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Speech by Ms Aw Kah Peng, Assistant Managing Director, Singapore Economic Development Board, at Frost & Sullivan's Second ASEAN 4 Logistics Awards at Pan Pacific Hotel on Friday, 20 July 2007, at 8pm
Distinguished Guests,
Ladies and Gentlemen
Good evening. To our guests from overseas, a warm welcome to Singapore. I am delighted to join you this evening at Frost & Sullivan's second ASEAN 4 Logistics Awards.
Globalisation Extends Complexity of Supply Chains
Few industries are more exposed to the forces of globalisation than logistics. Globalisation has pried open what used to be domestic or regional wholesale and retail marketplaces to the world, creating a “buy anywhere, make anywhere, sell anywhere” environment. Supply chains have become more complex and extended, and as a result, demand for true international logistics services and global freight management has increased many-fold.
Increased Role of 3PLs, the Solutions Providers
The past couple of years have seen tremendous growth opportunities for 3PLs, and this trend is here to stay. Global 3PLs are providing end-to-end solutions, including sourcing, order management and optimised network distribution. 3PLs are also finding new ways to be agile, responsive and flexible through technology solutions. Some 3PLs choose to differentiate by providing end-to-end solutions focused on specific industry verticals. Others choose to expand their services, penetrate new geographies and increase their market share.
Supply Chain Solutions are Key Drivers to Businesses
Whatever their strategy, the language of freight is now laced with terms such as seamless and risk-mitigated global logistics, industry-specialised logistics, supply chain transparency and just-in-time delivery. Put in simpler terms, this means two things. Firstly, both shippers and 3PLs have to deliver effective supply chains solutions. Second, these solutions are critical drivers of shareholder value and financial performance.
Singapore, An Integrated Global Logistics Gateway in Asia
In Singapore, we have positioned ourselves as a global logistics gateway in Asia. But more importantly, what differentiates Singapore is that our logistics gateway is connected, is solutions-focused and it delivers. Allow me to elaborate on each of these factors that differentiate us.
Being Connected
Today, Singapore has an established logistics community supported by unparalleled connectivity at both our sea and air ports. Our extensive network and high frequency mean that logistics companies can move their goods faster and ultimately, cheaper. We are committed to sustain our excellent connectivity and add to our network by growing connections to vital growth markets such as China and Vietnam.
Being Solutions-Focused
Singapore has taken several approaches to being solutions-focused. First, in the area of infrastructure. Singapore’s top-of-class basic infrastructure is already a given. Building on that, we have developed a suite of specialised infrastructure that cater to the specific needs of different industries. For example, the oil and chemical Logistics Park on Jurong Island, which is now further enlarged with underground rock caverns that are under construction. There is also the Airport Logistics Park. Located next to Changi Airport, it allows direct access to the airport for rapid turnaround of time-sensitive products and services. Under development is the Air Cargo Express Hub for express cargo.
Second, getting industry players to build and develop expert capabilities in Singapore. Today, industry players in Singapore serve the region using regional distribution centres that provide specific solutions for industries such as infocomms, aerospace, FMCG, retail, electronics, chemicals and biomedical sciences. These niche capabilities involve specialized infrastructure to ensure safe and time critical delivery of customers’ shipments.
For example, 3PLs that have specialised capabilities to service the biomedical sciences sector employ the latest in cold chain management technology to safely transport and store good such as medical devices, clinical diagnostics and pharmaceuticals. Staff are trained and systems put in place to ensure that the temperature of products is maintained throughout the supply chain process. By ensuring no breaks in the cold chain, 3PLs give healthcare manufacturers complete assurance of the integrity of their products throughout the supply chain.
On the FMCG and high-tech fronts, 3PLs in Singapore are providing procurement and postponement solutions. Premium goods arrive in standardised form from various suppliers for value-added activities such as quality control checks, final product assembly and customized packaging. This allows optimised inventory management and lead-times to market are sometimes cut from ten weeks to three.
Logistics companies involved in such specialised handling have built up significant expertise and capabilities, helping to move Singapore up the value chain of the global logistics industry.
Third, extending the scope of solutions. By this, we mean taking solutions beyond supply chain activities into related areas which in turn will strengthen our logistics sector. For example, our logistics community is involved in providing financial solutions for companies to help smoothen the financial flow. Innovative financing solutions leverage on 3PLs’ supply chain visibility to reduce financing risks. We see collaborations between 3PLs, banks, factoring houses and insurance credit companies to provide such value-added services of inventory financing to clients.
Availability of Expert Workforce
The last factor that differentiates Singapore logistics is how we deliver. At the heart of our ability to deliver is a trained workforce. Know-how is nested among the 9,000 logistics companies already here and within a ready pool of supply chain talent. Approximately 100,000 professionals support this industry that contributes to more than 8% of our GDP. They are knowledgeable in high value-added, knowledge-intensive and supply chain management solutions from inventory management to network optimisation.
The Singapore government has also made efforts to ensure the continued supply of manpower through training of the local workforce. One such initiative was the setting up of The Logistics Institute, Asia Pacific, TLI-AP in short. It is a collaboration between the National University of Singapore (NUS) and the Georgia Institute of Technology (Georgia Tech) for research and education programs in global logistics. As a reflection of the quality of its work, TLI-AP was recently conferred the Best Education Course Provider title at this year’s Asian Freight & Supply Chain Awards for the 5th consecutive year.
All in all, a full suite of supply chain training programmes produce 850 graduates per year from apprenticeship programmes, logistics diplomas and degrees, and post-graduate programmes.
The availability of talent has resulted in a growing interest by multinationals in setting up supply chain management nerve centre activities in Singapore to optimise their logistics activities in the region and globally. These companies build up strong SCM competent teams in Singapore to orchestrate and coordinate the flow of goods, information and funds for their global supply chains from here. Examples of such setups include Motorola, IBM, Verifone, and Lenovo.
Conclusion
Ladies and gentlemen, as we honour outstanding performance and best practices by 3PL companies this evening, I want to assure you of EDB’s commitment to our vision of building Singapore into a global logistics gateway in Asia, differentiated by our connectivity, our focus on solutions and our ability to deliver. We want to work with you, the movers and shakers of this industry, to accelerate the growth of logistics in this region.
On that note, I would like to congratulate all the winners tonight for your achievements and to wish you even more success in future. Thank you for inviting me to share in your celebrations. I wish you a very enjoyable evening ahead.
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