change
in thinking’ that is urgently required and the
immediate actions that are necessary.
History has shown the Irish people to
be resilient and determined in the face of
tough challenges and that psyche will drive
the country forward resulting in improved
commercial and public sector mechanisms,
delivering value to all stakeholders.
January 2011 Link 25

FINANCE Banking
Bank investments
in private equity: an
unfair advantage?
Private sector, government and logistics industry
collaboration vital to realize potential economic success
by Stuart Pallister
A
recent study has called into question
private equity investments by
bank-affiliated PE firms. The study
by INSEAD Professor Lily Fang with coauthors
Victoria Ivashina and Josh Lerner
of Harvard, called ‘An Unfair Advantage’?
Combining Banking with Private Equity
Investing, found that between 1983 and
2009, bank-affiliated groups accounted for
more than a quarter of all PE investments.
It also found that the involvement of
banks increases during peaks of PE cycles,
with deals by bank-affiliated groups getting
financing on ‘significantly better terms’ than
other deals when the parent bank is part of
the lending syndicate.
Yet, the bank-affiliated PE investments
have slightly worse outcomes and deals
during market peaks have ‘significantly
higher rates of bankruptcy’.
So while there are clearly risks in
combing bank and PE investing, are the
bank-affiliated PE groups getting an unfair
advantage?
“We argue in the paper that the concerns
that regulators have, in terms of allowing
banks into different risky opportunities
and the concerns of risks associated with
combining various activities (of banks and
PE groups), do seem to be well justified”,
Fang said in an interview with INSEAD
Knowledge.
The study was completed as US
lawmakers considered the so-called ‘Volcker
14
bank-affiliated PE groups
accounted for more than a
quarter of all PE deals between
1983 and 2009
26 Link January 2011
rule’, named after Paul Volcker, the former
chairman of the Federal Reserve who had
championed it. The rule, part of the Dodd-
Frank Act, seeks to curb the proprietary
trading operations of US banks, in terms of
speculating on the markets.
Fang says she and her co-authors were
‘quite lucky’ with the timing of the paper.
“We started this paper in early 2009. At
the time, the ‘Volcker rule’ hadn’t been talked
about and in fact the phrase -- ‘Volcker rule’
-- hadn’t been coined.”
She adds that the phrase became
common currency a year later, just as the
research team had prepared its initial draft.
“The study compares the financing and
performance of private equity deals done by
bank-affiliated private equity groups (such as
Goldman Sachs Capital Partners) with those
done by standalone private equity groups
(such as KKR).”
“I, myself, was actually a bit surprised
by how extensively banks were involved
in private equity investments” as the
researchers found that just 14 bank-affiliated
PE groups accounted for more than a
quarter of all PE deals between 1983 and
2009.
“That’s a significant amount. If we used
our (data to assess) larger deals, they
actually account for nearly 30 per cent of
them.”
There was also a high concentration
of activity, with Goldman Sachs alone
accounting for more than a third of all the
deals done by bank-affiliated PE groups.
Moreover, many of the bank-linked deals
were done at the peaks of PE markets. One
possible hypothesis is that this may have
been due to the banks being more prepared
to lend money based on the information they
have about potential deals.
However, the authors believe another
hypothesis may be more relevant: that
the banks can take advantage of creditexpansion
cycles and then pass this capital
on to their subsidiaries.
“We do find that the banks seem to be
able to take advantage of the cheap credit at
the peak of the market and essentially that
benefits the financing of the private equity
deals done by their PE subsidiary.”
Asked whether the Volcker rule, which

would cap the level of banks’ investment in
PE groups, goes far enough, Fang replies:
“We should look at the Volcker rule as
trying to reduce the complexity of financial
institutions. Complexity helps make banks
‘too big to fail’. And when certain institutions
are enjoying taxpayer subsidies implicitly or
explicitly, this is unfair. So the key question
is whether any benefits of combining certain
activities, such as banking and private equity
investing, outweigh the costs in terms of risktaking
behaviour and its consequences”.
Banking
FINANCE
“If anything, our study shows that we
have a very big knowledge gap in terms of
these very complex investments and our
study is really one of the first attempts to try
to shed some light on the subject.”
Stuart Pallister - Editor, INSEAD Knowledge.
January 2011 Link 27

INNERVIEW Restructuring
Restructuring
Dubai World
HH Sheikh Ahmed bin Saeed al-Maktoum – spearheaded Dubai’s attempts
to recover from last year’s crippling debt crisis as head of the
Supreme Fiscal Committee
28 Link January 2011

Dubai’s ruler HH Sheikh Mohammed
Bin Rashid Al Maktoum appointed a
new board for Dubai World DBWLD.
UL, the flagship conglomerate which struck a
deal to restructure $25 billion in debt earlier,
appointing HH Sheikh Ahmed Bin Saeed Al
Maktoum and key adviser as chairman.
Sheikh Ahmed is also Group Chairman
of Emirates Airline and a top adviser to
ruler HH Sheikh Mohammed bin Rashid
al-Maktoum.
Other SFC members were also named
to a new board of directors, including
Mohammed al-Shaibani and Ahmed Humaid
al-Tayer. Dubai finance director Abdulrahman
al-Saleh is also a new director.
“The board’s functions include approving
plans to restructure (Dubai World) and its
affiliates, as well as approving the draft
annual budget and final accounts and
adopting its administrative and financial
systems and those of its subsidiaries, the
adoption of financing and borrowing from
financial institutions and providing them
financial guarantees,” said an official in a
statement to local media.
“The board is to also approve the sale
and purchase and leasing of real estate,
stocks, bonds and other securities and other
property belonging to (Dubai World) or its
affiliates.”
Also on the board are Hamad Buamim,
Director General of Dubai Chamber of
Commerce, and Soon Young Chang, an
advisor to the Investment Corporation
of Dubai. State-owned Dubai World won
creditor support from all its creditors in
November for a $25 billion restructuring plan,
one of the first major milestones in resolving
the debt headache which has plagued the
Gulf Arab emirate since last year.
In its debt deal, presented to creditors
earlier this year and seen by Reuters,
Dubai World had said there would be a new
managing director and chief financial officer
for the company, whose assets range from
shipping to real estate.
“If they put the heaviest hitters in Dubai
on the board of the company that was
successfully restructured, I sense they
realize that the DW story is certainly not over
yet,” said a financial industry source, asking
not to be identified.
Dubai World plans to sell its prized assets
over a period of eight years to generate as
much as $19.4 billion to pay off creditors,
according to the restructuring proposal
Restructuring
HH Sheikh Ahmed Bin Saeed Al Maktoum
INNERVIEW
document obtained by Reuters.
It said in the document asset disposals
over an eight-year period will help generate
up to a maximum of $19.4 billion, while
similar sales based on current prices would
be worth a maximum of $10.4 billion.
“The appointment of Sheikh Ahmed is
indeed significant and consistent with the
ongoing reorganization of the management
team of Dubai Inc,” said Chavan Bhogaita,
head of credit research at National Bank of
Abu Dhabi.
“In my view the appointment is likely
to be received positively by the investor
community,” Bhogaita added.
Haissam Arabi, Chief Executive and
fund manager at Gulfmena Alternative
Investments, said: “This is very good news,
not only because of Sheikh Ahmed’s track
record at Emirates group, but also as a
statement from the government.”
“The fact is Sheikh Ahmed is very good
for Dubai World’s restructuring plan and will
give more confidence to creditors that the
government is very serious about fulfilling the
obligations of the restructuring.”
About Dubai World
Global holding company Dubai World
focuses on the strategic growth areas of
Transport & Logistics, Drydocks & Maritime,
Urban Development, Investment & Financial
Services. Its portfolio contains some of the
world’s leading companies in their industries,
including Drydocks World, Economic Zones
World, Istithmar World, Nakheel and majority
ownership of DP World.
January 2011 Link
29

ISSUES Business Solutions
Cutting Freight Costs when
Fuel Keeps Rising
With only the strength of the dollar to keep petrol below the $2 mark, it would
take a brave soul to predict relief in the medium or even long term
Most business owners are in sombre
agreement that fuel prices are not
going to drop anytime soon, if at
all. With only the strength of the dollar to
keep petrol below the $2 mark, it would take
a brave soul to predict relief in the medium
Again, I’m as aware
as anyone that speed
and reliability are
considerations when
selecting which carrier
should take which
shipment
30 Link January 2011
or even long term.
If as a distributor you agree with the
above there is an important question that
needs to, and can, be addressed. How
can freight costs be managed effectively to
minimise the impact of further fuel hikes?
Paul Lattimore, who heads the NZ
agency for the Sydney developed IFS
SmartFreight®, believes the answer lies in
running multi–carrier dispatch software, with
the ability to select the cheapest dispatch
method per consignment.

“All carriers, whether courier or bulk,
would prefer to be the exclusive provider in
their field for any given client”, Mr Lattimore
explains. “But while service is a major
factor in your choice of freight provider, it’s
important that you at least be aware whether
your default carrier really provides the
cheapest method of shipment for a particular
consignment.”
The IFS SmartFreight ® software system
offers an optional “Cost Comparison”
module, allowing freight rates for each
carrier to be inserted. At the push of a
button, any consignment going out the door
can have the cheapest carrier automatically
selected, eliminating guesswork and
potentially saving a business thousands per
2.0
million data points would be
handled by a team in a year, a
simple calculation shows this
year in unnecessary freight costs.
“Again, I’m as aware as anyone that
speed and reliability are considerations when
selecting which carrier should take which
shipment”, says Mr Lattimore. “However to
ignore the option of at least comparing rates
for a consignment would be folly, given that
the technology exists. All freight companies
have strengths and weaknesses in their
rates schedules, and different rate structures
mean no carrier is going to come out on top
every time.”
IFS SmartFreight® has now exceeded
1400 installations worldwide, with most
clients taking advantage of the multicarrier
options that the software provides.
Since reaching New Zealand in 2005, IFS
SmartFreight® is used to process over
120,000 shipped items per month, with
clients throughout the country moving
everything from hairspray to medical
supplies to windscreens.
Managing Freight Pricing –
Where companies hit the wall?
Pricing and business development teams
in any reasonably sized freight forwarding
company handle around 200 bids in a year.
Typically each of the bids would contain
around 200-800 lanes that need to be priced.
These lines could be Ocean based, air
based and involve specific incoterms, service
conditions, SLAs and require all accessorials
to be provided as per client’s format. Even
if we take average 500 lanes in a bid and
around 5 to 6 accessorials and there would
be at the least 15-20 odd data points that
need to be determined per lane. A simple
calculation would show that in a year, a team
would handle 2.0 million data points. Freight
being the most critical one ofcourse and is a
decisive factor for winning the business.
Multiple studies by various industry
players and my interactions with some of the
leading players indicate that ‘all powerful’
excel is still the ‘app to go’ when it comes
to determining pricing. Organizations invest
Business Solutions
ISSUES
millions of dollars in automating operations
and improving customer experience. They
do realize that those few cents in the high
volume lanes may make or break the deal on
hand. Yet age old practices galore. With some
manual calculations they are able to push
the proposal off the table. However, more
and more logistics companies are realizing
that yield management is matter that needs
to be actively managed in each deal not just
for winning the deal but for sustenance of
business. Pricing and yield management has
become a focus area for CFO’s of the world
today.
For determining basic freight itself over
10 decision points need to be factored in
which include historical data, achieved
costs, volumes etc., Optimizing this further
at the tradelane level, given the size of
data involved is herculean task. Slowly, but
definitively more and more organizations
are moving towards automating this area
and managing yield more actively in each
transaction and shipment. Yep, it’s the factor
that puts you in or out of business. Profitable
growth, that’s the buzzword of the day.
One would wonder why did no one
addressed this space when there are so
many application vendors all around. One
of the primary reasons is excel is such a
handy tool, its difficult to get such usability in
any other app. More over each of the clients
give different formats to submit (most of them
again excel based) and multiple data points to
feed and this complicates the task.
www.smartfreight.co.nz
Paul Lattimore. paul@smartfreight.co.nz
brahma.mutya@wipro.com
SOME OF THE KEY POINTS TO
REMEMBER WHEN YOU HIT
THE WALL IN PRICING IS:
1. Roll up lane level volumes to gateways.
That is where volume play is.
2. Keep achieved costs handy. But, never
they are the final answer to fix a new
contract.
3. Keep an eye on spot rates.
4. Never predict pricing. Have a scientific
mechanism to determine final price.
5. In freight forwarding every single
contractual term counts. Convert all of
them into a data point.
January 2011 Link
31

