Creating innovative new services, and coming up with ways to add new value to existing services, are ideals for many customer-oriented corporations. British-based logistics company Exel has made this ideal a reality, and as result of innovation and operational efficiency they are now a world leader in supply chain management.

An overview of the company’s current status gives a good insight into the extent of their success. They have 111,000 employers working in over 2,000 various locations in 135 countries around the world. Exel is now serving 75% of the world’s largest non-financial companies, including corporations involved in manufacturing, health care, chemicals, automobiles, high technology and a vast range of consumer retail products.

The services offered by Exel can be classified into two major categories: freight management and contract logistics. While freight management activities involve reasonably straightforward physical realities - ie the shipping of tangible goods - contract logistics involves a lot more end-to-end customized solutions that require support from a wide array of different parties stretching into various stages of the supply chain.

For example, a leading telecommunication manufacturer does not manufacture all the components of its products by itself: instead it sources raw materials, parts and final production services and facilities all over the world. In what is termed as “inbound to manufacturing” (I2M) service, Exel manages the movement of raw materials and items produced by suppliers, and transports them to a regional “inbound hub” where they are distributed to different manufacturers in the region. Exel then picks up the finished goods from these manufacturers and channels them to domestic or export markets.

Contract logistics covers many facets and stages of the movement of materials and goods. Sometimes Exel will become a sub-contractor of warehousing operations, managing - on behalf of their clients - the incoming and outgoing of finished goods to support wholesale and retail activities. This extends to information processing, like the preparation of regular incoming and sales reports, and value-added services like repackaging and re-labeling.

Exel also offers a special service that reverses the usual flow of materials, components and finished goods. Called spare parts logistics (SPL), Exel helps collect goods that need to be serviced or repaired and transport them from different locations to a regional servicing centre. This service facility is manned by a team of specialized technicians and has a full inventory of spare parts and components. As a variation on this, Exel can arrange transportation of spare parts from a central inventory to various “satellite” servicing centres.

Contract logistics can also support centralized regional or global distribution operations, in which goods sourced from different parts of the world are first moved into a few distribution centres. From these centres the goods are distributed to wholesalers and retailers as required.

As Michael Yuen, deputy director of Excel Hong Kong, points out, supply chain management of today involves more than just physical movement of goods from one place to another. It includes management of information flows that make accurate and timely delivery of the physical logistics service possible.

Logistics information management has become a critical to the success of Exel as a service provider - and also of Hong Kong as a regional distribution logistics hub.

“This is a very time-consuming process that draws on a disproportionate amount of management time and expertise from us,” Mr Yuen said. “We are always looking at solutions that can streamline this process.”

Various parties currently handle trade transactions either via exchange of physical paper documents or electronic interchange in proprietary, non-uniform formats. It has always been a challenge for providers like Exel to translate or rekey the data into its own house computer system so that the information can be used and passed on through stage after stage to enable more efficient and accurate backend processing.

This is where Exel sees the Digital Trade and Transportation Network (DTTN) - which is preparing itself for a full roll out - to be of vital importance to their business.

DTTN is a platform built and operated by DTTN Ltd., a company jointly owned by Tradelink and the HKSAR Government. DTTN provides interconnection among the industry stakeholders and related community systems to facilitate information flow and enhance efficiency. It could seamlessly and securely connect all large and small businesses involved in every aspect of trading, from manufacturers, freight forwarders and shippers through to banks, customs clearance houses and end recipients.

Mr Yuen says Exel expects DTTN to bring benefits in the following ways:

• Improved customer satisfaction through the automation of handling payments and order processing;
• Online availability to customers of their project or job status;
• Reduced operation costs (e.g. data entry and courier) through the replacement of labour-intensive tasks with an automated electronic communication system;
• Paperless working environment;
• Less re-keying of information - once a set of data is keyed into the system it can be used for a number of different trading documents and sent to any of the parties involved in the business processes;
• Reduced risk and error - paper documents and typing errors are often rejected, sometimes resulting in a costly penalty.

Exel will participate in DTTN’s Pilot Program, due to start at the end of this year and go for three months. Mr Yuen hopes - and expects - that DTTN will be used by many more shippers because they are the major source of non-electronic data in the information management process.

With the aim to reduce the source of non-electronic data, Exel will work hand in hand with DTTN to invite the shippers to join the Pilot Program. Mr. Yuen anticipates that Exel’s productivity will have an initial improvement of 5% to 10% after using the DTTN services.