APL Logistics Presentation to GAP INC. Partnership In Retail Sector In China 15 th February 2006.
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Transcript of APL Logistics Presentation to GAP INC. Partnership In Retail Sector In China 15 th February 2006.
APL Logistics Presentation
to GAP INC.
Partnership In Retail Sector In China
15th February 2006
APL Logistics CapabilityAPL Logistics Capability
Retail Sector in ChinaRetail Sector in China
Case StudyCase Study
ConclusionConclusion
Ag
end
a
APL Logistics Capability
NOL Group
SCM SpecialtySCM SpecialtyChemicalsChemicalsAutomotiveAutomotiveFMCG/RetailFMCG/Retail
NOL Founded in 1968Global Transportation & Logistics Group2004 Revenue USD 6.5 billion
APLL established in 1980Global 3PL. Exceptional strength in U.S & Asia2004 Revenue USD 1.2 billion
APLL Global Coverage
Chile
Jamaica
United States of America
China
Africa
India
Japan
Philippines
IndonesiaBrazil
Fiji
Sri Lanka
Argentina
Peru
Mexico
SingaporeMalaysia
Taiwan
Korea
Thailand
Madagascar
Mauritius
Egypt
Hungary
Finland
United Kingdom
Hong Kong
SwedenNorway
TurkeyItalyFrance
GermanyCzech Republic
Pakistan
UAE
Netherlands
SaipanDominican Republic
ColumbiaCosta RicaNicaragua
El Salvador
Guatemala
Bahrain
Denmark
Spain5,000 Employees 271 Offices 174 Cities 55 Countries 18.4 m Cbm Turnover 26 m 5,000 Employees 271 Offices 174 Cities 55 Countries 18.4 m Cbm Turnover 26 m ftft22 Warehouse Warehouse
China Office Network
Xiamen
Shanghai
Qingdao
Shenzhen
Dalian
Hong Kong
BeijingBeijing
Tianjin
NanjingNanjing
Ningbo
Guangzhou
APL and APLL in China
1 HQ (BEJ)1 HQ (BEJ) 15 15
branches branches (Taizhou (Taizhou registration registration to be to be completed)completed)
24 liaison 24 liaison officesoffices
1 HQ (SHA)1 HQ (SHA) 10 branches 10 branches
(PEK, GGZ, (PEK, GGZ, FUZ FUZ registration registration to be to be completed)completed)
4 liaison 4 liaison offices offices
North ChinaSouth China/Hong KongHead Offices & Branches
Fuzhou
Liaison Office
APLL Great China Organization Chart
George Goldman
VP/MDNPRC
Dan Ryan
VP/MDHKSC
Jerry WangDirector,
Automotive
(Covered by Paul Tay)DirectorRetail/
Lifestyle
Paul ManDirector, Contract Logistics
& SCS
Raymond ChoyGM,
Service Integrity
(Open)Manager, Marketing
(Open)Manager, Solutions
Engineering
Koay, Peng Yen
President Greater China
Paul Tay
VP, Reg. LogisticsGreater China
Saito TadayoshiSales Mgr, Japanese
Accts
Mike SullivanManager,
Sales/ Key Acct Mgmt
Frank Chen
MDTaiwan
Jacky Li
Director, Logistics
HKSC
Joe Lee
Director, Logistics
NPRC
(Covered by Frank Chen)
Director, Logistics Taiwan
Direct report to Dennis Chan.