OVERVIEW Transport
The goods shipment sector is booming
and represents a key, strategic vector
for economic development due to its
major role in driving business relationships.
Goods shipments bring into play a large
number of actors operating in real-time in a
particularly complex system.
Goods transport involves a number of
different operating modes (road, rail, sea,
air, and river) depending on the specific
requirements (product type, cost, lead time,
security, delivery addresses, countries, and
so on), and makes use of an increasingly
innovative and efficient array of techniques
and technologies.
Road transport
With 2% growth in 2006, it has lately been
more gainful for the French economy
to develop the road transport sector,
especially where manufactured products are
concerned.
With business having increased by
3.2%, road haulage operators transporting
goods for other companies are now working
32 Link January 2011
Goods shipments:
A two-speed sector
Goods shipments bring into play a large number of
actors operating in real-time in a particularly
complex system
at levels comparable to those of 2004.
Internationally-speaking, the revival in
exports has helped to stabilise the situation
for French businesses which, nevertheless,
still face fierce competition.
In addition to the more favourable
economic situation, businesses have
benefited from the effects of two exceptional
measures, i.e. the reduction of payment
times and the reimbursement of VAT on toll
fees paid out between 1996 and 2000.
Even so, the observed recovery still
remains fragile. Furthermore, some
cost items have risen sharply since the
introduction of the Euro 4 standard and
cuts in motorway rebates. Also, the large
variations in diesel taxes throughout the
EU have led to serious distortion of the
competition in a totally liberalised market.
The act of opening up borders and
developing infrastructures has led to a
significant tightening of quality and quantity
requirements in the freight sector.
Experience has shown that road haulage
operators are best equipped to adapt to
these new requirements.
The act of opening up
borders and developing
infrastructures has led to
a significant tightening
of quality and quantity
requirements in the
freight sector

A leader market...
National road transport of perishable food
products represents 7% of total goods
shipment figures and is currently growing at
a rate of 2% to 3% a year, mainly generated
by the larger volumes of products being
shipped under controlled temperature. The
sector is divided up among ninety operators,
including five large-scale key companies.
This market is highly concentrated due to the
number of regional operators subcontracting
on behalf of the five leading key groups of
road haulage contract givers. Road haulage
is by far the main mode of goods shipment.
In 2006, a total of 207,300,000 tonnes of
freight (food products and animal feeds) was
transported by road (for third-party accounts
and own accounts) against 6,442,000 tonnes
for rail freight and 562,000 tonnes for river
freight. Rungis Market recorded the passage
of 440,000 road haulage vehicles (all types
taken together) in 2006.
Cabotage (transport made entirely within
a given country’s borders by a vehicle
registered in another country) represented
only 0.9% of the tonnes/kilometres chalked
up by companies in the twenty-six EU
countries and 0.2% of business volumes for
French companies. If we take all countries
together, about 1.1% of national goods
shipments are performed by a foreign road
haulage contractor. In France, this figure
reaches 2.7% and is mainly handled by
operators from Luxembourg, Belgium, Spain
and Germany, even if some are seeing
Eastern European companies making
inroads on their market share.
Maritime transport
Maritime transport is gaining market share
in the international trade sector. It provides
a cost-effective means of shipping goods,
although this benefit is offset by the longer
lead times. Goods can be transported on
specialised multi-purpose refrigerated ships
designed to transport perishable foodstuffs,
National road transport of
perishable food products
represents 7% of total
goods shipment figures
and is currently growing at
a rate of 2% to 3% a year
270
million tonnes of fruit and
vegetables and 90 million
tonnes of meat were
transported in equal parts by
reefer ships
or on non-specialised vessels, i.e. standard
cargo vessels, container carriers, mixedpurpose
vessels, barge carriers for combined
river and sea transport). Containerisation
offers the lowest costs and has a certain
number of advantages such as cold chain
security, traceability, speed, door-to-door
deliveries and services. Technological
advances linked to packaging, automation,
ship refrigeration systems (products stored
under controlled atmosphere and modified
atmosphere), and computerised goods
tracking have enabled the maritime sector
to develop its competitiveness on the fresh
produce shipment market and, consequently,
lower costs.
Refrigerated freight shipped worldwide
mainly consists in meat, fish, dairy products,
fruits and vegetables (80% of which concerns
bananas, citrus fruits and other). These are
generally transported on reefer boats, which
are currently the cheapest and least polluting
means of marine transport. However,
Transport
OVERVIEW
maritime transport faces stiff competition
from containerisation transport which is
benefiting from growth in the trade of fresh
produce and the preferences of customers
(including large-scale retail outlets) who are
attracted by the tariffs and the possibility
of being supplied to tight flows. Despite all
this, the lack of flexibility of the loading and
unloading ports and the higher costs are still
impacting negatively on this segment. The
globalisation of consumption markets linked
to trade liberalisation and the concentration
of the various actors, applies to all maritime
markets. Increased consumption of tropical
fruits and out-of-season produce is set to
drive market development over the next few
years, leading to its practical and economic
segmentation between rapid but costly
containerisation and the less flexible but
more cost-effective reefer shipments.
Increased development
In 2005, overall exports of refrigerated freight
totalled 270 million tonnes (180 million
tonnes of fruit and vegetables and 90 million
tonnes of meat) including 80 million tonnes
transported in equal parts by reefer ships and
reefer container carriers. Volumes transported
by container carriers entering and leaving
European ports have doubled over the last
few years (3.2 bn tonnes of freight per year,
90% of which concerns non-EU countries).
The port of Anvers maintains its position as
European leader with 3.12 million tonnes
January 2011 Link 33

OVERVIEW Transport
(transport of fruit and vegetables) ahead
of Rotterdam and Sheerness. The leading
French port is Marseille (0.60 million tonnes)
ahead of Dunkirk (0.26 million tonnes) and
Port-Vendres (0.17 million tonnes). Maritime
freight is seeing a constant rise in volumes.
Despite the current economic difficulties
(rise in petrol prices, etc.), world demand
for container transport has risen still further.
This development has been underpinned
by the expansion of international trade,
the on-going shift from cargo shipments to
containerised deliveries and the development
of transhipments.
There are plans to create a European
maritime area with no border limitations in
order to streamline administrative procedures
and develop the maritime routes deemed
most profitable and least polluting. Until now,
maritime transport was governed by a system
of ‘maritime conferences’ that allowed ship
owners to agree on their pricing policy in
return for certain guarantees on price stability.
This exemption is set to expire in late autumn
2008. Contractors (loading operators) will
then be able to maximise on the competition
between the various ship owners and ports.
There are also plans to triple container traffic
over the next ten years (from 3.5 million to 10
million).
Rail transport is not the
preferred choice for
distances under 100
km but becomes more
attractive as distances
increase (with an average
journey of 450 km)
Rail transport
Rail transport is not the preferred choice for
distances under 100 km but becomes more
attractive as distances increase (with an
average journey of 450 km). At distances
of around a thousand kilometres, which
represents the maximum distance for national
good transport, its market share (all products
taken together) can reach 30%, falling to 10%
for consumption products. Transporting goods
by rail is most efficient when this involves the
exchange of very large product flows between
two sites or towns as this makes it possible
to optimise train use, in particular concerning
34 Link January 2011
whole trains. In fact, the market share for rail
shipments always grows in proportion to the
size of the exchanged flows.
While very low for diffuse flows, it
approaches an equivalent level (all products
taken together) where very large shipment
flows are involved. Rail transport increases its
modal share with the increase in the flows of
merchandise. Diffuse rail traffic loses out to
road traffic due to its terminal runs and sorting
costs. This is the case for consumption
goods and equipment that generate diluted
flows between a large number of sites, with
the added drawback of a low-volume share
of rail transport. Together with the lowered
competitiveness of the rail offer, structural
changes in the French economy are driving
businesses towards road transport.
Together with the lowered competitiveness
of the rail offer, structural changes in the
French economy are driving businesses
towards road transport. The overall rail freight
sector stabilised in 2006 (freight shipments
of 41 bn tonnes/kilometre) following the
sharp drop in its business turnover between
2002 and 2005. Freight shipments of food
products rose by 15.7% in 2007. Around
225,000 tonnes of fresh produce under
controlled temperature were shipped on the
Avignon-Paris region and Avignon-Lille lines
(two trains per day in combined transport)
and 255,000 tonnes of fresh produce under
controlled temperature were shipped on the
Perpignan-Rungis line (three trains/day - two
standard and one combined transport).
The Rungis rail terminal is currently
being modernized and refurbished on
several levels: tracks and platforms (new
platforms are being built while some of
the original platforms are being widened),
superstructures (platforms are being covered
to cater for controlled temperature shipments,
construction of adjacent buildings), roads
and miscellaneous networks (development
of yard facilities, extra roads, public lighting,
purification of water and miscellaneous
networks). This ambitious project should help
to develop rail traffic at the Rungis MIN and
exterior warehouses by increasing volumes
to 340,000 tonnes during 2008. This would
represent the equivalent of about 7,500 less
HGV per year on the Ile-de-France roads .
A moderate business...
Combined transport still provides one of the
best solutions by optimising a multimodal
transport chain according to traffic flows,
geography, and environmental policy. This
system tends to maximise transported
tonnages by using judiciously located freight
exchange platforms. The annual volume of
combined transport traffic represented an
average of 12.7 bn tonnes/kilometre over
the five years of the study (2000-2005). It
represents about 12% of total “road + rail”
transport for distances of over 500 km. If
compared with other modes of rail transport
(separate wagons, whole trains), up to 1997,
combined transport was the only mode to
record a growth in volumes. In 2004, its
tonnes/kilometre figure rose another 4.8%,
in actual fact due to domestic runs and
international routes. Since 2006, the rail
freight sector has seen a slight increase in
transported volumes (40.9 GT/km) compared
to 2005 (40.7 GT/km).
The effects of liberalising the national rail
freight sector (1 April 2006) have not so far
been sufficient to negate the fall in business,
and we shouldn’t forget the potentially
severe impact of the latest periods of social
unrest (November 2007) which could see
profits slashed by up to 40%. Faced with this
situation, Fret SNCF plans to set up a highrate
project designed to reassign production
means where traffic actually exists, and to

