Singapore's Logistic and Suply Chain

Table of Contents

Executive Summary        

Introduction        

Situational Analysis        

Singapore’s Logistics and Supply Chain Sector        

Contributions of the sector to the national economy        

Challenges facing at present and in the future        

Strategic Planning in the Present and Future        

Conclusion        

References        

Executive Summary

The main purpose of this report is to analysis the logistics and supply chain sector in Singapore. Logistics and supply chain is the starting, managing and controlling the flow of raw materials to finished goods. Global business is becoming ever more reliant on logistics and supply chain management and Singapore is the leading logistics and supply chain hub in Asia. Due to the significant contributions to the national economy, the logistics and supply chain sector has become the pillar for Singapore’s economy. The contributions are mainly reflected in job creation, income generation and trades promotion. However this sector also faces challenges or threats at present and in the future, mainly reflected in shortage of work force, dependency of regional or global economy, competition from other regional logistics hub, digital media revolution, cyber-crime, government regulation and deregulation, cultural change, terrorism and natural disaster etc. To address these challenges/threats, approaches could be training and education, government policies, innovation, digital participation project, security and regulation and global innovation etc. overall, the sector in Singapore will have a good prospect in the future.

Introduction

Logistics is the management of planning, implementing and controlling procedures for effective storage and transportation of goods from origin to the consumption in order to meet the customer’s needs. Supply Chain is the procedure from raw materials to final customer using the finished goods including conversion sourcing and procurement and all logistics management activities and it links many related companies or individuals together (Vitasek, 2013). At present logistics and supply chain sector has become the important component to Singapore’s economy. According to Department of Statistic & SPRING Singapore (2013), in 2013 it contributes 5.2% to the GDP which added value for 18.4 billion dollars and there are approximately 7606 related logistics establishments. Additionally, as logistics and supply chain sector is a key powerroom to other industries, it also contributes to increase the productivity in both the manufacturing and services sectors. Figure 1 shows the statistical data of logistics industry from 2009~2013 (Department of Statistic & SPRING Singapore, 2013). Figure 2 shows the Share of GDP by Industry in Singapore (Department of Statistic Singapore., 2015a). From the figure, it is evident that logistics and supply chain sector play a critical role in Singapore’s GDP constantly. So it is the pillar for Singapore’s economy.

[pic 1]

Figure 1. Statistical data of logistics industry from 2009~2013 in Singapore. Data from Department of Statistic & SPRING Singapore (2013).

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Figure 2. Share of GDP by Industry in Singapore. Data from Department of Statistic Singapore (2015a).

Situational Analysis

Singapore’s Logistics and Supply Chain Sector

The World Bank ranked Singapore as the leading logistics and supply chain hub renowned for its efficient customs excellent connectivity and world-class port infrastructure. Coupled with Singapore’s strategic location (at the nexus of major shipping lanes and in the center of Southeast Asia), well-established physical, financial stability and IT infrastructure, Singapore has made it a preferred logistics and supply chain management conduit and hub for the world trade. Today 20 of the top 25 global third-party logistics (3PLs) are based here, including DHL, FedEx, TNT, Agility, UPS, Toll Logistics, Nippon Express and NYK Logistics. The country is also acknowledged as the world’s busiest transshipments hub, transporting about 1/7 of the world’s container transshipments (31.24×106 TEUs) in 2013 and it links 200 shipping lines between 600 ports in 123 countries (Wong, 2013).

Contributions of the sector to the national economy

As logistics and supply chain sector is the pillar for Singapore economy, it contributes a lot to the national economy.

1. Every year logistics and supply chain sector is developing many employment opportunities in Singapore. According to “Singapore in Figures 2015”, there are 192.6×103 and 188.9×103 employees in 2013 and 2014 respectively in the industry of Transportation & Storage which is 8.9% and 9.0% of the labor force (Department of Statistic Singapore, 2015b). Additionally, the sector also create indirect jobs. For example, UPS, the worldwide logistics company, direct employs more than 50,000 workers and indirect employs for another 90,000 (Sheffi, 2012).

2. The sector is an important economic growth area and generate economy income in Singapore. In 2013 it contributes 5.2% to the GDP which added value for 18.4 billion dollars (Department of Statistic & SPRING Singapore, 2013).  

3. By promoting trades, it has direct impact on other industries. With an efficient logistics and supply chain system, flow of goods transportation increases, and it will reduce operation cost and improve the level of service. A high transportation capability will enable enterprise to operate larger market. The high level of service will attracts more distribution and logistics operations, result in generates more freight movements and attracts more carriers (Global Agenda Council, 2013). So companies in Singapore can work at a lower operating costs and higher productivity with the help from logistics and supply chain sector. Been as the logistics hub in Asia, it contributes to the efficiency of Asia and even global supply chains. In this way, the Asia/global trade flows and international trade is enhanced.

Challenges facing at present and in the future

The logistics and supply chain sector also faces challenges and threats. Firstly, globalization is the inevitable trend in this era, and it has been a major impetus for an organization to further improve its strategies in order to enhance capability to reach globally and develop products to meet international market needs (Kumar et al., 2012). It request logistics and supply chain sector in Singapore to come up with a wider market and enhance the connectivity with other nations. Secondly, due to Singapore is a relatively small country, with a limited scale and population. The leading role in logistics and supply chain hub is facing competitions from neighboring regions such as Shanghai which is developing its logistics industry in a high speed. Thirdly, as this sector is closely related to international trade, it is sensitive to global economy change. Fourthly, as the international trade is now stretching to various countries/regions, the sector will face challenges of geographical and cultural differences. There is obviously no “one-size-fits-all” approach that fully address all the likely situations. This brings difficulties for the logistics companies to adapt different culture, laws and regulations in different countries/regions. Fifthly, the shortage of work force including skilled and unskilled is becoming a constraint of the development of the sector. Sixthly, as the government play a dominated role in the regulation of the industries, the development of logistics and supply chain sector is deeply influenced by the policy. Seventhly, as this century has evolved to digital era, the sector is facing information reform and the way they start, manage, and control the procedure logistics and supply chain will be significantly changed. Meanwhile, the possibility of cyber-crime is also a potential threat to the sector. The attack may result in consequences ranging from the inconvenient to the catastrophic. Finally, terrorism such as piracy, natural disaster are also the potential risk factor.