TNT has achieved double-digit growth in Asia in its hi-tech sector business so far this year thankspartly to ‘sea to air’ and ‘sea to road’ modal shifts based on changing supply chain strategies.
In Singapore alone, revenue grew by more than 50% while freight volume almost doubled, thecompany announced this week. Despite the economic downturn, TNT attributed its growth to its leansupply chain solutions that address the topmost concern of hi-tech and electronic businesses –excess inventory.
Recent studies conducted with several hi-tech and electronic companies indicate that thecurrent economic downturn has increased the volatility of demand and as such, many businesses aremost concerned about keeping their inventory low to prevent product obsolescence. In response, manybusinesses are leaning towards a ‘build-to-supply’ model rather than a ‘build-to-inventory’ modelwhich takes into account lower levels of inventory, but also shorter delivery times and reducedcosts, TNT said.
Onno Boots, regional managing director of TNT Asia, explained: “The pressure on hi-techbusinesses to keep inventory levels low has led to a demand for a short end-to-end supply chainsolution that is responsive and also economical. As a result, businesses are slowly turning awayfrom sea transportation that is cheap but slow to faster transportation modes such as road or airtransportation that are capable of delivering goods in smaller volumes. Our air and in particular,road networks which we have developed over the years, enable us to provide exactly that.”
TNT has developed a calculation model to determine the optimal mode of transport for abusiness, taking more than just the price of transportation into account. Called the IDEA tool, itgained greater prominence lately due to the increased pressure on cost control that companies havebeen facing. The calculation model computes financial savings derived from four components:
– Reduction in cycle stock and in-transit inventory
– Reduction or elimination of Safety Stock
– Reduction or elimination of Dead Stock
– Avoidance of Service Enhancement Stock
TNT has relied on this tool to identify the most cost-efficient mode of transportation forits customers.
TNT’s air and road network are seamlessly linked enabling customers to choose a variety oftransport combinations that offer a mixture of economy and speed. TNT’s Boeing 747 freighter fliesthree times a week between Singapore, Shanghai and Liege (Europe), and an additional TNT freighterlaunched in September flies three times a week between Hong Kong and Liege (Europe) which thenconnects to TNT’s extensive Europe Road Network. TNT’s Asia Road Network (ARN) provides a 7,500kilometre long road network wholly managed by TNT and stretches across 125 cities in six countries.The ARN is 30% cheaper than air transportation and three times faster than sea transportation.
TNT added that it recognises the paramount importance of security to the hi-tech andelectronic industry and has been implementing and maintaining a sophisticated security managementsystem which identifies, analyses and mitigates risks up and down the supply chain. TNT’s highlevel of security management has earned the company the ISO 28000 certification for its AsiaPacific operations, the first for any express integrator.