oost its business share on developing flows
by focusing on international flows, such
as with combined freight traffic and whole
trains. The EU Commission has decided that
at least one international freight-dedicated
transportation corridor should be created in
each member State by 2012. Accordingly,
work on the longest European rail track
(linking Bettembourg in Luxembourg to
Perpignan – Le Boulou in France) was begun
in June 2007. At 1,060 km, it will enable
road haulage operators to cut travel times
and transportation costs by about 10%, and
will take some of the pressure off motorway
routes. With one return trip per day, this line
will be able to transport some 30,000 trucks
per day.
Air transport
Airlines are attracted by the transport of
perishable food produce due to the rapid
growth of this type of goods traffic, itself
linked to the revolution in consumption
patterns. Generally speaking, global air
freight of fresh produce represents 3% of
transported volumes (0.3% for Air France).
Air transport, with its capacity to ensure an
unbroken cold chain, still can’t be beaten
where fragile products and products with
197
million tonnes of road traffic,
218 million tonnes of maritime
traffic, 19 million tonnes of
river traffic and 17 million
tonnes of rail traffic transpired
in 2008
very short use-by dates are concerned
Flows of perishable products into Europe
break down as: 30% fruits and vegetables,
20% plants and flowers and 20% meat and
fresh seafood combined. These products
are shipped in specific containers, referred
to as ‘envirotainers’ at Air France, which
allow goods to be shipped at a constant
temperature of -20°C to +20°C. Air freight
is handled by mixed flights (freight and
passengers) and cargo flights. In France,
55% of general freight is shipped in mixed
flights (holds with a capacity of 25 to 35
tonnes).
For cargo planes, capacities vary from 65
tonnes (B-MD11) to 100 tonnes (B777) and
115 tonnes (B747-400). The A380F will have
a capacity of 150 tonnes. Air France has
Transport
OVERVIEW
four B747-400 and eight B747-200 aircraft.
These are scheduled for replacement by
B777 cargo planes in October 2008. On
the international scene, Air France-KLM is
the world leader in air freight with its fresh
freight shipments totalling 145,000 tonnes.
In terms of international exchanges, overall
French air freight figures represent 1.27
million tonnes/year (for 45,000 tonnes of
fresh freight, 85% of which goes to Rungis),
compared with 197 million tonnes of road
traffic, 218 million tonnes of maritime traffic,
19 million tonnes of river traffic and 17
million tonnes of rail traffic.
Essential but costly...
The average value of one kilo of goods
transported by plane is €114 for imports
and €122 for exports, while it is only
€1.15 for imports and €1.90 for exports,
all other transport modes combined. This
is mainly due to high fuel surcharges
which are equivalent to the basic freight
tariff. Air freight requires extensive airport
infrastructures (logistics platforms handling
storage and goods breakdown under
controlled temperature for perishable
products). ADP is European leader in the
freight sector and ranked 7th in the world.
About 90% of freight shipments transit via
Roissy Charles de Gaulle (CDG). Given the
increasing amount of volumes handled, ADP
has begun work on reorganising the Paris-
Orly freight processing area (10,000 m2 of
warehouse space for 80,000 tonnes/year of
freight), which is scheduled to open in March
2008.
Similarly, there are plans to build a rail
freight station at Roissy CDG airport with
the aim of developing intermodal transport.
Planners are predicting growth of 5.5%
to 6.2% in the air freight sector by 2025,
against 4.8% for passenger traffic. This will
trigger increased demand for large capacity
(and less polluting) cargo planes and bigger
airports.
In France, new companies entering the
market will be seeking airports with free
access, low costs and good road links
such as Vatry or Châteauroux. Following
the Grenelle Environment Forum, public
authorities aim to boost non-road mode
shares by 25%, by developing rail (quality
and reliability) and rail-road freight transport,
plus river, maritime and rail freight transport
routes.
Francis Duriez
January 2011 Link 35

MANAGEMENT Warehousing
36 Link January 2011
Automating the
conventional
Order sizes are shrinking while the frequency of
orders, as well as SKU counts, are growing
By Jeff Hedges

Current trends and practices in the
industry are requiring a change
in the way refrigerated and cold
storage facilities operate. Order sizes are
shrinking while the frequency of orders, as
well as SKU counts, are growing. At the
same time labor, space and energy costs are
still growing. Couple this with the looming
issues around Health Care Reform, CFAT,
Truck Driver Certification and where current
legislation is on Card Check and FoodSafety,
and further operational costs can only
continue to rise. With all of these issues, it
is more and more difficult for companies to
maintain their traditional profit base, let alone
receive board level approval for large capital
investments.
There are no two refrigerated or cold
storage facilities alike. Operational issues
around commodity, distribution and import/
export environments present vastly different
handling requirements. Therefore, the
point solutions for one may not work well
for another. However, all refrigerated and
cold storage operations share a common
incentive to drive down costs associated
with L.E.A.D.S. (Labor, Energy, Accuracy,
Damage & Space).
In general, refrigerated and frozen food
warehouse and distributors look for shortterm,
rapid payback solutions that can be
implemented within existing facilities. The
problem is that educating the market on
available automation options has traditionally
been poor and hyper focused on large scale
automated systems rather than smaller scale
solutions with justifiable ROI / IRR.
When it comes to material handling
automation, there is a general industry
perception that if you are going to consider
automation it has to happen when you are
planning a new, very large greenfield project.
There are, in fact, many automation “pointsolutions”
that can be implemented within
an existing facility. They provide a justifiable
Operational issues
around commodity,
distribution and import/
export environments
present vastly different
handling requirements
ROI, will adapt to changes in your business
conditions and have proven successes
in refrigerated and frozen environments;
effectively reducing your operational costs
by 20-30%. With automation you can do
more within your existing footprint, expand
and add automation or build new. Each
approach has its own unique justification
based on your unique operation.
This past year, in conjunction with the
Global Cold Chain Alliance, I led a research/
survey initiative to better understand where
the Public Refrigerated Warehouse (PRW)
industry was in its readiness to implement
automation. One of the more interesting
findings was that there appears to be
tremendous opportunity for automation point
solutions for existing facilities within this
segment of the refrigerated and cold storage
industry. This is a finding that we are now
seeing as a trend throughout the industry as
a whole.
One of the problems this industry faces,
though, is that end users have traditionally
received little guidance and training on
what type of automated technologies are
available to them. To date the majority of
implementations within this industry tend to
begin with WMS and maybe some conveyor
and then jump to large ASRS type solutions.
There are many automation solutions that
fall in between creating a spectrum of
opportunities that are typically overlooked
and worth understanding.
Automation point solutions can provide
ways to eliminate lost or damaged goods,
increase picking efficiencies, reduce travel
time, eliminate rack and product damage,
drastically reduce multiple handling
scenarios, increase accuracy and reduce
errors. Some technologies can completely
automate these processes, others serve as
aids to help workers and operators perform
more efficiently.
Think about what it would cost you to
add an additional 25,000 sq ft to your facility.
Then take that figure and cut it in half. I
would contend that there are more than a
few automation scenarios that you could
implement within your existing facility to
essentially “free-up” that exact amount of
space; all for half the cost of an expansion.
How?....through better and more efficient
space utilization. Typically conventional
storage solutions demand a much larger
square footage per load than automation
Warehousing
MANAGEMENT
50%
cases of facility expansion
could have been avoided
if more dense storage and
handling solutions had been
considered
solutions. In 50% of most cases a facility
expansion could have been avoided if more
dense storage and handling solutions had
been considered.
There have been some recent
developments in Automated Guided Vehicles
(AGV) technology that are worth mentioning.
Successful installations of Fork AGV’s to
replace counterbalance and VNA vehicles
have been completed for multiple end users
throughout North America. The AGV’s offer
the ability to operate in most any size aisle
and can lift up to 35’, all without an operator.
Storage into multi deep racking capabilities
are expected soon to be realized. For the
refrigerated and cold storage industry,
AGV’s are now successfully being beta
tested in freezer and cooler environments,
a big plus for introducing automation into
existing facilities. The other advantage
that this technology offers is it is not a fixed
asset, allowing it to be moved and installed
into another facility if desired.
Another technology development is the
deployment of stand-alone tray handling
ASRS mini-loads for buffering and staging
slow moving SKU’s. The base design is a
free-standing structure that would replace
an existing aisle of pallet storage. The key
advantages include reduced labor, reduced
travel time for pickers, and the ability to
free-up valuable pallet space currently used
to store low volume, low case count SKU’s.
This technology is currently operational in
freezer and cooler environments in North
America.
There is an old proverb that essentially
advises that you must “Learn to walk before
you run”. In today’s refrigerated and cold
storage facilities, the desire to incorporate
automation could be best advised by these
words “Automate the conventional before
you build new”
Jeff Hedges is Director, Business
Development; Dematic
January 2011 Link 37

OPINION Freespeak
Why do we fail as supply
chain professionals even with
experience and confidence?
By Nigel Lewis
After Spending 18+ years in the
Supply Chain Indutry with various
roles started from 1989 I remember
my 1st job was with a courier company
carrying courier bags to customs (45kgs
each), flying as On Board Courier to various
cities to handover the consignment, jumping
on pickups to pull pallets out, climbing on
flat rack containers to measure out of gauge
cargo, sticking dangerous goods protocol
for air shipments at airports, filling customs
formalities and walking 5 kms to find a
transporter to handover documents and not
38 Link January 2011
forgetting driving the forklift when no one
is in the warehouse as Grand Prix Motor
racing...... that was challenging being on the
ground and learning operations.
I wish to share with you my experience
on where we go wrong and how to avoid
such risks. Bottom line for a SC Pro is
execution, delivery and drive the process
which should be KPI driven. Processes are
driven by people. End of the day goods have
to be delivered from point A to point B.
Let me explain to you what the basic risks
we have in SC.
Planning:
The most important aspect for any
organization is planning... and planning...
You can have a wonderful ERP (million
dollar) but if you don’t plan well, what can
your ERP generate? Reports are based
on data entry and accordingly output is
generated? (Junk in – Junk out). We spend
hours in Board rooms with wonderful “colors”
in power point presentations of Forecast /
Budgets but in reality it’s just an assumption
which has to be converted into reality or do

