2009 Supply Chain Top Performers for Southeast...

2009 Supply Chain Benchmark Study for Southeast Asia by iCognitive

2009 Supply Chain Top Performers for Southeast Asia

A Supply Chain Benchmarking Study by iCognitive

December 2009

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© 2010 Copyright of this document is vested with iCognitive. It must not be reproduced, in whole or in part, or disclosed to third parties except with the written consent of iCognitive.


About iCognitiveg

iCognitive is a fast-growing international consulting firm specializing insupply chain management with offices in Asia and Europe. Over the yearswe have gained hands-on experience in supporting our customers with theirsupply chain challenges, using SCOR® model (Supply Chain OperationsReference) and its applications.

We’ve been benchmarking companies for more than 10 years. As to date,we maintain the largest benchmark database for Asia Pacific using SCOR®model metricsmodel metrics.

South East Asia

After successfully launching the first benchmark study on supply chainmanagement using SCOR® metrics in Southeast Asia in 2000, iCognitivehas for the last 10 years organized the benchmark study annually on behalfhas for the last 10 years organized the benchmark study annually on behalfof the Supply Chain Council Southeast Asia Chapter. In 2009, 330companies from Indonesia, Malaysia, Philippines, Singapore, Thailandparticipated in the study.

China

After successfully launching the first benchmark study on supply chainmanagement using SCOR® metrics in China in 2004, iCognitive has for thelast 5 years organized the benchmark study annually in collaboration withFudan University. In 2009, 955 companies from major industries have beenbenchmarked.

Europe

Launched since 2007, benchmarking results for Europe are available frommajor industries such as Food and beverages, Automotive, Electronics,Chemicals etc. Last years 2009 study contains results from 154 companiesacross 8 industry groups.

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Table of Contents

About iCognitive………………………………………………………………………......1

Preface……………………………………………………………………………………..3

Benchmark for Supply Chain Excellence……………………………………………….4

Methodology, Scope and Objectives……………………………………......................5

Benchmark Results Overview:

Five years financial trend overview for Southeast Asia……………………………………...11

SCM operational performance per industry group……………………..…………………….14

Financial performance per industry group…………………..………………………………...19

Performance Ranking Results:Performance Ranking Results:

Electronics Top 10…………………………………………………...…………………………..23

Chemicals Top 10…………………………………………………………………...…………...30

Industrial Top 10…………………………………………………………..……………………..37

Food, Beverages & Tobacco Top 10………………………………………………...…………43

Logistics Top 5………………………………………………………………………..………….49

Cross-industry Champions Top 15…………………………………………………...………...55

Additional:

SCM operational performance per country………………….……………………………...…62

Financial performance per country……………………………………….…………………….67

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Appendices……………………………………………………………………………….69

Contact Us ………………………………....……………………..…………...….……..73


Preface

After successfully launching the firstsupply chain benchmarking study in 2000,iCognitive has for the last 10 yearsorganized the benchmarking research

ll b h lf f th S l Ch i

“Benchmarking is a process in whichcompanies target key improvement areaswithin their firms, identify and study bestpractices by others in these areas, andimplement new processes and systems to annually on behalf of the Supply Chain

Council Southeast Asia Chapter.

Through our ongoing, deep supply chainresearch based on SCOR® this year,iCognitive research centre has developedmulti-criteria ranking methodology based

implement new processes and systems toenhance their own productivity and quality.”

-International Benchmarking Clearinghouse

As we know, the competition in today’sbusiness world has been shift from company

on advanced mathematical model, whichis able to compare and rank the supplychain performance of companies of thesame/across industries. The model willhelp companies to improve from decision-making at the strategic level toimplementations at the operational level.

to company level to supply chain level. Insupply chain management, benchmarkingplays a very important role in providing seniorexecutives a structured approach by which todevelop competitor information, and toachieve supply chain excellence andbusiness success. p p

The financial as well as the operationalSCOR® metrics are used for themeasurement of four performanceattributes: cost management, assetutilization, growth and profitability. Thecomposite score is used to gauge the

SCOR® performance measurement - thisproven methodology is currently beingadopted by major companies all over theworld to improve their supply chainoperations, while the benchmarking data hasso far been available mainly about the US. composite score is used to gauge the

overall aggregated supply chainperformance, based on which thecompanies are ranked.

The Top SCM performers’ industrialbusiness contexts, business strategies arehighlighted From this complete analysis

so far been available mainly about the US.

Due to a different business environment andlocal issues, there is a strong need amonglocal companies to have benchmark dataagainst their regional competitors and/orcross-industry companies in the region. Thisstudy fills the gap in this area and provides a highlighted. From this complete analysis,

success factors of these top performersare identified. It helps leaders of acompany to understand better therelationship between business strategy,financial performance and supplychain/operational performance, and tob i i h f i

study fills the gap in this area and provides aset of relevant benchmark data, based onSCOR® metrics, for SEA. Companies fromvarious industries, local and foreign ownedparticipated, confirming the nationwide scopeof this study. Operational and financialmetrics published provides a rich set ofb h k lt f t i d t t

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better position the company from strategiclevel to operational level.

benchmark results for most industry sectors.


Benchmark for Supply Chain Excellence“The basis of competition for winning companies in today’s economy is supply-chain superiority.”

- Kevin O’Marah, vice president of research, AMR Research

According to a recent report from AMR Research, companies that excel in supply-

pp y

g p p pp ychain operations perform better in almost every financial measures of success.

With ten years’ supply chain benchmark experience spanning nine variousindustry groups in Southeast Asia, iCognitive has benchmarked and rankedperformance of companies from the same and across industries, using multi-criteria ranking methodology based on advanced mathematical model.criteria ranking methodology based on advanced mathematical model.

Benchmarking helps you to identify the weak points in your supply chain,as the first step for supply chain optimization.

You will learn:Where your company stands compared to your competitors with perspective ofWhere your company stands compared to your competitors with perspective of

various supply chain attributes

How is your cost management, asset utilization efficiency and growth ability

How efficient your operation is, and how profitable your company is

Which areas need to be improved in order to optimize your supply chainefficiency and to balance the factors which determine your performanceefficiency, and to balance the factors which determine your performanceexcellence

Provided we could get more operational data from your company, we canalso assist you with:

Add Operational Excellence measures to improve the accuracy of the analysis

to better analyze your company’s strengths and weaknesses, identify thegaps, and identify areas for improvement

Go to a lower level of detail

benchmark and rank your various product lines, customer segments etc.to give you more detailed measures of the efficiency and profitability of

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g y y p yeach product, customer segment etc. to assist your strategic decisionmaking


Methodology, Scope and Objectivesgy p j

Benchmark study population profile

The results from this study are based on the FY2008 financial data of 274 companiesfrom nine industry groups The coverage is five major countries from Southeast Asiafrom nine industry groups. The coverage is five major countries from Southeast Asia(including Indonesia, Malaysia, Philippines, Singapore and Thailand). The pie chartbelow show the number distribution of companies by industry and country.

1817 Apparel, footwear & luxury goodsBy Industry

18

50

16

46

1510

17 pp , y g

Chemicals

Consumer products

Electronics

Food, beverages & tobaccoChart 116

4953

Industrial

Logistics

Oil & Gas

Retail

4167

Indonesia

By Country

66

71

Malaysia

Philippines

Singapore

Thailand

Chart 2

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29



Definition of ‘Best-in-class’ and ‘Median’The results include ‘best-in-class’ (BIC)performance and ‘median’ performance.They are defined as follows:

Study yearThe results from this study of 2009are based on the calendar year of2008 This is relevant to keep in mind They are defined as follows:

•Best-in-class performance is defined asthe average performance of the top 20% ofcompanies.

•Median performance is defined as theaverage performance of the 40th to 60th

2008. This is relevant to keep in mindwhen interpreting the results.

Company sizeTo get an idea of the size ofcompanies in the study we haveranked them based on their totalannual sales (in US dollars) Chart 3 average performance of the 40th to 60th

percentile of companies.annual sales (in US dollars). Chart 3shows the distribution of annual salesacross our benchmark population.

Chart 3

7000

8000

9000

Mill

ion

s

Annual Gross Sales Distribution Chart (in US dollars)

3000

4000

5000

6000

0

1000

2000

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Methodology – SCOR CardFor this study, we have selected 8 operational metrics and 3 financial metrics calculated from the companies’ financial data, using tools developed by iCognitive. Table 1 shows these metrics based on which the comparison and interpretation are conducted These 11 metrics belong to 4 measuringinterpretation are conducted. These 11 metrics belong to 4 measuring attributes/criterions which are shown in Table 2.

Compound Annual Growth Rate on 5

CAGR is an important indicator of the competitive position of the company in its industry and growing sales is in many cases a top

Table 1

Growth Rate on 5 Years (CAGR)

company in its industry and growing sales is in many cases a top strategic objective a company wants to achieve.

Cost of Good Sold (COGS)

COGS is the direct and indirect cost incurred to produce finished goods in a company or to provide the service to the customer in a warehousing / distribution environment. it is an indicator of the effectiveness of a company's supply chain management to keep its costs down while satisfying customer service levels

lMet

rics

its costs down while satisfying customer service levels.

Cash to Cash Cycle Time

Cash-to-cash cycle time represents the impact of inventory holdings, payments by customers and payments to suppliers on the velocity of cash moving through a company.

Inventory Days of Inventory days of supply indicates how many days the inventory can satisfy the demand based on value. A high value for days in

Op

erat

ion

al supply inventory could suggest an excessive buildup of inventory with a negative impact on working capital.

Days of Sales Outstanding

Days of sales outstanding indicates the time it takes for a company to collect its accounts receivable. Typically, each industry sector has its own practice related to usual credit terms, customer payment behavior etc.

Days of Payable Outstanding

Days of Payable Outstanding is the number of days on average a company takes to pay its accounts payable.

Operating IncomeOperating Income represents the pre-tax, pre-interest profit from the company's ongoing operations. In this study we divide it by total revenues to make the figure comparable across companies.

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Operating ExpenseOperating expenses is calculated as gross profit minus operating income. It includes typical cost components such as ‘selling and distribution expenses’, ‘administrative expenses’ etc .



