Intelligent Logistics Power

The manufacturing economy has been transformed fundamentally, emphasizing more on quality over quantity. How can the logistics industry facilitate and capitalize on this trend?
Logistics in the manufacturing industry

By Eddy Chan, Senior Vice President and Head of China, FedEx Express

Manufacturing is at the core of the real economy of a country and a foundation from which a country can prosper. Take China as an example, the label “Made in China” is well-known and recognized across the world. However, in the international market it is often also associated with words such as “cheap” and “low-end”. The reason for this is quite simple: China’s manufacturing industry has long been giving people the impression of being ‘big’ rather than ‘strong’. Therefore, the Chinese government has set up a goal to transform China from a “big manufacturing country” to a “powerful manufacturing country”.

The structure of the global economy is currently undergoing profound changes which is triggering a new round of technological and industrial revolutions. China’s manufacturing industry now faces the major challenge of improving its international competitiveness and reshaping its international brand image of “Made in China” to bridge a transition from “big” to “strong”. In its 2015 “Made in China 2025” plan, the Chinese government pointed out that it would require technological innovation to promote the fusion of informatization and industrialization to transform “manufacturing” into “intelligent manufacturing”. This is sure to give manufacturing enterprises in China a new lease of life.

Against such a backdrop, new development opportunities are beginning to surface for the logistics industry. At the same time, however, we are faced with an array of new challenges. As logistics service suppliers, we must do our best to act as advisers for manufacturing enterprise supply chains. This includes adapting our services to match the constantly-changing needs of enterprises, and combining new thinking and concepts with practical experience to provide manufacturing enterprises with efficient and reliable logistics solutions.

At the industry level, I believe manufacturing and logistics are inseparable, like the body and wheels of a car. Manufacturing has increasingly higher requirements of logistics, while at the same time, logistics needs to support manufacturing. The two are interdependent. Key links in the transformation of the manufacturing industry are on the horizon, including a new generation of IT and communication technology, intelligent manufacturing equipment, aviation and aerospace equipment, and bio-pharmaceutical and high-performance medical devices. These sectors have been high-growth markets for the logistics industry in recent years. However, we are clearly aware that they have specialized and individualized logistical needs, requiring a comprehensive logistics supply chain solution covering production, warehousing, sorting, packaging, distribution and information processing.

Take the pharmaceutical and medical device industries as examples: as technologies advance, people across the world have increasingly higher demands of healthcare products, accompanying which are increasing logistical needs. However, high standards must be met in the transportation of these products with inherent complexity and variability. Meanwhile, structural changes in the global medicine market and cross-border regulatory variations make market access requirements for medical products vary from country to country. Without experience, a company will find it hard to avoid problems incurred during transportation, customs and other areas when selling products to other countries, which can result in significant losses. Therefore, an international logistics supplier with professional transportation technology and rich experience in agent customs clearance will play an essential role.

With the advent of globalization, SMEs have already become an indispensable part of the world economy. It is estimated that more than 90 percent of the world’s businesses are SMEs and contribute about 50% to world gross value add (GVA)[1]. The transformation of the rapidly developing manufacturing industry will be driven by thriving SMEs. However, SMEs engaged in manufacturing face even bigger challenges as they seek to transform. They must work out how to survive as well as grasp the development opportunities available to them. They must make full use of technological innovation to build their brands and sharpen their competitive edges.

According to a Harris Interactive study commissioned by FedEx, many SMEs especially in APAC have realized their potential to “Go Global” but still face obstacles and lack the support needed to overcome such obstacles. These companies list logistics service suppliers as the most important source of advice for their import and export business because effective logistics and supply chain management can help them lower transportation costs and use warehousing resources more efficiently.

FedEx has decades of experience helping enterprises tap into global trade and take their business international helped them navigate the complex world of international customs regulations on a daily basis. With a global team of over 3,000 staff dealing especially with package customs clearance for clients worldwide, we handle customs declarations for our clients’ goods by preparing all necessary documentation in advance. This helps to ease the process and solve the customs problems of SMEs so they can better expand their business overseas.

We forecast that in future, supply chain demand from manufacturing enterprises will become more diversified, individualized and specialized. FedEx will have an even closer connection with these manufacturing enterprises, which for us represents a great opportunity for growth. We will provide well-planned, reliable, highly efficient and intelligent logistics solutions to support any manufacturing enterprises in their transformation.

[1] The big business of small companies”, ISO, March 4, 2015