we play with numbers? (Most of the time we
discuss the future years as this year and
the year ahead is locked I presume. But....
Trends.....?)
Anyway, I am here to advise the risks
and way forward. If you don’t plan well with
the right mindset (whether aggressively
to please the Board with numbers or
defensively to cover sales force/ customers)
the company can fail not just with Cash flow,
Inventory or Slow moving. But, in a nutshell
can affect the company’s growth and the
FUTURE too. Planning to me is the heart of
the organizational strategy which has to be
put in play and action. Planning (Demand
Planning) is a vast subject which books are
written on but a good Planner comes with
experience and is one who understands
product knowledge, market trends, company
norms/ growth path /numbers to Hit/systems
& process.
Master Data / Product
Hierarchy maintenance team:
Every Company has its own SKUs and
New SKUs (Innovations / Promotions etc..)
but the ERP or the system has to maintain
the Master Data Creation to the Perfect
T. If everyone depends on exploiting the
system, the conclusion is that data has to be
100% correct which will eventually help the
complete Order to Cash or Complete Supply
chain process.
Goods in Transit / Import
Process:
Every company depends on Imports (could
be finished goods for Exports/ Distribution
or Raw Material/Packaging Material for a
factory to produce the finished goods).
Lets get this process to the basics. We
all know that once a supplier triggers the
shipment to a consignee, the consignee
starts planning his inventory turns based
on GIT / Transit times / shipping time from
Port to Port (including transshipment cutoffs)
based on global shipping company websites
and communication follow-ups done at both
ends. But imagine a critical container is
required for a supplier to produce finished
goods and the container shows on a website
it will have a specific ETA and factory
plans production. Could be that the ship is
delayed, the transshipment at the port was
late, the mother vessel came in late, the
container had a leak, customs discharge
port delayed the process to handover
to your transporter? What could be the
repercussions for the factory to stop its line
and don’t produce.
Why do we depend on ETA and why
don’t we plan on ATA? This is not rocket
science but such process breakdown
can cause financial losses. How can the
procurement department who is responsible
to place orders with the Supplier, Planning
& Production Department and Logistics and
Operations Department who get sandwiched
between these departments execute and
bring the physical container to plant when
in reality the box never came for one of the
above reasons has made this Logistics and
Operations department a failure? Goods in
Transit have to be clearly used as inventory
stock control rather than depending on these
goods to a just in time business model to
support the business. Why do we depend on
websites when we can pick up the phones
and check with local offices, ports if the
ship has called in, communicate well? 75%
of the issue here is Communication or it
becomes a Chinese whisper.
Inventory control:
This does not require explanations but in a
simple lay man’s language. Every company
should have the right products to sell rather
than have products which become obsolete
and become dusty in warehouses which
eventually are written off from financial
books and scrapped. (Even scrapping costs
are increasing these days.....!) Millions are
spent on ERP and even WMS but if your
start of entering data is not correct imagine
the reports of your inventory accuracy. Even
if you use RFID, Data capture and data
transfer has to be checked and verified in a
timely pattern. Money and time is spent on
physical stock count but when the physical
stock count sheets have to be data entered
into Excel or systems what happens if some
entries are wrong. Imagine the physical
recounts and then systems don’t match. A
good inventory controller is the one who
Supply Chain can be
learnt only in time. Its
taken time and efforts
to understand what are
ground realities
Freespeak
OPINION
is experienced, not one who just studies a
course in college and takes on an Inventory
role. Older the wine better it tastes is what I
can say for Inventory control.
People and people are the most
important point I wish to make in SC.
You may have a million dollar ERP, best
processes and procedures, fantastic new
equipment / forklifts / shelves / state-of-theart
warehouse and tons of money but its
imperative that you have the right people
to run your SC models. People should be
motivated and dedicated. The Positive
attitude is important (example is if you have
an inexperienced staff compared to an over
confident staff, its better to give training to an
inexperienced staff and develop him than to
have an overconfident person who can make
blunders.)
You may have a great team but if you
do not have an experience leader how will
you row the boat to shore? People drive SC
and most important thing is being a good
listener, no staff of yours is interested in a
leader who only preaches but a balance
of being & bringing discipline and also
motivational skills is a must. I don’t want
leaders to be diplomatic but be transparent
to your team. Every team player is unique
in his temperament but it’s for the company
and individuals to coach them and train
them. Some professionals don’t need
increase in salary they just need some one
to guide them from the problems and issues
they face. Every staff is not just focused on
money, salary increase or career growth
there are other issues too. Never Judge a
book by its cover.
Let me conclude by saying that a good
supply chain professional is one who
understands and anticipates risks and
proactively delivers first and then goes about
trouble shooting on what went wrong. Never
think that if you have years of experience
you have achieved the complete know how
of SC, take pride in learning even from your
peers. A good SC leader will always push his
team for appreciations and awards.
Supply chain is a team effort and if you
have a positive mind to take up challenges
as it’s not a routine job, its robust and
challenging.
If you feel Supply Chain can be learnt
from books only, you are sadly mistaken its
taken time and efforts to understand what
are ground realities.
January 2011 Link
39

China’s economic growth has led
to massive expansion across all
consumer categories as its citizens
become more affluent, and, in many cases,
have discretionary income for the first time.
But one sector stands out for growth even
in China: automobile sales. Over the past
five years, China was the only country in the
world to achieve annual growth of more than
20%, and in 2010 alone, car sales will likely
grow by 23%, according to Nielsen estimates.
The big story, however, is not the size of
that growth—sales of cars will consistently
increase for the next few years—but where
that growth is coming from: China’s lower tier
cities. These and other issues facing China’s
automotive industry were addressed today
by a range of speakers at the Nielsen China
Forum.
Shirley Ng, Director, Client Leaders,
Automotive, The Nielsen Company, China,
spoke of the challenges and opportunities
for car manufacturers and retailers. “Private
vehicle ownership is still low in China and
we expect that the number of first-time
car buyers will increase sharply in the
next few years. Car owners in first tier
cities like Shanghai are starting to trade
up—good news for luxury models. But the
real opportunity is in the tier two, three and
four cities such as Shandong, Fujian and
Guangdong, where the middle class is
growing every year and their confidence as
consumers has been rising faster than in tier
one cities.”
Ng said manufacturers and retailers
must understand the differences between
the needs of consumers in lower tier cities
compared with those in tier one cities, and
noted that advertisers must approach these
price sensitive car buyers creatively by
focusing on brand building for the long-term.
To better understand these new car
consumers, Georgia Zhuang, Director,
Consumer Research, The Nielsen Company,
China, provided an in-depth look at this group
and the factors and themes that drive their
purchase decisions. Lower tier consumers
tend to be older than those in tier one, and
their families are their top priority. Work is
viewed as a way to increase their family’s
quality of life and they tend to have fewer
financial pressures. In short, they have
positive outlooks on life and are confident
about their futures.
Auto manufacturers and retailers need to
market toward these consumers by finding
Auto Industry
Chinese Auto
Industry Racing
Forward
New opportunities for long-term growth
come from lower tier cities
the emotional linkage with their priorities
and satisfying their basic needs. Zhuang
noted that companies focusing on lower
tier consumers would do well to emphasize
fundamental themes such as economical,
durable, safe, reliable, simple and plain
exterior to consumers. It’s also necessary to
build a trustworthy brand image that offers
high value.
Since these consumers have little
experience with or knowledge about cars
(90% are first-time buyers) and have limited
information, their purchase decision making is
relatively simpler and quicker. Manufacturers
and retailers should use a range of media
including the Internet and social media as
well as physical displays at various locations.
Dealer network expansion and training of
the sales and service associates will further
enhance brand visibility and reputation—key
factors important to lower tier consumers.
Mirroring the growth in car sales in China
REAL REPORT
has been advertising spending. From 2009-
2010, the auto industry posted the highest
growth in spending of any industry, up 24
percent and indicative of the increased level
of competition between manufacturers.
But that high level of spending has led to
decreased efficiency in mature markets
whereas lower spending in lower tier markets
has yielded strong results.
Given this marketing environment,
Kenneth Tan, Associate Director, Analytical
Consulting, The Nielsen Company, said
that car makers need to focus on long-term
growth by consistently advertising to build
brand equity. “Marketing helps build market
share in the near-term, but also helps grow
brand Equity in the longer term. Without
incremental activities to bring in new buyers
and respond to competitive activities, brand
equity will erode. ”Based on Nielsen research,
Tan noted that up to 35 percent of total auto
sales are based primarily on brand equity.
January 2011 Link
41

INFOCUS Management
Mapping the dynamics of
regional growth
The Asian region is better equipped to handle recession while European countries
face new challenges post recession.
By Savio Pimenta
A
study into critical innovation and
knowledge economy skills in Europe
and Asia by INSEAD’s eLab has
found there are striking differences between
the regions. According to its data, Asia
came out of the global financial crisis early
and, says eLab Executive Director Bruno
Lanvin, as the region has been posting
strong economic growth, it has also been
developing the skills it will need to be
competitive. In Europe, however, many
42 Link January 2011
Singapore is an excellent
example of a country that
continues to invest in all
three levels of skills:
basic literacy,
occupational skills and
global knowledge skills
countries are seen as being ‘at risk’ of losing
ground in the skills race.
“We see leaders like Singapore that are
securing their position,” Lanvin told INSEAD
Knowledge on the sidelines of the school’s
Leadership Summit Asia. “They are indeed
investing and are continuing to invest heavily
in skills and therefore keeping ahead.”
However, not all are doing so well. “Others
who have been leaders like Korea are
actually losing ground on the scale of skills.”

Last year, the INSEAD eLab’s study into
innovation skills in Europe showed that the
EU was facing some difficulties and urgent
attention would be needed if it were to
benefit from technological innovation and
investment.
Based on its skills pyramid and three
years of data, the eLab team updated
the scores for some 55 countries: the 27
member countries of the European Union,
20 countries from the Asia-Pacific region,
and eight other countries which compete
with EU and Asia.
In addition, it also examined which
countries had improved their scores over
the past three years when the financial crisis
was at its height, and those which have seen
their scores weaken in that period.
“Singapore is an excellent example of a
country that continues to invest in all three
levels of skills: basic literacy, occupational
skills and global knowledge skills”, says
Nils Olaya Fonstad, Associate Director of
INSEAD’s eLab.
The eLab report identifies four types
of countries: ‘solid leaders’ (countries with
high scores for skills which kept improving);
‘leaders at risk’ (countries that scored above
average but whose scores have declined
over the past three years); ‘potential leaders’
(countries that are still below average but
who are getting stronger); and countries
which are struggling.
Solid leaders include Singapore, Australia
and New Zealand in the Asia-Pacific region,
and the Czech Republic and Cyprus in
Europe. As for countries at risk of losing
their leading positions, these include South
Korea, Taiwan, Japan in Asia, as well as
Finland, Sweden, Germany, France, the
Netherlands, the UK and Ireland in Europe.
Among the potential leaders are
China, Vietnam and Sri Lanka in Asia, and
Luxemburg, Poland and Romania in Europe.
The initial study came about in response
to a request from the IT sector, as Lanvin
27
member countries of the
European Union, 20 countries
from the Asia-Pacific region,
and eight other countries
compete with the EU and Asia
points out: “Some large companies came
to INSEAD and said ‘we want to invest in
Europe, but we don’t find enough people
who would be programmers, engineers,
scientists. What can be done about it?
Should we expect to face the same situation
in 10 years from now? Are governments
going to take specific measures, or should
we the private sector start getting our act
together and churn out more of these skills
internally?’”
The INSEAD research centre began
investigating the issue and found it didn’t
make sense to consider IT skills in isolation
– hence the pyramid, Lanvin says, which
also takes into account basic literacy as well
as key knowledge skills which are “required
for innovation, and not just technological and
IT innovation, just to produce the innovative
mindsets that economies will need to
compete in this century.”
“Increasingly, what we’ve seen over the
last couple of decades, is that infrastructure,
like telecommunication infrastructure and
connectivity, is key”, says Lanvin. “At the
same time, he adds, without the related
GREEN ENERGY PROGRAM PARTICIPATION BY REGION
Management
INFOCUS
skills, infrastructure in itself would not bring
about the right business environment”.
“It has often been said, for instance,
that, in the 1960s, countries like Korea and
Ghana had about the same income per
capita. A few decades later, the multiplier
was between eight and 10 to the advantage
of Korea. And people tend to focus on
broadband, saying ‘yes, this is a country that
has developed its IT sector’, forgetting that
indeed the skills and education component
has been absolutely key for Korea to take
advantage of this massive investment.”
This is why it’s now a cause for concern
that, according to eLab’s data, skills in Korea
are deteriorating because, as Lanvin says,
the authorities there “know that it’s a primary
condition for creating the right environment
for investment and growth.”
Another good example of the dynamics
involved is India, which is seen as struggling
(albeit a borderline leader at risk). Fonstad
points out that for decades it has been
investing in the development of skills to
attract foreign investment to sectors such
as ICT.
January 2011 Link
43

