Changes in consumers’ purchasing habits have driven retailers to adapt accordingly for survival. Similarly, consumer goods manufacturers now aim to distribute their products to the biggest number of retailers in order to cover most target customers. These dynamics have also led to a change among retail logistics service providers, whose work is to link up consumer goods manufacturers, wholesalers, and retailers in the supply chain. The retail logistics sector now finds a need to develop its service and strategies to cater to the new ways of both retailers’ and manufacturers’.
It is undeniable that retail businesses have long been a significant part of Thailand’s economy. Today, retailers are found in many different forms, such as, general stores, convenient stores, and department stores. Retail logistics service providers are obliged to understand the true needs of both ends of the supply chain, manufacturers and retailers, especially when it comes to inventory management and reaching the most coverage of cargo distribution.
We had an opportunity to speak to two retail logistics experts, Mr. Kevin Burrell, Chief Executive Officer Thailand, the Philippines, and Vietnam DHL Supply Chain (Thailand), and Mr. Anirut Udomratchatavanit, Associate Director – Business Development Berli Junker Logistics (BJC Logistics) about today’s retail logistics industry and its services that have altered to cater to the present dynamics of retail businesses.
In the retail business world, retail stores and distribution have become more diverse compared to the past, with the influence of changes in consumers’ purchasing habits. General stores, the so-called Mini-Marts, convenient stores, supermarkets, and even hypermarkets can now be found on every corner of a residential zone. The diverse retail store forms can offer a wide range of products, ranging from daily consumption products to clothing items, and much more.
When demands for a wide range of products, convenience, accessibility, speed, and quality become the key requirements; retailers react by setting up promotional campaigns to raise revenues, while many manufacturers have shifted their strategy to getting as close to both retailers and consumers as possible. The combination of these demands and a need for inventory management have triggered retail logistics service providers to find the right solutions and technologies that can optimize their business efficiency in terms of time, cost, and distribution coverage.
Coming of Technology
“We constantly seek innovation to develop our operations and services. DHL was the first organization to bring Voice Picking technology to Thailand, which assists picking operations that are commanded by voice. The technology is designed to improve picking precision and efficiency. Before, our warehouse team members had to pick out each piece by hand, note down the record onto a paper copy before scanning the bar code adhered to each unit of stock. Bar code scanning may have helped, but the method is still flawed in terms of scanning precision and a possibility of human error in scanning. However, Voice Picking eliminates human error in scanning entirely. We want to innovate new technologies because we understand the changes that have happened in logistics operations, which are usually manual labor-intensive. However, we are moving towards a more automated work environment for enhanced efficiency. We have a need to develop our system accordingly to our operational functions”, said Mr. Burrell.
In terms of inventory management and retail distribution, retail logistics service providers have introduced various software products and platforms to improve inventory management and warehousing. Mr. Anirut said, “BJC Logistics has introduced a Warehouse Management System (WMS) developed by an Australian company to assist in warehouse and inventory management. Due to its stability and precision, the WMS is specialized for holding inventory and for product distribution and data filing. Furthermore, the system comes equipped with an expiry date management system that can manage stock in many patterns, including FIFO (First In, First Out), FEFO (First Expiry, First out), LIFO (Last In, First Out), Lot Control, Serial Control, and Shelf Life Management. Our WMS can answer diverse demands of our current clients and anticipated demands in the future, which is very important for the retail business.”
“We want to innovate new technologies because we understand the changes that have happened in logistics operations, which are usually manual labor-intensive. However, we are moving towards a more automated work environment for enhanced efficiency. We have a need to develop our system accordingly to our operational functions”
Mr. Kevin Burrell, Chief Executive Officer Thailand, the Philippines, and Vietnam DHL Supply Chain (Thailand)
Prior to distribution to retail locations, manufacturers normally store their goods in warehouses on the way to be distributed to retail stores. There are four main types of warehouses a business can choose from, which include private warehouse, public warehouse, contract warehouse, and multi-client warehouse. In order to choose which type of warehouse, manufacturers must assess their own commodity and storage requirements.
A suitable type of warehouse to host daily consumer goods or fast-moving consumer goods (FMCGs) for small retail distribution operations seems to be the multi-client warehouse, which can best cater to SME businesses and their demands. This is because this type of warehouse allows for the preparation and management of goods in a shared space that is already fully equipped with the right tools for picking and packing as well as convenient container stuffing and cross-docking and consolidation.
Distribution within Thailand is carried out mainly via trucking. The most important aspect of truck distribution is to have the most coverage possible, in order to be cost-efficient. Furthermore, this transportation mode helps shorten transport time, since trucks are able to make stops at many stores in one single trip. “We are seeing more of our clients distributing their goods by truck to different parts of Thailand. The most important thing about trucking is the volume of cargo for each trip. This is because many fast-moving consumer goods can be distributed without having to wait for a container to be filled. Such transportation takes data from location pooling of retail stores and capability pooling to management the distribution, in cases where procurement are irregular. For example, in a certain month two retailers can still share a distribution operational ground with a big difference in volume each has procured. This is the management of uncertain procurement which does not only increase efficiency in combining containers and distribution, but also helps save cost by dividing it between other retails who share the operational ground and containers.” This distribution management not only benefits the manufacturer, but also benefits retailers who can receive their fulfillment sooner. Retail stores must always be amply stocked, and fill up their shelves to avoid product shortage.
“BJC Logistics has introduced a Warehouse Management System (WMS) developed by an Australian company to assist in warehouse and inventory management. Due to its stability and precision, the WMS is specialized for holding inventory and for product distribution and data filing.”
Mr. Anirut Udomratchatavanit, Associate Director – Business Development Berli Junker Logistics (BJC Logistics)
Mr. Burrell stated, “Those who are unfamiliar with retail businesses or retailers often misunderstand their focus on cost saving. They tend to think that most retail businesses’ only concern is about cutting cost, which is not true. Retail businesses’ main focus when it comes to retail logistics is about being offered a quality service that comes at a reasonable price. Basically, all retailers want to make sure is that their customers will always be welcomed with shelves full of everything they need. At the same time, retailers do not want to overstock, but rather to have just enough. This comes down to only two main needs of retailers; to be served with quality and consistency.”