Shifting boxes saving time

The regional players in the logistics and warehousing industry are working hard to attract and maintain customers by optimising their supply chain and improving information and delivery capabilities.

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By  Zoe Moleshead Published  July 3, 2001

Logistics|~||~||~|Increasing customer demands and expectations, the high costs of standing stock and the continuing role of e-commerce are pressuring companies to examine and improve their logistics and delivery models. But improving delivery times is not a simple process — it cuts through the whole supply chain, including everyone from the company itself to the warehousing facility and the distribution or delivery company — and customers expect to be kept up-to-date at every stage.

The IT vendors and their resellers have been particularly quick to recognise the benefits of supply chain efficiency, with the likes of Compaq, Dell, Cisco and their partners like, Tech Data and Tech Access looking to strengthen their market positions by enhancing their supply chains, maximising their internal efficiency and strengthening customer service.

“With the multinationals [companies] their margins are coming close together, and if the specifications of the products they are selling are similar to that of their competitors — it comes down to customer service,” says Bilal Kabaly, logistics manager, UAE, DHL.

Sun Microsystems’ country reseller, Tech Access is setting up a logistics centre with DHL at Manma airport, Bahrain, which will house standard configuration servers most likely to be required by the customer.

“The idea is we’re going to stock standard configuration [machines], and then the most likely additions the customer will want,” says Tim Carlson, chief technical officer, technical sales, Tech Access. “Traditionally what Sun did was send the these components in separate boxes, and at the other end put it together.”

The move to improve its logistics strategy is driven by a need to enhance delivery times for improved customer service.

“If a customer needs a configuration, I will build the box here, I will install the software, and I will put it back in the box as a plug and play device, with a list of easy set up instructions. Instead of installation time being a day-to-half-a-day, it’s going to come down to two hours,” explains Carlson.

Tech Access is not alone in leveraging on DHL’s services, Compaq’s local office recently signed a redistribution agreement with the distribution company and Danzas AEi Intercontinental, to improve the flexibility and reliability for moving parts and products around the region. The deal also provides transparency to its customers.

“In today’s highly competitive IT market it is not just who comes out with the latest technology… it is who delivers it fastest at the lowest price as well,” comments Compaq’s Middle East operations manager, Mohammed Itani. “The supply chain division plays and integral role in the purchase cycle and ultimate customer satisfaction.”

DHL is also looking to address the needs of its own customers, such as Compaq, Tech Access and Microsoft, and is likewise continually striving to improve its delivery of services to its customers. For a company like DHL, this can involve everything from upgrading its web site, call centre, relationships with customs departments, to developing more efficient ways of storing, and delivering information and goods.

“It’s not only about the plans, the facilities and the trucks, it is really about information. With information and logistics you can really do anything, you can make good decisions,” says David Wild, general manager, DHL, UAE.

For DHL managing its information is the biggest challenge, and the greatest way to stay ahead of the competition. The delivery company has developed a whole range of IT services aimed at enhancing the tracking and visibility of deliveries, as well as establishing strategic partnerships to ensure it can meet customers’ needs.

The company established its online tracking facilities, eTrack and DHL Connect a couple of years ago.

“DHL Connect is a client/server software that we give our customers. It talks back to DHL over the Internet, [helping] customers do all their processing and communication with DHL,” explains Avtar Mamotra, DHL’s IT manager for the Gulf States & Iran.

DHL Connect also enables customers to process their orders, and find out additional information, such as rate enquiries.

eTrack allows customers to check the status of their orders online, and can take up to 30 labels at a time, reducing the pressure on the DHL’s call centre.

“Instead of being on the line with customer service for an hour each morning, [you] just type it in, and 10 minutes later get an e-mail with all proof of deliveries,” adds Kabaly.

||**||Delivery|~||~||~|DHL has also carried out improvements on its local web site, and will unveil its enhanced web site later this month, with a whole range of functionality including information on time zones and currency calculations, which have been Arabised for the local market.

But DHL’s IT initiatives have not been restricted to the Web, the company is about to deploy across its global network, MCR2, a mobile data capture device, which will provide real-time automatic delivery updates. One of the benefits of the system is that it can be used even in ‘a remote town in Saudi Arabia.’ As deliveries are completed and the information is scanned back through the mobile checkpoints in the vans, information can be transmitted within minutes.

“MCR2 is replacing an older system. Where we might be out on a run, then we come back in two hours later, and place a scanner in a cradle, and that could be an hour and a half or two hours later, so there would be a gap when you didn’t have data in the system,” states Wild.

DHL is also looking to help local businesses develop their e-commerce initiatives and provide e-fulfilment. The company is currently in the final stages of agreeing deals with two local organisations, which already have established sites online conducting e-business transactions.

DHL’s e-commerce project code named ‘spider’, is aiming to simplify the processing and delivery for online shoppers, bringing DHL into the loop the moment a transaction is made.

“[Users] go into a portal that is linked up to the DHL web site. After their payment is authorised it links up to the DHL web site, and they [portal] can send in the order for such an amount of [goods] sent over to us,” says Kabaly.