Functional report to Paul
Tay
Direct report to Dan Ryan. Functional
report to Paul Tay
APLL Logistics Capabilities In China
• Wholly Foreign Owned Enterprise (WFOE) Wholly Foreign Owned Enterprise (WFOE) LicenseLicense
19971997
• Public Distribution Enterprise License in FTZPublic Distribution Enterprise License in FTZ 20002000
• Non-Vessel Operated Common Carrier License Non-Vessel Operated Common Carrier License (NVOCC)(NVOCC)
20022002
• Class One & Class Two Air Forwarding License Class One & Class Two Air Forwarding License JVJV
• Trucking Operation LicenseTrucking Operation License JVJV
• Import & Export Business License Import & Export Business License JVJV
• Modern Logistics Advisory Board memberModern Logistics Advisory Board member
• Local Logistics Alliances and Joint VenturesLocal Logistics Alliances and Joint Ventures
Global End-to-End and time definite supply chain management services
Distribution Centres
Door / Customer
Factory / DC
ProductShipped
Foreign Supplier
Local Distribution
Local Transportation
Customs
Cleared
Export
Distributors / Wholesalers
Store Door / Customer
Customs
Cleared
Customs
Cleared
Domestic Supplier
Customs
Cleared
Product FlowProduct Flow
Velocity, Flexibility & PredictabilityVelocity, Flexibility & Predictability
Information FlowInformation Flow
Increase Visibility & Accelerate Decision Increase Visibility & Accelerate Decision MakingMaking
Document FlowDocument Flow
Accuracy & TimelinessAccuracy & Timeliness
Financial FlowFinancial Flow
Transactional Speed & SavingsTransactional Speed & Savings
Vision & Strategy
APLLL Warehouses In China
XiameXiamen
ShanghaiShanghai
QingdaoQingdao
Shenzhen
DalianDalian
Hong KongHong Kong
BeijingBeijing
TianjinTianjin
NanjingNanjing
NingboNingbo
GuangzhoGuangzhou
FuzhouFuzhou
ZhangjiagangZhangjiagang
40,000 ft²
38,500 ft²
ChongqingChongqing
19,368 ft²
53,820 ft²
975,126 ft²
180,018 ft²
33,000 ft²
185,000 ft²
129,120 ft²
213,050 ft²
215,285 ft²
560,000 ft²
As of 2005,total of 25 Facilities over 2.5Mil sq. ft of space
550 employees in china.
Formed 2 Joint Ventures in 2002
Handled more than 600,000 CBM domestic cargoes in 2004
Warehouse Management Scopes
• Pick & PackPick & Pack• Consolidation Consolidation • Label printing & Sticking Label printing & Sticking • Floor Planning & Space Optimization Floor Planning & Space Optimization • Product Quality & Quantity Verification Product Quality & Quantity Verification • Expiration Date Control & Alert Report Expiration Date Control & Alert Report • Humidity & Temperature Monitor Humidity & Temperature Monitor • Distribution & Transportation Management Distribution & Transportation Management • JIT JIT • Real Time Records of Inventory Real Time Records of Inventory • PO Validation PO Validation • EDI Data Exchanging EDI Data Exchanging • Customized ReportsCustomized Reports
• Pick & PackPick & Pack• Consolidation Consolidation • Label printing & Sticking Label printing & Sticking • Floor Planning & Space Optimization Floor Planning & Space Optimization • Product Quality & Quantity Verification Product Quality & Quantity Verification • Expiration Date Control & Alert Report Expiration Date Control & Alert Report • Humidity & Temperature Monitor Humidity & Temperature Monitor • Distribution & Transportation Management Distribution & Transportation Management • JIT JIT • Real Time Records of Inventory Real Time Records of Inventory • PO Validation PO Validation • EDI Data Exchanging EDI Data Exchanging • Customized ReportsCustomized Reports
