from A.S. Watson

Food, Electronics &
General Merchandise
from A.S. Watson
LOGISTICS IN THE RETAIL MARKET IN HK
1992-2004
Keith Bartlett
Business Process Director
Parknshop, Fortress, Watson’s Wine Cellar, Great
Food, Electronics &
General Merchandise
from A.S. Watson
HONG KONG
Export Logistics
Internal Logistics
Leading Edge
Lagging behind
Food, Electronics &
General Merchandise
from A.S. Watson
Problems for internal distribution
1. High cost of land
2. Traditional retail structure
3. Government Policy HK + PRC
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General Merchandise
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1. High cost of land
• High rentals costs for warehouse
• High cost for store rentals
• Difficult movement of goods
• Difficult to modernize
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General Merchandise
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2. Traditional retailing
-Fragmented retail trade
-Traditional outlets
-Lack of modernization
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from A.S. Watson
3. Government Policy HK + PRC
• Promoted outbound
logistics.
• No support for internal
logistics
• PRC policy on customs,
export barriers
Food, Electronics &
General Merchandise
from A.S.
Watson
• 235 stores in Hong Kong and Southern China
• No.1 brand in the two markets
• ParknShop share 20%+
• 500,000 container per year distribution volume.
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General Merchandise
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Fo Tan Warehouse
Designed to handle 25,000 cases per day
4 Lifts
6 Floors
High Bay
4 Lifts
G/F
Receiving
6 Dock
Basement - Shipping's
6 Dock
In 1990 – 50,000 cases, 100,000 cases per day at peak
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General Merchandise
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Delivery to store - 1990
Traditional manner, hand-loaded at every stage
Goods being hand loaded to truck
Goods being hand stack onto pallet
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General Merchandise
from A.S. Watson
Delivery to store - 1991
Roll-cages and tail-lifts – 1st stage in modernization
Food, Electronics &
General Merchandise
Roll cage being loaded
from A.S. Watson
Roll cage loading into truck with dock leveler
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Fresh Food Facility at Sheung Shui
Food, Electronics &
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HIDC Facility
Food, Electronics &
General Merchandise
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HIDC Facility
Receiving
11 Docks
22 Docks
F + Veg. Ambient Goods DC
D.C.
11 Docks
22 Docks
Shipping
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General Merchandise
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Watson
Expansion to Superstore
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Fresh Foods Facility
-Fish Warehouse at Ap Lei Chau
-Pig Cutting Operation at SSDC
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Supply Chain Management Board of HKANA
1990 – 14 pallet sizes in HK
1995 – standard pallets
1997 – pallet pool
exchange system for pallets
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General Merchandise
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Modernization of the Supply Chain
•Palletization
•Supplier collaboration
•Warehouse waiting time reduction
•Inventory management + reduction
•Lead time reduction
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General Merchandise
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Fast Track
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PNS logistics control
Just in time delivery
Cross – Docking
Vendor Manager Inventory
Electronics Data
Exchange
Food, Electronics &
General Merchandise
from A.S. Watson
ParknShop Logistics 1992-2004
Range
Warehouse
800% Volume
Space
400% No Increase
Inventory
80%
Out of Stocks
50%
Food, Electronics &
General Merchandise
Parknshop HK
from A.S. Watson
Lotus Thailand
500,000 sq ft
500,000 sq ft
50 docks
200 docks
No parking space
100’s parking space
6 facilities
1 facility
20 chambers
1 chamber
25-ton truck delivery to store
40’ container to store
Food, Electronics &
General Merchandise
from A.S.
Watson
Food, Electronics &
General Merchandise
from A.S. Watson
HK Distribution Costs Company with other
markets
Hong Kong
Other SE Asia / PRC
Warehouse
Labour
Warehouse
Labour
Delivery
Rent
Rent
Delivery
Food, Electronics &
General Merchandise
from A.S.
Watson
• No warehouse system - 2002
• Computer controlled stock management - 2003
• Scanning and ratio frequency.
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General Merchandise
from A.S. Watson
Internal Logistics
Lagging behind
• Lack of mechanization
• Shifting operations to PRC
Food, Electronics &
General Merchandise
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Cross-border Issues
ƒ Cross-border transport
High
costs
Licenses
24 hours / customs
• Export Restrictions :Commodity
Certifications
Export Licenses
Red
Tape
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General Merchandise
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Impact of Cross-Border Issues
•Inefficient logistics
•High costs of consumer items
•Unable to leverage scale
•One country – Two distribution network
Food, Electronics &
General Merchandise
from A.S. Watson
HONG KONG
Export Logistics
Internal Logistics
Leading Edge
Lagging behind