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Organised pallet pool streamlines logistics

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WHEN most people think of Indonesia, the images of Bali beaches, temples, and the recent terrible tsunami come to mind. But Indonesia is a lot more than that.

The problem faced by manufacturers getting their products to market is a daily battle. Consider for a moment, that Indonesia is the largest archipelago in the world with more than 14,500 islands. It's also home to 220 million people from 365 ethnic backgrounds and groups.

So in other countries where distribution is fairly straightforward, Indonesia's young, vibrant logistics and warehousing industry, has issues that many other countries don't face.

A key player in the changing face of Indonesia's logistic business is Loscam Asia . Headed up in Indonesia by country manager Zulhizar Hasibuan, the company, today, is a major supplier of pallets to the industry.

“One of the things that attracts companies to Loscam, is the growing awareness that an organised pallet pool with top quality pallets is a smart way to streamline product delivery and save both time and money," explained Zul, when speaking to the "Loscam Leader" about the activities in this important Asian nation.

"In general, standardisation of logistic components such as transportation (truck design), and packaging including pallet standards is now being driven by industry and its relevant associations.

"The trend to outsourcing logistics began around 1995, when a lot of overseas third party logistic companies invested in the country. This has resulted in outsourcing having a positive image with FMCG companies,” he said.

"Before Loscam started in Indonesia, almost all FMCG companies using a third party logistic warehouse provider, used their own pallets. They were not standard in size, timber or quality, and there wasn't a huge investment made to provide quality pallets.

“Some industries still rent through local companies and a typical local supplier only makes his pallets available for original rental, without trying to improve customer efficiency or bring any value propositions that a pooling company provides.

"Loscam Asia went to the market as a new organisation offering standard pallets, technical support, and an attitude of introducing existing customers to the pallet-pooling concept,” Zul added.

“Some customers started with exchange pallets as an embryonic introduction to pooling. Quickly customers realised that Loscam could manage the pallets in their supply chain."

Prior to immersing himself in pallets and pooling, Zul had a sales and marketing background, and sees his new position as a challenge for the newcomer.

With four key people running the operation - Zul, Ghatot Kersoharjo as finance executive, Desi Ekawaki in administration and customer service, and Aceng Pahrudin as warehouse supervisor, it's a close-knit team. Additional customer service and sales staff, are currently being recruited.

While the country stretches over hundreds of thousands of square kilometres, the main manufacturing tends to happen in two main cities: Jakarta and Surabaya.

Jakarta is the main distribution for all of west Indonesia while Surabaya looks after mid and eastern parts of the country. It is in these areas that Loscam supports its main customers like Unilever P&G and the Hero Group who have manufacturing and distribution sites.

"One of the advantages that many of these customers see when they use us, is not only the obvious of saving in time because they can move their product straight to warehouse racking, but also reduction in damaged goods which costs money," Zul said.

"The growth of the business has been formidable, with companies like Hero who have a number of supermarkets and hyper-markets under the Giant banner and who started using just a few pellets in 1996, to now, somewhere near 20,000 and growing. They like the fact that we can provide pallets to buffer their shortage problems, and we get very positive feedback on the services we provide.

"Other success stories include Unilever and P&G. We started with Unilever less than a year ago, and they have two third party warehouse suppliers - Linfox and Exel. Every month, more and more Unilever product is transported on Loscam pellets, and while we are just one small part of these companies' successes, it's nice that we can assist them to achieve a bigger share of the Indonesian market."

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