Met

rics

Net Profit

Net profit is one of the most popular indicators of profitability. It indicates the 'bottom line' or how much money the company has made as a profit in the year after deducting all its costs including financing costs, taxes and minority interests.

Asset Turns metric represents the total turns of your company’s

Fin

anci

al M

Asset Turns

Asset Turns metric represents the total turns of your company s net assets within a year and is an important measure of how efficiently your company’s assets are used to support supply chain operations.

Return on Asset (ROA)

ROA is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings.g g g

Cost ManagementCost of goods sold (COGS)

Operating expenses

Table 2

Asset Utilization

Inventory days of supply

Days of sales outstanding

Days of payables outstanding

Cash-to-cash cycle time

Asset turns

ProfitabilityReturn on assets (ROA)

Net Profit

Operating incomeGrowth Compound annual growth rate (CAGR)

Note that this analysis could be made even more insightful if the attributeOperational Excellence would be added. However, due to limitations in datacollection, we have not done this for this study. However, upon request, we canfurther enhance this methodology by including your operational performance such as

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gy y g ydelivery performance, order fulfillment cycle time and supply chain flexibility as well.


Methodology, Scope and Objectives

Methodology – DuPont Analysis of Best & Worst PerformersThe DuPont model breaks down return on equity (ROE) into three distinctelements: firstly, operating efficiency (measured by net margin); secondly, asset

tili ti ffi i ( d b t t ) d thi dl fi i l l

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utilization efficiency (measured by asset turnover); and thirdly, financial leverage(measured by financial leverage). This analysis enables the analyst to understandthe source of superior (or inferior) ROE by comparison with companies in thesame industry or across industries.

The ranking methodology of iCognitive is consistent and compatible with DuPontanalysis as we access and rank companies from the compound score of 4attributes/criterions: 1) Cost management (measured by COGS and operatingexpense), 2) Profitability (measured by operating income, net profit and ROA), 3)Asset utilization efficiency (measured by cash-to-cash cycle time, days ofinventory, days of payable outstanding, days of sales outstanding and assetturns), and 4) Sales growth (measured by CAGR). The first two criterions), ) g ( y )corresponds to the first element of DuPont model: operating efficiency. And thethird criteria corresponds to the second element: asset utilization efficiency.

Using DuPont Analysis, company strategic decision makers can understand theimpact of supply chain management (such as levels of productions, pricing, costmanagement) as well as financial investment decisions on a company’s financialmanagement), as well as financial investment decisions on a company s financialperformance.

ObjectivesThis study aims:This study aims:

To measure, score and rank companies of each specific industry To measure, score and rank all the 274 cross-industry companiesTo identify and present performance of single industry and cross-industrial top

performersTo analyze success factors of top performers, and identify weak areas for worst

performers for improvement

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performers for improvement. To explore and demonstrate the linkages between supply chain management

and financial performance


Overview of Results

Benchmark Results Overview

Five years financial trend overview for Southeast Asia

SCM operational performance – per industry group

Financial performance – per industry group

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Five years financial trend overview for Southeast Asiafor Southeast Asia

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Five years financial trend overview for Southeast Asiafor Southeast Asia

Net Profit

%15.2

14 6 15.01613.8 13.4

14.6

4 76

8

10

12

14

Best-in-class (BIC)

Medium

Both medium net profit (3.5%) and medium operating income (4.7%) have bottomed out in 2009 for recent 5 years.

After three years of continuous

4.74.1 3.7 4.1

3.5

0

2

4

6

05 06 07 08 09 05 06 07 08 09

Operating Income

yclimbing up from 2006 to 2008, BIC operating income declined in 2009, back to the level of 2007 (18%).

BIC companies maintained25

%

BIC companies maintained their net profit increase.20.1

17.218.0 18.6 18.0

10

15

20

Best-in-class

Medium

7.15.5 5.6 6.2

4.7

0

5

10

05 06 07 08 09 05 06 07 08 09

(BIC)

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Five years financial trend overview for Southeast Asia

Compound Annual Growth Rate on 5 Years (CAGR)

for Southeast Asia

%

27.328.9

27.3 27.5

30.4

20

25

30

35

Medium

Sales growth increased significantly in 2009, however, profitable sales growth was not achieved as indicated above by the drop in net profit and operating

7.29.4 8.6

10.3 10.9

0

5

10

15 Best-in-class (BIC)

05 06 07 08 09 05 06 07 08 09

Return on Assets

p p gincome.

Medium return on assets has dropped slightly from 5% to 4.6% in 2009, while BIC ROA increased slightlyBIC ROA increased slightly from 15.8% to 16%.

19.017.5

16.1 15.8 16.0

12

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Medium

%

5.9 5.34.4 5.0 4.6

2

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6

8

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Best-in-class (BIC)

Medium

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005 06 07 08 09 05 06 07 08 09


SCM operational performanceper industry group– per industry group

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SCM operational performance per industry group– per industry group

Cost of Goods Sold (COGS)

100% 85%9% 82% 82% 85%

97%

20%

40%

60%

80%

85%79% 82% 82% 85%

76%64%

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59%51%

58%66%

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SCM operational performance per industry group


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SCM operational performanceper industry group– per industry group

Cash-to-cash cycle (CCC) time decomposed into 3 elements:

CCC = Days of inventory + Days of sales outstanding – Days of payable outstanding

Days of Inventory

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SCM operational performanceper industry groups


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Financial performance per industry group– per industry group

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© 2010 20

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Summary Notesy

Oil & gas industry (medium 97%, BIC 70%), and Electronic industry (85% for medium, and BIC is 74%) show the highest COGS among all the industry groups. This indicates high materials cost and direct labor cost for oil & gas industry and g g yelectronic industry.

The operating expense of retail industry is the highest (medium 22% and BIC 14%), while oil & gas industry has the lowest operating expenses (medium is only 3% and BIC as low as1%).

Retail has the shortest cash-to-cash cycle time, with a medium of only 7 days and BIC as low as -49 days, while chemicals has the longest cash-to-cash cycle time (medium 90 days and BIC is 27 days). Retailers have to maintain a short cash-to-cash cycle time because of the relatively stringent require on inventory storage time, Chemicals companies may paid more attention to their cash flow and increase the liquidity to improve their ability to generate profit from cashincrease the liquidity to improve their ability to generate profit from cash.

The operating income of retail industry is lowest (2.5% for medium and 5.8% for BIC), while consumer product industry provides the highest operating income (8.2% for medium and BIC as high as 25.9%). Net profit and return on assets of consumer product industry is also relatively higher than other industries.

Asset turns of industrial is smallest (medium is only 1.7 and BIC is 4.4), while retail industry has the largest asset turns with the BIC value as high as 11.7. It is important for industrial companies to optimize the asset utilization efficiency.

The medium compound sales growth rate of Food, beverages & tobacco is the lowest among all the industry groups – medium 8.1% and BIC 22.6%. This indicates a stabilization of consumer demand.

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Overview of Results

Performance Ranking Results

Electronics Top 10

Chemicals Top 10

Industrial Top 10

Food, Beverages & Tobacco Top 10

Logistics Top 5

Cross-industry Champions Top 15

Note:All the ranking results presented in this report are based on companies included in thisb h k t d D t li it d l i it h th t h b tt

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benchmark study. Due to limited sample size, it may happen that your company has betterperformance than the number one company presented in this report.


Electronics Top 10Electronics Top 10

Industry context:

Electronics industry is going to enter into a sustained recovery in the second half of 2010 with a reacceleration in sales in 2011, according to Gartner, Inc.

Worldwide Semiconductor capital equipment market Growth is accelerating.(source: Gartner)

Supply of 3.5-inch HDDs for desktops and servers is tight until March 2010, sayTaiwan PC makers. Main global suppliers of HDDs have increased production of 2.5-inch HDDs for notebooks due to short supply arising from fast growing demand fornotebooks in 2009. (Source: DIGITIMES)

Global Cellphones shipments is predicted to grow 12% up to 1.33 billion units in2010, including 235 million Smartphones. (Source: Topology Research Institute), g p ( p gy )

From last quarter of 2009, China, India and Southeast Asia were back in a growthmode as industrial production was expanding in all its major countries, referring to thechart below.

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Electronics Industry Summeryy y

It's no secret that 2009 has been a difficult year. Although it has been predictedby most forecasters that recovery and a big growth for electronics industry isahead of us in 2010, uncertainties and challenges still exist.

In order to succeed in an increasingly globalized world and in a collaborativeyet competitive ecosystem, companies need to become ‘best in class’ in anumber of key competencies, many of them related to supply chainmanagement. These are operational excellence, cost control, asset utilization,profitability, sales growth and staff (management & executive) skills &

biliticapabilities.

Using its inhouse research and analytical capabilities, iCognitive hasperformed a benchmark study to determine the actual performance on keysupply chain competencies for companies that are leading in their industry andwhat are the gaps compared to other companies. The results from this studywill allow companies to better understand their own performance in terms ofstrengths and weaknesses and be able to compare themselves againstcompetitors.

For the Electronics industry, iCognitive has measured and ranked the supply chain performance of 49 companies in Southeast Asia in 2009, which include p pfive sectors: Computers & Peripherals, Electronic Components, Electronic Equipment & Instruments, EMS and Semiconductor Equipment & Products.

A composite score for each company consisting of 4 measurable attribute costmanagement, asset utilization, profitability and growth has been prepared. Thiswas done with a novel multi-criteria ranking methodology based on anwas done with a novel multi criteria ranking methodology based on anadvanced mathematical model developed by the research team in iCognitive.Through our assessment, top 10 performers results are presented in the report,and the best and worst company are analyzed by DuPont model.