Xi’an
Harbin
Shenyang
DalianBeijing
Tianjin
Kunming
Wuhan
Nanning
Zhengzhou
Chengdu
Changsha
Hefei
Baoding
Shijiazhuang
JinanQingdao
Nanjing
Shanghai
Hangzhou
Ningbo
Suzhou
XiamenFuzhou
Haikou
GuangzhouShantou
Shenzhen
ChongqingWenzhou
Zhuhai
Daqing
Umuqi
XiningLanzhou
Yinchuan
Huhehaote
Changchun
Nanchang
Taiyuan Yantai
Nantong
Wuxi
Zhanjiang
Guiyang
Trucking Services Through Selective Partnerships :
Bonded & Non-bonded trucking services
All truck types/sizes
Full truck load and less-than-truckload service
Cover all major cities in China
Stringent Lead Time control
No Overload Guarantee
APLL PRC Capability – Road Transportation
Trucking Partner Equipments0.5T/2T/3T/5T trailers total 10around 15 controlled trucks60x40' customs custody & 20x40'foot container tailersControlled trucks:more than 200 x 40' cnter tailers non-baonded truck owned 30Bonded truck:5
Wanwang
Beihai
APLL Zhiqin
APLL PRC Capability – River Transportation
Partnership with local carriers to provide barge Service in Yangtze River Delta, Pearl River Delta and Coastal area
Offering domestic consolidation service in Shanghai, Tianjin, Dalian, Qingdao, Fuzhou, Xiamen, Shenzhen, Chongqing & Chengdu
Shanghai
Yangtze River DeltaYangtze River Delta
Chongqing
Kong Hong
Pearl River DeltaPearl River DeltaGuangzhou
Xinjiang
Qinghai
Tibet
Yunnan
Sichuan
Gansu
Ningxia
Shanxi
Shanxi
Henan
Hubei
Guizhou
Guangxi
Hainan
JiangxiFujian
Anhui
Hebei
Inner Mongolia
Liaonign
Jilin
Helongjiang
Hunan
Chongqing
ShanghaiNingbo
Guangzhou
TianjinDalian
Jiangsu
Guangdong
Shandong
Zhejiang
Qinghuangdao
Qingdao
Shenyang
Chengdu
ShenzhenYantian
Xiamen
Fuzhou
Nanjin
Beijing
Hangzhou
Changchun
HongKongC
oas
tal Tra
nsp
orta
tion
APLL PRC Capability – Air Transportation
Xinjiang
Qinghai
Tibet
Yunnan
Sichuan
Gansu
Ningxia
Shanxi
Shanxi
Henan
Hubei
Guizhou
Guangxi
Hainan
JiangxiFujian
Anhui
Hebei
Inner Mongolia
Liaonign
Jilin
Helongjiang
Hunan
Chongqing
Shanghai
Ningbo
Guangzhou
TianjinDalian
Jiangsu
Guangdong
Shandong
Zhejiang
Qinghuangdao
Qingdao
Shenyang
Chengdu
ShenzhenYantian
Xiamen
Fuzhou
Nanjin
Beijing
Hangzhou
Changchun
HongKong
JV APLL-Zhiqin owns Class “A” (international) & Class “B” (Domestic) Airfreight Operator License issued by CAAC
3 regional air freight consolidation hubs in Beijing, Shanghai and Shenzhen airports
Dedicated on-site operation team in the airports
Reliable partnership with main Airlines
APLL’s Customer Service Excellence
Warehouse KPIKPI Description & Measurement Target
Inventory Accuracy Percentage of line items with physical count matches with system record. (By pcs)
>99.9%
Damage Ratio Percentage of stocks damaged with respect to overall cargo volume. (By pcs)
<0.1%
Complete/Accurate order
Percentage of order lines with the right model number & requested quantity picked.(By order lines)
>99%
On-time dispatch Percentage of orders received and made ready for loading within the same day.
> 99.5%
On-time receipt Percentage of goods received and updated into WMS within 4 hours upon arrival.
>99.5%
Safe Operation Number of major accidents occurred during the month.
0 incident
Compliance with Government regulations
Number of violations on local government building/fire/safety regulations
0 incident
Subject to Contract
APLL also provide various tailored KPI services to fulfill different customers requirements.
