Kerry Logistics - Post Company Visit Report

Company Background

Kerry Logistics is the largest third party logistics (3PL) in Hong Kong, providing logistics services to trans-national corporates (TNCs) such as H&M and Canon. With the vision of “be[ing] the leading Asia based logistics service provider” (“Our Vision” n.d.), Kerry has developed “the largest distribution network and hub operations in Greater China and the ASEAN region” (About Us, n.d.). Currently, it has near 60 warehouses and logistics centers across East, Southeast Asia, and Australia.

Company Visit

On 3rd March, 2014, our team has visited the Kerry Cargo Centre at Kwai Chung, Hong Kong to learn its business model and visited its distribution center for Hong Kong Disneyland.

Once we were arrived, a presentation about Kerry was given to us. First, the representative briefly told us the situation among different regions and how Kerry faces this (see table. 1).

Region	Situation	Kerry Response
Hong Kong	30% of frozen food market is handled by Kerry.	Two warehouses specified to frozen food were built.
Taiwan	Tai Dong is less accessible owing to its low population and topography.	Kerry focuses on Tai Bei and Tai Nan.
Southeast Asia (SEA)	Thailand is regarded as Eastern Detroit since it produces many cars.	Kerry put more focuses on Thailand.
China + SEA	Generally, the sea transport is cheap but slow while air transport is fast but expensive.	Kerry launches the Kerry Asia Road Transport (KART), a cross border road transportation network, to balance both the advantages of sea and air transport.
Australia	Railway is the major transport.	Kerry follows suit.

Table 1. The situation and Kerry’s solution among different regions


Then, Kerry representative presented us the success of Kerry Logistics. Kerry provides combined integrated logistics and international freight forwarding supply chain solutions to customers. To generate the best result, Kerry has a separate IT department to increase programmers’ flexibility for providing solution; and provides quality and value-added services (see table 2). Kerry further assures quality services by gaining the ISO 27001 Information Security and HKQAA Fine Wine Storage and Transportation which the representative stressed it is hard to get.

Services	Detail	Purpose
Garment on Hanger	Garments are hanged instead of packed in boxes throughout the storage and transport.	- Prevent wrinkle - Ensure garment in best quality
Last Mile Customization	Services such as QC, labeling, assembling are provided in last minute	- Better coup with the market demand - Flexibility
Security	- CCTVs are installed - Workers need to pass through metal detector when leaving the warehouse - Lockers are provided to workers.	- Prevent theft

Table 2. Examples of value-added and quality services Kerry provided


After the presentation, we visited the distribution center For Hong Kong Disney Land to see how Kerry put its key to success into practice. We learnt the basic process flow Kerry developed (see figure 1).

Throughout the visit, we can find how Kerry pays efforts to provide quality service. Smoothening pickup and delivery flow, Kerry has set up storage zone and pickup zone separately to prevent chaotic situation from happening. Besides, Kerry has invested a machine which specifically store small items like keychain in a bid to smoothen pickup process and prevent inventory loss.

It also deploys barcode scanners with the function of receiving pickup order. This result in monitoring workers’ working condition; minimizing time used on receiving order; ensuring the goods are picked; and maximizing the box usage since the arrangement of ordered goods has already been calculated to utilize the box . These measures maximize the effectiveness of the supply chain.

Reflection

From this visit, we can experience how the supply chain planners can develop effective logistics solutions, providing quality services and save cost in the long run. In our opinion, Hong Kong Disneyland supply chain focuses more on effective rather than efficiency in short term as we can find that the set up cost and fixed cost is high. Deploying multi-functional barcode scanners need to have a support system, which cost a lot to build. Setting two different zones implies more space is needed, increasing land cost.

Yet, we see a smooth, systematic process flow is beneficial, especially in long term. One of the pros is inventory cost which “are a significant portion of total logistics costs for many firms” (Shou, n.d.: 33) can be minimized. Setting two zones can reduce inventory loss caused during transferring the goods. Machine specializing in storing small items can prevent inventory loss when picking up. Other than that, transport cost can be reduced since the boxes for storing goods are fully utilized. In the long run, these accumulated costs will be huge if measures are not implemented.

All in all, the visit gives us a good example on how the effectiveness of the supply chain can be. This reference can come into handy if we have a chance to set up a warehouse supply chain.

Reference:

About Us, n.d.. Available from: <http://www.kerrylogistics.com/eng/OUR_COMPANY/About_Us/About%20Us.jsp>. [11 April 2014].
Ho, Hin Chi 2014, Post Visit Report – Kerry Logistics. Report, City University of Hong Kong.

Our Vision, n.d. Availble from: <https://www.kerrylogistics.com/eng/OUR_COMPANY/About_Us/philosophy/ourvision/ourvision.jsp>. [11 April 2014].

Shou, Biying n.d., Procurement and Inventory Management, lecture notes distributed in MS3122 Logistics and Supply Chain Analysis at City University of Hong Kong, Hong Kong.