Company Visit - Kerry Logistics

Company Background

Kerry logistics was founded in 1981. Its first warehouse was operated in Kwai Chung Container Terminals. Kerry logistics Network Limited is a subsidiary of Kerry Group Limited. Its core business is to provide logistics services in Asia and internationally. It offers integrated logistics services, such as storage and value-added services, trucking and distribution services etc. Kerry Logistics also provides international freight forwarding and supply chain solutions for their customers. They are also expertise on handling merchandise and non-merchandise, to POSM(Point of Sales Materials) and more. Kerry Logistics service network now accesses to 24 countries and has earned a wealth of recognition.

Visit Flow
Firstly, we had a talk in Kerry Logistics company to learn basic knowledge about its business.

Secondly, we had a visit on one of their warehouse, learning how their serve and cooperate with Canon.

1. What are the differences in managing land-base and flight-base logistics?

Answer:

For the land-base, service provider need more labor resource to provide, for example, door to door and pick-up service. Labor resources are also located to manage warehouse and route planning. For the flight-base logistics, the use of system providing information is more important. GPS, RFID, and other technologies provide information where the packages or goods are now and even be used to check all status of the packages or goods, like security and quantity.

2. What were the challenges your company faced when trying to expand in US?

Answer:

In the US market, Kerry Logistics needs compete with FedEx, UPS, TNT, and DHL.  Kerry Logistics has opened 8 offices in the USA to expand in the market. Kerry Logistics offers customers 'be global-act local' total transportation and logistics solution in America. Kerry Logistics tries localize its service  to satisfy its customers in the competition.

In US market, Kerry Logistics offers:

• International freight forwarding
• Ocean freight (FCL an LCL)
• Air freight
• Project cargo
• Integrated logistics
• Custom broker
• Domestic door-to-door solutions
• DG certified
• Cross dorder shipment

3. Would your company provide any value-added services?   What are the advantages for your     customers and your company?

Answer:

Kerry Logistics divides their value-added services into 7 catalogs: F&L (fashion & lifestyle), E&T (electronic & technology), F&B (food & beverage), FMCG (fast moving customer good), IMS (industrial & material science), AUTO (automobile), and PHARMA (pharmaceuticals & healthcare). Each catalog has different requirements. For example, in E&T section, more labor are needed to pack products according to different requirements, in  PHARMA section, products need to be stored in aseptic environment.

Customers  using Kerry Logistics value-added service can reduce operation. Continue with example in E&T section, customers place orders to let Kerry Logistics pack their products according to various standards, like a smartphone sold in mainland China with simple Chinese warranty card only and a smart phone sold in the UK with English warranty card only. Customers can reduce in-advance packing cost and re-packing cost when products moved from one region to another region to sell.

Providing value-added service enhance Kerry Logistics strong control in supply chain management and increase bargaining power to its supplier.


4. How does Kerry Logistics differentiate with other rivalry?

Answer:

Kerry Logistics makes significant investments in upgrading or maintaining its self-owned logistics facilities so as to better serve its customers. As at 28 November 2013, Kerry Logistics managed approximately 39 million sq.ft. of logistics facilities, of which approximately 55% was self-owned and the vast majority located in Asia. This asset-ownership model provides greater flexibility in modifying and optimizing the utilization of facilities for different services and allows higher operating leverage due to the absence of rental cost exposure. It also offers greater reliability and product security to customers, which is especially preferred by customers in Asia, thereby enhancing the Company’s ability to secure long-term service agreements and differentiating Kerry Logistics from its peers in Asia.

5. If you encounter some operational problems (such as hard/software problems, delay problems), what is your contingency plan?

Answer:

Kerry Logistics will depends on each situation to provide different solutions. Actually, Kerry Logistics has formulated several policies to deal with different unexpected situations.

• Quality Policy Statement
• Environmental Policy Statement
• Occupational Health & Safety Policy Statement
• Information Security Management Policy Statement
• Security Policy Statement
• Business Continuity Management Policy Statement
• 5S Policy Statement
• Wine Storage Management Policy Statement
• Policy Statement of Quality Management System for the Supply of Pharmaceuticals and Medical Devices

6. DHL and FedEx are the major global competitors while SF express is the local main competitor in recent years.  How can Kerry Logistics keep the international market position without losing the local market share?

