Dean Locke and John Fawcett are co-CEOs of Royale Asia, an Asia-Pacific logistics and courier company whose clients include some of the region’s major retailers. In an interview with Retail in Asia they share the latest logistics trends among Asian retailers and offer top logistics tips for e-tailers around the region.
RIA: What supply chain management solutions are retailers most looking for in the Asia-Pacific region?
Royale Asia (RA): In recent years we have seen a noticeable shift among European retailers in opening up replenishment warehouses in the Asia-Pacific region as opposed to housing stock in their home nations. With their greater numbers of stores in the region it has made sense for retailers to handle their replenishment from the region thus shortening replenishment times, reducing transport costs and also reducing actual warehousing costs.
Royale has responded by developing its warehousing services and introducing a new online inventory management system whereby clients can manipulate their inventory and place orders directly online. As a result we have seen this area of our business flourish, particularly in the garment/fashion sector.
RIA: Since the beginning of 2011, serious natural disasters have occurred in different parts of the region. How do disasters such as these affect your distribution and how do you cope with the challenges?
RA: Such natural disasters can of course have dramatic effects upon our industry. In many instances there is simply no solution in the immediate aftermath like the Brisbane floods but we believe by reacting quickly and thinking creatively there is always a way!
For example, in the aftermath of the Japan Earthquake we have based a team of time critical couriers in Tokyo to assist in servicing clients time critical requirements where production in region has been affected thus impacting on supply chains throughout the Asian region as a whole.
Also if you take the Icelandic volcano from last year, Royale were well ahead of the competition by implementing flights into Rome and distributing by road throughout Europe to minimise disruption to clients. We were also required to charter low level flying business jets out of Rome to various locations to meet just-in-time production schedules. There is always a solution and having the flexibility to adapt in such times is what keeps the Royale ahead of the competition.
RIA: Outside of natural disasters, what are the biggest challenges in the logistics industry this year?
RA: The ongoing increases in fuel prices continue to be a major challenge for all logistics companies as we strive to maintain competitive pricing with the ever-increasing costs. For example, in the China market we see a lot of competition from one man and wholesale agents, utilising multiple networks to gain a price advantage. Thus, we need to constantly re-evaluate our network and costs in order to stay competitive against these types of companies.
Another challenge is the continual alterations to customs processes throughout the region. Unlike the UK where customs processes are more developed, Asian customs processes are still developing and the big challenge is keeping abreast of the constant regulation changes.
RIA: We are increasingly seeing the growth of e-tailing in the region and globally. What type of logistic solutions does the e-tailing market need to consider? Do e-tailers need special logistics solutions?
RA: Most e-commerce operators are looking for the most simple to run and fully automated solutions available. This sector is experiencing huge growth and with outsourcing of warehousing, inventory management and delivery of the product to end users, a huge amount of any e-tailer’s business is placed in the hands of their logistics partners. This therefore requires a great deal of trust and an efficient operation as the success of the business really is in the hands of the logistics provider.
It’s also important to note the variety of products being sold on the internet and also the huge potential variance in price which can have cross border customs issues, particularly across the Asian region where customs requirements can differ significantly when compared with more mature regions. In a lot of cases a distribution model for one company will not work for another so a great deal of flexibility and also creativity is required to provide the solution necessary for success.
RIA: What tips can you offer to e-tailers looking to set up logistic operations?
RA: Get to know your logistics provider closely and treat them as an integral part of management, rather than just a vendor. This will help facilitate a degree of interest and responsibility in achieving your overall corporate goals.
Understand your day-to-day business inside out, as well as what your anticipated future requirements will be and develop clear objectives (e.g. if you are outsourcing your warehousing operations, transportation management, or both.)
Visit the warehouse facility and get to know how the systems work. As above, unlike traditional retailers, a huge amount of the business relies on the logistical support so it important to feel comfortable with this element.
RIA: What are your expansion plans in the Asia Pacific region for 2011?
RA: Royale currently operates globally. In the Asia-Pacific region we operate in 20 countries thru 35 offices. This year Royale will see further growth in China with new offices planned for Chengdu, Changzhou, Dalian and Fuzhou. There are also plans for warehouse expansion in Beijing, Guangzhou, Hangzhou, Shenzhen and Xiamen to specifically handle storage, pick, pack and direct to store distribution and expansion in the India market.
RIA: How will these plans help Royale Asia to enhance its services in Asia-Pacific?
RA: Royale’s continued rapid growth in the region will further strengthen our services as we offer new products to our existing client base. New warehousing facilities are being opened across China this year to meet the rising demand for such services and the strengthened delivery networks in second tier cities will provide us with even greater reach for our clients.
RIA: What are your expansion plans globally? How will this affect you distribution network, service quality, etc?
RA: This month, you will see the opening of our Royale offices in Germany. This is a major step for the company as Germany is one of Europe’s biggest trade partners with China. The full portfolio of Royale’s services will be rolled out nationwide and service to both Germany and much of Central and Eastern Europe will be coordinated by our offices in Frankfurt and Düsseldorf representing improvements in efficiency and service levels to our clients.
Asian retailers will also see the benefits as we see the rise of more and more European products being welcomed with open arms in the burgeoning consumer sector in mainland China. The utilisation of direct flights from Germany to the region will undoubtedly see rapid growth as Royale strengthens its presence in both nations.
Dean Locke and John Fawcett are the co-founders and managing partners of the Royale International Group with over 20 years of experience in the logistics industry.
They have developed the business from a two man operation into an international enterprise with over 35 global offices with their strategic business planning and unique executive acumen. Their vision, passion, leadership and straight forward approach to business has lead Royale to substantial revenue and profit growth whilst firmly establishing the group’s philosophy and direction.
Visit Royale Asia for more on the company’s services.
CEO Talking Shop is the Retail in Asia section devoted to interviews with brand CEOs and retail industry leaders