Menlo Worldwide Expands its Domestic China Supply Chain Network
Shanghai, China
March 10, 2008
Evan Armstrong

Key Personnel:
Frank Lange, Vice President of Global Development, Menlo Worldwide Logistics
Johnson Shen, Managing Director, Menlo Worldwide Logistics – China
Anny Wang, Sales Director, Menlo Worldwide Logistics – China
Lim Sau Hong, Operations Director, Menlo Worldwide Logistics – China
Marc Schneider, Director of Global Project Management, Menlo Worldwide Logistics
Thomas Lau, Account Management Director, Menlo Worldwide Logistics
Oliver Han, Operations Manager, Menlo Worldwide Logistics
Bob Basset, Vice President of Sales and Marketing, Menlo Worldwide Logistics
Tom Nightingale, Vice President of Communications and Chief Marketing Officer, Con-way, Inc.

In a recent visit to Shanghai, we had the opportunity to review Menlo Worldwide Logistics’ expanding Chinese operations. Menlo Worldwide Logistics has over 45 years of experience in China. In 1962, it established a Hong Kong office and in 1999 Menlo Worldwide Logistics established a wholly-owned subsidiary, Shanghai-Menlo Worldwide Logistics (Shanghai) Company Ltd., in the Waigaoqiao Free Trade Zone. In 2006, Menlo formed a wholly owned foreign enterprise (WOFE) allowing it to provide domestic warehousing and transportation services.

In 2007, Menlo greatly expanded its domestic mainland Chinese supply chain management network through the acquisition of Shanghai based Chic Logistics. Chic was founded in 1997 by now managing director Johnson Shen. According to Frank Lange, vice president of global development for Menlo, Menlo reviewed approximately 150 Chinese based third-party logistics providers (3PLs) before electing to make an offer and finalizing the deal with Chic Logistics. Chic had approximate revenues of $60 million in 2007 and is a significant domestic Chinese provider of non-asset based transportation management and value-added warehousing services. The combined Menlo/Chic operational resources are detailed in the table below.

Table 1–Chic Logistics and Menlo Worldwide Logistics Combined Mainland China 3PL Parameters

Combined Businesses



 Markets (Cities)


 Operating Sites


 Footprint (m2)




Menlo, with its acquisition of Chic, has significant coverage in mainland China with large warehousing and transportation management operations in major cities including Beijing, Chengdu, Guangzhou, Hong Kong, Shanghai, Suzhou, Tianjin, Wuhan, and Xian. These are shown on the map (Figure 1) below. Key customers include B&Q, Bobcat, Braun shavers (Braun GmbH), ICI (Imperial Chemical Industries Limited), Mary Kay, Powerwave Technologies, Volvo, General Motors, and Procter & Gamble.

Figure 1–Key Menlo/Chic Mainland China Operations

This network provides Menlo/Chic with good north-south transportation management capabilities for less than truckload and truckload shipments. It is also managing domestic air, in-land barge, and rail shipments for customers. In 2007, Chic managed approximately four million shipments in and between over 700 cities in China primarily utilizing the services of just over 300 contract carriers. In addition to outside carriers, Menlo/Chic has a fleet of 64 owned and dedicated capacity trucks.

The best example of Menlo/Chic’s value-added warehousing and distribution capabilities is its Mary Kay cosmetics China operations. Menlo/Chic runs seven distribution centers and 73 Mary Kay direct sales counter operations throughout China. Examples of both operations are detailed in the following paragraphs.

Mary Kay Shanghai Distribution Center

In the Songjiang District of southwest Shanghai, Menlo/Chic is running a 23,000 square meter (247,570 square foot) warehouse for Mary Kay cosmetics. Two-thirds of the warehouse is dedicated to the central distribution center (CDC) operation that manages the replenishment of cosmetics inventories for seven Mary Kay regional distribution centers (RDCs). The Shanghai area RDC operation is collocated in the other third of the warehouse and fulfills orders for the 19 Chic Logistics run Mary Kay counter operations that it supports. All of the outbound transportation is managed by Menlo/Chic using outside carriers and with its own fleet.

The CDC operation is staffed with 18 people responsible for replenishing inventories in Mary Kay’s seven China RDCs located in Beijing, Chengdu, Guangzhou, Shanghai, Shenzhen, Wuhan, and Xian. Approximately 1,000 stock keeping units (SKUs) are maintained in on-hand inventory in 2,700 pallet/rack positions. Menlo/Chic’s proprietary warehouse management system (WMS) is interfaced with Mary Kay’s JD Edwards enterprise resource planning (ERP) to ensure accurate inventory levels and is used in conjunction with radio frequency (RF) devices to manage the CDC work flow.

The Shanghai Mary Kay RDC has a staff of 48 and fulfills approximately 1,500 to 7,000 orders per day. Each order is delivered overnight to 19 Shanghai area direct sales counter operations. Most of the high-volume picking is performed in two main pick modules. Each pick module has seven picking stations and product is picked from cartons in rack positions and placed into cartons on a roller conveyor. Each module utilizes RF devices to increase picking accuracy and a radio frequency identification (RFID) tag is included in each pack out carton to identify the order and the carton contents.

Mary Kay Shanghai Pickup Counter Operation

The 73 pickup counter operations in China are managed by an approximate staff of 200 Menlo/Chic personnel and process 2,000 individual pickup orders per week.

We had the opportunity to visit one of the 19 Shanghai area Mary Kay pickup counter operations. It is located in an office on the fourth floor of a high-rise office building on Xin Zha Road in Shanghai. When you walk into the operation, you see a pickup counter to the immediate right and an open room with many pink Mary Kay sales related postings. Behind the counter in another room are racks containing Mary Kay products received from the RDC.

This is a mid-sized “Class B” operation in terms of order volume and processes approximately 70 pickup orders per week. It is open seven days from 10 A.M. to 6 P.M. Products picked and packed out of the Shanghai RDC by 1 A.M. are delivered to the counter operation by 10 A.M.

Waigaoqiao Multi-Client Logistics Center

A short drive from Shanghai city is the Menlo Waigaoqiao multi-client logistics center. It is a 26,400 square foot secure bonded warehouse operating in the Waigaoqiao Free Trade Zone.

Its main customer is Bobcat Company whose operation occupies 85% of the warehouse. Utilizing a staff of 14, Menlo builds kits of manufacturing parts to order, handles customs clearance and distributes the parts to Bobcat’s manufacturing plant in Suzhou. At any given time, 4,000-5,000 SKU’s are warehoused for Bobcat. Each kit contains approximately 800-1,000 parts used in manufacturing excavators and steel loaders. The quality of this operation mirrors many of those we have seen within the U.S.

Shanghai Operations Review Summary

Through its acquisition of Chic Logistics, Menlo Worldwide Logistics has taken a significant step in becoming a major 3PL in the domestic Chinese market. The newly combined enterprise is one of the largest players in contract logistics on the mainland and the level of sophistication of its operations is closer to those of Western 3PL operations when compared to most of the manual-intensive Chinese operations we have visited. By leveraging the local expertise and relationships developed by Chic and deploying its information systems, engineering, and contract logistics skill set, Menlo Worldwide Logistics has gained a solid footing for future growth in China. We anticipate that the next step will be to add international transportation management capabilities to this strong domestic compatibility.


Sources: A&A Primary Research,

Copyright © 2024 Armstrong & Associates. All rights reserved.