At Supply Chain Game Changer we believe in sharing experiences and expertise from people in every industry and from across the globe. As such we have introduced our “Seasoned Leadership in Action” Interview series at Supply Chain Game Changer.
This interview is with Leonard Han. I have had the tremendous opportunity of working with Leonard. He is truly a seasoned leader having run businesses across Asia. Leonard very easily deals with people across all countries and cultures. He is very pragmatic and knows how to get things done to meet all business and customer challenges while at the same time earning the respect of all those who deal with him.
Leonard contributed an article for us last year on The Humble Label in Supply Chain – Too many of them are in use! The article was extremely insightful and proved to be phenomenally popular. It reflects Leonard’s ability to observe a situation and translate that into a vision and a call to action which others will readily rally around.
Thank you Leonard for your friendship and taking the time to share your experiences and expertise with us.
Here is out interview with a true Industry leader, Leonard Han:
Tell our readers a little about your background and experience
My work with Supply Chain started in 1983 when it was known as Materials Management and Logistics, it was a staff function in support of Operations to ensure that there was no interruption to supply and to maximise efficiency.
It was with the use of inventory models such as EOQ, Safety Stock, Fixed Lead-time and Demand Forecasting to ensure that Operations is not interrupted. Then came MRP which balanced supply to demand through the use of algorithms. I had the opportunity to participate in the implementation and use of MRP systems that grew to MRPII and DRP expanding the use of algorithms.
I moved on into many roles within the field of Supply Chain ending as Vice President of Operations for a Supply Chain company with experience working in Taiwan and China.
What are some of your greatest achievements in the Supply Chain and in Business?
I had the opportunity to be in China in the 1990s till the early 2000s to see the expansion of manufacturing of Electronics and Consumer goods. It was in China that a Supply Chain model was put in place that took advantage of flexible low-cost manufacturing capable of meeting high volume demands and customizing the products to meet the particularities of the markets such as languages, safety standards, consumers preferences, etc.
The products were customized and shipped direct to store or consumers from China in what is now known as B2B and B2C models. However, there are constraints namely;
- Must have high volume demand preferably consumer products
- Consumers demand customization or differentiation as it is difficult to “force” differentiation
- Products have to be lightweight as they have to be air-freighted
This was done during the late 1990s and early 2000s before the proliferation of eCommerce.
How has the Supply Chain changed over the course of your career?
The term Supply Chain was not used when I started in this field of work. It was to support Operations to prevent interruption of supply and to maximise efficiency through the management of supply.
Hence it was the management of Supply; demand was assumed fixed and there was little customization of products. Now it is the management of demand and customization of products. Suppliers had fixed lead-times and customers did not assume constant availability of supply. Now availability of supply is expected.
Manufacturing was done based on economies of scale hence EOQs and large lot sizes were the norms which are mostly non-existent now. To summarise the main difference in the past was management of supply to focus on availability to ensure production efficiency without interruption to meet delivery lead-times. Now it is the management of demand to focus on availability to ensure support for consumer purchases within shortest lead-times.
What are some of the lessons you learned in your career that you would like to share for others to learn from?
Major lessons learned were the constant changing Supply Chain models and the expanding roles of companies moving further into Supply Chain. OEMs are becoming fulfilment houses and/or Supply Chain service providers (HP and IBM). Shippers are becoming Supply Chain service providers (Maersk adding Damco to its services). Traditional retailers are becoming virtual retailers and vice versa (Amazon buying Whole Foods). Airlines are becoming retailers and Supply Chain service providers (Hainan Airlines buying Ingram Micro and CWT).
Such transformations were seldom heard of and not welcomed. For example, when Fedex went into freight forwarding it almost caused a revolt by freight forwarders refusing to use Fedex planes. Fedex prevailed as a trend setter and grew as a result of moving into bulk freight.
What challenges facing the world are important to you?
The trends and focus on mass customization and speed of availability sacrificing efficiency and waste are major concerns. Ecommerce started as a great thing bringing availability and low-cost products (taking out the middle man) to consumers is now the main buying model.
The waste created due to low volume shipping, stock of products in forward stocking locations (FSLs) which result in duplication of inventory. Not to mention the amount of packaging waste which are mostly not reused. It is infuriating to read about on-line retailers wanting to change the brown box to more attractive packaging for the purpose of differentiation.
We have to look at how to reduce waste and inefficiencies in this trend of mass customization and speed of availability or else it will still be a model where we take away malls but replace them with forward stock locations and return goods locations opened 24/7, though less attractively decorated and costly.
We have to address reduction of the use of packaging or we will have more packaging as compared to products purchased from malls.
What is the role of Supply Chain and Change Leadership in addressing these challenges?
Supply Chain leadership and Business leaders are beginning to put more emphasis into looking at inefficiencies of Supply Chains. The need to expand and service consumers with a virtual availability model likened to a mall is getting to be costly. Other models are being worked on like:
- The use of POP boxes like the days when you go to the post office to get your parcel except now POP boxes are located few blocks away
- More use of data to predict the buying patterns and habits of the consumer
- Planning of forward stocking locations (FSLs) for consumer goods. In the past FSLs were mostly for repairs and spares to ensure operational up-time
- More efficient routing to move products from point of Supply to point of Demand to shorten the route. Very bold alternatives are being looked at. When the rail network to move products from China to Europe was presented it was an eye opener as it a much cheaper option compared to air-freight. Now more options are being studied.
Policy makers need feedback from Businesses to ensure viability of the options.
What are you working on these days?
I am now working with companies on Supply Chain models mostly for Asia focusing on supplies from China which is still the major point of supply to markets or point of demand in Asia.
What advice would you give people who have a career in, or who are considering joining, the Supply Chain?
Supply Chain used to be a supporting role for industries to ensure operational efficiencies. Now it is no longer the supporting role it is the main role in businesses.
Supply Chain roles will continue to evolve with the need to fulfil consumer demand with higher efficiencies. Personnel in Supply Chain must be data savvy, knowing how to turn data into useful information using the information to create Supply Chain models that will increase efficiencies which will be of very high value to companies.
How can people contact you?
I can be contacted through my Linkedin account at https://www.linkedin.com/in/leonard-han
Please see our other blog posts at https://supplychaingamechanger.com.