INFOCUS Management
“Interestingly now, they’ve been so
successful that the demand for those type
of skills and even more sophisticated skills
far exceeds the supply”, says Fonstad.
Consequently India now realises that it has
to invest more in skills.
“So both the example of Korea and
India highlight that it actually is quite an
investment to initiate and create attractive
conditions for foreign direct investment,
but it’s also a challenge to maintain that
investment in skills, because the skills
requirements are constantly evolving.
And it requires a partnership between
industry, between academia and between
governments in order to maintain an
understanding of the future demand and to
maintain the supply of those new skills.”
China is often regarded as the factory of
the world, but Beijing is trying to steer the
country up the value chain and so China is
44 Link January 2011
moving some lower-end processes out to
countries like Vietnam.
“This regional dynamics is a critical
element that we will see more of in the years
to come. But it’s clear that some countries
may have the critical mass to regenerate
skills by themselves. Others will have to
rely on dynamics which will include also
economic dynamics in terms of where the
investment is going, how they get production
to be combined in their own regions.”
“What is one of the striking elements
in our analysis is that in the world, we
were able to identify only three countries,
that have grown on all three tiers of the
skills pyramid. And the three countries are
Singapore, China, and Vietnam in Asia.
Another example is Cyprus in Europe, but
it is a rather specific example due to the
convergence of EU policies”, says Fonstad.
“But if you look at what China, Vietnam
and Singapore represent in Asia, we have
three totally different kinds of environment.
Singapore is an established leader, which
is consolidating its position. Vietnam is the
up-and-coming new kid on the block with
spectacular rates of growth over the last few
years. And China is also investing massively
in skills, because they look at the longerterm
competitiveness of their economy”,
adds Lanvin.
The eLab study provides action
plans for three main stakeholder groups:
academia, government and industry. These
include making teaching a prestigious
profession, developing curricula to help build
occupational and knowledge economy skills,
getting academia and business to work
together, and leveraging foreign investment
to build competencies.
Governments, businesses and
universities cannot “tackle these skills issues
on their own”, says Fonstad. “They each
have a role and they each have overlapping
roles in this.”
Korea and India
highlight that it actually
is quite an investment
to initiate and create
attractive conditions
for foreign direct
investment
“Vietnam is an excellent example (of this
collaboration). They’ve invested in skills
and now they’ve attracted huge foreign
direct investment, such as Intel whose
largest manufacturing plant in Asia is now
in Vietnam. However Intel has had to invest
heavily in collaboration with the government
and with universities both in Vietnam and the
United States. All of these folks are working
together to build the skills in Vietnam to
sustain these investments.”
So investment in education is key?
“Definitely, but it also points at the quality
of investment, not just the quantity of
investment necessary,” says Lanvin. “One
of the elements of our analysis for Europe
which we would very much like to extend to
Asia very soon based on this first report, has
been the identification of what we call best
practices.”
“Finland, for instance, has been the key
source of such practices in Europe. And one
of the examples we looked at in detail is the
example of Aalto University, whereby the
Finnish public authorities with the support of
private companies, decided to bring together
their best business school, their best
engineering school and their best design
school and merge them into one single
entity called Aalto, which has now started
to produce people who have a major and
two minors. So they are not just businessoriented
people or technicians or artists.
They combine all three. And this is one
of the best practices we found to actually
produce innovators.”
“What we’ve found -- and I think there’s
consensus around this -- is that diversity is a
key element of the top tier of the knowledge
skills we’ve identified. Clearly INSEAD is a
good example of how to build multicultural
education across different campuses, time
zones and areas of the world, which have
helped make it a top business school in the
world, but this is spreading to other areas.
When innovation is the key word, diversity is
a key ingredient.”
INSEAD’s eLab now plans to extend
its study into critical innovation skills to
Latin America and other parts of the world,
“because each of these regions offer their
own types of success stories and critical
success factors”, says Fonstad. Meanwhile,
he adds, “there are lots of lessons in the
Asia-Pacific region that Europe, the US,
other parts of the world could learn from.”
- Information courtesy INSEAD

For some, capitalism is synonymous
with the notion of shareholder value.
But for others, the stakeholder holds
greater sway and that concept extends
beyond just those directly linked to a
particular company to the community in
which it operates.
At INSEAD’s Leadership Summit Asia
last month, a panel session on new and
evolving forms of capitalism quickly shifted
to the topic of corporate social responsibility
(CSR) and the notion of companies doing
well by giving back to the community.
“How do we really make growth not just
competitive growth but responsible growth?”
said Harish Manwani, Unilever’s President
of Asia, Africa, Central and Eastern Europe.
“How do we make consumption sustainable?
How do we make businesses responsible?
That, to my mind, is the true north of
organisations that is very much going to
decide the future of whether you are going to
go for the next 100 years or not.”
CSR is certainly not new and some
corporations appear to have embraced it, at
least in theory. Walmart, for instance, has
hosted events like its Sustainability Summit
and Sustainable Packaging Expo, in addition
to publishing an annual sustainability report.
McDonald’s has similar initiatives, with
a sustainable supply chain and healthier
menu choices. The Body Shop has built its
entire brand and business around ethically
responsible practices.
Brands must have a social mission, said
Manwani. “When you are in the business
of fast moving consumer goods, we believe
that the best leverage we can provide in
terms of making that little bit of difference in
society is the fact that billions of consumers
use our brands,” he said in an interview with
INSEAD Knowledge on the sidelines of the
Leadership Summit. With Lifebuoy, one of
Unilever’s best selling brands, he explained
the company’s partnership with several
non-governmental organisations and health
organisations to educate the poor of the
need to wash hands in order to mitigate the
risks of disease. “In the end, we sell a soap,”
he said. “But that soap has a social mission.”
“CSR is becoming a bigger agenda
but it troubles me how companies look at
CSR,” said Anil K. Gupta, INSEAD Chaired
Professor in Strategy, who also took part
in the panel discusssion. At the basic level
or ‘CSR 1.0’, as he termed it, companies
leverage their financial capital by charitable
CSR: a new model
for capitalism?
Harish Manwani
contributions. At the next level or ‘CSR
2.0’, they leverage their human capital and
encourage employees to take time off to
work in the community. However CSR can
be truly meaningful only in ‘CSR 3.0’ when
companies reflect on their organisational
capital, core competencies, the whole
value chain and analyse how those can be
leveraged, said Gupta. “At that point, CSR
is not a peripheral thing,” said Gupta. “When
CSR
GLOBAL
it’s your whole value chain being directed
and channeled toward CSR, that is when
you embrace it.”
But if CSR continues to hold sway, what
advice would the panellists have for students
seeking jobs and companies that integrate
social values and sustainable practices?
“It’s all about organisational culture and
behaviours,” said Manwani. “People want to
have the same values in the office as they
do at home.”
For all its benefits, both tangible and
intangible, CSR efforts still come at a cost,
particularly to shareholders and analysts
seeking short-term returns.
“We believe that doing well by doing good
is a business model that allows us to grow
our business sustainably and profitably,” said
Manwani. “At the end of the day, you’ve got
to ask yourself, what are the drivers of value
in an organisation? Ultimately value has to
be sustainable. It has to be longer term. We
believe the best value comes out of giving
our consumers what they are looking for
and catering to the communities in which we
live.”
- Information courtesy INSEAD
January 2011 Link
45

CASE STUDY North Pole
After spending a few days here at
the heart of the world’s largest toy
distributor, it is impossible not to walk
away tremendously impressed.
The sprawling manufacturing and
fulfillment operations are a model of
efficiency, collaboration and integration,
offering lessons for companies across the
globe.
Cleary, the supply chain effectiveness
here starts at the top, where North Pole
Inc.’s first and only CEO, Santa, clearly
understands the role of SCM in overall
corporate success.
“We do a great job of branding, and we
don’t have to worry much about creating
demand, though the low rates of child birth
in Europe are a concern,” Santa said. “In the
end, we have to have a supply chain that
can seamlessly support our overall strategy,
and do so at an affordable cost.”
While trying to do everything well, the
North Pole has really picked “customer
intimacy” as its most important value driver.
But achieving that objective would simply be
cost prohibitive without what appears to be
the world’s most efficient supply chain.
It all starts with a strategic supply chain
master plan, which stretches out for a rolling
five year horizon, with annual reviews and
updates.
The key is consistency, says Chief
Supply Chain Elf Elessar Calmcacil. “While
our supply chain has to be flexible, we’ve
learned that core principles need to be
developed and consistently affirmed to the
whole organization even as we change
supply chain executives,” Calmcacil says.
Supply chain network optimization is a
core competency here, with North Pole long
ago having acquired a network planning
tool and maintaining a small full time staff to
constantly evaluate network improvements
and provide insight into the real benefits of
proposed changes.
Singapore is an excellent
example of a country that
continues to invest in all
three levels of skills:
basic literacy,
occupational skills and
global knowledge skills
46 Link January 2011
Predictive
Demand, Planning
and Demand
Sensing
Supply chain network optimization is a core
competency in the North Pole, having acquired a
network planning tool long ago
“It’s hard sometimes to completely
connect the savings to the cost of the effort,
but we know it’s there even if the ROI is
sometimes difficult to show on paper,”
Calmacil says. The team uses the tool,
for example, to evaluate global sourcing
strategies for raw materials and where
and when to utilize outsourced production,
which is still small as a percent of the total
but growing in recent years, with a lot of
business now going to Eastern Europe.
Within the giant manufacturing and
fulfillment operations here, the network
team is also used to support constant flow
path optimization and to determine which
products are best made on which elf line.

