Four directions towards road to success
Acommon trait among supply chain executives is the ability to slip effortlessly into their corporate sales pitch. The details may differ, but the theme is pretty much the same - aggressive expansion, endless conquest of new markets, and plans for a service portfolio that will offer everything for everyone.
It is therefore refreshing to encounter a company with more scaleable ambitions.
'We are very focused on four key industries,' said Edward Lau Chung-wai, managing director of TNT Express Worldwide (HK). 'It is a policy supported from the top which has allowed us to grow at a very profitable pace, and which has delighted our shareholders.' The four sectors are information technology and telecoms, life sciences and health care, automotive and industrial, and high-end fashion. Each was targeted because it offered the chance to provide complex supply chain solutions for individual customers by linking suppliers, factories, warehouses and perhaps hundreds of pick-up and delivery points via a multimodal transport network.
The key to making this work, Mr Lau explained, was to give customers choice, certainty and 'control of time'. And for TNT, the first step in the process is always to 'map backwards'. That involves going through a prospective client's procedures with a fine-tooth comb to understand every wrinkle of their full manufacturing, shipping and payment cycle.
'Projects of this kind are not loosely put together,' Mr Lau said. 'You need trust so the customer will share requirements, but once you know what is going on, you can plan what moves by express, air, sea or road. We can then ensure the customer does not waste money or rush production [unnecessarily].' An in-house team of industrial engineers and business analysts undertake the initial reviews. Generally, they begin by meeting the customers' customers to establish their needs, commitments and possible problem areas.
Subsequently, they delve into every aspect of the flow process for handling raw materials, manufactured items, orders and invoices in order to identify bottlenecks and clarify hand-off points.
As part of the task, they can expect to visit component suppliers, factories, receiving docks, port gateways, customs posts and container bases in various countries.
'From end to end, we map out what is happening and what should be most efficient,' Mr Lau said. 'The shortest path may have a roadblock, so we have to see what makes sense, then sit down with the right people and redesign the process.' All being well, what emerges is a detailed set of standard operating procedures and 'rules of engagement'. These stated the respective duties for component suppliers, subcontractors and any other parties involved, making it possible to set time frames, create visibility and meticulously control the transfer of goods, information and payments.
'When studying customer processes, you must remember that everything is already being done a certain way for a reason,' Mr Lau said. 'It might be because of tax or investments, so we have to go back and investigate why to find out if there is a better way to do it.' At least for major clients - hi-tech Fortune 500 companies or those providing annual revenue of several million euros - TNT sets up a special 'control tower' to supervise day-to-day activities. It consists of a team of up to 10 people, expert in the client's requirements and able to manage every aspect of the order and shipment cycle.
However, Mr Lau emphasised that, ultimately, customers still exercised full control. Thanks to the system's 'strong IT backbone' and the two-way flow of data, it was possible to track the daily progress of every item and update or amend the standard instructions as required.
'Customers have full visibility on the other side of the ocean, so can plan how much to move and when,' he said.
'They can see what is feeding into their own factories, know the time factors, and we make sure it moves like clockwork along the way.'
He noted that, in view of the high value of some consignments and the sensitivity of commercial information, security concerns were paramount. For this reason, access control to various databases is strictly graded, and certain information is routinely encrypted.
'The ability to execute flawlessly is one thing, but you also need trust and confidentiality built into the fundamentals of the business,' Mr Lau said.
An indication of success, he suggested, was the willingness of customers to sign multiyear agreements. Besides that, a significant proportion of new business now comes from referrals and personal recommendations, or can be traced to the fact that one-time non-clients want to sharpen their competitive edge.
'There is a very honest approach,' Mr Lau said. 'We build in savings and advantages for the customer, and if they achieve extra sales or cost savings, then there is a [financial] benefit for TNT as well. This reinforces the relationship and is what partnership is all about.' He added that the logistics industry in Hong Kong was likely to remain quite labour intensive. In particular, the way things are moving, there will be a need for trained logisticians, people able to build the latest information and communication systems, and industrial engineers.
'They are the sort of people who need to be objective and very inquisitive because they will spend a lot of time devising customer solutions and diving into businesses,' he said.