Transportation KPI KPI Description & Measurement Target
On Time Delivery Percentage of orders delivered to customer within agreed service lead time or promised date. (By order)
>95%
Damage Ratio Percentage of cargo damaged when delivered to customer with respect to overall cargo volume. (By ton)
<1%
On Time D/O Return
Percentage of endorsed D/O signed by end-customer which have been brought back within promised days upon cargo delivery. (By order)
>95%
Success Delivery Ratio
Percentage of correct and completed delivery fulfillment. (By order)
>99%
Customer Complaint Ratio
Percentage of service failure claimed by customer. (By order)
<1%
Subject to Contract
Sample KPIs – Determined to be the Best In Class
End to End Technology
Proactive information technology services and toolsProactive information technology services and tools
Internet Visibility
ASN Compliance (RFID, bar code scanning and labeling)
Transportation Management System (TMS)
Warehouse Management System (WMS)
Yard Management System (YMG)
XML (Transmission Protocol)
Electronic Data Interface (EDI)
Internet Visibility
ASN Compliance (RFID, bar code scanning and labeling)
Transportation Management System (TMS)
Warehouse Management System (WMS)
Yard Management System (YMG)
XML (Transmission Protocol)
Electronic Data Interface (EDI)
Our Customers in China
WMS & TMS In China:
Allenberg
Belden
IKEA
ChangAn Ford
SONY
UCB Chemical
Huntsman
Rohm & Haas
Reliance
Novus
Jinsen
Maxxium…
Apparel Consolidation Customers:The GapPolo/Ralph LaurenTommy HilfigerEsprit Charming ShoppesAnn TaylorNikeTimberlandStride RiteRuss BerrieTarget Corp.J.C. PenneyK martTJ MaxxMay Department Store…
Retail Sector in China
China Retail Market
Traditional grocery store. Still the most important retail format in China with low entry capital.
Supermarket & Hypermarket. Increasing rapidly in China with fierce competition among big retailers in both domestic and international players.
Department stores. Once the most popular retail format in China. Their leading position is gradually losing to modern retail formats.
Flagship/Specialty stores. Including home appliance, pharmaceutical, computer etc. are increasing popular in China these days.
Convenience stores. Quite successful in urban cities like Guangzhou, Beijing and Shanghai. However, the margin becomes thinner and thinner affected by the stiff market competition
Online shoppings. a new format with increasing popular among young generation which has very small sales proportion compared to other channels
Major Retail Formats
Example of Major Supermarket : Example of Major Supermarket : – Global : Carrefour (China), K-mart, Global : Carrefour (China), K-mart,
Lotus, Matro, AuchanLotus, Matro, Auchan– Local : Bailian Group, Beijing Huailian, Local : Bailian Group, Beijing Huailian,
Suguo Supermarket,Suguo Supermarket,
Example of Department Stores :Example of Department Stores : – Global Retailers : Istan, Parkson, Global Retailers : Istan, Parkson,
Pacific, Grand SquarePacific, Grand Square
– Local Retailers : Dashang Group, Local Retailers : Dashang Group, Chongqing Commerce GroupChongqing Commerce Group
Example of Professional stores:Example of Professional stores:– Local Retailers : Gome, Suning, Local Retailers : Gome, Suning,
Yolong (Electronic) Yolong (Electronic)
Example of Brand Chain: Example of Brand Chain: – Esprit, CK,Esprit, CK, Samsonite, SwarovskiSamsonite, Swarovski
Example of Convenience Store: Example of Convenience Store: – C-Stone, KEDI, HaodeC-Stone, KEDI, Haode
13%
43% 40%
1.5%2.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
DepartmentStore
Supermarket &Hypermarket
ProfessionalStore
Brand ChainStore
ConvenientStore
Sales Proportion by Retail Channel
China Retail Market Sharing
Source: National Bureau of Statistics of China, top 100 retailers statistics 2004 data
Source: Market information & discussion with FMCG customer
Retail Modes Split by Regions
Beijing Liaoning Shanghai Jiangsu Zhejiang Guangzhou Chongqing Sichuan
Convenient Store
Brand Chain Store
Professional Store
Super Market
Department Store
Retails Sales Rev by Regions (2004 vs 2003)
• Shanghai and Beijing still stay as the top retail markets in China. Their retail sales revenue takes more than 40% of country wide retail sales revenue.
• Retail industry continuously keeps high increasing rates of more than 30% compares to 2003.