© 2010 24


Electronics Top 10 SCM Performers Resultsp

Electronics Rank Composite Score

Performance Attribute Metrics Category

Cost AssetCost Management

Asset Utilization

Profitability Growth Financial Operational

Uchi Technologies

1 4.003 1.85 0.31 1.80 0.04 1.18 2.82

Datapulse 2 1.806 0 47 0 51 0 77 0 06 0 52 1 29

Technology2 1.806 0.47 0.51 0.77 0.06 0.52 1.29

Cal-Comp Electronics (Thailand)

3 1.427 0.31 0.64 0.21 0.26 0.45 0.98

Hana Microelectronics

4 1.338 0.36 0.29 0.61 0.08 0.44 0.90

Malaysian Pacific Industrial

5 1.306 0.31 0.46 0.46 0.08 0.33 0.98

PCA 6 1.203 0.25 0.24 0.45 0.28 0.34 0.87

Globetronics Technology

7 1.181 0.33 0.43 0.39 0.03 0.26 0.92

Semiconductor Ventures International

8 1.164 0.29 0.22 0.54 0.12 0.46 0.70

Metro SystemsMetro Systems Corporation

9 1.162 0.20 0.67 0.25 0.04 0.33 0.83

Chartered Semiconductors

10 1.161 0.33 0.38 0.24 0.21 0.17 1.00

© 2010 25


Electronics Top 10 SCM Performers Resultsp

0 29

0.20

0.33

0 22

0.67

0.38

0 54

0.25

0.24

0 12

0.04

0.21


Metro Systems Corporation

Chartered Semiconductors

Performance Attribute Scores - Electronics

0.36

0.31

0.25

0.33

0.29

0.29

0.46

0.24

0.43

0.22

0.61

0.46

0.45

0.39

0.54

0.08

0.08

0.28

0.03

0.12



PCA



1.85

0.47

0.31

0.31

0.51

0.64

1.80

0.77

0.21

0.04

0.06

0.26

0.00 1.00 2.00 3.00 4.00 5.00

Uchi Technologies

Datapulse Technology


Cost Management Asset Utilization Profitability GrowthCost Management Asset Utilization Profitability Growth

0.17 1.00Chartered Semiconductors

Financial & Operational Scores - Electronics

0 33

0.34

0.26

0.46

0.33

0 98

0.87

0.92

0.70

0.83


PCA



Metro Systems Corporation

1.18

0.52

0.45

0.44

0.33

2.82

1.29

0.98

0.90

0.98

Uchi Technologies





© 2010 26

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50

Financial Operational


Interpreting Metrics of Best & Worst Performersp g

Industry Group ElectronicsYear 2008Period 365 days

Currency US dollar

Best Performer Uchi Technologies Berhad (Malaysia)

Worst Performer Company A (Singapore)

© 2010 27


Interpreting Metrics of Best & Worst Performers

No.1 performer of electronics industry, Uchi Technologies Berhad is a Malaysiacompany with operations in Malaysia and the People's Republic of China. It wasnominated as one of the “Asia’s 200 Best under a Billion” in 2006. The group isprimarily involved in original design manufacturing (ODM) and original equipmentmanufacturing (OEM) for multinational household appliances and precision weighing

p g

manufacturing (OEM) for multinational household appliances and precision weighingscale companies like Krups, Sartorius, Eugster and Moulinex, which are locatedprimarily in Europe, namely Switzerland, Germany and France. Other activitiesinclude trading complete electrical module and saturated paper for PCB laminationand investment holding.

Uchi Technologies demonstrates a superior ROE (34 1%) By DuPont model weUchi Technologies demonstrates a superior ROE (34.1%). By DuPont model, wecan observe clearly that it is mainly because of the ultra-high net profit margin of47.8% which lead to a high ROA of 26.4%. By further decomposing, the high netprofit margin mainly comes from a high gross margin. The COGS is only 47% of thegross sale (compare to the Best-in-class COGS which is 74% and medium COGS of85%). We can also see from table, its compound score is highest mainly because it

f fhas much higher scores for cost management and profitability compared withcompetitors. Its asset utilization efficiency and growth rate are moderate which arenot affecting its overall performance and champion position.

Uchi shows the benefit of the global value chain. It is uncommon for a Malaysiancompany to become a significant component in the supply chain of a globalconsumer product. For instance, none of the Malaysian companies benefited fromthe Apple iPod which is made in Japan, China, South Korea and the Philippines. TheGroup started operations in China, Dongguan and this can further lower the cost andoperating expenses. The group maintained a high profit margin of 47.8% even inyear 2008, despite the 2007-2010 financial crisis. The only impact of the financialcrisis is the drop of sales compared to 2007, after more than 10 years of high salesp p , y ggrowth rate. The group starts as a design firm, and it keeps its strong emphasis ondesign, with 7% of the Group's revenue allocated for R&D expenses.

The high profit margin come from mainly three reasons: 1) global value chain.operations in Malaysia and china, while export oriented with a wide global customerbase (mostly Europe); 2) moving up the value added chain The management are

© 2010 28

base (mostly Europe); 2) moving up the value added chain.. The management areinvesting heavily on R&D and design, to develop high grade, market orientated withoptimal cost efficient products; 3) Stable and long term (more than 20 years)customer relationship with global leaders.



*The color scale indicates level of performance for each metrics The Deeper the color the

Company A (Singapore) was ranked the last in electronics. The DuPont and SCORcard both show its huge performance gap compared to the No.1, best-in-class andeven medium performance:

The color scale indicates level of performance for each metrics. The Deeper the color, the better the performance.

COGS is 89% which is about double of the best performer’s COGS.Inventory days of supply is around triple of the medium value, which indicates a huge issue in its

inventory management.Extreme long days of sales outstanding (102 days) and days of payable outstanding (201 days).The company has a negative profit indicate its poor profitability.Sales volumes is dropping indicating possible customer satisfaction issueSales volumes is dropping, indicating possible customer satisfaction issue.

For Company A to improve its operation performance, and to present a strongerBalance sheet as well as P & L sheet, it has to address the following SCM issues:

Reduce COGS and control operating expenses, improve operation efficiency.Reduce inventory, improve inventory management.

© 2010 29

y y gReduce cycle time to pay suppliers and to receive payment from customers.Reduce cash-to-cash cycle time, increase liquidity.Boost sales.


Chemicals Top 10Chemicals Top 10

Industry context:

As in 2008 and 2009 consumers eschewed many of the products made fromchemicals, including automobiles and electronics, the chemical companies werefacing a weak demand and low profitability. In response, many companies tookcost reduction measures such as laying off and closing plants. After comingthrough a tough recession, many chemical companies will be more cautious andspend carefully in 2010.

According to an analysis by Reuters, chemical industry is facing an upbeat butcautious 2010. Some of the industry's biggest players like DuPont and Dow areconfident that a long-awaited economic uptick is coming in 2010. (Source: Reuters)

Due to several factors such as low prices for chemicals, pending U.S climatechange legislation, a weak market in developed regions and more rapidly growingmarkets in Asia chemical companies continue to restructure assets in Northmarkets in Asia, chemical companies continue to restructure assets in NorthAmerica and Europe, while spend more dollars in fast-growing markets like theMiddle East. “Dow Chemical, for instance, is busy building the Ras Tanura refineryin Saudi Arabia, but the chemical giant is unlikely to spend more money in theUnited States in 2010.” (Source: Reuters)

Although most analysts think that chemicals industry has bottomed out, PaulH d h i f UK b d I i Ch ld ICIS i idHodges, chairman of UK-based Internationa eChem, told ICIS news in a videointerview that it is difficult to return back to pre-downturn levels in any chemicalmarket globally. He admitted that Asia, especially China will be potential growingmarkets, while he is also worried about possible economic and financial bubbleburst in China. “We’ll get some volatility in markets here which we’ll have to learnto live with. This is new and we’ll have to feel our way through.” (Source: ICISnews)

2010 seems to be a challenging year for chemicals industry, despite of potentialrise of demand in Asia. In order to keep the profit margin with low prices forchemicals, companies have to seek to reduce cost, and be more flexible to themarket and demand. Due to the uncertainties and volatility in today’s businessenvironment, they need to be cautious and plan well to meet their capacity withdemand.

© 2010 30

demand.


Chemicals Industry Summeryy y

Giant chemical producers of US and Europe are facing a weak demand in developed regions, thus a lot of them are closing their plants and move to Asia regions where there are bigger markets and cheap raw materials, creating increased competition with Asian producers.

Many manufacturers are trying to maximize the efficiency of their assets by outsourcing services they previously did themselves, and also by leasing rather than owning, equipment and employees. Productivity has steadily increased in manufacturing because of automation. Global production capacity would rise g ydue to the new capacities coming onstream in Middle East and China.

As we can see from iCognitive data, cash-to-cash cycle time of chemicals industry is relatively long compared to other industries for SEA. In order to succeed in this globalized, competitive, and volatile market, they need to plan properly and meet the capacity with the demand. At the same time, increaseproperly and meet the capacity with the demand. At the same time, increase productivity and maximize efficiency to keep the profit margin.

ICognitive has measured and ranked the supply chain performance of 50 companies of SEA in 2009 from chemicals industry, comprising of five sectors: Commodity Chemicals, Fertilizers & Agricultural Chemicals, Industrial Gases, Pharmaceuticals and Specialty ChemicalsPharmaceuticals, and Specialty Chemicals.

The composite score for each company comprises of 4 measurable attribute scores: cost management, asset utilization, profitability and growth; it can also be categorized into financial and operational performance scores. Through our assessment, top 10 performers results are presented in the report, and the best and worst company are analyzed by DuPont model The success factorsbest and worst company are analyzed by DuPont model. The success factors of the champion are identified, while the areas for improvement are picked out for the worst performer.