Answer:

Kerry Logistics now focus on B2B service. Most of Kerry Logistics’ key customers are multi-national corporations and it currently serves more than 40 of the Top 100 Brands (ranked by Interbrand, a well-recognised global brand consultancy). Kerry Logistics provides high quality value-added service to its customers to earn high reputation and get success. Kerry Logistics has a clear target segment of its customers and has certain experience and ability to serve them.

7. Apart from using RFID to save cost effectively, what other methods or technologies that Kerry Logistics have been adopted?

Answer:

Kerry Logistics uses PO/Vendor management for managing supply chain with its customers and partners.

PO / Vendor Management offers a range of highly effective, streamlining services that include:

• Monitoring and ensuring that vendors cross-reference orders against PO quantity and cargo ready date
• Ensuring vendor compliance within agreed parameters, including providing proper training
• Managing documentation: offer fast, efficient and thorough documentation collection, verification and uploading from vendors to prevent delays
• Implementing of vendor performance KPIs, including measurement of delivery within agreed shipment windows from ex-factory date, vendor booking, cargo delivery and document submission date
• Distributing POs: run the PO distribution directly to factory or agent

8. Kerry Logistics won the award for Asian 3PL of the Year at the prestigious Supply Chain Asia Logistics Award, what made Kerry logistics succeed in doing 3PL service?

Answer:

Kerry Logistics provides customized end-to-end solutions to meet its customers’ supply chain needs. These include traditional inventory storage, trucking and distribution services and returns management, as well as diverse value-added services designed for different types of manufacturers, retailers and other customers, as well as a combination of air, ocean and cross-border road freight forwarding services. The substantial scale of logistics facilities managed by the Company, coupled with its strong regional and local presence in Asia and its comprehensive freight forwarding service offerings, has enabled it to deliver customized end-to-end supply chain solutions to its customers and provide them with global access to and within the Asian markets. The Company cross-sells its integrated logistics and international freight forwarding services to many of its customers located worldwide.

9. Hong Kong is the largest market for Kerry.  Will your company worry about the rise of Shanghai as a new logistics hub may affect Kerry’s performance in Hong Kong in the near future?

Answer:

To capture the opportunity of developing in mainland China, Kerry Logistics has already had conversation with Shanghai free-trade zone authority. Kerry Logistics plans to expand its business in B2C which matching the rapid development of e-commerce in China current years. Kerry Logistics plans to focus on high quality service but not cheap price service, for example, Kerry Logistics will deliver well from factory to customer home when customers buy an expensive smartphone. Kerry Logistics has plan a seed on China and is now waiting a chance.

Reflection:
The reason why Kerry Logistics got success and developed rapidly in current years is not only Kerry Logistics has built a thorough route for delivery service but also taken one more step--building high quality and one-stop supply chain management to serve its customers. Nowadays, global business is more and more popular. As a result, more and more companies choose to use 3PL service. As one of main players of 3PL, Kerry Logistics provides supply chain management to satisfy different kinds of customers, including: fashion, electronic products. That is not surprise that customers like to use Kerry Logistics supply chain management service because operation cost can be reduced, customers has more flexibility in inventory management, and customers can focus their resources on core production. Kerry Logistics has clear goal and plan in each market/region,especially in Mainland China, USA, and Northwest Asia. There is not doubt that Kerry Logistics will expand continuously in the future and, maybe one day, it can against UPS, DHL, TNT, and FedEx.

Source Of Reference:
Kerry Logistics Announces Details of Proposed Listing on Main Board of the HKEx:
http://www.kerrylogistics.com/eng/OUR_COMPANY/Press/pressrelease/pressrelease_66.jsp?langc=true

Kerry Logistics policies
http://www.kerrylogistics.com/eng/main/legal/policies/index.js

PO / Vendor Management:
http://www.kerrylogistics.com/eng/OUR_EXPERTISE/SupplyChainSolutions/povendormanage/povendormanage.jsp?langc=true

Kerry Logistics seeks quality over quantity:
http://www.scmp.com/business/companies/article/1601281/kerry-logistics-seeks-quality-over-quantity

Kerry Logistics in US
http://www.kerrylogistics.com/eng/OUR_COMPANY/Press/publications/countryflyers/images/Country%20North%20America%2013Jan2015.pdf

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