Door to door delivery

Aptec Gulf, a major IT distributor, is taking a hybrid approach to its logistics management. By retaining control of key areas of its operations whilst selectively outsourcing others to DHL, the company believes it has an edge on time and price.

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By  David Ingham Published  October 10, 2004

|~|aptecman.jpg|~|Aanand Rai, logistics manager, Aptec Gulf: “DHL takes care of all my headaches.”|~|In the competitive world of IT product distribution, two things are key: getting the product to the client on time and keeping the cost of delivery down. Easier said than done and for Aptec Gulf, one of the Middle East and North Africa’s largest IT distributors, the solution is a hybrid approach. On the one hand, the company manages its own warehouses and fulfils deliveries within the UAE using its own fleet of vans. For Kuwait, Bahrain, Saudi Arabia and Qatar, however, the job of transporting and delivering shipments is handed over to DHL. “DHL takes care of all my headaches,” says Aanand Rai, logistics manager, Aptec Gulf. “I just hand over the box and tell them to deliver it to the customer.” Aptec represents almost 30 IT vendors, including big names such as HP, Microsoft, IBM, BenQ, Fujitsu-Siemens and Symantec, and carries around 3000 individual stock keeping units (SKUs.) The hub of Aptec’s Gulf distribution operation is a warehouse in Jebel Ali that covers 25,000 square feet. Deliveries to customers all over the UAE and Gulf now originate from this consolidated facility following the recent closure of a warehouse in central Dubai. To keep this huge facility running efficiently, Aptec has installed a software solution from Epicor Scala, which it has customised extensively to suit its own requirements. Every single item that enters the warehouse is logged in the system and a quality check is carried out before it is put into storage. Once an order comes in, Aptec draws up an air waybill using DHL’s software system and a confirmation is e-mailed to the customer. Before items leave the warehouse, their status is updated in the system so that the progress of shipments can be tracked. Aptec makes 35-50 direct deliveries per day in the UAE and around 15-20 are dispatched daily via DHL to other parts of the Gulf. A single shipment can range anywhere in size from half a kilo to one ton. A large part of the company’s business also involves customers who prefer to pick up deliveries directly from Jebel Ali. Aptec’s biggest brand is HP, in particular its laptops and printers, and as a distributor for Nokia, Aptec also moves mobile phones in considerable quantities. Aptec’s customer base is diverse, from small retailers and computer assemblers to the largest supermarkets. However, before Aptec can even begin to service these clients, goods must first land in its warehouse. Some items, such as BenQ products, are collected directly from their vendors in Jebel Ali, but in most cases, products are sourced from places as far apart as Ireland, Germany the UK and the Far East. DHL is helping Aptec here, right at the very start of the supply chain, collecting orders from the vendors and shipping them to the Middle East. “Depending on how urgently we need the goods over here, they will ship to us immediately or we will advise them to hold [the shipment] a little while and consolidate it with a few more shipments,” explains Rai. Although the range of products that an IT distributor deals with is diverse, there is a clear distinction between time sensitive PC components such as hard drives and memory chips and less time sensitive finished goods such as PCs and printers. Within the UAE, this is not an issue because deliveries can be made same day to any type of customer. However, outside the UAE it’s a different story, with huge distances and different customs authorities, each with their own way of doing things, to deal with. That is where a specialist logistics provider that knows the lie of the land becomes essential. “We use DHL because they have the experience, they have the knowledge and they get the job done for us without us having to get involved in the nitty gritty,” says Rai. Once goods are handed over to DHL in Jebel Ali, they either head by truck towards the Saudi border or are taken to Dubai International Airport. The more time sensitive goods are moved by air express service in DHL’s own planes. The company claims to have one of the most comprehensive air cargo networks in the region and, as a result, Aptec can be confident of delivering vital PC components to its customers within a day. “We have eleven aircraft flying all over the region,” says Salim K P, business development manager, DHL. “I think DHL is the only air express company operating so many of its own aircraft in the region.” Getting PC components to clients within 24 hours is vital since they turn over so quickly and the value is falling almost as soon as they leave the manufacturer’s warehouse. Thus, the higher cost of moving them by plane is justified. “By air, we are mostly transporting components like memory chips and hard disks,” says Salim. “There are certain IT products where the market rates are slashed on an hourly basis, so time is very critical for some of the components.” To some