© 2010 31


Chemicals Top 10 SCM Performers Resultsp

Chemicals Rank Composite S

Performance Attribute Metrics CategoryScore

Cost Management

Asset Utilization


PT Bristol-Myers Squibb

1 2.523 0.58 0.17 1.72 0.06 1.10 1.42

PT Merck Indonesia

2 1.875 0.56 0.29 0.96 0.07 0.69 1.19

PT Polychem Indonesia

3 1.593 0.33 0.37 0.09 0.80 0.09 1.50

PT Tit Ki iPT Titan Kimia Nusantara

4 1.515 0.31 0.61 0.05 0.53 0.10 1.41

Pato Chemical Industry

5 1.448 0.34 0.26 0.81 0.04 0.58 0.87

PT Darya-Varia 6 1 360 0 71 0 13 0 47 0 04 0 36 1 00

Laboratoria6 1.360 0.71 0.13 0.47 0.04 0.36 1.00

PTT Chemicals 7 1.323 0.35 0.37 0.55 0.06 0.36 0.96

Indorama Polymers

8 1.273 0.29 0.44 0.21 0.34 0.22 1.06y

Jack Chia Industries (Thailand)

9 1.272 0.33 0.20 0.68 0.06 0.45 0.82

PT Pyridam Farma

10 1.248 0.74 0.18 0.16 0.17 0.15 1.10

© 2010 32


Chemicals Top 10 SCM Performers Results

0.74 0.180.160.17PT Pyridam Farma

Performance Attribute Scores - Chemicals

p

0.34

0.71

0.35

0.29

0.33

0.26

0.13

0.37

0.44

0.20

0.81

0.47

0.55

0.21

0.68

0.04

0.04

0.06

0.34

0.06


PT Darya-Varia Laboratoria

PTT Chemicals

Indorama Polymers


0.58

0.56

0.33

0.31

0.17

0.29

0.37

0.61

1.72

0.96

0.09

0.05

0.06

0.07

0.80

0.53

0 00 0 50 1 00 1 50 2 00 2 50 3 00


PT Merck Indonesia


PT Titan Kimia Nusantara

0.00 0.50 1.00 1.50 2.00 2.50 3.00

Cost Management Asset Utilization Profitability Growth

Financial & Operational Scores - Chemicals

0.36

0.36

0.22

0.45

0.15

1.00

0.96

1.06

0.82

1.10

PT Darya-Varia Laboratoria

PTT Chemicals

Indorama Polymers


PT Pyridam Farma

1.10

0.69

0.09

0.10

0.58

0.36

1.42

1.19

1.50

1.41

0.87

1.00


PT Merck Indonesia


PT Titan Kimia Nusantara


y

© 2010 33

0.00 0.50 1.00 1.50 2.00 2.50 3.00




Industry Group ChemicalsYear 2008Period 365 daysCurrency US dollarBest Company PT Bristol-Myers Squibb (Indonesia)Best Company PT Bristol-Myers Squibb (Indonesia)Worst Company Company N (Thailand)

© 2010 34



No.1 performer of chemicals industry, PT Bristol-Myers Squibb is the Indonesian branchof U.S. bio pharmaceutical company Bristol-Myers Squibb. This plant manufactures anddistributes finished dosage form products to Indonesia, Malaysia, Singapore, Philippines,Myanmar, and Hong Kong. 2009 September 15, Bristol-Myers Squibb announced the saleof its OTC assets in Asia Pacific, excluding China and Japan, and shares in PT Bristol-M ers Sq ibb Indonesia Tbk to Taisho Pharmace tical Compan Ltd for $310 million

p g

Myers Squibb Indonesia Tbk to Taisho Pharmaceutical Company Ltd. for $310 million.

PT Bristol-Myers Squibb demonstrates a high ROA of 26.4%. The COGS is only 45% ofthe gross sale (compare to the Best-in-class COGS which is 51% and medium COGS of82%). The asset turnover of 1.4 shows fair asset utilization efficiency. The compound scoreis highest because it has 2nd highest score for cost management and highest profitabilityscore compared with competitors. Its asset utilization efficiency and growth rate aremoderate which are not affecting its overall performance and champion position.

As part of their Supply Chain Management strategy, the supplier/contractor/third-partymanufacturer are evaluated by quality or EHS questionnaires to ensure the highest level ofquality, expertise, and experience. Other management strategies which also account totheir success include:

Continuous Improvement for Strong Operating PerformanceThey view productivity and cost effectiveness as one core competency. The managementaims for enhanced efficiency and effectiveness by aligning infrastructure to support growth,continuous improvement and simplifying processes.

Selective Integration Traditional “vertically integrated” model is not used by BMS, instead, they partner for bothinnovation and commercial success to remain competitive. By “String of Pearls multipleintegration approaches”, a global supply chain is built up providing high flexibility andresponsiveness to geographies and customers.

Unique OrganizationBy consolidating all transactional groups into a unique Strategic Transactions Group,By consolidating all transactional groups into a unique Strategic Transactions Group,governance process and due diligence for all transactions are streamlined, to enabled rapiddecision making, flexibility and involvement of the most senior level executives.

Innovative product portfolio aiming at unmet medical needsBy strategically select and build the product portfolio according to their market position,BMS management can align the direction of R&D and production with the targeted marketdemand

© 2010 35

demand.



*The color scale indicates level of performance for each metrics. The Deeper the color, the b tt th f

Company N (Thailand) was ranked the last in chemicals. The DuPont and SCORcard both show its huge performance gap compared to the No.1, best-in-class andeven medium performance.

better the performance.

It has a COGS of 91% which is higher than medium of 82%.Inventory days of supply is almost triple of the medium value, which indicates a huge issue in its

inventory management.Cash-to-cash cycle time is 189 days, which doubles the industrial medium (90 days).The company has a negative profit and small asset turns, which indicate its weak asset

utilization efficiency and poor profitability.Sales volumes is dropping in large scale, indicating possible customer satisfaction issue.

For Company N to improve its operation performance, and to present a strongerBalance sheet as well as P & L sheet, it has to address the following SCM issues:

Reduce COGS and control operating expenses, improve operation efficiencyReduce inventory improve inventory management

© 2010 36

Reduce inventory, improve inventory managementReduce cash-to-cash cycle time, increase liquidityBoost sales, make profitable growthReduce its debt to equity ratio, reduce the risk (the financial leverage of 7.8 is extremely high)


Industrial Top 10Industrial Top 10

This financial crisis started from the U.S. has altered the role of the U.S. in the world economy, with large developing markets such as those in Asia gaining competitive ground.

Automotive industry one of the industry sectors of industrials is the growing at anAutomotive industry, one of the industry sectors of industrials, is the growing at an unprecedented speed in Asian region (especially China, India, & ASEAN) countries in the world, primarily due to demand saturation of western markets. Two large automotive manufactures: Chrysler LLC and General Motors Corp have been guided through bankruptcies by U.S. government.

Companies are seeking immediate cost cutting measures to survive rather than profit According to a recent survey of 550 European and North American financeprofit. According to a recent survey of 550 European and North American finance officers, 64 percent of respondents rate cost cutting as top priority and only 37 percent cite increasing profits as a main priority.

"Most experts begin by emphasizing the one thing they should NOT do, which is to impose 'slash and burn,' across-the-board spending cuts," Global Logistics & Supply Chain Strategies (GL&SCS) says.

"Budget reductions may be necessary, but they certainly shouldn't be spread evenly. Now is the time for careful surgical cuts that don't cripple a firm for the future. It's time for tough decisions on what really is important for the future," according to J. Paul Dittmann, director of the Office of Corporate Partnership at the University of Tennessee.

What should companies do to both reduce cost and meet long-term goals? More and more companies start to look from a higher strategic perspective and realize that supply chains hold the key to survival in the global economic downturn like never before. By refocusing their supply chains successfully, companies with a healthy supply chain not only survive but also profit in the financial crisis.

© 2010 37


Industrial Top 10 SCM Performers Resultsp

Industrial Rank Composite Performance Attribute Metrics CategoryIndustrial pScore

g y

Cost Management

Asset Utilization


PT Semen Gresik

1 2.399 0.67 0.29 1.33 0.11 0.95 1.45

Republic Cement

2 2.044 0.66 0.35 0.94 0.09 0.52 1.53

PT Indocement

3 1.991 0.62 0.35 0.91 0.12 0.57 1.42

PT Lion Metal Works

4 1.894 0.63 0.22 0.89 0.14 0.61 1.29

PT Tembaga Mulia

5 1.892 0.61 0.87 0.11 0.31 0.56 1.33

Hil Industries 6 1.847 0.47 0.23 0.79 0.36 0.54 1.30

YTL Cement 7 1.779 0.58 0.27 0.70 0.22 0.39 1.39

Siam City Cement

8 1.738 0.67 0.28 0.77 0.02 0.54 1.20Cement

Dynasty Ceramic

9 1.705 0.56 0.31 0.78 0.05 0.58 1.13

Alucon 10 1.687 0.49 0.37 0.75 0.08 0.55 1.13

© 2010 38


Industrial Top 10 SCM Performers Resultsp

0 56

0.49

0 31

0.37

0 78

0.75

0 05

0.08

Dynasty Ceramic

Alucon

Performance Attribute Scores - Industrial

0.63

0.61

0.47

0.58

0.67

0.56

0.22

0.87

0.23

0.27

0.28

0.31

0.89

0.11

0.79

0.70

0.77

0.78

0.14

0.31

0.36

0.22

0.02

0.05

PT Lion Metal Works

PT Tembaga Mulia

Hil Industries

YTL Cement

Siam City Cement

Dynasty Ceramic

0.67

0.66

0.62

0.63

0.29

0.35

0.35

0.22

1.33

0.94

0.91

0.89

0.11

0.09

0.12

0.14

0.00 0.50 1.00 1.50 2.00 2.50 3.00

PT Semen Gresik

Republic Cement

PT Indocement

o eta o s


Financial & Operational Scores - Industrial

0 54

0.39

0.54

0.58

0.55

1 30

1.39

1.20

1.13

1.13

Hil Industries

YTL Cement

Siam City Cement

Dynasty Ceramic

Alucon

0 95

0.52

0.57

0.61

0.56

0.54

1 45

1.53

1.42

1.29

1.33

1.30

PT Semen Gresik

Republic Cement

PT Indocement

PT Lion Metal Works

PT Tembaga Mulia

Hil Industries

© 2010 39

0.95 1.45

0.00 0.50 1.00 1.50 2.00 2.50 3.00

PT Semen Gresik




Industry Group IndustrialYear 2008

Period 365 daysCurrency US dollarCurrency US dollar

Best Company PT Semen Gresik (Indonesia)Worst Company Company T (Thailand)

© 2010 40


Interpreting Metrics of Best & Worst PerformersNo.1 performer of industrials, Indonesian company PT Semen Gresik was able to boost its market share to around 45.7% within the domestic market, a bit increase from 43.7% in FY2008. In 2009, the Company received awards of “The Best Managed Company Award” (ranking # 7) from Finance Asia Magazine, “Indonesia’s Best Wealth Creators” (ranking # 9) from SWA Magazine.

p g

( g ) g

PT Semen Gresik demonstrates a superior ROE (34.3%). The company presents a good profit margin of 20.7% due to increase in average selling price and the management’s effort in cost management. The COGS is only 56% of the gross sale (compare to the Best-in-class COGS which is 66% and medium COGS of 85%). We can also see from table, its compound score is highest mainly because it has muchcan also see from table, its compound score is highest mainly because it has much higher scores for cost management and profitability compared with competitors. Its asset utilization efficiency and growth rate are moderate which are not affecting its overall performance and champion position.