“We already have the payment authorisation and would take that order to order processing, and send a pre-alert with DHLtracker.com to the reseller and customer.”
Improved delivery times is not the only aim, it also accelerates the supply chain enabling greater inventory management, with companies able to reduce the levels of standing stock.

Distributor, Tech Data has set about improving its supply chain and removing some of the cost and depreciation burdens of stock holding from the resellers.

“Our key aim is to provide fast and reliable services that give resellers the chance to not only get away from that inventory management problem, but also open up new service capabilities, such as direct delivery to the customer,” explains Arul Raj, director of operations at Tech Data.

Tech Data is also broadening its operations within the Middle East region with the establishment of an operational ‘hub’ in Bahrain. One of the reasons for the move is to enhance its delivery capabilities to countries such as Kuwait, Saudi Arabia, Qatar and Bahrain. With another hub planned for the Levant area, Tech Data is planning to revamp its internal IT systems.

“This will require an overhaul of Tech Data’s IT systems to the level where they can become an effective tool for the management of three integrated logistics centres [the other being Jebel Ali], as well as for the management of sourcing and supply from the vendors and other Tech Data regional operations,” continues Raj.

The delivery companies and IT companies are not alone in their development of streamlined logistics systems.

||**||Warehousing|~||~||~|Traditional warehousing companies in the region have also been implementing IT to manage inventory with increasing efficiency, and move the logistics business into the e-business age.

RHS Logistics, based in Jebel Ali, has deployed a best of breed package from EXE Technologies to provide its third party warehouse management software.

The warehousing company, part of the Rais Hassan Saadi Group, is currently running EXceed version 2.1 series 4000, a client/server based package providing Internet, retail, production and warehouse management modules as well as automatic backup.

The benefits of EXceed have also been realised by Public Warehousing Company (PWC) in Kuwait, which has also deployed the package.

“We started off with an inventory control system, but it just told you if the product was in the warehouse,” says Andrew Raymant, project development manager, RHS Logistics.

The move to a warehouse management system, providing the company with increased real-time monitoring of it stock, and advice on the most efficient ways of storing and picking stock. The web interface increases data visibility, and consequently enhances customer services.

“The warehouse management system has a web interface, and that allows our customers full visibility of their inventory. It also allows them to carry out transactions, shipping orders, and purchase orders. EXceed also has a full reporting facility,” adds Kevin Monaghan, business development manager, PWC.

According to Monaghan the core requirements for warehousing facilities are “powerful servers, plus a large secure storage and powerful networking, radio frequency technology, and an interface into the warehouse management system so you can bring this all together.”

The radio frequency capabilities allow the warehousing facilities increased real-time visibility to track products in the warehouses, and to send and confirm handling activities.

PWC is also using its radio frequency technology to provide online tracking within the warehouse. This information is then web-enabled.

“A vendor’s products come into our warehouse, where they are measured, scanned, put on the shelf. The whole process is visible [through the web], and means products can be sold online,” adds Monaghan.

PWC’s e-commerce service provides customers with a template to create their own online store front. A shop manager module allows the customer’s to manage their stock, change prices or create promotions.

“Shop manager also allows them to transact in both B2C and B2B, by allowing the browser to have access to different sets of price information,” reveals Monaghan.
“So the wholesaler can come in and buy in bulk, and he obviously gets a special price. But the consumer can come in and buy one unit at the normal retail price.”

The web page is automatically updated when stocks start to decrease, and when stock runs out the item is removed from the web page.

A robust back end with 100% uptime is also key to these facilities. As such PWC invested in an EMC/StorageTek based storage area network (SAN).

RHS Logistics has deployed three servers to run its operations — an application server to run its SQL database and EXceed, an Internet server running the EXceed Internet module, and a third server to run the radio frequency bar code scanning application.

RHS Logistics is planning further IT developments, such as the introduction of a call centre management module to facilitate telephone ordering. RHS is also planning to manage financial transactions with a link to a bank’s network payment gateway. It is also looking to improve its cross docking capabilities.

“Cross docking is where one product comes in a pre-defined sorted format for immediate or timely dispatch,” comments Raymant. “Already the client can allocate his products’ destination while the product is still on route to the facility.”

Warehousing facilities are also looking to extend their services to their clients, PWC’s e-commerce initiative being an obvious example, enabling those companies for whom an online shop would be a significant and substantial investment and risk. RHS can also run other warehouses from its ‘mother’ warehouse if they are using the same systems.

The Internet has enabled the various parts of the supply chain — the vendors, the warehouses, and delivery companies — to interface with one another.

Consequently, the logistics and warehousing market has moved beyond the simple movement and management of goods. Customers are now offered supply chain visibility, with tracking from departure, through storage, to arrival, with quicker and more efficient delivery times.

||**||Software|~||~||~|Vendors are rushing in to fill the void in the market for logistics and partnership information software. Public warehousing Company (PWC) opted for EXceed, and PWC’s Kevin Monaghan explains the decision was partly forced by lack of choice.
Two companies are looking to exploit the lack of products in the market and provide warehousing companies with a greater choice.

