Smarties: Kerry Logistics Visit (3 March 2014)

Brief introduction of Kerry Logistics:

Kerry Logistics is a premier logistics service provider which is based in Hong Kong. With the core value of Value Creation, Openness, Integrity, Commitment and Excellence, they continues the innovative process to differentiate itself. Their understanding in the uniqueness of the Asian market help them to become a leading logistics service provider in Asia.Their core business encompasses integrated logistics, international freight forwarding and supply chain solutions.

We found that Kerry Logistic has agile market sense which can be revealed from their core value. On 3 March, our class visited Kerry Logistics’ headquarter situated at Kerry Cargo Centre in Kwai Chung. This was a great opportunity to see how this leading logistic company operate.

1. It seems that Kerry Logistics has put more focus at Thailand (e.g. headquarter of KART, Kerry Siam Seaport) when compared with other Southeast Asian countries. What are the major factors of putting the focus at Thailand? Does the recent anti-Thaksin movement affect the company business?

Kerry logistic has put more focus on Thailand because Thailand has historical advantage since it has many companies there before. And it is well developed. Also, Thailand also has the geographical advantage as it is on the middle part of Asia so that it can easy to develop in Asia. Moreover, Thailand is political stable too. The recent anti-Thaksin would not affect the company business.

2. Kerry Logistics often makes use of inter-modal transportation. How do Kerry Logistics effectively communicate and corporate with different transportation modes' partners in order to deliver the goods to the destination efficiently and take advantage of inter-modal transportation?

Firstly, all the deliveries of Kerry are well-planned in advance, including the route, the delivery time and the resources included. It is very crucial for the well-organization before each delivery and it is not the work can do at the last minute before the delivery. Indeed, the corporation between each mode of transportation is linked with the qualified system developed by Kerry Logistics. Meanwhile, the inter-modal transportation provides large flexibility for Kerry Logistics in order to provide excellent solution for delivery.

3. Last year, Kerry Logistics has secured a major contract with ASOS to support the on-line fashion and beasty retailer’s push into the China market. It reveals that foreign companies always choose Kerry as their partners to explore market in China. What are the key factors that make Kerry attractive to your business partners?

The manager told us that the business environment in China is much about “Guan Xi”. It would be a large problem for the foreign companies to knock the door of different departments in China rather than take advantages by the well-developed relationship of Kerry. At the same time, the competitive advantages for Kerry is attributed to the fully spread warehouse distributions rather than the coastal focused distribution of rivals in China. Lots of the competitors only focus on the coastal areas, however, the business opportunities in China is indeed moving to the west. Thus, the facilities of Kerry Logistics are well-established and distributed throughout China. It is also beneficial for those foreign countries to penetrate faster into the China market. Besides, having a great network in China, Kerry also has the following competitive advantages:

a) Reasonable price:

Compare with their competitor, the price of using Kerry Logistic not very high. Due to Kerry logistic is a multinational corporation, they can enjoy the advantage of economies of scale that their competitor in China do not have, such as lower renting cost, and it allows Kerry to offer a relative low price to their customer. Also, in order to provide a stable/good services quality, Kerry has a professional operation team which cannot offered by their competitor. Therefore, under the same service quality level, Kerry Logistic has a lower operation cost, and it allows them to provide a reasonable to their customer.

b) Good financial situation and reputation:

As I mention before, Kerry Logistic is a multinational corporation, so it is not difficult to find their financial situation. According to the financial report of Kerry Logistic in 2012, we can see their financial situation is very well, their net profit in 2012 is 216 million. Also, the history background of Kerry Logistic makes them have a great reputation, which is useful for a foreign company to enter a new market and attractive business partners, especially in China. And those kinds of evidence give a great confidence to their customer and business partners.

4. As we know, “KerrierVISION” is the own IT system of Kerry Logistics. It provides many services to meet individual needs of customers. What kinds of services or technologies that you differentiate from your competitors?

KerrierVISION is the platform designed to meet the individual needs for every customer. Just in Hong Kong, there are 50 programmers conduct operation for the system to understand the needs of customers. And in Mainland China, there are more than 100 programmers to run the system. Kerry Logistics have invested a lot of resources to the IT department. The rich and professional IT human resource is the main way that Kerry differentiates themselves against other competitors. The system is more feasible and effective for their clients.

5. Kerry has many in-house customized systems, such as KerrierVISION, KBOS. Could you tell us more about the benefits toward the company after implementing these systems?

As a logistics company, IT development behaves as the core element to outperform within the industry nowadays. In particularly, speed is emphasized for logistics industry as well as the reliability. The main point is that advanced technology helped to facilitate the service provided to the customers with higher speed and reliability. Just like the in-house customized systems which can definitely help customers to monitor the whole process delivery; at the meantime, help Kerry Logistics to surveil the distribution efficiency and effectiveness. Accurate information is also acquired through the system which is important for the database establishment.

6. What are the major competitive advantages of Kerry logistics to differentiate itself from other logistics companies like FedEx and DHL Express, UPS to maintain its competitiveness in Asia?

The major competitive advantages of Kerry Logistics are including the distribution capability and the reliability given. Firstly, Kerry Logistics is good in financial health. Besides, the whole distribution operation also supported with lots of security measurements. The manager mentioned they are not hesitating to invest in the assets such as the well distributed distribution center throughout different countries. They have developed a good network on road. For example, as mentioned above, the distribution capability of Kerry is enlarged with the west of China while the competitors mainly focused on the coastal area only. Totally, it is a tradeoff between good service and cost.

Learning reflection:

Kerry is not an ordinary logistics provider! In the past, I think that logistic company only provide service of storing and distributing. After visit, I realize that company should continue think of new services to increase its competitiveness. Being a customer-oriented company, services must satisfy customers’ need or even beyond their needs and expectation. Kerry logistics’ strategy wider our eye and change our understanding about logistic industry.