#Supply Chain#Asia

ID Logistics: “Innovation is part of our DNA”

Catherine Sturman
|Jun 3|magazine23 min read

Expanding into the Indonesian market, supply chain and logistics company ID Logistics has fully adapted its products and services to develop new partnerships and opportunities, taking on all new challenges with enthusiasm. Since its establishment, the company has consequently grown approximately 20 percent year on year over the last 15 years. With more than $1 billion in revenue, the company now operates in 16 countries around the globe. Managing Director Vincent Holley is responsible for continually developing the company in Indonesia, which he recognises as “a difficult market,” but adds “there is no easy market, however.” With around 18,000 islands making up Indonesia’s archipelago, only 900 of them are inhabited by approximately 260 million citizens, creating significant logistical challenges. Holley explains: “There is a duality in Indonesia where we have to make sound decisions and quick actions. Things change very quickly here, which makes the challenges very interesting and demanding, but the country remains very promising.” Starting as a 3PL strongly focused on retail logistics, ID Logistics has further developed its services, incorporating high standards throughout its operations. With a motto to develop sustainable logistics solutions, the company guarantees operational excellence, which is all fully measured by KPIs, agreed with customers and clients. Increased performance With the implementation of KPIs, Holley explains that the company can place an emphasis on continuous improvement. “In a country like Indonesia which is an emerging country, it is important to get high standards and step by step, upgrade standards and performance to a world-class level,” adds Holley. “The management of ID Logistics is demanding with its staff and also demanding with its business partners.” Internally, the company incorporates a number of certifications. The Certification of ID Logistics (CID) works in parallel with ISO, alongside another certification, which the company calls LID (LEAN of ID Logistics). Whilst the purpose of CID is for staff to really focus on the daily operations of a logistics provider and micromanagement, the LID program involves value stream mapping, looking at waste and improving company processes step by step. Through these certifications, the company continually supports staff and promotes knowledge sharing in order to further develop high standards. Operations Managers are tasked with monitoring KPIs on a daily basis, where they escalate and explain any deviations to the norm. Additionally, weekly and monthly operational reviews are implemented, on top of quarterly business reviews, documenting all performance, policy changes and any change in activity. “Whilst business is in continuous change, we make sure that customer satisfaction remains a key focus,” says Holley. “The focus is simple - to make our customer happy and bring continuous positive change. “This is also what customers appreciate – since we are straight forward and organised, we are able to move quickly. Action to Customer and internal quick communication is key.” Developing partnerships Through promoting the cross-fertilisation of knowledge and skills, ID Logistics develops strong partnerships. One such example is Schaffer, which has recently worked with the company on the revamping of an ID Logistics’ warehouse in Jakarta in less than three months during the Ramadan fasting period. With occasions such as this, it is imperative for the company to acquire committed partners who understand the ID Logistics’ strive for excellence. Another example is ID Logistics’ collaboration with Indonesian distributor of Everlight, which has been behind the company for the LED lighting project of its new warehouse. “Both Schaffer and Everlight are industry owned in the way they work and are solution orientated, which is not easy to find in Indonesia,” comments Holley. “I can commit to customers because they can commit to me and deliver on time, according to the agreement. This has allowed us to focus more on pure operations.” Future planning Becoming widely renowned within Indonesia’s retail logistics sector, Holley recalls a conversation with the Head of Supply Chain of L’Oréal Indonesia. Whilst ID Logistics as a 3PL is aware of the ongoing issues within retail and consumer goods, Holley was asked whether he would support the development of a forum in order to not only align these constraints, but find a compromise to improve the overall logistic costs within Indonesia. Since then, the duo has been behind the development of a forum (or community), incorporating supply chain directors from companies such as Nestlé and Danone, and also other 3PLs, with the aim to also attract technology companies. “The aim is to align our challenges to push the government here, and to some extent, improve the infrastructure and give Supply Chain actors the visibility for improvement,” adds Holley. “To define strategy for the improvement of the supply chain, we need to know roughly what the government plans to do in 10 years. “From a supply chain perspective, when you want to make a redesign of your distribution network, or even brief your supply chain by relocating some points, it is important to know where the new highways and industrial parks are, or deep-sea ports etc. That, at the moment, is lacking. That’s a good thing about being in an emerging country, it gives you the opportunities to address different challenges and to define different solutions. At the moment, we are just starting this community, but the aim is to lower the logistic costs in