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Company Background

Kerry Logistics is a logistic service provider with head office in Hong Kong. It develops a global network across six continents with the largest distribution network and hub operations in China and ASEAN region. As the logistics service provider of many of the top 100 Brands, Kerry Logistics serves customers in different industries, such as fashion & lifestyle, electronics & technology and food & beverage, etc. Its aim is to deliver the best logistics solution to make its customers successful, with the advantage of its home base in Asia and a strong focus on China.

Visit flow

The visit to Kerry Cargo Centre included two warehouse visits: GAP and Netgear. Kerry has tailored its value-added services to fit the needs of its clients, please see details as follows.

Kerry Cargo Centre Project 1: GAP

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GAP has been one of Kerry Logistics’ clients since the year of 2011. With 200,000 square feet of storage areas (occupying both 4th and 11th of Kerry Cargo Center) leased to GAP, Old Navy and Banana Republic, Kerry has been providing inventory managing and value-adding services to them.

Inventory managing services:

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Shelves with location ID

For local stores, after dispatching inbound goods and storing them with assorted slots (each slot represents one store), goods, when needed, are packed in three different ways, 1.) piece pick, 2.) pick to store; and 3.) full carton pick, and are replenished in individual branches according to respective Stock-Keeping Units (SKUs). Different shelves are used to identify different locations with a specific code. ce63146b-3ad9-4b95-89ea-8118a713f882

For overseas inventory shipping, incoming inventory that would later be shipped to Taiwan or other pacific regions would be packed in cartons; what’s more, excess inventory from Hong Kong would also be relabelled and tagged with prices in destined location of sale.

Value-Adding Services (VASs):

GAP only deploys little VASs from Kerry Logistics, such services include relabelling, repairing of damaged items, disposing of excess inventory.

GAP Performance Monitoring System:

Kerry Logistics puts efforts in monitoring their daily performance through different indicatiors, such as Key Performance Index (KPI), inbound and outbound volume and averages days from dock to stock. Through these straight monitoring, forecasting and quality management can be done under quantitative statistics.

These are the photos we took during the visit in 4th floor of Kerry Logistics Cargo:

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Kerry Cargo Center Project 2: Netgear

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The company has served Netgear since 2001 and is leasing more than 70,000 square feet of warehouse area for operations. The warehouse, storing more than 400,000 pieces of products, is divided into two areas for finished goods and returned goods. For finished goods, the operations include storing inbound goods from the factory, comparing quantity of goods with invoice, and shipping. Netgear has three warehouses located in Netherland, California, and Hong Kong to fulfill the company’s storage and shipping demand.

For return merchandise authorisation (RMA), all returned goods are sent to the Hong Kong centre. The returned goods will undergo three processes: 1) Unpacking, 2) Testing, and 3) Repacking/Scraping. Netgear has set up a centre to facilitate the whole process. The unpack area can handle 4,000 pieces of router per day. First, the employees unpack and sort the router into different pieces such as the case, the motherboard, and the packaging materials. Afterwards, they scan the serial number so that the item can be tracked on the web system providing real time monitoring.

Then, the unpacked routers are sent to the test centre and given different grades (R, A, B, C) to indicate different conditions: R stands for refurbished goods, A stands for products with good condition, B stands for products that need to be repaired, and C stands for products that will be scrapped. About 300 pieces are tested in each station with the testing program provided by their relative customers. The Kerry staff can use those program and facilitate the testing procedure according to customer’s requirement.

If the product can be fixed, the process will be straightly according to the standard operation process required by the customers and return as refurbished product. The next stage will the the repacking after the repairment. As the RMA centre in Hong Kong serves overseas customers, multiple or suitable language packaging will be used in the repacking procedure. For product needed to be scrapped, an orange sticker is used to indicate clearly on the box to prevent errors. Though their Original Design Manufacturing (ODM) is not on-site, to ensure the service quality, supervisor of the customer will arrive at Kerry everyday to monitor the overall process.

Question & Answer

1. How exactly does your “KerrierVISION” IT Platform work to enhance supply chain management?

The “KerrierVISION” helps Kerry Logistics as well as specific clients to monitor the whole supply chain process. Upon receipt of incoming goods, Kerry Logistics would make use of “KerrierVISION” to update respective inventory information and clients would be able to instantly browse said information; moreover, with “KerrierVISION”, inventory levels of individual retailing branches of 3PL clients would be kept under record. When stock level falls below required SKU (Stock-keeping units), Kerry would help 3PL clients to replenish (repurchase merchandise or stock to individual branches) inventory. In general, with “KerryVISION”, not only can Kerry logistics make good use of client information to provide Value-Adding Services (VAS) such as automated inventory replenishment, but also can it enable 3PL clients to further analyze sales data and react accordingly (such as [in the case of GAP] relabelling excess inventory for overseas resale).