Insight from the network optimization tool
is also extensively employed in North Pole’s
robust List and Elf Operations Planning
(L&EP) process, which actually now more
explicitly includes toy inventory as part of
that discipline (LTEP).
“We get a constant stream of companies
that come here to see how we do this,”
says Ireth Helyanwe, director of LTEP at
North pole. “Santa has made it clear this is
a board level issue, not just a supply chain
thing,” she adds, noting the bearded CEO
with the portly belly purposely selected her
for this role from out of the Toy Marketing
department to send a message about
how critical the process was for the entire
enterprise.
20
years ago the Elf Management
System (EMS), was somewhat
controversial when it was first
implemented
Of course, a high performance
forecasting program is a critical element of
LTEP, since despite a highly efficient and
flexible manufacturing operation, much
inventory must be made in advance to
support the once per year fulfillment surge.
“We are highly seasonal,” notes
Calmcacil. Demand planners are highly
respected here, and that is one of the
key pieces of advice they offer to visiting
benchmarkers.
North Pole is also very advanced in new
techniques such as Predictive Demand
Planning and Demand Sensing. This is
critical, as toy demand is very unpredictable,
especially with the growing preference on
Christmas lists for electronic toys.
“Our staple SKUs - you know the Barbies,
the GI Joes, the basketballs - we just let the
software system run with those,” Helyanwe
says. “But what will ultimately be the most
in demand gaming system come December,
that is a much different ball game.” She adds
that demand volatility is higher than ever.
Finrod Ancalime, North Pole CIO, has led
the development of a system that constantly
monitors social network sites for clues as
to where demand is headed throughout the
year. The earliest Santa letters received
here from children are quickly encoded
and posted to a data igloo to give early
intelligence as to where final demand is
really headed. While “demand shaping” in
the Dell sense is not really possible - the
toys are free, after all - the North Pole does
subsidize some television advertising for
certain products if it believes it will not be
able to meet demand in other areas given
the way list trends are headed.
Deciding on whether to use push, pull
or push-pull strategies for each SKU is a
core competence here too. While North
Pole tries to be pull based where it can,
with substantial make-to-order operations,
extreme seasonality means make-to stock
is also heavily utilized. Calmcacil notes that
in the relatively few times North Pole greatly
overestimates demand for a given toy, a
hard push strategy is often used.
“Every child is used to getting a toy or
two they weren’t expecting, right? We add
in a few of our forecasting mistakes to each
pick list, but that’s OK.” Calmcacil says.
North Pole uses that technique to draw
down inventories of slow movers, then later
partners with Overstock.com and similar
retail channels to quickly get rid of excess
North Pole
CASE STUDY
inventories after the peak season. “We used
to hold the inventory to avoid the write-down,
but have learned that is just a bad strategy in
the end,” he added.
Flexible manufacturing and
postponement strategies are the real keys to
meeting these demand dynamics.
Elves on production lines are cross
trained in numerous tasks, and investments
have been made to enable each elf line
to be capable of making multiple product
categories. But you can go too far, Calmcacil
says they have learned.
Postponement is a common practice.
Board games, for example, generally use
standard boards and boxes, which are then
digitally printed at the last moment based
on list demand to create the specific games
needed to fulfill kid customer requests.
The actual fulfillment operations here are
simply astonishing. Most of the DCs could
operate almost “lights out” given the level of
automation, though a few have been kept
more manual to test Lean versus highly
automated models.
In the most highly automated DCs, new
to the world robotic systems have been
deployed to enable high volume, childspecific
order picking.
“We’ve had Wal-Mart, LL Bean, Cardinal
Health, and several others up here to
see how we are doing this,” says Alatariel
Inglorion, Sr. VP of List Fulfillment.
The Elf Management System (EMS),
based on discrete standards, was
somewhat controversial when it was
implemented about 20 years ago, but in the
end it has both reduced costs and improved
morale and retention in the DC.
While everything seems to run here like
a high end Swiss watch, North Pole is not
without its supply chain concerns.
“Fuel costs are skyrocketing,” says
Calmcacil, noting that the grain products
used to feed the reindeer are up some
50% in 2010. An aging work force is also a
concern, with many elves more than 1000
years old. A decent percent of recent capital
investment has been to reduce the stress on
the elf bodies working the production lines,
spend which has shown a huge ROI.
With the elf population largely static and
increasing global demand, everyone at the
North Pole is overtaxed, sometimes not
leaving enough time for keeping up with the
latest SCM development and trends.
Courtesy: Supply Chain Digest
January 2011 Link
47

MARITIME Acquisitions
Festive season puts a lid on
ship acquisitions
The holiday season affected the overall
turnover of ship acquistions deals
prior to Christmas with the current
week not expected to exhibit any different
signs. According to a weekly report from
Piraeus-based shipbroker Golden Destiny,
last week was marked by a slow pace of
overall sale & purchase activity, with the
shipbuilding industry accounting for 46% of
the total deals reported, while after weeks of
stalling, the demolition market is also picking
up its pace.
Golden Destiny said that the purchase
interest in in the secondhand market
continues fairly solid with the Baltic Dry
Index closing at 1,773 points, down by more
than 43% since the beginning of the year
48 Link January 2011
and down by 40.2% from the 2009 end
year, when it was standing at 3,005 points
with capesizes earning above $35,000/day.
“Nowadays, owners of large size units in
the panamax and capesize segment are
experiencing low earnings at levels of around
$15,000/day and $20,400/day respectively.
In total, 37 sales reported in the secondhand
and demolition market posting a 32% positive
change” said the shipbroker.
Out of those 22 ships changed hands
through the secondhand market for a total of
$368,650,000, while an additional transaction
was done on private terms terms. In terms
of reported number of transactions, the S&P
activity is similar of previous week’s activity
when 21 vessels reported to have changed
hands with bulk carriers holding 55% of the
total S&P activity and tankers of MR size still
being popular purchase candidates. Although
the weak sentiment in the freight markets,
the appetite seems that has not eased off
under the Christmas spirit and asset values
show signs of corrections in the dry sector.
Among Greek shipowners, it seems that
their “appetite” for secondhand carriers has
diminished this month, with just one vessel
bought this week. It was a modern MR
tanker of 45,985 dwt built in 2003 and it was
acquired for $21,000,000. On the other hand,
Chinese owners appear to have bounced
back, as a result of an expectance of sliding
asset values for dry bulk carriers during 2011.
“In the newbuilding market, week 51/10

has been one of the weeks with the lowest
business in the shipbuilding industry,
indicating an almost 89% decline from
the record activity of the second week of
December.
Greek owners have been absent from
the market since the end of November with
only one capesize order reported in previous
week. In total, 17 new vessels have been
ordered equalling a total deadweight ordered
of around 1.423.200 with a quite massive
investment in the offshore sector and big
size bulkers being on the spotlight by major
players of the industry. SK Shipping ordered
in compatriot shipyard Hyundai H.I one unit
of 250,000 dwt for delivery in 2012. So,
even the oversupply issue in the VLOC and
capesize segment, some activity is still there
that may trouble even more large size units
in the dry sector within the next three to four
years. In the container segment, one more
massive investment has been reported this
week in the post panamax segment by one
more major player of the industry, OOCL,
for 2 units of 8,600 TEU for delivery in 2014.
It seems that now that financial problems
have been sorted, liner operators are trying
to rebuild their owned fleet, but the container
segment has not been fully recoverable and
there are worries for the 2011” said Golden
Destiny.
As far as demolition activity is concerned,
a weekly increase of 114% was noted this
week, as 15 vessels headed to scrap yards
equalling a total deadweight of 573,902 tons
with bulk carriers, tankers and liners holding
the 86% of the total demolition activity. In
terms of demolition countries, the news
are not so encouraging for the Bangladesh
industry as BELA has been successful once
again in its appeals to the high court and
allow no further imports of scrap vessels.
On December 15th, the BDESH High
Court passed an official order to local
authorities to cease the issuance of fresh
NOCs for future/incoming vessels. On the
other hand, in terms of scrap prices, the rates
are spectacular for the eager owners who are
ready to scrap their vintage tonnage.
China is said to have been bid $448/ldt
for a capesize built 1991 whereas Turkey
is offering region $300/ldt and Pakistan is
near fetching $500/ldt for wet units. At the
beginning of the year, scrap rates for dry
cargo were standing at $300-$350/ldt for dry
and $360-$400/ldt for wet cargo.
DARK POOLS BOOST SHARE
OF JAPAN EQUITY
The share of Japanese equity trades
taking place in dark pools, or private
systems that don’t display prices
publicly, is growing, according to data from
the Tokyo Stock Exchange’s alternative
share trading platform.
The share of Japanese stocks traded
on the Tokyo Stock Exchange Trading
Network, or Tostnet, increased to 10
percent in November from 7 percent in
March, when regulators first required dark
pools to connect to the system, the bourse
said.
Daiwa Securities Capital Markets is
among the operators of dark pools that
uses Tostnet, according to the brokerage’s
Global Head of Electronic Trading Services
Punit Mittal.
“The increase in Tostnet’s share of
trades shows use of dark pools is growing
in Japan,” said Lee Porter, Hong Kong-
based managing director for Liquidnet
Holdings Inc.’s Asian dark pool operations.
“Most of the major broker-dealers
have now deployed their dark pools in
Japan. You are now seeing the Japanese
domestic brokers doing the same too, so
clearly there is appetite.”
Japan’s Financial Services Agency in
March ruled dark pools must register as
proprietary trading systems or connect
to financial markets via systems such as
Tostnet.
Foreign brokers including Credit
Suisse, Citigroup and Morgan Stanley
operate dark pools in Japan alongside
domestic operators like Daiwa Securities.
Tostnet trades accounted for 6.6 percent
of domestic share volume at the Tokyo
exchange in 2009 and 6.2 percent in 2008,
according to bourse data.
Income May Drop
The portion of trades handled outside
of public exchanges in the Asia-Pacific
region is forecast to rise to 5 percent of
transactions within three years from about
2 percent this year, John Feng, New
York-based managing director of research
company Greenwich Associates, said.
Acquisitions
MARITIME
Tostnet’s increased share “signals
more dark pools exist here,” Tsuyoshi
Masuda, deputy director of the stockmarket
department at the exchange, said.
The exchange’s “income may drop if more
money shifts to dark pools from the auction
as Tostnet’s fees are cheaper than those
for auction trades.”
The commission for Tostnet is about
one-seventh of that charged for regular
auction trades, according to TSE. The
alternative trading system was launched
in 1998 as a venue for block share
transactions after regular trading hours.
The service was re-established as an
equities and derivatives platform in 2008.
“As traders and their trading needs
become more sophisticated they will need
to broaden their execution options,” Porter
said. “You will see a gradual increase
in the percentage of trades reported to
Tostnet as opposed to executed directly on
the TSE.”
Record Volume
Trading volume is at a record on Tostnet,
with about 39 billion shares changing
hands so far this year, according to
preliminary TSE data.
That compares to the previous record of
36.4 billion shares in 2009.
“It’s very difficult to estimate percentage
growth because dark pool statistics are
not officially published anywhere,” said
Daiwa’s Mittal.
Requiring dark pools to connect
to Tostnet or similar systems at other
exchanges “is a positive move as all
trades will be published and consolidated
on one venue to provide greater market
transparency and efficiency.”
The growth of dark pools in Asia
has lagged behind the U.S. and Europe
because regulators in the region have
been slow to accept the systems,
Greenwich’s Feng said.
Trades through dark pools this year
in the U.S. accounted for 10 percent of
the total, and 5 percent in Europe, he
estimates.
January 2011 Link
49

SCLG Event
Third Annual
Leadership Forum
2010
On December 9th, 2010 the 3rd
SCLG Annual Leadership Forum
took place at the Shangri-La Hotel
in Dubai.
In his introduction Shashi Shekhar,
Founder President of the SCLG, highlighted
the purpose of the SCLG and discussed the
progress made since its inception.
André Verdier, President of the Executive
Committee, outlined the organisation’s
achievements in 2010 and gave a glimpse
of the 2011 plan in his State of the Nation
presentation. ‘’A lot done and a lot more
to do’’, he concluded, and stressed that any
achievements are a result of the joint effort
of all the members, working together as a
team in a consultative way.
This year’s Leadership Forum revolved
around three distinct subjects:
Under the expert facilitation of Dr.
50 Link January 2011
Madrecha the Leadership Team discussed
the current strategy for SCLG’s International
Expansion. This Strategy is to grow in
a controlled way, ensuring a consistent
representation of the industry and its leaders
in the various countries and regions.
A steady growth has been achieved so far
with SCLG South Africa, SCLG Ireland and
SCLG Danube already established. 2011 will
see an increased effort towards the GCC,
Latin America and Asia.
In his workshop themed ‘Government
Interaction and Support in Policy
Formulation’, Dr. Mapara elaborated on
the different government bodies that have
a relationship with the Supply Chain and
Logistics Industry. It was decided to create
a map of these links and define the right
strategy and contacts to maximize our
interaction at the right level.
Soma Sekhar led the discussion on
Internal and External Communication. The
discussion was very lively as those present
felt that improvement in this area is required.
Progress is underway with a revival of ‘The
Link’ and our e-Newsletter. A major overhaul
of our website is also planned for early
2011. The team discussed the importance of
Social Media as a vehicle of communication.
A taskforce has been appointed to address
the strategy and best way forward to make
use of these new communication tools.
It was generally agreed that a more
frequent formal interaction among the
leadership team is required, and it
was proposed to increase the meeting
frequency to twice a year while having VOIP
Conference calls in the interim periods.
The Forum was concluded with
a Networking Event giving the wider
membership the opportunity to meet and
exchange ideas with the Leadership Team.

