BY JAMES A. COOKE, EDITOR AT LARGE
LOGISTICS NETWORK DESIGN
THE VASTNESS OF ASIA MAKES SUPPLY CHAIN OPERATIONS IN THAT
region especially susceptible to disruptions. A 2012 study by the Asian Development
Bank reported that people living in the Asia-Pacific region are 25 times more likely
to be affected by a natural disaster than are residents of Europe or North America.
And it’s not just natural disasters that can impact supply chains in that part of
the world. Geopolitical upheavals, epidemics, currency fluctuations, port delays,
terrorist attacks, and volatile fuel prices can also wreak havoc with Asian supply
chains. Despite those risks, many companies view the Asian market as critical to
their long-term growth. To succeed in that continent’s diverse and far-flung markets, then, they must adopt strategies to confront such challenges.
One of those companies is Diageo plc, the global manufacturer and distributor
of premium spirits, wine, and beer. Serving the Asian market is a complex undertaking for Diageo, which imports more than 60 percent of the product it sells in
Asia from Scotland. That’s because of country-specific differences in duties and
regulations, a huge range of stock-keeping units (SKUs), the perishable nature of
its products, the long leadtimes for transportation, and market demand volatility.
All of those factors can influence inventory, warehousing costs, production flexibility, and customer service.
strategicinsight
How Diageo
reduced risk in Asia
This story first appeared in the
Quarter 2/2014 edition of CSCMP’s
Supply Chain Quarterly, a journal
of thought leadership for the
supply chain management profession
and a sister publication to AGiLE
Business Media’s DC VELOCITY.
Readers can obtain a subscription
by joining the Council of Supply
Chain Management Professionals
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For more information, visit
www.SupplyChainQuarterly.com.
By tailoring its supply chain strategy for specific product segments, the global beverage
company reduced the risk of disruption to its growing Asian business. In the process, it
gained a competitive advantage in this vast and variable market.
