VALUE CHAIN RESEARCH AND GVC Mekong Institute Dr Gautam Dutta Present ed By.
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Transcript of VALUE CHAIN RESEARCH AND GVC Mekong Institute Dr Gautam Dutta Present ed By.
VALUE CHAIN RESEARCH AND GVC
Mekong Institute
Dr Gautam Dutta
Presented By
OUTLINE PRESENTATION
IntroductionObjective Process Outcome Q&A
Value Chain
The term value chain refers to the full range of activities that are required to bring products from conception through different phases of to delivery to the final customers and disposal after use.
A value chain exist when all the actors operate in a way that generates maximization of value across the chain.
Common questions that value chain should reply analysis Who are the actors that participate in
businesses across value chains? Are there actors that coordinate
activities in the overall value chain? What are the contractual arrangements
under which actors buy and sell products? How do actors exchange information and
learn about solutions to improve products and business performance? What technical, business and financial
services are available to support actors in the chain?
How much value do actors add to the product in the different steps in the chain,
what are their costs and how is this value distributed?
What are the power relations in the chain and to what extent do they determine
how economic gains and risks are distributed among chain actors?
What kinds of barriers exist for firms to enter the value chain?
What is the level of competitiveness of firms in the value chain?
What bottlenecks exist and what opportunities are available for development (upgrading) of the value chain?
Which policies and institutions constrain/support chain actors and facilitate value chain development?
Global value chain and cluster linkage
purRaw
cottonSpinnin
g Dying
Knitting
Finishing with
Japanese zipper
EU
Pakistan India
Twain Banglad
esh
Thailand
Selling
Barbie is sold in 140 countries at a rate of two dolls every second.
Barbie's story begins on the outskirts of Los Angeles where Mattel's team of experts on commodity and material prices determine the optimum locations to buy the plastic resins, the cloth, the paper and other materials.
Barbie has never been made in the United States.
The first doll was produced in Japan in 1959,
More than 40% of the dolls are sold overseas, primarily in Europe and Japan.
Taiwan's imported oil--about 32%--comes from Saudi Arabia. Other major sources include Oman (10%), Kuwait (10%), Iran (8%) and the United Arab Emirates (7%).
Most of the moulds themselves, the most expensive item in toy making, come from the U.S. (for Barbie), Japan or Hong Kong.
Pricing
Virtually all the materials used in making Barbie are shipped through Hong Kong and trucked to the Guangdong factories
In most cases, the only things that China supplies are the factory space, labor and electricity.
Pricing: US Retail price: $9.99 Leaving Hong Kong harbor: $2 which
includes :35 cents for labor,65 cents for materials. 80 cents for transportation and overhead, 20 cents profit for the companies that manage the manufacturing process.
Shipping, ground transportation, marketing, wholesale, retail, : $5.99
Approx Mattel profit:$2
Barbie's Sourcing
El Segundo: Mattel Inc. U.S.: Cardboard packaging, paint
pigments, moulds China: Factory space, labor, electricity Saudi Arabia: Oil Hong Kong: Management, shipping Taiwan: Refines oil into ethylene for
plastic pellets for Barbie's body. Japan: Nylon hair
Nike’s Value Chain
In footwear, Nike has been able to develop long-term relations with several large Korean and Taiwanese firms. With some of these firms, Nike designers create and then relay via satellite new footwear designs and styles for upcoming seasons to suppliers, who in turn, develop the prototypes.
• Once these prototypes are approved, these lead suppliers fax the product specifications to their various plants throughout Southeast Asia, where production can take place almost immediately.
•In apparel, given short product cycles and volatile trends, the situation is completely different. Nike works with numerous suppliers, most of whom are also working for other (often competitor) companies.
NIKE’S Sourcing ke
Performing production slicing to identify the best location/ country to undertake each stage of process, adding value along the way & integrating the entire supply chain
Zipper
Assembly
Filler
Label, elastic, studs, toggle and string
Lining
Product Design
ShellBY
X
Cluster linkage with GVC /IPN
Orchestrate & discover value along the supply chain
Consumer Needs
ProductDesign
Product Development
Raw MaterialSourcing
FactorySourcing
ManufacturingControlShipping
Consolidation
ForwarderConsolidation
CustomsClearance
Local ForwardingConsolidation
Wholesaler
Consumer
Li & Fung’s Supply Chain
The Evolution of SCM
Li & Fung
Trading
Li & Fung
Retailing
IDS Group
Li & Fung Group
Export Sourcing Integrated-Distribution
Services
Retailing
Li & Fung Group
• USD14 billion in 2008
• Soft & Hard goods• 40 countries, 70
offices(HKSE#494)
• USD1.7 billion in 2008
• Asian Distribution• Global Logistics
(HKSE#2387) (Privately held)
• USD900 million in 2008
• Toys ‘R Us, Trinity, BLS
• Circle K (HK GEM)