2. How does Kerry take advantage of advanced technologies (such as Internet of Things, wearable technology, etc.) to enhance accessibility and connectivity along the supply chains? 

Now Kerry is testing on the possibility of using a brand-new electronic guiding system for pick and pack. Currently, staff of Kerry Logistics is using RF (Radio frequency) handheld to scan and pick inventories. Routings (towards the locations of desired inventories for picking) mostly based on staff memory and would sometimes require long and troublesome, if not redundant, walks. With the new technology, workers who are equipped with smartphones and headsets would be guided by instructions given by the pre-installed application which would plan shortest routes and instruct them accordingly, enhancing inventory pick-and-packing efficiency and reduce waste (redundant labor movement).

3. Kerry Logistics provides different supply chain solutions to clients from different industries such as fashion, F&B, automotives, etc. How does Kerry Logistics fulfil the wide variety of requirements with limited resources? 

Kerry has separated its workers into different groups for that relevant industry. Those experienced workers can make use of their expertise in that particular industry to fulfil the client’s’ singular needs. Besides, Kerry has also provided its workers with some training in order to enhance their knowledge about the logistics industry. And that’s the reason why they can serve the clients in a more comprehensive manner.

4. How does Kerry Logistics use tracking and tracing system to provide real-time service to customers?Are there any tailored-made systems for specific customers and/or high-end products?

Electronic Proof of Delivery (ePOD) system is used by Kerry Logistics and customers to keep track on the delivery. Customers can use their smartphones to know when and where their inventories are transferred and transported. In addition, they are required to sign on the smart devices of the delivery staff when they receive their order.In general, the ePOD system, on one hand, provides an accurate gauge of inventory arrival time; on the other, it eases the verification and documentation processes for Kerry’s Logistics upon successful delivery.

5. Apart from adopting environmental friendly designs in office, what other practices do Kerry Logistics has deployed in promoting sustainability? 

Kerry Logistics has developed LED lighting and environmentally-friendly construction layout of offices. Certificates are presented to proof the building is built under those construction in 2007 and 2011. Besides, the wall paintings in the building applied environmental-friendly materials with the rainwater collection facilities in the warehouse. Additionally, the delivery trucks it uses has higher consumption preference towards electricity to fossil fuel and can be used interchangeably.

6. What kinds of unique value-added service do Kerry logistics provide to its customers?

Kerry Logistics’ partnership with GODIVA

Kerry Logistics opened a travel retail packing centre for GODIVA, the chocolate are shipped to Hong Kong from Belgium and packed in the Hong Kong centre. Kerry also provides cold chain storage facilities and training packing staff. Moreover, Kerry provides order tracking system to facilitate the tracking of products and handles return logistics for GODIVA.

7. How do Kerry logistics expand new customer base? 

In Kerry Logistics, there are professional salespersons to help them explores business opportunities in Hong Kong and overseas. Also, its integrated logistics linkage can implement cross-selling between different clients.

8. How did Kerry manage to keep its operation smoothly when Kerry had to redesign its warehouse layout to cater the implementation of the robotic butler system in its P3C facility? Is it always the case that automation brings positive impact towards the company? 

Before the application of the robotic butler system, Kerry will form a team for planning the relocation of shelves and goods. Not only the specific team members, cooperation with the warehouse staff is essential as they have more knowledge towards the client demand and practical situation to ensure the operations can run smoothly. Moreover, implementation of the forecasting system can help to predict the goods demand and seasonal fluctuations.

9. What are the competitive advantages of Kerry Logistics in logistics industry? 

Being the largest 3PL company in Hong Kong, Kerry Logistics has over 30 years of expertise and experience in the sector. New staff can receive sufficient training towards the industry from the senior staff and gain more knowledge towards the new technology in the industry. On the other hand, as the company size is very large, it can have an advantage of economy of scale, such as the allocation of inventory and human resources among different warehouses.

Learning Reflection

Our group thinks that there is a huge market for the third-party logistics industry to grow because most of the companies will mainly focus on the core business, and they would seldom pay much attention on doing the valued-added services for their customers. After our visit to Kerry Logistics, we could see that it does not only provide simple logistics for different companies, it also pays attention on providing the value-added services, like packing the valentine’s day chocolate gift box for Godiva, removing the price tag of Gap’s garment etc. This actually helps differentiate Kerry from most of the third-party logistics companies in Hong Kong and this is also one of the reasons why currently, Maxims’ will also cooperate with Kerry logistics.

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