degree, Aptec is playing the role of warehouse for its clients. Because the distributor can deliver components within 24 hours, PC assemblers do not have to store large inventories of products whose value is diminishing almost as soon as they are made. “Companies actually use us as their warehouse and logistics provider, rather than stocking products themselves, locking up cash and holding inventory,” says Rai. “They expect us to hold inventory for them and expect delivery within 24 hours when they place an order.” Air freight may be vital for some products, but the vast majority of goods are not so time sensitive and can be delivered by road. Within the UAE, Aptec does this itself using its own fleet of vans. The move is an unusual one for a company like Aptec, but it feels that it can do the job cost effectively and efficiently. Initially, however, the company had to go in-house out of necessity. “When we started out in Jebel Ali, we did have outsourced logistics,” says Rai. “Unfortunately, it wasn’t a very pleasant experience. Then the management decided to try out our own logistics.” That was in 1997 and initially the company had just one van making deliveries. Now, trucks leave Jebel Ali twice a day and the company is close to adding a third run. Rai says that any customer in the UAE who places an order by 1.00 pm can expect to receive a delivery by 6.00 pm the same day. However, for shipments destined for places further afield, Aptec needs to partner with a third party that has regional reach. The first stage is for DHL to collect shipments from Aptec’s Jebel Ali warehouse. Normally, duty would then be paid at the Jebel Ali customs office, but DHL’s trucks are exempted and sealed shut by the free zone’s customs officers. Trucks then head straight through Saudi Arabia to DHL’s regional distribution centre in Bahrain, where shipments are unloaded, logged, consolidated with other customers’ consignments and then dispatched by truck to their final destination. Customs duty is only paid when the truck reaches the Dhahran causeway on its way back into KSA, where, thanks to its long history in the region and its sponsor’s support, DHL has an exclusive clearance facility that allows it to bypass queues that can run up to 100 trucks in length. “Before we disperse a shipment from Bahrain to the Dhahran causeway, we electronically transfer all the data on that particular shipment to the customs computer,” says Salim. “Once there, we’ve got an exclusive clearance facility.” This combination of dealing with paperwork and duty payments in advance, and then being able to jump the queue means that DHL trucks can clear customs in around one hour. For everyone else at the Dhahran causeway, it can take anywhere up to seven hours or even more on a slow day, according to Salim. He sees this ability to get things into KSA quickly as a key competitive advantage for his company, especially in the light of a recent tightening up of procedures at Saudi border posts. Although sending products to Bahrain and redistributing them from there may sound like a roundabout way of doing things, there are good reasons. Bahrain is DHL’s historical hub in the region and a large investment has been made in the facility there. Also, Bahrain is close to the huge Saudi market and a lot of shipments destined for Saudi come into the centre from Europe and the USA. With its Dhahran clearance facility, DHL is able to get goods out of Bahrain and into other GCC markets quickly. Once through Dhahran customs, shipments are generally delivered directly to customers. Exceptions are Kuwait, where some vendors prefer Aptec to store inventory locally with PWC, and Saudi Arabia, where shipments are taken to an Aptec warehouse in Riyadh. From there, they are then distributed, again by DHL, directly to customers. From Aptec’s warehouse in Jebel Ali to a customer’s front door, a typical delivery time would be three or four days. According to Rai, both Aptec and its customers are satisfied with this and the price they pay. “Often the rate I can offer the customer [on the product] and the cost the competitor can offer is more or less the same, but what makes a difference is the rate of freight,” he says. “I’ve had customers tell me that they buy from me because I offer a better rate of freight.” “The customer doesn’t need to know where we are clearing or how we are transporting the shipment,” adds Salim. “We sell transit time, not the road link or how it gets there.” Other benefits that Rai mentions are that Aptec can make use of DHL’s in-house insurance services and it has been given a dedicated customer service agent within DHL. Rai says that this agent can advise him on the status of a shipment within 30 seconds of dispatching an e-mail query. With both parties happy with current arrangements, moves are afoot to deepen their relationship. Aptec is keen to serve the Iraqi market and plans to open an office in the country. “We are looking forward to offering them a solution for [Iraq] because we have solid infrastructure in place,” says Salim. “We fly six times a day from Bahrain to Baghdad and we have road service to Baghdad from Jordan. We are looking forward to helping Aptec serve more destinations.”||**||

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