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Our NEDA 3 Regional Director

Severino S. Santos, the Chairman,

Regional Development Council-3

and Governor of Bulacan, Hon.

Wilhelmino M. Sy-Alvarado, the

President and CEO of Clark

International Airport Authority, Atty. Emigdio P. Tanjuatco, the President of

the Philippine Institute for Development Studies, Dr. Gilbert M. Llanto, the

local executives from different LGUS of this region, the officers and staff of

RDC-3, friends, ladies and gentlemen, magandang umaga po sa inyong lahat.

Hayaan nyo rin po na batiin ko na kayo ng Maligayang Pasko.

Alam nyo po, when I received the invitation to speak before you, I did not

hesitate to say yes, dahil malapit po sa aking puso ang inyong rehiyon

sapagkat ang akin pong ina ay nagmula sa lalawigan ng Nueva Ecija at

magpahanggang sa ngayon ay mga mga kapatid ako at kamag-anakan sa

bayan ng Licab, maging sa Zambales at Bataan. At marahil ay hindi lingid sa

inyong kaalaman na sa loob po ng mahabang panahon ang AIR21 at ang Lina

Group of Companies ay nagtaguyod ng cargo at logistics business dito sa

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inyong mga lalawigan...kaya marami po kaming mga kasama sa hanapbuhay

dito sa Central Luzon. Kami din po ay kasama sa mga unang tumugon sa

panawagan na mag-invest sa Subic Bay Freeport Zone at sa Clark Freeport

Zone at masasabi ko po na hindi kami nagkamali when we decided to join the

volunteers in cleaning up the rubbles and ashes left by the Pinatubo eruption

back then. We now have expanded and modernized our warehouse facility in

Clark International Airport and set up a container yard to serve the needs of

shippers in this northern corridor.

It has been 35 years since I put up

my cargo and logistics business

and as I look back, I asked myself

what was I thinking when I started

out. I would have to say, the simplest goal was to start a business that would

provide a higher level of cargo and logistics services at a fair price. We aim to

provide our clients with an accurate cargo and logistics support and process

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and help them to comply with the basic regulatory requirements and

rudiments of import and export transactions.

I had wished to have a cargo and logistics business that was fresh in its

approach to the customer, to be proactive in regards to business and

regulatory compliance, to possess old-fashioned qualities such as looking

after the customer and to recognize the fact that without the customer the

company would cease to exist. Moreover, in all these objectives, with the

guidance of our Divine Creator, thousands of skilled and talented

professionals from this region helped us bring where our organization stands

today.

Let me share with you a basic

diagram that serves as our

reference in the logistics industry

to identify the common activities

that go with the movement of

goods from the supply side to the

EndUsers

Raw materialcomponents

Packaging itemsProduct sourcing

Imported materialsBought-in parts

Productionprocess Packaging

UnitizationSub assemblyWork-inprocess

Finished Goods

Inventory

Warehouse

Depots

DistributionCenters

Supply Chain

Suppliers Logistics Customers

Materials ManagementSupply Distribution

Supply sideUpstreamInbound

Demand sideDownstream

Outbound

The Logistics Flow

Information Transport Reverse

Buying

Importation

Selling

Exportation

EndUsers

Raw materialcomponents

Packaging itemsProduct sourcing

Imported materialsBought-in parts

Productionprocess Packaging

UnitizationSub assemblyWork-inprocess

Finished Goods

Inventory

Warehouse

Depots

DistributionCenters

Supply Chain

Suppliers Logistics Customers

Materials ManagementSupply Distribution

Supply sideUpstreamInbound

Demand sideDownstream

Outbound

The Logistics Flow

Information Transport Reverse

Buying

Importation

Selling

Exportation

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demand side. In all these points are where we are coming in, whether from

the in-house materials management and procurement or to the outsourced

logistic processes like forwarding, customs documentation and customs

clearance, warehousing and distribution...yung outsourced po kami ang

gumagawa ng mga yan. At kung ating pong titingnan mabuti marami po ang

mga activities na yan ay matagal na po nating ginagawa dito sa inyong

rehiyon, with Subic and Clark serving as a major logistics hub for many

companies who located their manufacturing and distribution centers in your

freeport and economic zones.

Allow me to tackle briefly some

key developments in the global

supply chain and later on present

some simple strategies that we

have adopted to combat the

challenges brought by these

developments. Alam naman po natin, that the regional integration like our

AEC is a measure taken to counter the rapid globalization of business.

Professor Rakesh Mohan Joshi, in his book International Business (published

by the Oxford University Press in 2009), defined “economic globalization” as

the economic interdependence of national economies across the world

The Economic Globalizationand Supply Chain

The Economic Globalizationand Supply Chain

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through a rapid increase in cross-border movement of goods, service,

technology, and capital. Professor Joshi added that economic globalization

comprises the globalization of production, markets, competition, technology,

and corporations and industries. And depending on the paradigm, economic

globalization can be viewed as either positive or negative phenomenon. If I

will look back into our long association with the logistics processes in the

region through the various industries operating here....matagal na po kayong

nag-ooperate within this context.