The net income of PT Semen Gresik is predicted to grow 35% to Rp3.40 trillion compared in 2008 which reached Rp2 52 trillion due to its efficiency and operationalcompared in 2008 which reached Rp2.52 trillion, due to its efficiency and operational growth. To succeed and maintain its market leader position, the company has the following strategic initiatives:

Revenue Management: Maintaining operating margin by maintaining market share.

Procurement & Inventory Management:Procurement & Inventory Management: Improving procurement synergy among the group; joint inventory of raw material and spare parts; improving centralizing coal procurement.

Cost Management:a) Energy Cost: minimize oil, coal and electricity consumption index, increase energy alternative

use, stabilize productivity production level.) C fb) Direct and Indirect Material Cost: maximize purified gypsum use, maximize substitution

materials.c) Maintenance Cost: lowering spare-parts use index, improve the total predictive maintenance &

autonomous program.d) Packaging Cost: lowering craft paper index, increase the use of local craft paper.e) Transportation cost: improve cross bagging initiatives, improve the performance of packing

plants among the group.

© 2010 41

g g

Capacity & Energy Management:De-bottlenecking/optimization project; construction of 2 new cement plants in Java and Sulawesi; constructions of 2 x 35 MW power plants in Sulawesi.



*The color scale indicates level of performance for each metrics. The Deeper the color, the better the performance.

Company T (Thailand) was ranked the last in industrials. The DuPont and SCORcard both show its huge performance gap compared to the No.1, best-in-classand even medium performance:

It has a COGS of 94% which is higher than medium of 85%.

p

Inventory days of supply is almost triple of the medium value, which indicates a huge issue inits inventory management.

Cash-to-cash cycle time is 170 days, which largely exceeded industrial medium (72 days).The company has a negative profit and small asset turns, which indicate its weak asset

utilization efficiency and poor profitability.Sales volumes is dropping, indicating possible customer satisfaction issue.

For Company T to improve its operation performance, and to present a strongerBalance sheet as well as P & L sheet, it has to address the following SCM issues:

Reduce COGS and control operating expenses, improve operation efficiency.Reduce inventory, improve inventory management.Reduce cash-to-cash cycle time, increase liquidity.

© 2010 42

y , q yBoost sales, increase product market share by improving product quality or service level.


Food, Beverages & Tobacco Top 10

The food, beverages and tobacco industry ranges over the manufacturing andpackaging of food products alcoholic/non alcoholic beverages cigarettes andpackaging of food products, alcoholic/non-alcoholic beverages, cigarettes andother tobacco products, and distribution to retail and foodservice companies.

Regulation is wide-ranging and increasingly stringent for this industry. Price ofraw materials and COGS have been increasing in recent years. FromiCognitive research, the medium and BIC COGS have increased 2-3% fromyear 2007. The possible causes include the rising oil and gas prices and theeffect of severe weather conditions in agricultural regions. Industry players aretherefore striving to maintain their margins while facing cost pressures andstrong buyer power. One way is to minimize transportation by monitoringdemand within a particular global region, thus mitigating the exposure to therising costs associated with crude oil.

Over the last few years, the global Food, Beverages and Tobacco industrygroup has exhibited modest growth, with growth particularly low in the tobaccoand beverage markets. iCognitive data has shown previously in this report(Page 17), in Southeast Asia, medium CAGR of this industry is 8.1% and BICCAGR is 22.6% for the five-year period spanning 2005-2009, which is theCAGR is 22.6% for the five year period spanning 2005 2009, which is thelowest among all the industry groups. Faced with limited volume growth inmajor developed markets like US and Europe, higher-demand-growthdeveloping markets of Asia are becoming much more important. Mergers,acquisitions and partnerships are on the rise as food and drink brands look toestablish and build their brands in international markets.

Environmental concerns are rising, however, and the ‘green element’ isopening up a new set of issues manufacturers need to deal with, notably withregard to packaging and transportation.

It is also noticed that the market demand of brewery and tobacco companieswas barely affected by the recession

© 2010 43

was barely affected by the recession.


Food, Beverages & Tobacco Top 10 SCM Performers ResultsPerformers Results

Food, beverages &

Rank Composite Score


tobaccoCost

ManagementAsset

UtilizationProfitability Growth Financial Operational

PT Multi Bintang 1 2.584 0.62 0.39 1.39 0.19 1.04 1.54

PT HM Sampoerna

2 2.300 0.36 0.46 1.29 0.19 1.04 1.26

Thai Theparos Food Products

3 1.773 0.46 0.25 1.02 0.04 0.62 1.15

PT Gudang Garam

4 1.612 0.52 0.17 0.88 0.04 0.38 1.23

Sri Trang Agro-Industry

5 1.553 0.36 0.84 0.09 0.26 0.50 1.05

Jollibee 6 1.551 0.40 0.54 0.59 0.02 0.53 1.02

JT International 7 1.542 0.55 0.37 0.57 0.06 0.43 1.12

Thai PresidentThai President Foods

8 1.536 0.25 0.30 0.35 0.63 0.30 1.24

PT Kalbe Farma 9 1.492 0.60 0.14 0.49 0.26 0.30 1.19

Cerebos 10 1 490 0 73 0 17 0 55 0 05 0 36 1 13

© 2010 44

Cerebos 10 1.490 0.73 0.17 0.55 0.05 0.36 1.13


Food, Beverage & Tobacco Top 10 SCM Performers ResultsPerformers Results

0.73 0.17 0.55 0.05Cerebos

Performance Attribute Scores - Food, beverages & tobacco

0 52

0.36

0.40

0.55

0.25

0.60

0 17

0.84

0.54

0.37

0.30

0.14

0 88

0.09

0.59

0.57

0.35

0.49

0 04

0.26

0.02

0.06

0.63

0.26

PT G d G


Jollibee

JT International

Thai President Foods

PT Kalbe Farma

0.62

0.36

0.46

0.52

0.39

0.46

0.25

0.17

1.39

1.29

1.02

0.88

0.19

0.19

0.04

0.04

0.00 0.50 1.00 1.50 2.00 2.50 3.00

PT Multi Bintang

PT HM Sampoerna

Thai Theparos Food …

PT Gudang Garam

Cost Management Asset Utilization Profitability GrowthCost Management Asset Utilization Profitability Growth

Financial & Operational Scores - Food, beverages & tobacco

0.53

0.43

0.30

0.30

0.36

1.02

1.12

1.24

1.19

1.13

Jollibee

JT International

Thai President Foods

PT Kalbe Farma

Cerebos

1.04

1.04

0.62

0.38

0.50

1.54

1.26

1.15

1.23

1.05

0 00 0 50 1 00 1 50 2 00 2 50 3 00

PT Multi Bintang

PT HM Sampoerna


PT Gudang Garam


© 2010 45

0.00 0.50 1.00 1.50 2.00 2.50 3.00




Industry Group Food, beverages & tobaccoYear 2008

Period 365 daysCurrency US dollar

Best Company PT Multi Bintang (Indonesia)Worst Company Company G (Philippines)

© 2010 46



No.1 performer of Food, Beverages & Tobacco, Multi Bintang Indonesia Tbkis mainly engaged in the production and marketing of alcoholic and non-alcoholic beverages, as well as importing of related promotional items. The

p g

g , p g pGroup is part of the Heineken Group, which has its roots in Amsterdam. In February 2010, 68.5% of stake was acquired at a price of S$352M by Asia Pacific Breweries Limited (APB), Singapore listed and a leading brewery in Asia Pacific.

Multi Bintang demonstrates strong performance both operationally andMulti Bintang demonstrates strong performance both operationally and financially. According to iCognitive analysis, it is especially excellent in terms of cost management and profitability. The COGS is only 52% of the gross sale (compare to the Best-in-class COGS which is 59% and medium COGS of 79%). Its asset utilization efficiency and growth rate are moderate which are not affecting its overall performance and champion position.

Its parent company, Heineken, is an international broad leader in brewery market. By acquiring strong local brand and improving the organizing, training the employees and introducing new technology, it successfully reinforce the position of the local brands. This results in economies of scale that create a distribution network for both the local beers and Heineken beer. In order to

hi t i bl th th t k f t t i i itiachieve sustainable growth, the company takes four strategic priorities:

1) Accelerate sustainable top-line growth2) Accelerate efficiency and cost reduction3) Speed up implementation, commit to faster decision making and execution4) Have a focus on markets where best winning potential exists

© 2010 47



*The color scale indicates level of performance for each metrics. The Deeper the color, the better the performance

Company G (Philippines) was ranked the last in Food, Beverages & Tobaccoindustry. The DuPont and SCOR card both show its huge performance gapcompared to the No.1, best-in-class and even medium performance:

Inventory days of supply (116 days) is almost twice of the medium value which indicates a huge


Inventory days of supply (116 days) is almost twice of the medium value, which indicates a hugeissue in its inventory management.

Days of payable which is 83 days is about twice longer than the best practice of 30-45 days.Cash-to-cash cycle time is 81 days, which is way off the BIC and can be largely shortened.The company has a small profit, operation income and asset turns, which indicate its weak

asset utilization efficiency and poor profitability.CAGR of 5% is lower than the medium sales growth of 8%, indicating possible customer

satisfaction iss esatisfaction issue.

