Globalisation, costs and competition are three leading factors which force companies to keep looking for new efficiencies and ways to refine their business processes.
One of the usual steps is to improve key aspects of the supply chain, and this has had obvious implications for the logistics industry.
Firstly, multinationals are focusing more on their core activities and looking to outsource logistics requirements. Secondly, they want to work with a limited number of service providers which can offer a genuinely global network. If necessary, this must include services for sea and air freight, contract logistics, warehousing and distribution, customs clearance, insurance brokerage and vendor-managed inventory.
Logistics companies with the required worldwide scope have seen impressive rates of growth in recent years and are very confident about future demand. "We are equipped with the necessary logistics expertise and the wide-reaching global network to provide our customers with the services they need," says Andy Weber, managing director of Kuehne+Nagel (Asia Pacific) Management Ltd.
With the support of 750 offices in over 100 countries, the company believes it can offer more efficient services by working through owned operations. This makes it easier to provide tailor-made solutions and integrate all of a customer's requirements in a complete logistics package.
The challenge is to recruit, educate and develop staff, while still keeping service levels up to our high standards
Track and trace
Although over 600 competitors are fighting for the same business in Hong Kong alone, Mr Weber says that Kuehne+Nagel's commitment to continuous innovation gives them a clear edge. In particular, this can be seen in a sophisticated IT system which lets customers trace a consignment and check its status at each stage of the supply chain. "Customers want to know when their purchase orders or consignments are ready, what is in each of the containers, when it will be picked up or delivered," Mr Weber explains.
With access to the company's IT system, it is possible to check all this and more for consignments in different parts of the world. When able to track and trace in such detail, shippers and consignees can know exactly where specific cargo is at any given time and minimise storage or other costs accordingly. "It is relatively easy for us to have the same IT systems in all of our offices, so customers can quickly track how much stock they have, for example, in Singapore, North America or Germany," Mr Weber adds.
To some extent, such IT applications are driving growth in the industry. They have become a critical factor for many customers who now rely on having a standardised and integrated system. Benefiting from this, the company has been able to outperform the market in terms of growth in both sea and air freight, and has already set very optimistic targets for 2007.
In view of this, the greatest challenge at present is recruiting experienced staff. In Hong Kong, many employers are competing for the same talent, while in mainland China, there are very few candidates with a background in logistics. To sustain more than 30 per cent year-on-year business growth in China, Kuehne+Nagel has had to rely on hiring graduates in other disciplines. "The challenge is to recruit, educate and develop staff, while still keeping service levels up to our high standards," Mr Weber says.
Therefore, a number of internal and external training programmes have been set up to help staff master the complexities of the business. "We have to train them in everything from the basic industry knowledge to very sophisticated IT systems," Mr Weber notes. Specially developed courses led by the company's team of "super-users" makes it easy for new recruits to learn how to use the systems.
"As long as candidates speak good English, have a degree and possess a proactive attitude, they will have a chance to join our company," Mr Weber concludes.