SEEING is believing.
Visitors to Integrated Logistics Bhd's (ILB) warehouses in Shenzhen can see the just-in-time (JIT) concept, often mentioned in management textbooks, being practised in real life.
From outside, ILB’s warehouses in the Futian tax-exempted zone that borders with Hong Kong look no different from other warehouses.
Even inside, the lower levels are just like a normal warehouse with thousands of big and small cartons marked with barcodes from around the world being piled up on metal shelves.
But it is another world on one of the top floors. You may mistakenly think you are in an assembly plant rather than a warehouse.
Workers are busy putting together parts sent from storerooms downstairs to produce laptop computers. From assembly and quality testing to kitting and packaging, all are done in the warehouse.
This is what ILB is doing in China to make its warehouse a platform for manufacturers to implement the JIT concept. Technically, they call it “vendor management inventory (VMI) solutions.”
ILB manages its clients’ raw materials inventory, ensuring adequate stocks – not too much or too little – for daily needs, apart from leasing its warehouse space to manufacturers for storage and products assembly.
The group’s inventory management projects for laptop computer Thinkpad and IBM servers are testament to the group’s service quality that meets international standards.
“That’s something that we take pride in. I think we are comparable with multinational logistics companies, if not better,” ILB chief executive officer Tee Tuan Sem said.
In Shenzhen’s Futian tax-exempted zone, ILB is well known by the local authorities.
The group’s VMI projects have driven the development of the logistics business in Futian.
“ILB is a role model for the logistics business in our area,” said Chen Jie Feng, deputy chief of economic development department at The Shenzhen Free Trade Zones Administration.
Shareholders are happy to see the rise in income flowing into China. However, ILB’s success has also brought a new challenge to Tee.
His challenge is to lead the group to greater heights. Tee pointed out that his current job was to motivate the staff to work harder. He does not want them to rest on their laurels and be complacent.
“Our earnings are growing. But I’m sure we have not reached the peak yet,” Tee said, adding that ILB had promising growth prospects.
Tee wants the group to climb the value-added chain in order to expand its clientele.
The ILB group realises that its existing business model requires heavy capital for warehouse construction and that will involve risks.
Tee said the group would build a new warehouse only when a long-term contract was inked, unlike the first venture it had in Shenzhen. The warehouses were empty for nearly three years after completion without income to service bank loans.
ILB will focus on managing clients’ warehouses. The warehousing and logistics contract granted by Titan Petchem (M) Sdn Bhd was an example of it.
“We have the experience and track record,” he said. “These are proof of our strength. We have the confidence to take up large projects.”
Did you find this article insightful?