The efforts of the Trade-Van logistics team have
greatly enhanced information flow among retailers,
distributors and logistics Enterprises.
The Power of Intelligence
Trade-Van: Pinpointing the Pivotal Product
By Jerry Lai
Published:CommonWealth Magazine April 02, 2009 (No.418)
Managing cohesive electronic logistics intelligence for 15 major chains and two thirds of all manufacturers in Taiwan, Trade-Van also provides marketing information analysis that makes businesses smart about sales.
The headquarters of Trade-Van Information Services in Taipei’s Nangang Software Park sports a huge data center of several hundred square meters. Control lights are flashing on tightly spaced computer servers, each flicker representing a piece of real-time business information.
Trade-Van carries out 3.5 million instructions per year, from item-by-item orders of goods to call-off orders to payments, on behalf of Taiwan’s 15 largest chain stores including budget supermarket Pxmart, hypermarket Carrefour, Watsons drugstore, Matsusei supermarkets, Cosmed drugstore and Starbucks coffee shops. Meanwhile, two thirds of Taiwan’s manufacturers – 4,143 companies in total – including Procter & Gamble, beverage maker Heysong, and the Taiwan Tobacco & Liquor Corporation, connect with the Trade-Van network on a daily basis to understand their products’ sales situation, hoping to optimize manufacturing and delivery plans in order to avoid excess stock or lack of inventory.
Trade-Van was founded in 1996 as a provider of online customs clearance services for sea and air cargo, with the Ministry of Finance holding a 36 percent stake. Since then, the company has been transformed into a professional information service company that provides export/import customs clearance, tax filing, land administration services, distribution and supply chain services, all online. Trade-Van has more than 30,000 customers, making it Taiwan’s biggest business information processing center.
Trade-Van made the first step toward building an e-commerce platform in 1999. Just as automated customs clearance services neared completion, Trade-Van decided to launch a new supply chain platform and approached the Formosa Plastics Group (FPG) with its proposal.
As soon as recently deceased FPG founder Wang Yung-ching heard about the proposal, he gave orders to get the entire conglomerate and its suppliers involved. FPG uses the platform to get price quotes, to compare and negotiate prices with suppliers for procurements worth hundreds of billions of Taiwan dollars, even for making payments, electronic billing and bank loans. Later on, FPG’s B2B e-commerce platform, run by subsidiary Formosa Technology Corporation, was opened to outside companies and commercialized. Presently, the Formosa Technology Corporation is contributing an annual turnover of more than NT$1 billion to the Group.
After taking its first successful step, Trade-Van developed its platform in the direction of communicating with upstream distributors and manufacturers.
Its first partner was discount supermarket chain Pxmart (also known as Chuan Lian), which adopts the rare model of consignment sales. Since Pxmart’s business model is different from the average retailer that pays for goods before stocking them, Trade-Van designed a custom-made "distribution network platform" for the discount chain, its delivery agents and outlets.
The present platform has become the main driving force behind the continued expansion of Pxmart’s network of stores. Chuan Lian Enterprise general manager Tsai Chien Ho says with a laugh, "If I go for a whole day without looking at the Trade-Van website, I won’t know what to do." Tsai is not only referring to the 450 or so Pxmart stores, but also the more than 700 logistics enterprises and nearly 1,000 manufacturers with which it does business.
The "logistics network platform" provides crucial business information for retailers, distributors and logistics enterprises alike.
For retailers, what is most crucial for improving business performance is efficiently raising sales per square meter of store area. By using an e-commerce platform for placing orders and refilling inventory, companies can avoid stockpiling slow-selling items and prevent running out of stock for hot-selling products. Order accuracy can be raised from 95 percent to a perfect 100 percent.
The platform even helps Pxmart save on personnel expenses, because invoice costs can be reduced from NT$35 per invoice to NT$5.
Upstream distributors and manufacturers, meanwhile, can conveniently tap the Trade-Van platform to obtain orders, sales and inventory information on their products. At any given time they will know which item currently is a hot seller so that they can immediately restock inventory to ensure timely supply. These measures have helped to reduce inventory levels from 15 days to 7 days.
The biggest plus for the logistics industry is higher shipment accuracy. In the past logistics companies depended on their gut feelings when it came to making a rough estimate as to how much goods should be loaded for delivery. But they knew only upon the delivery trucks’ arrival at the stores how much was actually needed, which incurred a lot of unnecessary costs in terms of gasoline and wasted time.
"The more information you have, the less you will face inventory surpluses or shortages," explains supply chain management expert professor Andy Kuo, head of the School of Professional and Continuing Studies at National Taiwan University in a positive evaluation of such B2B systems.
B2B systems like Trade-Van can help avoid the whiplash effect (which means that excess inventory or inventory shortages are amplified as one moves upstream in the supply chain further away from the customer) because they allow information sharing within the supply chain. This is a sure-fire way for distributors and suppliers to narrow the gap with end consumers, Kuo notes.
But he also warns that such a platform can only continue to operate if it is just, fair and secure for all supply chain participants and if everyone is able to make money.
Finding the Pivotal Product
Trade-Van spokesman Toby Kuo is confident that information used on the website is secure. He points to Trade-Van’s rich experience in thwarting hacker attacks, which rain in from all over, even academic institutions, and are especially prevalent during the annual tax reporting season. He also points to the company’s strict internal controls, which prevent the leaking of critical business information to competitors.
In order to help its customers better target their marketing initiatives and sales campaigns, Trade-Van is also further developing its business intelligence analysis services.
Provided that customers voluntarily provide sales information, Trade-Van runs these data through a business intelligence system for analysis.
Once a distributor wanted to know which of its products was "the most sensitive product" (meaning the one that drew customers into a store when they saw it). Much to everyone’s surprise, the customer magnet turned out to be a men’s undershirt, which the distributor had been planning to discontinue.
With the onset of the economic recession, it has become even more important that Trade-Van provide services that improve the accuracy of the supply chain. Trade-Van has turned out to be a good partner that raises Taiwanese enterprises’ information-gathering capabilities.
Translated from the Chinese by Susanne Ganz
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