Recently, globalization, regional integration, competitiveness, and so forth

have been our buzzwords in almost all talks and conferences. I may have to

add other words to this list and for that very reason; I cited Professor Joshi’s

definition of economic globalization so I would be able to present to you

clearly the topic that was assigned to me today.

Over the years, firms struggle

with supply chain operations -

low cost country sourcing, long

distance transport and security

uncertainty, increased pipeline

Key Developments in the GlobalSupply Chain

Key Developments in the GlobalSupply Chain

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inventory, currency fluctuations, trade regulations, tariff and non-tariff

barriers, environmental protection, and a lot more. However, the past-faced

economic globalization has drawn a different picture and introduced trends

in the global supply chain.

We, in the logistics industry, are no longer new in the international

movement of goods and services. During the 80’s when the U.S. Silicon Valley

decided to extend and set up their tests and assembly plants in the

Philippines, we have seen, witnessed and experienced moving cargo and data

in and out of the country any time of the day. Both foreign and local

technicians move back and forth to and from the head office or regional

center to either work or learn (training). And as part of these industries’

global supply chain process, 24/7 operations have been in placed in our

system – as we have to stay awake to communicate (using rotary phones and

for some, telex machines) with our overseas partners in Europe and the U.S.

Allow me to me list down some of the developments we have gone

through...I just pick three: Globally Integrated Enterprises, Trade in a smarter

planet, and Regional integration

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Globally Integrated Enterprise

GIE is a term coined in 2006 by

the CEO of IBM, Sam Palmisano,

to denote "a company that

fashions its strategy, its management, and its operations in pursuit of a new

goal: the integration of production and value delivery worldwide.”

In this example, you will see an

Australian company

headquartered in Melbourne,

Australia, which based on the GIE

model locate functions in several

parts of the world, based on the right cost, skills and environment. While it is

spread across the globe, it only has one, connected supply chain and this

approach is made possible due to the rise of globalization, and the opening of

cross borders commerce or trade liberalization. This model is very evident

Globally Integrated Enterprise

GIE is a term coined in 2006 by the then CEOof IBM, Sam Palmisano, to denote "acompany that fashions its strategy, itsmanagement, and its operations in pursuitof a new goal: the integration of productionand value delivery worldwide.”

Globally Integrated Enterprise

GIE is a term coined in 2006 by the then CEOof IBM, Sam Palmisano, to denote "acompany that fashions its strategy, itsmanagement, and its operations in pursuitof a new goal: the integration of productionand value delivery worldwide.”

Globally Integrated EnterpriseAsset management

Bratislava, - Slovakia

ProcurementShenzen - China

Accounts PayableShanghai - China

Leasing AdministrationOkinawa - Japan

HR ServicesManila - PhilippinesAccounting, Financial Planning

Kuala Lumpur - Malaysia

Tours and cruisesMelbourne - Australia

Globally Integrated EnterpriseAsset management

Bratislava, - Slovakia

ProcurementShenzen - China

Accounts PayableShanghai - China

Leasing AdministrationOkinawa - Japan

HR ServicesManila - PhilippinesAccounting, Financial Planning

Kuala Lumpur - Malaysia

Tours and cruisesMelbourne - Australia

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now in our economy as we are already providing various modalities of the

business process outsourcing (BPO).

If we are going to find, let us say

the location of our main

warehouses in NCR – we will see

it somewhere in Paranaque.

Ngayon po mas madali na dahil

google map na lang natin

hinahanap. And if we zoom into google map or gps device, we will be able to

find it’s exact location (and coordinates). Dito po Central Luzon, we have

several warehouses – Clark Freeport Zone, San Fernando, Tarlac, Subic

Freeport Zone at yung iba po ay thru our agent’s operations in Nueva Ecija,

Bulacan and Aurora.

But if we will look into the bigger picture, where will you find us in the world

map.

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Let’s spread the world map with

the Philippines at the center and

imagine yourself sourcing and

distributing your wares (goods) to

and from the various continents.

Would you consider this as a

logistical nightmare?

Of course not! We both find solutions to our logistical problems. Practically,

this is the reason we are all still here and doing our jobs as logistics

practitioners, or I may say – Experts!

Trade in a Smarter Planet

Allow me to borrow again from

the words of Mr. Palmisano,

defining how goods and services

are traded in a smarter planet. It is instrumented, interconnected and

intelligent.

Trade in a Smarter PlanetTrade in a Smarter Planet

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Sino po ba sa inyo ngayon ang bumibili online or doing bank transactions like

bills payment, funds transfer, etc. using your smart devices (iphone, ipad,

android devices, etc.)? All of these have changed dramatically on how we do

our trade activities now...it is instrumented (using various devices)...it is

interconnected (if you are buying online, you can complete your buy, pay and

ship transactions in just one site)...it is intelligent (all of the data can now be

captured and turned into intelligence because we now have the processing

power and advanced analytics to make sense of it all).

