Background & Objectives
Our client is looking for a senior logistics, shipping, supply chain
consultant who will be in charge of their improvement project.
About the Project
The recent Hub Act in Sri Lanka provides incentives and tax exemptions
for companies that set up logistics hub type of operations. In this context,
our client wants to set up a business under the above law in order to deliver
higher value to customers.
Initial analysis was carried out in order to identify possible benefits
in routes of Speed, Inventory and cost perspectives. Outcome is on positive
side even though there are some challenges that are required to address. Key
findings of the initial studies are as follows,
• The recent Hub Act in Sri Lanka
encourages the development of Colombo into a major logistics hub and
free port in Asia
• Colombo is a cost-competitive
location on the core Trans-Atlantic shipping lanes making it a very
good transshipment hub. Our client is looking at this as an opportunity to
increase the competitive advantage for our key customers by addressing their
future supply chain needs
• Our client understands that global
Apparel supply chain concerns are on account of increasing
complexity, spiraling costs & rapidly changing designs
• A Sri Lanka hub will
enable the creation of a centrally located & globally fungible inventory. Such
a hub can potentially cater majority of global apparel flows –
primarily for US and European markets
• Such a hub will allow greater
direct dispatches (by 15 % points) to retailers, consolidate safety stock (by
~40%) for in-line and material staging orders and reduce the
planning complexity for demand pull orders
• This will lead to a reduction of customer’s
inventory (in US and Europe) by 20% - Inventory in US
reduces by 60%, of which 40% shifts to Sri Lanka
• Supply chain cost reduces
by 2-3% - warehouse cost goes down by 6-10% and value added services
costs go down by 25%) without adversely impacting response times (2-3 days)
This concept was presented to key customers of our client and they are
very keen to explore the opportunities further.
What Our Client Wants from Consultants
Currently our client is looking into diversifying operations and
venturing into supply chain network planning in order to deliver higher value
to customers. Our client has 3 key value drivers that they are focusing on in
terms of our logistics model.
1. Customer Value Focus
§ How can our client generate value for our key customers through
restructuring their logistics model?
2. Internal competitiveness
§ How can our client leverage to streamline current logistic
models to add value internally?
3. Value through Diversification
§ How can our client utilize the external forces such as the new
legislations and Sri Lanka’s strategic positioning to offer value current
customers as well as create new value streams?