1. Dedication to efficiency

COMPANY: OTTO INTERNATIONAL ASIA BUSINESS: MERCHANDISE SOURCING EMPLOYEES: 1,162 FOUNDED: 1966 REVENUE: US$1,099 MILLION WEBSITE: WWW.OTTOASIA.COM

The winner of the 2006 Logistics Awards Hong Kong, Otto International Asia (OIA), is a buying organisation catering to over 30 mail order and retail companies, and is part of the global Otto Group. Its headquarters in Hong Kong spreads over four floors in Peninsula Square in Hung Hom, Kowloon and boasts a 300-strong staff.

OIA's clients include Eddie Bauer and bonprix.The products they deal with range from fashion garments, to lingerie to furniture. Its parent company, German-based Otto Group, is second only to Amazon.com in the online shopping business.

OIA structures its supply chain according to its clients' preference - whether the client is part of the Otto Group, or a third-party one. The company adopts a pragmatic approach to arrive at solutions that will enable their supply chain operations to be more effective.

One of the reasons OIA was awarded the "Hong Kong In-house Logistics Management Award" is its quality control inspection process, which was revamped into a more efficient and meticulous operation. Its use of electronic shipping documents via Tradelink's Trader Documentation Service also helps streamline its supply chain operation.

2. Team work

The OIA supply chain stretches across Asia - with offices in, among others, Taipei, Seoul, Singapore and Delhi.
OIA also has inspection centres in Shanghai, Qingdao and Dongguan. The Hong Kong Holding of OIA manages the finance, human resource and IT side of the business.

3. Standardising documents

Every aspect of the supply chain operation is linked by the specially designed Enterprise Resource Planning (ERP) system called allegroB. It standardises documents so they are accessible to all relevant parties, including employees, at every step of the supply chain. Any new documents uploaded onto the system and revisions to the existing documents are immediately noticeable.

allegroB ensures that all employees are consulting the same administration documents, the same style specifications, the same time schedules and more. In doing so, allegroB greatly reduces the time and resources spent on communications and co-ordination, resulting in an increase in efficiency and productivity.

allegroB is modified according to the needs of the clients and interfaces with their preferred product development management (PDM) system. Once OIA employees in Asia have received the style specifications and designated supplier of garments through the ERP, they will start the quality assurance (QA) process for the garments. The QA staff starts fitting together the garments, measuring and testing them to ensure that the style specifications are accurate, feasible for manufacturing and ultimately profitable.
When the QA process is completed, the staff inputs the results into the PDM. The client can then
immediately access the data and act accordingly. If the QA process gives an all-clear to the product, the client can go on to confirm the final marketing plans.

4. Inspection with care

After the QA process, the suppliers can begin manufacturing the product. allegroB ensures that all specifications relating to the garment is readily available at all times to the relevant personnel.

OIA has a unique inspection process, developed over time by taking into account past experiences. Previously, OIA would send quality control (QC) inspectors to each factory to conduct a random inspection of the garments. Should the inspectors find some flaws in the merchandise, the factory would have to re-work the merchandise and have the QC inspector visit the factory again to re-examine it.

Such a process was time consuming and led to delays in delivery, which, given the timely nature of the fashion business, should be avoided as much as possible. There was also no guarantee that the supplier would sift out all the defective pieces after the random inspection.
OIA improved the process by having factories send over the entire, completed batch of merchandise to its QC inspection centres. Trained staff at the centres will conduct a statistical sampling, known as the AQL test, within 24 hours. A specified number of the
garments are checked and if a defect is found, every single piece in the batch is unpacked and subject to inspection.

5. Smooth delivery

Logistics Awards Hong Kong is organised by, among others, the Hong Kong Trade Development Council and the Chartered Institute of Logistics & Transport, and aims to recognise outstanding logistics companies and professionals for their significant contributions to the logistics industry.

The rejected pieces will be sent back to the supplier, while approved pieces will be passed to the forwarder to be loaded onto the container and shipped to Europe or the United States. The whole process is completed in a mere 48 hours. The new process allows the good quality goods to be delivered without delay while the defective goods are being amended. In addition, having every single piece inspected under one roof using consistent guidelines ensures a very thorough QC process.

"We are keen to ensure on-time delivery, as most of our clients are mail order companies and the items need to be available when the marketing material (the catalogue) is distributed," says Sven Jasper, General Manager for Information Technology, Asia.

By adopting a pragmatic approach to improving its supply chain operations, OIA has created an innovative QC inspection process and a
competitive edge over others.

6. A paperless future

In its continual effort for best practices and in adhering to its values for environmental protection - OIA is aiming to reduce its paper usage to zero.

Despite the widespread use of the ERP in all aspects of the supply chain, shipping documents are still done manually. These include invoices, packaging list, bill of lading and country of origin certificates.

"This is where Tradelink comes in - via their TDS, Tradelink helps us to streamline this process," says Jasper.

Tradelink's Trader Documentation Service (TDS) leverages the latest Internet technology to facilitate and secure the exchange of digital shipping documents among all stakeholders in international trade transactions.

Using TDS, OIA and its suppliers and forwarders are on their way to having all of their shipping documents converted into digital format, so that they can run a paperless supply chain operation.

In doing so, all of the shipping documents will be available in electronic formats on the ERP system. OIA staff in the shipping department can verify the documents received with the information they have on record for faster processing. This significantly reduces the time and number of staff needed for verifying the documents at all points of the supply chain - be it OIA's customers, suppliers or forwarders.

Otto UK is the first client that enjoys a paperless supply chain operation with OIA. OIA is conducting ongoing discussions with port authorities in other countries to allow for shipping documents to be submitted digitally.

OIA feels it is possible to reduce paper usage to zero, which, given today's sophisticated information technology and the increasing need for corporations to adopt green practices, seems like the next natural step.