For Company G to improve its operation performance, and to present a strongerBalance sheet as well as P & L sheet, it has to address the following SCM issues:

Control operating expenses, improve operation efficiency.Reduce inventory improve inventory management

© 2010 48

Reduce inventory, improve inventory management.Reduce days of payable, pay the suppliers faster.Reduce cash-to-cash cycle time, increase liquidity.Boost sales, increase product market share by improving product quality or service level.


Logistics Top 5

Many of the logistics companies studied in this study are Singapore andMalaysia companies. Besides local companies, Singapore has attracted manyglobal companies to set up distribution centers due to its excellent globalconnectivity conductive business and investment environment

Logistics Top 5

connectivity, conductive business and investment environment.

It's no secret that 2009 has been a difficult year. Although it has been predictedby most forecasters that recovery is ahead of us in 2010, uncertainties andchallenges still exist. In order to succeed in an increasingly globalized worldand in a collaborative yet competitive ecosystem, companies need to become‘b t i l ’ i b f k t i f th l t d t‘best in class’ in a number of key competencies, many of them related tosupply chain management. These are operational excellence, cost control,asset utilization, profitability, sales growth and staff (management & executive)skills & capabilities.

Using its inhouse research and analytical capabilities, iCognitive hasperformed a benchmark study to determine the actual performance on keysupply chain competencies for companies that are leading in their industry andwhat are the gaps compared to other companies. The results from this studywill allow companies to better understand their own performance in terms ofstrengths and weaknesses and be able to compare themselves againstcompetitors.p

For the Logistics industry, iCognitive has measured and ranked the supply chain performance of 15 companies in Southeast Asia in 2009, which include two sectors: Distributors, and Third Party Logistics Providers.

A composite score for each company consisting of 4 measurable attributesA composite score for each company consisting of 4 measurable attributes(cost management, asset utilization, profitability and growth) has beenprepared. This was done with a novel multi-criteria ranking methodology basedon an advanced mathematical model developed by the research team iniCognitive.

© 2010 49


Logistics Top 5 SCM Performers Resultsg p

Logistics Industry Supply Chain P f R ki

Composite S

CountryPerformance Ranking Score

CWT Limited 1 1.49 Singapore

I t t d L i tiIntegrated Logistics Berhad

2 1.37 Malaysia

Tamadam Bonded Warehouse

3 1.35 Malaysia

Poh Tiong Choon4 1 28 Si

o o g C ooLogistics

4 1.28 Singapore

Yinson Holding 5 1.19 Malaysia

© 2010 50


Logistics Top 5 SCM Performers Resultsg p

0.42 0.41 0.21 0.15Yinson Holding

Performance Attribute Scores ‐ Logistics

0.26

0.56

0.28

0.29

0.32

0.32

0.80

0.09

0.62

0.02

0.39

0.06

Integrated Logistics Berhad

Tamadam Bonded …

Poh Tiong Choon Logistics

0.26 0.40 0.73 0.10

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60

CWT Limited


Financial & Operational Scores ‐ Logistics

0.07

0.45

0.25

1.27

0.83

0.94

Tamadam Bonded Warehouse

Poh Tiong Choon Logistics

Yinson Holding

0.73

0.34

0.76

1.03

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60

CWT Limited

Integrated Logistics Berhad

© 2010 51




Industry Group LogisticsYear 2008

Period 365 daysCurrency US dollar

Best Company CWT LimitedBest Company CWT Limited Worst Company Company H (Malaysia)

© 2010 52



Ranked # 1 Performer in logistics in this study, CWT Limited was set up in 1970 and listed on the Singapore Exchange in 1993. It is the largest listed logistics company in Southeast Asia, which serves world’s leading brands in

p g

g p y , gchemical, commodities, automotive, marine, oil & gas and industrial sectors. The revenue has been growing strongly in recent years. The company is expanding local warehouse capabilities to tap into the booming global 3PL market of US$250 billion potential. The principle businesses of CWT currently comprise: logistics, freight forwarding and engineering.

CWT demonstrates strong performance both operationally and financially. According to iCognitive analysis, it is especially excellent in terms of asset utilization and profitability. The cash-to-cash cycle time is -24 days (compare to the Best-in-class which is 2 days and medium which is 43 days). The company also demonstrates high net profit, however, it should be noted that there was an exceptional gain which contributes to the total profit Days of payable is 90an exceptional gain which contributes to the total profit. Days of payable is 90 days which can be further shortened.

According to Eric Herman, CEO of CWT Logistics, CWT has established the Borouge South East Asia (SEA) Logistics Hub and to provide local logistics services for Borouge’s customers in Asia for duration of 10 years with effect f it ti l t t d t i 2010 I d t k it titi dfrom its operational start-up date in 2010. In order to keep its competitive edge, the company takes four strategic priorities:

1) Expand local and oversea market, accelerate growth2) Make short term and long term plans carefully to ensure 3) Adopt flat organization for rapid decision making, flexibility and

involvement of the most senior level executives.4) Make sure seamless integration inside the company, between

sectors/departments for successful and efficient execution of tasks or projects.

© 2010 53



*The color scale indicates level of performance for each metrics. The Deeper the color, the better the performance

Company H (Malaysia) was ranked the last in Logistics industry. The DuPont andSCOR card both show its performance gaps compared to the No.1, best-in-class andeven medium performance:

Inventory days of supply (40 days) is five times of the medium value which indicates an issue in


Inventory days of supply (40 days) is five times of the medium value, which indicates an issue inits inventory management.

Days of payable which is 76 days is about twice longer than the best practice of 30-45 days.Cash-to-cash cycle time is 84 days, which is way off the BIC and can be largely shortened.The company has a small profit, operation income and asset turns, which indicate its weak

asset utilization efficiency and poor profitability.The company indicates high operating expenses which is more than double of the medium

al e this ma ca se its poor profitabilitvalue, this may cause its poor profitability.

For Company H to improve its operation performance, and to present a strongerBalance sheet as well as P & L sheet, it has to address the following SCM issues:

Control operating expenses, improve operation efficiency.Reduce inventory improve inventory management

© 2010 54

Reduce inventory, improve inventory management.Reduce days of payable, pay the suppliers faster.Reduce cash-to-cash cycle time, increase liquidity.


Cross-industry Top 15 SCM Performers Resultsy p

Cross-Industry Rank Composite Score


Cost Management

Asset Utilization


UchiTechnologies

1 2.83 1.25 0.22 1.31 0.05 0.85 1.97

PTT Exploration and Production

2 2.50 0.81 0.50 1.08 0.11 0.54 1.97


3 1.60 0.44 0.14 0.95 0.07 0.62 0.98Squibb

PT Unilever Indonesia

4 1.51 0.33 0.44 0.66 0.07 0.61 0.90

PT MULTI BINTANG

5 1.48 0.26 0.46 0.69 0.08 0.64 0.84

PT Roda Vivatex 6 1 48 0 43 0 24 0 76 0 05 0 39 1 09PT Roda Vivatex 6 1.48 0.43 0.24 0.76 0.05 0.39 1.09

PT Merck Indonesia

7 1.44 0.28 0.30 0.06 0.80 0.06 1.38

PT Sepatu Bata 8 1.36 0.27 0.25 0.79 0.06 0.77 0.59

PT HMPT HM Sampoerna

9 1.33 0.32 0.39 0.53 0.08 0.45 0.88


10 1.26 0.42 0.25 0.51 0.08 0.39 0.87

PT Semen Gresik

11 1.26 0.32 0.22 0.64 0.08 0.43 0.82

Thai TheparosFood Products

12 1.25 0.26 0.82 0.09 0.09 0.47 0.78

PT Medco Energi

13 1.24 0.31 0.30 0.53 0.10 0.33 0.91

Datapulse T h l

14 1.22 0.44 0.34 0.38 0.06 0.27 0.95

© 2010 56

Technology1.22 0.44 0.34 0.38 0.06 0.27 0.95

Republic Cement

15 1.21 0.32 0.71 0.07 0.12 0.48 0.74


Cross-industry Top 15 SCM Performers Resultsy p

0.31

0.44

0.32

0.30

0.34

0.71

0.53

0.38

0.07

0.10

0.06

0.12

PT Medco Energi


Republic Cement

Performance Attribute Scores ‐ Cross‐industry

0.43

0.28

0.27

0.32

0.42

0.32

0.26

0.24

0.30

0.25

0.39

0.25

0.22

0.82

0.76

0.06

0.79

0.53

0.51

0.64

0.09

0.05

0.80

0.06

0.08

0.08

0.08

0.09

PT Roda Vivatex

PT Merck Indonesia

PT Sepatu Bata

PT HM Sampoerna


PT Semen Gresik


1.25

0.81

0.44

0.33

0.26

0.43

0.22

0.50

0.14

0.44

0.46

0.24

1.31

1.08

0.95

0.66

0.69

0.76

0.05

0.11

0.07

0.07

0.08

0.05

0.00 0.50 1.00 1.50 2.00 2.50 3.00

Uchi Technologies


PT Bristol‐Myers Squibb


PT MULTI BINTANG

PT Roda Vivatex


0 48 0 74Republic Cement

Financial & Operational Scores ‐ Cross‐industry

0.77

0.45

0.39

0.43

0.47

0.33

0.27

0.48

0.59

0.88

0.87

0.82

0.78

0.91

0.95

0.74

PT Sepatu Bata

PT HM Sampoerna


PT Semen Gresik


PT Medco Energi


Republic Cement

0.85

0.54

0.62

0.61

0.64

0.39

0.06

1.97

1.97

0.98

0.90

0.84

1.09

1.38

Uchi Technologies


PT Bristol‐Myers Squibb


PT MULTI BINTANG

PT Roda Vivatex

PT Merck Indonesia

p

© 2010 57

0.00 0.50 1.00 1.50 2.00 2.50 3.00



Cross-industry Top 15 SCM Performers Results

Indonesia's economy has demonstrated surprising resilience in the face of the global economic slowdown, outperforming many of its regional counterparts.

y p

Indonesian chemical, brewery and tobacco companies were especially resilient to the recession.

