A hub in a flash

When Apacer Technology decided to open a hub in the Middle East, it turned to DHL. The 3PL quickly allowed the IT company to execute its plans from its Dafza logistics facility.

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By  Neil Denslow Published  September 6, 2005

|~||~||~|Taiwanese IT component manufacturer, Apacer Technology has opened an inventory hub in Dubai to support its Middle East sales drive. The DHL-run facility will enable Apacer to better service its distributors by both providing them with stock more quickly, while also protecting them from the wildly fluctuating prices for computer components. Apacer, which makes flash and DRAM memory devices for PCs, notebooks and other types of computers, has been active in the Middle East for the last four years. In this time, it has serviced its distributor, FDC, by sending goods directly to the Dubai-based company’s facility from its plant in Taiwan. However, despite the use of air cargo, this was still a slow process and the delay hampered Apacer’s sales in the fast-moving local IT sector. FDC was also unwilling to take on the risk of investing in a large inventory, so Apacer opted to open a parts centre in the region itself. “If the channel does not have stock, they cannot sell, which is no good for Apacer or our channel partners,” says Michelle Chen, senior director, A. P. sales & marketing division, Apacer Technology. “And, in our experience, shipments from Taiwan to Dubai normally take four or five days, which is long enough to lose a deal. Therefore, in order to better service our channel partners and to cut down shipment times we decide to set up a hub here,” she continues. The company turned to DHL, and its direct express inventory service, to run the hub, because of the already strong connection between the two companies in Taiwan. Furthermore, the 3PL was also able to quickly provide the secure temperature-controlled storage needed by Apacer’s products at its facility in the Dubai Airport Free Zone (Dafza). “We trust DHL’s services and we have a good relationship with them already, so once we thought about our need to have a hub here [in Dubai] to help our channel partners, we talked to them,” says Chen. The main advantage of the hub, which opened a few months ago, is that it enables Apacer to hold stock within the region, without exposing its channel partners to the financial risk of holding large inventories. This is key, as IT component prices fluctuate widely in line with peaks and troughs in demand and supply, which then deters distributors from investing in stock they may need for future sales. ||**|||~||~||~|“For the kinds of products [we make], the pricing trend is very important,” said Chen. “The pricing quickly falls when the supply is bigger than the demand, and then the price will go down a lot.” “However, our channel partners will now be protected by Apacer,” she continues. “They do not need to worry any longer about the stock and they do not need to worry that pricing will go down, as Apacer will be holding the inventory. This is the reason we have the hub here.” Within the hub, DHL also picks the orders for the channel partners based on instructions from Apacer’s sales team. Again, speed is of the essence in order to ensure the quick fulfilment of customer orders. “If we get an order from our channel partner, we can release the shipment within about four hours,” notes Chen. Aside from running the Dubai hub, DHL also organises the shipment of the parts from Taiwan to the Middle East. Apacer notifies the 3PL’s Taiwan office about a shipment usually via e-mail, and then it is collected from the factory for delivery. The manufacturer is then able to follow the shipment all the way to Dubai via the logistics company’s track & trace system, which is a key tool in measuring DHL’s performance against the KPIs agreed in the contract. “When we ship the shipments from Taiwan to Dubai, when the goods arrive in Dubai, and when then go through the customs clearance, we always know, so it is really easy for us to track it,” says Chen. DHL also provides regular updates on the amount of stock it is holding in the Dubai facility, which then allows Apacer to keep track of its inventory levels. “Everyday, after the shipments have been made, they send us the inventory control saying how many they have of each line, and then we check the inventory to make sure everything is under control,” explains Chen. Looking ahead, Apacer expects to expand its relationship with DHL mainly in terms of the amount of inventory it has stored in Dubai. However, in the future, it may also turn to the logistics company to organise shipments from the hub to the channel partners as well. “Right now, our channel partners go to DHL to pick up the goods, but in the future, we are discussing with DHL the possibility of them doing the deliveries instead,” said Chen.||**||

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