Menlo Accelerates its Southeast Asia Growth
Singapore and Bangkok, Thailand Site Visits
February 26, 2013
By
Evan Armstrong
Key Personnel:
Bob Bassett, Vice President of Sales and Marketing
John Beckett, Vice President – International Operations
Desmond Chan, Managing Director – South Asia
Thomas Koh, Director, Business Development – South Asia
Trong Worraprecha, General Manager – Thailand
Desmond Lim, Group Manager, Operations – Singapore
Panjagorn Gittipongsiri, Senior Manager Operations – Thailand
Peter Ng Fook Mow, Operations Manager – Thailand
Vincent Chan, Operations Manager – Singapore
Menlo Southeast Asia Overview
Menlo Worldwide Logistics operates in 20 countries on five continents. In 2012, it generated gross revenue of $1.7 billion and net revenue of $639 million. Menlo now has over half of its 5,300 staff in operations outside of the United States. Its expanding global operating network has repositioned Menlo within the global third-party logistics market. Menlo is now part of a select group of third-party logistics providers (3PLs) which we classify as Tier-One Major Market Global Supply Chain Managers.
Much of Menlo’s global expansion has been in rapidly growing Asian 3PL markets. Since our first visit to Singapore in 2007, Menlo has dramatically expanded its Southeast Asia operations. After Menlo acquired Singapore based Cougar Logistics in 2007, it was managing 14 sites. Over the next five years, it solidified its regional management team and ramped up its business development efforts. It paid off through solid organic growth; Menlo is now managing 32 value-added warehousing operations with a total footprint of 3.8 million square feet and has a workforce of 1,827.
In addition to expanding its value-added warehousing and distribution network, Menlo has added significant pieces of business increasing its regional transportation management capabilities. While Menlo’s early Southeast Asia business centered on meeting the needs of its multinational automotive and high-tech industry customers, it has incrementally added many new multinational and regional distribution customers in apparel, consumer packaged goods and retail. Menlo’s major South Asia customers include Bacardi, BMW, Bosch, Dana, GM, Nike, Pernod Ricard, Philips, Puma, Tata Automotive, Trane, and Triumph.
Menlo South Asia Operating Network
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7 |
1,700,000 |
361 |
193 |
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15 |
1,600,000 |
1,050 |
14 |
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6 |
360,000 |
270 |
10 |
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4 |
165,000 |
145 |
6 |
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2 |
0 |
1 |
2 |
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34 |
3,825,000 |
1,827 |
225 |
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New Business Drives Menlo’s Singapore Warehouse Addition
To meet its growing Southeast Asia customers’ logistics needs, Menlo had a January 2013 grand opening for its seventh warehouse in Singapore. Menlo occupies 400,000 square feet on four floors of a new eight floor facility located in the Boon Lay section of Singapore. The new operation brings Menlo’s total Singapore warehousing footprint to 1.7 million square feet.
The multi-client operation has a total staff of 100 with 70 working in the warehouse. Each floor has 11 dock doors. Floors 1-7 have 10-meter high ceilings and level 8 has 12-meter high ceilings. The operation’s key customers include Robert Bosch, Philips, and Canon. The operation was awarded Menlo’s Bronze Lean Management Certification and the facility has been assessed as being environmentally sustainable via its BCA Green Mark GoldPlus Certification.
Two operations are managed for Robert Bosch in 32,000 square feet of the facility’s first floor. Half of the operation is dedicated to Bosch automotive parts distribution and a power tool warehousing and distribution operation is housed in the other half.
Approximately 5,000 active SKUs (stock keeping units) of Bosch automotive parts are maintained in inventory. Parts are kept in six-high racking, on shelves, and in bulk storage. Approximately 100-150 parts and power tool orders are processed daily by a staff of 12. Some of the automotive parts orders are for the local Singapore market, but the majority are exported to the neighboring countries of Indonesia, Malaysia, Thailand, the Philippines, and Vietnam. The Bosch power tools stored in the warehouse are distributed solely to the local Singapore market.
In addition to inventory management, order fulfillment, and outbound distribution, Menlo is also performing local market product labeling as a value-added service.
To monitor service performance, the Bosch operation’s KPIs (key performance indicators) include: outbound order accuracy, on-time receiving and shipping, and inventory accuracy.
On the third floor of the warehouse, 29 workers fulfill orders for Philips Consumer Lifestyle and Lighting products. Combined 4,000 SKUs of product are maintained in five-high racking and bulk storage.
Menlo utilizes its proprietary “SIMS” WMS (warehouse management system) to manage the operation. Orders vary between pallet pick, case pick, to each pick. The majority of outbound orders are destined to Singapore, Indonesia, Malaysia, Thailand, the Philippines, and Vietnam.
The operation performs a host of value-added services including price tagging, local market labeling, DVD coding, and packaging. In a small separate room of the third-floor operation, Menlo is running a baby bottle packing operation. 4,000-5,000 individual bottles are shrink-wrapped into 12 packs and packaged each month.
The final floor we toured was level seven which is dedicated to Canon. The 36 person operation supports Canon’s inventory management, order fulfillment, and transportation management services. Menlo uses its Infor/Provia “Viaware” WMS to manage the Canon operation.
Approximately 2,000 SKUs of product are maintained in inventory. Most product is stored in conventional six-high warehouse racking and some four-high, drive-in racking is used for product with the same SKUs.
