Excerpt from: China Supply Chain and Logistics Strategy
|
 |
| February 01, 2006 | | Developing and Refining Distribution Network Strategy for China | In the past, foreign firms selling in China were required to work with distributors. However, in 2006 the early batch of new WFOE (Wholly Owned Foreign Enterprise) trading companies are now beginning to take control over their supply chains.
These companies are replacing the role that their distributors once played and are realizing the need to develop and refine their distribution network strategy for China.
In order to develop the distribution network strategy for China, Wholly Foreign Owned Enterprises typically need to do the following:
- Design and map the flow of goods, information and funds among their third-party logistics provider operations, remaining distributors (if any) and their information system
- Identify and evaluate third party logistics service providers
- Develop the service territory for each of their third-party logistics operations
- Identify information systems best practices
Design and map the flow of goods, information and funds among their third-party logistics provider operations, remaining distributors and their information system
Typically, foreign companies beginning to distribute directly in China need to begin thinking about their supply chains for the first time. Whereas in the past their distributors handled the challenges of delivering product to the customers, now these companies must strategize their supply chains in more detail. The first step for many companies is to design and map out how they think the ideal supply chain flows should work.
Identify and evaluate third party logistics service providers
Since WFOEs will take over some or all of their supply chain activities from their former distributors, they will need to evaluate their options for outsourcing the warehousing, fulfillment, and transportation to qualified third partly logistics providers.
Develop the service territory for each of the third-party logistics operations
WFOEs need to determine where to locate DCs and must decide on the geo-spatial reach for each DC. Making this decision correctly requires a balance between common sense, industry experience, and hard quantitative figures on past and projected sales.
Identify information systems best practices
WFOEs taking control over their China supply chains must invest in IT systems that provide visibility and tracking of supply chain activities. The company’s operations need to be analyzed to establish current performance and the gap with requirements based on best practices in the industry in China. | | |
|
|
