As Asia's largest electronics distributor, WPG Holdings continues to expand and diversify its products, particularly for 5G, artificial intelligence and automotive electronics to meet the needs of these emerging applications in 2020.
In a recent interview with Digitimes, WPG CEO Frank Yeh also talked about the company's implementation of digital logistics services that are expected to be enhanced in a rapidly changing market. LaaS (Logistics as a Service) is one of the strategies for WPG transformation.
Q: WPG has a market share of approximately 12% worldwide. As the world's leading IC distributor, what innovations are you exploring to further enhance your value?
A: For any IC distributor, “information flow” and “logistics” are the places where we start to innovate. The role of IC distributors is between upstream chip manufacturers and downstream equipment manufacturers. In the past few decades, our business has been operating in the old traditional model. However, new concepts and technologies such as artificial intelligence, the Internet of Things, blockchain and big data analytics will change the way we conduct our business in the next 20 to 30 years.
As a result, WPG is transforming its business model to better meet the future needs of its customers. As part of this process, we launched an online service platform project called WPGDADAWANT to provide customized solutions tailored to individual customer needs.
Under our WPGDADAWANT project, there are five platforms for different types of customers: WPGDADAJIA for large enterprise customers; WPGDADABANG for small and medium-sized enterprises that need customized solutions; WPGDADATONG, which is more like an engineer-oriented knowledge sharing Platform; WPGDADAGO provides online small-volume purchases for individual consumers; and WPGDADAPIN provides trending news that can be personalized for individual consumers.
Through the WPGDADAWANT project, WPG hopes to propose new solutions and services to connect with our customers.
At the same time, WPG has improved and further strengthened our logistics management. We used to let our employees handle our logistics processes and quality stability. This type of work has moved to a smart sensor-based system that monitors the workflow and shows us all of this data and information.
Intelligent sensor-based systems enable us to handle warehouse and inventory management in a more efficient manner. WPG has warehouses in Taiwan and China, as well as in Vietnam and India, and our intelligent logistics services can be implemented in these warehouses to improve our operational efficiency.
Q: Can you explain the future of WPG as a LaaS provider?
A: The concept of LaaS will enable WPG to extend its business model from "B2B" to "B2B2L". In B2B mode, we deliver IC parts and components to our customers' warehouses, and they must deliver their own chips to all of the different production lines. But WPG wants to adopt the B2B2L model, and we hope to help customers save on operating costs by delivering IC parts and components directly to designated production facilities.
In other words, as a LaaS provider, WPG has a warehouse around the world, and we are able to manage and deliver the chips ordered by customers directly to their factories and manufacturing partners. Therefore, WPG has been investing in automation equipment to enhance our value in intelligent logistics.
WPG's logistics services will better meet the needs of small and medium-sized enterprises because their warehouse costs are relatively high. WPG uses AI and big data analytics to create our intelligent logistics services. Customers using the service will be charged according to their usage.
WPG will continue to invest in its warehouse and logistics services based on customer needs. The idea is similar to how a pure foundry can help its fabless customers expand their chip business, and as a leading IC distributor, we want to assist companies that want to save on warehouse management costs and focus resources on key issues.
Q: Have you started implementing the LaaS model?
A: WPG initially implemented the LaaS model in its Hong Kong warehouse and will gradually adopt the model in other warehouses in Taiwan and overseas.
WPG's warehouse base in Hong Kong and the upcoming plant in Shenzhen are well suited for our LaaS model and intelligent logistics services, as China and Southeast Asia are their target markets. WPG also plans to establish new warehouse sites in Singapore to meet the growing needs of Southeast Asian customers.
In fact, many original chip makers have their own warehouses in Asia. WPG, as an IC distributor, is also seeking to work with original chip manufacturers in the smart logistics arena.
In addition, WPG is exploring partnerships with East China local companies that specialize in Vendor Managed Inventory (VMI) warehouses.
Q: What impact will the Sino-US trade war have on the digital transformation of WPG?
A: WPG put forward the idea of intelligent logistics when the trade war was not started two years ago. Now our suppliers and customers are facing a trade war, I believe this is a good time to digital transformation and implementation of the LaaS model.
WPG is also aware of the impact of trade wars on the supply chain. For example, Chinese companies intend to reduce the purchase of chips and components made in the United States. In order to be fully loaded with their warehouses, they may place additional orders for chips and components to their suppliers in Taiwan and Southeast Asia.WPG provides smart warehousing solutions for companies that want to diversify their supplier base and minimize their operating costs.