Jan 24, 2014

Casio restructures logistics system, boosts sales in India


Chennai warehouse that kicked off operation in June 2013

Casio Computer Co. (headquarter in Shibuya, Tokyo and headed by its president, Kazuo Kashio) has restructured its sales and logistics system in India following its business expansion in the country. By opening a new warehouse in Chennai in June 2013 and changing the transport routes for South India-bound products, the company successfully shortened the lead time up to the point of sale of its goods. It also managed to slash its transport costs. Casio claims that its moves enabled the company to shorten the lead time by six days from the hitherto lead time and reduce its logistics costs by about Y20 million per annum. Now it plans to further reinforce its warehouse network and beef up its logistics-to-sales system in the future.

The company has hammered out business expansion strategies at emerging economies due to the maturity of the markets in Japan and Europe/U.S., expanding sales in the ASEAN, Middle/Near East and Latin America regions. In particular, sales in India have been steadily rising for watches, its conventional main product in the country, as well as musical instruments such as keyboards, and calculators, among other products. Sales in the three-year period until fiscal 2012 grew 20-30% per annum, with the growth rate expected to reach 20% in fiscal 2013, too.

In terms of logistics, Casio used to manage inventories at its own warehouse in Delhi, but it leased a warehouse in Mumbai in 2011 and developed a logistics base there. It built a system for delivering cargoes to the whole of India from two bases - Delhi and Mumbai. Thereafter, its warehouse in Delhi was put under a lot of pressure due to the rise in logistics volume, so the company leased another warehouse in the outskirts of its existing facility and then shifted to the management of musical instruments, calculators and other large-size products at the new warehouse. With regard to watches, regulations in the country require these products to undergo complex distribution processes, so the company sent a dedicated team of experienced staff to manage these products at its own facility and then distribute them all over the country.

Casio currently manages products bound for overseas destinations, except Europe and the U.S., at its warehouse in Shenzhen, China. Products manufactured in China, Thailand and Japan are temporarily consolidated at the Shenzhen facility. Prior to the opening of the Chennai warehouse, India-bound products were hauled by sea from Shenzhen through two routes - one to Delhi and one to Mumbai. Products bound to Chennai were sent by land to the stores from Mumbai. After the operation of the new warehouse, products bound for South India have been directly transported by sea to Chennai port. Thus far, marine transport time from Shenzhen to Mumbai totaled 14 days, while import customs clearance took five days and land transport took four days. By changing ports, however, the lead time for the entire array of procedures has been successfully cut by six days, comprising three days in marine transport and three days in land transport. As for the watches hauled by air directly to Delhi, these are still delivered from the Delhi warehouse, as usual.

Shigeo Kojima, head of the planning and control section of Casio's logistics division, claimed that, "We managed to modify our logistics system by carefully matching it to our business expansion in South India. Expanding a warehouse could make us prone to deteriorating efficiency due to the dispersion of inventories, but we pushed for pure increase, so our operation under the new system is doing just great."

The warehouse in Chennai currently measures 5,000 sqm. Over at Delhi and Mumbai, Casio leases sites with area of around 8,000 sqm (excluding the company's own facilities). While the Chennai warehouse is still small compared to the other two bases of Casio in the country and it only handles about 20% of the logistics volume in the whole of India, the company still aims to expand its space corresponding to the growth in sales volume. Sales in South India currently accounts for about 35% of Casio's sales in all of India, but the projection is that this percentage will reach 40% by 2015. And the company wants to realize the same level of handling volume at its Chennai warehouse. India-bound Casio products totaled about 130 FEUs in fiscal 2012 and are projected to reach 170 FEUs in fiscal 2013, up 30% from the previous year.

Now Casio is eyeing the establishment of logistics bases in Kolkata and other areas in East India, as well as Hyderabad and other cities in South India, in the future.

As for developments in other emerging economies, Casio will kick off operation at a warehouse in Dubai in February toward its utilization as a logistics base in the GCC region.

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