The operation boasts a 4,000 square foot, high-value area for cameras and a 3,000 square foot, temperature and humidity controlled room for camera lenses.
Approximately 180 domestic orders and 100 export orders are fulfilled daily. KPIs being tracked include: on-time delivery, inventory accuracy, and order processing cycle times.
Menlo Expands it Thailand Operations to Meet Increasing Demand – New 23Km Bangkok Warehouse
Menlo’s Thailand operating revenue grew 983% from 2007 to 2012 and totaled $4.7 million for 2012. To support this growth, Menlo is working with a local developer in opening a new 80,000 square foot warehousing operation at the 23 Kilometer marker on Bangna Trad Road. Thus, the new operation is dubbed the “23Km” warehouse and is part of a 800,000 square foot warehouse campus with multiple tenants including Nissan and Starbucks.
The 23Km facility is five kilometers from Bangkok’s Suwannaphum International Airport and approximately six kilometers from Bangkok’s 200 acre Lat Krabang inland container depot. Lat Krabang acts as a satellite terminal to Thailand’s largest ocean port Laem Chabang, which is over 100 kilometers southeast of Bangkok on the Gulf of Thailand. To avoid Bangkok’s motorway congestion, ocean containers can be railed to Laem Chabang from the inland container depot.
With the addition of 23Km, Menlo has expanded its Bangkok warehousing footprint from 86,000 square feet in 2007 to 245,000 square feet. It also has an option to expand into an adjacent 70,000 square foot warehouse section at 23Km if needed.
19Km Bangna Trad Road Multi-Client Value-Added Warehousing & Distribution Operation
The next warehouse we toured on our Southeast Asia trek was a modern 86,000 square foot, multi-client warehouse southeast of Bangkok’s city center. The 19Km facility marked Menlo’s entry into the Thailand market in 2007. Today it has staffing of 100-120 depending upon seasonal demand and operates two shifts, six days a week.
19Km’s largest customer is Philips Lighting and it provides “flex” space for additional customers and small, multi-client accounts. As a result of its ongoing process improvements, the operation received Menlo’s Bronze Lean Management Certification in November 2009.
Menlo uses its “SIMS” WMS to manage operations at 19Km and Menlo’s other Bangkok operations.
Approximately 2,600 SKUs of product is maintained in six-high racking and a small number of some bulk storage locations. The warehouse fulfills 250-300 orders each day. Approximately 80% of orders are piece pick and the remainder are case pick. Sixty percent of its outbound distribution is to construction companies and the remainder is primarily delivered to local retailers and hypermarkets such as Big C, Carrefour, and Tesco.
The average monthly volume of products shipped is over 6,000 cubic meters. For shipments within a 1,000 kilometer radius of the warehouse, Menlo provides its customers with same-day, or next-day delivery.
In addition to outbound order fulfillment, Menlo performs inbound product receiving and inspection, labeling, product bundling and returns management for its customers. It is also performing country specific product labeling for the Thai market, repacking products as requested, and performing import labeling.
To monitor service performance, the operation’s KPIs include: outbound order accuracy, on-time delivery, damages, and inventory accuracy.
18Km Bangna Trad Road Multi-Client Value-Added Warehousing & Distribution Operation
The next operation we visited was the 40,000 square foot 18Km value-added warehousing and distribution operation. The warehouse has 10-meter high ceilings and six dock doors. The operation began in 2011 to handle additional business and expand Menlo’s Bangkok footprint. The two-shift, seven day per week operation has a staff of 18 serving three customers: Dana Spicer, Franke, and Trane.
Menlo manages five inbound milkruns of parts and components from Bangkok area vendors for Dana Spicer. Every day, Menlo receives two or more production plans from Dana Spicer which are used to merge parts and components from the milkruns with parts on hand at the warehouse to assemble kits. The kits are sequenced for the manufacturing line according to the production plans. Menlo has a contracted fleet of 10 metric ton trucks which make four daily shuttle runs of kits to Dana’s manufacturing plant located approximately seven kilometers north of the warehouse. Menlo’s onsite staff at the Dana Spicer plant unload the trucks and stage the kits for injection into the manufacturing line.
Menlo’s KPIs for Dana Spicer include: inventory accuracy, on-time parts supply, picking accuracy, and order fulfillment rates.
In 22,000 square feet of the warehouse, Menlo fulfills orders of sinks and faucets for Franke. Just over 1,400 SKUs of product are maintained in inventory and approximately 200 items are picked and shipped daily. As a value-added service, Menlo drills holes in sinks to accommodate different faucet combinations. Franke’s KPIs include: picking accuracy, on-time dispatch, dock-to-stock cycle time, and inventory accuracy.
At the time of our visit, Trane was utilizing approximately 6,000 square feet of the 18Km warehouse. Its product inventory was “overflow” from the Trane Manufacturing warehouse operation managed by Menlo approximately one kilometer away.
Menlo Southeast Asia Operations Summary
Menlo has solidified its regional management team and is rapidly adding to its book of Southeast Asia business. In addition to growing in automotive and high-tech, it has also developed more retail and consumer products value-added warehousing and distribution business. Based upon its new business gains and solid customer “pipeline”, we anticipate that Menlo will continue growing its operations throughout Southeast Asia. By instituting Lean Management process improvement principles, Menlo has built a global operation which is winning both multinational and regional customers.
Sources: A&A Primary Research, https://www.xpo.com