Regional integration

As globalizations sets in,

cooperation also increasingly

become popular as regional bloc

like ASEAN moved together in

strengthening intra-regional trade and service transactions. This may poses

as a challenge for some but at the same time open the door of opportunity

for those who possses the right mindset, attitude and preparations to survive

ASEAN FormedIndonesiaMalaysiaPhilippinesSingaporeThailand

ASEAN Timeline

PTA

Brunei Darussalam joined

AFTAVietnam joined

AFAS

Burma and Laos joined

AIA

Bali Accord IICebu declaration

ASEAN Charter

Free flow of• Goods• Services• Investments• Skilled laborFreer flow of capita;

ASEAN EconomicCommunity (AEC)Cambodia joined

ASEAN FormedIndonesiaMalaysiaPhilippinesSingaporeThailand

ASEAN Timeline

PTA

Brunei Darussalam joined

AFTAVietnam joined

AFAS

Burma and Laos joined

AIA

Bali Accord IICebu declaration

ASEAN Charter

Free flow of• Goods• Services• Investments• Skilled laborFreer flow of capita;

ASEAN EconomicCommunity (AEC)Cambodia joined

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the perceived competition. As you will see in this timeline....the ASEAN

regional cooperation started way back in 1967...with the ultimate aim for the

ASEAN Economic Community by end of 2015. Malapit na po eto, napakabilis

ng 365 days at eto po ang dahilan kung bakit naririto po tayong lahat sa

forum ngayon.

Here I am showing you the

current profile of the ASEAN

industries and you will see that

our country is a combination of

manufacturing oriented and

service oriented type of

industries. Primarily, we are a great source of skilled talents for the regional

and global industries operating in the country or in major markets in Asia.

So where the challenges are now? It rests upon us now to develop and

deploy our own strategies on how to stay competitive in the global supply

chain.

ASEAN IndustriesASEAN Industries

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Let me share with you our action

plan, which we call the I CAN

Strategy: Innovate, Collaborate,

Activate, Nurture

Innovate

We have seen so much

innovation in various industries

that located their manufacturing

centers here, and we in the

logistics business have to catch up with all these developments. We have to

upscale our competencies and find ways on how to do things better or even

differently to bring about change in the supply chain environment.

Action PlanInnovate

CollaborateActivateNurture

Action PlanInnovate

CollaborateActivateNurture

INNOVATEINNOVATE

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Traditionally, if you may want to

expand your business coverage or

stores, you may start with a main

one in Manila, and then the

smaller ones may start sprouting

across the archipelago.

How about doing it differently

following this model?

Or expanding operations in abigger regional network ofASEAN?

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One aspect of innovation is to

leverage on technology...one of

the major strategies that we also

took in LGC.

There is a new concept saying

that collaboration is the new

competition. Leaders and

organizations should

acknowledge that even their best

individual efforts could not stack

up against today’s complex and interconnected problems.

When we say activate – this is a

call to action. Are we going to

participate or just remain as

spectator? How can we expect

inclusive growth and

development...kung hindi po tayo

COLLABORATECOLLABORATE

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sasama sa mga action plans? I am happy that your RDC sa pamumuno ng

inyong Chairman at pakikipag-ugnayan sa NEDA at mga kasapi ninyo are

taking this challenges seriously at isa na rito ang pagdaraos ng ganitong

forum...it is an opportunity for everyone to learn, share and collaborate.

Finally, how are we going tonurture it...each step isimportant but sustaining theaction is far more important.Minsan po, ang sabi sa atingmga Filipino...ningas-kugon dawpo tayo....magaling mag-umpisa

pero di natatapos. This may be a behavioral perception about us and weshould turn this into a positive one. Marami din po ang naniniwala sakakayahan ng ating mga manggagawa at propesyonal...we just need to helpin educating the trading community and in continuously developing ourhuman capital. Alam nyo po...last week I had the opportunity to meet anddiscuss with the new Chairman of the Professional RegulationsCommission...and we both agreed on a common goal...go back to basics andcontinuously hone the talents and potentials of our people. Our educationdoes not stop when we went out of school but every opportunity should betaken as an avenue for us to learn...and for some to teach and impartknowledge to others.

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One of the major components of

the AEC blueprint is the

development of human

capital...kaya’t kasabay po ng iba

pang pillars na nakita nyo na sa

iba pang mga papers and

presentation...dito po kami naka-focus sa ngayon.

Alam nyo po sa amin sa LGC...everybody is required to complete a minimum

of 60 hours training every year...mula po sa Chairman at mga

Presidente...kay si Mr. Lina, hanggang ngayon aral pa rin ng aral. We even

have our onsite MBA program in partnership with Pamantasan ng Lungsod

ng Maynila...at ang amin pong first batch, kung may awa ang Diyos,

magmamartsa na po this coming March 2015.

So as a way of our contribution

to the logistics industry,

minarapat na po namin na by

next year...we will expand the

program offering of our

The AIR21 Academy Video Intro

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corporate training center, ang tawag po namin dyan ay ang AIR21 Academy

of Developmental Logistics.

In closing, hayaan po ninyong i-play namin etong aming short introductory

video about the AIR21 Academy.

Magandang hapon po at Maraming salamat sa inyong pakikinig!