APICS CEO Abe Eshkenazi CSCP, CPA, CAE -
January 27, 2012
Throughout the last week, the number of news articles covering Asia has been striking. The New York Times and the Atlantic each published articles exploring the various reasons Apple and its suppliers are bullish on China as a manufacturing hub for iPhones. However, the Economist is unimpressed with Asian innovation, even though Asian countries are spending more on research and development. And the Wall Street Journal reports that last year's natural disasters have hastened Japan's move into a negative trade balance.
Asia, like the Americas, includes economies at various levels of development. As mature economies, South Korea and Japan are in a decidedly different place than China. Yet, due to their proximity, all three have contributed to making Asia the hub for the electronic industry and its supporting supply chains. In their article, "How the US Lost Out on iPhone Work," writers Charles Duhigg and Keith Bradsher relay comments from Tim Cook, Apple CEO and former head of operations: "Factories in Asia 'can scale up and down faster' and 'Asian supply chains have surpassed what's in the US.' The result is that 'we can't compete at this point,' the executive said."
Access to an incredibly large, relatively cheap, and immediately mobilized workforce is one of the reasons China excels in drawing manufacturing operations from all over the world. But as the Atlantic's Jordan Weissmann points out, "The country also excels at educating middle-skill 'industrial engineers.'" The education these graduates receive is specific to the manufacturing functions they are being trained by the state to perform. There is no question that China is training and leveraging its workforce to dominate the electronics supply chain.
The rising tide
China is becoming the new anchor for manufacturing in Asia, a role previously played by Japan. While Japan distinguished itself based on the manufacturing process, China is leveraging its most important asset__its available and agile workforce. In both cases, it must be pointed out that government and industry aligned to promote manufacturing.
China's momentum is benefitting other Asian countries, as well. As the Times article describes, companies such as Corning are moving operations to Asia to be close to manufacturing customers located in Taiwan, Korea, Japan, and__of course__China. Corning's decision to locate in Asia is a lean supply chain strategy that eliminates excess pipeline inventory, increases speed to market, reduces operational costs, and minimizes risk. As Corning demonstrates, the benefits of a lean supply chain extend across national boundaries within a region.
Supply chain and operations management professionals are integral to the key decisions regarding where to locate operations to better serve markets and increase efficiency. Therefore, it is important that you continually enhance your global ability and connections with other professionals throughout the world. Your APICS affiliation can help you do just that. This week, APICS launched a new website at apics.org. One of the most significant new features is the Supply Chain Channel, a social networking site where our international community of members can meet to discuss issues of shared interest. Included is an Asian community. Or, if you prefer face-to-face interactions, we encourage you to attend the 2012 APICS Asia Supply Chain & Operations conferences in Seoul (April 2-3) or Shanghai (April 5-6). We hope to see you there.
In other news
How APICS Operations Management Now relates to you
- To what degree is Asia part of your organization's supply chain? Is Asia becoming more or less a part of your supply chain?
- How do supply chains in Asia differ from those in other parts of the world?
- What do you think of Tim Cook's assertion that US supply chains "can't compete" with those in Asia?