Xmediaries, established six months ago, has recently signed a deal with the Rais Hassan Saadi Group, to deploy its Crossroads package. Though not strictly for distribution and logistics companies, Xmediaries’ CEO, Kalpesh Desai, says this is one of the industries that could benefit from the solution.

Crossroads deals with four domains; partner relationship management (PRM), customer relationship management (CRM), employee relationship management (ERM) and vendor relationship management (VRM).

According to Desai, Crossroads provides the logistics and distribution industry with a host of online services, with individual portals for exporters, consigners or warehousing companies.

For example a consignee portal will allow users, “when they log-in to see account statements, cargo arrivals, delivery order calculations, vessel arrivals and so on,” explains Desai. “From an exporters perspective they can book orders, track cargo, check their accounts and make complaints.”

Employees will also be able to log in and check the status of shipments and customer accounts. Xmediaries is looking to improve the flow of information between the various channels, and leverage mobile features such as SMS, to support tracking and information visibility.

“We intend to service multiple channels of delivery,” says Desai. “For instance if you have a situation where you are travelling, and need to know the inventory status of a particular stock, you can use your mobile phone to send out a message to your server requesting that information. Once that has been received and processed it will send back a message with the information.”

The benefits, however, are not just for the employees, customers can also access the system and receive information on the status of their inventory or containers.

CargoMate, developed by a Dutch company called Westlake Systems, is also looking to make an impact on the local logistics market. Saudico Progress Systems is the local reseller for the product, and its software consultant, Vidya Dhar, says its interest in CargoMate was sparked by the lack of industry specific solutions.

“CargoMate can basically support every operational activity of international freight forwarders,” comments Dhar. “It can tackle single shipments and consolidations, which are processed including all transport and customs documents, and sales and purchase contracts.”

Users of CargoMate can select specific modules of the package and tailor it to suit their specific requirements. The software can also interface with other applications, such as an accounting system, reveals Dhar. The package can also be customised to include VAT or customs charges for particular countries or airline codes or international shipping codes.

Both software companies claim implementation is straightforward and provide onsite training for companies deploying the solution. While Dhar cites an average of 20-25 days for CargoMate installation, Desai says Crossroads takes an average of 45 days depending on the complexity of the solution.

||**||Middle East problems|~||~||~|The traditional mentalities that persist within the region’s smaller freight forwarding companies and merchants create additional barriers to progress in the logistics and warehousing industry. Maximising the supply chain in the region is hindered by the number if one man operations in these sectors. With smaller budgets and fewer incentives to implement IT systems these companies are always going to lag behind the larger more established players in the industry.

While the UAE and its Free Zones can be considered ‘bright spots’ for the distribution of goods, as RHS Logistics’ Andrew Raymant comments, “the Middle East is a big area, and there are relatively few Jebel Ali’s for an area the size of Europe.

The regional logistics and warehousing industry is playing catch up with the likes of Europe and the US in terms of technological deployments, and although Raymant is confident that deploying systems to enhance cross border movements will be relatively quick, overcoming the mindset within the industry is proving a slower task.

The Public Warehousing Company (PWC) in Kuwait has encountered similar problems in the local market.

“I can only speak for Kuwait, but IT adoption is weak, as most companies prefer traditional methods,” explains Kevin Monaghan of PWC. “They like to have their own key, their own people, they like to do it their way.”

Monaghan feels it is a matter of educating the market to the benefits of IT, showing merchants or freight forwarding companies the efficiencies that can be wrought with greater inventory control and visibility.

“Once we bring them here and we show them the benefits they really start to take some notice,” concludes Monaghan.

The Dubai-centric nature of the distribution market and an inefficient supply chain in the Middle East are also taking its toll on IT distribution organisations, and resulting in standing stock. “Stock is a necessary evil,” according to Tim Carlson, chief technical officer, technical sales, Tech Access.

“You are tying up money in something that you hope will sell,” adds Carlson. The country reseller for Sun Microsystems is starting on the lean side with its distribution plans for configured systems, pushing basic, standard configurations of fast moving models, and testing the market, and developing and extending its range over time.

“We will start with a higher miss rate, but the idea is that the rate goes down month by month,” predicts Carlson.

Tech Data’s plans are also determined by local market forces, with the company encountering similar problems to Tech Access in terms of stock levels, “the requirement of stock volumes locally in order to meet market demand puts a huge burden on the resellers,” says Arul Raj, director of operations, Tech Data.

Thus Tech Data is looking at ways to optimise its supply chain and distribution methods, and reduce the pressure on its resellers.

Tech Data’s decision to open a hub in Bahrain is influenced by what it describes as the Dubai-centric policies of distribution companies, which restricts the distribution of goods because freight movement is often conducted from a single location.

“Even today, distribution companies are ‘opening up’ in countries with representative offices rather than operational local hub capabilities,” explains Raj.

But the news is not all bad in terms of the industries IT deployment. According to DHL’s general manager, David Wild, the UAE leads the way globally in terms of processing shipments electronically.

The Middle East logistics and warehousing market is slowly warming up to the efficiencies of supply chain management and visibility, with Dubai leading the way for regional development.

While according to Raymant, the most encouraging sign for the regional market is the speed of implementation, which is fast improving.
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