0
20000
40000
60000
80000
100000
120000
140000
Sale
s R
ev (
Mil
lio
n R
MB
)
Source: Market information & discussion with FMCG customer
• Brand Chain Store only take about 1% of total retail sales in China.
• Beijing, Shanghai, Guangdong, Zhejiang, Jiangsu lead this brand chain sales mode and show high potential on acceptance.
0
400
800
1200
1600
Sal
es R
ev (
Mil
lio
n R
MB
)
2004
2003
Sales Rev of Brand Chain Stores by Origins
Foreign Brand Apparel Retailers in China
Source: APL Logistics China internal research
Brand Beijing Shanghai Guangzhou Dalian Hangzhou Jinan Wuhan Others Total Chain Shops Other FormatESPRIT 5 10 7 3 2 1 1 20 77 500+
NAUTICA 19 12 2 1 4 0 7 59 104 N/ABENETON 1 1 0 1 1 0 0 14 18 N/AGIODANO 10 7 11 8 0 6 5 N/A 47 600+
Store Location
Retail Market Trend
Market is expected to record massive growth over the next few years with some trends as below:
Intense competition and low profitability due to serious business expansion including both local and foreign retailers.
China Logistics cost in top 100 retailers is 25-27% comparing to 7-8% in the US
More M&A leading to consolidation of retail market.
Growth remains focused on key market cities due to high average individual incomes in China’s rich urban centers such as Shanghai, Beijing and Guangzhou.
Continuous expansion from 1st tier to 2nd tier cities. More retailers are moving to provincial towns and rural areas to capture new market share although these areas are still relatively underdeveloped and less competitive.
Supermarkets and hypermarkets formats are to overtake department stores. While retail chain store is to replace traditional grocery stores, mini-markets and kiosks.
Multi-format operations will be a choice of big retailers to achieve greater economies of scale
Case Study
China Supply Chain China Supply Chain NetworkNetwork
Guangzhou ReDC
Dalian ReDC
Shanghai CDC
Beijin ReDC
Panyu CDC
Case Study – A Famous Garment Retailer
• 153 wholesale routes
• 470 POS’s & 85 POS’s in shanghai
• 8 special Stores
• 58 POS’s in Beijing • 16 POS’s in Dailian
• 10 POS’s in Guangzhou
• 5 wholesale routes
• 15 POS’s
• 6 special Stores
Ports of sales in China Number of Retails : 171+
- 39% Own Retails
- 61% Franchise Number of Wholesale : 496+
Distribution Centers60,000 FT2 (Beijing) 300,000 FT2 (Shanghai) 30,000 FT2 (Shenzhen)
Delivery Cities 70+
POS 500+
Transportation Vehicles 450+
Inventory Accuracy >99.9%
Damage Rate <0.1%
Order Pick Accuracy >99.9%
On time Delivery >99.0%
Snapshot of APLL Existing Distribution Service in China
Conclusion
Document/Data Flow: - Diverse data system cause non-homogenous data modality in
Logistics Chain; - Data Accuracy - Various different level of Requirements for documents as per
different Clients.
Product FlowProduct Flow:: - Proper Packaging to keep damage rate satisfaction;- Proper Packaging to keep damage rate satisfaction; - Timely & Effective Replenishment;- Timely & Effective Replenishment; - Distribution network Design;- Distribution network Design; - Inventory - Inventory rationality & rationality & accuracy.accuracy.
Logistics Challenges for Retailers in China
Logistics Challenges for Retailers in China
Before tailor-made and setup essential solution for GAP’s Before tailor-made and setup essential solution for GAP’s domestic distribution & operations, should know:domestic distribution & operations, should know:
GAP’s SKU ProfileGAP’s SKU Profile
Volume forecastVolume forecast
Planned points of domestic salesPlanned points of domestic sales
Percentage split of domestic sourcing and importPercentage split of domestic sourcing and import
Profile of domestic suppliers (Location & Volume)Profile of domestic suppliers (Location & Volume)
… …… …
Thank You !Thank You !