Kuehne & Nagel in the Asia Pacific
Prepared by: Satya Jagannathan KOTHIMANGALAM (G0750279L)
Q 1. How do you see KN’s environment changing?
The changes in the environment could be classified into the following –
Regulatory changes: The formation of trade barrier-free European Union meant lower Customs Clearance (CC) revenue for Freight Forwarding (FF) companies. It used to form 60% of an FF company’s business and now was reduced considerably. Hence, companies like KN had to look for other avenues to make money.
Changes in customer demand: Companies wanted to shorten their product cycles, squeeze out inefficiencies and make SCM their competitive advantage. They wanted companies which were transportation and distribution suppliers with IT capabilities and well-trained professionals. Since the requirements of these companies were very varied and companies had different bottlenecks, they would require specialised, custom services.
Rise in global SCM spending: The world merchandise trade was growing by the rate of 12% annually and for MNCs, it was getting critical to manage their supply chains efficiently. The need of global SCM grew with MNCs doing business worldwide, the cultural differences that come with it and the IT logistical inefficiencies. Hence, the global spending on SCM was growing.
Rise of new markets: The European markets were well-developed and saturated, while there was plenty of room for growth in Asia-Pacific (APAC) region. More and more MNCs were moving to APAC and required global SCM capabilities. This was limited by infrastructure and logistics in some parts of Asia, but it appeared very likely that the industry would experience high growth in Asia.
Q2. Given such changes in the industry, what overall positioning should KN seek or what should KN do?
My suggestion to KN would be to become a specialist SCM consulting firm, with