10 of the top 15 performers are Indonesian companies. And one from Malaysia (electronics industry), one from Singapore (electronics industry), two from Thailand and the last one is a Philippine company.pp p y

The top performers generally have superior performance in cost management and profitability, and a balanced performance in other attributes as well (Such as No. 1 performer Uchi Technologies, No. 2 performer PTT Exploration and Production and No. 3 PT Bristol-Myers Squibb). It means they are able to control cost and maintain their profit despite of the impact of economic crisiscontrol cost and maintain their profit despite of the impact of economic crisis. These companies have a healthy and strong supply chain which is able to make sustainable profit and growth, even under crisis.

There are also some companies which are able to make them into top 15 because they are outstanding in one metrics: for example, No. 7 PT Merck Indonesia (it is #1 in sales growth) No 12 Thai Theparos Food ProductsIndonesia (it is #1 in sales growth), No. 12 Thai Theparos Food Products and No.15 Republic Cement have superior high score in asset management.

© 2010 58


Champions Briefingp g

No. 1: Uchi Technologies BerhadThe No.1 performer of electronics industry, Malaysia company which was nominated as one ofthe “Asia’s 200 Best under a Billion” in 2006. The group is primarily involved in original designmanufacturing (ODM) and original equipment manufacturing (OEM) for multinationalho sehold appliances and precision eighing scale companies like Kr ps Sartori s E gsterhousehold appliances and precision weighing scale companies like Krups, Sartorius, Eugsterand Moulinex, which are located primarily in Europe, namely Switzerland, Germany andFrance. Both cost management and profitability score the highest (1.25 and 1.31 respectively).

No. 2: PTT Exploration and Production Public Company LimitedRanked No. 1 of oil and gas industry, PTT Exploration and Production is a Thailand-basedcompany primarily engaged in the exploration, extraction, production and development ofco pa y p a y e gaged t e e p o at o , e t act o , p oduct o a d de e op e t opetroleum products. The company has the 2nd highest score for both cost management andprofitability, which are slightly lower than Uchi technologies.

No. 3: PT Bristol-Myers Squibb No. 1 performer of chemicals industry PT Bristol-Myers Squibb is the Indonesian branch of USbio pharmaceutical company Bristol-Myers Squibb. This plant manufactures and distributesfi i h d d f d t t I d i M l i Si Phili i M dfinished dosage form products to Indonesia, Malaysia, Singapore, Philippines, Myanmar, andHong Kong. 2009 September 15, Bristol-Myers Squibb announced the sale of its OTC assetsin Asia Pacific, excluding China and Japan, and shares in PT Bristol-Myers Squibb IndonesiaTbk to Taisho Pharmaceutical Company Ltd. for $310 million. It has the 3rd highest score inprofitability (0.95) and cost management (0.44), just below No.1 and No.2 performer.

No. 4: PT Unilever Indonesia TbkNo. 4: PT Unilever Indonesia TbkIndonesia-based consumer goods company ranked #1 in consumer product industry. TheCompany's principal activities are the production, marketing and distribution of consumergoods, including soaps, detergents, margarine, dairy-based products, ice cream, cosmeticproducts, tea-based beverages and fruit juice. It has two segments, namely Home andPersonal Care and Foods and Beverages.

N 5 PT M lti Bi tNo. 5: PT Multi BintangNo.1 performer of Food, Beverages & Tobacco, Multi Bintang Indonesia Tbk is mainlyengaged in the production and marketing of alcoholic and non-alcoholic beverages, as well asimporting of related promotional items. The Group is part of the Heineken Group, which has itsroots in Amsterdam, where in 1864. 68.5% of stake was acquired at a price of S$352MFebruary 2010 by Asia Pacific Breweries Limited (APB).

© 2010 59



No. 6: PT Roda Vivatex TbkNo.1 performer of Apparel industry, PT Roda Vivatex Tbk, is an Indonesia-based companyengaged in the textile industry and trading. The Company distributes its products to bothdomestic and international markets, including Europe, the United States, Asia and MiddleEastEast.

No. 7: PT Merck Indonesia TbkNo.2 performer of Chemicals industry, founded in 1970, PT Merck Tbk has its majority of theshares held by the Merck Group, headquartered in Germany the oldest pharmaceutical andchemical companies in the world. PT Merck Tbk. is a leading multinational company in thepharmaceutical and chemical business in Indonesia.p

No. 8: PT Sepatu BataAs the 2nd best performer in Apparel, footwear & luxury goods industry, PT Sepatu Bata Tbkis an Indonesia-based shoe manufacturer. The Company is engaged in manufacturing leatherfootwear, canvas built-up, casual and sports shoes, injection molded sandals and slippersand industrial safety footwear. Its production facilities are located in Purwakarta. TheC i b f th B t Sh O i ti Th i t t di i lCompany is a member of the Bata Shoe Organization. The company is outstanding in salesgrowth. It demonstrates the highest score for growth among the 15 top performers.

No. 9: PT HM Sampoerna TbkAs the No.2 best performer of Food, Beverages & Tobacco industry, HM Sampoerna is one ofthe leading tobacco companies in Indonesia, its parent company Philip Morris International,based in Lausanne, Switzerland, is one of the largest tobacco companies in the world.based in Lausanne, Switzerland, is one of the largest tobacco companies in the world.

No. 10: PT Polychem Indonesia TbkRanked No.3 in Chemicals industry, PT Polychem Indonesia Tbk is an Indonesia-basedmanufacturing company. The Company manufactures polyester chips, polyester filaments,engineering plastic, engineering resin, ethylene glycol, polyester staple fiber andpetrochemical. It also engaged in knitting, weaving and textile manufacturing, as well asf ffishing net yarn manufacturing.

© 2010 60



No. 11: PT Semen GresikIndonesia-based cement company, PT Semen Cresik ranked No.1 in industrials. TheCompany’s production facilities have a current capacity of 17.1 million tons cement annually.Company s production facilities have a current capacity of 17.1 million tons cement annually.

No. 12: Thai Theparos Food ProductsThis Thailand-based manufacturing company is engaged in the production and sale ofseasoning sauces under the names Golden Mountain and Sriracha Phanit. Its products aresold in both domestic (majority) and overseas markets. The Company has a total productioncapacity of 106,090 tons of sauce products annually. It demonstrates excellent assettili ti f ith th hi h t i t tili ti th 15 h iutilization performance, with the highest score in asset utilization among the 15 champions.

No. 13: PT Medco EnergiPT Medco Energi Internasional Tbk is an Indonesia-based integrated energy company. TheCompany is engaged in oil and gas exploration and production, drilling services, methanolproduction and the power generation industry. It owns favorable location and cost structure,and balanced performance for all the four attributesand balanced performance for all the four attributes.

No. 14: Datapulse Technology LimitedAs the 2nd best performer in electronics industry, Datapluse Technology is a Singapore-based company engaged in the manufacture and sale of media storage products used incontent distribution, including compact discs and digital versatile discs. It has balancedperformance for all the four attributes.

No. 15: Republic CementRepublic Cement is engaged in the manufacture, development, exploitation and sale ofcement, marble and other building materials, and the processing and manufacture ofmaterials for industrial and commercial purposes. The company is excellent in terms ofasset utilization, which has the 2nd highest score for this attribute.

© 2010 61


Additional: SCM operational performance per country– per country

“Globalization has always existed in a sense, but until recently it mostly meant trade - countries made goods and sold them abroad.

Today globalization has a much fuller meaning, It refers to the way companies operate supply chains that span the planet, to the way people work together and learn from each other, and to the way knowledge is dispersed across our world.”to the way knowledge is dispersed across our world.

(Source: Newsweek, Special Edition Issues 2010)

© 2010 62


SCM operational performance per country– per country

Cost of Goods Sold (COGS)

80%

90% 79%83% 81% 82% 85%

The materials cost used in creating the goods along with the direct labor20%

30%

40%

50%

60%

70%

80%

50%

66% 66%60%

65%Median

Best-in-class (BIC)

the goods along with the direct labor costs used to produce the good does not differ a lot for the five countries.

The gap between medium and BIC performance is not very large. It h th t t i t d t f

0%

10%

20%

Operating Expensesshows that trying to reduce cost from materials cost and direct labor will be challenging.

12.0%

14.0%

16.0%

11.7%

13.8% 14.0%

15.9%

10 0%

Operating expenses in Singapore is highest among the five SEA countries, while the lowest in Thailand.

BIC i ’ ti0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0% 10.0%

3.7%2.3% 3.0%

6.1%

2.5%

BIC companies’ operating expenses are almost one quarter of the medium companies’, which indicate a significant potential space for operating expense reduction.

© 2010 63


SCM operational performance per country


– per country

80 73 7466 62

67

0

20

40

60

66 62

16

3 Median

Best in class (BIC)

-60

-40

-20

0-4

-60

-5Best-in-class (BIC)

-80

The gaps between median and BIC performers for all the five countries are quite large. BIC companies are able to limit their cash-to-cash cycle time to less than 10 days.

Averagely, Singapore companies has the shortest cash-to-cash cycle time. They are more efficient in using working capitals.

Companies of Malaysia demonstrate longer cash-to-cash cycle time, p y g ythey need to manage the financial flows from suppliers and customers better to reduce the liquidity needs.

Also note that Best-in-class companies in Philippines give an extremely good cash-to-cash cycle time performance (-60 days). However, it will be shown later that these BIC companies reduce the cash-to-cash cycle time

© 2010 64

shown later that these BIC companies reduce the cash to cash cycle time mainly by not paying for purchases immediately (using trade credit), so that the companies reduce the liquidity needs.


SCM operational performance per co ntr

Days of Inventory

- per country


20

30

40

50

60

7067

6166

5963

30

16

29

21 21 30

40

50

60

70

80

47

60

42

71

45

15

24 22Median

Best-in-class (BIC)

0

10

20 16

0

10

20 1511 13

( )

160 141

Days of Payables Outstanding Singapore companies are moreefficient in using working capitalbecause: 1) they are able to sell theproducts fast; and 2) not paying the

li i di t l Th b t

20406080

100120140

43 47 43

76

41

91 95

124

88

suppliers immediately. The bestpractice for days of payableoutstanding should be around 45-60days, however, the medium days ofpayable outstanding of Singaporecompanies is 76 days, largely exceed

0 this range.