Indonesia.” Smart savings An ambition to develop sustainable logistics solutions, whilst remaining sustainable and profitable, is something all businesses are currently tackling throughout their operations. Developing an initiative to find smart savings, ID Logistics has also focused on reducing its carbon footprint through the implementation of green trucks within the last three years, where the consumption of each NGV truck is monitored. Holley explains: “Indonesia is a country which produces gas, which is cheaper than the cost of diesel. This NGV truck is more expensive than the diesel truck but at the end of the day, when you consider the TCO (Total Cost of Ownership), this green truck is cost affordable, even cost efficient. The more important thing is looking at the standard of trucks on the Indonesian market at the moment in terms of CO2 emission, this green truck has an CO2 emission more than 60 percent lesser than the current market standard. In addition to the green truck initiative, a way to decrease the carbon footprint is to optimise the transport capacities as well. To do so, ID Logistics has been implementing over the last five years 4PL Transport Control Tower solutions. Doing that, ID Logistics has also implemented a QCD approach by improving the Quality, decreasing Costs and the Delivery lead-time by the usage of smart monitoring technologies, such as GPS devices, geo-fencing and sensors. Usually, the expected savings are from 5 percent until 15 percent of the total distribution transport budget depending on the market maturity. “Innovation is part of our DNA, so innovation is not only new technologies, it could be a simple, smart idea to implement. Implementing new technologies makes sense to any 3PL, with a quick return on investment.” Supporting education With the curriculum for supply chain and logistics in Indonesia being less substantial than other APAC countries such as Australia, Japan and Singapore, ID Logistics strives to support local talent and the development of supply chain logistics in Indonesia through a number of investments. With limited supply chain actors on the market, ID Logistics has created a community to develop the supply chain scene in Indonesia. Additionally, to fund talent in Indonesia, the company works with universities to make this a more seamless process. Holley explains: “We work to upgrade the curriculum – so it is the type of investment to start enjoying in approximately five years – the rise of new talent in a sense of better education, and it will sit closer to western education in terms of supply chain and logistics. In the short term, develop talent through cross-fertilisation, and those people are supposed to be coached to develop the skills of my local team.” To further this drive, when the company can see an employee has potential, it sends them to another country, such as Taiwan, to see how different processes and technologies are used and gain increased exposure. “Sometimes you don’t change things because you don’t know see how to change it, it’s when you’re exposed to new things, you realise how you could do things differently,” adds Holley. Regional challenges Despite this, ID Logistics has come across a number of regional challenges since its establishment in Asia. Launching in 2002 within Taiwan, Carrefour also launched into Indonesia in 2007 and saw contrasting differences between the two countries. Whilst in Taiwan, Carrefour remains, the Indonesian Carrefour is no longer operating directly. Holley explains that whilst the brand name exists under a franchisee, this will likely disappear soon. From this experience, Holley explains that “the western retail industry has to adapt the way of doing retail in, I would say, non-western countries. Our main customers at the moment are retailers, but we need to change the way in which we are operating ourselves, which is part of the challenge, and to work more and more with ecommerce companies.” The rise in e-commerce, with companies such as Alibaba, as well as smaller e-commerce companies in Indonesia not yet known overseas, are slowly altering the business map in the country. However, “retailers are not the only one to move to ecommerce,” reflects Holley. “The second and third revenue of ID Logistics worldwide is the consumer goods industry – big players like Danone and Unilever are some, and even those ones are thinking to move in this direction.” To this effect, the company has had to adapt its ways of operating, such as the use of its work management system, which has been customised and upgraded in order to deliver quality and tailor-made solutions. Nonetheless, Holley says, “in e-commerce, there is some cut off. For instance, every order before 2pm can be delivered the next day, whereas in some areas there is same day delivery. It is a different way to address logistics which encompasses new challenges.” These challenges are also heightened through the increased Uberisation of the economy, where an individual can sell any product and ensure it is delivered to the other side of Indonesia by the next day, as everybody in the country is using Uber or local company GO-JEK. With all these complexities, ID Logistics continually transforms its services and the way it addresses business with clients and end users. We think properly and we move forward. It’s a lean organisation which makes communication flow quickly, ensuring the company remains competitive within the Indonesian market.”

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Since we are straight forward and organised, we are able to move quickly. Action to customer and internal quick communication is key.”


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