Ryder System Gains Traction in China

Shanghai, China

October 2007

By

Evan Armstrong

Key Personnel:

Christopher Woodward - Vice President & Managing Director, China

Alice Yu - Director of Business Development, Greater China

Gary Maida - Senior Logistics Manager

Chris Gee - Senior Logistics Project Manager, China

Ryder has been working in China since 2000 when it began assisting Shanghai General Motors (SGM) in launching an inbound logistics management process for its production facility in Shanghai. In 2001 Ryder formally entered the market by forming a Wholly Owned Consulting Company in the Shanghai Free Trade Zone. In 2006 Ryder received a logistics license to perform integrated logistics services in China. Its main third-party logistics (3PL) service offering includes: transportation management, value-added warehousing and distribution, and supply chain engineering and design services. Major customers in China include: Beijing Benz, Lucent, and Italian household systems manufacturer Merloni TermoSanitari (Merloni). Ryder China's basic operational service offering is detailed in the figure below.

      Ryder China - Basic Operational Overview

At the time of our visit in mid-October, Ryder had a team of 95 people in China, eight of which were logistics engineers. It managed 226,000 square feet of warehouse space in six cities: Shanghai, Beijing, Wuxi, Changchun, Nanjing and Kunming. Ryder was also managing domestic transportation in approximately 200 distinct lanes. This December, Ryder is starting up a new operation for a consumer electronics/white goods customer in Shanghai that will bring its total square footage to approximately 500,000 square feet, its transportation management network to about 250 lanes, and its total number of employees to 160. This operation is set to go live the second week of December. In addition, Ryder is contracted to open up warehousing operations in Guangzhou, Harbin, Fuzhou, Changsha, Wuhan, and Zhengzhou in the first quarter of the new year.

In addition to Ryder's traditional transportation management and value-added warehousing and distribution operations, Ryder China is currently providing some interesting global transportation management services that are capable due to the time difference of 12 hours between the eastern U.S. and Shanghai. According to Chris Woodward--Ryder's managing director for China--by using teams composed of Ryder staff in both the U.S. and China, Ryder provides a virtual 24 hour work day making it easier to staff and support central transportation management operations required to run 24 hours, seven days a week.

Case Study: Merloni's, Ryder Domestic China, Network Redesign and 3PL/4PL Services

With the help of i2's Supply Chain Strategist, supply chain network optimization software, forecasted demand volumes and service level requirements, Ryder's engineers designed an optimal domestic China distribution network for Merloni's Ariston water heater product line. In addition, Ryder worked with Merloni in developing key indicators for monitoring supply chain performance.

By utilizing Ryder's optimal network design solution and its 3PL and 4PL services, Merloni has reduced its Chinese distribution center (DC) network from 18 to 12 Ryder managed locations. The redesign has dramatically reduced Merloni's on-hand inventory levels while improving its transportation service and direct service area coverage to customers.

While Ryder's main Merloni central distribution center operation is in Wuxi, we had a chance to visit its 4PL Shanghai regional distribution center (RDC) operation in the northwestern Jiading district of Shanghai.

Ryder utilizes a local 3PL (Kanto) for warehousing, including non-management labor, and Merloni's Shanghai local transportation services. The RDC is 22,600 square feet and product is stored on pallets on the warehouse floor. Most of the water heaters are destined to Chinese big-box retail stores such as Gome and Yolo. 

To support its Chinese warehousing and distribution operations including Merloni, Ryder uses a popular local warehouse management system--"Flux" WMS. Flux is integrated with Merloni's order management system in Wuxi. As orders are generated they drop into Flux. Flux is used to print paper pick lists for picking in the warehouse and for putaway of product as it is received. Once product is picked and loaded into trucks for outbound distribution, Flux is updated with the information which also automatically updates Merloni's order management system. Through this tight integration, inventory accuracy and visibility has been dramatically improved.

Summary

Ryder has learned many lessons since entering the Chinese 3PL market with SGM. It is using its logistics engineering expertise, information systems, and operational process design expertise to develop tier-one Chinese supply chain operations and differentiate itself from domestic 3PL competitors. Ryder has had to be creative in its business development approach and is beginning to see significant success. With this approach, Ryder has become established in one of the fastest growing global 3PL markets and is on track to become a leading domestic Chinese 3PL provider.

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