Singapore Has Long Built Its Economy on Essay

Excerpt from Essay :

Singapore has long built its economy on its strategic positioning for trade. The country is now home to the world's second-largest container port according to the World Shipping Council (2013). The country's position as a leading trade makes it a natural place to find solutions to global supply chain issues, and has also encouraged a significant amount of foreign direct investment in the country. Foreign companies have set up shop in Singapore, often in either services or retail. This paper will analyze some of the issues that foreign firms dealing in Singapore have with respect to global supply chain management.

Starbucks

Starbucks has a significant retail presence in Singapore, but it also benefits from the country's geographic position in a couple of ways. The first is that Singapore is situated in the heart of a fertile coffee-growing region -- critical islands like Java, Sumatra and New Guinea are nearby, as are high volume growing regions like Vietnam. Starbucks has set up a regional distribution center in Singapore in order to manage the flow of goods and services throughout Asia, both in terms of raw materials and finished goods.

Changi Airport Group (2013) notes that Starbucks is one of many Western countries to have such a regional distribution center. With stores throughout Southeast Asia, the coffee company can organize its goods in Singapore for onward distribution, either overland to Malaysia and Thailand, or over sea to Indonesia and points beyond. For this business, Singapore competes with other hubs like Kuala Lumpur/Port Klang, Jakarta, Ho Chi Minh City and more. There are specific advantages that Singapore has that make it an ideal location for a Starbucks regional distribution center. The first is the strong retail presence that Singapore has. However, the country's infrastructure also gives it a competitive advantage. With the largest port, Singapore has excellent water-based supply chain infrastructure, but it also has Changi Airport, which is critical to the Starbucks operation. The company's core product -- roasted coffee, is somewhat time-sensitive, especially in tropical areas. Therefore, the ability to ship using air freight is critical to the company's success. With good overland connections to the company's other major Southeast Asian markets, and air connections elsewhere such as Philippines or Hong Kong, Singapore has proven a nature base.

Thus for Starbucks, transportation infrastructure is a key deciding factor in using Singapore as its base in the region.

Case Study #2: FedEx.

Singapore in general and Changi Airport in particular have been able to attract a number of the world's leading logistics firms through a combination of world class infrastructure, a good business environment and free trade zones. The FedEx hub is to be the company's second-largest in Asia-Pacific, was opened in 2011, and is in the Airport Logistics Park in the Changi free trade zone. By encouraging companies to use Singapore as a logistics hub, Singapore is positioning itself as a leader in supply chain solutions (LIA, 2011)

FedEx has already developed strong ties with Singapore as a major supply chain solutions company. For example, the company has established in the nation its South Pacific headquarters, its Asia Pacific Data Centre and its Asia Pacific Financial Service Centre. These decisions all reflect the strong positioning of Singapore in the region for supply chain solutions. The country has fairly open banking and has a very low rate of corruption. That makes Singapore a natural for handling the financing side of supply chain management. In addition, the high level of technological development makes Singapore a positive place for the establishment of a Data Centre as well.

FedEx joins a long list of companies in the global supply chain industry that have established in Singapore. Their customers encompass a very wide range of businesses, so Singapore becomes the go-to solution centre for their customers as well. The ease of moving goods in and out of Singapore -- and the Changi free trade zone in particular -- has encouraged a number of supply chain providers to use the country. What this means for business is a company like Apple might otherwise have chosen a different country for its supply chain needs, but its strong relationship with FedEx means that it, too, will rely on Singapore for moving goods in and out of Southeast Asia, and Asia Pacific in general.

Case Study: IBM

IBM is another company that uses Singapore as a base for dealing with supply chain issues. The company does this on a number of fronts. The first is that it has a strong team located in Singapore to assist with supply chain problems. This team has capabilities across the entire supply chain management spectrum. In addition, IBM focuses on issues like cloud computing, e-commerce and mobile communications solutions as well. The company does this because Singapore is becoming a hub for dealing with a number of these issues.

The country's long-established focus on supply chain management has given it a significant amount of top talent that has meant that numerous companies who performed supply chain management service have set up operations in Singapore. These companies, like, IBM, provide a wide range of services. They can often work with their clients to outsource. Many companies outsource cloud computing to Singapore, which has a competitive advantage in supply chain management. This allows firms from all side of the supply chain spectrum to rely on Singapore.

Outsourcing is a critical source of growth for Singapore. The country has fairly high wages in line with Western standards, so outsourcing something like cloud computing to Singapore is not done for the purposes of achieving cost advantage. Instead, it is done because Singapore has built up its competencies in specific areas, and is able to compete on a platform of high quality that other nations in the region cannot match. Even Western firms, from countries with high levels of capability in something like cloud computing, are choosing Singapore because the nation has positioned itself as a world leader, with a very high market penetration for cloud computing (Yap, 2012).

Case Study: Robert Walters

Robert Walters is a consulting firm that has operations in Singapore. This company provides supply chain solutions, outsourcing and other related services. The company has chosen Singapore as a regional hub again because of the country's high level of competency, strong business-friendly environment and tradition of supply chain excellence. Speirs (2012) outlines some of the attributes that are found in the industry in Singapore.

These are a high level of regional exposure -- Singapore has long been a hub in the region, and it has ties throughout. The population of Singapore is especially conducive to this, with the people being of Indian, Chinese, Malay and European descent. As such, Singaporeans have links both east and west that help to find new sources of goods and services. Countries in the region look up to Singapore as well, given the country's historic status as the strongest economy in the region.

Green Supply Chain

The idea of the green supply chain has grown in prominence lately. Consumers are beginning to demand products that are ethically supplied, or that have a minimal negative impact on the environment. This could even include questions about the manufacturing processes and about the environmental credentials of the supply chain in general (Murray, 2013).

To this point, Singapore has not undertaken strong efforts to adhere to green supply chain principles, however there have been some efforts to educate people and businesses in Singapore about the idea. There have also been success stories with respect to green supply chain solutions in the nation. A partnership between logistics provider DHL and the Logistics Institute Asia Pacific to found the Sustainable Supply Chain Centre of Asia-Pacific (SSCCAP). This initiative is a think tank to develop better ideas with respect to supply chain management, including a committee to think about issues, research programs and also educational programs that will be taken by people in the industry (MHL, 2010).

Over time, having an institute such as this will allow Singapore to improve its performance with respect to green supply chain management. Education is the key to initiatives like this, including awareness of the different issues involved in green supply chain, and how different elements of the logistics industry within Singapore can work to meet customer needs in this emerging field.

Analysis

Companies that operate in Singapore seldom have supply chain issues. There are a number of reasons for this. As the major port and airport in the region, goods are more widely available in Singapore than they area in other countries. In addition, Singapore's high level of wealth and developed retail sector means that many companies have a presence in the country -- finding the right contacts is easy. For companies in retail, like Starbucks, this also affords them the opportunity to set up their regional warehouse in one of their largest markets.

Firms also have few supply chain problems in Singapore because the nation has positioned itself as a leader in supply chain solutions. With its free trade zones,…

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