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June 21, 2016

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Home » District » Minhang

Logistics: ‘key to the trade of every industry’

By Lu Feiran | June 21, 2016, Tuesday | Print Edition

THOUGH Shanghai Runbow Logistics & Technology Co has been delivering goods for the likes of Nike, Dulux and IKEA for 11 years, company President Zhang Pengfei prefers to think of the enterprise as still in its first phase of development.

A reliable supply chain, he said, is key to the trade of every industry. That realization caused him to give up a career in his college major, industrial motors, and start a solutions and logistics business based in Minhang.

“It was my experience from my previous work that made me realize how logistics can determine the fate of a company,” he said.

In the early 2000s, when TV set manufacturers were engaged in a fierce price war in China, Zhang’s adeptness at industrial solutions began to take shape.

The TV manufacturers believed the market was big enough to consume all their stock and duly were building more warehouses. But the market contracted more rapidly than they had figured, and many of the companies went broke.

TCL Corp was among the survivors, largely thanks to Zhang’s assistance.

“At the time, TCL had 96 warehouses around the country and numerous models of TV sets,” he said. “That meant the company needed to have at least 96 sets of every model, which resulted in a huge waste of stock.”

Zhang suggested the number of warehouses be reduced to 21 and logistics be increased, ensuring that 95 percent of all products could be delivered within a day. The inventory quickly emptied.

“It made me realize that great technical capability and production couldn’t survive without solid logistics,” said Zhang.

That appraisal was firmly driven home when Runbow took IKEA as a client.

The Swedish tycoon who founded the company had enjoyed decades of success in Europe, but when the flat-pack firm entered China, it encountered problems. Not many Chinese families owned cars at that time and had no means to transport the furniture-assembly packs from the store to their homes. Indeed, most of the public was unfamiliar with flat-pack furnishings.

The market gap gave rise to unscrupulous people who offered to assemble the furniture and have it delivered to customers. Lacking oversight, scammers sometimes demanded exorbitant prices. Ignorant customers complained to IKEA.

The first state-owned logistics company that IKEA turned to for help had a rigid schedule that didn’t dovetail with busy sales days. Delivery was inefficient and consumer complaints mounted again.

IKEA turned to Zhang for help. Runbow designed a whole new logistics system that included order arrangements, loading plans and route mapping. There was no existing company willing or able to implement the new system, so Runbow took the task upon itself.

Under Runbow’s operation, the satisfaction rate of IKEA’s service soared to 99 percent. His system was soon promoted to and adopted by other companies, including Adidas and Dulux.

“We succeeded because we gained the trust of our clients,” said Zhang.

In recent years, Runbow has turned its hand to designing financial services for truck delivery drivers.

Zhang said a driver who works hard can make about 100,000 yuan (US$15,237) a year, but most of the income goes to gas, maintenance and highway tolls.

Many new delivery drivers have to borrow money to start the job. To help them, Runbow devised a plan that assists in the payment of gas and other fees. In return, drivers share a small part of their profits with Runbow. Now more than 10,000 drivers have joined the plan.

“Every one of them is like a micro company,” said Zhang. “Theirs profits are stable, and that helps the company.”

Zhang said the ultimate goal of Runbow is to establish a health supply chain where every one in the chain, from clients to drivers, can share the benefits.

“We want our company to be an admired leader in the industry,” he said.

Minhang


 

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