The concept of globalisation has been much spoken of in recent years but nowhere is its impact seen more clearly than in the field of logistics. As new markets have opened up and production bases switched to lower cost areas, it has been necessary to develop worldwide operations to move consignments from supplier to end-user within tight timescales and without adding significantly to costs.
With over 15 years' experience in the industry, Thomas Lee, logistics director, Asia Pacific for Ecco Asia Limited, has witnessed these changes and his latest assignment will certainly put his skills to the test. Since joining the company last November, he has assumed responsibility for the logistics function throughout the Asia Pacific area, including the set-up of systems, the appointment of subcontractors and the management of staff.
The company's regional office is relatively new, having opened in 2002 and, like other departments, Mr Lee's team has to act as a bridge between the corporate headquarters in Denmark, various manufacturing locations and destination markets. He points out that his first step has been to understand the company's direction and expectations.
"Logistics can be a very generic description, so you have to be clear about the nature of the business and fully understand the exact requirements in terms of service and the movement of products," he says. "Once you have identified what will work best, you then have to concentrate on the operational side, which is essential in supporting the rest of the business and has a direct bearing on profitability."
In the case of Ecco, a footwear manufacturer employing over 9,000 staff around the world, that has meant coordinating shipments of shoes, bags and accessories, mostly from factories in Thailand, Portugal, Denmark and Slovakia to consumer markets stretching from Japan to Australia and Taiwan to India. More than 500,000 pairs per year are currently moving to the appointed distributors and subsidiaries around Asia and, in addition, semi-finished products are being shipped to contract manufacturers in Japan.
The information systems in logistics are now sophisticated and really comprehensive
"A major concern is the different country requirements for things like packaging and customs clearance," notes Mr Lee. "There may also be different declaration procedures and varying quota requirements for certain types of leather." These aspects must be monitored on a day-to-day basis, while planning for the next phase of corporate development. This will involve setting up further subsidiaries to implement a major expansion plan which calls for high annual increases in sales and more direct control of the distribution process.
Besides that, a new factory will be opened in Xiamen in the second half of 2005. In the long run this will be more cost effective for the company, eventually meaning fewer shipments from Europe, but far more within the region. In preparation for this, Mr Lee is now examining alternative distribution plans and weighing up options for outsourcing to third-party logistics providers, as one way of minimising fixed costs and increasing flexibility.
In tackling such issues, Mr Lee will be able to draw on his extensive experience overseeing logistics for both hi-tech and pharmaceutical companies. Although he originally graduated in computing, he went into logistics in the hope of finding new challenges and initially worked in both customer service and finance positions. He soon found that his logical approach to solving problems was a key attribute in a fast-changing sector and that his background in IT was invaluable.
"The information systems in logistics are now sophisticated and really comprehensive," he says. "Computerisation has made it possible to link inventory control, warehousing, customer service, invoicing and finance, as well as providing an interface with factories and distributors."
With many more companies now focusing on the efficiency of their logistics operations, Mr Lee suggests this is a good time to get into the industry. "There is more government emphasis on the sector, as one of the so-called four pillars of the local economy and, even though there is competition in the region, Hong Kong has good facilities and can benefit from the increased flow of import and export goods," he says.
He agrees that a professional logistics qualification can definitely help those with limited practical experience in the field, but also points out that part of the job requires being ready to deal with contingencies. "Almost anything can happen, with possible production delays, wrong documentation or late arrivals," he says. "You have to be prepared for all of this and know how to react in the right way."
The mainland is viewed by the logistics industry as a market with enormous potential, but also one that presents considerable challenges. Mr Lee says there will be many opportunities for people from Hong Kong who have the necessary management and language skills along with a good knowledge of the fundamentals of the logistics business.
"A lot of operations functions are now moving to China," he explains, "and as trade expands, so will the demand for people to handle the increased movements of raw materials and finished products." In overall terms, the Hong Kong and South China markets are expected to become more integrated, with further attention given to achieving cost effectiveness and reacting quickly to market requirements.