Speed, Scale & Control: How a Managed eCommerce Logistics Solution Worked Across 5 Markets for an Apparel Distributor
Our client needed a good balance of costs and delivery speed across 5 markets in Asia. Discover how our 4PL service fulfilled their needs
September 18, 2022
Back in 2019, Southeast Asia was an eCommerce growth darling, and many brands and retailers raced to grow their presence and reach in the region. Among these was an apparel distributor who in addition to needing to scale up quickly in the region required the best mix of service quality, cost, and flexible eCommerce support such as returns solutions and cash on delivery.
Southeast Asia has been highlighted annually by Google as an up-and-coming region in terms of Internet economy growth. Google’s 2021 e-Conomy SEA report estimates that Southeast Asia’s internet economy (including both services and goods sales) could hit US$ 1 trillion in gross merchandise value by 2030.1
However, Southeast Asia has a fragmented geography including challenges like countries consisting of thousands of islands like Indonesia (17,508 islands) and the Philippines (7,107 islands).
Infrastructure in some Southeast Asian countries are also still underdeveloped particularly in rural areas, necessitating partnerships with many local players who can better cover their parts of their countries.
The client was faced with a choice:
If they choose to fulfil their shipments via in-house operations, they would gain greater control over their variable costs but would need to design, set up and manage their own delivery systems, get their own warehouses, fleets and operations staff.
If they choose to outsource their operations to third-party logistics partners (3PLs), they would need to consider the trade-offs between costs and performance between postal and express vendors.
Postal services are cheap and easy to set up, but their delivery quality options and flexibility would be limited. Postal also tends to be the slower delivery option.
Express couriers would give them the quality they pay for, but another cost of that efficiency would be the lack of flexibility as they would need to conform to the express courier’s strict delivery rules.
It would be possible to manage multiple 3PLs at once via an in-house team, but this capability would need to be built up over time.
They were looking for an option that can provide a middle-ground between the costs and performance of postal and express while getting ease of use, flexibility and the go-to-market speed to ensure they can scale quickly in Southeast Asia. This is where Janio’s managed logistics solution comes into play.
Janio’s 4PL Solution: International Logistics Vendor Management
The distributor needs to meet the rising expectations of consumers but also needs sufficient capacity and flexibility for peak periods. With multiple international markets to cover, a multicarrier solutions offered many benefits:
Getting the Best Cost and Performance for Different Locations
Different couriers have different specialisations and perform better and cheaper in areas they specialise in. Working with only one partner would prevent them from getting the most optimal performance at the best prices for all the regions they want to cover.
In this example*, an international shipment from the client’s origin to Manila and Mindanao costs the following for 2 different logistics service providers (also known as network partners):
If the distributor chose to work with only one carrier, they would not be able to get the best rates for both areas. Working with both of them and allocating Manila-bound volumes to Partner A and Mindanao-bound volumes to Partner B will ensure that they get the best rates for both zones.
Janio’s managed multi carrier solution ensures that we always have the right partner to give our clients the service they need. To continue the Philippines example, Janio works with multiple partners in each region.
Portfolio Management – Having the Capacity to Manage Surge Volumes or Capacity Crunches
Some logistics software providers also integrate with many shipping providers and aggregate their services for clients where end-consumers can choose which 3PL they want to fulfil their order.
However, these providers who arrange for a single courier to handle all legs of that delivery lead to a loss of the shipper’s autonomy over SLAs. Once the parcel is in the hands of the selected shipping partner, your delivery is at their mercy. This is especially true during times of crisis as well.
As an example, Shipping Partner A is selected to ship from end-to-end from Singapore to Mindanao. If Shipping Partner A runs into issues at the last mile delivery leg, they won’t be able to quickly hand over the affected parcels to another available 3PL to maintain their SLA commitments. This is where a partner who manages other 3PLs via portfolio management can step in.
The wide network of 3PLs that they can access via Janio at each leg of the journey lets us choose faster and more stable options backed up with data from past performance. SLAs can be maintained by being able to quickly reallocate volumes to a different partner at affected legs when issues arise. To ensure sufficient capacity, Janio also takes on the risks of shortlisting, onboarding and integrating with new network partners when the need arises.
This option also helped our client navigate through 2020’s air freight capacity crunch. Travel restrictions saw air freight mid-mile capacity drop sharply due to global lockdowns while triggering massive eCommerce purchase growth. In 6 Southeast Asian countries, Bain & Company estimated that 70 million more people shopped online since the pandemic began.2
Scalability and Control All in One Touchpoint
A multicarrier strategy provides the middle-ground between the benefits of postal and express courier services that the client was looking for. If the apparel distributor chose to manage multiple carriers on its own, it would need a lot of commitment and resources if it is done in-house.
One challenge is data standardisation across all their 3PLs. Different service providers have different ways of handling their data such as:
Statuses for leg of the journey (e.g. in warehouse, out for delivery)
Delivery zones and postcodes
Payment timings could also differ, and along with different styles of work the complexity of managing multiple 3PLs would only grow as capacity requirements increase.
To manage this in-house, a control tower consisting of a team and transport management system (TMS) is needed to standardise statuses and communication between the business and their various 3PLs.
Building this system is a long-term commitment which can take time and money, which is unavailable to those looking to rapidly scale up in Southeast Asia. Additional in-house resources also need to be added when more 3PLs are added.
The apparel distributor needed the flexibility and cost and performance benefits of a multicarrier strategy to scale rapidly but was looking for the simplicity afforded by having a single touchpoint, which Janio’s dedicated accounts management team provides.
Escalations, client issues, delivery customer service and returns management are handled by Janio’s dedicated team which helped our client save on manpower and costs that would otherwise be spent on managing these.
This team is also in charge of managing value-added eCommerce solutions: Cash on Delivery in key markets like Indonesia, Malaysia and the Philippines as well as custom-built returns solutions in Singapore and the Philippines.
While it is possible to get comparatively similar service levels by choosing shipping software providers that connect you with individual 3PLs for each shipment, their approach gives clients less control over the shipment process itself. Once the customer has selected their desired courier at check out, the process and performance is all in the hands of the selected courier.
Janio’s vendor management solution helps to standardise tracking data and managing communications across multiple 3PLs on the client’s behalf while continuously optimising the supply chain solutions we manage for clients. Past data across 3PLs is analysed to find any leakages or places of improvement in the supply chain strategy. The results of implementing these changes are presented to clients during monthly business reviews (MBRs).
Janio’s managed international logistics solution gave our client the scalability, flexibility and control over costs and performance they needed for their regional operations. Being able to outsource the management of multiple carriers at every leg of the journey saves them manpower and resources while getting the best rates and performance by mixing and matching top performing 3PLs at every stage of the delivery process.
With Janio, our client had access to specialised services such as Cash on Delivery, Trading house solutions for Indonesia and returns services (PUDO point-enabled) in key markets were also custom-built according to our client’s requirements. Finally, consolidating past performance data and analysing it ensured that Janio continuously improves its efficiency and performance. From our past performance, our client continues to trust us to keep their operations running smoothly and efficiently.