Its a Multipolar (Oligopolar) World
The SCLG Danube Region held its
first meeting in Budapest, Hungary
on November 29th, 2010 under the
theme of ‘The Danube Region and the GCC
in a new Multipolar (Oligopolar) World’.
Dr. Ernst Schmied took the initiative in
his role as a member of the SCLG Regional
Development Team to interlink the GCC and
the Danube Regions in the context of the
momentum of a new Multipolar (Oligopolar)
World.
The meeting took place in Budapest,
Hungary under the leadership of Dr.
Schmied as Program Chair and Ferenc
Kovacs as the Hungarian Host and
Co-Chair.
30 participants of 8 European and
4 non European Countries and Global
Players in the Supply Chain from Shippers,
Forwarders, Shipping Lines and Airlines,
Airports and Container Terminal Operators,
Railway & Intermodal Operators, Banks and
Insurance Groups discussed and evaluated
the need and value for closer cooperation
between the Danube Region and the GCC.
Starting with high level keynotes, followed
by briefings from leading global industries
such as Automotive, Retail, Electronics and
Contract Manufacturing. Four parallel groups
for Trade, Containerisation, Air cargo and
Project Finance identified possible business
cases and partnering models. The outcome
was presented by the relevant Moderators
and reviewed and discussed in a panel
session.
Special attention was also given to the
4th SCLG Strategy Summit to be held in
Dubai on May 18th, 2011 and a possible
later convention between the GCC and the
Danube Region mid of June 2011, which
the participants would like to support and
facilitate.
This first meeting and workshop was a
success. The participants have expressed
the need for further meetings and dialog.
Beside the achievement of a general
Event
SCLG
understanding, a partnering model was
identified together with a number of possible
business cases, pre-projects and projects.
The participants have enjoyed an open
and freely speaking forum addressing the
drivers, facilitators and the components for
a promising partnership. The idea of a larger
convention in June 2011 aligned with the
presidency of Hungary of the EU for the first
half of 2011 got consensus.
January 2011 Link
51

INTERNATIONAL News
Lufthansa and bmi
under one roof
On the 18th floor of the Dubai’s iconic
World Trade Center tower, situated on
Sheikh Zayed Road, Lufthansa celebrated
the opening of its new office premises. It was
not only an evening of joy and celebration for
Lufthansa itself, but also for bmi and SWISS,
as they moved in with their parent company -
bringing together the Lufthansa family under
one roof.
At the inauguration ceremony, guests and
staff spontaneously applauded as Joachim
Steinbach, Lufthansa’s Vice President Sales
& Services Southeast Europe, Africa, Middle
East and Pakistan, Thierry Antinori, Member
of the Lufthansa German Airlines Board,
and Max Hunt, General Manager Middle
East and Africa for bmi, together with Martin
Massüger, SWISS’s Director, Head of Sales
Middle East, Africa, Pakistan & Iran, officially
opened the new office.
Emphasizing the key benefits of the
new office in his short address, Steinbach
said: “Moving together under one roof
allows for a more direct and more open
communication between the management
and staff of Lufthansa, SWISS and bmi. The
52 Link January 2011
new premises lay the foundation for a further
enhanced customer service – a crucial factor
for successful business.”
Lufthansa and SWISS took the alliance a
step further by not only uniting their regional
sales & marketing departments in the same
office, but also merging their Dubai city
offices. Thanks to its convenient location in
the World Trade Center tower, SWISS and
Lufthansa customers benefit from the superb
accessibility of the new joint ticket office.
With the recent opening of Lufthansa’s new
check-in facilities in Terminal 1, travelers
now also enjoy a further enhancement of the
airline’s ground and customer services at
Dubai International Airport.
Passengers travelling on Lufthansa and
SWISS continue to enjoy a host of benefits
resulting from the airlines’ close cooperation.
These include more flight options to choose
from, outbound via Frankfurt and inbound
via Zurich or vice versa for example, better
connections to more destinations worldwide,
a shared frequent flyer program and
enhanced international lounge access, to
name a few.
PCG supports
maritime
commission
T he Philippine Coast Guard (PCG)
welcomed the filing of a bill in
Congress seeking to enact a “Maritime
Code of the Philippines” that will upgrade
the country’s shipping laws.
PCG commandant Admiral Wilfredo
Tamayo said the bill filed by Muntinlupa
Rep. Rodolfo Biazon which aims to
upgrade the current laws dealing with
ship registration, maritime liens and ship
mortgages is a major development for the
maritime industry.
It will also help prevent maritime fraud
and sea tragedies, Tamayo said. “This
will also boost ship owner’s liability and
responsibility particularly those in the
passenger shipping industry,” he said.
The bill seeks to unify and re-organize
the present maritime agencies such
as the PCG, the Maritime Industry
Authority (MARINA), the Philippine
Ports Authority (PPA) and the Office of
Transport Security into a one super body
or Maritime Commission. It also aims to
upgrade the current marine insurance
provisions in the 1978 Insurance Code.
Ships’ passenger going home or
spending their vacation in the provinces
this yuletide season have started to
increase reaching from 70 to 90 percent
of passenger capacity and is expected to
further increase tomorrow until Thursday.
In this regard, Coast Guard Commandant
Admiral Wilfredo Tamayo has directed all
PCG units to further enhance visibility,
vigilance and preparedness of respective
personnel and operational readiness of
SAR assets/ response equipment.
PCG units have been directed to
strictly guard against excess passengers,
overloading of cargo, inadequate
lifesaving appliances, improper cargo
lashing, and colorum vessels, among
others. Passengers are likewise enjoined
to travel light, be at the passenger
terminal at least 2 hours before ship’s
departure, avoid bringing prohibited items
onboard such as bladed weapons, sharp
or pointed objects, unlicensed firearms,
flammable items and banned firecrackers.

Toyota Material Handling U.S.A., Inc.
(TMHU) today announced that Toyota
Genuine Parts ranked highest as the brand
of lift truck parts that customers consider the
best in quality and most reliable in a recent
2010 Lift Truck Parts Study.
The annual independent survey,
conducted by Peerless Media LLC -
Research, gauges the most important
attributes that customers evaluate for lift
truck parts purchases and which brands of
lift truck parts lead in these key factors.
“This study is an important validation
by forklift users that Toyota Genuine
Parts have built a reputation for their high
level of quality and reliability,” said Brett
Wood, president of TMHU. “We have long
maintained that customers can maximize
their forklift’s performance and trade-in value
by using quality Toyota Genuine Parts and
accessories.”
Responses were collected from 303
industry decision-makers, readers of Modern
Materials Handling magazine, involved in the
purchasing of material handling equipment,
products, technologies and services. Most
of those surveyed were plant managers,
distribution center and warehouse
management, and corporate management
within manufacturing and distribution
facilities across a wide range of businesses
and industries including automotive, food
and beverage, machinery and wholesale
trade.
About Toyota Material
Handling, U.S.A., Inc.
Celebrating more than 40 years of
News
INTERNATIONAL
Toyota rank highest in quality
established operations in the United States,
Irvine, Calif.-based Toyota Material Handling,
U.S.A., Inc., (TMHU) has been the No. 1
selling lift truck supplier in the U.S. since
2002. In addition to the full line of highquality
lift trucks sold under the Toyota
brand, the company’s extended industrial
equipment solutions include: Aichi aerial
work lifts—scissor lifts, crawler and wheeled
boom lifts—Automated Guided Vehicles, and
electric and diesel tow tractors.
Quality is the hallmark of the Toyota
Production System practiced at all Toyota
TNT Express and Spir Communication sign MoU
TNT Express and the French publishing
company Spir Communication have
signed a memorandum of understanding
on a partnership in business-to-consumer
(B2C) standard parcel deliveries. The two
partners intend to quickly take a strong
position in the fast-growing domestic French
market for e-commerce and B2C deliveries.
Under the agreement, TNT Express
will take a 50% stake in Adrexo Colis,
the B2C standard parcels subsidiary of
Spir Communication, pending approval
by relevant authorities. Once finalised,
the partnership will allow TNT Express
France and Adrexo Colis to speed up the
development of an offering of standard
home parcel delivery services with
48/72 hour guarantee. The offering will be
primarily aimed at merchant websites. It
will build on the two companies’ strengths,
such as:-
The expertise of Adrexo Colis in
guaranteed, domestic parcel deliveries
to residential addresses (or service
points) with full track and trace. Adrexo
Colis delivered 22 million parcels and
had revenues of €52.8 million in 2009. It
employs 300 permanent staff and relies
on a subcontracted network of 1,700
deliverers.
manufacturing facilities, including Toyota
Industrial Equipment Mfg., Inc. (TIEM). Most
of the Toyota lift trucks sold in the United
States are manufactured at TIEM, a zerolandfill
facility, in Columbus, Ind.
TIEM, and all Toyota manufacturing
plants in the U.S. and Canada,
comply with the ISO 14001 standard
from the International Organization
for Standardization (ISO), and have
been honored for their environmental
management systems and dedication to
continuous improvement.
The density and performance of TNT’s
transportation network in France (120 hubs,
depots and sorting centers, 620 scheduled
road connections, 14 daily air connections),
which will strengthen the quality and
coverage of Adrexo Colis’ service. Adrexo
will only make use of TNT’s network in
few places where its own network is not
developed.
The French e-commerce market for
products and services reached €25 billion in
2009, up 26% compared with 2008*. During
the same year, the number of online stores
rose 35% to 64,100. One French out of
three regularly shops online.
January 2011 Link
53