Philippines companies reduce theircash-to-cash cycle time largely by 1)maximizing the time to paying thesupplier; and 2) minimize the time of

© 2010 65

pp ; )receiving payment from customers.This may affect overall supply chainefficiency of company, and is not thebest practice.


SCM operational performance per country


– per country

60.0% 55.0%Median

10 0%

20.0%

30.0%

40.0%

50.0%

16.7%11.0%

6.6% 9.1% 10.1%

28.5%

18.2%

30.2%27.3%

Median

Best-in-class (BIC)

Best-in-class operating income and

0.0%

10.0% p gsales growth rate are generally around 3 times higher than medium values. It indicates a big gap for improvement.

Indonesian companies have the highest operating income as well as

30.0%25.2%

Operating Income

highest operating income as well as largest sales growth. BIC sales growth is 55% which is about double of other countries’ BIC growth rate.

Philippines companies show lowest growth rate with a medium of 6 6%

5.0%

10.0%

15.0%

20.0%

25.0%

6.9% 5.6%3.2% 3.6% 4.5%

25.2%

16.9% 16.2%

11.6%

17.2%

growth rate with a medium of 6.6%.

Medium sales growth rates of Malaysia, Singapore and Thailand companies are all around 10%, and BIC all around 30%.

0.0%

© 2010 66


Financial performance per country– per country

Assets Turns

12.0014.0016.00

15.08

8 529.72 9.65

Median

Best-in-class (BIC)

0.002.004.006.008.00

10.00

2.05 1.86 1.71 2.30 2.32

8.52

5.93 Averagely, Thailand companies were doing the best financially in 2008, with the medium asset turns, net profit and ROA all the highest among

Net Profit

20 0%19.3%

15 5%

the five countries, meanwhile the BIC values rank the 2nd only to Indonesia. This is due to the lowest operating expenses, fairly good inventory and cash flow management, moderate

0.0%

5.0%

10.0%

15.0%

20.0%

2.8% 3.8% 2.5% 3.3% 4.1%

15.5%12.7%

9.9%

14.9%g ,

sales growth rate and operating income.

Some Indonesian companies are doing extremely well financially which makes

Return on Assets

25 0%23.0%

Indonesia ranking 1st in BIC asset turns, net profit and ROA. Also note that they have extremely large sales growth which probably be the main reason.

0.0%5.0%

10.0%15.0%20.0%25.0%

3.6% 4.0% 2.3% 4.4%6.9%

13.5%9.3% 11.2%

14.8%

reason.

With lowest asset turns and ROA, Philippines companies did not perform well financially in 2008. Note that, as mentioned before they have poor sales

© 2010 68

before, they have poor sales growth and slow payment to suppliers, which imply the underlying problems.


Appendicespp

Appendices

Appendix A: Benchmarking methodology: Calculation of financial metrics

Appendix B: Benchmarking methodology: Calculation of SCM operational metrics

Appendix C: Benchmarking methodology: Industry group and sector classification

© 2010 69


Appendix A: Benchmarking methodologyCalculation of SCM operational metricsCalculation of SCM operational metrics

SCOR MetricsThe metrics used in the study arebased on the Supply Chain Council’sSupply Chain Operations Reference-

Perfect Order fulfillment

Order fulfillment cycle time[Sum actual cycle times for all orders shipped]

[number of perfect orders] / [total number of orders received] result = percentage

Supply Chain Operations Referencemodel (SCOR) version 9.0. Thesemetrics allow companies to measurethemselves and compare them withother companies using well definedcross-functional, process-based KPIsthat are internationally recognized.

Cost of Goods Sold:

[ y pp ]/ [total number of orders shipped] result =time (in days)

[total annual cost of goods sold] / [total grossannual sales] result = percentage

For more information on the SupplyChain Council and SCOR, please visitwww.supply-chain.org

This study is based on the newSCOR version 9.0 metrics. However,

h till i l d d ‘d li

Total SCM cost:

Days of Sales Outstanding:

[sum of supply chain related costs for MIS,finance, planning, inventory carrying, materialacquisition and order management] / [total grossannual sales] result = percentage

[5 point annual average of gross accountswe have still included ‘deliveryperformance’ which is a SCORversion 6.1 metric, for thosecompanies who have difficultiesmeasuring perfect order fulfillment.This metric captures the same kind ofperformance (supply chain reliability)

Inventory Days of Supply:

D f P bl O t t di

[5 point annual average of gross value ofinventory at standard cost] / [annual cost ofgoods sold (COGS) / 365] result = time (indays)

receivable (AR)] / [total gross annual sales /365] result = time (in days)

but in a less stringent way.

Many participating companies found itdifficult to capture some of the newlydefined metrics in version 9.0 such assupply flexibility and adaptability, andreturn on supply chain assets. Based

Days of Payables Outstanding:

Cash-to-Cash Cycle Time:

[inventory days of supply + days of sales

[5 point annual average of gross accountspayable (AP)] / [total gross annual materialpurchases / 365] result = time (in days)

return on supply chain assets. Basedon the data provided to us it possibleto show results for the followingmetrics:

Delivery performance (to commitdate):

Return on supply chain assets

Return on Working Capital

outstanding – days of payables outstanding] result = time (in days)

[Supply chain revenue – Cost of goods sold – totalscm cost] / [Total supply chain fixed assets] result= percentage

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Return on Working Capital[number of orders delivered on time and in full ] / [total number of orders received] result = percentage

(Supply Chain Revenue – COGS – Supply ChainManagement Costs) / (Inventory + AccountsReceivable – Accounts Payable) result =percentage


Appendix B: Benchmarking methodology Calculation of financial metricsCalculation of financial metrics

Financial MetricsThe financial metrics used in thestudy have been chosen by iCognitiveand are commonly used metrics to

Net profit (after tax) : [net profit after tax] / [total gross annualsales] result = percentage

and are commonly used metrics tocapture a company’s financialperformance. These metrics allowcompanies to measure themselvesand compare them with othercompanies.

This study offers companies to

Sales growth :

Asset turns :

Compound annual growth rate over the last 5years result = percentage

This study offers companies toassess their financial performance on5 key financial metrics. Note thatasset turns was formerly a SCORlevel metric in SCOR version 6.1 andolder.

P ti i ti i f t

Return on Assets

[total gross annual sales] / [total net assets] result = turns per year

[net profit] / [total asset] result =percentage

Participating companies are free tosubmit only those metrics that theyfind relevant or, for which they areable to gather the necessary data.Most participating companiesprovided us with all financial metricsresults. This made it possible to showresults for all metrics:

Operating income:[operating income] / [total gross annual sales] result = percentage

Operating expenses:[operating expenses] / [total gross annual sales] result = percentage

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Appendix C: Benchmarking methodology Industry group and sector classificationIndustry group and sector classification

Industry Group Industry Sector

Apparel, footwear &

luxury goodsApparel

Chemicals

Commodity Chemicals

Fertilizers & Agricultural

Chemicals

Industrial

Automotive

Construction Materials

Electrical Equipment

Industrial Gases

Pharmaceuticals

Specialty Chemicals

Consumer Products Consumer Electronics

Household Products

Machinery

Packaging Products

Paper Products

Precision EngineeringHousehold Products

Personal Products

Electronics

Computers & Peripherals

Electronic Components

Electronic Equipment &

Instruments

Steel & Aluminium

Logistics Distributors

Third party logistics providers

Oil & Gas Exploration & Production

R fi i & T t tiInstruments

EMS

Semiconductor Equipment

& Products

Food, beverages &

b

Agricultural Products

Refining & Transportation

Retail

Apparel Retail

Computer & Electronics

Retail

Department storestobacco Beverages

Food Products

Tobacco

General Merchandise Stores

Grocery Retail

Specialty Stores

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In order to classify the various industry groups and sectors, we use the Global Industry Classification Standard (GICS) from Standard & Poor and MSCI.


Contact Us

iCognitive track record

• Facilitated the launch of the Southeast Asia Chapter of the Supply Chain Council end of1999.• Sole provider of SCOR workshops in Southeast Asia as a result of employing the onlySupply Chain Council-certified SCOR instructor in the region: Trained over 2000 supply chainprofessionals in SCOR, from 180 different companies.• Launched in 2000 the first Benchmark study on SCOR metrics in Southeast Asia attractingy g125 participating companies. The latest study of 2009 includes results from 330 participantsand expands the coverage from supply chain performance to overall financial performance aswell.• Recipient of the 2008 SIMTech Award-for-Partners’ appreciation for 15 years of closecollaboration between iCognitive and SIMTech.• In cooperation with our client British American Tobacco (BAT), winner of the SupplyOperational Excellence Award and the Global SCOR Award, by the Supply Chain Council.Operational Excellence Award and the Global SCOR Award, by the Supply Chain Council.

AMR ranks iCognitive as one of the 6 topbenchmarking companies in the world

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Contact UsInterpretation of results

iCognitive can assist your company to customize your benchmarking and interpret the results. Our business consultants offer in-depth knowledge of industry performance levels and industry best practices, and can assist your company to identify opportunities for improvements.

For more information, please contact:

Mr. John Paul, DirectorTelephone: (+65) 6325 2811 Email: [email protected]

Mr Luc Kremers Senior Supply Chain consultantMr. Luc Kremers, Senior Supply Chain consultantTelephone: (+65) 6325 2813 Email: [email protected]

Ms. Leila Du, Benchmarking AdvisorTelephone: (+65) 6325 2832Email: [email protected]

iCognitive Singapore 13 Ann Siang RoadSingapore 069693

Fax: (+65) 6220 0690

iCognitive Declaration:

All the ranking results presented in this report are based on companies included in thisAll the ranking results presented in this report are based on companies included in thisbenchmark study. Due to limited sample size, it may happen that your company has betterperformance than the number one company presented in this report.

Please contact us if there is any enquiries about the results. We could also assist yourcompany to obtain your own ranking results compared to your competitors in the industrysector, and to perform the gap analysis.

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