Positioned as LaaS provider：Q&A with WPG CEO Frank Yeh
WPG CEO Frank Yeh, Photo: Michael Lee, Digitimes, October 2019
As the largest electronics distributor in Asia, WPG Holdings continues to expand and diversify its offerings particularly those for 5G, AI and automotive electronics devices gearing up for demand coming from these emerging applications in 2020.
In a recent interview with Digitimes, WPG CEO Frank Yeh also talked about digital logistics services the company has started implementing and is looking to enhance amid a rapidly-changing market. LaaS (logistics as a service) is among the strategies for WPG's transformation.
Q: WPG has an about 12% market share worldwide. As the world's leading IC distributor, what innovation are you exploring to further enhance your value?
A: For any IC distributor, "information flow" and "logistics" are where we begin our innovation. The role of IC distributors is somewhere between upstream chipmakers and downstream device makers. Our business over the past few decades have been run under an old, traditional model. However, new concepts and technologies, such as AI, IoT, blockchain and big data analytics, are set to transform the way we do business in the next 20-30 years.
Therefore, WPG is in the process of transforming its business model to better serve its customers' future needs. As part of the process, we have launched our online services platform project named WPGDADAWANT to offer customized solutions for individual customer needs.
Under our WPGDADAWANT project, there are five platforms for our different types of customers: WPGDADAJIA for large-size enterprise clients; WPGDADABANG for small- and medium-size businesses demanding customized solutions; WPGDADATONG, which is more like a knowledge sharing platform for engineers; WPGDADAGO offering individual consumers small-volume purchases online; and WPGDADAPIN providing trend news that can be personalized to individual consumers.
Through the WPGDADAWANT project, WPG expects to come up with new solutions and services to connect with our customers.
Meanwhile, WPG has internally improved and further enhanced our logistics management. We used to have staff deal with our logistics flow and quality stability. Such work has shifted to smart sensor-based systems which will monitor the workflow and show us all those data and information.
Smart sensor-based systems enable us to deal with warehouse and inventory management in a more effective way. WPG has warehouses not only in Taiwan and China, but also Vietnam and India, where our smart logistics services can all be implemented to improve our operating efficiency.
Q: Can you explain the idea of WPG's future role as a LaaS provider?
A: The concept of LaaS would enable WPG to extend its business model to "B2B2L" from "B2B." Under the B2B model, we deliver IC parts and components to our customers' warehouses where they have to deliver the chips themselves to all different production lines. But under the B2B2L model WPG is looking to implement, we want to help save operating costs for our customers by delivering IC parts and components directly to their specified production facilities.
In other words, as a LaaS provider, WPG has warehouses worldwide and we are capable of managing and delivering the chips ordered by our customers directly to their factories and manufacturing partners. Therefore, WPG has been investing in automation equipment for our capability in smart logistics where we find our value.
WPG's logistics services would better satisfy small- and medium-size businesses' needs, as their warehouse costs are relatively high. WPG uses AI and big data analytics to create our smart logistics services. Customers using the services will pay according to their usage.
WPG will continue investing in its warehouses and logistics services based on customer demand. The idea is similar to how pure-play foundries help their fabless clients expand their chip businesses, and we as a leading IC distributor want to assist companies which intend to save warehouse management costs and concentrate resources on critical matters.
Q: Have you started executing the LaaS model?
A: WPG has initially implemented its LaaS model at its warehouse site in Hong Kong, and will gradually have the model become practical at its other warehouses in Taiwan and overseas.
WPG's warehouse site in Hong Kong and soon-to-be-built facility in Shenzhen are well suited for our LaaS model and smart logistics services, due to China and Southeast Asia being their target market. WPG also has plans to build a new warehouse site in Singapore to satisfy the growing needs of our Southeast Asia-based customers.
In fact, many original chipmakers have their own warehouses located in Asia. WPG as an IC distributor is also looking for cooperation with original chipmakers in the smart logistics field.
In addition, WPG is exploring cooperation with local companies in eastern China specializing in vendor managed inventory (VMI) warehousing.
Q: What impact will the US-China trade war have on WPG's digital transformation?
A: WPG came up with the idea of smart logistics two years ago, when the trade war had not started. Now the trade war is facing us, our suppliers and customers, I believe it is good timing for our digital transformation and the implementation of our LaaS model.
WPG is also aware of the trade war's impact on the supply chain. For example, China-based companies intend to lower their purchases of US-made chips and components. In order to have their warehouses packed full, they may place extra chip and component orders with their Taiwan- and Southeast Asia-based suppliers. However, these companies may consider cutting warehouse costs by working with WPG. WPG provides smart warehousing solutions for businesses looking to diversify their supplier bases and minimize their operating costs.
Source form DIGITIMES