Distriparks go ON LINE

To beat rising land and labour costs, Singapore's distribution park are installing software for maximum efficiency

Huge investments continue to be made in Singapore in the development of new distribution park distripark warehousing complexes.   However given the growing shipping volumes of those neighbouring countries who are now enjoying new periods of rapid economic growth, substantial changes in regional distribution patterns are seen as inevitable.

Particularly so when these countries have much lower land and labour costs which will offer sharp competition to current distripark operations.

And so, the argument continues, Singapore must adapt to these evolving conditions. It must gear up today, for the time when there are more and more close by feeder ports of consequence, which will substantially change its own hub port role in life. This suggests that the traditional distripark contract warehousing approach currently in vogue, needs significantly to reassess its services and objectives.

The key will be to offer far more value added warehousing and distribution services than are now generally available. Among the pioneers and disciples of this new far thinking focus is Singapore's Changi International Logistics Centre (CILC). Established in 1991, Changi International Logistics Centre is a joint venture partnership formed by Changi International Airport Services (CIAS), Asia Pacific Logistics Services (APLS), MeGregor Sea and Air Services (MSAS), and Sime Singapore.

With a $28 million expansion program due for completion by early 1997, the company has already geared its approach to what it describes as the next generation of client contract service. A model it dubs as its 'TechPark' strategy, and in which value added services and facilities have a very integral part to play.

At the same time, CILC is also implementing advanced warehouse management systems (WMS) technology supplied by PULSE Logistics Systems to further enhance its systems delivering 9000 pallet positions. With its new construction project well progressed, CILC's continued expansion is very much predicated on providing clients with much more than mere raw storage space, no matter how efficiently this might be delivered. Thus of the total new gross floor area that will be opened in Phase Two, about one third will be dedicated to office and ancillary working space.  

This will certainly enable the company's clients, to locate their key 'front office' functions such as customer order processing on the same contract site as their warehouse facility. However under CILC's TechPark strategy, it will offer a great deal more than this. Much of such a game plan is competitively sensitive and is not yet being publicly discussed. However corporate general manager, Cheong Teow Cheng, notes one key example of its implementation that substantially hints at the approach being taken.

As Cheong notes, the Singapore Government has long and effectively fostered the country's capabilities to offer a very effective regional distribution port and hub. However among the more recent economic development policies being pursued is that in which the island nation is being promoted as an ideal research and development centre.

"This is an highly significant field of endeavour. It is one where we can synergise with key clients to attract the type of business activities which not only require traditional warehouse space, but which also need access to accommodation for product QA, endurance testing and such things as test bed workshop activities. By combining, in the single TechPark location, the space needed for this, for front office functions and for the bulk product itself, we are looking at a new type of highly comprehensive contract capability.

"It's a one stop solution that overcomes the problem for this type of major venture of finding its operations geographically fragmented, and having to continually shift product around to get everything done that it needs to.

Stressing the significance of this new thinking, Cheong suggests that conventional distriparks are really only a 'flavour of the moment'.

"We first started to see their real emergence in Singapore only about five years or so ago.

"Although the concepts adopted were, of course, very much those that had been operating elsewhere for quite some time, particularly out of places like the west coast of the United States and in locales like Holland and Belgium.

"And over time there really has been very little change in the real basis of what such operations have had to offer. At days end, they are merely about the movement of huge volumes of bulk cargo, that is brought in, stored, and then reshipped out around the neighbouring region in smaller or consolidated product parcels.

"The significant and widely recognised benefits of such a process being the manufacturers' ability to economically bring product much closer to their end customers, and then being equally able to cost effectively cut down delivery lead times to meet those customers' orders.

"Certainly, to date, that has been a scenario which has readily suited Singapore, particularly given its natural geographical advantages and economic development policy.

"It most certainly has become a major distribution centre for Asia Pacific where, one would guess that, more than 85 percent of all inbound product is subsequently reshipped out."

However what Cheong equally points to are the significant new distribution patterns that are fast emerging within this region.

Cambodia, for instance, has an economy in which consumer demand is starting to escalate quite rapidly.

It is now starting to buy much higher levels of finished goods and in turn will be exporting increased volumes of raw materials and agricultural products. Vietnam too has experienced similar trends.

"When you add this increased shipping volume and frequency to the fact that distribution centres could easily operate in such countries for about half the cost of those in Singapore, you may see distripark work being relocated. The alternative locales can quickly become specialist feeder ports for high labour intensive work, particularly where their governments support such a move," Cheong says.

So for Singapore to maintain its potency as a hub port, "the first priority for the logistics sector is to synergise with what its port can best deliver and what its customers of tomorrow will want". Turning this theory into practice, CIILC's commercial strategy is clearly addressing such issues. At the same time, however, it is similarly committed to streamlining and bringing major cost efficiencies to its more traditional and behind the scenes operational procedures. This is particularly exemplified by its decision, early this year, to fully convert its day to day warehouse activity to advanced warehouse management system techniques. "We handle so much cargo, that purely manual and paperwork procedures could not effectively keep track of everything to the extent we wanted. Our aim was to acquire a system that would enable us to far better monitor and keep control of all warehouse operations, and, most importantly, to help us make the most effective use of all available space.

"In making our evaluation of available options, our thinking certainly had an economic component: everything has to be thought of in dollar terms of course. But more to the fore in our decision was the enhanced quality of work that would be possible under the optimum warehouse management system.

"Let me give a simple example. Today we are now looking at a zero error rate in warehouse activities. So given the variety of different ways in which we are required to manage stock for individual clients by expiry date or straight FIFO, for instance the WMS ensures that we don't get this wrong.

"Overall, PULSE is helping ensure that whatever we do we do it right and do it right the first time."

Cheong notes the comparable capacity of PULSE to powerfully underscore CILC's TechPark strategy and to support it taking on a multi based regional role should this become appropriate.

"PULSE will make a great contribution to client service for those TechPark customers who will be regularly moving product in and out of local storage for testing, QA and R & D work and so on. Such activity will substantially increase stock handling and movement. Which is all the more reason to have an effective system that handles such workloads with maximum efficiency, minimum error, maximum productivity and minimum extra cost.

"Also, because it is built around the concept of location control and management, it can do its job equally well if stock is spread across warehouse sites in, say, Malaysia, Thailand and Cambodia, as well as in Singapore itself," he said.