Since 2006, Hong Kong’s Fast Moving Consumer Goods (FMCG) team has provided Unilever with customized supply chain management services, ranging from strategic optimization and efficiency planning to import and export, customs clearing, warehousing and all the way through to further value added services.
Building a super efficient supply chain for the Hong Kong market: with the very competitive market situation in Hong Kong, it became increasingly clear that Unilever desired to develop a super efficient supply chain solution to optimize it costs.
Capitalizing on the Laws of Comparative Advantage: DKSH’s in-house consultants in 2006 had conducted a Business Process Re-engineering study for FMCG Hong Kong in view of the rising costs of rents and labour, eroding profits. It was discovered that there were substantial cost reduction by moving DKSH’s bulk storage from Hong Kong into Southern China, where land and labour were at lower costs.
A joint team was set-up by Unilever and DKSH and studies reveal that significant costs savings can be derived by setting a distribution hub in Shenzhen feeding into Hong Kong stocks in a daily basis. In June 2007, DKSH conducted a pilot test for Unilever via a small 3,000 sqm warehouse with small trial shipments between South China and Hong Kong.
New distribution center boosts efficiency: the trial year proved to be successful with the targeted costs savings achieved. Today, DKSH operates a bonded distribution center in Shenzhen South China International Logistics Center (SILC), is fully operational and covering an area of 20, 000 sqm. Besides products manufactured in China, it also functions as a multiple consolidation center for imported goods. The center is managed by a professional team with information technology link-up and closely supported by the FMCG logistics team in Hong Kong. It features ten production lines for co-packaging as well as labelling and is able to provide direct deliveries to large customers in Hong Kong. At the same time, the 50,000 sqm distribution center in Hong Kong also continues to play an important role as a cross-docking center for incoming goods and is being upgraded with bonded facilities for dutiable goods as well as an efficiency upgrade to handle higher value cargo.
The benefits for Unilever are evident and have resulted in real competitive edge over its competitors
Market Expansion Services at work
Delivering total solutions in Asia Pacific: with the direct trade links between mainland China and Taiwan, the Fast Moving Consumer Goods business is able to operate on a Greater China platform and now offers total solutions for its customers and suppliers operating in these regions.