INTERNATIONAL News
Eyeing Indian Ports
Cargomen, a mid-sized
logistics company
based in south India, having
presence in many major
Indian ports is implementing
an ERP solution with a
view to provide enhanced
services to their clients.
Started in 2000,
Cargomen soon established
itself as a logistics company
that can satisfy the entire
logistic needs and has been
widely recognized over the
years for its competency
in serving international
trade. Cargomen’s solution
ranges from Air Freight,
Sea Freight, Transportation
and project cargo
movement, Warehousing
and distribution, Customs
Brokerage to consultancy.
The company today
delivers comprehensive
solutions for all logistics
requirement of the supply
chain.
In keeping with its core values of
sharing common goals, customer focus
and innovation the company was scouting
the market for a solution that would be
flexible and adaptable to meet customer’s
changing needs. They were also looking
for a solution that would help them become
an integral part and an extension of their
Customers. Softlink’s Logi-Sys was selected
by Cargomen as it fit all their parameters.
Hariharan, Managing Director,
Cargomen, said, “Cargomen’s has been
providing innovative, practical and topquality
logistic services that improve
business solutions. We have constantly
reoriented ourselves to the prevalent and
the changing market dynamics. Information
technology has become crucial for sustained
growth in current times and this is the reason
we decide to go for an advanced IT system.
In Logi-Sys we found an application that
is flexible and adaptable to the changing
needs of the company and our clients. It will
help us in our efforts to deliver greater client
experience.”
54 Link January 2011
Kamal Jain, Director, Cargomen said,
“Our goal was to enhance the productivity
and quality of our customer services and
operating performance. We aim to deliver
greater customer satisfaction by providing
value added services. I am confident Logi-
Sys will help us in sharing information timely
and accurately delivering quality service
to our clients. This is a part of our move to
build the infrastructure required to serve our
customers logistics needs domestically and
globally.”
Commenting on the implementation at
Cargomen Amit Maheshwari, CEO,
Softlink said “It is heartening to note that
there is a growing awareness among the
logistics service providers about the benefits
of IT adoption. The focus of the segment is
now shifting towards technology and they
have realised it to be the means for their
growth and competitiveness. Speaking
about Logi-Sys he said “One of the reasons
Cargomen selected Logi-Sys was their
uncompromising stand on keeping up
the quality and cost-effectiveness of their
services in these competitive times.”
APL introduces
Cross-Border
Trucking
Global supply chain services company
APL Logistics has introduced
containerized Cross-Border Trucking,
a new service from Phnom Penh,
Cambodia to Cai Mep port in Vietnam.
The new service offers shippers a later
cut-off time at APL Logistics’ container
freight station in Phnom Penh.
“Cross-Border Trucking is a service
recovery solution designed for shippers
when production runs unexpectedly late,”
said Glenn Kong, Managing Director for
APL Logistics in Cambodia. “Trucking
from Phnom Penh to Cai Mep can also
reduce transit times by as much as four
days compared to feeder services from
Sihanoukville port or barge services from
Phnom Penh river port to Cai Mep port.”
Cross-Border Trucking targets
shippers who increasingly source
manufactured goods in Cambodia,
particularly in the retail, garments, and
FMCG segments. With the additional
flexibility, shipments from Cambodia to
U.S. destinations can still be delivered
on-time.
From Cai Mep port, shippers can take
advantage of global and feeder services
to reach their destination.

News
INTERNATIONAL
Malaysia’s CIMB seeks to boost its Gulf business
CIMB Group Holding, the top global
sukuk underwriter for a fourth year, is
seeking to boost its business in the Arabian
Gulf to fight off HSBC Holdings’s challenge
to its dominance.
The Southeast Asian nation’s secondbiggest
lender arranged $3.6bn of notes
complying with Islam’s ban on receiving and
paying interest in 2010, or 23 percent of the
total, data compiled by Bloomberg show.
Arabian Gulf issues made up 3.5 percent
of CIMB’s business this year. The Kuala
Lumpur-based bank beat HSBC into second
place for a fourth year. Global sukuk sales
totaled $15.3bn so far this year, 24 percent
less than in 2009. Sales reached a record
$31bn in 2007.
“We should be able to do better” in 2011,
Badlisyah Abdul Ghani, chief executive of
CIMB Bank Islamic Bhd, said. “With the
infrastructure developments in Malaysia and
the Gulf Cooperation Council countries, I
anticipate sukuk issuance will be about the
same as 2007 or better. We are looking at
several deals from the Gulf.”
CIMB’s only Arabian Gulf deal this year
was a $125m sale in October for a unit of
Saudi Arabia’s Islamic Development Bank.
The bank also helped arrange IDB’s debt
issuance in 2009.
HSBC arranged $1.6bn of sukuk sales in
the Middle East to be the biggest underwriter
in the region for a second year with 35
percent of sales, according to data compiled
by Bloomberg. The London-based bank
expects issuance from Arabian Gulf states
to climb in 2011 as it tries to break CIMB’s
dominance of the global Sharia-compliant
market.
“Next year, we expect issuances
from Saudi and the region to improve,”
Mohammed Dawood, Dubai-based director
of debt capital markets at HSBC Amanah,
said in a telephone interview on Wednesday.
“As a consequence that puts us in good
shape to capture that top spot in 2011.”
CIMB helped Malaysia sell $1.25bn
of global sukuk this year with HSBC and
Barclays Capital and assisted Celcom Axiata
Bhd, the nation’s second-largest mobilephone
operator, with a 1.8 billion ringgit
($575m) bond in August.
The bank has been hired by Dubai as
lead arranger for a planned sale of $1bn
to $1.5bn of multi-currency Islamic bonds
in Malaysia, a person with knowledge of
the plan, who asked not to be identified
as the details are private, said last month.
Badlisyah declined to comment on the
matter.
A Malaysian government ten-year
private-led project initiative, including a
nuclear power plant and an underground rail
network, will spur sales of Sharia-compliant
debt next year, Kuala Lumpur-based RHB
Investment Management Sdn’s chief
executive Sharifatul Hanizah Said Ali said.
Saudi Arabian companies may overtake
Malaysia as the largest issuer of Islamic
bonds for the first time in 2011 as the
kingdom’s 1.44 trillion-riyal ($384bn)
stimulus plan boosts spending, Tariq Al
Rifai, director of Islamic Market Indexes in
Dubai for Dow Jones Indexes, announced.
The world’s largest oil exporter announced
in August a five-year development plan to
spur growth, create jobs and diversify its
economy away from hydrocarbons.
HSBC arranged $2.6bn of sukuk in 2010,
according to data compiled by Bloomberg.
Kuala Lumpur-based Maybank Investment
Bank Bhd. and AmInvestment Bank Bhd.
ranked third and fourth. Three of the top
four underwriters are based in Malaysia and
arranged 39 percent of Islamic bond sales
this year. The country’s investment banks
have an advantage in the sukuk market as
the nation’s issuers account for more than
half of the $144bn of Sharia-compliant debt
outstanding.
National Bank of Abu Dhabi PJSC,
the United Arab Emirates’ second-largest
lender by assets, sold 500 million ringgit of
ten- year sukuk this month. The bank’s 4.75
percent ringgit- denominated sukuk due
June 2015 yielded 4.02 percent when the
debt last traded November 19, according to
prices provided by Bursa Malaysia Bhd.
The yield on Malaysia’s 3.928 percent
Islamic notes due June 2015 was little
changed at 3 percent today, according to
prices from Royal Bank of Scotland Group
Plc. The extra yield investors demand to
hold Dubai’s government sukuk rather than
Malaysia’s has narrowed 74 basis points,
or 0.74 percentage point, since June 30 to
342, data compiled by Bloomberg show. The
yield on Dubai’s 6.396 percent sukuk due
November 2014 was little changed at 6.50
percent today, according to Bloomberg data.
Global sukuk returned 12.6 percent this
year, according to the HSBC/NASDAQ
Dubai US Dollar Sukuk Index. Emergingmarket
debt returned 11.9 percent,
JPMorgan Chase & Co’s EMBI Global
Diversified Index shows.
January 2011 Link
55

Understanding leadership
I
was walking alongside the river Danube
I
was walking alongside the river Danube
in Budapest, Hungary late noon last
month where the temperature was
subzero when I received a call from Dr Ken,
a researcher and professor of leadership,
organizational design and behavior in USA
who brought my attention to the subject
of Leadership. “Leadership is mostly an
organizational phenomenon and not solely
the property of individuals”, said Dr Ken.
Later I was engaged in several discussions
with Dr Ken and other leading experts in the
domain of organizational development and
leadership over past weeks.
During the course of such discussions
many concepts and practical tools relating
processes, management, leadership, related
competence & behavioral traits, related
processes and technologies came to the fore
which become an enabler for attaining high
performance of organizational leadership.
I was faced with some deep, some vague
and some contrasting statements, a few are
reproduced as below:
Leaders are those who are bosses.
Leadership is about influencing one
in direction of desired contribution for
something great to happen. Leadership
is all about authority managers having to
take decisions and supervise. Discussions
relating to organizational leadership has
been centuries old with no definitive model
till date. Leaders are born and common
people cannot not be trained to be leaders.
I was guided towards 5 big traits (Openness,
Conscientiousness, Extraversion,
Agreeableness, Neuroticism) and develop
them systematically for individuals to
attain leadership values. There are many
personality assessment tools like NEO-PI
available to test leadership competence of
human assets and help develop them.
I am now more convinced that the way
we devise organizations, deploy human
resources & material resources in a welldefined
horizontal and vertical hierarchy,
continuously develop competence, acquire
and recruit talent in more scientific ways has
a positive and sometimes dramatic impact
on organizational performance. So human
resources and their continued development
are as important as deployment of
processes and technologies. I was then
56 Link January 2011
Think of simple questions and help
prepare your organizations in identifying,
acquiring, developing and leveraging
human talents, managers and leaders,
advises Shashi Shekhar, Founder &
Group President
told that many organizations in this region
still had an opportunity to organize human
resources functions more scientifically
— there are many organizations in this
region which don’t have a well defined
human resources development efforts and
dedicated personnel to drive such efforts. An
attitude of ignorance towards human assets
development for leveraging their potential
could be fatal to organizations in the post-
recession period.
Leadership and management are two
notions that are often used interchangeably.
These words actually describe two different
manifestations of organizational behavior.
Leadership is just one of the many assets a
successful manager should possess. While
managers focus to maximize the bottom-line
through administrative implementation of
organization planning, staffing, directing and
controlling, leaders bring sensitive and fairly
radical thinking to these functions. Managers
generally think incrementally while leaders
think more radically.
Leaders also generate more loyalty due
to their attitude towards ownership of failures
and awarding credit of success to others
involved. I subscribe to a view-point that
managing and leading are two different ways
of organizing manpower. The managers
use a more formal, rational method whilst
the leaders exhibit passion and emotion.
William Wallace is one excellent example of
a brilliant leader but could never be thought
of as the manager of the Scots.
Great leaders create great organizations.
Great organizations deliver both social and
economic values. So great organizations
and great leaders are needed all the
time. Organizations should follow an
integrated approach to the development
of human resources, related processes
and technologies — many organizations
in the region need to pay more importance
in acquiring, retaining, engaging and
organizing talents.
While I am busy with this subject, I would
encourage all to think of simple questions
and help prepare your organizations in
identifying, acquiring, developing and
leveraging human talents, managers and
leaders:
Ë Are jobs and job holders in my
organization mapped to competence.
Ë Is my organization doing assessment
of competence and traits for all employees,
managers and leaders.
Ë Have I, my peers and superiors ever
undergone leadership and other personality
assessment tests, if yes then what
happened next.
Ë Is my organization deploying process
and technology framework for identifying and
training high potential leaders.
Ë Is my organization deploying process
and technology for career and succession
planning?
Ë Is my organization doing non-partial
performance evaluation and review and are
such review processes mapped to rewards.
Ë Are jobs linked to competence and are
competence then assessed and developed.
Hope the Year 2011 begins with more
attention to human assets, managers and
leaders – all are finally people.